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EVIDENCE

ADMINISTRATIVE AND QUASI-JUDICIAL PROCEEDINGS

BANTOLINO VS COCA-COLA BOTTLERS, INC.


G.R. No. 153660 June 10, 2003

FACTS: In 1995 62 employees of Coca-Cola and its officers, Lipercon, People's Specialist Services, and Interim filed a
complaint against respondents for unfair labor practice through illegal dismissal, violation of their security of tenure
and the perpetuation of the "Cabo System." They thus prayed for reinstatement with full back wages, and the
declaration of their regular employment status. They failed to either attend the scheduled mandatory conferences or
submit affidavits, the claims of 52 complainant were dismissed. LA De Vera conducted clarificatory hearings to elicit
information from the 10 remaining complainants as to their alleged employment with CC. As route helpers, bottle
segregators, of CC. They were replaced and prevented from entering the company premises. CC filed a motion to
dismiss complaint for lack of jurisdiction and cause of action, there being no employer-employee relationship, officers
being bona fide independent contractors, were the real employers of the complainants. LA rendered a decision to
reinstate complainants to their former positions and to pay their full back wages which, with the exception of
Prudencio Bantolino whose back wages must be computed upon proof of his dismissal. Appellate court dismissed their
complaints for lack of sufficient evidence. Petitioners insist that, unlike regular courts, labor cases are decided based
merely on the parties' position papers and affidavits in support of their allegations and subsequent pleadings that may
be filed thereto. As such, according to petitioners, the Rules of Court should not be strictly applied in this case
specifically by putting them on the witness stand to be cross-examined because the NLRC has its own rules of
procedure which were applied by the LA in coming up with a decision in their favor.

In Loquias v. Office of the Ombudsman, The crux of the controversy revolves around the propriety of giving evidentiary
value to the affidavits despite the failure of the affiants to affirm their contents and undergo the test of cross-
examination.

ISSUE: WON the court should apply ROC in a labor case.

HELD: No. In Rabago v. NLRC9 SC held that "the argument that the affidavit is hearsay because the affiants were not
presented for cross-examination is not persuasive because the rules of evidence are not strictly observed in
proceedings before administrative bodies like the NLRC where decisions may be reached on the basis of position
papers only." Art. 221 of the Labor Code, the rules of evidence prevailing in courts of law do not control proceedings
before the Labor Arbiter and the NLRC. LA and the NLRC are authorized to adopt reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of law and procedure, all in the interest
of due process. To reiterate, administrative bodies like the NLRC are not bound by the technical niceties of law and
procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing jurisprudence
may be given only stringent application, i.e., by analogy or in a suppletory character and effect. Not all waivers and
quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind.

JUDICIAL NOTICE
A.M. No. RTJ-92-876 September 19, 1994
STATE PROSECUTORS vs MURO

FACTS: In assaying the requisite norms for qualifications and eminence of a magistrate, legal authorities place a
premium on how he has complied with his continuing duty to know the law. A quality thus considered essential to the
judicial character is that of "a man of learning who spends tirelessly the weary hours after midnight acquainting
himself with the great body of traditions and the learning of the law; is profoundly learned in all the learning of the law;
and knows how to use that learning." 1

Obviously, it is the primary duty of a judge, which he owes to the public and to the legal profession, to know the very
law he is supposed to apply to a given controversy. He is called upon to exhibit more than just a cursory acquaintance
with the statutes and procedural rules. Party litigants will have great faith in the administration of justice if judges
cannot justly be accused of apparent deficiency in their grasp of the legal principles. For, service in the judiciary means
a continuous study and research on the law from beginning to end. 2

In 1992, respondent Judge Muro of RTC Manila was charged by State Prosecutors Mariano, Dee and Tac-an with
ignorance of the law, grave misconduct and violations of Rules 2.01, 3.01 and 3.02 of the Code of Judicial Conduct,
respondent judge issued an Order dismissing 11 cases against the accused Mrs. Imelda Romualdez Marcos, for
Violation of Central Bank Foreign Exchange Restrictions, he issued his Order solely on the basis of newspaper reports
concerning the announcement by the President of the lifting by the government of all foreign exchange restrictions
and the arrival at such decision by the Monetary Board as per statement of Central Bank Governor Jose Cuisia;
claiming that the reported announcement of the Executive Department on the lifting of foreign exchange restrictions
by two newspapers which are reputable and of national circulation had the effect of repealing Central Bank Circular No.
960, as allegedly supported by SC decisions, the Court contended that it was deprived of jurisdiction, and, motu,
proprio had to dismiss "for not to do so opens this Court to charges of trying cases over which it has no more
jurisdiction;" In dismissing the cases on the basis of a Central Bank Circular or Monetary Board Resolution which as of
date hereof, has not even been officially issued, and basing his Order/decision on a mere newspaper account of the
advance announcement made by the President of the said fact of lifting or liberalizing foreign exchange controls,
respondent judge acted prematurely and in indecent haste. Judge's arrogant and cavalier posture in taking judicial
notice purportedly as a matter of public knowledge a mere newspaper account that the President had announced the
lifting of foreign exchange restrictions as basis for his assailed order of dismissal is highly irregular, erroneous and
misplaced. For the respondent judge to take judicial notice thereof even before it is officially released by the Central
Bank and its full text published as required by law to be effective shows his precipitate action in utter disregard of the
fundamental precept of due process which the People is also entitled to and exposes his gross ignorance of the law,
thereby tarnishing public confidence in the integrity of the judiciary.
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Respondent judge filed his comment, that there was no need to await publication of the Central Bank (CB) circular
repealing the existing law on foreign exchange controls for the simple reason that the public announcement made by
the President in several newspapers of general circulation lifting foreign exchange controls was total, absolute, without
qualification, and was immediately effective; the "saving clause" under CB Circular No. 1353 specifically refers only to
pending actions or investigations involving violations of CB Circular No. 1318, whereas the eleven cases dismissed
involved charges for violations of CB Circular No. 960, hence the accused cannot be tried and convicted under a law
different from that under which she was charged; that assuming that respondent judge erred in issuing the order of
dismissal, the proper remedy should have been an appeal therefrom but definitely not an administrative complaint for
his dismissal; that a mistake committed by a judge should not necessarily be imputed as ignorance of the law; and
that a "court can reverse or modify a doctrine but it does not show ignorance of the justices or judges whose decisions
were reversed or modified" because "even doctrines initiated by the Supreme Court are later reversed, so how much
more for the lower courts?"

Finally, respondent judge asseverates that complainants who are officers of the Department of Justice, violated Section
6, Rule 140 of the Rules of Court which provides that "proceedings against judges of first instance shall be private and
confidential" when they caused to be published in the newspapers the filing of the present administrative case against
him. Repeal of a penal law without re-enactment extinguishes the right to prosecute or punish the offense committed
under the old law and if the law repealing the prior penal law fails to penalize the acts which constituted the offense
defined and penalized in the repealed law, the repealed law carries with it the deprivation of the courts of jurisdiction
to try, convict and sentence persons charged with violations of the old law prior to its repeal. The doctrine of judicial
notice rests on the wisdom and discretion of the courts. The power to take judicial notice is to be exercised by courts
with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should
be promptly resolved in the negative. Matters of judicial notice have three material requisites: (1) the matter must be
one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain;
and (3) it must be known to be within the limits of the jurisdiction of the court. 11 The provincial guide in determining
what facts may be assumed to be judicially known is that of notoriety. 12 Hence, it can be said that judicial notice is
limited to facts evidenced by public records and facts of general notoriety. 13

To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of evidence will
be dispensed with if knowledge of the fact can be otherwise acquired. 14 This is because the court assumes that the
matter is so notorious that it will not be disputed. 15 But judicial notice is not judicial knowledge. The mere personal
knowledge of the judge is not the judicial knowledge of the court, and he is not authorized to make his individual
knowledge of a fact, not generally or professionally known, the basis of his action. Judicial cognizance is taken only of
those matters which are "commonly" known. 16

Things of "common knowledge," of which courts take judicial notice, may be matters coming to the knowledge of men
generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by
mankind as true and are capable of ready and unquestioned demonstration. Respondent judge, in exercising discretion
and on the basis of a mere newspaper account referred to as hearsay evidence twice removed, took judicial notice of
the supposed lifting of foreign exchange controls, a matter which was not and cannot be considered of common
knowledge or of general notoriety. Worse, he took cognizance of an administrative regulation which was not yet in
force when the order of dismissal was issued. Jurisprudence dictates that judicial notice cannot be taken of a statute
before it becomes effective. 19 The reason is simple. A law which is not yet in force and hence, still inexistent, cannot
be of common knowledge capable of ready and unquestionable demonstration, which is one of the requirements
before a court can take judicial notice of a fact.

Secondly, had respondent judge only bothered to read a little more carefully the texts of the circulars involved, he
would have readily perceived and known that Circular No. 1318 also contains a substantially similar saving clause as
that found in Circular No. 1353

It unequivocally appears from the section above quoted that although Circular No. 1318 repealed Circular No. 960, the
former specifically excepted from its purview all cases covered by the old regulations which were then pending at the
time of the passage of the new regulations. Thus, any reference made to Circular No. 1318 necessarily involves and
affects Circular No. 960.

Court finds respondent Judge Manuel T. Muro guilty of gross ignorance of the law. He is hereby DISMISSED from the
service, such dismissal to carry with it cancellation of eligibility, forfeiture of leave credits and retirement benefits, and
disqualification from reemployment in the government service. Respondent is hereby ordered to CEASE and DESIST
immediately from rendering any judgment or order, or effective upon receipt of this decision.

G.R. No. 104235 November 18, 1993

ZALAMEA vs CA

FACTS: TransWorld Airlines, Inc.'s refused to accommodate them in TWA Flight from NY to LA in 1984 despite
possession of confirmed tickets, petitioners filed an action for damages before the RTC Makati. Appellate court found
that while there was a breach of contract on respondent TWA's part, there was neither fraud nor bad faith because
under the Code of Federal Regulations by the Civil Aeronautics Board of the United States of America it is allowed to
overbook flights.

Zalamea’s purchased (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight at a
discount of 75% while that of their daughter was a full fare ticket. All three tickets represented confirmed reservations.
They received notice of the reconfirmation of their reservations for said flight. On the appointed date, petitioners
checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list
because the number of passengers who had checked in before them had already taken all the seats available on the
flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas were listed as "No. 34,
showing a party of two." Next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated
because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from
American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars. Upon their arrival in the Philippines, petitioners
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filed an action for damages based on breach of contract of air carriage before RTC Makati. CA held that moral damages
are recoverable in a damage suit upon a breach of contract of carriage only where there is fraud or bad faith. Since it is
a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is
specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could
be imputed on respondent TransWorld Airlines.

U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves
nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved. TWA relied solely
on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition dated January 27, 1986 that
the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside from said statement, no
official publication of said code was presented as evidence. Thus, respondent court's finding that overbooking is
specifically allowed by the US Code of Federal Regulations has no basis in fact.

Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in
accordance with the principle of lex loci contractus which require that the law of the place where the airline ticket was
issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is
issued in such State by the defendant airline.8 Since the tickets were sold and issued in the Philippines, the applicable
law in this case would be Philippine law.

Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its
passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was
overbooking. Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving
less priority to discounted tickets.

The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which allows
recovery when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his
interest.

G.R. Nos. 172760-61 October 15, 2007

KAREN and KRISTY FISHING INDUSTRY vs CA

FACTS: Sps Tuvilla were the proprietors of Karen & Kristy Fishing Industry which operated the fishing vessels M/V Karen
and M/V Kristy. In 1998, several fishermen-crew members of said vessels filed a complaint for illegal dismissal, unfair
labor practice and money claims against Spouses Tuvilla and Karen & Kristy Fishing Industry. LA ordered petitioners to
pay the money claims but dismissed the complaint for illegal dismissal and unfair labor practice.

If counsel moves to another address without informing the court of that change, such omission or neglect is
inexcusable and will not stay the finality of the decision. The court cannot be expected to take judicial notice of the
new address of a lawyer who has moved or to ascertain on its own whether or not the counsel of record has been
changed and who the new counsel could possibly be or where he probably resides or holds office. The Court ruled that
the counsel’s omission was an inexcusable neglect binding upon petitioner therein for the following reasons:

When a party is represented by counsel of record, service of orders and notices must be made upon said attorney and
notice to the client and to any other lawyer than the counsel of record is not notice in law.

G.R. No. 85423 May 6, 1991


JOSE TABUENA vs CA

FACTS: Disputed lot was sold by Juan Peralta, Jr. sometime in 1926 to Alfredo Tabernilla while the two were in US.
Tabernilla returned to the Philippines in 1934, and Timtiman, acting upon her son Juan's instruction, conveyed the
subject land to Tabernilla. At the same time, she requested that she be allowed to stay thereon as she had been living
there all her life. Tabernilla agreed provided she paid the realty taxes on the property, which she promised to do, and
did. She remained on the said land until her death, following which the Tabuena, her son and half-brother of Juan
Peralta, Jr., took possession.

The respondent court held that the trial court committed no reversible error in taking judicial notice of Tabuena's
testimony it had previously heard which was closely connected with the case before it. It conceded that as a general
rule "courts are not authorized to take judicial notice, in the adjudication of cases pending before them, of the contents
of the records of other cases, even when such cases have been tried or are pending in the same court, and
notwithstanding the fact that both cases may have been heard or are actually pending b before the same
judge.7 Nevertheless, it applied the exception that:

. . . in the absence of objection, and as a matter of convenience to all parties, a court may properly treat all or
any part of the original record of a case filed in its archives as read into the record of a case pending before it,
when, with the knowledge of the opposing party, reference is made to it for that purpose, by name and
number or in some other manner by which it is sufficiently designated; or when the original record of the
former case or any part of it, is actually withdrawn from the archives by the court's direction, at the request or
with the consent of the parties, and admitted as a part of the record of the case then pending.8

It is clear, though, that this exception is applicable only when, "in the absence of objection," "with the knowledge of
the opposing party," or "at the request or with the consent of the parties," the case is clearly referred to or "the
original or part of the records of the case are actually withdrawn from the archives" and "admitted as part of the record
of the case then pending." These conditions have not been established here. On the contrary, the petitioner was
completely unaware that his testimony in Civil Case was being considered by the trial court in the case then pending
before it. As the petitioner puts it, the matter was never taken up at the trial, leaving him no opportunity to counteract.
It has failed to prove that the subject lot was the same parcel of land sold by Juan Peralta, Jr. to Tabernilla and not
another property, as the petitioner contends. Even assuming it was the same lot, there is no explanation for the sale
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thereof by Juan Peralta, Jr., who was the son of Damasa Timtiman. According to the trial court, "no question that before
1934 the land in question belonged to Timtiman." Juan Peralta, Jr. could not have validly conveyed title to property that
did not belong to him unless he had appropriate authorization from the owner. SC finding is that the private
respondent, as plaintiff in the lower court, failed to prove his claim of ownership over the disputed property with
evidence properly cognizable under our adjudicative laws.

G.R. No. 173151 March 28, 2008


EDUARDO BUGHAW, JR. vs. TREASURE ISLAND INDUSTRIAL CORP

FACTS: In 1986, petitioner was employed as production worker by respondent. In 2001, one of its employees, Erlito
Loberanes (Loberanes) was caught in flagrante delicto by the police officers while in possession of shabu. Loberanes
was arrested and sent to jail. In the course of police investigation, Loberanes admitted the commission of the crime.
He implicated petitioner in the crime by claiming that part of the money used for buying the illegal drugs was given by
the latter, and the illegal drugs purchased were for their consumption for the rest of the month.

In view of Loberanes’s statement, respondent served a Memo for Explanation to petitioner requiring him to explain
within 120 hours why no disciplinary action should be imposed against him for his alleged involvement in illegal drug
activities. Petitioner was further directed to appear at the office of respondent’s legal counsel on 16 June 2001 at 9:00
o’clock in the morning for the hearing on the matter. For the meantime, petitioner was placed under preventive
suspension for the period of 30 days effective upon receipt of the Notice. Petitioner failed to show up in administrative
mtgs. Respondent addressed to petitioner, terminated the latter’s employment for using illegal drugs within company
premises during working hours, and for refusal to attend the administrative hearing and submit written explanation on
the charges hurled against him. Petitioner filed a complaint for illegal dismissal against respondent and its President
before LA. Petitioner alleged that he had been working for the respondent for 15 years and he was very conscientious
with his job. He was suspended for 30 days based on the unfounded allegation of his co-worker that he used illegal
drugs within company premises. When petitioner reported back to work after the expiration of his suspension, he was
no longer allowed by respondent to enter the work premises.

LA in favor of petitioner since the respondent failed to present substantial evidence to establish the charge leveled
against the petitioner. Apart from Loberanes’s statements on petitioner’s alleged illegal drug use, no other
corroborating proof was offered by respondent to justify petitioner’s dismissal. Further, respondent failed to comply
with due process when it immediately suspended petitioner and eventually dismissed him from employment. NLRC
decreed that respondent failed to accord due process to petitioner when it dismissed him from employment. The use of
illegal drugs can be a valid ground for terminating employment only if it is proven true. An accusation of illegal drug
use, standing alone, without any proof or evidence presented in support thereof, would just remain an accusation.

The charge of drug abuse inside the company’s premises and during working hours against petitioner constitutes
serious misconduct, which is one of the just causes for termination. Misconduct is improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not merely an error in judgment. This Court took judicial notice of scientific findings
that drug abuse can damage the mental faculties of the user. It is beyond question therefore that any employee under
the influence of drugs cannot possibly continue doing his duties without posing a serious threat to the lives and
property of his co-workers and even his employer. while there was a valid ground for dismissal, the procedural
requirements for termination as mandated by law and jurisprudence were not observed. Respondent Treasure Island
Corporation is ORDERED to pay the amount of ₱30,000.00 as nominal damages

G.R. No. 112573 February 9, 1995


NORTHWEST ORIENT AIRLINES, INC. vs CA

FACTS: NORTHWEST is a corporation from U.S.A., sought to enforce in Civil Case in RTC Manila, a judgment rendered in
its favor by a Japanese court against private respondent SHARP under Philippine laws. Both entered into an
International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its air transportation
tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said
agreement, plaintiff sued defendant in Japan, for collection of the unremitted proceeds of the ticket sales, claim for
damages. After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to have
the complaint and the writs of summons served at the head office of the defendant in Manila. Director of the Tokyo
District Court requested SC Japan to serve the summons through diplomatic channels upon the defendant's head office
in Manila. Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court
proceeded to hear the plaintiff's complaint and rendered judgment ordering the defendant to pay the plaintiff the sum
of 83,158,195 Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up to and until payment
is completed, a suit for enforcement of the judgment was filed by plaintiff before RTC Manila.

This Court agrees that if the defendant in a foreign court is a resident in the court of that foreign court such court could
acquire jurisdiction over the person of the defendant but it must be served upon the defendant in the territorial
jurisdiction of the foreign court. Such is not the case here because the defendant was served with summons in the
Philippines and not in Japan. In an action strictly in personam, such as the instant case, personal service of summons
within the forum is required for the court to acquire jurisdiction over the defendant.

Residence is said to be an attribute of a natural person, and can be predicated on an artificial being only by more or
less imperfect analogy. Strictly speaking, therefore, a corporation can have no local residence or habitation.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court contending that the
respondent court erred in holding that SHARP was not a resident of Japan and that summons on SHARP could only be
validly served within that country.

A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is
shown. It is also proper to presume the regularity of the proceedings and the giving of due notice therein. 6
5

It is settled that matters of remedy and procedure such as those relating to the service of process upon a defendant
are governed by the lex fori or the internal law of the forum.8 In this case, it is the procedural law of Japan where the
judgment was rendered that determines the validity of the extraterritorial service of process on SHARP. As to what this
law is is a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any
other fact.9 Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an official
publication or by a duly attested or authenticated copy thereof. It was then incumbent upon SHARP to present
evidence as to what that Japanese procedural law is and to show that under it, the assailed extraterritorial service is
invalid. It did not. Accordingly, the presumption of validity and regularity of the service of summons and the decision
thereafter rendered by the Japanese court must stand.

Alternatively in the light of the absence of proof regarding Japanese


law, the presumption of identity or similarity or the so-called processual presumption 10 may be invoked. Applying it,
the Japanese law on the matter is presumed to be similar with the Philippine law on service of summons on a private
foreign corporation doing business in the Philippines.

Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only under the
processual presumption but also because of the presumption of regularity of performance of official duty.

SHARP L COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case,
with interest thereon at the legal rate from the filing of the complaint therein until the said foreign judgment is fully
satisfied.

G.R. No. 124642 February 23, 2004


ALFREDO CHING vs CA

FACTS: In 1978, the Philippine Blooming Mills Company obtained a loan of ₱9M from Allied Bank. PBMCI, through Exec
Vice-Pres Ching, executed a promissory note for the amount promising to pay in 1978 at interest of 14% per annum.
As added security for loan, Ching, together with Tañedo and Hua, executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the payment of all the PBMCI obligations owing the ABC to the extent of
38M. Loan was renewed on various dates, the last renewal having been made in 1980. December 1979, the ABC
extended another loan to PBMCI for ₱13M payable in eighteen months at 16% interest. PBMCI, through Ching,
executed a promissory note to evidence the loan. This was renewed once for a period of one month. PBMCI defaulted
in the payment of all its loans. ABC filed a complaint for sum of money with prayer for a writ of preliminary attachment
against the PBMCI to collect ₱12.6M exclusive of interests, penalties and bank charges. Impleaded as co-defendants
were Ching, et al as sureties of the PBMCI in RTC Manila. ABC averred they falsely represented themselves to be in a
financial position to pay their obligation upon maturity thereof. RTC denied ABC’s application for writ of preliminary
attachment. The trial court decreed that the grounds alleged in the application and that of its supporting affidavit "are
all conclusions of fact and of law", however, RTC reconsidered its previous order and granted the ABC’s application for
a writ of preliminary attachment on a bond of ₱12,700,000. PBMCI and Ching jointly filed a petition for suspension of
payments with SEC seeking PBMCI’s rehabilitation. SEC issued an Order placing the PBMCI’s business, including its
assets and liabilities, under rehabilitation receivership, and ordered that "all actions for claims pending before any
court or tribunal are suspended in whatever stage the same may be until further orders from the Commission." PBMCI
and Alfredo Ching jointly filed a Motion to Dismiss/ motion to suspend Civil Case, PBMCI’s pending application for
suspension of payments which the SEC had assumed jurisdiction. Trial court partially granted the motion by
suspending the proceedings with respect to the PBMCI. It denied Ching’s motion to dismiss the complaint/or suspend
the proceedings and pointed out that P.D. No. 1758 concerns the activities of corporations, partnerships and
associations and was never intended to regulate and/or control activities of individuals. Thus, it directed the individual
defendants to file their answers.22
ISSUE/S: (a) whether the petitioner-wife has the right to file the motion to quash the levy on attachment on the
100,000 shares of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.
HELD: Yes. petitioner-wife had the right to file the said motion, although she was not a party in Civil Case. Upon
application of the third person, the court shall order a summary hearing for the purpose of determining whether the
sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of attachment, if he
has indeed levied on attachment and taken hold of property not belonging to the plaintiff. If so, the court may then
order the sheriff to release the property from the erroneous levy and to return the same to the third person. In
resolving the motion of the third party, the court does not and cannot pass upon the question of the title to the
property with any character of finality. It can treat the matter only insofar as may be necessary to decide if the sheriff
has acted correctly or not. If the claimant’s proof does not persuade the court of the validity of the title, or right of
possession thereto, the claim will be denied by the court. The aggrieved third party may also avail himself of the
remedy of "terceria" by executing an affidavit of his title or right of possession over the property levied on attachment
and serving the same to the office making the levy and the adverse party. Such party may also file an action to nullify
the levy with damages resulting from the unlawful levy and seizure, which should be a totally separate and distinct
action from the former case.
In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000 shares of stocks in
the name of petitioner-husband claiming that the said shares of stocks were conjugal in nature; hence, not liable for
the account of her husband under his continuing guaranty and suretyship agreement with the PBMCI. The petitioner-
wife had the right to file the motion for said relief.
CA erred in setting aside and reversing the orders of the RTC. The private respondent, The tribunal acts without
jurisdiction if it does not have the legal purpose to determine the case; there is excess of jurisdiction where the
tribunal, being clothed with the power to determine the case, oversteps its authority as determined by law. There is
grave abuse of discretion where the tribunal acts in a capricious, whimsical, arbitrary or despotic manner in the
exercise of its judgment and is equivalent to lack of jurisdiction.
RTC did not commit any grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed
orders.
6

Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed to belong
to the conjugal partnership, unless it be proved that it pertains exclusively to the husband, or to the wife.
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the Citycorp
Investment Philippines were issued to and registered in its corporate books in the name of the petitioner-husband
when the said corporation was incorporated on May 14, 1979. This was done during the subsistence of the marriage of
the petitioner-spouses. The shares of stocks are, thus, presumed to be the conjugal partnership property of the
petitioners.
This is different from the situation where the husband borrows money or receives services to be used for his own
business or profession. In the Ayala case, we ruled that it is such a contract that is one within the term "obligation for
the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to
be used in or for his own business or his own profession, that contract falls within the term "… obligations for the
benefit of the conjugal partnership." Here, no actual benefit may be proved. It is immaterial, if in the end, his business
or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family
business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership.

