1.) G.R. No.

170491             April 4, 2007

NATIONAL POWER CORPORATION, Petitioner,

vs.
HON. RAMON G. CODILLA, JR., Presiding Judge, RTC of Cebu, Br. 19, BANGPAI SHIPPING COMPANY,
and WALLEM SHIPPING, INCORPORATED, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the
Decision1 of the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated 9 November 2005, which dismissed the
Petition for Certiorari filed by the National Power Corporation seeking to set aside the Order2 issued by the Regional
Trial Court (RTC) of Cebu, Branch 19 dated 16 November 2004, denying admission and excluding from the records
plaintiff’s (herein petitioner) Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J", and its sub-markings, "K",
"L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R"
and "S" and its sub-markings.

On 20 April 1996, M/V Dibena Win, a vessel of foreign registry owned and operated by private respondent Bangpai
Shipping, Co., allegedly bumped and damaged petitioner’s Power Barge 209 which was then moored at the Cebu
International Port. Thus, on 26 April 1996, petitioner filed before the Cebu RTC a complaint for damages against
private respondent Bangpai Shipping Co., for the alleged damages caused on petitioner’s power barges.

Thereafter, petitioner filed an Amended Complaint dated 8 July 1996 impleading herein private respondent Wallem
Shipping, Inc., as additional defendant, contending that the latter is a ship agent of Bangpai Shipping Co. On 18
September 1996, Wallem Shipping, Inc. filed a Motion to Dismiss which was subsequently denied by public
respondent Judge in an Order dated 20 October 1998. Bangpai Shipping Co. likewise filed a Motion to Dismiss
which was also denied by public respondent Judge in an Order issued on 24 January 2003.

Petitioner, after adducing evidence during the trial of the case, filed a formal offer of evidence before the lower court
on 2 February 2004 consisting of Exhibits "A" to "V" together with the sub-marked portions thereof. Consequently,
private respondents Bangpai Shipping Co. and Wallem Shipping, Inc. filed their respective objections to petitioner’s
formal offer of evidence.

On 16 November 2004, public respondent judge issued the assailed order denying the admission and excluding
from the records petitioner’s Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K",
"L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R"
and "S" and its sub-markings. According to the court a quo:

The Court finds merit in the objections raised and the motion to strike out filed respectively by the defendants. The
record shows that the plaintiff has been given every opportunity to present the originals of the Xerox or photocopies
of the documents it offered. It never produced the originals. The plaintiff attempted to justify the admission of the
photocopies by contending that "the photocopies offered are equivalent to the original of the document" on the basis
of the Electronic Evidence (Comment to Defendant Wallem Philippines’ Objections and Motion to Strike). But as
rightly pointed out in defendant Wallem’s Reply to the Comment of Plaintiff, the Xerox copies do not constitute the
electronic evidence defined in Section 1 of Rule 2 of the Rules on Electronic Evidence as follows:

"(h) "Electronic document" refers to information or the representation of information, data, figures, symbols or other
models of written expression, described or however represented, by which a right is established or an obligation
extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically. It includes digitally signed documents and any printout, readable by
sight or other means which accurately reflects the electronic data message or electronic document. For the purpose
of these Rules, the term "electronic document" may be used interchangeably with "electronic data message".

Evidence II.
The information in those Xerox or photocopies was not received, recorded, retrieved or produced
electronically. Moreover, such electronic evidence must be authenticated (Sections 1 and 2, Rule 5, Rules on
Electronic Evidence), which the plaintiff failed to do. Finally, the required Affidavit to prove the admissibility and
evidentiary weight of the alleged electronic evidence (Sec. 1, Rule 9, Ibid) was not executed, much less presented in
evidence.

The Xerox or photocopies offered should, therefore, be stricken off the record. Aside from their being not properly
identified by any competent witness, the loss of the principals thereof was not established by any competent proof.

xxxx

WHEREFORE, plaintiff’s Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J", and its sub-markings, "K", "L",
"M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, and
"R" are hereby DENIED admission and excluded from the records. However, these excluded evidence should be
attached to the records of this case to enable the appellate court to pass upon them should an appeal be taken from
the decision on the merits to be rendered upon the termination of the trial of this case.

Exhibits "S" and its sub-markings are also DENIED admission for lack of proper identification since the witness who
brought these pictures expressly admitted that he was not present when the photos were taken and had not
knowledge when the same where taken.3

Upon denial of petitioner’s Motion for Reconsideration in an Order dated 20 April 2005, petitioner filed a Petition
for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals maintaining that public
respondent Judge acted with grave abuse of discretion amounting to lack or excess of jurisdiction in denying the
admission of its Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and
its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R", and "S"
and its sub-markings.

On 9 November 2005, the appellate court issued a Decision dismissing petitioner’s petition for certiorari, the
pertinent portions of which elucidate:

After a judicious scrutiny of the record of the case on hand, together with the rules and jurisprudence which are
applicable in the premises, we have come up with a finding that the petition for certiorari filed in this case is not
meritorious.

It appears that there is no sufficient showing by the petitioner that the respondent judge acted with grave abuse of
discretion in issuing the assailed orders in Civil Case No. CEB-18662. As what our jurisprudence tells us, grave
abuse of discretion is meant such capricious and whimsical exercise of judgment as would be equivalent to lack of
jurisdiction x x x.

In the case at bench, what has been shown to the contrary by the totality of the record on hand is that the
respondent judge acted correctly and within the pale of his sound discretion in issuing the assailed order, dated
November 16, 2004, in Civil Case No. CEB-18662.

Indeed, it appears that the pieces of petitioner’s documentary evidence which were denied admission by the
respondent judge were not properly identified by any competent witness. As pointed out by the respondent Bangpai
Shipping Company in its comment on the petition filed in this case which reproduces some excerpts of the
testimonies in the court a quo of Atty. Marianito De Los Santos, Engr. Nestor Enriquez, Jr. and Mr. Rodulfo I.
Pagaling, the said witnesses did not have personal knowledge of and participation in the preparation and making of
the pieces of documentary evidence denied admission by respondent judge x x x. In other words, there was lack of
proper identification of said pieces of documentary evidence. x x x.

Then another ground for denying admission of petitioner’s Exhibits A, C, D, E, H, I, J, K, L, M, N, O, P, Q, R, and S

by the respondent judge is that said pieces of documentary evidence were merely photocopies of purported
documents or papers. There is no gainsaying the fact that the respondent judge acted within the pale of his
discretion when he denied admission of said documentary evidence. Section 3 of Rule 130 of the Rules of Court of

Evidence II.
the Philippines is very explicit in providing that, when the subject of inquiry are the contents of documents, no
evidence shall be admissible other than the original documents themselves, except in certain cases specifically so
enumerated therein, and the petitioner has not shown that the non-presentation or non-production of its original
documentary pieces of evidence falls under such exceptions. As aptly pointed out by the respondent judge in the
order issued by him on November 16, 2004:

"x x x The record shows that the plaintiff (petitioner herein) has been given every opportunity to present the originals
of the Xerox or photocopies of the documents it offered. It never produced said originals."

So, the petitioner has only itself to blame for the respondent judge’s denial of admission of its aforementioned
documentary evidence.

Of course, the petitioner tries to contend that the photocopies of documents offered by it are equivalent to the
original documents that it sought to offer in evidence, based on the Rules on Electronic Evidence which were in
force and effect since August 1, 2001. However, such a contention is devoid of merit. The pieces of documentary
evidence offered by the petitioner in Civil Case CEB-18662 which were denied admission by the respondent judge
do not actually constitute as electronic evidence as defined in the Rules on Electronic Evidence. The informations
therein were not received, retrieved or produced electronically. The petitioner has not adequately established that its
documentary evidence were electronic evidence. it has not properly authenticated such evidence as electronic
documents, assuming arguendo that they are. Lastly, the petitioner has not properly established by affidavit
pursuant to Rule 9 of the Rules on Electronic Evidence the admissibility and evidentiary weight of said documentary
evidence.

Thus, by any legal yardstick, it is manifest that the respondent judge did not commit grave abuse of discretion in
denying admission of the aforementioned documentary evidence of petitioner.

But even if it be granted just for the sake of argument that the respondent judge committed an error in denying the
aforementioned documentary evidence of the petitioner, still the petition for certiorari filed in this case must fail.
Such error would at most be only an error of law and not an error of jurisdiction. In Lee vs. People, 393 SCRA 397,
the Supreme Court of the Philippines said that certiorari will not lie in case of an error of law. x x x.

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the petition filed
in this case and AFFIRMING the assailed orders issued by respondent judge in Civil Case No. CEB-18662.4

Aggrieved by the aforequoted decision, petitioner filed the instant petition.

The focal point of this entire controversy is petitioner’s obstinate contention that the photocopies it offered as formal
evidence before the trial court are the functional equivalent of their original based on its inimitable interpretation of
the Rules on Electronic Evidence.

Petitioner insists that, contrary to the rulings of both the trial court and the appellate court, the photocopies it
presented as documentary evidence actually constitute electronic evidence based on its own premise that an
"electronic document" as defined under Section 1(h), Rule 2 of the Rules on Electronic Evidence is not limited to
information that is received, recorded, retrieved or produced electronically. Rather, petitioner maintains that an
"electronic document" can also refer to other modes of written expression that is produced electronically, such as
photocopies, as included in the section’s catch-all proviso: "any print-out or output, readable by sight or other
means".

We do not agree.

In order to shed light to the issue of whether or not the photocopies are indeed electronic documents as
contemplated in Republic Act No. 8792 or the Implementing Rules and Regulations of the Electronic Commerce Act,
as well as the Rules on Electronic Evidence, we shall enumerate the following documents offered as evidence by
the petitioner, to wit:

Evidence II.
 1. Exhibit "A" is a photocopy of a letter manually signed by a certain Jose C. Troyo, with "RECEIVED"
stamped thereon, together with a handwritten date;

2. Exhibit "C" is a photocopy of a list of estimated cost of damages of petitioner’s power barges 207 and 209
prepared by Hopewell Mobile Power Systems Corporation and manually signed by Messrs. Rex Malaluan
and Virgilio Asprer;

3. Exhibit "D" is a photocopy of a letter manually signed by a certain Nestor G. Enriquez, Jr., with
"RECEIVED" stamped thereon, together with a handwritten notation of the date it was received;

4. Exhibit "E" is a photocopy of a Standard Marine Protest Form which was filled up and accomplished by
Rex Joel C. Malaluan in his own handwriting and signed by him. Portions of the Jurat were handwritten, and
manually signed by the Notary Public;

5. Exhibit "H" is a photocopy of a letter manually signed by Mr. Nestor G. Enriquez, Jr. with "RECEIVED"
stamped thereon, together with a handwritten notation of the date it was received;

6. Exhibit "I" is a photocopy of a computation of the estimated energy loss allegedly suffered by petitioner
which was manually signed by Mr. Nestor G. Enriquez, Jr.;

7. Exhibit "J" is a photocopy of a letter containing the breakdown of the cost estimate, manually signed by
Mr. Nestor G. Enriquez, Jr., with "RECEIVED" stamped thereon, together with a handwritten notation of the
date it was received, and other handwritten notations;

8. Exhibit "K" is a photocopy of the Subpoena Duces Tecum Ad Testificandum written using a manual
typewriter, signed manually by Atty. Ofelia Polo-De Los Reyes, with a handwritten notation when it was
received by the party;

9. Exhibit "L" is a photocopy of a portion of the electricity supply and operation and maintenance agreement
between petitioner and Hopewell, containing handwritten notations and every page containing three
unidentified manually placed signatures;

10. Exhibit "M" is a photocopy of the Notice of Termination with attachments addressed to Rex Joel C.
Malaluan, manually signed by Jaime S. Patinio, with a handwritten notation of the date it was received. The
sub-markings also contain manual signatures and/or handwritten notations;

11. Exhibit "N" is a photocopy of a letter of termination with attachments addressed to VIrgilio Asprer and
manually signed by Jaime S. Patino. The sub-markings contain manual signatures and/or handwritten
notations;

12. Exhibit "O" is the same photocopied document marked as Annex C;

13. Exhibit "P" is a photocopy of an incident report manually signed by Messrs. Malaluan and Bautista and
by the Notary Public, with other handwritten notations;

14. Exhibit "Q" is a photocopy of a letter manually signed by Virgilio Asprer and by a Notary Public, together
with other handwritten notations.

On the other hand, an "electronic document" refers to information or the representation of information, data, figures,
symbols or other models of written expression, described or however represented, by which a right is established or
an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically.5 It includes digitally signed documents and any printout,
readable by sight or other means which accurately reflects the electronic data message or electronic document.6

The rules use the word "information" to define an electronic document received, recorded, transmitted, stored,
processed, retrieved or produced electronically. This would suggest that an electronic document is relevant only in
Evidence II.
terms of the information contained therein, similar to any other document which is presented in evidence as proof of
its contents.7 However, what differentiates an electronic document from a paper-based document is the manner by
which the information is processed; clearly, the information contained in an electronic document is received,
recorded, transmitted, stored, processed, retrieved or produced electronically.

A perusal of the information contained in the photocopies submitted by petitioner will reveal that not all of the
contents therein, such as the signatures of the persons who purportedly signed the documents, may be recorded or
produced electronically. By no stretch of the imagination can a person’s signature affixed manually be considered as
information electronically received, recorded, transmitted, stored, processed, retrieved or produced. Hence, the
argument of petitioner that since these paper printouts were produced through an electronic process, then these
photocopies are electronic documents as defined in the Rules on Electronic Evidence is obviously an erroneous, if
not preposterous, interpretation of the law. Having thus declared that the offered photocopies are not tantamount to
electronic documents, it is consequential that the same may not be considered as the functional equivalent of their
original as decreed in the law.

Furthermore, no error can be ascribed to the court a quo in denying admission and excluding from the records
petitioner’s Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its
sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, and "R". The trial
court was correct in rejecting these photocopies as they violate the best evidence rule and are therefore of no
probative value being incompetent pieces of evidence. Before the onset of liberal rules of discovery, and modern
technique of electronic copying, the best evidence rule was designed to guard against incomplete or fraudulent
proof and the introduction of altered copies and the withholding of the originals.8 But the modern justification for the
rule has expanded from the prevention of fraud to a recognition that writings occupy a central position in the
law.9 The importance of the precise terms of writings in the world of legal relations, the fallibility of the human
memory as reliable evidence of the terms, and the hazards of inaccurate or incomplete duplicate are the concerns
addressed by the best evidence rule.10

Moreover, as mandated under Section 2, Rule 130 of the Rules of Court:

"SECTION 2. Original writing must be produced; exceptions. — There can be no evidence of a writing the contents
of which is the subject of inquiry, other than the original writing itself, except in the following cases:

(a) When the original has been lost, destroyed, or cannot be produced in court;

(b) When the original is in the possession of the party against whom the evidence is offered, and the latter
fails to produce it after reasonable notice;

(c) When the original is a record or other document in the custody of a public officer;

(d) When the original has been recorded in an existing record a certified copy of which is made evidence by
law;

(e) When the original consists of numerous accounts or other documents which cannot be examined in court
without great loss of time and the fact sought to be established from them is only the general result of the
whole."

When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of
its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order
stated.11 The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or destruction of
the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial evidence of
routine practices of destruction of documents;12 (b) the proponent must prove by a fair preponderance of evidence
as to raise a reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a
diligent and bona fide but unsuccessful search has been made for the document in the proper place or
places.13 However, in the case at bar, though petitioner insisted in offering the photocopies as documentary
evidence, it failed to establish that such offer was made in accordance with the exceptions as enumerated under the

Evidence II.
abovequoted rule. Accordingly, we find no error in the Order of the court a quo denying admissibility of the
photocopies offered by petitioner as documentary evidence.

Finally, it perplexes this Court why petitioner continued to obdurately disregard the opportunities given by the trial
court for it to present the originals of the photocopies it presented yet comes before us now praying that it be
allowed to present the originals of the exhibits that were denied admission or in case the same are lost, to lay the
predicate for the admission of secondary evidence. Had petitioner presented the originals of the documents to the
court instead of the photocopies it obstinately offered as evidence, or at the very least laid the predicate for the
admission of said photocopies, this controversy would not have unnecessarily been brought before the appellate
court and finally to this Court for adjudication. Had it not been for petitioner’s intransigence, the merits of petitioner’s
complaint for damages would have been decided upon by the trial court long ago. As aptly articulated by the Court
of Appeals, petitioner has only itself to blame for the respondent judge’s denial of admission of its aforementioned
documentary evidence and consequently, the denial of its prayer to be given another opportunity to present the
originals of the documents that were denied admission nor to lay the predicate for the admission of secondary
evidence in case the same has been lost.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals in
CA-G.R. CEB-SP No. 00848, dated 9 November 2005 is hereby AFFIRMED. Costs against petitioner.

Evidence II.
 2.) [G.R. NO. 170633 : October 17, 2007]

MCC INDUSTRIAL SALES CORPORATION, Petitioner, v. SSANGYONG

CORPORATION, Respondents.

DECISION

NACHURA, J.:

Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals in CA-
G.R. CV No. 82983 and its Resolution2 denying the motion for reconsideration thereof.

Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at Binondo, Manila,
is engaged in the business of importing and wholesaling stainless steel products.3 One of its
suppliers is the Ssangyong Corporation (Ssangyong),4 an international trading company5 with
head office in Seoul, South Korea and regional headquarters in Makati City, Philippines.6 The two
corporations conducted business through telephone calls and facsimile or telecopy
transmissions.7 Ssangyong would send the pro forma invoices containing the details of the
steel product order to MCC; if the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to Ssangyong, again by fax.8

On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter9 addressed to Gregory Chan, MCC
Manager [also the President10 of Sanyo Seiki Stainless Steel Corporation], to confirm MCC's and
Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel under a preferential rate
of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and affixed his signature on
the conforme portion of the letter.11

On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-

POSTSO40112 containing the terms and conditions of the transaction. MCC sent back by fax to
Ssangyong the invoice bearing the conformity signature13 of Chan. As stated in the pro forma invoice,
payment for the ordered steel products would be made through an irrevocable letter of credit (L/C)
at sight in favor of Ssangyong.14 Following their usual practice, delivery of the goods was to be made
after the L/C had been opened.

In the meantime, because of its confirmed transaction with MCC, Ssangyong placed the order with its
steel manufacturer, Pohang Iron and Steel Corporation (POSCO), in South Korea15 and paid the same
in full.

Because MCC could open only a partial letter of credit, the order for 220MT of steel was split into
two,16 one for 110MT covered by Pro Forma Invoice No. ST2-POSTS0401-117 and another for
110MT covered by ST2-POSTS0401-2,18 both dated April 17, 2000.

On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and Chan, by way of a
fax transmittal, that it was ready to ship 193.597MT of stainless steel from Korea to the
Philippines. It requested that the opening of the L/C be facilitated.19 Chan affixed his signature on the
fax transmittal and returned the same, by fax, to Ssangyong.20

Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki, thru Chan, that it
was able to secure a US$30/MT price adjustment on the contracted price of US$1,860.00/MT for the
200MT stainless steel, and that the goods were to be shipped in two tranches, the first 100MT on
that day and the second 100MT not later than June 27, 2000. Ssangyong reiterated its request for
the facilitation of the L/C's opening.21

Evidence II.
Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to the Treasury Group of
Sanyo Seiki that it was looking forward to receiving the L/C details and a cable copy thereof that
day.22 Ssangyong sent a separate letter of the same date to Sanyo Seiki requesting for the opening
of the L/C covering payment of the first 100MT not later than June 28, 2000.23 Similar letters were
transmitted by Ssangyong Manila Office on June 27, 2000.24 On June 28, 2000, Ssangyong sent
another facsimile letter to MCC stating that its principal in Korea was already in a difficult
situation25 because of the failure of Sanyo Seiki and MCC to open the L/C's.

The following day, June 29, 2000, Ssangyong received, by fax, a letter signed by Chan, requesting
an extension of time to open the L/C because MCC's credit line with the bank had been fully availed
of in connection with another transaction, and MCC was waiting for an additional credit line.26 On the
same date, Ssangyong replied, requesting that it be informed of the date when the L/C would be
opened, preferably at the earliest possible time, since its Steel Team 2 in Korea was having problems
and Ssangyong was incurring warehousing costs.27 To maintain their good business relationship and
to support MCC in its financial predicament, Ssangyong offered to negotiate with its steel
manufacturer, POSCO, another US$20/MT discount on the price of the stainless steel ordered. This
was intimated in Ssangyong's June 30, 2000 letter to MCC.28 On July 6, 2000, another follow-up
letter29 for the opening of the L/C was sent by Ssangyong to MCC.

However, despite Ssangyong's letters, MCC failed to open a letter of credit.30 Consequently, on

August 15, 2000, Ssangyong, through counsel, wrote Sanyo Seiki that if the L/C's were not opened,
Ssangyong would be compelled to cancel the contract and hold MCC liable for damages for breach
thereof amounting to US$96,132.18, inclusive of warehouse expenses, related interests and
charges.31

Later, Pro Forma Invoice Nos. ST2-POSTS080-132 and ST2-POSTS080-233 dated August 16, 2000

were issued by Ssangyong and sent via fax to MCC. The invoices slightly varied the terms of the
earlier pro forma invoices (ST2-POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-2), in that
the quantity was now officially 100MT per invoice and the price was reduced to US$1,700.00 per
MT. As can be gleaned from the photocopies of the said August 16, 2000 invoices submitted to the
court, they both bear the conformity signature of MCC Manager Chan.

On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00 covering payment
for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-POSTS080-2.34 The goods
covered by the said invoice were then shipped to and received by MCC.35

MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting for a price
adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1, considering that the
prevailing price of steel at that time was US$1,500.00/MT, and that MCC lost a lot of money due to a
recent strike.36

Ssangyong rejected the request, and, on August 23, 2000, sent a demand letter37 to Chan for the
opening of the second and last L/C of US$170,000.00 with a warning that, if the said L/C was not
opened by MCC on August 26, 2000, Ssangyong would be constrained to cancel the contract and hold
MCC liable for US$64,066.99 (representing cost difference, warehousing expenses, interests and
charges as of August 15, 2000) and other damages for breach. Chan failed to reply.

Exasperated, Ssangyong through counsel wrote a letter to MCC, on September 11, 2000, canceling
the sales contract under ST2-POSTS0401-1 /ST2-POSTS0401-2, and demanding payment of
US$97,317.37 representing losses, warehousing expenses, interests and charges.38

Ssangyong then filed, on November 16, 2001, a civil action for damages due to breach of contract
against defendants MCC, Sanyo Seiki and Gregory Chan before the Regional Trial Court of Makati
City. In its complaint,39 Ssangyong alleged that defendants breached their contract when they

Evidence II.
refused to open the L/C in the amount of US$170,000.00 for the remaining 100MT of steel under Pro
Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.

After Ssangyong rested its case, defendants filed a Demurrer to Evidence40 alleging that Ssangyong
failed to present the original copies of the pro forma invoices on which the civil action was based. In
an Order dated April 24, 2003, the court denied the demurrer, ruling that the documentary evidence
presented had already been admitted in the December 16, 2002 Order41 and their admissibility finds
support in Republic Act (R.A.) No. 8792, otherwise known as the Electronic Commerce Act of 2000.
Considering that both testimonial and documentary evidence tended to substantiate the material
allegations in the complaint, Ssangyong's evidence sufficed for purposes of a prima facie case.42

After trial on the merits, the RTC rendered its Decision43 on March 24, 2004, in favor of
Ssangyong. The trial court ruled that when plaintiff agreed to sell and defendants agreed to buy the
220MT of steel products for the price of US$1,860 per MT, the contract was perfected. The subject
transaction was evidenced by Pro Forma Invoice Nos. ST2-POSTS0401 - 1 and ST2-POSTS0401-
2, which were later amended only in terms of reduction of volume as well as the price per MT,
following Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2. The RTC, however,
excluded Sanyo Seiki from liability for lack of competent evidence. The fallo of the decision reads:

WHEREFORE, premises considered, Judgment is hereby rendered ordering defendants MCC Industrial
Sales Corporation and Gregory Chan, to pay plaintiff, jointly and severally the following:

1) Actual damages of US$93,493.87 representing the outstanding principal claim plus interest at the
rate of 6% per annum from March 30, 2001.

2) Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's appearance in court, the
same being deemed just and equitable considering that by reason of defendants' breach of their
obligation under the subject contract, plaintiff was constrained to litigate to enforce its rights and
recover for the damages it sustained, and therefore had to engage the services of a lawyer.

3) Costs of suit.

No award of exemplary damages for lack of sufficient basis.

SO ORDERED.44

On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio B. Samson, filed their
Notice of Appeal.45 On June 8, 2004, the law office of Castillo Zamora & Poblador entered its
appearance as their collaborating counsel.

In their Appeal Brief filed on March 9, 2005,46 MCC and Chan raised before the CA the following
errors of the RTC:

I. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS VIOLATED THEIR
CONTRACT WITH APPELLEE

A. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS AGREED TO

PURCHASE 200 METRIC TONS OF STEEL PRODUCTS FROM APPELLEE, INSTEAD OF ONLY 100 METRIC
TONS.

1. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE THE PRO

FORMA INVOICES WITH REFERENCE NOS. ST2 - POSTS0401-1 AND ST2-POSTS0401-2.

II. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL DAMAGES TO APPELLEE.
Evidence II.
III. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEY'S FEES TO APPELLEE.

IV. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT GREGORY CHAN
JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MCC.47

On August 31, 2005, the CA rendered its Decision48 affirming the ruling of the trial court, but
absolving Chan of any liability. The appellate court ruled, among others, that Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible in
evidence, although they were mere facsimile printouts of MCC's steel orders.49 The dispositive portion
of the appellate court's decision reads:

WHEREFORE, premises considered, the Court holds:

(1) The award of actual damages, with interest, attorney's fees and costs ordered by the lower court
is hereby AFFIRMED.

(2) Appellant Gregory Chan is hereby ABSOLVED from any liability.

SO ORDERED.50

A copy of the said Decision was received by MCC's and Chan's principal counsel, Atty. Eladio B.
Samson, on September 14, 2005.51 Their collaborating counsel, Castillo Zamora &
Poblador,52 likewise, received a copy of the CA decision on September 19, 2005.53

On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a motion for
reconsideration of the said decision.54 Ssangyong opposed the motion contending that the decision of
the CA had become final and executory on account of the failure of MCC to file the said motion within
the reglementary period. The appellate court resolved, on November 22, 2005, to deny the motion
on its merits,55 without, however, ruling on the procedural issue raised.

Aggrieved, MCC filed a Petition for Review on Certiorari 56 before this Court, imputing the following
errors to the Court of Appeals:

THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH JURISPRUDENCE
AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL
PROCEEDINGS BY REVERSING THE COURT A QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE
NO. 02-124 CONSIDERING THAT:

I. THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY IN EVIDENCE OF THE PRO-
FORMA INVOICES WITH REFERENCE NOS. ST2-POSTSO401-1 AND ST2-POSTSO401-2, DESPITE THE
FACT THAT THE SAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS.

II. THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS FACT THAT, EVEN ASSUMING
PETITIONER BREACHED THE SUPPOSED CONTRACT, THE FACT IS THAT PETITIONER FAILED TO
PROVE THAT IT SUFFERED ANY DAMAGES AND THE AMOUNT THEREOF.

III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93,493.87 IS SIMPLY

UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED, IF NOT DELETED BY THE COURT
OF APPEALS.57

In its Comment, Ssangyong sought the dismissal of the petition, raising the following arguments:
that the CA decision dated 15 August 2005 is already final and executory, because MCC's motion for
reconsideration was filed beyond the reglementary period of 15 days from receipt of a copy thereof,
and that, in any case, it was a pro forma motion; that MCC breached the contract for the purchase of
Evidence II.
the steel products when it failed to open the required letter of credit; that the printout copies and/or
photocopies of facsimile or telecopy transmissions were properly admitted by the trial court because
they are considered original documents under R.A. No. 8792; and that MCC is liable for actual
damages and attorney's fees because of its breach, thus, compelling Ssangyong to litigate.

The principal issues that this Court is called upon to resolve are the following:

I - Whether the CA decision dated 15 August 2005 is already final and executory;

II - Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and
admissible as such;

III - Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in the
affirmative, whether MCC breached the said contract; and cralawlibrary

IV - Whether the award of actual damages and attorney's fees in favor of Ssangyong is proper and
justified.

-I-

It cannot be gainsaid that in Albano v. Court of Appeals,58 we held that receipt of a copy of the
decision by one of several counsels on record is notice to all, and the period to appeal commences on
such date even if the other counsel has not yet received a copy of the decision. In this case, when
Atty. Samson received a copy of the CA decision on September 14, 2005, MCC had only fifteen (15)
days within which to file a motion for reconsideration conformably with Section 1, Rule 52 of the
Rules of Court, or to file a Petition for Review on Certiorari in accordance with Section 2, Rule 45. The
period should not be reckoned from September 29, 2005 (when Castillo Zamora & Poblador received
their copy of the decision) because notice to Atty. Samson is deemed notice to collaborating counsel.

We note, however, from the records of the CA, that it was Castillo Zamora & Poblador, not Atty.
Samson, which filed both MCC's and Chan's Brief and Reply Brief. Apparently, the arrangement
between the two counsels was for the collaborating, not the principal, counsel to file the appeal brief
and subsequent pleadings in the CA. This explains why it was Castillo Zamora & Poblador which filed
the motion for the reconsideration of the CA decision, and they did so on October 5, 2005, well within
the 15-day period from September 29, 2005, when they received their copy of the CA decision. This
could also be the reason why the CA did not find it necessary to resolve the question of the
timeliness of petitioner's motion for reconsideration, even as the CA denied the same.

Independent of this consideration though, this Court assiduously reviewed the records and found that
strong concerns of substantial justice warrant the relaxation of this rule.

In Philippine Ports Authority v. Sargasso Construction and Development Corporation,59 we ruled that:

In Orata v. Intermediate Appellate Court, we held that where strong considerations of substantive
justice are manifest in the petition, this Court may relax the strict application of the rules of
procedure in the exercise of its legal jurisdiction. In addition to the basic merits of the main case,
such a petition usually embodies justifying circumstance which warrants our heeding to the
petitioner's cry for justice in spite of the earlier negligence of counsel. As we held in Obut v. Court of
Appeals:

[W]e cannot look with favor on a course of action which would place the administration of justice in a
straight jacket for then the result would be a poor kind of justice if there would be justice at all.
Verily, judicial orders, such as the one subject of this petition, are issued to be obeyed, nonetheless a
non-compliance is to be dealt with as the circumstances attending the case may warrant. What
Evidence II.
should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity
to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or
property on technicalities.

The rules of procedure are used only to secure and not override or frustrate justice. A six-day delay
in the perfection of the appeal, as in this case, does not warrant the outright dismissal of the appeal.
In Development Bank of the Philippines v. Court of Appeals, we gave due course to the petitioner's
appeal despite the late filing of its brief in the appellate court because such appeal involved public
interest. We stated in the said case that the Court may exempt a particular case from a strict
application of the rules of procedure where the appellant failed to perfect its appeal within the
reglementary period, resulting in the appellate court's failure to obtain jurisdiction over the case.
In Republic v. Imperial, Jr., we also held that there is more leeway to exempt a case from the
strictness of procedural rules when the appellate court has already obtained jurisdiction over the
appealed case. We emphasize that:

[T]he rules of procedure are mere tools intended to facilitate the attainment of justice, rather than
frustrate it. A strict and rigid application of the rules must always be eschewed when it would subvert
the rule's primary objective of enhancing fair trials and expediting justice. Technicalities should never
be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the
amplest opportunity for the proper and just determination of his cause, free from the constraints of
technicalities.60

Moreover, it should be remembered that the Rules were promulgated to set guidelines in the orderly
administration of justice, not to shackle the hand that dispenses it. Otherwise, the courts would be
consigned to being mere slaves to technical rules, deprived of their judicial discretion. Technicalities
must take a backseat to substantive rights. After all, it is circumspect leniency in this respect that will
give the parties the fullest opportunity to ventilate the merits of their respective causes, rather than
have them lose life, liberty, honor or property on sheer technicalities.61

The other technical issue posed by respondent is the alleged pro forma nature of MCC's motion for
reconsideration, ostensibly because it merely restated the arguments previously raised and passed
upon by the CA.

In this connection, suffice it to say that the mere restatement of arguments in a motion for
reconsideration does not per se result in a pro forma motion. In Security Bank and Trust Company,
Inc. v. Cuenca,62 we held that a motion for reconsideration may not be necessarily pro forma even if
it reiterates the arguments earlier passed upon and rejected by the appellate court. A movant may
raise the same arguments precisely to convince the court that its ruling was erroneous. Furthermore,
the pro forma rule will not apply if the arguments were not sufficiently passed upon and answered in
the decision sought to be reconsidered.

- II -

The second issue poses a novel question that the Court welcomes. It provides the occasion for this
Court to pronounce a definitive interpretation of the equally innovative provisions of the Electronic
Commerce Act of 2000 (R.A. No. 8792) vis - à-vis the Rules on Electronic Evidence.

Although the parties did not raise the question whether the original facsimile transmissions are
"electronic data messages" or "electronic documents" within the context of the Electronic Commerce
Act (the petitioner merely assails as inadmissible evidence the photocopies of the said facsimile
transmissions), we deem it appropriate to determine first whether the said fax transmissions are
indeed within the coverage of R.A. No. 8792 before ruling on whether the photocopies thereof are
covered by the law. In any case, this Court has ample authority to go beyond the pleadings when, in

Evidence II.
the interest of justice or for the promotion of public policy, there is a need to make its own findings in
order to support its conclusions.63

Petitioner contends that the photocopies of the pro forma invoices presented by respondent

Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in evidence and
do not fall within the ambit of R.A. No. 8792, because the law merely admits as the best evidence
the original fax transmittal. On the other hand, respondent posits that, from a reading of the law and
the Rules on Electronic Evidence, the original facsimile transmittal of the pro forma invoice is
admissible in evidence since it is an electronic document and, therefore, the best evidence under the
law and the Rules. Respondent further claims that the photocopies of these fax transmittals
(specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on
Evidence because the respondent sufficiently explained the non-production of the original fax
transmittals.

In resolving this issue, the appellate court ruled as follows:

Admissibility of Pro Forma

Invoices; Breach of Contract
by Appellants

Turning first to the appellants' argument against the admissibility of the Pro Forma Invoices with
Reference Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F", pp. 215-218,
Records), appellants argue that the said documents are inadmissible (sic) being violative of the best
evidence rule.

The argument is untenable.

The copies of the said pro-forma invoices submitted by the appellee are admissible in evidence,
although they are mere electronic facsimile printouts of appellant's orders. Such facsimile printouts
are considered Electronic Documents under the New Rules on Electronic Evidence, which came into
effect on August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).

"(h) 'Electronic document' refers to information or the representation of information, data, figures,
symbols or other modes of written expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be proved and affirmed, which is
received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes
digitally signed documents and any printout or output, readable by sight or other means, which
accurately reflects the electronic data message or electronic document. For purposes of these Rules,
the term 'electronic document' may be used interchangeably with 'electronic data message'.

An electronic document shall be regarded as the equivalent of an original document under the Best
Evidence Rule, as long as it is a printout or output readable by sight or other means, showing to
reflect the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)

The ruling of the Appellate Court is incorrect. R.A. No. 8792,64 otherwise known as the Electronic
Commerce Act of 2000, considers an electronic data message or an electronic document as the
functional equivalent of a written document for evidentiary purposes.65 The Rules on Electronic
Evidence66 regards an electronic document as admissible in evidence if it complies with the rules on
admissibility prescribed by the Rules of Court and related laws, and is authenticated in the manner
prescribed by the said Rules.67 An electronic document is also the equivalent of an original document
under the Best Evidence Rule, if it is a printout or output readable by sight or other means, shown to
reflect the data accurately.68

Evidence II.
Thus, to be admissible in evidence as an electronic data message or to be considered as the
functional equivalent of an original document under the Best Evidence Rule, the writing must
foremost be an "electronic data message" or an "electronic document."

The Electronic Commerce Act of 2000 defines electronic data message and electronic document as
follows:

Sec. 5. Definition of Terms. For the purposes of this Act, the following terms are defined, as
follows:

xxx

c. "Electronic Data Message" refers to information generated, sent, received or stored by electronic,
optical or similar means.

xxx

f. "Electronic Document" refers to information or the representation of information, data, figures,

symbols or other modes of written expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be proved and affirmed, which is
received, recorded, transmitted, stored, processed, retrieved or produced electronically.

The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69 which was signed on July 13,
2000 by the then Secretaries of the Department of Trade and Industry, the Department of Budget
and Management, and then Governor of the Bangko Sentral ng Pilipinas, defines the terms as:

Sec. 6. Definition of Terms. For the purposes of this Act and these Rules, the following terms are
defined, as follows:

xxx

(e) "Electronic Data Message" refers to information generated, sent, received or stored by electronic,
optical or similar means, but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy. Throughout these Rules, the term "electronic data message" shall be
equivalent to and be used interchangeably with "electronic document."

xxx

(h) "Electronic Document" refers to information or the representation of information, data, figures,
symbols or other modes of written expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be proved and affirmed, which is
received, recorded, transmitted, stored, processed, retrieved or produced electronically. Throughout
these Rules, the term "electronic document" shall be equivalent to and be used interchangeably with
"electronic data message."

The phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or
telecopy" in the IRR's definition of "electronic data message" is copied from the Model Law on
Electronic Commerce adopted by the United Nations Commission on International Trade Law
(UNCITRAL),70 from which majority of the provisions of R.A. No. 8792 were taken.71 While Congress
deleted this phrase in the Electronic Commerce Act of 2000, the drafters of the IRR reinstated it. The
deletion by Congress of the said phrase is significant and pivotal, as discussed hereunder.

The clause on the interchangeability of the terms "electronic data message" and "electronic
document" was the result of the Senate of the Philippines' adoption, in Senate Bill 1902, of the
Evidence II.
phrase "electronic data message" and the House of Representative's employment, in House Bill 9971,
of the term "electronic document."72 In order to expedite the reconciliation of the two versions, the
technical working group of the Bicameral Conference Committee adopted both terms and intended
them to be the equivalent of each one.73 Be that as it may, there is a slight difference between the
two terms. While "data message" has reference to information electronically sent, stored or
transmitted, it does not necessarily mean that it will give rise to a right or extinguish an
obligation,74 unlike an electronic document. Evident from the law, however, is the legislative intent to
give the two terms the same construction.

The Rules on Electronic Evidence promulgated by this Court defines the said terms in the following
manner:

SECTION 1. Definition of Terms. - For purposes of these Rules, the following terms are defined, as
follows:

xxx

(g) "Electronic data message" refers to information generated, sent, received or stored by electronic,
optical or similar means.

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

Given these definitions, we go back to the original question: Is an original printout of a facsimile
transmission an electronic data message or electronic document? cra lawlibrary

The definitions under the Electronic Commerce Act of 2000, its IRR and the Rules on Electronic
Evidence, at first glance, convey the impression that facsimile transmissions are electronic data
messages or electronic documents because they are sent by electronic means. The expanded
definition of an "electronic data message" under the IRR, consistent with the UNCITRAL Model Law,
further supports this theory considering that the enumeration "xxx [is] not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or telecopy." And to telecopy is to send a
document from one place to another via a fax machine.75

As further guide for the Court in its task of statutory construction, Section 37 of the Electronic
Commerce Act of 2000 provides that

Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its
international origin and the need to promote uniformity in its application and the observance of good
faith in international trade relations. The generally accepted principles of international law and
convention on electronic commerce shall likewise be considered.

Obviously, the "international origin" mentioned in this section can only refer to the UNCITRAL Model
Law, and the UNCITRAL's definition of "data message":

"Data message" means information generated, sent, received or stored by electronic, optical or
similar means including, but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy.76

Evidence II.
is substantially the same as the IRR's characterization of an "electronic data message."

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

Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Senate Bill 1902 (the
predecessor of R.A. No. 8792), sponsored the bill on second reading, he proposed to adopt the term
"data message" as formulated and defined in the UNCITRAL Model Law.79 During the period of
amendments, however, the term evolved into "electronic data message," and the phrase "but not
limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy" in the
UNCITRAL Model Law was deleted. Furthermore, the term "electronic data message," though
maintaining its description under the UNCITRAL Model Law, except for the aforesaid deleted
phrase, conveyed a different meaning, as revealed in the following proceedings:

xxx

Senator Santiago. Yes, Mr. President. I will furnish a copy together with the explanation of this
proposed amendment.

And then finally, before I leave the Floor, may I please be allowed to go back to Section 5; the
Definition of Terms. In light of the acceptance by the good Senator of my proposed amendments, it
will then become necessary to add certain terms in our list of terms to be defined. I would like to add
a definition on what is "data," what is "electronic record" and what is an "electronic record system."

If the gentleman will give me permission, I will proceed with the proposed amendment on Definition
of Terms, Section 5.

Senator Magsaysay. Please go ahead, Senator Santiago.

Senator Santiago. We are in Part 1, short title on the Declaration of Policy, Section 5, Definition of
Terms.

At the appropriate places in the listing of these terms that have to be defined since these are
arranged alphabetically, Mr. President, I would like to insert the term DATA and its definition. So, the
amendment will read: "DATA" MEANS REPRESENTATION, IN ANY FORM, OF INFORMATION OR
CONCEPTS.

The explanation is this: This definition of "data" or "data" as it is now fashionably pronounced in
America - - the definition of "data" ensures that our bill applies to any form of information in an
electronic record, whether these are figures, facts or ideas.

So again, the proposed amendment is this: "DATA" MEANS REPRESENTATIONS, IN ANY FORM, OF
INFORMATION OR CONCEPTS.

Senator Magsaysay. May I know how will this affect the definition of "Data Message" which
encompasses electronic records, electronic writings and electronic documents? cra lawlibrary

Evidence II.
Senator Santiago. These are completely congruent with each other. These are compatible. When we
define "data," we are simply reinforcing the definition of what is a data message.

Senator Magsaysay. It is accepted, Mr. President.

Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD." The proposed amendment is
as follows:

"ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR STORED ON ANY MEDIUM IN OR BY A

COMPUTER SYSTEM OR OTHER SIMILAR DEVICE, THAT CAN BE READ OR PERCEIVED BY A PERSON
OR A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT INCLUDES A DISPLAY, PRINTOUT OR
OTHER OUTPUT OF THAT DATA.

The explanation for this term and its definition is as follows: The term "ELECTRONIC RECORD" fixes
the scope of our bill. The record is the data. The record may be on any medium. It is electronic
because it is recorded or stored in or by a computer system or a similar device.

The amendment is intended to apply, for example, to data on magnetic strips on cards or in Smart
cards. As drafted, it would not apply to telexes or faxes, except computer-generated faxes,
unlike the United Nations model law on electronic commerce. It would also not apply to
regular digital telephone conversations since the information is not recorded. It would apply to voice
mail since the information has been recorded in or by a device similar to a computer. Likewise, video
records are not covered. Though when the video is transferred to a website, it would be covered
because of the involvement of the computer. Music recorded by a computer system on a compact
disc would be covered.

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

Paper records that are produced directly by a computer system such as printouts are themselves
electronic records being just the means of intelligible display of the contents of the record.
Photocopies of the printout would be paper record subject to the usual rules about copies, but the
original printout would be subject to the rules of admissibility of this bill.

However, printouts that are used only as paper records and whose computer origin is never again
called on are treated as paper records. In that case, the reliability of the computer system that
produces the record is irrelevant to its reliability.

Senator Magsaysay. Mr. President, if my memory does not fail me, earlier, the lady Senator accepted
that we use the term "Data Message" rather than "ELECTRONIC RECORD" in being consistent with
the UNCITRAL term of "Data Message." So with the new amendment of defining "ELECTRONIC
RECORD," will this affect her accepting of the use of "Data Message" instead of "ELECTRONIC
RECORD"? cra lawlibrary

Senator Santiago. No, it will not. Thank you for reminding me. The term I would like to insert is
ELECTRONIC DATA MESSAGE in lieu of "ELECTRONIC RECORD."

Senator Magsaysay. Then we are, in effect, amending the term of the definition of "Data
Message" on page 2A, line 31, to which we have no objection.

Evidence II.
Senator Santiago. Thank you, Mr. President.

xxx

Senator Santiago. Mr. President, I have proposed all the amendments that I desire to, including the
amendment on the effect of error or change. I will provide the language of the amendment together
with the explanation supporting that amendment to the distinguished sponsor and then he can feel
free to take it up in any session without any further intervention.

Senator Magsaysay. Before we end, Mr. President, I understand from the proponent of these
amendments that these are based on the Canadian E-commerce Law of 1998. Is that not right? cra lawlibrary

Senator Santiago. That is correct.80

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

"Electronic record" fixes the scope of the Act. The record is the data. The record may be any medium.
It is "electronic" because it is recorded or stored in or by a computer system or similar device. The
Act is intended to apply, for example, to data on magnetic strips on cards, or in smart cards. As
drafted, it would not apply to telexes or faxes (except computer-generated faxes), unlike the United
Nations Model Law on Electronic Commerce. It would also not apply to regular digital telephone
conversations, since the information is not recorded. It would apply to voice mail, since the
information has been recorded in or by a device similar to a computer. Likewise video records are not
covered, though when the video is transferred to a Web site it would be, because of the involvement
of the computer. Music recorded by a computer system on a compact disk would be covered.

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

Paper records that are produced directly by a computer system, such as printouts, are themselves
electronic records, being just the means of intelligible display of the contents of the record.
Photocopies of the printout would be paper records subject to the usual rules about copies, but the
"original" printout would be subject to the rules of admissibility of this Act.

However, printouts that are used only as paper records, and whose computer origin is never again
called on, are treated as paper records. See subsection 4(2). In this case the reliability of the
computer system that produced the record is relevant to its reliability.81

Evidence II.
There is no question then that when Congress formulated the term "electronic data message," it
intended the same meaning as the term "electronic record" in the Canada law. This construction of
the term "electronic data message," which excludes telexes or faxes, except computer-generated
faxes, is in harmony with the Electronic Commerce Law's focus on "paperless" communications and
the "functional equivalent approach"82 that it espouses. In fact, the deliberations of the Legislature
are replete with discussions on paperless and digital transactions.

Facsimile transmissions are not, in this sense, "paperless," but verily are paper-based.

A facsimile machine, which was first patented in 1843 by Alexander Bain,83 is a device that can send
or receive pictures and text over a telephone line. It works by digitizing an image dividing it into a
grid of dots. Each dot is either on or off, depending on whether it is black or white. Electronically,
each dot is represented by a bit that has a value of either 0 (off) or 1 (on). In this way, the fax
machine translates a picture into a series of zeros and ones (called a bit map) that can be
transmitted like normal computer data. On the receiving side, a fax machine reads the incoming
data, translates the zeros and ones back into dots, and reprints the picture.84 A fax machine is
essentially an image scanner, a modem and a computer printer combined into a highly specialized
package. The scanner converts the content of a physical document into a digital image, the modem
sends the image data over a phone line, and the printer at the other end makes a duplicate of the
original document.85 Thus, in Garvida v. Sales, Jr.,86 where we explained the unacceptability of filing
pleadings through fax machines, we ruled that:

A facsimile or fax transmission is a process involving the transmission and reproduction of printed
and graphic matter by scanning an original copy, one elemental area at a time, and representing the
shade or tone of each area by a specified amount of electric current. The current is transmitted as a
signal over regular telephone lines or via microwave relay and is used by the receiver to reproduce
an image of the elemental area in the proper position and the correct shade. The receiver is equipped
with a stylus or other device that produces a printed record on paper referred to as a facsimile.

x x x A facsimile is not a genuine and authentic pleading. It is, at best, an exact copy preserving all
the marks of an original. Without the original, there is no way of determining on its face whether the
facsimile pleading is genuine and authentic and was originally signed by the party and his counsel. It
may, in fact, be a sham pleading.87

Accordingly, in an ordinary facsimile transmission, there exists an original paper-based information or

data that is scanned, sent through a phone line, and re-printed at the receiving end. Be it noted that
in enacting the Electronic Commerce Act of 2000, Congress intended virtual or paperless writings to
be the functional equivalent and to have the same legal function as paper-based
documents.88 Further, in a virtual or paperless environment, technically, there is no original copy to
speak of, as all direct printouts of the virtual reality are the same, in all respects, and are considered
as originals.89 Ineluctably, the law's definition of "electronic data message," which, as aforesaid, is
interchangeable with "electronic document," could not have included facsimile transmissions, which
have an original paper-based copy as sent and a paper-based facsimile copy as received. These two
copies are distinct from each other, and have different legal effects. While Congress anticipated
future developments in communications and computer technology90 when it drafted the law, it
excluded the early forms of technology, like telegraph, telex and telecopy (except computer-
generated faxes, which is a newer development as compared to the ordinary fax machine to fax
machine transmission), when it defined the term "electronic data message."

Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim the
UNCITRAL Model Law's definition of "data message," without considering the intention of Congress
when the latter deleted the phrase "but not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy." The inclusion of this phrase in the IRR offends a basic tenet in the
exercise of the rule-making power of administrative agencies. After all, the power of administrative

Evidence II.
officials to promulgate rules in the implementation of a statute is necessarily limited to what is found
in the legislative enactment itself. The implementing rules and regulations of a law cannot extend the
law or expand its coverage, as the power to amend or repeal a statute is vested in the
Legislature.91 Thus, if a discrepancy occurs between the basic law and an implementing rule or
regulation, it is the former that prevails, because the law cannot be broadened by a mere
administrative issuance an administrative agency certainly cannot amend an act of Congress.92 Had
the Legislature really wanted ordinary fax transmissions to be covered by the mantle of the Electronic
Commerce Act of 2000, it could have easily lifted without a bit of tatter the entire wordings of the
UNCITRAL Model Law.

Incidentally, the National Statistical Coordination Board Task Force on the Measurement of E-
Commerce,93 on November 22, 2006, recommended a working definition of "electronic commerce,"
as "[a]ny commercial transaction conducted through electronic, optical and similar medium, mode,
instrumentality and technology. The transaction includes the sale or purchase of goods and services,
between individuals, households, businesses and governments conducted over computer-mediated
networks through the Internet, mobile phones, electronic data interchange (EDI) and other channels
through open and closed networks." The Task Force's proposed definition is similar to the
Organization of Economic Cooperation and Development's (OECD's) broad definition as it covers
transactions made over any network, and, in addition, it adopted the following provisions of the
OECD definition: (1) for transactions, it covers sale or purchase of goods and services; (2) for
channel/network, it considers any computer-mediated network and NOT limited to Internet alone;
(3) it excludes transactions received/placed using fax, telephone or non-interactive mail; (4) it
considers payments done online or offline; and (5) it considers delivery made online (like
downloading of purchased books, music or software programs) or offline (deliveries of goods).94

We, therefore, conclude that the terms "electronic data message" and "electronic document," as
defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission.
Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is not the
functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic
evidence.

Since a facsimile transmission is not an "electronic data message" or an "electronic document," and
cannot be considered as electronic evidence by the Court, with greater reason is a photocopy of such
a fax transmission not electronic evidence. In the present case, therefore, Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2-POSTS0401 - 2 (Exhibits "E" and "F"), which are mere
photocopies of the original fax transmittals, are not electronic evidence, contrary to the position of
both the trial and the appellate courts.

- III -

Nevertheless, despite the pro forma invoices not being electronic evidence, this Court finds that
respondent has proven by preponderance of evidence the existence of a perfected contract of sale.

In an action for damages due to a breach of a contract, it is essential that the claimant proves (1)
the existence of a perfected contract, (2) the breach thereof by the other contracting party and (3)
the damages which he/she sustained due to such breach. Actori incumbit onus probandi. The burden
of proof rests on the party who advances a proposition affirmatively.95 In other words, a plaintiff in a
civil action must establish his case by a preponderance of evidence, that is, evidence that has greater
weight, or is more convincing than that which is offered in opposition to it.96

In general, contracts are perfected by mere consent,97 which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer
must be certain and the acceptance absolute.98 They are, moreover, obligatory in whatever form they
may have been entered into, provided all the essential requisites for their validity are present.99 Sale,

Evidence II.
being a consensual contract, follows the general rule that it is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and upon the price. From
that moment, the parties may reciprocally demand performance, subject to the provisions of the law
governing the form of contracts.100

The essential elements of a contract of sale are (1) consent or meeting of the minds, that is, to
transfer ownership in exchange for the price, (2) object certain which is the subject matter of the
contract, and (3) cause of the obligation which is established.101

In this case, to establish the existence of a perfected contract of sale between the parties,
respondent Ssangyong formally offered in evidence the testimonies of its witnesses and the following
exhibits:

Exhibit Description Purpose

E Pro forma Invoice dated 17 To show that defendants contracted
April 2000 with Contract with plaintiff for the delivery of 110
No. ST2-POSTS0401-1, phot MT of stainless steel from Korea
ocopy payable by way of an irrevocable letter
of credit in favor of plaintiff, among
other conditions.
E-1 Pro forma Invoice dated 17 To show that defendants sent their
April 2000 with Contract confirmation of the (i) delivery to it of
No. ST2-POSTS0401, contai the specified stainless steel products,
ned in facsimile/thermal paper (ii) defendants' payment thereof by
faxed by defendants to way of an irrevocable letter of credit
plaintiff showing the printed in favor of plaintiff, among other
transmission details on the conditions.
upper portion of said paper as
coming from defendant MCC
on 26 Apr 00 08:41AM
E-2 Conforme signature of Mr. To show that defendants sent their
Gregory Chan, contained in confirmation of the (i) delivery to it of
facsimile/thermal paper faxed the total of 220MT specified stainless
by defendants to plaintiff steel products, (ii) defendants'
showing the printed payment thereof by way of an
transmission details on the irrevocable letter of credit in favor of
upper portion of said paper as plaintiff, among other conditions.
coming from defendant MCC
on 26 Apr 00 08:41AM
F Pro forma Invoice dated 17 To show that defendants contracted
April 2000 with Contract with plaintiff for delivery of another
No. ST2-POSTSO401-2, pho 110 MT of stainless steel from Korea
tocopy payable by way of an irrevocable letter
of credit in favor of plaintiff, among
other conditions.
G Letter to defendant SANYO To prove that defendants were
SEIKE dated 20 June informed of the date of L/C opening
2000, contained in and defendant's conforme/approval
facsimile/thermal paper thereof.

Evidence II.
G-1 Signature of defendant
Gregory Chan, contained in
facsimile/thermal paper.
H Letter to defendants dated 22 To prove that defendants were
June 2000, original informed of the successful price
adjustments secured by plaintiff in
favor of former and were advised of
the schedules of its L/C opening.
I Letter to defendants dated 26 To prove that plaintiff repeatedly
June 2000, original requested defendants for the agreed
J Letter to defendants dated 26 opening of the Letters of Credit,
June 2000, original defendants' failure and refusal to
comply with their obligations and the
K Letter to defendants dated 27 problems of plaintiff is incurring by
June 2000, original reason of defendants' failure and
L Facsimile message to refusal to open the L/Cs.
defendants dated 28 June
2000, photocopy
M Letter from defendants dated To prove that defendants admit of
29 June 2000, contained in their liabilities to plaintiff, that they
facsimile/thermal paper faxed requested for "more extension" of time
by defendants to plaintiff for the opening of the Letter of Credit,
showing the printed and begging for favorable
transmission details on the understanding and consideration.
upper portion of said paper as
coming from defendant MCC
on 29 June 00 11:12 AM
M-1 Signature of defendant  
Gregory Chan, contained in
facsimile/thermal paper faxed
by defendants to plaintiff
showing the printed
transmission details on the
upper portion of said paper as
coming from defendant MCC
on June 00 11:12 AM
N Letter to defendants dated 29  
June 2000, original
O Letter to defendants dated 30 To prove that plaintiff reiterated its
June 2000, photocopy request for defendants to L/C opening
after the latter's request for extension
of time was granted, defendants'
failure and refusal to comply therewith
extension of time notwithstanding.
P Letter to defendants dated 06  
July 2000, original
Q Demand letter to defendants To prove that plaintiff was constrained
dated 15 Aug 2000, original to engaged services of a lawyer for

Evidence II.
 collection efforts.
R Demand letter to defendants To prove that defendants opened the
dated 23 Aug 2000, original first L/C in favor of plaintiff,
requested for further postponement of
the final L/C and for minimal
amounts, were urged to open the final
L/C on time, and were informed that
failure to comply will cancel the
contract.
S Demand letter to defendants To show defendants' refusal and
dated 11 Sept 2000, original failure to open the final L/C on time,
the cancellation of the contract as a
consequence thereof, and final
demand upon defendants to remit its
obligations.
W Letter from plaintiff To prove that there was a perfected
SSANGYONG to defendant sale and purchase agreement between
SANYO SEIKI dated 13 April the parties for 220 metric tons of steel
2000, with fax back from products at the price of US$1,860/ton.
defendants SANYO
SEIKI/MCC to plaintiff
SSANGYONG, contained in
facsimile/thermal paper with
back-up photocopy
W-1 Conforme signature of To prove that defendants, acting
defendant Gregory Chan, through Gregory Chan, agreed to the
contained in facsimile/thermal sale and purchase of 220 metric tons
paper with back-up photocopy of steel products at the price of
US$1,860/ton.
W-2 Name of sender MCC To prove that defendants sent their
Industrial Sales Corporation conformity to the sale and purchase
agreement by facsimile transmission.
X Pro forma Invoice dated 16 To prove that defendant MCC agreed
August 2000, photocopy to adjust and split the confirmed
purchase order into 2 shipments at 100
metric tons each at the discounted
price of US$1,700/ton.
X-1 Notation "1/2", photocopy To prove that the present Pro forma
Invoice was the first of 2 pro forma
invoices.
X-2 Ref. No. ST2-POSTS080- To prove that the present Pro
1, photocopy forma Invoice was the first of 2 pro
forma invoices.
X-3 Conforme signature of To prove that defendant MCC, acting
defendant Gregory through Gregory Chan, agreed to the
Chan, photocopy sale and purchase of the balance of
100 metric tons at the discounted price
of US$1,700/ton, apart from the other
Evidence II.
 order and shipment of 100 metric tons
which was delivered by plaintiff
SSANGYONG and paid for by
defendant MCC.
DD Letter from defendant MCC to To prove that there was a perfected
plaintiff SSANGYONG dated sale and purchase agreement between
22 August 2000, contained in plaintiff SSANGYONG and defendant
facsimile/thermal paper with MCC for the balance of 100 metric
back-up photocopy tons, apart from the other order and
shipment of 100 metric tons which
was delivered by plaintiff
SSANGYONG and paid for by
defendant MCC.
DD-1 Ref. No. ST2-POSTS080- To prove that there was a perfected
1, contained in sale and purchase agreement between
facsimile/thermal paper with plaintiff SSANGYONG and defendant
back-up photocopy MCC for the balance of 100 metric
tons, apart from the other order and
shipment of 100 metric tons which
was delivered by plaintiff
SSANGYONG and paid for by
defendant MCC.
DD-2 Signature of defendant To prove that defendant MCC, acting
Gregory Chan, contained in through Gregory Chan, agreed to the
facsimile/thermal paper with sale and purchase of the balance of
back-up photocopy 100 metric tons, apart from the other
order and shipment of 100 metric tons
which was delivered by plaintiff
Ssangyong and paid for by defendant
MCC.102

Significantly, among these documentary evidence presented by respondent, MCC, in its petition

before this Court, assails the admissibility only of Pro Forma Invoice Nos. ST2-POSTS0401-
1 and ST2-POSTS0401-2 (Exhibits "E" and "F"). After sifting through the records, the Court found
that these invoices are mere photocopies of their original fax transmittals. Ssangyong avers that
these documents were prepared after MCC asked for the splitting of the original order into two, so
that the latter can apply for an L/C with greater facility. It, however, failed to explain why the
originals of these documents were not presented.

To determine whether these documents are admissible in evidence, we apply the ordinary Rules on
Evidence, for as discussed above we cannot apply the Electronic Commerce Act of 2000 and the
Rules on Electronic Evidence.

Because these documents are mere photocopies, they are simply secondary evidence, admissible
only upon compliance with Rule 130, Section 5, which states, "[w]hen the original document has
been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavailability without bad faith on his part, may prove its contents by
a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses
in the order stated." Furthermore, the offeror of secondary evidence must prove the predicates
thereof, namely: (a) the loss or destruction of the original without bad faith on the part of the
proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction
Evidence II.
of documents; (b) the proponent must prove by a fair preponderance of evidence as to raise a
reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a
diligent and bona fide but unsuccessful search has been made for the document in the proper place
or places. It has been held that where the missing document is the foundation of the action, more
strictness in proof is required than where the document is only collaterally involved.103

Given these norms, we find that respondent failed to prove the existence of the original fax
transmissions of Exhibits E and F, and likewise did not sufficiently prove the loss or destruction of the
originals. Thus, Exhibits E and F cannot be admitted in evidence and accorded probative weight.

It is observed, however, that respondent Ssangyong did not rely merely on Exhibits E and F to prove
the perfected contract. It also introduced in evidence a variety of other documents, as enumerated
above, together with the testimonies of its witnesses. Notable among them are Pro Forma Invoice
Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by Ssangyong and sent via fax to
MCC. As already mentioned, these invoices slightly varied the terms of the earlier invoices such that
the quantity was now officially 100MT per invoice and the price reduced to US$1,700.00 per MT.
The copies of the said August 16, 2000 invoices submitted to the court bear the conformity signature
of MCC Manager Chan.

Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere photocopy of its original.

But then again, petitioner MCC does not assail the admissibility of this document in the instant
petition. Verily, evidence not objected to is deemed admitted and may be validly considered by the
court in arriving at its judgment.104 Issues not raised on appeal are deemed abandoned.

As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"), which was certified by

PCIBank as a true copy of its original,105 it was, in fact, petitioner MCC which introduced this
document in evidence. Petitioner MCC paid for the order stated in this invoice. Its admissibility,
therefore, is not open to question.

These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-2), along with the other
unchallenged documentary evidence of respondent Ssangyong, preponderate in favor of the claim
that a contract of sale was perfected by the parties.

This Court also finds merit in the following observations of the trial court:

Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R") referring to Pro Forma Invoice for
Contract No. ST2POSTS080-2, in the amount of US$170,000.00, and which bears the signature of
Gregory Chan, General Manager of MCC. Plaintiff, on the other hand, presented Pro Forma Invoice
referring to Contract No. ST2-POSTS080-1, in the amount of US$170,000.00, which likewise bears
the signature of Gregory Chan, MCC. Plaintiff accounted for the notation "1/2" on the right upper
portion of the Invoice, that is, that it was the first of two (2) pro forma invoices covering the subject
contract between plaintiff and the defendants. Defendants, on the other hand, failed to account for
the notation "2/2" in its Pro Forma Invoice (Exhibit "1-A"). Observably further, both Pro Forma
Invoices bear the same date and details, which logically mean that they both apply to one and the
same transaction.106

Indeed, why would petitioner open an L/C for the second half of the transaction if there was no first
half to speak of?cra lawlibrary

The logical chain of events, as gleaned from the evidence of both parties, started with the petitioner
and the respondent agreeing on the sale and purchase of 220MT of stainless steel at US$1,860.00
per MT. This initial contract was perfected. Later, as petitioner asked for several extensions to pay,
adjustments in the delivery dates, and discounts in the price as originally agreed, the parties slightly
varied the terms of their contract, without necessarily novating it, to the effect that the original order
Evidence II.
was reduced to 200MT, split into two deliveries, and the price discounted to US$1,700 per MT.
Petitioner, however, paid only half of its obligation and failed to open an L/C for the other 100MT.
Notably, the conduct of both parties sufficiently established the existence of a contract of sale, even
if the writings of the parties, because of their contested admissibility, were not as explicit in
establishing a contract.107 Appropriate conduct by the parties may be sufficient to establish an
agreement, and while there may be instances where the exchange of correspondence does not
disclose the exact point at which the deal was closed, the actions of the parties may indicate that a
binding obligation has been undertaken.108

With our finding that there is a valid contract, it is crystal-clear that when petitioner did not open the
L/C for the first half of the transaction (100MT), despite numerous demands from respondent
Ssangyong, petitioner breached its contractual obligation. It is a well-entrenched rule that the failure
of a buyer to furnish an agreed letter of credit is a breach of the contract between buyer and seller.
Indeed, where the buyer fails to open a letter of credit as stipulated, the seller or exporter is entitled
to claim damages for such breach. Damages for failure to open a commercial credit may, in
appropriate cases, include the loss of profit which the seller would reasonably have made had the
transaction been carried out.109

- IV -

This Court, however, finds that the award of actual damages is not in accord with the evidence on
record. It is axiomatic that actual or compensatory damages cannot be presumed, but must be
proven with a reasonable degree of certainty.110 In Villafuerte v. Court of Appeals,111 we explained
that:

Actual or compensatory damages are those awarded in order to compensate a party for an injury or
loss he suffered. They arise out of a sense of natural justice and are aimed at repairing the wrong
done. Except as provided by law or by stipulation, a party is entitled to an adequate compensation
only for such pecuniary loss as he has duly proven. It is hornbook doctrine that to be able to recover
actual damages, the claimant bears the onus of presenting before the court actual proof of the
damages alleged to have been suffered, thus:

A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as
he has duly proved. Such damages, to be recoverable, must not only be capable of proof, but must
actually be proved with a reasonable degree of certainty. We have emphasized that these damages
cannot be presumed and courts, in making an award must point out specific facts which could afford
a basis for measuring whatever compensatory or actual damages are borne.112

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

The statement of account and the details of the losses sustained by respondent due to the said
breach are, at best, self-serving. It was respondent Ssangyong itself which prepared the said
documents. The items therein are not even substantiated by official receipts. In the absence of
corroborative evidence, the said statement of account is not sufficient basis to award actual
damages. The court cannot simply rely on speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend on competent proof that the claimant had suffered, and on
evidence of, the actual amount thereof.113

Evidence II.
Furthermore, the sales contract and its authentication certificates, Exhibits "V" and "V-1," allegedly
evidencing the resale at a loss of the stainless steel subject of the parties' breached contract, fail to
convince this Court of the veracity of its contents. The steel items indicated in the sales
contract114 with a Korean corporation are different in all respects from the items ordered by petitioner
MCC, even in size and quantity. We observed the following discrepancies:

List of commodities as stated in Exhibit "V":

COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge

SPEC: SUS304 NO. 1
SIZE/Q'TY:
2.8MM X 1,219MM X C 8.193MT
3.0MM X 1,219MM X C 7.736MT
3.0MM X 1,219MM X C 7.885MT
3.0MM X 1,219MM X C 8.629MT
4.0MM X 1,219MM X C 7.307MT
4.0MM X 1,219MM X C 7.247MT
4.5MM X 1,219MM X C 8.450MT
4.5MM X 1,219MM X C 8.870MT
5.0MM X 1,219MM X C 8.391MT
6.0MM X 1,219MM X C 6.589MT
6.0MM X 1,219MM X C 7.878MT
6.0MM X 1,219MM X C 8.397MT
TOTAL: 95.562MT115

List of commodities as stated in Exhibit "X" (the invoice that was not paid):

DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304

SIZE AND QUANTITY:
2.6 MM X 4' X C 10.0MT
3.0 MM X 4' X C 25.0MT
4.0 MM X 4' X C 15.0MT
4.5 MM X 4' X C 15.0MT
5.0 MM X 4' X C 10.0MT
6.0 MM X 4' X C 25.0MT
TOTAL: 100MT116

From the foregoing, we find merit in the contention of MCC that Ssangyong did not adequately prove
that the items resold at a loss were the same items ordered by the petitioner. Therefore, as the claim
for actual damages was not proven, the Court cannot sanction the award.

Nonetheless, the Court finds that petitioner knowingly breached its contractual obligation and
obstinately refused to pay despite repeated demands from respondent. Petitioner even asked for
several extensions of time for it to make good its obligation. But in spite of respondent's continuous
accommodation, petitioner completely reneged on its contractual duty. For such inattention and
Evidence II.
insensitivity, MCC must be held liable for nominal damages. "Nominal damages are 'recoverable
where a legal right is technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can be shown.'"117 Accordingly, the
Court awards nominal damages of P200,000.00 to respondent Ssangyong.

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

WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY GRANTED. The Decision of the

Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the award of actual damages
is DELETED. However, petitioner is ORDERED to pay respondent NOMINAL DAMAGES in the
amount of P200,000.00, and the ATTORNEY'S FEES as awarded by the trial court.

Evidence II.
3.) G.R. No. 182835               April 20, 2010

RUSTAN ANG y PASCUA, Petitioner,

vs.
THE HONORABLE COURT OF APPEALS and IRISH SAGUD, Respondents.

DECISION

ABAD, J.:

This case concerns a claim of commission of the crime of violence against women when a former boyfriend sent to
the girl the picture of a naked woman, not her, but with her face on it.

The Indictment

The public prosecutor charged petitioner-accused Rustan Ang (Rustan) before the Regional Trial Court (RTC) of
Baler, Aurora, of violation of the Anti-Violence Against Women and Their Children Act or Republic Act (R.A.) 9262 in
an information that reads:

That on or about June 5, 2005, in the Municipality of Maria Aurora, Province of Aurora, Philippines and within the
jurisdiction of this Honorable Court, the said accused willfully, unlawfully and feloniously, in a purposeful and
reckless conduct, sent through the Short Messaging Service (SMS) using his mobile phone, a pornographic picture
to one Irish Sagud, who was his former girlfriend, whereby the face of the latter was attached to a completely naked
body of another woman making it to appear that it was said Irish Sagud who is depicted in the said obscene and
pornographic picture thereby causing substantial emotional anguish, psychological distress and humiliation to the
said Irish Sagud.1

The Facts and the Case

The evidence for the prosecution shows that complainant Irish Sagud (Irish) and accused Rustan were classmates
at Wesleyan University in Aurora Province. Rustan courted Irish and they became "on-and-off" sweethearts towards
the end of 2004. When Irish learned afterwards that Rustan had taken a live-in partner (now his wife), whom he had
gotten pregnant, Irish broke up with him.

Before Rustan got married, however, he got in touch with Irish and tried to convince her to elope with him, saying
that he did not love the woman he was about to marry. Irish rejected the proposal and told Rustan to take on his
responsibility to the other woman and their child. Irish changed her cellphone number but Rustan somehow
managed to get hold of it and sent her text messages. Rustan used two cellphone numbers for sending his
messages, namely, 0920-4769301 and 0921-8084768. Irish replied to his text messages but it was to ask him to
leave her alone.

In the early morning of June 5, 2005, Irish received through multimedia message service (MMS) a picture of a naked
woman with spread legs and with Irish’s face superimposed on the figure (Exhibit A).2 The sender’s cellphone
number, stated in the message, was 0921-8084768, one of the numbers that Rustan used. Irish surmised that he
copied the picture of her face from a shot he took when they were in Baguio in 2003 (Exhibit B).3

After she got the obscene picture, Irish got other text messages from Rustan. He boasted that it would be easy for
him to create similarly scandalous pictures of her. And he threatened to spread the picture he sent through the
internet. One of the messages he sent to Irish, written in text messaging shorthand, read: "Madali lang ikalat yun,
my chatrum ang tarlac rayt pwede ring send sa lahat ng chatter."4

Irish sought the help of the vice mayor of Maria Aurora who referred her to the police. Under police supervision, Irish
contacted Rustan through the cellphone numbers he used in sending the picture and his text messages. Irish asked
Rustan to meet her at the Lorentess Resort in Brgy. Ramada, Maria Aurora, and he did. He came in a motorcycle.
After parking it, he walked towards Irish but the waiting police officers intercepted and arrested him. They searched
Evidence II.
him and seized his Sony Ericsson P900 cellphone and several SIM cards. While Rustan was being questioned at
the police station, he shouted at Irish: "Malandi ka kasi!"

Joseph Gonzales, an instructor at the Aurora State College of Technology, testified as an expert in information
technology and computer graphics. He said that it was very much possible for one to lift the face of a woman from a
picture and superimpose it on the body of another woman in another picture. Pictures can be manipulated and
enhanced by computer to make it appear that the face and the body belonged to just one person.

Gonzales testified that the picture in question (Exhibit A) had two distinct irregularities: the face was not
proportionate to the body and the face had a lighter color. In his opinion, the picture was fake and the face on it had
been copied from the picture of Irish in Exhibit B. Finally, Gonzales explained how this could be done, transferring a
picture from a computer to a cellphone like the Sony Ericsson P900 seized from Rustan.

For his part, Rustan admitted having courted Irish. He began visiting her in Tarlac in October 2003 and their relation
lasted until December of that year. He claimed that after their relation ended, Irish wanted reconciliation. They met in
December 2004 but, after he told her that his girlfriend at that time (later his wife) was already pregnant, Irish walked
out on him.

Sometime later, Rustan got a text message from Irish, asking him to meet her at Lorentess Resort as she needed
his help in selling her cellphone. When he arrived at the place, two police officers approached him, seized his
cellphone and the contents of his pockets, and brought him to the police station.

Rustan further claims that he also went to Lorentess because Irish asked him to help her identify a prankster who
was sending her malicious text messages. Rustan got the sender’s number and, pretending to be Irish, contacted
the person. Rustan claims that he got back obscene messages from the prankster, which he forwarded to Irish from
his cellphone. This explained, he said, why the obscene messages appeared to have originated from his cellphone
number. Rustan claims that it was Irish herself who sent the obscene picture (Exhibit A) to him. He presented six
pictures of a woman whom he identified as Irish (Exhibits 2 to 7).5

Michelle Ang (Michelle), Rustan’s wife, testified that she was sure Irish sent the six pictures. Michelle claims that she
received the pictures and hid the memory card (Exhibit 8) that contained them because she was jealous and angry.
She did not want to see anything of Irish. But, while the woman in the pictures posed in sexy clothing, in none did
she appear naked as in Exhibit A. Further, the face of the woman in Exhibits 2, 4, 5 and 6 could not be seen. Irish
denied that she was the woman in those four pictures. As for Exhibits 3 and 7, the woman in the picture was fully
dressed.

After trial, the RTC found Irish’s testimony completely credible, given in an honest and spontaneous
manner. The RTC observed that she wept while recounting her experience, prompting the court to comment: "Her
tears were tangible expression of pain and anguish for the acts of violence she suffered in the hands of her former
sweetheart. The crying of the victim during her testimony is evidence of the credibility of her charges with the verity
borne out of human nature and experience."6 Thus, in its Decision dated August 1, 2001, the RTC found Rustan
guilty of the violation of Section 5(h) of R.A. 9262.

On Rustan’s appeal to the Court of Appeals (CA),7 the latter rendered a decision dated January 31,
2008,8 affirming the RTC decision. The CA denied Rustan’s motion for reconsideration in a resolution dated April 25,
2008. Thus, Rustan filed the present for review on certiorari.

The Issues Presented

The principal issue in this case is whether or not accused Rustan sent Irish by cellphone message the picture with
her face pasted on the body of a nude woman, inflicting anguish, psychological distress, and humiliation on her in
violation of Section 5(h) of R.A. 9262.

The subordinate issues are:

Evidence II.
 1. Whether or not a "dating relationship" existed between Rustan and Irish as this term is defined in R.A.
9262;

2. Whether or not a single act of harassment, like the sending of the nude picture in this case, already
constitutes a violation of Section 5(h) of R.A. 9262;

3. Whether or not the evidence used to convict Rustan was obtained from him in violation of his
constitutional rights; and

4. Whether or not the RTC properly admitted in evidence the obscene picture presented in the case.

The Court’s Rulings

Section 3(a) of R.A. 9262 provides that violence against women includes an act or acts of a person against a
woman with whom he has or had a sexual or dating relationship. Thus:

SEC. 3. Definition of Terms. – As used in this Act,

(a) "Violence against women and their children" refers to any act or a series of acts committed by any
person against a woman who is his wife, former wife, or against a woman with whom the person has or had
a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate
or illegitimate, within or without the family abode, which result in or is likely to result in physical, sexual,
psychological harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion,
harassment or arbitrary deprivation of liberty.

xxxx

Section 5 identifies the act or acts that constitute violence against women and these include any form of
harassment that causes substantial emotional or psychological distress to a woman. Thus:

SEC. 5. Acts of Violence Against Women and Their Children. – The crime of violence against women and
their children is committed through any of the following acts:

xxxx

h. Engaging in purposeful, knowing, or reckless conduct, personally or through another, that alarms or
causes substantial emotional or psychological distress to the woman or her child. This shall include, but not
be limited to, the following acts:

xxxx

5. Engaging in any form of harassment or violence;

The above provisions, taken together, indicate that the elements of the crime of violence against women through
harassment are:

1. The offender has or had a sexual or dating relationship with the offended woman;

2. The offender, by himself or through another, commits an act or series of acts of harassment against the
woman; and

3. The harassment alarms or causes substantial emotional or psychological distress to her.

Evidence II.
One. The parties to this case agree that the prosecution needed to prove that accused Rustan had a "dating
relationship" with Irish. Section 3(e) provides that a "dating relationship" includes a situation where the parties are
romantically involved over time and on a continuing basis during the course of the relationship. Thus:

(e) "Dating relationship" refers to a situation wherein the parties live as husband and wife without the benefit of
marriage or are romantically involved over time and on a continuing basis during the course of the relationship. A
casual acquaintance or ordinary socialization between two individuals in a business or social context is not a dating
relationship. (Underscoring supplied.)

Here, Rustan claims that, being "romantically involved," implies that the offender and the offended woman have or
had sexual relations. According to him, "romance" implies a sexual act. He cites Webster’s Comprehensive
Dictionary Encyclopedia Edition which provides a colloquial or informal meaning to the word "romance" used as a
verb, i.e., "to make love; to make love to" as in "He romanced her."

But it seems clear that the law did not use in its provisions the colloquial verb "romance" that implies a sexual act. It
did not say that the offender must have "romanced" the offended woman. Rather, it used the noun "romance" to
describe a couple’s relationship, i.e., "a love affair."9

R.A. 9262 provides in Section 3 that "violence against women x x x refers to any act or a series of acts committed
by any person against a woman x x x with whom the person has or had a sexual or dating relationship." Clearly, the
law itself distinguishes a sexual relationship from a dating relationship. Indeed, Section 3(e) above defines "dating
relationship" while Section 3(f) defines "sexual relations." The latter "refers to a single sexual act which may or may
not result in the bearing of a common child." The dating relationship that the law contemplates can, therefore, exist
even without a sexual intercourse taking place between those involved.

Rustan also claims that since the relationship between Irish and him was of the "on-and-off" variety (away-bati), their
romance cannot be regarded as having developed "over time and on a continuing basis." But the two of them were
romantically involved, as Rustan himself admits, from October to December of 2003. That would be time enough for
nurturing a relationship of mutual trust and love.

An "away-bati" or a fight-and-kiss thing between two lovers is a common occurrence. Their taking place does not
mean that the romantic relation between the two should be deemed broken up during periods of misunderstanding.
Explaining what "away-bati" meant, Irish explained that at times, when she could not reply to Rustan’s messages,
he would get angry at her. That was all. Indeed, she characterized their three-month romantic relation as
continuous.10

Two. Rustan argues that the one act of sending an offensive picture should not be considered a form of
harassment. He claims that such would unduly ruin him personally and set a very dangerous precedent. But Section
3(a) of R.A. 9262 punishes "any act or series of acts" that constitutes violence against women. This means that a
single act of harassment, which translates into violence, would be enough. The object of the law is to protect women
and children. Punishing only violence that is repeatedly committed would license isolated ones.

Rustan alleges that today’s women, like Irish, are so used to obscene communications that her getting one could
not possibly have produced alarm in her or caused her substantial emotional or psychological distress. He claims
having previously exchanged obscene pictures with Irish such that she was already desensitized by them.

But, firstly, the RTC which saw and heard Rustan and his wife give their testimonies was not impressed with their
claim that it was Irish who sent the obscene pictures of herself (Exhibits 2-7). It is doubtful if the woman in the
picture was Irish since her face did not clearly show on them.

Michelle, Rustan’s wife, claimed that she deleted several other pictures that Irish sent, except Exhibits 2 to 7. But
her testimony did not make sense. She said that she did not know that Exhibits 2 to 7 had remained saved after she
deleted the pictures. Later, however, she said that she did not have time to delete them.11 And, if she thought that
she had deleted all the pictures from the memory card, then she had no reason at all to keep and hide such memory
card. There would have been nothing to hide. Finally, if she knew that some pictures remained in the card, there

Evidence II.
was no reason for her to keep it for several years, given that as she said she was too jealous to want to see
anything connected to Irish. Thus, the RTC was correct in not giving credence to her testimony. 1avvphi1

Secondly, the Court cannot measure the trauma that Irish experienced based on Rustan’s low regard for the alleged
moral sensibilities of today’s youth. What is obscene and injurious to an offended woman can of course only be
determined based on the circumstances of each case. Here, the naked woman on the picture, her legs spread open
and bearing Irish’s head and face, was clearly an obscene picture and, to Irish a revolting and offensive one. Surely,
any woman like Irish, who is not in the pornography trade, would be scandalized and pained if she sees herself in
such a picture. What makes it further terrifying is that, as Irish testified, Rustan sent the picture with a threat to post
it in the internet for all to see. That must have given her a nightmare.

