PHILIPPINE JURISPRUDENCE on evidence

PHILIPPINE JURISPRUDENCE - FULL TEXT The Lawphil Project - Arellano Law Foundation G.R. No. 152807 August 12, 2003HEIRS OF LOURDES SAEZ SABANPAN, ET AL. vs. ALBERTO C. COMORPOSA, ET AL.

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

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 Appeals3 (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.

"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.

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

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.

SO ORDERED.

Puno, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Footnotes

1 Also spelled "Ariega" in the pleadings.

1a Also spelled "Lariega" in the pleadings.

2 Rollo, pp. 11-37.

3 Eighth Division. Written by Justice Perlita J. Tria Tirona and concurred in by Justices Eugenio S. Labitoria (Division chairman) and Eloy R. Bello Jr. (member).

4 Assailed Decision, p. 6; rollo, p. 49.

5 Rollo, p. 52.

6 Assailed Decision, pp. 2-3; rollo, pp. 45-46.

7 This case was deemed submitted for decision on January 15, 2003, upon the Court's receipt of respondents' Memorandum, signed by Atty. William G. Carpentero. Petitioners' Memorandum, filed on January 10, 2003, was signed by Atty. Oswaldo A. Macadangdang.

8 Petitioners' Memorandum, p. 8; rollo, p. 283. Original in upper case.

9 Annex I; rollo, pp. 91-92.

10 Commonwealth Act 141 as amended.

11 §4 of CA 141 as amended.

12 The LMB absorbed the functions of the Bureau of Lands, which was abolished by Executive Order No. 131, except those line functions that were transmitted to the regional field offices.

13 §3 of CA 141 as amended.

14 Omandam v. Court of Appeals, 349 SCRA 483, January 18, 2001; Solis v. Intermediate Appellate Court, 198 SCRA 267, June 19, 1991; Rallon v. Ruiz Jr, 138 Phil. 347, May 26, 1969; Molina et al v. Bacud et al., 126 Phil. 166, April 27, 1967; Bohayang v. Maceren, 96 Phil. 390, December 29, 1954; Pitargue v. Sorilla, 92 Phil. 5, September 17, 1952.

15 Solis v. Intermediate Appellate Court, supra, citing National Development Company v. Hervilla, 151 SCRA 520, June 30, 1987; Espejo v. Malate, 205 Phil. 216, January 27, 1983.

16 Omandam v. Court of Appeals, supra.

17 338 Phil. 484, April 18, 1997.

18 Id., p. 496, per Puno, J., citing Webster's Third New International Dictionary (1976), p. 813.

19 bid.

20 "Facsimile signature," Webster's Third New International Dictionary (1976), p. 813.

21 Rollo, p. 104.

22 Id., p. 121.

23 §34, Rule 132 of the Rules of Court.

24 People v. Carino, 165 SCRA 664, September 26, 1988; Veran v. Court of Appeals, 157 SCRA 438, January 29, 1988.

25 Republic of the Philippines v. Court of Appeals, 277 SCRA 633, August 18, 1997; De los Reyes v. Intermediate Appellate Court, 176 SCRA 394, August 11, 1989.

26 PNOC Shipping & Transport Corporation v. Court of Appeals, 358 Phil. 38, October 8, 1998.

27 Id., p. 59.

28 People v. Villar, 322 SCRA 393, January 19, 2000; Pacific Banking Corporation Employees Organization v. Court of Appeals, 351 Phil. 438, March 27, 1998; Rivera v. Court of Appeals, 348 Phil. 734, January 23, 1998; Ramcar Incorporated v. Garcia, 114 Phil. 1026, April 25, 1962.

29 Rollo, pp. 83-84.

30 Id., p. 105.

31 §1 of Rule 45 of the Rules of Court; Heirs of Anastacio Fabela v. Court of Appeals, 414 Phil 838, August 9, 2001; American President Lines Ltd. v. Court of Appeals, 336 SCRA 582, July 31, 2000; Liberty Construction and Development Corporation v. Court of Appeals, 327 Phil. 490, June 28, 1996.


Manila

SECOND DIVISION

G.R. No. 161602 July 13, 2010

ALFREDO T. ROMUALDEZ, Petitioner, vs.THE HONORABLE SANDIGANBAYAN (THIRD DIVISION) and THE REPUBLIC OF THE PHILIPPINES,Respondents.

D E C I S I O N

ABAD, J.:

This case is about the Ombudsman’s authority to conduct preliminary investigation in a forfeiture case where the petitioner allegedly amassed ill-gotten wealth before February 25, 1986.

The Facts and the Case

On March 6, 1996 respondent Republic of the Philippines (Republic) filed an action for the forfeiture of alleged unlawfully acquired property with the Sandiganbayan in Civil Case 0167 against petitioner Alfredo T. Romualdez and his wife Agnes Sison Romualdez as well as against Romson Realty, Inc., R & S Transport, Inc., Fidelity Management, Inc., and Dio Island Resort, Inc. (collectively, the Romualdezes) pursuant to Republic Act (R.A.) 1379.1

On January 16, 2000 the Romualdezes filed a motion to dismiss the action on grounds of a) violation of their right to a speedy disposition of their case; b) lack of jurisdiction of the Sandiganbayan over the action; c) prematurity; d) prescription; and e) litis pendentia. On September 11, 2002 the Sandiganbayan denied the motion. It also denied on March 10, 2003 their subsequent motion for reconsideration.

On March 31, 2003 the Romualdezes next filed a motion for preliminary investigation and to suspend proceedings.2 They claim that since Civil Case 0167 was a forfeiture proceeding filed under R.A. 1379, the Ombudsman should have first conducted a "previous inquiry similar to preliminary investigations in criminal cases" before the filing of the case pursuant to Section 2 of the law.3

In its Comment4 on the motion, the Republic pointed out that the Office of the Ombudsman in fact conducted such a preliminary investigation in 1991 in OMB-0-91-08205 and issued on January 22, 1992 a resolution, recommending the endorsement of the matter to the Office of the Solicitor General (OSG) for the filing of the forfeiture case.

On August 13, 2003 the Sandiganbayan issued a resolution,6 denying the Romualdezes’ March 31, 2003 motion. It also denied by resolution on December 3, 2003 their subsequent motion for reconsideration.7 Thus, the Romualdezes filed the present petition for certiorari and prohibition, seeking to annul the Sandiganbayan’s rulings and prevent it from further proceeding with Civil Case 0167 until another preliminary investigation is conducted in their case.

The Question Presented

The sole question presented in this case is whether or not the preliminary investigation that the Ombudsman conducted in OMB-0-91-0820 in 1991 satisfied the requirement of the law in forfeiture cases.

The Ruling of the Court

The Romualdezes point out that the Office of the Ombudsman should not have conducted an investigation of their case, since its authority to investigate ill-gotten or unexplained wealth cases pertained only to wealth amassedafter February 25, 1986 and not before that date.8 Since the Romualdezes acquired the allegedly ill-gotten wealth involved in their case as early as 1970, then the Ombudsman had no authority to conduct the investigation that it did in OMB-0-91-0820. In the absence of a prior valid preliminary investigation, the forfeiture proceedings in Civil Case 0167 cannot continue.

In addition, the Romualdezes insist that it was improper for the Ombudsman to have conducted its investigation in their absence. The spouses Alfredo and Agnes Romualdez were in the United States when that investigation took place. They were thus denied their right to be heard in that investigation.

But, as the Sandiganbayan correctly pointed out, quoting Republic v. Sandiganbayan,9 the Ombudsman has under its general investigatory powers the authority to investigate forfeiture cases where the alleged ill-gotten wealth had been amassed before February 25, 1986. Thus:

Nonetheless, while we do not discount the authority of the Ombudsman, we believe and so hold that the exercise of his correlative powers to both investigate and initiate the proper action for the recovery of ill-gotten and/or unexplained wealth is restricted only to cases for the recovery of ill-gotten and/or unexplained wealth which were amassed after February 25, 1986. Prior to said date, the Ombudsman is without authority to initiate such forfeiture proceedings. We, however, uphold his authority to investigate cases for the forfeiture or recovery of such ill-gotten and/or unexplained wealth amassed even before the aforementioned date, pursuant to his general investigatory power under Section 15(1) of Republic Act No. 6770.10 (Emphasis supplied)

And, although it was the Ombudsman who conducted the preliminary investigation, it was the OSG that instituted the action in Civil Case 0167 in line with the Court’s ruling in the above-cited Republic and other cases that followed.1avvphi1

The Court cannot also subscribe to the Romualdezes’ claim that they are entitled to a new preliminary investigation since they had no opportunity to take part in the one held in 1991, in OMB-0-91-0820. They admit that the subpoena for that investigation had been sent to their last known residence at the time it was conducted.11 The Republic categorically insists that the appropriate subpoena had been served on the Romualdezes.12

Actually, the lament of the spouses was that they left the Philippines because of danger to their lives after the EDSA revolution of February 1986 and so could not take part in the proceedings against them. While it is true that the Court characterized the departure of the Romualdezes as forced upon them by the uncertainty of the situation in 1986, it also said that such was the case only until things shall have stabilized.13 The Court will take judicial notice of the fact that the people’s ratification of the 1987 Constitution on February 2, 1987 signaled the return to normalcy of the political situation in the Philippines. Consequently, the Romualdezes had no valid excuse for not responding to the subpoena served on them at their last known address in 1991, which they do not deny having received.

The Ombudsman could not be faulted for proceeding with the investigation of the Romualdezes’ cases when they did not show up despite notice being sent to them at their last known residence. As the Court held in a case:

The New Rules on Criminal Procedure "does not require as a condition sine qua non to the validity of the proceedings [in the preliminary investigation] the presence of the accused for as long as efforts to reach him were made, and an opportunity to controvert the evidence of the complainant is accorded him. The obvious purpose of the rule is to block attempts of unscrupulous respondents to thwart the prosecution of offenses by hiding themselves or by employing dilatory tactics."14

In sum, no reason exists for suspending or interrupting the conduct of the forfeiture proceedings before the Sandiganbayan.

WHEREFORE, the Court DISMISSES the petition for lack of merit.

SO ORDERED.

ROBERTO A. ABADAssociate Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

MARTIN S. VILLARAMA, JR.*

Associate JusticeJOSE PORTUGAL PEREZ**

Associate Justice

JOSE CATRAL MENDOZAAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIOAssociate JusticeChairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONAChief Justice

Footnotes

* Designated as additional member in lieu of Associate Justice Diosdado M. Peralta, per Special Order No. 858 dated July 1, 2010.

** Designated as additional member in lieu of Associate Justice Antonio Eduardo B. Nachura, per Special Order No. 863 dated July 5, 2010.

1 "An Act Declaring Forfeiture in Favor of the State of any Property Found to have been Unlawfully Acquired by any Public Officer or Employee and Providing for the Proceedings therefor."

2 Rollo, pp. 62-68.

3 Section 2. Filing of petition. Whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. The Solicitor General, upon complaint by any taxpayer to the city or provincial fiscal who shall conduct a previous inquiry similar to preliminary investigations in criminal cases and shall certify to the Solicitor General that there is reasonable ground to believe that there has been committed a violation of this Act and the respondent is probably guilty thereof, shall file, in the name and on behalf of the Republic of the Philippines, in the Court of First Instance of the city or province where said public officer or employee resides or holds office, a petition for a writ commanding said officer or employee to show cause why the property aforesaid, or any part thereof, should not be declared property of the State: Provided, That no such petition shall be filed within one year before any general election or within three months before any special election.

The resignation, dismissal or separation of the officer or employee from his office or employment in the Government or in the Government-owned or controlled corporation shall not be a bar to the filing of the petition: Provided, however, That the right to file such petition shall prescribe after four years from the date of the resignation, dismissal or separation or expiration of the term of the office or employee concerned, except as to those who have ceased to hold office within ten years prior to the approval of this Act, in which case the proceedings shall prescribe after four years from the approval hereof. (Emphasis supplied)

4 Rollo, pp. 71-73.

5 "Presidential Commission on Good Government v. Alfredo Romualdez."

6 Rollo, p. 31. Adopted and approved by Associate Justices Godofredo L. Legaspi, Raoul V. Victorino, and Norberto Y. Geraldez.

7 Id. at 32-36. Penned by Associate Justice Godofredo L. Legaspi, and with the concurrence of Associate Justices Raoul V. Victorino and Norberto Y. Geraldez.

8 Citing Section 15(1) of Republic Act 6770, Republic v. Sandiganbayan, G.R. No. 90529, August 16, 1991, 200 SCRA 667, 682-683.

9 Id. at 667.

10 Supra note 8.

11 Rollo, p. 17.

12 Id. at 147-148.

13 Romualdez v. Regional Trial Court, Branch 7, Tacloban City, G.R. No. 104960, September 14, 1993, 226 SCRA 408, 415.

14 Mercado v. Court of Appeals, 315 Phil. 657, 662 (1995).

The Lawphil Project - Arellano Law Foundation


Manila

SECOND DIVISION

G.R. No. 182622 September 8, 2010

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY [PLDT], Petitioner, vs.ROBERTO R. PINGOL, Respondent.

D E C I S I O N

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court filed by petitioner Philippine Long Distance Telephone Company (PLDT) which seeks to reverse and set aside: (1) the December 21, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 98670, affirming the November 15, 20062 and January 31, 20073 Resolutions of the National Labor Relations Commission (NLRC); and (2) its April 18, 2008 Resolution4denying the Motion for Reconsideration of petitioner.

THE FACTS

In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a maintenance technician.

On April 13, 1999, while still under the employ of PLDT, Pingol was admitted at The Medical City, Mandaluyong City, for "paranoid personality disorder" due to financial and marital problems. On May 14, 1999, he was discharged from the hospital. Thereafter, he reported for work but frequently absented himself due to his poor mental condition.

From September 16, 1999 to December 31, 1999, Pingol was absent from work without official leave. According to PLDT, notices were sent to him with a stern warning that he would be dismissed from employment if he continued to be absent without official leave "pursuant to PLDT Systems Practice A-007 which provides that ‘Absence without authorized leaves for seven (7) consecutive days is subject to termination from the service.’"5 Despite the warning, he failed to show up for work. On January 1, 2000, PLDT terminated his services on the grounds of unauthorized absences and abandonment of office.

On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal and Monetary Claims6against PLDT. In his complaint, he alleged that he was hastily dismissed from his employment on January 1, 2000. In response, PLDT filed a motion to dismiss claiming, among others, that respondent’s cause of action had already prescribed as the complaint was filed four (4) years and three (3) months after his dismissal.

Pingol, however, countered that in computing the prescriptive period, the years 2001 to 2003 must not be taken into account. He explained that from 2001 to 2003, he was inquiring from PLDT about the financial benefits due him as an employee who was no longer allowed to do his work, but he merely got empty promises. It could not, therefore, result in abandonment of his claim.

On July 30, 2004, the Labor Arbiter (LA) issued an order granting petitioner’s Motion to Dismiss on the ground of prescription, pertinent portions of which read:

As correctly cited by (PLDT), as ruled by the Supreme Court in the case of Callanta vs. Carnation Phils., 145 SCRA 268, the complaint for illegal dismissal must be filed within four (4) years from and after the date of dismissal.

Needless to state, the money claims have likewise prescribed.

Article 291 of the Labor Code provides:

‘All money claims arising from employer-employee relations accruing from the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued, otherwise they shall be forever barred.’

WHEREFORE, let this case be, as it is hereby DISMISSED on the ground of prescription.

SO ORDERED.7

Pingol appealed to the NLRC arguing that the 4-year prescriptive period has not yet lapsed because PLDT failed to categorically deny his claims. The NLRC in its November 15, 2006 Resolution reversed the LA’s resolution and favored Pingol. The dispositive portion thereof reads:

WHEREFORE, the foregoing premises considered, the instant appeal is GRANTED and the Order appealed from is REVERSED and SET ASIDE.

Accordingly, let the entire records of the case be REMANDED to the Labor Arbiter a quo for further proceedings.

SO ORDERED.8

PLDT moved for reconsideration but the same was denied by the NLRC in its Resolution dated January 31, 2007.

Unsatisfied, PLDT elevated the case to the CA by way of a petition for certiorari under Rule 65 alleging grave abuse of discretion on the part of the NLRC in issuing the assailed resolutions.

The CA denied the petition in its December 21, 2007 Decision, the fallo of which reads:

WHEREFORE, the Petition for Certiorari is hereby DISMISSED. The Resolutions dated 15 November 2006 and 31 January 2007 of the National Labor Relations Commission are AFFIRMED.

SO ORDERED.9

PLDT moved for reconsideration but the same was denied by the CA in a Resolution dated April 18, 2008.

THE ISSUES

Not in conformity with the ruling of the CA, PLDT seeks relief with this Court raising the following issues:

THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT.

THE HONORABLE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION.10

The issues boil down to whether or not respondent Pingol filed his complaint for constructive dismissal and money claims within the prescriptive period of four (4) years as provided in Article 1146 of the Civil Code11 and three (3) years as provided in Article 291 of the Labor Code,12 respectively.

Petitioner PLDT argues that the declaration under oath made by respondent Pingol in his complaint before the LA stating January 1, 2000 as the date of his dismissal, should have been treated by the NLRC and the CA as a judicial admission pursuant to Section 4, Rule 129 of the Revised Rules of Court.13 According to petitioner, respondent has never contradicted

his admission under oath. On the basis of said declaration, petitioner posits that the LA was correct in finding that Pingol’s complaint for illegal dismissal was filed beyond the prescriptive period of four (4) years from the date of dismissal pursuant to Article 1146 of the New Civil Code.