OBJECT EVIDENCE

G.R. No. L-36638 June 28, 1974

PEOPLE vs SACABIN

FACTS: In 1968, Erlinda Montibon was 15 years old. She finished sixth grade. She was then living in the house of the
spouses Patrolman and Mrs. Constancio Villondo as a helper. She knew the appellant, then single and 22 years old, He
was a laborer in Iligan City, then under construction, and was a usual buyer of native bread and cakes which Erlinda
used to sell at the supermarket nearby.

Erlinda testified that around 8pm, she was enticed by Dagondon to go to the supermarket. Teodelita said she was
going to buy for her birthday the following day all of Erlinda's bread and cakes. They went upstairs to one of the rooms
of the Laya Building where they would agree on the price of the bread and cakes. The appellant was then there inside.
The door was closed and appellant was able to have sexual intercourse with her two times. Erlinda was a mere
household helper but at the same time engaged in the selling of native bread and cakes. She belonged to the poor and
was one of them, and was still possessed of the traditional and proverbial modesty of the Filipina, especially the
provinciana. She would not have filed a complaint for rape and suffered the torment if not the ignominy of having to
testify in a court of justice about the wrong done to her, if in truth she was not really raped. She was brought to the
medico legal officer of Iligan City, Dr. Manuel Simon, who testified that on December 2, 1968, he examined the
offended party, found lacerations in her hymen, in positions 10 and 8 o'clock, which had just recently healed (a
laceration heals in 7 days). The lacerations could not have been more than one month old "because at the edge of the
lacerations, the color was reddish and therefore they have healed recently."

Physical evidence is evidence of the highest order. They consist of the green color dress and the panty that Erlinda was
wearing at the time she was raped and which show a torn portion of the left side of the dress and a torn portion of the
panty. According to Erlinda, they were torn when appellant forcibly pulled her dress up and removed her panty shortly
before she was raped. Driver Bagohin, corroborated the testimony of the offended party, Erlinda, that Teodelita
Dagondon was the one who fetched Erlinda "because the puto and bread that she is selling will all be bought by
Teodelita for the next day would be her birthday." The testimony of the appellant that he and Erlinda were sweethearts
is unworthy of belief. Erlinda denied vehemently this testimony of the appellant and even stated that he never courted
her. And if they were really sweethearts, Erlinda would not have filed this serious charge of rape against him.

G.R. No. 156132 October 12, 2006

CITIBANK vs SABENIANO

FACTS: Petitioner Investor's Finance Corp, an affiliate company of petitioner Citibank, handles money market
placements for its clients. Sabeniano was a client of both petitioners Citibank and FNCB Finance. In 1985, respondent
filed a Complaint in RTC Makati. Respondent claimed to have substantial deposits and money market placements with
the petitioners, as well as money market placements with the Ayala, the proceeds of which were supposedly deposited
automatically and directly to respondent's accounts with petitioner Citibank. Respondent alleged that petitioners
refused to return her deposits and the proceeds of her money market placements despite her repeated demands
compelling respondent to file Civil Case against petitioners for "Accounting, Sum of Money and Damages." Petitioners
admitted that respondent had deposits and money market placements with them, including dollar accounts in the
Citibank branch in Geneva, Switzerland (Citibank-Geneva). Petitioners further alleged that the respondent later
obtained several loans from petitioner Citibank, for which she executed Promissory Notes (PNs), and secured by (a) a
Declaration of Pledge of her dollar accounts in Citibank-Geneva, and (b) Deeds of Assignment of her money market
placements with petitioner FNCB Finance. When respondent failed to pay her loans despite repeated demands by
petitioner Citibank, the latter exercised its right to off-set or compensate respondent's outstanding loans with her
deposits and money market placements.

ISSUE: WON petitioners are indeed liable to return the foregoing amounts, together with the appropriate interests and
penalties, to respondent.

HELD: History of respondent's money market placements with petitioner Citibank began in 1976, when she made a
placement of ₱500,000.00 as principal amount, which was supposed to earn an interest of 16% p.a. Citibank alleged
that it had already paid to respondent the principal amounts upon their maturity. SC finds that petitioner Citibank
failed to satisfactorily prove that PNs had already been paid, and that the amount so paid was actually used to open
one of respondent's TD accounts with petitioner Citibank. Citibank presented the testimonies of two witnesses to
support its contention of payment: (1) That of Mr. Herminio Pujeda, 35 the officer-in-charge of loans and placements; and
7

(2) that of Mr. Francisco Tan,36 the former Assistant Vice-President of Citibank, who directly dealt with respondent with
regard to her deposits and loans. There is an evident absence of any documentary evidence on the payment of these
last two PNs and the use of the proceeds thereof by respondent for opening TD accounts. The paper trail seems to
have ended with the copies of PNs. Although both Mr. Pujeda and Mr. Tan said that they based their testimonies, not
just on their memories but also on the documents on file, the supposed documents on which they based those portions
of their testimony on the payment of PNs, were never presented before the courts nor made part of the
records of the case. Respondent's money market placements were of substantial amounts – consisting of the
principal amount of ₱500,000.00, plus the interest it should have earned during the years of placement – and it is
difficult for this Court to believe that petitioner Citibank would not have had documented the payment thereof. PNs
No. 23356 and 23357 are still outstanding and petitioner Citibank is still liable to respondent for the
amounts stated therein.

ent sent a reply letter63 dated 26 April 1979, printed on paper bearing the letterhead of respondent's company, MC
Adore International Palace, the body of which reads –

This is in reply to your letter dated April 5, 1979 inviting my attention to my loan which has become due.
Pursuant to our representation with you over the telephone through Mr. F. A. Tan, you allow us to pay the
interests due for the meantime.

Please accept our Comtrust Check in the amount of ₱62,683.33.

Please bear with us for a little while, at most ninety days. As you know, we have a pending loan with the
Development Bank of the Philippines in the amount of ₱11-M. This loan has already been recommended for
approval and would be submitted to the Board of Governors. In fact, to further facilitate the early release of
this loan, we have presented and furnished Gov. J. Tengco a xerox copy of your letter.

You will be doing our corporation a very viable service, should you grant us our request for a little more time.

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as "Executive Secretary," sent a letter 64 to
petitioner Citibank, on behalf of respondent. The letter was again printed on paper bearing the letterhead of MC Adore
International Palace. The pertinent paragraphs of the said letter are reproduced below –

Per instructions of Mrs. Modesta R. Sabeniano, we would like to request for a re-computation of the interest and
penalty charges on her loan in the aggregate amount of ₱1,920,000.00 with maturity date of all promissory
notes at June 30, 1979. As she has personally discussed with you yesterday, this date will more or less assure
you of early settlement.

In this regard, please entrust to bearer, our Comtrust check for ₱62,683.33 to be replaced by another check
with amount resulting from the new computation. Also, to facilitate the processing of the same, may we
request for another set of promissory notes for the signature of Mrs. Sabeniano and to cancel the previous
ones she has signed and forwarded to you.

This was followed by a telegram,65 dated 5 June 1979, and received by petitioner Citibank the following day. The
telegram was sent by a Dewey G. Soriano, Legal Counsel. The telegram acknowledged receipt of the telegram sent by
petitioner Citibank regarding the "re-past due obligation" of McAdore International Palace. However, it reported that
respondent, the President and Chairman of MC Adore International Palace, was presently abroad negotiating for a big
loan. Thus, he was requesting for an extension of the due date of the obligation until respondent's arrival on or before
31 July 1979.

The next letter,66 dated 21 June 1979, was signed by respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote therein –

Re: PN No. 20138 for ₱500,000.00 & PN No. 20139 for ₱500,000.00 totalling ₱1 Million, both PNs will
mature on 9/3/1979.

This is to authorize you to release the accrued quarterly interests payment from my captioned placements and
forward directly to Citibank, Manila Attention: Mr. F. A. Tan, Manager, to apply to my interest payable on my
outstanding loan with Citibank.

Please note that the captioned two placements are continuously pledged/hypothecated to Citibank, Manila to
support my personal outstanding loan. Therefore, please do not release the captioned placements upon
maturity until you have received the instruction from Citibank, Manila.

On even date, respondent sent another letter67 to Mr. Tan of petitioner Citibank, stating that –

Re: S/A No. 25-225928


and C/A No. 484-946

This letter serves as an authority to debit whatever the outstanding balance from my captioned accounts and
credit the amount to my loan outstanding account with you.

Unlike respondent's earlier letters, both letters, dated 21 June 1979, are printed on plain paper, without the letterhead
of her company, MC Adore International Palace.

By 5 September 1979, respondent's outstanding and past due obligations to petitioner Citibank totaled ₱2,123,843.20,
representing the principal amounts plus interests. Relying on respondent's Deeds of Assignment, petitioner Citibank
applied the proceeds of respondent's money market placements with petitioner FNCB Finance, as well as her deposit
8

account with petitioner Citibank, to partly Mr. Tan of petitioner Citibank subsequently sent a letter, 69 dated 28
September 1979, notifying respondent of the status of her loans and the foregoing compensation which petitioner
Citibank effected. In the letter, Mr. Tan informed respondent that she still had a remaining past-due obligation in the
amount of ₱1,069,847.40, as of 5 September 1979, and should respondent fail to pay the amount by 15 October 1979,
then petitioner Citibank shall proceed to off-set the unpaid amount with respondent's other collateral, particularly, a
money market placement in Citibank-Hongkong.

On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper bearing the letterhead of MC Adore
International Palace, as regards the ₱1,920,000.00 loan account supposedly of MC Adore Finance & Investment, Inc.,
and requested for a statement of account covering the principal and interest of the loan as of 31 October 1979. She
stated therein that the loan obligation shall be paid within 60 days from receipt of the statement of account.

Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino dropped by the office of petitioner
Citibank, with a letter, dated 9 October 1979, and printed on paper with the letterhead of MC Adore International
Palace, which authorized the bearer thereof to represent the respondent in settling the overdue account, this time,
purportedly, of MC Adore International Palace Hotel. The letter was signed by respondent as the President and
Chairman of the Board.

Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as counsel of petitioner Citibank, sent a letter to respondent,
dated 31 October 1979, informing her that petitioner Citibank had effected an off-set using her account with Citibank-
Geneva, in the amount of US$149,632.99, against her "outstanding, overdue, demandable and unpaid obligation" to
petitioner Citibank. Atty. Agcaoili claimed therein that the compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through 1290 of the Civil Code. He further declared that respondent's
obligation to petitioner Citibank was now fully paid and liquidated.

Unfortunately, on 7 October 1987, a fire gutted the 7 th floor of petitioner Citibank's building at Paseo de Roxas St.,
Makati, Metro Manila. Petitioners submitted a Certification 70 to this effect, dated 17 January 1991, issued by the Chief
of the Arson Investigation Section, Fire District III, Makati Fire Station, Metropolitan Police Force. The 7 th floor of
petitioner Citibank's building housed its Control Division, which was in charge of keeping the necessary documents for
cases in which it was involved. After compiling the documentary evidence for the present case, Atty. Renato J.
Fernandez, internal legal counsel of petitioner Citibank, forwarded them to the Control Division. The original copies of
the MCs, which supposedly represent the proceeds of the first set of PNs, as well as that of other documentary
evidence related to the case, were among those burned in the said fire. 71

Respondent's version of events

Respondent disputed petitioners' narration of the circumstances surrounding her loans with petitioner Citibank and the
alleged authority she gave for the off-set or compensation of her money market placements and deposit accounts with
petitioners against her loan obligation.

Respondent denied outright executing the first set of PNs, except for one (PN No. 34534 in particular). Although she
admitted that she obtained several loans from petitioner Citibank, these only amounted to ₱1,150,000.00, and she had
already paid them. She secured from petitioner Citibank two loans of ₱500,000.00 each. She executed in favor of
petitioner Citibank the corresponding PNs for the loans and the Deeds of Assignment of her money market placements
with petitioner FNCB Finance as security.72 To prove payment of these loans, respondent presented two provisional
receipts of petitioner Citibank – No. 19471,73 dated 11 August 1978, and No. 12723,74 dated 10 November 1978 – both
signed by Mr. Tan, and acknowledging receipt from respondent of several checks in the total amount of ₱500,744.00
and ₱500,000.00, respectively, for "liquidation of loan."

She borrowed another ₱150,000.00 from petitioner Citibank for personal investment, and for which she executed PN
No. 34534, on 9 January 1979. Thus, she admitted to receiving the proceeds of this loan via MC No. 228270. She
invested the loan amount in another money market placement with petitioner FNCB Finance. In turn, she used the very
same money market placement with petitioner FNCB Finance as security for her ₱150,000.00 loan from petitioner
Citibank. When she failed to pay the loan when it became due, petitioner Citibank allegedly forfeited her money
market placement with petitioner FNCB Finance and, thus, the loan was already paid. 75

Respondent likewise questioned the MCs presented by petitioners, except for one (MC No. 228270 in particular), as
proof that she received the proceeds of the loans covered by the first set of PNs. As recounted in the preceding
paragraph, respondent admitted to obtaining a loan of ₱150,000.00, covered by PN No. 34534, and receiving MC No.
228270 representing the proceeds thereof, but claimed that she already paid the same. She denied ever receiving MCs
No. 220701 (for the loan of ₱400,000.00, covered by PN No. 33935) and No. 226467 (for the loan of ₱250,000.00,
covered by PN No. 34079), and pointed out that the checks did not bear her indorsements. She did not deny receiving
all other checks but she interposed that she received these checks, not as proceeds of loans, but as payment of the
principal amounts and/or interests from her money market placements with petitioner Citibank. She also raised doubts
as to the notation on each of the checks that reads "RE: Proceeds of PN#[corresponding PN No.]," saying that such
notation did not appear on the MCs when she originally received them and that the notation appears to have been
written by a typewriter different from that used in writing all other information on the checks (i.e., date, payee, and
amount).76 She even testified that MCs were not supposed to bear notations indicating the purpose for which they were
issued.

As to the second set of PNs, respondent acknowledged having signed them all. However, she asserted that she only
executed these PNs as part of the simulated loans she and Mr. Tan of petitioner Citibank concocted. Respondent
explained that she had a pending loan application for a big amount with the Development Bank of the Philippines
(DBP), and when Mr. Tan found out about this, he suggested that they could make it appear that the respondent had
outstanding loans with petitioner Citibank and the latter was already demanding payment thereof; this might persuade
DBP to approve respondent's loan application. Mr. Tan made the respondent sign the second set of PNs, so that he may
have something to show the DBP investigator who might inquire with petitioner Citibank as to respondent's loans with
the latter. On her own copies of the said PNs, respondent wrote by hand the notation, "This isa (sic) simulated non-
9

negotiable note, signed copy given to Mr. Tan., (sic) per agreement to be shown to DBP representative. itwill (sic) be
returned to me if the ₱11=M (sic) loan for MC Adore Palace Hotel is approved by DBP."77

Findings of this Court as to the existence of the loans

After going through the testimonial and documentary evidence presented by both sides to this case, it is this Court's
assessment that respondent did indeed have outstanding loans with petitioner Citibank at the time it effected the off-
set or compensation on 25 July 1979 (using respondent's savings deposit with petitioner Citibank), 5 September 1979
(using the proceeds of respondent's money market placements with petitioner FNCB Finance) and 26 October 1979
(using respondent's dollar accounts remitted from Citibank-Geneva). The totality of petitioners' evidence as to the
existence of the said loans preponderates over respondent's. Preponderant evidence means that, as a whole, the
evidence adduced by one side outweighs that of the adverse party. 78

Respondent's outstanding obligation for ₱1,920,000.00 had been sufficiently documented by petitioner Citibank.

The second set of PNs is a mere renewal of the prior loans originally covered by the first set of PNs, except for PN No.
34534. The first set of PNs is supported, in turn, by the existence of the MCs that represent the proceeds thereof
received by the respondent.

It bears to emphasize that the proceeds of the loans were paid to respondent in MCs, with the respondent specifically
named as payee. MCs checks are drawn by the bank's manager upon the bank itself and regarded to be as good as the
money it represents.79 Moreover, the MCs were crossed checks, with the words "Payee's Account Only."

In general, a crossed check cannot be presented to the drawee bank for payment in cash. Instead, the check can only
be deposited with the payee's bank which, in turn, must present it for payment against the drawee bank in the course
of normal banking hours. The crossed check cannot be presented for payment, but it can only be deposited and the
drawee bank may only pay to another bank in the payee's or indorser's account. 80 The effect of crossing a check was
described by this Court in Philippine Commercial International Bank v. Court of Appeals 81 –

[T]he crossing of a check with the phrase "Payee's Account Only" is a warning that the check should be
deposited in the account of the payee. Thus, it is the duty of the collecting bank PCI Bank to ascertain that the
check be deposited in payee's account only. It is bound to scrutinize the check and to know its depositors
before it can make the clearing indorsement "all prior indorsements and/or lack of indorsement guaranteed."

The crossed MCs presented by petitioner Bank were indeed deposited in several different bank accounts and cleared
by the Clearing Office of the Central Bank of the Philippines, as evidenced by the stamp marks and notations on the
said checks. The crossed MCs are already in the possession of petitioner Citibank, the drawee bank, which was
ultimately responsible for the payment of the amount stated in the checks. Given that a check is more than just an
instrument of credit used in commercial transactions for it also serves as a receipt or evidence for the drawee bank of
the cancellation of the said check due to payment,82 then, the possession by petitioner Citibank of the said MCs, duly
stamped "Paid" gives rise to the presumption that the said MCs were already paid out to the intended payee, who was
in this case, the respondent.

This Court finds applicable herein the presumptions that private transactions have been fair and regular, 83 and that the
ordinary course of business has been followed. 84 There is no question that the loan transaction between petitioner
Citibank and the respondent is a private transaction. The transactions revolving around the crossed MCs – from their
issuance by petitioner Citibank to respondent as payment of the proceeds of her loans; to its deposit in respondent's
accounts with several different banks; to the clearing of the MCs by an independent clearing house; and finally, to the
payment of the MCs by petitioner Citibank as the drawee bank of the said checks – are all private transactions which
shall be presumed to have been fair and regular to all the parties concerned. In addition, the banks involved in the
foregoing transactions are also presumed to have followed the ordinary course of business in the acceptance of the
crossed MCs for deposit in respondent's accounts, submitting them for clearing, and their eventual payment and
cancellation.

The afore-stated presumptions are disputable, meaning, they are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence.85 Respondent, however, was unable to present sufficient and credible
evidence to dispute these presumptions.

It should be recalled that out of the nine MCs presented by petitioner Citibank, respondent admitted to receiving one
as proceeds of a loan (MC No. 228270), denied receiving two (MCs No. 220701 and 226467), and admitted to receiving
all the rest, but not as proceeds of her loans, but as return on the principal amounts and interests from her money
market placements.

Respondent admitted receiving MC No. 228270 representing the proceeds of her loan covered by PN No. 34534.
Although the principal amount of the loan is ₱150,000.00, respondent only received ₱146,312.50, because the interest
and handling fee on the loan transaction were already deducted therefrom. 86 Stamps and notations at the back of MC
No. 228270 reveal that it was deposited at the Bank of the Philippine Islands (BPI), Cubao Branch, in Account No. 0123-
0572-28.87 The check also bore the signature of respondent at the back. 88 And, although respondent would later admit
that she did sign PN No. 34534 and received MC No. 228270 as proceeds of the loan extended to her by petitioner
Citibank, she contradicted herself when, in an earlier testimony, she claimed that PN No. 34534 was among the PNs
she executed as simulated loans with petitioner Citibank. 89

Respondent denied ever receiving MCs No. 220701 and 226467. However, considering that the said checks were
crossed for payee's account only, and that they were actually deposited, cleared, and paid, then the presumption
would be that the said checks were properly deposited to the account of respondent, who was clearly named the
payee in the checks. Respondent's bare allegations that she did not receive the two checks fail to convince this Court,
for to sustain her, would be for this Court to conclude that an irregularity had occurred somewhere from the time of the
issuance of the said checks, to their deposit, clearance, and payment, and which would have involved not only
10

petitioner Citibank, but also BPI, which accepted the checks for deposit, and the Central Bank of the Philippines, which
cleared the checks. It falls upon the respondent to overcome or dispute the presumption that the crossed checks were
issued, accepted for deposit, cleared, and paid for by the banks involved following the ordinary course of their
business.

The mere fact that MCs No. 220701 and 226467 do not bear respondent's signature at the back does not negate
deposit thereof in her account. The liability for the lack of indorsement on the MCs no longer fall on petitioner Citibank,
but on the bank who received the same for deposit, in this case, BPI Cubao Branch. Once again, it must be noted that
the MCs were crossed, for payee's account only, and the payee named in both checks was none other than
respondent. The crossing of the MCs was already a warning to BPI to receive said checks for deposit only in
respondent's account. It was up to BPI to verify whether it was receiving the crossed MCs in accordance with the
instructions on the face thereof. If, indeed, the MCs were deposited in accounts other than respondent's, then the
respondent would have a cause of action against BPI. 90

BPI further stamped its guarantee on the back of the checks to the effect that, "All prior endorsement and/or Lack of
endorsement guaranteed." Thus, BPI became the indorser of the MCs, and assumed all the warranties of an
indorser,91 specifically, that the checks were genuine and in all respects what they purported to be; that it had a good
title to the checks; that all prior parties had capacity to contract; and that the checks were, at the time of their
indorsement, valid and subsisting.92 So even if the MCs deposited by BPI's client, whether it be by respondent herself
or some other person, lacked the necessary indorsement, BPI, as the collecting bank, is bound by its warranties as an
indorser and cannot set up the defense of lack of indorsement as against petitioner Citibank, the drawee bank. 93

Furthermore, respondent's bare and unsubstantiated denial of receipt of the MCs in question and their deposit in her
account is rendered suspect when MC No. 220701 was actually deposited in Account No. 0123-0572-28 of BPI Cubao
Branch, the very same account in which MC No. 228270 (which respondent admitted to receiving as proceeds of her
loan from petitioner Citibank), and MCs No. 228203, 228357, and 228400 (which respondent admitted to receiving as
proceeds from her money market placements) were deposited. Likewise, MC No. 226467 was deposited in Account No.
0121-002-43 of BPI Cubao Branch, to which MCs No. 226285 and 226439 (which respondent admitted to receiving as
proceeds from her money market placements) were deposited. It is an apparent contradiction for respondent to claim
having received the proceeds of checks deposited in an account, and then deny receiving the proceeds of another
check deposited in the very same account.

Another inconsistency in respondent's denial of receipt of MC No. 226467 and her deposit of the same in her account,
is her presentation of Exhibit "HHH," a provisional receipt which was supposed to prove that respondent turned over
₱500,000.00 to Mr. Tan of petitioner Citibank, that the said amount was split into three money market placements, and
that MC No. 226467 represented the return on her investment from one of these placements. 94Because of her Exhibit
"HHH," respondent effectively admitted receipt of MC No. 226467, although for reasons other than as proceeds of a
loan.

Neither can this Court give credence to respondent's contention that the notations on the MCs, stating that they were
the proceeds of particular PNs, were not there when she received the checks and that the notations appeared to be
written by a typewriter different from that used to write the other information on the checks. Once more, respondent's
allegations were uncorroborated by any other evidence. Her and her counsel's observation that the notations on the
MCs appear to be written by a typewriter different from that used to write the other information on the checks hardly
convinces this Court considering that it constitutes a mere opinion on the appearance of the notation by a witness who
does not possess the necessary expertise on the matter. In addition, the notations on the MCs were written using both
capital and small letters, while the other information on the checks were written using capital letters only, such
difference could easily confuse an untrained eye and lead to a hasty conclusion that they were written by different
typewriters.

Respondent's testimony, that based on her experience transacting with banks, the MCs were not supposed to include
notations on the purpose for which the checks were issued, also deserves scant consideration. While respondent may
have extensive experience dealing with banks, it still does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National City Bank) and by petitioner FNCB Finance, the existence and
validity of which were not disputed by respondent, also bear similar notations that state the reason for which they
were issued.

Respondent presented several more pieces of evidence to substantiate her claim that she received MCs No. 226285,
226439, 226467, 226057, 228357, and 228400, not as proceeds of her loans from petitioner Citibank, but as the
return of the principal amounts and payment of interests from her money market placements with petitioners. Part of
respondent's exhibits were personal checks 95 drawn by respondent on her account with Feati Bank & Trust Co., which
she allegedly invested in separate money market placements with both petitioners, the returns from which were paid
to her via MCs No. 226285 and 228400. Yet, to this Court, the personal checks only managed to establish respondent's
issuance thereof, but there was nothing on the face of the checks that would reveal the purpose for which they were
issued and that they were actually invested in money market placements as respondent claimed.