Three. Rustan argues that, since he was arrested and certain items were seized from him without any warrant, the
evidence presented against him should be deemed inadmissible. But the fact is that the prosecution did not present
in evidence either the cellphone or the SIM cards that the police officers seized from him at the time of his
arrest. The prosecution did not need such items to prove its case. Exhibit C for the prosecution was but a
photograph depicting the Sony Ericsson P900 cellphone that was used, which cellphone Rustan admitted owning
during the pre-trial conference.

Actually, though, the bulk of the evidence against him consisted in Irish’s testimony that she received the obscene
picture and malicious text messages that the sender’s cellphone numbers belonged to Rustan with whom she had
been previously in communication. Indeed, to prove that the cellphone numbers belonged to Rustan, Irish and the
police used such numbers to summon him to come to Lorentess Resort and he did.12 Consequently, the prosecution
did not have to present the confiscated cellphone and SIM cards to prove that Rustan sent those messages.

Moreover, Rustan admitted having sent the malicious text messages to Irish.13 His defense was that he himself
received those messages from an unidentified person who was harassing Irish and he merely forwarded the same
to her, using his cellphone. But Rustan never presented the cellphone number of the unidentified person who sent
the messages to him to authenticate the same. The RTC did not give credence to such version and neither will this
Court. Besides, it was most unlikely for Irish to pin the things on Rustan if he had merely tried to help her identify the
sender.

Four. Rustan claims that the obscene picture sent to Irish through a text message constitutes an electronic
document. Thus, it should be authenticated by means of an electronic signature, as provided under Section 1, Rule
5 of the Rules on Electronic Evidence (A.M. 01-7-01-SC).

But, firstly, Rustan is raising this objection to the admissibility of the obscene picture, Exhibit A, for the first time
before this Court. The objection is too late since he should have objected to the admission of the picture on such
ground at the time it was offered in evidence. He should be deemed to have already waived such ground for
objection.14

Besides, the rules he cites do not apply to the present criminal action. The Rules on Electronic Evidence applies
only to civil actions, quasi-judicial proceedings, and administrative proceedings.15

In conclusion, this Court finds that the prosecution has proved each and every element of the crime charged beyond
reasonable doubt.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals in CA-G.R. CR
30567 dated January 31, 2008 and its resolution dated April 25, 2008.

Evidence II.
4.) G.R. No. 203302               March 12, 2013

MAYOR EMMANUEL L. MALIKSI, Petitioner,

vs.
COMMISSION ON ELECTIONS and HOMER T. SAQUILAYAN, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for certiorari1 assailing the 14 September 2012 Resolution2 of the Commission on
Elections (COMELEC) En Banc which affirmed the 15 August 2012 Resolution3 of the COMELEC First Division in
EAC (AE) No. A-22-2011.

The Antecedent Facts

Emmanuel L. Maliksi (Maliksi) and Homer T. Saquilayan (Saquilayan) were both mayoralty candidates for the
Municipality of Imus, Cavite during the 10 May 2010 Automated National and Local Elections. The Municipal Board
of Canvassers (MBC) proclaimed Saquilayan as the duly elected municipal mayor garnering a total of 48,181 votes
as against Maliksi’s 39,682 votes. Thus, based on the MBC’s canvass, Saquilayan won over Maliksi by 8,499 votes.

Maliksi filed an election protest before the Regional Trial Court of Imus, Cavite, Branch 22 (trial court), questioning
the results of the elections in 209 clustered precincts. The case was docketed as Election Protest No. 009-10. In its
15 November 2011 Decision, the trial court declared Maliksi as the duly elected Municipal Mayor of Imus, Cavite.
The trial court ruled that Maliksi garnered 41,088 votes as against Saquilayan’s 40,423 votes. Thus, based on the
trial court’s recount, Maliksi won over Saquilayan by a margin of 665 votes. The dispositive portion of the trial court’s
decision reads:

WHEREFORE, in view of all the foregoing, this Court finds the Election Protest filed by Emmanuel L. Maliksi
meritorious. Accordingly, Emmanuel L. Maliksi is hereby DECLARED as the duly elected Mayor of the Municipality
of Imus, Province of Cavite after having obtained the highest number of legal votes of 41,088 as against Protestant
Homer T. Saquilayan’s 40,423 votes or a winning margin of 665 votes in favor of the former.

Thus, the election and proclamation of Homer T. Saquilayan as Mayor of Imus, Cavite is hereby ANNULLED and
SET ASIDE and he is COMMANDED to immediately CEASE and DESIST from performing the duties and functions
of said office.

Finally, pursuant to Section 4, Rule 14 of A.M. 10-4-1-SC, the Clerk of Court is hereby DIRECTED to personally
deliver the copy of the signed and promulgated decision on the counsels of the parties.

SO ORDERED.4

Saquilayan filed an appeal before the COMELEC, docketed as EAC (AE) No. A-22-2011. Meanwhile, in a Special
Order dated 28 November 2011, the trial court granted Maliksi’s motion for execution pending appeal.

On 2 December 2011, Saquilayan also filed with the COMELEC a petition for certiorari with prayer for the issuance
of a writ of preliminary injunction and temporary restraining order or status quo order with prayer for early
consideration, docketed as SPR (AE) No. 106-2011, assailing the trial court’s Special Order of 28 November 2011
granting execution pending appeal. A COMELEC First Division Order dated 20 December 20115 enjoining the trial
court from enforcing its 28 November 2011 Special Order was not implemented since only Presiding Commissioner
Rene V. Sarmiento (Sarmiento) voted to grant the temporary restraining order while Commissioners Armando C.
Velasco (Velasco) and Christian Robert S. Lim (Lim) dissented.

Evidence II.
The Resolution of the COMELEC First Division

The COMELEC First Division, after inspecting the ballot boxes, ruled that it was apparent that the integrity of the
ballots had been compromised. To determine the true will of the electorate, and since there was an allegation of
ballot tampering, the COMELEC First Division examined the digital images of the contested ballots stored in the
Compact Flash (CF) cards. The COMELEC First Division used the following guidelines in appreciating the contested
ballots:

1. On Marked Ballots. - The rule is that no ballot should be discarded as marked unless its character as such
is unmistakable. The distinction should always be between marks that were apparently, carelessly, or
innocently made, which do not invalidate the ballot, and marks purposely placed thereon by the voter with a
view to possible future identification of the ballot, which invalidate it. In the absence of any circumstance
showing that the intention of the voter to mark the ballot is unmistakable, or any evidence aliunde to show
that the words or marks were deliberately written or put therein to identify the ballots, the ballots should not
be rejected.

2. On ballots claimed to have been shaded by two or more persons. - Unlike in the manual elections where it
is easy to identify if a ballot has been written by two persons, in case of an automated election, it would be
very hard if not impossible to identify if two persons shaded a single ballot. The best way to identify if a ballot
has been tampered is to go to the digital image of the ballot as the PCOS machine was able to capture such
when the ballot was fed by the voter into the machine when he cast his vote. In the absence of any
circumstance showing that the ballot was shaded by persons other than the voter, the ballots should not be
rejected to give effect to the voter’s intent.

3. On ballots with ambiguous votes. - It has been the position of the Commission to always take into
consideration [that] the intent of the voter shall be given effect, taking aside any technicalities. A ballot
indicates the voter’s will. In the reading and appreciation of ballots, every ballot is presumed valid unless
there is a clear reason to justify its rejection. The object in the appreciation of ballots is to ascertain and
carry into effect the intention of the voter, if it can be determined with reasonable certainty.

4. On spurious ballots. - Ballots have security features like bar codes, ultra-violet inks and such other
security marks to be able to preserve its integrity and the PCOS machines were programmed to accept
genuine and valid ballots only. Further, the ballots used in the elections were precinct specific, meaning, the
PCOS machine assigned to a specific precinct will only accept those ballots designated to such precinct.
This follows that the digital images stored in the CF cards are digital images of genuine, authentic and valid
ballots. In the absence of any evidence proving otherwise, the Commission will not invalidate a vote cast
which will defeat the sovereign will of the electorate.

5. On over-voting. - It has been the position of the Commission that over-voting in a certain position will
make the vote cast for the position stray but will not invalidate the entire ballot, so in case of over-voting for
the contested position, such vote shall be considered stray and will not be credited to any of the contending
parties.

6. On rejected ballots. - As correctly observed by [the] court a quo, with all the security features of the ballot,
the PCOS machines will only accept genuine ballots and will reject it if, inter alia, fake, duplicate, ballots
intended for another precinct, or has been fed an[d] accepted by the machines already. Bearing in mind the
voter’s will, rejected ballots can still be claimed by the parties and be admitted as valid votes, if, upon further
examination, it is found that the ballot is genuine and was inadvertently rejected by the machine.6

After the counting and appreciation of the ballot images in the CF cards of the appealed clustered precincts, the
COMELEC First Division came up with the following findings:
1âwphi1

Clustered Ruling of Ruling of Votes for Votes

Precinct Trial Court COMELEC Saquilayan for
No. First Maliksi
Division
Evidence II.
 96 84 ballots Upon 235 270
were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded.

61 68 ballots Upon 230 173

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded.

51 133 ballots Upon 212 182

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded.
2 ballots were
declared stray
because the
slots for
Maliksi and
Astillero were
both shaded.

42 207 ballots Upon 273 231

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 1
were shaded. ballot was
1 ballot was rejected by
declared stray the PCOS
because the machine but it
slots for was clear that
Maliksi and the intent of
Astillero were the voter was
both shaded. to vote for
Maliksi.

36 92 ballots Upon 154 202

were declared examining the
stray because digital images
both slots for of the ballots
Maliksi and there was no
Saquilayan over-voting. 2
were shaded. ballots were
rejected by
the PCOS machine but it
was clear that
the intent of

Evidence II.
 the voters was
to vote for
Maliksi.

03 33 ballots Upon 73 89
were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 1
were shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

49 172 ballots Upon 279 265

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded.

50 153 ballots Upon 313 275

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 2
were shaded. ballots were
rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Maliksi.

34 155 ballots Upon 210 164

were declared stray examining the digital
because images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 1
were shaded. ballot was
1 ballot was rejected by
declared stray the PCOS
because the machine but it
slots for was clear that
Maliksi and the intent of
Dominguez the voter was
were both to vote for

Evidence II.
 shaded. Saquilayan.

35 215 ballots Upon 286 288

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 2
were shaded. ballots were
rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Saquilayan.

146 216 ballots Upon 305 271

were declared examining the
stray because digital images
both slots for of the ballots,
the mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

120 246 ballots Upon 309 269

were declared stray examining the digital
because images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

127 248 ballots Upon 332 304

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded. were shaded.
1 ballot was

Evidence II.
 rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

206 132 ballots Upon 136 116

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting. 3
were shaded. ballots (1 for
Saquilayan, 2
for Maliksi)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the candidate of
choice.

76 253 ballots Upon 329 251

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan over-voting.
were shaded.

202 122 ballots Upon 140 158

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 1 ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

67 203 ballots Upon 246 180

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 2 ballots were

Evidence II.
 rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

209 168 ballots Upon 220 171

were declared examining the
stray because digital images
both slots for of the ballots,
Maliksi and there was no
Saquilayan were shaded. over-voting.

81 181 ballots Upon 329 194

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

87 107 ballots Upon 133 147

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots were
rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

86 189 ballots Upon 246 239

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 3
shaded. ballots (1 for
Maliksi, 2 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of

Evidence II.
 choice.

91 95 ballots Upon 137 189

were declared examining the
stray because 2 slots for digital images of the
the ballots,
mayoralty there was no
position were over-voting. 3
shaded. ballots (2 for
Maliksi, 1 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

88 75 ballots Upon 142 223

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots were
rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Maliksi.

68 113 ballots Upon 243 180

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 1 ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

45 120 ballots Upon 216 211

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no

Evidence II.
 position were over-voting.
shaded. 1 ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

43 101 ballots Upon 256 182

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 3
shaded. ballots (2 for
Maliksi, 1 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

85 89 ballots Upon 184 213

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

74 114 ballots Upon 179 161

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty position were there was no over-voting.
shaded. 7
ballots (2 for
Maliksi, 5 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

47 186 ballots Upon 250 226

Evidence II.
 were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 1 ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

128 105 ballots Upon 272 223

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

107 77 ballots Upon 127 178

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

97 220 ballots Upon 280 299

were declared examining the
stray because 2 slots for digital images of the
the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots (1 for
Maliksi, 1 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

99 114 ballots Upon 243 354

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by

Evidence II.
 the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

208 154 ballots Upon 200 163

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

204 119 ballots Upon 269 119

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots were
rejected by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Saquilayan.

201 108 ballots Upon 143 131

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

207 338 ballots Upon 419 117

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

109 136 ballots Upon 173 257

were declared examining the
stray because digital images

Evidence II.
 2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

131 140 ballots were declared Upon 297 165

stray because examining the
2 slots for the digital images
mayoralty of the ballots,
position were there was no
shaded. over-voting.

52 98 ballots Upon 118 87

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Maliksi.

117 146 ballots Upon 302 265

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

100 90 ballots Upon 370 228

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 3
shaded. ballots (2 for
Maliksi, 1 for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of

Evidence II.
 the voters was
to vote for the
candidate of choice.

95 215 ballots Upon 288 270

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

98 103 ballots Upon 218 304

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

94 257 ballots Upon 270 150

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots were
rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Maliksi.

93 105 ballots Upon 205 167

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 2
shaded. ballots were rejected by
the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for
Maliksi.

Evidence II.
 64 117 ballots Upon 170 162
were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

44 169 ballots Upon 273 200

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

41 262 ballots Upon 368 176

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded.

130 156 ballots Upon 314 170

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 3 ballots (2
for Maliksi, 1
for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was to vote for
the
candidate of
choice.

118 126 ballots Upon 310 248

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting.
shaded. 3 ballots (2
for Maliksi, 1
for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that

Evidence II.
 the intent of
the voters was
to vote for the
candidate of
choice.

56 127 ballots Upon 202 223

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were over-voting. 1
shaded. ballot was
rejected by
the PCOS
machine but it
was clear that
the intent of
the voter was
to vote for
Saquilayan.

205 153 ballots Upon 185 242

were declared examining the
stray because digital images
2 slots for the of the ballots,
mayoralty there was no
position were shaded. over-voting. 3 ballots (1
for Maliksi, 2
for
Saquilayan)
were rejected
by the PCOS
machine but it
was clear that
the intent of
the voters was
to vote for the
candidate of
choice.

The COMELEC First Division found that Maliksi obtained a total of 40,092 votes, broken down as follows: (a) 29,170
votes in the clustered precincts not appealed as per statement of votes by precinct, and (b) 10,922 votes in the
appealed clustered precincts. On the other hand, Saquilayan obtained a total of 48,521 votes, broken down as
follows: (a) 35,908 votes in the clustered precincts not appealed as per statement of votes by precinct, and (b)
12,613 votes obtained in the appealed clustered precincts. Saquilayan won over Maliksi by 8,429 votes. Thus, in a
Resolution promulgated on 15 August 2012, the COMELEC First Division nullified the trial court’s decision and
declared Saquilayan as the duly-elected Municipal Mayor of Imus, Cavite. The COMELEC First Division noted that
Maliksi attached a photocopy of an official ballot to his election protest. The COMELEC First Division stated that
unless one of the clustered precincts had a photocopying machine, it could only mean that an official ballot was
taken out of the polling place to be photocopied, in violation of Section 30(a) of COMELEC Resolution No.
8786.7 The dispositive portion of the 15 August 2012 Resolution reads:

WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES, to:

Evidence II.
 1. NULLIFY the pronouncement of the lower court that protestant-appellee EMMANUEL L. MALIKSI is the
duly-elected Municipal Mayor of Imus, Cavite and HEREBY DECLARES HOMER T. SAQUILAYAN as the
duly-elected Municipal Mayor of the above-mentioned municipality;

2. Further, the Law Department is hereby DIRECTED:

i. To conduct an investigation as to who were responsible for the tampering of the ballot boxes for
purposes of filing the appropriate information for violation of election laws; and

ii. To conduct an investigation as to possible violation of election laws and Comelec Resolutions by
herein protestant-appellee EMMANUEL L. MALIKSI as to how he was able to secure a photocopy of
the official ballot which he attached in his Election Protest.

SO ORDERED.8

Maliksi filed a motion for reconsideration of the COMELEC First Division’s Resolution and for the voluntary inhibition
of Commissioners Sarmiento, Velasco, and Lim from further acting on the case.

The Resolution of the COMELEC En Banc

In its 14 September 2012 Resolution, the COMELEC En Banc denied Maliksi’s motion for reconsideration and
affirmed the 15 August 2012 Resolution of the COMELEC First Division.

The COMELEC En Banc ruled that the COMELEC First Division did not err in ordering the decryption, printing, and
examination of the ballot images in the CF cards instead of recounting the physical ballots. The COMELEC En Banc
stated that when the case was elevated to it on appeal, it immediately noted an "unprecedented number of double-
votes involving 8,387 ballots – exclusively affecting the position of Mayor and specifically affecting the ballots for
Saquilayan."9 The COMELEC En Banc further noted:

x x x. Worth noting also is that these 8,387 ballots all came from 53 clustered precincts specifically pinpointed by
Maliksi as his pilot precincts (which is 20% of the total precincts he protested) – thereby affecting a total of 33.38%
or more than one-third (1/3) of the total ballots cast in those precincts. We find this too massive to have not been
detected on election day, too specific to be random and too precise to be accidental – which leaves a reasonable
mind no other conclusion except that those 8,387 cases of double-shading were purposely machinated. These
dubious and highly suspicious circumstances left us with no other option but to dispense with the physical ballots
and resort to their digital images. To recount the tampered ballots will only yield us tampered results defeating the
point of this appeal.10

The COMELEC En Banc also ruled that it is free to adopt procedures that will ensure the speedy disposition of its
cases as long as the parties are amply heard on their opposing claims. The COMELEC En Banc ruled that the
decryption, printing, and examination of the ballot images in the CF cards are not without basis since a Division,
through its Presiding Commissioner, may take such measures as he may deem proper to resolve cases pending
before it. The COMELEC En Banc ruled that Maliksi was not denied due process because he never questioned the
Order of decryption by the COMELEC First Division nor did he raise any objection in any of his pleadings. Further,
the ballot images are not mere secondary images, as Maliksi claimed. The digital images of the physical ballots,
which are instantaneously written in the CF cards by the PCOS11 machines the moment the ballots are read and
counted, are equivalent to the original for the purpose of the best evidence rule. The COMELEC En Banc accorded
higher evidentiary value to the ballot images because their integrity are more secure for the following reasons:

(1) the digital images are encrypted to prevent unauthorized alteration or access;

(2) the ballot images cannot be decrypted or in anyway accessed without the necessary decryption key;

(3) the ballot images may only be decrypted using a special system designed by the COMELEC and not by
any ordinary operating system or computer;

Evidence II.
 (4) the CF cards storing the digital images of all the ballots used in the 10 May 2010 elections are kept in a
secured facility within the Commission to prevent unauthorized access.12

The COMELEC En Banc further ruled that the result of the revision proceedings in the trial court could not be
admitted because of the finding by the COMELEC First Division that the recounted ballots were tampered.

The COMELEC En Banc explained:

The allegation of post-election fraud of Saquilayan was in fact confirmed by the First Division when upon
examination of the scanned digital images of all the double-shaded ballots, they were found to bear no traces of
double-shading – instead they contain clear and unambiguous votes for Saquilayan. This finding of the First Division
proves that double-votes did not exist when the PCOS machines counted them on election day, which in turn proves
that the ballots recounted and admitted by the trial court were tampered and were clear products of post-election
fraud. Under these circumstances, the doctrines in Rosal v. COMELEC and Varias v. COMELEC edict that the
tampered revision result which was the basis of the appealed decision cannot be admitted and cannot be used to
overturn the the official count.13 (Emphasis in the original; citations omitted)

Finally, the COMELEC En Banc ruled that Maliksi had no basis to call for the inhibition of Commissioners Sarmiento
and Velasco. Commissioner Lim voluntarily inhibited himself from the case.

The dispositive portion of the COMELEC En Banc’s 14 September 2012 Resolution reads:

WHEREFORE, premises considered, the MOTION FOR RECONSIDERATION of Protestant-Appellee EMMANUEL

L. MALIKSI is hereby DENIED for lack of merit. Consequently, we are AFFIRMING the August 15, 2012 Resolution
of the First Division NULLIFYING the November 15, 2011 Decision of the Regional Trial Court, Branch 22 of Imus,
Cavite.

SO ORDERED.14

Hence, Maliksi filed the present petition before this Court.

In a Resolution dated 11 October 2012, this Court issued a temporary restraining order directing the COMELEC En
Banc to desist from implementing its 14 September 2012 Resolution.

The Issues

The overriding issue in this petition for certiorari is whether the COMELEC En Banc committed grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing its assailed Resolution dated 14 September 2012. In
resolving this issue, we shall examine:

(1) whether Maliksi was deprived of due process when the COMELEC First Division ordered on appeal the
decryption, printing, and examination of the ballot images in the CF cards;

(2) whether the ballot images in the CF cards are mere secondary evidence that should only be used when
the physical ballots are not available;

(3) whether the issue of tampering of ballots and ballot boxes was belatedly raised by Saquilayan; and

(4) whether there were grounds for the inhibition of Commissioners Sarmiento and Velasco.

The Ruling of this Court

We dismiss the petition.

The Alleged Violation of Due Process

Evidence II.
Maliksi alleged that he was denied due process when the COMELEC First Division directed the decryption, printing,
and examination of the ballot images in the CF cards for the first time on appeal without notice to him, thus depriving
him of his right to be present and observe the decryption proceedings.

The records point to the contrary.

In a Motion dated 21 March 2011 filed before the trial court,15 Saquilayan moved for the printing of the images of the
ballots in the CF cards of the contested clustered precincts. Thus, it cannot be said that Saquilayan asked for
decryption of the ballot images for the first time only on appeal. Saquilayan had called the attention of the trial court
to the unusually large number of double-shaded ballots affecting only the position of Mayor, giving rise to a strong
suspicion of tampering of the ballots and ballot boxes. However, the trial court did not immediately act on his motion,
as shown by Saquilayan’s Omnibus Motion To Resolve and For Issuance of Order16 dated 14 April 2011.

In an Omnibus Order17 dated 3 May 2011, the trial court granted Saquilayan’s motion for the printing of the ballot
images in the CF cards. The trial court gave Saquilayan a period of 30 days within which to accomplish the printing
of the ballot images. Saquilayan received a copy of the Omnibus Order on 10 May 2011. On 11 May 2011, he sent
a letter to the COMELEC requesting it to forward at the soonest time the CF cards of the protested precincts to the
COMELEC Election Records and Statistics Department (ERSD) to enable the decrypting and printing of the ballot
images. It turned out that the CF cards were still with the trial court. Thus, in a Manifestation and Request18 dated 20
May 2011, Saquilayan asked the trial court to forward the CF cards of the protested precincts to the ERSD to enable
the COMELEC to decrypt and print the ballot images.

In an Order19 dated 17 June 2011, the trial court noted that the ERSD already specified the main and back-up CF
cards that were used in the 10 May 2010 National and Local Elections in Imus, Cavite and the decryption and
copying of the ballot images was scheduled to start on 21 June 2011. The trial court then requested the ERSD to
specify the procedure that the ERSD would undertake for the decryption of the ballot images. In a letter20 dated 20
June 2011, Maliksi wrote the ERSD requesting that further proceedings be deferred and held in abeyance in
deference to the 17 June 2011 Order of the trial court requiring the ERSD to specify the procedure it would
undertake for the decryption.

Thereafter, Maliksi filed a Motion to Consider That Period Has Lapsed to Print Ballot’s Picture Images,21 alleging that
Saquilayan was only given a maximum of 30 days within which to accomplish the printing of the ballot images.
Maliksi alleged that the period, which was until 22 June 2011, had lapsed and Saquilayan should be considered
barred from having access to the electronic data in the COMELEC’s back-up server to print the ballot images in the
CF cards. The trial court granted Maliksi’s motion in its Order dated 3 August 2011.22 The trial court stated that
Saquilayan should have included in his motion to have access to the electronic data a request for the trial court to
turn over to the COMELEC the CF cards in its possession. As it turned out, the delay in the turn over of the CF
cards likewise delayed the printing of the ballot images in the CF cards.

It is clear from the foregoing events that the delay in the printing of the ballot images could not be attributed to
Saquilayan alone. In its 17 June 2011 Order, the trial court set a conference on 27 June 2011 upon Maliksi’s motion
to request the ERSD to specify the procedure it would undertake in decrypting the CF cards. Maliksi then requested
for the deferment of the printing of the ballot images in his 20 June 2011 letter to ERSD. However, during the 27
June 2011 hearing, Maliksi’s counsel filed in open court his Motion to Consider That Period Has Lapsed to Print
Ballot’s Picture Images. The trial court acted on the motion by requiring Saguilayan’s counsel to comment within five
days. The original reason for the hearing, which was for ERSD to specify the procedure it would undertake in
decrypting the CF cards, was not even taken up. The trial court eventually granted Maliksi’s motion and declared
that the period given to Saquilayan had lapsed. The failure of the trial court to turn over the CF cards to the ERSD,
as well as the move of Maliksi for the ERSD to specify the procedure in decrypting the CF cards, contributed
significantly to the delay in the printing of the ballot images.

The records also showed that Maliksi was aware of the decryption, printing, and examination of the ballot images by
the COMELEC First Division. The COMELEC First Division issued an Order23 dated 28 March 2012 directing
Saquilayan to deposit the required amount for expenses for the supplies, honoraria, and fee for the decryption of the
CF cards, and a copy of the Order was personally delivered to Maliksi’s counsel.24 Maliksi’s counsel was likewise
given a copy of Saquilayan’s Manifestation of Compliance with the 28 March 2012 Order.25 In an Order26 dated 17
April 2012, the COMELEC First Division directed Saquilayan to deposit an additional amount for expenses for the
Evidence II.
printing of additional ballot images from four clustered precincts, and a copy of the Order was again personally
delivered to Maliksi’s counsel.27 The decryption took weeks to finish.

Clearly, Maliksi was not denied due process.  He received notices of the decryption, printing, and examination of the
1âwphi1

ballot images by the COMELEC First Division. In addition, Maliksi raised his objections to the decryption in his
motion for reconsideration before the COMELEC En Banc.

The Court has ruled:

x x x. The essence of due process, we have consistently held, is simply the opportunity to be heard; as applied to
administrative proceedings, due process is the opportunity to explain one’s side or the opportunity to seek a
reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all times and in all
instances essential. The requirement is satisfied where the parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand. x x x.28

There is no denial of due process where there is opportunity to be heard, either through oral arguments or
pleadings.29 It is settled that "opportunity to be heard" does not only mean oral arguments in court but also written
arguments through pleadings.30 Thus, the fact that a party was heard on his motion for reconsideration negates any
violation of the right to due process.31 The Court has ruled that denial of due process cannot be invoked where a
party was given the chance to be heard on his motion for reconsideration.32

Evidentiary Value of the Digital Ballot Images

Maliksi assailed the use by the COMELEC First Division of the ballot images in the CF cards. He alleged that the
best and most conclusive evidence are the physical ballots themselves, and when they cannot be produced or when
they are not available, the election returns would be the best evidence of the votes cast.

We do not agree. We have already ruled that the ballot images in the CF cards, as well as the printouts of such
images, are the functional equivalent of the official physical ballots filled up by the voters, and may be used in an
election protest.

In the recent consolidated cases of Vinzons-Chato v. House of Representatives Electoral Tribunal and Panotes and
Panotes v. House of Representatives Electoral Tribunal and Vinzons-Chato,33 the Court ruled that "the picture
images of the ballots, as scanned and recorded by the PCOS, are likewise ‘official ballots’ that faithfully capture in
electronic form the votes cast by the voter, as defined by Section 2 (3) of R.A. No. 9369."34 The Court declared
that the printouts of the ballot images in the CF cards "are the functional equivalent of the paper ballots filled out by
the voters and, thus, may be used for purposes of revision of votes in an electoral protest." In short, both the ballot
images in the CF cards and the printouts of such images have the same evidentiary value as the official physical
ballots filled up by the voters.

In Vinzons-Chato and Panotes, the Court explained in length:

Section 2 (3) of R.A. No. 9369 defines "official ballot" where AES is utilized as the "paper ballot, whether printed or
generated by the technology applied, that faithfully captures or represents the votes cast by a voter recorded or to
be recorded in electronic form."

An automated election system, or AES, is a system using appropriate technology which has been demonstrated in
the voting, counting, consolidating, canvassing, and transmission of election result, and other electoral process.
There are two types of AES identified under R.A. No. 9369: (1) paper-based election system; and (2) direct
recording electronic system. A paper-based election system, such as the one adopted during the May 10, 2010
elections, is the type of AES that "use paper ballots, records and counts votes, tabulates, consolidates/canvasses
and transmits electronically the results of the vote count. On the other hand, direct recording electronic election
system "uses electronic ballots, records, votes by means of a ballot display provided with mechanical or electro-
optical component that can be activated by the voter, processes data by means of computer programs, record
voting data and ballot images, and transmits voting results electronically.

Evidence II.
As earlier stated, the May 10, 2010 elections used a paper-based technology that allowed voters to fill out an official
paper ballot by shading the oval opposite the names of their chosen candidates. Each voter was then required to
personally feed his ballot into the Precinct Count Optical Scan (PCOS) machine which scanned both sides of the
ballots simultaneously, meaning, in just one pass. As established during the required demo tests, the system
captured the images of the ballots in encrypted format which, when decrypted for verification, were found to be
digitized representations of the ballots cast.

We agree, therefore, with both the HRET and Panotes that the picture images of the ballots, as scanned and
recorded by the PCOS, are likewise "official ballots" that faithfully captures (sic) in electronic form the votes cast

by the voter, as defined by Section 2 (3) of R.A. No. 9369. As such, the printouts thereof are the functional
equivalent of the paper ballots filled out by the voters and, thus, may be used for purposes of revision of votes in an
electoral protest.

It bears stressing that the digital images of the ballots captured by the PCOS machine are stored in an encrypted
format in the CF cards. "Encryption is the process of encoding messages (or information) in such a way that
eavesdroppers or hackers cannot read it, but that authorized parties can. In an encryption scheme, the message or
information (referred to as plaintext) is encrypted using an encryption algorithm, turning it into an unreadable
ciphertext. This is usually done with the use of an encryption key, which specifies how the message is to be
encoded. Any adversary that can see the ciphertext, should not be able to determine anything about the original
message. An authorized party, however, is able to decode the ciphertext using a decryption algorithm, that usually
requires a secret decryption key, that adversaries do not have access to."35 (Citations omitted)

Hence, the COMELEC First Division did not gravely abuse its discretion in using the ballot images in the CF cards.

Maliksi further alleged that the ballot images in the CF cards should merely be considered as secondary evidence
and should be resorted to only when the physical ballots are not available or could not be produced.

Maliksi is mistaken.

Rule 4 of A.M. No. 01-7-01-SC36 is clear on this issue. It states:

SECTION 1. Original of an Electronic Document. - An electronic document shall be regarded as the equivalent of an
original document under the Best Evidence Rule if it is a printout or output readable by sight or other means, shown
to reflect the data accurately.

SECTION 2. Copies as equivalent of the originals. - When a document is in two or more copies executed at or about
the same time with identical contents, or is a counterpart produced by the same impression as the original, or from
the same matrix, or by mechanical or electronic recording, or by chemical reproduction, or by other equivalent
techniques which accurately reproduces the original, such copies or duplicates shall be regarded as the equivalent
of the original.

Notwithstanding the foregoing, copies or duplicates shall not be admissible to the same extent as the original if:

(a) a genuine question is raised as to the authenticity of the original; or

(b) in the circumstances it would be unjust or inequitable to admit the copy in lieu of the original. (Emphasis
supplied)

The ballot images, which are digital, are electronically generated and written in the CF cards when the ballots are
fed into the PCOS machine. The ballot images are the counterparts produced by electronic recording which
accurately reproduce the original, and thus are the equivalent of the original. As pointed out by the COMELEC, "the
digital images of the physical ballots are electronically and instantaneously generated by the PCOS machines once
the physical ballots are fed into and read by the machines."37 Hence, the ballot images are not secondary evidence.
The official physical ballots and the ballot images in the CF cards are both original documents. The ballot images in
the CF cards have the same evidentiary weight as the official physical ballots.
Evidence II.
The Court notes that Maliksi did not raise any allegation that the use of the ballot images falls under any of the
exceptions under Section 2, Rule 4 of A.M. No. 01-7-01-SC that would make their use inadmissible as original
ballots.

Tampering of Ballots and Ballot Boxes

Maliksi alleged that there was no allegation of ballot and ballot box tampering before the trial court. He further
alleged that the COMELEC First Division did not explain how it came to the conclusion that the integrity of the ballot
boxes had been compromised or that there was ballot tampering.

The records reveal otherwise.

Contrary to Maliksi’s claim, Saquilayan questioned the integrity of the ballot boxes and election paraphernalia before
the trial court. In an Urgent Manifestation of Concern and Objections38 dated 8 June 2010, Saquilayan manifested
his serious concern regarding the integrity of the ballot boxes and election paraphernalia which remained under the
effective control of Maliksi. Saquilayan informed the trial court that his watchers were being limited to the outside of
the building where the ballot boxes and election paraphernalia were kept, thus preventing them from looking over
the security of the ballot boxes and election paraphernalia. In the same manifestation, Saquilayan categorically
stated that he was "questioning the integrity of the ballot boxes and other election paraphernalia."39 Saquilayan also
alleged in the same manifestation that the trial court could have prescribed a procedure that would allow his
watchers to view the ballot boxes and other election paraphernalia that "would have prevented to some degree the
tampering of the boxes and election materials."40 Clearly, Saquilayan raised before the trial court the issue of
tampering of the ballots and ballot boxes.

Further, the COMELEC En Banc clarified in its Comment41 that the COMELEC First Division ordered the decryption,
printing, and examination of the digital images because the COMELEC First Division "discovered upon inspection
that the integrity of the ballots themselves was compromised and that the ballot boxes were tampered."42 The
COMELEC First Division properly invoked Section 6(f), Rule 2 of the COMELEC Rules of Procedure which states:

Sec. 6. Powers and Duties of the Presiding Commissioner. - The powers and duties of the Presiding Commissioner
of a Division when discharging its functions in cases pending before the Division shall be as follows:

xxxx

(f) To take such other measures as he may deem proper upon consultation with the other members of the Division.

In this case, the COMELEC En Banc categorically stated that the recounting of the physical ballots in the revision
before the trial court yielded dubious results. The COMELEC En Banc stressed:

x x x. Worth noting also is that these 8,387 ballots all came from 53 clustered precincts specifically pinpointed by
Maliksi as his pilot precincts (which is 20% of the total precincts he protested) – thereby affecting a total of 33.38%
or more than one-third (1/3) of the total ballots cast in those precincts. We find this too massive to have not been
detected on election day, too specific to be random and too precise to be to be accidental – which leaves a
reasonable mind no other conclusion except that those 8,387 cases of double-shading were purposely machinated.
These dubious and highly suspicious circumstances left us with no other option but to dispense with the physical
ballots and resort to their digital images. To recount the tampered ballots will only yield us tampered results
defeating the point of this appeal.43 (Emphasis supplied)

The tampering of the ballots and ballot boxes had been fully established and it justified the decryption of the ballot
images in the CF cards.

Inhibition of Commissioners Sarmiento and Velasco

Maliksi alleged that the COMELEC En Banc gravely abused its discretion when it included in the body of its 14
September 2012 Resolution a discussion of his motion for the inhibition of Commissioners Sarmiento and Velasco
instead of leaving it to their own discretion and prerogative.
Evidence II.
We see nothing wrong with the inclusion of the matter of inhibition in the Resolution. Commissioners Sarmiento and
Velasco signed the Resolution which means they concurred with the COMELEC En Banc’s ruling that the motion for
their inhibition had no basis. Maliksi himself pointed out that the matter of inhibition is better left to the
Commissioner’s discretion and thus, he could not impose the inhibition of Commissioners Sarmiento and Velasco
just because Commissioner Lim inhibited himself from the case. Commissioners Sarmiento and Velasco are not
even required, although they are neither prohibited, to individually explain their vote or to individually answer the
motion for inhibition, like what Commissioner Lim did. In this case, the COMELEC En Banc ruled on the motion for
inhibition. Moreover, the dissent of Commissioners Lim and Velasco in SPR (AE) No. 106-2011 is not a prejudgment
of EAC (AE) No. A-22-2011. While the two cases involved the same parties, the only issue in SPR (AE) No. 106-
2011 is the issuance of a temporary restraining order to stop the execution of the trial court’s decision pending
appeal. Contrary to Maliksi’s allegation, the ruling in SPR (AE) No. 106-2011 on the temporary restraining order is
not a confirmation of the validity of the decision subject of the appeal in EAC (AE) No. A-22-2011. In the same
manner, the fact that Commissioner Elias R. Yusoph did not take part in SPR (AE) No. 106-2011 does not mean he
should also take no part in EAC (AE) No. A-22-2011 considering that they involve different issues.

In sum, we find no grave abuse of discretion on the part of the COMELEC En Bane when it issued the assailed
Resolution of 14 September 2012.

WHEREFORE, we DISMISS the petition. We AFFIRM the Resolution promulgated on 14 September 2012 by the
Commission on Elections En Bane which affirmed the 15 August 2012 Resolution of the Commission on Elections
First Division declaring HOMER T. SAQUILA Y AN as the duly-elected Municipal Mayor of Imus, Cavite. We LIFT
the temporary restraining order issued on 11 October 2012. This decision is IMMEDIATELY EXECUTORY
considering that the remainder of Saquilayan' s term of office is only less than five ( 5) months.

Evidence II.
5.) G.R. No. 204894               March 10, 2014

PEOPLE OF THE PHILIPPINES, Appellee,

vs.
NOEL ENOJAS y HINGPIT, ARNOLD GOMEZ y FABREGAS, FERNANDO SANTOS y DELANTAR, and
ROGER JALANDONI y ARI, Appellants.

DECISION

ABAD, J.:

On September 4, 2006 the City Prosecutor of Las Piñas charged appellants Noel Enojas y Hingpit (Enojas), Arnold
Gomez y Fabregas (Gomez), Fernando Santos y Delantar (Santos), and Roger Jalandoni y Ari (Jalandoni) with
murder before the Las Pifias Regional Trial Court (RTC) in Criminal Case 06-0854. 1

PO2 Eduardo Gregorio, Jr. (P02 Gregorio) testified that at around 10:30 in the evening of August 29, 2006, he and
P02 Francisco Pangilinan (PO2 Pangilinan) were patrolling the vicinity of Toyota Alabang and SM Southmall when
they spotted a taxi that was suspiciously parked in front of the Aguila Auto Glass shop near the intersection
of BF Almanza and Alabang-Zapote Roads. The officers approached the taxi and asked the driver, later
identified as accused Enojas, for his documents. The latter complied but, having entertained doubts
regarding the veracity of documents shown them, they asked him to come with them to the police station in
their mobile car for further questioning. 2

Accused Enojas voluntarily went with the police officers and left his taxi behind. On reaching the 7-11
convenience store on the Zapote-Alabang Road, however, they stopped and PO2 Pangilinan went down to
relieve himself there. As he approached the store’s door, however, he came upon two suspected robbers and
shot it out with them. PO2 Pangilinan shot one suspect dead and hit the other who still managed to escape.
But someone fired at PO2 Pangilinan causing his death.

On hearing the shots, PO2 Gregorio came around and fired at an armed man whom he saw running towards Pilar
Village. He saw another man, who came from the Jollibbee outlet, run towards Alabang-Zapote Road while firing his
gun at PO2 Gregorio. The latter returned fire but the men were able to take a taxi and escape. PO2 Gregorio
radioed for help and for an ambulance. On returning to his mobile car, he realized that accused Enojas, the
taxi driver they had with them had fled.

P/Insp. Ferjen Torred (Torred), the Chief of Investigation Division of the Las Piñas Police, testified that he and PO2
Teoson Rosarito (PO2 Rosarito) immediately responded to PO2 Gregorio’s urgent call. Suspecting that accused
Enojas, the taxi driver who fled, was involved in the attempted robbery, they searched the abandoned taxi
and found a mobile phone that Enojas apparently left behind. P/Ins. Torred instructed PO3 Joel Cambi (PO3
Cambi) to monitor its incoming messages. 3

The police later ascertained that the suspect whom PO2 Pangilinan had killed was someone named Reynaldo
Mendoza who was armed with a .38 caliber revolver. The police found spent 9 mm and M-16 rifle shells at the crime
scene. Follow-up operations at nearby provinces resulted in finding the dead body of one of the suspects, Alex
Angeles, at the Metro South Medical Center along Molino, Bacoor, Cavite. 4

PO3 Cambi and PO2 Rosarito testified that they monitored the messages in accused Enojas’ mobile phone
and, posing as Enojas, communicated with the other accused. The police then conducted an entrapment
operation that resulted in the arrest of accused Santos and Jalandoni. Subsequently, the police were also
able to capture accused Enojas and Gomez. The prosecution presented the transcripts of the mobile phone
text messages between Enojas and some of his co-accused. 5

The victim’s father, Ricardo Pangilinan, testified that his son was at the time of his death 28 years old, unmarried,
and was receiving police pay of ₱8,000.00 to ₱10,000.00 per month. Ricardo spent ₱99,999 for burial expense,
₱16,000.00 for the interment services, and ₱50,000.00 for purchase of the cemetery lot. 6

Evidence II.
Manifesting in open court that they did not want to adduce any evidence or testify in the case,  the accused opted to
7

instead file a trial memorandum on March 10, 2008 for their defense. They pointed out that they were entitled to
an acquittal since they were all illegally arrested and since the evidence of the text messages were
inadmissible, not having been properly identified.

On June 2, 2008 the RTC rendered judgment,  finding all the accused guilty of murder qualified by evident
8

premeditation and use of armed men with the special aggravating circumstance of use of unlicensed firearms. It
thus sentenced them to suffer the penalty of reclusion perpetua, without the possibility of parole and to indemnify
the heirs of PO2 Pangilinan with ₱165,999.00 as actual damages, ₱50,000.00 as moral damages, ₱25,000.00 as
exemplary damages, and ₱2,080,000.00 as compensation for loss of earning capacity.

Upon review in CA-G.R. CR-H.C. 03377, on June 14, 2012 the Court of Appeals (CA) dismissed the appeal and
affirmed in toto the conviction of the accused.  The CA, however, found the absence of evident premeditation since
9

the prosecution failed to prove that the several accused planned the crime before committing it. The accused
appealed from the CA to this Court. 10

The defense points out that the prosecution failed to present direct evidence that the accused Enojas, Gomez,
Santos, or Jalandoni took part in shooting PO2 Pangilinan dead.  This may be true but the prosecution could prove
11

their liability by circumstantial evidence that meets the evidentiary standard of proof beyond reasonable doubt. It has
been held that circumstantial evidence is sufficient for conviction if: 1) there is more than one circumstance; 2) the
facts from which the inferences are derived are proven; and 3) the combination of all the circumstances is such as to
produce a conviction beyond reasonable doubt. 12

Here the totality of the circumstantial evidence the prosecution presented sufficiently provides basis for the
conviction of all the accused. Thus:

1. PO2 Gregorio positively identified accused Enojas as the driver of the taxicab suspiciously parked in front
of the Aguila Auto Glass shop. The officers were bringing him with them to the police station because of the
questionable documents he showed upon query. Subsequent inspection of the taxicab yielded Enojas’
mobile phone that contained messages which led to the entrapment and capture of the other accused who
were also taxicab drivers.

2. Enojas fled during the commotion rather than remain in the cab to go to the police station where he was
about to be taken for questioning, tending to show that he had something to hide. He certainly did not go to
the police afterwards to clear up the matter and claim his taxi.

3. PO2 Gregorio positively identified accused Gomez as one of the men he saw running away from the
scene of the shooting.

4. The text messages identified "Kua Justin" as one of those who engaged PO2 Pangilinan in the shootout;
the messages also referred to "Kua Justin" as the one who was hit in such shootout and later died in a
hospital in Bacoor, Cavite. These messages linked the other accused.

5. During the follow-up operations, the police investigators succeeded in entrapping accused Santos,
Jalandoni, Enojas, and Gomez, who were all named in the text messages.

6. The text messages sent to the phone recovered from the taxi driven by Enojas clearly made references to
the 7-11 shootout and to the wounding of "Kua Justin," one of the gunmen, and his subsequent death.

7. The context of the messages showed that the accused were members of an organized group of taxicab
drivers engaged in illegal activities.

8. Upon the arrest of the accused, they were found in possession of mobile phones with call numbers that
corresponded to the senders of the messages received on the mobile phone that accused Enojas left in his
taxicab.13

Evidence II.
The Court must, however, disagree with the CA’s ruling that the aggravating circumstances of a) aid of armed men
and b) use of unlicensed firearms qualified the killing of PO2 Pangilinan to murder. In "aid of armed men," the men
act as accomplices only. They must not be acting in the commission of the crime under the same purpose as the
principal accused, otherwise they are to be regarded as co-principals or co-conspirators. The use of unlicensed
firearm, on the other hand, is a special aggravating circumstance that is not among the circumstances mentioned in
Article 248 of the Revised Penal Code as qualifying a homicide to murder.  Consequently, the accused in this case
14

may be held liable only for homicide, aggravated by the use of unlicensed firearms, a circumstance alleged in the
information.

As to the admissibility of the text messages, the RTC admitted them in conformity with the Court’s earlier
Resolution applying the Rules on Electronic Evidence to criminal actions.  Text messages are to be proved
15

by the testimony of a person who was a party to the same or has personal knowledge of them.  Here, PO3 16

Cambi, posing as the accused Enojas, exchanged text messages with the other accused in order to identify
and entrap them. As the recipient of those messages sent from and to the mobile phone in his possession,
PO3 Cambi had personal knowledge of such messages and was competent to testify on them.

The accused lament that they were arrested without a valid warrant of arrest.  But, assuming that this was so, it
1âwphi1

cannot be a ground for acquitting them of the crime charged but for rejecting any evidence that may have been
taken from them after an unauthorized search as an incident of an unlawful arrest, a point that is not in issue here.
At any rate, a crime had been committed—the killing of PO2 Pangilinan—and the investigating police officers had
personal knowledge of facts indicating that the persons they were to arrest had committed it.  The text messages to
17

and from the mobile phone left at the scene by accused Enojas provided strong leads on the participation and
identities of the accused. Indeed, the police caught them in an entrapment using this knowledge.

The award of damages by the courts below has to be modified to conform to current jurisprudence. 18

WHEREFORE, the Court MODIFIES the Court of Appeals Decision of June 14, 2012 in CA-G.R. CR-HC 03377.
The Court instead FINDS accused-appellants Noel Enojas y Hingpit, Arnold Gomez y Fabregas, Fernando Santos y
Delantar, and Roger Jalandoni y Ari GUILTY of the lesser crime of HOMICIDE with the special aggravating
circumstance of use of unlicensed firearms. Applying the Indeterminate Sentence Law, the Court SENTENCES
each of them to 12 years of prision mayor, as minimum, to 20 years of reclusion temporal, as maximum. The Court
also MODIFIES the award of exemplary damages by increasing it to ₱30,000.00, with an additional ₱50,000.00 for
civil indemnity.

Evidence II.
6.) G.R. No. 198799

BANK OF THE PHILIPPINE ISLANDS, Petitioner

vs
AMADO M. MENDOZA and MARIA MARCOS VDA. DE MENDOZA, Respondents

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari  is the Decision  dated February 4, 2011 and the Resolution  dated
1 2 3

August 26, 2011 of the Court of Appeals (CA) in CA-GR. CV No. 91704, which reversed and set aside the
Decision  dated May 9, 2007 of the Regional Trial Court of Gapan City, Nueva Ecija, Branch 87 (RTC) in Civil Case
4

No. 1913, and consequently, dismissed the complaint filed by petitioner Bank of the Philippine Islands (BPI) against
respondents Amado M. Mendoza (Amado) and his mother, Maria Marcos vda. de Mendoza (Maria; collectively,
respondents).

The Facts

This case stemmed from a Complaint for Sum of Money with Application for Writ of Attachment  filed by BPI
5

against respondents before the RTC. BPI alleged that on April 8, 1997, respondents: (a) opened a foreign
currency savings account with Account No. 0584-0007-08 (US savings account) at BPI-Gapan Branch and
deposited therein the total amount of US$l6,264.00, broken down as follows: US$100.00 in cash and US$16,164.00
in US Treasury Check with No. 3149-09693369 payable to "Ma. Marcos Vda. de Mendoza" (subject
check); and (b) placed the amount of US$2,000.00 in a time deposit account. After the lapse of the thirty (30)
day clearing period on May 9 and 13, 1997, respondents withdrew the amount of US$16,244.00 from the US
savings account, leaving only US$20.00 for bank charges.  However, on June 26, 1997, BPI received a notice
6

from its correspondent bank, Bankers Trust Company New York (Bankers Trust), that the subject check was
dishonored due to "amount altered",  as evidenced by (1) an electronic mail (e-mail) advice from Bankers
7

Trust,  and (2) a photocopy of the subject check with a notation "endorsement cancelled" by Bankers
8

Trust  as the original copy of the subject check was allegedly confiscated by the government of the United
9

States of America (US government).  This prompted BPI to inform respondents of such dishonor and to demand
10

reimbursement.  BPI then claimed that: (a) on July 18, 1997, respondents allowed BPI to apply the proceeds of
11

their time deposit account in the amount ofUS$2,015.00 to their outstanding obligation;  (b) upon the exhaustion of
12

the said time deposit account, Amado gave BPI a promissory note dated September 8, 1997 containing his promise
to pay BPI-Gapan Branch the amount of ₱l,000.00 monthly;  and (c) when respondents failed to fulfill their
13

obligation despite repeated demands, BPI was constrained to give a final demand letter  to respondents on
14

November 27, 1997. 15

For their part, while respondents admitted the withdrawals and exchanged the same with BPI at the rate of ₱26.l59
per dollar, they did not receive the amount of ₱582,140.00 from the proceeds. Respondents then maintained that
Amado only affixed his signature in the letter dated July 18, 1997 in order to acknowledge its receipt, but not to give
his consent to the application of the proceeds of their time deposit account to their purported obligations to
BPI. According to Amado, he would have been willing to pay BPI, if only the latter presented proper and
authenticated proof of the dishonor of the subject check. However, since the bank failed to do so, Amado
argued that BPI had no cause of action against him and his mother, Maria. 16

The RTC Ruling

In a Decision  dated May 9, 2007, the RTC ruled in BPI's favor, and accordingly, ordered respondents to
17

pay: (a) ₱369,600.5l representing the peso equivalent of amounts withdrawn by respondent less the amounts
already recovered by BPI, plus legal interest of 12% per annum reckoned from the time the money was withdrawn;
and (b) 10% of the aforesaid monetary award representing attorney's fees. 18

Evidence II.
The RTC found that: (a) BPI duly notified respondents of the dishonor of the subject check, thus, creating an
obligation on the part of the respondents to return the proceeds that they had already withdrawn; and (b) Amado
unmistakably acknowledged the same by executing a promissory note dated September 8, 1997 promising to pay
BPI-Gapan Branch the amount of ₱l,000.00 monthly in connection with such obligation. In this regard, the RTC
opined that since respondents withdrew the money prior to the dishonor and that BPI allowed such withdrawal by
mistake, it is only proper that respondents return the proceeds of the same pursuant to the principle of solutio
indebiti under Article 2154 of the Civil Code. 19

Aggrieved, respondents appealed to the CA. 20

The CA Ruling

In a Decision  dated February 4, 2011, the CA reversed and set aside the RTC's ruling, and consequently,
21

dismissed BPI's complaint for lack of merit.  It held that BPI failed to prove the dishonor of the subject check,
22

since: (a) the presentation of a mere photocopy of the subject check is in violation of the Best Evidence
Rule; and (b) the e-mail advice from Bankers Trust was not properly authenticated in accordance with the
Rules on Electronic Evidence as the person who sent the e-mail advice was neither identified nor presented
in court. As such, the CA ordered the dismissal of the complaint due to BPI's failure to prove its claim against
respondents. 23

Dissatisfied, BPI moved for reconsideration,  which was, however, denied in a Resolution  dated August 26, 2011;
24 25

hence, this petition.

The Issue Before the Court

The primordial issue for the Court's resolution is whether or not the CA correctly dismissed BPI's complaint
for sum of money against respondents.

The Court's Ruling

The petition is meritorious.

As a general rule, the Court's jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is
limited to the review of pure questions of law. Otherwise stated, a Rule 45 petition does not allow the review of
questions of fact because the Court is not a trier of facts.  Case law provides that "there is a 'question of law' when
26

the doubt or difference arises as to what the law is on a certain set of facts or circumstances; on the other hand,
there is a 'question of fact' when the issue raised on appeal pertains to the truth or falsity of the alleged facts. The
test for determining whether the supposed error was one of 'law' or 'fact' is not the appellation given by the parties
raising the same; rather, it is whether the reviewing court can resolve the issues raised without evaluating the
evidence, in which case, it is a question of law; otherwise, it is one of fact."  Where there is no dispute as to the
27

facts, the question of whether or not the conclusions drawn from these facts are correct is a question of law.
However, if the question posed requires a re-evaluation of the credibility of witnesses, or the existence or relevance
of surrounding circumstances and their relationship to each other, the issue is factual. 28

Notably, however, the foregoing general rule admits of several exceptions, such as where the factual findings of the
RTC and the CA are conflicting or contradictory,  which is evident in this case. As such, the Court is constrained to
29

make its own factual findings in order to resolve the issue presented before it.

To recapitulate, the RTC declared that BPI was able to sufficiently establish by preponderance of evidence that
respondents were duly notified of the dishonor of the subject check, rendering them liable to refund what they had
withdrawn from BPI. Pertinently, it hinged its ruling on the pieces of evidence presented during the trial, namely: the
e-mail printout advice from Bankers Trust informing BPI that the subject check was dishonored, the BPI letters dated
June 27, 1997 and July 18, 1997 addressed to respondents, and the subject promissory note voluntarily executed
by Amado. On the contrary, the CA held that respondents were not liable to BPI for its failure to competently prove
the fact of the subject check's dishonor and its subsequent confiscation by the US government. In this relation, the

Evidence II.
CA deemed that the printout of the e-mail advice is inadmissible in evidence for lack of proper authentication
pursuant to the Rules on Electronic Evidence.

After a judicious review of the records, including a re-evaluation of the evidence presented by the parties, the Court
is inclined to sustain the findings of the RTC over that of the CA, as will be explained hereunder.

It is settled that in civil cases, the party having the burden of proof must produce a preponderance of evidence
thereon, with plaintiff having to rely on the strength of his own evidence and not upon the weakness of the
defendant's.  Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side
30

and is usually considered to be synonymous with the term 'greater weight of evidence' or 'greater weight of credible
evidence.'  Succinctly put, it only requires that evidence be greater or more convincing than the opposing evidence.
31 32

Records evince that BPI was able to satisfactorily prove by preponderance of evidence the existence of
respondents' obligation in its favor. Verily, Amado acknowledged its existence and expressed his conformity
thereto when he voluntarily: (a) affixed his signature in the letters dated June 27, 1997  and July 18, 1997,  where
33 34

he acknowledged the dishonor of the subject check, and subsequently, allowed BPI to apply the proceeds of their
US time deposit account to partially offset their obligation to the bank; and (b) executed a Promissory Note  dated
35

September 8, 1997 wherein he undertook to pay BPI in installments of ₱l,000.00 per month until the remaining
balance of his obligation is fully paid.

On the other hand, aside from his bare testimony, Amado did not present any corroborative evidence to support his
claim that his performance of the aforesaid voluntary acts was subject to BPI's presentment of the proper and
authenticated proof of the dishonored subject check. Amado's unsubstantiated testimony is self-serving at the most,
and hence, cannot be relied upon.  In fact, the RTC did not lend any credence to Amado's testimony in resolving
36

this case. In this regard, it should be borne in mind that the "findings of the trial court on the credibility of witnesses
deserve great weight, as the trial judge is in the best position to assess the credibility of the witnesses, and has the
unique opportunity to observe the witness firsthand and note his demeanor, conduct and attitude under gruelling
examination. Absent any showing that the trial court's calibration of credibility was flawed, the appellate court is
bound by its assessment,"  as in this case.
37

Overall, assessing the pieces of evidence presented by BPI as opposed to the self-serving allegations of
respondents, the weight of evidence clearly preponderates in favor of the former. Otherwise stated, BPI has proven
by the required quantum of proof, i.e., preponderance of evidence, respondents' obligation towards it, and as such,
respondents must be made to fulfill the same.

In any event, the CA erred in concluding that BPI failed to prove the dishonor of the subject check by merely
presenting: (a) a photocopy thereof with its dorsal portion stamped "ENDORSEMENT CANCELLED" by
Bankers Trust;  and (b) a print-out of the e-mail advice from Bankers Trust stating that the subject check
38

was returned unpaid because the amount was altered. 39

Anent the subject check, while the Best Evidence Rule under Section 3, Rule 130  of the Rules of Court states
40

that generally, the original copy of the document must be presented whenever the content of the document is
under inquiry, the rule admits of certain exceptions, such as "[w]hen the original has been lost or destroyed, or
cannot be produced in court, without bad faith on the part of the offeror."  In order to fall under the aforesaid
41

exception, it is crucial that the offeror proves: (a) the existence or due execution of the original; (b) the loss and
destruction of the original, or the reason for its non-production in court; and (c) the absence of bad faith on the part
of the offeror to which the unavailability of the original can be attributed. 
42

In this case, BPI sufficiently complied with the foregoing requisities. First, the existence or due execution of the
subject check was admitted by both parties. Second, the reason for the non-presentation of the original copy of the
subject check was justifiable as it was confiscated by the US government for being an altered check. The subject
check, being a US Treasury Warrant, is not an ordinary check, and practically speaking, the same could not be
easily obtained. Lastly, absent any proof to the contrary and for the reasons already stated, no bad faith can be
attributed to BPI for its failure to present the original of the subject check. Thus, applying the exception to the Best
Evidence Rule, the presentation of the photocopy of the subject check as secondary evidence was permissible.

Evidence II.
As to the e-mail advice, while it may not have been properly authenticated in accordance with the Rules on
Electronic Evidence, the same was merely corroborative evidence, and thus, its admissibility or
inadmissibility should not diminish the probative value of the other evidence proving respondents'
obligation towards BPI, namely: (a) Amado's voluntary acts of conforming to BPI's letters dated June 27,
1997 and July 18, 1997 and executing the promissory note to answer for such obligation; and (b) the
photocopy of the subject check, which presentation was justified as falling under the afore-discussed exception to
the Best Evidence Rule. As such, their probative value remains.

Besides, it should be pointed out that respondents did not proffer any objection to the evidence presented
by BPI, as shown by their failure to file their comment or opposition to the latter's formal offer of
evidence.  It is well-settled that evidence not objected to is deemed admitted and may validly be considered by the
43

court in arriving at its judgment, as what the RTC did in this case, since it was in a better position to assess and
weigh the evidence presented during the trial.44

In sum, considering that BPI had proven its cause of action by preponderance of evidence, the Court finds the CA to
have erred in dismissing BPI's complaint against respondents. Accordingly, the RTC ruling must be reinstated,
subject to modification in the award of interest imposed on the adjudged amount.

To recount, respondents were ordered by the RTC to pay BPI the amount of ₱369,600.51 representing the peso
equivalent of the amounts withdrawn by respondents less the amounts already recovered by BPI, plus legal interest
of twelve percent (12%) per annum reckoned from the time the money was withdrawn,  thus, implying that such
45

amount was a loan or a forbearance of money. However, records reveal that BPI's payment of the proceeds of the
subject check was due to a mistaken notion that such check was cleared, when in fact, it was dishonored due to an
alteration in the amount indicated therein. Such payment on the part of BPI to respondents was clearly made by
mistake, giving rise to the quasi-contractual obligation of solutio indebiti under Article 2154  in relation to Article
46

2163  of the Civil Code. Not being a loan or forbearance of money, an interest of six percent (6%) per annum should
47

be imposed on the amount to be refunded and on the damages and attorney's fees awarded, if any, computed from
the time of demand until its satisfaction.  Consequently, respondents must return to BPI the aforesaid amount, with
48

legal interest at the rate of six percent (6%) per annum from the date of extrajudicial demand - or on June 27, 1997,
the date when BPI informed respondents of the dishonor of the subject check and demanded the return of its
proceeds - until fully paid.

WHEREFORE, the petition is GRANTED. The Decision dated February 4, 2011 and the Resolution dated August
26, 2011 of the Court of Appeals in CA-G.R. CV No. 91704 is hereby REVERSED and SET ASIDE. The Decision
dated May 9, 2007 of the Regional Trial Court of Gapan City, Nueva Ecija, Branch 87 in Civil Case No. 1913
is REINSTATED with MODIFICATION, adjusting the interest imposed on the amount ordered to be
returned, i.e., ₱369,600.51, to six percent (6%) per annum reckoned from the date of extrajudicial demand on June
27, 1997, until fully paid.

Evidence II.
 7.) G.R. No. 241445, August 14, 2019

REY BEN P. MADRIO, PETITIONER, v. ATLAS FERTILIZER CORPORATION, RESPONDENT.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 20, 2018 of the Court of
Appeals (CA) in CA-G.R. SP No. 08194-MIN which partially set aside the Decision3 dated January 31,
2017 and the Resolution4 dated April 28, 2017 of the National Labor Relations Commission (NLRC) in
NLRC No. MAC-10-014668-2016 granting, among others, in favor of petitioner Rey Ben P. Madrio
(petitioner) the amount of P84,150.00 representing separation benefits pursuant to respondent Atlas
Fertilizer Corporation's (AFC) retirement/separation policy.

The Facts

Petitioner was formerly the Area Sales Manager of AFC from May 1, 2008 until he tendered
his resignation in November 2015,5 which, however, was not shown to have been approved by
the company. At that time, he also requested for the payment of several monetary
benefits,6 but the same remained unheeded.

Feeling aggrieved, petitioner, on January 5, 2016, filed a complaint 7 against AFC for the
payment of several monetary benefits. Among others, petitioner claimed8 that he was
entitled to separation benefits in the amount of P158,400.009 pursuant to AFC's
retirement/separation policy. As proof, petitioner attached an unsigned and unauthenticated
typewritten copy of the Retirement Plan10 and Policy on Separation from Employment11 to
his position paper, as well as copies of his pay slips12 to show his monthly pay.13

For its part,14 AFC categorically denied that the Retirement Plan is the
retirement/separation policy it had for its employees.15 In any event, it argued that it
would be unreasonable for it to pay separation benefits to an employee who was solely
responsible in causing the company a whopping financial loss of
P43,023,550.2116 attributed to his gross negligence in the handling of uncollected receivables
from Richfield Agri-Supply (RAS). In this regard, AFC averred that the disciplinary proceeding for
petitioner's gross negligence was only deferred out of humane considerations and in light of
petitioner's years of service. It further stressed that petitioner was given the chance to redeem
himself by assisting AFC to recover said amount from the defaulting customer, i.e., RAS, but he just
unceremoniously left the company without obtaining any clearance or permission from the
management.17

The LA Ruling

In a Decision18 dated August 26, 2016, the LA ruled in favor of petitioner, and accordingly, ordered
AFC to pay him the total amount of P273,200.00 representing his monetary claims, inclusive of
separation benefits in the amount of P158,400.00. AFC was likewise ordered to issue petitioner's
Certificate of Employment.19

The LA held that petitioner's entitlement to separation benefits, among others, was already admitted
by AFC itself as evinced by the tenor of its March 20, 2016 reply-letter received during conciliation
proceedings. Considering that AFC introduced the reply-letter as its own evidence, and without
qualification, it was estopped from assailing the contents thereof.20 In this relation, the LA further
pointed out that AFC, as the employer, had complete control over all the records of its employees. As
such, it had the burden to prove payment or settlement when there was an allegation of nonpayment
Evidence II.
of monetary claims. However, since AFC failed to do so, the claims are deemed admitted.21

Dissatisfied, AFC appealed22 to the NLRC.

Among others, AFC argued that the LA's award of separation benefits was unwarranted as nothing in
the March 20, 2016 reply-letter could be construed as automatically warranting petitioner's
entitlement to the same. All it indicated was that petitioner's possible benefits were being processed.
AFC also reiterated its objection to the admissibility of the unsigned and unauthenticated Retirement
Plan submitted by petitioner. Moreover, even assuming the admissibility of the same, petitioner was
still not entitled to separation pay since he did not meet the minimum age requirement and had a
derogatory record, i.e., the P43,023,550.22 loss that the company incurred for his gross
negligence.23

The NLRC Ruling

In a Decision24 dated January 31, 2017, the NLRC affirmed with modification the LA's ruling by
reducing the amount of the separation benefits from P158,400.00 to P84,150.00, among others.25

The NLRC held that contrary to AFC's arguments, it already tacitly admitted petitioner's entitlement
to separation benefits based on its March 20, 2016 reply-letter received during
conciliation.26 Furthermore, while petitioner was not eligible for normal or optional retirement
benefits, he was entitled to separation benefits under Section 4, Article IV of the Retirement Plan
which covers an employee who "voluntarily resigns from the Company without any derogatory
record[.]"27 However, the amount should be corrected to reflect the correct monthly salary exclusive
of overtime pay, commissions, per diems, and other special remuneration, pursuant to the said
Plan.28

Aggrieved, AFC sought partial reconsideration29 which the NLRC denied in a Resolution30 dated April
28, 2017. Thus, it filed a petition for certiorari31 before the CA, raising only the twin issues of whether
or not the NLRC committed grave abuse of discretion in admitting the unsigned and unauthenticated
Retirement Plan, and declaring that petitioner was not disqualified from receiving his separation
benefits.32

The CA Ruling

In a Decision33 dated June 20, 2018, the CA partially set aside the NLRC ruling insofar as the award
of separation benefits to petitioner was concerned.34

According to the CA, the NLRC erred in considering the Retirement Plan as evidence to support
petitioner's claim for separation benefits. Being unsigned and unauthenticated, there was no way to
verify the truth of its contents, and thus, it should have been rejected as evidence. In this regard,
the CA held that while the NLRC is not bound by technical rules of procedure, the evidence presented
must at least have a modicum of admissibility for it to have probative value, which was not the case
here.35 Consequently, it ruled that petitioner was not entitled to separation benefits under AFC's
Retirement Plan given that there was no substantial evidence to prove the same.36

Hence, the instant petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the NLRC gravely abused its
discretion when it admitted the Retirement Plan as evidence, and consequently, granted
the award of separation benefits in favor of petitioner.

The Court's Ruling

Evidence II.
At the outset, the Court stresses that in a Rule 45 review of labor cases, the Court only examines the
correctness of the CA's decision in contrast with the review of jurisdictional errors under Rule
65.37 "In ruling for legal correctness, the Court views the CA decision in the same context that the
petition for certiorari was presented to the CA. Hence, the Court has to examine the CA Decision
from the prism of whether the CA correctly determined the presence or absence of grave abuse of
discretion in the NLRC Decision."38

For decisions of the NLRC, there is grave abuse of discretion "when its findings and conclusions are
not supported by substantial evidence, which refers to that amount of relevant evidence that a
reasonable mind might accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has
basis in the evidence and the applicable law and jurisprudence, then no grave abuse of discretion
exists and the CA should so declare and accordingly, dismiss the petition."39

In holding that the NLRC committed grave abuse of discretion, the CA found that it erroneously
considered in evidence the unsigned and unauthenticated Retirement Plan for petitioner's claim of
separation benefits. Considering that the said document should not have been admitted, the CA set
aside the NLRC's award of separation benefits.40

The Court agrees with the result reached by the CA.

It is well-settled that administrative and quasi-judicial bodies, like the NLRC, are not
bound by the technical rules of procedure in the adjudication of cases. 41 However, when it
comes to admitting documents as evidence in labor cases, it is nonetheless required that
there be some proof of authenticity or reliability as condition for the admission of
documents.42 In IBM Philippines, Inc. v. NLRC,43 which was cited by the CA, the Court held that:
The computer print-outs, which constitute the only evidence of petitioners, afford no assurance of
their authenticity because they are unsigned. The decisions of this Court, while adhering to a liberal
view in the conduct of proceedings before administrative agencies, have nonetheless consistently
required some proof of authenticity or reliability as condition for the admission of
documents.44
Contrary to the CA's holding, the circumstances of this case show that there is
actually some proof of authenticity or reliability that the copy of the Retirement Plan
attached to petitioner's position paper reflects AFC's retirement/separation policy. This is
because: (a) AFC never denied having an existing company policy wherein separation
benefits are given to its qualified employees; (b) AFC, which is presumed to have custody
of the relevant documents covering its company policies, never submitted the "true" copy
of its Retirement Plan despite being given the opportunity to do so; and (c) as petitioner
pointed out, the "eight (8)-page [copy of the Retirement Plan] is too technical, verbose
and comprehensive to be simply attributed as a fake."45 Hence, these circumstances lend
"some proof of authenticity or reliability" to the document presented by petitioner, and as
such, the NLRC did not err in lending credence to the same.

Nevertheless, this does not mean that petitioner is automatically entitled to the claimed separation
benefits. Proving the existence of AFC's retirement/separation policy, as well as its
pertinent terms and conditions, is separate and distinct matter from proving the fact that
these terms and conditions have been complied with.

To be sure, the separation benefits under the AFC's company policy is not the separation pay
contemplated under the labor code,46 but rather, a special benefit given by the company only to
upstanding employees who have satisfied the following conditions:

1. The employee must voluntarily resign from the company;

2. The employee must not have a derogatory record; and

Evidence II.
 3. The employee must meet the minimum number of years in his credited service.47

In light of these special conditions, it is fairly apparent that the separation benefits under the
Retirement Plan are not in the nature of benefits incurred in the normal course of AFC's business,
such as salary differentials, service incentive leave pay, or holiday pay.48 As such, the burden is on
the employee to prove his entitlement thereto;49 failing m which, the latter should not be paid the
same.

In this case, petitioner only submitted a copy of the Retirement Plan as proof of his
entitlement to the separation benefits claimed. However, by and of itself, the said
document only proves what the retirement/separation policy of AFC is. It does not, in any
way, demonstrate that the conditions for entitlement had already been met by the
employee.

Most glaring of all is the failure of petitioner to at least, prima facie show that he had no derogatory
record before voluntarily resigning from the company. As indicated in AFC's March 20, 2016 reply-
letter, AFC was still dealing with the P43,023,550.21 financial loss from the RAS account based on
petitioner's alleged gross negligence at the time he abruptly "resigned" from the company.50 While
the records do not show that petitioner was disciplined for such infraction, AFC claims that "[d]ue to
[petitioner's] unceremonious resignation, [it] was no longer able to conduct disciplinary proceedings
and/or administrative hearings in relation to [petitioner's] nonfeasance. It might even [be] safe to
say that [petitioner] resigned just to preempt [AFC] from instituting disciplinary proceedings against
him."51 As such, it cannot be said that petitioner has no derogatory record with the company. Hence,
unless proven otherwise, petitioner is not qualified to claim separation benefits from AFC.

Moreover, petitioner's claim for separation benefits appears to be premature. It is undisputed that

petitioner left the company while his separation benefits were still being processed and yet to be
approved by the Retirement Committee52 pursuant to the "company's normal operating
procedure."53 This is clear from the March 20, 2016 reply-letter which - contrary to the findings of the
labor tribunals - was not an admission of liability but, quite the contrary, an assertion that
petitioner's claim for separation benefits was still subject to a contingency, i.e., the approval by the
Retirement Committee, viz.:
In any case, please be informed that based on records since your turn over or handover report were
late (records were only turned over to personnel department/PMIRD around last week of January
2016) the processing of your clearance and also your separation benefit computation in our
accounting department is still being processed.

A documented and written handover report is a requirement in our company policy for clearance. You
are aware of this policy. Your delayed submission of the said requirement have also contributed to
the delay of your separation pay. This could have been avoided had you coordinated much earlier
to your immediate superior regarding all your clearance requirements.

In any case, this is now under process and PMIRD is trying its best to fast track the routing of
your separation benefit sheet which needs to be approved by the retirement
committee. This is part of the company's normal operating procedure. 54
In fine, the Court is unconvinced that petitioner has proven his entitlement to the separation benefits
under AFC's company policy. As such, the CA Decision is affirmed insofar as it set aside the NLRC's
award of separation benefits in favor of petitioner not for the reasons given by the CA but based on
the above discussion.