In his Comment,14 respondent Pingol counters that petitioner PLDT could not have sent those notices with warning as that claim "has never been supported by sufficient proof not only before the Labor Arbiter but likewise before the Court of Appeals."15 He further alleges that his dismissal is likewise unsupported by any evidence. He insists that both the NLRC and the CA correctly stated that his cause of action has not yet prescribed as he was not formally dismissed on January 1, 2000 or his monetary claims categorically denied by petitioner.

THE COURT’S RULING

The Court finds the petition meritorious.

Parties apparently do not dispute the applicable prescriptive period.

Article 1146 of the New Civil Code provides:

Art. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff;

x x x x x x x x x

As this Court stated in Callanta v. Carnation,16 when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four (4) years.

With regard to the prescriptive period for money claims, Article 291 of the Labor Code states:

Article 291. Money Claims. – All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be barred forever.

The pivotal question in resolving the issues is the date when the cause of action of respondent Pingol accrued.

It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.17

Respondent asserts that his complaint was filed within the prescriptive period of four (4) years. He claims that his cause of action did not accrue on January 1, 2000 because he was not categorically and formally dismissed or his monetary claims categorically denied by petitioner PLDT on said date. Further, respondent Pingol posits that the continuous follow-up of his claim with petitioner PLDT from 2001 to 2003 should be considered in the reckoning of the prescriptive period.

Petitioner PLDT, on the other hand, contends that respondent Pingol was dismissed from the service on January 1, 2000 and such fact was even alleged in the complaint he filed before the LA. He never contradicted his previous admission that he was dismissed on January 1, 2000. Such admitted fact does not require proof.

The Court agrees with petitioner PLDT. Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in the same case are conclusive and so does not require further evidence to prove them. These admissions cannot be contradicted unless previously shown to have been made through palpable mistake or that no such admission was made.18 In Pepsi Cola Bottling Company v. Guanzon,19it was written:

xxx that the dismissal of the private respondent's complaint was still proper since it is apparent from its face that the action has prescribed. Private respondent himself alleged in the complaint that he was unlawfully dismissed in 1979 while the complaint was filed only on November 14, 1984. xxx (Emphasis supplied. Citations omitted.)1avvphil

In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his dismissal in his complaint20 filed on March 29, 2004, exactly four (4) years and three (3) months later. Respondent never denied making such admission or raised palpable mistake as the reason therefor. Thus, the petitioner correctly relied on such allegation in the complaint to move for the dismissal of the case on the ground of prescription.

The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states:

Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought. (Emphasis supplied)

The day the action may be brought is the day a claim starts as a legal possibility.21 In the present case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. Respondent Pingol cited the same date of dismissal in his complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already prescribed.

Respondent claims that between 2001 and 2003, he made follow-ups with PLDT management regarding his benefits. This, to his mind, tolled the running of the prescriptive period.

The rule in this regard is covered by Article 1155 of the Civil Code. Its applicability in labor cases was upheld in the case of International Broadcasting Corporation v. Panganiban22 where it was written:

Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit:

ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.

Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.

In this case, respondent Pingol never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed "follow-ups" could not have validly tolled the running of the prescriptive period. It is worthy to note that respondent never presented any proof to substantiate his allegation of follow-ups.

Unfortunately, respondent Pingol has no one but himself to blame for his own predicament. By his own allegations in his complaint, he has barred his remedy and extinguished his right of action. Although the Constitution is committed to the policy of social justice and the protection of the working class, it does not necessary follow that every labor dispute will be automatically decided in favor of labor. The management also has its own rights. Out of Its concern for the less privileged in life, this Court, has more often than not inclined, to uphold the cause of the worker in his conflict with the employer. Such leaning, however, does not blind the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.23

WHEREFORE, the petition is GRANTED. The assailed December 21, 2007 Decision and April 18, 2008 Resolution of the Court of Appeals, in CA-G.R. SP No. 98670, are REVERSED and SET ASIDE and a new judgment enteredDISMISSING the complaint of Roberto R. Pingol.

SO ORDERED.

JOSE CATRAL MENDOZAAssociate Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

Chairperson

ANTONIO EDUARDO B. NACHURAAssociate Justice

DIOSDADO M. PERALTAAssociate Justice

ROBERTO A. ABADAssociate Justice



ANTONIO T. CARPIOAssociate JusticeChairperson, Second Division


Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONAChief Justice

Footnotes

1 Rollo pp. 134-140. Penned by Associate Justice Japar D. Dimaampao with Associate Justice Mario L. Guariña III and Associate Justice Sixto C. Marella, Jr., concurring.

2 Id. at 126-129.

3 Id. at 131-132.

4 Id. at 141-142.

5 Id. at 18.

6 Id. at 124-125.

7 Id. at 136.

8 Id. at 129.

9 Id. at 139.

10 Id. at 31.

11 Art. 1146. The following actions must be instituted within four years:

(1) upon an injury to the rights of the plaintiff. xxx

12 Article 291. Money claims. – All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three years from the time the cause of action accrued, otherwise they shall be forever barred.

13 Sec. 4. Judicial admissions.—An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

14 Rollo pp. 62-76.

15 Id. at 70.

16 229 Phil. 279, 289 (1986).

17"J" Marketing Corporation v. Taran, G.R. No. 163924, June 18, 2009, 589 SCRA 428, 440, citing Auto Bus Transport Systems, Inc. v. Baustista, 497 Phil. 863 (2005).

18 Damasco v. NLRC, 400 Phil. 568, 586 (2000), citing Philippine American General Insurance Inc. v. Sweet Lines, Inc., G.R. No. 87434, August 5, 1992, 212 SCRA 194.

19 254 Phil. 578, 586 (1989).

20 Rollo, p. 124.

21 Anabe v. Asian Construction, G.R. No. 183233, December 23, 2009, 609 SCRA 213, 221.

22 G.R. No. 151407, February 6, 2007, 514 SCRA 404, 411-412, citing Laureano v. Court of Appeals, 381 Phil. 403, 412, (2000).

23 Maribago Bluewater Beach Resort, Inc. v. Dual, G.R. No. 180660, July 20, 2010.



Manila

FIRST DIVISION

G.R. No. 157594 March 9, 2010

TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC., Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE, Respondent.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, petitioner Toshiba Information Equipment (Philippines), Inc. (Toshiba) seeks the reversal and setting aside of (1) the Decision2 dated August 29, 2002 of the Court of Appeals in CA-G.R. SP No. 63047, which found that Toshiba was not entitled to the credit/refund of its unutilized input Value-Added Tax (VAT) payments attributable to its export sales, because it was a tax-exempt entity and its export sales were VAT-exempt transactions; and (2) the Resolution3 dated February 19, 2003 of the appellate court in the same case, which denied the Motion for Reconsideration of Toshiba. The herein assailed judgment of the Court of Appeals reversed and

set aside the Decision4 dated October 16, 2000 of the Court of Tax Appeals (CTA) in CTA Case No. 5762 granting the claim for credit/refund of Toshiba in the amount of P1,385,282.08.

Toshiba is a domestic corporation principally engaged in the business of manufacturing and exporting of electric machinery, equipment systems, accessories, parts, components, materials and goods of all kinds, including those relating to office automation and information technology and all types of computer hardware and software, such as but not limited to HDD-CD-ROM and personal computer printed circuit board.5 It is registered with the Philippine Economic Zone Authority (PEZA) as an Economic Zone (ECOZONE) export enterprise in the Laguna Technopark, Inc., as evidenced by Certificate of Registration No. 95-99 dated September 27, 1995.6 It is also registered with Regional District Office No. 57 of the Bureau of Internal Revenue (BIR) in San Pedro, Laguna, as a VAT-taxpayer with Taxpayer Identification No. (TIN) 004-739-137.7

In its VAT returns for the first and second quarters of 1997,8 filed on April 14, 1997 and July 21, 1997, respectively, Toshiba declared input VAT payments on its domestic purchases of taxable goods and services in the aggregate sum of P3,875,139.65,9 with no zero-rated sales. Toshiba subsequently submitted to the BIR on July 23, 1997 its amended VAT returns for the first and second quarters of 1997,10 reporting the same amount of input VAT payments but, this time, with zero-rated sales totaling P7,494,677,000.00.11

On March 30, 1999, Toshiba filed with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance (DOF One-Stop Shop) two separate applications for tax credit/refund12 of its unutilized input VAT payments for the first half of 1997 in the total amount of P3,685,446.73.13

The next day, on March 31, 1999, Toshiba likewise filed with the CTA a Petition for Review14 to toll the running of the two-year prescriptive period under Section 230 of the Tax Code of 1977,15 as amended.16 In said Petition, docketed as CTA Case No. 5762, Toshiba prayed that –

[A]fter due hearing, judgment be rendered ordering [herein respondent Commissioner of Internal Revenue (CIR)] to refund or issue to [Toshiba] a tax refund/tax credit certificate in the amount of P3,875,139.65 representing unutilized input taxes paid on its purchase of taxable goods and services for the period January 1 to June 30, 1997.17

The Commissioner of Internal Revenue (CIR) opposed the claim for tax refund/credit of Toshiba, setting up the following special and affirmative defenses in his Answer18 –

5. [Toshiba’s] alleged claim for refund/tax credit is subject to administrative routinary investigation/examination by [CIR’s] Bureau;

6. [Toshiba] failed miserably to show that the total amount of P3,875,139.65 claimed as VAT input taxes, were erroneously or illegally collected, or that the same are properly documented;

7. Taxes paid and collected are presumed to have been made in accordance with law; hence, not refundable;

8. In an action for tax refund, the burden is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund;

9. It is incumbent upon [Toshiba] to show that it has complied with the provisions of Section 204 in relation to Section 229 of the Tax Code;

10. Well-established is the rule that claims for refund/tax credit are construed in strictissimi juris against the taxpayer as it partakes the nature of exemption from tax.19

Upon being advised by the CTA,20 Toshiba and the CIR filed a Joint Stipulation of Facts and Issues,21 wherein the opposing parties "agreed and admitted" that –

1. [Toshiba] is a duly registered value-added tax entity in accordance with Section 107 of the Tax Code, as amended.

2. [Toshiba] is subject to zero percent (0%) value-added tax on its export sales in accordance with then Section 100(a)(2)(A) of the Tax Code, as amended.

3. [Toshiba] filed its quarterly VAT returns for the first two quarters of 1997 within the legally prescribed period.

x x x x

7. [Toshiba] is subject to zero percent (0%) value-added tax on its export sales.

8. [Toshiba] has duly filed the instant Petition for Review within the two-year prescriptive period prescribed by then Section 230 of the Tax Code.22

In the same pleading, Toshiba and the CIR jointly submitted the following issues for determination by the CTA –

Whether or not [Toshiba] has incurred input taxes in the amount of P3,875,139.65 for the period January 1 to June 30, 1997 which are directly attributable to its export sales[.]

Whether or not the input taxes incurred by [Toshiba] for the period January 1 to June 30, 1997 have not been carried over to the succeeding quarters[.]

Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 have not been offset against any output tax[.]

Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 are properly substantiated by official receipts and invoices.23

During the trial before the CTA, Toshiba presented documentary evidence in support of its claim for tax credit/refund, while the CIR did not present any evidence at all.

With both parties waiving the right to submit their respective memoranda, the CTA rendered its Decision in CTA Case No. 5762 on October 16, 2000 favoring Toshiba. According to the CTA, the CIR himself admitted that the export sales of Toshiba were subject to zero percent (0%) VAT based on Section 100(a)(2)(A)(i) of the Tax Code of 1977, as amended. Toshiba could then claim tax credit or refund of input VAT paid on its purchases of goods, properties, or services, directly attributable to such zero-rated sales, in accordance with Section 4.102-2 of Revenue Regulations No. 7-95. The CTA, though, reduced the amount to be credited or refunded to Toshiba toP1,385,292.02.

The dispositive portion of the October 16, 2000 Decision of the CTA fully reads –

WHEREFORE, [Toshiba’s] claim for refund of unutilized input VAT payments is hereby GRANTED but in a reduced amount of P1,385,282.08 computed as follows:

1st Quarter 2nd Quarter Total

Amount of claimed input taxes filed with the DOF One Stop Shop Center P3,268,682.34 P416,764.39 P3,685,446.73

Less: 1) Input taxes not properly supported by VAT invoices and official receipts a. Per SGV’s verification (Exh. I) P 242,491.45 P154,391.13 P 396,882.58

b. Per this court’s further verification (Annex A)P 189,499.13 P 2,300,164.65

P1,852,437.65 P 35,108.00 P1,887,545.65

Amount Refundable P 1,158,016.82 P 227,265.26 P 1,385,282.08

Respondent Commissioner of Internal Revenue is ORDERED to REFUND to [Toshiba] or in the alternative, ISSUE a TAX CREDIT CERTIFICATE in the amount of P1,385,282.08 representing unutilized input taxes paid by [Toshiba] on its purchases of taxable goods and services for the period January 1 to June 30, 1997.24

Both Toshiba and the CIR sought reconsideration of the foregoing CTA Decision.

Toshiba asserted in its Motion for Reconsideration25 that it had presented proper substantiation for theP1,887,545.65 input VAT disallowed by the CTA.

The CIR, on the other hand, argued in his Motion for Reconsideration26 that Toshiba was not entitled to the credit/refund of its input VAT payments because as a PEZA-registered ECOZONE export enterprise, Toshiba was not subject to VAT. The CIR invoked the following statutory and regulatory provisions –

Section 24 of Republic Act No. 791627

SECTION 24. Exemption from Taxes Under the National Internal Revenue Code. – Any provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and enterprises within the ECOZONE shall be remitted to the national government. x x x.

Section 103(q) of the Tax Code of 1977, as amended

Sec. 103. Exempt transactions. – The following shall be exempt from the value-added tax:

x x x x

(q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972, 1491, and 1950, and non-electric cooperatives under Republic Act No. 6938, or international agreements to which the Philippines is a signatory.

Section 4.103-1 of Revenue Regulations No. 7-95

SEC. 4.103-1. Exemptions. – (A) In general. – An exemption means that the sale of goods or properties and/or services and the use or lease of properties is not subject to VAT (output tax) and the seller is not allowed any tax credit on VAT (input tax) previously paid.

The person making the exempt sale of goods, properties or services shall not bill any output tax to his customers because the said transaction is not subject to VAT. On the other hand, a VAT-registered purchaser of VAT-exempt goods, properties or services which are exempt from VAT is not entitled to any input tax on such purchase despite the issuance of a VAT invoice or receipt.

The CIR contended that under Section 24 of Republic Act No. 7916, a special law, all businesses and establishments within the ECOZONE were to remit to the government five percent (5%) of their gross income earned within the zone, in lieu of all taxes, including VAT. This placed Toshiba within the ambit of Section 103(q) of the Tax Code of 1977, as amended, which exempted from VAT the transactions that were exempted under special laws. Following Section 4.103-1(A) of Revenue Regulations No. 7-95, the VAT-exemption of Toshiba meant that its sale of goods was not subject to output VAT and Toshiba as seller was not allowed any tax credit on the input VAT it had previously paid.

On January 17, 2001, the CTA issued a Resolution28 denying both Motions for Reconsideration of Toshiba and the CIR.

The CTA took note that the pieces of evidence referred to by Toshiba in its Motion for Reconsideration were insufficient substantiation, being mere schedules of input VAT payments it had purportedly paid for the first and second quarters of 1997. While the CTA gives credence to the report of its commissioned certified public accountant (CPA), it does not render its decision based on the findings of the said CPA alone. The CTA has its own CPA and the tax court itself conducts an investigation/examination of the documents presented. The CTA stood by its earlier disallowance of the amount of P1,887,545.65 as tax credit/refund because it was not supported by VAT invoices and/or official receipts.1avvphi1

The CTA refused to consider the argument that Toshiba was not entitled to a tax credit/refund under Section 24 of Republic Act No. 7916 because it was only raised by the CIR for the first time in his Motion for Reconsideration. Also, contrary to the assertions of the CIR, the CTA held that Section 23, and not Section 24, of Republic Act No. 7916, applied to Toshiba. According to Section 23 of Republic Act No. 7916 –

SECTION 23. Fiscal Incentives. – Business establishments operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987.

Furthermore, tax credits for exporters using local materials as inputs shall enjoy the benefits provided for in the Export Development Act of 1994.

Among the fiscal incentives granted to PEZA-registered enterprises by the Omnibus Investments Code of 1987 was the income tax holiday, to wit –

Art. 39. Incentives to Registered Enterprises. – All registered enterprises shall be granted the following incentives to the extent engaged in a preferred area of investment:

(a) Income Tax Holiday. —

(1) For six (6) years from commercial operation for pioneer firms and four (4) years for non-pioneer firms, new registered firms shall be fully exempt from income taxes levied by the national government. Subject to such guidelines as may be prescribed by the Board, the income tax exemption will be extended for another year in each of the following cases:

(i) The project meets the prescribed ratio of capital equipment to number of workers set by the Board;

(ii) Utilization of indigenous raw materials at rates set by the Board;

(iii) The net foreign exchange savings or earnings amount to at least US$500,000.00 annually during the first three (3) years of operation.

The preceding paragraph notwithstanding, no registered pioneer firm may avail of this incentive for a period exceeding eight (8) years.

(2) For a period of three (3) years from commercial operation, registered expanding firms shall be entitled to an exemption from income taxes levied by the National Government proportionate to their expansion under such terms and conditions as the Board may determine: Provided, however, That during the period within which this incentive is availed of by the expanding firm it shall not be entitled to additional deduction for incremental labor expense.