Respondent further submitted handwritten notes that purportedly computed and presented the returns on her money
market placements, corresponding to the amount stated in the MCs she received from petitioner Citibank. Exhibit
"HHH-1"96 was a handwritten note, which respondent attributed to Mr. Tan of petitioner Citibank, showing the
breakdown of her BPI Check for ₱500,000.00 into three different money market placements with petitioner Citibank.
This Court, however, noticed several factors which render the note highly suspect. One, it was written on the reversed
side of Provisional Receipt No. 12724 of petitioner Citibank which bore the initials of Mr. Tan acknowledging receipt of
respondent's BPI Check No. 120989 for ₱500,000.00; but the initials on the handwritten note appeared to be that of Mr.
Bobby Mendoza of petitioner FNCB Finance.97 Second, according to Provisional Receipt No. 12724, BPI Check No.
120989 for ₱500,000.00 was supposed to be invested in three money market placements with petitioner Citibank for
the period of 60 days. Since all these money market placements were made through one check deposited on the same
day, 10 November 1978, it made no sense that the handwritten note at the back of Provisional Receipt No. 12724
provided for different dates of maturity for each of the money market placements (i.e., 16 November 1978, 17 January
1979, and 21 November 1978), and such dates did not correspond to the 60 day placement period stated on the face
11

of the provisional receipt. And third, the principal amounts of the money market placements as stated in the
handwritten note – ₱145,000.00, ₱145,000.00 and ₱242,000.00 – totaled ₱532,000.00, and was obviously in excess of
the ₱500,000.00 acknowledged on the face of Provisional Receipt No. 12724.

Exhibits "III" and "III-1," the front and bank pages of a handwritten note of Mr. Bobby Mendoza of petitioner FNCB
Finance,98 also did not deserve much evidentiary weight, and this Court cannot rely on the truth and accuracy of the
computations presented therein. Mr. Mendoza was not presented as a witness during the trial before the RTC, so that
the document was not properly authenticated nor its contents sufficiently explained. No one was able to competently
identify whether the initials as appearing on the note were actually Mr. Mendoza's.

Also, going by the information on the front page of the note, this Court observes that payment of respondent's alleged
money market placements with petitioner FNCB Finance were made using Citytrust Checks; the MCs in question,
including MC No. 228057, were issued by petitioner Citibank. Although Citytrust (formerly Feati Bank & Trust Co.),
petitioner FNCB Finance, and petitioner Citibank may be affiliates of one another, they each remained separate and
distinct corporations, each having its own financial system and records. Thus, this Court cannot simply assume that
one corporation, such as petitioner Citibank or Citytrust, can issue a check to discharge an obligation of petitioner
FNCB Finance. It should be recalled that when petitioner FNCB Finance paid for respondent's money market
placements, covered by its PNs No. 8167 and 8169, as well as PNs No. 20138 and 20139, petitioner FNCB Finance
issued its own checks.

As a last point on this matter, if respondent truly had money market placements with petitioners, then these would
have been evidenced by PNs issued by either petitioner Citibank or petitioner FNCB Finance, acknowledging the
principal amounts of the investments, and stating the applicable interest rates, as well as the dates of their of issuance
and maturity. After respondent had so meticulously reconstructed her other money market placements with petitioners
and consolidated the documentary evidence thereon, she came surprisingly short of offering similar details and
substantiation for these particular money market placements.

Since this Court is satisfied that respondent indeed received the proceeds of the first set of PNs, then it proceeds to
analyze her evidence of payment thereof.

In support of respondent's assertion that she had already paid whatever loans she may have had with petitioner
Citibank, she presented as evidence Provisional Receipts No. 19471, dated 11 August 1978, and No. 12723, dated 10
November 1978, both of petitioner Citibank and signed by Mr. Tan, for the amounts of ₱500,744.00 and ₱500,000.00,
respectively. While these provisional receipts did state that Mr. Tan, on behalf of petitioner Citibank, received
respondent's checks as payment for her loans, they failed to specifically identify which loans were actually paid.
Petitioner Citibank was able to present evidence that respondent had executed several PNs in the years 1978 and
1979 to cover the loans she secured from the said bank. Petitioner Citibank did admit that respondent was able to pay
for some of these PNs, and what it identified as the first and second sets of PNs were only those which remained
unpaid. It thus became incumbent upon respondent to prove that the checks received by Mr. Tan were actually applied
to the PNs in either the first or second set; a fact that, unfortunately, cannot be determined from the provisional
receipts submitted by respondent since they only generally stated that the checks received by Mr. Tan were payment
for respondent's loans.

Mr. Tan, in his deposition, further explained that provisional receipts were issued when payment to the bank was made
using checks, since the checks would still be subject to clearing. The purpose for the provisional receipts was merely to
acknowledge the delivery of the checks to the possession of the bank, but not yet of payment. 99 This bank practice
finds legitimacy in the pronouncement of this Court that a check, whether an MC or an ordinary check, is not legal
tender and, therefore, cannot constitute valid tender of payment. In Philippine Airlines, Inc. v. Court of Appeals, 100 this
Court elucidated that:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code;
Bryan Landon Co. v. American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check,
whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt
is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks
does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended
until the payment by commercial document is actually realized (Art. 1249, Civil Code, par. 3).

In the case at bar, the issuance of an official receipt by petitioner Citibank would have been dependent on whether the
checks delivered by respondent were actually cleared and paid for by the drawee banks.

As for PN No. 34534, respondent asserted payment thereof at two separate instances by two different means. In her
formal offer of exhibits, respondent submitted a deposit slip of petitioner Citibank, dated 11 August 1978, evidencing
the deposit of BPI Check No. 5785 for ₱150,000.00. 101 In her Formal Offer of Documentary Exhibits, dated 7 July 1989,
respondent stated that the purpose for the presentation of the said deposit slip was to prove that she already paid her
loan covered by PN No. 34534.102 In her testimony before the RTC three years later, on 28 November 1991, she
changed her story. This time she narrated that the loan covered by PN No. 34534 was secured by her money market
placement with petitioner FNCB Finance, and when she failed to pay the said PN when it became due, the security was
applied to the loan, therefore, the loan was considered paid. 103 Given the foregoing, respondent's assertion of payment
of PN No. 34534 is extremely dubious.

According to petitioner Citibank, the PNs in the second set, except for PN No. 34534, were mere renewals of the unpaid
PNs in the first set, which was why the PNs stated that they were for the purpose of liquidating existing obligations. PN
No. 34534, however, which was part of the first set, was still valid and subsisting and so it was included in the second
set without need for its renewal, and it still being the original PN for that particular loan, its stated purpose was for
personal investment.104 Respondent essentially admitted executing the second set of PNs, but they were only meant to
cover simulated loans. Mr. Tan supposedly convinced her that her pending loan application with DBP would have a
greater chance of being approved if they made it appear that respondent urgently needed the money because
petitioner Citibank was already demanding payment for her simulated loans.
12

Respondent's defense of simulated loans to escape liability for the second set of PNs is truly a novel one.1âwphi1 It is
regrettable, however, that she was unable to substantiate the same. Yet again, respondent's version of events is totally
based on her own uncorroborated testimony. The notations on the second set of PNs, that they were non-negotiable
simulated notes, were admittedly made by respondent herself and were, thus, self-serving. Equally self-serving was
respondent's letter, written on 7 October 1985, or more than six years after the execution of the second set of PNs, in
which she demanded return of the simulated or fictitious PNs, together with the letters relating thereto, which Mr. Tan
purportedly asked her to execute. Respondent further failed to present any proof of her alleged loan application with
the DBP, and of any circumstance or correspondence wherein the simulated or fictitious PNs were indeed used for their
supposed purpose.

In contrast, petitioner Citibank, as supported by the testimonies of its officers and available documentation,
consistently treated the said PNs as regular loans – accepted, approved, and paid in the ordinary course of its
business.

The PNs executed by the respondent in favor of petitioner Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the said PNs, in adherence to the Central Bank requirement to
disclose the full finance charges to a loan granted to borrowers.

Mr. Tan, then an account officer with the Marketing Department of petitioner Citibank, testified that he dealt directly
with respondent; he facilitated the loans; and the PNs, at least in the second set, were signed by respondent in his
presence.105

Mr. Pujeda, the officer who was previously in charge of loans and placements, confirmed that the signatures on the PNs
were verified against respondent's specimen signature with the bank. 106

Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan processor, was responsible for booking
respondent's loans. Booking the loans means recording it in the General Ledger. She explained the procedure for
booking loans, as follows: The account officer, in the Marketing Department, deals directly with the clients who wish to
borrow money from petitioner Citibank. The Marketing Department will forward a loan booking checklist, together with
the borrowing client's PNs and other supporting documents, to the loan pre-processor, who will check whether the
details in the loan booking checklist are the same as those in the PNs. The documents are then sent to Signature
Control for verification of the client's signature in the PNs, after which, they are returned to the loan pre-processor, to
be forwarded finally to the loan processor. The loan processor shall book the loan in the General Ledger, indicating
therein the client name, loan amount, interest rate, maturity date, and the corresponding PN number. Since she
booked respondent's loans personally, Ms. Dondoyano testified that she saw the original PNs. In 1986, Atty. Fernandez
of petitioner Citibank requested her to prepare an accounting of respondent's loans, which she did, and which was
presented as Exhibit "120" for the petitioners. The figures from the said exhibit were culled from the bookings in the
General Ledger, a fact which respondent's counsel was even willing to stipulate. 107

Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control Department of petitioner Citibank.
She was presented by petitioner Citibank to expound on the microfilming procedure at the bank, since most of the
copies of the PNs were retrieved from microfilm. Microfilming of the documents are actually done by people at the
Operations Department. At the end of the day or during the day, the original copies of all bank documents, not just
those pertaining to loans, are microfilmed. She refuted the possibility that insertions could be made in the microfilm
because the microfilm is inserted in a cassette; the cassette is placed in the microfilm machine for use; at the end of
the day, the cassette is taken out of the microfilm machine and put in a safe vault; and the cassette is returned to the
machine only the following day for use, until the spool is full. This is the microfilming procedure followed everyday.
When the microfilm spool is already full, the microfilm is developed, then sent to the Control Department, which
double checks the contents of the microfilms against the entries in the General Ledger. The Control Department also
conducts a random comparison of the contents of the microfilms with the original documents; a random review of the
contents is done on every role of microfilm.108

Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from the ranks, initially working as a secretary in
the Personnel Group; then as a secretary to the Personnel Group Head; a Service Assistant with the Marketing Group,
in 1972 to 1974, dealing directly with corporate and individual clients who, among other things, secured loans from
petitioner Citibank; the Head of the Collection Group of the Foreign Department in 1974 to 1976; the Head of the
Money Transfer Unit in 1976 to 1978; the Head of the Loans and Placements Unit up to the early 1980s; and,
thereafter, she established operations training for petitioner Citibank in the Asia-Pacific Region responsible for the
training of the officers of the bank. She testified on the standard loan application process at petitioner Citibank.
According to Ms. Rubio, the account officer or marketing person submits a proposal to grant a loan to an individual or
corporation. Petitioner Citibank has a worldwide policy that requires a credit committee, composed of a minimum of
three people, which would approve the loan and amount thereof. There can be no instance when only one officer has
the power to approve the loan application. When the loan is approved, the account officer in charge will obtain the
corresponding PNs from the client. The PNs are sent to the signature verifier who would validate the signatures therein
against those appearing in the signature cards previously submitted by the client to the bank. The Operations Unit will
check and review the documents, including the PNs, if it is a clean loan, and securities and deposits, if it is
collateralized. The loan is then recorded in the General Ledger. The Loans and Placements Department will not book
the loans without the PNs. When the PNs are liquidated, whether they are paid or rolled-over, they are returned to the
client.109 Ms. Rubio further explained that she was familiar with respondent's accounts since, while she was still the
Head of the Loan and Placements Unit, she was asked by Mr. Tan to prepare a list of respondent's outstanding
obligations.110 She thus calculated respondent's outstanding loans, which was sent as an attachment to Mr. Tan's letter
to respondent, dated 28 September 1979, and presented before the RTC as Exhibits "34-B" and "34-C." 111

Lastly, the exchange of letters between petitioner Citibank and respondent, as well as the letters sent by other people
working for respondent, had consistently recognized that respondent owed petitioner Citibank money.

In consideration of the foregoing discussion, this Court finds that the preponderance of evidence supports the
existence of the respondent's loans, in the principal sum of ₱1,920,000.00, as of 5 September 1979. While it is well-
settled that the term "preponderance of evidence" should not be wholly dependent on the number of witnesses, there
are certain instances when the number of witnesses become the determining factor –
13

The preponderance of evidence may be determined, under certain conditions, by the number of witnesses
testifying to a particular fact or state of facts. For instance, one or two witnesses may testify to a given state of
facts, and six or seven witnesses of equal candor, fairness, intelligence, and truthfulness, and equally well
corroborated by all the remaining evidence, who have no greater interest in the result of the suit, testify
against such state of facts. Then the preponderance of evidence is determined by the number of witnesses.
(Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep., 761.)112

Best evidence rule

This Court disagrees in the pronouncement made by the Court of Appeals summarily dismissing the documentary
evidence submitted by petitioners based on its broad and indiscriminate application of the best evidence rule.

In general, the best evidence rule requires that the highest available degree of proof must be produced. Accordingly,
for documentary evidence, the contents of a document are best proved by the production of the document itself, 113to
the exclusion of any secondary or substitutionary evidence. 114

The best evidence rule has been made part of the revised Rules of Court, Rule 130, Section 3, which reads –

SEC. 3. Original document must be produced; exceptions. – When the subject of inquiry is the contents of a
document, no evidence 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.

As the afore-quoted provision states, the best evidence rule applies only when the subject of the inquiry is the
contents of the document. The scope of the rule is more extensively explained thus –

But even with respect to documentary evidence, the best evidence rule applies only when the content of such
document is the subject of the inquiry. Where the issue is only as to whether such document was actually
executed, or exists, or on the circumstances relevant to or surrounding its execution, the best evidence rule
does not apply and testimonial evidence is admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78).
Any other substitutionary evidence is likewise admissible without need for accounting for the original.

Thus, when a document is presented to prove its existence or condition it is offered not as documentary, but
as real, evidence. Parol evidence of the fact of execution of the documents is allowed (Hernaez, et al. vs.
McGrath, etc., et al., 91 Phil 565). x x x 115

In Estrada v. Desierto,116 this Court had occasion to rule that –

It is true that the Court relied not upon the original but only copy of the Angara Diary as published in the
Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court, did not, however, violate the best
evidence rule. Wigmore, in his book on evidence, states that:

"Production of the original may be dispensed with, in the trial 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.24

"x x x x

"In several Canadian provinces, the principle of unavailability has been abandoned, for certain documents in
which ordinarily no real dispute arised. This measure is a sensible and progressive one and deserves universal
adoption (post, sec. 1233). Its essential feature is that a copy may be used unconditionally, if the opponent
has been given an opportunity to inspect it." (Emphasis supplied.)

This Court did not violate the best evidence rule when it considered and weighed in evidence the photocopies and
microfilm copies of the PNs, MCs, and letters submitted by the petitioners to establish the existence of 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.
14

Alternatively, even if it is granted that the best evidence rule should apply to the evidence presented by petitioners
regarding the existence of respondent's loans, it should be borne in mind that the rule admits of the following
exceptions under Rule 130, Section 5 of the revised Rules of Court –

SEC. 5. When the original document is unavailable. – When the original document has been lost or destroyed,
or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its
unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in
some authentic document, or by the testimony of witnesses in the order stated.

The execution or existence of the original copies of the documents was established through the testimonies of
witnesses, such as Mr. Tan, before whom most of the documents were personally executed by respondent. The original
PNs also went through the whole loan booking system of petitioner Citibank – from the account officer in its Marketing
Department, to the pre-processor, to the signature verifier, back to the pre-processor, then to the processor for
booking.117 The original PNs were seen by Ms. Dondoyano, the processor, who recorded them in the General Ledger. Mr.
Pujeda personally saw the original MCs, proving respondent's receipt of the proceeds of her loans from petitioner
Citibank, when he helped Attys. Cleofe and Fernandez, the bank's legal counsels, to reconstruct the records of
respondent's loans. The original MCs were presented to Atty. Cleofe who used the same during the preliminary
investigation of the case, sometime in years 1986-1987. The original MCs were subsequently turned over to the
Control and Investigation Division of petitioner Citibank. 118

It was only petitioner FNCB Finance who claimed that they lost the original copies of the PNs when it moved to a new
office. Citibank did not make a similar contention; instead, it explained that the original copies of the PNs were
returned to the borrower upon liquidation of the loan, either through payment or roll-over. Petitioner Citibank proffered
the excuse that they were still looking for the documents in their storage or warehouse to explain the delay and
difficulty in the retrieval thereof, but not their absence or loss. The original documents in this case, such as the MCs
and letters, were destroyed and, thus, unavailable for presentation before the RTC only on 7 October 1987, when a fire
broke out on the 7th floor of the office building of petitioner Citibank. There is no showing that the fire was intentionally
set. The fire destroyed relevant documents, not just of the present case, but also of other cases, since the 7 th floor
housed the Control and Investigation Division, in charge of keeping the necessary documents for cases in which
petitioner Citibank was involved.

The foregoing would have been sufficient to allow the presentation of photocopies or microfilm copies of the PNs, MCs,
and letters by the petitioners as secondary evidence to establish the existence of respondent's loans, as an exception
to the best evidence rule.

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

In its assailed Decision, the Court of Appeals made the following pronouncement –

Besides, We find the declaration and conclusions of this Court in CA-G.R. CV No. 15934 entitled Sps. Dr.
Ricardo L. Dy and Rosalind O. Dy vs. City Bank, N.A., et al, promulgated on 15 January 1990,
as disturbingtaking into consideration the similarities of the fraud, machinations, and deceits employed by
the defendant-appellant Citibank and its Account Manager Francisco Tan.

Worthy of note is the fact that Our declarations and conclusions against Citibank and the person of Francisco
Tan in CA-G.R. CV No. 15934 were affirmed in toto by the Highest Magistrate in a Minute Resolution dated 22
August 1990 entitled Citibank, N.A., vs. Court of Appeals, G.R. 93350.

As the factual milieu of the present appeal created reasonable doubts as to whether the nine (9) Promissory
Notes were indeed executed with considerations, the doubts, coupled by the findings and conclusions of this
Court in CA-G.R. CV No. 15934 and the Supreme Court in G.R. No. 93350. should be construed against
herein defendants-appellants Citibank and FNCB Finance.

What this Court truly finds disturbing is the significance given by the Court of Appeals in its assailed Decision to the
Decision119 of its Third Division in CA-G.R. CV No. 15934 (or the Dy case), when there is an absolute lack of legal basis
for doing such.

Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy case, that is about the only
connection between the Dy case and the one at bar. Not only did the Dy case tackle transactions between parties
other than the parties presently before this Court, but the transactions are absolutely independent and unrelated to
those in the instant Petition.

In the Dy case, Severino Chua Caedo managed to obtain loans from herein petitioner Citibank amounting to
₱7,000,000.00, secured to the extent of ₱5,000,000.00 by a Third Party Real Estate Mortgage of the properties of
Caedo's aunt, Rosalind Dy. It turned out that Rosalind Dy and her husband were unaware of the said loans and the
mortgage of their properties. The transactions were carried out exclusively between Caedo and Mr. Tan of petitioner
Citibank. The RTC found Mr. Tan guilty of fraud for his participation in the questionable transactions, essentially
because he allowed Caedo to take out the signature cards, when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses' signatures in the PNs and Third Party Real Estate Mortgage were
forged, they were approved by the signature verifier since the signature cards against which they were compared to
were also forged. Neither the RTC nor the Court of Appeals, however, categorically declared Mr. Tan personally
responsible for the forgeries, which, in the narration of the facts, were more likely committed by Caedo.

In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third party involved who could have
perpetrated any fraud or forgery in her loan transactions. Although respondent attempted to raise suspicion as to the
authenticity of her signatures on certain documents, these were nothing more than naked allegations with no
corroborating evidence; worse, even her own allegations were replete with inconsistencies. She could not even
15

establish in what manner or under what circumstances the fraud or forgery was committed, or how Mr. Tan could have
been directly responsible for the same.

While the Court of Appeals can take judicial notice of the Decision of its Third Division in the Dy case, it should not
have given the said case much weight when it rendered the assailed Decision, since the former does not constitute a
precedent. The Court of Appeals, in the challenged Decision, did not apply any legal argument or principle established
in the Dy case but, rather, adopted the findings therein of wrongdoing or misconduct on the part of herein petitioner
Citibank and Mr. Tan. Any finding of wrongdoing or misconduct as against herein petitioners should be made based on
the factual background and pieces of evidence submitted in this case, not those in another case.

It is apparent that the Court of Appeals took judicial notice of the Dy case not as a legal precedent for the present
case, but rather as evidence of similar acts committed by petitioner Citibank and Mr. Tan. A basic rule of
evidence,however, states that, "Evidence that one did or did not do a certain thing at one time is not admissible to
prove that he did or did not do the same or similar thing at another time; but it may be received to prove a specific
intent or knowledge, identity, plan, system, scheme, habit, custom or usage, and the like." 120 The rationale for the rule
is explained thus –

The rule is founded upon reason, public policy, justice and judicial convenience. The fact that a person has
committed the same or similar acts at some prior time affords, as a general rule, no logical guaranty that he
committed the act in question. This is so because, subjectively, a man's mind and even his modes of life may
change; and, objectively, the conditions under which he may find himself at a given time may likewise change
and thus induce him to act in a different way. Besides, if evidence of similar acts are to be invariably admitted,
they will give rise to a multiplicity of collateral issues and will subject the defendant to surprise as well as
confuse the court and prolong the trial.121

The factual backgrounds of the two cases are so different and unrelated that the Dy case cannot be used to prove
specific intent, knowledge, identity, plan, system, scheme, habit, custom or usage on the part of petitioner Citibank or
its officer, Mr. Tan, to defraud respondent in the present case.

IV

The liquidation of respondent's outstanding loans were valid in so far as petitioner Citibank used
respondent's savings account with the bank and her money market placements with petitioner FNCB
Finance; but illegal and void in so far as petitioner Citibank used respondent's dollar accounts with
Citibank-Geneva.

Savings Account with petitioner Citibank

Compensation is a recognized mode of extinguishing obligations. Relevant provisions of the Civil Code provides –

Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of
each other.

Art. 1279. In order that compensation may be proper, it is necessary;

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

There is little controversy when it comes to the right of petitioner Citibank to compensate respondent's outstanding
loans with her deposit account. As already found by this Court, petitioner Citibank was the creditor of respondent for
her outstanding loans. At the same time, respondent was the creditor of petitioner Citibank, as far as her deposit
account was concerned, since bank deposits, whether fixed, savings, or current, should be considered as simple loan
or mutuum by the depositor to the banking institution.122 Both debts consist in sums of money. By June 1979, all of
respondent's PNs in the second set had matured and became demandable, while respondent's savings account was
demandable anytime. Neither was there any retention or controversy over the PNs and the deposit account
commenced by a third person and communicated in due time to the debtor concerned. Compensation takes place by
operation of law,123 therefore, even in the absence of an expressed authority from respondent, petitioner Citibank had
the right to effect, on 25 June 1979, the partial compensation or off-set of respondent's outstanding loans with her
deposit account, amounting to ₱31,079.14.

Money market placements with FNCB Finance

Things though are not as simple and as straightforward as regards to the money market placements and bank account
used by petitioner Citibank to complete the compensation or off-set of respondent's outstanding loans, which came
from persons other than petitioner Citibank.

Respondent's money market placements were with petitioner FNCB Finance, and after several roll-overs, they were
ultimately covered by PNs No. 20138 and 20139, which, by 3 September 1979, the date the check for the proceeds of
the said PNs were issued, amounted to ₱1,022,916.66, inclusive of the principal amounts and interests. As to these
money market placements, respondent was the creditor and petitioner FNCB Finance the debtor; while, as to the
outstanding loans, petitioner Citibank was the creditor and respondent the debtor. Consequently, legal compensation,
16

under Article 1278 of the Civil Code, would not apply since the first requirement for a valid compensation, that each
one of the obligors be bound principally, and that he be at the same time a principal creditor of the other, was not met.

What petitioner Citibank actually did was to exercise its rights to the proceeds of respondent's money market
placements with petitioner FNCB Finance by virtue of the Deeds of Assignment executed by respondent in its favor.

The Court of Appeals did not consider these Deeds of Assignment because of petitioners' failure to produce the original
copies thereof in violation of the best evidence rule. This Court again finds itself in disagreement in the application of
the best evidence rule by the appellate court.

To recall, the best evidence rule, in so far as documentary evidence is concerned, requires the presentation of the
original copy of the document only when the context thereof is the subject of inquiry in the case. Respondent does not
question the contents of the Deeds of Assignment. While she admitted the existence and execution of the Deeds of
Assignment, dated 2 March 1978 and 9 March 1978, covering PNs No. 8169 and 8167 issued by petitioner FNCB
Finance, she claimed, as defense, that the loans for which the said Deeds were executed as security, were already
paid. She denied ever executing both Deeds of Assignment, dated 25 August 1978, covering PNs No. 20138 and
20139. These are again issues collateral to the contents of the documents involved, which could be proven by
evidence other than the original copies of the said documents.

Moreover, the Deeds of Assignment of the money market placements with petitioner FNCB Finance were notarized
documents, thus, admissible in evidence. Rule 132, Section 30 of the Rules of Court provides that –

SEC. 30. Proof of notarial documents. – Every instrument duly acknowledged or proved and certified as
provided by law, may be presented in evidence without further proof, the certificate of acknowledgement
being prima facie evidence of the execution of the instrument or document involved.