WHEREFORE, the petition is DENIED. The Decision dated June 20, 2018 of the Court of Appeals in
CA-G.R. SP No. 08194-MIN is hereby AFFIRMED with MODIFICATION. The award of separation
benefits amounting to P84,150.00 in the Decision dated January 31, 2017 and the Resolution dated
April 28, 2017 of the National Labor Relations Commission in NLRC No. MAC-10-014668-2016 is
hereby DELETED.
Evidence II.
Evidence II.
8.) G.R.   Nos. 237106-07

FLORENDO B. ARIAS, Petitioner
vs.
PEOPLE OF THE PHILIPPINES, Respondent

DECISION

PERALTA, J.:

This is to resolve the Petition  for review on certiorari under Rule 45 of the Rules of Court, dated March 15, 2018, of
1

petitioner Florendo B. Arias assailing the Sandiganbayan's Decision  promulgated on November 10, 2016, finding
2

him guilty beyond reasonable doubt of the crime of Estafa Thru Falsification of Official/Commercial Documents in
Criminal Case No. 28100, and for Violation of Section 3(e) of Republic Act (R.A.) No. 3019, as amended, in Criminal
Case No. 28253, and its Resolution  issued on January 15, 2018, denying his Motion for Reconsideration.
3

Culled from documentary and testimonial evidence, the antecedents of this case are summarized by the
Sandiganbayan, as follows:

During the period March to December 2001, or sometime subsequent thereto, reimbursements were claimed and
paid by DPWH in an amount totaling millions of pesos covering 409 transactions purportedly for the
emergency repairs of 39 DPWH service vehicles. Of the 409 transactions, 274 transactions were made in the
name of accused Martinez for which the total sum of ₱5,166,539.00, not ₱6,368,364.00, were claimed and paid as
reimbursements. The spare parts were purportedly supplied by J-CAP Motorshop, owned by accused Capuz,
and DEB Repair Shop and Parts Supply owned by accused Dela Cruz. The transactions are covered by
Disbursement Vouchers with supporting documents to justify the release of checks, pertinent details of which
are as follows:

1) Mitsubishi L-200 with Plate No. TSC 482 purportedly underwent 44 emergency repairs and reimbursements for 2
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-04-05261 Borje, M. 359433 4/10/01 22,170.00 DEB

2 101-01-04-01690 Borje, M. 359879 4/23/01 24,350.00 DEB

3 101-01-03-01687 Borje, M. 360306 5/2/01 20,200.00 DEB

4 101-01-03-01692 Borje, M. 360307 5/2/01 24,660.00 DEB

5 101-01-03-01688 Borje, M. 360323 5/2/01 24,990.00 DEB

6 101-01-06-10012 Borje, M. 380120 6/7/01 10,675.00 DEB

7 101-01-06-10397 Borje, M. 381059 6/28/01 8,580.00 DEB

8 101-01-06-10400 Borje, M. 381306 7/4/01 19,200.00 DEB

9 101-01-06-11050 Borje, M. 381326 7/4/01 22,580.00 DEB

10 101-01-07-12059 Borje, M. 381664 7/10/01 11,080.00 DEB

11 101-01-07-13 313 Borje, M. 382465 7/25/01 6,560.00 DEB

Evidence II.
 12 101-01-07-13307 Borje, M. 382469 7/25/01 10,930.00 DEB

13 101-01-08-14639 Borje, M. 383426 8/14/01 3,750.00 DEB

14 101-01-08-15040 Borje, M. 383732 8/20/01 5,000.00 DEB

15 101-01-09-16371 Borje, M. 384492 9/4/01 7,060.00 DEB

16 101-01-11-22707 Valdez, C. 385615 12/3/01 24,450.00 GK&J

17 101-01-12-25096 Borje, M. 390386 12/21/01 8,160.00 DEB

18 102-01-02-01206 Borje, M. 1265854 2/26/01 24,556.00 DEB

19 102-01-02-12137 Borje, M[.] 1265847 2/28/01 22,050.00 DEB

20 102-0l-01-00632 Borje, M. 1200464 2/15/01 23,120.00 DEB

21 102-01-01-00631 Borje, M. 1200468 2/15/01 21,900.00 DEB

22 102-01-02-12126 Borje, M. 1266081 3/12/01 24,640.00 DEB

23 102-01-02-12128 Borje, M. 1266083 3/12/01 19,800.00 DEB

24 102-01-02-12113 Borje, M. 1266086 3/12/01 13,800.00 DEB

25 102-01-02-121-- Borje, M. 1266093 3/12/01 24,900.00 DEB

26 102-01-03-01681 Borje, M. 1266218 3/20/01 20,450.00 DEB

27 102-01-03-02010 MARTINEZ, J. 1266301 3/23/01 10,900.00 DEB

28 102-01-03-02014 MARTINEZ, J. 1266304 3/23/01 16,580.00 DEB

29 102-01-07-05562 Borje, M. 1358964 7/17/01 9,100.00 DEB

30 102-01-08-08145 Borje, M. 1474242 9/10/01 18,190.00 DEB

31 102-01-09-08960 Borje, M. 1474974 9/26/01 22,400.00 DEB

32 102-01-09-0896 l Borje, M. 1474991 9/26/01 19,600.00 DEB

33 102-01-09-09718 Borje, M. 1475050 9/28/01 1,500.00 DEB

34 102-01-09-09719 Borje, M. 1475058 9/28/01 6,540.00 DEB

35 102-01-10-107 60 Borje, M. 1585982 10/23/01 5,680.00 DEB

36 102-01-11-11926 Valdez, C. 1586876 11/9/01 25,000.00 GK&J

37 102-01-11-12011 Valdez, C. 1587204 11/22/01 24,760.00 GK&J

38 102-01-11-12018 Valdez, C. 1587223 11/22/01 24,350.00 GK&J

39 102-01-12-13538 Valdez, C. 1587844 12/7/01 23,950.00 GK&J

40 102-01-12-13966 Valdez, C. 288164 12/20/01 24,400.00 GK&J

41 102-01-12-13969 Valdez, C. 288165 12/20/01 24,990.00 GK&J

42 102-01-12-14542 Valdez, C. 288307 12/21/01 24,500.00 GK&J

Evidence II.
 43 102-01-12---- Valdez, C. 288320 12/21/01 25,000.00 GK&J

44 102-01-12-13666 Borje, M. 288519 12/21/01 10,520.00 DEB

TOTAL 768,561.00

2) Nissan Pathfinder with Plate No. PND-918 purportedly underwent 27 emergency repairs and reimbursements for
21 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-11-21783 Umali, N 385035 11/22/01 24,340.00 J-Cap

2 101-01-11-21790 Umali, N 385039 11/22/01 25,000.00 J-Cap

3 101-01-11-21786 Umali, N 385064 11/22/01 24,850.00 J-Cap

4 101-01-12-25448 Umali, N 390299 12/21/01 24,600.00 J-Cap

5 102-01-05-03626 Fernandez, D. 1267343 5/17/01 11,600.00 DEB

6 102-01-02-00742 MARTNEZ, J. 1267567 5/24/01 24,196.00 J-Cap

7 102-01-03-02308 MARTINEZ, J. 1267570 5/24/01 24,850.00 J-Cap

8 102-01-02-007 41 MARTINEZ, J. 1267576 5/24/01 23,582.00 J-Cap

9 102-01-03-02301 MARTINEZ, J. 1267578 5/24/01 24,500.00 J-Cap

10 102-01-03-02293 MARTINEZ, J. 1267581 5/24/01 21,550.00 J-Cap

11 102-01-03-02306 MARTINEZ, J. 1267582 5/24/01 19,150.00 J-Cap

12 102-01-03-02294 MARTINEZ, J. 1267585 5/24/01 23,650.00 J-Cap

13 102-01-06-05416 MARTINEZ, J. 1358474 7/3/01 24,800.00 J-Cap

14 102-01-06-05411 MARTINEZ, J. 1358493 7/3/01 24,900.00 J-Cap

15 102-01-07-06395 MARTINEZ, J. 1359260 7/31/01 24,800.00 J-Cap

16 102-01-08-07648 MARTINEZ, J. 1360500 8/28/01 13,760.00 DEB

17 102-01-08-07651 MARTINEZ, J. 1473651 8/28/01 20,650.00 DEB

18 102-01-08-07650 MARTINEZ, J. 1473653 8/28/01 13,230.00 DEB

19 102-01-09-08291 MARTINEZ, J. 1473958 9/4/01 24,800.00 J-Cap

20 102-01-08-08089 MARTINEZ, J. 1473965 9/4/01 24,900.00 J-Cap

21 102-01-09-08671 MARTINEZ, J. 1474370 9/13/01 25,000.00 J-Cap

22 102-01-09-08680 MARTINEZ, J. 1474381 9/13/01 25,000.00 J-Cap

23 102-01-10-11322 MARTINEZ, J. 1586723 11/5/01 24,000.00 J-Cap

24 102-01-11-12122 MARTINEZ, J. 1587500 11/27/01 23,120.00 DEB

Evidence II.
 25 102-01-12-14437 MARTINEZ, J. 288358 12/21/01 24,800.00 J-Cap

26 101-01-12-25446 Umali, N. 340192 03/12/02 24,150.00 J-Cap

27 101-01-12-24449 Umali, N. 340218 03/12/02 24,700.00 J-Cap

GRAND TOTAL 614,478.00

3) Nissan Pick-Up with Plate No. PLH-256 purportedly underwent 30 emergency repairs and reimbursements for 20
of them were made in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-00-12-3122 l P. Badere 1199738 01/12/01 1,640.00 DEB

2 102-01-01-00218 P. Badere 1200449 02/15/01 1,500.00 DEB

3 102-01-02-01198 P. Badere 1265963 03/07/01 22,240.00 DEB

4 102-01-03-01663 P. Badere 1266207 03/19/01 24,980.00 DEB

5 102-01-03-02011 P. Badere 1266302 03/23/01 24,215.00 DEB

6 102-00-11- P. Badere 333203 04/19/01 1,350.00 DEB

354201

7 102-01-05-03683 P. Badere 1267320 05/17/01 9,200.00 DEB

8 102-01-05-03901 M. Borje 1267548 05/24/01 3,960.00 DEB

9 102-01-03-02299 J. MARTINEZ 1267571 05/24/01 23,100.00 J-CAP

10 102-01-03-02290 J. MARTINEZ 1267583 05/24/01 21,450.00 J-CAP

11 102-01-07-06388 J. MARTINEZ 1359433 08/02/01 24,800.00 J-CAP

12 102-01-07-06547 J. MARTINEZ 1359440 08/02/01 22,450.00 J-CAP

13 102-01-09-08731 J. MARTINEZ 1474365 09/12/01 8,730.00 DEB

14 102-01-10-11169 M. Borje 1586453 10/29/01 14,650.00 DEB

15 102-01-10-11301 J. MARTINEZ 1586662 11/05/01 23,200.00 J-CAP

16 102-01-10-11305 J. MARTINEZ 1586728 11/05/01 24,800.00 J-CAP

17 102-01-11-12134 J. MARTINEZ 1587271 11/22/01 4,070.00 DEB

18 102-01-11-12101 P. Badere 1587272 11/22/01 16,190.00 DEB

19 102-01-11-12129 J. MARTINEZ 1587286 11/22/01 3,500.00 DEB

20 102-01-11-12124 J. MARTINEZ 1587332 11/22/01 2,400.00 DEB

21 102-01-11-13366 J. MARTINEZ 1588063 12/01/01 23,650.00 J-CAP

22 102-01-12-13690 J. MARTINEZ 288197 12/20/01 24,800.00 DEB

Evidence II.
 23 102-01-12-13687 J. MARTINEZ 288207 12/20/01 19,160.00 DEB

24 102-01-12-13686 J. MARTINEZ 288208 12/20/01 24,980.00 DEB

25 102-01-12-13689 J. MARTINEZ 288210 12/20/01 13,055.00 DEB

26 102-01-11-13376 J. MARTINEZ 288578 12/21/01 24,550.00 J-CAP

27 102-01-12-14781 J. MARTINEZ 288763 12/21/01 24,900.00 DEB

28 102-01-11-12829 J. MARTINEZ 1588348 12/21/01 24,990.00 DEB

29 102-01-11-12826 J. MARTINEZ 1588354 12/21/01 24,800.00 DEB

30 102-01-12-14887 J. MARTINEZ 333459 02/11/02 24,300.00 DEB

TOTAL 507,610.00

4) Nissan Pick-Up with Plate No. PMY-110 purportedly underwent 24 emergency repairs and reimbursements for 18
of them were made in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16313 S. Florencio 384672 09/06/01 2,500.00 DEB

2 101-01-09-16314 S. Florencio 384680 09/06/01 13,760.00 DEB

3 101-01-11-22595 L. Velasquez 385366 11/27/01 24,580.00 RCF

MOTOR

4 102-00-12-16212 S. Florencio 1199784 01/16/01 11,498.00 DEB

5 102-01-03-02292 J. MARTINEZ 1267574 05/24/01 22,540.00 J-CAP

6 102-01-03-02305 J. MARTINEZ 1267579 05/24/01 21,850.00 J-CAP

7 102-01-06-05419 J. MARTINEZ 1358473 07/03/01 23,140.00 J-CAP

8 102-01-06-05413 J. MARTINEZ 1358485 07/03/01 23,550.00 J-CAP

9 102-01-07-063 89 J. MARTINEZ 1359556 08/07/01 24,800.00 J-CAP

10 102-01-08-07 521 L. Velasquez 1359981 08/15/01 24,880.00 NEMAN

11 102-01-08-08157 L. Velasquez 473752 08/30/01 24,500.00 NEMAN

12 102-01-09-08301 J. MARTINEZ 1473944 09/04/01 16,640.00 J-CAP

13 102-01-09-08293 J. MARTINEZ 1473950 09/04/01 23,550.00 J-CAP

14 102-01-09-08296 J. MARTINEZ 1473953 09/04/01 23,140.00 J-CAP

15 102-01-09-08672 J. MARTINEZ 1474388 09/13/01 15,200.00 J-CAP

16 102-01-09-08688 J. MARTINEZ 1474391 09/13/01 25,000.00 J-CAP

17 102-01-10-10112 L. Velasquez 1475424 10/04/01 24,860.00 RCF

MOTOR

Evidence II.
 18 102-01-10-11304 J. MARTINEZ 1586713 11/05/01 23,670.00 J-CAP

19 102-01-10-11303 J. MARTINEZ 1586722 11/05/01 25,000.00 J-CAP

20 102-01-11-13375 J. MARTINEZ 1588074 12/11/01 22,150.00 J-CAP

21 102-01-11-13361 J. MARTINEZ 1588209 12/13/01 24,400.00 J-CAP

22 102-01-12-14436 J. MARTINEZ 288357 12/21/01 23,140.00 J-CAP

23 102-01-12-14438 J. MARTINEZ 288359 12/21/01 23,550.00 J-CAP

24 102-01-12-14426 J. MARTINEZ 288362 12/21/01 16,640.00 J-CAP

TOTAL 504,538.00

5) Toyota Land Cruiser (Jeep) with Plate No. CEJ-591 purportedly underwent 23 emergency repairs and
reimbursements- for all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-03-01666 MARTINEZ J. 1266209 03/19/01 15,400.00 DEB

2 102-00-10-12400 MARTINEZ J. 333235 04/19/01 4,900.00 DEB

3 102-01-03-02295 MARTINEZ J. 1267573 05/24/01 23,600.00 J-CAP

4 102-01-03-02296 MARTINEZ J. 1267580 05/24/01 24,400.00 J-CAP

5 102-01-06-05421 MARTINEZ J. 1358484 07/03/01 24,550.00 J-CAP

6 102-01-06-05410 MARTINEZ J. 1358494 07/03/01 19,450.00 J-CAP

7 102-01-07-06383 MARTINEZ J. 1359435 08/02/01 22,500.00 J-CAP

8 102-01-09-08290 MARTINEZ J. 1473942 09/04/01 24,540.00 J-CAP

9 102-01-08-08090 MARTINEZ J. 1473959 09/04/01 19,450.00 J-CAP

10 102-01-09-08696 MARTINEZ J. 1474386 09/13/01 23,900.00 J-CAP

11 102-01-09-08689 MARTINEZ J. 1474390 09/13/01 24,700.00 J-CAP

12 102-01-09-09694 MARTINEZ J. 1475066 09/28/01 21,470.00 DEB

13 102-01-10-10234 MARTINEZ J. 1475490 10/08/01 24,000.00 DEB

14 102-01-10-11165 MARTINEZ J. 1586481 10/29/01 10,100.00 DEB

15 102-01-10-11319 MARTINEZ J. 1586719 11/05/01 24,900.00 J-CAP

16 102-01-10-11312 MARTINEZ J. 1586725 11/05/01 25,000.00 J-CAP

17 102-01-11-12131 MARTINEZ J. 1587276 11/22/01 5,180.00 DEB

18 102-01-11-12116 MARTINEZ J. 1587285 11/22/01 18,300.00 DEB

Evidence II.
 19 102-01-11-12121 MARTINEZ J. 1587457 11/27/01 20,520.00 DEB

20 102-01-11-12125 MARTINEZ J. 1587565 11/28/01 24,720.00 DEB

21 102-01-11-13367 MARTINEZ J. 1588061 12/11/01 22,550.00 J-CAP

22 102-01-11-13369 MARTINEZ J. 1588206 12/13/01 24,150.00 J-CAP

23 102-01-12-14431 MARTINEZ J. 288097 12/19/01 23,940.00 J-CAP

TOTAL 472,220.00

6) Toyota Land Cmiser with Plate No. TNY-416 purportedly underwent 22 emergency repairs and reimbursements
for 18 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-07-12433 J. MARTINEZ 381850 07/13/01 11,290.00 DEB

2 102-00-12-15398 M. Borje 1199744 01/12/01 10,750.00 DEB

3 102-00-12-15401 M. Borje 1199747 01/12/01 13,990.00 DEB

4 102-01-01-00225 J. MARTINEZ 1200038 02/01/01 21,900.00 DEB

5 102-01-01-00230 J. MARTINEZ 1200039 02/01/01 24,350.00 DEB

6 102-01-01-00228 J. MARTINEZ 1200041 02/01/01 24,990.00 DEB

7 102-01-01-00226 J. MARTINEZ 1200043 02/01/01 24,660.00 DEB

8 102-01-01-00227 J. MARTINEZ 1200050 02/01/01 22,050.00 DEB

9 102-01-01-00231 J. MARTINEZ 1200055 02/01/01 24,556.00 DEB

10 102-01-01-00229 J. MARTINEZ 1200069 02/01/01 24,640.00 DEB

11 102-01-01-00642 J. MARTINEZ 1200447 02/15/01 24,900.00 DEB

12 102-01-01-00641 J. MARTINEZ 1200462 02/15/01 22,050.00 DEB

13 102-01-02-01208 M. Borje 1265851 02/28/01 14,700.00 DEB

14 102-01-02-01197 J. MARTINEZ 1265962 03/07/01 19,800.00 DEB

15 102-01-02-01207 M. Borje 1265971 03/07/01 19,000.00 DEB

16 102-01-03-01664 J. MARTINEZ 1266206 03/19/01 20,450.00 DEB

17 102-01-03-02017 J. MARTINEZ 1266300 03/23/01 8,750.00 DEB

18 102-01-03-02012 J. MARTINEZ 1266303 03/23/01 17,860.00 DEB

19 102-01-03-02016 J. MARTINEZ 1266306 03/23/01 15,220.00 DEB

20 102-01-10-1023 J. MARTINEZ 1475476 10/08/01 2,780.00 DEB

Evidence II.
 21 102-01-11-12119 J. MARTINEZ 1587267 11/22/01 21,550.00 DEB

22 102-01-10-09930 J. MARTINEZ 1587324 11/22/01 20,070.00 DEB

TOTAL 410,306.00

7) Toyota Land Cruiser with Plate No. CEJ-514 purportedly underwent 19 emergency repairs and reimbursements
for 15 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-00-12-33114 M. Borje 338105 04/26/01 24,800.00 DEB

2 102-00-12-15418 J. MARTINEZ 1199745 01/12/01 9,400.00 DEB

3 102-00-12-15397 J. MARTINEZ 1199743 01/12/01 13,600.00 DEB

4 102-00-12-15396 J. MARTINEZ 1199732 11/12/01 13,600.00 DEB

5 102-01-02-01211 M. Borje 1265862 02/28/01 20,740.00 DEB

6 101-01-02-01203 M. Borje 1265900 03/02/01 19,070.00 DEB

7 102-01-04-01670 M. Borje 1266744 04/16/01 22,250.00 DEB

8 102-00-10-12399 J. MARTINEZ 333236 04/19/01 13,400.00 DEB

9 102-08-06-05409 J. MARTINEZ 1358475 07 /03/01 24,250.00 J-CAP

10 102-01-06-05422 J. MARTINEZ 1358477 07 /03/01 24,900.00 J-CAP

11 102-01-07-06382 J. MARTINEZ 1359557 08/07/01 24,800.

J-CAP
[00]

12 102-01-09-08299 J. MARTINEZ 1473941 09/04/01 24,900.00 J-CAP

13 102-01-09-08298 J. MARTINEZ 1473955 09/04/01 24,250.00 J-CAP

14 102-01-09-08673 J. MARTINEZ 1474372 09/13/01 24,720.00 J-CAP

15 102-01-09-09255 J. MARTINEZ 1474773 09/24/01 25,000.00 J-CAP

16 102-01-10-09927 J. MARTINEZ 1587323 11/22/01 12,850.00 DEB

17 102-00-12-31216 J. MARTINEZ 1199746 12/10/01 22,980.00 DEB

18 102-01-12-14432 J. MARTINEZ 288098 12/19/01 24,900.00 DEB

19 102-01-12-14440 J. MARTINEZ 288360 12/21/01 24,250.00 DEB

TOTAL 394,660.00

8) Mitsubishi Pajero with Plate No. TKL-106 purportedly underwent 17 emergency repairs and reimbursements for
15 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

Evidence II.
 VOUCHER NO. NO. DATE AMOUNT

1 102-00-12-31218 Santos M. 1199739 01/12/01 3,960.00 DEB

2 102-00-12-15612 Santos M. 1199750 01/12/01 10,190.00 DEB

3 102-01-03-02015 MARTINEZ J. 1266305 03/23/01 23,640.00 DEB

4 102-01-03-02302 MARTINEZ J. 1267566 05/24/01 22,700.00 J-CAP

5 102-01-03-02304 MARTINEZ J. 1267575 05/24/01 22,840.00 J-CAP

6 102-01-06-05423 MARTINEZ J. 1358478 07/03/01 25,000.00 J-CAP

7 102-01-06-05406 MARTINEZ J. 1358492 07/03/01 22,440.00 J-CAP

8 102-01-07-06384 MARTINEZ J. 1359261 07/31/01 24,600.00 J-CAP

9 102-01-09-08300 MARTINEZ J. 1473943 09/04/01 25,000.00 J-CAP

10 102-01-08-08093 MARTINEZ J. 1473964 09/24/01 22,640.00 J-CAP

11 102-01-09-08675 MARTINEZ J. 1474387 09/13/01 25,000.00 J-CAP

12 102-01-09-08685 MARTINEZ J. 1474389 09/13/01 25,000.00 J-CAP

13 102-01-10-11313 MARTINEZ J. 1586721 11/05/01 24,990.00 J-CAP

14 102-01-10-11321 MARTINEZ J. 1586724 11/05/01 24,140.00 J-CAP

15 102-01-11-13363 MARTINEZ J. 1588059 12/11/01 24,700.00 J-CAP

16 102-01-11-13358 MARTINEZ J. 1588073 12/11/01 24,350.00 J-CAP

17 102-01-12-14434 MARTINEZ J. 288356 12/21/0[1] 24,900.00 J-CAP

TOTAL 376,090.00

9) Nissan Pick-Up with Plate No. PMB-631 I HI-4148 purportedly underwent 17 emergency repairs and
reimbursements for 16 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-02-01199 Badere P. 1265856 02/28/01 8,350.00 DEB

2 102-01-03-02303 MARTINEZ J. 1267565 05/24/01 24,750.00 J-CAP

3 102-01-03-02291 MARTINEZ J. 1267568 05/24/01 21,900.00 J-CAP

4 102-01-02-00743 MARTINEZ J. 1267572 05/24/01 24,701.00 J-CAP

5 102-01-06-05408 MARTINEZ J. 1358481 07/03/01 21,800.00 J-CAP

6 102-01-06-05417 MARTINEZ J. 1358496 07/03/01 13,050.00 J-CAP

7 102-01-07-06364 MARTINEZ J. 1359262 07/31/01 24,900.00 J-CAP

Evidence II.
 8 102-01-09-08297 MARTINEZ J. 1473954 09/04/01 21,800.00 J-CAP

9 102-01-08-08094 MARTINEZ J. 1473966 09/04/01 13,050.00 J-CAP

10 102-01-09-08773 MARTINEZ J. 1474366 09/21/01 7,980.00 DEB

11 102-01-09-0867 MARTINEZ J. 1475377 09/13/01 23,500.00 J-CAP

12 102-01-09-08669 MARTINEZ J. 1474380 09/13/01 23,500.00 J-CAP

13 102-01-10-11315 MARTINEZ J. 1586664 11/05/01 23,800.00 J-CAP

14 102-01-10-113 11 MARTINEZ J. 1586666 11/05/01 23,640.00 J-CAP

15 102-01-11-13371 MARTINEZ J. 1588060 12/11/01 24,000.00 J-CAP

16 102-01-11-13359 MARTINEZ J. 1588075 12/11/01 24,750.00 J-CAP

17 102-01-12-14427 MARTINEZ J. 288111 12/19/01 21,800.00 J-CAP

TOTAL 347,271.00

10) Mitsubishi L-200 with Plate No. SFG-496 purportedly underwent 19 emergency repairs and reimbursements for
10 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-07-12432 Jimenez R. 381999 07/16/01 4,800.00 DEB

2 102-00-12-15395 MARTINEZ J. 1199734 1/12/01 3,600.00 DEB

3 102-00-05-03682 Jimenez R. 1267319 05/17/01 11,000.00 DEB

4 102-01-01-00221 Jimenez R. 1358245 06/27/01 3,900.00 DEB

5 102-01-01-00220 Jimenez R. 1358251 06/27/01 3,800.00 DEB

6 102-01-06-05401 MARTINEZ J. 1358495 07/13/01 23,700.00 J-CAP

7 102-01-08-08092 MARTINEZ J. 1473962 09/04/01 23,700.00 J-CAP

8 102-01-09-08732 Jimenez R. 1474358 09/12/01 2,658.00 DEB

9 102-01-09-08678 MARTINEZ J. 1474373 09/13/01 24,900.00 J-CAP

10 102-01-09-08681 MARTINEZ J. 1474382 09/13/01 24,200.00 J-CAP

11 102-01-10-11308 MARTINEZ J. 1586720 11/05/01 24,290.00 J-CAP

12 102-01-10-11318 MARTINEZ J. 1586726 11/05/01 17,970.00 J-CAP

13 102-01-11-12814 Jimenez R. 1587539 11/28/01 4,440.00 DEB

14 102-01-11-13379 MARTINEZ J. 1588208 12/13/01 14,850.00 J-CAP

15 102-01-11-12827 MARTINEZ J. 1588352 12/21/01 15,220.00 DEB

Evidence II.
 16 102-01-12-13683 Jimenez R. 288206 12/20/01 22,420.00 DEB

17 102-01-11-13364 MARTINEZ J. 288572 12/21/01 20,670.00 J-CAP

18 102-01-12-14785 MARTINEZ J. 288762 12/21/01 17,860.00 DEB

19 102-01-14888 Jimenez R. 333422 02/11/02 4,980.00 DEB

TOTAL 268,958.00

11) Mitsubishi L-200 with Plate No. SFC-309 purportedly underwent 15 emergency repairs and reimbursement for 1
of them is in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-06-10943 MARTINEZ J. 380910 06/25/01 3,536.00 DEB

2 101-01-07-11697 Valdez C. 381495 07/06/01 15,220.00 DEB

3 101-01-08-14147 Borje M., Jr. 383032 08/07/01 18,750.00 DEB

4 101-01-09-17042 Borje M., Jr. 386245 09/18/01 5,000.00 DEB

5 101-01-10-19568 Valdez C. 387810 10/18/01 14,260.00 DEB

6 101-01-10-20056 Valdez C. 387872 10/19/01 17,860.00 DEB

7 102-01-03-01897 Valdez C. 1266161 03/16/01 20,130.00 GK & J

8 102-01-07-05571 Borje M., Jr. 1358970 07/17/01 15,460.00 DEB

9 102-01-08-08153 Borje M., Jr. 1474247 09/10/01 14,950.00 DEB

10 102-01-09-09703 Borje M., Jr. 1475061 09/28/01 9,980.00 DEB

11 102-01-10-10903 Planta D. 1476031 10/18/01 24,680.00 GK & J

12 102-01-10-10908 Planta D. 1476109 10/22/01 24,400.00 GK & J

13 102-01-10-11519 Valdez C. 1586497 10/29/01 24,600.00 GK & J

14 102-01-11-12013 Valdez C. 1587052 11/15/01 24,700.00 GK & J

15 102-01-11-11953 Valdez C. 1587795 12/06/01 25,000.00 GK & J

TOTAL 258,526.00

12) Nissan Pathfinder with Plate No. PND-908 / HI-4J21 purportedly underwent 11 emergency repairs and all
reimbursements were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

Evidence II.
 1 102-01-03-02300 MARTINEZ J. 1267569 05/24/01 21,650.00 J-CAP

2 102-01-03-02298 MARTINEZ J. 1267586 05/24/01 18,400.00 J-CAP

3 102-01-06-05414 MARTINEZ J. 1358476 07/03/01 23,400.00 J-CAP

4 102-01-07-06391 MARTINEZ J. 1359563 08/07/01 24,400.00 J-CAP

5 102-01-09-09261 MARTINEZ J. 1474765 09/24/01 24,900.00 J-CAP

6 102-01-09-09260 MARTINEZ J. 1474776 09/24/01 20,950.00 J-CAP

7 102-01-10-113 16 MARTINEZ J. 1586665 11/05/01 21,150.00 J-CAP

8 102-01-10-11300 MARTINEZ J. 1586716 11/05/01 24,250.00 J-CAP

9 102-01-11-13365 MARTINEZ J. 1588064 12/11/01 24,900.00 J-CAP

10 102-01-11-13360 MARTINEZ J. 1588070 12/11/01 24,700.00 J-CAP

11 102-01-11-13357 MARTINEZ J. 1588207 12/13/01 24,200.00 J-CAP

TOTAL 252,900.00

13) Nissan Pick Up with Plate No. PME-676 purportedly underwent 17 emergency repairs and reimbursements for 7
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16316 384501 09/04/01 22,530.00 DEB

2 101-01-09-16317 384504 09/04/01 19,410.00 DEB

3 101-01-09-16366 384514 09/04/01 20,340.00 DEB

4 102-00-09-11707 333240 04/19/01 24,180.00 DEB

5 102-01-05-03622 1267342 05/17/01 4,800.00 DEB

6 102-01-03-01659 1358081 06/21/01 3,900.00 DEB

7 102-01-03-01661 1358248 06/27/01 4,910.00 DEB

8 102-01-03-01660 1358256 06/27/01 4,500.00 DEB

9 102-01-08-07645 1473655 08/28/01 23,900.00 DEB

10 102-01-09-08735 1474368 09/12/01 9,600.00 DEB

11 102-01-10-09936 1475801 10/12/01 20,200.00 DEB

12 102-01-10-09935 1475841 10/12/01 4,310.00 DEB

13 102-01-10-09937 1475797 10/12/01 22,680.00 DEB

14 102-01-11-12103 1587282 11/22/01 16,400.00 DEB

Evidence II.
 15 102-01-11-12114 1587289 11/22/01 5,110.00 DEB

16 102-01-11-12104 1587540 11/28/01 17,290.00 DEB

17 102-01-11-12123 1587564 11/28/01 17,480.00 DEB

TOTAL 241,540.00

14) Toyota Land Cruiser with Plate No. SFT-208 purportedly underwent 11 emergency repairs and reimbursements
for all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-06-05402 MARTINEZ J. 1358488 07/03/01 22,190.00 J-CAP

2 102-01-07-06385 MARTINEZ J. 1359564 08/07/01 22,600.00 J-CAP

3 102-01-08-08091 MARTINEZ J. 1473956 09/04/01 24,590.00 J-CAP

4 102-01-09-08684 MARTINEZ J. 1474375 09/13/01 15,780.00 J-CAP

5 102-01-09-08687 MARTINEZ J. 1474384 09/13/01 25,000.00 J-CAP

6 102-01-10-09933 MARTINEZ J. 1475799 10/12/01 20,850.00 DEB

7 102-01-10-09942 MARTINEZ J. 1475831 10/12/01 1,800.00 DEB

8 102-01-10-11314 MARTINEZ J. 1586718 11/23/01 14,790.00 J-CAP

9 102-01-10-11320 MARTINEZ J. 1586717 11/05/01 14,470.00 J-CAP

10 102-01-11-13368 MARTINEZ J. 1588062 12/11/01 24,500.00 J-CAP

11 102-01-11-13372 MARTINEZ J. 1588076 12/11/01 21,150.00 J-CAP

TOTAL 207,720.00

15) Toyota Land Cruiser with Plate No. SFT-308 / HI-4398 purportedly underwent 10 emergency repairs and
reimbursements for all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-06-05400 MARTINEZ J. 1358490 07/03/01 24,540.00 J-CAP

2 102-01-07-06363 MARTINEZ J. 1359264 07/31/01 16,700.00 J-CAP

3 102-01-09-09257 MARTINEZ J. 1474767 09/24/01 20,900.00 J-CAP

4 102-01-09-09259 MARTINEZ J. 1474777 09/24/01 24,700.00 J-CAP

5 102-01-10-11309 MARTINEZ J. 1586661 11/05/01 17,900.00 J-CAP

Evidence II.
 6 102-01-10-09929 MARTINEZ J. 1586615 11/05/01 2,770.00 DEB

7 102-01-10-11307 MARTINEZ J. 1586727 11/05/01 18,670.00 DEB

8 102-01-11-13381 MARTINEZ J. 1588201 12/13/01 20,770.00 J-CAP

9 102-01-11-13377 MARTINEZ J. 1588210 12/13/01 21,500.00 J-CAP

10 102-01-12-14439 MARTINEZ J. 288361 12/21/01 24,550.00 J-CAP

TOTAL 193,000.00

16) Mitsubishi L-200 with Plate No. SFG-417 purportedly underwent 12 emergency repairs and reimbursements for
8 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-08-15628 T. Bauzon 384132 08/28/01 3,200.00 DEB

2 101-01-08-16112 T. Bauzon 384357 08/31/01 2,550.00 DEB

3 102-01-05-03620 T. Bauzon 1267380 05/18/01 9,700.00 DEB

4 102-01-03-01667 T. Bauzon 1358250 06/27/01 24,970.00 DEB

5 102-01-06-05407 MARTINEZ J. 1358482 07/03/01 19,470.00 J-CAP

6 102-01-08-07485 MARTINEZ J. 1360025 08/16/01 22,150.00 J-CAP

7 102-01-08-07654 MARTINEZ J. 1360496 08/28/01 11,510.00 DEB

8 102-01-09-08306 MARTINEZ J. 1473948 09/04/01 19,470.00 J-CAP

9 102-01-09-08668 MARTINEZ J. 1471376 09/13/01 25,000.00 J-CAP

10 102-01-09-08683 MARTINEZ J. 1474383 09/13/01 24,720.00 J-CAP

11 102-01-10-09926 MARTINEZ J. 1586616 11/05/01 5,090.00 DEB

12 102-01-12-14428 MARTINEZ J. 288113 12/19/01 19,470.00 DEB

TOTAL 187,300.00

17) Mitsubishi L-200 with Plate No. SED-999 purportedly underwent 6 emergency repairs and reimbursements for
all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12589 MARTINEZ J. 1587189 11/22/01 24,800.00 J-CAP

2 102-01-11-12590 MARTINEZ J. 1587191 11/22/01 24,750.00 J-CAP

Evidence II.
 3 102-01-11-13092 MARTINEZ J. 1588205 12/13/01 24,920.00 J-CAP

4 102-01-11-13374 MARTINEZ J. 288095 12/19/01 24,000.00 J-CAP

5 102-01-12-14044 MARTINEZ J. 288112 12/19/01 25,000.00 J-CAP

6 102-01-12-14043 MARTINEZ J. 288116 12/19/01 24,900.00 J-CAP

TOTAL 148,370.00

18) Mitsubishi L-200 with Plate No. SFG-361 / H1-4237 purportedly underwent 6 emergency repairs and
reimbursements for all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12591 MARTINEZ J. 1587190 11/22/01 24,750.00 J-CAP

2 102-01-11-12491 MARTINEZ J. 1587192 11/22/01 24,800.00 J-CAP

3 102-01-12-14046 MARTINEZ J. 288094 12/19/01 25,000.00 J-CAP

4 102-01-12-14045 MARTINEZ J. 288099 12/19/01 24,900.00 J-CAP

5 102-01-11-13373 MARTINEZ J. 288110 12/19/01 24,000.00 J-CAP

6 102-01-11-13093 MARTINEZ J. 288115 12/19/01 24,920.00 J-CAP

TOTAL 148,370.00

19) Mitsubishi L-200 with Plate No. SFG-346 purportedly underwent 20 emergency repairs and reimbursements for
15 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16363 Fernandez D. 384500 09/04/01 6,400.00 DEB

2 102-01-01-00224 Fernandez D. 1200445 02/15/01 3,000.00 DEB

3 102-01-01-00223 Fernandez D. 1200469 02/15/01 1,900.00 DEB

4 102-01-03-01658 Fernandez D. 1358249 06/27/01 6,200.00 DEB

5 102-01-08-07 646 MARTINEZ J. 1473654 08/28/01 14,300.00 DEB

6 102-01-08-07 644 MARTINEZ J. 1360499 08/28/01 13,590.00 DEB

7 102-01-09-08734 MARTINEZ J. 1474364 09/12/01 7,030.00 DEB

8 102-01-10-10233 MARTINEZ J. 1475482 10/08/01 17,600.00 DEB

9 102-01-10-09928 MARTINEZ J. 1475795 10/12/01 2,180.00 DEB

Evidence II.
 10 102-01-10-09938 MARTINEZ J. 1475798 10/12/01 1,795.00 DEB

11 102-01-10-09939 MARTINEZ J. 1475840 04/19/01 2,200.00 DEB

12 102-01-10-09932 MARTINEZ J. 1475833 10/12/01 3,070.00 DEB

13 102-01-10-09934 MARTINEZ J. 1475842 10/12/01 8,470.00 DEB

14 102-01-10-09943 MARTINEZ J. 1475854 12/12/01 2,470.00 DEB

15 102-01-10-09941 MARTINEZ J. 1475843 10/12/01 2,180.00 DEB

16 102-01-10-11167 Borje M. Jr. 1586473 10/29/01 19,200.00 DEB

17 102-01-10-12120 MARTINEZ J. 1587275 11/22/01 2,900.00 DEB

18 102-01-11-12133 MARTINEZ J. 1587284 11/22/01 3,100.00 DEB

19 102-01-11-12128 MARTINEZ J. 1587288 11/22/01 10,400.00 DEB

20 102-01- MARTINEZ J. 288766 12/21/01 5,700.00 DEB

TOTAL 133,685.00

20) Toyota Land Cruiser with Plate No. SFT-304 purportedly underwent 5 emergency repairs and reimbursements
for all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-06-05405 MARTINEZ J. 1358491 07/02/01 16,640.00 J-CAP

2 102-01-07-06387 MARTINEZ J. 1359422 08/02/01 23,200.00 J-CAP

3 102-01-09-08303 MARTINEZ J. 1473946 09/04/01 23,550.00 J-CAP

4 102-01-09-08304 MARTINEZ J. 1473947 09/04/01 24,550.00 J-CAP

5 102-01-12-14433 MARTINEZ J. 288092 12/19/01 23,550.00 J-CAP

TOTAL 111,490.00

21) Mitsubishi L-200 with Plate No. SFG-455/H1-4231 purportedly underwent 8 emergency repairs and
reimbursements for 2 of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-05-10279 Borje M., Jr. 360465 05/07/01 15,220.00 DEB

2 101-01-05-07902 Borje M., Jr. 360475 05/07/01 17,860.00 DEB

3 101-01-09-17910 Borje M., Jr. 387150 10/08/01 3,845.00 DEB

Evidence II.
 4 101-01-11-22977 Borje M., Jr. 385585 12/03/01 10,540.00 DEB

5 102-01-10-11183 Borje M., Jr. 1586475 10/29/01 18,300.00 DEB

6 102-01-11-12137 MARTINEZ J. 1587277 11/22/01 6,600.00 DEB

7 102-01-11-12117 MARTINEZ J. 1587292 11/22/01 11,200.00 DEB

8 102-01-12-25614 Borje M., Jr. 338738 03/12/02 5,365.00 DEB

TOTAL 88,930.00

22) Mitsubishi L-200 with Plate No. SFG-292 purportedly underwent 4 emergency repairs and reimbursements for
all of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-06-05398 MARTINEZ J. 1358483 07/03/01 21,220.00 J-CAP

2 102-01-07-06392 MARTINEZ J. 13599272 07/31/01 20,400.00 J-CAP

3 102-01-09-08682 MARTINEZ J. 1474379 09/13/01 15,580.00 J-CAP

4 102-01-09-08677 MARTINEZ J. 1474385 09/13/01 24,800.00 J-CAP

GRAND TOTAL 82,000.00

23) Mitsubishi L-200 with Plate No. SFG-465 purportedly underwent 6 emergency repairs and reimbursements for
one of them was in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-02-00313 de Vera T. 357469 02/13/01 9,800.00 DEB

2 102-00-12-15647 de Vera T. 333186 04/19/01 3,380.00 DEB

3 102-01-08-07510 Borje M. 1360110 08/16/01 15,900.00 J-CAP

4 102-01-10-10164 Planta D. 1475581 10/09/01 14,650.00 GK&J

5 102-01-10-09940 MARTINEZ J. 1475796 10/12/01 1,800.00 DEB

6 102-01-10-09940 de Vera T. 333407 02/11/02 25,000.00 DEB

TOTAL 70,530.00

24) Mitsubishi L-300 with Plate No. SFT-272 purportedly underwent 3 emergency repairs and reimbursements for all
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

Evidence II.
 VOUCHER NO. NO. DATE AMOUNT

1 102-01-12-13688 MARTINEZ J. 288209 12/20/01 24,900.00 DEB

2 102-01-11-12825 MARTINEZ J. 1588353 12/21/01 17,860.00 DEB

3 102-01-11-12824 MARTINEZ J. 1588350 12/21/01 15,220.00 DEB

TOTAL 57,980.00

25) Mitsubishi L-200 with Plate No. SFT-282 purportedly underwent 3 emergency repairs and reimbursements for all
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-12-13692 MARTINEZ J. 288211 12/20/01 24,900.00 DEB

2 102-01-11-12828 MARTINEZ J. 1588355 12/21/01 17,860.00 DEB

3 102-01-12-14862 MARTINEZ J. 333494 02/21/01 15,220.00 DEB

TOTAL 57,980.00

26) Toyota Corolla with Plate No. TEG-822 purportedly underwent 2 emergency repairs and reimbursements for
both were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-03-02297 MARTINEZ J. 1267577 05/24/01 21,810.00 JCAP

2 102-01-03-02307 MARTINEZ J. 1267584 05/24/01 21,250 00 JCAP

TOTAL 43,060.00

27) Mitsubishi L-200 with Plate No. SFG-527 purportedly underwent 5 emergency repairs and reimbursements for 4
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16652 MARTINEZ J. 384632 09/06/01 7,170.00 DEB

2 102-01-05-03627 Borje M. 1267341 05/17/01 2,700.00 DEB

3 102-01-08-07643 MARTINEZ J. 1360495 08/28/01 13,440.00 DEB

4 102-01-11-12118 MARTINEZ J. 1587266 11/22/01 8,200.00 DEB

Evidence II.
 5 102-01-11-12132 MARTINEZ J. 1587294 11/22/01 9,300.00 DEB

TOTAL 40,810.00

28) Mitsubishi L-200 with Plate No. SFK-735 purportedly underwent 4 emergency repairs and reimbursements for 3
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-02-01204 Borje M. 1265858 02/28/01 5,880.00 DEB

2 102-00-11-3542 MARTINEZ J. 333201 04/19/01 1,900.00 DEB

3 102-00-11-35422 MARTINEZ J. 333204 04/19/01 23,000.00 DEB

4 102-01-05-03887 MARTINEZ J. 1267553 05/24/01 3,970.00 DEB

TOTAL 34,750.00

29) Mitsubishi L-200 with Plate No. SFT-715 purportedly underwent 2 emergency repairs and reimbursements for
both of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12821 MARTINEZ J. 1588358 12/21/01 17,800.00 DEB

2 102-01-11-12820 MARTINEZ J. 1588359 12/21/01 15,220.00 DEB

TOTAL 33,020.00

30) Mitsubishi L-200 with Plate No. SED-732 purportedly underwent 3 emergency repairs and reimbursements for
one of them was in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12821 Borje M. 383728 08/20/01 3,800.00 DEB

2 102-01-11-12820 Borje M. 386327 09/19/01 7,490.00 DEB

3 102-01-11-12822 MARTINEZ J. 1588357 12/21/01 15,220.00 DEB

TOTAL 26,510.00

31) Nissan Pick-Up with Plate No. PME-687 purportedly underwent 3 emergency repairs and reimbursements for 2
of them were in the name of accused Martinez, to wit:

Evidence II.
 DISBURSEMENT PAYEE CHECK SUPPLIER
VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16655 MARTINEZ J. 384636 09/26/01 3,980.00 DEB

2 102-00-11-35411 Fernandez D. 333234 04/19/01 3,820.00 DEB

3 102-01-08-07653 MARTINEZ J. 1360497 08/28/01 15,220.00 DEB

TOTAL 23,020.00

32) Mitsubishi L-200 with Plate No. SFT-732 purportedly underwent 1 emergency repair and reimbursement was in
the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-12-14784 MARTINEZ J. 288761 12/21/01 17,860.00 DEB

33) Mitsubishi L-200 with Plate No. SFG-485 purportedly underwent 3 emergency repairs and reimbursements for 2
of them were in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-09-08765 Borje M. Jr. 1474430 09/13/01 6,300.00 DEB

2 102-01-11-12136 MARTINEZ J. 1587268 11/22/01 1,600.00 DEB

3 102-01-11-12135 MARTINEZ J. 1587270 11/22/01 9,870.00 DEB

TOTAL 17,770.00

34) Mitsubishi L-200 with Plate No. SFG-407 purportedly underwent 1 emergency repair and reimbursement was in
the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12115 MARTINEZ J. 1587290 11/22/01 17,400.00 DEB

35) Toyota Prado with Plate No. SFG-402 purportedly underwent 1 emergency repair and reimbursement was in the
name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

Evidence II.
 VOUCHER NO. NO. DATE AMOUNT

1 102-01-03-02018 MARTINEZ J. 1266307 03/23/01 4,900.00 DEB

36) Mitsubishi L-200 with Plate No. SFD-732 purportedly underwent 1 emergency repair and reimbursement was in
the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-05-03886 MARTINEZ J. 1267559 05/24/01 4,200.00 DEB

37) Mitsubishi L-200 with Plate No. SFG-369 purportedly underwent 1 emergency repair and reimbursement was in
the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-05-04005 MARTINEZ J. 1267739 06/01/01 4,188.00 DEB

38) Toyota Land Cruiser with Plate No. SFD-302 purportedly underwent 1 emergency repair and reimbursement
was in the name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 102-01-11-12831 MARTINEZ J. 1588333 12/20/01 3,480.00 DEB

39) Toyota Prado with Plate No. SFT-207 purportedly underwent 1 emergency repair and reimbursement was in the
name of accused Martinez, to wit:

DISBURSEMENT PAYEE CHECK SUPPLIER

VOUCHER NO.
NO. DATE AMOUNT

1 101-01-09-16656 MARTINEZ J. 384637 09/06/01 3,400.00 DEB

Of the 39 vehicles aforementioned, only the Mitsubishi L-200 with Plate No. SFG-361/H1-4237 was assigned to
accused Martinez. The others were assigned to other agencies or officials of the DPWH.

To support the issuance of the Disbursement Vouchers (DVs) and checks for the reimbursements of the amounts
claimed and paid by the DPWH, the following documents were submitted: Job Orders; Pre-Repair Inspection
Reports; Requisitions for Supplies and Equipment (RSEs); Accreditation Papers; Sales Invoices or Official Receipt;
Certificates of Acceptance; Post-Repair Inspection Reports; Reports of Waste Materials; Requests for Obligation of

Evidence II.
Allotment (ROAs); Certificates of Emergency Purchase; Certificates of Fair Wear and Tear; Canvas from 3 suppliers
and Price Monitoring Sheets.  (Citations omitted.)
4

On May 16, 2005,  petitioner, together with his co-accused, was Arraigned in Criminal Case No. 28100 in an
5

Information that reads, as follows:

That during the period from March to December, 2001, or sometime prior or subsequent thereto, in the City of
Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named high-ranking public
officials and employees of the Department of Public Works and Highways (DPWH), Port Area, Manila, namely:
JULIO T. MARTINEZ, then the Clerk/Supply Officer, BURT FAVORITO y BARBA, Director III, Administrative and
Manpower Management Services (SG 27), FLORENDO ARIAS y BUNAG, Assistant Director, Bureau of
[Equipment (SG 27), VIOLETA AMAR y CASTILLO, NAPOLEON ANAS y SEBASTIAN, ROGELIO BERAY y
LAGANGA, MAXIMO BORJE y AQUINO, ROLANDO CASTILLO y COMIA, JESSICA CATIBAYAN y JARDIEL, MA.
LUISA CRUZ y TALAO, RICARDO JUAN, JR. y MACLANG, AGERICO PALAYPAY y CORTES, ERDITO QUARTO
y QUIAOT, FELIPE A. SAN JOSE, RONALDO G. SIMBAHAN, VIOLETA TADEO y RAGASA, NORMA
VILLARMINO y AGCAOILI and JOHN DOES, whose true names are not yet known, acting with unfaithfulness and
abuse of confidence, committing the offense in relation to their office, and taking advantage of their official positions,
and private individuals, namely: JESUS D. CAPUZ and CONCHITA M. DELA CRUZ and JOHN DOES, whose true
names are not yet known, conspiring, confederating and mutually helping one another, with intent to defraud the
government, did then and there, willfully[,] unlawfully and feloniously forge and falsify or cause to be forged and
falsified documents, purportedly for emergency repairs of various DPWH vehicles and/or purchase of spare parts,
with a total amount of SIX MILLION THREE HUNDRED SIXTY-EIGHT THOUSAND THREE HUNDRED SIXTY-
FOUR PESOS (₱6,368,364.00), and thereafter, cause the payment of said fictitious repairs and/or purchase of
spare parts in the said total amount from funds held in trust and for administration by the said public officers, and
which payments were made by the government on the basis of and relying on said forged and falsified documents,
when in truth and in fact, the accused knew fully well that there were no emergency repairs of DPWH
vehicles and/or purchases of spare parts, which said amount, accused, thereafter, willfully, unlawfully and criminally
take, convert and misappropriate, to the personal use and benefit of person(s) not entitled to receive said funds, to
the damage and prejudice of the government and the public interest in the aforesaid sum.

CONTRARY TO LAW. 6

While in Criminal Case No. 28253, petitioner was arraigned on July 20, 2005,  under an Information that states the
7

following:

That during the period from March to December, 2001, or sometime prior or subsequent thereto, in the City of
Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named high-ranking public officials
and employees of the Department of Public Works and Highways (DPWH), Port Area, Manila, namely: JULIO T.
MARTINEZ, then the Clerk/Supply Officer, BURT FAVORITO y BARBA, Director III, Administrative and Manpower
Management Services (SG 27), FLORENDO ARIAS y BUNAG, Assistant Director, Bureau of [E]quipment (SG 27),
VIOLETA AMAR y CASTILLO, NAPOLEON ANAS y SEBASTIAN, ROGELIO BERAY y LAGANGA, MAXIMO
BORJE y AQUINO, ROLANDO CASTILLO y COMIA, JESSICA CATIBAYAN y JARDIEL, MA. LUISA CRUZ y
TALAO, RICARDO JUAN, JR. y MACLANG, AGERICO PALAYPAY y CORTES, ERDITO QUARTO y QUIAOT,
FELIPE A. SAN JOSE, RONALDO G. SIMBAHAN, VIOLETA TADEO y RAGASA, NORMA VILLARMINO y
AGCAOILI, and JOHN DOES, whose true names are not yet known, committing the offense in relation to their
office, and taking advantage of their official positions, and private individuals, namely: JESUS D. CAPUZ and
CONCHITA M. DELA CRUZ and JOHN DOES, whose true names are not yet known, conspiring, confederating and
mutually helping one another, acting with evident bad faith, manifest partiality or at the very least gross inexcusable
negligence, did then and there, willfully, unlawfully and feloniously forge and falsify or cause to be forged and
falsified documents purportedly for emergency repairs of various DPWH vehicles and/or purchase of spare parts,
with a total amount of SIX MILLION THREE HUNDRED SIXTY EIGHT THOUSAND THREE HUNDRED SIXTY
FOUR PESOS (₱6,368,364.00), and which payments were made by the government on the basis of and relying on
said forged and falsified documents, when in truth and in fact, as the accused fully well knew, that there were no
emergency repairs of DPWH vehicles and/or purchases of spare parts, and these are ghost repairs in the total
amount of SIX MILLION THREE HUNDRED SIXTY EIGHT THOUSAND THREE HUNDRED SIXTY FOUR PESOS
(P6,368,364.00), thereby causing undue injury to the government in the aforesaid sum.

Evidence II.
CONTRARY TO LAW. 8

The Sandiganbayan, on November 10, 2016, promulgated its Decision,  the dispositive portion of which reads, as
9

follows:

WHEREFORE, premises considered, judgment is hereby rendered, as follows:

1) In Criminal Case No. 28100, the Court finds accused Florendo Arias y Bunag, Maximo Borje y Aquino, Rolando
Castillo y Comia, Burt Favorito y Barba, Erdito Quarto y Quiaot, Felipe A. San Jose and Conchita M. dela Cruz guilty
beyond reasonable doubt of Estafa Through Falsification Of Documents, defined and penalized under Article
315, in relation to Article 171 and Article 48, of the Revised Penal Code, as charged in the Information dated
March 1, 2005. Pursuant to the Indeterminate Sentence Law, all said accused are hereby sentenced to suffer
imprisonment often (10) years and one (1) day of prision mayor, as minimum, to twenty (20) years of reclusion
temporal, as maximum, with perpetual absolute disqualification for public office. The aforementioned accused are
also hereby declared solidarity liable to pay the Department of Public Works and Highways civil indemnity in the
sum of ₱5,166,539.00.

For insufficiency of evidence, the following accused are hereby acquitted: Napoleon Anas y Sebastian, Rogelio
Beray y Laganga, Jessica Catibayan y Jardial, Maria Luisa Cruz y Talao, Ricardo Juan, Jr. y Maclang, Ronaldo G.
Simbahan, Violeta Tadeo y Tagasa and Norma Villarmino y Agcaoili.

By reason of their death, the case is dismissed as against accused Julio T. Martinez, Violeta Amar y Castillo,
Agerico Palaypay y Cortez and Jesus N. Capuz by reason of their death.

-and-

2) In Criminal Case No. 28253, the Court finds accused Florendo Arias y Bunag, Maximo Borje y Aquino, Rolando
Castillo y Comia, Burt Favorito y Barba, Erdito Quarto y Quiaot, Felipe A. San Jose and Conchita dela Cruz guilty
beyond reasonable doubt of Violation of Section 3(e) of Republic Act No. 3019, as amended, as charged in
the Information dated June 8, 2005. All said accused are hereby sentenced to suffer imprisonment of six (6) years
and one (1) month, as minimum, to ten (10) years, as maximum. They shall also suffer perpetual disqualification
from public office.

For insufficiency of evidence, the following accused are hereby acquitted: Napoleon Anas y Sebastian, Rogelio
Boray y Laganga, Jessica Catibayan y Jardiel, Maria Luisa Cruz y Talao, Ricardo Juan, Jr. y Maclang, Ronaldo G.
Simbahan, Violeta Tadeo y Ragasa and Norma Villarmino y Agcaoili.

By reason of their death, the case is dismissed as against Julio T. Martinez, Violeta Amar y Castillo, Agerico
Palaypay y Cortez and Jesus N. Capuz.

SO ORDERED.  (Emphases in the original.)

10

On November 24, 2016, petitioner filed a Motion for Reconsideration,  contending, among others, that the
11

testimonies of the prosecution witnesses were self-serving. He argued that the findings of fact made by the
Sandiganbayan were not proven during the trial and that its ruling was based mainly on conjectures and surmises.
Petitioner maintained that in signing documents, he performed only ministerial functions and that he relied on the
tasks performed by his subordinates which were done in a regular manner.

In its Resolution  dated January 15, 2018, the Sandiganbayan denied the motions for reconsideration filed by some
12

of the accused, including that of the petitioner. The court stood by its earlier findings that the prosecution was able
to prove beyond reasonable doubt the guilt of the petitioner and his other co-accused. The dispositive portion of the
said Resolution reads as follows:

WHEREFORE, premises considered, the Court resolves to deny the following:

1) Motion for Reconsideration dated November 22, 2016, filed by accused Maximo A. Borje, Jr., through counsel;
Evidence II.
2) Motion for Reconsideration dated November 24, 2016, filed by accused Florendo B. Aries (sic), through counsel;

3) Motion for Reconsideration (Of The Decision Dated November 10, 2016) dated November 24, 2016, filed by
accused Conchita M. dela Cruz, through counsel;

and

4) Motion for Reconsideration dated November 18, 2016, filed by accused Burt B. Favorito, through counsel. 13

Hence, the present petition.

Petitioner raised the following issues for our consideration:

WITH ALL DUE RESPECT, THE HONORABLE SANDIGANBAYAN, FOURTH DIVISION, HAS COMMITTED A
REVERSIBLE ERROR WHEN IT FOUND PETITIONER-APPELLANT FLORENDO B. ARIAS GUILTY BEYOND
REASONABLE DOUBT OF THE CRIME OF ESTAFA AND VIOLATION OF SECTION 3(E) OF R.A. 3019,
CONTRARY TO THE FACTUAL CIRCUMSTANCES OF THE CASE.

II

WITH ALL DUE RESPECT, THE HONORABLE SANDIGANBAYAN, FOURTH DIVISION, COMMITTED A
REVERSIBLE ERROR WHEN IT GAVE DUE COURSE TO THE PROSECUTION'S EXHIBITS DESPITE FAILURE
TO PRESENT THE ORIGINAL DOCUMENTS ALLEGED TO HAVE BEEN FALSIFIED. 14

The petition lacks merit.

All the elements of the crime of Estafa through Falsification of Official/Commercial Documents were established by
the prosecution beyond reasonable doubt.

Article 315, paragraph 2 (a) of the Revised Penal Code (RPC) reads, as follows:

Article 315. Swindling (Estafa). - Any person who shall defraud another by any of the means mentioned hereinbelow
x x x:

xxxx

2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the
commission of the fraud:

xxxx

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit,
agency, business or imaginary transactions, or by means of other similar deceits.

The elements of the above crime are the following:

1. That there must be a false pretense, fraudulent act or fraudulent means;

2. That such false pretense, fraudulent act or fraudulent means must be made or executed prior to or
simultaneously with the commission of the fraud;

Evidence II.
3. That the offended party must have relied on the false pretense, fraudulent act, or fraudulent means, that is, he
was induced to part with his money or property because of the false pretense, fraudulent act or fraudulent means;
and

4. That as a result thereof, the offended party suffered damage.

Article 171, paragraph 4 of the RPC provides that:

Article 171. x x x. - The penalty of prision mayor and a fine not to exceed 5,000 pesos shall be imposed upon any
public officer, employee, or notary who, taking advantage of his official position, shall falsify a document by
committing any of the following acts:

xxxx

4. Making untruthful statements in a narration of facts[.]

In this case, certain funding requirements were set forth by the Department of Public Works and Highways (DPWH)
for the payment of claims for emergency repairs of DPWH service vehicles, thus:

D. FUNDING REQUIREMENTS

1. Documentation - No claim for payment for the emergency minor/major repair of service vehicles of this
Department shall be processed by the Accounting Division, CFMS without strictly following provisions of COA
Circular No. 92-389 dated November 03, 1992. The following documentary requirements shall be complied with
prior to funding and/or processing of payment, to wit:

1.1 Request for Obligation of Allotment (ROA) for said claim which shall be signed by the concerned
Undersecretary, Assistant Secretary, Bureau Directors, Project Director/Manager, Service Chief, or the duly
designated representative of the office of the end-user;

1.2 Certification of Emergency Purchase/Repair which shall be signed by the end-user, duly approved by the Head
of Office concerned (with the rank higher than Division Chief)[;]

1.3 Abstract of Open Canvass and corresponding written quotations for the purchase of spare parts and repair of
vehicles duly signed by the Supply Officer, Canvasser, and supplier concerned[;]

1.4 The Requisition for Supplies or Equipment (RSE) which shall be prepared and signed by the end-user,
recommended for approval and duly approved by the official concerned, in accordance with the existing delegation
of authorities;

1.5 The Motor Vehicle Pre-repair/Post-repair Inspection Report which shall indicate the Control Series No. and the
date of inspection, duly signed by all the members of the Special Inspectorate Team (SIT);

1.6 The Certificate of Acceptance which shall be signed by the end-user of said vehicle. All documents, under
accounting and auditing rules and regulations, shall be signed by the official and/or supplier concerned over their
respective printed names. 15

Based on the evidence presented by the prosecution, it was proven that except for the Cash Invoices issued by the
suppliers, the documents required under the DPWH Memorandum,  dated July 31, 1997, were prepared,
16

accomplished and signed by all the public officials concerned, taking advantage of their official positions in making
untruthful statements in the narration of facts. The said documents were made to appear that the 39 service vehicles
underwent emergency repairs or required purchase of spare parts. In addition, in order to claim payment from
DPWH, the Disbursement Vouchers were also falsified to justify the release of checks.

Evidence II.
Thus, as aptly ruled by the Sandiganbayan, all the elements of the crime of Estafa through Falsification of
Official/Commercial Documents are present because the petitioner and his co-accused utilized false pretense,
fraudulent act or fraudulent means to make it appear that the DPWH service vehicles underwent emergency repairs
or required the purchase of spare parts, and that reimbursements are due to petitioner by using falsified documents.
Through those falsified documents, petitioner and his co-accused employed fraudulent means in order to defraud
the government in paying the claims for the fictitious emergency repairs/purchases of spare parts. Therefore, the
government suffered undue injury or damages in the amount of ₱5,166,539.00 through such fraudulent act.

As held by the Sandiganbayan:

The Court finds, and so holds, that all the aforementioned documents submitted were falsified. Except for the Cash
Invoices issued by the suppliers, the documents were prepared, accomplished and/or executed and signed by
public officers/employees taking advantage of their official positions in making untruthful statements in the
narration of facts. Through these documents, it was made to appear, albeit untrue, that the 39 vehicles
subject of reimbursements claimed and paid to accused Martinez in the total sum of ₱5,166,539.00
underwent emergency repairs that required purchases of spare parts. The Disbursement Vouchers were also
falsified to justify the release of checks for payment of the reimbursements claimed. The Cash Invoices
issued by the suppliers were also falsified because they pertain to fictitious or non-existent purchases of
spare parts. As earlier stated, these falsified documents were all utilized in sinister schemes to steal government
funds.

The evidence on record shows that the falsified documents were accomplished and signed or initialed by the
accused, as follows:

xxxx

The aforementioned falsified documents, as well as the Cash Invoices issued by suppliers DEB and JCAP, were all
utilized to defraud the government in a manner constituting Estafa under Article 315, paragraph 2(a) of the RPC. All
the elements thereof were present, to wit:

First. There were false pretenses, fraudulent acts or fraudulent means in that it was made to appear, through the
use of the falsified documents, that the DPWH service vehicles in question underwent emergency repairs that
required purchases of spare parts, and that reimbursements were due to accused Martinez;

Second. The false pretenses, fraudulent acts or fraudulent means, in the form of falsification of documents, were
employed prior to the commission of the fraud; that is to deceive the government in paying the claims for the
fictitious emergency repairs/purchases of spare parts;

Third. The government was induced to pay the claims relying on the false pretenses, fraudulent acts or fraudulent
means employed;

- and-

Fourth. The government suffered damages in the total amount of ₱5,166,539.00, the sum total of the false claims
paid.

The crime committed was the complex crime of Estafa Through Falsification of Documents, as charged in the
Information dated March 1, 2005.

When the offender commits on a public, official or commercial document any of the acts of falsification enumerated
in Article 171 of the RPC as a necessary means to commit another crime like Estafa under Article 315 of the RPC,
the two crimes form a complex crime under Article 48 of the same law. A complex crime, as earlier defined, may
refer to a single act which constitutes two or more grave or less grave felonies or to an offense as a necessary
means for committing another.

Evidence II.
In a complex crime of Estafa Through Falsification of Public, Official or Commercial Document, the falsified
document is actually utilized to defraud another. The falsification is already consummated and it is the defraudation
which causes damage or prejudice to another that constitutes estafa.

xxxx

After a careful and meticulous scrutiny of the records, the Court finds, and so holds, that the prosecution evidence
proved beyond reasonable doubt that the following accused are guilty of the offense charged, namely: Arias, Borja,
Castillo, Favorito, Quarto, San Jose and Dela Cruz. These accused conspired with one another, and with accused
Martinez whose criminal liability has been extinguished by death.

Accused Arias, an OIC Asst. Director of the Bureau of Equipment, affixed his signature approving and/or
recommending approval of the falsified Disbursement Vouchers, Reports of Waste Materials, Requisitions for
Supplies and/or Equipment (RSE) and Certificates of Emergency Purchase. 17

In Tanenggee v. People,  this Court discussed the complex crime of estafa through falsification of public
18

documents, thus:

When the offender commits on a public, official or commercial document any of the acts of falsification enumerated
in Article 171 as a necessary means to commit another crime like estafa, theft or malversation, the two crimes form
a complex crime. Under Article 48 of the RPC, there are two classes of a complex crime. A complex crime may refer
to a single act which constitutes two or more grave or less grave felonies or to an offense as a necessary means for
committing another. 19

In Domingo v. People,  we held:

20

The falsification of a public, official, or commercial document may be a means of committing estafa, because before
the falsified document is actually utilized to defraud another, the crime of falsification has already been
consummated, damage or intent to cause damage not being an element of the crime of falsification of public,
official, or commercial document. In other words, the crime of falsification has already existed. Actually utilizing that
falsified public, official, or commercial document to defraud another is estafa. But the damage is caused by the
commission of estafa, not by the falsification of the document. Therefore, the falsification of the public, official, or
commercial document is only a necessary means to commit estafa.

In general, the elements of estafa are: (1) that the accused defrauded another (a) by abuse of confidence or (b) by
means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party
or third person. Deceit is the false representation of a matter of fact, whether by words or conduct, by false or
misleading allegations, or by concealment of that which should have been disclosed; and which deceives or is
intended to deceive another so that he shall act upon it, to his legal injury.  (Citation omitted.)
21

It must be emphasized that the falsified documents (Disbursement Vouchers, Reports of Waste Materials,
Requisition for Supplies and/or Equipment and Certificates of Emergency Purchase) involved in this case are official
or public documents. Public documents are: (a) the written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines or of a foreign
country; (b) documents acknowledged before a notary public except last wills and testaments; and (c) public
records, kept in the Philippines, of private documents required by law to be entered therein.  A public document, by
22

virtue of its official or sovereign character, or because it has been acknowledged before a notary public (except a
notarial will) or a competent public official with the formalities required by law, or because it is a public record of a
private writing authorized by law, is self-authenticating and requires no further authentication in order to be
presented as evidence in court.  In considering whether the accused is liable for the complex crime of estafa
23

through falsification of public documents, it would be wrong to consider the component crimes separately from each
other.  While there may be two component crimes (estafa and falsification of public documents), both felonies are
24

animated by and result from one and the same criminal intent for which there is only one criminal liability.  That is
25

the concept of a complex crime.  In other words, while there are two crimes, they are treated only as one, subject to
26

a single criminal liability.  While a conviction for estafa through falsification of public documents requires that the
27

elements of both estafa and falsification exist, it does not mean that the criminal liability for estafa may be
determined and considered independently of that for falsification.  The two crimes of estafa and falsification of public
28

Evidence II.
documents are not separate crimes but component crimes of the single complex crime of estafa and falsification of
public documents.  In this case, the prosecution was able to prove the elements of the crime.
29

Petitioner further seeks a review of the testimonies of the prosecution witnesses for allegedly being "self-serving"
and "perjured."

Findings of the trial court on the credibility of witnesses and their testimonies are generally accorded great respect
by an appellate court. Well-settled is the rule that findings of facts and assessment of credibility of witnesses are
matters best left to the trial court because of its unique position of having observed that elusive and incommunicable
evidence of the witnesses' deportment on the stand while testifying, which opportunity is denied to the appellate
courts. For this reason, the trial court's findings are accorded finality, unless there appears in the record some fact
or circumstance of weight which the lower court may have overlooked, misunderstood or misappreciated and which,
if properly considered, would alter the results of the case.
30

At any rate, the records of this case show no reversible error to warrant a reversal of the assailed decision. It
appears that petitioner did not impugn his signatures appearing in the Disbursement Vouchers, Reports of Waste
Materials, Requisitions for Supplies and/or Equipment and Certificates of Emergency Purchase. Furthermore,
the repeated issuance and execution of these documents belies petitioner's claim that his participation was not
necessary and that his function in signing documents is merely ministerial; on the contrary, these documents were
necessary for the claims for payment of emergency repairs of DPWH service vehicles and/or purchases of spare
parts which were found to be fictitious. Thus, petitioner's signatures on these documents were a clear manifestation
of his assent and participation or complicity to the illegal transactions, and his assertion of lack of participation is
without merit.

With regard to petitioner's contention as to the Best Evidence Rule, or, more specifically, to the Sandiganbayan's
admission on the prosecution's exhibits despite the non-presentation of the original documents, such is
misplaced. Instructive on this point is the case of Citibank, N.A. v. Sabeniano,  wherein this Court stated that:
31

As the afore-quoted provision states, the best evidence rule applies only when the subject of the inquiry is the
contents of the document. The scope of the rule is more extensively explained thus -

But even with respect to documentary evidence, the best evidence rule applies only when the content of such
document is the subject of the inquiry. Where the issue is only as to whether such document was actually executed,
or exists, or on the circumstances relevant to or surrounding its execution, the best evidence rule does not apply
and testimonial evidence is admissible. Any other substitutionary evidence is likewise admissible without need for
accounting for the original.

Thus, when a document is presented to prove its existence or condition it is offered not as documentary, but as real,
evidence. Parol evidence of the fact of execution of the documents is allowed.

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

It is true that the Court relied not upon the original but only [a] copy of the Angara Diary as published in the
Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court, did not, however, violate the best evidence
rule. Wigmore, in his book on evidence, states that:

"Production of the original may be dispensed with, in the trial court's discretion, whenever in the case in
hand the opponent does not bona fide dispute the contents of the document and no other useful purpose
will be served by requiring production.

"xxx xxx xxx

"In several Canadian provinces, the principle of unavailability has been abandoned, for certain documents in which
ordinarily no real dispute arised. This measure is a sensible and progressive one and deserves universal adoption.
Its essential feature is that a copy may be used unconditionally, if the opponent has been given an
opportunity to inspect it." x x x
Evidence II.
This Court did not violate the best evidence rule when it considered and weighed in evidence the photocopies and
microfilm copies of the PNs, MCs, and letters submitted by the petitioners to establish the existence of respondent's
loans. The terms or contents of these documents were never the point of contention in the Petition at bar. It was
respondent's position that the PNs in the first set (with the exception of PN No. 34534) never existed, while the PNs
in the second set (again, excluding PN No. 34534) were merely executed to cover simulated loan transactions. As
for the MCs representing the proceeds of the loans, the respondent either denied receipt of certain MCs or admitted
receipt of the other MCs but for another purpose. Respondent further admitted the letters she wrote personally or
through her representatives to Mr. Tan of petitioner Citibank acknowledging the loans, except that she claimed that
these letters were just meant to keep up the ruse of the simulated loans. Thus, respondent questioned the
documents as to their existence or execution, or when the former is admitted, as to the purpose for which the
documents were executed, matters which are, undoubtedly, external to the documents, and which had nothing to do
with the contents thereof.  (Citations omitted.)
32

Here, petitioner's objection to the prosecution's documentary evidence, as stated in his

Comment/Objections to Formal Offer of Exhibits,  essentially relates to the materiality, relevance or
33

purpose for which the documents were offered which had nothing to do with the contents thereof.

As to petitioner's guilt for violation of Section 3(e) of R.A. No. 3019, such has been established beyond reasonable
doubt.

Section 3(e) of R.A. No. 3019 reads, as follows:

Section 3. Corrupt practices of public officers. - In addition to acts or omissions of public officers already penalized
by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be
unlawful:

xxxx

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official[,] administrative or judicial functions through
manifest partiality, evident bad faith or gross inexcusable negligence.

The elements of the above violation are:

(1) the offender is a public officer;

(2) the act was done in the discharge of the public officer's official, administrative or judicial functions;

(3) the act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and

(4) the public officer caused any undue injury to any party, including the Government, or gave any unwarranted
benefits, advantage or preference. 34

All the above elements are present in this case. The petitioner is a public officer, being then the Assistant Director of
the Bureau of Equipment of DPWH, discharging administrative and official functions. Petitioner and his co-accused
acted with evident bad faith by falsifying official documents to defraud the DPWH into paying the claims for fictitious
emergency repairs or purchase of spare parts under the name of Julio Martinez. The act of petitioner caused undue
injury or damage to the government in the total amount of ₱5,166,539.00.

Petitioner acted with evident bad faith when he affixed his signature to the falsified documents in order to induce the
government to pay the claim for fictitious emergency repairs and purchases of spare parts of certain vehicles. Bad
faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity
and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the
nature of fraud.35

Evidence II.
In view, however, of R.A. No. 10951 (An Act Adjusting the Amount or the Value of Property and Damage on which a
Penalty is Based, and the Fines Imposed under the Revised Penal Code, amending for the Purpose Act No. 3815,
otherwise known as "The Revised Penal Code"), a modification must be made as to the penalty imposed by the
Sandiganbayan. Section 85 of the said law provides the following:

SEC. 85. Article 315 of the same Act, as amended by Republic Act No. 4885, Presidential Decree No. 1689, and
Presidential Decree No. 818, is hereby further amended to read as follows:

"ART. 315. Swindling (estafa). - Any person who shall defraud another by any of the means mentioned hereinbelow
shall be punished by:

"1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if
the amount of the fraud is over Two million four hundred thousand pesos (P2,400,000) but does not exceed
Four million four hundred thousand pesos (P4,400,000), and if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each
additional Two million pesos (P2,000,000); but the total penalty which may be imposed shall not exceed
twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for
the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion
temporal as the case may be.

xxxx

"4th. The penalty of prision mayor in its medium period, if such amount is over Forty thousand pesos (P40,000) but
does not exceed One million two hundred thousand pesos (P1,200,000).

"5th. By prision mayor in its minimum period, if such amount does not exceed Forty thousand pesos (P40,000).

"3. Through any of the following fraudulent means:

"(a) By inducing another, by means of deceit, to sign any document.

"(b) By resorting to some fraudulent practice to insure success in a gambling game.

"(c) By removing, concealing or destroying, in whole or in part, any court record, office files, document or any other
papers." (Emphasis ours.)

Applying the above provisions, the maximum term of the penalty that must be imposed should be within the
maximum period of prision correccional maximum to prision mayor minimum, considering that the amount defrauded
is ₱5,166,539.00 and the crime committed is a complex crime under Article 48 of the RPC, where the penalty of the
most serious of the crimes should be imposed which, in this case, is the penalty for Estafa. Hence, applying the
Indeterminate Sentence Law, the minimum term of the penalty should be within the range of the penalty next lower
in degree or prision correccional minimum to prision correccional medium and the maximum term should be taken
from the maximum period of prision mayor minimum. Thus, an indeterminate penalty of four (4) years and two (2)
months of prision correccional medium, as the minimum term, to eight (8) years of prision mayor minimum, as the
maximum term, is appropriate.

WHEREFORE, the petition for review on certiorari dated March 15, 2018 of petitioner Florendo B. Arias
is DENIED for lack of merit. Consequently, the Decision of the Sandiganbayan dated November 10, 2016, in the
consolidated Criminal Case No. 28100 and Criminal Case No. 28253, and its Resolution dated January 15, 2018
are AFFIRMED with the MODIFICATION that in Criminal Case No. 28100 for Estafa through Falsification of
Official/Commercial Documents, petitioner is sentenced to suffer imprisonment of from four (4) years and two (2)
months of prision correccional medium, as minimum, to eight (8) years of prision mayor minimum, as maximum.

Evidence II.
9.) G.R. No. 223274

RCBC BANKARD SERVICES CORPORATION, Petitioner

vs.
MOISES ORACION, JR. AND EMILY  L. ORACION, Respondents
*

DECISION

CAGUIOA, J.:

Before the Court is the petition for review on certiorari  (Petition) under Rule 45 of the Rules of Court (Rules) filed by
1

petitioner RCBC Bankard Services Corporation (petitioner) assailing the Decision  dated August 13, 2013 (RTC
2

Decision) and the Order  dated March 1, 2016 (RTC Order) of the Regional Trial Court, Branch 71, Pasig City (RTC)
3

in Civil Case No. 73756. The RTC Decision affirmed in toto the Decision  dated September 28, 2012 of the
4

Metropolitan Trial Court, Branch 72, Pasig City (MeTC) in Civil Case No. 18629, which dismissed the complaint of
petitioner for lack of preponderance of evidence.  The RTC Order denied petitioner's Motion for Reconsideration.
5 6

The Facts and Antecedent Proceedings

The antecedent facts as gleaned from the MeTC Decision and narrated in the RTC Decision are straightforward.

Respondents Moises Oracion, Jr. (Moises) and Emily L. Oracion (Emily) (collectively, respondents) applied
for and were granted by petitioner credit card accommodations with the issuance of a Bankard PESO
Mastercard Platinum  with Account No. 5243-0205-8171-4007 (credit card) on December 2, 2010.  Respondents
7 8

on various dates used the credit card in purchasing different products but failed to pay petitioner the total
amount of ₱117,157.98, inclusive of charges and penalties or at least the minimum amount due under the credit
card.  Petitioner attached to its complaint against respondents "duplicate original" copies of the Statements
9

of Account from April 17, 2011 to December 15, 2011  (SOAs, Annexes "A", "A-l" to "A-8") and the Credit History
10

Inquiry (Annex "B").  The SOAs bear the name of Moises as the addressee and the Credit History Inquiry bears the
11

name: "MR ORACION JR M A" on the top portion.  Despite the receipt of the SOAs, respondents failed and refused
12

to comply with their obligation to petitioner under the credit card.  Consequently, petitioner sent a written demand
13

letter (dated January 26, 2012, Annex "C" to the complaint ) to respondents but despite receipt thereof, respondents
14

refused to comply with their obligation to petitioner.  Hence, petitioner filed a Complaint for Sum of
15

Money  dated February 7, 2012 before the MeTC.

16 17

Acting on the complaint, the MeTC issued summons on March 13, 2012.  Based on the return of the summons
18

dated April 12, 2012 of Sheriff III Inocentes P. Villasquez, the summons was duly effected to respondents through
substituted service on April 11, 2012.  For failure of respondents to file their answer within the required period, the
19

MeTC motu proprio, pursuant to Section 6 of the Rule on Summary Procedure, considered the case submitted for
resolution. 20

Ruling of the MeTC

The MeTC, without delving into the merits of the case, dismissed it on the ground that petitioner, as the
plaintiff, failed to discharge the required burden of proof in a civil case, which is to establish its case by
preponderance of evidence.  The MeTC justified the dismissal in this wise:
21

Perusal of the records shows that the signature in the attachments in support of the [complaint] are mere
photocopies, stamp mark  in the instant case. The Best Evidence Rule provides that the court shall not receive
22

any evidence that is merely substitutionary in its nature, such as stamp mark, as long as the original evidence can
be had. Absent a clear showing that the original writing has been lost, destroyed or cannot be produced in court; the
photocopies must be disregarded being unworthy of any probative value and being an inadmissible piece of
evidence (PHILIPPINE BANKING CORPORATION, petitioner, vs. COURT OF APPEALS and LEONILO MARCOS,
respondents, G.R. No 127469 2004 Jan 15, 1st Division). 23

Evidence II.
The decretal portion of the MeTC Decision dated September 28, 2012 reads:

WHEREFORE, for lack of [preponderance of evidence, herein [complaint] is hereby DISMISSED.

SO ORDERED. 24

Petitioner filed a Notice of Appeal  dated December 17, 2012 on the ground that the MeTC Decision was contrary to
25

the facts and law. 26

In its Memorandum for Appellant  dated February 19, 2012, petitioner argued that what it attached to the
27

complaint were the "duplicate original copies" and not mere photocopies.  Petitioner also argued that:
28

x x x [if for] unknown reasons or events the said Duplicate Original Copies were no longer found in the record of the
court or that the copy of the Complaint intended for the court, where these Originals were attached, was not
forwarded to the x x x MTC, [petitioner] respectfully submits that justice and equity dictates that the x x x MTC
should have required [petitioner] to produce or reproduce the same instead of immediately dismissing the case on
that ground alone. In which case, a clarificatory hearing for that purpose is proper. This is especially true in the
present case considering that there were allegations in the complaint that the Duplicate Original Copies were
attached as annexes therein; and that the x x x MTC motu proprio submitted the case for decision. Not to mention
the fact that these documents are computer generated reports, in which case, [petitioner] could simply present
another set of printed Duplicate Original Copies for the x x x MTC['s] perusal. 29

Ruling of the RTC

The RTC found petitioner's appeal to be without merit.  It reasoned out that:
30

In the instant case, it is up to [petitioner] to prove that the attachments in support of the complaint are originals and
not merely substitutionary in nature. Only after submission of such original documents can the court delve into the
merit of the case.

[Petitioner's] insistence that it attached Duplicate Original Copies of the [SOAs] and the Credit History Inquiry as
Annexes x x x in its complaint is entirely for naught, as such documents could not be considered as original.

A perusal of the said annexes would show that there is a stamp mark at the bottom right portion of each page of the
said annexes, with the words "DUPLICATE ORIGINAL (signature) CHARITO O. HAM, Senior Manager, Collection
Support Division Head, Collection Group, Bankard Inc."

Further inspection of the said stamp marks would reveal that the signatures appearing at the top of the name
CHARITO O. HAM in the respective annexes are not original signatures but are part of the subject stamp marks.

Indeed, Annexes "A", "A-1" to "A-8" and "B", attached to the complaint, cannot be considered as original documents
contemplated under Section 3, Rule 130 of the x x x Rules of Court. In fact, even [petitioner] found the need to
stamp mark them as "DUPLICATE ORIGINAL" to differentiate them from the original documents.

The Court also noted the fact that [petitioner] filed a MANIFESTATION dated August 9, 2012, attaching therewith as
Annexes "A", "A-1" to "A-8" the Duplicate Original Itemized [SOAs], and as Annex "B" the Credit History Inquiry.
Upon examination of these latter annexes, the Court observed that they are merely photocopies of the annexes
attached to the complaint, but with a mere addition of stamp marks bearing the same inscription as the first stamp
marks. These only demonstrate that whenever [petitioner] describes a document as "DUPLICATE ORIGINAL", it
only refers to a copy of the document and not necessarily the original thereof. Such substitutionary documents could
not be given probative value and are inadmissible pieces of evidence. 31

The dispositive portion of the RTC Decision dated August 13, 2013 reads:

WHEREFORE, premises considered, and finding no cogent reason to disturb the Decision of the [MeTC] dated
September 28, 2012, said DECISION is hereby AFFIRMED IN TOTO.
Evidence II.
SO ORDERED. 32

Petitioner filed a Motion for Reconsideration  dated August 29, 2013, which was denied by the RTC in its
33

Order  dated March 1, 2016.

34

Hence, the instant Rule 45 Petition. The Court in its Resolution  dated June 27, 2016 required respondents to
35

comment on the Petition and directed the Branch Clerk of Court of the RTC to elevate the complete records of Civil
Case No. 73756, which were subsequently received by the Court. In view of the returned and unserved copy of the
Resolution dated June 27, 2016, the Court in its Resolution  dated June 6, 2018 dispensed with respondents'
36

comment.

The Issues

Petitioner raises the following issues:

1. on pure question of law, whether the RTC erred in affirming the MeTC's dismissal of petitioner's complaint in that
pursuant to Section 1, Rule 4 of the Rules on Electronic Evidence (A.M. No. 01-7-01-SC), an electronic document
is to be regarded as an original thereof under the Best Evidence Rule and thus, with the presented evidence
in "original duplicate copies," petitioner has preponderantly proven respondents' unpaid obligation; and

2. in any event, invoking the rule that technicalities must yield to substantial justice, whether petitioner must be
afforded the opportunity to rectify its mistake, offer additional evidence and/or present to the court another set of
direct print-outs of the electronic documents.

The Court's Ruling

On the first issue, petitioner invokes for the first time on appeal the Rules on Electronic Evidence to justify its
position that it has preponderantly proven its claim for unpaid obligation against respondents because it
had attached to its complaint electronic documents. Petitioner argues that since electronic documents,
which are computer-generated, accurately representing information, data, figures and/or other modes of
written expression, creating or extinguishing a right or obligation, when directly printed out are considered
original reproductions of the same, they are admissible under the Best Evidence Rule.  Petitioner explains
37

that since the attachments to its complaint are wholly computer-generated print-outs which it caused to be
reproduced directly from the computer, they qualify as electronic documents which should be regarded as
the equivalent of the original documents pursuant to Section 1, Rule 4 of the Rules on Electronic Evidence. 38

Procedurally, petitioner cannot adopt a new theory in its appeal before the Court and abandon its theory in its
appeal before the RTC. Pursuant to Section 15, Rule 44 of the Rules, petitioner may include in his assignment of
errors any question of law or fact that has been raised in the court below and is within the issues framed by the
parties.

In the Memorandum for Appellant which it filed before the RTC, petitioner did not raise the Rules on Electronic
Evidence to justify that the so-called "duplicate original copies" of the SOAs and Credit History Inquiry are electronic
documents. Rather, it insisted that they were duplicate original copies, being computer-generated reports, and not
mere photocopies or substitutionary evidence, as found by the MeTC. As observed by the RTC, petitioner even tried
to rectify the attachments (annexes) to its complaint, by filing a Manifestation dated August 9, 2012 wherein it
attached copies of the said annexes. Unfortunately, as observed by the RTC, the attachments to the said
Manifestation "are merely photocopies of the annexes attached to the complaint, but with a mere addition of stamp
marks bearing the same inscription as the first stamp marks"  that were placed in the annexes to the
39

complaint. Because petitioner has not raised the electronic document argument before the RTC, it may no longer be
raised nor ruled upon on appeal.

Even in the complaint, petitioner never intimated that it intended the annexes to be considered as electronic
documents as defined in the Rules on Electronic Evidence. If such were petitioner's intention, then it would have laid
down in the complaint the basis for their introduction and admission as electronic documents.

Evidence II.
Also, estoppel bars a party from raising issues, which have not been raised in the proceedings before the lower
courts, for the first time on appeal.  Clearly, petitioner, by its acts and representations, is now estopped to claim that
40

the annexes to its complaint are not duplicate original copies but electronic documents. It is too late in the day for
petitioner to switch theories.

Thus, procedurally, the Court is precluded from resolving the first issue.

Even assuming that the Court brushes aside the above-noted procedural obstacles, the Court cannot just
concede that the pieces of documentary evidence in question are indeed electronic documents, which
according to the Rules on Electronic Evidence are considered functional equivalent of paper-based documents  and 41

regarded as the equivalent of original documents under the Best Evidence Rule if they are print-outs or outputs
readable by sight or other means, shown to reflect the data accurately. 42

For the Court to consider an electronic document as evidence, it must pass the test of admissibility. According to
Section 2, Rule 3 of the Rules on Electronic Evidence, "[a]n electronic document is admissible in evidence if it
complies with the rules on admissibility prescribed by the Rules of Court and related laws and is
authenticated in the manner prescribed by these Rules."