(3) The provision of Article 7(14) notwithstanding, registered firms shall not be entitled to any extension of this incentive.

The CTA pointed out that Toshiba availed itself of the income tax holiday under the Omnibus Investments Code of 1987, so Toshiba was exempt only from income tax but not from other taxes such as VAT. As a result, Toshiba was liable for output VAT on its export sales, but at zero percent (0%) rate, and entitled to the credit/refund of the input VAT paid on its purchases of goods and services relative to such zero-rated export sales.

Unsatisfied, the CIR filed a Petition for Review29 with the Court of Appeals, docketed as CA-G.R. SP No. 63047.

In its Decision dated August 29, 2002, the Court of Appeals granted the appeal of the CIR, and reversed and set aside the Decision dated October 16, 2000 and the Resolution dated January 17, 2001 of the CTA. The appellate court ruled that Toshiba was not entitled to the refund of its alleged unused input VAT payments because it was a tax-exempt entity under Section 24 of Republic Act No. 7916. As a PEZA-registered corporation, Toshiba was liable for remitting to the national government the five percent (5%) preferential rate on its gross income earned within the ECOZONE, in lieu of all other national and local taxes, including VAT.

The Court of Appeals further adjudged that the export sales of Toshiba were VAT-exempt, not zero-rated, transactions. The appellate court found that the Answer filed by the CIR in CTA Case No. 5762 did not contain any admission that the export sales of Toshiba were zero-rated transactions under Section 100(a)(2)(A) of the Tax Code of 1977, as amended. At the least, what was admitted by the CIR in said Answer was that the Tax Code provisions cited in the Petition for Review of Toshiba in CTA Case No. 5762 were correct. As to the Joint Stipulation of Facts and Issues filed by the parties in CTA Case No. 5762, which stated that Toshiba was subject to zero percent (0%) VAT on its export sales, the appellate court declared that the CIR signed the said pleading through palpable mistake. This palpable mistake in the stipulation of facts should not be taken against the CIR, for to do otherwise would result in suppressing the truth through falsehood. In addition, the State could not be put in estoppel by the mistakes or errors of its officials or agents.

Given that Toshiba was a tax-exempt entity under Republic Act No. 7916, a special law, the Court of Appeals concluded that the export sales of Toshiba were VAT-exempt transactions under Section 109(q) of the Tax Code of 1997, formerly Section 103(q) of the Tax Code of 1977. Therefore, Toshiba could not claim refund of its input VAT payments on its domestic purchases of goods and services.

The Court of Appeals decreed at the end of its August 29, 2002 Decision –

WHEREFORE, premises considered, the appealed decision of the Court of Tax Appeals in CTA Case No. 5762, is hereby REVERSED and SET ASIDE, and a new one is hereby rendered finding [Toshiba], being a tax exempt entity under R.A. No. 7916, not entitled to refund the VAT payments made in its domestic purchases of goods and services.30

Toshiba filed a Motion for Reconsideration31 of the aforementioned Decision, anchored on the following arguments: (a) the CIR never raised as an issue before the CTA that Toshiba was tax-exempt under Section 24 of Republic Act No. 7916; (b) Section 24 of Republic Act No. 7916, subjecting the gross income earned by a PEZA-registered enterprise within the ECOZONE to a preferential rate of five percent (5%), in lieu of all taxes, did not apply to Toshiba, which availed itself of the income tax holiday under Section 23 of the same statute; (c) the conclusion of the CTA that the export sales of Toshiba were zero-rated was supported by substantial evidence, other than the admission of the CIR in the Joint Stipulation of Facts and Issues; and (d) the judgment of the CTA granting the refund of the input VAT payments was supported by substantial evidence and should not have been set aside by the Court of Appeals.

In a Resolution dated February 19, 2003, the Court of Appeals denied the Motion for Reconsideration of Toshiba since the arguments presented therein were mere reiterations of those already passed upon and found to be without merit by the appellate court in its earlier Decision. The Court of Appeals, however, mentioned that it was incorrect for Toshiba to say that the issue of the applicability of Section 24 of Republic Act No. 7916 was only raised for the first time on appeal before the appellate court. The said issue was adequately raised by the CIR in his Motion for Reconsideration before the CTA, and was even ruled upon by the tax court.

Hence, Toshiba filed the instant Petition for Review with the following assignment of errors –

5.1 THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT [TOSHIBA], BEING A PEZA-REGISTERED ENTERPRISE, IS EXEMPT FROM VAT UNDER SECTION 24 OF R.A. 7916, AND FURTHER HOLDING THAT [TOSHIBA’S] EXPORT SALES ARE EXEMPT TRANSACTIONS UNDER SECTION 109 OF THE TAX CODE.

5.2 THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO DISMISS OUTRIGHT AND GAVE DUE COURSE TO [CIR’S] PETITION NOTWITHSTANDING [CIR’S] FAILURE TO ADEQUATELY RAISE IN ISSUE DURING THE TRIAL IN THE COURT OF TAX APPEALS THE APPLICABILITY OF SECTION 24 OF R.A. 7916 TO [TOSHIBA’S] CLAIM FOR REFUND.

5.3 THE HONORABLE COURT OF APPEALS ERRED WHEN [IT] RULED THAT THE COURT OF TAX APPEALS’ FINDINGS, WITH REGARD [TOSHIBA’S] EXPORT SALES BEING ZERO RATED SALES FOR VAT PURPOSES, WERE BASED MERELY ON THE ADMISSIONS MADE BY [CIR’S] COUNSEL AND NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

5.4 THE HONORABLE COURT OF APPEALS ERRED WHEN IT REVERSED THE DECISION OF THE COURT OF TAX APPEALS GRANTING [TOSHIBA’S] CLAIM FOR REFUND[;]32

and the following prayer –

WHEREFORE, premises considered, Petitioner TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC. most respectfully prays that the decision and resolution of the Honorable Court of Appeals, reversing the decision of the CTA in CTA Case No. 5762, be set aside and further prays that a new one be rendered AFFIRMING AND UPHOLDING the Decision of the CTA promulgated on October 16, 2000 in CTA Case No. 5762.

Other reliefs, which the Honorable Court may deem just and equitable under the circumstances, are likewise prayed for.33

The Petition is impressed with merit.

The CIR did not timely raise before the CTA the issues on the VAT-exemptions of Toshiba and its export sales.

Upon the failure of the CIR to timely plead and prove before the CTA the defenses or objections that Toshiba was VAT-exempt under Section 24 of Republic Act No. 7916, and that its export sales were VAT-exempt transactions under Section 103(q) of the Tax Code of 1977, as amended, the CIR is deemed to have waived the same.

During the pendency of CTA Case No. 5762, the proceedings before the CTA were governed by the Rules of the Court of Tax Appeals,34 while the Rules of Court were applied suppletorily.35

Rule 9, Section 1 of the Rules of Court provides:

SECTION 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

The CIR did not argue straight away in his Answer in CTA Case No. 5762 that Toshiba had no right to the credit/refund of its input VAT payments because the latter was VAT-exempt and its export sales were VAT-exempt transactions. The Pre-Trial Brief36 of the CIR was equally bereft of such allegations or arguments. The CIR passed up the opportunity to prove the supposed VAT-exemptions of Toshiba and its export sales when the CIR chose not to present any evidence at all during the trial before the CTA.37 He missed another opportunity to present the said issues before the CTA when he waived the submission of a Memorandum.38 The CIR had waited until the CTA already rendered its Decision dated October 16, 2000 in CTA Case No. 5762, which granted the claim for credit/refund of Toshiba, before asserting in his Motion for Reconsideration that Toshiba was VAT-exempt and its export sales were VAT-exempt transactions.

The CIR did not offer any explanation as to why he did not argue the VAT-exemptions of Toshiba and its export sales before and during the trial held by the CTA, only doing so in his Motion for Reconsideration of the adverse CTA judgment. Surely, said defenses or objections were already available to the CIR when the CIR filed his Answer to the Petition for Review of Toshiba in CTA Case No. 5762.

It is axiomatic in pleadings and practice that no new issue in a case can be raised in a pleading which by due diligence could have been raised in previous pleadings.39 The Court cannot simply grant the plea of the CIR that the procedural rules be relaxed based on the general averment of the interest of substantive justice. It should not be forgotten that the first and fundamental concern of the rules of procedure is to secure a just determination of every action.40 Procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain instances, the Court allows a relaxation in the application of the rules, it never intends to forge a weapon for erring litigants to violate the rules with impunity. The liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants and their counsel are well advised to abide by, rather than flaunt, procedural rules for these rules illumine the path of the law and rationalize the pursuit of justice.41

The CIR judicially admitted that Toshiba was VAT-registered and its export sales were subject to VAT at zero percent (0%) rate.

More importantly, the arguments of the CIR that Toshiba was VAT-exempt and the latter’s export sales were VAT-exempt transactions are inconsistent with the explicit admissions of the CIR in the Joint Stipulation of Facts and Issues (Joint Stipulation) that Toshiba was a registered VAT entity and that it was subject to zero percent (0%) VAT on its export sales.

The Joint Stipulation was executed and submitted by Toshiba and the CIR upon being advised to do so by the CTA at the end of the pre-trial conference held on June 23, 1999.42 The approval of the Joint Stipulation by the CTA, in its Resolution43 dated July 12, 1999, marked the culmination of the pre-trial process in CTA Case No. 5762.

Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was discretionary under the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent amendments in 1997. It has been hailed as "the most important procedural innovation in Anglo-Saxon justice in the nineteenth century."44

The nature and purpose of a pre-trial have been laid down in Rule 18, Section 2 of the Rules of Court:

SECTION 2. Nature and purpose. – The pre-trial is mandatory. The court shall consider:

(a) The possibility of an amicable settlement or of a submission to alternative modes of dispute resolution;

(b) The simplification of the issues;

(c) The necessity or desirability of amendments to the pleadings;

(d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid unnecessary proof;

(e) The limitation of the number of witnesses;

(f) The advisability of a preliminary reference of issues to a commissioner;

(g) The propriety of rendering judgment on the pleadings, or summary judgment, or of dismissing the action should a valid ground therefor be found to exist;

(h) The advisability or necessity of suspending the proceedings; and

(i) Such other matters as may aid in the prompt disposition of the action. (Emphasis ours.)

The admission having been made in a stipulation of facts at pre-trial by the parties, it must be treated as a judicial admission.45 Under Section 4, Rule 129 of the Rules of Court, a judicial admission requires no proof. The admission may be contradicted only by a showing that it was made through palpable mistake or that no such admission was made. The Court cannot lightly set aside a judicial admission especially when the opposing party relied upon the same and accordingly dispensed with further proof of the fact already admitted. An admission made by a party in the course of the proceedings does not require proof.46

In the instant case, among the facts expressly admitted by the CIR and Toshiba in their CTA-approved Joint Stipulation are that Toshiba "is a duly registered value-added tax entity in accordance with Section 107 of the Tax Code, as amended[,]"47 that "is subject to zero percent (0%) value-added tax on its export sales in accordance with then Section 100(a)(2)(A) of the Tax Code, as amended."48 The CIR was bound by these admissions, which he could not eventually contradict in his Motion for Reconsideration of the CTA Decision dated October 16, 2000, by arguing that Toshiba was actually a VAT-exempt entity and its export sales were VAT-exempt transactions. Obviously, Toshiba could not have been subject to VAT and exempt from VAT at the same time. Similarly, the export sales of Toshiba could not have been subject to zero percent (0%) VAT and exempt from VAT as well.

The CIR cannot escape the binding effect of his judicial admissions.

The Court disagrees with the Court of Appeals when it ruled in its Decision dated August 29, 2002 that the CIR could not be bound by his admissions in the Joint Stipulation because (1) the said admissions were "made through palpable mistake"49 which, if countenanced, "would result in falsehood, unfairness and injustice";50 and (2) the State could not be put in estoppel by the mistakes of its officials or agents. This ruling of the Court of Appeals is rooted in its conclusion that a "palpable mistake" had been committed by the CIR in the signing of the Joint Stipulation. However, this Court finds no evidence of the commission of a mistake, much more, of a palpable one.

The CIR does not deny that his counsel, Atty. Joselito F. Biazon, Revenue Attorney II of the BIR, signed the Joint Stipulation, together with the counsel of Toshiba, Atty. Patricia B. Bisda. Considering the presumption of regularity in the performance of official duty,51 Atty. Biazon is presumed to have read, studied, and understood the contents of the Joint Stipulation before he signed the same. It rests on the CIR to present evidence to the contrary.

Yet, the Court observes that the CIR himself never alleged in his Motion for Reconsideration of the CTA Decision dated October 16, 2000, nor in his Petition for Review before the Court of Appeals, that Atty. Biazon committed a mistake in signing the Joint Stipulation. Since the CIR did not make such an allegation, neither did he present any proof in support thereof. The CIR began to aver the existence of a palpable mistake only after the Court of Appeals made such a declaration in its Decision dated August 29, 2002.

Despite the absence of allegation and evidence by the CIR, the Court of Appeals, on its own, concluded that the admissions of the CIR in the Joint Stipulation were due to a palpable mistake based on the following deduction –

Scrutinizing the Answer filed by [the CIR], we rule that the Joint Stipulation of Facts and Issues signed by [the CIR] was made through palpable mistake. Quoting paragraph 4 of its Answer, [the CIR] states:

"4. He ADMITS the allegations contained in paragraph 5 of the petition only insofar as the cited provisions of Tax Code is concerned, but SPECIFICALLY DENIES the rest of the allegations therein for being mere opinions, arguments or gratuitous assertions on the part of [Toshiba] and/or because they are mere erroneous conclusions or interpretations of the quoted law involved, the truth of the matter being those stated hereunder

x x x x"

And paragraph 5 of the petition for review filed by [Toshiba] before the CTA states:

"5. Petitioner is subject to zero percent (0%) value-added tax on its export sales in accordance with then Section 100(a)(2)(A) of the Tax Code x x x.

x x x x"

As we see it, nothing in said Answer did [the CIR] admit that the export sales of [Toshiba] were indeed zero-rated transactions. At the least, what was admitted only by [the CIR] concerning paragraph 4 of his Answer, is the fact that the provisions of the Tax Code, as cited by [Toshiba] in its petition for review filed before the CTA were correct.52

The Court of Appeals provided no explanation as to why the admissions of the CIR in his Answer in CTA Case No. 5762 deserved more weight and credence than those he made in the Joint Stipulation. The appellate court failed to appreciate that the CIR, through counsel, Atty. Biazon, also signed the Joint Stipulation; and that absent evidence to the contrary, Atty. Biazon is presumed to have signed the Joint Stipulation willingly and knowingly, in the regular performance of his official duties. Additionally, the Joint Stipulation53 of Toshiba and the CIR was a more recent pleading than the Answer54 of the CIR. It was submitted by the parties after the pre-trial conference held by the CTA, and subsequently approved by the tax court. If there was any discrepancy between the admissions of the CIR in his Answer and in the Joint Stipulation, the more logical and reasonable explanation would be that the CIR changed his mind or conceded some points to Toshiba during the pre-trial conference which immediately preceded the execution of the Joint Stipulation. To automatically construe that the discrepancy was the result of a palpable mistake is a wide leap which this Court is not prepared to take without substantial basis.

The judicial admissions of the CIR in the Joint Stipulation are not intrinsically false, wrong, or illegal, and are consistent with the ruling on the VAT treatment of PEZA-registered enterprises in the previous Toshiba case.

There is no basis for believing that to bind the CIR to his judicial admissions in the Joint Stipulation – that Toshiba was a VAT-registered entity and its export sales were zero-rated VAT transactions – would result in "falsehood, unfairness and injustice." The judicial admissions of the CIR are not intrinsically false, wrong, or illegal. On the contrary, they are consistent with the ruling of this Court in a previous case involving the same parties, Commissioner of Internal Revenue v. Toshiba Information Equipment (Phils.) Inc.55 (Toshiba case), explaining the VAT treatment of PEZA-registered enterprises.

In the Toshiba case, Toshiba sought the refund of its unutilized input VAT on its purchase of capital goods and services for the first and second quarters of 1996, based on Section 106(b) of the Tax Code of 1977, as amended.56 In the Petition at bar, Toshiba is claiming refund of its unutilized input VAT on its local purchase of goods and services which are attributable to its export sales for the first and second quarters of 1997, pursuant to Section 106(a), in relation to Section 100(a)(1)(A)(i) of the Tax Code of 1977, as amended, which read –

SEC. 106. Refunds or tax credits of creditable input tax. – (a) Any VAT-registered person, whose sales are zero-rated or effectively zero-rated, may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax:Provided, however, That in the case of zero-rated sales under Section 100(a)(2)(A)(i),(ii) and (b) and Section 102(b)(1) and (2), the acceptable foreign currency exchange proceeds thereof has been duly accounted for in accordance with the regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties of services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume sales.

SEC. 100. Value-added tax on sale of goods or properties. – (a) Rate and base of tax. – x x x

x x x x

(2) The following sales by VAT-registered persons shall be subject to 0%:

(A) Export sales. – The term "export sales" means:

(i) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipnas (BSP).

Despite the difference in the legal bases for the claims for credit/refund in the Toshiba case and the case at bar, the CIR raised the very same defense or objection in both – that Toshiba and its transactions were VAT-exempt. Hence, the ruling of the Court in the former case is relevant to the present case.