Significant herein is this Court's elucidation in De Jesus v. Court of Appeals,124 which reads –

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

The rule on the evidentiary weight that must be accorded a notarized document is clear and unambiguous. The
certificate of acknowledgement in the notarized Deeds of Assignment constituted prima facie evidence of the
execution thereof. Thus, the burden of refuting this presumption fell on respondent. She could have presented
evidence of any defect or irregularity in the execution of the said documents 125 or raised questions as to the verity of
the notary public's acknowledgment and certificate in the Deeds. 126 But again, respondent admitted executing the
Deeds of Assignment, dated 2 March 1978 and 9 March 1978, although claiming that the loans for which they were
executed as security were already paid. And, she assailed the Deeds of Assignment, dated 25 August 1978, with
nothing more than her bare denial of execution thereof, hardly the clear and convincing evidence required to trounce
the presumption of due execution of a notarized document.

Petitioners not only presented the notarized Deeds of Assignment, but even secured certified literal copies thereof
from the National Archives.127 Mr. Renato Medua, an archivist, working at the Records Management and Archives Office
of the National Library, testified that the copies of the Deeds presented before the RTC were certified literal copies of
those contained in the Notarial Registries of the notary publics concerned, which were already in the possession of the
National Archives. He also explained that he could not bring to the RTC the Notarial Registries containing the original
copies of the Deeds of Assignment, because the Department of Justice (DOJ) Circular No. 97, dated 8 November 1968,
prohibits the bringing of original documents to the courts to prevent the loss of irreplaceable and priceless
documents.128

Accordingly, this Court gives the Deeds of Assignment grave importance in establishing the authority given by the
respondent to petitioner Citibank to use as security for her loans her money her market placements with petitioner
FNCB Finance, represented by PNs No. 8167 and 8169, later to be rolled-over as PNs No. 20138 and 20139. These
Deeds of Assignment constitute the law between the parties, and the obligations arising therefrom shall have the force
of law between the parties and should be complied with in good faith. 129 Standard clauses in all of the Deeds provide
that –

The ASSIGNOR and the ASSIGNEE hereby further agree as follows:

xxxx

2. In the event the OBLIGATIONS are not paid at maturity or upon demand, as the case may be, the
ASSIGNEE is fully authorized and empowered to collect and receive the PLACEMENT (or so much
thereof as may be necessary) and apply the same in payment of the OBLIGATIONS. Furthermore, the
ASSIGNOR agrees that at any time, and from time to time, upon request by the ASSIGNEE, the
ASSIGNOR will promptly execute and deliver any and all such further instruments and documents as
may be necessary to effectuate this Assignment.

xxxx

5. This Assignment shall be considered as sufficient authority to FNCB Finance to pay and deliver the
PLACEMENT or so much thereof as may be necessary to liquidate the OBLIGATIONS, to the ASSIGNEE
in accordance with terms and provisions hereof.130
17

Petitioner Citibank was only acting upon the authority granted to it under the foregoing Deeds when it finally used the
proceeds of PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to partly pay for respondent's outstanding
loans. Strictly speaking, it did not effect a legal compensation or off-set under Article 1278 of the Civil Code, but
rather, it partly extinguished respondent's obligations through the application of the security given by the respondent
for her loans. Although the pertinent documents were entitled Deeds of Assignment, they were, in reality, more of a
pledge by respondent to petitioner Citibank of her credit due from petitioner FNCB Finance by virtue of her money
market placements with the latter. According to Article 2118 of the Civil Code –

ART. 2118. If a credit has been pledged becomes due before it is redeemed, the pledgee may collect and
receive the amount due. He shall apply the same to the payment of his claim, and deliver the surplus, should
there be any, to the pledgor.

PNs No. 20138 and 20139 matured on 3 September 1979, without them being redeemed by respondent, so that
petitioner Citibank collected from petitioner FNCB Finance the proceeds thereof, which included the principal amounts
and interests earned by the money market placements, amounting to ₱1,022,916.66, and applied the same against
respondent's outstanding loans, leaving no surplus to be delivered to respondent.

Dollar accounts with Citibank-Geneva

Despite the legal compensation of respondent's savings account and the total application of the proceeds of PNs No.
20138 and 20139 to respondent's outstanding loans, there still remained a balance of ₱1,069,847.40. Petitioner
Citibank then proceeded to applying respondent's dollar accounts with Citibank-Geneva against her remaining loan
balance, pursuant to a Declaration of Pledge supposedly executed by respondent in its favor.

Certain principles of private international law should be considered herein because the property pledged was in the
possession of an entity in a foreign country, namely, Citibank-Geneva. In the absence of any allegation and evidence
presented by petitioners of the specific rules and laws governing the constitution of a pledge in Geneva, Switzerland,
they will be presumed to be the same as Philippine local or domestic laws; this is known as processual presumption. 131

Upon closer scrutiny of the Declaration of Pledge, this Court finds the same exceedingly suspicious and irregular.

First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of Assignment of the PNs
notarized, yet left the Declaration of Pledge unnotarized. This Court would think that petitioner Citibank would take
greater cautionary measures with the preparation and execution of the Declaration of Pledge because it involved
respondent's "all present and future fiduciary placements" with a Citibank branch in another country, specifically, in
Geneva, Switzerland. While there is no express legal requirement that the Declaration of Pledge had to be notarized to
be effective, even so, it could not enjoy the same prima facie presumption of due execution that is extended to
notarized documents, and petitioner Citibank must discharge the burden of proving due execution and authenticity of
the Declaration of Pledge.

Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was actually executed.
The photocopy of the Declaration of Pledge submitted by petitioner Citibank before the RTC was undated. 132 It
presented only a photocopy of the pledge because it already forwarded the original copy thereof to Citibank-Geneva
when it requested for the remittance of respondent's dollar accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore the date
24 September 1979.133 Respondent, however, presented her passport and plane tickets to prove that she was out of
the country on the said date and could not have signed the pledge. Petitioner Citibank insisted that the pledge was
signed before 24 September 1979, but could not provide an explanation as to how and why the said date was written
on the pledge. Although Mr. Tan testified that the Declaration of Pledge was signed by respondent personally before
him, he could not give the exact date when the said signing took place. It is important to note that the copy of the
Declaration of Pledge submitted by the respondent to the RTC was certified by an officer of Citibank-Geneva, which
had possession of the original copy of the pledge. It is dated 24 September 1979, and this Court shall abide by the
presumption that the written document is truly dated.134 Since it is undeniable that respondent was out of the country
on 24 September 1979, then she could not have executed the pledge on the said date.

Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard printed form. It was constituted
in favor of Citibank, N.A., otherwise referred to therein as the Bank. It should be noted, however, that in the space
which should have named the pledgor, the name of petitioner Citibank was typewritten, to wit –

The pledge right herewith constituted shall secure all claims which the Bank now has or in the future acquires
against Citibank, N.A., Manila (full name and address of the Debtor), regardless of the legal cause or the
transaction (for example current account, securities transactions, collections, credits, payments, documentary
credits and collections) which gives rise thereto, and including principal, all contractual and penalty interest,
commissions, charges, and costs.

The pledge, therefore, made no sense, the pledgor and pledgee being the same entity. Was a mistake made by
whoever filled-out the form? Yes, it could be a possibility. Nonetheless, considering the value of such a document, the
mistake as to a significant detail in the pledge could only be committed with gross carelessness on the part of
petitioner Citibank, and raised serious doubts as to the authenticity and due execution of the same. The Declaration of
Pledge had passed through the hands of several bank officers in the country and abroad, yet, surprisingly and
implausibly, no one noticed such a glaring mistake.

Lastly, respondent denied that it was her signature on the Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery, the best evidence rule applies –

Basic is the rule of evidence that when the subject of inquiry is the contents of a document, no evidence is
admissible other than the original document itself except in the instances mentioned in Section 3, Rule 130 of
18

the Revised Rules of Court. Mere photocopies of documents are inadmissible pursuant to the best evidence
rule. This is especially true when the issue is that of forgery.

As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the
burden of proof lies on the party alleging forgery. The best evidence of a forged signature in an instrument is
the instrument itself reflecting the alleged forged signature. The fact of forgery can only be established by a
comparison between the alleged forged signature and the authentic and genuine signature of the person
whose signature is theorized upon to have been forged. Without the original document containing the alleged
forged signature, one cannot make a definitive comparison which would establish forgery. A comparison based
on a mere xerox copy or reproduction of the document under controversy cannot produce reliable results. 135

Respondent made several attempts to have the original copy of the pledge produced before the RTC so as to have it
examined by experts. Yet, despite several Orders by the RTC, 136 petitioner Citibank failed to comply with the production
of the original Declaration of Pledge. It is admitted that Citibank-Geneva had possession of the original copy of the
pledge. While petitioner Citibank in Manila and its branch in Geneva may be separate and distinct entities, they are
still incontestably related, and between petitioner Citibank and respondent, the former had more influence and
resources to convince Citibank-Geneva to return, albeit temporarily, the original Declaration of Pledge. Petitioner
Citibank did not present any evidence to convince this Court that it had exerted diligent efforts to secure the original
copy of the pledge, nor did it proffer the reason why Citibank-Geneva obstinately refused to give it back, when such
document would have been very vital to the case of petitioner Citibank. There is thus no justification to allow the
presentation of a mere photocopy of the Declaration of Pledge in lieu of the original, and the photocopy of the pledge
presented by petitioner Citibank has nil probative value. 137 In addition, even if this Court cannot make a categorical
finding that respondent's signature on the original copy of the pledge was forged, it is persuaded that petitioner
Citibank willfully suppressed the presentation of the original document, and takes into consideration the presumption
that the evidence willfully suppressed would be adverse to petitioner Citibank if produced. 138

Without the Declaration of Pledge, petitioner Citibank had no authority to demand the remittance of respondent's
dollar accounts with Citibank-Geneva and to apply them to her outstanding loans. It cannot effect legal compensation
under Article 1278 of the Civil Code since, petitioner Citibank itself admitted that Citibank-Geneva is a distinct and
separate entity. As for the dollar accounts, respondent was the creditor and Citibank-Geneva is the debtor; and as for
the outstanding loans, petitioner Citibank was the creditor and respondent was the debtor. The parties in these
transactions were evidently not the principal creditor of each other.

Therefore, this Court declares that the remittance of respondent's dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner Citibank was illegal, and null and void. Resultantly,
petitioner Citibank is obligated to return to respondent the amount of US$149,632,99 from her Citibank-Geneva
accounts, or its present equivalent value in Philippine currency; and, at the same time, respondent continues to be
obligated to petitioner Citibank for the balance of her outstanding loans which, as of 5 September 1979, amounted to
₱1,069,847.40.

The parties shall be liable for interests on their monetary obligations to each other, as determined
herein.

In summary, petitioner Citibank is ordered by this Court to pay respondent the proceeds of her money market
placements, represented by PNs No. 23356 and 23357, amounting to ₱318,897.34 and ₱203,150.00, respectively,
earning an interest of 14.5% per annum as stipulated in the PNs, 139 beginning 17 March 1977, the date of the
placements.

Petitioner Citibank is also ordered to refund to respondent the amount of US$149,632.99, or its equivalent in Philippine
currency, which had been remitted from her Citibank-Geneva accounts. These dollar accounts, consisting of two
fiduciary placements and current accounts with Citibank-Geneva shall continue earning their respective stipulated
interests from 26 October 1979, the date of their remittance by Citibank-Geneva to petitioner Citibank in Manila and
applied against respondent's outstanding loans.

As for respondent, she is ordered to pay petitioner Citibank the balance of her outstanding loans, which amounted to
₱1,069,847.40 as of 5 September 1979. These loans continue to earn interest, as stipulated in the corresponding PNs,
from the time of their respective maturity dates, since the supposed payment thereof using respondent's dollar
accounts from Citibank-Geneva is deemed illegal, null and void, and, thus, ineffective.

VI

Petitioner Citibank shall be liable for damages to respondent.

Petitioners protest the award by the Court of Appeals of moral damages, exemplary damages, and attorney's fees in
favor of respondent. They argued that the RTC did not award any damages, and respondent, in her appeal before the
Court of Appeals, did not raise in issue the absence of such.

While it is true that the general rule is that only errors which have been stated in the assignment of errors and properly
argued in the brief shall be considered, this Court has also recognized exceptions to the general rule, wherein it
authorized the review of matters, even those not assigned as errors in the appeal, if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a close inter-relation between the omitted assignment
of error and those actually assigned and discussed by the appellant. 140 Thus, the Court of Appeals did not err in
awarding the damages when it already made findings that would justify and support the said award.

Although this Court appreciates the right of petitioner Citibank to effect legal compensation of respondent's local
deposits, as well as its right to the proceeds of PNs No. 20138 and 20139 by virtue of the notarized Deeds of
19

Assignment, to partly extinguish respondent's outstanding loans, it finds that petitioner Citibank did commit wrong
when it failed to pay and properly account for the proceeds of respondent's money market placements, evidenced by
PNs No. 23356 and 23357, and when it sought the remittance of respondent's dollar accounts from Citibank-Geneva by
virtue of a highly-suspect Declaration of Pledge to be applied to the remaining balance of respondent's outstanding
loans. It bears to emphasize that banking is impressed with public interest and its fiduciary character requires high
standards of integrity and performance.141 A bank is under the obligation to treat the accounts of its depositors with
meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos. 142 The bank must
record every single transaction accurately, down to the last centavo, and as promptly as possible. 143 Petitioner Citibank
evidently failed to exercise the required degree of care and transparency in its transactions with respondent, thus,
resulting in the wrongful deprivation of her property.

Respondent had been deprived of substantial amounts of her investments and deposits for more than two decades.
During this span of years, respondent had found herself in desperate need of the amounts wrongfully withheld from
her. In her testimony144 before the RTC, respondent narrated –

Q By the way Mrs. Witness will you kindly tell us again, you said before that you are a businesswoman, will you
tell us again what are the businesses you are engaged into [sic]?

A I am engaged in real estate. I am the owner of the Modesta Village 1 and 2 in San Mateo, Rizal. I am also the
President and Chairman of the Board of Macador [sic] Co. and Business Inc. which operates the Macador [sic]
International Palace Hotel. I am also the President of the Macador [sic] International Palace Hotel, and also the
Treasures Home Industries, Inc. which I am the Chairman and president of the Board and also operating
affiliated company in the name of Treasures Motor Sales engaged in car dealers [sic] like Delta Motors, we are
the dealers of the whole Northern Luzon and I am the president of the Disto Company, Ltd., based in Hongkong
licensed in Honkong [sic] and now operating in Los Angeles, California.

Q What is the business of that Disto Company Ltd.?


A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from those businesses are you a member of any national or community organization for social and civil
activities?
A Yes sir.
Q What are those?
A I am the Vice-President of thes [sic] Subdivision Association of the Philippines in 1976, I am also an officer of the …
Chamber of Real Estate Business Association; I am also an officer of the Chatholic [sic] Women's League and I am also
a member of the CMLI, I forgot the definition.
Q How about any political affiliation or government position held if any?
A I was also a candidate for Mayo last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984, Independent party in Regional I, Pangasinan.
Q What happened to your businesses you mentioned as a result of your failure to recover you [sic] investments and
bank deposits from the defendants?
A They are not all operating, in short, I was hampered to push through the businesses that I have.
A [sic] Of all the businesses and enterprises that you mentioned what are those that are paralyzed and what remain
inactive?
A Of all the company [sic] that I have, only the Disto Company that is now operating in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and later as Assemblywoman of Region I, what happened
to this?
A I won by voting but when election comes on [sic] the counting I lost and I protested this, it is still pending and
because I don't have financial resources I was not able to push through the case. I just have it pending in the Comelec.
Q Now, do these things also affect your social and civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would like to inform the Honorable Court that I was awarded as
the most outstanding businesswoman of the year in 1976 but when this money was not given back to me I was not
able to comply with the commitments that I have promised to these associations that I am engaged into [sic], sir.

For the mental anguish, serious anxiety, besmirched reputation, moral shock and social humiliation suffered by the
respondent, the award of moral damages is but proper. However, this Court reduces the amount thereof to
₱300,000.00, for the award of moral damages is meant to compensate for the actual injury suffered by the
respondent, not to enrich her.145

Having failed to exercise more care and prudence than a private individual in its dealings with respondent, petitioner
Citibank should be liable for exemplary damages, in the amount of ₱250,000.00, in accordance with Article 2229 146and
2234147 of the Civil Code.

With the award of exemplary damages, then respondent shall also be entitled to an award of attorney's
fees.148Additionally, attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act of the other party. 149 In this case, an award of ₱200,000.00
attorney's fees shall be satisfactory.

In contrast, this Court finds no sufficient basis to award damages to petitioners.1âwphi1 Respondent was compelled to
institute the present case in the exercise of her rights and in the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its entirety, it did raise meritorious points and on which this Court rules
in her favor. Any injury resulting from the exercise of one's rights is damnum absque injuria.150

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The assailed Decision of the Court of
Appeals in CA-G.R. No. 51930, dated 26 March 2002, as already modified by its Resolution, dated 20 November 2002,
is hereby AFFIRMED WITH MODIFICATION, as follows –
20

1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner Citibank is ORDEREDto
return to respondent the principal amounts of the said PNs, amounting to Three Hundred Eighteen Thousand
Eight Hundred Ninety-Seven Pesos and Thirty-Four Centavos (₱318,897.34) and Two Hundred Three Thousand
One Hundred Fifty Pesos (₱203,150.00), respectively, plus the stipulated interest of Fourteen and a half
percent (14.5%) per annum, beginning 17 March 1977;

2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US Dollars and Ninety-Nine
Cents (US$149,632.99) from respondent's Citibank-Geneva accounts to petitioner Citibank in Manila, and the
application of the same against respondent's outstanding loans with the latter, is DECLARED illegal, null and
void. Petitioner Citibank is ORDERED to refund to respondent the said amount, or its equivalent in Philippine
currency using the exchange rate at the time of payment, plus the stipulated interest for each of the fiduciary
placements and current accounts involved, beginning 26 October 1979;

3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of Three Hundred
Thousand Pesos (₱300,000.00); exemplary damages in the amount of Two Hundred Fifty Thousand Pesos
(₱250,000.00); and attorney's fees in the amount of Two Hundred Thousand Pesos (₱200,000.00); and

4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding loans, which, from the
respective dates of their maturity to 5 September 1979, was computed to be in the sum of One Million Sixty-
Nine Thousand Eight Hundred Forty-Seven Pesos and Forty Centavos (₱1,069,847.40), inclusive of interest.
These outstanding loans shall continue to earn interest, at the rates stipulated in the corresponding PNs, from
5 September 1979 until payment thereof.

SO ORDERED.

G.R. No. 109775 November 14, 1996

PEOPLE OF THE PHILIPPINES vs MALIMIT

Appellant Jose Encarnacion Malimit, charged with 1 and convicted of the special complex crime of robbery with
homicide, 2 was meted by the trial court 3 the penalty of reclusion perpetua. He was also ordered to indemnify the heirs
of Onofre Malaki the sum of Fifty Thousand Pesos (P50,000.00) without subsidiary imprisonment in case of insolvency,
and to pay the cost. 4

In this appeal, appellant asks for his acquittal alleging that the trial court committed the following errors, to wit:

THE TRIAL COURT ERRED IN GIVING CREDENCE TO THE UNRELIABLE TESTIMONIES OF THE
PROSECUTION WITNESSES ON THEIR ALLEGED IDENTIFICATION OF THE ACCUSED-APPELLANT AS THE
PERPETRATOR OF THE CRIME DESPITE THE FACT (SIC) THEY REVEALED THEIR ALLEGED "KNOWLEDGE"
OF TH6E CRIME MORE THAN FIVE MONTHS AFTER THE INCIDENT.

II

THE TRIAL COURT ERRED IN ADMITTING AS EVIDENCE THE WALLET AND ITS CONTENTS ALTHOUGH THE
CIRCUMSTANCES WHICH LEAD TO ITS PRODUCTION WAS OBTAINED IN VIOLATION OF THE
CONSTITUTIONAL RIGHTS OF THE ACCUSED.

III

THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT DESPITE FAILURE OF THE
PROSECUTION TO PROVE HIS GUILT BEYOND REASONABLE DOUBT. 5

The following is the recital of facts as summarized by the appellee in its Brief, and duly supported by the evidence on
record:

On April 15, 1991, around 8:00 o'clock in the evening, [Onofre] Malaki was attending to his store.
Malaki's houseboy Edilberto Batin, on the other hand, was busy cooking chicken for supper at the
kitchen located at the back of the store (TSN, June 19, 199 (sic), p. 14).

Soon thereafter, Florencio Rondon, a farmer, arrived at the store of Malaki. Rondon was to purchase
chemical for his rice farm (TSN, May 22, 1992, p. 19). Rondon came from his house, approximately one
hundred and fifty (150) meters distant from Malaki's store (Ibid., p. 24).

Meanwhile, Batin had just finished cooking and from the kitchen, he proceeded directly to the store to
ask his employer (Malaki) if supper is to be prepared. As Batin stepped inside the store, he was taken
aback when he saw appellant coming out of the store with a bolo (TSN, June 9, 1992, p. 14), while his
boss, bathed in his own blood, was sprawled on the floor "struggling for his life" (hovering between life
and death) (Ibid.).

Rondon, who was outside and barely five (5) meters away from the store, also saw appellant Jose
Malimit (or "Manolo") rushing out through the front door of Malaki's store with a blood-stained bolo
(TSN, May 22, 1992, p. 29). Aided by the illumination coming from a pressure lamp ("petromax") inside
the store, Rondon clearly recognized Malimit (Ibid., p. 22).
21

Batin immediately went out of the store to seek help. Outside the store, he met Rondon (TSN, June 9,
1992, p. 15). After a brief conversation, both Batin and Rondon rushed to the nearby house of Malaki's
brother-in-law Eutiquio Beloy and informed Beloy of the tragic incident which befell Malaki. Batin, along
with Beloy, went back to the store. Inside, they saw the lifeless body of Malaki in a pool of blood lying
prostrate at the floor. Beloy readily noticed that the store's drawer was opened and ransacked and the
wallet of Malaki was missing from his pocket (Ibid., pp. 16-17). 6

In his first assignment of error, appellant questions the credibility of prosecution witnesses Florencio Rondon and
Edilberto Batin by pointing out their alleged delay in revealing what they knew about the incident. He posits that while
the crime took place on April 15, 1991, it was only on September 17, 1991 when these witnesses tagged him as the
culprit.

We find these contentions bereft of merit. Appellant haphazardly concluded that Rondon and Batin implicated the
appellant to this gruesome crime only on September 17, 1991. The aforementioned date however, was merely the
date 7 when Rondon and Batin executed their respective affidavits, 8 narrating that they saw the appellant on the night
of April 15, 1991 carrying a bolo stained with blood and rushing out of Malaki's store. As to appellant's claim of delay,
suffice it to state that extant from the records are ample testimonial evidence negating appellant's protestation, to wit:
(1) after having discovered the commission of the crime, Rondon and Batin immediately looked for Eutiquio Beloy,
Malaki's brother-in-law, and informed him that appellant was the only person they saw running away from the crime
scene; 9 (2) Beloy and Batin reported the crime with the CAFGU detachment in their barangay where Batin declared
that it was appellant who robbed Malaki on that fateful night; 10 and (3) Batin again made a similar statement later at
the Silago Police Station.11

Next, appellant derided the non-presentation by the prosecution of the police blotter which could prove if appellant
was indeed implicated right away by Batin to the crime. 12 We do not believe, however, that it was necessary for the
prosecution to present as evidence a copy of the aforementioned police blotter. Neither was its non-presentation in
court fatal to the prosecution's case. Entries in the police blotter are merely corroborative evidence of the
uncontroverted testimony of Batin that he identified the appellant as the perpetrator of the crime before the Silago
police. As such, its presentation as evidence is not indispensable. 13 Besides, if appellant believed that he was not
identified therein, then he should have secured a copy thereof from the Silago Police Station and utilized the same as
controverting evidence to impeach Batin's credibility as witness. 14 Having failed to do so, appellant cannot now pass
the blame on the prosecution for something which appellant himself should have done.

Even assuming arguendo that Rondon and Batin identified the appellant only on September 15, 1991, or after the
lapse of five months from commission of the crime, this fact alone does not render their testimony less credible. The
non-disclosure by the witness to the police officers of appellant's identity immediately after the occurrence of the
crime is not entirely against human experience. 15 In fact the natural reticence of most people to get involved in
criminal prosecutions against immediate neighbors, as in this case, 16 is of judicial notice. 17 At any rate, the consistent
teaching of our jurisprudence is that the findings of the trial court with regard to the credibility of witnesses are given
weight and the highest degree of respect by the appellate court. 18 This is the established rule of evidence, as the
matter of assigning values to the testimony of witnesses is a function best performed by the trial court which can
weigh said testimony in the light of the witness" demeanor, conduct and attitude at the
trial. 19 And although the rule admits of certain exceptions, namely: (1) when patent inconsistencies in the statements
of witnesses are ignored by the trial court, or (2) when the conclusions arrived at are clearly unsupported by the
evidence, 20 we found none in this case.

In his second assignment of error, appellant asseverates that the admission as evidence of Malaki's wallet 21together
with its contents, viz., (1) Malaki's residence certificate; 22 (2) his identification card;23 and (3) bunch of keys, 24 violates
his right against self-incrimination. 25 Likewise, appellant sought for their exclusion because during the custodial
investigation, wherein he pointed to the investigating policemen the place where he hid Malaki's wallet, he was not
informed of his constitutional rights.