Rule 5 of the Rules on Electronic Evidence lays down the authentication process of electronic documents. Section 1
of Rule 5 imposes upon the party seeking to introduce an electronic document in any legal proceeding the burden of
proving its authenticity in the manner provided therein. Section 2 of Rule 5 sets forth the required proof of
authentication:

SEC. 2. Manner of authentication. - Before any private electronic document offered as authentic is received
in evidence, its authenticity must be proved by any of the following means:

(a) by evidence that it had been digitally signed by the person purported to have signed the same;

(b) by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court
or by law for authentication of electronic documents were applied to the document; or

(c) by other evidence showing its integrity and reliability to the satisfaction of the judge.

As to method of proof, Section 1, Rule 9 of the Rules on Electronic Evidence provides:

SECTION 1. Affidavit of evidence. - All matters relating to the admissibility and evidentiary weight of an
electronic document may be established by an affidavit stating facts of direct personal knowledge of the
affiant or based on authentic records. The affidavit must affirmatively show the competence of the affiant to
testify on the matters contained therein.

Evidently, petitioner could not have complied with the Rules on Electronic Evidence because it failed to
authenticate the supposed electronic documents through the required affidavit of evidence. As earlier
pointed out, what petitioner had in mind at the inception (when it filed the complaint) was to have the annexes
admitted as duplicate originals as the term is understood in relation to paper-based documents. Thus, the annexes
or attachments to the complaint of petitioner are inadmissible as electronic documents, and they cannot be given
any probative value.

Even the section on "Business Records as Exception to the Hearsay Rule" of Rule 8 of the Rules on Electronic
Evidence requires authentication by the custodian or other qualified witness:

SECTION 1. Inapplicability of the hearsay rule. - A memorandum, report, record or data compilation of acts, events,
conditions, opinions, or diagnoses, made by electronic, optical or other similar means at or near the time of or from
transmission or supply of information by a person with knowledge thereof, and kept in the regular course or conduct
of a business activity, and such was the regular practice to make the memorandum, report, record, or data
compilation by electronic, optical or similar means, all of which are shown by the testimony of the custodian or other
qualified witnesses, is excepted from the rule on hearsay evidence.
Evidence II.
In the absence of such authentication through the affidavit of the custodian or other qualified person, the said
annexes or attachments cannot be admitted and appreciated as business records and excepted from the rule on
hearsay evidence. Consequently, the annexes to the complaint fall within the Rule on Hearsay Evidence and are to
be excluded pursuant to Section 36, Rule 130 of the Rules.

In fine, both the MeTC and the RTC correctly applied the Best Evidence Rule. They correctly regarded the annexes
to the complaint as mere photocopies of the SOAs and the Credit History Inquiry, and not necessarily the original
thereof. Being substitutionary documents, they could not be given probative value and are inadmissible based on
the Best Evidence Rule.

The Best Evidence Rule, which requires the presentation of the original document, is unmistakable:

SEC. 3. Original document must be produced; exceptions. - When the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the
offeror;

(b) When the original is in the custody or under the control of the party against whom the evidence is offered, and
the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in court without
great loss of time and the fact sought to be established from them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in a public office. (2a) 43

With respect to paper-based documents, the original of a document, i.e., the original writing, instrument, deed,
paper, inscription, or memorandum, is one the contents of which are the subject of the inquiry.  Under the Rules on
44

Electronic Evidence, an electronic document is regarded as the functional equivalent of an original document under
the Best Evidence Rule if it is a printout or output readable by sight or other means, shown to reflect the data
accurately.  As defined, "electronic document" refers to information or the representation of information, data,
45

figures, symbols or other modes of written expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received,
recorded, transmitted, stored, processed, retrieved or produced electronically; and it includes digitally signed
documents and any print-out or output, readable by sight or other means, which accurately reflects the electronic
data message or electronic document.  The term "electronic document" may be used interchangeably with
46

"electronic data message"  and the latter refers to information generated, sent, received or stored by electronic,
47

optical or similar means. 48

Section 4, Rule 130 of the Rules and Section 2, Rule 4 of the Rules on Electronic Evidence identify the following
instances when copies of a document are equally regarded as originals:

[1] When a document is in two or more copies executed at or about the same time, with identical contents, all such
copies are equally regarded as originals.

[2] When an entry is repeated in the regular course of business, one being copied from another at or near the time
of the transaction, all the entries are likewise equally regarded as originals.49

[3] When a document is in two or more copies executed at or about the same time with identical contents, or is a
counterpart produced by the same impression as the original, or from the same matrix, or by mechanical or
electronic re-recording, or by chemical reproduction, or by other equivalent techniques which accurately reproduces
the original, such copies or duplicates shall be regarded as the equivalent of the original. 50

Apparently, "duplicate original copies" or "multiple original copies" wherein two or more copies are executed at or
about the same time with identical contents are contemplated in 1 and 3 above. If the copy is generated after the

Evidence II.
original is executed, it may be called a "print-out or output" based on the definition of an electronic document, or a
"counterpart" based on Section 2, Rule 4 of the Rules on Electronic Evidence.

It is only when the original document is unavailable that secondary evidence may be allowed pursuant to Section 5,
Rule 130 of the Rules, which provides:

SEC. 5. When original document is unavailable. - When the original document has been lost or destroyed, or cannot
be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without
bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or
by the testimony of witnesses in the order stated. (4a)

Going back to the documents in question, the fact that a stamp with the markings:

DUPLICATE ORIGINAL

(Sgd.)
CHARITO O. HAM
Senior Manager
Collection Support Division Head

Collection group
Bankard Inc.51

was placed at the right bottom of each page of the SOAs and the Credit History Inquiry did not make
them "duplicate original copies" as described above. The necessary allegations to qualify them as "duplicate
original copies" must be stated in the complaint and duly supported by the pertinent affidavit of the qualified
person.

The Court observes that based on the records of the case, only the signature in the stamp at the bottom of the
Credit History Inquiry appears to be original. The signatures of the "certifying" person in the SOAs are not original
but part of the stamp. Thus, even if all the signatures of Charito O. Ham, Senior Manager, Collection Support
Division Head of petitioner's Collection Group are original, the required authentication so that the annexes to the
complaint can be considered as "duplicate original copies" will still be lacking.

If petitioner intended the annexes to the complaint as electronic documents, then the proper allegations should have
been made in the complaint and the required proof of authentication as "print-outs", "outputs" or "counterparts"
should have been complied with.

The Court is aware that the instant case was considered to be governed by the Rule on Summary Procedure, which
does not expressly require that the affidavits of the witness must accompany the complaint or the answer and it is
only after the receipt of the order in connection with the preliminary conference and within 10 days therefrom,
wherein the parties are required to submit the affidavits of the parties' witnesses and other evidence on the factual
issues defined in the order, together with their position papers setting forth the law and the facts relied upon by
them.52

Given the nature of the documents that petitioner needed to adduce in order to prove its cause of action, it would
have been prudent on the part of its lawyer, to make the necessary allegations in the complaint and attach thereto
the required accompanying affidavits to lay the foundation for their admission as evidence in conformity with the
Best Evidence Rule.

This prudent or cautionary action may avert a dismissal of the complaint for insufficiency of evidence, as what
happened in this case, when the court acts pursuant to Section 6 of the Rule on Summary Procedure, which
provides:

SEC. 6. Effect of failure to answer. — Should the defendant fail to answer the complaint within the period above
provided, the court, motu proprio, or on motion of the plaintiff, shall render judgment as may be warranted by the
Evidence II.
facts alleged in the complaint and limited to what is prayed for therein: Provided, however, That the court may in its
discretion reduce the amount of damages and attorney's fees claimed for being excessive or otherwise
unconscionable. This is without prejudice to the applicability of Section 4, Rule 18 of the Rules of Court, if there are
two or more defendants.

As provided in the said Section, the judgment that is to be rendered is that which is "warranted by the facts alleged
in the complaint" and such facts must be duly established in accordance with the Rules on Evidence.

Upon a perusal of the items in the SOAs, the claim of petitioner against respondents is less than ₱100,000.00,  if 53

the late charges and interest charges are deducted from the total claim of ₱117,157.98. Given that the action filed
by petitioner is for payment of money where the value of the claim does not exceed ₱100,000.00 (the jurisdictional
amount when the complaint was filed in January 2013), exclusive of interest and costs, petitioner could have opted
to prosecute its cause under the Revised Rules of Procedure for Small Claims Cases (Revised Rules for Small
Claims).

Section 6 of the Revised Rules for Small Claims provides: "A small claims action is commenced by filing with the
court an accomplished and verified Statement of Claim (Form 1-SCC) in duplicate, accompanied by a Certification
Against Forum Shopping, Splitting a Single Cause of Action, and Multiplicity of Suits (Form 1-A-SCC), and two (2)
duly certified photocopies of the actionable document/s subject of the claim, as well as the affidavits of witnesses
and other evidence to support the claim. No evidence shall be allowed during the hearing which was not attached to
or submitted together with the Statement of Claim, unless good cause is shown for the admission of additional
evidence."

If petitioner took this option, then it would have been incumbent upon it to attach to its Statement of Claim even the
affidavits of its witnesses. If that was the option that petitioner took, then maybe its complaint might not have been
dismissed for lack of preponderance of evidence. Unfortunately, petitioner included the late and interest charges in
its claim and prosecuted its cause under the Rule on Summary Procedure.

Proceeding to the second issue, petitioner begs for the relaxation of the application of the Rules on Evidence and
seeks the Court's equity jurisdiction.

Firstly, petitioner cannot, on one hand, seek the review of its case by the Court on a pure question of law and
afterward, plead that the Court, on equitable grounds, grant its Petition, nonetheless. For the Court to exercise its
equity jurisdiction, certain facts must be presented to justify the same. A review on a pure question of law
necessarily negates the review of facts.

Petitioner has not presented any compelling equitable arguments to persuade the Court to relax the application of
elementary evidentiary rules in its cause.

Secondly, petitioner has not been candid in admitting its error as pointed out by both the MeTC and the RTC. After
being apprised that the annexes to its complaint do not conform to the Best Evidence Rule, petitioner did not make
any effort to comply so that the lower courts could have considered its claim. Rather, it persisted in insisting that the
annexes are compliant. Even before the Court, petitioner did not even attach such documents which would
convince the Court that petitioner could adduce the original documents as required by the Best Evidence
Rule to prove its claim against respondents.

A Final Note

The present Petition is clearly a frivolous appeal. An appeal is frivolous if it presents no justiciable question and is so
readily recognizable as devoid of any merit on the face of the record that there is little, if any, prospect that it can
ever succeed.  The Petition indubitably shows the counsel's frantic search for any ground to resuscitate petitioner's
54

lost cause, which due to the counsel's fault was doomed with the filing of a deficient complaint.  Thus, pursuant to
55

Section 3, Rule 142 of the Rules the imposition of treble costs on petitioner, to be paid by its counsel, is justified.

WHEREFORE, the Petition is hereby DENIED. The Decision dated August 13, 2013 and the Order dated March 1,
2016 of the Regional Trial Court, Branch 71, Pasig City in Civil Case No. 73756 are AFFIRMED. Treble costs are

Evidence II.
hereby charged against the counsel for petitioner RCBC Bankard Services Corporation. Let a copy of this Decision
be attached to the personal records of Atty. Xerxes E. Cortel in the Office of the Bar Confidant.

Evidence II.
 10.) [ G.R. No. 223178, December 09, 2020 ]

VICENTE T. GUERRERO, PETITIONER, VS. PHIL. PHOENIX SURETY & INSURANCE, INC., RESPONDENT.

DECISION

CARANDANG, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the Decision2 dated June
23, 2015 and the Resolution3 dated January 20, 2016 of the Court of Appeals (CA) in CA-G.R. CV No. 101902. The
Decision and the Resolution denied petitioner's appeal and affirmed the Decision4 dated May 6, 2013 of the
Regional Trial Court (RTC) of Manila, Branch 11 ordering petitioner Vicente T. Guerrero (Guerrero) and his co-
defendant, Rogelio Cordero (Cordero), to pay respondent Phil. Phoenix Surety & Insurance, Inc. (Phoenix)
P425,100.00 representing the losses incurred by Phoenix, the amount of P9,180.00 as reimbursement for the
participation fee paid by a certain Atty. Joseph Agustin Gaticales (Gaticales), attorney's fees, and cost of suit.

Facts of the Case

On December 31, 2008 at 6:30 p.m., an Isuzu Sportivo vehicle (Isuzu) owned by Gaticales figured in a vehicular
accident along the National Highway, Barangay Gines, Zarraga, Iloilo, with Guerrero's Chevrolet pick-up truck
(Chevrolet). At the time, the Chevrolet was driven by Cordero.5 The left front bumper, headlight, signal light, front
fender, front door, rear door, rear fender, rear tire, rear bumper, and other parts of the Isuzu were damaged by the
incident. When the incident was reported to the nearest police station, i.e., Zarraga Municipal Police Station, a
certain PO2 Jose Diestro (PO2 Diestro) was sent to the place of the accident to investigate and make a police report
on his findings. It was found that Guerrero's Chevrolet overlapped the center line of the highway, encroaching the
lane occupied by the Isuzu (which was moving in the opposite direction) and resulting in a head-on collision
between the two vehicles. It was also noted that Cordero fled after the incident. The incident was recorded in the
police blotter under entry no. 1327 dated December 31, 2008 and entered at 7:30 p.m.6

Gaticales then filed an own damage claim with Phoenix — a corporation engaged in non-life insurance where
Gaticales had the Isuzu insured - for the amount of P810,000.00 and declared his Isuzu as a constructive total
loss. After Phoenix paid the amount of P810,000.00 to Gaticales, Gaticales executed a Release of Claim in favor of
Phoenix subrogating the latter to all his rights to recover on all claims as a consequence of the accident.7 Since
Phoenix sold the Isuzu in a public auction for P399,050.00, it filed a Complaint8 for damages against Guerrero and
Cordero for the following amounts: (1) the balance of P425,100.00 (equivalent to the P810,000.00 Phoenix paid
Cordero and P14,150.00 it paid its handling insurance adjuster less P399,050.00 the Isuzu was sold for in the public
auction); (2) P9,180.00 paid by Gaticales as his participation fee; (3) P42,500.00 attorney's fees plus P2,500.00 as
appearance fee for its counsel; and (4) cost of suit.9

In the Complaint, Phoenix averred that the accident could have been avoided if Cordero exercised due care in
driving the Chevrolet and if Guerrero exercised the required diligence in supervising Cordero as Cordero's
employer. Phoenix thus sought to have Guerrero solidarily liable with Cordero for the abovementioned amounts.10

To prove its claim, Phoenix attached to the Complaint the following documents: (1) Gaticales' Insurance Policy with
Phoenix;11 (2) the Zarraga Municipal Police Station's Certification12 dated January 5, 2009 and issued by Police
Inspector/Chief of Police Romar V. Peregil (PI Peregil); (3) two pictures of the Isuzu showing the damages
sustained by it;13 (4) Disbursement Voucher for the amount of P824,150.00;14 (5) Release of Claim (Loss and
Subrogation Receipt) signed by Gaticales in favor of Phoenix;15 (6) Demand Letter dated August 1, 2009 with its
registry receipts;16 and (7) engagement letter with Phoenix's counsel.17 The police certificate, certifying the
contents of the police blotter issued by PO2 Diestro, states:

CERTIFICATION

Quoted hereunder is the record of event from the Police Blotter of Zarraga Municipal Police Station, Zarraga, Iloilo,
in blotter entry No. 1327 dated 31 December 2008.
Evidence II.
Entry No. 1327

31  December 2008, 7:30 P.M. - INFO - VEHICULAR ACCIDENT - A concerned citizen informed this Police Station
thru telephone call  informing that there was a vehicular accident that transpired at Brgy. Gines, Zarraga, Iloilo. 
Immediately thereafter PNP team of this  Police station led by PO2 Jose Diestro proceeded at the scene of [the]
incident. Investigation conducted disclosed that on or about 6:30 P.M. of this date, Joseph Agustin Gaticales y
Capawan, 41 years old, married, resident of San Mateo, St., Ledesco Village, Lapaz, Iloilo City, holder of
Professional Driver's License no. F03-09-049829 with expiry date 08-22-2009 while driving his Isuzu Sportivo with
plate no. ZCZ-326 under OR No. 369927967 dated 06/15/2006 and CR No. 2502057-5 dated 06/15/2006 with
registration valid for three (3) years, en route from north to south direction heading towards Iloilo City was
accidentally bumped by Chevrolet pick up with plate no. FAJ-877 under OR no. 652801166 dated 09/15/2008 and
CR [n]o. 481593-5 dated 07/05/2005, owned by Vicente Guerrero, resident of 20 Lacson St., Bacolod City, Neg.
Occ., upon reaching along the national highway of Brgy.  Gines,  Zarraga Iloilo  a collision appeared. The driver of
the Chevrolet pick up fled away to unknown direction after the incident. Investigation conducted disclosed that the
Chevrolet pickup overlapped to the center line which resulted [in] the accident. That the Isuzu Sportive incurred
damaged (sic) on its left portion of bumper, head light, signal light, front fender, hood. Front door, rear door, rear
fender, rear tire, rear bumper and other parts of its body. While the Chevrolet pick up incurred also damages on its
left portion of bumper, hood, headlight, signal light, front fender, front wheel and broken windshield. That all the
damaged (sic) of both vehicles could only be determined by an expert mechanic.

Entry No. 01

31 January 2009, 8:00 A.M. - INFO - ADDENDUM RE VEHICULAR ACCIDENT TRANSPIRED 6:30 PM OF
DECMEBER 31, 2008 - Follow up investigation conducted by this Police office, the driver of Chevrolet pick up late
no. FAJ-877 was identified as Rogelio Cordero Jr. y Zurita, of legal age, married, temporarily resides at Melliza St.,
Poblacion Ilaud, Zarraga Iloilo, a native of Bonifacio Ext., Silay City Neg. Occ. holder of professional driver's license
no. F01-05-000862 with expiry date 03-02-2010.

This certification is being issued upon the request of Atty. Joseph Gaticales for whatever legal purpose it may serve
best.

(sgd)

ROMAR V. PEREGIL
Police Inspector
Chief of Police18

In his Answer with Compulsory Counterclaim, Guerrero denied any vicarious liability from the vehicular accident
because he exercised due diligence in the selection and supervisions of his employees. According to him, Cordero
was not authorized to operate the Chevrolet because the car was assigned to another employee. The business
owned by Guerrero enforced a strict policy against the unauthorized use or possession of company property.
Despite this, Cordero opted to use Guerrero's Chevrolet on December 31, 2008 because of strong rains. Cordero,
coming from a marketplace near the construction site where the Chevrolet was parked, was soaking wet from riding
a motorcycle. Thus, he took shelter in the said construction site and drove the Chevrolet home without Guerrero's
knowledge and consent. Cordero even picked up a friend along the way. Nevertheless, Guerrero alleged that
Cordero drove slowly along the national highway due to the rain while Gaticales was the one driving fast with his
Isuzu's headlights at high beam. Disoriented and confused, Cordero and his companion just fled the scene. Thus,
Guerrero accused Gaticales of negligently hitting the Chevrolet.20

Guerrero also questioned Phoenix's prayer that Guerrero reimburse Gaticales the latter's participation fee of
P9,180.00 because Gaticales is not a party to the suit.21

During trial, Phoenix presented as its lone witness its claims manager, Roberto Salaver (Salaver).  Aside from
LaW㏗iL

identifying his judicial affidavit, Salaver also identified the police certificate, which he also referred to as the police
investigation report. Guerrero, on the other hand, testified on his behalf and presented his legal staff, Salvador M.
Acsay (Ascay), as his second witness. Acsay testified that (1) Guerrero's company issued a Memorandum dated
December 18, 2006 allowing only authorized or registered drivers of company vehicles to operate the same and
Evidence II.
only for the company's transactions and operations; (2) Acsay made known and implemented the policy covered by
the said memorandum; and (3) Cordero was suspended for violating the said policy, as evidenced by a
Memorandum dated January 6, 2009.22

Ruling of the Regional Trial Court

In a Decision23 dated May 6, 2013, the RTC granted Phoenix's complaint and declared Guerrero and Cordero
solidarily liable to Phoenix, as follows:

WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of the plaintiff and against
defendants as follows:

1. Defendants are directed, jointly and severally, to pay plaintiff the amount of P425,100.00 representing the
subrogated loss incurred by the plaintiff in settling the damages insured vehicle on a constructive total loss
basis;

2. Defendants are directed jointly and severally, to pay plaintiffs assured, Atty. Joseph Agustin Gaticales, the
sum of P9,180.00 as his reimbursement of his participation in the settlement of his own damaged claim on a
constructive total loss basis;

3. Defendants are directed, jointly and severally, to pay plaintiff attorney's fees in the amount of P42,500.00
plus an additional amount of P2,500.00 per appearance every time plaintiffs counsel or his assistant
appears in court to attend to the legal needs of the plaintiff; and

4. To pay the cost of the suit.

SO ORDERED.24

Using the principle of res ipsa loquitur, the trial court concluded that Cordero and Guerrero were solidarily liable
because the accident was due to Cordero's negligent driving of Guerrero's Chevrolet. The RTC declared that: (1)
Guerrero's Chevrolet hit the front left portion of Gaticales' Isuzu because of Cordero's negligence (as shown by the
police report that the Chevrolet overlapped to the center line of the highway and that Cordero immediately fled the
scene after the accident); (2) the Chevrolet was under the exclusive control of Cordero; and (3) Gaticales is not
guilty of contributory negligence.25

In his Motion for Reconsideration,26 Guerrero alleged that the RTC improperly applied the doctrine of res ipsa
loquitur because none of the requisites for the doctrine's application are present. According to Guerrero: (1) it was
never established that the accident does not ordinarily occur in the absence  of negligence;  (2)  Phoenix's  sole 
witness  never testified that Guerrero's Chevrolet was under Cordero's exclusive control since the witness's
knowledge is based only on the police report; and (3) it was never proven that Gaticales was not guilty of
contributory negligence. Guerrero pointed out that Phoenix failed to prove an additional requirement - i.e., Gaticales
had no knowledge of or means of knowing the cause of the accident because he was never presented as a witness.
Furthermore, Guerrero claimed that res ipsa loquitur applies only when evidence establishing negligence is absent
or not readily available and that Phoenix could have obtained readily available evidence in the form of Gaticales'
testimony.27

Guerrero also averred that the trial court should not.have given the police certificate any probative value because it
was merely copied from a police blotter, thus, falling short of the requirements set forth in Section 44 (now Section
46),28 Rule 130 of the Rules of Court. In particular, Phoenix did not prove that the police report was prepared by a
public officer who had sufficient knowledge of the facts, which he acquired personally or through official
information.29

However, the trial court denied Guerrero's motion for reconsideration in an Order30 dated September 12, 2013. This
prompted Guerrero to file an appeal with the CA.

Ruling of the Court of Appeals

Evidence II.
In its Decision31 dated June 23, 2015, the appellate court affirmed the findings of the RTC, thus denying Guerrero's
appeal.

The CA ruled that the police certificate is admissible and is an exception to the hearsay rule because it is an official
record. Under Section 46 of the Rules of Court, an official record is defined as:

Section 46. Entries in official records. — Entries in official records made in the performance of his or her duty by a
public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated.

Citing Malayan Insurance Co., Inc. v. Alberto,32 the appellate court found that the requisites for the admissibility of
the police certificate were complied with, namely: (1) the entry was made by a public officer specially enjoined by
law to do so; (2) it was made by the public officer in the performance of his duties; (3) the public officer had sufficient
knowledge of the facts stated by him, which was acquired through official information based on the investigation
conducted by a police investigator (i.e., PO2 Diestro). The CA thus concluded that the police certificate, as well as
the pictures of the insured vehicle, established a rebuttable presumption of negligence on the part of Cordero.33

Even if the police certificate and blotter were declared inadmissible, the CA maintained that Cordero and Guerrero
would still be found liable under the doctrine of res ipsa loquitur. The appellate court held that the requirements for
the operation of the said doctrine were met, i.e., (1) the accident is of a kind which ordinarily does not occur in the
absence of someone's negligence; (2) it is caused by an instrumentality within the exclusive control of Cordero - the
negligent party as pointed out by Phoenix; and (3) there is no possibility of contributory negligence on the part of
Gaticales. Coupled with Cordero's act of fleeing the scene of the accident, Cordero and Guerrero (as Cordero's
employer) were found liable to Phoenix and Gaticales for the amounts previously awarded by the trial court.34

Petitioner's Arguments

Undeterred, Guerrero filed the instant petition for review on certiorari. Guerrero alleged that he was denied his
constitutional right to meet and cross-examine PO2 Diestro, the police who investigated the accident and prepared
the police report. He claimed that the police blotter is not conclusive proof of the truth of its entry since the officer
who prepared it was never presented in court. Guerrero also questioned the probative value of the pictures
presented by Phoenix because these do not show that they were taken at the scene of the accident and were not
identified by the person who took the said pictures. Guerrero now asks this Court to determine whether the doctrine
of res ipsa loquitur applies based on a picture of the damaged vehicle alone.35

Respondent's Comment

In its Comment,36 Phoenix sought to have the instant petition dismissed for raising a factual issue since it questions
the probative value of Phoenix's testimonial and documentary evidence.37 It also averred that the constitutional
right of an accused to meet the witnesses face to face does not apply to a civil complaint for damages.38 Lastly,
Phoenix agreed with the RTC and CA when they applied the doctrine of res ipsa loquitur, citing the same reasons
used by the trial and appellate courts.39

Ruling of the Court

The strength of Phoenix's claim for damages mainly rests on the admissibility and probative value of the police
certificate (embodying the contents of the police blotter) and the pictures of the damaged Isuzu. The lower courts
both concluded that the police blotter is an exception to the hearsay rule because it is classified as an entry in
official record, following Section 46, Rule 130 of the Rules of Court.40

A police blotter entry, or a certification thereof, is admissible in evidence as an exception to the hearsay
rule under Section 46, Rule 130 of the Rules of Court. In order for it to be admissible, the said evidence
must be properly presented in evidence. What must have been presented in evidence was either the police
blotter itself or a copy thereof certified by its legal keeper.41

Evidence II.
Otherwise stated, the nature of the evidence as admissible — being an exception to the hearsay rule - is different
from how a party should introduce the evidence to make it admissible.

The police blotter itself could have been presented to prove the existence of the blotter entry and a copy of the said
entry made in order for the opposing party to determine whether the copy is a faithful representation of the entry in
the police blotter. The party offering the blotter entry may opt to present secondary evidence in the form of a certified
copy of the blotter entry since such is allowed under Section 8, Rule 130 of the Rules of Court. Following Section 8,
Rule 130 of the Rules of Court, "[w]hen the original of the document is in the custody of a public officer or is
recorded in a public office, its contents may be proved by a certified copy issued by the public officer in custody
thereof."

Here, the Certification dated January 5, 2009 issued by Zarraga Municipal Police Station's Chief of Police, PI
Peregil, did not state that PI Peregil was the legal custodian of the police blotter. Even if We were to assume that PI
Peregil had legal custody of the police blotter as Zarraga Municipal Station's Chief of Police, the Certification should
still be identified by PI Peregil himself or his representative to attest to the contents of the Certification, as copied
from the police blotter, and the authenticity of PI Peregil's signature. Salaver is incompetent to testify on the
Certification's authenticity and due execution because Salaver is not an authorized representative of PI Peregil or
even a police officer assigned to the Zarraga Municipal Police Station. Phoenix's failure to properly present the
Certification does not extinguish any doubts on the genuineness of the said Certification.

With its inadmissibility, the lower courts erred in assigning any probative value to the Certification.  Therefore, the
ℒαwρhi ৷

Certification cannot be used as basis for applying the doctrine of res ipsa loquitur.

This Court is now left to determine whether the pictures Phoenix presented during trial will suffice to prove Cordero's
negligence under the principle of res ipsa loquitur.

The pictures presented by Phoenix are likewise inadmissible in evidence for Phoenix's its failure to prove its due
execution and authenticity. As this Court held, "photographs, when presented in evidence, must be identified by the
photographer as to its production and he must testify as to the circumstances under which they were
produced."44 This requirement for admissibility was similarly stated in Section 1, Rule 11 of the Rules on Electronic
Evidence when it required photographic evidence of events to be "identified, explained or authenticated by the
person who made the recording or by some other person competent to testify on the accuracy thereof." While We
have allowed witnesses (other than the person who took the photograph) to identify pictures presented in evidence,
the said witness must be competent to identify the photograph as a faithful representation of the object
portrayed.45 A competent witness must be able to "assure the court that they know or are familiar with the scenes
or objects shown in the pictures and the photographs depict them correctly."46

Salaver is not competent to identify the pictures presented in evidence. Salaver was not at the scene of the crime.
Therefore, he does not have personal knowledge of the scene or objects shown in the pictures. More importantly,
the said pictures do not depict the vehicular accident — i.e., the position of the Isuzu and the Chevrolet along the
National Highway at the time of the accident. The Chevrolet was not in any of the pictures presented by Phoenix. It
cannot be presumed that (1) the Chevrolet was the instrumentality that caused the accident; (2) Gaticales was the
only injured party; and (3) Gaticales was not guilty of any contributory negligence.

All told, Phoenix failed to discharge its burden of proving its case with preponderance of evidence.

Guerrero's prayer for P500,000.00 as moral damages, P200,000.00 as exemplary damages, and P150,000.00 as
attorney's fees are denied for lack of any factual or legal basis. Guerrero failed to justify why he should be awarded
the abovementioned monetary claims as the instant petition focused solely on the inadmissibility of the police
certificate and pictures.

WHEREFORE, the petition is GRANTED. The Decision dated June 23, 2015 and the Resolution dated January 20,
2016 of the Court of Appeals in CA-G.R. CV No. 101902 are REVERSED and SET ASIDE. The Complaint in Civil
Case No. 09-122267 is DISMISSED.

Evidence II.
 11.) [ G.R. No. 233104, September 02, 2020 ]

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. EDDIE MANANSALA Y ALFARO, ACCUSED-

APPELLANT.

DECISION

HERNANDO, J.:

Before Us is an appeal1 filed by herein accused-appellant Eddie Manansala y Alfaro (Manansala) assailing the

January 5, 2017 Decision2 of the Court of Appeals (CA) in CA-G.R. CR HC No. 07893 which found him guilty
beyond reasonable doubt of the crime of Murder.

The Information by which Manansala was charged, alleged:

That on or about November 2, 2013, in the City of Manila, Philippines, the said accused, did then and there willfully,
unlawfully and feloniously, with intent to kill and with treachery and evident premeditation, attack, assault and use
personal violence upon one ARMANDO RAMOS y SANTOS, by then and there shooting him with a handgun hitting
the left portion of his upper body (back), thereby inflicting upon him mortal gunshot wound which was the direct and
immediate cause of his death thereafter.

Contrary to law.

During arraignment, Manansala pleaded "not guilty" to the crime charged. Thereafter, pre-trial and trial ensued. The
prosecution presented the eyewitness accounts of Edward Reyes (Edward)5 and Renato R. Mananquil
(Mananquil).6 It likewise presented the testimonies of Corazon Ramos (Corazon),7 the victim's wife; Asas Ramos
(Asas),8 the victim's son; Barangay Kagawad Jume Piojo (Piojo);9 Police Officer 1 Leopoldo N. Tuazon (PO1
Tuazon);10 Dr. Romeo T. Salen (Dr. Salen),11 medico-legal expert; and Senior Police Officer 1 Jonathan L. Moreno
(SPO1 Moreno),12 the investigating officer.

The defense, on the other hand, presented the testimony of Manansala13 and his daughter, Kiera Noreen
Manansala (Kiera).14

Version of the Prosecution:

On November 2, 2013, at around 8 o'clock in the evening, brothers Edward and Elmer Reyes were in front of their
rented apartment owned by the victim Armando Ramos (Ramos) at No. 2637 Severino Reyes Street, Tondo,
Manila, where the latter also resides. The Reyes brothers were watching Mananquil play his guitar beside the door
of their rented apartment when suddenly they heard a gunshot inside the house. Edward then saw Manansala
facing towards the direction of the stairs and holding a gun aimed upwards.15 Thereafter, Manansala hurriedly left
towards Lico Street while still holding a gun. Shouts and commotion soon followed upstairs. Edward also saw
Ramos fall from the stairs with blood oozing from his left chest.16

Corazon, for her part, testified that she was taking a bath at the second floor of their house when Manasala came
and shot her husband. When she heard the gunshot, she immediately ran and saw her husband lying at the bottom
of the stairs covered with blood. Asas, the victim's son who was also inside the house, likewise heard the gunshot
and his father's shout. He quickly ran towards the door and saw his father falling down the stairs.17

Several onlookers rushed Ramos to the Chinese General Hospital. Corazon immediately followed but upon her
arrival, she was told husband had already expired.18

A concerned citizen reported the shooting incident to the Police authorities. PO1 Marinito Daya and PO1 Tuazon
went to verify the report.  Upon confirmation, Police Superintendent Roderick Mariano formed a team headed by
Ꮮαwρhi ৷

Police Senior Inspector (PSI) Alvin Balagat (PSI Balagat) to conduct an extensive follow-up and hot pursuit
operation for the apprehension of Manansala.19
Evidence II.
Meanwhile, upon Corazon's request, Ramos's cadaver was examined by Dr. Salen. The medical findings indicated
that the entry point of the gunshot wound was at the victim's back, particularly at the lumbar region, while the exit
point was at the front portion of the body. The trajectory of the bullet from the entrance to the exit was upward and
the distance between the muzzle of the gun and the victim's body was about two feet or more.20 The gunshot
wound fatally lacerated the lungs and the heart which caused the victim's death.21

On November 6, 2013, the team of PSI Balagat received an information that Manansala was hiding in San Jose Del
Monte, Bulacan. They immediately coordinated with Chief PSupt. Joel Estaris (CPSupt. Estaris). The next day, PSI
Balagat and his team went to San Jose Del Monte after receiving information from CPSupt. Estaris that Manansala
is already in their custody. PSI Balagat and his team verified the identity of Manansala and thereafter brought him to
Jose Abad Santos Police Station (PS-7), Manila Police District (MPD) for verification. Manansala was then turned
over to MPD's Crime Against Person Section.22

During trial, the closed-circuit television (CCTV) footages of the crime scene were presented in court where a man
appearing to be Manansala was seen entering the house while armed with a gun and proceeding upstairs. The man
then aimed his gun, shot the victim and immediately thereafter left the house.23

Asas testified that he was the one who transferred the video footages from the barangay-owned CCTV that was
located outside their house to the compact disc that was submitted in court as evidence. When the footage was
played in court and the enlarged screenshot was presented, he identified said person as Manansala and the
perpetrator of the crime.

The prosecution also presented the testimony of Barangay Kagawad Piojo who confirmed the location of the CCTV.
He also impressed upon the trial court that prior to the killing incident, there were several complaints filed against
Manasala concerning the installation of illegal electric connections/jumpers. These complaints became the subject
of the altercation between Manasala and Ramos one day before the latter was killed.24

Version of the Defense:

Manansala, on the other hand, averred that on November 2, 2013, at around 7 o'clock in the evening, he was on his
way to Bulacan to visit his friend, Allan Bautista (Bautista). While on his way, he passed by the house of Ramos
then took the bus bound for Bulacan and arrived thereat past 8 o'clock in the evening.

On November 3, 2013, he was surprised upon being informed by his daughter, Kiera, that he was the suspect in the
killing of Ramos and that the killing was all over the local news. He denied killing Ramos and planned to surrender
to a certain "Col. Pascual", Kiera's godparent. However, on November 5, 2013, he was suddenly arrested in
Bautista's home by the police forces of San Jose Del Monte, Bulacan.

Manansala claimed that he had known Ramos since he was 13 years old and that he was the one doing the repairs
for his electricity and water supply. However, Ramos had ill-feelings towards him because of the jumpers he
installed which Manansala claimed even benefitted Ramos and his tenants. He denied the allegations against him,
as well as of owning a gun.25 Kiera corroborated his story.

Ruling of the RTC:

In its October 20, 2015 Decision,26 the RTC adjudged Manansala guilty as charged. The dispositive portion of the
judgment reads:

WHEREFORE, in the light of the foregoing, the prosecution having proven the guilt of the accused beyond
reasonable doubt of the crime of Murder, the accused EDDIE MANANSALA y ALFARO, alias "Eddie Pusa", alias
"Bulag" is hereby sentenced to RECLUSION PERPETUA.

As to the civil liability, the accused is hereby ordered to pay the heirs of the deceased Armando Ramos, the
following:

1. P107,286.17 as actual damages[;]

Evidence II.
 2. P75,000.00 as civil indemnity[; and]

3. P50,000.00 as moral damages[.]

SO ORDERED.27

The RTC relied heavily on the accounts of the eyewitnesses pointing to Manansala as the author of the crime,
especially since their accounts were corroborated by the CCTV footages.

The RTC found that treachery attended the commission of the crime because the shooting was sudden and
unexpected, leaving the victim no chance to defend himself. As revealed by the medical findings, the entrance of the
fatal gunshot wound was at the back of the victim's body.28 The trial court also found the qualifying circumstance of
evident premeditation to be present. The RTC noted that there was a prior public confrontation and altercation
between the victim and Manansala on the alleged installation of electric jumpers. The trial court surmised that
Manansala must have harbored resentment against the victim and resolved to kill him as a form of retaliation.29

All in all, the trial court held that the prosecution satisfactorily established the guilt of Manansala beyond reasonable
doubt and successfully proved all the elements of Murder.

Ruling of the CA:

Upon review, the CA sustained the finding of the RTC that the prosecution was able to establish all the elements of
the crime of Murder and has proved the guilt of Manansala beyond reasonable doubt.

The CA gave credence to the circumstantial evidence presented by the prosecution which reasonably and positively
pointed to Manansala as the person who shot the victim as the same was corroborated by the CCTV footages
played and viewed in open court.30

The CA held that the RTC correctly admitted the CCTV footages as evidence as well as the competency of Asas in
attesting to the accuracy of the footages. The appellate court rejected the argument of Manansala that Asas was not
qualified to authenticate the footages as he was not the one who made the recording and that the CCTV was owned
by the barangay. The CA held that the Rules on Electronic Evidence provides that the one who made the recording
can authenticate the video, as well as any other person competent to testify on the accuracy of the video.31

Finally, the CA held that considering the qualifying circumstances of treachery and evident premeditation, the proper
imposable penalty is death. However, due to its proscription, the CA imposed instead the penalty of reclusion
perpetua without eligibility for parole. The CA also modified the monetary awards by increasing the amounts of civil
indemnity and moral damages to P100,000.00 each and awarding exemplary damages for the same amount.32

Thus, the dispositive portion of the January 5, 2017 Decision33 of the CA states:

WHEREFORE, the assailed Decision dated October 20, 2015 of the Regional Trial Court, Branch 25, Manila finding
accused-appellant EDDIE MANANSALA y ALFARO @ "Eddie Pusa", "Bulag" guilty beyond reasonable doubt of the
crime of murder is AFFIRMED without eligibility for parole.

The civil liabilities of accused-appellant are hereby MODIFIED, and he is ordered to pay the heirs of deceased
Armando Ramos the following:

1. Php 100,000.00 by way of civil indemnity ex delicto;

2. Php 100,000.00 by way of moral damages;

3. Php 100,000.00 by way of exemplary damages;

4. Php 107,286.17 as actual damages; and

Evidence II.
 5. All monetary awards shall earn interest at the rate of six percent (6%) per annum from date of finality of
this Decision until fully paid.

SO ORDERED.34

Undeterred, Manansala filed his appeal before Us.35

Assignment of Errors

I.

THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF THE CRIME

CHARGED DESPITE THE INSUFFICIENCY OF THE PROSECUTION'S EVIDENCE TO PROVE THAT IT WAS
THE FORMER WHO SHOT THE VICTIM.

II.

THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF THE CRIME

CHARGED DESPITE THE PROSECUTION'S FAILURE TO SUFFICIENTLY ESTABLISH THE EXISTENCE OF
TREACHERY AND EVIDENT PREMEDITATION.36

Our Ruling

The instant appeal is dismissed.

Settled is the rule that an appeal in a criminal case throws the entire case wide open for review. Thus, it becomes
the duty of the appellate court to correct any error that may be found in the appealed judgment, whether assigned
as an error or not. In the crime of murder, the elements of murder and the aggravating circumstances qualifying the
killing must be proven beyond reasonable doubt by the prosecution.37

Here, Manansala was charged with Murder qualified by evident premeditation and treachery. Article 248 of the
Revised Penal Code (RPC) states:

Article 248. Murder. - Any person who, not falling within the provisions of Article 246 shall kill another, shall be guilty
of murder and shall be punished by reclusion temporal in its maximum period to death, if committed with any of the
following attendant circumstances:

1. With treachery, x x x

xxxx

5. With evident premeditation.

Jurisprudence dictates that the elements of murder are as follows: (a) that a person was killed; (b) that the accused
killed him; (c) that the killing was attended by any of the qualifying circumstances mentioned in Article 248; and (d)
that the killing is not parricide or infanticide.38

Thus, for the charge of Murder to prosper, the prosecution must prove beyond reasonable doubt that: (1) the
offender killed the victim, (2) through treachery, or by any of the other five qualifying circumstances, duly alleged in
the Information.39

In the case at bar, the death of the victim Ramos is undisputed and there is no question that the killing is neither
parricide nor infanticide. The remaining points of contentions are whether Manansala was the perpetrator of the
crime and whether the killing was attended by treachery and evident premeditation.

Evidence II.
This Court agrees with the CA that the pieces of circumstantial evidence sufficiently support the finding that
Manansala was the one who killed the victim. It is an elementary rule in criminal law that absence of direct evidence
will not bar conviction of the accused when pieces of circumstantial evidence satisfactorily prove the crime charged.

In People v. Evangelio,40 this Court elaborated on how circumstantial evidence may be appreciated to support
conviction, thus:

Circumstantial evidence, also known as indirect or presumptive evidence, refers to proof of collateral facts and
circumstances whence the existence of the main fact may be inferred according to reason and common experience.
Circumstantial evidence is sufficient to sustain conviction if (a) there is more than one circumstance; (b) the facts
from which the inferences are derived are proven; (c) the combination of all circumstances is such as to produce a
conviction beyond reasonable doubt. A judgment of conviction based on circumstantial evidence can be sustained
when the circumstances proved form an unbroken chain that results in a fair and reasonable conclusion pointing to
the accused, to the exclusion of all others, as the perpetrator. [Emphasis supplied]

Here, We are in agreement with the Office of the Solicitor General in its brief, as affirmed by the CA, that the
prosecution was able to establish that Manansala was the author of the crime of murder based on the following
circumstantial evidence:

1. Upon hearing the gunshot, Edward turned around and saw appellant holding a gun.

2. When Edward saw appellant, the latter was facing the stairs of the victim's house where he had his gun
aimed towards the stairs.

3. After Edward saw appellant running towards Lico Street, the former went back to the place where the
gunshot was heard and there he saw the victim face down on the ground bloodied and unconscious. Blood
was oozing from the victim's left chest.

4. Mananquil, on the other hand, after hearing the gunshot turned to his right and saw appellant coming out
from the house of the victim.

5. When appellant was no longer in the vicinity of the shooting, Mananquil went back to the victim's house.
There he saw the victim lying down.

6. The CCTV and its printouts corroborating the testimonies of Edward and Mananquil.41

The inescapable conclusion based on the above circumstances laid out by the prosecution convincingly point to
Manansala as the killer.

Paragraph 16, Article 14 of the RPC defines treachery as the direct employment of means, methods, or forms in the
execution of the crime against persons which tend directly and specially to insure its execution, without risk to the
offender arising from the defense which the offended party might make. The essence of treachery is that the attack
is deliberate and without warning, done in a swift and unexpected way, affording the hapless, unarmed and
unsuspecting victim no chance to resist or escape. In order for treachery to be properly appreciated, two elements
must be present: (1) at the time of the attack, the victim was not in a position to defend himself; and (2) the accused
consciously and deliberately adopted the particular means, methods, or forms of attack employed by him. x x x42

These elements are present in this case as testified to by the prosecution witnesses and corroborated by the CCTV
footages.

Manansala stealthily entered the house of the victim and shot him while he was going upstairs. The fatal wound was
inflicted from behind since the entry point was located at the back lumbar region while the exit point was at the front
portion of the victim's body with the trajectory traversing upwards. These clearly indicate that the victim was going
upstairs with his back towards the assailant when he was shot. We are thus in agreement with the OSG that
treachery attended the killing as the victim's position rendered him defenseless from the sudden attack from
behind.43
Evidence II.
Incidentally, treachery was also proven by the CCTV footages presented in court and testified on by witness Asas.
Pertinent excerpts of Asas' testimony shows the following:

ACP POSO:

During the last hearing you were asked to produce the larger image extracted in the CCTV, do you have that copy
of the picture or larger image of what were marked during the presentation of your testimony?

WITNESS [ASAS]:

Yes sir.

ACP POSO

The witness handed to me these pictures. In these pictures handed to me, where is the start or the beginning of the
video?

WITNESS

Ito po.

ACP POSO

May I pray that this [enlarged] picture from the CCTV memory be [marked] as our exhibit U. This is prior to the
shooting your Honor. Another [enlarged] (sic) copy of the picture depicting somebody playing guitar as U-1 your
Honor.

COURT

Mark it.

ACP POSO

Who is [depicted] in this picture?

WITNESS

Eddie Manasala sir.

ACP POSO

While looking at the door where the incident happened, the person identified as Eddie Manansala be [marked] as
exhibit V?

COURT

Okay, how about the first one, the first picture?

ACP POSO

Also the accused your Honor. The accused your Honor. The accused as pointed to by the witness as V-1 your
Honor?

COURT

Evidence II.
Mark it.

ACP POSO

Another picture of the accused while he was already about to pass the door of the house where the incident
happened as exhibit W your Honor and the picture of the accused looking at the door as W-1?

COURT

Mark it.

ACP POSO

Another picture showing the accused [entering] the door of the house and raising his arm while shooting the victim
as exhibit X and the location of the accused as our exhibit X-1?

COURT

Okay.

ACP POSO

The picture showing the accused after the shooting leaving the door of the house where the incident happened as
exhibit Y and the picture holding the gun right after the shooting as exhibit Y-1 your Honor?

COURT

Mark it.44

This Court agrees with the RTC in appreciating the CCTV footages and admitting the same as evidence because
they bolstered the testimonies of the witnesses and supported the finding of treachery in the case at bar. As
correctly held by the CA, the Rules on Electronic Evidence provides that persons authorized to authenticate the
video or CCTV recording is not limited solely to the person who made the recording but also by another competent
witness who can testify to its accuracy. In the case at bar, Asas was able to establish the origin of the recording and
explain how it was transferred to the compact disc and subsequently presented to the trial court.45 Hence, this
Court finds no reason to contradict such finding.

However, this Court finds that the prosecution was not able to satisfactorily establish the qualifying circumstance of
evident premeditation. Per jurisprudence, "[t]he elements of evident premeditation are: (1) a previous decision by
the accused to commit the crime; (2) an overt act or acts manifestly indicating that the accused clung to his
determination; and (3) a lapse of time between the decision to commit the crime and its actual execution sufficient to
allow accused to reflect upon the consequences of his acts.46

The above circumstances are not present in the case at bar. The only basis for the RTC and the appellate court in
finding evident premeditation as attendant to the crime was the confrontation between the victim and Manansala
one day before the killing. The trial court merely surmised that Manansala must have harbored feelings of
resentment towards the victim and has clung to that thought and killed the victim.

The essence of evident premeditation is that the execution of the criminal act must be preceded by cool thought and
reflection upon the resolution to carry out the criminal intent, during the space of time sufficient to arrive at a calm
judgment. When it is not shown as to how and when the plan to kill was hatched or what time had elapsed before it
was carried out, evident premeditation cannot be considered. "Evident premeditation must be based on external
acts and must be evident, not merely suspected, indicating deliberate planning."47

Evidence II.
Nevertheless, despite the absence of evident premeditation, the killing remains to be murder in view of the
qualifying circumstance of treachery.

Necessarily so, this Court modifies the penalty imposed in light with our pronouncement in People v Jugueta48 and
revert the penalty to reclusion perpetua in accordance with Article 248 of the RPC. Considering too that no other
aggravating circumstance was present in the killing, the awards of civil indemnity, moral damages, and exemplary
damages should be reverted to P75,000.00 each.49

Anent the award of actual damages, Article 2199 of the Civil Code provides that "one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved." In this case, the amount of
P7,286.1750 and P100,000.0051 as hospital and funeral expenses, respectively, were duly supported by official
receipts. The handwritten list of expenses amounting to P36,000.00 as shown in Exhibit S52 were not duly
supported by receipts hence were properly disregarded. The heirs of the victim are therefore entitled to be paid the
amount of P107,286.17 as actual damages.

WHEREFORE, the appeal is hereby DISMISSED. The January 5, 2017 Decision of the Court of Appeals in CA-G.R.
CR HC No. 07893 is hereby AFFIRMED with MODIFICATIONS in that accused-appellant EDDIE
MANANSALA y ALFARO @ "Eddie Pusa," @ "Bulag" is found GUILTY of Murder and sentenced to suffer the
penalty of reclusion perpetua. He is ordered to pay the heirs of deceased Armando Ramos the following:

1. P75,000.00 as civil indemnity;

2. P75,000.00 as moral damages;

3. P75,000.00 as exemplary damages; and

4. P107,286.17 as actual damages.

Interest at the rate of six percent (6%) per annum shall be imposed on the aggregate amount of the monetary
awards computed from the finality of this Decision until full payment.

Evidence II.
 12.) G.R. No. L-18077             September 29, 1962

RODRIGO ENRIQUEZ, ET AL., Plaintiffs-Appellants, vs. SOCORRO A. RAMOS, Defendant-

Appellee.

Gelacio L. Dimaano for plaintiffs-appellants.

Vicente K. Aranda for defendant-appellee.

BAUTISTA ANGELO, J.: chanrobles virtual law library

          This is an action for foreclosure of a real estate mortgage. chanroblesvirtualawlibrary chanrobles virtual law library

          It is alleged that on November 24, 1958 defendant purchased from plaintiffs 20 parcels
of land located in Quezon City and covered by transfer certificates of title for the amount of
P235,056.00 of which only the amount of P35,056.00 was paid on the date of sale, the
balance of P200,000.00 being payable within two years from the date of sale, with 6% interest per
annum during the first year, and the remainder to draw 12% interest per annum if paid thereafter,
provided that at least P100,000.00 should be paid during the first year, otherwise the whole unpaid
balance would become immediately demandable; that to secure the payment of the balance of
P200,000.00 defendant executed a mortgage in favor of plaintiffs upon the 20 parcels of land
sold and on a half interest over a parcel of land in Bulacan which was embodied in the same
deed of sale; that said deed of sale with mortgage was registered in the Offices of the Registers of
Deeds of Quezon City and Pampanga; and that as defendant broke certain stipulations
contained in said deed of sale with mortgage, plaintiffs instituted the present foreclosure
proceedings. chanroblesvirtualawlibrary chanrobles virtual law library

          Defendant set up as affirmative defense that the contract mentioned in the

complaint does not express the true agreement of the parties because certain important
conditions agreed upon were not included therein by the counsel who prepared the contract; that the
stipulation that was omitted from the contract was the promise assumed by plaintiffs that they
would construct roads in the lands which were to be subdivided for sale on or before January,
1959; that said condition was not placed in the contract because, according to plaintiffs'
counsel, it was a superfluity, inasmuch as there is an ordinance in Quezon City which
requires the construction of roads in a subdivision before lots therein could be sold; and
that, upon the suggestion of plaintiff's counsel, their promise to construct the roads was
not included in the contract because the ordinance was deemed part of the contract.
Defendant further claims that the true purchase price of the sale was not P235,056.00 but only
P185,000.00, the difference of P50,000.00 being the voluntary contribution of defendant to the cost
of the construction of the roads which plaintiffs assumed to do as abovementioned. chanroblesvirtualawlibrary chanrobles virtual law library

          After the reception of the evidence, the trial court sustained the contention of defendant
and dismissed the complaint on the ground that the action of plaintiffs was premature. It found
that plaintiffs really assumed the construction of the roads as a condition precedent to the fulfillment
of the obligation stipulated in the contract on the part of defendant, and since the same has not been
undertaken, plaintiffs have no cause of action. In due time, plaintiffs have appealed. chanroblesvirtualawlibrary chanrobles virtual law library

          The evidence of record discloses the following facts: On November 6, 1966, plaintiffs entered
into a contract of conditional sale with one Pedro del Rosario covering a parcel of land in Quezon City
described in Transfer Certificate of Title No. 1148 which has a total area of 77,772 square meters in
consideration of a purchase price of P10.00 per square meter. To guarantee the performance of the
Evidence II.
conditions stipulated therein a performance bond in the amount of P100,000.00 was executed by
Pedro del Rosario. Del Rosario was given possession of the land for development as a subdivision at
his expense. He undertook to pay for the subdivision survey, the construction of roads, the
installation of light and water, and the income tax plaintiffs may be required to pay arising from the
transaction, in consideration of which Del Rosario was allowed to buy the property for P600,000.00
within a period of two years from November 6, 1956 with the condition that, upon his failure to pay
said price when due, all the improvements introduced by him would automatically become part of the
property without any right on his part to reimbursement and the conditional sale would be
rescinded. chanroblesvirtualawlibrary chanrobles virtual law library

          Unable to pay the consideration of P600,000.00 as agreed upon, and in order to avoid court
litigation, plaintiffs and Del Rosario, together with defendant Socorro A. Ramos, who turned out to be
a partner of the latter, entered into a contract of rescission on November 24, 1958. To release the
performance bond and to enable defendant to pay some of the lots for her own purposes, plaintiffs
allowed defendant to buy 20 of the lots herein involved at the rate of P16.00 per square meter on
condition that she will assume the payment of P50,000.00 as her share in the construction of roads
and other improvements required in the subdivision. This situation led to the execution of the
contract of sale Exhibit A subject of the present foreclosure proceedings. chanroblesvirtualawlibrary chanrobles virtual law library

          The main issues closed in this appeal are: (1) Is the purchase price of the 20 lots bought by
defendant from plaintiffs the sum of P185,000.00, as claimed by defendant, or P235.056.00, as
claimed by plaintiffs?; and (2) Was an oral agreement, coetaneous to the execution of the
contract of sale, entered into between the parties to the effect that plaintiffs would
undertake the construction of the roads on the lots sold before defendant could be
required to comply with her financial obligation? chanrobles virtual law library

          Defendant contends that the contract of sale Exhibit A does not express the true
agreement of the parties because certain important conditions agreed upon were not
included therein by plaintiffs' counsel among which is the promise assumed by plaintiffs
that they would undertake to construct the roads that may be required in the subdivision
subject sale of the sale on or before January, 1959; that said condition was not placed in the
contract because plaintiffs' counsel said that it was a superfluity inasmuch as there was then in
Quezon City an ordinance which requires the construction of road in a subdivision before the lots
therein could be sold; and that, upon the suggestion of plaintiffs' counsel, such commitment was not
included in the contract because the ordinance aforesaid was already deemed to be part of the
contract.chanroblesvirtualawlibrary chanrobles virtual law library

          Plaintiffs, on the other hand, dispute the above contention arguing that there was no
such oral agreement or understanding because all that was agreed upon between the
parties was already expressed and included in the contract of sale Exhibit A executed
between the parties, and since defendant failed to pay the balance of her obligation within the period
stipulated the whole obligation became due and demandable thus giving plaintiffs the right to
foreclose the mortgage in accordance with law. chanroblesvirtualawlibrary chanrobles virtual law library

          After considering and evaluating the evidence submitted by both parties, the court a
quo found defendant's contention well-taken, thereby concluding that the action of plaintiffs was
premature. In reaching this conclusion; the court a quo made the following comment:

          . . . The Court is of the opinion that the construction of the roads was a condition
precedent to the enforcement of the terms of Exhibit A, particularly the foreclosure of mortgage,
for the reason that the subdivision regulations of Quezon City requires, as a matter of law, that the
sellers of lands therein to be converted into subdivision lots must construct the roads in said
subdivision before the lots could be sold. This requirement must have been uppermost in the mind of
the parties in this case which led to the execution of the so-called 'Explanation' (Exhibit 3) wherein it

Evidence II.
is stated that the sum of P50,000.00 was a contribution of the herein defendant for the construction
of the roads which the plaintiffs would undertake 'in accordance with the provisions of the City
Ordinance of Quezon City' (Exhibit 3). It is to be noted that Exhibit 3 was executed on November 24,
1958, the very day when Exhibit A was also executed. Exhibit 3 also proves that the purchase price is
not, as appearing in the deed of sale with mortgage Exhibit A, actually P235,000.00 but only
P185,000.00 which would approximately be the price of the entire area of the land sold at the rate of
P16.00 per square meter.

          We find no error in the conclusion reached by the court a quo for indeed that is the condition
to be expected by a person who desires to purchase a big parcel of land for purposes of subdivision.
In a subdivision the main improvement to be undertaken before it could be sold to the public is
feeder roads as otherwise it would be inaccessible and valueless and would offer no attraction to the
buying public. And so it is correct to presume was the court a quo did, that when the sale in question
was being negotiated the construction of roads in the prospective subdivision must have been
uppermost in the mind of defendant for her purpose in purchasing the property was to develop it into
a subdivision. That such requirement was uppermost in the mind of defendant is proven by
the execution by the plaintiffs of the so-called "Explanation" (Exhibit 3) on the very day
the deed of sale was executed wherein it was stated that the sum of P50,000.00 was
advanced by defendant as her contribution to the construction of the roads which plaintiffs
assumed to undertake "in accordance with the provisions of the City Ordinance of Quezon
City." It is to be noted that said document specifically states that the amount of P50,000.00 should
be deducted from the purchase price of P235,056.00 appearing in the deed of sale, and this is a clear
indication that the real purchase price is only P185,000.00 as claimed by defendant, which would
approximately be the price of the entire area of the land at the rate of P16.00 per square meter. chanroblesvirtualawlibrary chanrobles virtual law library

          A circumstance which lends cogency to defendant's claim that the commitment of

plaintiffs to construct roads was not inserted in the contract because of the insurance
made by their counsel that it would be a superfluity is the fact that in Quezon City there
was really an ordinance which requires the construction of roads it subdivision before lots
therein could be sold, and considering that this assurance came from the very counsel who
prepared the document who even intimated that ordinance was deemed part of the
contract, defendant must have agreed to the omission relying on the good faith plaintiffs
and their counsel. At any rate, the execute of the document Exhibit 3 clarifies whatever doubt may
have existed with regard to the true terms of the agreement on the matter. chanroblesvirtualawlibrary chanrobles virtual law library

          It is argued that the court a quo erred in allowing presentation of parole evidence to

prove that a conteporaneous oral agreement was also reached between parties relative to
the construction of the roads for same is in violation of our rule which provides that when
the terms of an agreement had been reduced to writing it is to be considered as containing
all that has been agreed upon and that no evidence other than the terms there can be
admitted between the parties (Section 22, Rule 123). This rule, however, only holds true if
there is allegation that the agreement does not express the intent of the parties. If there is
and this claim is in issue in the pleadings, the same may be the subject parole evidence
(Idem.). The fact that such failure has been put in issue in this case is patent in the answer
wherein defendant has specifically pleaded that the contract of sale in question does not
express the true intent of the parties with regard to the construction of the roads. chanroblesvirtualawlibrary chanrobles virtual law library

          It appearing that plaintiffs have failed to comply with the condition precedent relative to the
construction of the roads in the subdivision in question, it follows that their action is premature as
found by the court a quo. The failure of defendant to pay the realty and income taxes as agreed
upon, as well as to register the mortgage with respect to the Bulacan property, aside from being
minor matters, appear sufficiently explained in the brief of defendant-appellee. chanroblesvirtualawlibrary chanrobles virtual law library

          WHEREFORE, the decision appealed from is affirmed, with costs against appellants.

Evidence II.
Evidence II.
13.) G.R. No. L-11346            March 21, 1918

ESPIRIDIONA CANUTO, plaintiff-appellee,
vs.
JUAN MARIANO, defendant-appellant.

Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant.

Alfonso E. Mendoza for appellee.

CARSON, J.:

This is an appeal from a judgment of the Court of First Instance of Manila, providing for the execution of a deed
evidencing the repurchase by the plaintiff of a parcel of land from the defendant, upon the payment by the former of
the sum of P360.

On December 4, 1913, the plaintiff executed a deed of sale of the parcel of land described in the complaint, to the
defendant, for the sum of P360, reserving the right to repurchase the land for that amount within one year from the
date of the deed of sale. The redemption period having elapsed, and the plaintiff having failed to exercise her right
to repurchase within that period, the defendant set up a claim of absolute ownership to the land, notwithstanding
the insistent demand of the plaintiff that she be permitted to exercise her reserved right of repurchase in accordance
with an alleged oral agreement for the extension of the r redemption period down to the end of the month of
December, 1914. She claims that on the second day of December, 1914, two days before the expiration of the
original redemption period, she asked the defendant for an extension of time for the repurchase of the land and that
upon her promise to make the repurchase during the month of December, 1914, the defendant agreed to extend the
redemption set out in the written contract, to the end of that month; that after the expiration of the original
redemption period, she thought to make the repurchase in accordance with the agreement as to the extension of the
time therefor; but the defendant failed to appear at the time and place agreed upon for the payment of the purchase
price and has refused since that time to execute a deed of resale, or to reserve the purchase price agreed upon,
despite the plaintiff's repeated demands and tender of the purchase price.

The plaintiff testified that on the morning of December the second, 1914, while she was washing clothes near a well,
the defendant passed by; that she seized the opportunity to beg an extension of time in which to repurchase the
land, promising the defendant that she would borrow the money and make payment if he would extend the
redemption period until the end of the month; that after some demur the defendant agreed to allow her the whole of
the month of December in which to redeem the land; that the following Sunday she went to the house of the
defendant and that he promised to meet her at the house of Mercado, an attorney, at 4 o'clock of the next day, there
to receive the purchase price and execute the necessary documents evidencing the transaction; that she took the
money to the lawyer's office at the time appointed, and waited there until dark, but that the defendant failed to meet
his engagement; that she then went to his house, but was told that he was not at home; and that since that time
defendant has refused to carry out his oral agreement, claiming that the redemption period set out in the original
deed of sale expired on the fourth day of December, 1914, and that she had no right to repurchase the land after
that date. Severino Pascual, who was present when the oral agreement to extend the time for the repurchase of the
land was made, corroborated her testimony in this regard, and we find nothing in the record which would justify us in
disturbing the findings of the trial judge who accepted her testimony as a substantially true account of all that
occurred, and declined to believe the conflicting testimony of the defendant which he characterized as vague and
incredible.

The defendant having extended the time within which the plaintiff could repurchase the land on condition that she
would find the money and make repurchase within the extended period, it is clear that he cannot be permitted to
repudiate his promise, it appearing that the plaintiff stood ready to make the payment within the extended period,
and was only prevented from doing so by the conduct of the defendant himself. (Villegas vs. Capistrano, 9 Phil.
Rep., 416; Fructo vs. Fuentes, 15 Phil. Rep., 362; Retes vs. Suelto, 20 Phil. Rep., 394; Rosales vs. Reyes and
Ordoveza, 25 Phil. Rep., 495.)

Evidence II.
The contention that the plaintiff should not be permitted to alter, vary, or contradict the terms of the written
instrument by the introduction of oral evidence is manifestly untenable under the circumstances of the case, as will
readily appear from the following citation from 17 Cyc., p. 734, and numerous cases cited in support of the doctrine:

The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written
instrument does not apply so as to prohibit the establishment by parol of an agreement between the
parties to a writing, entered into subsequent to the time when the written instrument was executed,
notwithstanding such agreement may have the effect of adding to, changing, modifying, or even
altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence
does not in any way deny that the original agreement of the parties was that which the writing
purports to express, but merely goes to show that the parties have exercised their right to change or
abrogate the same, or to make a new and independent contract.

It makes no difference how soon after the execution of the written contract the parol one was made. If it was
in fact subsequent and is otherwise unobjectionable it may be proved and enforced.

The contention that the plaintiff lost her right to redeem because she failed to make judicial deposit of the purchase
price when the defendant declined to receive it, is not entitled to serious consideration in view of the repeated
decisions of this court to the contrary collated and discussed in the case of Rosales vs. Reyes and Ordoveza (25
Phil. Rep., 495). In that case and in the cases cited therein we declared that the settled rule in this jurisdiction is that
a bona fide offer or tender of the price agreed upon for the repurchase is sufficient to preserve the rights of the party
making it, without the necessity of making judicial deposit, if the offer or tender is refused; and in the case of Fructo
vs. Fuentes (15 Phil. Rep., 362) we said that in such cases when diligent effort is made by the vendor of the land to
exercise the right to repurchase reserved by him in his deed of sale "and fails by reason of circumstances over
which he has no control, we are of the opinion and so hold that he does not lose his right to repurchase on the day
of maturity."

Evidence II.
14.) G.R. No. L-9935             February 1, 1915

YU TEK and CO., plaintiff-appellant,

vs.
BASILIO GONZALES, defendant-appellant.

Beaumont, Tenney and Ferrier for plaintiff.

Buencamino and Lontok for defendant.

TRENT, J.:

The basis of this action is a written contract, Exhibit A, the pertinent paragraphs of which follow:

1. That Mr. Basilio Gonzalez hereby acknowledges receipt of the sum of P3,000 Philippine currency
from Messrs. Yu Tek and Co., and that in consideration of said sum he obligates himself to deliver to
the said Yu Tek and Co., 600 piculs of sugar of the first and second grade, according to the result of the
polarization, within the period of three months, beginning on the 1st day of January, 1912, and ending on the
31st day of March of the same year, 1912.

2. That the said Mr. Basilio Gonzales obligates himself to deliver to the said Messrs. Yu Tek and Co., of this
city the said 600 piculs of sugar at any place within the said municipality of Santa Rosa which the said
Messrs. Yu Tek and Co., or a representative of the same may designate.

3. That in case the said Mr. Basilio Gonzales does not deliver to Messrs. Yu Tek and Co. the 600 piculs
of sugar within the period of three months, referred to in the second paragraph of this document, this
contract will be rescinded and the said Mr. Basilio Gonzales will then be obligated to return to Messrs. Yu
Tek and Co. the P3,000 received and also the sum of P1,200 by way of indemnity for loss and damages.

Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to recover the
P3,000. Plaintiff prayed for judgment for the P3,000 and, in addition, for P1,200 under paragraph 4, supra.
Judgment was rendered for P3,000 only, and from this judgment both parties appealed.

The points raised by the defendant will be considered first. He alleges that the court erred in refusing to permit
parol evidence showing that the parties intended that the sugar was to be secured from the crop which the
defendant raised on his plantation, and that he was unable to fulfill the contract by reason of the almost
total failure of his crop. This case appears to be one to which the rule which excludes parol evidence to add to or
vary the terms of a written contract is decidedly applicable. There is not the slightest intimation in the contract that
the sugar was to be raised by the defendant. Parties are presumed to have reduced to writing all the essential
conditions of their contract. While parol evidence is admissible in a variety of ways to explain the meaning
of written contracts, it cannot serve the purpose of incorporating into the contract additional
contemporaneous conditions which are not mentioned at all in the writing, unless there has been fraud or
mistake. In an early case this court declined to allow parol evidence showing that a party to a written contract was
to become a partner in a firm instead of a creditor of the firm. (Pastor vs. Gaspar, 2 Phil. Rep., 592.) Again, in
Eveland vs. Eastern Mining Co. (14 Phil. Rep., 509) a contract of employment provided that the plaintiff should
receive from the defendant a stipulated salary and expenses. The defendant sought to interpose as a defense to
recovery that the payment of the salary was contingent upon the plaintiff's employment redounding to the benefit of
the defendant company. The contract contained no such condition and the court declined to receive parol evidence
thereof.

In the case at bar, it is sought to show that the sugar was to be obtained exclusively from the crop raised by
the defendant. There is no clause in the written contract which even remotely suggests such a condition.
The defendant undertook to deliver a specified quantity of sugar within a specified time. The contract
placed no restriction upon the defendant in the matter of obtaining the sugar. He was equally at liberty to
purchase it on the market or raise it himself. It may be true that defendant owned a plantation and expected to raise
the sugar himself, but he did not limit his obligation to his own crop of sugar. Our conclusion is that the condition

Evidence II.
which the defendant seeks to add to the contract by parol evidence cannot be considered. The rights of the
parties must be determined by the writing itself.

The second contention of the defendant arises from the first. He assumes that the contract was limited to the sugar
he might raise upon his own plantation; that the contract represented a perfected sale; and that by failure of his crop
he was relieved from complying with his undertaking by loss of the thing due. (Arts. 1452, 1096, and 1182, Civil
Code.) This argument is faulty in assuming that there was a perfected sale. Article 1450 defines a perfected sale as
follows:

The sale shall be perfected between vendor and vendee and shall be binding on both of them, if they have
agreed upon the thing which is the object of the contract and upon the price, even when neither has been
delivered.

Article 1452 reads: "The injury to or the profit of the thing sold shall, after the contract has been perfected, be
governed by the provisions of articles 1096 and 1182."

This court has consistently held that there is a perfected sale with regard to the "thing" whenever the article of sale
has been physically segregated from all other articles Thus, a particular tobacco factory with its contents was held
sold under a contract which did not provide for either delivery of the price or of the thing until a future time.
McCullough vs. Aenlle and Co. (3 Phil. Rep., 295). Quite similar was the recent case of Barretto vs. Santa
Marina (26 Phil. Rep., 200) where specified shares of stock in a tobacco factory were held sold by a contract which
deferred delivery of both the price and the stock until the latter had been appraised by an inventory of the entire
assets of the company. In Borromeo vs. Franco (5 Phil. Rep., 49) a sale of a specific house was held perfected
between the vendor and vendee, although the delivery of the price was withheld until the necessary documents of
ownership were prepared by the vendee. In Tan Leonco vs. Go Inqui (8 Phil. Rep., 531) the plaintiff had delivered a
quantity of hemp into the warehouse of the defendant. The defendant drew a bill of exchange in the sum of P800,
representing the price which had been agreed upon for the hemp thus delivered. Prior to the presentation of the bill
for payment, the hemp was destroyed. Whereupon, the defendant suspended payment of the bill. It was held that
the hemp having been already delivered, the title had passed and the loss was the vendee's. It is our purpose to
distinguish the case at bar from all these cases.

In the case at bar the undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of the first and
second classes. Was this an agreement upon the "thing" which was the object of the contract within the meaning of
article 1450, supra? Sugar is one of the staple commodities of this country. For the purpose of sale its bulk is
weighed, the customary unit of weight being denominated a "picul." There was no delivery under the contract. Now,
if called upon to designate the article sold, it is clear that the defendant could only say that it was "sugar." He could
only use this generic name for the thing sold. There was no "appropriation" of any particular lot of sugar. Neither
party could point to any specific quantity of sugar and say: "This is the article which was the subject of our contract."
How different is this from the contracts discussed in the cases referred to above! In the McCullough case, for
instance, the tobacco factory which the parties dealt with was specifically pointed out and distinguished from all
other tobacco factories. So, in the Barretto case, the particular shares of stock which the parties desired to transfer
were capable of designation. In the Tan Leonco case, where a quantity of hemp was the subject of the contract, it
was shown that that quantity had been deposited in a specific warehouse, and thus set apart and distinguished from
all other hemp.

A number of cases have been decided in the State of Louisiana, where the civil law prevails, which confirm our
position. Perhaps the latest is Witt Shoe Co. vs. Seegars and Co. (122 La., 145; 47 Sou., 444). In this case a
contract was entered into by a traveling salesman for a quantity of shoes, the sales having been made by sample.
The court said of this contract:

But it is wholly immaterial, for the purpose of the main question, whether Mitchell was authorized to make a
definite contract of sale or not, since the only contract that he was in a position to make was an agreement
to sell or an executory contract of sale. He says that plaintiff sends out 375 samples of shoes, and as he
was offering to sell by sample shoes, part of which had not been manufactured and the rest of which were
incorporated in plaintiff's stock in Lynchburg, Va., it was impossible that he and Seegars and Co. should at
that time have agreed upon the specific objects, the title to which was to pass, and hence there could have
been no sale. He and Seegars and Co. might have agreed, and did (in effect ) agree, that the identification
Evidence II.
 of the objects and their appropriation to the contract necessary to make a sale should thereafter be made by
the plaintiff, acting for itself and for Seegars and Co., and the legend printed in red ink on plaintiff's billheads
("Our responsibility ceases when we take transportation Co's. receipt `In good order'" indicates plaintiff's
idea of the moment at which such identification and appropriation would become effective. The question
presented was carefully considered in the case of State vs. Shields, et al. (110 La., 547, 34 Sou., 673) (in
which it was absolutely necessary that it should be decided), and it was there held that in receiving an order
for a quantity of goods, of a kind and at a price agreed on, to be supplied from a general stock, warehoused
at another place, the agent receiving the order merely enters into an executory contract for the sale of the
goods, which does not divest or transfer the title of any determinate object, and which becomes effective for
that purpose only when specific goods are thereafter appropriated to the contract; and, in the absence of a
more specific agreement on the subject, that such appropriated takes place only when the goods as ordered
are delivered to the public carriers at the place from which they are to be shipped, consigned to the person
by whom the order is given, at which time and place, therefore, the sale is perfected and the title passes.

This case and State vs. Shields, referred to in the above quotation are amply illustrative of the position taken by the
Louisiana court on the question before us. But we cannot refrain from referring to the case of Larue and
Prevost vs. Rugely, Blair and Co. (10 La. Ann., 242) which is summarized by the court itself in the Shields case as
follows:

. . . It appears that the defendants had made a contract for the sale, by weight, of a lot of cotton, had
received $3,000 on account of the price, and had given an order for its delivery, which had been presented
to the purchaser, and recognized by the press in which the cotton was stored, but that the cotton had been
destroyed by fire before it was weighed. It was held that it was still at the risk of the seller, and that the buyer
was entitled to recover the $3,000 paid on account of the price.

We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale and not a
sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are not applicable. The defendant
having defaulted in his engagement, the plaintiff is entitled to recover the P3,000 which it advanced to the
defendant, and this portion of the judgment appealed from must therefore be affirmed.

The plaintiff has appealed from the judgment of the trial court on the ground that it is entitled to recover the
additional sum of P1,200 under paragraph 4 of the contract. The court below held that this paragraph was simply a
limitation upon the amount of damages which could be recovered and not liquidated damages as contemplated by
the law. "It also appears," said the lower court, "that in any event the defendant was prevented from fulfilling the
contract by the delivery of the sugar by condition over which he had no control, but these conditions were not
sufficient to absolve him from the obligation of returning the money which he received."

The above quoted portion of the trial court's opinion appears to be based upon the proposition that the sugar which
was to be delivered by the defendant was that which he expected to obtain from his own hacienda and, as the dry
weather destroyed his growing cane, he could not comply with his part of the contract. As we have indicated, this
view is erroneous, as, under the contract, the defendant was not limited to his growth crop in order to make the
delivery. He agreed to deliver the sugar and nothing is said in the contract about where he was to get it.

We think is a clear case of liquidated damages. The contract plainly states that if the defendant fails to
deliver the 600 piculs of sugar within the time agreed on, the contract will be rescinded and he will be
obliged to return the P3,000 and pay the sum of P1,200 by way of indemnity for loss and damages. There
cannot be the slightest doubt about the meaning of this language or the intention of the parties. There is no
room for either interpretation or construction. Under the provisions of article 1255 of the Civil Code contracting
parties are free to execute the contracts that they may consider suitable, provided they are not in contravention of
law, morals, or public order. In our opinion there is nothing in the contract under consideration which is opposed to
any of these principles.

For the foregoing reasons the judgment appealed from is modified by allowing the recovery of P1,200 under
paragraph 4 of the contract. As thus modified, the judgment appealed from is affirmed, without costs in this instance.

Evidence II.
15.) G.R. No. L-17820             April 24, 1963

LAND SETTLEMENT AND DEVELOPMENT CORPORATION, plaintiff-appellant,

vs.
GARCIA PLANTATION CO., INC., and/or SALUD GARCIA and VICENTE B. GARCIA, defendants-appellees.

Lucido A. Guinto, Alfonso O. Alindogan and Marcelino A. Yumol for plaintiff-appellant.

Bausa and Ampil for defendants-appellees.

PAREDES, J.:

This is a case of specific performance of contract, instituted by the Land Settlement and Development
Corporation, against the Garcia Plantation Co., Inc. and/or Salud C. De Garcia and Vicente B. Garcia, for the
recovery of the sum of P5,955.30, representing the unpaid balance of the purchase price of two tractors,
bought by the defendant Garcia Plantation Co., Inc. from the plaintiff. Salud C. de Garcia was made alternative
co-defendant because of two promissory notes executed by her, whereby she personally assumed the account of
the company with the plaintiff, and the defendant Vicente B. Garcia was included as husband of Salud C. de Garcia.
The defendants, in their answer, admitted the execution of the two promissory notes, but contended that the
same had been novated by a subsequent agreement contained in a letter (Exh. L) sent by Filomeno C.
Kintanar, Manager, Board of Liquidators of the LASEDECO, giving the defendant Salud C. de Garcia an
extension up to May 31, 1957, within which to pay the account, and since the complaint was filed
on February 20, 1957, they claimed that the action was premature and prayed that the complaint be dismissed.
The plaintiff in the reply and answer to the counterclaim, admitted the due execution and genuineness of the
letter marked Exhibit L, but contended that the same did not express the true and intent agreement of the
parties, thereby placing the fact in issue, in the pleadings.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this
stipulation of facts. 
1äwphï1.ñët

After several postponements requested by both parties on the ground of pending amicable settlement, trial on the
merits was ordered and held on July 25, 1957, at 1:00 o'clock in the afternoon. At the trial, the defendant admitted
all the documentary evidence adduced by the plaintiffs, showing that they were indebted to said plaintiff.
However, when the plaintiff presented Atty. Lucido A. Guinto, Legal Officer of the Board of Liquidators, to
testify on the true agreement and the intention of the parties at the time the letter (Exh. L for the defendants)
was drafted and prepared, the lower court presided by the Hon. B. A. Tan, upon the objection of the counsel
for defendants, ruled out said testimony and prevented the introduction of evidence under the parol
evidence rule (Sec. 22, Rule 123). Plaintiff also intended to present Mr. Kintanar, the writer of the letter, to
testify on the same matter, but in view of the ruling of the lower court, it rested its case. The lower court
dismissed the case, stating that the action was premature. Plaintiff appealed to the Court of Appeals, which
certified the case to us, pointing that the questions presented were purely legal in nature.

Appellants allege that the lower court erred (1) In forcing the parties to trial despite requests by both parties for
more time to submit an amicable settlement of the case; (2) In excluding parol evidence, tending to prove the
true intention and agreement of the parties and the existence of a condition precedent, before the extension
granted the defendants, contained in Exhibit L, could become effective and (3) In holding that the action was
premature and in dismissing the case on this ground.

The disposal of the second issue would render the determination of the other issues unnecessary. The fact that the
letter Exhibit L, failed "to express the true intent and agreement of the parties", Section 22, Rule 123, had
been put in issue by the Answer of the plaintiff to defendants' counterclaim (Heirs of Dela Rama v. Talisay-Silay
Milling Co., 54 Phil., 580). The parol evidence consisted of the testimony of Attys. Guinto and Kintanar, to the
effect that in view of the plea of defendant Vicente B. Garcia to give the defendants an extension of time to pay
their accounts, Atty. Kintanar gave the defendants up to May 31, 1957, to coincide with their ramie harvest
"provided that they will make a substantial down payment immediately, with the understanding that upon
non-payment of the substantial amount, the extension shall be deemed as not granted and the LASEDECO
Evidence II.
shall feel free to seek redress in court". That there was such condition precedent is manifested by the second
paragraph of the letter Exhibit L, quoted hereunder:

November 20, 1956

Mrs. Salud de Garcia Tacurong, Cotabato

Dear Madam;

Please be advised that the Board has granted you an extension up to May 31, 1957, within which to
pay your account.

This matter has been the subject of agreement between your husband and this office.