At the outset, the Court establishes that there is a basic distinction in the VAT-exemption of a person and the VAT-exemption of a transaction –

It would seem that petitioner CIR failed to differentiate between VAT-exempt transactions from VAT-exempt entities. In the case of Commissioner of Internal Revenue v. Seagate Technology (Philippines), this Court already made such distinction –

An exempt transaction, on the one hand, involves goods or services which, by their nature, are specifically listed in and expressly exempted from the VAT under the Tax Code, without regard to the tax status – VAT-exempt or not – of the party to the transaction…

An exempt party, on the other hand, is a person or entity granted VAT exemption under the Tax Code, a special law or an international agreement to which the Philippines is a signatory, and by virtue of which its taxable transactions become exempt from VAT x x x.57

In effect, the CIR is opposing the claim for credit/refund of input VAT of Toshiba on two grounds: (1) that Toshiba was a VAT-exempt entity; and (2) that its export sales were VAT-exempt transactions.

It is now a settled rule that based on the Cross Border Doctrine, PEZA-registered enterprises, such as Toshiba, are VAT-exempt and no VAT can be passed on to them. The Court explained in the Toshiba case that –

PEZA-registered enterprise, which would necessarily be located within ECOZONES, are VAT-exempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of all taxes; but, rather, because of Section 8 of the same statute which establishes the fiction that ECOZONES are foreign territory.

x x x x

The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT; while, those destined for use or consumption within the Philippines shall be imposed with ten percent (10%) VAT.

Applying said doctrine to the sale of goods, properties, and services to and from the ECOZONES, the BIR issued Revenue Memorandum Circular (RMC) No. 74-99, on 15 October 1999. Of particular interest to the present Petition is Section 3 thereof, which reads –

SECTION 3. Tax Treatment of Sales Made by a VAT Registered Supplier from the Customs Territory, to a PEZA Registered Enterprise. –

(1) If the Buyer is a PEZA registered enterprise which is subject to the 5% special tax regime, in lieu of all taxes, except real property tax, pursuant to R.A. No. 7916, as amended:

(a) Sale of goods (i.e., merchandise). – This shall be treated as indirect export hence, considered subject to zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC and Sec. 23 of R.A. No. 7916, in relation to ART. 77(2) of the Omnibus Investments Code.

(b) Sale of service. – This shall be treated subject to zero percent (0%) VAT under the "cross border doctrine" of the VAT System, pursuant to VAT Ruling No. 032-98 dated Nov. 5, 1998.

(2) If Buyer is a PEZA registered enterprise which is not embraced by the 5% special tax regime, hence, subject to taxes under the NIRC, e.g., Service Establishments which are subject to taxes under the NIRC rather than the 5% special tax regime:

(a) Sale of goods (i.e., merchandise). – This shall be treated as indirect export hence, considered subject to zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC and Sec. 23 of R.A. No. 7916 in relation to ART. 77(2) of the Omnibus Investments Code.

(b) Sale of Service. – This shall be treated subject to zero percent (0%) VAT under the "cross border doctrine" of the VAT System, pursuant to VAT Ruling No. 032-98 dated Nov. 5, 1998.

(3) In the final analysis, any sale of goods, property or services made by a VAT registered supplier from the Customs Territory to any registered enterprise operating in the ecozone, regardless of the class or type of the latter’s PEZA registration, is actually qualified and thus legally entitled to the zero percent (0%) VAT. Accordingly, all sales of goods or property to such enterprise made by a VAT registered supplier from the Customs Territory shall be treated subject to 0% VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC, in relation to ART. 77(2) of the Omnibus Investments Code, while all sales of services to the said enterprises, made by VAT registered suppliers from the Customs Territory, shall be treated effectively subject to the 0% VAT, pursuant to Section 108(B)(3), NIRC, in relation to the provisions of R.A. No. 7916 and the "Cross Border Doctrine" of the VAT system.

This Circular shall serve as a sufficient basis to entitle such supplier of goods, property or services to the benefit of the zero percent (0%) VAT for sales made to the aforementioned ECOZONE enterprises and shall serve as sufficient compliance to the requirement for prior approval of zero-rating imposed by Revenue Regulations No. 7-95 effective as of the date of the issuance of this Circular.

Indubitably, no output VAT may be passed on to an ECOZONE enterprise since it is a VAT-exempt entity. x x x.58

The Court, nevertheless, noted in the Toshiba case that the rule which considers any sale by a supplier from the Customs Territory to a PEZA-registered enterprise as export sale, which should not be burdened by output VAT, was only clearly established on October 15, 1999, upon the issuance by the BIR of RMC No. 74-99. Prior to October 15, 1999, whether a PEZA-registered enterprise was exempt or subject to VAT depended on the type of fiscal incentives availed of by the said enterprise.59 The old rule, then followed by the BIR, and recognized and affirmed by the CTA, the Court of Appeals, and this Court, was described as follows –

According to the old rule, Section 23 of Rep. Act No. 7916, as amended, gives the PEZA-registered enterprise the option to choose between two sets of fiscal incentives: (a) The five percent (5%) preferential tax rate on its gross income under Rep. Act No. 7916, as amended; and (b) the income tax holiday provided under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, as amended.

The five percent (5%) preferential tax rate on gross income under Rep. Act No. 7916, as amended, is in lieu of all taxes. Except for real property taxes, no other national or local tax may be imposed on a PEZA-registered enterprise availing of this particular fiscal incentive, not even an indirect tax like VAT.

Alternatively, Book VI of Exec. Order No. 226, as amended, grants income tax holiday to registered pioneer and non-pioneer enterprises for six-year and four-year periods, respectively. Those availing of this incentive are exempt only from income tax, but shall be subject to all other taxes, including the ten percent (10%) VAT.

This old rule clearly did not take into consideration the Cross Border Doctrine essential to the VAT system or the fiction of the ECOZONE as a foreign territory. It relied totally on the choice of fiscal incentives of the PEZA-registered enterprise. Again, for emphasis, the old VAT rule for PEZA-registered enterprises was based on their choice of fiscal incentives: (1) If the PEZA-registered enterprise chose the five percent (5%) preferential tax on its gross income, in lieu of all taxes, as provided by Rep. Act No. 7916, as amended, then it would be VAT-exempt; (2) If the PEZA-registered enterprise availed of the income tax holiday under Exec. Order No. 226, as amended, it shall be subject to VAT at ten percent (10%). Such distinction was abolished by RMC No. 74-99, which categorically declared that all sales of goods, properties, and services made by a VAT-registered supplier from the Customs Territory to an ECOZONE enterprise shall be subject to VAT, at zero percent (0%) rate, regardless of the latter’s type or class of PEZA registration; and, thus, affirming the nature of a PEZA-registered or an ECOZONE enterprise as a VAT-exempt entity.60

To recall, Toshiba is herein claiming the refund of unutilized input VAT payments on its local purchases of goods and services attributable to its export sales for the first and second quarters of 1997. Such export sales took place before October 15, 1999, when the old rule on the VAT treatment of PEZA-registered enterprises still applied. Under this old rule, it was not only possible, but even acceptable, for Toshiba, availing itself of the income tax holiday option under Section 23 of Republic Act No. 7916, in relation to Section 39 of the Omnibus Investments Code of 1987, to be subject to VAT, both indirectly (as purchaser to whom the seller shifts the VAT burden) and directly (as seller whose sales were subject to VAT, either at ten percent [10%] or zero percent [0%]).

A VAT-registered seller of goods and/or services who made zero-rated sales can claim tax credit or refund of the input VAT paid on its purchases of goods, properties, or services relative to such zero-rated sales, in accordance with Section 4.102-2 of Revenue Regulations No. 7-95, which provides –

Sec. 4.102-2. Zero-rating. – (a) In general. - A zero-rated sale by a VAT-registered person, which is a taxable transaction for VAT purposes, shall not result in any output tax. However, the input tax on his purchases of goods, properties or services related to such zero-rated sale shall be available as tax credit or refund in accordance with these regulations.

The BIR, as late as July 15, 2003, when it issued RMC No. 42-2003, accepted applications for credit/refund of input VAT on purchases prior to RMC No. 74-99, filed by PEZA-registered enterprises which availed themselves of the income tax holiday. The BIR answered Question Q-5(1) of RMC No. 42-2003 in this wise –

Q-5: Under Revenue Memorandum Circular (RMC) No. 74-99, purchases by PEZA-registered firms automatically qualify as zero-rated without seeking prior approval from the BIR effective October 1999.

1) Will the OSS-DOF Center still accept applications from PEZA-registered claimants who were allegedly billed VAT by their suppliers before and during the effectivity of the RMC by issuing VAT invoices/receipts?

x x x x

A-5(1): If the PEZA-registered enterprise is paying the 5% preferential tax in lieu of all other taxes, the said PEZA-registered taxpayer cannot claim TCC or refund for the VAT paid on purchases. However, if the taxpayer is availing of the income tax holiday, it can claim VAT credit provided:

a. The taxpayer-claimant is VAT-registered;

b. Purchases are evidenced by VAT invoices or receipts, whichever is applicable, with shifted VAT to the purchaser prior to the implementation of RMC No. 74-99; and

c. The supplier issues a sworn statement under penalties of perjury that it shifted the VAT and declared the sales to the PEZA-registered purchaser as taxable sales in its VAT returns.

For invoices/receipts issued upon the effectivity of RMC No. 74-99, the claims for input VAT by PEZA-registered companies, regardless of the type or class of PEZA-registration, should be denied. (Emphases ours.)

Consequently, the CIR cannot herein insist that all PEZA-registered enterprises are VAT-exempt in every instance. RMC No. 42-2003 contains an express acknowledgement by the BIR that prior to RMC No. 74-99, there were PEZA-registered enterprises liable for VAT and entitled to credit/refund of input VAT paid under certain conditions.

This Court already rejected in the Toshiba case the argument that sale transactions of a PEZA-registered enterprise were VAT-exempt under Section 103(q) of the Tax Code of 1977, as amended, ratiocinating that –

Section 103(q) of the Tax Code of 1977, as amended, relied upon by petitioner CIR, relates to VAT-exempt transactions. These are transactions exempted from VAT by special laws or international agreements to which the Philippines is a signatory. Since such transactions are not subject to VAT, the sellers cannot pass on any output VAT to the purchasers of goods, properties, or services, and they may not claim tax credit/refund of the input VAT they had paid thereon.

Section 103(q) of the Tax Code of 1977, as amended, cannot apply to transactions of respondent Toshiba because although the said section recognizes that transactions covered by special laws may be exempt from VAT, the very same section provides that those falling under Presidential Decree No. 66 are not. Presidential Decree No. 66, creating the Export Processing Zone Authority (EPZA), is the precursor of Rep. Act No. 7916, as amended, under which the EPZA evolved into

the PEZA. Consequently, the exception of Presidential Decree No. 66 from Section 103(q) of the Tax Code of 1977, as amended, extends likewise to Rep. Act No. 7916, as amended.61(Emphasis ours.)

In light of the judicial admissions of Toshiba, the CTA correctly confined itself to the other factual issues submitted for resolution by the parties.

In accord with the admitted facts – that Toshiba was a VAT-registered entity and that its export sales were zero-rated transactions – the stated issues in the Joint Stipulation were limited to other factual matters, particularly, on the compliance by Toshiba with the rest of the requirements for credit/refund of input VAT on zero-rated transactions. Thus, during trial, Toshiba concentrated on presenting evidence to establish that it incurredP3,875,139.65 of input VAT for the first and second quarters of 1997 which were directly attributable to its export sales; that said amount of input VAT were not carried over to the succeeding quarters; that said amount of input VAT has not been applied or offset against any output VAT liability; and that said amount of input VAT was properly substantiated by official receipts and invoices.

After what truly appears to be an exhaustive review of the evidence presented by Toshiba, the CTA made the following findings –

(1) The amended quarterly VAT returns of Toshiba for 1997 showed that it made no other sales, except zero-rated export sales, for the entire year, in the sum of P2,083,305,000.00 for the first quarter andP5,411,372,000.00 for the second quarter. That being the case, all input VAT allegedly incurred by Toshiba for the first two quarters of 1997, in the amount of P3,875,139.65, was directly attributable to its zero-rated sales for the same period.

(2) Toshiba did carry-over the P3,875,139.65 input VAT it reportedly incurred during the first two quarters of 1997 to succeeding quarters, until the first quarter of 1999. Despite the carry-over of the subject input VAT of P3,875,139.65, the claim of Toshiba was not affected because it later on deducted the said amount as "VAT Refund/TCC Claimed" from its total available input VAT of P6,841,468.17 for the first quarter of 1999.

(3) Still, the CTA could not allow the credit/refund of the total input VAT of P3,875,139.65 being claimed by Toshiba because not all of said amount was actually incurred by the company and duly substantiated by invoices and official receipts. From the P3,875,139.65 claim, the CTA deducted the amounts of (a)P189,692.92, which was in excess of the P3,685,446.23 input VAT Toshiba originally claimed in its application for credit/refund filed with the DOF One-Stop Shop; (b) P396,882.58, which SGV & Co., the commissioned CPA, disallowed for being improperly substantiated, i.e., supported only by provisional acknowledgement receipts, or by documents other than official receipts, or not supported by TIN or TIN VAT or by any document at all; (c) P1,887,545.65, which the CTA itself verified as not being substantiated in accordance with Section 4.104-562 of Revenue Regulations No. 7-95, in relation to Sections 10863 and 23864 of the Tax Code of 1977, as amended; and (d) P15,736.42, which Toshiba already applied to its output VAT liability for the fourth quarter of 1998.

(4) Ultimately, Toshiba was entitled to the credit/refund of unutilized input VAT payments attributable to its zero-rated sales in the amounts of P1,158,016.82 and P227,265.26, for the first and second quarters of 1997, respectively, or in the total amount of P1,385,282.08.

Since the aforementioned findings of fact of the CTA are borne by substantial evidence on record, unrefuted by the CIR, and untouched by the Court of Appeals, they are given utmost respect by this Court.

The Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of its functions, is dedicated exclusively to the resolution of tax problems and has accordingly developed an expertise on the subject unless there has been an abuse or improvident exercise of authority.65 In Barcelon, Roxas Securities, Inc. (now known as UBP Securities, Inc.) v. Commissioner of Internal Revenue,66 this Court more explicitly pronounced –

Jurisprudence has consistently shown that this Court accords the findings of fact by the CTA with the highest respect. In Sea-Land Service Inc. v. Court of Appeals [G.R. No. 122605, 30 April 2001, 357 SCRA 441, 445-446], this Court recognizes that the Court of Tax Appeals, which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Such findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in every respect.

WHEREFORE, the assailed Decision dated August 29, 2002 and the Resolution dated February 19, 2003 of the Court of Appeals in CA-G.R. SP No. 63047 are REVERSED and SET ASIDE, and the Decision dated October 16, 2000 of the Court

of Tax Appeals in CTA Case No. 5762 is REINSTATED. Respondent Commissioner of Internal Revenue is ORDERED to REFUND or, in the alternative, to ISSUE a TAX CREDIT CERTIFICATE in favor of petitioner Toshiba Information Equipment (Phils.), Inc. in the amount of P1,385,282.08, representing the latter’s unutilized input VAT payments for the first and second quarters of 1997. No pronouncement as to costs.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTROAssociate Justice

WE CONCUR:

REYNATO S. PUNOChief JusticeChairperson

CONCHITA CARPIO MORALESAssociate Justice

LUCAS P. BERSAMINAssociate Justice

MARTIN S. VILLARAMA, JR.Associate Justice


Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Rollo, pp. 11-32.

2 Penned by Associate Justice Rodrigo V. Cosico with Associate Justices Buenaventura J. Guerrero and Perlita J. Tria Tirona, concurring; rollo, pp. 35- 52.

3 Id. at 54-55.

4 Penned by Associate Judge Amancio Q. Saga with Presiding Judge Ernesto D. Acosta and Associate Judge Ramon O. De Veyra, concurring; rollo, pp. 83-92.

5 Rollo, p. 12.

6 Exhibit "A," Folder of Exhibits "A-I" of Toshiba.

7 Records, p. 7.

8 Exhibits "B" and "C," Folder of Exhibits "A-I" of Toshiba.

9 Toshiba declared P3,320,034.44 and P555,105.21 of input VAT payments for the first and second quarters or 1997, respectively.

10 Exhibits "B-1" and "C-1," Folder of Exhibits "A-I" of Toshiba.

11 Toshiba reported P2,083,305,000.00 and P5,411,372,000.00 of zero-rated sales for the first and second quarters of 1997, respectively.

12 Records, pp. 10-13.

13 Toshiba claimed in its applications for refund/credit P3,268,682.34 and P416,764.39 of local input VAT for the first and second quarters of 1997, respectively.


15 Republic Act No. 8424, otherwise known as the Tax Code of 1997, took effect only on January 1, 1998. Prior to said date, Presidential Decree No. 1158, otherwise known as the Tax Code of 1977, as amended, was in effect. According to Section 230 of the Tax Code of 1977, as amended:

Sec. 230. Recovery of tax erroneously or illegally collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (Emphasis ours.)

16 As amended by Republic Act No. 7716, bearing the title "An Act Restructuring the Value Added Tax (VAT) System, Widening its Tax Base and Enhancing its Administration and for These Purposes Amending and Repealing the Relevant Provisions of the National Internal Revenue Code, As Amended, and For Other Purposes."