We are not persuaded. The right against self-incrimination guaranteed under our fundamental law finds no application
in this case. This right, as put by Mr. Justice Holmes in Holt vs. United States, 26 ". . . is a prohibition of the use of
physical or moral compulsion, to extort communications from him . . ." It is simply a prohibition against legal process
to extract from the [accused]'s own lips, against his will, admission of his guilt. 27 It does not apply to the instant case
where the evidence sought to be excluded is not an incriminating statement but an object evidence. Wigmore,
discussing the question now before us in his treatise on evidence, thus, said:

If, in other words (the rule) created inviolability not only for his [physical control of his] own vocal
utterances, but also for his physical control in whatever form exercise, then, it would be possible for a
guilty person to shut himself up in his house, with all the tools and indicia of his crime, and defy the
authority of the law to employ in evidence anything that might be obtained by forcibly overthrowing
his possession and compelling the surrender of the evidential articles — a clear reduction ad
absurdum. In other words, it is not merely compulsion that is the kernel of the privilege, . . .
but testimonial compulsion 28

Neither are we prepared to order the exclusion of the questioned pieces of evidence pursuant to the provision of the
Constitution under Article III, Section 12, viz:

(1) Any person under investigation for the commission of an offense shall have the right to be informed
of his right to remain silent and to have competent and independent counsel preferably of his own
choice. If the person cannot afford the services of counsel, he must be provided with one. These rights
cannot be waived except in writing and in the presence of counsel.

xxx xxx xxx

(3) Any confession or admission obtained in violation of this or Sec. 17 hereof, shall be inadmissible in
evidence against him. (Emphasis ours.)
22

xxx xxx xxx

These are the so-called "Miranda rights" so oftenly disregarded by our men in uniform. However, infractions thereof
render inadmissible only the extrajudicial confession or admission made during custodial investigation. The
admissibility of other evidence, provided they are relevant to the issue and is not otherwise excluded by law or
rules, 29 is not affected even if obtained or taken in the course of custodial investigation. Concededly, appellant was
not informed of his right to remain silent and to have his own counsel by the investigating policemen during the
custodial investigation. Neither did he execute a written waiver of these rights in accordance with the constitutional
prescriptions. Nevertheless, these constitutional short-cuts do not affect the admissibility of Malaki's wallet,
identification card, residence certificate and keys for the purpose of establishing other facts relevant to the crime.
Thus, the wallet is admissible to establish the fact that it was the very wallet taken from Malaki on the night of the
robbery. The identification card, residence certificate and keys found inside the wallet, on the other hand, are
admissible to prove that the wallet really belongs to Malaki. Furthermore, even assuming arguendo that these pieces
of evidence are inadmissible, the same will not detract from appellant's culpability considering the existence of other
evidence and circumstances establishing appellant's identity and guilt as perpetrator of the crime charged.

We, now come to appellant's third assignment of error where he demurs on the prosecution's evidence, contending
that they are insufficient to sustain his conviction.

Our close scrutiny of the record reveals otherwise. Time and again, we ruled that there can be a verdict of conviction
based on circumstantial evidence when the circumstances proved form an unbroken chain which leads to a fair and
reasonable conclusion pinpointing the accused, to the exclusion of all the others, as the perpetrator of the crime. 30In
order that circumstantial evidence may be sufficient to convict, the same must comply with these essential
requisites, viz., (a) there is more than one circumstance; (b) the facts from which the inferences are derived are
proven; and (c) the combination of all the circumstances is such as to produce a conviction beyond reasonable
doubt. 31 In this case, there were at least five (5) circumstances constituting an unbroken chain of events which by
their "concordant combination and cumulative effect", satisfy the requirements for the conviction of the
appellant, 32specifically: (1) appellant was seen by Rondon and Batin, whose credibilities were untarnished, holding a
bolo in his right hand and rushing out of Malaki's store seconds prior to their discovery of the crime; 33 (2) Malaki
sustained multiple stab wounds 34 and he died of "cardiac arrest, secondary to severe external hemorrhage due to
multiple stab wounds", 35 (3) witness Elmer Ladica saw the appellant on August 6, 1991, accompanied by some
policemen, retrieve Malaki's wallet underneath a stone at the seashore in Barangay Hingatungan; 36 (4) appellant
himself admitted in his testimony that on August 6, 1991, he accompanied several policemen to the seashore where
he hid Malaki's wallet; 37 and (5) appellant's flight and his subsequent disappearance from Hingatungan immediately
after the incident. 38

On the other hand, appellant's version of the story does not inspire belief. He maintains that on that fateful night he
was in his house together with his wife. He claims that they had just arrived from a gambling spree allegedly in the
house of a certain Maui Petalcorin. Surprisingly, however, the defense did not bother to call appellant's wife to the
witness stand to corroborate appellant's alibi. Neither did it present as witness Maui Petalcorin, or any other person
who may have seen the appellant in the said place, if only to provide a semblance of truth to this assertion. As the
defense of alibi is weak in view of the positive identification of the appellant by the prosecution witnesses, 39 it
becomes weaker because of the unexplained failure of the defense to present any corroboration. 40 Furthermore, proof
that appellant was in his house when the crime was committed is not enough. Appellant must likewise demonstrate
that he could not have been physically present at the place of the crime or in its vicinity, at the time of its
commission. 41 In this case, appellant himself admitted that his house was just about eighty (80) meters away from the
house of
Malaki. 42 It was, therefore, not impossible for him to have been physically present at the place of the commission of
the crime, as in fact, no evidence to negate this possibility was ever adduced by him at the trial.

Appellant's insistence that he merely found Malaki's wallet by chance while gathering shells along the seashore, and
that he feared being implicated in the crime for which reason he hid the wallet underneath a stone, hardly inspires
belief. We are at a loss, just as the trial court was, as to why appellant should fear being implicated in the crime if
indeed he merely found Malaki's wallet by chance. No inference can be drawn from appellant's purported
apprehension other than the logical conclusion that appellant had knowledge of the crime. Besides, proof that
appellant is in possession of a stolen property gives rise to a valid presumption that he stole the same. 43

In fine, as the killing of Malaki took place on the occasion of robbery, appellant was correctly convicted by the trial
court of the special complex crime of robbery with homicide, defined and penalized under Article 294, paragraph 1 of
the Revised Penal Code.

WHEREFORE, the appealed judgment of conviction is hereby AFFIRMED in toto

G.R. No. L-43955-56 July 30, 1979


RENATO LAZATIN alias RENATO STA. CLARA vs CAMPOS
The Court dismisses the petition which seeks to overrule respondent judge's orders declaring that petitioner has failed
to establish by competent evidence his alleged status as an adopted child of the deceased Lazatin spouses and prays
for judgment of this Court "declaring as established the fact of (his) adoption as a son of the deceased spouses
entitling him to succeed in their estates as such." Respondent judge correctly ruled that he could not allow petitioner
(who had filed a motion to intervene in the proceedings to probate the will of the late Margarita de Asis Vda. de Lazatin
and to settle her estate as her adopted son, after having earlier filed a motion to intervene in the intestate
proceedings of her pre-deceased husband as his admitted illegitimate [not natural] son), over the opposition of private
respondents, to introduce evidence that he had "enjoyed ... the status of an adopted child of the without his first
producing competent and documentary that there had been judicial proceedings for his by the said spouses which
resulted in the final judgment of a competent court decreeing his adoption.
23

On January 13, 1974, Dr. Mariano M. Lazatin diamond intestate in Pasay City, survived by his wife, Margarita de Asis,
and his adopted twin daughters, respondent Nora L. de Leon, married to respondent Bernardo de Leon, and
respondent Irma Lazatin, married to Francisco Veloso.
One month after Mariano's death, his widow, Margarita de Asis, commenced an intestate proceeding before the Court
of First Instance of Pasay, docketed as Sp. Proc. No. 2326-P. Mariano, Oscar, Virgilio and Yvonne, claiming to be
admitted illegitimate (not natural) children of Dr. Lazatin with one Helen Munoz, intervened. Subsequently, one Lily
Lazatin also intervened, claiming to be another admitted illegitimate (not natural) child.
Two months after or on April 11, 1974, the widow, Margarita de Asis, also died, leaving a & holographic will executed
on May 29, 1970, providing, among others, for a legacy of cash, jewelry, and stocks to respondent Arlene de Leon, a
granddaughter; a legacy of support to Rodolfo Gallardo, a son of her late sister; and a legacy of education to Ramon
Sta. Clara, son of petitioner Renato Lazatin alias Renato Sta. Clara.
During her lifetime, Margarita de Asis kept a safety deposit box at the People's Bank and Trust Company, Roxas
Boulevard branch, which either she or respondent Nora L. de Leon could open. Five days after Margarita's death,
respondent Nora L. de Leon, accompanied by her husband, respondent Bernardo de Leon, opened the safety deposit
box and removed its contents: (a) shares of stock; (b) her adoption papers and those of her sister, respondent Irma L.
Veloso; and (c) jewelry belonging to her and to her mother. Respondent Nora L. de Leon claims that she opened the
safety deposit box in good faith, believing that it was held jointly by her and her deceased mother. Her sole reason for
opening the box was to get her stock certificates and other small items deposited therein. When she was to close the
deposit box, the bank personnel informed her that she needed an authority from the court to do so, in view of her
mother's death and so, she removed everything from the box.
On June 3, 1974, private respondents filed a petition to probate the will of the late Margarita de Asis, before docketed
as Sp. Proc. No. 2341-P of respondent Court, Days after having learned that respondent Nora L. de Leon had opened
this safety deposit box, petitioner's son, Ramon Sta. Clara, filed a motion in the probate court, claiming that the
deceased had executed a will subsequent to that submitted for probate and demanding its production. He likewise
prayed for the opening of the safety deposit box. Respondent Nora L. de Leon admitted that she opened the box but
there was no will or any document resembling a will therein.
Upon the order of the probate court, presided over by Judge Arsenio B. Alcantara, the safety deposit box was opened
on November 6, 1974, at which time it was found to be empty, because prior thereto respondent Nora L. de Leon had
already removed its contents.
On November 22, 1974, or seven months after, the death of Margarita de Asis, petitioner intervened for the first time
in the proceedings to settle the estate of the late Dr. Mariano M. Lazatin (Sp. Proc. No. 2326- P), as an admitted
illegitimate (not natural) child.
Under the same date of November 22, 1974, petitioner's son, Ramon, filed a petition in the estate proceedings of
Margarita de Asis to examine private respondents on the contents of the safety deposit box, Whereupon, on January
31, 1975, the probate court ordered respondent Nora L. de Leon to deliver the properties taken from the safety deposit
box to the Clerk of Court. Subsequently, however, the two cases (Sp. Proc. No. 2326-P, Mariano Lazatin, and 2341-P,
Margarita de Asis) were transferred to the sala of respondent Judge Jose C. Campos, Jr.
On May 29, 1975, Judge Campos issued an order requiring counsel for respondents Nora L. de Leon and Bernardo de
Leon to produce all those papers and items removed from the safety deposit box and to deliver the same to the
custody of the court within one week. Within the period ordered, respondent Nora L. de Leon deposited with the Clerk
of Court, not the items themselves, but two keys to a new safety deposit box which could only be opened upon order
of the court.
On August 20, 1975, petitioner Renato to Lazatin alias Renato Sta. Clara filed a motion to intervene in the estate of
Margarita de Asis, Sp. Proc. No. 2341-P, as an adopted child, on the basis of an affidavit executed by Benjamin Lazatin,
brother of the deceased Dr. Mariano M. Lazatin, the petitioner was an "illegitimate son" of Dr. Lazatin and was later
adopted by him. This affidavit was later modified on August 19, 1975 to state that petitioner was adopted by both
Mariano M. Lazatin and his wife Margarita de Asis.
On September 29, 1975, Judge Campos found respondent' Nora L. de Leon guilty of contempt of court for not
complying with the orders of January 31, 1975 and May 29, 1975, requiring her to produce and deliver to the court an
the papers and items removed from the safety deposit box. Her former counsel was also found guilty of contempt,
sentenced to pay a fine of P00.00 and suspended from appearing in the two cases (Sp. Proc. No. 2326-P, Mariano M.
Lazatin, and Sp. Proc. No. 2341-P, Margarita de Asis), on her testimony that she, Nora L. de Leon, acted upon his
advice.
Respondent court heard petitioner's motion to intervene as an adopted son in the estate of Margarita de Asis, Sp. Proc.
No. 2341-P, at which hearings petitioner presented no decree of adoption in his, favor. Instead, petitioner attempted to
prove, over private respondents' objections, that he had recognized the deceased spouses as his parents; he had been
supported by them until their death; formerly he was known as "Renato Lazatin" but was compelled to change his
surname to "Sta. Clara" when the deceased spouses refused to give consent to his marriage to his present wife; that at
first, he and his wife stayed at the residence of Engracio de Asis, father of Margarita, but a few months later, they
transferred to the Mercy Hospital at Taft Avenue, Manila, owned by the deceased spouses, where they continuously
resided up to the present. Photographs were also intended to be presented by petitioner, e.g., photograph of Irma
Veloso where she addressed herself as sister of petitioner; photograph of deceased Margarita de Asis and petitioner
when he was a boy; document showing that petitioners real name is "Renato Lazatin." 1
Respondent court first reserved its ruling on private respondents' objections to the admission of petitioner's evidence,
but on November 14, 1975, when petitioner could not present evidence on the issue of his alleged legal adoption,
respondent court discontinued the hearing and gave the parties time to file memoranda on the question of the
admissibility of the evidence sought to be introduced by petitioner.
On March 4, 1976, respondent court barred the introduction of petitioner's evidence because: têñ.£îhqwâ£
All the evidence submitted by Renato and Ramon Sta. Clara through their counsel do not prove or have no tendency to
prove the existence of any judicial proceeding where the adoption of the parties above named were taken up by any
court. Neither do the evidence tend to establish the presence of any record of a proceeding in court where the
adoption of the above named persons was held. The evidence, however, tends to prove a status of a recognized
natural child which, however, is not the legal basis for which Renato and Ramon seek to intervene in this
proceedings. In view thereof, and taking into consideration the evidence heretofore presented by the petitioners, any
24

further introduction of similar evidence, documentary or oral, would not prove or tend to prove the fact of their
adoption but rather of a recognized natural child.
Petitioner then filed on March 16, 1976, in both cases, a motion to declare as established the fact of adoption in view
of respondent Nora L. de Leon's refusal to comply with the orders of respondent court to deposit the items she had
removed from the safety deposit box of Margarita de Asis. As authority therefor, petitioner invokes the sanction of Rule
29, Section 3 of the Rules of Court, since according to him, the order of the court for the production of the items in the
safety deposit box can be considered as an order for production and inspection of documents under Rule 27.
Private respondents opposed the motion, and on March 26, 1976, respondent court denied petitioner's motion. On
April 26, 1976, respondent Nora L. de Leon deposited with respondent court the items she had removed from the
safety deposit box. An inventory was conducted by respondent court, with notice to the parties, and the items
surrendered consisted only of pieces of jewelry and stock certificates.
On June 3,1976, respondent court, ruling on petitioners motion for definite resolution on his previous n declare as
established the fact of adoption, issued the f order: têñ.£îhqwâ£
As far as the case of Renato Sta. Clara is his Petition to establish his status as an adopted child, The Court has ruled
that he has failed to establish such status. The any motion for reconsideration unless based on some documentary
proof.
Hence, the petition at bar.
We find the ruling of the respondent court to be in conformity with law and jurisprudence.
1. Adoption is a juridical act, a proceeding in rem 2 which creates between two persons a relationship similar to that
which results from legitimate paternity and filiation. 3 Only an adoption made through the court, or in pursuance with
the procedure laid down under Rule 99 of the Rules of Court is valid in this jurisdiction. 4 It is not of natural law at all,
but is wholly and entirely artificial. 5 To establish the relation, the statutory requirements must be strictly carried out,
otherwise, the adoption is an absolute nullity. 6 The fact of adoption is never presumed, but must be affirmatively
proved by the person claiming its existence. The destruction by fire of a public building in which the adoption papers
would have been filed if existent does not give rise to a presumption of adoption nor is the destruction of the records
of an adoption proceeding to be presumed. On the contrary, the absence of a record of adoption has been said to
evolve a presumption of its non-existence. 7 Where, under the provisions of the statute, an adoption is effected by a
court order, the records of such court constitute the evidence by which such adoption may be established. 8
2. Petitioner's flow of evidence in the case below does not lead us to any proof of judicial adoption. We can not pluck
from his chain of evidence any link to the real existence of a court decree of adoption in his favor. Petitioner's proofs do
not show or tend to show that at one time or another a specific court of competent jurisdiction rendered in an adoption
proceeding initiated by the late spouses an order approving his adoption as a child of the latter. No judicial records of
such adoption or copies thereof are presented or attempted to be presented. Petitioner merely proceeds from a
nebulous assumption that he was judicially adopted between the years 1928 and 1932. By what particular court was
the adoption decreed or by whom was the petition heard, petitioner does not even manifest, much less show. There
are no witnesses cited to that adoption proceeding or to the adoption decree. Apparently on the assumption that the
adoption was commenced in Manila, petitioner's counsel secured a certification from the Court of first Instance of
Manila which, however, negatively reported "(T)hat among the salvaged records now available in this Office, there has
not been found, after a diligent search, any record regarding the adoption of Mr. Renato Lazatin alias Renato Sta. Clara
allegedly filed sometime in the years 1928 to 1931 by the spouses Dr. Mariano M. Lazatin and Margarita de Asis
Lazatin." The certification of the Local Civil Registrar of Manila "(T)hat our pre-war records relative to decisions of the
Court of First Instance were either destroyed or burned during the Liberation of the City of Manila," does not furnish
any legal basis for a presumption of adoption in favor of petitioner. This is because there was no proof that petitioner
was really adopted in Manila or that an adoption petition was filed in the Court of first Instance of Manila by the
deceased spouses, where, after hearing, a judgment of approval was rendered by said court. Moreover, if there was
really such adoption, petitioner could have conveniently secured a copy of the newpaper publication of the adoption as
required under Section 4, Rule 99 of the Rules of Court (formerly Section 4, Rule 100) or a certification of the
publishing house to that effect. Petitioner's failure on this point is anotherer strong indication of the non-existence of
the one who gave the written consent of the non-existence of the adoption paper. We also observed to the adoption
(Section 3, Rule 99, Rules of Court), whether the parents or orphanage, does not appear on this point is not so difficult
and such proof must be presented if only to prove the real existence of the adoption. And of course, if the war, the
clear right and duty of petitioner was to duly reconstitute the records as provided by law.
3. The absence of proof of such order of adoption by the court, as provided by the statute, cannot be substituted by
parol evidence that a child has lived with a person, not his parent, and has been treated as a child to establish such
adoption. 9 Even evidence of declaration of the deceased, made in his lifetime, that he intended to adopt a child as his
heir, and that he had adopted him, and of the fact that the child resided with the deceased, as a member of his family,
from infancy until he attained his majority, is not sufficient to establish the fact of adoption.10 Nor does the fact that
the deceased spouses fed, clothed, educated, recognized and referred to one like petitioner as an adopted child,
recognized and referred to one like petitioner as an adopted child, necessarily establish adoption of the
child. 11 Withal, the attempts of petitioner to prove his adoption by acts and declarations of the deceased do not
discharge the mandatory presentation of the judicial decree of adoption. The thrust of petitioner's evidence is rather to
establish his status as an admitted illegitimate child, not an adopted child which status of an admitted illegitimate
child was — the very basis of his petitioner for intervention in the estate proceedings of the late Dr. Lazatin, as above
stated. (Supra, at page 3 hereof)
We do not discount though that declarations in regard to pedigree, although hearsay, are admitted on the principle
that they are natural expressions of persons who must know the truth. 12 Pedigree testimony is admitted because it is
the best that the nature of the case admits and because greater evil might arise from the rejection of such proof than
from its admission. 13 But, in proving an adoption, there is a better proof available and it should be produced. The
whereabouts of the child's family and circulation of the jurisdiction in which they resided and investigation in those
courts where adoption are usually granted would surely produce an adoption order, if indeed there was an
order. 14 Besides, since the point in favor of receiving hearsay evidence upon matters of family history or pedigree is
its reliability, it has been set forth as a condition upon which such evidence is received that it emanate from a source
within the family. Pursuant to this view, before a declaration of a deceased person can be admitted to prove pedigree,
or ancestry, the relationship of the declarant, by either of blood or affinity to the family in question, or a branch
thereof, must ordinarily be established by competent evidence. 15 Section 33 of Rule 130 states: "The act or
declaration of a person deceased, or outside of the Philippines, or unable to testify, in respect to the pedigree of
25

another person related to him by birth or marriage, may be received in evidence where it occurred before the
controversy, and the relationship between the two persons is shown by evidence other than such actor declaration ..."
4. Secondary evidence is nonetheless admissible where the records of adoption proceedings were actually lost or
destroyed. But, prior to the introduction of such secondary evidence, the proponent must establish the former
existence of the instrument. The correct order of proof is as follows: Existence; execution; loss; contents; although this
order may be changed if necessary in the discretion of the court. 16 The sufficiency of the proof offered as a predicate
for the admission of an alleged lost deed lies within the judicial discretion of the trial court under all the circumstances
of the particular case.17 As earlier pointed out, petitioner failed to establish the former existence of the adoption
paper and its subsequent loss or destruction. Secondary proof may only be introduced if it has first beer. established
that such adoption paper really existed and was lost. This is indispensable. 18 Petitioner's supposed adoption was only
testified to by him and is allegedly to be testified to a brother of the deceased Mariano M. Lazatin or others who have
witnessed that the deceased spouses treated petitioner as their child. If adoption was really made, the records thereof
should have existed and the same presented at the hearing or subsequent thereto or a reasonable explanation of loss
or destruction thereof, if that be the case, adduced. 19
Assuming the mere fact that the deceased spouses treated petitioner as their child does not justify the conclusion that
petitioner had been in fact judicially adopted by the spouses nor does it constitute admissible proof of adoption.
We cannot entertain the plea of petitioner that the sanction of Rule 29 should be applied to consider as established the
fact of his adoption due to the refusal of respondent Nora L. de Leon to produce the document of adoption,
because first, the fact or real existence of petitioner's adoption had not been established; second, there is no proof
that such document of adoption is in the possession of respondent Nora L. de Leon; third, the motu proprio order of the
court for Nora de Leon to produce the items retrieved from the safety deposit box cannot be treated as a mode of
discovery of production and inspection of documents under Rule 27; and fourth, the items deposited in the safety
deposit box have already been surrendered by respondent Nora L. de Leon on April 26; 1976 and no document of
adoption in favor of petitioner was listed as found in the safety deposit box.
5. As a necessary consequence, petitioner Renato Lazatin alias Renato Sta. Clara cannot properly intervene in the
settlement of the estate of Margarita de Asis, Sp. Proc. No. 2341-P as an adopted child because of lack of proof thereof.
For one to intervene in an estate proceeding, it is a requisite that he has an interest in the estate, either as one who
would be benefited as an heir or one who has a claim against the estate like a creditor. 20 A child by adoption cannot
inherit from the parent creditor. by adoption unless the act of adoption has been done in strict accord with the statue.
Until this is done, no rights are acquired by the child and neither the supposed adopting parent or adopted child could
be bound thereby. 21 The burden of proof in establishing adoption is upon the person claiming such relationship. He
must prove compliance with the statutes relating to adoption in the jurisdiction where the adoption occurred. 22 A
fortiori if no hereditary interest in the estate can be gained by a claimant who failed to submit proof thereof, whether
the will is probated or not, intervention should be denied as it would merely result in unnecessary complication. 23 To
succeed, a child must be ligitimate, legitimated, adopted, acknowledged illegitimate natural child or natural child by
legal fiction or recognized spurious child. 24
In the face of the verified pleadings of record (constituting judicial admissions) which show that petitioner sought to
intervene on November 22, 1974 in the estate proceedings of his alleged adoptive father Dr. Mariano M. Lazatin (Sp.
Proc. No. 2326-P) as an admitted illegitimate (not natural) child, 25 while his intervention on August 20, 1975 in the
estate of Margarita de Asis, widow of the deceased Dr. Lazatin (Sp. Proc. No. 2341-P) was as her adopted child on the
basis of the affidavit of a brother of the deceased Dr. Lazatin, Benjamin Lazatin, executed August 19, 1975 (which
affidavit modified a first affidavit executed on May 31, 1975, which failed to estate by "oversight" petitioner, but stated
that affiant knew petitioner to be "an illegitimate son" of Dr. Lazatin who later "legally adopted (him) as a son before
the Court of First Instance of Manila sometime between the years 1928 and 1921") and prescinding from the question
of whether a natural or spurious child may be legally adopted by the putative father, we hold that no grave abuse of
discretion nor error of law as committed by respondent judge in issuing the questioned orders of March 4, 1976, March
26, 1976 and June 3, 1976 denying petitioner's petition "to declare as established in this proceeding the fact of
adoption" and denying "any motion for reconsideration unless based on some documentary proof." The Court finds no
basis to grant the affirmative relief sought in this proceeding by petitioner for a rendition of judgment "declaring as
established the fact of your petitioner's adoption as a son of the deceased spouses entitling him to succeed in their
estates as such in accordance with the applicable law on succession as to his inheritance."
Upon the filing of the petition, the Court issued on June 16, 1976 a temporary restraining order; which as amended on
July 21, 1976, restrained respondent judge "from proceeding with the hearing scheduled on June 17, 1976 at 8:30 a.m.,
requiring the submission of evidence to establish heirship in Special Proceedings No. 2326-P entitled 'Intestate Estate
of the Late Mariano M. Lazatin' and Special Proceedings No. 2341-P, entitled 'Testate Estate of the late Margarita de
Asis Vda. de Lazatin,' and from proceeding with the probate of the alleged holographic will of the deceased Doñ;a
Margarita de Asis Vda. de Lazatin scheduled on June 29, 1976, August 10 and 12, 1976 and on any other dates." With
the Court's determination of the issues as herein set forth, there is no longer any need for restraining the proceedings
below and the said restraining order shall be immediately lifted.
On January 24, 1977, the Court upon petitioner's motion resolved to conditionally allow respondent judge "to take the
deposition of petitioner's witnesses to perpetuate their testimonies pursuant to Rule 134, Section 7 of the Rules of
Court, subject to the Court's ruling in due course on the admissibility of such testimonies." The Court thereby
permitted in effect the advance testimonies of petitioner's witnesses, principally among them Rafael Lazatin and
Esteban L. Lazatin, both brothers of the deceased Dr. Mariano L. Lazatin and as stated in petitioner's motion of January
11, 1977: têñ.£îhqwâ£
Substantially, the testimony of the above-named witnesses will be on the fact that they had been informed by the
deceased spouses, Mariano and Margarita Lazatin that your petitioner was their [Mariano's and Margarita's] judicially
adopted son and to elicit further from them the fact that your petitioner enjoys the reputation of being their judicially
adopted son in the Lazatin family.
The Court's resolution allowing the advance testimonies of petitioner's witnesses was but in application of the Court's
long standing admonition to trial courts is reaffirmed in Lamagan vs. De la Cruz, 26, "to be liberal in accepting
proferred evidence since even if they were to refuse to accept the evidence, the affected party will nevertheless be
allowed to spread the excluded evidence on the record, for review on appeal." The Court therein once again stressed
the established rule that "it is beyond question that rulings of the trial court on procedural questions and on
admissibility of evidence during the course of the trial are interlocutory in nature and may not be the subject of
separate appeal or review on certiorari, but are to be assigned as errors and reviewed in the appeal properly taken
from the decision rendered by the trial court on the merits of the case," 27 and that a party's recourse when proferred
26

evidence is rejected by the trial court is to make a offer stating on the record what a party or witness would have
testified to were his testimony not excluded, as well as to attach to the record any rejected exhibits.
At the continuation of the proceedings below for declaration of heirship and for probate of the alleged holographic the
deceased Margarita de Asis Vda. de Lazatin, pet who has failed to establish his status as an alleged ;m child of
Margarita de Asis (unless, as reserved to him by the court below, he can show some documentary proof),and whose
intervention in the estate of the deceased Dr. Mariano Lazatin is as an admitted illegitimate child, win have to decide
whether he will pursue his first theory of having the of such admitted illegitimate child of said deceased. Whatever be
his theory and his course of action and whether or not he may be duly snowed to intervene in the proceedings below
as such alleged admitted illegitimate child, his recourse in the event of an adverse ruling against him is to make a
formal offer of proof and of his excluded evidence, oral and documentary, and seek a reversal on an appeal in due
course.
ACCORDINGLY, the petition is dismissed and the questioned orders denying petitioner's petition below "to declare as
established in this proceeding the fact of [his] adoption" are hereby affirmed. The temporary restraining order issued
on June 16, 1976 and amended on July 21, 1976 is ordered lifted, effective immediately. Without costs.
G.R. No. 143736 August 11, 2004
OFELIA HERRERA-FELIX, vs CA