Respectfully,
(Sgd.) FILOMENO C. KINTANAR

The subject of agreement alluded to in the second paragraph of the above letter, was the condition to be
complied with or the consideration given for the extension of time, within which the Garcia spouses pay
their account. The lower court should have admitted the parol evidence sought to be introduced to prove
the failure of the document in question to express the true intent and agreement of the parties. It should not
have improvidently and hastily excluded said parol evidence, knowing that the subject-matter treated therein, was
one of the exceptions to the parol evidence rule. When the operation of the contract is made to depend upon
the occurrence of an event, which, for that reason is a condition precedent, such may be established by
parol evidence. This is not varying the terms of the written contract by extrinsic agreement, for the simple
reason that there is no contract in existence; there is nothing to which to apply the excluding rule (Heitman
vs. Commercial Bank of Savannah, 6 Ga. App. 584, 65 SE 590, cited in Comments on the Rules of Court, 1957 Ed.,
200), "... This rule does not prevent the introduction of extrinsic evidence to show that a supposed contract
never became effective by reason of the failure of some collateral condition or stipulation, pre-requisite to
liability" (Peabody & Co. v. Bromfield & Ross, 38 Phil. 841).The rule excluding parol evidence to vary or
contradict a writing, does not extend so far as to preclude the admission of extrinsic evidence, to show
prior or contemporaneous collateral parol agreements between the parties, but such evidence may be
received, regardless of whether or not the written agreement contains reference to such collateral
agreement (Robles v. Lizarraga Hnos., 50 Phil. 387). In the case at bar, reference is made of a previous
agreement, in the second paragraph of letter Exhibit L, and although a document is usually to be interpreted
in the precise terms in which it is couched, Courts, in the exercise of sound discretion, may admit evidence
of surrounding circumstances, in order to arrive at the true intention of the parties (Aves & Alzona v.
Orilleneda, 70 Phil. 262). Rulings by the same effect were also announced by the United States courts (Payne v.
Campbell, 6 E & B, 370; Wilson v. Powers, 131 Mass. 540; Blewitt v. Brown, 142 NY 357; Burke v. Delany, 153 US
288).

Had the trial court permitted, as it should, the plaintiff to prove the condition precedent to the extension of the
payment the said plaintiff would have been able to show that because the defendants had failed to pay a substantial
down payment, the agreement was breached and the contract contained in Exhibit "L", never became effective and
the extension should be considered as not having been given at all. So that, although the complaint was filed on
February 20, 1957, three months before the deadline of the extension on May 31, 1957, there would be no
premature institution of the case. The lower court, therefore, erred in dismissing the case.

The decision appealed from is reversed, and the case remanded to the lower court for further proceedings. Costs
against the appellees.

Evidence II.
16.) G.R. No. L-8844 December 16, 1914

FERNANDO MAULINI, ET AL., plaintiffs-appellees,

vs.
ANTONIO G. SERRANO, defendant-appellant.

R. M. Calvo for appellant.

Jose Arnaiz for appellees.

MORELAND, J.:

This is an appeal from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff for the
sum of P3,000, with interest thereon at the rate of
1½ per cent month from September 5, 1912, together with the costs.

The action was brought by the plaintiff upon the contract of indorsement alleged to have been made in his
favor by the defendant upon the following promissory note:

3,000. Due 5th of September, 1912.

We jointly and severally agree to pay to the order of Don Antonio G. Serrano on or before the 5th day of
September, 1912, the sum of three thousand pesos (P3,000) for value received for commercial
operations. Notice and protest renounced. If the sum herein mentioned is not completely paid on the
5th day of September, 1912, this instrument will draw interest at the rate of 1½ per cent per month
from the date when due until the date of its complete payment. The makers hereof agree to pay the
additional sum of P500 as attorney's fees in case of failure to pay the note.

Manila, June 5, 1912.

(Sgd.) For Padern, Moreno & Co., by F. Moreno, member of the firm. For Jose Padern, by F. Moreno. Angel
Gimenez.

The note was indorsed on the back as follows:

Pay note to the order of Don Fernando Maulini, value received. Manila, June 5, 1912. (Sgd.) A.G.
Serrano.

The first question for resolution on this appeal is whether or not, under the Negotiable Instruments Law, an
indorser of a negotiable promissory note may, in an action brought by his indorsee, show, by parol
evidence, that the indorsement was wholly without consideration and that, in making it, the indorser acted as
agent for the indorsee, as a mere vehicle of transfer of the naked title from the maker to the indorsee, for which he
received no consideration whatever.

The learned trial court, although it received parol evidence on the subject provisionally, held, on the final decision
of the case, that such evidence was not admissible to alter, very, modify or contradict the terms of the
contract of indorsement, and, therefore, refused to consider the evidence thus provisionally received, which
tended to show that, by verbal agreement between the indorser and the indorsee, the indorser, in making
the indorsement, was acting as agent for the indorsee, as a mere vehicle for the transference of naked title,
and that his indorsement was wholly without consideration. The court also held that it was immaterial whether
there was a consideration for the transfer or not, as the indorser, under the evidence offered, was an
accommodation indorser.

We are of the opinion that the trial court erred in both findings. 1awphil.net

Evidence II.
In the first place, the consideration of a negotiable promissory note, or of any of the contracts connected therewith,
like that of any other written instrument, is, between the immediate parties to the contract, open to attack, under
proper circumstances, for the purpose of showing an absolute lack or failure of consideration.

It seems, according to the parol evidence provisionally admitted on the trial, that the defendant was a broker doing
business in the city of Manila and that part of his business consisted in looking up and ascertaining persons
who had money to loan as well as those who desired to borrow money and, acting as a mediary, negotiate a
loan between the two. He had done much business with the plaintiff and the borrower, as well as with many
other people in the city of Manila, prior to the matter which is the basis of this action, and was well known to the
parties interested. According to his custom in transactions of this kind, and the arrangement made in this particular
case, the broker obtained compensation for his services of the borrower, the lender paying nothing therefor.
Sometimes this was a certain per cent of the sum loaned; at other times it was a part of the interest which the
borrower was to pay, the latter paying 1½ per cent and the broker ½ per cent. According to the method usually
followed in these transactions, and the procedure in this particular case, the broker delivered the money
personally to the borrower, took note in his own name and immediately transferred it by indorsement to the
lender. In the case at bar this was done at the special request of the indorsee and simply as a favor to him,
the latter stating to the broker that he did not wish his name to appear on the books of the borrowing
company as a lender of money and that he desired that the broker take the note in his own name,
immediately transferring to him title thereto by indorsement. This was done, the note being at
once transferred to the lender.

According to the evidence referred to, there never was a moment when Serrano was the real owner of the
note. It was always the note of the indorsee, Maulini, he having furnished the money which was the consideration
for the note directly to the maker and being the only person who had the slightest interest therein, Serrano, the
broker, acting solely as an agent, a vehicle by which the naked title to the note passed fro the borrower to the
lender. The only payment that the broker received was for his services in negotiating the loan. He was paid
absolutely nothing for becoming responsible as an indorser on the paper, nor did the indorsee lose, pay or forego
anything, or alter his position thereby.

Nor was the defendant an accommodation indorser. The learned trial court quoted that provision of the Negotiable
Instruments Law which defines an accommodation party as "one who has signed the instrument as maker, drawer,
acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other
person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of
taking the instrument knew the same to be only an accommodation party." (Act No. 2031, sec. 29.)

We are of the opinion that the trial court misunderstood this definition. The accommodation to which reference is
made in the section quoted is not one to the person who takes the note — that is, the payee or indorsee, but one to
the maker or indorser of the note. It is true that in the case at bar it was an accommodation to the plaintiff, in a
popular sense, to have the defendant indorse the note; but it was not the accommodation described in the law, but,
rather, a mere favor to him and one which in no way bound Serrano. In cases of accommodation indorsement the
indorser makes the indorsement for the accommodation of the maker. Such an indorsement is generally for the
purpose of better securing the payment of the note — that is, he lend his name to the maker, not to the holder.
Putting it in another way: An accommodation note is one to which the accommodation party has put his name,
without consideration, for the purpose of accommodating some other party who is to use it and is expected to pay it.
The credit given to the accommodation part is sufficient consideration to bind the accommodation maker. Where,
however, an indorsement is made as a favor to the indorsee, who requests it, not the better to secure payment, but
to relieve himself from a distasteful situation, and where the only consideration for such indorsement passes from
the indorser to the indorsee, the situation does not present one creating an accommodation indorsement, nor one
where there is a consideration sufficient to sustain an action on the indorsement.

The prohibition in section 285 of the Code of Civil Procedure does not apply to a case like the one before
us. The purpose of that prohibition is to prevent alternation, change, modification or contradiction of
the terms of a written instrument, admittedly existing, by the use of parol evidence, except in the cases
specifically named in the section. The case at bar is not one where the evidence offered varies, alters,
modifies or contradicts the terms of the contract of indorsement admittedly existing. The evidence was not
offered for that purpose. The purpose was to show that no contract of indorsement ever existed; that the
minds of the parties never met on the terms of such contract; that they never mutually agreed to enter into

Evidence II.
such a contract; and that there never existed a consideration upon which such an agreement could be
founded. The evidence was not offered to vary, alter, modify, or contradict the terms of an agreement which
it is admitted existed between the parties, but to deny that there ever existed any agreement whatever; to
wipe out all apparent relations between the parties, and not to vary, alter or contradict the terms of a relation
admittedly existing; in other words, the purpose of the parol evidence was to demonstrate, not that the
indorser did not intend to make the particular indorsement which he did make; not that he did not intend to
make the indorsement in the terms made; but, rather, to deny the reality of any indorsement; that a relation
of any kind whatever was created or existed between him and the indorsee by reason of the writing on the
back of the instrument; that no consideration ever passed to sustain an indorsement of any kind
whatsoever.

The contention has some of the appearances of a case in which an indorser seeks prove forgery. Where an
indorser claims that his name was forged, it is clear that parol evidence is admissible to prove that fact, and, if he
proves it, it is a complete defense, the fact being that the indorser never made any such contract, that no such
relation ever existed between him and the indorsee, and that there was no consideration whatever to sustain such a
contract. In the case before us we have a condition somewhat similar. While the indorser does not claim that his
name was forged, he does claim that it was obtained from him in a manner which, between the parties themselves,
renders, the contract as completely inoperative as if it had been forged.

Parol evidence was admissible for the purpose named. 1awphil.net

There is no contradiction of the evidence offered by the defense and received provisionally by the court. Accepting it
as true the judgment must be reversed.

The judgment appealed from is reversed and the complaint dismissed on the merits; no special finding as to
costs.

Arellano, C.J., Johnson and Trent, JJ., concur.

Separate Opinions

TORRES, J., concurring:

Act No. 2031, known as the Negotiable Instruments Law, which governs the present case, establishes various kinds
of indorsements by means of which the liability of the indorser is in some manner limited, distinguishing it from that
of the regular or general indorser, and among those kinds is that of the qualified indorsement which, pursuant to
section 38 of the same Act, constitutes the indorser a mere assignor of the title to the instrument, and may be made
by adding to the indorser's signature the words "without recourse" or any words of similar import.

If the defendant, Antonio G. Serrano, intervened, as he alleged and tried to prove that he did at the trial, only as a
broker or agent between the lender and plaintiff, Maulini, and the makers of the promissory note, Padern, Moreno &
Co. and Angel Gimenez, in order to afford an opportunity to the former to invest the amount of the note in such
manner that it might bring him interest, the defendant could have qualified the indorsement in question by adding to
his signature the words "without recourse" or any others such as would have made known in what capacity he
intervened in that transaction. As the defendant did not do so ad as he signed the indorsement in favor of the
plaintiff Maulini for value received from the latter, his liability, according to section 66 of the Act aforecited, is that of
a regular or general indorser, who, this same section provides, engages that if the instrument be dishonored, and
the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any
subsequent indorser who may be compelled to pay it. And the evidence which the defendant presented, tending to
show what were the conditions to which the defendant presented, tending to show what were the conditions to
which he obligated himself and in what capacity he intervened in making that indorsement and that this latter was
absolutely without consideration, should not have been admitted so that he might elude the aforesaid obligation, or,
if admitted, should not be taken into account, because as a regular indorser he warranted, pursuant to the said
section 66, that the instrument was genuine and in all respects what it purported to be, that he had a good title to it,
and that it was at the time of his indorsement valid and subsisting. He cannot, therefore, by means of any evidence,
and much less of such as consists of his own testimony, and as such interested party, alter, modify, contradict or

Evidence II.
annul, as he virtually claimed and claims to be entitled to do, what in writing and with a full and perfect knowledge of
the meaning and import of the words contained in the indorsement, he set forth therein over his signature.

Section 63 of the Act above cited says that a person placing his signature upon an instrument otherwise than as
maker, drawer, or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his
contention to be bound indicates by appropriate words his intention to be bound in some other capacity. This
provision of the law clearly indicates that in every negotiable instrument it is absolutely necessary to specify the
capacity in which the person intervenes who is mentioned therein or takes part in its negotiation, because only by so
doing can it be determined what liabilities arise from that intervention and from whom, how and when they must be
exacted. And if, in the vent of a failure to express the capacity in which the person who signed the negotiable
instrument intended to be bound, he should be deemed to be an indorser, when the very words of the instrument
expressly and conclusively show that such he is, as occurs in the present case, and when the indorsement contains
no restriction, modification, condition or qualification whatever, there cannot be attributed to him, without violating
the provisions of the said Act, any other intention than that of being bound in the capacity in which he appears in the
instrument itself, nor can evidence be admitted or, if already admitted, taken into consideration, for the purpose of
proving such other intention, for the simple reason that if the law has already fixed ad determined the capacity in
which it must be considered that the person who signed the negotiable instrument intervened and the intention of
his being bound in a definite capacity, for no other purpose, undoubtedly, than that there shall be no evidence given
in the matter, when the capacity appears in the instrument itself and the intention is determined by the very same
capacity, as occurs in this case, the admission of evidence in reference thereto is entirely unnecessary, useless,
and contrary to the purposes of the law, which is clear and precise in its provisions and admits of no subterfuges or
evasions for escaping obligations contracted upon the basis of credit, with evident and sure detriment to those who
intervened or took part in the negotiation of the instrument.

However, it is held in the majority opinion, for the purpose of sustaining the premises that the proofs presented by
the defendant could have been admitted without violating the provisions of section 285 of the Code of Civil
Procedure, that the evidence was not offered to vary, alter, modify, or contradict the terms of an agreement which it
is admitted existed between the parties, but to deny that there ever existed any agreement whatever; to wipe out all
apparent relations between the parties, and not to vary, alter or contradict the terms of a relation admittedly existing;
in other words, the purpose of the parol evidence was to demonstrate, not that the indorser did not intend to make
the particular indorsement in the terms made, but rather to deny the reality of any indorsement; to deny that a
relation of any kind whatsoever was created or existed between him and the indorsee by reason of the writing on
the back of the instrument; to deny that any consideration ever passed to sustain an indorsement of any kind
whatsoever. It is stated in the same decision that the contention has some of the appearances of a case in which an
indorser seeks to prove forgery.

First of all, we do not see that there exists any appearance or similarity whatever between the case at bar and one
where forgery is sought to be proved. The defendant did not, either civilly or criminally, impugn the indorsement as
being false. He admitted its existence, as stated in the majority opinion itself, and did not disown his signature
written in the indorsement. His denial to the effect that the indorsement was wholly without consideration, aside from
the fact that it is i contradiction to the statements that he over his signature made in the instrument, does not allow
the supposition that the instrument was forged.

The meaning which the majority opinion apparently wishes to convey, in calling attention to the difference between
what, as it says, was the purpose of the evidence presented by the defendant and what was sought to be proved
thereby, is that the defendant does not endeavor to contradict or alter the terms of the agreement, which is
contained in the instrument and is admitted to exist between the parties; but to deny the existence of such an
agreement between them, that is, the existence of any indorsement at all, and that any consideration ever passed to
sustain the said indorsement, or, in other words, that the defendant acknowledged the indorsement as regards the
form in which it appears to have been drawn up, but not with respect to its essence, that is, to the truth of the
particular facts set forth in the indorsement. It cannot be denied that the practical result evidence is other than to
contradict, modify, alter or even to annul the terms of the agreement contained in the indorsement: so that, in reality,
the distinction does not exist that is mentioned as a ground of the decision of the majority of the court in support of
the opinion that the evidence in question might have been admitted, without violating the provisions of the
aforementioned section 285 of the Code of Civil Procedure. This section is based upon the same principle which is
taken into account in the Negotiable Instruments Law to write into it such positive and definite provisions which
purport, without possibility of discussion or doubt, the uselessness of taking evidence when the capacity of the

Evidence II.
person who intervened in a negotiable instrument or his intention of being bound in a particular way appears in the
instrument itself or has been fixed by statute, if it is not shown that he did so in some other capacity than that of
maker, drawer or acceptor.

But aside from what the Code of Civil Procedure prescribes with respect to this matter, as the present case is
governed by the Negotiable Instruments Law, we must abide by its provisions.

Section 24 of this Act, No. 2031, says that every negotiable instrument is deemed prima facie to have been issued
for a valuable consideration; and every person whose signature appears thereon, to have become a party thereto
for value. If the Act establishes this presumption for the case where there might be doubt with respect to the
existence of a valuable consideration, in order to avoid the taking of evidence in the matter, when the consideration
appears from the instrument itself by the expression of the value, the introduction of evidence is entirely
unnecessary and improper.

According to section 25 of the same Act, value is any consideration sufficient to support a simple contract, and so
broad is the scope the law gives to the meaning of "value" in this kind of instruments that it considers as such a prior
of preexistent debt, whether the instrument be payable on demand or at some future date.

Section 26 provides that where value has at any time been given for the instrument, the holder is deemed a holder
for value, both in respect to the maker and to the defendant indorser, it is immaterial whether he did so directly to
the person who appears in the promissory note as the maker or whether he delivered the sum to the defendant in
order that this latter might in turn deliver it to the maker.

The defendant being the holder of the instrument, he is also unquestionably the holder in due course. In the first
place, in order to avoid doubts with respect to this matter which might require the introduction of evidence, the Act
before mentioned has provided, in section 59, that every holder is deemed prima facie to be a holder in due course,
and such is the weight it gives to this presumption and to the consequences derived therefrom, that it imposes upon
the holder the burden to prove that he or some person under whom he claims acquired the title in due course, only
when it is shown that the title of any person who has negotiated the instrument was defective. This rule, however,
pursuant to the said section, does not apply in favor of a party who became bound on the instrument prior to the
acquisition of such defective title, in which case the defendant Serrano is not included, because, in the first place, he
was not bound on the instrument prior to the acquisition of the title by the plaintiff, but it was the maker of the
promissory note who was bound on the instrument executed in favor of the defendant or indorser prior to the
acquisition of the title by the plaintiff; and, in the second place, it does not appear, nor was it proved, as will be seen
hereinafter, that the title in question was defective.

According to section 52 of the same Act, the plaintiff is the holder in due course of the instrument in question, that is,
of the promissory note containing the obligation compliance with which is demanded of him by the defendant,
because he took the instrument under the condition: (a) That it was complete and regular upon its face; (b) that he
became the holder of it before it was overdue, and without notice that it had been previously dishonored; (c) that he
took it in good faith and for value; and (d) that at the time it was negotiated to him he had no notice of any deficiency
in the instrument or defect in the title of the person negotiating it.

Pursuant to section 56 of the said Act, to constitute notice of a deficiency in the instrument or defect in the title of the
person negotiating the same, the person to whom it is transferred must have had actual knowledge of the deficiency
or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.

In the present case it cannot be said, for it is not proven, that the plaintiff, upon accepting the instrument from the
defendant, had actual knowledge of any deficiency or defect in the same, for the simple reason that it contains no
deficiency or defect. Its terms are very clear and positive. There is nothing ambiguous, concealed, or which might
give rise to any doubt whatever with respect to its terms or to the agreement made by the parties. Furthermore, as
stated in the majority opinion, the defendant did not intend to make the particular indorsement which he did make in
the terms, form and manner in which it was made, nor did he intend to change or alter the terms of the agreement
which is admitted to have existed between the parties. All of which indicates that, neither as regards the plaintiff nor
as regards the defendant, was there any deficiency or defect in the title or in the instrument, and that the plaintiff,
upon taking or receiving the instrument from the defendant, had no knowledge of any fact from which bad faith on

Evidence II.
his part might be implied. Besides, no evidence was produced of the existence of any such bad faith, nor of the
knowledge of any deficiency or defect.

Moreover, section 55 of Act No. 2031 provides that the title of a person who negotiates an instrument is defective
within the meaning of this Act when he obtained the instrument, or any signature thereto, by fraud, duress, or force
and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under
such circumstances as amount to a fraud. As no evidence was taken on these points, the only ones that may be
proven as regards negotiable instruments, the defendant must be deemed to be the holder of the instrument in due
course, pursuant to the provisions of the aforecited section 59, and he cannot be required to prove that he or his
predecessor in interest acquired the title as such holder in due course.

Now then, according to section 28 of the same Act, as against the holder of the instrument in due course absence or
failure of consideration is not a matter of defense; and, pursuant to section 57, a holder in due course holds the
instrument free from any defect of title of prior parties, and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon.
And the next section, No. 58 prescribes that in the hands of any holder other than a holder in due course, a
negotiable instrument is subject to the same defenses as if it were nonnegotiable.

So it could not be clearer than that, pursuant to the provisions of the Negotiable Instrument Law, which governs the
case at bar, as the plaintiff is the holder in due course of the instrument in question, no proof whatever from the
defendant could be admitted, nor if admitted should be taken into account, bearing on the lack of consideration in
the indorsement, as alleged by him, and for the purpose of denying the existence of any indorsement and that any
relation whatever was created or existed between him and the indorsee; likewise, that no defense of any kind could
have been admitted from the defendant in respect to the said instrument, and, finally, that the defendant is obligated
to pay the sum mentioned in the said indorsement, it being immaterial whether or not he be deemed to be an
accommodation party in the instrument, in order that compliance with the said obligation may be required of him in
his capacity of indorser.

Basing our conclusions on the foregoing grounds, and regretting to dissent from the opinion of the majority of our
colleagues, we believe that the judgment appealed from should be affirmed, with the costs against the appellant.

Evidence II.
17.) G.R. No. L-4388             August 13, 1952

PHILIPPINE NATIONAL BANK, petitioner,

vs.
BENITO SEETO, respondent.

Ramon B. de los Reyes for petitioner.

Montano A. Ortiz for respondent.

LABRADOR, J.:

On March 13, 1948, respondent Benito Seeto called at the branch of the Philippine National Bank, petitioner herein,
at Surigao, and presented a check, No. A-21096, in the amount of P5,000 dated at Cebu on March 10, 1948,
payable to cash or bearer, and drawn by one Gan Yek Kiao against the Cebu branch of the Philippine National Bank
of Communications. After consultation with the employees of the branch, Seeto made a general and unqualified
indorsement of the check, and petitioner's agency accepted it and paid respondent the amount of P5,000 therefor.
The check was mailed to petitioner's Cebu branch on March 20, 1948, and was presented to the drawee bank for
payment on April 9, 1948, but the check was dishonored for "insufficient funds." So the check was returned to
petitioner's Surigao agency, and upon receipt thereof by it on April 14, 1948, said branch immediately sent a letter to
the respondent herein demanding immediate refund of in the value of the check. A second communication of the
same tenor was sent on April 26, 1948, to which respondent answered asking that plaintiff's contemplated suit be
deferred while he was making inquiries about the reasons for the dishonor of the check. Thereafter, respondent
refused to make the refund demanded, claiming that at the time of the negotiation o the check the drawer had
sufficient funds in the drawee bank, and that the petitioner's Surigao agency not delayed to forward the check until
the drawer's funds were exhausted, the same would have been paid.

Thereupon petitioner presented a complaint in the Court of First Instance of Surigao, alleging that respondent
Benito Seeto gave assurance to petitioner's agency in Surigao that the drawer of the check had sufficient
funds with the drawee bank, and that upon these assurances petitioner's agency delivered the P5,000 to the
respondent after the latter had made a general and unqualified indorsement thereon. Respondent denied
having made the alleged assurances. Upon this issue petitioner submitted two witnesses at the time of the trial, who
testified that it was not the practice of petitioner's agency to cash out of town checks, and that the check was cashed
because of the assurances given by the respondent that the drawer had sufficient funds, and that he (respondent)
would refund the amount paid by petitioner's agency in case the check is dishonored. Respondent denied having
given the assurances. The trial court found notwithstanding respondent's denial to the contrary, that the respondent
made an undertaking to refund the amount of the checks in the event of dishonor. In support of this finding it found
that as the drawee bank is not in Cebu, it was impossible for petitioner's agency to make an independent verification
of the drawer's solvency, and must have taken precautions to protect itself against loss by requiring the respondent
to give assurances that he would return the amount of the check in the case of nonpayment. It also found that there
was no unreasonable delay in the presentation of the check, and, therefore, rendered judgment sentencing
respondent to refund the amount he had received for the check.

On appeal to the Court of Appeals, this court held that petitioner was guilty of unreasonably retaining and with-
holding the check, and that the delay in the presentment for payment was inexcusable, so that respondent was
thereby discharged from liability. It also held that parol evidence is incompetent to show that one signing of a check
as indorser is merely a surety or guarantor, rejecting the evidence adduced at the trial court about the respondent's
assurance and promise to refund. It, therefore, reversed the judgment of the trial court and dismissed the complaint,
with costs. Against this judgment an appeal by certiorari has been brought to this Court, petitioner Philippine
National Bank contending that the Court of Appeals erred in applying sections 143 and 144 of the Negotiable
Instruments Law and declaring respondent Benito Seeto discharged of his liability as indorser of the check, and in
not admitting parol evidence to show that respondent made oral assurances to refund the value of the check in case
of dishonor.

In support of petitioner's first assignment of error, it is argued that inasmuch as a check need not to be presented for
acceptance, unlike a bill of exchange as required by Section 143, Section 144 of the law is not applicable to the
case at bar but Section 84, which provides:
Evidence II.
 SEC. 84. Liability of person secondarily liable, when instrument dishonored. — Subject to the provisions of
this Act, when the instrument is dishonored by nonpayment, as immediate right of recourse to all parties
secondarily liable thereon accrues to the holder.

It is true that Section 143 and 144 of the law are not applicable, because these are provisions having to do with the
presentation of a bill of exchange for acceptance, and are not applicable to a check, as to which presentment for
acceptance is not required.

It is also true that Section 84 is applicable, but its application is subject to the condition imposed by Section 186, to
the effect that the check must be presented for payment within a reasonable time after its issue.

SEC. 186. — Within what time a check must be presented. — A check must be presented for payment
within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of
the loss caused by the delay.

Counsel for the petitioner, however, argues that inasmuch as the above section expressly provides for the discharge
of the drawer from liability to the extent of the loss caused by the delay, and, on the other hand, it is silent as to the
liability of the indorser, the latter may not be considered discharged from liability by reason of the delay in the
presentment of payment under the general principle inclusio unius est exclusion alterius. We find no reason nor
merit in the argument. The silence of Section 186 as to the indorser is due to the fact that his discharge is already
expressly covered by the provision of Section 84, the indorser being a person secondarily liable on the instrument.
The reason for the difference between the liability of the indorser and that of the drawer in case of dishonor is that
the drawer is not probably or necessarily prejudiced thereby, while an indorser is, actually or by legal presumption.

Innumerable decisions have already been rendered in the state courts of the United States to the effect that
although the drawer of a check is discharged only to the extent of loss caused by unreasonable delay in
presentment, an indorser is wholly discharged thereby irrespective of any question of loss or injury. ( Swift & Co. vs.
Miller, 62 Ind. App. 312, 113 N.E. 447, cited in Brannan's Negotiable Instruments Law, p. 1134, Nuzum vs.
Sheppard, 87 W. Va. 243, 104 S.E. 587, 11 A.L.R. 1024, Ibid.)

The proposition maintained in the reported case (Nuzum vs. Sheppard., ante. 1024) that the indorser of a
check, unlike the drawer, is relieved of liability thereon by an unreasonable delay in presenting the same for
payment, whether or not he is injured by the delay, is supported by the great weight of authority, (Cases
cited.)

The Court, in Gough v. Staats (N.Y.) supra, says: "Upon the question of due diligence to charge an indorser,
whether he has been prejudiced or not by the delay is perfectly immaterial. It is not inquired into. The law
presumes he has been prejudiced." According to the Court in Caroll v. Sweet (1891) 128 N.Y. 19, 13 L.R.A.
43, 27 N.E. 763, "presentment to due time as fixed by the law merchant was a condition upon performance
of which the liability of the defendant, as indorser, depended, and this delay was not excused, although the
drawer of the check had no funds, or was insolvent, or because presentment would not been unavailing as a
means of procuring payment." Only where there is affirmative proof that the indorser knew when he cashed
the check that there would be no funds in the bank to meet it can the rule be avoided. Otherwise, the failure
to present the check in due course of payment will discharge the indorser even though such presentment
would have been unavailing. Start v. Tupper (Vt.) supra. (11 A.L.R. Annotation, pp. 1028-1029.)

We have been unable to find any authority sustaining the proposition that an indorser of a check is not discharged
from liability for an unreasonable delay in presentation for payment. This is contrary to the essential nature and
character of negotiable instruments — their negotiability. They are supposed to be passed on with promptness in
the ordinary course of business transactions; not to be retained or kept for such time as the holder may want,
otherwise the smooth flow of commercial transactions would be hindered.

There seems to be an intimation in the decision appealed from that inasmuch as the check was drawn payable
elsewhere than at the place of business of the drawer, it must be presented for acceptance or negotiable within a
reasonable time, and upon failure to do so the drawer and all indorsers thereof are discharged pursuant to Section
144 of the law. Against this insinuation the petitioner argues that the application of sections 143 and 144 is not
proper, and that it may not be presumed that the check in question was not drawn and executed in Cebu, the
Evidence II.
residence or place of business of the drawer. There is no evidence at all as to the place where the check was
drawn. However, we have already pointed out above that neither Section 143 nor Section 144 is applicable. But our
ruling that respondent was discharged upon the dishonor of the check is based on Sections 84 and 186, the latter
expressly requiring that a check must be presented for payment within a reasonable time after issue.

It is not claimed by the petitioner on this appeal that the conclusion of the Court of Appeals that there was
unreasonable delay in the presentation of the check for payment at the drawee bank is erroneous. The petitioner
concedes the correctness of this conclusion, although for purposes of argument merely. We find that the conclusion
is correct. The fact, admitted by the witnesses for the petitioner, the checks for the drawer issued subsequent to
March 13, 1948, drawn against the same bank and cashed at the same Surigao agency, were not dishonored
positively shows that the drawer had enough funds when he issued the check in question, and that had it not been
for the unreasonable delay in its presentation for payment, the petitioner herein would have been able to receive
payment therefor. The check is dated March 10, and was cashed by the petitioner's agency on March 13, 1948. It
was not mailed until seven days thereafter, i.e., on March 20, 1948, or ten days after issue. No excuse was given for
this delay. Assuming that it took one week, or say ten days, or until March 30, for the check to reach Cebu, neither
can there be any excuse for not presenting it for payment at the drawee bank until April 9, 1948, or 10 days after it
reached Cebu. We, therefore, find no reason for disturbing the conclusion of the Court of Appeals that there was
unreasonable delay in the presentation of the check for payment at the drawee bank, and that is a consequence
thereof, the indorser, respondent herein, was thereby discharged.

With respect to the second assignment of error, petitioner argues that the verbal assurances given by the
respondent to the employees of the bank that he was ready to refund the amount if the check should be
dishonored by the drawee bank is a collateral agreement, separate and distinct from the indorsement, by
virtue of which petitioner herein was induced to cash the check, and, therefore, admissible as an exception
that the parol evidence rule. Petitioners contention in this respect is not entirely unfounded. In the case of Tan
Machan vs. De La Trinidad, et al., 4 Phil., 684, this court held that parol evidence is admissible to show that parties
signing as principals merely did so as sureties. In the case of Robles vs. Lizarraga Hermanos, 50 Phil., 387, it was
also held by this court that parol evidence is admissible to prove "an independent thereof." (Ibid., p. 395.) In Philips
vs. Preston, 5 How. (U.S.) 278, 12 L. ed, 152, the Supreme Court of the United States held that any prior or
contemporaneous conversation in connection with a note or its indorsement, may be proved by parol evidence. And
Wigmore states that "an extrinsic agreement between indorser and indorsee which cannot be embodied in the
instrument without impairing its credit is provable by parol." (9 Wigmore 148, section 2445 [3].) If, therefore, the
supposed assurances that the drawer had funds and that the respondent herein would refund the amount of the
check if the drawer had no funds, were the considerations or reasons that induced the branch agency of the
petitioners to go out of its ordinary practice of not cashing out of town checks and accept the check and to pay its
face value, the same would be provable by parol, provided, of course, that the assurances or inducements offered
would not vary, alter, or destroy the obligations attached by law to the indorsement.

We find, however, that the supposed assurances of refund in case of dishonor of the check are precisely the
ordinary obligations of an indorser, and these obligations are, under the law, considered discharged by an
unreasonable delay in the presentation of the check for payment.

SEC. 66. Liability of general indorser. — . . . .

And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may
be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly
taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to
pay it. (Emphasis ours.)

There was no express obligation assumed by the respondent herein that the drawer would always have funds, or
that he (the indorser) would refund the amount of the check even if there was delay in its presentation, so that while
the Court of Appeals may have committed an error in disregarding the evidence submitted by petitioner at the trial of
the assurances made by respondent herein at the time of the negotiation of the check, such error was without
prejudice, because the supposed assurances given were part of his obligations as an indorser, which were
discharged by the unreasonable delay in the presentation of the check for payment.

The judgment appealed from is, therefore, affirmed, with costs against the petitioner.
Evidence II.
18.) G.R. No. L-4811             July 31, 1953

CHARLES F. WOODHOUSE, plaintiff-appellant,
vs.
FORTUNATO F. HALILI, defendant-appellant.

Tañada, Pelaez & Teehankee for defendant and appellant.

Gibbs, Gibbs, Chuidian & Quasha for plaintiff and appellant.

LABRADOR, J.:

On November 29, 1947, the plaintiff entered on a written agreement, Exhibit A, with the defendant, the most
important provisions of which are (1) that they shall organize a partnership for the bottling and distribution of
Mision soft drinks, plaintiff to act as industrial partner or manager, and the defendant as a capitalist, furnishing the
capital necessary therefor; (2) that the defendant was to decide matters of general policy regarding the business,
while the plaintiff was to attend to the operation and development of the bottling plant; (3) that the plaintiff was to
secure the Mission Soft Drinks franchise for and in behalf of the proposed partnership; and (4) that the
plaintiff was to receive 30 per cent of the net profits of the business. The above agreement was arrived at after
various conferences and consultations by and between them, with the assistance of their respective attorneys. Prior
to entering into this agreement, plaintiff had informed the Mission Dry Corporation of Los Angeles, California, U.S.A.,
manufacturers of the bases and ingridients of the beverages bearing its name, that he had interested a prominent
financier (defendant herein) in the business, who was willing to invest half a million dollars in the bottling and
distribution of the said beverages, and requested, in order that he may close the deal with him, that the right to
bottle and distribute be granted him for a limited time under the condition that it will finally be transferred to the
corporation (Exhibit H). Pursuant for this request, plaintiff was given "a thirty-days" option on exclusive bottling
and distribution rights for the Philippines" (Exhibit J). Formal negotiations between plaintiff and defendant began
at a meeting on November 27, 1947, at the Manila Hotel, with their lawyers attending. Before this meeting plaintiff's
lawyer had prepared the draft of the agreement, Exhibit II or OO, but this was not satisfactory because a
partnership, instead of a corporation, was desired. Defendant's lawyer prepared after the meeting his own draft,
Exhibit HH. This last draft appears to be the main basis of the agreement, Exhibit A.

The contract was finally signed by plaintiff on December 3, 1947. Plaintiff did not like to go to the United States
without the agreement being not first signed. On that day plaintiff and defendant went to the United States, and on
December 10, 1947, a franchise agreement (Exhibit V) was entered into the Mission Dry Corporation and Fortunato
F. Halili and/or Charles F. Woodhouse, granted defendant the exclusive right, license, and authority to produce,
bottle, distribute, and sell Mision beverages in the Philippines. The plaintiff and the defendant thereafter returned to
the Philippines. Plaintiff reported for duty in January, 1948, but operations were not begun until the first week of
February, 1948. In January plaintiff was given as advance, on account of profits, the sum of P2,000, besides the use
of a car; in February, 1948, also P2,000, and in March only P1,000. The car was withdrawn from plaintiff on March
9, 1948.

When the bottling plant was already on operation, plaintiff demanded of defendant that the partnership papers be
executed. At first defendant executed himself, saying there was no hurry. Then he promised to do so after the sales
of the product had been increased to P50,000. As nothing definite was forthcoming, after this condition was
attained, and as defendant refused to give further allowances to plaintiff, the latter caused his attorneys to take up
the matter with the defendant with a view to a possible settlement. as none could be arrived at, the present action
was instituted.

In his complaint plaintiff asks for the execution of the contract of partnership, an accounting of the profits, and a
share thereof of 30 per cent, as well as damages in the amount of P200,000. In his answer defendant alleges by
way of defense (1) that defendant's consent to the agreement, Exhibit A, was secured by the representation of
plaintiff that he was the owner, or was about to become owner of an exclusive bottling franchise, which
representation was false, and plaintiff did not secure the franchise, but was given to defendant himself; (2) that
defendant did not fail to carry out his undertakings, but that it was plaintiff who failed; (3) that plaintiff agreed to
contribute the exclusive franchise to the partnership, but plaintiff failed to do so. He also presented a counter-claim
for P200,000 as damages. On these issues the parties went to trial, and thereafter the Court of First Instance
Evidence II.
rendered judgment ordering defendant to render an accounting of the profits of the bottling and distribution
business, subject of the action, and to pay plaintiff 15 percent thereof. it held that the execution of the contract of
partnership could not be enforced upon the parties, but it also held that the defense of fraud was not proved.
Against this judgment both parties have appealed.

The most important question of fact to be determined is whether defendant had falsely represented that he had an
exclusive franchise to bottle Mission beverages, and whether this false representation or fraud, if it existed, annuls
the agreement to form the partnership. The trial court found that it is improbable that defendant was never shown
the letter, Exhibit J, granting plaintiff had; that the drafts of the contract prior to the final one can not be considered
for the purpose of determining the issue, as they are presumed to have been already integrated into the final
agreement; that fraud is never presumed and must be proved; that the parties were represented by attorneys, and
that if any party thereto got the worse part of the bargain, this fact alone would not invalidate the agreement. On this
appeal the defendant, as appellant, insists that plaintiff did represent to the defendant that he had an exclusive
franchise, when as a matter of fact, at the time of its execution, he no longer had it as the same had expired, and
that, therefore, the consent of the defendant to the contract was vitiated by fraud and it is, consequently, null and
void.

Our study of the record and a consideration of all the surrounding circumstances lead us to believe that defendant's
contention is not without merit. Plaintiff's attorney, Mr. Laurea, testified that Woodhouse presented himself as being
the exclusive grantee of a franchise, thus:

A. I don't recall any discussion about that matter. I took along with me the file of the office with regards to
this matter. I notice from the first draft of the document which I prepared which calls for the organization of a
corporation, that the manager, that is, Mr. Woodhouse, is represented as being the exclusive grantee of a
franchise from the Mission Dry Corporation. . . . (t.s.n., p.518)

As a matter of fact, the first draft that Mr. Laurea prepared, which was made before the Manila Hotel conference on
November 27th, expressly states that plaintiff had the exclusive franchise. Thus, the first paragraph states:

Whereas, the manager is the exclusive grantee of a franchise from the Mission Dry Corporation San
Francisco, California, for the bottling of Mission products and their sale to the public throughout the
Philippines; . . . .

3. The manager, upon the organization of the said corporation, shall forthwith transfer to the said corporation
his exclusive right to bottle Mission products and to sell them throughout the Philippines. . . . .

(Exhibit II; emphasis ours)

The trial court did not consider this draft on the principle of integration of jural acts. We find that the principle invoked
is inapplicable, since the purpose of considering the prior draft is not to vary, alter, or modify the agreement,
but to discover the intent of the parties thereto and the circumstances surrounding the execution of the
contract. The issue of fact is: Did plaintiff represent to defendant that he had an exclusive franchise?
Certainly, his acts or statements prior to the agreement are essential and relevant to the determination of said issue.
The act or statement of the plaintiff was not sought to be introduced to change or alter the terms of the
agreement, but to prove how he induced the defendant to enter into it — to prove the representations or
inducements, or fraud, with which or by which he secured the other party's consent thereto. These are
expressly excluded from the parol evidence rule. (Bough and Bough vs. Cantiveros and Hanopol, 40 Phil., 209;
port Banga Lumber Co. vs. Export & Import Lumber Co., 26 Phil., 602; III Moran 221,1952 rev. ed.) Fraud and false
representation are an incident to the creation of a jural act, not to its integration, and are not governed by the rules
on integration. Were parties prohibited from proving said representations or inducements, on the ground that the
agreement had already been entered into, it would be impossible to prove misrepresentation or fraud. Furthermore,
the parol evidence rule expressly allows the evidence to be introduced when the validity of an instrument is put in
issue by the pleadings (section 22, par. (a), Rule 123, Rules of Court),as in this case.

That plaintiff did make the representation can also be easily gleaned from his own letters and his own testimony. In
his letter to Mission Dry Corporation, Exhibit H, he said:.

Evidence II.
 . . . He told me to come back to him when I was able to speak with authority so that we could come to terms
as far as he and I were concerned. That is the reason why the cable was sent. Without this authority, I am in
a poor bargaining position. . .

I would propose that you grant me the exclusive bottling and distributing rights for a limited period of time,
during which I may consummate my plants. . . .

By virtue of this letter the option on exclusive bottling was given to the plaintiff on October 14, 1947. (See Exhibit J.)
If this option for an exclusive franchise was intended by plaintiff as an instrument with which to bargain with
defendant and close the deal with him, he must have used his said option for the above-indicated purpose,
especially as it appears that he was able to secure, through its use, what he wanted.

Plaintiff's own version of the preliminary conversation he had with defendant is to the effect that when plaintiff called
on the latter, the latter answered, "Well, come back to me when you have the authority to operate. I am definitely
interested in the bottling business." (t. s. n., pp. 60-61.) When after the elections of 1949 plaintiff went to see the
defendant (and at that time he had already the option), he must have exultantly told defendant that he had the
authority already. It is improbable and incredible for him to have disclosed the fact that he had only an option to the
exclusive franchise, which was to last thirty days only, and still more improbable for him to have disclosed that, at
the time of the signing of the formal agreement, his option had already expired. Had he done so, he would have
destroyed all his bargaining power and authority, and in all probability lost the deal itself.

The trial court reasoned, and the plaintiff on this appeal argues, that plaintiff only undertook in the agreement "to
secure the Mission Dry franchise for and in behalf of the proposed partnership." The existence of this provision in
the final agreement does not militate against plaintiff having represented that he had the exclusive franchise; it
rather strengthens belief that he did actually make the representation. How could plaintiff assure defendant that he
would get the franchise for the latter if he had not actually obtained it for himself? Defendant would not have gone
into the business unless the franchise was raised in his name, or at least in the name of the partnership. Plaintiff
assured defendant he could get the franchise. Thus, in the draft prepared by defendant's attorney, Exhibit HH, the
above provision is inserted, with the difference that instead of securing the franchise for the defendant, plaintiff was
to secure it for the partnership. To show that the insertion of the above provision does not eliminate the probability of
plaintiff representing himself as the exclusive grantee of the franchise, the final agreement contains in its third
paragraph the following:

. . . and the manager is ready and willing to allow the capitalists to use the exclusive franchise . . .

and in paragraph 11 it also expressly states:

1. In the event of the dissolution or termination of the partnership, . . . the franchise from Mission Dry
Corporation shall be reassigned to the manager.

These statements confirm the conclusion that defendant believed, or was made to believe, that plaintiff was the
grantee of an exclusive franchise. Thus it is that it was also agreed upon that the franchise was to be transferred to
the name of the partnership, and that, upon its dissolution or termination, the same shall be reassigned to the
plaintiff.

Again, the immediate reaction of defendant, when in California he learned that plaintiff did not have the exclusive
franchise, was to reduce, as he himself testified, plaintiff's participation in the net profits to one half of that agreed
upon. He could not have had such a feeling had not plaintiff actually made him believe that he (plaintiff) was the
exclusive grantee of the franchise.

The learned trial judge reasons in his decision that the assistance of counsel in the making of the contract made
fraud improbable. Not necessarily, because the alleged representation took place before the conferences were had,
in other words, plaintiff had already represented to defendant, and the latter had already believed in, the existence
of plaintiff's exclusive franchise before the formal negotiations, and they were assisted by their lawyers only when
said formal negotiations actually took place. Furthermore, plaintiff's attorney testified that plaintiff had said that he

Evidence II.
had the exclusive franchise; and defendant's lawyer testified that plaintiff explained to him, upon being asked for the
franchise, that he had left the papers evidencing it.(t.s.n., p. 266.)

We conclude from all the foregoing that plaintiff did actually represent to defendant that he was the holder of the
exclusive franchise. The defendant was made to believe, and he actually believed, that plaintiff had the exclusive
franchise. Defendant would not perhaps have gone to California and incurred expenses for the trip, unless he
believed that plaintiff did have that exclusive privilege, and that the latter would be able to get the same from the
Mission Dry Corporation itself. Plaintiff knew what defendant believed about his (plaintiff's) exclusive franchise, as
he induced him to that belief, and he may not be allowed to deny that defendant was induced by that belief. (IX
Wigmore, sec. 2423; Sec. 65, Rule 123, Rules of Court.)

We now come to the legal aspect of the false representation. Does it amount to a fraud that would vitiate the
contract? It must be noted that fraud is manifested in illimitable number of degrees or gradations, from the innocent
praises of a salesman about the excellence of his wares to those malicious machinations and representations that
the law punishes as a crime. In consequence, article 1270 of the Spanish Civil Code distinguishes two kinds of (civil)
fraud, the causal fraud, which may be a ground for the annulment of a contract, and the incidental deceit, which only
renders the party who employs it liable for damages. This Court had held that in order that fraud may vitiate consent,
it must be the causal (dolo causante), not merely the incidental (dolo causante), inducement to the making of the
contract. (Article 1270, Spanish Civil Code; Hill vs. Veloso, 31 Phil. 160.) The record abounds with circumstances
indicative that the fact that the principal consideration, the main cause that induced defendant to enter into the
partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and distribute
for the defendant or for the partnership. The original draft prepared by defendant's counsel was to the effect that
plaintiff obligated himself to secure a franchise for the defendant. Correction appears in this same original draft, but
the change is made not as to the said obligation but as to the grantee. In the corrected draft the word
"capitalist"(grantee) is changed to "partnership." The contract in its final form retains the substituted term
"partnership." The defendant was, therefore, led to the belief that plaintiff had the exclusive franchise, but that the
same was to be secured for or transferred to the partnership. The plaintiff no longer had the exclusive franchise, or
the option thereto, at the time the contract was perfected. But while he had already lost his option thereto (when the
contract was entered into), the principal obligation that he assumed or undertook was to secure said franchise for
the partnership, as the bottler and distributor for the Mission Dry Corporation. We declare, therefore, that if he was
guilty of a false representation, this was not the causal consideration, or the principal inducement, that led plaintiff to
enter into the partnership agreement.

But, on the other hand, this supposed ownership of an exclusive franchise was actually the consideration or price
plaintiff gave in exchange for the share of 30 percent granted him in the net profits of the partnership business.
Defendant agreed to give plaintiff 30 per cent share in the net profits because he was transferring his exclusive
franchise to the partnership. Thus, in the draft prepared by plaintiff's lawyer, Exhibit II, the following provision exists:

3. That the MANAGER, upon the organization of the said corporation, shall forthwith transfer to the said
corporation his exclusive right to bottle Mission products and to sell them throughout the Philippines. As a
consideration for such transfer, the CAPITALIST shall transfer to the Manager fully paid non assessable
shares of the said corporation . . . twenty-five per centum of the capital stock of the said corporation. (Par. 3,
Exhibit II; emphasis ours.)

Plaintiff had never been a bottler or a chemist; he never had experience in the production or distribution of
beverages. As a matter of fact, when the bottling plant being built, all that he suggested was about the toilet facilities
for the laborers.

We conclude from the above that while the representation that plaintiff had the exclusive franchise did not vitiate
defendant's consent to the contract, it was used by plaintiff to get from defendant a share of 30 per cent of the net
profits; in other words, by pretending that he had the exclusive franchise and promising to transfer it to defendant,
he obtained the consent of the latter to give him (plaintiff) a big slice in the net profits. This is the dolo
incidente defined in article 1270 of the Spanish Civil Code, because it was used to get the other party's consent to a
big share in the profits, an incidental matter in the agreement.

El dolo incidental no es el que puede producirse en el cumplimiento del contrato sino que significa aqui, el
que concurriendoen el consentimiento, o precediendolo, no influyo para arrancar porsi solo el
Evidence II.
 consentimiento ni en la totalidad de la obligacion, sinoen algun extremo o accidente de esta, dando lugar
tan solo a una accion para reclamar indemnizacion de perjuicios. (8 Manresa 602.)

Having arrived at the conclusion that the agreement may not be declared null and void, the question that next
comes before us is, May the agreement be carried out or executed? We find no merit in the claim of plaintiff that the
partnership was already a fait accompli from the time of the operation of the plant, as it is evident from the very
language of the agreement that the parties intended that the execution of the agreement to form a partnership was
to be carried out at a later date. They expressly agreed that they shall form a partnership. (Par. No. 1, Exhibit A.) As
a matter of fact, from the time that the franchise from the Mission Dry Corporation was obtained in California, plaintiff
himself had been demanding that defendant comply with the agreement. And plaintiff's present action seeks the
enforcement of this agreement. Plaintiff's claim, therefore, is both inconsistent with their intention and incompatible
with his own conduct and suit.

As the trial court correctly concluded, the defendant may not be compelled against his will to carry out the
agreement nor execute the partnership papers. Under the Spanish Civil Code, the defendant has an obligation to
do, not to give. The law recognizes the individual's freedom or liberty to do an act he has promised to do, or not to
do it, as he pleases. It falls within what Spanish commentators call a very personal act (acto personalismo), of which
courts may not compel compliance, as it is considered an act of violence to do so.

Efectos de las obligaciones consistentes en hechos personalismo.—Tratamos de la ejecucion de las

obligaciones de hacer en el solocaso de su incumplimiento por parte del deudor, ya sean los hechos
personalisimos, ya se hallen en la facultad de un tercero; porque el complimiento espontaneo de las
mismas esta regido por los preceptos relativos al pago, y en nada les afectan las disposiciones del art.
1.098.

Esto supuesto, la primera dificultad del asunto consiste en resolver si el deudor puede ser precisado a
realizar el hecho y porque medios.

Se tiene por corriente entre los autores, y se traslada generalmente sin observacion el principio
romano nemo potest precise cogi ad factum. Nadie puede ser obligado violentamente a haceruna cosa. Los
que perciben la posibilidad de la destruccion deeste principio, añaden que, aun cuando se pudiera obligar al
deudor, no deberia hacerse, porque esto constituiria una violencia, y noes la violenciamodo propio de
cumplir las obligaciones (Bigot, Rolland, etc.). El maestro Antonio Gomez opinaba lo mismo cuandodecia
que obligar por la violencia seria infrigir la libertad eimponer una especie de esclavitud.

xxx     xxx     xxx

En efecto; las obligaciones contractuales no se acomodan biencon el empleo de la fuerza fisica, no ya

precisamente porque seconstituya de este modo una especie de esclavitud, segun el dichode Antonio
Gomez, sino porque se supone que el acreedor tuvo encuenta el caracter personalisimo del hecho ofrecido,
y calculo sobre laposibilidad de que por alguna razon no se realizase. Repugna,ademas, a la conciencia
social el empleo de la fuerza publica, mediante coaccion sobre las personas, en las relaciones puramente
particulares; porque la evolucion de las ideas ha ido poniendo masde relieve cada dia el respeto a la
personalidad humana, y nose admite bien la violencia sobre el individuo la cual tiene caracter visiblemente
penal, sino por motivos que interesen a la colectividad de ciudadanos. Es, pues, posible y licita esta
violencia cuando setrata de las obligaciones que hemos llamado ex lege, que afectanal orden social y a la
entidad de Estado, y aparecen impuestas sinconsideracion a las conveniencias particulares, y sin que por
estemotivo puedan tampoco ser modificadas; pero no debe serlo cuandola obligacion reviste un interes
puramente particular, como sucedeen las contractuales, y cuando, por consecuencia, paraceria salirseel
Estado de su esfera propia, entrado a dirimir, con apoyo dela fuerza colectiva, las diferencias producidas
entre los ciudadanos. (19 Scaevola 428, 431-432.)

The last question for us to decide is that of damages,damages that plaintiff is entitled to receive because of
defendant's refusal to form the partnership, and damages that defendant is also entitled to collect because of the
falsity of plaintiff's representation. (Article 1101, Spanish Civil Code.) Under article 1106 of the Spanish Civil Code
the measure of damages is the actual loss suffered and the profits reasonably expected to be received, embraced in
the terms daño emergente and lucro cesante. Plaintiff is entitled under the terms of the agreement to 30 per cent of
Evidence II.
the net profits of the business. Against this amount of damages, we must set off the damage defendant suffered by
plaintiff's misrepresentation that he had obtained a very high percentage of share in the profits. We can do no better
than follow the appraisal that the parties themselves had adopted.

When defendant learned in Los Angeles that plaintiff did not have the exclusive franchise which he pretended he
had and which he had agreed to transfer to the partnership, his spontaneous reaction was to reduce plaintiff's share
form 30 per cent to 15 per cent only, to which reduction defendant appears to have readily given his assent. It was
under this understanding, which amounts to a virtual modification of the contract, that the bottling plant was
established and plaintiff worked as Manager for the first three months. If the contract may not be considered
modified as to plaintiff's share in the profits, by the decision of defendant to reduce the same to one-half and the
assent thereto of plaintiff, then we may consider the said amount as a fair estimate of the damages plaintiff is
entitled to under the principle enunciated in the case of Varadero de Manila vs. Insular Lumber Co., 46 Phil. 176.
Defendant's decision to reduce plaintiff's share and plaintiff's consent thereto amount to an admission on the part of
each of the reasonableness of this amount as plaintiff's share. This same amount was fixed by the trial court. The
agreement contains the stipulation that upon the termination of the partnership, defendant was to convey the
franchise back to plaintiff (Par. 11, Exhibit A). The judgment of the trial court does not fix the period within which
these damages shall be paid to plaintiff. In view of paragraph 11 of Exhibit A, we declare that plaintiff's share of 15
per cent of the net profits shall continue to be paid while defendant uses the franchise from the Mission Dry
Corporation.

With the modification above indicated, the judgment appealed from is hereby affirmed. Without costs.

Evidence II.
19.) G.R. No. L-26173             July 13, 1927

ZACARIAS ROBLES, plaintiff-appellee,
vs.
LIZARRAGA HERMANOS, defendant-appellant.

J. Arroyo, Jose Lopez Vito, and Francisco, Lualhati and Lopez for appellant.
Paredes, Buencamino and Yulo for appellee.

STREET, J.:

This action was instituted in the Court of First Instance of Occidental Negros by Zacarias Robles against Lizarraga
Hermanos, a mercantile partnership organized under the laws of the Philippine Islands, for the purpose of
recovering compensation for improvements made by the plaintiff upon the hacienda "Nahalinan" and the value of
implements and farming equipment supplied to the hacienda by the plaintiff, as well as damages for breach of
contract. Upon hearing the cause the trial court gave judgment for the plaintiff to recover of the defendant the sum of
P14,194.42, with costs. From this judgment the defendant appealed.

It appears that the hacienda "Nahalinan," situated in the municipality of Pontevedra, Occidental Negros,

belonged originally to the spouses Zacarias Robles and Anastacia de la Rama, parents of the present
plaintiff, Zacarias Robles. Upon the death of Zacarias Robles, sr., several years ago, his widow Anastacia de
la Rama was appointed administratrix of his estate; and on May 20, 1913, as widow and administratrix, she
leased the hacienda to the plaintiff, Zacarias Robles, for the period of six years beginning at the end of the
milling season in May, 1915, and terminating at the end of the milling season in May, 1920. It was stipulated that
any permanent improvements necessary to the cultivation and exploitation of the hacienda should be made
at the expense of the lessee without right to indemnity at the end of the term. As the place was in a run-down
state, and it was foreseen that the lessee would be put to much expense in bringing the property to its productive
capacity, the annual rent was fixed at the moderate amount of P2,000 per annum.

The plaintiff accordingly entered upon the property, in the character of lessee; and, in order to put the farm in good
condition, he found it necessary to make various improvements and additions to the plant. Briefly stated, the
changes and additions thus effected were these: Substitution of a new hydraulic press; reconstruction of dwelling
house; construction of new houses for workmen; building of camarins; construction of chimney; reconstruction of
ovens; installment of new coolers; purchase of farming tools and many head of carabao, with other repairs and
improvements. All this expense was borne exclusively by the lessee, with the exception that his mother and coheirs
contributed P1,500 towards the expense of the reconstruction of the dwelling house, which was one-half the outlay
for that item. The firm of Lizarraga Hermanos was well aware of the nature and extent of these improvements, for
the reason that the lessee was a customer of the firm and had purchased from it many of the things that went into
the improvements.

In 1916, or three years before the lease was to expire, Anastacia de la Rama died, leaving as heirs Zacarias
Robles (the plaintiff), Jose Robles, Evarista Robles, Magdalena Robles, Felix Robles, Jose Robles, and Evarista
Robles acquired by purchase the shares of their coheirs in the entire inheritance; and at this juncture Lizarraga
Hermanos came forward with a proposal to buy from these three all of the other properties belonging to the
Robles estate (which included other properties in addition to the hacienda "Nahalinan").

In course of the negotiations an obstacle was encountered in the fact that the lease of Zacarias Robles still
had over two years to run. It was accordingly proposed that he should surrender the last two years of his lease
and permit Lizarraga Hermanos to take possession as purchaser in June, 1918. A surrender of the two years of the
lease would naturally involve a heavy sacrifice on the part of Zacarias Robles not only because the rent which he
was bound to pay was low, but because he had already made most of the expenditures in outfitting the farm which
would be necessary for farming operations during the entire period of the lease.

The plaintiff alleges and the trial court found, upon what we believe to be sufficient proof, that, in
consideration that the plaintiff should shorten the term of his lease to the extent stated, the defendant

Evidence II.
agreed to pay him the value of all betterments that he had made on the hacienda and furthermore to
purchase from him all that belonged to him personally on the hacienda, including the crop of 1917-18, the
cattle, farming implements and equipment, according to a valuation to be made after the harvest. The plaintiff
agreed to this; and the instrument of conveyance by which the three owners, Zacarias, Jose and Evarista
Robles, conveyed the property to Lizarraga Hermanos was accordingly executed on November 16, 1917.

The effective clauses of conveyance by which each of the three owner transferred their respective interest to the
purchaser read as follows:

(a) Por la presente, Don Jose Robles, en consideracion a la cantidad de P25,266.37 que declara haber ya
recibido de la casa comercial Lizarraga Hermanos, vende, cede y traspasa a la mencionada casa comercial
Lizarraga Hermanos, representada en este acto por D. Severiano Lizarraga, como gerente de la misma, sus
sucesores y causahabientes, todos sus derechos, interes y participacion en la testamentaria de la difunta
Da. Anastacia de la Rama, como uno de los herederos forzosos de la misma y todos los derechos, interes y
participacion adquiridos conjuntamente por el y sus hermanos Da. Evarista Robles y D. Zacarias Robles de
D. Rafael Campos y Hurtado y de Da. Magdalena Robles.

(b) Y Da. Evarista Robles, con la debida licencia marital de su esposo D. Enrique Martin, quien concurre al
otorgamiento de este documento, en consideracion a la cantidad de P23,036.43, que declara haber ya
recibido de la casa comercial Lizarraga Hermanos, representada en este acto por D. Severano Lizarraga,
como gerente de la misma, sus sucesores y causahabientes, vende, cede y traspasa todos sus derechos,
intereses y participacion en la testamentaria de la difunta Da. Anastacia de la Rama, como una de interes y
participacion adquiridos por ella juntamente con sus hermanos D. Jose Robles y D. Zacarias Robles de D.
Rafael Campos y Hurtado y de Da. Magdalena Robles.

(c) Y, finalmente, D. Zacarias Robles, en consideracion a la cantidad de P32,589.59 que la casa Lizarraga
Hermanos, representada en este acto por D. Severiano Lizarraga, por la presente promete pagarle en o
antes del 30 de mayo de 1917, con los intereses a razon de 8 por ciento anual, vende, cede y traspasa a
favor de la mencionada casa comercial Lizarraga Hermanos, sus sucesores y causahabientes, todos sus
derechos, interes y participacion en la testamentaria de la difunta Da. Anastacia de la Rama, como uno de
los herederos forzosos de la misma, y todos los derechos, interes y participcion adquiridospor el,
juntamente con sus hermanos, Da. Evarista Robles y D. Jose Robles, de D. Rafael Campos y Hurtado y de
Da. Magdalena Robles."

It will be seen from the clauses quoted that the plaintiff received some thousands of pesos of the purchase money
more than his brother and sister. This is explained by the fact that the plaintiff was a creditor of his mother's estate
while the other two were debtors to it; and the difference in the amounts paid to each resulted from the adjustments
of their respective rights. Furthermore, it will be noted that the three grantors in the deed conveyed only their
deceased mother; and precisely the same words are used in defining what was conveyed by Zacarias Robles as in
defining what was conveyed by the other two. These words are noteworthy, and in the original Spanish they run as
follows: "Sus derechos, interes y participacion en la testamentaria de la difunta Da. Anastacia de la Rama, como
uno de los herederos forzosos de la misma." What was conveyed by the plaintiff is not defined as being, in part,
the hacienda "Nahalinan," nor as including any of his rights in or to the property conveyed other than those which he
possessed in the character of heir.

No reference is made in this conveyance to the surrender of the plaintiff's rights as lessee, except in fixing
the date when the lease should end; nor is anything said concerning the improvements or the property of a
personal nature which the plaintiff had placed on the hacienda. The plaintiff says that, when the instrument was
presented to him, he saw that in the sixth paragraph it was declared that the plaintiff's lease should subsist only until
June 30, 1918, instead of in May, 1920, which was the original term, while at the same time the promise of the
defendant to compensate for him for the improvements and to purchase the existing crop, together with the
cattle and other things, was wanting; and he says that upon his calling attention to this, the representative
of the defendant explained that this was unnecessary in view of the confidence existing between the
parties, at the same time calling the attention of the plaintiff to the fact that the plaintiff was already debtor to the
house of Lizarraga Hermanos in the amount of P49,000, for which the firm had no security. Upon this manifestation
the plaintiff subsided; and, believing that the agreement with respect to compensation would be carried out

Evidence II.
in good faith, he did not further insist upon the incorporation of said agreement into this document. Nor was the
supposed agreement otherwise reduced to writing.

On the part of the defendant it is claimed that the agreement with respect to compensating the plaintiff for
improvements and other things was never in fact made. What really happened, accordingly to the defendant's
answer, is that, after the sale of the hacienda had been effected, the plaintiff offered to sell the defendant firm the
crop of cane then existing uncut on the hacienda, together with the carabao then in use on the place. This
propositon was favorably received by the defendant; and it is admitted that an agreement was arrived at with
respect to the value of the carabao, which were taken over for the agreed price, but it is claimed with respect to the
crop that the parties did not come into accord.

Upon the issue of fact thus made we are of the opinion that the preponderance of the evidence supports the
contention of the plaintiff — and the finding of the trial court — to the effect that, in consideration of the
shortening of the period of the lease by nearly two years, the defendant undertook to pay for the
improvements which the plaintiff had placed on the hacienda and take over at a fair valuation, to be made
by appraisers, the personal property, such as carabao, tools and farming impliments, which the plaintiff had
placed upon the hacienda at his own personal expense. The plaintiff introduced in evidence a letter (Exhibit D),
written on March 1, 1917, by Severiano Lizarraga to the plaintiff, in which reference is made to an appraisal and
liquidation. This letter is relied upon by the plaintiff as constituting written evidence of the agreement; but it seems to
us so vague that, if it stood alone, and a written contract were really necessary, it could not be taken as sufficient
proof of the agreement in question. But we believe that the contract is otherwise proved by oral testimony.

When testifying as a witness of the defense Carmelo Lizarraga himself admitted — contrary to the
statement of defendant's answer — that a few days before  the conveyance was executed the plaintiff
proposed that the defendant should buy all the things that the plaintiff then had on the hacienda,
whereupon the Lizarragas informed him that they would buy those things if an agreement should be arrived
at as to the price. We note that as regards the improvements the position of the defendant is that they pertained to
the hacienda at the time the purchase was effected and necessarily passed with it to the defendant.

As against the denials of the Lizarraga we have the direct testimony of the plaintiff and his brother Jose to the effect
that the agreement was as claimed by the plaintiff; and this is supported by the natural probabilities of the case in
connection with a subsequent appraisal of the property, which was rendered futile by the course pursued by the
defendants. It is, however, unnecessary to enter into details with respect to this, because, upon examining the
assignments of error of the appellant in this court, it will be found that no exception has been taken to the finding of
the trial court to the effect that a verbal contract was made in the sense claimed by the plaintiff.

We now proceed to discuss seriatim the errors assigned by the appellant. Under the first, exception is taken to the
action of the trial court in admitting oral evidence of a contract different from that expressed in the contract of sale
(Exhibit B); and it is insisted that the written contract must be taken as expressing all of the pacts, agreements and
stipulations entered into between the parties with respect to the acquisition of the hacienda. In this connection stress
is placed upon the fact that there is no allegation in the complaint that the written contract fails to express the
agreement of the parties. This criticism is in our opinion not well directed. The case is not one for the reformation
of a document on the ground of mistake or fraud in its execution, as is permitted under section 285 of the Code of
Civil Procedure. The purpose is to enforce an independent or collateral agreement which constituted an
inducement to the making of the sale, or part of the consideration therefor. There is no rule of evidence of
wider application than that which declares extrinsic evidence inadmissible either to contradict or vary the terms of a
written contract. The execution of a contract in writing is deemed to supersede all oral negotiations or stipulations
concerning its terms and the subject-matter which preceded the execution of the instrument, in the absence of
accident, fraud or mistake of fact (10 R. C. L., p. 1016). But it is recognized that this rule is to be taken with proper
qualifications; and all the authorities are agreed that proof is admissible of any collateral, parol agreement that
is not inconsistent with the terms of the written contract, though it may relate to the same subject-matter
(10 R. C. L., p. 1036). As expressed in a standard legal encyclopedia, the doctrine here referred to is as follows:
"The rule excluding parol evidence to vary or contradict a writing does not extend so far as to preclude the
admission of extrinsic evidence to show prior or contemporaneous collateral parol agreements between the
parties, but such evidence may be received, regardless of whether or not the written agreement contains
any reference to such collateral agreement, and whether the action is at law or in equity." (22 C. J., p. 1245.)
It has accordingly been held that, in case of a written contract of lease, the lessee may prove an independent verbal

Evidence II.
agreement on the part of the landlord to put the leased premises in a safe condition; and a vendor of realty may
show by parol evidence that crops growing on the land were reserved, though no such reservation was made in the
deed of conveyance (10 R. C. L., p. 1037). In the case before us the deed of conveyance purports to transfer
to the defendant only such interests in certain properties as had come to the conveyors by inheritance.
Nothing is said concerning the rights in the hacienda which the plaintiff had acquired by lease or
concerning the things that he had placed thereon by way of improvement or had acquired by purchase. The
verbal contract which the plaintiff has established in this case is therefore clearly independent of the main
contract of conveyance, and evidence of such verbal contract is admissible under the doctrine above
stated. The rule that a preliminary or contemporaneous oral agreement is not admissible to vary a written
contract appears to have more particular reference to the obligation expressed in the written agreement,
and the rule had never been interpreted as being applicable to matters of consideration or inducement. In
the case before us the written contract is complete in itself; the oral agreement is also complete in itself,
and it is a collateral to the written contract, notwithstanding the fact that it deals with related matters.

Under the second assignment of error the appellant directs attention to subsection 4 of article 335 of the Code of
Civil Procedure wherein it is declared that a contract for the sale of goods, chattels or things in action, at a price of
not less than P100, shall be unenforceable unless the contract, or some note or memorandum thereof shall be in
writing and subscribed by the party charged, or by his agent; and it is insisted that the court erred in admitting proof
of a verbal contract over the objection of the defendant's attorney. But it will be noted that the same subsection
contains a qualification, which is stated in these words, "unless the buyer accept and receive part of such goods and
chattels." In the case before us the trial court found that the personal property, consisting of farming implements and
other movables placed on the farm by the plaintiff, have been utilized by the defendant in the cultivation of
the hacienda, and that the defendant is benefiting by those things. No effort was made in the court below by the
defendant to controvert the proof submitted on this point in behalf of the plaintiff, and no error is assigned in this
court to the findings of fact with reference thereto made by the trial judge. It is evident therefore that proof of the oral
agreement with respect to the movables was properly received by the trial judge, even over the objection of the
defendant's attorney. .

The appellant's third assignment of error has reference to the alleged suspensive condition annexed to the oral
agreement. In this connection it is claimed that the true meaning of the proven verbal agreement is that, in case the
parties should fail to agree upon the price, after an appraisal of the property, the agreement would not be binding; in
other words, that the stipulation for appraisal and agreement as to the price was a suspensive condition in the
contract: and since the parties have never arrived at any agreement on the price (except as to the carabao), it is
contended that the obligation of the defendant has never become effective. We are of the opinion that the stipulation
with respect to the appraisal of the property did not create a suspensive condition. The true sense of the contract
evidently was that the defendant would take over the movables and the improvements at an appraised valuation,
and the defendant obligated itself to promote the appraisal in good faith. As the defendant partially frustrated the
appraisal, it violated a term of the contract and made itself liable for the true value of the things contracted about, as
such value may be established in the usual course of proof. Furthermore, it must occur to any one, as the trial judge
pointed out, that an unjust enrichment of the defendant would result from allowing it to appropriate the movables
without compensating the plaintiff thereof.

The fourth assignment of error is concerned with the improvements. Attention is here directed to the fact that the
improvements placed on the hacienda by the plaintiff became a part of the realty and as such passed to the
defendant by virtue of the transfer effected by the three owner in the deed of conveyance (Exhibit B.). It is therefore
insisted that, the defendant having thus acquired the improvements, the plaintiff should not be permitted to recover
their value again from the defendant. This criticism misses the point. There can be no doubt that the defendant
acquired the fixed improvements when it acquired the land, but the question is whether the defendant is obligated to
indemnify the plaintiff for his outlay in making the improvements. It was upon the consideration of the defendant's
promise so to indemnify the plaintiff that the latter agreed to surrender the lease nearly two no doubt as to the
validity of the promise made under these circumstances to the plaintiff.

The fifth assignment of error is directed towards the action of the trial court in awarding to the plaintiff the sum of
P1,142 as compensation for the damage caused by the failure of the defendant to take the existing crop of cane
from the hacienda at the proper time. In this connection it appears that it was only in November, 1917, that the
defendant finally notified the plaintiff that he would not take the cane off the plaintiff's hands. Having relied upon the
promise of the defendant with respect to this matter, the plaintiff had made no prior arrangements to have the cane

Evidence II.
ground himself, and he had failed to contract ahead for the necessary laborers to harvest the crop. Due to this lack
of hands the milling of the cane was delayed, and things that ought to have been done in December, 1917, were
only accomplished in February, 1918. It resulted also that the milling of the cane was not completed until July, 1918.
The trial court took judicial notice of the fact that protracted delay in the milling of sugar-cane results in loss; and his
Honor estimated the damage to the plaintiff's crop upon this account in the amount above stated. As fortifying his
position on this point his Honor quoted extensively in his opinion from scientific treatises on the subject of the sugar
industry in this and other countries. That there must have been damage attributable to the cause above stated is
manifest; and although the estimate made by the court was based upon what may be considered matter of judicial
notice without any specific estimate from farmers, we see no reason to conclude that any injustice was done to the
plaintiff in said estimate.

Upon the whole we find no reason to modify the conclusions of the trial court upon any point, and the judgement
appealed from must be affirmed. It is so ordered, with costs against the appellant.

Evidence II.
 20.) [G.R. No. 79962 :  December 10, 1990.]
192 SCRA 209
LUCIO R. CRUZ, Petitioner, vs. COURT OF APPEALS AND CONRADO Q. SALONGA, Respondents.
 