17 Records, p. 5.

18 Id. at 20-22.

19 Id. at 21.

20 Id. at 33.

21 Id. at 34-35.

22 Id.

23 Id. at 35.

24 Id. at 91-92.

25 Id. at 99-100.

26 Id. at 89-95.

27 Otherwise known as The Special Economic Zone Act of 1995, as amended by Republic Act No. 8748.

28 Signed by Presiding Judge Ernesto D. Acosta and Associate Judges Amancio Q. Saga and Ramon O. de Veyra. Rollo, pp. 103-106.

29 Rollo, pp. 107-118.

30 Id. at 52.

31 Id. at 147-163.

32 Id. at 17-18.

33 Id. at 30.

34 The RCTA was promulgated on September 10, 1955, following the enactment on June 16, 1954 of Republic Act No. 1125, otherwise known as An Act Creating the Court of Appeals. Republic Act No. 9282, which was enacted on March 30, 2004, amended Republic Act No. 1125 by expanding the jurisdiction of the CTA, elevating the same to the level of a collegiate court with special jurisdiction, and enlarging its membership. Accordingly, the Court approved on November 25, 2005 the Revised Rules of the Court of Tax Appeals (RRCTA). Thereafter, Republic Act No. 9503, which was enacted on June 12, 2008, further amended Republic Act No. 1125 by enlarging the organization structure of the CTA. As a result, the Court approved on September 16, 2008 the amendments to the 2005 RRCTA.

35 Rule 16 of the RCTA is reproduced in full below:

RULE 16APPLICABILITY OF THE RULES OF THE COURT OF FIRST INSTANCE

SECTION 1. The provisions of the Rules of Court applicable to proceedings before the Courts of First Instance shall, insofar as they may not be inconsistent with the provisions of Republic Act No. 1125 and of these rules, be applicable to cases pending before this Court, except that, in any case pending before it, the Court may, in the exercise of its discretion, fix a shorter period for the filing of pleadings and papers.

Under Batas Pambansa Blg. 129, otherwise known as The Judiciary Reorganization Act of 1980, the Court of First Instance became the Regional Trial Court.


37 Resolution dated May 10, 2000, signed by Presiding Judge Ernesto D. Acosta and Associate Judges Amancio Q. Saga and Ramon O. de Veyra; id. at 72.

38 Rollo, p. 85.

39 Director of Lands v. Court of Appeals, 363 Phil. 117, 128 (1999).

40 Commissioner of Internal Revenue v. A. Soriano Corporation, 334 Phil. 965, 972 (1997).

41 Land Bank of the Philippines v. Natividad, 497 Phil. 738, 744-745 (2005).

42 Records, p. 33.

43 Signed by Presiding Judge Ernesto D. Acosta and Associate Judges Amancio Q. Saga and Ramon O. De Veyra, id. at 36.

44 Tiu v. Middleton, 369 Phil. 829, 835 (1999).

45 SCC Chemicals Corporation v. Court of Appeals, 405 Phil. 514, 522-523 (2001).

46 Garcia v. Court of Appeals, 327 Phil. 1097, 1113 (1996).

47 Records, p. 34.

48 Id.

49 Rollo, p. 49.

50 Id. at 51.

51 Rule 131, Section 3(m) of the Rules of Court.

52 Rollo, pp. 49-50.

53 Filed by the parties on July 7, 1999.

54 Filed by the CIR on May 11, 1999.

55 G.R. No. 150154, August 9, 2005, 466 SCRA 211, 230-231.

56 SEC. 106. Refunds or tax credits of creditable input tax. –

x x x x

(b) Capital goods. – A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made.

57 Commissioner of Internal Revenue v. Toshiba Information Equipment (Phils.) Inc., supra note 55 at 222-223, citing Commissioner of Internal Revenue v. Seagate Technology (Philippines), 491 Phil. 317, 335 (2005).

58 Commissioner of Internal Revenue v. Toshiba Information Equipment (Phils.) Inc., id. at 223-226.

59 Id. at 229-230.

60 Id. at 230-231.

61 Id. at 223.

62 SECTION 4.104-5. Substantiation of claims for input tax credit. – (a) Input taxes shall be allowed only if the domestic purchase of goods, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Sections 108(a) and 237 of the Code. Input tax on purchases of real property should be supported by a copy of the public instrument, i.e., deed of absolute sale, deed of conditional sale, contract/agreement to sell, etc., together with the VAT receipt issued by the seller.

A cash register machine tape issued to a VAT-registered buyer by a VAT-registered seller from a machine duly registered with the BIR in lieu of the regular sales invoice, shall constitute valid proof of substantiation of tax credit only if the name and TIN of the purchaser is indicated in the receipt and authenticated by a duly authorized representative of the seller.

(b) Input tax on importations shall be supported with the import entry or other equivalent document showing actual payment of VAT on the imported goods.

(c) Presumptive input tax shall be supported by an inventory of goods as shown in a detailed list to be submitted to the BIR.

(d) Input tax on "deemed sale" transactions shall be substantiated with the required invoices.

(e) Input tax from payments made to non-residents shall be supported by a copy of the VAT declaration/return filed by the resident licensee/lessee in behalf of the non-resident licensor/lessor evidencing remittance of the VAT due.

63 SEC. 108. Invoicing and accounting requirements for VAT-registered persons. – (a) Invoicing requirements. – A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to the information required under Section 238, the following information shall be indicated in the invoice or receipt:

(1) A statement that the seller is a VAT-registered person, followed by his taxpayer’s identification number (TIN); and

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value-added tax.

(b) Accounting requirements. – Notwithstanding the provision of Section 223, all persons subject to the value-added tax under Sections 100 and 102 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain such information as may be required by the Secretary of Finance.

64 SEC. 238. Issuance of receipts or sales or commercial invoices. – All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at P25.00 or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, however, That in the case of sales, receipts or transfers in the amount of P100.00 or more, or, regardless of amount, where the sale or transfer is made by a person liable to value-added tax to another person also liable to value-added tax; or where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer, or client: Provided, further, That where the purchaser is a VAT-registered person, in addition to the information herein required the invoice or receipt shall further show the taxpayer’s identification number of the purchaser.

The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of 3 years from the close of the taxable year in which such invoice or receipt was issued while the duplicate shall be kept and preserved by the issuer, also in his place of business for a like period.

The Commissioner may, in meritorious cases exempt any person subject to an internal revenue tax from compliance with the provisions of this section.

65 Commissioner of Internal Revenue v. Cebu Toyo Corporation, 491 Phil. 625, 640 (2005).

66 G.R. No. 150764, August 7, 2006, 498 SCRA 126, 135-136.



Manila

THIRD DIVISION

G.R. No. 178908 February 4, 2010

SPOUSES EULOGIO N. ANTAZO and NELIA C. ANTAZO, Petitioners, vs.LEONIDES DOBLADA, DIOSDADO CELESTRA, LEOPOLDO CELESTRA, FERDINAND CELESTRA, and ROBERTO DOBLADA, Respondents.

D E C I S I O N

NACHURA, J.:

This is a petition for review on certiorari of the Court of Appeals (CA) Decision1 dated February 28, 2007 and Resolution2 dated July 18, 2007, which affirmed the order directing petitioners to vacate the subject property.

The case arose from the following antecedents:

Respondents, Leonides Doblada, Diosdado Celestra, Leopoldo Celestra, Ferdinand Celestra, and Roberto Doblada, filed a complaint for forcible entry against petitioners, spouses Eulogio N. Antazo and Nelia C. Antazo. The complaint alleged that respondents have been in open and peaceful possession of a parcel of land, identified as Assessor’s Lot Nos. 112 and 113, located in Barangay Pila-Pila, Binangonan, Rizal, with an area of, approximately, 551.87 square meters.3

Respondents narrated that, in May 2003, they received a letter from petitioners, through the Panganiban Law Office, informing them that the latter had bought the property. It was made to appear in the said letter that respondents forcibly took possession of the property from petitioners. Respondents replied that they could not have wrested possession of the property from petitioners, as they were in possession thereof and that, in fact, on June 11, 2003, petitioners evicted them therefrom, destroyed respondents’ bamboo fence, and constructed a concrete perimeter fence thereon.4

In their Answer, petitioners admitted that they sent a letter to respondents through the Panganiban Law Office, but they denied that respondents had been in possession of the property since time immemorial. They averred that respondents failed to show their right to recover possession of the property. On the contrary, petitioners claimed that they are the ones entitled to possess the property considering that they purchased it from a certain Carmencita S. Anciano, registered it for taxation purposes in their names, and paid the real property tax thereon.

The records reveal that the subject property is part of the parcel of land owned by Eduardo Paralejas, respondents’ great grandfather, who died in 1939. Paralejas had three daughters: Matea, Eufemia and Leoncia. On April 12, 1983, Eufemia and Atanacio Buesa, Matea’s son, purportedly executed an Extrajudicial Settlement and Sale,5 adjudicating to themselves the entire parcel of land and, at the same time, selling it to Guadalupe Morales Sevillano. The document bears the thumbprints of Eufemia and Atanacio, which, respondents claim, are not genuine. After Sevillano died on November 24, 1995, her sole heir, Carmencita S. Anciano, petitioners’ predecessor-in-interest, executed a document, denominated as Sinumpaang Salaysay ng Paglilipat sa Sarili ng Mga Lupang Naiwan ng Namatay,6 adjudicating to herself the properties that Sevillano left, which included the subject property. On April 21, 2003, Anciano sold the subject property to petitioners.7

On July 2, 2004, the Municipal Trial Court (MTC) dismissed the complaint because respondents failed to prove by preponderance of evidence that they had prior possession of the subject property. The court a quo found that ownership and possession of the subject property was transferred to petitioners when they purchased the same from Anciano. 8

On appeal, the Regional Trial Court (RTC) initially affirmed the MTC Decision.9 Upon respondents’ motion for reconsideration, the RTC, in an Order dated May 29, 2006, reversed its previous decision and ruled in favor of respondents, thus:

Wherefore, this Court reconsiders the Decision of Judge Bernelito R. Fernandez, dated August 18, 2005, and the Decision of the Municipal Trial Court of Binangonan dated July 2, 2004 is hereby reversed as follows:

A. That the complaint which was dismissed by the Lower Court is hereby reinstated.

B. That this Court finds that the plaintiffs-appellants were in prior possession of lot 112 and 113, subject of this case, before defendants-appellees Eulogio Antazo and Nelia Antazo forcibly seized possession of the aforementioned property from the plaintiffs-appellants.

C. That defendants-appellees, Eulogio Antazo, and Nelia Antazo are hereby ordered to vacate lots 112, 113 situated at Barrio Pila-Pila, Binangonan, Rizal, covered by Tax Declaration No. 17-0765 consisting of 787.87 square meters.

D. That there was a substantial compliance of the Katarungan Pambarangay Law.

E. That the defendants-appellees are hereby ordered to pay 1,000.00 a month as reasonable compensation for the occupancy of the lots from the time they purchased the property on April 21, 2003 up to the present.

F. The defendants-appellees are hereby ordered to pay attorney’s fees in the amount of 20,000.00 pesos.

G. To pay the costs of suit.

SO ORDERED.10

Petitioners moved for reconsideration, but the motion was denied by the RTC on August 1, 2006.11

Unrelenting, petitioners filed a petition for review with the CA. On February 28, 2007, the CA affirmed the RTC decision with modification, thus:

WHEREFORE, premises considered, the petition is DENIED. The assailed Orders are hereby AFFIRMED with MODIFICATION deleting the award of P1,000.00 as reasonable compensation for the use and occupation of the land from April 21, 2003 up to the present.

SO ORDERED.12

According to the CA, petitioners may not eject respondents from the subject property since it appears that, as between them, the latter had prior possession thereof. Assuming that petitioners have the legal title to the property and that respondents are mere usurpers thereof, the latter are nonetheless entitled to stay until they are lawfully ejected therefrom.13 The CA also deleted the amount of reasonable compensation awarded to respondents for the use and occupation of the property, ratiocinating that the latter can recover only the damages they have sustained as mere possessors.14

Both petitioners and respondents moved for the partial reconsideration of the decision. In a Resolution dated July 18, 2007, the CA denied both motions.15

Petitioners filed this petition for review on certiorari, ascribing the following errors to the CA:

I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE REGIONAL TRIAL COURT ERRED IN REVERSING ITS EARLIER DECISION DATED AUGUST 18, 2005 AND IN ORDERING THE EJECTMENT OF PETITIONERS FROM LOTS 112 AND 113;

II. THE COURT OF APPEALS ERRED IN NOT RULING THAT PETITIONERS HAVE PRIORITY IN POSSESSION OF THE SUBJECT PROPERTY.16

Petitioners contend that respondents’ claim is not supported by competent evidence. They aver that when they bought the property from Anciano, the latter transferred to them possession and ownership of the subject property. They point out that, after they purchased the property from Anciano, they declared it in their names for taxation purposes and paid real property tax thereon.

The petition is without merit.

Petitioners’ argument is misplaced, considering that this is a forcible entry case. They are apparently referring to "possession" flowing from ownership of the property, as opposed to actual possession. In ejectment cases, possession means nothing more than actual physical possession, not legal possession in the sense contemplated in civil law.17

Prior physical possession is the primary consideration in a forcible entry case. A party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him.18 The party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror.19

We are convinced that respondents were in prior possession of the property and that petitioners deprived them of such possession by means of force.

In the Letter dated May 26, 2003, Atty. Jimmy R. Panganiban of Panganiban Law Office, on behalf of petitioners, wrote to respondents:

According to my clients, they bought the above-mentioned property from the true and absolute owner sometime in April 2003. Immediately upon the sale of said land in their favor, they took possession thereof in the concept of an owner. They reported to me that they are now fencing said property. They were surprise[d] that through force, violence, threat, strategy, and stealth you deprived them of possession. The saddest part of it is that you timed the deprivation after they have already paid a worker for one week fencing activity. They have already bought fencing construction materials such as gravel[,] sand, steel, wires, and others. They could not understand why you are doing this thing to them because they know that you have no legal basis [for] putting up a bamboo fence at the frontage portion of the said property.

Accordingly, FINAL DEMAND is hereby made upon all of you to remove the bamboo fence and to restore my clients’ possession within five (5) days from receipt of this letter. If you [fail] to comply with this demand, I shall take it that I am at liberty to file an ejectment case against all of you in order to protect the rights and interests of my clients.20

1avvph!1

The RTC correctly concluded that it would have been unnecessary to write the letter if petitioners were already in possession of the property. The contents of the letter are clear—petitioners are demanding that respondents restore possession of the property to them.

We also note that petitioners did not deny in their Answer respondents’ allegation that they constructed a concrete fence on the subject property. Failure to specifically deny the allegation amounts to a judicial admission. Unlawfully entering the subject property, erecting a structure thereon and excluding therefrom the prior possessor would necessarily imply the use of force. In order to constitute force, the trespasser does not have to institute a state of war.21 No other proof is necessary.

While the Letter intimates that petitioners were in possession of the property prior to respondents and that the latter were the ones who forcibly evicted them therefrom, such statement is clearly self-serving and unsupported by other evidence. Verily, this information, assuming that it is true, is not relevant to the resolution of this case. This case involves respondents’ cause of action against petitioners for evicting them from the subject property which was in their possession. It is immaterial how respondents came into such possession or by what right they did so. Even usurpers of land owned by another are entitled to remain on it until they are lawfully ejected therefrom.22

Granting that petitioners had earlier possession and respondents were the ones who first forcibly dispossessed them of the property, this circumstance would not have given petitioners license to recover possession in the same way. Such course of action is precisely what is sought to be avoided by the rule on ejectment. The underlying philosophy behind ejectment suits is to prevent breach of the peace and criminal disorder and to compel the party out of possession to respect and resort to the law alone to obtain what he claims is his. The party deprived of possession must not take the law into his own hands.23 Petitioners would have had a right of action against respondents to file an ejectment suit, but they evidently let the chance pass and chose the easier and faster way. Unfortunately for them, this time, their opponents chose to resort to appropriate judicial measures.

WHEREFORE, the petition is DENIED DUE COURSE. The CA Decision dated February 28, 2007 and Resolution dated July 18, 2007 are AFFIRMED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice

WE CONCUR:

ANTONIO T. CARPIO*

Associate Justice

RENATO C. CORONAAssociate Justice

Chairperson

PRESBITERO J. VELASCO, JR.Associate Justice

DIOSDADO M. PERALTAAssociate Justice



RENATO C. CORONAAssociate JusticeChairperson, Third Division


Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

* Additional member in lieu of Associate Justice Jose Catral Mendoza per Special Order No. 818 dated January 18, 2010.

1 Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices Vicente S.E. Veloso and Marlene Gonzales-Sison, concurring; rollo, pp. 21-32.

2 Id. at 34-35.

3 CA rollo, p. 60.

4 Id. at 61.

5 Id. at 44-46.

6 Id. at 127-128.

7 Id. at 76-77.

8 Rollo, p. 46.

9 Id. at 51.

10 Id. at 56-57.

11 CA rollo, p. 201.

12 Rollo, p. 31.

13 Id. at 27-29.

14 Id. at 30.

15 Id. at 35.

16 Id. at 13.

17 Arbizo v. Santillan, G.R. No. 171315, February 26, 2008, 546 SCRA 610.

18 Pajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492, 510-511.

19 Id. at 493.

20 CA rollo, p. 137. (Emphasis supplied.)

21 Arbizo v. Santillan, supra note 17, at 624-625.

22 Heirs of Pedro Laurora v. Sterling Technopark III, G.R. No. 146815, April 9, 2003, 401 SCRA 181, 185.

23 Pajuyo v. Court of Appeals, supra note 18, at 512.

The Lawphil Project - Arellano Law FoundationRepublic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 142641 July 17, 2006

PACIFICO B. ARCEO, JR., petitioner, vs.PEOPLE OF THE PHILIPPINES, respondent.