FACTS: In 1993, respondent St. Joseph Resource Dev't filed a complaint for sum of money against Spouses Felix with
prayer for writ of preliminary attachment. It was alleged that, during the period from November 1992 to December
1992, the Felix Spouses purchased from the respondent tubs of assorted fish. Spouses still had an outstanding
obligation amounting to P1M after deducting their total payment of P438,615.50 from their aggregate purchases.
The trial court granted respondent's prayer for a writ of preliminary attachment on a bond of P1.1M which was
posted in 1993. The Sheriff levied and took custody of some of the personal properties of the Spouses. A copy of the
writ of preliminary attachment, summons and complaint were served on them at their residence, through the sister of
Herrera-Felix, Ma. Luisa Herrera. According to the Sheriff's Return, Ofelia Herrera-Felix was out of the country, as per
the information relayed to him by Ma. Luisa Herrera. Feliz spouses through counsel filed a motion praying for an
extension of time to file their answer to the complaint. The trial court issued an Order granting the motion. However,
the Felix Spouses failed to file their answer to the complaint. The respondent then filed a Motion to declare the said
spouses in default, granted by the court in its Resolution. A copy of the said resolution was sent to and received by the
counsel of the Felix Spouses through registered mail.
The petitioner, through her sister, Jovita Herrera-Seña, now comes to this Court via a petition for review
on certioraripraying for the reversal of the decision of the Court of Appeals. She alleges that the trial court did not
acquire jurisdiction over her person through the service of the complaint and summons on her sister, Ma. Luisa
Herrera. She maintains that the latter was a mere visitor in her house, not a resident therein; hence, the decision of
the trial court is null and void. She further alleges that even assuming the validity of the trial court's decision, such
decision never became final and executory since she was not served a copy of the same. As such, the writ of execution
issued by the trial court, the sale of her personal properties at public auction, as well as the issuance of the Certificate
of Sale, are null and void. She asserts that the actuations of both the trial court and the Sheriff deprived her of her
right to due process.
The contentions of the petitioner have no merit.
The court acquires jurisdiction over the person of the defendant by service of the complaint and summons on him,
either by personal service or by substituted service or by extra-territorial service thereof or by his voluntary personal
appearance before the court or through counsel. In this case, the petitioner appeared before the court, through
counsel, and filed a motion for extension of time to file her answer to the complaint which the trial court granted. She
even admitted in the said motion that she was served with a copy of the complaint as well as the summons. The
admissions made in a motion are judicial admissions which are binding on the party who made them. Such party is
precluded from denying the same unless there is proof of palpable mistake or that no such admission was made.

SECONDARY EVIDENCE

G.R. No. 191696 April 10, 2013


ROGELIO DANTIS vs MAGHINANG
FACTS: This is a complaint for quieting of title and recovery of possession with damages filed by petitioner Dantis
against respondent Maghinang before RTC. Rogelio alleged that he was the registered owner of a parcel of land
covered by TCT, with an area of 5,657 sqm, located in Bulacan; that he acquired ownership of the property through a
deed of extrajudicial partition of the estate of his deceased father in 1993; that he had been paying the realty taxes on
the said property; that Julio, Jr. occupied and built a house on a portion of his property without any right at all; that
demands were made upon Julio, Jr. that he vacate the premises but the same fell on deaf ears; and that the acts of
Julio, Jr. had created a cloud of doubt over his title and right of possession of his property. He, thus, prayed that
judgment be rendered declaring him to be the true and real owner of the parcel of land ordering Julio, Jr. to deliver the
possession of that portion of the land he was occupying; and directing Julio, Jr. to pay rentals from October 2000 and
attorney’s fees.
Maghinang claimed that he was the actual owner of the 352 square meters (subject lot) of the land where he was
living; that he had been in open and continuous possession of the property for almost thirty (30) years; the subject lot
was once tenanted by his ancestral relatives until it was sold by Rogelio’s father, Emilio, to his father, Julio Maghinang;
that later, he succeeded to the ownership of the subject lot after his father died in 1968; and that he was entitled to a
separate registration of the subject lot on the basis of the documentary evidence of sale and his open and
uninterrupted possession of the property.
RTC rendered its decision declaring Rogelio as the true owner of the entire 5,657-square meter lot located in
Sta. Rita, San Miguel, Bulacan, as evidenced by his TCT over the same. The RTC did not lend any probative value on
the documentary evidence of sale adduced by Julio, Jr. consisting of: 1) an affidavit allegedly executed by Ignacio
Dantis (Ignacio), Rogelio’s grandfather, whereby said affiant attested, among others, to the sale of the subject lot
27

made by his son, Emilio, to Julio; and 2) an undated handwritten receipt of initial downpayment in the amount of
₱100.00 supposedly issued by Emilio to Julio, Sr. in connection with the sale of the subject lot.8 The RTC ruled that
even if these documents were adjudged as competent evidence, still, they would only serve as proofs that the
purchase price for the subject lot had not yet been completely paid, Rogelio was not duty-bound to deliver the
property to Julio, Jr. The RTC found Julio, Jr. to be a mere possessor by tolerance. CA found appeal to be impressed with
merit. It held that Exhibit "4" was an indubitable proof of the sale of the 352-square meter lot between Emilio and Julio,
Sr. It also ruled that the partial payment of the purchase price, coupled with the delivery of the res, gave efficacy to
the oral sale and brought it outside the operation of the statute of frauds. Finally, the court a quo declared that Julio, Jr.
and his predecessors-in-interest had an equitable claim over the subject lot which imposed on Rogelio and his
predecessors-in-interest a personal duty to convey what had been sold after full payment of the selling price.
ISSUE: WON there is a perfected contract of sale between Emilio and Julio, Sr.
HELD: CA and the RTC reached different conclusions on the question of whether or not there was an oral contract of
sale. The RTC ruled that Rogelio Dantis was the sole and rightful owner of the parcel of land and that no oral contract
of sale was entered into between Emilio Dantis and Julio Maghinang, Sr. The CA was of the opposite view.
Evidence is hearsay when its probative force depends on the competency and credibility of some persons other than
the witness by whom it is sought to be produced. The exclusion of hearsay evidence is anchored on three reasons: 1)
absence of cross-examination; 2) absence of demeanor evidence; and 3) absence of oath.
Exhibit "4," on the other hand, is considered secondary evidence being a mere photocopy which, in this case, cannot
be admitted to prove the contents of the purported undated handwritten receipt. The best evidence rule requires that
the highest available degree of proof must be produced. For documentary evidence, the contents of a document are
best proved by the production of the document itself to the exclusion of secondary or substitutionary evidence.
A secondary evidence is admissible only upon compliance with Rule 130, Section 5, which states that: when the
original 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. Accordingly, the offeror of
the secondary evidence is burdened to satisfactorily prove the predicates thereof, namely: (1) the execution or
existence of the original; (2) the loss and destruction of the original or its non-production in court; and (3) the
unavailability of the original is not due to bad faith on the part of the proponent/offeror. Proof of the due execution of
the document and its subsequent loss would constitute the basis for the introduction of secondary evidence.23 In MCC
Industrial Sales Corporation v. Ssangyong Corporation,24 it was 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.
The chief evidence of Julio, Jr. to substantiate the existence of the oral contract of sale is Exhibit "4."

G.R. No. 160855 April 16, 2008

CONCEPCION CHUA GAW, petitioner,


vs.
SUY BEN CHUA and FELISA CHUA, respondents.

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari from the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 66790 and
Resolution2 denying the motion for reconsideration. The assailed decision affirmed the ruling of the Regional Trial Court
(RTC) in a Complaint for Sum of Money in favor of the plaintiff.

The antecedents are as follows:

Spouses Chua Chin and Chan Chi were the founders of three business enterprises 3 namely: Hagonoy Lumber, Capitol
Sawmill Corporation, and Columbia Wood Industries. The couple had seven children, namely, Santos Chua; Concepcion
Chua; Suy Ben Chua; Chua Suy Phen; Chua Sioc Huan; Chua Suy Lu; and Julita Chua. On June 19, 1986, Chua Chin
died, leaving his wife Chan Chi and his seven children as his only surviving heirs. At the time of Chua Chin’s death, the
net worth of Hagonoy Lumber was P415,487.20.4

On December 8, 1986, his surviving heirs executed a Deed of Extra-Judicial Partition and Renunciation of Hereditary
Rights in Favor of a Co-Heir5 (Deed of Partition, for brevity), wherein the heirs settled their interest in Hagonoy Lumber
as follows: one-half (1/2) thereof will pertain to the surviving spouse, Chan Chi, as her share in the conjugal
partnership; and the other half, equivalent to P207,743.60, will be divided among Chan Chi and the seven children in
equal pro indiviso shares equivalent to P25,967.00 each.6 In said document, Chan Chi and the six children likewise
agreed to voluntarily renounce and waive their shares over Hagonoy Lumber in favor of their co-heir, Chua Sioc Huan.

In May 1988, petitioner Concepcion Chua Gaw and her husband, Antonio Gaw, asked respondent, Suy Ben Chua, to
lend them P200,000.00 which they will use for the construction of their house in Marilao, Bulacan. The parties agreed
that the loan will be payable within six (6) months without interest. 7 On June 7, 1988, respondent issued in their favor
China Banking Corporation Check No. 2408108 for P200,000.00 which he delivered to the couple’s house in Marilao,
Bulacan. Antonio later encashed the check.

On August 1, 1990, their sister, Chua Sioc Huan, executed a Deed of Sale over all her rights and interests in Hagonoy
Lumber for a consideration of P255,000.00 in favor of respondent.9

Meantime, the spouses Gaw failed to pay the amount they borrowed from respondent within the designated period.
Respondent sent the couple a demand letter, 10 dated March 25, 1991, requesting them to settle their obligation with
the warning that he will be constrained to take the appropriate legal action if they fail to do so.
28

Failing to heed his demand, respondent filed a Complaint for Sum of Money against the spouses Gaw with the RTC. The
complaint alleged that on June 7, 1988, he extended a loan to the spouses Gaw for P200,000.00, payable within six
months without interest, but despite several demands, the couple failed to pay their obligation. 11

In their Answer (with Compulsory Counterclaim), the spouses Gaw contended that the P200,000.00 was not a loan but
petitioner’s share in the profits of Hagonoy Lumber, one of her family’s businesses. According to the spouses, when
they transferred residence to Marilao, Bulacan, petitioner asked respondent for an accounting, and payment of her
share in the profits, of Capital Sawmills Corporation, Columbia Wood Industries Corporation, and Hagonoy Lumber.
They claimed that respondent persuaded petitioner to temporarily forego her demand as it would offend their mother
who still wanted to remain in control of the family businesses. To insure that she will defer her demand, respondent
allegedly gave her P200,000.00 as her share in the profits of Hagonoy Lumber. 12

In his Reply, respondent averred that the spouses Gaw did not demand from him an accounting of Capitol Sawmills
Corporation, Columbia Wood Industries, and Hagonoy Lumber. He asserted that the spouses Gaw, in fact, have no right
whatsoever in these businesses that would entitle them to an accounting thereof. Respondent insisted that
the P200,000.00 was given to and accepted by them as a loan and not as their share in Hagonoy Lumber. 13

With leave of court, the spouses Gaw filed an Answer (with Amended Compulsory Counterclaim) wherein they insisted
that petitioner, as one of the compulsory heirs, is entitled to one-sixth (1/6) of Hagonoy Lumber, which the respondent
has arrogated to himself. They claimed that, despite repeated demands, respondent has failed and refused to account
for the operations of Hagonoy Lumber and to deliver her share therein. They then prayed that respondent make an
accounting of the operations of Hagonoy Lumber and to deliver to petitioner her one-sixth (1/6) share thereof, which
was estimated to be worth not less than P500,000.00.14

In his Answer to Amended Counterclaim, respondent explained that his sister, Chua Sioc Huan, became the sole owner
of Hagonoy Lumber when the heirs executed the Deed of Partition on December 8, 1986. In turn, he became the sole
owner of Hagonoy Lumber when he bought it from Chua Sioc Huan, as evidenced by the Deed of Sale dated August 1,
1990.15

Defendants, in their reply,16 countered that the documents on which plaintiff anchors his claim of ownership over
Hagonoy Lumber were not true and valid agreements and do not express the real intention of the parties. They
claimed that these documents are mere paper arrangements which were prepared only upon the advice of a counsel
until all the heirs could reach and sign a final and binding agreement, which, up to such time, has not been executed
by the heirs.17

During trial, the spouses Gaw called the respondent to testify as adverse witness under Section 10, Rule 132. On direct
examination, respondent testified that Hagonoy Lumber was the conjugal property of his parents Chua Chin and Chan
Chi, who were both Chinese citizens. He narrated that, initially, his father leased the lots where Hagonoy Lumber is
presently located from his godfather, Lu Pieng, and that his father constructed the two-storey concrete building
standing thereon. According to respondent, when he was in high school, it was his father who managed the business
but he and his other siblings were helping him. Later, his sister, Chua Sioc Huan, managed Hogonoy Lumber together
with their other brothers and sisters. He stated that he also managed Hagonoy Lumber when he was in high school,
but he stopped when he got married and found another job. He said that he now owns the lots where Hagonoy Lumber
is operating.18

On cross-examination, respondent explained that he ceased to be a stockholder of Capitol Sawmill when he sold his
shares of stock to the other stockholders on January 1, 1991. He further testified that Chua Sioc Huan acquired
Hagonoy Lumber by virtue of a Deed of Partition, executed by the heirs of Chua Chin. He, in turn, became the owner of
Hagonoy Lumber when he bought the same from Chua Sioc Huan through a Deed of Sale dated August 1, 1990. 19

On re-direct examination, respondent stated that he sold his shares of stock in Capitol Sawmill for P254,000.00, which
payment he received in cash. He also paid the purchase price of P255,000.00 for Hagonoy Lumber in cash, which
payment was not covered by a separate receipt as he merely delivered the same to Chua Sioc Huan at her house in
Paso de Blas, Valenzuela. Although he maintains several accounts at Planters Bank, Paluwagan ng Bayan, and China
Bank, the amount he paid to Chua Sioc Huan was not taken from any of them. He kept the amount in the house
because he was engaged in rediscounting checks of people from the public market. 20

On December 10, 1998, Antonio Gaw died due to cardio vascular and respiratory failure. 21

The RTC held that respondent is entitled to the payment of the amount of P200,000.00 with interest. It noted that
respondent personally issued Check No. 240810 to petitioner and her husband upon their request to lend them the
aforesaid amount. The trial court concluded that the P200,000.00 was a loan advanced by the respondent from his
own funds and not remunerations for services rendered to Hagonoy Lumber nor petitioner’s advance share in the
profits of their parents’ businesses.

The trial court further held that the validity and due execution of the Deed of Partition and the Deed of Sale,
evidencing transfer of ownership of Hagonoy Lumber from Chua Sioc Huan to respondent, was never impugned.
Although respondent failed to produce the originals of the documents, petitioner judicially admitted the due execution
of the Deed of Partition, and even acknowledged her signature thereon, thus constitutes an exception to the best
evidence rule. As for the Deed of Sale, since the contents thereof have not been put in issue, the non-presentation of
the original document is not fatal so as to affect its authenticity as well as the truth of its contents. Also, the parties to
the documents themselves do not contest their validity. Ultimately, petitioner failed to establish her right to demand
an accounting of the operations of Hagonoy Lumber nor the delivery of her 1/6 share therein.

As for petitioner’s claim that an accounting be done on Capitol Sawmill Corporation and Columbia Wood Industries, the
trial court held that respondent is under no obligation to make such an accounting since he is not charged with
operating these enterprises.23
29

Aggrieved, petitioner appealed to the CA, alleging that the trial court erred (1) when it considered the amount
of P200,000.00 as a loan obligation and not Concepcion’s share in the profits of Hagonoy Lumber; (2) when it
considered as evidence for the defendant, plaintiff’s testimony when he was called to testify as an adverse party under
Section 10 (e), Rule 132 of the Rules of Court; and (3) when it considered admissible mere copies of the Deed of
Partition and Deed of Sale to prove that respondent is now the owner of Hagonoy Lumber. 24

On May 23, 2003, the CA affirmed the Decision of the RTC. 25 The appellate court found baseless the petitioner’s
argument that the RTC should not have included respondent’s testimony as part of petitioner’s evidence. The CA noted
that the petitioner went on a fishing expedition, the taking of respondent’s testimony having taken up a total of eleven
hearings, and upon failing to obtain favorable information from the respondent, she now disclaims the same.
Moreover, the CA held that the petitioner failed to show that the inclusion of respondent’s testimony in the statement
of facts in the assailed decision unduly prejudiced her defense and counterclaims. In fact, the CA noted that the facts
testified to by respondent were deducible from the totality of the evidence presented.

The CA likewise found untenable petitioner’s claim that Exhibits "H" (Deed of Sale) and Exhibit "I" (Deed of Partition)
were merely temporary paper arrangements. The CA agreed with the RTC that the testimony of petitioner regarding
the matter was uncorroborated — she should have presented the other heirs to attest to the truth of her allegation.
Instead, petitioner admitted the due execution of the said documents. Since petitioner did not dispute the due
execution and existence of Exhibits "H" and "I", there was no need to produce the originals of the documents in
accordance with the best evidence rule.26

On December 2, 2003, the CA denied the petitioner’s motion for reconsideration for lack of merit. 27

Petitioner is before this Court in this petition for review on certiorari, raising the following errors:

I. THAT ON THE PRELIMINARY IMPORTANT RELATED ISSUE, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN
COMMITTED IN THE APPLICATION AND LEGAL SIGNIFICANCE OF THE RULE ON EXAMINATION OF ADVERSE
PARTY OR HOSTILE WITNESS UNDER SECTION 10 (d) AND (e) OF RULE 132, CAUSING SERIOUS DOUBT ON THE
LOWER COURT’S APPEALED DECISION’S OBJECTIVITY, ANNEX "C".

II. THAT ON THE IMPORTANT LEGAL ISSUE RELATIVE TO THE AFORESAID TWO OPPOSING CLAIMS OF
RESPONDENT AND PETITIONER, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED UNDER THE
LOWER COURT’S DECISION ANNEX "C" AND THE QUESTIONED DECISION OF MAY 23, 2003 (ANNEX "A") AND
THE RESOLUTION OF DECEMBER 2, 2003, (ANNEX "B") IN DEVIATING FROM AND DISREGARDING ESTABLISHED
SUPREME COURT DECISIONS ENJOINING COURTS NOT TO OVERLOOK OR MISINTERPRET IMPORTANT FACTS AND
CIRCUMSTANCES, SUPPORTED BY CLEAR AND CONVINCING EVIDENCE ON RECORD, AND WHICH ARE OF GREAT
WEIGHT AND VALUE, WHICH WOULD CHANGE THE RESULT OF THE CASE AND ARRIVE AT A JUST, FAIR AND
OBJECTIVE DECISION. (Citations omitted)

III. THAT FINALLY, AS TO THE OTHER LEGAL IMPORTANT ISSUE RELATIVE TO CLAIM OR OWNERSHIP OF THE
"Hagonoy Lumber" FAMILY BUSINESS, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED ON THE
REQUIREMENTS AND CORRECT APPLICATION OF THE "BEST EVIDENCE RULE" UNDER SECTION 3, RULE 130 OF
THE REVISED RULES OF COURT.28

The petition is without merit.

Petitioner contends that her case was unduly prejudiced by the RTC’s treatment of the respondent’s testimony as
adverse witness during cross-examination by his own counsel as part of her evidence. Petitioner argues that the
adverse witness’ testimony elicited during cross-examination should not be considered as evidence of the calling party.
She contends that the examination of respondent as adverse witness did not make him her witness and she is not
bound by his testimony, particularly during cross-examination by his own counsel. 29 In particular, the petitioner avers
that the following testimony of the respondent as adverse witness should not be considered as her evidence:

(11.a) That RESPONDENT-Appellee became owner of the "HAGONOY LUMBER" business when he bought the
same from Chua Sioc Huan through a Deed of Sale dated August 1, 1990 (EXH.H);

(11.b) That the "HAGONOY LUMBER," on the other hand, was acquired by the sister Chua Sioc Huan, by virtue
of Extrajudicial Partition and Renunciation of Hereditary Rights in favor of a Co-Heir (EXH. I);

(11.c) That the 3 lots on which the "HAGONOY LUMBER" business is located were acquired by Lu Pieng from the
Santos family under the Deed of Absolute Sale (EXH. J); that Lu Pieng sold the Lots to Chua Suy Lu in 1976
(EXHS. K, L, & M.); that Chua Siok Huan eventually became owner of the 3 Lots; and in 1989 Chua Sioc Huan
sold them to RESPONDENT-Appellee (EXHS. Q and P); that after he acquired the 3 Lots, he has not sold them to
anyone and he is the owner of the lots.30

We do not agree that petitioner’s case was prejudiced by the RTC’s treatment of the respondent’s testimony during
cross-examination as her evidence.

If there was an error committed by the RTC in ascribing to the petitioner the respondent’s testimony as adverse
witness during cross-examination by his own counsel, it constitute a harmless error which would not, in any way,
change the result of the case.

In the first place, the delineation of a piece of evidence as part of the evidence of one party or the other is only
significant in determining whether the party on whose shoulders lies the burden of proof was able to meet the
quantum of evidence needed to discharge the burden. In civil cases, that burden devolves upon the plaintiff who must
establish her case by preponderance of evidence. The rule is that the plaintiff must rely on the strength of his own
evidence and not upon the weakness of the defendant’s evidence. Thus, it barely matters who with a piece of evidence
is credited. In the end, the court will have to consider the entirety of the evidence presented by both parties.
30

Preponderance of evidence is then determined by considering all the facts and circumstances of the case, culled from
the evidence, regardless of who actually presented it.31

That the witness is the adverse party does not necessarily mean that the calling party will not be bound by the
former’s testimony. The fact remains that it was at his instance that his adversary was put on the witness stand. Unlike
an ordinary witness, the calling party may impeach an adverse witness in all respects as if he had been called by the
adverse party,32 except by evidence of his bad character.33 Under a rule permitting the impeachment of an adverse
witness, although the calling party does not vouch for the witness’ veracity, he is nonetheless bound by his testimony
if it is not contradicted or remains unrebutted.34

A party who calls his adversary as a witness is, therefore, not bound by the latter’s testimony only in the sense that he
may contradict him by introducing other evidence to prove a state of facts contrary to what the witness testifies
on.35 A rule that provides that the party calling an adverse witness shall not be bound by his testimony does not mean
that such testimony may not be given its proper weight, but merely that the calling party shall not be precluded from
rebutting his testimony or from impeaching him.36 This, the petitioner failed to do.