DECISION
 
CRUZ, J.:
 
The private respondent Conrado Salonga filed a complaint for collection and damages against
petitioner Lucio Cruz ** in the Regional Trial Court of Lucena City alleging that in the course of their
business transactions of buying and selling fish, the petitioner borrowed from him an amount of
P35,000.00, evidenced by a receipt dated May 4, 1982, marked as Exhibit D, reading as follows:
5/4/82
Received the amount of Thirty Five Thousand Cash from Rodrigo Quiambao and Conrado Salonga on the
day of May 4, 1982.
Sgd. Lucio Cruz
The plaintiff claimed that of this amount, only P20,000.00 had been paid, leaving a balance of
P10,000.00; that in August 1982, he and the defendant agreed that the latter would grant him an
exclusive right to purchase the harvest of certain fishponds leased by Cruz in exchange for certain loan
accommodations; that pursuant thereto, Salonga delivered to Cruz various loans totaling P15,250.00,
evidenced by four receipts and an additional P4,000.00, the receipt of which had been lost; and that Cruz
failed to comply with his part of the agreement by refusing to deliver the alleged harvest of the fishpond
and the amount of his indebtedness.
Cruz denied having contracted any loan from Salonga. By way of special defense, he alleged that he was a
lessee of several hectares of a fishpond owned by Nemesio Yabut and that sometime in May 1982, he
entered into an agreement with Salonga whereby the latter would purchase (pakyaw) fish in certain areas
of the fishpond from May 1982 to August 15, 1982. They also agreed that immediately thereafter, Salonga
would sublease (bubuwisan) the same fishpond for a period of one year. Cruz admitted having received on
May 4, 1982, the amount of P35,000.00 and on several occasions from August 15, 1982, to September
30, 1982, an aggregate amount of P15,250.00. He contended however, that these amounts were received
by him not as loans but as consideration for their "pakyaw" agreement and payment for the sublease of
the fishpond. He added that it was the private respondent who owed him money since Salonga still had
unpaid rentals for the 10-month period that he actually occupied the fishpond. Cruz also claimed that
Salonga owed him an additional P4,000.00 arising from another purchase of fish from other areas of his
leased fishpond.
In a pre-trial conference held on August 24, 1984, petitioner and private respondent entered into the
following partial stipulation of facts.
COURT:
Plaintiff and defendant, through their respective counsel, during the pre-trial conference, agreed on the
following stipulation of facts:
1) That plaintiff Conrado Salonga entered into a contract of what is commonly called as 'pakyawan'
with defendant Lucio Cruz on the fishes contained in a fishpond which defendant Lucio Cruz was
taking care of as lessee from the owner Mr. Nemesio Yabut, with a verbal contract for the sum of
P28,000.00 sometime in May 1982.
2) That because of the necessity, defendant Lucio Cruz at that time needed money, he requested
plaintiff Conrado Salonga to advance the money of not only P28,000.00 but P35,000.00 in order
that Lucio Cruz could meet his obligation with the owner of the fishpond in question, Mr. Nemesio
Yabut;

Evidence II.
 3) That the amount of P35,000.00 as requested by defendant Lucio Cruz was in fact delivered by
plaintiff Conrado Salonga duly received by the defendant Lucio Cruz, as evidenced by a receipt
dated May 4, 1982, duly signed by defendant Lucio Cruz
4) That pursuant to said contract of "pakyaw," plaintiff Conrado Salonga was able to harvest the
fishes contained in the fishpond administered by Lucio Cruz in August 1982.
5) Immediately thereafter the aforesaid harvest thereon, they entered again on a verbal
agreement whereby plaintiff Conrado Salonga and defendant Lucio Cruz had agreed that defendant
Lucio Cruz will sublease and had in fact subleased the fishpond of Nemesio Yabut to the herein
plaintiff for the amount of P28,000.00 for a period of one year beginning August 15, 1982.
6) That sometime on June 15, 1983, Mayor Nemesio Yabut, who is the owner of the fishpond, took
back the subject matter of this case from the defendant Lucio Cruz.
7) That defendant Lucio Cruz in compliance with their verbal sublease agreement had received
from the plaintiff Conrado Salonga the following sums of money:
a) P8,000.00 on August 15, 1982 as evidenced by Annex "B" of the Complaint. (Exh. E);
b) The sum of P500.00 on September 4, 1982, as evidenced by Annex "C" of the complaint
(Exh. F);
c) The sum of P3,000.00 on September 19, 1982 as evidenced by Annex "D" of the
complaint (Exh. G); and
d) The sum of P3,750.00 on September 30, 1982 as Annex "E" of the complaint (Exh. H).
At the trial, the private respondent claimed that aside from the amounts of P35,000.00 (Exh. D),
P8,000.00 (Exh. E), P500.00 (Exh. F), P3,000.00 (Exh. G) and P3,750.00 (Exh. H) mentioned in the
partial stipulation of facts, he also delivered to the petitioner P28,000.00, which constituted the
consideration for their "pakyaw" agreement. This was evidenced by a receipt dated May 14,
1982 marked as Exhibit I and reading as follows:
May 14, 1982
Tinatanggap ko ang halagang dalawampu't walong libong piso (P28,000.00) bilang halaga sa
pakyaw nila sa akin sa sangla sa kahong bilang #8 maliit at sa kaputol na sapa sa gawing may
bomba. Ito ay tatagal hanggang Agosto 1982.
SGD. LUCIO CRUZ
Salonga also claimed that he had paid Cruz the amount of P4,000 but the receipt of which had been lost
and denied being indebted to the petitioner for P4,000 for the lease of other portions of the fishpond.
For his part, the petitioner testified that he entered into a "pakyaw" and sublease agreement with the
private respondent for a consideration of P28,000 for each transaction. Out of the P35,000 he received
from the private respondent on May 4, 1982, P28,000 covered full payment of their "pakyaw" agreement
while the remaining P7,000 constituted the advance payment for their sublease agreement. The petitioner
denied having received another amount of P28,000 from Salonga on May 14, 1982. He contended that the
instrument dated May 14, 1982 (Exh. I) was executed to evidence their "pakyaw" agreement and to fix its
duration. He was corroborated by Sonny Viray, who testified that it was he who prepared the May 4,
1982, receipt of P35,000.00, P28,000 of which was payment for the "pakyaw" and the excess of
P7,000.00 as advance for the sublease.
The trial court ruled in favor of the petitioner and ordered the private respondent to pay the former the
sum of P3,054.00 plus P1,000.00 as litigation expenses and attorney's fees, and the costs. Judge Eriberto
U. Rosario, Jr. found that the transactions between the petitioner and the private respondent were indeed
"pakyaw" and sublease agreements, each having a consideration of P28,000.00, for a total of P56,000.00.
Pursuant to these agreements, Salonga paid Cruz P35,000.00 on May 4, 1982 (Exh. D); P8,000.00 on
August 15, 1982 (Exh. E); P500.00 on September 4, 1982 (Exh. F); P3,000 on September 19, 1982;
P3,750 on September 30, 1982 (Exh. H) and P4,000.00 on an unspecified date. The trial court noted an
earlier admission of the private respondent that on an unspecified date he received the sum of P6,000.00
from the petitioner. This amount was credited to the petitioner and deducted from the total amount paid

Evidence II.
by the private respondent. As the one-year contract of sublease was pre-terminated two months short of
the stipulated period, the rentals were correspondingly reduced.
On appeal, the decision of the trial court was reversed. The respondent court instead ordered the
petitioner to pay the private respondent the sum of P24,916.00 plus P1,500.00 as litigation expenses and
attorney's fees, on the following justification:
Exhibit "I" is very clear in its non-reference to the transaction behind Exhibit "D." What only gives the
semblance that Exhibit "I" is an explanation of the transaction behind Exhibit "D" are the oral testimonies
given by the defendant and his two witnesses. On the other hand, Exhibit "I" is very clear in its language.
Thus, its tenor must not be clouded by any parol evidence introduced by the defendant. And with the
tenor of Exhibit "I" remaining unembellished, the conclusion that Exhibit "D" is a mere tentative receipt
becomes untenable.
The trial court erred when it relied on the self-serving testimonies of the defendant and his witness as
against the receipts both parties presented and adopted as their own exhibits. As said before, Exhibit "I" is
very clear in its tenor. And if it is really the intention of Exhibit "I" to explain the contents of Exhibit "D",
such manifestation or intention is not found in the four corners of the former document.
The respondent court also found that the amounts of P35,000.00, P8,000.00, P500.00, P3,000.00,
P3,750.00 and P4,000.00 were not payments for the "pakyaw" and sublease agreement but for loans
extended by Salonga to Cruz. It also accepted Salonga's claim that the amount of P28,000.00 was
delivered to the petitioner on May 14, 1982, as payment on the "pakyaw" agreement apart from the
P35,000.00 (Exh. D) that was paid on May 4, 1982. However, it agreed that the amount of P6,000.00
received by the private respondent from the petitioner should be credited in favor of the latter.
The petitioner is now before this Court, raising the following issues:
1. The public respondent Court of Appeals gravely erred in (1) disregarding parol
evidence to Exhibits "D" and "I" despite the fact that these documents fall under the
exceptions provided for in Sec. 7, Rule 130 of the Rules of Court and thereby in (2)
making a sweeping conclusion that the transaction effected between the private
respondent and petitioner is one of contract of loan and not a contract of lease.
2. Assuming for the sake of argument that exhibits "D" and "I" evidence separate transactions, the
latter document should be disregarded, the same not having been pleaded as a cause of action.
3. Whether or not the Stipulation of Facts entered into by the parties herein relative to their
executed transactions during the hearing of their case a quo, are binding upon them and as well
as, upon the public respondent?
Our ruling follows:
Rule 130, Sec. 7, of the Revised Rules of Court provides:  1
Sec. 7. Evidence of Written Agreements. — When the terms of an agreement have been reduced to
writing, it is to be considered as containing all such terms, and therefore, there can be, between the
parties and their successors in interest, no evidence of the terms of the agreement other than the
contents of the writing, except in the following cases:
a) When a mistake or imperfection of the writing or its failure to express the true intent and agreement of
the parties, or the validity of the agreement is put in issue by the pleadings;
b) When there is an intrinsic ambiguity in the writing. The term "agreement" includes wills.
The reason for the rule is the presumption that when the parties have reduced their agreement to writing
they have made such writing the only repository and memorial of the truth, and whatever is not found in
the writing must be understood to have been waived or abandoned.  2
The rule, however, is not applicable in the case at bar , Section 7, Rule 130 is predicated on the
existence of a document embodying the terms of an agreement, but Exhibit D does not contain
such an agreement. It is only a receipt attesting to the fact that on May 4, 1982, the petitioner
received from the private respondent the amount of P35,000 . It is not and could have not been
intended by the parties to be the sole memorial of their agreement. As a matter of fact, Exhibit
D does not even mention the transaction that gave rise to its issuance. At most, Exhibit D can only

Evidence II.
be considered a casual memorandum of a transaction between the parties and an acknowledgment of the
receipt of money executed by the petitioner for the private respondent's satisfaction. A writing of this
nature, as Wigmore observed is not covered by the parol evidence rule.
A receipt — i.e. a written acknowledgment, handed by one party to the other, of the manual custody of
money or other personality — will in general fall without the line of the rule; i.e. it is not intended to be an
exclusive memorial, and the facts may be shown irrespective of the terms of the receipt. This is because
usually a receipt is merely a written admission of a transaction independently existing, and, like other
admissions, is not conclusive.  3
The "pakyaw" was mentioned only in Exhibit I, which also declared the petitioner's receipt of
the amount of P28,000.00 as consideration for the agreement. The petitioner and his witnesses
testified to show when and under what circumstances the amount of P28,000.00 was received.
Their testimonies do not in any way vary or contradict the terms of Exhibit I. While Exhibit I is
dated May 14, 1982, it does not make any categorical declaration that the amount of
P28,000.00 stated therein was received by the petitioner on that same date. That date may not
therefore be considered conclusive as to when the amount of P28,000.00 was actually
received.
A deed is not conclusive evidence of everything it may contain. For instance, it is not the only
evidence of the date of its execution, nor its omission of a consideration conclusive evidence
that none passed, nor is its acknowledgment of a particular consideration an objection to other
proof of other and consistent considerations; and, by analogy, the acknowledgment in a deed is
not conclusive of the fact.  4
A distinction should be made between a statement of fact expressed in the instrument and the
terms of the contractual act. The former may be varied by parol evidence but not the latter.   5
Section 7 of Rule 130 clearly refers to the terms of an agreement and provides that "there can be,
between the parties and their successors in interest, no evidence of the terms of the agreement other
than the contents of the writing."
The statement in Exhibit I of the petitioner's receipt of the P28,000.00 is just a statement of
fact. It is a mere acknowledgment of the distinct act of payment made by the private
respondent. Its reference to the amount of P28,000.00 as consideration of the "pakyaw"
contract does not make it part of the terms of their agreement. Parol evidence may therefore
be introduced to explain Exhibit I, particularly with respect to the petitioner's receipt of the
amount of P28,000.00 and of the date when the said amount was received.
Even if it were assumed that Exhibits D and I are covered by the parol evidence rule, its application by the
Court of Appeals was improper. The record shows that no objection was made by the private
respondent when the petitioner introduced evidence to explain the circumstances behind the
execution and issuance of the said instruments. The rule is that objections to evidence must be
made as soon as the grounds therefor become reasonably apparent.  6 In the case of
testimonial evidence, the objection must be made when the objectionable question is asked or
after the answer is given if the objectionable features become apparent only by reason of such
answer.  7
For failure of the private respondent to object to the evidence introduced by the petitioner, he
is deemed to have waived the benefit of the parol evidence rule. Thus, in Abrenica v. Gonda,  8
this Court held:
. . . it has been repeatedly laid down as a rule of evidence that a protest or objection against the
admission of any evidence must be made at the proper time, and that if not so made it will be understood
to have been waived. The proper time to make a protest or objection is when, from the question
addressed to the witness, or from the answer thereto, or from the presentation of proof, the
inadmissibility of evidence is, or may be inferred.
It is also settled that the court cannot disregard evidence which would ordinarily be incompetent under the
rules but has been rendered admissible by the failure of a party to object thereto. Thus:
. . . The acceptance of an incompetent witness to testify in a civil suit, as well as the allowance of
improper questions that may be put to him while on the stand is a matter resting in the discretion of the
litigant. He may assert his right by timely objection or he may waive it, expressly or by silence. In any
Evidence II.
case the option rests with him. Once admitted, the testimony is in the case for what it is worth and the
judge has no power to disregard it for the sole reason that it could have been excluded, if it had been
objected to, nor to strike it out on its own motion. (Emphasis supplied.)  9
We find that it was error for the Court of Appeals to disregard the parol evidence introduced by the
petitioner and to conclude that the amount of P35,000.00 received on May 4, 1982 by the petitioner was
in the nature of a loan accommodation. The Court of Appeals should have considered the partial
stipulation of facts and the testimonies of the witnesses which sought to explain the circumstances
surrounding the execution of Exhibits D and I and their relation to one another.
We are satisfied that the amount of P35,000.00 was received by the petitioner as full payment of their
"pakyaw" agreement for P28,000.00 and the remaining P7,000.00 as advance rentals for their sublease
agreement. The claim that the excess of P7,000.00 was advance payment of the sublease agreement is
bolstered by the testimony of the private respondent himself when during the cross examination he
testified that:
ATTY. CRUZ:
Q And during the time you were leasing the fishpond, is it not a fact that you pay lease rental to the
defendant?
SALONGA:
A No sir, because I have already advanced him money.
Q What advance money are you referring to?
A Thirty-Five Thousand Pesos (P35,000.00), sir. 10
It was also error to treat the amounts received by the petitioner from August 15, 1982, to September 30,
1982, from the private respondent as loan accommodations when the partial stipulation of facts clearly
stated that these were payments for the sublease agreement. The pertinent portions read:
7) That defendant Lucio Cruz in compliance with their verbal sublease agreement had received from the
plaintiff Conrado Salonga the following sums of money: (Emphasis Supplied.)
(a) P8,000.00 on August 15, 1982, as evidenced by Annex "B" of the complaint;
(b) the sum of P500.00 on September 4, 1982, as evidenced by Annex "C" of the complaint;
(c) the sum of P3,000.00 on September 19, 1982, as evidenced by Annex "D" of the complaint;
(d) the sum of P3,750.00 on September 30, 1982, as Annex "E" of the complaint; 11
These admissions bind not only the parties but also the court, unless modified upon request before the
trial to prevent manifest injustice.
We find, however, that the Court of Appeals did not act in excess of its jurisdiction when it appreciated
Exhibit I despite the fact that it was not pleaded as a cause of action and was objected to by the
petitioner. According to Rule 10 of the Rules of Court:
Sec. 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by the
pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if
they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause
them to conform to the evidence and to raise these issues may be made upon motion of any party at any
time, even after judgment; but failure to amend does not affect the result of the trial of these issues. If
evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings,
the court may allow the pleadings to be amended and shall do so freely when the presentation of the
merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the
admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The
court may grant a continuance to enable the objecting party to meet such evidence.
In Co Tiamco v. Diaz, 12 the Supreme Court held:
. . . When evidence is offered on a matter not alleged in the pleadings, the court may admit it even
against the objection of the adverse party, when the latter fails to satisfy the court that the admission of

Evidence II.
the evidence would prejudice him in maintaining his defense upon the merits, and the court may grant
him continuance to enable him to meet the situation created by the evidence . . .
While it is true that the private respondent did not even file a motion to amend his complaint in order that
it could conform to the evidence presented, this did not prevent the court from rendering a valid judgment
on the issues proved. As we held in the Co Tiamco case:
. . . where the failure to order an amendment does not appear to have caused a surprise or prejudice to
the objecting party, it may be allowed as a harmless error. Well-known is the rule that departures from
procedure may be forgiven when they do not appear to have impaired the substantial rights of the parties.
The following computation indicates the accountability of the private respondent to the petitioner:
 Exh. D, May 4, 1982  — P35,000.00
 Exh. E, Aug. 15, 1982 — 8,000.00
 Exh. F, Sept. 4, 1982  — 500.00
 Exh. G, Sept. 19, 1982 — 3,000.00
 Exh. H, Sept. 30, 1982 — 3,750.00
 Lost receipt    4,000.00
      ————
      P54,250.00
 Less: (amount received by the
 private respondent from the
 petitioner)    (6,000.00)
      ————
 Total amount paid by the
 private respondent to
 the petitioner    48,250.00
Amount to be paid by the private respondent to the petitioner:
 1. Pakyaw  P28,000.00
 2. Sublease   — 28,000 per annum
 Less: 2 months: 4,666 23,334.00
     ————
 Total amount to be paid by
 the private respondent to
 the petitioner P51,334.00
 Total amount to be paid
 by the private respondent P51,334.00
 Total amount paid by
 the private respondent 48,250.00
     ————
 Deficiency in the amount
 paid by the private respondent P3,084.00

Evidence II.
ACCORDINGLY, the decision of the respondent Court of Appeals is REVERSED and that of the Regional
Trial Court of Laguna AFFIRMED, with the modification that the private respondent shall pay the petitioner
the sum of P3,084.00 instead of P3,054.00, plus costs. It is so ordered.

Evidence II.
21.) G.R. No. L-39972 & L-40300 August 6, 1986

VICTORIA LECHUGAS, petitioner,
vs.
HON. COURT OF APPEALS, MARINA LOZA, SALVADOR LOZA, ISIDRO LOZA, CARMELITA LOZA, DAVID
LOZA, AMPARO LOZA, ERLINDA LOZA and ALEJANDRA LOZA, respondents.

A.R. Montemayor for petitioner.

Arturo L. Limoso for private respondents.

GUTIERREZ, JR., J:

This petition for review invokes the parol evidence rule as it imputes grave abuse of discretion on the part of the
appellate court for admitting and giving credence to the testimony of the vendor regarding the sale of the disputed
lot. The testimony is contrary to the contents of the deed of sale executed by the vendor in favor of the petitioner.

The petitioner filed a complaint for forcible entry with damages against the private respondents, alleging
that the latter by means of force, intimidation, strategy and stealth, unlawfully entered lots A and B,
corresponding to the middle and northern portion of the property owned by the petitioner known as Lot No.
5456. She alleged that they appropriated the produce thereof for themselves, and refused to surrender the
possession of the same despite demands made by the petitioner. The complaint was dismissed. Petitioner appealed
to the then Court of First Instance (CFI) of Iloilo where the case was docketed as Civil Case No. 5055.

While the above appeal was pending, the petitioner instituted another action before the CFI of Iloilo for
recovery and possession of the same property against the private respondents.

This case was docketed as Civil Case No. 5303. The two cases were tried jointly. After trial, the court rendered
judgment. The dispositive portion of the decision states:

Wherefore, premises considered, judgment is rendered, to wit:

a. dismissing the complaints in two cases;

b. declaring defendants except Salvador Anona and Jose Lozada as owners and lawful possessors
of the land in question together with all the improvements thereon;

c. dismissing the claim for damages of all defendants except that of Jose Lozada;

d. ordering plaintiff to pay defendant Jose Lozada the sum of P500.00 as attorney's fees and the
amount of P300.00 as litigation expenses; and

e. ordering plaintiff to pay the costs of both proceedings.

The petitioner appealed to the Court of Appeals but the latter sustained the dismissal of the cases. Hence,
this petition with the petitioner making the following assignments of errors:

THAT THE RESPONDENT COURT ERRED IN CONSIDERING PAROL EVIDENCE OVER THE
OBJECTION OF THE PETITIONER IN ORDER TO VARY THE SUBJECT MATTER OF THE
DEED OF DEFINITE SALE (EXHIBIT A) ALTHOUGH THE LAND THEREIN IS DESCRIBED AND
Evidence II.
 DELIMITED BY METES AND BOUNDS AND IdENTIFIED AS LOT NO. 5456 OF LAMBUNAO
CADASTRE.

II

THAT THE RESPONDENT COURT ERRED IN CONSIDERING THE THEORY OF THE

DEFENDANTS-APPELLEES FOR THE FIRST TIME ON APPEAL THAT THE LAND DESCRIBED
IN THE DEED OF SALE (EXHIBIT A) IS LOT NO. 5522 INSTEAD OF LOT NO. 5456 OF THE
LAMBUNAO CADASTRE, THEIR ORIGINAL THEORY BEING THAT THE DEED OF SALE
(EXHIBIT A) IS NULL AND VOID AB INITIO BECAUSE LEONCIA LASANGUE CAN NOT SELL
THE LAND IN QUESTION IN 1950 SINCE IT WAS ALLEGEDLY SOLD IN 1941 BY HER FATHER
EMETERIO LASANGUE.

III

THAT THE RESPONDENT COURT CANNOT REFORM THE DEED OF DEFINITE SALE BY
CHANGING ITS SUBJECT MATTER IN THE ABSENCE OF STRONG, CLEAR AND CONVINCING
EVIDENCE AND ON THE STRENGTH OF LONG TESTIMONY OF THE VENDOR AND
ALTHOUGH NO DIRECT ACTION FOR REFORMATION WAS FILED IN THE COURT OF ORIGIN.

A summary of the facts which brought about the controversy is contained in the findings of the appellate court:

Plaintiff (petitioner) Victoria Lechugas testified that she bought the land now subject of this
litigation from Leoncia Lasangue as evidenced by a public "Deed of Absolute Sale" which
plaintiff had caused to be registered in the Office of the Register of Deeds; preparatory to the
execution of the deed Exhibit "A", plaintiff had the land segregated from the bigger portion of 12
hectares owned by Leoncia Lasangue by contracting a private land surveyor, the Sirilan Surveying
Office, to survey the land on December 3, 1950 and establish its boundaries, shape, form and area
in accordance with the said plan which was attached to exhibit A as Annex A thereof. She also
states that she caused the declaration of the said portion of six hectares subject of Exhibit A in her
name beginning the year 1951 under tax declaration No. 7912, paid taxes on the same land, and
has taken possession of the land through her tenants Jesus Leoncio, Roberta Losarita and Simeon
Guinta, who shared one-half of the produce of the riceland with her, while she shouldered some of
the expenses in cultivation and seeds, and one-third share in other crops, like coffee beans,
bamboos, coconuts, corn and the like.

x x x           x x x          x x x

Plaintiff's declaration is corroborated by her tenant Simeon Guinta who testifies that the land
subject of the complaint was worked on by him 1954 when its former tenant, Roberto Lazarita, now
deceased, left the land. As tenant thereof, he planted rice, corn peanuts, coffee, and other minor
products, sharing the same with the owner, plaintiff Victoria Lechugas; that on June 14, 1958, while
witness was plowing Lot A preparatory to rice planting, defendants entered the land and forced him
to stop his work. Salvador Anona and Carmelita Losa, particularly, told witness that if he (witness)
would sign an affidavit recognizing them as his landlords, they would allow him to continue plowing
the land. On that occasion, Salvador Anona, David Loza and Jose Loza were carrying unsheathed
bolos, which made this witness very afraid, so much so that he left the land and reported the matter
to Victoria Lechugas who reportedly went to the Chief of Police of Lambunao to ask the latter to
intervene. The advise however of the chief of police, who responded to the call of plaintiff, was not
heeded by the defendants who stayed adamantly on Lot A and refused to surrender the possession
thereof to plaintiff appropriating the harvest to themselves. This witness further declares that on June
24, 1958, defendants entered Lot B of the land in question, situated on the northern portion, and cut
the bamboo poles growing thereof counted by plaintiff's brother and overseer in the land, Bienvenido
Laranja, to be 620 bamboo poles all in all. Despite the warning of the overseer Laranja, defendants
did not stop cutting the bamboos, and they remained on the land, refusing to leave the same. To top
it all, in June of 1959, defendants, not contended with just occupying the middle and northern
portions of the land (Lots A and B), grabbed the whole parcel containing six hectares to the damage
Evidence II.
 and prejudice of herein plaintiff, so that plaintiff was left with no other recourse but to file Civil Case
No. 5303 for ownership, recovery of possession and damages.

Defendants, on the other hand, maintain that the land which plaintiff bought from Leoncia
Lasangue in 1950 as evidenced by the deed exhibit A, is different from the land now subject
of this action, and described in paragraph 2 of plaintiff's complaint. To prove this point, defendants
called as their first witness plaintiff herself (pp. 6167, t.s.n., Tuble), to elicit from her the reason why it
was that although her vendor Leoncia Lasangue was also residing at the municipality of Lambunao,
Iloilo, plaintiff did not care to call her to the witness stand to testify regarding the Identity of the land
which she (plaintiff) bought from said vendor Leoncia Lasangue; to which query witness Lechugas
countered that she had tried to call her vendor, but the latter refused, saying that she (Lasangue)
had already testified in plaintiff's favor in the forcible entry case in the Justice of the Peace Court. In
connection with her testimony regarding the true Identity of the land plaintiff, as witness of
defendants, stated that before the execution of Exhibit "A" on December 8, 1950 the lot in question
was surveyed (on December 3, 1950) by the Sirilan Surveyor Company after due notice to the
boundary owners including Leoncia Lasangue.

Defendant's evidence in chief, as testified to by Carmelita Lozada (pp. 100-130, t.s.n.,

Trespeces; pp. 131-192, t.s.n., Tuble) shows that on April 6, 1931 Hugo Loza father of Carmelita
Loza and predecessor-in-interest of the rest of the heirs of herein defendants, (with the
exception of Jose Loza and Salvador Anona) purchased a parcel of land from one Victorina
Limor as evidenced by the deed "Venta Definitiva" (exhibit 3, pp. 49-50, folder of exhibits). This
land, containing 53,327 square meters is bounded on the north by Ramon Lasangue, on the south
by Emeterio Lasangue and covered by tax declaration No. 7346 (exhibit 3-9, p. 67, Id.) in vendor's
name; that immediately after the sale, Hugo Loza took possession of the said parcel of land and
declared the same in his name (exhibit 3-10, p. 67, folder of exhibits) starting the year 1935. On
March 17, 1941, Hugo Loza bought from Emeterio Lasangue a parcel of land with an area of
four hectares more or less, adjoining the land he (Loza) had earlier bought from Victoria
Limor, and which sale was duly evidenced by a public instrument (exhibit 2, pp. 35-36, folder of
exhibits). This property had the following boundaries, to wit: on the north by Eladio Luno, on the
south, by Simeon Lasangue, on the west, by Gregorio Militar and Emeterio Lasangue and on the
east, by Maximo Lasangue and Hipolito Lastica (exhibit 2, exhibit 2-B, p. 37, Id). After the execution
of the deed of sale, Exhibit 2, Hugo Loza cause the transfer of the declaration in his own name (tax
declaration No. 8832, exh. 2-C, p. 38, Id.) beginning 1945, and started paying the taxes on the land
(exhibits 2-d to 2-i, pp. 39-44, Id.). These two parcels of land (that purchased by Hugo Loza in 1941
from Emeterio Lasangue, and a portion of that bought by him from Victoria Limor sometime in 1931)
were consolidated and designated, during the cadastral survey of Lambunao, Iloilo in 1959 as Lot
No. 5456; while the remaining portion of the lot bought from Victorina Limor, adjoining Lot 5456 on
the east, was designated as Lot No. 5515 in the name of the Heirs of Hugo Loza. Defendants claim
that the lot bought by plaintiff from Leoncia Lasangue as evidenced by exhibit A, is situated south of
the land now subject of this action and designated during cadastral survey of Lambunao as Lot No.
5522, in the name of Victoria Lechugas.

x x x           x x x          x x x

Leoncia Lasangue, plaintiff's vendor in exhibit A, testifying for defendants (pp. 182-115, t.s.n.,
Tambagan; pp. 69-88, t.s.n., Tuble) declared that during his lifetime her father, Emeterio Lasangue,
owned a parcel of land in Lambunao, Iloilo, containing an area of 36 hectares; that said Emeterio
Lasangue sold a slice of 4 hectares of this property to Hugo Loza evidenced by a deed of sale
(Exh. 2) dated March 17, 1941; that other sales were made to other persons, leaving only some
twelve hectares out of the original 36; that these 12 hectares were transferred by her parents in her
(witness) name, being the only child and heir; that on December 8, 1950, she (Leoncia Lasangue)
sold six hectares of her inherited property to Victoria Lechugas under a public instrument
(exhibit A) which was prepared at the instance of Victoria Lechugas and thumbmarked by herself
(the vendor).

Evidence II.
 Refuting plaintiff's contention that the land sold to her is the very land under question,
vendor Leoncia Lasangue testifies that:

Q. But Victoria Lechugas declared here that, by means of this document, exhibit 'A',
you sold to her this very land in litigation; while you declared here now that this land
in litigation was not included in the sale you made of another parcel of land in her
favor. What do you say about that?

A. I only sold six (6) hectares to her.

Q. And that was included in this land in litigation?

A. No.

xxx xxx xxx

Q. Did you tell her where that land you were selling to her was situated?

xxx xxx xxx

A. On the South.

Q. South side of what land, of the land in litigation?

A. The land I sold to her is south of the land in litigation.

xxx xxx xxx

Q. What portion of these thirty-six (36) hectares of land did you sell actually,
according to your agreement with Victoria Lechugas, and was it inside the thirty-six
(36) hectares of land or a portion on one of the sides of thirty-six (36) hectares?

A. It is on the edge of the whole land.

Q. Where is that edge? on the north, east, west or south?

A . This edge. (witness indicating the lower edge of the piece of paper shown into
her)

Q. Do you know what is east, that is, the direction where the sun rises?

A. I know what is east.

Q. Do you know where the sun sets ?

A. The sun sets on the west.

Q. If you are standing in the middle of your land containing thirty-six (36) hectares
and facing the east, that is, the direction where the sun rises, where is that portion of
land sold to Victoria Lechugas, on your left, on your right, front of you or behind you?

A. On my right side. (Witness indicating south). (Testimony of Leoncia Lasangue, pp.

209-211, rollo) (emphasis supplied).

Evidence II.
On the basis of the above findings and the testimony of vendor Leoncia Lasangue herself, who although illiterate
was able to specifically point out the land which she sold to the petitioner, the appellate court upheld the trial court's
decision except that the deed of sale (Exhibit A) was declared as not null and void ab initio insofar as Leoncia
Lasangue was concerned because it could pass ownership of the lot in the south known as Lot No. 5522 of the
Lambunao Cadastre which Leoncia Lasangue intended to sell and actually sold to her vendee, petitioner Victoria
Lechugas.

In her first assignment of error, the petitioner contends that the respondent Court had no legal justification
when it subjected the true intent and agreement to parol evidence over the objection of petitioner and that
to impugn a written agreement, the evidence must be conclusive. Petitioner maintains, moreover, that the
respondent Court relied so much on the testimony of the vendor who did not even file a case for the
reformation of Exhibit A.

The contentions are without merit.

The appellate court acted correctly in upholding the trial court's action in admitting the testimony of Leoncia
Lasangue. The petitioner claims that Leoncia Lasangue was the vendor of the disputed land. The petitioner denies
that Leoncia Lasangue sold Lot No. 5522 to her. She alleges that this lot was sold to her by one Leonora Lasangue,
who, however, was never presented as witness in any of the proceedings below by herein petitioner.

As explained by a leading commentator on our Rules of Court, the parol evidence rule does not apply, and may
not properly be invoked by either party to the litigation against the other, where at least one of the parties to
the suit is not party or a privy of a party to the written instrument in question and does not base a claim on
the instrument or assert a right originating in the instrument or the relation established thereby. (Francisco
on Evidence, Vol. VII, part I of the Rules of Court, p. 155 citing 32 C.J.S. 79.)

In Horn v. Hansen (57 N.W. 315), the court ruled:

...and the rule therefore applies, that as between parties to a written agreement, or their privies,
parol evidence cannot be received to contradict or vary its terms. Strangers to a contract are,
of course, not bound by it, and the rule excluding extrinsic evidence in the construction of
writings is inapplicable in such cases; and it is relaxed where either one of the parties
between whom the question arises is a stranger to the written agreement, and does not claim
under or through one who is party to it. In such case the rule is binding upon neither. ...

In the case of Camacho v. Municipality of Baliuag, 28 Phil. 466, this Court held that parol evidence which was
introduced by the municipality was competent to defeat the terms of the plaintiff's deed which the latter executed
with the Insular Government. In his concurring opinion, Justice Moreland stated:

It should be noted in the first place, that there is no written instrument between the plaintiff and the
municipality, that is, between the parties to the action; and there is, therefore, no possibility of the
question arising as to the admissibility of parol evidence to vary or contradict the terms of an
instrument. The written instrument that is, the conveyance on which plaintiff bases his action was
between the Insular Government and the plaintiff, and not between the municipality and the plaintiff;
and therefore, there can arise, as between the plaintiff and defendant no question relative to the
varying or contradicting the terms of a written instrument between them ...

The petitioner's reliance on the parol evidence rule is misplaced. The rule is not applicable where the controversy is
between one of the parties to the document and third persons. The deed of sale was executed by Leoncia
Lasangue in favor of Victoria Lechugas. The dispute over what was actually sold is between petitioner and
the private respondents. In the case at bar, through the testimony of Leoncia Lasangue, it was shown that
what she really intended to sell and to be the subject of Exhibit A was Lot No. 5522 but not being able to read
and write and fully relying on the good faith of her first cousin, the petitioner, she just placed her thumbmark on a
piece of paper which petitioner told her was the document evidencing the sale of land. The deed of sale described
the disputed lot instead.

Evidence II.
This fact was clearly shown in Lasangue's testimony:

Q. And how did you know that that was the description of the land that you wanted to
sell to Victoria Lechugas?

R. I know that because that land came from me.

S. But how were you able to read the description or do you know the description?

A. Because, since I do not know how to read and write and after the document was
prepared, she made me sign it. So I just signed because I do not know how to read.

xxx xxx xxx

Q. What explanation did she make to you?

A. She said to me, 'Manang, let us have a document prepared for you to sign on the
land you sold to me.' So, after the document was prepared, I signed.

Q. Did you tell her where that land you were selling to her was situated?

xxx xxx xxx

A. On the South.

Q. South side of what land, of the land in litigation?

A. The land I sold to her is south of the land in litigation.

Q. Did you tell her that before preparing the document you signed?

A. Yes, I told her so because I had confidence in her because she is my first cousin.
(pp. 198-207, rollo)

From the foregoing, there can be no other conclusion but that Lasangue did not intend to sell as she could
not have sold, a piece of land already sold by her father to the predecessor-in-interest of the respondents.

The fact that vendor Lasangue did not bring an action for the reformation of Exhibit "A" is of no moment. The
undisputed fact is that the respondents have timely questioned the validity of the instrument and have proven
that, indeed Exhibit "A" does not reflect the true intention of the vendor.

There is likewise no merit in the contention of the petitioner that the respondents changed their theory on appeal.

Respondents, from the very start, had questioned and denied Leoncia Lasangue's capacity to sell the
disputed lot to petitioner. It was their contention that the lot was sold by Leoncia's father Emeterio Lasangue to
their father, Hugo Loza wayback in 1941 while the alleged sale by Leoncia to the petitioner took place only in 1950.
In essence, therefore, the respondents were already attacking the validity of Exhibit "A". Moreover, although the
prior sale of the lot to their father may have been emphasized in their defenses in the civil cases filed against them
by the petitioner in the lower court, nevertheless in their affirmative defense, the respondents already raised doubt
on the true intention of Leoncia Lasangue in signing Exhibit "A" when they alleged that..." Leoncia Lasangue,
publicly, and in writing repudiated said allegation and pretension of the plaintiff, to the effect that the parcel of land
now in litigation in the present case "WAS NOT INCLUDED in the sale she executed in favor of the plaintiff ... .

Consequently, petitioner cannot impute grave abuse on the part of the appellate court and state that it allowed a
change of theory by the respondents for the first time on appeal for in reality, there was no such change.
Evidence II.
The third issue raised by the petitioner has no merit. There is strong, clear, and convincing evidence as to which lot
was actually sold to her. We see no reason to reverse the factual findings of both the Court of First Instance and the
Court of Appeals on this point. The "reformation" which the petitioner questions was, in fact, intended to favor her.
Instead of declaring the deed of sale null and void for all purposes, the Court upheld its having passed ownership of
Lot No. 5522 to the petitioner.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED for lack of merit with costs
against the petitioner.

Evidence II.
22.) G.R. No. 96405 June 26, 1996

BALDOMERO INCIONG, JR., petitioner,

vs.
COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS, respondents.

ROMERO, J.:p

This is a petition for review on certiorari of the decision of the Court of Appeals affirming that of the Regional Trial Court of Misamis Oriental, Branch 18,1 which
disposed of Civil Case No. 10507 for collection of a sum of money and damages, as follows:

WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is adjudged solidarily liable and ordered
to pay to the plaintiff Philippine Bank of Communications, Cagayan de Oro City, the amount of
FIFTY THOUSAND PESOS (P50,000.00), with interest thereon from May 5, 1983 at 16% per
annum until fully paid; and 6% per annum on the total amount due, as liquidated damages or penalty
from May 5, 1983 until fully paid; plus 10% of the total amount due for expenses of litigation and
attorney's fees; and to pay the costs.

The counterclaim, as well as the cross claim, are dismissed for lack of merit.

SO ORDERED.

Petitioner's liability resulted from the promissory note in the amount of P50,000.00 which he signed with
Rene C. Naybe and Gregorio D. Pantanosas on February 3, 1983, holding themselves jointly and severally
liable to private respondent Philippine Bank of Communications, Cagayan de Oro City branch. The promissory
note was due on May 5, 1983.

Said due date expired without the promissors having paid their obligation. Consequently, on November 14,
1983 and on June 8, 1984, private respondent sent petitioner telegrams demanding payment thereof.  On December 2

11, 1984 private respondent also sent by registered mail a final letter of demand to Rene C. Naybe. Since both
obligors did not respond to the demands made, private respondent filed on January 24, 1986 a complaint for
collection of the sum of P50,000.00 against the three obligors.

On November 25, 1986, the complaint was dismissed for failure of the plaintiff to prosecute the case. However, on
January 9, 1987, the lower court reconsidered the dismissal order and required the sheriff to serve the summons.
On January 27, 1987, the lower court dismissed the case against defendant Pantanosas as prayed for by the
private respondent herein. Meanwhile, only the summons addressed to petitioner was served as the sheriff learned
that defendant Naybe had gone to Saudi Arabia.

In his answer, petitioner alleged that sometime in January 1983, he was approached by his friend, Rudy
Campos, who told him that he was a partner of Pio Tio, the branch manager of private respondent in Cagayan de
Oro City, in the falcata logs operation business. Campos also intimated to him that Rene C. Naybe was interested in
the business and would contribute a chainsaw to the venture. He added that, although Naybe had no money to
buy the equipment, Pio Tio had assured Naybe of the approval of a loan he would make with private
respondent. Campos then persuaded petitioner to act as a "co-maker" in the said loan. Petitioner allegedly
acceded but with the understanding that he would only be a co-maker for the loan of P50,000.00.

Petitioner alleged further that five (5) copies of a blank promissory note were brought to him by Campos at
his office. He affixed his signature thereto but in one copy, he indicated that he bound himself only for the
amount of P5,000.00. Thus, it was by trickery, fraud and misrepresentation that he was made liable for the
amount of P50,000.00.

Evidence II.
In the aforementioned decision of the lower court, it noted that the typewritten figure "-- 50,000 --" clearly
appears directly below the admitted signature of the petitioner in the promissory note.   Hence, the latter's
3

uncorroborated testimony on his limited liability cannot prevail over the presumed regularity and fairness of the
transaction, under Sec. 5 (q) of Rule 131. The lower court added that it was "rather odd" for petitioner to have
indicated in a copy and not in the original, of the promissory note, his supposed obligation in the amount of
P5,000.00 only. Finally, the lower court held that, even granting that said limited amount had actually been agreed
upon, the same would have been merely collateral between him and Naybe and, therefore, not binding upon the
private respondent as creditor-bank.

The lower court also noted that petitioner was a holder of a Bachelor of Laws degree and a labor consultant who
was supposed to take due care of his concerns, and that, on the witness stand, Pio Tio denied having participated in
the alleged business venture although he knew for a fact that the falcata logs operation was encouraged by the
bank for its export potential.

Petitioner appealed the said decision to the Court of Appeals which, in its decision of August 31, 1990, affirmed that
of the lower court. His motion for reconsideration of the said decision having been denied, he filed the instant
petition for review on certiorari.

On February 6, 1991, the Court denied the petition for failure of petitioner to comply with the Rules of Court and
paragraph 2 of Circular No. 1-88, and to sufficiently show that respondent court had committed any reversible error
in its questioned decision.  His motion for the reconsideration of the denial of his petition was likewise denied with
4

finality in the Resolution of April 24, 1991.  Thereafter, petitioner filed a motion for leave to file a second motion for
5

reconsideration which, in the Resolution of May 27, 1991, the Court denied. In the same Resolution, the Court
ordered the entry of judgment in this case. 6

Unfazed, petitioner filed a notion for leave to file a motion for clarification. In the latter motion, he asserted that he
had attached Registry Receipt No. 3268 to page 14 of the petition in compliance with Circular No. 1-88. Thus, on
August 7, 1991, the Court granted his prayer that his petition be given due course and reinstated the same. 7

Nonetheless, we find the petition unmeritorious.

Annexed to the petition is a copy of an affidavit executed on May 3, 1988, or after the rendition of the decision of the
lower court, by Gregorio Pantanosas, Jr., an MTCC judge and petitioner's co-maker in the promissory note. It
supports petitioner's allegation that they were induced to sign the promissory note on the belief that it was only for
P5,000.00, adding that it was Campos who caused the amount of the loan to be increased to P50,000.00.

The affidavit is clearly intended to buttress petitioner's contention in the instant petition that the Court of Appeals
should have declared the promissory note null and void on the following grounds: (a) the promissory note was
signed in the office of Judge Pantanosas, outside the premises of the bank; (b) the loan was incurred for the
purpose of buying a second-hand chainsaw which cost only P5,000.00; (c) even a new chainsaw would cost only
P27,500.00; (d) the loan was not approved by the board or credit committee which was the practice, as it exceeded
P5,000.00; (e) the loan had no collateral; (f) petitioner and Judge Pantanosas were not present at the time the loan
was released in contravention of the bank practice, and (g) notices of default are sent simultaneously and
separately but no notice was validly sent to him.  Finally, petitioner contends that in signing the promissory note, his
8

consent was vitiated by fraud as, contrary to their agreement that the loan was only for the amount of P5,000.00, the
promissory note stated the amount of P50,000.00.

The above-stated points are clearly factual. Petitioner is to be reminded of the basic rule that this Court is not a trier
of facts. Having lost the chance to fully ventilate his factual claims below, petitioner may no longer be accorded the
same opportunity in the absence of grave abuse of discretion on the part of the court below. Had he presented
Judge Pantanosas affidavit before the lower court, it would have strengthened his claim that the promissory note did
not reflect the correct amount of the loan.

Nor is there merit in petitioner's assertion that since the promissory note "is not a public deed with the
formalities prescribed by law but . . . a mere commercial paper which does not bear the signature of . . .
attesting witnesses," parol evidence may "overcome" the contents of the promissory note.  The first 9

paragraph of the parol evidence rule   states:

10

Evidence II.
 When the terms of an agreement have been reduced to writing, it is considered as containing
all the terms agreed upon and there can be, between the parties and their successors in
interest, no evidence of such terms other than the contents of the written agreement.

Clearly, the rule does not specify that the written agreement be a public document.

What is required is that the agreement be in writing as the rule is in fact founded on "long experience that written
evidence is so much more certain and accurate than that which rests in fleeting memory only, that it would be
unsafe, when parties have expressed the terms of their contract in writing, to admit weaker evidence to control and
vary the stronger and to show that the parties intended a different contract from that expressed in the writing signed
by them."   Thus, for the parol evidence rule to apply, a written contract need not be in any particular form, or
11

be signed by both parties.   As a general rule, bills, notes and other instruments of a similar nature are not
12

subject to be varied or contradicted by parol or extrinsic evidence.  13

By alleging fraud in his answer,   petitioner was actually in the right direction towards proving that he and his
14

co-makers agreed to a loan of P5,000.00 only considering that, where a parol contemporaneous agreement
was the inducing and moving cause of the written contract, it may be shown by parol evidence.   However, 15

fraud must be established by clear and convincing evidence, mere preponderance of evidence, not even
being adequate.   Petitioner's attempt to prove fraud must, therefore, fail as it was evidenced only by his
16

own uncorroborated and, expectedly, self-serving testimony.

Petitioner also argues that the dismissal of the complaint against Naybe, the principal debtor, and against
Pantanosas, his co-maker, constituted a release of his obligation, especially because the dismissal of the case
against Pantanosas was upon the motion of private respondent itself. He cites as basis for his argument, Article
2080 of the Civil Code which provides that:

The guarantors, even though they be solidary, are released from their obligation whenever by some
act of the creditor, they cannot be subrogated to the rights, mortgages, and preferences of the latter.

It is to be noted, however, that petitioner signed the promissory note as a solidary co-maker and not as a guarantor.
This is patent even from the first sentence of the promissory note which states as follows:

Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY promise to pay
to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of Cagayan de Oro,
Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos, Philippine Currency, together
with interest . . . at the rate of SIXTEEN (16) per cent per annum until fully paid.

A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each
creditor is entitled to demand the whole obligation.  7 on the other hand, Article 2047 of the Civil Code states:
1

By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so.

If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3,
Title I of this Book shall be observed. In such a case the contract is called a suretyship. (Emphasis
supplied.)

While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different
from that of a solidary debtor. Thus, Tolentino explains:

A guarantor who binds himself in solidum with the principal debtor under the provisions of the
second paragraph does not become a solidary co-debtor to all intents and purposes. There is a
difference between a solidary co-debtor and a fiador in solidum (surety). The latter, outside of the
liability he assumes to pay the debt before the property of the principal debtor has been exhausted,
retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while a

Evidence II.
 solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3, Title I,
Book IV of the Civil Code. 
18

Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and several obligations. Under Art.
1207 thereof, when there are two or more debtors in one and the same obligation, the presumption is that the
obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. There is a solidary
liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation
so requires. 19

Because the promissory note involved in this case expressly states that the three signatories therein are jointly and
severally liable, any one, some or all of them may be proceeded against for the entire obligation.   The choice is left
20

to the solidary creditor to determine against whom he will enforce collection.   Consequently, the dismissal of the
21

case against Judge Pontanosas may not be deemed as having discharged petitioner from liability as well. As
regards Naybe, suffice it to say that the court never acquired jurisdiction over him. Petitioner, therefore, may only
have recourse against his co-makers, as provided by law.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned decision of the
Court of Appeals is AFFIRMED. Costs against petitioner.

Evidence II.
23.) G.R. No. 107372 January 23, 1997

RAFAEL S. ORTAÑES, petitioner,
vs.
THE COURT OF APPEALS, OSCAR INOCENTES AND ASUNCION LLANES INOCENTES, respondents.

RESOLUTION

FRANCISCO, J.:

On September 30, 1982, private respondents sold to petitioner two (2) parcels of registered land in Quezon
City for a consideration of P35,000.00 and P20,000.00, respectively. The first deed of absolute sale covering
Transfer Certificate of Title (TCT) No. 258628 provides in part:

That for and in consideration of the sum of THIRTY FIVE THOUSAND (P35,000.00) PESOS, receipt
of which in full is hereby acknowledged, we have sold, transferred and conveyed, as we hereby
sell, transfer and convey, that subdivided portion of the property covered by TCT No. 258628 known
as Lot No. 684-G-1-B-2 in favor of RAFAEL S. ORTAÑEZ, of legal age, Filipino, whose marriage is
under a regime of complete separation of property, and a resident of 942 Aurora Blvd., Quezon City,
his heirs or assigns.1

while the second deed of absolute sale covering TCT. No. 243273 provides:

That for and in consideration of the sum of TWENTY THOUSAND (P20,000.00) PESOS receipt of
which in full is hereby acknowledged, we have sold, transferred and conveyed, as we hereby sell,
transfer and convey, that consolidated-subdivided portion of the property covered by TCT No.
243273 known as Lot No. 5 in favor of RAFAEL S. ORTANEZ, of legal age, Filipino, whose marriage
is under a regime of complete separation of property, and a resident of 942 Aurora Blvd., Cubao,
Quezon City his heirs or assigns.2

Private respondents received the payments for the above-mentioned lots, but failed to deliver the titles to
petitioner. On April 9, 1990 the latter demanded from the former the delivery of said titles. 3 Private
respondents, however, refused on the ground that the title of the first lot is in the possession of another
person,4 and petitioner's acquisition of the title of the other lot is subject to certain conditions .

Offshoot, petitioner sued private respondents for specific performance before the RTC. In their answer with
counterclaim private respondents merely alleged the existence of the following oral conditions5 which were
never reflected in the deeds of sale:6

3.3.2 Title to the other property (TCT No. 243273) remains with the defendants (private
respondents) until plaintiff (petitioner) shows proof that all the following requirements have
been met:

(i) Plaintiff will cause the segregation of his right of way amounting to 398 sq. m.;

(ii) Plaintiff will submit to the defendants the approved plan for the segregation;

(iii) Plaintiff will put up a strong wall between his property and that of defendants' lot to
segregate his right of way;

(iv) Plaintiff will pay the capital gains tax and all other expenses that may be incurred by reason of
sale. . .

Evidence II.
During trial, private respondent Oscar Inocentes, a former judge, orally testified that the sale was subject to
the above conditions,7 although such conditions were not incorporated in the deeds of sale. Despite
petitioner's timely objections on the ground that the introduction of said oral conditions was barred by the parol
evidence rule, the lower court nonetheless, admitted them and eventually dismissed the complaint as well as the
counterclaim. On appeal, the Court of Appeals (CA) affirmed the court a quo. Hence, this petition.

We are tasked to resolve the issue on the admissibility of parol evidence to establish the alleged oral
conditions-precedent to a contract of sale, when the deeds of sale are silent on such conditions.

The parol evidence herein introduced is inadmissible. First, private respondents' oral testimony on the
alleged conditions, coming from a party who has an interest in the outcome of the case, depending
exclusively on human memory, is not as reliable as written or documentary evidence.8 Spoken words could
be notoriously unreliable unlike a written contract which speaks of a uniform language.9 Thus, under the
general rule in Section 9 of Rule 13010 of the Rules of Court, when the terms of an agreement were reduced to
writing, as in this case, it is deemed to contain all the terms agreed upon and no evidence of such terms can be
admitted other than the contents thereof.11 Considering that the written deeds of sale were the only repository of
the truth, whatever is not found in said instruments must have been waived and abandoned by the
parties.12 Examining the deeds of sale, we cannot even make an inference that the sale was subject to any
condition. As a contract, it is the law between the parties.13

Secondly, to buttress their argument, private respondents rely on the case of Land Settlement Development,
Co. vs. Garcia Plantation14 where the Court ruled that a condition precedent to a contract may be established by
parol evidence. However, the material facts of that case are different from this case. In the former, the contract
sought to be enforced15 expressly stated that it is subject to an agreement containing the conditions-precedent
which were proven through parol evidence. Whereas, the deeds of sale in this case, made no reference to any
pre-conditions or other agreement. In fact, the sale is denominated as absolute in its own terms.

Third, the parol evidence herein sought to be introduced would vary, contradict or defeat the operation of a
valid instrument,16 hence, contrary to the rule that:

The parol evidence rule forbids any addition to . . . the terms of a written instrument by testimony
purporting to show that, at or before the signing of the document, other or different terms were orally
agreed upon by the parties.17

Although parol evidence is admissible to explain the meaning of a contract, "it cannot serve the purpose of
incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the
writing unless there has been fraud or mistake."18 No such fraud or mistake exists in this case.

Fourth, we disagree with private respondents' argument that their parol evidence is admissible under the
exceptions provided by the Rules, specifically, the alleged failure of the agreement to express the true
intent of the parties. Such exception obtains only in the following instance:

[W]here the written contract is so ambiguous or obscure in terms that the contractual
intention of the parties cannot be understood from a mere reading of the instrument. In such a
case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to each
other, and of the facts and circumstances surrounding them when they entered into the contract may
be received to enable the court to make a proper, interpretation of the instrument.19

In this case, the deeds of sale are clear, without any ambiguity, mistake or imperfection, much less obscurity
or doubt in the terms thereof.

Fifth, we are not persuaded by private respondents' contention that they "put in issue by the pleadings" the failure of
the written agreement to express the true intent of the parties. Record shows20 that private respondents did
not expressly plead that the deeds of sale were incomplete or that it did not reflect the
intention21 of the buyer (petitioner) and the seller (private respondents). Such issue must be, "squarely
presented."22 Private respondents merely alleged that the sale was subject to four (4) conditions which they tried

Evidence II.
to prove during trial by parol evidence.23 Obviously, this cannot be done, because they did not plead any of the
exceptions mentioned in the parol evidence rule.24 Their case is covered by the general rule that the contents of the
writing are the only repository of the terms of the agreement. Considering that private respondent Oscar Inocentes is
a lawyer (and former judge) he was "supposed to be steeped in legal knowledge and practices" and was "expected
to know the consequences"25 of his signing a deed of absolute sale. Had he given an iota's attention to scrutinize
the deeds, he would have incorporated important stipulations that the transfer of title to said lots were conditional.26

One last thing, assuming arguendo that the parol evidence is admissible, it should nonetheless be disbelieved as no
other evidence appears from the record to sustain the existence of the alleged conditions. Not even the other seller,
Asuncion Inocentes, was presented to testify on such conditions.

ACCORDINGLY, the appealed decision is REVERSED and the records of this case REMANDED to the trial court
for proper disposition in accordance with this ruling.

Evidence II.
24.) G.R. No. 196023               April 21, 2014

JOSE JUAN TONG, ET AL., Petitioners,

vs.
GO TIAT KUN, ET AL., Respondents.

DECISION

REYES, J.:

This appeal by petition for review seeks to annul and set aside the Decision  dated October 28, 2010 and the
1

Resolution  dated March 3, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 03078, which reversed the
2

Decision  dated May 21, 2009 of the Regional Trial Court of Iloilo City, Branch 37, in Civil Case No. 05-28626.
3

The Facts

The instant petition stemmed from an action for Nullification of Titles and Deeds of Extra-Judicial
Settlement and Sale and Damages instituted by the petitioners against the respondents over a parcel of
land known as Lot 998-A of the Cadastral Survey of Iloilo, having an area of 2,525 square meters and now
covered by Transfer Certificate of Title (TCT) No. 134082.

The petitioners are nine of the ten children of Spouses Juan Tong (Juan Tong) and Sy Un (Spouses Juan
Tong), namely: Jose Juan Tong, Lucio Juan Tong, Simeon Juan Tong, Felisa Juan Tong Cheng, Luisa Juan Tong
Tan, Julia Juan Tong Dihiansan, Ana Juan Tong Dy, Elena Juan Tong Yng Choan, and Vicente Juan Tong, who
being already deceased, is survived by his widow, Rosita So and their children, Chanto Juan Tong and Alfonso So-
Chanto Juan Tong.

Completing the ten children of Spouses Juan Tong is the deceased Luis Juan Tong, Sr. (Luis, Sr.) whose
surviving heirs are: his spouse Go Tiat Kun, and their children, Leon, Mary, Lilia, Tomas, Luis, Jr., and Jaime, who
being already dead, is survived by his wife, Roma Cokee Juan Tong (respondents).

Sometime in 1957, Juan Tong had a meeting with all his children to inform them of his intention to purchase
Lot 998 to be used for the family’s lumber business called "Juan Tong Lumber". However, since he was a
Chinese citizen and was disqualified from acquiring the said lot, the title to the property will be registered in
the name of his eldest son, Luis, Sr., who at that time was already of age and was the only Filipino citizen among
his children. On May 11, 1957, Juan Tong bought Lot 998 from the heirs of Jose Ascencio. Accordingly, on May 16,
1957, TCT No. 10346 was issued by the Register of Deeds in the name of Luis, Sr.

On December 8, 1978, the single proprietorship of Juan Tong Lumber was incorporated into a corporation known as
the Juan Tong Lumber, Inc.  However, Sy Un and Juan Tong both died intestate on October 31, 1984, and
4

November 13, 1990, respectively.

Meanwhile, on May 30, 1981, Luis, Sr. died and the respondents, being his surviving heirs, claimed ownership
over Lot 998 by succession, alleging that no trust agreement exists and it was Luis, Sr. who bought Lot 998.
On July 2, 1982, the respondents executed a Deed of Extra-Judicial Settlement of Estate of Luis, Sr.,
adjudicating unto themselves Lot 998 and claiming that the said lot is the conjugal property of Luis, Sr., and his
wife, which the Juvenile and Domestic Relations Court of Iloilo City approved on June 28, 1982. On July 19, 1982,
the said deed was registered causing the cancellation of TCT No. 10346 and the issuance of TCT No. T-60231 in
the name of the respondents.

Subsequently, the respondents agreed to subdivide Lot 998, thus, on October 12, 1992, two new titles were issued:
(1) TCT No. 97068 over Lot 998-A in the name of Go Tiat Kun and her children; and (2) TCT No. T-96216 over Lot
998-B in the name of Luis, Jr.

Evidence II.
After Lot 998 was subdivided, Luis, Jr. sold Lot 998-B to Fine Rock Development Corporation (FRDC), which in turn
sold the same to Visayas Goodwill Credit Corporation (VGCC). It was only after the petitioners received a letter from
VGCC, on August 31, 1995, that they discovered about the breach of the trust agreement committed by the
respondents.

To protect their rights, the petitioners filed an action for Annulment of Sales, Titles, Reconveyance and Damages of
Lot 998-B docketed as Civil Case No. 22730 against Luis, Jr., FRDC and VGCC. On March 6, 1997, the trial court
ruled  in favor of the petitioners which were later affirmed by the CA  and this Court  on appeal. Consequently, Lot
5 6 7

998-B was reconveyed to the petitioners and TCT No. T-14839 was issued under their names including the late
Luis, Sr.

Then, on February 24, 2001, Go Tiat Kun executed a Deed of Sale of Undivided Interest over Lot 998-A in
favor of her children, Leon, Mary, Lilia, Tomas, and the late Jaime, resulting in the issuance of TCT No. T-134082
over Lot 998-A.

Hence, on August 2, 2005, the petitioners filed the instant case for Nullification of Titles, and Deeds of Extra-
judicial Settlement and Sale and Damages claiming as owners of Lot 998-A. 8

After trial, the court a quo rendered its judgment in favor of the petitioners, ruling that there was an implied resulting
trust between Juan Tong, Luis, Sr., the petitioners and the respondents, over Lot 998. The trial court found that Luis
Sr. was a mere trustee, and not the owner of Lot 998, and the beneficial interest over said property remained in
Juan Tong and subsequently in the Juan Tong Lumber, Inc. The trust is further established by the fact that Luis Sr.,
during his lifetime: (1) did not build a house or any structure thereon or make use of the property in any manner; (2)
resided with his family together with his parents, brothers and sisters in Juan Tong building in front of the said lot; (3)
have acquired a residential property at Ledesco Village, La Paz, Iloilo City and other places, where his heirs now
reside; and (4) did not exercised any other act of ownership over the said lot.

The trial court further claimed that any right that the respondents may have over Lot 998-A would have been merely
derived from that of their predecessor-in-interest, Luis Sr. Since the respondents were not the owners of Lot 998-A,
they could not appropriate the property unto themselves, much less convey the same unto third persons. Thus, any
document executed by them adjudicating unto themselves or conveying in favor of each other Lot 998-A, as well as
the titles issued in their favor as a consequence of those documents, are invalid. Since the petitioners were deprived
of Lot 998-A through the surreptitious and fraudulent acts of the respondents, the petitioners are entitled to the
reconveyance of the properties, and the validity of TCT No. T-134082 which covers Lot 998-A as well as the
previous titles and documents of conveyance covering the said lot were null and void. Thus:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and
against the defendants:

1. Declaring null and void the following:

a. Deed of Extrajudicial Settlement of Estate of Deceased Person executed by the Defendants on

July 2, 1982 executed by defendants Go Tiat Kun, Leon Juan Tong, Mary Juan Tong, Lilia Juan
Tong, and Tomas Juan Tong, and the late Jaime Juan Tong;

b. Transfer Certificate of Title No. T-60231 in the name of defendants Go Tiat Kun, Leon Juan Tong,
Mary Juan Tong, Lilia Juan Tong, and Tomas Juan Tong and the late Jaime Juan Tong;

c. Transfer Certificate of Title No. T-97068 in the name of defendants Go Tiat Kun, Leon Juan Tong,
Mary Juan Tong, Lilia Juan Tong, and Tomas Juan Tong and the late Jaime Juan Tong;

d. Deed of Sale of Undivided Interest over Real Property executed by defendant Go Tiat Kun on
February 24, 2001 in favor of defendants Leon Juan Tong, Mary Juan Tong, Lilia Juan Tong, and
Tomas Juan Tong and the late Jaime Juan Tong; [and]

Evidence II.
 e. Transfer Certificate of Title No. T-134082, and all titles issued subsequent thereto, covering Lot
998-A, in the names of defendants Leon Juan Tong, Mary Juan Tong, Lilia Juan Tong, and Tomas
Juan Tong and the late Jaime Juan Tong[.]

2. Ordering defendants to jointly and severally pay Jose Juan Tong Moral Damages of Php200,000.00, and
the plaintiffs Litigation Expenses of Php100,000.00 and Attorney’s Fees of Php200,000.00.

3. Ordering the Register of Deeds of the City of Iloilo to issue a new transfer certificate of title covering Lot
998-A in the name of the plaintiffs and Luis Juan Tong, in equal shares.

4. The Counterclaim is hereby ordered dismissed for lack of merit.

SO ORDERED. 9

On appeal, the CA rendered the herein assailed decision, which reversed and set aside the trial court’s
decision, and dismissed the complaint for lack of merit.

The appellate court, more particularly ruled that an express trust was created because there was a direct and
positive act from Juan Tong to create a trust. And when an express trust concerns an immovable property or
any interest therein, it may not be proved by parol or oral evidence, but must be proven by some writing or
deed.  The CA also ruled that even granting that an implied resulting trust was created; the petitioners are still
10

barred by prescription because the said resulting trust was terminated upon the death of Luis, Sr. and was then
converted into a constructive trust.  Since in an action for reconveyance based on a constructive trust prescribes in
11

ten years from the issuance of the Torrens title over the property, counting from the death of Luis, Sr. in 1981, the
action has already prescribed.

The CA went on to rule that there is a presumption of donation in this case pursuant to Article 1448 of the Civil Code
that if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. Thus, even
though the respondents did not present evidence to prove a donation, the petitioners likewise did not also try to
dispute it. The CA also held that the petitioners were already barred by estoppel and laches.

Aggrieved by the foregoing disquisition, the petitioners moved for reconsideration but it was denied by the appellate
court,  hence, they filed this petition for review.
12

The Issue

Briefly stated, the issues to be resolved in this petition are: (1) Was there an implied resulting trust constituted over
Lot 998 when Juan Tong purchased the property and registered it in the name of Luis, Sr.? (2) May parol evidence
be used as proof of the establishment of the trust? (3) Were the petitioners’ action barred by prescription,
estoppel and laches?

The Court’s Ruling

The petition is impressed with merit.

As a general rule, in petitions for review under Rule 45 of the Rules of Court, the jurisdiction of this Court in cases
brought before it from the CA is limited to the review and revision of errors of law allegedly committed by the
appellate court. The question of the existence of an implied trust is factual, hence, ordinarily outside the purview of
Rule 45. Nevertheless, the Court’s review is justified by the need to make a definitive finding on this factual issue in
light of the conflicting rulings rendered by the courts below. 13

At the outset, it is worthy to note that the issues posited in this case are not novel because in Civil Case No. 22730
involving Lot 998-B which forms part of Lot 998, the trial court already found that said lot was held in trust by Luis Sr.
in favor of his siblings by virtue of an implied resulting trust. The trial court’s decision was then affirmed by the CA in
CA-G.R. CV No. 56602, and this Court in G.R. No. 156068. Thus, Lot 998-A, the subject of this instant case, and
Evidence II.
Lot 998-B, are similarly situated as they comprise the subdivided Lot 998, the property which in its entirety was held
in trust by Luis Sr. in favor of his siblings.

A review of the records shows an intention to create a trust between the parties. Although Lot 998 was titled in
the name of Luis, Sr., the circumstances surrounding the acquisition of the subject property eloquently
speak of the intent that the equitable or beneficial ownership of the property should belong to the Juan
Tong family.

First, Juan Tong had the financial means to purchase the property for ₱55,000.00. On the other hand, respondents
failed to present a single witness to corroborate their claim that Luis, Sr. bought the property with his own money
since at that time, Luis Sr., was merely working for his father where he received a monthly salary of ₱200.00 with
free board and lodging.

Second, the possession of Lot 998 had always been with the petitioners. The property was physically possessed by
Juan Tong and was used as stockyard for their lumber business before it was acquired, and even after it was
acquired. In fact, the lot remains to be the stockyard of the family lumber business until this very day.

Third, from the time it was registered in the name of Luis, Sr. in 1957, Lot 998 remained undivided and untouched
by the respondents. It was only after the death of Luis, Sr. that the respondents claimed ownership over Lot 998 and
subdivided it into two lots, Lot 998-A and Lot 998-B.

Fourth, respondent Leon admitted that up to the time of his father’s death, (1) Lot 998 is in the possession of the
petitioners, (2) they resided in the tenement in the front part of Juan Tong’s compound, (3) Luis Sr. never sent any
letter or communication to the petitioners claiming ownership of Lot 998, and (4) he and his mother have a
residence at Ledesco Village, La Paz, Iloilo City while his brother and sisters also have their own residences.

Fifth, the real property taxes on Lot 998 were paid not by Luis Sr. but by his father Juan Tong and the Juan Tong
Lumber, Inc., from 1966 up to early 2008 as evidenced by the following: a) the letter of assessment sent by the City
Treasurer of Iloilo, naming Juan Tong as the owner of Lot 998; and b) the receipts of real property taxes paid by
Juan Tong Lumber, and later by Juan Tong Lumber, Inc., from 1997 to 2008. While some of the tax receipts were in
the name of Luis Sr., the fact that the petitioners were in possession of the originals thereof established that the
petitioners, the Juan Tong Lumber, Inc., or the late Juan Tong paid for the taxes. The respondents did not try to
explain the petitioners’ possession of the realty property tax receipts in the name of Luis Sr.

The appellate court’s conclusion that an express trust was created because there was a direct and positive act by
Juan Tong to create a trust must inevitably yield to the clear and positive evidence on record which showed that
what was truly created was an implied resulting trust. As what has been fully established, in view of the mutual
trust and confidence existing between said parties who are family members, the only reason why Lot 998 was
registered in the name of Luis, Sr. was to facilitate the purchase of the said property to be used in the family’s
lumber business since Luis, Sr. is the only Filipino Citizen in the Juan Tong family at that time. As the registered
owner of Lot 998, it is only natural that tax declarations and the corresponding tax payment receipts be in the name
of Luis, Sr. so as to effect payment thereof.

The principle of a resulting trust is based on the equitable doctrine that valuable consideration and not legal title
determines the equitable title or interest and are presumed always to have been contemplated by the parties. They
arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby
becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the
other hand, a constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation.
Constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent
unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 14

Guided by the foregoing definitions, the Court is in conformity with the finding of the trial court that an implied
resulting trust was created as provided under the first sentence of Article 1448  which is sometimes referred to as a
15

purchase money resulting trust, the elements of which are: (a) an actual payment of money, property or services, or
an equivalent, constituting valuable consideration; and (b) such consideration must be furnished by the alleged
beneficiary of a resulting trust.  Here, the petitioners have shown that the two elements are present in the instant
16

Evidence II.
case. Luis, Sr. was merely a trustee of Juan Tong and the petitioners in relation to the subject property, and it was
Juan Tong who provided the money for the purchase of Lot 998 but the corresponding transfer certificate of title was
placed in the name of Luis, Sr.

The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by
relying on the registration is one of the well-known limitations upon a title. A trust, which derives its
strength from the confidence one reposes on another especially between families, does not lose that
character simply because of what appears in a legal document. 17

Contrary to the claim of the respondents, it is not error for the trial court to rely on parol evidence, i.e., the
oral testimonies of witnesses Simeon Juan Tong and Jose Juan Tong, to arrive at the conclusion that an
implied resulting trust exists. What is crucial is the intention to create a trust.

"Intention—although only presumed, implied or supposed by law from the nature of the transaction or from
the facts and circumstances accompanying the transaction, particularly the source of the consideration—is
always an element of a resulting trust and may be inferred from the acts or conduct of the parties rather
than from direct expression of conduct. Certainly, intent as an indispensable element is a matter that
necessarily lies in the evidence, that is, by evidence, even circumstantial, of statements made by the parties
at or before the time title passes. Because an implied trust is neither dependent upon an express agreement
nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the admission of parol
evidence to prove their existence. Parol evidence that is required to establish the existence of an implied
trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or indefinite declarations." 18

Lastly, the respondents’ assertion that the petitioners’ action is barred by prescription, laches and estoppel is
erroneous.

As a rule, implied resulting trusts do not prescribe except when the trustee repudiates the trust.  Further, the action
1âwphi1

to reconvey does not prescribe so long as the property stands in the name of the trustee.  To allow prescription
19

would be tantamount to allowing a trustee to acquire title against his principal and true owner. It should be noted
that the title of Lot 998 was still registered in the name of Luis Sr. even when he predeceased Juan Tong.
Considering that the implied trust has been repudiated through such death, Lot 998 cannot be included in his estate
except only insofar as his undivided share thereof is concerned. It is well-settled that title to property does not vest
ownership but it is a mere proof that such property has been registered. And, the fact that the petitioners are in
possession of all the tax receipts and tax declarations of Lot 998 all the more amplify their claim of ownership over
Lot 998-A. Although these tax declarations or realty tax payments of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind
would be paying taxes for a property that is not in his actual or at least constructive possession. Such realty tax
payments constitute proof that the holder has a claim of title over the property.  Therefore, the action for
20

reconveyance of Lot 998-A, which forms part of Lot 998, is imprescriptible and the petitioners are not estopped from
claiming ownership thereof.

Moreso, when the petitioners received a letter from VGCC, and discovered about the breach of the trust agreement
committed by the heirs of Luis, Sr., they immediately instituted an action to protect their rights, as well as upon
learning that respondent Go Tiat Kun executed a Deed of Sale of Undivided Interest over Lot 998-A in favor of her
children. Clearly, no delay may be attributed to them. The doctrine of laches is not strictly applied between near
relatives, and the fact that the parties are connected by ties of blood or marriage tends to excuse an otherwise
unreasonable delay.

On the question of whether or not Juan Tong intended a donation to Luis, Sr., this is merely a disputable
presumption which in this case was clearly disputed by the petitioners and supported by the pieces of evidence on
record.

Thus, contrary to the CA' s finding that there was no evidence on record showing that an implied resulting trust
relation arose between Juan Tong and Luis, Sr., the Court finds that the petitioners before the trial court, had
actually adduced sufficient evidence to prove the intention of Juan Tong to transfer to Luis, Sr. only the legal title of
Lot 998, with attendant expectation that Luis, Sr. would hold the property in trust for the family. The evidence of
course is not documentary, but rather testimonial. Furthermore, the respondents never proffered any proof that
Evidence II.
could tend to establish that they were the ones who have been paying taxes from the time of its purchase up to the
present, that they have been in possession of the subject property or that they had it surveyed and subdivided
openly with notice to all concerned.

WHEREFORE, in consideration of the foregoing premises, the instant petition is hereby GRANTED. The Decision
dated October 28, 2010 and Resolution dated March 3, 2011 of the Court of Appeals in CA-G.R. CV No. 03078 are
REVERSED and SET ASIDE. The Decision dated May 21, 2009 of the Regional Trial Court of Iloilo City, Branch 37
in Civil Case No. 05-28626 is REINSTATED.

Evidence II.
25.) G.R. No. 204029               June 4, 2014

AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except Emelinda R. Gualvez] and
SALVADOR A. OROSCO, Petitioners,
vs.
SPS. DOMINGO and EMELINDA REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI
CITY, Respondents.

DECISION

VELASCO, JR., J.:

Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision  and Resolution  dated March
1 2

30, 2012 and September 25, 2012, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 93035, which
reversed and set aside the Decision dated January 20, 2009 of the Regional Trial Court (RTC), Branch 4 in Legazpi
City, in Civil Case No. 10407.

The antecedent facts may be summarized as follows:

On October 26, 2004, petitioners Avelina Abarientos Rebusquillo (Avelina) and Salvador Orosco (Salvador) filed a
Complaint for annulment and revocation of an Affidavit of Self-Adjudication dated December 4, 2001 and a Deed of
Absolute Sale dated February 6, 2002 before the court a quo. In it, petitioners alleged that Avelina was one of the
children of Eulalio Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3, 1964,
survived by his wife Victoria, six legitimate children, and one illegitimate child, namely: (1) Avelina Abarientos-
Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the mother of petitioner Salvador; (3) Rosalino
Abarientos; (4) Juan Abarientos; (5) Feliciano Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His
wife Victoria eventually died intestate on June 30, 1983.

On his death, Eulalio left behind an untitled parcel of land in Legazpi City consisting of two thousand eight hundred
sixty-nine(2,869) square meters, more or less, which was covered by Tax Declaration ARP No. (TD) 0141.

In 2001, Avelina was supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez
(Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the pretext that the
documents were needed to facilitate the titling of the lot. It was only in 2003, so petitioners claim, that Avelina
realized that what she signed was an Affidavit of Self-Adjudication and a Deed of Absolute Sale in favor of
respondents.

As respondents purportedly ignored her when she tried to talk to them, Avelina sought the intervention of the RTC to
declare null and void the two (2) documents in order to reinstate TD0141 and so correct the injustice done to the
other heirs of Eulalio.

In their answer, respondents admitted that the execution of the Affidavit of Self-Adjudication and the Deed of Sale
was intended to facilitate the titling of the subject property. Paragraph 9 of their Answer reads:

Sometime in the year 2001, [petitioner] Avelina together with the other heirs of Eulalio Abarientos brought out the
idea to [respondent] Emelinda Rebusquillo-Gualvez to have the property described in paragraph 8 of the complaint
registered under the Torrens System of Registration. To facilitate the titling of the property, so that the same could
be attractive to prospective buyers, it was agreed that the property’s tax declaration could be transferred to
[respondents] Spouses [Emelinda] R. Gualvez and Domingo Gualvez who will spend all the cost of titling subject to
reimbursement by all other heirs in case the property is sold; That it was agreed that all the heirs will be given their
corresponding shares on the property; That pursuant to said purpose Avelina Abarientos-Rebusquillo with the
knowledge and consent of the other heirs signed and executed an Affidavit of Self-Adjudication and a Deed of
Absolute Sale in favor of [respondents] Gualvez. In fact, [petitioner] Avelina Rebusquillo was given an advance sum
of FIFTY THOUSAND PESOS (₱50,000.00) by [respondent] spouses and all the delinquent taxes paid by
[respondents]. 3

Evidence II.
After trial, the RTC rendered its Decision dated January 20, 2009 annulling the Affidavit of Self-Adjudication and the
Deed of Absolute Sale executed by Avelina on the grounds that (1) with regard to the Affidavit of Self-Adjudication,
she was not the sole heir of her parents and was not therefore solely entitled to their estate; and (2) in the case of
the Deed of Absolute Sale, Avelina did not really intend to sell her share in the property as it was only executed to
facilitate the titling of such property. The dispositive portion of the RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered, as follows:

1. The subject Affidavit of Self-Adjudication of the Estate of the Deceased Spouses Eulalio Abarientos and
Victoria Villareal, dated December 4, 2001 as well as the subject Deed of Absolute Sale, notarized on
February 6, 2002, covering the property described in par. 8 of the Amended Complaint are hereby ordered
ANNULLED;

2. That defendant City Assessor’s Officer of Legazpi City is hereby ordered to CANCEL the Tax Declaration
in the name of private [respondents] spouses Gualvez under ARP No. 4143 and to REINSTATE the Tax
Declaration under ARP No. 0141 in the name of Eulalio Abarientos;

3. By way of restitution, [petitioner] Avelina Abarientos Rebusquillo is hereby ordered to return or refund to
[respondents] spouses Domingo Gualvez and Emelinda Gualvez, the ₱50,000.00 given by the latter
spouses to the former. 4

Assailing the trial court’s decision, respondents interposed an appeal with the CA arguing that the Deed of Sale
cannot be annulled being a public document that has for its object the creation and transmission of real rights over
the immovable subject property. The fact that Avelina’s testimony was not offered in evidence, so respondents
argued, the signature on the adverted deed remains as concrete proof of her agreement to its terms. Lastly,
respondents contended that the Complaint filed by petitioners Avelina and Salvador before the RTC is not the
proper remedy provided by law for those compulsory heirs unlawfully deprived of their inheritance.

Pending the resolution of respondents’ appeal, Avelina died intestate on September 1, 2009 leaving behind several
living heirs  including respondent Emelinda.
5

In its Decision dated March 30, 2012, the appellate court granted the appeal and reversed and set aside the
Decision of the RTC. The CA held that the RTC erred in annulling the Affidavit of Self-Adjudication simply on
petitioners’ allegation of the existence of the heirs of Eulalio, considering that issues on heirship must be made in
administration or intestate proceedings, not in an ordinary civil action. Further, the appellate court observed that the
Deed of Absolute Sale cannot be nullified as it is a notarized document that has in its favor the presumption of
regularity and is entitled to full faith and credit upon its face.

Aggrieved by the CA’s Decision, petitioner Avelina, as substituted by her heirs except respondent Emelinda, and
petitioner Salvador are now before this Court ascribing reversible error on the part of the appellate court.

We find merit in the instant petition.

It has indeed been ruled that the declaration of heirship must be made in a special proceeding, not in an
independent civil action. However, this Court had likewise held that recourse to administration proceedings to
determine who heirs are is sanctioned only if there is a good and compelling reason for such recourse.  Hence, the
6

Court had allowed exceptions to the rule requiring administration proceedings as when the parties in the civil case
already presented their evidence regarding the issue of heirship, and the RTC had consequently rendered judgment
upon the issues it defined during the pre-trial.  In Portugal v. Portugal-Beltran,  this Court held:
7 8

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal’s estate, executed
on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule 74, Section 1 of
the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies leaving a property,
it should be judicially administered and the competent court should appoint a qualified administrator, in the order
established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor
therein.

Evidence II.
Petitioners claim, however, to be the exclusive heirs of Portugal. A probate or intestate court, no doubt, has
jurisdiction to declare who are the heirs of a deceased.

It appearing, however, that in the present case the only property of the intestate estate of Portugal is the Caloocan
parcel of land to still subject it, under the circumstances of the case, to a special proceeding which could be long,
hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is burdensome to
the estate with the costs and expenses of an administration proceeding. And it is superfluous in light of the fact that
the parties to the civil case - subject of the present case, could and had already in fact presented evidence before
the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal’s
estate to administration proceedings since a determination of petitioners’ status as heirs could be achieved in the
civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented by the parties during
the trial and render a decision thereon upon the issues it defined during pre-trial x x x. (emphasis supplied)

Similar to Portugal, in the present case, there appears to be only one parcel of land being claimed by the contending
parties as the inheritance from Eulalio. It would be more practical, as Portugal teaches, to dispense with a separate
special proceeding for the determination of the status of petitioner Avelina as sole heir of Eulalio, especially in light
of the fact that respondents spouses Gualvez admitted in court that they knew for a fact that petitioner Avelina was
not the sole heir of Eulalio and that petitioner Salvador was one of the other living heirs with rights over the subject
land. As confirmed by the RTC in its Decision, respondents have stipulated and have thereby admitted the veracity
of the following facts during the pre-trial:

IV – UNCONTROVERTED FACTS: (Based on the stipulation of facts in the Pre-Trial Order)

A. x x x

B. [Petitioners] and private [respondents] spouses Gualvez admitted the following facts:

1. Identity of the parties;

2. Capacity of the [petitioners] and private [respondents] to sue and be sued;

3. [Petitioner] Avelina Abarientos-Rebusquilllo is not the only surviving heir of deceased spouses Eulalio and
Victoria Abarientos;

4. Petitioner Salvador Orosco is a co-owner/possessor of a portion of the subject property;

5. Fortunata Abarientos-Orosco is the sister of Avelina Abarientos;

6. [Respondent] Emelinda Rebusquillo-Gualves is a daughter of [petitioner] Avelina A. Rebusquillo;

7. [Petitioner] Avelina Rebusquillo was born on Nov. 10, 1923;

8. The existence of Affidavit of Self-Adjudication of Estate of the Deceased and Deed of Absolute Sale
executed by [petitioner] Avelina A. Rebusquillo on the subject property.  (emphasis supplied)
9

In light of the admission of respondents spouses Gualvez, it is with more reason that a resort to special proceeding
will be but an unnecessary superfluity. Accordingly, the court a quo had properly rendered judgment on the validity
of the Affidavit of Self-Adjudication executed by Avelina. As pointed out by the trial court, an Affidavit of Self-
Adjudication is only proper when the affiant is the sole heir of the decedent. The second sentence of Section 1, Rule
74 of the Rules of Court is patently clear that self-adjudication is only warranted when there is only one heir:

Evidence II.
Section 1. Extrajudicial settlement by agreement between heirs. –– x x x If there is only one heir, he may adjudicate
to himself the entire estate by means of an affidavit filed in the office of the register of deeds. x x x (emphasis
supplied)

As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by respondents, petitioner
Salvador is one of the co-heirs by right of representation of his mother. Without a doubt, Avelina had perjured
herself when she declared in the affidavit that she is "the only daughter and sole heir of spouses EULALIO
ABARIENTOS AND VICTORIA VILLAREAL."  The falsity of this claim renders her act of adjudicating to herself the
10

inheritance left by her father invalid. The RTC did not, therefore, err in granting Avelina’s prayer to declare the
affidavit null and void and so correct the wrong she has committed.

In like manner, the Deed of Absolute Sale executed by Avelina in favor of respondents was correctly nullified and
voided by the RTC. Avelina was not in the right position to sell and transfer the absolute ownership of the subject
property to respondents. As she was not the sole heir of Eulalio and her Affidavit of Self-Adjudication is void, the
subject property is still subject to partition. Avelina, in fine, did not have the absolute ownership of the subject
property but only an aliquot portion. What she could have transferred to respondents was only the ownership of
such aliquot portion. It is apparent from the admissions of respondents and the records of this case that Avelina had
no intention to transfer the ownership, of whatever extent, over the property to respondents. Hence, the Deed of
Absolute Sale is nothing more than a simulated contract.

The Civil Code provides:

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not
intend to be bound at all; the latter, when the parties conceal their true agreement. (emphasis supplied)

Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a
third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy
binds the parties to their real agreement.

In Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta,  this Court explained the concept of the simulation of
11

contracts:

In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be
bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or
intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely
simulated or fictitious contract is void, and the parties may recover from each other what they may have given under
the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract
is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites
of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is
absolutely binding and enforceable between the parties and their successors in interest. (emphasis supplied)

In the present case, the true intention of the parties in the execution of the Deed of Absolute Sale is immediately
apparent from respondents’ very own Answer to petitioners’ Complaint. As respondents themselves acknowledge,
the purpose of the Deed of Absolute Sale was simply to "facilitate the titling of the [subject] property," not to transfer
the ownership of the lot to them. Furthermore, respondents concede that petitioner Salvador remains in possession
of the property and that there is no indication that respondents ever took possession of the subject property after its
supposed purchase. Such failure to take exclusive possession of the subject property or, in the alternative, to collect
rentals from its possessor, is contrary to the principle of ownership and is a clear badge of simulation that renders
the whole transaction void. 12

Contrary to the appellate court’s opinion, the fact that the questioned Deed of Absolute Sale was reduced to
writing and notarized does not accord it the quality of incontrovertibility otherwise provided by the parole
evidence rule. The form of a contract does not make an otherwise simulated and invalid act valid. The rule on
parole evidence is not, as it were, ironclad. Sec. 9, Rule 130 of the Rules of Court provides the exceptions:

Section 9. Evidence of written agreements. – x x x

Evidence II.
However, a party may present evidence to modify, explain or add to the terms of written agreement if he
puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the parties
thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after the execution of
the written agreement.

The term "agreement" includes wills. (emphasis supplied)

The failure of the Deed of Absolute Sale to express the true intent and agreement of the contracting parties
was clearly put in issue in the present case. Again, respondents themselves admit in their Answer that the
Affidavit of Self-Adjudication and the Deed of Absolute Sale were only executed to facilitate the titling of the
property. The RTC is, therefore, justified to apply the exceptions provided in the second paragraph of Sec.
9, Rule 130 to ascertain the true intent of the parties, which shall prevail over the letter of the document.
That said, considering that the Deed of Absolute Sale has been shown to be void for being absolutely
simulated, petitioners are not precluded from presenting evidence to modify, explain or add to the terms of
the written agreement. 13

WHEREFORE, the instant petition is GRANTED. The Decision dated March 30, 2012 and the Resolution dated
September 25, 2012 of the Court of Appeals in CA-G.R. CV No. 93035 are hereby REVERSED and SET ASIDE.
The Decision dated January 20, 2009 in Civil Case No. 10407 of the Regional Trial Court (RTC),Branch 4 in Legazpi
City is REINSTATED.

Evidence II.
26.) G.R. No. 204700               November 24, 2014

EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I. OBEN, Petitioners,

vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., Respondent.

RESOLUTION

LEONEN, J.:

For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's motion for reconsideration  of our April
1

10, 2013 decision,  which reversed and set aside the Court of Appeals' resolutions  and ordered respondent to
2 3

produce the Loan Sale and Purchase Agreement (LSPA) dated April 7, 2006, including its annexes and/or
attachments, if any, in order that petitioners may inspect or photocopy the same.