D E C I S I O N

CORONA, J.:

This petition for review on certiorari assails the April 28, 1999 decision1 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 PeriodFor Presentment of the Check

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

Section 1 of BP 22 provides:

SECTION 1. Checks without sufficient funds Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency 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 theBest 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 aprima 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 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 PetitionerAnd 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.

Costs against petitioner.

SO ORDERED.

Puno, Chairperson, Sandoval-Gutierrez, Azcuna, Garcia, J.J., concur.

Footnotes

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

2 Penned by Associate Justice Bernardo P. Abesamis (retired) and concurred in by Associate Justices Conchita Carpio Morales (now a member of the Supreme Court) and Marina L. Buzon of the Former Third Division of the Court of Appeals; rollo, p. 26.

3 CA decision, rollo, pp. 17-24.

4 G.R. No. 117857, 02 February 2001, 351 SCRA 100.

5 Florenz D. Regalado, Remedial Law Compendium, Volume II, Seventh Revised Edition, 1995, p. 555.

6 Tan v. Mendez, Jr., 432 Phil. 760 (2002).

7 The information read:

The undersigned Assistant City Prosecutor accuses PACIFICO B. ARCEO, JR. of violation of Batas Pambansa Blg. 22, committed as follows:

That on or about the 15th day of April 1991, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the said accused, did then and there, willfully, unlawfully and feloniously make, draw and issue in favor of JOSEFINO CENIZAL a check no. 163255 drawn against the Bank of the Philippine Island[,] a duly established domestic banking institution[,] in the amount in the amount of P150,000.00 Philippine Currency, postdated August 4, 1991, in payment of an obligation, knowing fully well at the time of issue that [he] did not have the payment of such check; that upon presentation of said check to said bank for payment, the same was dishonored for the reason that the drawer thereof, accused Pacifico B. Arceo, Jr., did not have sufficient funds therein, and despite notice of dishonor thereof, accused failed and refused and still fails and refuses to redeem or make good said check, to the damage and prejudice of the said Josefino Cenizal in the amount aforementioned and in such other amount as may be awarded under the provisions of the Civil Code.

CONTRARY TO LAW. (Rollo, pp. 17-18.)

8 Vaca v. Court of Appeals, 359 Phil. 187 (1998).

9 Section 2 of BP 22 provides:

Section 2. Evidence of knowledge of insufficient funds. ― The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee.

10 Tan v. Mendez, Jr., supra; Lim v. People, 420 Phil. 506 (2001).

11 Miranda v. Besa , G.R. No. 146513, 30 July 2004, 435 SCRA 532.


Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 146586 January 26, 2005

DEPARTMENT OF EDUCATION CULTURE and SPORTS, petitioner, vs. JULIA DEL ROSARIO, MARIA DEL ROSARIO, PACENCIA DEL ROSARIO, and HEIRS OF SANTOS DEL ROSARIO, respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review1 to set aside the Decision2 dated 25 September 2000 and the Resolution dated 29 December 2000 of the Court of Appeals in CA-G.R. CV No. 43929. The Court of Appeals reversed the Decision3 dated 7 July 1993 of the Regional Trial Court of Bulacan, Branch 8, Malolos ("trial court") in Civil Case No. 70-M-92.

The Facts

On 14 February 1992, respondents Julia Del Rosario, Maria Del Rosario, Pacencia Del Rosario and the Heirs of Santos Del Rosario ("respondents") filed before the trial court a complaint for Recovery of Possession against petitioner Department of Education, Culture and Sports ("DECS"). Respondents alleged that they own a parcel of land with an area of 1,181 square meters ("Property") situated in Kaypombo,4 Sta. Maria, Bulacan. The Property was registered in 1976 in the name of respondents under Transfer Certificate of Title No. T-222432 of the Bulacan Register of Deeds. Respondents alleged that the Kaypombo Primary School Annex ("KPPS") under DECS was occupying a portion of the Property through respondents’ tolerance and that of their predecessors-in-interest. Respondents further alleged that KPPS refused to vacate the premises despite their valid demands to do so.

In its Answer, DECS countered that KPPS’s occupation of a portion of the Property was with the express consent and approval of respondents’ father, the late Isaias Del Rosario ("Isaias"). DECS claimed that some time in 1959 Isaias donated a portion ("Donated Site") of the Property to the Municipality of Sta. Maria ("Municipality") for school site purposes. Atty. Ely Natividad, now a regional trial court judge ("Judge Natividad"), prepared the deed of donation and the acceptance. KPPS started occupying the Donated Site in 1962. At present, KPPS caters to the primary educational needs of approximately 60 children between the ages of 6 and 8. Because of the donation, DECS now claims ownership of the 650 square meter Donated Site. In fact, DECS renamed the school the Isaias Del Rosario Primary School.

During the pre-trial conference held on 3 September 1992, DECS admitted the existence and execution of TCT No. T-222432 (Exhibit "A"), Tax Declaration No. 6310 (Exhibit "B"), and the tax receipts in respondents’ names for the years 1991 and 1992 (Exhibits "B-1" and "B-2"). On the other hand, respondents admitted the existence of Judge Natividad’s affidavit that he prepared the deed of donation (Exhibit "1") and the tax declaration for 1985 in the Municipality’s name (Exhibit "2"). Since there was no dispute that the Property was registered in respondents’ names, the parties agreed to a reverse trial with DECS presenting its evidence first to prove that there was a valid donation to the Municipality.

DECS presented three witnesses: Ricardo Nicolas, Vidal De Jesus and Judge Natividad, all residents of Kaypombo, Sta. Maria, Bulacan. The trial court summarized the witnesses’ testimonies, thus:

Defendant, represented by the Office of the Solicitor General, proceeded to present as its first witness, Ricardo Nicolas, 78 years old, widower, housekeeper and residing at [K]aypombo, Sta. Maria, Bulacan, since 1953 up to the present. He

testified that during the duration of his residency in [K]aypombo, he came across a public elementary school (KPPS); that as far as he knows, the land occupied by the primary school was formerly owned by Isaias del Rosario who donated said land to the people of Sta. Maria, Bulacan in 1959; that the act of donating said land was made during a political meeting in his residence by Isaias del Rosario and in the presence of the then incumbent mayor; he actually saw Isaias del Rosario and Mayor Ramos sign a document which is a deed of donation in favor of the Municipality of Sta. Maria; that the signing was made in the presence of Judge Natividad who was then a municipal councilor; that Isaias del Rosario is now dead but his death occurred long after the construction of the KPPS and that Isaias del Rosario even witnessed the construction of the primary school.

Vidal de Jesus, the second witness for the defense, 65 years old, married, a barangay councilman of Kaypombo, Sta. Maria, Bulacan, and presently residing at No. 437 Kaypombo, Sta. Maria, Bulacan, testified that as barangay councilman, he was aware of the land problem of KPPS; that in 1991, the barangay council and the children of Isaias del Rosario had a meeting in the presence of Judge Natividad, during which, the latter told the children of Isaias del Rosario that the land had been donated by their father. The children agreed but requested that the school be renamed after their father’s name; that the barangay council tried to secure a copy of the deed of donation from the Municipality of Sta. Maria, but according to the people at the municipal hall, when they transferred to the new municipal building, the deed got lost, only they were able to get a copy of the tax declaration in the name of the municipality of Sta. Maria, Bulacan (Exh. "2"), a certification to that effect was issued by the municipal mayor (Exh. "3"). They went to the DECS office in Malolos, but could not likewise find a copy of the deed.

The last witness for the defense was Judge Eli Natividad, 63 years old, widower, resident of Kaypombo, Sta. Maria, Bulacan. He testified that KPPS is very near his house; that the land occupied by said school is formerly owned by Isaias del Rosario, a close relative; that as far as he knows, the municipality of Sta. Maria is now the owner of the land; that when he was still one of the incumbent municipal councilors of Sta. Maria in 1961, his relative Isaias del Rosario went to his house and told him that he wanted to have a primary school in their place as he saw the plight of small pupils in their place; that the elementary school then existing was very far from their place and Isaias del Rosario wanted to have a primary school to help these pupils; that Isaias del Rosario was willing to donate a portion of the questioned lot for school site, so that said matter was relayed to the municipal council; he also testified that he prepared the deed of donation which was signed by Isaias del Rosario in his residence which was accepted by the municipality of Sta. Maria, Bulacan through a resolution signed in the office of the secretary and the municipal mayor; that a copy of said resolution could not be found due to the transfer of the municipal hall from the old to the new building.5

Respondents presented two witnesses: Eugenia R. Ignacio and Maria Del Rosario-Esteban, daughters of the late Isaias. The trial court summarized their testimonies, as follows:

For the plaintiffs, Eugenia R. Ignacio, 59, residing at Kaypombo, Sta. Maria, Bulacan testified that she knows the plaintiffs as they are her brothers/sisters; that their father Isaias del Rosario died on April 18, 1966 long after the construction of the school and that she does not know everything about the donation because her father never informed them of his dealings and she did not inquire from him about the occupancy of the lot by the school.

Maria del Rosario-Esteban, 66, residing at Pulang-lupa, Pandi, one of the plaintiffs herein, testified that she knows the property in question and that they own it by virtue of succession and that she cannot recall how the school was constructed on the land; that her parents never donated any property because that is their only property. Also, she stated that their father told them that he just lent the property temporarily to the municipality and she never found any document conveying the lot in question to the municipality of Sta. Maria, Bulacan.6

On 7 July 1993, the trial court rendered judgment dismissing respondents’ complaint for recovery of possession as follows:

WHEREFORE, based on the foregoing premises, and for a much greater cause, the instituted complaint, for recovery of possession of 1,181 square meters of land in Kaypombo, Sta. Maria, Bulacan, covered by TCT No. T-222432 against the defendant is hereby DISMISSED without costs.7

The trial court explained its decision in this wise:

After a careful consideration of the facts at hand, taking into account the credibility and reasonableness of the testimonies of the witnesses, the court is of the opinion that the defense was able to prove the due execution of the deed of donation and its acceptance, as well as the loss of the same, in accordance with Rule 130[,] Sec. 4. It is recalled that Judge Eli Natividad, then a municipal councilor of Sta. Maria, testified that he was the person who prepared the deed of donation and later notarized the same, and that said deed was duly executed and signed before him and in his presence. Likewise, he affirmed that the municipal board of Sta. Maria, Bulacan, passed a resolution accepting the deed of donation in favor of the said municipality. Noteworthy is the rule that a recantation/recollection of witness is a form of secondary evidence to prove the existence/content of a document. Since the loss of the deed subject matter of this case was likewise duly proved by the

defense, exerting the best possible efforts to locate or secure a copy of the same and without bad faith on its part, this Court is bent to give a greater weight to the secondary evidence adduced by the defense vis-à-vis the title in the name of the plaintiff[s], most particularly in this case, where the plaintiffs failed to make it appear that other and more secondary evidence is known to the defendant and can be produced by them.

Further judging on the consistency, credibility and personality of the witnesses of the defense, notably Judge Eli Natividad who was then a municipal councilor of Sta. Maria at the time of the execution of the deed of donation and who is thus in a best position to testify on the matter, not to mention the fact that their testimonies were all under oath, the Court cannot avoid but give weight to their statements and declarations. The defense witnesses were not induced by ill motive to testify in favor of the DECS, considering that they will not derive any personal benefit, material or otherwise, from such an act. On the contrary, such act may be considered heroic, as it is a manifestation of a moral compulsion to help shed light to the truth.

On the part of the plaintiffs, it was testified to by Eugenia Ignacio that their father (donor) died on April 18, 1966, long after the school was constructed on the subject land with the occupation of the land by the school which continued up to the present, and even after the land was allegedly transferred by succession to the plaintiffs in 1976, it was only now that it comes to the mind of the plaintiffs to seek recovery of the possession of the same. This, among other things, may be taken to favor the stand of the defense that the land occupied by the school was in truth, donated to the municipality of Sta. Maria.8

Respondents appealed to the Court of Appeals. On 25 September 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, premises considered, the appealed decision is REVERSED and another one entered ordering the defendant to vacate the subject premises.9

The appellate court denied DECS’ motion for reconsideration in the Resolution dated 29 December 2000. Hence, this petition.

The Court of Appeals’ Ruling

The Court of Appeals held that DECS failed to prove the existence and due execution of the deed of donation as well as the Resolution of the municipal council accepting the donation. The Court of Appeals was not fully satisfied that DECS or the Municipality had made a diligent search of the alleged "lost" deed of donation. Pertinent portions of the Court of Appeals’ Decision read:

It is unfortunate that the Deed of Donation and the Resolution were not produced during the trial. The defendant alleged that these were lost when the Municipality transferred to a new building. The defendant resorted to proving the documents’ existence through Sec. 5 of Rule 130 (B) of the Revised Rules on Evidence by relying on the testimony of the witnesses who were present during the execution of the lost documents. xxx.

xxx

The Court disagrees with the ruling of the lower court to the effect that the defendant was able to satisfy the foregoing requisites. The defense was not able to prove the due execution or existence of the deed of donation and the resolution, as well as the loss of these documents as the cause of their unavailability.

The Rule requires that the defendant must "prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of the witnesses in the order stated". However, the defendant proceeded with the last resort-testimony of the witnesses, without even showing any diligent effort to secure a copy of the deed of donation and the resolution. Note that Atty. Eli Natividad, then a municipal councilor of Sta. Maria, testified that he was the person who prepared the deed of donation and later notarized the same. He also affirmed that the municipal board of Sta. Maria, Bulacan passed a Resolution as he was a municipal councilor at that time such resolution was passed. He testified that he furnished the municipal government, the Division Office of Education in Bulacan, the court of Sta. Maria a copy of the deed. However, the defendant only submitted an affidavit showing that the deed can no longer be located in the municipal government. There was no evidence to show that the defendant looked for a copy from the Clerk of Court of Sta. Maria, Bulacan. If it is true that Atty. Natividad notarized the deed, he should have a copy of it. In fact, such act of notarizing the deed should have been in his notarial register. This notarial register was supposed to be forwarded to the Clerk of Court of the Court of First Instance of the province and later, to the Chief of the National Library.

"Before secondary evidence of a writing may be introduced on the ground that the instrument has been lost there must be proof that a diligent search has been made in the place where it is most likely to be found and that the search has not been successful."

In the case at bar, this Court is not fully satisfied that a search was made or that there was diligence in the search. The lower court erred in hastily concluding that the loss of the document was sufficiently established when in fact, the defendant did not look for it in the office of the Clerk of Court and the National Library. Since there was no diligent search, this Court finds it hard to believe the defendant’s theory that such documents existed because, for sure, if there really was a notarized deed or a resolution, there must be a copy.

"Secondary evidence of the contents of writings is admitted upon the theory that the original cannot be produced by the party by whom the evidence is offered within a reasonable time by the exercise of reasonable diligence. Until, however, the non-production of the primary evidence has been sufficiently accounted for, secondary evidence is not ordinarily admissible."

For this Court to affirm the ruling of the lower court based on testimonies alone will work injustice to the plaintiffs.10

The Issue

In its memorandum, DECS raises the sole issue of –

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER FAILED TO PROVE THE DUE EXECUTION OR EXISTENCE OF THE DEED OF DONATION AND THE RESOLUTION OF THE MUNICIPAL COUNCIL ACCEPTING THE DONATION, AS WELL AS THE LOSS OF THE DOCUMENTS AS THE CAUSE OF THEIR UNAVAILABILITY.11

The Solicitor General contends that DECS had satisfactorily proven by secondary evidence the fact of donation, the existence and due execution of the deed of donation as well as the municipal council Resolution accepting the donation. DECS had also adequately proven the loss of these documents. According to the Solicitor General, based on the evidence presented in the trial court, DECS established that Isaias donated a parcel of land to the Municipality as the site of a school. Isaias executed a deed of donation, which then Atty. Eli Natividad notarized. There was a municipal council Resolution accepting the donation and expressing gratitude to Isaias. There was notice of this acceptance as DECS constructed the school on the Donated Site during the lifetime of the donor, without objection on his part. Since all the essential formalities had been followed, the donation made by Isaias long after the death of his wife Nieves Gumatay is valid and proven by secondary evidence.

The Court’s Ruling

The petition lacks merit.

Formal Requisites of Donations of Real Property

The donation of real property, which is a solemn contract, is void without the formalities stated in Article 749 of the Civil Code of the Philippines ("Civil Code"). Article 749 of the Civil Code reads:

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

Article 749 of the Civil Code requires that the donation of real property must be made in a public instrument. Otherwise, the donation is void. A deed of donation acknowledged before a notary public is a public document.12 The notary public shall certify that he knows the person acknowledging the instrument and that such person is the same person who executed the instrument, acknowledging that the instrument is his free act and deed. The acceptance may be made in the same deed of donation or in a separate instrument. An acceptance made in a separate instrument must also be in a public document. If the acceptance is in a separate public instrument, the donor shall be notified in writing of such fact. Both instruments must state the fact of such notification.13

Best and Secondary Evidence

The best or primary evidence of a donation of real property is an authentic copy of the deed of donation with all the formalities required by Article 749 of the Civil Code. The duty to produce the original document arises when the subject of the inquiry are the contents of the writing in which case there can be no evidence of the contents of the writing other than the writing itself. Simply put, when a party wants to prove the contents of the document, the best evidence is the original writing itself.