In the present case, the petitioner, by her own testimony, failed to discredit the respondent’s testimony on how
Hagonoy Lumber became his sole property. The petitioner admitted having signed the Deed of Partition but she
insisted that the transfer of the property to Chua Siok Huan was only temporary. On cross-examination, she confessed
that no other document was executed to indicate that the transfer of the business to Chua Siok Huan was a temporary
arrangement. She declared that, after their mother died in 1993, she did not initiate any action concerning Hagonoy
Lumber, and it was only in her counterclaim in the instant that, for the first time, she raised a claim over the business.

Due process requires that in reaching a decision, a tribunal must consider the entire evidence presented. 37 All the
parties to the case, therefore, are considered bound by the favorable or unfavorable effects resulting from the
evidence.38 As already mentioned, in arriving at a decision, the entirety of the evidence presented will be considered,
regardless of the party who offered them in evidence. In this light, the more vital consideration is not whether a piece
of evidence was properly attributed to one party, but whether it was accorded the apposite probative weight by the
court. The testimony of an adverse witness is evidence in the case and should be given its proper weight, and such
evidence becomes weightier if the other party fails to impeach the witness or contradict his testimony.

Significantly, the RTC’s finding that the P200,000.00 was given to the petitioner and her husband as a loan is
supported by the evidence on record. Hence, we do not agree with the petitioner’s contention that the RTC has
overlooked certain facts of great weight and value in arriving at its decision. The RTC merely took into consideration
evidence which it found to be more credible than the self-serving and uncorroborated testimony of the petitioner.

At this juncture, we reiterate the well-entrenched doctrine that the findings of fact of the CA affirming those of the trial
court are accorded great respect, even finality, by this Court. Only errors of law, not of fact, may be reviewed by this
Court in petitions for review on certiorari under Rule 45.39 A departure from the general rule may be warranted where
the findings of fact of the CA are contrary to the findings and conclusions of the trial court, or when the same is
unsupported by the evidence on record.40 There is no reason to apply the exception in the instant case because the
findings and conclusions of the CA are in full accord with those of the trial court. These findings are buttressed by the
evidence on record. Moreover, the issues and errors alleged in this petition are substantially the very same questions
of fact raised by petitioner in the appellate court.

On the issue of whether the P200,000.00 was really a loan, it is well to remember that a check may be evidence of
indebtedness.41 A check, the entries of which are in writing, could prove a loan transaction. 42 It is pure naiveté to insist
that an entrepreneur who has several sources of income and has access to considerable bank credit, no longer has any
reason to borrow any amount.

The petitioner’s allegation that the P200,000.00 was advance on her share in the profits of Hagonoy Lumber is
implausible. It is true that Hagonoy Lumber was originally owned by the parents of petitioner and respondent.
However, on December 8, 1986, the heirs freely renounced and waived in favor of their sister Chua Sioc Huan all their
hereditary shares and interest therein, as shown by the Deed of Partition which the petitioner herself signed. By virtue
of this deed, Chua Sioc Huan became the sole owner and proprietor of Hagonoy Lumber. Thus, when the respondent
delivered the check for P200,000.00 to the petitioner on June 7, 1988, Chua Sioc Huan was already the sole owner of
Hagonoy Lumber. At that time, both petitioner and respondent no longer had any interest in the business enterprise;
neither had a right to demand a share in the profits of the business. Respondent became the sole owner of Hagonoy
Lumber only after Chua Sioc Huan sold it to him on August 1, 1990. So, when the respondent delivered to the
petitioner the P200,000.00 check on June 7, 1988, it could not have been given as an advance on petitioner’s share in
the business, because at that moment in time both of them had no participation, interest or share in Hagonoy Lumber.
Even assuming, arguendo, that the check was an advance on the petitioner’s share in the profits of the business, it
was highly unlikely that the respondent would deliver a check drawn against his personal, and not against the business
enterprise’s account.

It is also worthy to note that both the Deed of Partition and the Deed of Sale were acknowledged before a Notary
Public. The notarization of a private document converts it into a public document, and makes it admissible in court
without further proof of its authenticity.43 It is entitled to full faith and credit upon its face. 44 A notarized document
carries evidentiary weight as to its due execution, and documents acknowledged before a notary public have in their
favor the presumption of regularity. Such a document must be given full force and effect absent a strong, complete
and conclusive proof of its falsity or nullity on account of some flaws or defects recognized by law. 45 A public document
executed and attested through the intervention of a notary public is, generally, evidence of the facts therein express in
clear unequivocal manner.46

Petitioner, however, maintains that the RTC erred in admitting in evidence a mere copy of the Deed of Partition and the
Deed of Sale in violation of the best evidence rule. In addition, petitioner insists that the Deed of Sale was not the
result of bona fide negotiations between a true seller and buyer.
31

The "best evidence rule" as encapsulated in Rule 130, Section 3, 47 of the Revised Rules of Civil Procedure 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 to account for the original. 48 Moreover, production of the original may be dispensed with, in the trial
court’s discretion, whenever the opponent does not bona fide dispute the contents of the document and no other
useful purpose will be served by requiring production. 49

Accordingly, we find that the best evidence rule is not applicable to the instant case. Here, there was no dispute as to
the terms of either deed; hence, the RTC correctly admitted in evidence mere copies of the two deeds. The petitioner
never even denied their due execution and admitted that she signed the Deed of Partition. 50 As for the Deed of Sale,
petitioner had, in effect, admitted its genuineness and due execution when she failed to specifically deny it in the
manner required by the rules.51 The petitioner merely claimed that said documents do not express the true agreement
and intention of the parties since they were only provisional paper arrangements made upon the advice of
counsel.52 Apparently, the petitioner does not contest the contents of these deeds but alleges that there was a
contemporaneous agreement that the transfer of Hagonoy Lumber to Chua Sioc Huan was only temporary.

An agreement or the contract between the parties is the formal expression of the parties’ rights, duties and
obligations. It is the best evidence of the intention of the parties. 53 The parties’ intention is to be deciphered from the
language used in the contract, not from the unilateral post facto assertions of one of the parties, or of third parties who
are strangers to the contract.54 Thus, when the terms of an agreement have been reduced to writing, it is deemed to
contain 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. 55

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No.
66790 dated May 23, 2003 and Resolution dated December 2, 2003 are AFFIRMED.

G.R. No. 142641 July 17, 2006

PACIFICO B. ARCEO, JR., petitioner,


vs.
PEOPLE OF THE PHILIPPINES, respondent.

DECISION

CORONA, J.:

This petition for review on certiorari assails the April 28, 1999 decision 1 and March 27, 2000 resolution2 of the Court of
Appeals in CA-G.R. CR No. 19601 affirming the trial court’s judgment finding petitioner Pacifico B. Arceo, Jr. liable for
violation of Batas Pambansa Blg. (BP) 22, otherwise known as the "Bouncing Checks Law."

The facts of the case as found by the trial court and adopted by the Court of Appeals follow.

On March 14, 1991, [petitioner], obtained a loan from private complainant Josefino Cenizal [] in the amount
of P100,000.00. Several weeks thereafter, [petitioner] obtained an additional loan of P50,000.00 from
[Cenizal]. [Petitioner] then issued in favor of Cenizal, Bank of the Philippine Islands [(BPI)] Check No. 163255,
postdated August 4, 1991, for P150,000.00, at Cenizal’s house located at 70 Panay Avenue, Quezon City. When
August 4, 1991 came, [Cenizal] did not deposit the check immediately because [petitioner] promised [] that he
would replace the check with cash. Such promise was made verbally seven (7) times. When his patience ran
out, [Cenizal] brought the check to the bank for encashment. The head office of the Bank of the Philippine
Islands through a letter dated December 5, 1991, informed [Cenizal] that the check bounced because of
insufficient funds.

Thereafter, [Cenizal] went to the house of [petitioner] to inform him of the dishonor of the check but [Cenizal]
found out that [petitioner] had left the place. So, [Cenizal] referred the matter to a lawyer who wrote a letter
giving [petitioner] three days from receipt thereof to pay the amount of the check. [Petitioner] still failed to
make good the amount of the check. As a consequence, [Cenizal] executed on January 20, 1992 before the
office of the City Prosecutor of Quezon City his affidavit and submitted documents in support of his complaint
for [e]stafa and [v]iolation of [BP 22] against [petitioner]. After due investigation, this case for [v]iolation of [BP
22] was filed against [petitioner] on March 27, 1992. The check in question and the return slip were however
lost by [Cenizal] as a result of a fire that occurred near his residence on September 16, 1992. [Cenizal]
executed an Affidavit of Loss regarding the loss of the check in question and the return slip. 3

After trial, petitioner was found guilty as charged. Aggrieved, he appealed to the Court of Appeals. However, on April
28, 1999, the appellate court affirmed the trial court’s decision in toto. Petitioner sought reconsideration but it was
denied. Hence, this petition.

Petitioner claims that the trial and appellate courts erred in convicting him despite the failure of the prosecution to
present the dishonored check during the trial. He also contends that he should not be held liable for the dishonor of
the check because it was presented beyond the 90-day period provided under the law. Petitioner further questions his
conviction since the notice requirement was not complied with and he was given only three days to pay, not five
banking days as required by law. Finally, petitioner asserts that he had already paid his obligation to Cenizal.

Petitioner’s contentions have no merit.

Significance of the 90-day Period


For Presentment of the Check
32

Petitioner asserts that there was no violation of BP 22 because the check was presented to the drawee bank only on
December 5, 1991 or 120 days from the date thereof (August 4, 1991). He argues that this was beyond the 90-day
period provided under the law in connection with the presentment of the check. We disagree.

Section 1 of BP 22 provides:

SECTION 1. Checks without sufficient funds Any person who makes or draws and issues any check to apply on
account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its presentment, which check is subsequently
dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same
reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by
imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than but not
more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or
both such fine and imprisonment at the discretion of the court.

The same penalty shall be imposed upon any person who, having sufficient funds in or credit with the drawee
bank when he makes or draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to
cover the full amount of the check if presented within a period of ninety (90) days from the date appearing
thereon, for which reason it is dishonored by the drawee bank.

Where the check is drawn by a corporation, company or entity, the person or persons who actually signed the
check in behalf of such drawer shall be liable under this Act.

In Wong v. Court of Appeals,4 the Court ruled that the 90-day period provided in the law is not an element of the
offense. Neither does it discharge petitioner from his duty to maintain sufficient funds in the account within a
reasonable time from the date indicated in the check. According to current banking practice, the reasonable period
within which to present a check to the drawee bank is six months. Thereafter, the check becomes stale and the drawer
is discharged from liability thereon to the extent of the loss caused by the delay.

Thus, Cenizal’s presentment of the check to the drawee bank 120 days (four months) after its issue was still within the
allowable period. Petitioner was freed neither from the obligation to keep sufficient funds in his account nor from
liability resulting from the dishonor of the check.

Applicability of the
Best Evidence Rule

Petitioner’s insistence on the presentation of the check in evidence as a condition sine qua non for conviction under BP
22 is wrong. Petitioner anchors his argument on Rule 130, Section 3, of the Rules of Court, otherwise known as the best
evidence rule. However, the rule applies only where the content of the document is the subject of the inquiry. Where
the issue is the execution or existence of the document or the circumstances surrounding its execution, the best
evidence rule does not apply and testimonial evidence is admissible. 5

The gravamen of the offense is the act of drawing and issuing a worthless check. 6 Hence, the subject of the inquiry is
the fact of issuance or execution of the check, not its content.

Here, the due execution and existence of the check were sufficiently established. Cenizal testified that he presented
the originals of the check, the return slip and other pertinent documents before the Office of the City Prosecutor of
Quezon City when he executed his complaint-affidavit during the preliminary investigation. The City Prosecutor found
a prima facie case against petitioner for violation of BP 22 and filed the corresponding information based on the
documents. Although the check and the return slip were among the documents lost by Cenizal in a fire that occurred
near his residence on September 16, 1992, he was nevertheless able to adequately establish the due execution,
existence and loss of the check and the return slip in an affidavit of loss as well as in his testimony during the trial of
the case.

Moreover, petitioner himself admited that he issued the check. He never denied that the check was presented for
payment to the drawee bank and was dishonored for having been drawn against insufficient funds.

Presence of the
Elements of the Offense

Based on the allegations in the information,7 petitioner was charged for violating the first paragraph of BP 22. The
elements of the offense are:

1. the making, drawing and issuance of any check to apply to account or for value;

2. knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in or
credit with the drawee bank for the payment of the check in full upon its presentment; and

3. subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor of the
check for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment. 8

All these elements are present in this case.

Both the trial and appellate courts found that petitioner issued BPI check no. 163255 postdated August 4, 1991 in the
amount of P150,000 in consideration of a loan which he obtained from Cenizal. When the check was deposited, it was
dishonored by the drawee bank for having been drawn against insufficient funds. There was sufficient evidence on
record that petitioner knew of the insufficiency of his funds in the drawee bank at the time of the issuance of the
33

check. In fact, this was why, on maturity date, he requested the payee not to encash it with the promise that he would
replace it with cash. He made this request and assurance seven times but repeatedly failed to make good on his
promises despite the repeated accommodation granted him by the payee, Cenizal.

Notice of Dishonor to Petitioner


And Payment of the Obligation

The trial court found that, contrary to petitioner’s claim, Cenizal’s counsel had informed petitioner in writing of the
check’s dishonor and demanded payment of the value of the check. Despite receipt of the notice of dishonor and
demand for payment, petitioner still failed to pay the amount of the check.

Petitioner cannot claim that he was deprived of the period of five banking days from receipt of notice of dishonor
within which to pay the amount of the check.9 While petitioner may have been given only three days to pay the value
of the check, the trial court found that the amount due thereon remained unpaid even after five banking days from his
receipt of the notice of dishonor. This negated his claim that he had already paid Cenizal and should therefore be
relieved of any liability.

Moreover, petitioner’s claim of payment was nothing more than a mere allegation. He presented no proof to support it.
If indeed there was payment, petitioner should have redeemed or taken the check back in the ordinary course of
business.10 Instead, the check remained in the possession of the payee who demanded the satisfaction of petitioner’s
obligation when the check became due as well as when the check was dishonored by the drawee bank.

These findings (due notice to petitioner and nonpayment of the obligation) were confirmed by the appellate court. This
Court has no reason to rule otherwise. Well-settled is the rule that the factual findings of the trial court, when affirmed
by the appellate court, are not to be disturbed. 11

WHEREFORE, the petition is hereby DENIED. The April 28, 1999 decision and March 27, 2000 resolution of the Court
of Appeals in CA-G.R. CR No. 19601 are AFFIRMED.

G.R. No. 152807 August 12, 2003

HEIRS OF LOURDES SAEZ SABANPAN: BERNARDO S. SABANPAN, RENE S. SABANPAN, DANILO S.


SABANPAN and THELMA S. CHU; HEIRS OF ADOLFO SAEZ: MA. LUISA SAEZ TAPIZ, MA. VICTORIA SAEZ
LAPITAN, MA. BELEN SAEZ and EMMANUEL SAEZ; and HEIRS OF CRISTINA SAEZ GUTIERREZ: ROY SAEZ
GUTIERREZ and LUIS SAEZ JR., petitioners,
vs.
ALBERTO C. COMORPOSA, HERDIN C. COMORPOSA, OFELIA C. ARIEGO,1 REMEDIOS COMORPOSA, VIRGILIO
A. LARIEGO,1a BELINDA M. COMORPOSA and ISABELITA H. COMORPOSA, respondents.

PANGANIBAN, J.:

The admissibility of evidence should be distinguished from its probative value. Just because a piece of evidence is
admitted does not ipso facto mean that it conclusively proves the fact in dispute.

The Case

Before us is a Petition for Review2 under Rule 45 of the Rules of Court, seeking to set aside the August 7, 2001 Decision
and the February 27, 2002 Resolution of the Court of Appeals 3 (CA) in CA-GR SP No. 60645. The dispositive portion of
the assailed Decision reads as follows:

"WHEREFORE, in view of all the foregoing, the Court hereby AFFIRMS the Decision dated 22 June 2000
rendered by Branch 18 of the Regional Trial Court of Digos, Davao del Sur, REVERSING and SETTING ASIDE the
Decision of the Municipal Trial Court of Sta. Cruz, Davao del Su[r]." 4

The assailed Resolution5 denied petitioners' Motion for Reconsideration.

The Facts

The CA summarized the factual antecedents of the case as follows:

"A [C]omplaint for unlawful detainer with damages was filed by [petitioners] against [respondents] before the
Santa Cruz, Davao del Sur Municipal Trial Court.

"The [C]omplaint alleged that Marcos Saez was the lawful and actual possessor of Lot No. 845, Land 275
located at Darong, Sta. Cruz, Davao del Sur with an area of 1.2 hectares. In 1960, he died leaving all his heirs,
his children and grandchildren.

"In 1965, Francisco Comorposa who was working in the land of Oboza was terminated from his job. The
termination of his employment caused a problem in relocating his house. Being a close family friend of
[Marcos] Saez, Francisco Comorposa approached the late Marcos Saez's son, [Adolfo] Saez, the husband of
Gloria Leano Saez, about his problem. Out of pity and for humanitarian consideration, Adolfo allowed Francisco
Comorposa to occupy the land of Marcos Saez. Hence, his nipa hut was carried by his neighbors and
transferred to a portion of the land subject matter of this case. Such transfer was witnessed by several people,
among them, Gloria Leano and Noel Oboza. Francisco Comorposa occupied a portion of Marcos Saez' property
without paying any rental.
34

"Francisco Comorposa left for Hawaii, U.S.A. He was succeeded in his possession by the respondents who
likewise did not pay any rental and are occupying the premises through petitioners' tolerance.

"On 7 May 1998, a formal demand was made upon the respondents to vacate the premises but the latter
refused to vacate the same and claimed that they [were] the legitimate claimants and the actual and lawful
possessor[s] of the premises. A [C]omplaint was filed with the barangay office of Sta. Cruz[,] Davao del Sur,
but the parties failed to arrive at an amicable settlement. Thus, the corresponding Certificate to File Action was
issued by the said barangay and an action for unlawful detainer was filed by petitioners against respondents.

"Respondents, in their Answer, denied the material allegations of the [C]omplaint and alleged that they
entered and occupied the premises in their own right as true, valid and lawful claimants, possessors and
owners of the said lot way back in 1960 and up to the present time; that they have acquired just and valid
ownership and possession of the premises by ordinary or extraordinary prescription, and that the Regional
Director of the DENR, Region XI has already upheld their possession over the land in question when it ruled
that they [were] the rightful claimants and possessors and [were], therefore, entitled to the issuance of a title.

"The Municipal Trial Court of Sta. Cruz, Davao del Sur rendered judgment in favor of petitioners but the
Regional Trial Court of Digos, Davao del Sur, on appeal, reversed and set aside the said decision. x x x" 6

Ruling of the Court of Appeals

Affirming the Regional Trial Court (RTC), the CA upheld the right of respondents as claimants and possessors. The
appellate court held that -- although not yet final -- the Order issued by the regional executive director of the
Department of Environment and Natural Resources (DENR) remained in full force and effect, unless declared null and
void. The CA added that the Certification issued by the DENR's community environment and natural resources (CENR)
officer was proof that when the cadastral survey was conducted, the land was still alienable and was not yet allocated
to any person.

According to the CA, respondents had the better right to possess alienable and disposable land of the public domain,
because they have sufficiently proven their actual, physical, open, notorious, exclusive, continuous and uninterrupted
possession thereof since 1960. The appellate court deemed as self-serving, and therefore incredible, the Affidavits
executed by Gloria Leano Saez, Noel Oboza and Paulina Paran.

Hence, this Petition.7

The Issue

In their Memorandum, petitioners raise the following issues for the Court's consideration:

"I

Did the Court of Appeals gravely abuse its discretion and [err] in sustaining the ruling of the Regional Trial
Court giving credence to the Order dated 2 April 1998 issued by the regional executive director?

"II

Did the Court of Appeals gravely abuse its discretion and err in sustaining the Regional Trial Court's ruling
giving weight to the CENR Officer's Certification, which only bears the facsimile of the alleged signature of a
certain Jose F. Tagorda and, [worse], it is a new matter raised for the first time on appeal?

"III

Did the Court of Appeals gravely abuse its discretion and err in holding that the land subject matter of this
case has been acquired by means of adverse possession and prescription?

"IV

Did the Court of Appeals gravely abuse its discretion, and err in declaring that, 'neither is there error on the
part of the Regional Trial Court, when it did not give importance to the affidavits by Gloria Leano Saez, Noel
[Oboza], and Paulina Paran for allegedly being self serving?'"8

To facilitate the discussion, the fourth and the third issues shall be discussed in reverse sequence.

The Court's Ruling

The Petition has no merit.

First Issue:
The DENR Order of April 2, 1998

Petitioners claim that the reliance of the CA upon the April 2, 1998 Order issued by the regional director of the DENR
was erroneous. The reason was that the Order, which had upheld the claim of respondents, was supposedly not yet
final and executory. Another Order dated August 23, 1999, 9 issued later by the DENR regional director, allegedly held
in abeyance the effectivity of the earlier one.
35

Under the Public Land Act,10 the management and the disposition of public land is under the primary control of the
director of lands11 (now the director of the Lands Management Bureau or LMB),12 subject to review by the DENR
secretary.13 As a rule, then, courts have no jurisdiction to intrude upon matters properly falling within the powers of the
LMB.

The powers given to the LMB and the DENR to alienate and dispose of public land does not, however, divest regular
courts of jurisdiction over possessory actions instituted by occupants or applicants to protect their respective
possessions and occupations.14 The power to determine who has actual physical possession or occupation of public
land and who has the better right of possession over it remains with the courts. 15 But once the DENR has decided,
particularly through the grant of a homestead patent and the issuance of a certificate of title, its decision on these
points will normally prevail.16

Therefore, while the issue as to who among the parties are entitled to a piece of public land remains pending with the
DENR, the question of recovery of possession of the disputed property is a matter that may be addressed to the
courts.

Second Issue:
CENR Officer's Certification

Petitioners contend that the CENR Certification dated July 22, 1997 is a sham document, because the signature of the
CENR officer is a mere facsimile. In support of their argument, they cite Garvida v. Sales Jr.17 and argue that the
Certification is a new matter being raised by respondents for the first time on appeal.

We are not persuaded.

In Garvida, the Court held:

"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. x x x" 18

Pleadings filed via fax machines are not considered originals and are at best exact copies. As such, they are not
admissible in evidence, as there is no way of determining whether they are genuine or authentic. 19

The Certification, on the other hand, is being contested for bearing a facsimile of the signature of CENR Officer Jose F.
Tagorda. The facsimile referred to is not the same as that which is alluded to in Garvida. The one mentioned here
refers to a facsimile signature, which is defined as a signature produced by mechanical means but recognized as valid
in banking, financial, and business transactions. 20

Note that the CENR officer has not disclaimed the Certification. In fact, the DENR regional director has acknowledged
and used it as reference in his Order dated April 2, 1998:

"x x x. CENR Officer Jose F. Tagorda, in a 'CERTIFICATION' dated 22 July 1997, certified among others, that: x x x
per records available in his Office, x x x the controverted lot x x x was not allocated to any person x x x."21

If the Certification were a sham as petitioner claims, then the regional director would not have used it as reference in
his Order. Instead, he would have either verified it or directed the CENR officer to take the appropriate action, as the
latter was under the former's direct control and supervision.

Petitioners' claim that the Certification was raised for the first time on appeal is incorrect. As early as the pretrial
conference at the Municipal Trial Court (MTC), the CENR Certification had already been marked as evidence for
respondents as stated in the Pre-trial Order.22 The Certification was not formally offered, however, because
respondents had not been able to file their position paper.

Neither the rules of procedure23 nor jurisprudence24 would sanction the admission of evidence that has not been
formally offered during the trial. But this evidentiary rule is applicable only to ordinary trials, not to cases covered by
the rule on summary procedure -- cases in which no full-blown trial is held. 25

Third Issue:
Affidavit of Petitioners' Witnesses

Petitioners assert that the CA erred in disregarding the Affidavits of their witnesses, insisting that the Rule on Summary
Procedure authorizes the use of affidavits. They also claim that the failure of respondents to file their position paper
and counter-affidavits before the MTC amounts to an admission by silence.

The admissibility of evidence should not be confused with its probative value. Admissibility refers to the question of
whether certain pieces of evidence are to be considered at all, while probative value refers to the question of whether
the admitted evidence proves an issue.26 Thus, a particular item of evidence may be admissible, but its evidentiary
weight depends on judicial evaluation within the guidelines provided by the rules of evidence. 27

While in summary proceedings affidavits are admissible as the witnesses' respective testimonies, the failure of the
adverse party to reply does not ipso facto render the facts, set forth therein, duly proven. Petitioners still bear the
burden of proving their cause of action, because they are the ones asserting an affirmative relief. 28

Fourth Issue:
Defense of Prescription
36

Petitioners claim that the court a quo erred in upholding the defense of prescription proffered by respondents. It is the
former's contention that since the latter's possession of the land was merely being tolerated, there was no basis for
the claim of prescription. We disagree.