Petitioners Eagleridge Development Corporation, Marcelo N. Naval, and Crispin I. Oben filed on June 7, 2013 their
motion to admit attached opposition.  Subsequently, respondent filed its reply  and petitioners their motion to admit
4 5

attached rejoinder. 6

The motion for reconsideration raises the following points:

(1) The motion for production was filed out of time; 7

(2) The production of the LSPA would violate the parol evidence rule; and 8

(3) The LSPA is a privileged and confidential document. 9

Respondent asserts that there was no "insistent refusal" on its part to present the LSPA, but that petitioners filed
their motion for production way out of time, even beyond the protracted pre-trial period from September 2005 to
2011.  Hence, petitioners had no oneto blame but themselves when the trial court denied their motion as it was filed
10

only during the trial proper. 11

Respondent further submits that "Article 1634 [of the] Civil Code had been inappropriately cited by
[p]etitioners"  inasmuch as it is Republic Act No. 9182 (Special Purpose Vehicle Act) that is
12

applicable.  Nonetheless, even assuming that Article 1634 is applicable, respondent argued that petitioners are: 1)
13

still liable to pay the whole of petitioner Eagleridge Development Corporation’s (EDC) loan obligation, i.e.,
₱10,232,998.00 exclusive of interests and/or damages;  and 2) seven (7) years late in extinguishing petitioner
14

EDC’s loan obligation because pursuant to Article 1634, they should have exercised their right of extinguishment
within 30 days from the substitution of Export and Industry Bank or EIB (the original creditor) by respondent in
December 2006.  According to respondent, the trial court order "granting the substitution constituted sufficient
15

judicial demand as contemplated under Article 1634."  Also, maintaining that the LSPA is immaterial or irrelevant to
16

the case, respondent contends that the "[o]rder of substitution settled the issue of [respondent’s] standing before the
[c]ourt and its right to fill in the shoes of [EIB]."  It argues that the production of the LSPA will neither prevent
17

respondent from pursuing its claim of 10,232,998.00, exclusive of interests and penalties, from petitioner EDC, nor
write off petitioner EDC’s liability to respondent.  The primordial issue of whether petitioners owe respondent a sum
18

of money via the deed of assignment can allegedly "be readily resolved by application of Civil Code provisions
and/or applicable jurisprudence and not by the production/inspection of the LSPA[.]"  Respondent also argues that
19

"a consideration is not always a requisite [in assignment of credits, and] an assignee may maintain an action based
on his title and it is immaterial whether ornot he paid any consideration [therefor][.]" 20

Respondent also contends that: (1) the production of the LSPA will violate the parol evidence rule  under 21

Rule 130, Section 9 of the Rules of Court; (2) the LSPA is a privileged/confidential bank document;  and (3) under
22

the Special Purpose Vehicle Act, "the only obligation of both the assignor (bank) and the assignee (the SPV;
respondent Cameron) is to give notice to the debtor (Eagleridge, Naval,and Oben) that its account has been

Evidence II.
assigned/transferred to a special purpose vehicle (Sec. 12, R.A. 9182) [and] [i]t does not require of the special
purpose vehicle or the bank to disclose all financial documents included in the assignment/sale/transfer[.]" 23

Finally, respondent points out that the deed of assignment is a contested document. "Fair play would be violated if
the LSPA is produced without [p]etitioners acknowledging that respondent Cameron Granville 3 Asset Management,
Inc. is the real party-in-interest because petitioners . . . would [thereafter] use . . . the contents of a document
(LSPA) to its benefit while at the same time"  refuting the integrity of the deed and the legal personality of
24

respondent to sue petitioners. 25

For their part, petitioners counter that their motion for production was not filed out of time, and "[t]here is no
proscription, under Rule 27 or any provision of the Rules of Court, from filing motions for production, beyond the pre-
trial."
26

Further, assuming that there was a valid transfer of the loan obligation of petitioner EDC, Article 1634 is applicable
and, therefore, petitioners must be informed of the actual transfer price, which information may only be supplied by
the LSPA.  Petitioners argue that the substitution of respondent in the case a quowas "not sufficient ‘demand’as
27

contemplated under Article 1634 of the Civil Code inasmuch asrespondent Cameron failed . . . to inform petitioner
EDC of the price it paid for the [transfer of the] loan obligation,"  which made it "impossible for petitioners to
28

reimburse what was paid for the acquisition of the . . . loan obligation [of EDC]."  Additionally, petitioners contend
29

that respondent was not a party to the deed of assignment, but Cameron Granville Asset Management (SPV-AMC),
Inc., hence, "as [to] the actual parties to the Deed of Assignment are concerned, no such demand has yet been
made." 30

Petitioners add that the amount of their liability to respondent is one of the factual issues to be resolved as stated in
the November 21, 2011 pretrial order of the Regional Trial Court, which makes the LSPA clearly relevant and
material to the disposition of the case.31

Petitioners next argue that the parol evidence rule is not applicable to them because they were not parties
to the deed of assignment, and "they cannot be prevented from seeking evidence to determine the complete
terms of the Deed of Assignment."  Besides, the deed of assignment made express reference to the LSPA,
32

hence,the latter cannot be considered as extrinsic to it. 33

As to respondent’s invocation that the LSPA is privileged/confidential, petitioners counter that "it has not been
shown that the parties fall under . . . or, at the very least . . . analogous to [any of the relationships enumerated in
Rule 130, Section 124] that would exempt [respondent] from disclosing information as to their transaction." 34

In reply, respondent argues that "[petitioners] cannot accept and reject the same instrument at the same
time."  According to respondent, by allegedly "uphold[ing] the truth of the contents as well as the validity of [the]
35

Deed of Assignment [in] seeking the production of the [LSPA],"  petitioners could no longer be allowed to impugn
36

the validity of the same deed. 37

In their rejoinder, petitioners clarified that their consistent position was always to assail the validity of the deed of
assignment; that alternatively, they invoked the application of Article 1634 should the court uphold the validity of the
transfer of their alleged loan obligation; and that Rule 8, Section 2 of the Rules of Court "permits parties to set forth
alternative causes of action or defenses." 38

We deny the motion for reconsideration.

Discovery mode of
production/inspection of
document may be availed of
even beyond pre-trial upon a
showing of good cause

The availment of a motion for production, as one of the modes of discovery, is not limited to the pre-trial stage. Rule
27 does not provide for any time frame within which the discovery mode of production or inspection of documents

Evidence II.
can be utilized. The rule only requires leave of court "upon due application and a showing of due cause."  Rule 27,
39

Section 1 of the 1997 Rules of Court, states:

SECTION 1. Motion for production or inspection order — Upon motion of any party showing good cause therefor the
court in which an action is pending may (a) order any party to produce and permit the inspection and copying or
photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things, not privileged, which constitute or contain evidence material to any matter
involved in the action and which are in his possession, custody or control[.] (Emphasis supplied)

In Producers Bank of the Philippines v. Court of Appeals,  this court held that since the rules are silent asto the
40

period within which modes of discovery (in that case, written interrogatories) may still be requested, it is necessary
to determine: (1) the purposeof discovery; (2) whether, based on the stage of the proceedings and evidence
presented thus far, allowing it is proper and would facilitate the disposition of the case; and (3) whether substantial
rights of parties would be unduly prejudiced.  This court further held that "[t]he use of discovery is encouraged, for it
41

operates with desirable flexibility under the discretionary control of the trial court."
42

In Dasmariñas Garments, Inc. v. Reyes,  this court declared that depositions, as a mode ofdiscovery, "may be taken
43

at any time after the institution of any action [as there is] no prohibition against the taking of depositions after pre-
trial."  Thus:
44

Dasmariñas also contends that the "taking of deposition is a mode of pretrial discovery to be availed of before the
action comes to trial." Not so. Depositions may be taken at any time after the institution of any action, whenever
necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-trial or before it; no
prohibition against the taking of depositions after pre-trial. Indeed, the law authorizes the taking of depositions of
witnesses before or after an appeal is taken from the judgment of a Regional Trial Court "to perpetuate their
testimony for use in the event of further proceedings in the said court" (Rule 134, Rules of Court), and even during
the process of execution of a final and executory judgment (East Asiatic Co. v. C.I.R., 40 SCRA 521, 544). 45

"The modes of discovery are accorded a broad and liberal treatment."  The evident purpose of discovery
46

procedures is "to enable the parties, consistent with recognized privileges, to obtain the fullest possible knowledge
of the issues and facts before civil trials"  and, thus, facilitating an amicable settlement or expediting the trial of the
47

case.48

Technicalities in pleading should be avoided in order to obtain substantial justice. In Mutuc v. Judge Agloro,  this 49

court directed the bank to give Mutuc a complete statement asto how his debt was computed, and should he be
dissatisfied with that statement, pursuant to Rule 27 of the Rules of Court, to allow him to inspect and copy bank
records supporting the items in that statement.  This was held to be "in consonance with the rules on discovery and
50

the avowed policy of the Rules of Court . . . to require the parties to lay their cards on the table to facilitate a
settlement of the case before the trial."51

We have determined that the LSPA is relevant and material to the issue on the validity of the deed of assignment
raised by petitioners in the court a quo, and allowing its production and inspection by petitioners would be more in
keeping with the objectives of the discovery rules. We find no great practical difficulty, and respondent continuously
fails to allege any, in presenting the document for inspection and copying of petitioners. On the other hand, to deny
petitioners the opportunity to inquire into the LSPA would bar their access to relevant evidence and impair their
fundamental right to due process. 52

Article 1634 of the New Civil Code is applicable

Contrary to respondent’s stance, Article 1634 of the Civil Code on assignment of credit in litigation is applicable.

Section 13 of the Special Purpose Vehicle Act clearly provides that in the transfer of the non-performing loans to a
special purpose vehicle, "the provisions on subrogation and assignment of credits under the New Civil Code shall
apply." Thus:

Evidence II.
Sec. 13. Nature of Transfer. – All sales or transfers of NPAs to an SPV shall be in the nature of a true sale after
proper notice in accordance with the procedures asprovided for in Section 12: Provided, That GFIs and GOCCs
shall be subject to existing law on the disposition of assets: Provided, further, That in the transfer of the NPLs, the
provisions on subrogation and assignment of credits under the New Civil Code shall apply.

Furthermore, Section 19 of the Special Purpose Vehicle Act expressly states that redemption periods allowed to
borrowers under the banking law, the Rules of Court, and/or other laws are applicable. Hence, the right of
redemption allowed to a debtor under Article 1634 of the Civil Code is applicable to the case a quo.

Accordingly, petitioners may extinguish their debt by paying the assignee-special purpose vehicle the transfer price
plus the cost of money up to the time of redemption and the judicial costs.

Petitioners’ right to
extinguish their debt has not
yet lapsed

Petitioners’ right to extinguish their debt under Article 1634 on assignment of credits has not yet lapsed. The
pertinent provision is reproduced here:

Art. 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by
reimbursing the assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on
the price from the day on which the same was paid. A credit or other incorporeal right shall be considered in
litigation from the time the complaint concerning the same is answered.

The debtor may exercise his right within thirty days from the date the assignee demands payment from him.
(Emphasis supplied)

Under the last paragraph of Article 1634, the debtor may extinguish his or her debt within 30 days from the date the
assignee demands payment. In this case, insofar as the actual parties to the deed of assignment are concerned, no
demand has yet been made, and the 30-day period did not begin to run. Indeed, petitioners assailed before the trial
court the validity of the deed of assignment on the groundsthat it did not comply with the mandatory requirements of
the Special Purpose Vehicle Act,  and it referred to Cameron Granville Asset Management (SPV-AMC), Inc., as the
53

assignee, and not respondent Cameron Granville 3 Asset Management, Inc.  The law requires that payment should
54

be made only "to the person in whose favor the obligation has been constituted, or his [or her] successor in interest,
or any person authorized to receive it."  It was held that payment made to a person who is not the creditor, his or
55

her successor-in-interest, or a person who is authorized to receive payment, even through error or good faith, is not
effective payment which will bind the creditor or release the debtor from the obligation to pay.  Therefore, it was
56

important for petitioners to determine for sure the proper assignee of the EIB credit or who to pay, in order to
effectively extinguish their debt.

Moreover, even assuming that respondent is the proper assignee of the EIB credit, petitioners could not exercise
their right of extinguishment because they were not informed of the consideration paid for the assignment. 57

Respondent must, pursuant to Article 1634 of the Civil Code, disclose how much it paid to acquire the EIB credit, so
that petitioners could make the corresponding offer to pay, by way of redemption, the same amount in final
settlement of their obligation.

Respondent insists that the transfer price of the EIB credit is ₱10,232,998.00 (the actual amount and value of the
credit), and that petitioners should have paid the said amount within 30 days from the December 8, 2006 order of
the Regional Trial Court approving its substitution of EIB.  Petitioners believe otherwise, and as the deed of
58

assignment was silent on the matter, it becomes necessary to verify the amount of the consideration from the LSPA.

Assuming indeed that respondent acquired the EIB credit for a lesser consideration, it cannot compel petitioners to
pay or answer for the entire original EIB credit, or more than what it paid for the assignment.

Evidence II.
Under the circumstances of this case, the 30-day period under Article 1634 within which petitioners could exercise
their right to extinguish their debt should begin to run only from the time they were informed of the actual price paid
by the assignee for the transfer of their debt. Parol evidence rule is not applicable

Claiming further the impropriety of allowing the production of the LSPA, respondent contends that the
presentation of the document and its annexes would violate the parol evidence rule in Rule 130, Section 9:

SEC. 9. Evidence of written agreements.—When the terms of an agreement have been reduced to writing, it
is considered as containing all the terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of the written agreement ifhe
puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the parties
thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after the
execution of the written agreement.

The term "agreement" includes wills.

We disagree.

The parol evidence rule does not apply to petitioners who are not parties to the deed of assignment and do
not base a claim on it.  Hence, they cannot be prevented from seeking evidence to determine the complete
59

terms of the deed of assignment.

Even assuming that Rule 130, Section 9 is applicable, an exception to the rule under the second paragraph is when
the party puts in issue the validity of the written agreement, as in the case a quo.

Besides, what is forbidden under the parol evidence rule is the presentation of oral or extrinsic evidence,
not those expressly referred to in the written agreement. "[D]ocuments can be read together when one
refers to the other."  By the express terms of the deed of assignment, it is clear that the deed of assignment
60

was meant to be read in conjunction with the LSPA.

As we have stated in our decision, Rule 132, Section 17  of the Rules of Court allows a party to inquire into the
61

whole of the writing or record when a part of it is given in evidence by the other party. Since the deed of assignment
was produced in court by respondent and marked as one of its documentary exhibits, the LSPA which was made a
part thereof by explicit reference and which is necessary for its understanding may also be inquired into by
petitioners.

The LSPA is not privileged

and confidential in nature

Respondent’s contention that the LSPA is privileged and confidential is likewise untenable.

Indeed, Rule 27 contains the proviso that the documents sought to be produced and inspected must not be
privileged against disclosure. Rule 130, Section 24 describes the types of privileged communication. These are
communication between or involving the following: (a) between husband and wife; (b) between attorney and client;
(c) between physician and patient; (d) between priest and penitent; and (e) public officers and public interest.

Evidence II.
Privileged communications under the rules of evidence is premised on an accepted need to protect a trust
relationship. It has not been shown that the parties to the deed of assignment fall under any of the foregoing
categories.

This court has previously cited other privileged matters such as the following: "(a) editors may not be compelled to
disclose the source of published news; (b) voters may not be compelled to disclose for whom they voted; (c) trade
secrets; (d) information contained in tax census returns; . . . (d) bank deposits"  (pursuant to the Secrecy of Bank
62

Deposits Act); (e) national security matters and intelligence information;  and (f) criminal matters.  Nonetheless, the
63 64

LSPA does not fall within any of these classes of information. Moreover, the privilegeis not absolute, and the court
may compel disclosure where it is indispensable for doing justice.

At any rate, respondent failed to discharge the burden of showing that the LSPA is a privileged
document.  Respondent did not present any law or regulation that considers bank documents such as the LSPA as
1âwphi1

classified information. Its contention that the Special Purpose Vehicle Act  only requires the creditor-bank to give
65

notice to the debtor of the transfer of his or her account to a special purpose vehicle, and that the assignee-special
purpose vehicle has no obligation to disclose other financial documents related to the sale, is untenable. The
Special Purpose Vehicle Act does not explicitly declare these financial documents as privileged matters. Further, as
discussed, petitioners are not precluded from inquiring as to the true consideration of the assignment, precisely
because the same law in relation to Article 1634 allows the debtor to extinguish its debt by reimbursing the
assignee-special purpose vehicle of the actual price the latter paid for the assignment.

An assignment of a credit "produce[s] no effect as against third persons, unless it appears ina public
instrument[.]"  It strains reason why the LSPA, which by law must be a publicinstrument to be binding against third
66

persons such as petitioners-debtors, is privileged and confidential.

Alternative defenses are

allowed under the Rules

Finally, respondent’s contention that petitioners cannot claim the validity and invalidity of the deed ofassignment at
the same time is untenable.

The invocation by petitioners of Article 1634, which presupposes the validity of the deed of assignment orthe
transfer of the EIB credit to respondent, even if it would run counter to their defense on the invalidity of the deed of
assignment, is proper and sanctioned by Rule 8, Section 2 of the Rules of Court, which reads:

SEC. 2. Alternative causes of action or defenses. — A party may set forth two or more statements of a claim or
defense alternatively or hypothetically, either in one causeof action or defense or in separate causes of action or
defenses. When two or more statements are made in the alternative and one of them if made independently would
be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements.
(Emphasis supplied)

All told, respondent failed to allege sufficient reasons for us to reconsider our decision. Verily, the production and
inspection of the LSPA and its annexes fulfill the discovery-procedures objective of making the trial "less a game of
blind man’s buff and morea fair contest with the basic issues and facts disclosed to the fullest practicable extent." 67

WHEREFORE, the motion for reconsideration is DENIED WITH FINALITY.

Evidence II.
 27.) G. R. No. 171601, April 08, 2015

SPOUSES BONIFACIO AND LUCIA PARAS, Petitioners, v. KIMWA CONSTRUCTION AND

DEVELOPMENT CORPORATION, Respondent.

DECISION

LEONEN, J.:

This resolves the Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure
praying that the assailed Decision2 dated July 4, 2005 and Resolution3 dated February 9, 2006 of the
Court of Appeals Special 20th Division in CA-G.R. CV No. 74682 be reversed and set aside, and that
the Decision4 of Branch 55 of the Regional Trial Court, Mandaue City dated May 16, 2001 in Civil Case
No. MAN-2412 be reinstated.5

The trial court's May 16, 2001 Decision ruled in favor of petitioners Spouses Bonifacio and Lucia
Paras (plaintiffs before the Regional Trial Court) in their action for breach of contract with damages
against respondent Kimwa Construction and Development Corporation (Kimwa).6

The assailed Decision of the Court of Appeals reversed and set aside the trial court's May 16, 2001
Decision and dismissed Spouses Paras' Complaint.7 The Court of Appeals' assailed Resolution denied
Spouses Paras' Motion for Reconsideration.8

Lucia Paras (Lucia) was a "concessionaire of a sand and gravel permit at Kabulihan, Toledo
City[.]"9 Kimwa is a "construction firm that sells concrete aggregates to contractors and haulers in
Cebu."10

On December 6, 1994, Lucia and Kimwa entered into a contract denominated "Agreement for Supply
of Aggregates" (Agreement) where 40,000 cubic meters of aggregates were "allotted"11 by Lucia as
supplier to Kimwa.12 Kimwa was to pick up the allotted aggregates at Lucia's permitted area in Toledo
City13 at P240.00 per truckload.14

The entirety of this Agreement reads: chanroblesvirtuallawlibrary

AGREEMENT FOR SUPPLY OF AGGREGATES

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into by and between:

LUCIA PARAS, of legal age, Filipino, married and resident of Poblacion, Toledo City, Province of Cebu,
hereinafter referred to as the SUPPLIER:

-and-

KIMWA CONSTRUCTION AND DEVELOPMENT CORP., a corporation duly organized and existing
under the laws of the Philippines with office address at Subangdaku, Mandaue City, hereinafter
represented by its President MRS. CORAZON Y. LUA, of legal age, Filipino and a resident of
Subangdaku, Mandaue City[,] hereinafter referred to as the CONTRACTOR;

WITNESSETH:

Evidence II.
That the SUPPLIER is [sic] Special Permittee of (Rechanelling Block # VI of Sapang Daco River along
Barangay Ilihan) located at Toledo City under the terms and conditions: chanroblesvirtuallawlibrary

1. That the aggregates is [sic] to be picked-up by the CONTRACTOR at the

SUPPLIER [sic] permitted area at the rate of TWO HUNDRED FORTY (P240.00)
PESOS per truck load;

2. That the volume allotted by the SUPPLIER to the CONTRACTOR is limited to

40,000 cu.m.;

3. That the said Aggregates is [sic] for the exclusive use of the Contractor;

4. That the terms of payment is Fifteen (15) days after the receipt of billing;

5. That there is [sic] no modification, amendment, assignment or transfer of this

Agreement after acceptance shall be binding upon the SUPPLIER unless agreed
to in writing by and between the CONTRACTOR and SUPPLIER.

IN WITNESS WHEREOF, we have hereunto affixed our signatures this 6th day of December, 1994 at
Mandaue City, Cebu, Philippines.
LUCIA PARAS (sgd.) CORAZON Y. LUA (sgd.)
Supplier Contractor15
(Emphasis supplied)  
Pursuant to the Agreement, Kimwa hauled 10,000 cubic meters of aggregates. Sometime after this,
however, Kimwa stopped hauling aggregates.16

Claiming that in so doing, Kimwa violated the Agreement, Lucia, oined by her husband, Bonifacio,
filed the Complaint17 for breach of contract with damages that is now subject of this Petition.

In their Complaint, Spouses Paras alleged that sometime in December 1994, Lucia was approached
by Kimwa expressing its interest to purchase gravel and sand from her.18 Kimwa allegedly asked that
it be "assured"19 of 40,000 cubic meters worth of aggregates.20 Lucia countered that her concession
area was due to be rechanneled on May 15, 1995, when her Special Permit expires.21 Thus, she
emphasized that she would be willing to enter into a contract with Kimwa "provided the forty
thousand cubic meter[s] w[ould] be withdrawn or completely extracted and hauled before 15 May
1995[.]"22 Kimwa then assured Lucia that it would take only two to three months for it to completely
haul the 40,000 cubic meters of aggregates.23 Convinced of Kimwa's assurances, Lucia and Kimwa
entered into the Agreement.24

Spouses Paras added that within a few days, Kimwa was able to extract and haul 10,000 cubic
meters of aggregates. However, after extracting and hauling this quantity, Kimwa allegedly
transferred to the concession area of a certain Mrs. Remedios dela Torre in violation of their
Agreement. They then addressed demand letters to Kimwa. As these went unheeded, Spouses Paras
filed their Complaint.25

In its Answer,26 Kimwa alleged that it never committed to obtain 40,000 cubic meters of
aggregates from Lucia. It argued that the controversial quantity of 40,000 cubic meters
represented only an upper limit or the maximum quantity that it could haul.27 It likewise claimed
that it neither made any commitment to haul 40,000 cubic meters of aggregates before May 15,
1995 nor represented that the hauling of this quantity could be completed in two to three
months.28 It denied that the hauling of 10,000 cubic meters of aggregates was completed in a matter
of days and countered that it took weeks to do so. It also denied transferring to the concession area
of a certain Mrs. Remedios dela Torre.29

Evidence II.
Kimwa asserted that the Agreement articulated the parties' true intent that 40,000 cubic meters was
a maximum limit and that May 15, 1995 was never set as a deadline. Invoking the Parol Evidence
Rule, it insisted that Spouses Paras were barred from introducing evidence which would show that
the parties had agreed differently.30

On May 16, 2001, the Regional Trial Court rendered the Decision in favor of Spouses Paras. The trial
court noted that the Agreement stipulated that the allotted aggregates were set aside exclusively for
Kimwa. It reasoned that it was contrary to human experience for Kimwa to have entered into an
Agreement with Lucia without verifying the latter's authority as a concessionaire.31 Considering that
the Special Permit32 granted to Lucia (petitioners' Exhibit "A" before the trial court) clearly indicated
that her authority was good for only six (6) months from November 14, 1994, the trial court noted
that Kimwa must have been aware that the 40,000 cubic meters of aggregates allotted to it must
necessarily be hauled by May 15, 1995. As it failed to do so, it was liable to Spouses Paras for the
total sum of P720,000.00, the value of the 30,000 cubic-meters of aggregates that Kimwa did not
haul, in addition to attorney's fees and costs of suit.33

On appeal, the Court of Appeals reversed the Regional Trial Court's Decision. It faulted the trial court
for basing its findings on evidence presented which were supposedly in violation of the Parol Evidence
Rule. It noted that the Agreement was clear that Kimwa was under no obligation to haul 40,000 cubic
meters of aggregates by May 15, 1995.34

In a subsequent Resolution, the Court of Appeals denied reconsideration to Spouses Paras.35

Hence, this Petition was filed.

The issue for resolution is whether respondent Kimwa Construction and Development Corporation is
liable to petitioners Spouses Paras for (admittedly) failing to haul 30,000 cubic meters of aggregates
from petitioner Lucia Paras' permitted area by May 15, 1995.

To resolve this, it is necessary to determine whether petitioners Spouses Paras were able to establish
that respondent Kimwa was obliged to haul a total of 40,000 cubic meters of aggregates on or before
May 15, 1995.

We reverse the Decision of the Court of Appeals and reinstate that of the Regional Trial Court.
Respondent Kimwa is liable for failing to haul the remainder of the quantity which it was obliged to
acquire from petitioner Lucia Paras.

Rule 130, Section 9 of the Revised Rules on Evidence provides for the Parol Evidence Rule, the rule
on admissibility of documentary evidence when the terms of an agreement have been reduced into
writing: chanroblesvirtuallawlibrary

Section 9. Evidence of written agreements. — When the terms of an agreement have been reduced
to writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other than the contents of the
written agreement.

However, a party may present evidence to modify, explain or add to the terms of written agreement
if he puts in issue in his pleading: chanroblesvirtuallawlibrary

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors in interest after the execution of
the written agreement.

The term "agreement" includes wills.

Evidence II.
Per this rule, reduction to written form, regardless of the formalities observed,36 "forbids any addition
to, or contradiction of, the terms of a written agreement by testimony or other evidence purporting
to show that different terms were agreed upon by the parties, varying the purport of the written
contract."37

This rule is animated by a perceived wisdom in deferring to the contracting parties' articulated intent.
In choosing to reduce their agreement into writing, they are deemed to have done so meticulously
and carefully, employing specific — frequently, even technical — language as are appropriate to their
context. From an evidentiary standpoint, this is also because "oral testimony . . . coming' from a
party who has an interest in the outcome of the case, depending exclusively on human memory, is
not as reliable as written or documentary evidence. Spoken words could be notoriously unreliable
unlike a written contract which speaks of a uniform language."38 As illustrated in Abella v. Court of
Appeals:39ChanRoblesVirtualawlib

rary

Without any doubt, oral testimony as to a certain fact, depending as it does exclusively on human
memory, is not as reliable as written or documentary evidence. "I would sooner trust the smallest
slip of paper for truth," said Judge Limpkin of Georgia, "than the strongest and most retentive
memory ever bestowed on mortal man." This is especially true in this case where such oral testimony
is given by a party to the case who has an interest in its outcome, and by a witness who claimed to
have received a commission from the petitioner.40 cralawlawlibrary

This, however, is merely a general rule. Provided that a party puts in issue in its pleading any of the
four (4) items enumerated in the second paragraph of Rule 130, Section 9, "a party may present
evidence to modify, explain or add to the terms of the agreement[.]"41 Raising any of these items as
an issue in a pleading such that it falls under the exception is not limited to the party initiating an
action. In Philippine National Railways v. Court of First Instance of Albay,42 this court noted that "if
the defendant set up the affirmative defense that the contract mentioned in the complaint does not
express the true agreement of the parties, then parol evidence is admissible to prove the true
agreement of the parties[.]"43 Moreover, as with all possible objections to the admission of
evidence, a party's failure to timely object is deemed a waiver, and parol evidence may
then be entertained.

Apart from pleading these exceptions, it is equally imperative that the parol evidence sought to be
introduced points to the conclusion proposed by the party presenting it. That is, it must be relevant,
tending to "induce belief in [the] existence"44 of the flaw, true intent, or subsequent extraneous
terms averred by the party seeking to introduce parol evidence.

In sum, two (2) things must be established for parol evidence to be admitted: first, that
the existence of any of the four (4) exceptions has been put in issue in a party's pleading
or has not been objected to by the adverse party; and second, that the parol evidence
sought to be presented serves to form the basis of the conclusion proposed by the
presenting party. cralawlawlibrary

II

Here, the Court of Appeals found fault in the Regional Trial Court for basing its findings "on the basis
of evidence presented in violation of the parol evidence rule."45 It proceeded to fault petitioners
Spouses Paras for showing "no proof of [respondent Kimwa's] obligation."46 Then, it stated that
"[t]he stipulations in the agreement between the parties leave no room for interpretation."47

The Court of Appeals is in serious error.

At the onset, two (2) flaws in the the Court of Appeals' reasoning must be emphasized. First, it is
inconsistent to say, on one hand, that the trial court erred on the basis of "evidence
presented"48 (albeit supposedly in violation of the Parol Evidence Rule), and, on the other, that
Evidence II.
petitioners Spouses Paras showed "no proof."49 Second, without even accounting for the exceptions
provided by Rule 130, Section 9, the Court of Appeals immediately concluded that whatever evidence
petitioners Spouses Paras presented was in violation of the Parol Evidence Rule.

Contrary to the Court of Appeal's conclusion, petitioners Spouses Paras pleaded in the
Complaint they filed before the trial court a mistake or imperfection in the Agreement, as
well as the Agreement's failure to express the true intent of the parties. Further,
respondent Kimwa, through its Answer, also responded to petitioners Spouses Paras'
pleading of these issues. This is, thus, an exceptional case allowing admission of parol
evidence.

Paragraphs 6 to 10 of petitioners' Complaint read: chanroblesvirtuallawlibrary

6. Sensing that the buyers-contractqrs and haulers alike could easily consumed [sic] the
deposits defendant proposed to the plaintiff-wife that it be assured of a forty thousand
(40,000) cubic meter [sic];

7. Plaintiff countered that the area is scheduled to be rechanneled on 15 May 1995 and by
that time she will be prohibited to sell the aggregates;

8. She further told the defendant that she would be willing to enter into a contract
provided the forty thousand cubic meter [sic] will be withdrawn or completely extracted
and hauled before 15 May 1995, the scheduled rechanneling:

9. Defendant assured her that it will take them only two to three months to haul
completely the desired volume as defendant has all the trucks needed;
10.Convinced of the assurances, plaintiff-wife and the defendant entered into a contract for
the supply of the aggregates sometime on 6 December 1994 or thereabouts, at a cost
of Two Hundred Forty (P240.00) Pesos per truckload[.]50

It is true that petitioners Spouses Paras' Complaint does not specifically state words and phrases
such as "mistake," "imperfection," or "failure to express the true intent of the parties." Nevertheless,
it is evident that the crux of petitioners Spouses Paras' Complaint is their assertion that the
Agreement "entered into on 6 December 1994 or thereabouts"51 was founded on the parties'
supposed understanding that the quantity of aggregates allotted in favor of respondent Kimwa must
be hauled by May 15, 1995, lest such hauling be rendered impossible by the rechanneling of
petitioner Lucia Paras' permitted area. This assertion is the very foundation of petitioners' having
come to court for relief.

Proof of how petitioners Spouses Paras successfully pleaded and put this in issue in their Complaint is
how respondent Kimwa felt it necessary to respond to it or address it in its Answer. Paragraphs 2 to 5
of respondent Kimwa's Answer read: chanroblesvirtuallawlibrary

2. The allegation in paragraph six of the complaint is admitted subject to the qualification
that when defendant offered to buy aggregates from the concession of the plaintiffs, it
simply asked the plaintiff-concessionaire if she could sell a sufficient supply of
aggregates to be used in defendant's construction business and plaintiff-concessionaire
agreed to sell to the defendant aggregates from her concession up to a limit of 40,000
cubic meters at the price of P240.00 per cubic meter.

3. The allegations in paragraph seven and eight of the complaint are vehemently denied
by the defendant. The contract which was entered into by the plaintiffs and the
defendant provides only that the former supply the latter the volume of 40,000.00
cubic meters of aggregates. There is no truth to the allegation that the plaintiff wife
entered into the contract under the condition that the aggregates must be quarried and
Evidence II.
 hauled by defendant completely before May 15, 1995, otherwise this would have been
unequivocally stipulated in the contract.

4. The allegation in paragraph nine of the complaint is hereby denied. The defendant
never made any assurance to the plaintiff wife that it will take only two to three months
to haul the aforesaid volume of aggregates. Likewise, the contract is silent on this
aspect for in fact there is no definite time frame agreed upon by the parties within
which defendant is to quarry and haul aggregates from the concession of the plaintiffs.

5. The allegation in paragraph ten of the complaint is admitted insofar as the execution of
the contract is concerned. However, the contract was executed, not by reason of the
alleged assurances of the defendant to the plaintiffs, as claimed by the latter, but
because of the intent and willingness of the plaintiffs to supply and sell aggregates to it.
It was upon the instance of the plaintiff that the defendant sign the subject contract to
express in writing their agreement that the latter would haul aggregates from plaintiffs'
concession up to such point in time that the maximum limit of 40,000 cubic meters
would be quarried and hauled without a definite deadline being set. Moreover, the
contract does not obligate the defendant to consume the allotted volume of 40,000
cubic meters.52

Considering how the Agreement's mistake, imperfection, or supposed failure to express the parties'
true intent was successfully put in issue in petitioners Spouses Paras' Complaint (and even responded
to by respondent Kimwa in its Answer), this case falls under the exceptions provided by Rule 130,
Section 9 of the Revised Rules on Evidence. Accordingly, the testimonial and documentary parol
evidence sought to be introduced by petitioners Spouses Paras, which attest to these supposed flaws
and what they aver to have been the parties' true intent, may be admitted and considered. cralawlawlibrary

III

Of course, this admission and availability for consideration is no guarantee of how exactly the parol
evidence adduced shall be appreciated by a court. That is, they do not guarantee the probative
value, if any, that shall be attached to them. In any case, we find that petitioners have established
that respondent Kimwa was obliged to haul 40,000 cubic meters of aggregates on or before May 15,
1995. Considering its admission that it did not haul 30,000 cubic meters of aggregates, respondent
Kimwa is liable to petitioners.

The Pre-Trial Order issued by the Regional Trial Court in Civil Case No. MAN-2412 attests to
respondent Kimwa's admission that: chanroblesvirtuallawlibrary

6) Prior to or during the execution of the contract[,] the Plaintiffs furnished the Defendant all the documents
and requisite papers in connection with the contract, one of which was a copy of the Plaintiff's [sic] special
permit indicating that the Plaintiff's [sic] authority was only good for (6) months from November 14,
1994.53

This Special Permit was, in turn, introduced by petitioners in evidence as their Exhibit "A,"54 with its
date of issuance and effectivity being specifically identified as their Exhibit "A-1."55 Relevant portions
of this Special Permit read:

To All Whom It May Concern: chanroblesvirtuallawlibrary

PERMISSION is hereby granted to:

Name                                                        Address

LUCIA PARAS                                      Poblacion, Toledo City

to undertake the rechannelling of Block No. VI of Sapang Daco River along Barangay Ilihan, Toledo
City, subject to following terms and conditions: chanroblesvirtuallawlibrary

1. That the volume to be extracted from the area is approximately 40,000 cubic meters;
Evidence II.
This permit which is valid for six (6) months from the date hereof is revocable anytime upon violation
of any of the foregoing conditions or in the interest of public peace and order.

Cebu Capitol, Cebu City, November 14, 1994.56 cralawlawlibrary

Having been admittedly furnished a copy of this Special Permit, respondent Kimwa was well aware
that a total of only about 40,000 cubic meters of aggregates may be extracted by petitioner Lucia
from the permitted area, and that petitioner Lucia Paras' operations cannot extend beyond May 15,
1995, when the Special Permit expires.

The Special Permit's condition that a total of only about 40,000 cubic meters of aggregates may be
extracted by petitioner Lucia Paras from the permitted area lends credence to the position that the
aggregates "allotted" to respondent Kimwa was in consideration of its corresponding commitment to
haul all 40,000 cubic meters. This is so, especially in light of the Agreement's own statement that
"the said Aggregates is for the exclusive use of [respondent Kimwa.]"57 By allotting the entire 40,000
cubic meters, petitioner Lucia Paras bound her entire business to respondent Kimwa. Rational human
behavior dictates that she must have done so with the corresponding assurances from it. It would
have been irrational, if not ridiculous, of her to oblige herself to make this allotment without
respondent Kimwa's concomitant undertaking that it would obtain the entire amount allotted.

Likewise, the condition that the Special Permit shall be valid for only six (6) months from November
14, 1994 lends credence to petitioners Spouses Paras' assertion that, in entering into the Agreement
with respondent Kimwa, petitioner Lucia Paras did so because of respondent Kimwa's promise that
hauling can be completed by May 15, 1995. Bound as she was by the Special Permit, petitioner Lucia
Paras needed to make it eminently clear to any party she was transacting with that she could supply
aggregates only up to May 15, 1995 and that the other party's hauling must be completed by May
15, 1995. She was merely acting with due diligence, for otherwise, any contract she would enter into
would be negated; any commitment she would make beyond May 15, 1995 would make her guilty of
misrepresentation, and any prospective income for her would be rendered illusory.

Our evidentiary rules impel us to proceed from the position (unless convincingly shown otherwise)
that individuals act as rational human beings, i.e, "[t]hat a person takes ordinary care of his
concerns[.]"58 This basic evidentiary stance, taken with the- supporting evidence petitioners Spouses
Paras adduced, respondent Kimwa's awareness of the conditions under which petitioner Lucia Paras
was bound, and the Agreement's own text specifying exclusive allotment for respondent Kimwa,
supports petitioners Spouses Paras' position that respondent Kimwa was obliged to haul 40,000 cubic
meters of aggregates on or before May 15, 1995. As it admittedly hauled only 10,000 cubic meters,
respondent Kimwa is liable for breach of contract in respect of the remaining 30,000 cubic meters. cralawred

WHEREFORE, the Petition is GRANTED. The assailed Decision dated July 4, 2005 and Resolution
dated February 9, 2006 of the Court of Appeals Special 20th Division in CA-G.R. CV No. 74682
are REVERSED and SET ASIDE. The Decision of Branch 55 of the Regional Trial Court, Mandaue
City dated May 16, 2001 in Civil Case No. MAN-2412 is REINSTATED.

A legal interest of 6% per annum shall likewise be imposed on the total judgment award from the
finality of this Decision until full satisfaction.

Evidence II.
 28.) G.R. No. 182409, March 20, 2017

FELIX PLAZO URBAN POOR SETTLERS COMMUNITY ASSOCIATION,

INC., Petitioner, v. ALFREDO LIPAT, SR. AND ALFREDO LIPAT, JR., Respondents.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the
Decision2 dated April 30, 2007 and Resolution3 dated March 17, 2008 of the Court of Appeals (CA) in
CA-G.R. CV No. 85684 which granted the appeal of Alfredo Lipat, Sr. (Lipat Sr.) and Alfredo Lipat, Jr.
(Lipat Jr.) (respondents) and accordingly dismissed the action for Specific Performance and Damages
with Prayer for Preliminary Injunction filed by Felix Plazo Urban Poor Settlers Community Association,
Inc. (petitioner) for lack of cause of action.

The Facts

On December 13, 1991, Lipat Sr., as represented by Lipat Jr., executed a Contract to Sell (CTS) in
favor of the petitioner, as represented by its President, Manuel Tubao (Tubao), whereby the former
agreed to sell to the latter two parcels of land in Naga City covered by Transfer Certificates of Title
Nos. 12236 and 12237 (subject properties) for a consideration of P200.00 per square meter.4

As stipulated in the CTS, the petitioner had 90 days to pay in full the purchase price of the subject
properties; otherwise, the CTS shall automatically expire. The period, however, elapsed without
payment of the full consideration by the petitioner.5

According to the petitioner, the 90-day period provided in the CTS was subject to the condition that
the subject properties be cleared of all claims from third persons considering that there were pending
litigations involving the same.6

Upon the expiry of the 90-day period, and despite the failure to clear the subject properties from the
claims of third persons, the petitioner contributed financial assistance for the expenses of litigation
involving the subject properties with the assurance that the CTS will still be enforced once the cases
are settled.7

In the meantime, the petitioner agreed to pay rental fees for their occupation of the subject
properties from 1992 to 1996.8

After the termination of the cases involving the subject properties, however, the respondents refused
to enforce the CTS on the ground that the same had expired and averred that there was no
agreement to extend its term.9

Consequently, the petitioner filed a case for Specific Performance and Damages with Prayer for the
Issuance of Preliminary Injunction against the respondents on June 10, 1997 before the Regional
Trial Court (RTC) of Naga City.10

For their defense, the respondents alleged that the CTS was not enforced due to the petitioner's
failure to pay the P200.00 per sq m selling price before the expiration of its term.11 As a result, the
members of the petitioner were required to pay rental fees corresponding to the area they occupy.12

Moreover, the respondents claimed that the so called "financial assistance" they received from the
petitioner's members was in the nature of a loan and that it has nothing to do with the alleged
extension of their CTS.13
Evidence II.
Considering that the CTS already expired, Lipat Jr. suggested an individual contract for each member
of the petitioner. Only four members, however, were able to buy individual lots, namely, Consuelo
Gomez, Edna Estioko, Gina Villar, and Pablo Calubad.14 Also, Rosemarie Buenaventura, who is not a
member of the petitioner, was able to buy two lots on the subject properties. Consequently, she filed
an urgent Motion for Leave to Intervene which was granted by the trial court on August 4, 1997.15

Ruling of the RTC

On August 9, 2004, the RTC of Naga City, Branch 22, in Civil Case No. RTC '97-3777, rendered a
Decision16 in favor of the petitioner directing the respondent to enforce the CTS after payment by the
petitioner of the selling price in the amount of P200.00 per sq m. The dispositive portion thereof
provides: chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the [petitioner] having proved by preponderance of evidence

the enforceability of the [CTS], dated December 13, 1991, judgment is hereby rendered ordering the
[respondents], to sell to [the petitioner] the properties] subject of this case, previously covered by
TCT No. 12236 and 12237, upon payment by the [petitioner] of the selling price of P200.00 per
square meter.

SO ORDERED.17
Aggrieved, the respondents filed an appeal to the CA to assail the RTC decision in holding that the
CTS dated December 13, 1991 they entered into with the petitioner is still in force and effect.18

Ruling of the CA

In a Decision19 dated April 30, 2007, the CA granted the appeal of the respondents. Accordingly, it
dismissed the action for Specific Performance and Damages with Prayer for Preliminary Injunction
filed by the petitioner for being premature. The dispositive portion thereof states:
chanRoblesvirtualLawlibrary

WHEREFORE, the instant appeal is GRANTED. The assailed decision in CIVIL CASE No. RTC '97-
3777 is REVERSED and SET ASIDE. The action for Specific Performance and Damages with Prayer
for Preliminary Injunction filed by the [petitioner] against the [respondents] with the court a quo is
hereby DISMISSED for lack of cause of action. No pronouncement as to costs.

SO ORDERED.20
The CA held that the petitioner cannot exact fulfillment from the respondents without itself having
first complied with what is incumbent upon it under the CTS. As shown in the records, the petitioner
failed to make full payment of the purchase price. Further, records do not show that the petitioner
ever attempted to at least, make the proper consignation of the amounts due to the court.21

A Motion for Reconsideration22 was filed by the petitioner, but the same was denied in a
Resolution23 dated March 17, 2008.

Issues

Hence, the instant petition for review on certiorari based on the following assignment of errors: chanRoblesvirtualLawlibrary

1. WHETHER OR NOT THE CA ERRED IN REVERSING THE TRIAL COURT'S DECISION THAT THE
PETITIONER CAN OBLIGE THE RESPONDENTS TO SELL THE PROPERTIES COVERED BY THE
CTS, THE CONTRACT BEING STILL EFFECTIVE;

2. WHETHER OR NOT THE CA ERRED IN DECLARING THAT THE CAUSE OF ACTION IS

PREMATURE AND IN DISREGARDING THE PAYMENTS AND EXPENSES MADE BY THE
PETITIONER OVER THE PROPERTIES IN QUESTION; and

Evidence II.
 3. WHETHER OR NOT THE CA ERRED IN NOT GRANTING THE MOTION FOR RECONSIDERATION
DESPITE THE FACT THAT THE PETITIONER SHOWED PROOF OF READINESS TO PAY.24

Ruling of the Court

To begin with, it bears stressing that the scope of the Court's judicial review under Rule 45 of the
Rules of Court is confined only to errors of law. It does not extend to questions of fact.25 This rule,
however, admits of exceptions, such as in the present case, where the factual findings of the CA and
the trial court are contradictory.26

After a careful review of the records of the case, however, the Court upholds the findings of the CA in
dismissing the complaint for specific performance filed by the petitioner against the respondents for
lack of merit.

The parties are bound to the stipulations they mutually agreed upon in the CTS

Indeed, the contract executed by the parties is the law between them. Consequently, from the time
the contract is perfected, all parties privy to it are bound not only to the fulfillment of what has been
expressly stipulated but likewise to all consequences which, according to their nature, may be in
keeping with good faith, usage and law.27

Here, the pertinent provisions of the CTS, denominated as Contract/Agreement, between the parties
read:

1. The Parties hereby agree that for and in consideration of the amount of TWO HUNDRED
(P200.00) Pesos, [Philippine] Currency per square meter, the VENDOR shall sell, cede, convey
and transfer unto the VENDEE, its assigns, or representative the above mentioned property;

xxxx

3. The registration fee for the mortgage to secure the loan to be obtained by the vendee to
finance the acquisition of the land shall be for the account of the VENDEE; [and]

4. This Contract/Agreement shall automatically expire on the Ninetyth [sic] (90) th [sic] day
commencing from the aforesaid date.28

Concededly, it is undisputed that the abovementioned contract is in the nature of a CTS. As such, the
obligation of the seller to sell becomes demandable only upon the occurrence of the suspensive
condition.29 In the present case, as correctly observed by the CA, the suspensive condition is the
payment in full of the purchase price by the petitioner prior to the expiration of the 90-day period
stipulated in their CTS, which the latter failed to do so. The relevant portion of the CA's decision
reads:chanRoblesvirtualLawlibrary

As shown in the case at bar, the [petitioner] did not pay the full purchase price which is its obligation
under the [CTS]. As the payment of the full purchase price is a positive suspensive condition the non-
fulfillment of which prevents the perfection of a [CTS], it is indubitable that the subject [CTS] is
ineffective and without force and effect. x x x.30
In Spouses Garcia, et al. v. Court of Appeals, et al.,31 the Court emphasized that in a CTS, payment
of the full purchase price is a positive suspensive condition, failure of which is not considered a
breach of the same but an occurrence that prevents the obligation of the seller to transfer title from
becoming effective.32 Here, there is no dispute that the petitioner failed to pay the full purchase price
stipulated in the CTS on the date fixed therein. Thus, the respondents are within their rights to refuse
to enforce the same.

As a rule, proof of verbal agreement that tends to vary the terms of a written agreement,
is inadmissible under theparol evidence rule
Evidence II.
Rule 130, Section 9 of the Revised Rules on Evidence embodies the parol evidence rule which
states: chanRoblesvirtualLawlibrary

SEC. 9. Evidence of written agreements. When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors-in-interest, no evidence of such terms other than the contents of the
written agreement.

However, a party may present evidence to modify, explain or add to the terms of the written
agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors-in-interest after the execution of
the written agreement.

The term "agreement" includes wills.

In Norton Resources and Development Corporation v. All Asia Bank Corporation,33 the Court
discussed the parol evidence rule in this manner: chanRoblesvirtualLawlibrary

The "parol evidence rule" forbids any addition to or contradiction of the terms of a written instrument
by testimony or other evidence purporting to show that, at or before the execution of the parties'
written agreement, other or different terms were agreed upon by the parties, varying the purport of
the written contract. When an agreement has been reduced to writing, the parties cannot be
permitted to adduce evidence to prove alleged practices which, to all purposes, would alter the terms
of the written agreement. Whatever is not found in the writing is understood to have been waived
and abandoned. x x x.34 (Citation omitted)
These rule and principle notwithstanding, the petitioner would have the Court rule that the CTS it
executed with the respondents falls within the exceptions, more specifically that the written
agreement failed to express the true intent and agreement of the parties considering that the same is
also subject to the condition that all pending litigations relative to the subject properties are settled.
This argument is untenable.

It is well settled that parol evidence can serve the purpose of incorporating into the contract
additional contemporaneous conditions, which are not mentioned at all in writing, only if there is
fraud or mistake.35 Here, the petitioner's claim that the reason for their failure to pay the full
purchase price was due to the failure of the respondents to settle the pending litigation involving the
subject properties is not tenable. Clearly, a perusal of the CTS executed by the parties does not show
any provision pertaining to such condition. Also, the petitioner failed to present sufficient evidence to
show that such failure was due to fraud or mistake.

Moreover, the petitioner likewise failed to prove by preponderant evidence their claim that an
extension was given to them to pay the full purchase price indicated in the CTS. In main, they
presented documents showing that they paid for the expenses and attorney's fees to settle the
pending litigations of the subject properties. According to them, in exchange for their financial
assistance, the respondents agreed to extend the period of payment until after the conclusion of the
pending litigations.

The allegation of the petitioner, however, was successfully rebutted by the respondents when they
presented a purported new contract pre-signed by Tubao, the petitioner's former president, and two
of its members as witnesses. Clearly, the petitioner itself recognized the expiration of the 90-day
period provided in their CTS and instead offered a new contract to Lipat Jr., who, however, refused to
sign the same. Unfortunately, this has not been controverted by the petitioner.36
Evidence II.
At any rate, assuming without conceding that the 90-day period was extended by the parties, the
obligation of the respondents based on the CTS did not arise as a result of the continued failure of
the petitioner to pay the full purchase price. As the Court held in Ursal v. Court of Appeals,37 the
perfected CTS imposed on the buyer the obligation to pay the balance of the purchase price. As such,
the buyer should have made the proper tender of payment and consignation of the price in court as
required by law. It is essential that consignation be made in court in order to extinguish the
obligation of the buyer to pay the balance of the purchase price.38 Here, records are bereft of any
showing that the petitioner even attempted to make the proper consignation of the amounts due, as
a result, the obligation on the part of the respondents never acquired obligatory force, thus, the
seller is released from his obligation to sell.

Payments made by the petitioner for the subject properties, however, must be refunded

In Pilipino Telephone Corporation v. Radiomarine Network (Smartnet) Philippines, Inc.,39 the Court

ordered the refund to the buyer of all sums previously made, after terminating the CTS for failure to
pay the purchase price, based on the principle against unjust enrichment. The Court in part
stated:chanRoblesvirtualLawlibrary

Likewise, a cause of action for specific performance does not arise where the [CTS] has been
cancelled due to nonpayment of the purchase price. Smartnet obviously cannot demand title to the
Valgoson Property because it did not pay the purchase price in full. For its part, Piltel also cannot
insist on full payment since Smartnet's failure to pay resulted in the cancellation of the [CTS].
Indeed, in the case of Ayala Life Assurance, Inc. v. Ray Burton Devt. Corp., the Court rejected the
seller's demand for full payment and instead ordered it to refund to the buyer all sums previously
paid. The order to refund is correct based on the principle that no one should unjustly enrich himself
at the expense of another.40 (Citations omitted)
In the present case, however, since the records are insufficient to use as bases to properly compute
all payments previously made by the petitioner to the respondents in connection with the CTS they
executed dated December 13, 1991, the case should be remanded to the RTC for a detailed
computation of the refund and to include the imposition of an interest at the rate of six percent
(6%) per annum pursuant to the Court's ruling in Nacar v. Gallery Frames, et al..41

WHEREFORE, the petition is DENIED. The Decision dated April 30, 2007 and Resolution dated
March 17, 2008 of the Court of Appeals in CA-G.R. CV No. 85684 are hereby AFFIRMED with the
MODIFICATION that the case is REMANDED to the Regional Trial Court of Naga City, Branch 22,
for the computation of all payments previously made by petitioner Felix Plazo Urban Poor Settlers
Community Association, Inc. to respondents Alfredo Lipat, Sr. and Alfredo Lipat, Jr. in connection
with the Contract to Sell they executed which the respondents should refund without delay. Also, the
Regional Trial Court is directed to include the imposition of an interest at the rate of six percent
(6%) per annum pursuant to prevailing jurisprudence.

Evidence II.
 29.) G.R. No. 239088, April 03, 2019

SPOUSES JOHN T. SY AND LENY N. SY, AND VALENTINO T. SY, PETITIONERS, v. MA.
LOURDES DE VERA-NAVARRO AND BENJAEMY HO TAN LANDHOLDINGS, INC., HEREIN
REPRESENTED BY GRACE T. MOLINA, IN HER CAPACITY AS CORPORATE SECRETARY,
RESPONDENTS.

DECISION

CAGUIOA, J.:

Before the Court is a Petition for Review on Certiorari1 (Petition) under Rule 45 of the Rules of Court
filed by petitioners Spouses John T. Sy (petitioner John) and Leny N. Sy (collectively, petitioners Sps.
Sy), and Valentino T. Sy (petitioner Valentino), assailing the Decision2 dated November 23, 2017
(assailed Decision) and Resolution3 dated April 20, 2018 (assailed Resolution) of the Court of Appeals
- Cagayan de Oro City (CA) Special Twenty-Second Division, and Former Special Twenty-Second
Division, respectively, in CA G.R. CV No. 04016-MIN, which reversed the Decision4 dated October 8,
2014 issued by the Regional Trial Court of Zamboanga City, Branch 12 (RTC) in Civil Case No. 6333.

The Facts and Antecedent Proceedings

As narrated by the CA in the assailed Decision, the essential facts and antecedent proceedings of the
instant case are as follows:

This case stems from a Complaint filed by petitioners Sps. Sy against respondents Ma. Lourdes De
Vera-Navarro (respondent De Vera-Navarro) and Benjaemy Ho Tan Landholdings, Inc. (respondent
BHTLI) before the RTC for Declaration of Nullity of Deed of Absolute Sale, Cancellation of Transfer
Certificate of Titles, Recovery of Ownership, and Damages, docketed as Civil Case No. 6333.

In their Complaint, it is alleged that petitioner John was one of the coowners of a parcel of land and
the four-storey building found therein situated at Rizal Street, Barangay Zone IV, Zamboanga City,
covered by Transfer Certificate of Title No. (TCT) T-171,105 (subject property).5 Petitioners Sps. Sy
alleged that the subject property has a market value of more than P40,000,000.00.

The controversy arose when on May 31, 2006, petitioner John, for himself and in representation of
his co-owners, borrowed P3,720,000.00 from respondent De Vera-Navarro, secured by a Real
Estate Mortgage Contract (Mortgage Contract) over the subject property. Such Mortgage Contract
was annotated on TCT T-171,105 on June 2, 2006.6 Petitioners Sps. Sy then alleged that immediately
after the execution of the Mortgage Contract, as per usual practice, respondent De Vera-Navarro
asked petitioner John to execute an undated Deed of Absolute Sale with a stated consideration in
the amount of P5,000,000.00, supposedly for the purpose of providing additional security for the
loan.7 Petitioners Sps. Sy also claimed that petitioner John and respondent De Vera-Navarro verbally
agreed that the mode of payment for the said loan would be respondent De Vera-Navarro's collection
of rental payments from the tenants of the subject property in the total amount of P70,000.00 per
month for five years.

Afterwards, on March 22, 2011, to the surprise of petitioner John, he was informed by respondent
BHTLI through a letter from its representative that the ownership of the subject property had been
transferred to respondent De Vera-Navarro; that a TCT, i.e., TCT T-199,288,8 was issued in favor of
respondent De Vera-Navarro; and that respondent BHTLI was demanding that the petitioners Sps. Sy

Evidence II.
vacate the subject property.

Upon learning this, on March 24, 2011, one of the co-owners, petitioner Valentino, caused the
annotation of an adverse claim on TCT T-199,288.9 Such annotation of adverse claim was carried
over to TCT T-129-2011001530.10

Thereafter, on March 30, 2011, a Deed of Absolute Sale was executed by respondent De Vera-
Navarro in favor of respondent BHTLI. The records reveal that on July 21, 2011, a new title, i.e., TCT
T-129-2011001530,11 was issued in favor of respondent BHTLI.

In the main, petitioners Sps. Sy claimed that they are the rightful owners of the subject property
since the undated Deed of Absolute Sale executed purportedly between petitioner John and
respondent De Vera-Navarro is allegedly null and void, and that, despite the execution of the Deed of
Absolute Sale dated March 30, 2011 by respondent De Vera-Navarro in favor of respondent BHTLI,
the latter has no right to own the property as it was allegedly not a buyer in good faith.

On the other hand, respondent De Vera-Navarro, while admitting the existence of the Mortgage
Contract to secure the P3,720,000.00 loan agreement with petitioners Sps. Sy, alleged that the
amount remained unpaid and that John even obtained additional loans reaching more or less
P10,500,000.00. Further, respondent De Vera-Navarro claimed that on February 6, 2007, petitioner
John sold to her the subject property by virtue of the undated Deed of Absolute Sale. It must be
noted that this is the same undated Deed of Absolute Sale identified by petitioners Sps. Sy, the
difference being that respondent De Vera-Navarro claimed that the said Deed was executed only on
February 6, 2007 and not immediately after the execution of the Mortgage Contract on May 31,
2006, as alleged by petitioners Sps. Sy. Respondent De Vera-Navarro also alleged that the undated
Deed of Absolute Sale is, for all intents and purposes, a legitimate contract of sale, while petitioners
Sps. Sy alleged that there was no real contract of sale between the parties and that the said Deed
was merely intended to provide added security to the Mortage Contract.

For its part, respondent BHTLI alleged that it is a buyer in good faith since the sale between it and
respondent De Vera-Navarro over the subject property was supposedly consummated on March 14,
2011, or 10 days prior to the annotation of the adverse claim on March 24, 2011. Since it was
supposedly not aware of any infirmity involving the subject property, respondent BHTLI alleged that
it should be treated as a buyer in good faith.

The Ruling of the RTC

On October 8, 2014, the RTC issued a Decision12 declaring the purported Deed of Absolute Sale
between petitioner John and respondent De Vera-Navarro an equitable mortgage and thus null
and void. The dispositive portion of the said Decision reads as follows:
WHEREFORE, all the foregoing premises considered, judgment is hereby rendered in favor of the
plaintiffs as against the defendants, in the following manner:

1. Declaring the Deed of Absolute Sale dated February 6, 2007 between the plaintiff John T. Sy
and defendant Ma. Lourdes De Vera-Navarro as an equitable mortgage and not a document of
sale;

2. Directing the plaintiffs to pay defendant Navarro the sum of P5,000,000.00 representing their
unpaid loan to said defendant within 30 days from the date the herein judgment becomes final
and executory with 6% interest per annum compounded until full payment is made to be
reckoned from February 6, 2007, otherwise, the ownership of the property covered under TCT
No. T-199,288 shall be vested finally on the defendant Navarro for all intents and purposes;

3. Directing the Register of Deeds for the City of Zamboanga, upon full payment of the sum of
P5,000,000.00 plus interest by plaintiffs to defendant Navarro as above directed, to cancel
Evidence II.
 TCT No. T-199,288 in the name of defendant Ma. Lourdes De Vera-Navarro and to restore TCT
No. T-171-105 in the names of the plaintiffs;

4. Declaring the Deed of Absolute Sale dated March 30, 2011 executed by defendant Navarro in
favor of defendant Benjaemy Ho Tan Landholdings, Inc., as null and void and directing the
Register of Deeds of the City of Zamboanga to cause the immediate cancellation of the
resulting title thereof in the name of defendant Benjaemy under TCT No. T-129-2011001530;

5. Ordering defendant Ma. Lourdes De Vera-Navarro to return to defendant Benjaemy the

purchase price of P13,000,000.00 plus the sum of P1,800,000.00 in reimbursements for the
expenses of the transfer of the title in the name of said defendant;

6. Ordering defendant Navarro to pay plaintiffs the sum of P50,000.00 representing moral
damages; P50,000.00 in exemplary damages; P20,000.00 in attorney's fees plus P2,000.00
per appearance of plaintiffs counsels in court; and, P30,000.00 in litigation expenses;

7. Ordering defendants to jointly and severally pay the costs of this suit.

SO ORDERED.13
In the main, the RTC held that there was really no intention on the part of the parties to enter into a
contract of sale over the subject property and that the undated Deed of Absolute Sale was merely an
additional security for the loan obtained by petitioner John from respondent De Vera-
Navarro.14 Further, the RTC pointed out that, instead of a valid contract of sale, what transpired
between the parties was an equitable mortgage due to the existence of certain circumstances
which jurisprudence identifies as badges of an equitable mortgage, i.e., (1) the Deed of Absolute Sale
is not dated; (2) the consideration of P5,000,000.00 is grossly inadequate; and (3) petitioners Sps.
Sy continue to be in actual possession of the subject property despite the supposed sale.15

Furthermore, the RTC held that respondent BHTLI cannot be considered a buyer in good faith
because there was a notice of adverse claim and because petitioners Sps. Sy were still in the
possession of the subject property which should have alerted respondent BHTLI to inquire and
investigate regarding the possible defects in the title of the seller of the subject property.16

Respondents De Vera-Navarro and BHTLI filed their respective Motions for Reconsideration on
October 22, 2014 and October 26, 2014, respectively. On October 28, 2014, petitioners Sps. Sy filed
their Comment/Opposition to respondents De Vera-Navarro and BHTLI's Motions for Reconsideration
with Partial Motion for Reconsideration.17 In an Order18 dated November 24, 2014, the RTC denied
the Motions for Reconsideration of respondents De Vera-Navarro and BHTLI, and the Partial Motion
for Reconsideration of the petitioners Sps. Sy.

On December 11, 2014, petitioners Sps. Sy filed an appeal with the CA. Respondent BHTLI likewise
filed an appeal with the CA. In its Resolution19 dated May 19, 2016, respondent De Vera-Navarro's
appeal was deemed abandoned and dismissed for failure to file an appellant's brief within the
prescribed period.

The Ruling of the CA

In the assailed Decision20 dated November 23, 2017, the CA reversed the rulings of the RTC and
denied the appeal of petitioners Sps. Sy, while granting the appeal of respondent BHTLI. The
dispositive portion of the said Decision reads:
WHEREFORE, premises considered, the appeal of the Spouses John and Leny Sy is DENIED while
the appeal of Benjaemy Ho Tan Landholdings is GRANTED. The Decision dated October 8, 2014 of
the Regional Trial Court, Branch 12, Zamboanga City in Civil Case No. 6333 is SET ASIDE. Perforce,
another Judgment is hereby rendered DISMISSING the Complaint of Spouses John T. Sy and Leny
N. Sy against Ma. Lourdes De Vera-Navarro and Benjaemy Ho Tan Landholdings, Inc. in Civil Case

Evidence II.
No. 6333 for lack of merit. No pronouncement as to costs.

SO ORDERED.21
Contrary to the findings of the RTC, the CA held that the undated Deed of Absolute Sale between
petitioner John and respondent De Vera-Navarro was indeed a contract of sale because the records
are supposedly bereft of any evidence indicative that there was an equitable mortgage.22 Further, the
CA posited that the transaction involved in the instant case is in fact a dacion en pago.23 Lastly, the
CA also held that respondent BHTLI was a buyer in good faith as there was supposedly no showing
that respondent BHTLI was aware of any irregularity as to the title covering the subject property.24

On December 21, 2017, the petitioners Sps. Sy filed their Motion for Reconsideration25 dated
December 18, 2017, which was subsequently denied by the CA in the assailed Resolution26 dated
April 20, 2018.

Hence, the instant appeal via Petition for Review on Certiorari under Rule 45 of the Rules of Court.27

On June 13, 2018, respondent BHTLI filed its Comment/Opposition28 to the instant Petition, to which
petitioners Sps. Sy filed their Reply to Respondents' Comments/Opposition29 dated October 8, 2018.

Issue

Stripped to its core, the critical question to be resolved by the Court is whether the CA erred when it
held in the assailed Decision dated November 23, 2017 and assailed Resolution dated April 20, 2018
that the transaction between petitioner John and respondent De Vera-Navarro was a valid contract of
sale and not an equitable mortgage, and that respondent BHTLI was a buyer in good faith, reversing
the previous ruling of the RTC.

The Court's Ruling

The instant Petition is meritorious.

The purported contract of sale between petitioner John and respondent De Vera-Navarro is an
equitable mortgage and not a legitimate contract of sale.

At the heart of the assailed CA Decision is the view that petitioners Sps. Sy failed to provide sufficient
evidence that an equitable mortgage exists in the instant case.

The applicable law, jurisprudence, and the evidence on record clearly belie the CA's conclusion.

An equitable mortgage is defined as one which although lacking in some formality, or form or words,
or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge
real property as security for a debt, and contains nothing impossible or contrary to law. Its essential
requisites are: (1) that the parties entered into a contract denominated as a contract of sale;
and (2) that their intention was to secure an existing debt by way of a mortgage.30

Article 1602 of the Civil Code states that a contract shall be presumed to be an equitable mortgage,
in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
Evidence II.
 (5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation.
Article 1604 of the Civil Code, in turn, provides that the abovementioned badges of an equitable
mortgage apply to a contract purporting to be an absolute sale, such as in the instant case.

At this juncture, it must be stressed that the RTC, after an exhaustive trial and appreciation of the
evidence presented by the parties, concluded that the supposed contract of sale entered between
petitioner John and respondent De Vera-Navarro is in fact an equitable mortgage.

The factual findings of the trial court, its calibration of the testimonies of the witnesses, and its
assessment of their probative weight are given high respect, if not conclusive effect, unless the trial
court ignored, misconstrued, misunderstood or misinterpreted cogent facts and circumstances of
substance, which, if considered, will alter the outcome of the case. The trial court is in the best
position to ascertain and measure the sincerity and spontaneity of witnesses through its actual
observation of the witnesses' manner of testifying, demeanor and behavior while in the witness box.

Upon examination of the records of the instant case, the Court finds that there was no reason for the
CA to reverse the RTC's correct finding that an equitable mortgage exists in the instant case.

Jurisprudence consistently shows that the presence of even one of the circumstances enumerated in
Article 1602 suffices to convert a purported contract of sale into an equitable mortgage.31 The
existence of any of the circumstances defined in Article 1602 of the New Civil Code, not the
concurrence nor an overwhelming number of such circumstances, is sufficient for a contract of sale to
be presumed an equitable mortgage.32

In fact, the Court has previously ruled that when in doubt, courts are generally inclined to construe a
transaction purporting to be a sale as an equitable mortgage, which involves a lesser transmission of
rights and interests over the property in controversy.33

Applying the foregoing to the instant case, the Court finds that the presence of at least four badges
of an equitable mortgage creates a very strong presumption that the purported contract of sale
entered between petitioner John and respondent De Vera-Navarro is an equitable mortgage.

First, it is not disputed by any party that the supposed vendor of the subject property, petitioner
John, remains to be in possession of the subject property despite purportedly selling the latter to
respondent De Vera-Navarro. It is uncanny for a supposed buyer to desist from taking possession
over property which he/she has already purchased.

Second, the purchase price of the purported sale indicated in the undated Deed of Absolute Sale is
inadequate.

According to the Rules of Court, Rule 129, Section 2, a court may take judicial notice of matters
which are of public knowledge. In fact, the Court has previously held that trial courts can take judicial
notice of the general increase in rentals of real estate especially of the business establishments.34

In the instant case, the RTC took judicial notice of the public knowledge that similar establishments
located at the commercial center of Zamboanga City have a value of around P20,000,000.00. Thus,
the P5,000,000.00 purchase price supposedly agreed upon by the parties is grossly inadequate.35

The inadequacy of the purchase price is even confirmed by the acts of respondent De Vera-Navarro
herself. As noted by the RTC, respondent De Vera-Navarro was able to mortgage the subject
property with Landbank of the Philippines for an amount of P13,000,000.00. Respondent De Vera-

Evidence II.
Navarro also sold the subject property to respondent BHTLI for the same amount of
P13,000,000.00.36

Hence, the Court cannot accept the CA's finding that the inadequacy of the purchase price is not
supported by any evidence on record.

Third, the evidence on record shows that respondent De Vera-Navarro retained for herself the
supposed purchase price. Aside from the testimony of petitioner John that no consideration was paid
at all for the supposed contract of sale, the RTC also noted that no proof was presented by
respondent De Vera-Navarro that she actually parted with the sum of P5,000,000.00 in favor of
petitioner John pursuant to the undated Deed of Absolute Sale.

Fourth, from the evidence presented by petitioners Sps. Sy, it is established that the real intention of
the parties is for the purported contract of sale to merely secure the payment of their debt owing to
respondent De Vera Navarro.

According to testimonies of petitioners Sps. Sy given under oath in open court, during the execution
of the Mortgage Contract in favor of respondent De Vera-Navarro on May 31, 2006, petitioner John,
right then and there, was immediately asked to sign an undated Deed of Absolute Sale in favor of
respondent De Vera-Navarro as it was agreed upon that such Deed was to be used as mere
additional security to the Mortgage Contract.37

The CA's hesitance in accepting the foregoing testimonies just because they are parol evidence and
that the undated Deed of Absolute Sale is unequivocal on paper in stating that a sale was intended
by the parties is misplaced. As the Court previously held,
x x x a document which appears on its face to be a sale-absolute x x x may be proven by the vendor
x x x to be one of a loan with mortgage. In this case, parol evidence becomes competent and
admissible to prove that the instrument was in truth and in fact given merely as a security for the
payment of a loan. And upon proof of the truth of such allegations, the court will enforce the
agreement or understanding in consonance with the true intent of the parties at the time of the
execution of the contract. Sales with a right to repurchase are not favored.38

It must also be stressed that the nomenclature given by the parties to the contract is not conclusive
of the nature and legal effects thereof. Even if a document appears on its face to be a sale, the
owner of the property may prove that the contract is really a loan with mortgage, and that the
document does not express the true intent of the parties.39

Hence, bearing in mind the jurisprudential rule that the courts are generally inclined to construe a
transaction purporting to be a sale as an equitable mortgage, it was incumbent upon respondent De
Vera-Navarro to rebut the petitioners Sps. Sy's testimonies and substantiate the claim that there was
indeed a legitimate contract of sale between the parties.

In this regard, it must be emphasized that all the documentary evidence of respondent De Vera-
Navarro supporting her claims were not admitted into evidence; the Formal Offer of Evidence of De
Vera-Navarro was ordered expunged by the RTC in its Order40 dated April 11, 2014. According to the
Rules of Court41 and jurisprudence,42evidence not formally offered has no probative value and must
be excluded by the court. Thus, the expunction of the evidence presented by respondent De Vera-
Navarro completely negates the CA's finding that respondent De Vera-Navarro was able to present
evidence that the parties really intended to enter into a contract of sale covering the subject
property.

In any case, even if the documentary evidence presented by respondent De Vera-Navarro were
considered, her contention of a valid contract of sale still fails to convince. The evidence presented by
respondent De Vera-Navarro center mainly on the fact that the UNDATED Deed of Absolute Sale was
properly notarized. However, as held previously by the Court, the notarization of a document does
Evidence II.
not guarantee its validity because it is not the function of the notary public to validate an instrument
that was never intended by the parties to have any binding legal effect on them. Neither is the
notarization of a document conclusive of the nature of the transaction conferred by the said
document, nor is it conclusive of the true agreement of the parties thereto.43

Therefore, to reiterate, established jurisprudence provides that the presence of even one of the
circumstances enumerated in Article 1602 suffices to convert a purported contract of sale into an
equitable mortgage,44 and that courts are inclined to construe a transaction purporting to be a sale as
an equitable mortgage, as it involves a lesser transmission of rights and interests over the subject
property.45 Bearing that in mind, the concurrence of four badges of equitable mortgage, which in fact
is a majority of the six circumstances identified under Article 1602 of the Civil Code, creates the very
strong presumption of the existence of an equitable mortgage in the instant case.

With respondent De Vera-Navarro miserably failing to controvert this presumption, especially

considering the expunction of her evidence from the records of the case, the Court indubitably finds
that the purported contract of sale entered into by petitioner John and respondent De Vera-Navarro
is in truth and in fact an equitable mortgage. Hence, with the undated Deed of Absolute Sale being
null and void, as it is in fact an equitable mortgage, the prevailing agreement governing petitioner
John and respondent De Vera-Navarro is the loan agreement secured by the Mortgage Contract
entered into by the parties.

Respondent BHTLI is NOT a buyer in good faith.

Consequently, since the purported contract of sale between petitioner John and respondent De Vera-
Navarro was in fact an equitable mortgage, the sale of the subject property to respondent BHTLI by
respondent De Vera Navarro was correctly adjudged by the RTC to be null and void, considering that
the latter had absolutely no right and capacity to sell the subject property.

Respondent BHTLI contends that since it is an innocent purchaser for value, supposedly having no
knowledge on any infirmity on the sale at the time of its transaction with respondent De Vera-
Navarro, the sale should still be upheld with respect to respondent BHTLI.

Respondent BHTLI's contention lacks merit.

Jurisprudence holds that he who alleges that he is a purchaser of registered land is burdened to
prove such statement. Such burden is not discharged by simply invoking the ordinary presumption of
good faith.46 In the instant case, the Court finds that respondent BHTLI failed to discharge such
burden. Instead of showing good faith on the part of respondent BHTLI, the incontrovertible facts
establish respondent BHTLI's status as a buyer in bad faith.

The Court has held that actual lack of knowledge of the flaw in title by one's transferor is not enough
to constitute a buyer in good faith where there are circumstances that should put a party on guard,
such as the presence of occupants in the subject property.47Again, it is not disputed that
petitioners Sps. Sy have been in continuing possession of the subject property. Yet, this fact
did not prompt respondent BHTLI to investigate further as to the contract of sale it entered with
respondent De Vera-Navarro.

Further, respondent BHTLI cannot seriously feign ignorance of any infirmity, considering that prior to
its entering into the Deed of Absolute Sale dated March 30, 2011 with respondent De Vera-Navarro,
petitioner Valentino had already caused on March 24, 2011 the annotation of an adverse claim on
TCT T-199,288.

Therefore, contrary to the CA's findings m its assailed Decision, respondent BHTLI is not a buyer in
good faith.

Evidence II.
All in all, with the Court's finding that the purported contract of sale between petitioner John and
respondent De Vera-Navarro is an equitable mortgage and not a legitimate contract of sale, and that
respondent BHTLI is not a buyer in good faith, the Court finds merit in the instant Petition.

WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 23, 2017 and
Resolution dated April 20, 2018 of the Court of Appeals in CA-G.R. CV No. 04016-MIN
are REVERSED. Accordingly, the Decision dated October 8, 2014 issued by the Regional Trial Court
of Zamboanga City, Branch 12 in Civil Case No. 6333 is REINSTATED WITH MODIFICATIONS, to
be read as follows:
WHEREFORE, all the foregoing premises considered, judgment is hereby rendered in favor of the
plaintiffs as against the defendants, in the following manner:

1. Declaring the Deed of Absolute Sale dated February 6, 2007 between plaintiff John T. Sy and
defendant Ma. Lourdes De Vera-Navarro as an equitable mortgage and not a document of
sale;

2. Declaring the Deed of Absolute Sale dated March 30, 2011 executed by defendant Ma. Lourdes
De Vera Navarro in favor of defendant Benjaemy Ho Tan Landholdings, Inc. as null and void
and directing the Register of Deeds of the City of Zamboanga to cause the immediate
cancellation of the resulting title thereof in the name of Benjaemy Ho Tan Landholdings, Inc.
under TCT No. T-129-2011001530;

3. Directing the Register of Deeds for the City of Zamboanga to cancel TCT No. T-199,288 in the
name of defendant Ma. Lourdes De Vera-Navarro and to restore TCT No. T-171-105 in the
names of the plaintiffs with all its original annotations prior to the annotation of the sale to
defendant Ma. Lourdes De Vera-Navarro and the cancellation of TCT No. T- 171-105;

4. Ordering defendant Ma. Lourdes De Vera-Navarro to return to defendant Benjaemy Ho Tan

Landholdings,  Inc. the purchase price of P13,000,000.00 plus the sum of P1,800,000.00 in
reimbursements for the expenses of the transfer of the title in the name of said defendant;

5. Ordering defendant Ma. Lourdes De Vera-Navarro to pay plaintiffs the sum of P50,000.00
representing moral damages; P50,000.00 in exemplary damages; P20,000.00 in attorney's
fees plus P2,000.00 per appearance of plaintiffs counsel in court; and P30,000.00 in litigation
expenses;

6. Ordering defendants to jointly and severally pay the costs of this suit.

Evidence II.
 30.) [ G.R. No. 194467, July 13, 2020 ]

MELCHOR A. x, MELENCIO TRINIDAD, AND SERAFIN TRINIDAD, PETITIONERS, VS. SAN MIGUEL
CORPORATION, RESPONDENT.

DECISION

LEONEN, J.:

When there is no evidence to the contrary, an employee's period of service is presumed continuous and its
reckoning point shall be the day the employee first came under the employ of the employer. However, if in the
interim, the employer-employee relationship was validly severed, returning to the same employer for work shall be
considered a rehiring, and the length of service shall be reckoned from the day the employee was rehired.

This resolves the Petition for Review on Certiorari1 assailing the Decision2 and Resolution3 of the Court of Appeals
in CA-G.R. SP No. 104828. The Court of Appeals declared that the length of service of Melchor Cuadra (Melchor),
Melencio Trinidad (Melencio), and Serafin Trinidad (Serafin) in San Miguel Corporation (San Miguel) must be
reckoned from the time they were declared regular employees on December 15, 1994.4 Thus, the Court of Appeals
affirmed with modification the Voluntary Arbitrator's Decision5 that reckoned the computation of Melchor, Melencio,
and Serafin's length of service from the time they first started working in San Miguel, i.e., 1985 for Melchor, and
1988 for Melencio and Serafin.

Melchor, Melencio, and Serafin were among the 606 complainants who filed an illegal dismissal case before the
National Labor Relations Commission against Lippercon Services, Inc. and San Miguel on January 4, 1991.7 During
the pendency of the proceedings before the Labor Arbiter, 51 out of the 60 complainants amicably settled with San
Miguel.

In the December 15, 1994 Decision,8 Labor Arbiter Manual R. Caday (Labor Arbiter Caday) found that the
remaining nine (9) complainants were regular employees of San Miguel. According to Labor Arbiter Caday,
Lippercon Services was a mere labor-only contractor and that San Miguel was the true employer of complainants.
Therefore, it was San Miguel who was ordered to reinstate the complainants to their former positions as regular
employees, their regular status "effective as of the date of [the Labor Arbiter's] decision."9 The complainants were
then awarded backwages "of not more than three (3) years"10 as well as wage differentials pursuant to Wage Order
No. NCR-01 and NCR-02. The dispositive portion of Labor Arbiter Caday's December 15, 1994 Decision reads:

WHEREFORE, premises all considered, judgment is hereby rendered declaring the respondent San Miguel
Corporation (SMC) as the true employer of the remaining nine (9) complainants, with the respondent Lippercon
Services, Inc. as "labor only" contractor; declaring the dismissal of the said remaining nine (9) complainants to be
illegal and ordering the respondent San Miguel Corporation to reinstate them as regular employees, effective as of
the date of this decision, to their former positions at its Manila Glass Plant with backwages of not more than three
(3) years without any qualification or reductions and to pay them the P17.00 and P10.00 Wage increases under
Wage Order No. NCR-01 and Wage Order No. 2 pursuant to the above dispositions.