A party may prove the donation by other competent or secondary evidence under the exceptions in Section 3, Rule 130 of the Revised Rules on Evidence. Section 3 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) xxx;

(c) xxx;

(d) xxx.

In relation to this, Section 5 of Rule 130 reads:

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

Secondary evidence of the contents of a document refers to evidence other than the original document itself.14 A party may introduce secondary evidence of the contents of a written instrument not only when the original is lost or destroyed, but also when it cannot be produced in court, provided there is no bad faith on the part of the offeror. However, a party must first satisfactorily explain the loss of the best or primary evidence before he can resort to secondary evidence. A party must first present to the court proof of loss or other satisfactory explanation for non-production of the original instrument. The correct order of proof is as follows: existence, execution, loss, contents, although the court in its discretion may change this order if necessary.15

The testimony of Ricardo Nicolas may have established to some extent the existence of the deed of donation since he testified that he was present when Isaias and the mayor talked about the donation and that he witnessed the signing of the document.1a\^/phi1.net However, Ricardo Nicolas admitted during cross-examination that he did not read and did not have personal knowledge of the contents of the document that Isaias and the mayor supposedly signed.16

In the same vein, Vidal De Jesus’ testimony does not help to establish the deed of donation’s existence, execution and contents. He testified that he never saw the deed of donation. On cross-examination, Vidal De Jesus admitted that the information that Isaias donated the lot to the Municipality was only relayed to him by Judge Natividad himself.17If at all, DECS offered Vidal De Jesus’ testimony to establish the loss of the deed of donation. Vidal de Jesus testified that the barangay council tried to get a copy of the deed but the Municipality informed the barangay council that the deed was lost when the municipal office was transferred to a new building. DECS also made a search in the DECS office in Malolos but this proved futile too.

This leaves us with Judge Natividad’s testimony. Judge Natividad testified that he prepared and notarized the deed of donation. He further testified that there was a municipal council Resolution, signed in the Office of the Secretary and of the Mayor, accepting the donation and expressing gratitude to the donor. He furnished the municipal government, the DECS Division Office of Bulacan and the clerk of court of Sta. Maria a copy of the deed of donation.

DECS did not introduce in evidence the municipal council Resolution accepting the donation. There is also no proof that the donee communicated in writing its acceptance to the donor aside from the circumstance that DECS constructed the school during Isaias’ lifetime without objection on his part. There is absolutely no showing that these steps were noted in both instruments.

Sufficiency of Proof of Loss

What mainly militates against DECS’ claim is, as the Court of Appeals found, inadequate proof that DECS or the Municipality made a diligent search in the places where the deed of donation may likely be found and that the search was unsuccessful. Prior to the introduction of secondary evidence, a party must establish the existence and due execution of the instrument. After a party establishes the existence and due execution of the document, he must prove that the document was lost or destroyed.18 The destruction of the instrument —

may be proved by any person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or by any one who had made, on the judgment of the court, a sufficient examination in the place [or] places where the document or papers of similar character are usually kept by the person in whose custody the document lost was, and has been unable to find it; or who has made any other investigation which is sufficient to satisfy the court that the instrument is indeed lost.19

Here, DECS allegedly made a search in the municipal building and in the DECS Division Office in Bulacan. The copies of the deed of donation furnished these offices were purportedly "lost" when these offices transferred to new locations. However, as the Court of Appeals correctly pointed out, Judge Natividad who claimed to have notarized the deed of donation failed to account for other copies of the deed, which the law strictly enjoins him to record, and furnish to other designated government offices.

The Notarial Law is explicit on the obligations and duties of a notary public. The law requires him to keep a notarial register where he shall record all his official acts as notary public. The law specifies the information that the notary public must enter in the notarial register. Failure to perform this duty results in the revocation of his commission as notary public. We quote the provisions of the Notarial Law pertinent to the case:

SECTION 245. Notarial register. - Every notary public shall keep a register to be known as the notarial register, wherein record shall be made of all his official acts as notary; and he shall supply a certified copy of such record, or any part thereof, to any person applying for it and paying the legal fees therefor.1ªvvphi1.nét

Such register shall be kept in books to be furnished by the Attorney-General (Solicitor-General) to any notary public upon request and upon payment of the actual cost thereof, but officers exercising the functions of notaries public ex officio shall be supplied with the register at government expense. The register shall be duly paged, and on the first page, the Attorney-General (Solicitor-General) shall certify the number of pages of which the book consist[s].

SECTION 246. Matters to be entered therein. - The notary public shall enter in such register, in chronological order, the nature of each instrument executed, sworn to, or acknowledged before him, the person executing, swearing to, or acknowledging the instrument, the witnesses, if any, to the signature, the date of the execution, oath, or acknowledgment or the instrument, the fees collected by him for his services as notary in connection therewith, and; when the instrument is contract, he shall keep a correct copy thereof as part of his records, and shall likewise enter in said records a brief description of the substance thereof, and shall give to each entry a consecutive number, beginning with number one in each calendar year. The notary shall give to each instrument executed, sworn to, or acknowledged before him a number corresponding to the one in his register, and shall also state on the instrument the page or pages of his register on which the same is recorded. No blank line shall be left between entries.

x x x

At the end of each week the notary shall certify in his register the number of instruments executed, sworn to, acknowledged, or protested before him; or if none, such certificate shall show this fact.

A certified copy of each month’s entries as described in this section and a certified copy of any instrument acknowledged before them shall within the first ten days of the month next following be forwarded by the notaries public to the clerk of the Court of First Instance of the province and shall be filed under the responsibility of such officer; Provided, that if there is no entry to certify for the month, the notary shall forward a statement to this effect in lieu of the certified copies herein required. (As amended by C.A. 72, Sec. 1.)

SECTION 247. Disposition of notarial register. - Immediately upon his notarial register being filled, and also within fifteen days after the expiration of his commission, unless reappointed, the notary public shall forward his notarial register to the clerk of the Court of First Instance of the province or of the City of Manila, as the case may be, wherein he exercises his office, who shall examine the same and report thereon to the judge of the Court of First Instance. If the judge finds that no irregularity has been committed in the keeping of the register, he shall forward the same to the chief of the division of archives, patents, copyrights, and trade-marks. In case the judge finds that irregularities have been committed in the keeping of the register, he shall refer the matter to the fiscal of the province - and in the City of Manila, to the fiscal of the city - for action and the sending of the register to the chief of the division of archives, patents, copyrights,

and trade-marks shall be deferred until the termination of the case against the notary public. (Emphasis and underscoring supplied)

The Notarial Law mandates a notary public to record in his notarial register the necessary information regarding the instrument acknowledged before him. The Notarial Law also mandates the notary public to retain a copy of the instrument acknowledged before him when it is a contract.20 The notarial register is a record of the notary public’s official acts. Acknowledged instruments recorded in the notarial register are public documents.21 If the instrument is not recorded in the notarial register and there is no copy in the notarial records, the presumption arises that the document was not notarized and is not a public document.22

DECS should have produced at the trial the notarial register where Judge Natividad as the notary public should have recorded the deed of donation. Alternatively, DECS should have explained the unavailability of the notarial register. Judge Natividad could have also explained why he did not retain a copy of the deed of donation as required by law. As the Court of Appeals correctly observed, there was no evidence showing that DECS looked for a copy from the Clerk of Court concerned or from the National Archives. All told, these circumstances preclude a finding that DECS or the Municipality made a diligent search to obtain a copy of the deed of donation.

In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. "Preponderance of evidence" means that the evidence as a whole adduced by one side is superior to that of the other. In other words, preponderance of evidence means the greater weight of the evidence - or evidence that outweighs the evidence of the adverse party. This Court is not satisfied that the evidence on the side of the party carrying the burden of proof is of preponderating weight.

Finally, DECS raises for the first time before this Court the issue on whether respondents’ claim is barred by the equitable defense of laches. DECS did not raise this matter in the complaint or during the trial in the court below. DECS did not also raise this matter in its appeal to the Court of Appeals. l^vvphi1.net This Court cannot entertain this issue at this late stage, for to do so would plainly violate the basic rule of fair play, justice and due process.23

Much as we sympathize with the plight of the schoolchildren, we do not find reversible error in the Decision of the Court of Appeals. We cannot grant the relief DECS is seeking and disregard existing laws and jurisprudence. DECS, however, is not without remedy. The government can expropriate at any time the Donated Site, paying just compensation to respondents.

WHEREFORE, we DENY the petition. The Decision dated 25 September 2000 and the Resolution dated 29 December 2000 of the Court of Appeals in CA-G.R. CV No. 43929 are AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.

Footnotes

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Penned by Associate Justice Romeo A. Brawner, with Associate Justices Cancio C. Garcia (now Associate Justice of this Court) and Andres B. Reyes, Jr., concurring.

3 Penned by Judge Valentin R. Cruz.

4 Also spelled CayPombo or Kay Pombo.

5 Rollo, pp. 64-65.

6 Ibid., pp. 65-66.

7 Ibid., p. 67.

8 Ibid., pp. 66-67.

9 Ibid., p. 46.

10 Rollo, pp. 45-46.

11 Ibid., p. 193.

12 See R. J. FRANCISCO, BASIC EVIDENCE 272-273 (1991).

13 Quilala v. Alcantara, 422 Phil. 648 (2001).

14 Supra, see note 12, p. 283.

15 Lazatin v. Campos, No. L-43955-56, 30 July 1979, 92 SCRA 250.

16 TSN, 19 November 1992, pp. 7-9.

17 Ibid., p. 10.

18 O. M. HERRERA, REMEDIAL LAW, 186 VOLUME V (1999).

19 Ibid.

20 See also Section 2(d) of the 2004 Rules on Notarial Practice.

21 Manongsong v. Estimo, G.R. No. 136773 , 25 June 2003, 404 SCRA 683; Section 19, Rule 132 of the Revised Rules of Court provides in part:

Sec. 19. Classes of documents. – For the purpose of their presentation in evidence, documents are either public or private.

Public documents are:

(a) x x x

(b) Documents acknowledged before a notary public except last wills and testaments; x x x. (Emphasis supplied)

22 Bernardo v. Atty. Ramos, 433 Phil. 8 (2002).

23 Sanchez v. The Hon. Court of Appeals, 345 Phil. 155 (1997).



Manila

FIRST DIVISION

G.R. No. 160065 February 28, 2006

FELINO EBREO, SPOUSES ANTONIO and EVELYN P. BERAÑA, IGNACIO EBREO and ELEUTERIA

CUETO, Petitioners, vs.GIL EBREO, represented by His Attorney-in-Fact, FELIXBERTO EBREO, FLAVIANO EBREO and HOMOBONO CUETO, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Does an annotation in a tax declaration of an alleged Deed of Sale sufficiently prove conveyance of title to a property? This is the issue presented to Us in the present petition.

The factual antecedents of this case are narrated herein:

A Complaint dated 04 January 1994, docketed as Civil Case No. 4132 for Partition, Reconveyance, Accounting and Damages, was filed by Gil Ebreo, represented by his Attorney-in-Fact Felixberto Ebreo, Flaviano Ebreo and Homobono Cueto against petitioners Felino Ebreo, Spouses Antonio Ebreo and Evelyn P. Beraña-Ebreo, Ignacio Ebreo and Eleuteria Cueto before the Regional Trial Court (RTC) of Batangas City, Branch 7.

From plaintiffs’ account in their complaint, Felipe Ebreo died intestate in 1926 leaving behind as heirs his five children, Gil, Flaviano, Felino, Ignacio, and Felipa.1 Subsequently, Felipa died leaving behind her heirs, Genoveva, Homobono and Eleuteria all surnamed Cueto. Genoveva died in 1991 without any issue. Defendants-spouses Antonio Ebreo and Evelyn Beraña are the son and daughter-in-law, respectively, of defendant Felino, one of the five children of Felipe Ebreo.

Felipe Ebreo left to his children an untitled parcel of land situated in Barangay Sampaga, Batangas City, more particularly described as follows:

Isang palagay na lupang palayanin o linangin ipinamumuwis sa ilalim ng Tax Declaration No. 39949 S-1953, na ang mga karatig sa Ilaya ay Prudencia Coz, sa Silangan ay Pablo Cantro at Santiago Banaag, sa ibaba ay Ilat (Creek) at sa Kanluran ay Marcos at Fortunato Banaag may luwang na 31,781 metros kuwadrados humigit kumulang at may balor amiliorada na halagang P950.00, lalong kilala sa Lote 9046 ng sukat katastro dito sa Batangas.2

Pursuant to the subdivision made by their father Felipe, Lot No. 9046 was subdivided into six lots identified as Lots A, B, C, D, E and F.3

lawph!l.net

On 11 September 1967, the five heirs of Felipe Ebreo, through themselves and their representatives, executed and signed a document entitled, "Kasulatan ng Pagbabahagi ng Lupa"4 where they extrajudicially partitioned the above-described property except the portion known as Lot No. 9046-F. As agreed upon by these heirs, Lot No. 9046-F, with an area of 13,799 square meters, shall remain under the co-ownership of Gil, Flaviano, Felino, Ignacio and the heirs of Felipa Ebreo. However, plaintiffs were surprised to discover that Lot 9046-F was declared for taxation purposes in the name of defendant Antonio Ebreo. Based on plaintiffs’ recitals, they alleged that they never sold, ceded, conveyed or transferred their rights, share and co-ownership over Lot 9046- F.

Answering the complaint, the defendants countered that after the execution of the Kasulatan ng Pagbabahagi ng Lupa, by and among the heirs of the late Felipe Ebreo, Lot 9046-F was sold by the heirs to Santiago Puyo. By virtue of this sale, the corresponding Real Property Tax Declaration was transferred in the name of Santiago Puyo as owner. However, the deed of sale evidencing this transaction was never presented.

As narrated by the defendants, Tax Declaration No. 39241,5 beginning in the year 1969 covering Lot 9046-F was under the names of the heirs of Felipe Ebreo. Thereafter, upon the sale of the lot by the heirs of Felipe Ebreo to Santiago Puyo, Tax Declaration No. 39241 was cancelled and a new one, Tax Declaration No. 482216 dated 15 January 1973, was issued in the name of Santiago Puyo. On this tax declaration, the alleged sale of Lot 9046-F by the Heirs of Felipe Ebreo to Santiago Puyo was annotated. Soon, Tax Declaration No. 48221 was cancelled by Tax Declaration No. 40427 for the year 1974, still in the name of Santiago Puyo. Upon the sale by Santiago Puyo of Lot 9046- F to Antonio Ebreo on 23 July 1976, Tax Declaration No. 4042 was cancelled and a new one, Tax Declaration No. 50669,8 for the year 1977, was issued in the name of Antonio

Ebreo. This Tax Declaration was later on revised and cancelled by Tax Declaration No. 075-534 upon the marriage of defendant Antonio Ebreo to defendant Evelyn Beraña. From 1977 up to 1994, defendants-spouses Antonio Ebreo and Evelyn Beraña religiously paid the taxes due on the land.9

Defendants further alleged that the Deed of Absolute Sale of Lot No. 9046-F by the heirs of Felipe Ebreo to Santiago Puyo was executed and ratified sometime in 1968 before Attorney Doroteo M. Chavez of Batangas City. From 1968 to 1976, Mr. Santiago Puyo possessed said lot peacefully, continuously, publicly and in the concept of owner. As stated earlier, on 23 July 1976, Lot No. 9046-F was sold by Santiago Puyo by way of Absolute Sale, to defendant Antonio Ebreo. The Deed of Absolute Sale or "Ganap na Bilihan ng Lupa"10 was duly executed and ratified before one Attorney Meynardo L. Atienza.

After due proceedings, a decision11 dated 18 August 1997, was rendered by the RTC which disposed:

WHEREFORE, in view of the foregoing, judgment is rendered as follows:

(1) Ordering the parties-in-interest (heirs of Felipe Ebreo and/or their representatives) to partition Lot No. 9046-F among themselves by proper instruments of conveyance under Sec. 2, Rule 69 of the 1997 Rules of Civil Procedure, and in default thereof, the partition shall be conducted in accordance with Sec. 3, et. seq., of the same Rule.

(2) Ordering the dismissal of the Counterclaim of the defendants.

(3) Ordering the defendants, jointly and severally, to pay the plaintiffs the sum of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, for and as attorney’s fee.

(4) Ordering the defendants, jointly and severally, to pay the costs of suit.12

Defendants- appellants appealed the decision of the RTC to the Court of Appeals. In a decision13 dated 27 February 2003, the Court of Appeals denied the appeal for lack of merit and affirmed in toto the decision of the trial court. The Court of Appeals held:

The main issue in this case is whether or not a valid transfer of Lot No. 9046-F was effected which conveyed ownership of the property to Santiago Puyo. The defendant-appellants rely on the Deed of Sale supposedly executed by the heirs of Felipe Ebreo in favor of Santiago Puyo. However, defendant-appellants failed to produce the alleged Deed of Sale in violation of the Best Evidence Rule.

x x x x

The best evidence rule, applied to documentary evidence, operates as a rule of exclusion, that is, secondary (or substitutionary) evidence cannot inceptively be introduced as the original writing itself must be produced in court, except in the four instances mentioned in Section 3. (Regalado, Remedial Law Compendium, Volume II, Seventh Revised Edition, p. 555). Defendant-appellants miserably failed to prove that their case is included among the exceptions to the Rule.