For the Court to uphold the contention of petitioners, they have first to prove that the possession of respondents was
by mere tolerance. The only pieces of evidence submitted by the former to support their claim were a technical
description and a vicinity map drawn in accordance with the survey dated May 22, 1936. 29 Both of these were
discredited by the CENR Certification, which indicated that the contested lot had not yet been allocated to any person
when the survey was conducted.30 The testimony of petitioners' witnesses alone cannot prevail over respondents'
continued and uninterrupted possession of the subject lot for a considerable length of time.

Furthermore, this is an issue of fact that cannot, as a rule, be raised in a petition for review under Rule 45. 31

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

G.R. No. 177505 November 27, 2008

HEIRS OF GORGONIO MEDINA, namely: LEONOR T. MEDINA, RAMON T. MEDINA, ABIEL T. MEDINA,
ILUDIVINA M. ROSARI, CONCEPCION DE LA CRUZ, LEONOR M. BAKKER, SAMUEL T. MEDINA, VICTOR T.
MEDINA, TERESITA M. SABADO, JOSEFINA M. CANAS and VERONICA M. DE GUZMAN, petitioners,
vs.
BONIFACIO NATIVIDAD, represented by PHILIP M. NATIVIDAD, respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks to set
aside the Decision1 of the Court of Appeals dated 20 November 2006 in CA-G.R. CV No. 82160 affirming with
modification the Decision2 of Branch 33 of the Regional Trial Court (RTC) of Guimba, Nueva Ecija, in Civil Case No.
1165-G and its Resolution3 dated 16 April 2007 denying petitioners’ motion for reconsideration.

The factual antecedents are as follows:

On 16 May 1969, Tirso Medina, Pacifico M. Ruiz, Gorgonio D. Medina, Vivencio M. Ruiz, and Dominica Medina, co-
owners of a parcel of land (Lot 1199, Cad-162, Guimba Cadastre, plan Ap-23418) situated in Poblacion, Municipality of
Guimba, Province of Nueva Ecija, containing an area of two thousand three hundred thirty nine (2,339) square meters,
agreed to divide and allot for themselves the said land. A sketch 4 signed by the co-owners showed the respective
portions of land allotted to each. Gorgonio D. Medina received two portions of said land. One portion was allotted to
him alone, while the second portion was allotted to him together with Tirso Medina and Pacifico M. Ruiz. This second
portion is labeled as "Gorgonio Medina, Tirso Medina and Pacifico M. Ruiz" which is adjacent to the portion labeled as
"Dominica Medina."

On 29 March 1972, Gorgonio D. Medina, predecessor-in-interest of petitioners, executed a Deed of Absolute


Sale5 whereby he sold to respondent Bonifacio Natividad for P2,000.00 his share (1/3) in the second portion of land
including the improvements found therein.

Subsequently, a case for Partition with Damages, docketed as Civil Case No. 781-G, was filed before the RTC of
Guimba, Nueva Ecija, Branch 33, by Tirso Medina against the co-owners of Lot 1199, among whom are Gorgonio
Medina and Bonifacio Natividad. Bonifacio Natividad had likewise already bought the share of Dominica Medina in the
land.

The parties entered into a compromise agreement which they submitted to the Court. On 20 November 1989, the RTC
approved the agreement and rendered its decision based on the same. 6The Compromise Agreement as quoted by the
Court reads:

COMPROMISE AGREEMENT

COME NOW the parties, assisted by their respective counsel(s), and unto this Honorable Court respectfully
submit this Compromise Agreement in full and final settlement of their differences, to wit:

1. The parties herein are the exclusive co-owners of that certain parcel of land located at the Poblacion,
Guimba, Nueva Ecija, known as Lot 1199, Guimba Cadastre and more particularly described as follows:

A parcel of land (Lot 1199, of the Cadastral Survey of Guimba Cad. 162, plan Ap-23418, L.R. Case No. G-51,
L.R.C. Record No. N-40711), situated in the Poblacion, Municipality of Guimba, Province of Nueva Ecija. x x x
containing an area of TWO THOUSAND THREE HUNDRED AND THIRTY NINE (2,339) SQUARE METERS, more or
less. x x x.

xxxx

2. The herein parties recognize and acknowledge that their respective shares in the property aforementioned
as appearing in the aforesaid Original Certificate of Title No. 130366 have been modified by agreement
between them to allot a portion thereof to their co-owner, Vivencio M. Ruiz, to compensate for valuable
services rendered to the parties vis-à-vis the said property, separate and apart from his rightful share therein
as participating heir of Maria Medina;
37

3. The plaintiff Tirso Medina hereby withdraws any/all statements appearing on record which he may have
made in said case in the course of his testimony therein, and hereby asks the Honorable Court that said
statements be expunged or withdrawn from the record;

4. The foregoing considered, the parties have determined that it is to their mutual convenience and
advantage, and in accord with their common desire to preserve and maintain the existing family harmony and
solidarity to terminate their present community of ownership in the property aforementioned by mutual
agreement and adjudication, in the manner appearing in the Sketch Plan of Partition attached as an integral
part hereof as Annex "A" where the property is subdivided into Lot 1, 2, 3, 4, 5, and 6 and adjudicated, as
follows:

a. To Bonifacio Natividad, Lot No. 1, consisting of 480 square meters, more or less, representing the
interests of Dominica Medina which was sold to him per document of "Sale of Rights, Waiver and
Renunciation" appearing as Doc. No. 367; Page No. 75; Book No. 10; Series of 1968 in the Notarial
Register of Atty.

b. To VIVENCIO M. RUIZ, Lot No. 3 consisting of 370.21 square meters, more or less, as compensation
for valuable services rendered; free and clear from any/all liens or encumbrances whatsoever or from
the claims of any person whomsoever, except the present tenant/s thereon;

c. To the heirs of MARIA MEDINA, Lot No. 2 consisting of 370.21 square meters, more or less, without
prejudice to sales and dispositions already made by the respective heirs of their interests and
participations therein;

d. To TIRSO MEDINA, Lot No. 4 consisting of 369.29 square meters, more or less;

e. To the heirs of PACIFICO M. RUIZ, Lot No. 5 consisting of 369.29 square meters, more or less, and

f. To GORGONIA MEDINA, Lot No. 6, consisting of 369.29 square meters, more or less. 7

On 8 October 1991, the trial court issued an order supplementing its decision dated 20 November 1989 which reads in
part:

[T]hat the parties thereafter, engaged the services of one common geodetic engineer in the person of Rolly
Francisco to conduct the survey and effect the subdivision of Lot 1199, which was subdivided into Lots A, B, C,
D, E, and F, the area of which appears, thus:

Lot 1199-A with an area of 371 sq. ms., which lot now corresponds to Lot No. 4 adjudicated to Tirso
Medina;

Lot 1199-B with an area of 371 sq. ms., which lot now corresponds to Lot No. 5 adjudicated to Pacifico
Ruiz;

Lot 1199-C with an area of 371 sq. ms., which lot now corresponds to Lot No. 6 adjudicated to Gorgonio
Medina;

Lot 1199-D with an area of 482 sq. ms., which lot now corresponds to Lot No. 1 adjudicated to
Bonifacio Natividad;

Lot 1199-E with an area of 372 sq. ms., which lot now corresponds to Lot No. 2 adjudicated to Heirs of
Maria Medina; and

Lot 1199-F with an area of 372 sq. ms., which lot now corresponds to Lot No. 3 adjudicated to Vivencio
M. Ruiz; that in this subdivision made by the geodetic engineer, there was no change in the
designation of the particular places adjudicated to the parties, except the change in areas allotted
after the actual survey made.

WHEREFORE, finding the motion to be in order, the Court resolves to grant the same and hereby orders, that:

Lot 1199-A with an area of 371 sq. ms. is Lot 4, decision, adjudicated to Tirso Medina;

Lot 1199-B with an area of 371 sq. ms. is Lot 5, decision, adjudicated to Pacifico Ruiz;

Lot 1199-C with an area of 371 sq. ms. is Lot 6, decision, adjudicated to Gorgonio Medina;

Lot 1199-D with an area of 482 sq. ms. is Lot 1, decision, adjudicated to Bonifacio Natividad;

Lot 1199-E with an area of 372 sq. ms. is Lot 2, decision, adjudicated to Heirs of Maria Medina;

Lot 1199-F with an area of 372 sq. ms. is Lot 3, decision, adjudicated to Vivencio M. Ruiz.

This Order supplements the Decision dated November 20, 1989. 8


38

Pursuant to the court-approved partition, Lot 1199-C, measuring 371 square meters, was registered in the name of
Gorgonio Median for which Transfer Certificate of Title (TCT) No. NT-230248 of the Registry of Deeds for the Province of
Nueva Ecija was issued to him.9

On 11 June 2001, Bonifacio Natividad, thru his alleged Attorney-In-Fact, Philip M. Natividad, filed before the RTC of
Guimba, Nueva Ecija, Branch 31, a Complaint for Annulment of TCT No. NT-230248 and Damages. 10 It impleaded as
respondents Abiel Medina and Veronica de Guzman who are occupying the said land. Bonifacio asks, among other
things, that 1/3 of said land be surrendered to him because he had bought the same from Gorgonio Medina. In the
Answer11 filed by Abiel Medina and Veronica de Guzman, they argued, inter alia, that Philip Natividad had no legal
capacity to sue because the Special Power of Attorney annexed to the Complaint did not grant him such authority.
They further added that the Complaint failed to implead all the parties-in-interest considering that the ownership of
the land covered by TCT No. NT-230248 had already passed to eleven heirs of Gorgonio Medina.

Bonifacio, thru Philip, filed a Motion for Bill of Particulars 12 praying that an order be issued by the court directing Abiel
Medina and Veronica de Guzman to give the names and present addresses of all the heirs of Gorgonio Medina. Said
motion was opposed.13 In an order dated 15 October 2001, the trial court granted the motion. 14 Defendants complied
with the court’s order and submitted the names and addresses of all the heirs of Gorgonio Medina. 15

On 7 January 2002, Bonifacio filed a Motion for Leave to Admit Amended Complaint with prayer that summons upon
eight heirs be made through publication.16 The Amended Complaint impleaded all the heirs of Gorgonio Medina
(petitioners herein). In said amended complaint, a special power of attorney 17 dated 21 September 2001 allegedly
executed by Bonifacio Natividad in the State of Washington, United States of America, and acknowledged before
Phyllis Perry, a Notary Public of the State of Washington, USA, was attached authorizing Philip Natividad to:

1. To file all appropriate cases in court against the heirs of Gorgonio Medina for the recovery of the lot that I
purchased from said Gorgonio Medina by virtue of Deed of Absolute Sale executed on March 29, 1972 and
notarized by Atty. Inocencio B. Garampil under Doc. No. 435, Page No. 87, Book No. 1, Series of 1972, which lot
is now titled in the name of Gorgonio Medina under Transfer Certificate of Title No. NT-230248;

2. To institute all legal actions/cases in court for the annulment of said Transfer Certificate of Title No. NT
-230248 which now covers the lot I bought from Gorgonio Medina;

3. To represent me in all proceedings/hearings of the above-mentioned case/s up to its termination;

4. To enter into a fair and reasonable compromise agreement and do all acts for the protection and
preservation of my rights and interest over the above-mentioned lot;

5. To negotiate/transact with all persons, secure and sign all necessary documents for the attainment of the
above purposes.

In an Order dated18 30 January 2002, the trial court approved the motion and admitted the Amended Complaint. It
directed the issuance of the corresponding summons, the same to be published in a newspaper of general circulation
for three consecutive weeks. As to plaintiff’s authority to sue, the trial court ruled that said issue had been settled by
the special power of attorney attached to the Amended Complaint.

On 17 May 2002, the heirs of Gorgonio Medina filed a Motion to Dismiss 19 which the trial court denied on 20 August
2002.20 On 10 September 2002, the heirs filed their Answer raising the following defenses: prescription, laches, lack of
cause of action, lack of legal capacity to sue by Attorney-in-Fact, indefeasibility of TCT No. NT-230248 and lack of
jurisdiction over the case for failure of the plaintiff to comply with the mandatory requirement of the Katarungang
Pambarangay. Plaintiff filed his Reply dated 18 September 2002 specifically denying the allegations contained in the
Answer with Compulsory Counterclaim.21

During the Pre-Trial, the parties stipulated the following facts and issues:

a. TCT No. N-230248 in the name of Gorgonio Medina covers 371 square meters. This title was one of the titles
issued as transfer from Original Certificate of Title No. 130366. 22

b. TCT No. 230248 came into being by virtue of the decision in Civil Case No. 781-G, a case of partition among
Gorgonio Medina and his co-heirs decided by RTC Branch 33.

c. The late Gorgonio Medina executed a Deed of Absolute Sale over 1/3 portion of his share in a parcel of land
(Lot 1199, CAD-162 Guimba Cadastre) owned in common by him and his co-heirs.

d. The land subject of the deed of sale is not the one covered by TCT No. 230248.

Issues:

1. Whether the deed of sale of sale may be given effect notwithstanding the fact that the subject
thereof is different from the portion covered by TCT No. 230248.

2. Whether Mr. Philip Natividad is duly authorized to represent his father, Bonifacio Natividad in this
case.23

The parties manifested that after they shall have filed their respective memoranda, the case shall be submitted for
decision.
39

In its decision dated 10 December 2003, the trial court ruled in favor of Bonifacio Natividad. The decretal portion of the
decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff ordering the defendants to convey to the
plaintiff 1/3 portion of the lot covered by TCT No. 230248 together with the improvements thereon and to
account for, and deliver to the plaintiff the income derived therefrom from the institution of this case up to the
execution of this decision.

No pronouncement as to damages there being no reservation made by the plaintiff to present evidence
thereof.24

On the issue of Philip Natividad’s authority to represent his father, the court ruled that it was convinced that Philip was
authorized to represent his father by virtue of a notarized special power of attorney executed by Bonifacio attached to
the amended complaint. It explained that the document was a public document as defined under Section 20,
paragraph (a) of Rule 132 of the Rules of Court, the same having been notarized by a notary public for the State of
Washington, USA. In the absence of any evidence to show that said special power of attorney was falsified, it was
sufficient authority for Mr. Natividad to represent his father.

The trial court likewise ruled that the deed of absolute sale executed by Gorgonio Medina in favor of Bonifacio
Natividad may be given effect notwithstanding the fact that the portion of Lot 1199 specified as its object was different
from the portion adjudicated to Gorgonio Medina. It declared that the 1/3 portion of the land covered by TCT No. NT-
230248 shall be deemed the object of the deed of sale. It agreed with Bonifacio that what was sold by Gorgonio
Medina to him (Bonifacio) was his share, right and participation in the land known as Lot 1199. At the time of the sale,
Lot 1199 was not yet divided. Gorgonio Medina specified a portion of Lot 1199, expecting that portion to be
adjudicated to him, but his expectation did not materialize because a different portion was adjudicated to him during
the partition. It added that justice demanded that a portion of what was adjudicated to him be considered as the object
of the deed of sale.

The trial court further ruled that prescription and laches did not set in. Since there was an express trust created
between Gorgonio Medina and Bonifacio Natividad, the action to compel the defendants to convey the property to
Bonifacio did not prescribe. It explained that it is only when the trustee repudiates the trust that the prescriptive period
of 10 years commences to run. In the instant case, Gorgonio Medina (trustee) repudiated the trust on 5 July 1993 when
TCT No. NT-230248 was issued in his name. Thus, the filing of the complaint on 11 June 2001 was well within the ten-
year prescriptive period.

On 22 December 2003, the petitioner-heirs of Gorgonio Medina filed a Notice of Appeal informing the trail court that
they were appealing the decision to the Court of Appeals. 25 A Notice of Appeal having been seasonably filed by the
petitioners, the entire records of the case were forwarded to the Court of Appeals. 26

On 13 January 2004, Bonifacio Natividad filed a Motion for Execution Pending Appeal 27 which the trial court denied, it
having lost jurisdiction over the case because the appeal was already perfected when the motion was filed. 28

On 20 November 2006, the Court of Appeals rendered its decision affirming with modification the decision of the trial
court. It disposed of the case as follows:

WHEREFORE, the Decision of the RTC, Branch 33, Guimba, Nueva Ecija, dated December 10, 2003, is hereby
AFFIRMED with the MODIFICATION ordering the defendants-appellants to convey to plaintiff-appellee an area
equivalent to 90 square meters of the land covered by TCT No. NT-230248. 29

The appellate court affirmed the findings of the trial court, but ruled that the trust established between the parties was
an implied or constructive trust, and not an express trust. It added that what should be conveyed to Bonifacio
Natividad was only 1/3 of 270 square meters or 90 square meters, and not 1/3 of 371 square meters since what was
sold to him was only a part of one of the two portions owned by Gorgonio Medina in the entire lot. Finally, it declared
that the contention that the Complaint should have been dismissed for lack of cause of action, considering that the
Special Power of Attorney executed abroad by Bonifacio Natividad in favor of his son was not properly authenticated
before a consular officer, put a premium on technicalities at the expense of substantial justice. Litigation, it said,
should, as much as possible, be decided on the merits and not on technicalities.

Petitioners filed a Motion for Reconsideration30 which the Court of Appeals denied in a resolution dated 16 April 2007. 31

Hence, the instant petition raising the following issues:

WHETHER OR NOT THE COMPROMISE AGREEMENT THAT THE TRIAL COURT APPROVED IN CIVIL CASE NO. 781-G
NOVATED THE DEED OF ABSOLUTE SALE DATED 29 MARCH 1972 BETWEEN GORGONIO MEDINA AND BONIFACIO
NATIVIDAD.
WHETHER OR NOT BONIFACIO NATIVIDAD IS ESTOPPED BY LACHES.
WHETHER OR NOT THE REGISTRATION OF LOT NO. 1199-C IN THE NAME OF GORGONIO MEDINA WAS IN FRAUD OF
BONIFACIO NATIVIDAD.
WHETHER OR NOT A CONSTRUCTIVE TRUST WAS CREATED BETWEEN GORGONIO MEDINA AND BONIFACIO NATIVIDAD.
WHETHER OR NOT BONIFACIO NATIVIDAD’S CAUSE OF ACTION HAS ALREADY PRESCRIBED.
WHETHER OR NOT THE COMPLAINT STATES A CAUSE OF ACTION.

Among the issues raised by petitioners the last is what we shall first tackle. Petitioners contend that the Court of
Appeals committed a very grave error in not finding that the respondent was without any cause of action. Petitioners
argue:

The Complaint in this case was instituted by Philip M. Natividad in the name of Bonifacio Natividad upon the
strength of a Special Power of Attorney executed by the latter in Washington, U.S.A. While the document
40

appears to have been acknowledged before Phyllis Perry, a Notary Public for the jurisdiction of the State of
Washington, U.S.A., it was not presented before a Philippine Consular Officer for the requisite authentication.

The Revised Rules on Evidence require that a document acknowledged before a notary public being a public
document, such record if kept in a foreign country, should be accompanied with a certificate that such officer
has the custody thereof made by a secretary of the embassy or legation, consul general, consul, vice consul,
or consular agent or by an officer in the foreign service of the Philippines stationed in the foreign country in
which the record is kept, authenticated by the seal of his office. In the absence of the requisite certification and
authentication of the public document, the same cannot be proved and, therefore, inadmissible as evidence.

Bonifacio Natividad’s Special Power of Attorney not having been duly certified and authenticated, it cannot be
duly proved. It is, therefore, deemed as not having been executed for purposes of instituting an action on his
behalf. Without any valid authority to institute the action on behalf of his father, Philip Natividad is deemed to
have instituted it on his own. Philip Natividad not being a party to the Deed of Absolute Sale between Gorgonio
Medina and Bonifacio Natividad, he is undoubtedly not the real party in interest because he does not have any
material interest in the contract which is the source of Bonifacio Natividad’s cause of action. He does not stand
to be benefited or injured by a judgment in the suit and neither is he entitled to the avails of the suit.

Not being the real party in interest, and being deemed to have brought the action on his own, Philip M.
Natividad has no cause of action.32

The trial court was convinced that Philip Natividad was authorized by his father (Bonifacio) in this case by virtue of the
special power of attorney that the latter issued. The special power of attorney, it claims, is a public document, the
same having been notarized by a notary public of the State of Washington, USA. It said that there being no evidence
showing that said document had been falsified, the same was sufficient authority for Philip to represent his father. The
Court of Appeals considered the fact that the special power of attorney was not properly authenticated before a
consular office to be a mere technicality and could not be the basis for the dismissal of the complaint for lack of cause
of action.

On his part, respondent said the notarized special power of attorney which he appended to the complaint is a public
document. It carries with it the presumption of regularity and any suspicion on the authenticity and due execution
thereof cannot stand against said presumption absent evidence which is clear and convincing.

The question to be answered is: Is the Special Power of Attorney supposedly authorizing Philip Natividad to file the
instant case in behalf of his father admissible in evidence?

In Lopez v. Court of Appeals,33 we have ruled that a special power of attorney executed in a foreign country is,
generally, not admissible in evidence as a public document in our courts. In said case, we said:

Is the special power of attorney relied upon by Mrs. Ty a public document? We find that it is. It has been
notarized by a notary public or by a competent public official with all the solemnities required by law of a
public document. When executed and acknowledged in the Philippines, such a public document or a certified
true copy thereof is admissible in evidence. Its due execution and authentication need not be proven unlike a
private writing.

Section 25,34 Rule 132 of the Rules of Court provides –

Sec. 25. Proof of public or official record. – An official record or an entry therein, when admissible for any
purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with
a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of embassy or legation, consul general, consul, vice consul, or consular
agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office.

From the foregoing provision, when the special power of attorney is executed and acknowledged
before a notary public or other competent official in a foreign country, it cannot be admitted in
evidence unless it is certified as such in accordance with the foregoing provision of the rules by a
secretary of embassy or legation, consul general, consul, vice consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the foreign country in which the record
is kept of said public document and authenticated by the seal of his office. A city judge-notary who
notarized the document, as in this case, cannot issue such certification.

Considering that the record of the case does not disclose any compliance with the provisions of Section 25,
Rule 132 of the Rules of Court on the part of the petitioner, the special power of attorney in question is not
admissible in evidence. As such, Mrs. Priscilla L. Ty cannot lawfully prosecute the case against the private
respondents in the name of her principal as her authority through a special power of attorney had not been
duly established in evidence. The litigation was not commenced by the real party-in-interest or by one duly
authorized by the said party.

This being so, the Metropolitan Trial Court, the Regional Trial Court and the Court of Appeals never acquired
jurisdiction over the person of the real party-in-interest – Angelita Lopez. For lack of the requisite jurisdiction,
all the proceedings in the said courts are null and void ab initio. All proceedings therein should be and are
hereby set aside.

Accordingly, it is Our considered opinion, and We so hold, that a special power of attorney executed before a
city judge-public notary in a foreign country, without the certification or authentication required under Section
25, Rule 132 of the Rules of Court, is not admissible in evidence in Philippine courts. (Emphasis supplied.)
41

In the case under consideration, the supposed special power of attorney involved was executed and acknowledged
before Phyllis Perry, a Notary Public of the State of Washington, USA. This being the case, a certification or
authentication, as required by Section 25 (now Section 24), Rules of Court, by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent or by any other officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of his office, is required. A
notary public in a foreign country is not one of those who can issue the required certificate.

The records are bereft of evidence showing that there was compliance with Section 25 (now Section 24). Non-
compliance therewith will render the special power of attorney not admissible in evidence. Not being duly established
in evidence, the special power of attorney cannot be used by Philip Natividad to represent his father, Bonifacio
Natividad, in this legal action against the petitioners. It is thus clear that this case was not filed by the real party-in-
interest (Bonifacio) or by one duly authorized by said party. Not being a real party-in-interest and sans the authority to
pursue the case, Philip Natividad could not have validly commenced this case. The special power of attorney executed
before a notary public in a foreign country without the requirements mentioned in Section 25 (now Section 24) of the
Rules of Court cannot be admitted in evidence before Philippine courts.

Both lower courts and respondent’s contention that the lack of consular authentication is a mere technicality that can
be brushed aside in order to uphold substantial justice, is untenable. The failure to have the special power of attorney
authenticated is not merely a technicality -- it is a question of jurisdiction. In Lopez, we pronounced that jurisdiction
over the person of the real party-in-interest was never acquired by the courts. As a result, all proceedings in the lower
courts were declared null and void ab initio and thus set aside.

In the case before us, the Regional Trial Court and the Court of Appeals did not acquire jurisdiction over the person of
Bonifacio Natividad. Following our pronouncement in Lopez, all proceedings before these courts are voided and set
aside. In light of this, we find no need to discuss the other issues raised. WHEREFORE, premises considered, the
instant petition is GRANTED. All the proceedings before the Regional Trial Court of Guimba, Nueva Ecija, Branch 33
(Civil Case No. 1165-G) and the Court of Appeals (CA-G.R. CV No. 82160) are hereby declared void, and the case is
hereby DISMISSED. No costs.