SO ORDERED.11

San Miguel appealed before the National Labor Relations Commission. In its May 31, 1995 Resolution, the
Commission's Third Division modified the Decision of Labor Arbiter Caday, ordering instead the payment of
separation pay to complainants, thus:

WHEREFORE, premises considered, the appealed decision is hereby MODIFIED as aforediscussed. The award of
reinstatement with one (1) year backwages is hereby deleted. In lieu thereof, respondent is hereby ordered to pay
complainants their separation pay equivalent to one (1) month salary for every year of service, as period of at least
six (6) months considered as one (1) whole year or the benefits provided under the Company's total assistance
program, whichever is higher.12

Evidence II.
Alleging grave abuse of discretion on the National Labor Relations Commission's part, the complainants directly
filed a Petition for Certiorari before this Court.13 However, pursuant to St. Martin Funeral Homes v. National Labor
Relations Commission,14 this Court referred the Petition for Certiorari to the Court of Appeals.15

In the April 12, 1999 Resolution, the Court of Appeals affirmed with modification the National Labor Relations
Commission's Decision. The Court of Appeals further ordered the payment of backwages to complainants to be
computed from the time they; were dismissed until the furnace they used for work was closed in June 1993.16 The
dispositive portion of the April 12, 1999 Resolution reads:

WHEREFORE, premises considered, the appealed Decision dated 31 May 1995 and Resolution dated 13 October
1995 are both AFFIRMED with modification that the petitioners are likewise entitled to backwages corresponding to
the period commencing on their respective dates of dismissal until the closure of the furnace in June 1993. The
case is hereby REMANDED to the public respondent for a computation of the amount of backwages to be paid to
petitioners in accordance with this decision as modified.17

San Miguel Corporation filed a Motion for Reconsideration and the complainants filed a Motion for Partial
Reconsideration of the April 12, 1999 Resolution.18 The Court of Appeals, in an October 14, 1999 Resolution,
denied San Miguel's Motion for Reconsideration and partly granted the complainants' Motion for Partial
Reconsideration by deleting the award of separation pay and ordering the complainants' reinstatement.19 The
dispositive portion of the October 14, 1999 Resolution states:

Accordingly, the private respondent's motion for reconsideration is DENIED and the petitioners' Motion for Partial
Reconsideration is partly granted. The Court's Decision dated April 12, 1999 is MODIFIED to the extent that the
award of separation pay is deleted and private respondent is directed to reinstate the petitioners to their former
positions. In all other respects, the Decision stands.20

The Petition for Review on Certiorari filed by San Miguel was denied by this Court in the Resolution dated
December 15, 1999 for having been filed out of time and for lack of the required affidavit of service. San Miguel's
Motion for Reconsideration and Second Motion for Reconsideration were likewise denied by this Court.21

On May 25, 2000, this Court made an Entry of Judgment in its Book of Entries of Judgments, declaring its
December 15, 1999 and February 7, 2000 Resolutions final and executory.22

On Melchor, Melencio, and Serafin's motion, Labor Arbiter Caday issued a Writ of Execution on September 1, 2000,
directing the Sheriff to implement the order of reinstatement, thus:

NOW THEREFORE, you are hereby commanded to proceed to the premises of the respondents at SMC Complex,
San Miguel Avenue, Mandaluyong City, or wherever it may be found to cause the immediate reinstatement of
complainants herein as decreed in the dispositive portion of the decision.23

During the execution proceedings, the parties entered into a compromise. Specifically for Melchor, Melencio, and
Serafin, they each received P550,000.00 "as full, complete, absolute[,] and final settlement and satisfaction"24 of
each of their money claims and benefits as well as "any and all claims" connected with the illegal dismissal case
filed before the National Labor Relations Commission. The complete terms of the quitclaim are as follows:

I, Melchor A. Cuadra[,] of legal age, Filipino[,] and with residence address at ___________ , hereby acknowledge
receipt of United Coconut Planters Bank (UCPB-SMC Complex, Mandaluyong City) Check No. 0000047548 dated
May 23, 2003 in the amount of Five Hundred Fifty Thousand Pesos (PhP 550,000.00) only, given to me by San
Miguel Corporation as full, complete, absolute[,] and final settlement and satisfaction of all my money claims and
benefits in connection with the case of Melchor Cuadra, et al. vs. San Miguel Corporation, et al.[,] [docketed as
NLRC-NCR Case No. 01-0049-91, now pending before the NLRC and whatever claims I may have in connection
therewith as well as any and all claims of whatever kind and nature which I had, I now may have or hereafter have
against all respondents regarding incidents of this case and if any and all other cases, related to or which arose
from the incidents of this case which were filed or are still pending.25

Evidence II.
The compromise agreement was approved by Labor Arbiter Antonio R. Macam Labor Arbiter Macam),26 replacing
Labor Arbiter Caday who had died during the pendency of the execution proceedings.27 Labor Arbiter Macam's
June 25, 2003 Order provides:

The parties appeared and manifested that they have finally settled the case with each complainant receiving a sum
of P550,000.00 plus reinstatement with a daily salary rate of P400.00. Reinstatement will begin on July 1, 2003.
Submitted in addition, are the respective Quitclaim and Release which complainants have executed.

ACCORDINGLY, finding the agreement to be fair and reasonable, the same is approved and the case dismissed,
with prejudice.28

Pursuant to the compromise agreement, Melchor, Melencio, and Serafin were accordingly reinstated on July 1,
2003. However, as reflected in their newly issued identification cards, San Miguel reckoned the date of their
employment from July 1, 2003—not from the time they were first hired to work in San Miguel, which was 1985 for
Melchor, and 1988 for Melencio and Serafin.29

Thus, with the reckoning date of their service's length in San Miguel as the sole issue for resolution, Melchor,
Melencio, and Serafin submitted their grievance to the Office of the Voluntary Arbitrator of the National Conciliation
and Mediation Board.30

For them, Melchor's reckoning date should be from 1985, while Melencio and Serafin's should be from 1988, simply
because they began their employment in those years. As for San Miguel, however, the lump sum paid under the
quitclaim already included Melchor, Melencio, and Serafin's separation pay. Thus, they were already
effectively new hires upon reinstatement, considering that their new positions were substantially different from their
previous positions.31

Furthermore, the reckoning date—as San Miguel concluded—should begin on July 1, 2003, as provided in Labor
Arbiter Macam's Order. Neither should the length of service be reckoned from December 15, 1994, the date of
Labor Arbiter Caday's Decision; nor should it be reckoned from 1985 and 1988—the years when Melchor, Melencio,
and Serafin began their employment in San Miguel.32

Voluntary Arbitrator Angel A. Ancheta (Voluntary Arbitrator Ancheta) decided the grievance, ruling in favor of
Melchor, Melencio, and Serafin. Voluntary Arbitrator Ancheta held that the length of their service should be
reckoned from the date when they were first hired, i.e., 1985 for Melchor, and 1988 for Melencio and Serafin. His
reason was that reinstatement, "in its generally accepted sense, refers or denotes to restoration to a state which one
has been removed or separated."33

Moreover, "[s]ince [Melchor, Melencio, and Serafin] were to be restored to their [former] positions and [their] status
being found to be regular employees ]" Voluntary Arbitrator Ancheta concluded that they "could not be said as
having started their employment only on the date when they were reinstated unless proven otherwise."34

Examining the terms of the quitclaim executed by Melchor, Melencio, and Serafin, Voluntary Arbitrator Ancheta held
that nothing in the quitclaim provided that the compromise amount included separation pay. Therefore, based on the
Parol Evidence Rule,35 San Miguel cannot claim that Melchor, Melencio, and Serafin received the P550,000.00 as
separation pay. They were not new hires when they commenced their employment on July 1, 2003, and their length
of service must be reckoned from the time they were first hired: 1985 for Melchor and 1988 for Melencio and
Serafin.

The dispositive portion of Voluntary Arbitrator Ancheta's July 22, 2008 Decision36 reads:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring that the complainants' length of
service must be reckoned from the date when they were hired specifically in 1985 for Melchor Cuadra, 1988 for both
Melencio and Serafin Trinidad.

All other claims are dismissed for lack of merit.

Evidence II.
SO ORDERED.37 (Emphasis in the original)

Similar to Voluntary Arbitrator Ancheta's finding, the Court of Appeals found that the parties agreed on
reinstatement, defined as the "continuation of the service that was temporarily stopped due to an act of illegal
dismissal imposed against an employee."38 It noted that the June 25, 2003 compromise judgment ordered
reinstatement.39 Therefore, San Miguel cannot conclude that the compromise amount included separation pay.

For the Court of Appeals, the contention that the new positions given to Melchor, Melencio, and Serafin were
substantially different from the previous positions they held does not mean that they were new hires when they
returned for work on July 1, 2003.40

Moreover, the Court of Appeals said that "while an employer cannot be compelled to reinstate an employee to the
same position if it is already legally impossible, [the employer], however, can choose to reinstate the latter to a
different position subject to the acceptance of the said employee."41 Considering that Melchor, Melencio, and
Serafin accepted their new positions, the Court of Appeals said that such acceptance amounted to "a waiver of their
right to be restored to their prior positions."42

However, the Court of Appeals differed from Voluntary Arbitrator Ancheta's finding on the reckoning date of
Melchor, Melencio, and Serafin's length of service. For the Court of Appeals, the date should be reckoned
from December 15, 1994: the date when they were officially declared as regular employees of San Miguel.
The reason was that reinstatement is "a right accorded to an illegally dismissed regular employee."43

The dispositive portion of the June 29, 2010 Decision44 of the Court of Appeals reads:

WHEREFORE, premises considered, the assailed decision of the Voluntary Arbitrator dated July 22, 2008
is AFFIRMED with the MODIFICATION that the reckoning period for the computation of the length of service of the
private respondents shall be on December 15, 1994.

SO ORDERED.45 (Emphasis in the original)

Melchor, Melencio, and Serafin then filed a Motion for Partial Reconsideration, maintaining that the length of service
should be reckoned from 1985 for Melchor, and 1988 for Melencio and Serafin.

The Court of Appeals, however, rejected their argument. According to the Court of Appeals, Melchor, Melencio, and
Serafin were initially hired as contractual employees through "labor-only"46 contractor Lippercon Services when
they first started working in San Miguel.

To attain regular status, they had to file a Complaint before the National Labor Relations Commission; further, it was
in Labor Arbiter Caday's Decision where they were ordered "reinstated with backwages, but this time as regular
employees already effective as of this date of the decision[,]"47 i.e., December 15, 1994. The Court of Appeals then
found that the issue of when they became regular employees remained undisputed; hence, already the law of the
case. As such, the date of their reinstatement as regular employees may no longer be assailed 48

The dispositive portion of the November 8, 2010 Court of Appeals Resolution49 reads:

WHEREFORE, the respondents' Partial Motion for Reconsideration is DENIED for lack of merit.

SO ORDERED.50 (Emphasis in the original)

On January 3, 2011, petitioners filed their Petition for Review on Certiorari,51 which respondent commented on April
11, 2011.52

On January 12, 2010, petitioners filed their Reply53 to the Comment. Although respondent filed a
Rejoinder,54 which was merely noted without action per A.M. No. 99-2-04-SC dispensing with the filing of
rejoinder.55

Evidence II.
In the January 28, 2013 Resolution, this Court gave due course to the Petition and directed the parties to file their
respective memoranda.56 Petitioners filed their Memorandum57 on April 19, 2013, while respondent filed its
own58 on April 25, 2013.

On July 4, 2018, this Court ordered the parties to move in the premises by filing a manifestation of pertinent
subsequent developments that may help this Court in the immediate disposition of the case or that may have
rendered the case moot and academic.59

In its July 30, 2018 Manifestation,60 respondent argued that, as to petitioner Serafin, the Petition had been
rendered moot and academic by his execution of a Release, Waiver, and Quitclaim that released San Miguel from
any and all claims that he may have against the corporation.61

Further, respondent alleged that petitioner Serafin had been separated since May 31, 2013 due to an Involuntary
Separation Program it had implemented to install labor saving devices. Petitioner Serafin then filed anew an illegal
dismissal case against respondent, but the parties amicably settled. The 2013 illegal dismissal case was closed and
terminated in an April 13, 2015 Order issued by Labor Arbiter Fe S. Cellan. As for petitioners Melencio and Melchor,
respondent alleged that no relevant event supervened during the pendency of the case.62

In their own Manifestation/Compliance,63 petitioner Serafin agreed that he had waived all his claims against
respondent. However, petitioners Melencio and Melchor maintain that they "are still employees of [respondent]
and... [are] petitioners in this case."64

The sole issue for this Court's resolution is the reckoning date of petitioners' length of service in San Miguel.

Petitioners maintain that the date of their reinstatement cannot be deemed the reckoning date for computing the
length of their service in San Miguel. Petitioners defined the term "length of service" as "the period that an employee
rendered service and it commences when the employee was hired[,]"65 and that "reinstatement," on the other hand,
means "restoration to a state which one has been removed or separated."66

Therefore, the Court of Appeals' pronouncement that the length of service should be reckoned from the time
petitioners were declared as regular employees on December 15, 1994 was "erroneous and contrary to
law"67 because "declaration of status as regular employee could be years after an employee started
working[,]"68 as in this case.

Petitioners cite Article 28369 and 28470 of the Labor Code and argue that the basis of separation pay is the
employee's years of service, not when the employee was declared regular. The Court of Appeals' declaration,
therefore, had no legal basis and must be modified to reckon petitioners' length of service from the years they first
came under the employ of respondent.71

Respondent counters that petitioners are already estopped from raising the issue of the date of their
reinstatement.72 That they were regular employees as of December 15, 1994 was already final and executory. As
such, when Labor Arbiter Caday ordered their reinstatement as regular employees as of the date of his decision,
petitioners' length of service should commence on December 15, 1994.73.

We grant the Petition as to petitioners Melchor Cuadra and Melencio Trinidad. Their length of service should be
reckoned from the time they first came under the employ of respondent, i.e., 1985 for Melchor and 1988 for
Melencio. However, given Serafin Trinidad's waiver of his claims against respondent, the Petition is deemed moot
and academic as to him.

The parol evidence rule provides that "when the terms of an agreement have been reduced into writing, it is
considered containing all the terms agreed upon and there can be, between the parties and their successors in
interest, no evidence of such terms other than the contents of the written agreement."74 In this case, the parties
entered into a compromise agreement to put an end to the litigation between them, and the terms of the quitclaim
executed by petitioners are as follows:

Evidence II.
I, [name of employee], of legal age, Filipino[,] and with residence address at ___________ , hereby acknowledge
receipt of United Coconut Planters Bank (UCPB-SMC Complex, Mandaluyong City) Check No. 0000047548 dated
May 23, 2003 in the amount of Five Hundred Fifty Thousand Pesos (Php 550,000.00) only, given to me by San
Miguel Corporation as full, complete, absolute and final settlement and satisfaction of all my money claims and
benefits in connection with the case of Melchor Cuadra, et al. vs. San Miguel Corporation, et al., [d]ocketed as
NLRC-NCR Case No. 01-0049-91, now pending before the NLRC and whatever claims I may have in connection
therewith as well as any and all claims of whatever kind and nature which I had, I now may have or hereafter have
against all i;espondents regarding incidents of this case and if any and all other cases, related to or which arose
from the incidents of this case which were filed or are still pending.75

The quitclaim provides that the compromise amount of P550,000.00 shall serve as "full, complete, absolute and final
settlement and satisfaction of all my money claims and benefits in connection with the case of Melchor Cuadra, et
al. vs. San Miguel Corporation, et al., docketed as NLRC-NCR Case No. 01-0049-91, now pending before the NLRC
and whatever claims I may have in connection therewith as well as any and all claims of whatever kind and nature
which I had, I now may have or hereafter have against all respondents regarding incidents of this case[.]" These
claims, in connection with the case, are the claims for payment of backwages, for regularization, and for
reinstatement. Nothing in the quitclaim, however, indicates that the compromise amount respectively paid to
petitioners included separation pay.

Since there is no evidence that the compromise amount included separation pay, the services of petitioners are
presumed continuous, reckoned from the date they first came under the employ of respondent.

The present case should be contrasted with Carandang v. Dulay,76 Sta. Catalina Colleges v. National Labor
Relations Commission,77 and Philippine Village Hotel v. National Labor Relations Commission78 where this Court
likewise determined length of service but did not consider as reckoning point the employee's first day of work with
the same employer.

Carandang involved a high school teacher, Felisa Carandang, who was first hired in 1974 but had to resign in 1979
to take graduate studies. Upon her application, she was re-employed in 1985 by respondent school, Diocesan
Schools of La Union. In 1988, the school wrote Carandang, stating that it would no longer be renewing her
employment for the next school year because she failed to pass the evaluation conducted for probationary teachers.
Thus, Carandang filed a complaint for illegal dismissal, contending that she was already a permanent employee in
1988 and may only be removed for just or authorized causes; not for failure to pass evaluations meant for
probationary employees.79

This Court held that Carandang was illegally dismissed because she was already a permanent employee when the
school terminated her employment. However, due to the strained relations between her and the school, she was
instead awarded separation pay. In computing Carandang's separation pay, this Court reckoned Carandang's length
of service from 1985, not from 1974 when she first started working in the school. This Court noted that Carandang
voluntarily resigned in 1979; hence, when she was re-employed in 1985, she started as a probationary employee
again, effectively a new hire with "zero" experience.80

Sta. Catalina College likewise involved a teacher, Hilaria Tercero, who first started working in Sta. Catalina College
in 1955. In 1970, the school granted her leave of absence for one (1) year because of her mother's illness.
However, after her leave of absence expired, the school had not heard from her until she returned in 1982 to apply
for re-employment. She was then accepted again by the school.81

In 1997, Tercero reached the compulsory retirement age of 65. In computing her retirement pay, the school only
considered her service from 1982 to 1997, and excluded her service rendered from 1955 to 1970. It was the
school's contention that Tercero abandoned her employment in 1971 when she failed to return for work after the
expiration of her leave of absence.82

This Court agreed with the school, holding that, for purposes of computing Tercero's retirement benefits, her length
of service should be reckoned from 1982 when she was re-employed, and not from 1955 when she first started
working in the school. This Court found that Tercero abandoned her employment in 1971 when she failed to return
after the expiration of her leave of absence. She was even employed in a different school for the school years 1980-
1981 and 1981-1982 before she returned to Sta. Catalina in 1982. Having abandoned her employment in Sta.
Evidence II.
Catalina from 1955 to 1971, this Court said that she "effectively relinquished the retirement benefits accumulated
during the said period."83

Philippine Village Hotel involved a hotel that was closed down in 1986 due to serious business losses, resulting in
the dismissal of employees. The employees then filed a complaint before the National Labor Relations Commission,
but the validity of the closure was upheld.84

In 1989, the hotel decided to have a one-month dry-run operation to explore the possibility of resuming its
operations. It then re-hired some of the employees it had dismissed earlier in 1986. However, by the end of the
month, the hotel dismissed the re-hired employees again. This caused them to file another illegal dismissal case.85

This Court held that the subsequently re-hired employees were validly dismissed after the end of the one-month
contract. According to this Court, the employees "voluntarily and knowingly agreed to be employed only for a period
of one (1) month[.]"86 As a consequence, the employees were not "deemed to have continued their regular
employment status, which they had enjoyed before their... termination due to [Philippine Village Hotel's] financial
losses."87 In this Court's words, "the prior employment which was terminated cannot be joined or tacked to the new
employment for purposes of security of tenure."88

Carandang, Sta. Catalina College, and Philippine Village Hotel all illustrate how an employee who returns to work
for the same employer is considered a new hire if prior employment was validly terminated, either voluntarily or
under any of the just and authorized causes provided in the Labor Code. Therefore, the reckoning point of the
length of service, for purposes of security of tenure, begins on the date the employee was re-hired.

However, if an employee returns to work upon an order of reinstatement, he or she is not considered a new hire.
Because reinstatement presupposes the illegality of the dismissal,89 the employee is deemed to have remained
under the employ of the employer from the date of illegal dismissal to actual reinstatement. Further, there is no
"prior employment"90 to speak of, and the payment of backwages is compensation for the time the employee was
illegally deprived of work. In the latter case, the reckoning point of the length of service must be the date the
employee first began working for the employer, not when he or she returned for work.

In Carandang, Sta. Catalina, and Philippine Village Hotel, the prior employment of the employees were all validly
terminated. Carandang voluntarily resigned from work before she was re-hired, while Tercero abandoned her prior
employment in Sta. Catalina. The closure of the establishment of Philippine Village Hotel was declared valid in a
final and executory judgment of the National Labor Relations Commission. In these cases, the reckoning point of the
employees' length of service is the date when they were re-hired.

The same, however, cannot be said in this case. Here, petitioners were found to have been illegally dismissed and
only returned to work upon an order of reinstatement. Further, they were not new hires when they returned in San
Miguel. Under the law, they remained under the employ of respondent from the time they were illegally dismissed up
to the time of their actual reinstatement. The reckoning point of their length of service must be the date they first
started working in San Miguel, i.e., 1985 for Melchor, and 1988 for Melencio and Serafin.

The Court of Appeals erred when it reckoned petitioners' length of service from the time they were supposedly
declared as regular employees pursuant to the December 15, 1994 Decision of Labor Arbiter Caday. What Labor
Arbiter Caday declared was that petitioners were "reinstated with backwages, but this time as regular employees
already effective as of this date of the decision."91 The use of "already effective" means that they became regular
employees even before the Labor Arbiter's Decision was rendered in December 15, 1994. This is consistent with
Labor Arbiter Caday's finding that petitioner Melchor was illegally dismissed on January 26, 1991, while petitioners
Melencio and Serafin were illegally dismissed on November 21, 1990:

With respect to the third issue of whether or not the remaining nine (9) complainants were illegally dismissed, the
evidence on record equally and convincingly requires an affirmative answer.

The evidence shows that complainants Melchor Cuadra, Joselito Flores, Dennis Rauto, were dismissed on January
26, 1991, while Raymundo Gaviola, Eliseo Yumang, Abelardo Carlos, Serafin Trinidad and Melencio Trinidad were

Evidence II.
dismissed on November 21, 1990 and Ben Mangindin on December 27, 1991, all by respondent [San Miguel
Corporation].

As undisputedly testified! to by the complainants, they were dismissed by respondent [San Miguel Corporation] due
to different reasons.  According to complainant Melchor Cuadra, on January 21, 1991 they were told by foreman
1âшphi1

Salucia that their line will be shut down or closed because of the Gulf War (t.s.n. 27, Oct. 3, 1991). While
complainants Eliseo Yumang and Serafin Trinidad were told by their supervisor Oligario that they are being
terminated because they were among those laid off or retrenched (t.s.n., pp. 19-23, Sept. 20, 1993 and pp. 15-17,
Nov. 11, 1993). On the other hand, complainant Ben Mangindin testified that in the notice posted in the Bulletin
Board on December 27, 1991, it was announced that all contract workers assigned at the Applied Color Level (ACL)
Department of SMC Manila Glass Plant will be up to December 27, 1991 only (tsn, pp. 9-11, July 28, 1993).92

For there to be an illegal dismissal, there must first exist the status as regular employee and the concomitant
violation of the regular employee's security of tenure.93 There can be no illegal dismissal in 1990 or 1991 when the
employee only became a regular employee in 1994.

In sum, service to an employer is presumed continuous unless there is evidence that employer-employee relations
were validly severed in the interim. Here, the employer-employee relationship between respondent, on the one
hand, and petitioners, on the other, was not validly severed when respondent illegally dismissed them.
Consequently, the length of service of petitioners must be reckoned from the time they first started working in San
Miguel—1985 for Melchor, and 1988 for Melencio and Serafin Trinidad.

However, considering that petitioner Serafin had waived his claims against respondent as he had manifested,94 the
Petition is moot and academic as to him.

WHEREFORE, as to petitioner Serafin Trinidad, the Petition for Review on Certiorari is DISMISSED for being moot
and academic.

However, as for petitioners Melchor Cuadra and Melencio Trinidad, the Petition for Review on Certiorari
is GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 104828
are REVERSED and SET ASIDE. Their length of service must be reckoned from the time they first started working
for respondent San Miguel Corporation, specifically, 1985 for petitioner Melchor Cuadra, and 1988 for petitioner
Melencio Trinidad.

Evidence II.
31.) Bacala v Sps. Poliño SEE PDF.

Evidence II.
32.) G.R. No. L-18857      December 11, 1967

THE CAPITAL INSURANCE and SURETY CO., INC., plaintiff-appellant,

vs.
ESTEBAN M. SADANG and MARIA LACHICA, defendants-appellees.

Achacoso, Ocampo and Simbulan for plaintiff-appellant.

L. Alba for defendants-appellees.

MAKALINTAL, J.:

The following statement of facts, reproduced from the brief for plaintiff-appellant, the Capital Insurance Surety Co.,
Inc., is admitted as correct by defendants-appellees:

Plaintiff Capital Insurance & Surety Co., Inc., subscribed on June 21, 1954 to a bond (Exhibit A) in the
amount of P42,000.00 in behalf of Mateo Pinto and in favor of the Macondray Farms, Inc., the purpose of
which was to guarantee the payment of rentals of the fishpond and other obligations of Mateo Pinto as
contained in the lease agreement marked as Exhibit A-1. lawphil.net

To protect the interest of plaintiff Capital Insurance & Surety Co., Inc. from any liability that may arise from
the above-mentioned bond, Mateo Pinto and the defendants in this case, Esteban M. Sadang and Maria
Lachica, executed an idemnity agreement (Exhibit B) and a deed of real of real estate mortage (Exhibit C)
on the property of the defendants located in the Province of Nueva Vizcaya and covered by Transfer
Certificate of Title No. 2216 issued by the Register of Deeds of Nueva Vizcaya.

Mateo Pinto failed to pay the rentals of the leased fishpond to Macondray Farms, Inc., in the total amount of
P24,668.83.1

Because of the failure of Mateo Pinto to pay the said amount of P24,668.83 to Macondray Farms, Inc.,
plaintiff in the instant case as surety had to pay, as it did pay Macondray Farms, Inc., the amount of
P24,668.83 on May 14, 1956 to settle the obligation of Mateo Pinto with the said Macondray Farms, Inc.

Notwithstanding repeated demands, Mateo Pinto and his indemnitors including herein defendants failed to
reimburse the Capital Insurance & Surety Co., Inc., the the said amount of P24,688.83.

Because of such failure to make reimbursement, the Capital Insurance & Surety Co., Inc., filed Civil Case
No. 30061 against Mateo Pinto and his indemnitors including the defendants in this instant case for the
collection of the above-mentioned amount.

On the strength of the agreement of the parties Civil Case No. 30061 (Exhibit E) wherein it is agreed among
others, that if after the sale of all the said properties, the judment shall not have been fully satisfied, then
plaintiff may file as separate civil action against the defendants-spouses, Esteban M. Sadang and Maria
Lachica, the other indemnitors, but at the same time dismissed the case against the herein defendants
without prejudice (Exhibit F-1).

Two executions were issued by the court for the enforcement of the above-mentioned decision in Civil Case
No. 30061 and after applying the proceeds of the sale of the properties in public auction there is still a
deficiency in the amount of P14,456.44 which, in view of the failure of the herein dependants to pay in spite
of plaintiff's repeated demands, had to become the subject of this instant case.

It is the contention of plaintiff that by virtue of the indemnity agreement (Exhibit B) and the estate mortgage
(exhibit C) of the herein defendants, they are liable for the said deficiency of P14,456.44, plus interest, plus
attorney's feest and costs of the suit.  On the other hand, defendants contend that their liability under the
itc-alf

mortgage contract (Exhibit C) is limited to the first P20,000.00 that might be incurred under the bond and
that since Mateo Pinto actually paid Macondray Farms, Inc., the amount of P19,700.00, they are liable to
Evidence II.
 pay only amount of P300.00 which remain after deducting what was paid by Mateo Pinto to Macondray
Farms, Inc. from the first liability of P20,000.00.

After due hearing, the trial court rendered judgment on April 20, 1961 (pp. 93-101, Record on Appeal)
ordering defendants to pay to plaintiff only, the amount of P300.00 and without costs.

To point on which the parties disagree is the interpretation of the following stipulation in the mortgage contract
executed by defendants-appellees:

This mortgage is constituted to indemnify the mortgagee for any damage, cost, expenses and charges of
whatever kind and nature that it may incur or sustain as a consequence of having acted as surety on the
bond referred to above, and or its substitution, modification, alteration, change and/or renewals. That liability
secured by the above properties is limited to the first P20,000.00 that might be incurred under the bond
issued in favor of the Macondray Farms, Inc.

Appellant lays stress on the general statement of appellees' liability as it appears in the contract, to wit; "to indemnify
the mortgagee for any damage, cost, expenses and charges of whatever kind and nature that it may incur or sustain
as a consequence of having acted as surety or the bond. . . ." Similar stress is laid on the fact that because the
principal debtor, Mateo Pinto, paid to Macondray Farms, Inc., the sum of P19,700.00 before he became in default,
no liability ever attached to appellant under its bond for that amount, and hence it should not be considered as part
of, or applied to, "the first P20,000.00 that might be incurred under the bond . . .," which defined the limit of
appellees' obligation.

At first blush the argument seems logical. But the real intention of the parties is revealed by the testimony of
appellee Esteban Sadang concerning the circumstances which led to the inclusion of the particular stipulation
aforequoted. We quote from the record: lawphil.net

Q.       In the course of your testimony in the last hearing you mentioned that there have been two contracts
of mortgage prepared in connection with this property belonging to you and situated in Nueva Vizcaya and
you also stated that the first draft or first copy of the Deed of contract was not signed by You.  Will you
itc-alf

please state to the Court the reason for not signing the first deed of mortgage that was presented to you for
signature?

A.       When Mr. Pinto brought me to the Capital Insurance Company I was permitted to see the written
document prepared by Atty. Achacoso with Atty. Nera as his companion and in the presence of one, the
mestizo who was supposed to be the manager of the Bonding Department. At that time, I was made to
understand that if I would consent to be one of the bondsmen I would only answer to the first P20,000.00 of
the total P42,000.00 bond which the Capital Insurance was supposed to underwrite to Mateo Pinto in favor
of Macondray Farms and I told Atty.  Achacoso in the presence of the mestizo the then Manager of the
lawphil.net

Bonding Department that I was only supposed to answer to the first P20,000.00 of the total bond
indebtedness of P42,000.00. That the moment the first P20,000.00 is paid the bonding company
automatically releases my responsibility to them.

Q.       Showing to you again this Exhibit C for the plaintiff, is this the second draft or second contract that
was prepared by Mr. Achacoso after you have made that interview in clarifying in so far as liability with the
bond is concerned?

           (Witness looking at Exhibit C)

A.       Yes, this last letter was the one inserted, "That the liability secured by the above properties is limited
to the first P20,000.00 that might be incurred under the bond issued in favor of the Macondray Farms, Inc."

Q.       In the first draft of the contract of mortgage that was sought to be signed by you do you mean then
that this last three lines of the second paragraph of page 2 of Exhibit 3 did not exist?

Evidence II.
 A.       It did not and so I insisted it should be specifically mentioned that I was answerable only to the first
P20,000.00.

Q.       Who made you understand that?

A.       Atty. Achaeoso in fact Atty. Nera was present including that mestizo.

Q.       What did Mr. Achacoso explain to you as to the extend of the liability of the property on the last three
lines of the second page of Exhibit C?

A.       He emphatically informed me that when that liability will be paid may free me to some connected
liability with the other bondsmen and he said, it is very clear. So I consented to sign with my wife.

The foregoing testimony is clear enough. Esteban Sadang agreed to be an indemnitor only on condition that he
would answer for the "first P20,000.00 of the total P42,000.00 bond," and that "the moment the first P20,000.00 is
paid the bonding company automatically releases my responsibility to them." The trial court found the said testimony
to be uncontradicted. If the mortgage contract as actually drafted seems to be vague or ambiguous, the doubt
must be resolved against appellant, whose lawyer prepared the document, and in accordance with the real
intention of the parties as explained by defendants-appellees.

The trial court correctly held said defendants-appellants liable only for the sum of P300.00. However, it failed to
provide for the stipulated interest thereon at the rate of 12% per annum, which if not paid would be liquidated and
added to the capital, quarterly, and to order foreclosure of the mortgaged properties in case of non-payment.

WHEREFORE, the judgment appealed from is affirmed, with the modification indicated above concerning interest,
the same to begin from the date of the filing of the complaint. In case of non-payment of the sum thus adjudged,
including interest, the mortgaged properties will be sold as provided in Rule 68. No costs in this instance.

Evidence II.
33.) G.R. No. 168078

FABIO CAHAYAG and CONRADO RIVERA, Petitioners,

vs.
COMMERCIAL CREDIT CORPORATION, represented by its President, LEONARDO B. ALEJANDRO;
TERESITA T. QUA, assisted by her husband ALFONSO MA. QUA; and the REGISTER OF DEEDS OF LAS
PINAS, METRO MANILA, DISTRICT IV, Respondents.

x-----------------------x

G.R. No. 168357

DULOS REALTY & DEVELOPMENT CORPORATION, represented by its President, JUANITO C. DULOS; and
MILAGROS E. ESCALONA, and ILUMINADA D. BALDOZA, Petitioners,
vs.
COMMERCIAL CREDIT CORPORATION, represented by its President, LEONARDO B. ALEJANDRO;
TERESITA T. QUA, assisted by her husband ALFONSO MA. QUA; and the REGISTER OF DEEDS OF LAS
PINAS, METRO MANILA, DISTRICT IV, Respondents.

DECISION

SERENO, J.:

Before us are consolidated Rule 45 Petitions  seeking to nullify the Court of Appeals (CA) Decision dated 2
1

November 2004  and Resolution dated 10 May 2005  in CA-G.R. CV No. 47421. The CA Decision reversed and set
2 3

aside the Decision dated 6 July 1992 issued by the Regional Trial Court (RTC), Branch 65 of Makati. 4

FACTUAL ANTECEDENTS

Petitioner Dulos Realty was the registered owner of certain residential lots covered by Transfer Certificate of Title
(TCT) Nos. S-39767, S-39775, S-28335, S-39778 and S-29776, located at Airmen's Village Subdivision, Pulang
Lupa II, Las Pinas, Metro Manila.

On 20 December 1980, Dulos Realty obtained a loan from respondent CCC in the amount of P300,000. To secure
the loan, the realty executed a Real Estate Mortgage over the subject properties in favor of respondent. The
mortgage was duly annotated on the certificates of title on 3 February 1981. 5

On 29 March 1981, Dulos Realty entered into a Contract to Sell with petitioner Cahayag over the lot covered by TCT
No. S-39775. 6

On 12 August 1981, Dulos Realty entered into another Contract to Sell, this time with petitioner Rivera over the lot
covered by TCT No. S-28335. 7

Dulos Realty defaulted in the payment of the mortgage loan, prompting respondent CCC to initiate extrajudicial
foreclosure proceedings. On 17 November 1981, the auction sale was held, with respondent CCC emerging as the
highest bidder. 8

On 23 November 1981, a Certificate of Sale covering the properties, together with all the buildings and
improvements existing thereon, was issued in favor of CCC.  The Certificate of Sale was annotated on the
9

corresponding titles to the properties on 8 March 1982. 10

Thereafter, or on 13 January 1983, Dulos Realty entered into a Contract to Sell with petitioner Escalona over the
house and lot covered by TCT No. S-29776. 11

Evidence II.
On 10 November 1983, an Affidavit of Consolidation in favor of respondent CCC dated 26 August 1983 was
annotated on the corresponding titles to the properties.  By virtue of the affidavit, TCT Nos. S-39775, S-28335, S-
12

39778 and S-29776 - all in the name of Dulos Realty - were cancelled and TCT Nos. 74531, 74532, 74533 and
74534 were issued in the name of respondent CCC on the same day. 13

On 10 December 1983, Dulos Realty entered into a Deed of Absolute Sale with petitioner Baldoza over the property
covered by TCT No. S-39778, together with the improvements existing thereon. 14

On 21 December 1983, respondent CCC, through a Deed of Absolute Sale, sold to respondent Qua the same
subject properties, now covered by TCT Nos. 74531, 74532, 74533 and 74534, which were in the name of
respondent CCC. The sale was duly annotated on the corresponding titles to the properties on 5 January 1984. 15

Accordingly, TCT Nos. 74531, 74532, 74533 and 74534 were cancelled; and TCT Nos. 77012, 77013, 77014 and
770015 were issued to respondent Qua on 5 January 1984. 16

Subsequently, respondent Qua filed ejectment suits individually against petitioners Du1os
Realty,  Cahayag,  Esca1ona,  and Rivera  before the Metropolitan Trial Court (MTC) of Las Piñas, Metro Manila.
17 18 19 20

The MTC rendered Decisions in favor of respondent Qua. It ordered Dulos Realty, Escalona, Cahayag, and Rivera
to vacate the properties.

On 8 March 1988, the MTC issued a Writ of Execution to enforce its Decision dated 20 October 1986 in Civil Case
No. 2257 against Dulos Realty "and all persons claiming right under defendant."  The subject of the writ of
21

execution was Lot 11 Block II,  which was the lot sold by Dulos Realty to petitioner Baldoza.
22

COMPLAINT FOR ANNULMENT

OF SHERIFF'S SALE AND OTHER DOCUMENTS

On 5 December 1988, petitioners filed a Complaint against respondents for the "Annulment of Sherifffs] Sale and
Other Documents with Preliminary Injunction and/or Temporary Restraining Order" before the RTC of Makati City,
where it was docketed as Civil Case No. 88-2599. 23

The Complaint  alleged that petitioners Cahayag, Rivera, Escalona and Baldoza were owners of the properties in
24

question by virtue of Contracts of Sale individually executed in their favor, and that the Real Estate Mortgage
between Dulos Realty and defendant-appellant CCC did not include the houses, but merely referred to the
lands themselves.  Thus, the inclusion of the housing units in the Deed of Sale executed by respondent
25

CCC in favor of respondent Qua was allegedly illegal. 26

Respondents failed to file an answer within the reglementary period. Subsequently, they were declared in default.
They appealed the order of default but their appeal was dismissed on 8 February 1990. 27

On 6 July 1992, the RTC rendered a Decision,  which ruled that the houses were not included in the Real Estate
28

Mortgage; and that the foreclosure of the mortgage over the subject lots, as well as the housing units, was not
valid.  The trial court held that this conclusion was established by the plaintiffs' evidence, which went unrefuted
29

when defendants were declared in default. 30

THE CA DECISION

Respondents proceeded to the CA, where they secured a favorable ruling. In its Decision rendered on 2 November
2004,  the appellate court held that the extrajudicial foreclosure was valid, since the Real Estate Mortgage clearly
31

included the buildings and improvements on the lands, subject of the mortgage.

After establishing the inclusion of the housing units in the Real Estate Mortgage, the CA determined the rights of the
buyers in the Contracts to Sell/Contract of Sale vis-a-vis those of the mortgagee and its successor-in-interest.

Evidence II.
In the cases of petitioners Cahayag, Rivera and Escalona, the CA pointed to lack of evidence establishing full
payment of the price. As supporting reason, it stated that even if there were full payment of the purchase price, the
mortgagee and the latter's successor-in-interest had a better right over the properties. The CA anchored this
conclusion on the fact that the Real Estate Mortgage was annotated at the back of the titles to the subject properties
before the execution of the Contracts to Sell. It said that the annotation constituted sufficient notice to third parties
that the property was subject to an encumbrance. With the notice, Cahayag, Rivera and Escalona should have
redeemed the properties within the one-year redemption period, but they failed to do so. Consequently, the right of
respondent CCC over the properties became absolute, and the transfer to respondent Qua was valid.

As regards Baldoza, though the case involved a Contract of Sale, and not a mere Contract to Sell, the CA declared
the transaction null and void on the purported ground that Dulos was no longer the owner at the time of the sale.

The CA accordingly reversed and set aside the RTC Decision, dismissed the case for lack of merit, and ordered
petitioners to surrender possession of the properties to respondent Qua.

THE RULE 45 PETITIONS

On 30 May 2005, petitioners Cahayag and Rivera filed their Rule 45 Petition with this Court.  For their part,
32

petitioners Dulos Realty, Baldoza and Escalona filed their Rule 45 Petition on 19 July 2005. 33

In the Petition under G.R. No. 168357, it is argued, among others, that the Deed of Absolute Sale in favor of
petitioner Baldoza was the culmination of a Contract to Sell between her and Dulos Realty. She claims that the
Contract to Sell, marked as Exhibit "L" during the trial, was executed on 10 January 1979, which preceded the
execution of the Deed of Real Estate Mortgage and the registration of the mortgage on 3 February 1981.  After full
34

payment of the price under the Contract to Sell, Dulos Realty executed the Deed of Absolute Sale. In other words,
Baldoza is arguing that she has a better title to the property than respondent Qua since the unregistered contract to
sell in her favor was executed before the registration of the mortgage. But the CA ignored Exhibit "L" and merely
stated that there was only a Deed of Absolute Sale in favor of Baldoza.

THE ARGUMENTS

The arguments of petitioners, as stated in their respective Memoranda, are summarized as follows:

Coverage of the Mortgage

Initially, petitioners attempt to stave off the effects of the extra judicial foreclosure by attacking the coverage
of the Real Estate Mortgage with respect to its subject-matter.  They draw attention to the fact that the List
35

of Properties attached to the Deed of Real Estate Mortgage refers merely to the lands themselves and does
not include the housing units found thereon.  Petitioners also contend that doubts should be resolved against
36

the drafter inasmuch as the agreement is a contract of adhesion, having been prepared by the mortgagee. 37

As backup argument for the theory that the houses are outside the coverage of the mortgage agreement, petitioners
argue that the improvements were not owned by Dulos Realty, the mortgagor, but by its buyers under the Contracts
to Sell and Contracts of Sale; hence, those improvements are excluded from the coverage of the real estate
mortgage.

Validity of the Mortgage

Petitioners next challenge the validity of the foreclosure sale on the ground that the mortgage executed by the
mortgagor (petitioner Dulos Realty) and the mortgagee (respondent CCC) was null and void.  Petitioners claim that
38

Dulos Realty was no longer the owner of the properties it had mortgaged at the time of the execution of the
mortgage contract, as they were sold under existing Contracts to Sell and Deed of Absolute Sale. 39

Petitioners Cahayag, Rivera and Escalona lean on the unregistered Contracts to Sell they had individually executed
with Dulos Realty as vendor. For his part, petitioner Baldoza points to the Deed of Absolute Sale executed by Dulos
Realty in his favor.
Evidence II.
Better Right over the Properties

Petitioners claim that respondent CCC cannot claim to be a mortgagee in good faith, since it is a financial
institution.  As such, respondent CCC knew that it was dealing with a subdivision developer, which was in the
40

business of selling subdivision lots.  Dela Merced v. GSIS  which states that the general rule that a mortgagee need
41 42

not look beyond the title cannot benefit banks and other financial institutions, as a higher due diligence requirement
is imposed on them.

They also raise the contention that lack of full payment of the purchase price under the Contracts to Sell on the part
of Cahayag, Rivera and Escalona was due to respondent Qua's "harassment and unlawful actuations. 43

Petitioners further state that respondent Qua is a mere transferee of respondent CCC and that, like a stream, she
cannot rise higher than her source. They also argue that Qua is not an innocent purchaser for value, since she is a
former investor of respondent CCC and one of its principal stockholders. 44

No Prior Written HLURB Approval of

the Mortgage

Finally, petitioners allege that the mortgage contract in this case was not approved by the BLURB, which violates
Section 18 of P.D. 957  and results in the nullity of the mortgage.
45 46

Exhibit "L" as Evidence of a Prior

Contract to Sell

The matter of CA ignoring Exhibit "L" as evidence of a prior unregistered Contract to Sell was not included in the
Memoranda of petitioners.

THE ISSUES

Based on the foregoing facts and arguments raised by petitioners, the threshold issues to be resolved are the
following:

1. Whether the real mortgage covers the lands only, as enumerated in the Deed of Real Estate
Mortgage or the housing units as well;

2. Whether Dulos Realty was the owner of the properties it had mortgaged at the time of its execution in
view of the various Contracts to Sell and Deed of Absolute Sale respectively executed in favor of petitioners
Cahayag, Rivera, Escalona and Cahayag;

3. Who, as between petitioners-buyers and respondent Qua, has a better right over the properties?

4. Whether the Deed of Absolute Sale in favor of Baldoza was not preceded by a Contract to Sell and full
payment of the purchase price; and

5. Whether the mortgage is void on the ground that it lacked the prior written approval of the HLURB.

OUR RULING

We deny the Petition for reasons as follows.

1. Attack on the Subject-matter of

the Real Estate Mortgage

It is true that the List of Properties attached to the Deed of Real Estate Mortgage refers merely to the lands
themselves and does not include the housing units found thereon. A plain reading of the Real Estate
Evidence II.
Mortgage, however, reveals that it covers the housing units as well. We quote the pertinent provision of the
agreement:

[T]he MORTGAGOR has transferred and conveyed and, by these presents, do hereby transfer and convey by way
of FIRST MORTGAGE unto the MORTGAGEE, its successors and assigns the real properties described in the list
appearing at the back of this document and/or in a supplemental document attached hereto as Annex "A" and made
and integral part hereof, together with all the buildings and/or other improvements now existing or which may
hereafter be place[d] or constructed thereon, all of which the MORTGAGOR hereby warrants that he is the
absolute owner and exclusive possessor thereof, free from all liens and encumbrances of whatever kind and nature.
xxx.  (Emphasis Ours)
47

Thus, the housing units would fall under the catch-all phrase "together with all the buildings and/or other
improvements now existing or which may hereafter be placed or constructed thereon."

The contra proferentem rule finds no application to this case. The doctrine provides that in the
interpretation of documents, ambiguities are to be construed against the drafter.  By its very nature, the
48

precept assumes the existence of an ambiguity in the contract, which is why contra proferentem is also
called the ambiguity doctrine.  In this case, the Deed of Real Estate Mortgage clearly establishes that the
49

improvements found on the real properties listed therein are included as subject-matter of the contract. It covers not
only the real properties, but the buildings and improvements thereon as well.

2. Challenge to the Foreclosure

Sale with Regard to the
Ownership of the Mortgaged
Properties

To begin with, the Contracts to Sell and Deed of Absolute Sale could not have posed an impediment at all to the
mortgage, given that these contracts had yet to materialize when the mortgage was constituted. They were all
executed after the constitution of the Real Estate Mortgage on 20 December 1980.

As regards Cahayag, the Contract to Sell in his favor was executed on 29 March 1981, more than three months
after the execution of the mortgage contract.  This is taken from the Contract to Sell itself, which forms part of the
50

records of this case. 51

At this juncture, we note that the CA, for reasons unknown, specified 29 September 1980,  and not 29 March 1981,
52

as the date of the execution of the Contract to Sell in its Decision. Respondent Qua has raised this point in her
Memorandum filed with us. This Court cannot be bound by the factual finding of the CA with regard to the date of
the Contract to Sell in favor of Cahayag. The general rule that the Court is bound by the factual findings of the CA
must yield in this case, as it falls under one of the exceptions: when the findings of the CA are contradicted by the
evidence on record.  In this case, there is nothing in the records to support the CA's conclusion that the Contract to
53

Sell was executed on 29 September 1980. The evidence on record, however, reveals that the correct date is 29
March 1981.

In the case of petitioner Rivera, the corresponding Contract to Sell in his favor was executed only on 12 August
1981, or almost eight months after the perfection of the mortgage contract on 20 December 1980.

Lastly, Dulos Realty executed the Deed of Absolute Sale in favor of petitioner Baldoza on 10 December 1983, which
was almost three years from the time the mortgage contract was executed on 20 December 1980.

There was neither a contract to sell nor a deed of absolute sale to speak of when the mortgage was executed.

Petitioners equate a contract to sell to a contract of sale, in which the vendor loses ownership over the property
upon its delivery.  But a contract to sell, standing alone, does not transfer ownership.  At the point of perfection, the
54 55

seller under a contract to sell does not even have the obligation to transfer ownership to the buyer.  The obligation
56

arises only when the buyer fulfills the condition: full payment of the purchase price.  In other words, the seller retains
57

ownership at the time of the execution of the contract to sell.58

Evidence II.
There is no evidence to show that any of petitioners Cahayag, Rivera and Escalona were able to effect full payment
of the purchase price, which could have at least given rise to the obligation to transfer ownership. Petitioners
Cahayag and Rivera even admit that they defaulted on their obligations under their respective Contracts to Sell,
although they attribute the default to respondent Qua's "harassment and unlawful actuations."  The statement,
59

though, was a mere allegation that was left unsubstantiated and, as such, could not qualify as proof of anything. 60

3. Who Has a Better Right over the Properties

Registration of the mortgage hound the buyers under the Contracts to Sell

Registration of the mortgage establishes a real right or lien in favor of the mortgagee, as provided by Articles
1312  and 2126  of the Civil Code.  Corollary to the rule, the lien has been treated as "inseparable from the
61 62 63

property inasmuch as it is a right in rem."  In other words, it binds third persons to the mortgage.
64

The purpose of registration is to notify persons other than the parties to the contract that a transaction concerning
the property was entered into.  Ultimately, registration, because it provides constructive notice to the whole world,
65

makes the certificate of title reliable, such that third persons dealing with registered land need only look at the
certificate to determine the status of the property.
66

In this case, the Real Estate Mortgage over the property was registered on 3 February 1981. On the other hand, the
Contracts to Sell were all executed after the registration of the mortgage. The Contract to Sell in favor of petitioner
Cahayag was executed on 29 March 1981, or almost two months after the registration of the mortgage. The
corresponding Contract to Sell in favor of Rivera was executed only on 12 August 1981, roughly six months after the
registration of the mortgage contract. Lastly, the Contract to Sell in favor of Escalona was executed on 13 January
1983, or nearly two years after the registration of the mortgage on 3 February 1981.

Consequently, petitioners Cahayag, Rivera and Escalona, were bound to the mortgage executed between
mortgagor Dulos Realty and mortgagee CCC, by virtue of its registration. Definitely, the buyers each had
constructive knowledge of the existence of the mortgage contract when they individually executed the Contracts to
Sell.

Dela Merced v. GSIS not applicable

Petitioner invokes the above case. Dela Merced involved a clash between an unrecorded contract to sell and a
registered mortgage contract. The contract to sell between the mortgagors (Spouses Zulueta) and the buyer
(Francisco Dela Merced) was executed before the former's constitution of the mortgage in favor of GSIS. Because
the Zuluetas defaulted on their loans, the mortgage was foreclosed; the properties were sold at public auction to
GSIS as the highest bidder; and the titles were consolidated after the spouses' failure to redeem the properties
within the one-year redemption period. GSIS later sold the contested lot to Elizabeth D. Manlongat and Ma. Therese
D. Manlongat. However, Dela Merced was able to fully pay the purchase price to Spouses Zulueta, who executed a
Deed of Absolute Sale in his favor prior to the foreclosure sale.

This Court stated therein the general rule that the purchaser is not required to go beyond the Torrens title if there is
nothing therein to indicate any cloud or vice in the ownership of the property or any encumbrance thereon. The case
nonetheless provided an exception to the general rule. The exception arises when the purchaser or mortgagee
has knowledge of a defect in the vendor's title or lack thereof, or is aware of sufficient facts to induce a reasonably
prudent person to inquire into the status of the property under litigation. The Court applied the exception, taking into
consideration the fact that GSIS, the mortgagee, was a financing institution.

But Dela Merced is not relevant here. Dela Merced involved a Contract to Sell that was executed prior to the
mortgage, while the Contracts to Sell in this case were all executed after the constitution and registration of the
mortgage.

In Dela Merced, since GSIS had knowledge of the contract to sell, this knowledge was equivalent to the registration
of the Contract to Sell. Effectively, this constitutes registration canceled out the subsequent registration of the

Evidence II.
mortgage. In other words, the buyer under the Contract to Sell became the- first to register. Following the priority in
time rule in civil law, the lot buyer was accorded preference or priority in right in Dela Merced.

In this case, the registration of the mortgage, which predated the Contracts to Sell, already bound the buyers to the
mortgage. Consequently, the determination of good faith does not come into play.

Dela Merced materially differs from this case on another point. The Contract to Sell in favor of Dela Merced was
followed by full payment of the price and execution of the Deed of Absolute Sale. In this case, the Contract to
Sell in favor of each of petitioners Cahayag, Rivera and Escalona, is not coupled with full payment and execution of
a deed of absolute sale.

This case also needs to be distinguished from Luzon Development Bank v. Enriquez.  In that case, the unregistered
67

Contract to Sell was executed after the execution of the mortgage. Instead of resorting to foreclosure, the
owner/developer and the bank entered into a dacion en pago. The Court declared that the bank was bound by the
Contract to Sell despite the non-registration of the contract. It reasoned that the bank impliedly assumed the risk that
some of the units might have been covered by contracts to sell. On the other hand, the Court pronounced the
mortgage to be void, as it was without the approval of the Housing and Land Use Regulatory Board (HLURB). The
Court consequently ordered the unit buyer in that case to pay the balance to the bank, after which the buyer was
obliged to deliver a clean title to the property.

There are points of distinction between the case at bar and Luzon Development Bank. First, there is a definite
finding in Luzon Development Bank that the mortgage was without prior HLURB approval, rendering the mortgage
void. In the present case, as will be discussed later, there is no proof from the records on whether the HLURB did or
did not approve the mortgage. Second, Luzon Development Bank did not even reach the foreclosure stage of the
mortgage. This case, however, not only reached the foreclosure stage; it even went past the redemption period,
consolidation of the title in the owner, and sale of the property by the highest bidder to a third person.

The first distinction deserves elaboration. The absence of prior written approval of the mortgage by the HLURB
rendered it void. This effectively wiped out any discussion on whether registration bound the installment buyer. In
fact, Luzon Development Bank did not even bother to state whether the mortgage was registered or not. More
important, the tables were turned when Luzon Development Bank held that the bank was bound to the Contract to
Sell in view of the latter's constructive notice of the Contract to Sell. Stated differently, the actually unregistered
Contract to Sell became fictionally registered, making it binding on the bank.

In this case, on account of its registration, and the fact that the contracts were entered into after it, the mortgage is
valid even as to petitioners.

No Redemption within One Year from the Foreclosure Sale

When it comes to extrajudicial foreclosures, the law  grants mortgagors or their successors-in-interest an
68

opportunity to redeem the property within one year from the date of the sale. The one-year period has been
jurisprudentially held to be counted from the registration of the foreclosure sale with the Register of Deeds.  An
69

exception to this rule has been carved out by Congress for juridical mortgagors. Section 47 of the General Banking
Law of 2000 shortens the redemption period to within three months after the foreclosure sale or until the registration
of the certificate of sale, whichever comes first.  The General Banking Law of 2000 came into law on 13 June 2000.
70

If the redemption period expires and the mortgagors or their successors-in-interest fail to redeem the foreclosed
property, the title thereto is consolidated in the purchaser.  The consolidation confirms the purchaser as the owner
71

of the property; concurrently, the mortgagor-for failure to exercise the right of redemption within the period-loses all
interest in the property.
72

We now apply the rules to this case.

As the foreclosure sale took place prior to the advent of the General Banking Law of 2000, the applicable
redemption period is one year. In this case, because the Certificate of Sale in favor of respondent CCC was
registered on 8 March 1982, the redemption period was until 8 March 1983. It lapsed without any right of redemption

Evidence II.
having been exercised by Dulos Realty. Consequently, the right of respondent CCC, as purchaser of the subject
lots, became absolute. As a matter of right, it was entitled to the consolidation of the titles in its name and to the
possession of those lots. Further, the right of respondent CCC over the lots was transferred to respondent Qua by
virtue of the Deed of Sale executed between them.

Given the foregoing considerations, respondent Qua, who now has title to the properties subject of the various
Contracts to Sell, is the lawful owner thereof.

Foreclosure Sale vs. Contract of Sale

When Dulos Realty executed a Deed of Absolute Sale covering the real property registered under TCT No. S-39778
in favor of petitioner Baldoza on 10 December 1983, it was no longer the owner of the property. Titles to the subject
properties, including the one sold to Baldoza, had already been consolidated in favor of respondent CCC as early as
10 November 1983. In fact, on the same date, the titles to the subject lots in the name of Dulos Realty had already
been cancelled and new ones issued to respondent CCC.

The fact that Dulos Realty was no longer the owner of the real property at the time of the sale led the CA to declare
that the Contract of Sale was null and void. On this premise, the appellate court concluded that respondent Qua had
a better title to the property over petitioner Baldoza.

We find no error in the conclusion of the CA that respondent Qua has a better right to the property. The problem lies
with its reasoning. We therefore take a different route to reach the same conclusion.

Proper place of nemo dat quod non habet in the Law on Sales

Undeniably, there is an established rule under the law on sales that one cannot give what one does not have (Nemo
dat quad non ha bet).  The CA, however, confuses the application of this rule with respect to time. It makes
73

the nemo dat quad non habet rule a requirement for the perfection of a contract of sale, such that a violation thereof
goes into the validity of the sale. But the Latin precept has been jurisprudentially held to apply to a contract of sale
at its consummation stage, and not at the perfection stage. 74

Cavite Development Bank v. Spouses Syrus Lim  puts nemo dat quad non habet in its proper place.  Initially, the
75
1âwphi1

Court rules out ownership as a requirement for the perfection of a contract of sale. For all that is required is a
meeting of the minds upon the object of the contract and the price. The case then proceeds to give examples of the
rule. It cites Article 1434 of the Civil Code, which provides that in case the seller does not own the subject matter of
the contract at the time of the sale, but later acquires title to the thing sold, ownership shall pass to the buyer. The
Court also refers to the rule as the rationale behind Article 1462, which deals with sale of "future goods."

Cavite Development Bank thereafter turns to Article 1459, which requires ownership by the seller of the thing sold at
the time of delivery or consummation stage of the sale. The Court explains that if the rule were otherwise, the
seller would not be able to comply with the latter's obligation to transfer ownership to the buyer under a perfected
contract of sale. The Court ends the discourse with the conclusion that "[i]t is at the consummation stage where the
principle of nemo dat quad non habet applies. 76

Case law also provides that the fact th,at the seller is not the owner of the subject matter of the sale at the time of
perfection does not make the sale void. 77

Hence, the lesson: for title to pass to the buyer, the seller must be the owner of the thing sold at
the consummation stage or at the time of delivery of the item sold. The seller need not be the owner at the
perfection stage of the contract, whether it is of a contract to sell or a contract of sale. Ownership is not a
requirement for a valid contract of sale; it is a requirement for a valid transfer of ownership'.

Consequently, it was not correct for the CA to consider the contract of sale void. The CA erroneously considered
lack of ownership on the part of the seller as having an effect on the validity of the sale. The sale was very much
valid when the Deed of Absolute Sale between the parties was executed on 10 December 1983, even though title to
the property had earlier been consolidated in favor of respondent CCC as early as 10 November 1983. The fact that
Evidence II.
Dulos Realty was no longer the owner of the property in question at the time of the sale did not affect the validity of
the contract.

On the contrary, lack of title goes into the performance of a contract of sale. It is therefore crucial to determine in
this case if the seller was the owner at the time of delivery of the object of the sale. For this purpose, it should be
noted that execution of a public instrument evidencing a sale translates to delivery.  It transfers ownership of the
78

item sold to the buyer.79

In this case, the delivery coincided with the perfection of the contract -The Deed of Absolute Sale covering the real
property in favor of petitioner Baldoza was executed on 10 December 1983. As already mentioned, Dulos Realty
was no longer the owner of the property on that date. Accordingly, it could not have validly transferred ownership of
the real property it had sold to petitioner.

Thus, the correct conclusion that should be made is that while there was a valid sale, there was no valid transfer of
title to Baldoza, since Dulos Realty was no longer the owner at the time of the execution of the Deed of Absolute
Sale.

No Bad Faith on Qua

The contention that Qua is a stockholder and former member of the Board of Directors of respondent CCC and
therefore she is not exactly a stranger to the affairs of CCC is not even relevant.

An innocent purchaser for value is one who "buys the property of another without notice that some other person has
a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice
of another person's claim."  The concept thus presupposes that there must be an adverse claim or defect in the title
80

to the property to be purchased by the innocent purchaser for value.

Respondent Qua traces her title to respondent CCC, whose acquisition over the property proceeded from a
foreclosure sale that was valid. As there is no defect in the title of respondent CCC to speak of in this case, there is
no need to go into a discussion of whether Qua is an innocent purchaser for value.

4. Dispute as to the Factual Finding of the CA that the Deed of Absolute Sale in Favor of Baldoza was not
Preceded by a Contract to Sell and Full Payment of the Purchase Price

We absolutely discard the argument. We can think of at least four reasons why. First, Exhibit "L" was not formally
offered in evidence. Second, it was not even incorporated into the records. Third, the argument is
irrelevant. Fourth, it was even abandoned in the Memoranda filed by petitioners with us. Last, we are not a trier of
facts and thus we yield to the finding of the CA.

Exhibit "L" not formally offered

A perusal of the records shows that the Contract to Sell that Baldoza referred to had in fact been marked as Exhibit
"L" during her direct examination in court.  Even so, Exhibit "L" was never formally offered as evidence. For this
81

reason, we reject her contention. Courts do not consider evidence that has not been formally offered.  This explains
82

why the CA never mentioned the alleged Contract to Sell in favor of Baldoza.

The rationale behind the rule rests on the need for judges to confine their factual findings and ultimately their
judgment solely and strictly to the evidence offered by the parties to a suit.  The rule has a threefold purpose. It
83

allows the trial judge to know the purpose of the evidence presented; affords opposing parties the opportunity to
examine the evidence and object to its admissibility when necessary; and facilitates review, given that an appellate
court does not have to review documents that have not been subjected to scrutiny by the trial court. 84

Exhibit "L" not incorporated into the records

Evidence II.
The rule, of course, admits an exception. Evidence not formally offered may be admitted and considered by the trial
court so long as the following requirements obtain: (1) the evidence is duly identified by testimony duly recorded;
and (2) the evidence is incorporated into the records of the case.

The exception does not apply to the case of Baldoza. While she duly identified the Contract to Sell during her direct
examination, which was duly recorded, Exhibit "L" was not incorporated into the records.

Exhibit "L" not relevant

Be that as it may, the contention that a Contract to Sell in favor of Baldoza preceded the sale in her favor is
irrelevant. It must be stressed that the sale to Baldoza made by Dulos Realty took place after the lapse of the
redemption period and after consolidation of title in the name of respondent CCC on 10 November 1983, one
month prior to the sale to Baldoza on 10 December 1983. Dulos Realty still would have lost all interest over the
property mortgaged.

The fact that Dulos Realty ceased to be the owner of the property and therefore it could no longer effect delivery of
the property at the time the Deed of Absolute Sale in favor of Baldoza was executed is the very reason why the case
of Baldoza cannot be compared with Dela Merced. In the case, the buyer in the Contract to Sell was able to effect
full payment of the purchase price and to execute a Deed of Absolute Sale in his favor before the foreclosure
sale. In this case, the full payment of the purchase price and the execution of a Deed of Absolute Sale in favor of
Baldoza was done after the foreclosure sale.

Issue over Exhibit "L" not included in the Memorandum

Equally important is the fact that petitioners failed to include the issue over Exhibit "L" in any of the Memoranda they
filed with us. The omission is fatal. Issues raised in previous pleadings but not included in the memorandum
are deemed waived or abandoned (A.M. No. 99-2-04-SC). As they are "a summation of the parties' previous
pleadings, the memoranda alone may be considered by the Court in deciding or resolving the petition."  Thus, even
85

as the issue was raised in the Petition, the Court may not consider it in resolving the case on the ground of failure of
petitioners to include the issue in the Memorandum. They have either waived or abandoned it.

5. Issue of HLURB's Non-Approval of the Mortgage

Petitioners allege before the Court that the mortgage contract in this case was not approved by the HLURB. They
claim that this violates Section 18 of P.D. 957  and results in the nullity of the mortgage. Respondents have
86

disputed the claim and counter-argue that the allegation of the petitioners is not supported by evidence.
Respondents likewise aver that the argument was raised for the first time on appeal. 87

It is rather too late in the day for petitioners to raise this argument. Parties are not permitted to change their theory of
a case at the appellate stage.  Thus, theories and issues not raised at the trial level will not be considered by a
88

reviewing court on the ground that they cannot be raised for the first time on appeal.  Overriding considerations of
89

fair play, justice and due process dictate this recognized rule.  This Court cannot even receive evidence on this
90

matter.

Petitioners' original theory of the case is the nullity of the mortgage on the grounds previously discussed. If
petitioners are allowed to introduce their new theory, respondents would have no more opportunity to rebut the new
claim with contrary evidence, as the trial stage has already been terminated. In the interest of fair play and justice,
the introduction of the new argument must be barred. 91

Exceptions Not Applicable

The Court is aware that the foregoing is merely a general rule. Exceptions are written in case law: first, an issue of
jurisdiction may be raised at any time, even on appeal, for as long as the exercise thereof will not result in a
mockery of the demands of fair play;  second, in the interest of justice and at the sound discretion of the appellate
92

court, a party may be allowed to change its legal theory on appeal, but only when the factual bases thereof would
not require further presentation of evidence by the adverse party for the purpose of addressing the issue raised in
Evidence II.
the new theory;  and last, which is actually a bogus exception, is when the question falls within the issues raised at
93

the trial court.

94

The exceptions do not apply to the instant case. The new argument offered in this case concerns a factual matter -
prior approval by the HLURB. This prerequisite is not in any way related to jurisdiction, and so the first exception is
not applicable. There is nothing in the record to allow us to make any conclusion with respect to this new allegation.

Neither will the case fall under the second exception. Evidence would be required of the respondents to disprove the
new allegation that the mortgage did not have the requisite prior HLURB approval. Besides, to the mind of this court,
to allow petitioners to change their theory at this stage of the proceedings will be exceedingly inappropriate.

Petitioners raised the issue only after obtaining an unfavorable judgment from the CA. Undoubtedly, if we allow a
change of theory late in the game, so to speak, we will unjustifiably close our eyes to the fundamental right of
petitioners to procedural due process. They will lose the opportunity to meet the challenge, because trial has
already ended. Ultimately, we will be throwing the Constitutional rulebook out the window.

WHEREFORE, premises considered, the Petitions are DENIED, and the Court of Appeals Decision dated 2
November 2004 and Resolution dated 10 May 2005 in CA-G.R. CV No. 47421 are hereby AFFIRMED.

Evidence II.
34.) G.R. No. 200383

NORMA M. DIAMPOC, Petitioner
vs.
JESSIE BUENAVENTURA and THE REGISTRY OF DEEDS FOH THE CITY OF TAGUIG, Respondents

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari  seeks to set aside the February 21, 2011 Decision  and May 6, 2011
1 2

Resolution  of the Court of .Appeals (CA) in CA-G.R, CV No. 92453 which denied herein petitioner's appeal and
3

affirmed the December 20, 2007 Decision  of the Regional Trial Court of Pasig City, Branch 268 (RTC) in Civil Case
4

No. 70076.

Factual Antecedents

In July, 2004, petitioner Norma M. Diampoc and her husband Wilbur L. Diampoc (the Diampocs) filed a
Complaint  for annulment of deed of sale and recovery of duplicate original copy of title, with damages, against
5

respondent Jessie Buenaventura (Buenaventura) and the Registry of Deeds for the Province of Rizal. The case was
docketed before the RTC as Civil Case No. 70076.

The Diampocs alleged in their Complaint that they owned a 174- square meter parcel of land (subject property) in
Signal Village, Taguig City covered by Transfer Certificate of Title No. 25044 (TCT 25044); that Buenaventura
became their friend; that Buenaventura asked to borrow the owner's copy of TCT 25044 to be used as security for a
₱1 million loan she wished to secure; that they acceded, on the condition that Buenaventura should not sell the
subject property; that Buenaventura promised to give them ₱300,000.00 out of the ₱1 million loan proceeds; that on
July 2, 2000, Buenaventura cause them to sign a folded document without giving them the opportunity to read its
contents; that Buenaventura filed to give them a copy of the document which they signed; that they discovered later
on that Buenaventura became the owner of a one· half portion (87 square meters) of the subject property by virtue
of a supposed deed of sale in her favor; that they immediately proceeded to the notary public who notarized the said
purported deed of sales and discovered that the said 87-square meter portion was purportedly sold to Buenaventura
for ₱200,000.00; that barangay conciliation proceedings were commenced, but proved futile; that the purported
deed of sale is spurious; and that the deed was secured through fraud and deceit, and thus null and void. The
Diampocs thus prayed that the purported deed of sale be annulled and the annotation thereof on TCT 25044 be
canceled; that the owner's duplicate copy of TCT 25044 be returned to them; and that attorney's fees and costs of
suit be awarded to them.

In her Answer, Buenaventura claimed that the Diampocs have no cause of action; that the case is a rehash of an
estafa case they previously filed against her but which was dismissed; and that the case is dismissible for lack of
merit and due to procedural lapses. 6

Ruling of the Regional Trial Court

After trial, the RTC rendered its December 20, 2007 Decision, pronouncing as follows:

Counsel for the plaintiffs presented two witnesses, namely: Norma Diampoc and Wilbur Diampoc, Stripped off of its
non-essentials, their testimonies are summarized as follows:

1. MRS. NORMA DIAMPOC - The witness is one of the plaintiffs. She testifies that they are the owners of the
property x x x covered by Transfer Certificate of Title No. 25044 x x x; that sometime in May 2000, defendant
borrowed the original owner's duplicate copy of said title from the plaintiffs to be used as collateral of her loan from a
bank as she needed additional capital for her store x x x; that they have agreed that after getting the proceeds of the
loan of Php1,000,000.00, defendant will give Php300,000.00 to plaintiff to be used for the repair of plaintiffs' second
floor x x x; it was further agreed by the parties that defendant will pay the entire amount of the loan and the
Evidence II.
Php300,000.00 shall represent payment for the use of plaintiffs' title x x x; that in the morning of July 3, 2000, while
plaintiff Norma Diampoc was in the store of a certain Marissa Ibes, defendant Jessie Buenaventura arrived and
force her to sign a document without giving her a chance to read the same x xx; that in the morning of November
19, 2002, Eng[r]. Perciliano Aguinaldo went to the plaintiffs' house and conducted a survey of the subject property;
that plaintiffs asked said engineer why he was conducting a Survey and the engineer replied that it was the
instruction of defendant Buenaventura as the said property has already been sold x x x;. that Engineer Aguinaldo
showed plaintiff a document denominated as "Deed of Sale" x x x; that when plaintiffs signed the Deed of Sale, the
word "Vendor" was not yet written x x x; that plaintiffs did not appear before the notary public who notarized the
document and never received the amount of Php200,000.00 as statod in the document x x x; that when they
confronted the lawyer who notarized the document, plaintiffs were advised to file a complaint before the Office of the
Barangay x x x; that the Lupong Tagapamayapa of the said Barangay issued a certificate to file action as the parties
failed to settle the case amicably x x x; that plaintiffs sent a letter of protest to Eng[r]. Aguinaldo x x x; that in
connection with the filing of the instant complaint, the witness executed a sw0rn statement x x x.

2. MR. WILBUR DIAMPOC -, x x x He was presented to corroborate the testimony of his wife-co-plaintiff, Mrs.
Norma Diampoc.

On May 19, 2005, defendant through counsel filed a Motion for Reconsideration praying that he be allowed to
participate in the trial. The Court in its Order dated August 22, 2005 gave defendant last opportunity to present
evidence in her behalf and allowed her to cross-examine the plaintiffs' witnesses.

On cross-examination, the witnesses confirmed that they signed the subject deed of sale but did not read the
contents of the document they signed; that they never appeared before the Notary Public to acknowledge the Deed
of Sale; that they did not file a case against the Notary Public; that they did not receive any consideration for the
alleged sale; that they filed a complaint against defendant only after they discovered that what they have signed was
a Deed of Sale: that they did not read the document before they affixed their signatures because they trusted the
defendant x x x.

Counsel for the defendant on the other hand presented the defendant herself as his lone witness. Jessie
Buenaventura testified that spouses Diampoc sold to her a portion of their land consisting of 87 square meters as
evidenced by a Deed of Sale marked in evidence x x x; that the said deed of sale was signed and acknowledged
before a Notary Public, Atty. Pastor Mendoza on July 6, 2000 x x x; that spouses Diampoc filed a case against her
for Estafa, Grave Threat, Coercion and Falsification before the Prosecutor's Office of Rizal x x x; that said cases
were dismissed x x x; that because of the filing of the instant case, defendant spent litigation expenses x x x. On
cross-examination, defendant further testified that [she] personally gave the amount of Php200,000.00 to plaintiff
Norma Diampoc before they went to the Notary Public x x x.

After evaluating the evidence on hand, the Court finds that plaintiffs fall short of the required evidence to
substantiate their allegations that subject Deed of Sale x x x is illegal and spurious. "The Deed of Sale being a
public document, it is prima facie evidence of the facts state therein’ (Domingo versus Domingo, 455 SCRA 555).
Under the rule, the terms of a contract are rendered conclusive upon the parties and evidence aliunde is not
admissible to vary or contradict a complete and enforceable agreement embodied in a document. (Rosario Textile
Mills Corp. versus Home Bankers Savings, 462 SCRA 88).

The pertinent provision of the New Civil Code reads:

‘Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith'

WHEREFORE, foregoing premises considered, the above-captioned case is hereby DISMISSED for insufficiency of
evidence. No pronouncement as to costs.

SO ORDERED. 7

Ruling of the Court of Appeals

Evidence II.
Respondents filed an appeal before the CA, which denied the same, ruling as follows:

In beseeching the annulment of the notarized deed of sale, appellants impress upon Us that they were deceived by
Jessie (now ‘appellee’) into believing that they were signing papers for the intended bank loan. They failed to read
the contents of the document fr.lr it 'was folded’, and Jessie was in a hurry.

These specious arguments are devoid adjudicial mooring.

As aptly declared by the court a quo, notarized documents, like the deed in question, enjoy the presumption of
regularity which can be overturned only by clear, convincing and more than merely preponderant evidence.
Miserably, appellants failed to discharge this burden.

Appellants are not illiterate, hut educated persons who understood the meaning of the word ‘vendor’ printed [ vividly]
under their names. They could easily read such word before they could affix their signatures. We are simply
appalled by appellant Wilbur's pathetic explanation that it was ‘dark’ at the time he signed the deed so that he failed
to read the word 'vendor'.

Yet, even if they avouch to be illiterate, which they most certainly are not being high school graduates themselves,
the enunciations in Bernardo v. Court of Appeals come to mind -

‘[G]ranting, without conceding, that private respondent and his wife were both illiterate, this still does not save the
day for them. As stressed in Tan Tua Sia v. Yu Biao Sontua, 56 Phil. 711, cited in Mata v. Court of Appeals - .... The
rule that one who signs a contract is presumed to know its contents have been applied even to contracts of
illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to
have the contract read to them. If a person cannot read the instrument, it is as much his duty to procure some
reliable persons to read and explain it to him, before he signs it, x x x and his failure to obtain a reading and
explanation of it is such gross negligence as will estop him from avoiding it on the ground that he was ignorant of its
contents. ‘x x x

Verily, the fact that appellants used only one community tax certificate cannot emasculate the evidentiary weight of
the notarized deed. The notary public may have been lax in his duty of requiring two community tax certificates from
the appellants, but this will not adversely affect the validity of the notarized deed.

Invariably, appellants cannot now be allowed to disavow the contractual effects of the notarized deed. It is true that
parol evidence may be admitted to challenge the contents of such agreement 'where a mistake or imperfection of
the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is
put in issue by the pleadings.’ However, such evidence must be clear and convincing and of such sufficient
credibility as to overturn the written agreement. The flimsy protestations of the parties are not substantiated by
compelling evidence which would Warrant a reversal of the impugned judgment.

As borne out by the notarized deed, a perfected contract of sale was forged between the parties.  Appellants
1âwphi1

received in full the payment of ₱200,000.00, having sold to appellee a portion of their lot. If the terms of the deed
were not in consonance with their expectations, they should have objected to it and insisted on the provisions they
wanted. Courts are not authorized to extricate parties from the necessary consequences of their acts, and the fact
that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their
obligations.

With this discourse, appellants' recourse falls through. The claim for payment of damages necessarily fails.

WHEREFORE, the Appeal is hereby DENIED. The Decision dated 20 December 2007 of the Regional Trial Court,
Pasig City, Branch 268, in Civil Case No. 70076, is AFFIRMED.

SO ORDERED.  (Emphasis in the original)

8

Petitioner filed a Motion for Reconsideration,  which was denied via the May 6, 2011 Resolution. Hence, the instant
9

Petition.
Evidence II.
In a January 25, 2016 Resolution,  this Court resolved to dispense with the filing of respondent Buenaventura's
10

comment, and petitioner manifested  her willingness to submit the case for resolution on the basis of the pleadings
11

on record.

Issues

Petitioner claims that -

A. THE COURT OF APPEALS ERRED IN APPLYING THE PRIMA FACIE PRESUMPTION OF REGULARITY OF
NOTARIZED DOCUMENTS AND UPHOLDING THE VALIDITY OF THE NOTARIZED DEED OF SALE
NOTWITHSTANDING THE UNDISPUTED FACT THAT THERE. WERE IRREGULARITIES JN THE EXECUTION
AND NOTARIZATlON OF THE DEED OF SALE.

B. THE COURT OF APPEALS ERRED IN RULING THAT THERE WAS A VALID CONTRACT OF SALE. 12

Petitioner’s Arguments

Seeking reversal of the assailed CA dispositions, nullification of the subject deed of sale, cancellation of Entry No.
5381 on the back of TCT 25044, 'the return of the owner’s duplicate copy of TCT 25044, and payment of attorney's
fees and costs of suit, petitioner argues that while a notarized document enjoys the presumption of regularity, this
does not apply to the subject deed of sale as it was not signed before the notary public, and was notarized in the
absence of petitioner and her husband; that Buenaventura failed to present as her witness the notary public who
notarized the deed of sale; that Buenaventura herself failed to show that she was present at the notarization; that
there was only one· Community Tax Certificate used for both petitioner and her husband; that with the irregularities
pointed out, the prima facie; presumption of regularity no longer applies to the subject deed of sale; that she and her
husband never intended to sell the subject property; that while she and her husband were not illiterate, still what
matters is that Buenaventura deceived them into signing the subject document without reading it through
assurances that what they were signing was an authorization for the purpose of obtaining a bank loan; that she and
her husband had no reason to distn1st Buenaventura as the purported Joan was previously agreed upon; that
Buenaventura failed to prove that she paid the purported consideration of ₱200,000,00 for the supposed sale, as
she did not present any receipt therefor; and that in view of these facts, the deed of sale should be annulled and
voided.

Our Ruling

The Court denies the Petition.

Petitioner's arguments center on the claim that the deed of sale suffers from defects relative to its notarization,
which thus render the deed ineffective, if not null and void. Petitioner claims that the deed was not signed by the
parties before the notary public; that it was notarized in her and her husband's absence; that there was only one
Community Tax Certificate used for both petitioner and her husband; and that Buenaventura failed to present the
notary public as her witness.

It must be remembered, however, that "the absence of notarization of the deed of sale would not invalidate the
transaction evidenced therein"; it merely "reduces the evidentiary value of a document to that of a private document,
which requires proof of its due execution and authenticity to be admissible as evidence."  "A defective notarization
13

will strip the document of its public character and reduce it to a private instrument. Consequently, when there is a
defect in the notarization of a document, the clear and convincing evidentiary standard normally attached to a duly-
notarized document is dispensed with, and the measure to test the validity of such document is preponderance of
evidence." 14

x x x Article 1358 of the Civil Code requires that the form of a contract that transmits or extinguishes real rights over
immovable property should be in a public document, yet the failure to observe the proper form does not render the
transaction invalid. The necessity of a public document for said contracts is only for convenience; it is not essential
for validity or enforceability. Even a sale of real property, though not contained in a public instrument or formal
writing, is nevertheless valid and binding, for even a verbal contract of sale or real estate; produces legal effects

Evidence II.
between the parties. Consequently, when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard originally attached to a duly-notarized document is dispensed with, and the
measure to test the validity of such document is preponderance of evidence. 15

x x x Nevertheless, the defective notarization of the deed does not affect the validity of the sale of the house.
Although Article 1358 of the Civil Code states that the sale of real property must appear in a public instrument, the
formalities required by this article is not essential for the validity of the contract but is simply for its greater efficacy or
convenience, or to bind third persons, and is merely a coercive means granted to the contracting parties to enab1e
them to reciprocally compel the observance of the prescribed form. Consequently, the private conveyance of the
house is valid between the parties. 16

Thus, following the above pronouncements, the remaining judicial task, therefore, is to determine if the deed of sale
executed by and between the parties should be upheld. The RTC and the CA are t.manimoi1s in declaring that the
deed should be sustained on account of petitioner's failure to discredit it with her evidence. The CA farther found
that petitioner and her husband received in full the consideration of ₱200,000.00 for the sale. As far as the lower
courts are concen1ed, the three requirements of cause, object, and consideration concurred. This Court is left with
no option but to respect the lower courts' findings, for its jurisdiction in a petition for review on certiorari is limited to
reviewing only errors of law since it is not a trier of facts. This is especially so in view of the identical conclusions
affirmed at by them.

Indeed, petitioner and her husband conceded that there was such a deed of sale, but only that they were induced to
sign it without being given the opportunity to read its contents -believing that the document they were signing was a
mere authorization to obtain a bank loan. According to petitioner, the document was "folded" when she affixed her
signature thereon; on the other hand, her husband added that at the time he signed the same, it was "dark". These
circumstances, however, did not prevent them from discovering the true nature of the document; being high school
graduates and thus literate, they were not completely precluded from reading the contents thereof, as they should
have done if they were prudent enough, Petitioner's excuses are therefore flimsy and specious.

Petitioner and her husband's admission that they failed to exercise prudence can only be fatal to their cause. They
are not unlettered people possessed with a modicum of intelligence; they are educated property owners capable of
securing themselves and their property from unwarranted intrusion when required. They knew the wherewithal of
property ownership. Their failure to thus observe the care and circumspect expected of them precludes the courts
from lending a helping hand, and so they must bear the consequences flowing from their own negligence.

The rule that one who signs a contract is presumed to know its contents has been applied even to contracts
of illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to
have the contract read to them. If a person cannot read the instrument, it is as much his duty to procure
some reliable persons to read and explain it to him, before he signs it, as it would be to read it before he
signed it if he were able to do so and his failure to obtain a reading and explanation of it is such gross
negligence as will estop him from avoiding it on the ground that he was ignorant of its contents. 17

It is also a well-settled principle that "the law will not relieve parties from the effects of an unwise, foolish or
disastrous agreement they entered into with all the required formalities and with full awareness of what they were
doing. Courts have no power to relieve them from obligations they voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments. Neither the law nor the courts will extricate them
from an unwise or undesirable contract which they entered into with all the required formalities and with full
knowledge of its consequences." 18

WHEREFORE, the Petition is DENlED. The February 21, 2011 Decision and May 6, 2011 Resolution of the Court of
Appeals in CA-G.R. CV No. 92453 are AFFIRMED in toto.

Evidence II.
35.)

Evidence II.