The testimony of Felino Ebreo regarding the execution of the Deed of Sale cannot be given credence. In fact, it was contradicted by his supposed co-sellers and co-owners. His claim that it was borrowed by Eleuteria Cueto and never returned to him was also refuted by Eleuteria Cueto. Not only are the testimonies of Felino Ebreo and his son Antonio Ebreo self-serving, they are also uncorroborated by independent witnesses. Defendant-appellants did not even look for a copy of the deed of sale on the notarial registry of Atty. Chavez, the notary public who allegedly notarized the deed of sale. Neither did they look for a copy in the archives of the Court where it should have been submitted as required by the notarial law. In the words of the trial court, "the decisive documentary evidence remains an elusive phantom and conspicuously unproven." The controversial deed of sale not having been produced as required by the rules of evidence, the trial court was correct in ruling that Santiago Puyo acquired no rights whatsoever to Lot No. 9046-F.

Since there was no valid transfer of the ownership of the subject lot from the heirs of Felipe Ebreo to Santiago Puyo, the subsequent transfer thereof to Antonio Ebreo is ineffectual. It is essential that the seller is the owner of the property he is selling (Noel vs. Court of Appeals, 240 SCRA 78). Moreover, the fact that the tax

declarations for said lot were issued in the name of Antonio Ebreo is of no moment for they are not conclusive proof of ownership. It must be remembered that a tax declaration may be issued to any claimant even if it is not supported by any deed.

Neither can defendant-appellants’ open, adverse, notorious and continuous possession of the land for several years amount to ownership for they are co-owners of the land as evidenced by the "Kasulatan ng Pagbabahagi Ng Lupa." A co-owner cannot acquire by prescription the share of the other co-owners absent a clear repudiation of co-ownership duly communicated to the other co-owners. (Trinidad v. Court of Appeals, 289 SCRA 188).14

The motion for reconsideration of the defendants-appellants was denied in the resolution of the Court of Appeals dated 22 September 2003.15

Hence this petition for review on certiorari.

The following issues are submitted for resolution in this petition:

1) Whether or not the annotation of the Deed of Sale appearing in Tax Declaration No. 48221 is a sufficient proof of transfer in line with the doctrine of presumption of regularity of performance of official duty.

2) Whether or not entries in official records are admissible in evidence to establish the fact of valid transfer of Lot No. 9046-F that effectively conveyed ownership of the property from the heirs of Felipe Ebreo to Santiago Puyo.16

After a painstaking review of the records, we find the petition bereft of merit. First, it is important to re-state the general rule that the findings of the trial court which are factual in nature, especially when affirmed by the Court of Appeals deserve to be respected and affirmed by this court provided they are supported by substantial evidence on record, as in the case at bench.17

As recounted by defendants, now petitioners, Antonio and Evelyn Ebreo, Lot 9046-F was sold by the heirs of Felipe Ebreo initially to Santiago Puyo sometime in 1967 or 1968 as evidenced by a deed of sale executed and ratified before Atty. Doroteo Chavez in Batangas City. Santiago Puyo caused the transfer of the tax declaration in his name and caused the sale to be annotated therein. Only this annotation in the tax declaration was offered as proof of the sale. Santiago Puyo took possession, cultivated the land, exercised uninterrupted ownership and paid real estate taxes thereon for a period of eight years.

Petitioners went on further to state that the Deed of Sale from the heirs of Felipe Ebreo to Santiago Puyo could not be presented because the copy on file with the Office of the City Assessor was lost in the fire which occurred in 23 May 1979 that gutted the building housing their office. From then on, petitioners advance that they have paid the real estate taxes on the land and were in open, continous and uninterrupted possession until the Complaint for Partition, Reconveyance and Damages was filed by the respondents.

On the basis of the above narrations, petitioners insist that there was a valid transfer of the lot from the heirs of Felipe Ebreo to Santiago Puyo, and thereafter from Santiago Puyo to them. To buttress this claim of sale by the heirs to Santiago Puyo, petitioners presented the testimony of Antonio Pajilan of the City Assessors Office of Batangas City who testified on the annotation in Tax Declaration No. 48221. The annotation reads:

Deed of sale

D.V. P2,500.00

Doc. on file

Doc. No. 312

Page No. 17

Book No. VI

Series of 196718

The testimony of Pajilan went on as follows:

Q I am showing to you a tax declaration No. 32941 in the name of Gil Flaviano, Felino, Ignacio, Genoveva, Eleuteria Cueto which is already marked as Exhibit "10" for the defendants in this case and Exhibit "F" for the plaintiff, will you please examine the same and identify it?

A Witness is examining the document. I think this tax declaration is an owner’s copy, Sir.

Q But this tax declaration was issued by your office, the City Assessor of Batangas?

A Yes, Sir.

Q Can you inform before this Honorable Court, if this tax declaration was still existing in your office or a copy thereof?

A This tax declaration could not be found because our office was burned on May 29, 1979, it could not be found anymore, Sir.

Q You are also required by this Honorable Court to bring a copy of the tax declaration No. 48221, do you have copy of the same?

A I have copy of that tax declaration, Sir.

Q Will you please produce the same?

Witness is producing a copy of tax declaration No. 32941 in the name of Santiago Puyo.

A Can you explain how this tax declaration was placed in the name of Santiago Puyo?

Q Previously this tax declaration was owned by Gil, Flaviano, Felino, Ignacio Ebreo and Genoveva, Eleuteria and Homobono Cueto under PD 32941 this tax declaration is under 48221 in the name of Santiago Puyo and this was transferred by a virtue of Deed of Sale annotated in the tax declaration and in the Deed of Sale and purchase value was there: 2,500.00 document docketed No. 312, Page 17, Book No. 6, Series of 1967, Doroteo de Chavez, the Notary Public, Sir.

Q Can you explain why this annotation was placed or written in this tax declaration No. 48221?

A This was placed under Tax Declaration No. 48221 because the office of the City Assessor transferred the tax declaration and annotated the instrument used in the transfer of the tax declaration, Sir.

Q Do you have copy of that document which is the basis of the transfer?

A We could not be located (sic) because as I have said earlier our office was burned on May 23, 1979, Sir.

Q So what does this phrase Deed of Sale, what do you mean by that?

A I placed that, that is the title of the instrument used in the transfer of this tax declaration, Sir.19

It is worth noting that Antonio Pajilan, an employee of the City Assessor’s Office of Batangas City20 who testified

regarding Tax Declaration No. 48221 dated 15 January 1973 on which was annotated the alleged sale between the heirs of Felipe Ebreo to Santiago Puyo, was employed in the said office only in the year 1978. Thus, he did not make nor did he witness the causing of the annotation as he was not yet employed in the said office at that time. Likewise, he was neither present when the deed of sale was executed nor did he personally see the said deed of sale. For these reasons, the testimony of Pajilan is inconclusive.

Petitioners next argue that Tax Declaration No. 48221 in the name of Santiago Puyo enjoys the presumption of regularity in its issuance. It is a good time as any to re-state that this rule is a mere presumption, not absolute nor inflexible and applies only in the absence of proof to the contrary.21 Besides, the mere fact that the disputed property may have been declared for taxation purposes in the name of the petitioners does not necessarily prove ownership. In the same manner, neither does the payment of taxes conclusively prove ownership of the land paid for.22 It is merely an indicium of a claim of ownership.23

Petitioners also presented the testimony of Felino Ebreo, father of petitioner Antonio Ebreo, who testified that the heirs of Felipe Ebreo sold Lot 9046 –F to Santiago Puyo.24When queried on the whereabouts of the document of sale, Felino alleged that it was borrowed by his niece Eleuteria Cueto who is the daughter of one of the heirs, Felipa Ebreo.25 According to Felino, Eleuteria refused to return the document and even got angry when he tried to demand its return.26 From Felino’s account,27 there are three copies of the missing deed of sale. Lamentably, petitioners failed to present any one of them.

Finally, petitioners presented Asuncion Aguado, step-daughter of Santiago Puyo, who testified that her stepfather Santiago Puyo bought the subject lot from the Ebreo heirs.28Similar to Pajilan’s testimony, Aguado’s testimony cannot be given much weight in view of the fact that save for her bare allegations that Lot 9046-F was purchased by her stepfather Santiago Puyo, she was not likewise present when the deed was executed. In her testimony she merely stated that her stepfather paid taxes for his real estate properties but could not state with specificity if the payment was made for Lot 9056-F.29

To summarize, the testimonies of Pajilan, Felino Ebreo and Asuncion Aguado are at most secondary evidence; hence, they are inadmissible considering that the petitioners, as offerors of the Deed of Sale, thereof failed to prove any of the exceptions provided in Section 3, Rule 130 of the Rules of Court and to establish conditions for their admissibility.30 Even if they are admitted, they have no probative value.31 This rule provides:

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.

Under this rule, it is axiomatic that before a party is allowed to adduce secondary evidence to prove the contents of the original of a deed or document, the party has to prove with the requisite quantum of evidence, the loss or destruction or unavailability of all the copies of the original of the said deed or document. As former Supreme Court Chief Justice Manuel V. Moran declared:

"Where there are two or more originals, it must appear that all of them have been lost, destroyed or cannot be produced before secondary evidence can be given of any one. For example, a lease was executed in duplicate, one being retained by the lessor and the other by the lessee. Either copy was, therefore, an original, and could have been introduced as evidence of the contract without the production of the other. One of these originals could not be found. The non-production of the other was not accounted for it was held that "under these circumstances, the rule is that no secondary evidence of the contents of either is admissible until it is shown

that originals must be accounted for before secondary evidence can be given of any one."

Indeed, before a party is allowed to adduce secondary evidence to prove the contents of the original of the deed, the offeror is mandated to prove the following:

"(a) the execution and existence of the original (b) the loss and destruction of the original or its non-production in court; and (c) unavailability of the original is not due to bad faith on the part of the offeror."32

On this score, the factual findings of the trial court are worth repeating. It held:

The pivotal document of sale allegedly executed by the heirs of Felipe Ebreo in favor of Santiago Puyo and chiefly relied upon by defendant Antonio Ebreo as the derivative basis of his ownership is sadly missing and remains a phantom in the dark. The testimonies of Felino Ebreo, Asuncion Aguado and Antonio Ebreo to prove by way of recollection of witnesses that Lot 9046-F was sold to Santiago Puyo sometime in 1967 for P2,500.00 by virtue of a deed notarized before deceased Atty. Doroteo Chavez merits scant consideration. They were the verbal say-so of interested parties and attributed acts to a party whose lips had been sealed by death. Quite evidently, their testimony should be taken cum grano salis – with a grain of salt.

Both the testimonies of Asuncion Aguado and Antonio Ebreo lacked the legal underpinning needed to prove the deed of sale. Their testimonies were not recollection of witnesses who saw the execution and delivery of the document. According to Sec. 4, Rule 130, the contents of the lost writing may be proved, inter alia, by the recollection of witnesses. As matters stand, however, Aguado’s testimony relates not to the execution of the document but to what her father (Santiago Puyo) did with the property after it was already acquired. (t.s.n. pp. 4-7, Direct, May 17, 1995) Similarly, Antonio Ebreo’s testimony does not refer to the execution and delivery of the deed of sale but of having allegedly seen said document when he purchased the lot from Santiago Puyo. He testified that "when I bought it from Santiago Puyo, he brought with him the Tax Declaration in the name of Santiago Puyo as well as the deed of sale between my father and his brothers and Santiago Puyo." (t.s.n. pp. 13-14, Direct, Aug. 16, 1995). In fine, they were not witnesses to the execution and delivery of the document of sale to qualify their testimonies under the phrase "recollection of witnesses."

Neither does the testimony of Felino Ebreo evoke faith and confidence. His salutary recollection of the missing document failed to instill credulity. For one, it was uncorroborated by any of the parties to the alleged deed of sale. In fact, such sale was directly controverted by his supposed co-sellers and co-owners Gil and Flaviano. (t.s.n. pp. 7-8, Direct, July 18, 1994; t.s.n. pp. 22-23, Cross, Sept. 29, 1994) Then too, it appears rather unusual for the heirs to retain Lot 9046-F in co-ownership in their partition agreement of 1967 and sell the said Lot that very same year (1967) if not on the same occasion. Felino Ebreo did not give the exact date of the supposed sale to Santiago Puyo except to say that it was sold in 1967. The Court got the impression, though, that it was on the same occasion as the partition agreement. (t.s.n. pp. 6-7, 14-16, Direct, Feb. 28, 1995) More important, his humanistic bias to favor his son Antonio Ebreo and his natural interest to defend his actuations leading to the issuance of the Tax Decl. 50669 (Exh. "2") which he signed caution us to accept his testimony with great care. He does not have the cold neutrality of a disinterested party. He was covetous of gain. The Tax Decl. No. 50669 that transferred in 1976 the property in the name of Antonio Ebreo was signed by Felino Ebreo himself (Exh. "2"). This illustrated a dialectical connection between him and his favored son Antonio Ebreo. Finally, Felino Ebreo’s claim that he could not produce it because it was borrowed by his niece Eleuteria Cueto and never returned to him was squarely refuted by said Eleuteria Cueto when she testified in rebuttal for the plaintiffs. (t.s.n. pp. 9, 12-13, Direct, Feb. 28, 1995) (See testimony of Eleuteria Cueto in rebuttal on July 17, 1997)

While many things have been said about the crucial deed of sale, the decisive documentary evidence remains an elusive phantom and conspicuously unproven. The ownership of Santiago Puyo becomes moreover doubtful because while the alleged sale was executed by the heirs of Felipe Ebreo in 1967 yet the earliest Tax Declaration in the name of Santiago Puyo was issued only in 1973 (Exh. "9") or 1974 (Exh. "4") as far as the record of this case can reveal. The issuance of a new tax declaration in the name of the sunrise owner (Puyo) which was late by six (6) or seven (7) years naturally cast a slur on the veracity of the sale.

The typewritten entry on Tax Decl. No. 48221 (Exhs. "9" and "9-A") detailing the particulars of the alleged deed of sale in favor of Santiago Puyo is patently suspicious and a very very poor ersatz for the primary document. While the sale allegedly took place in 1967, said deed was annotated on Exh. "9" which however only "begins with the year 1973." Moreover, while the alleged sale took place in 1967, yet Tax. Decl. No. 32941 (Exh. "10") that was issued on Feb. 7, 1968 still carried the names of Gil, Flaviano, Felino and Ignacio, all EBREO and Genoveva, Eleuteria and Homobono, all CUETO and not the name of Santiago Puyo. There even appears

thereon the annotation that the 1968 tax was paid on Jan. 29, 1968 – with no mention of Santiago Puyo despite his having allegedly acquired the property the year before (1967).

Riveting further its attention to the typewritten entry on Exh. "9", the Court finds it rather strange that such an entry appears on the Tax Declaration. Firstly, it is not a widely accepted practice to make such annotation. Secondly, there is more than meets the eye in the conspicuous presence of this annotation only on this particular Tax Declaration (Exh. "9"). All other tax declarations in this case do not have similar entry to identify the documentary basis for the issuance of the latest tax declaration. Thirdly, not even Tax Decl. Nos. 50669 and 075-534 (Exhs. "2" and "3") of Antonio Ebreo carry such annotation to indicate that he acquired the property by virtue of Doc. No. 70, Page No. 15, Book No. I, Series of 1976 of the Notarial Register of Atty. Meynardo L. Atienza. The pregnant suspicion lurks that the alleged particulars of the document of sale from Santiago Puyo to Antonio Ebreo were belatedly annotated.

As icing on the cake, Gil Ebreo categorically stated it was Felino Ebreo who authored the transfer. He testified on cross-examination that it was his eldest brother Felino Ebreo who was the caretaker of the lot and in-charge of the payment of taxes. It was his brother Felino who sold the subject lot known as Lot No. 9046-F in favor of his son Antonio Ebreo. (t.s.n. pp. 16-17, Cross, July 18, 1994) The evidence tended to show that indeed it was Felino Ebreo who had the opportunity to cause the transfer as it was he (Felino) who took possession of the lot and acted as its overseer. (t.s.n. pp. 3-4, Direct, Nov. 17, 1994)

The alleged document of sale executed between Santiago Puyo and Antonio Ebreo denominated as "Ganap na Bilihan ng Lupa" (Exh. "1"), was ineffectual for the purpose of transferring ownership of disputed Lot No. 9046-F to said Antonio Ebreo because the alleged vendor Santiago Puyo has not, as heretofore explained, acquired it from the heirs of Felipe Ebreo as the transaction has no supporting document of sale. It is self-evident that the seller cannot transfer more than what he has or as oftenly stated hyperbolically, the river cannot rise above its source. Moreover, Clerk of Court Jose C. Corales certified that the Ganap na Bilihan ng Lupa (Doc. No. 70, Page No. 15, Book No. I, Series of 1976) despite diligent efforts could not be found in the old CFI vault located at the Capitol Building, Batangas City. (Exh. "E" – Rebuttal)

The fact that tax declarations for Lot [No.] 9046-F were issued in the name of defendant Antonio Ebreo (Exhs. "2" and "3") and that he paid the taxes for the land (Exh. "8") provides no evidentiary value that he was the owner thereof. The existence of the tax declarations and payment of taxes did not transmogrify his possession into ownership. Tax declarations are not sufficient evidence to prove possession in the concept of owners. (Martinez, D., Summary of 1990 Supreme Court Rulings, Part. II, p. 734) Tax receipts are not conclusive evidence of ownership.33

In sum, considering that the annotation of the disputed Deed of Sale in a tax declaration is not sufficient proof of the transfer of property and inasmuch as the subject of inquiry is the Deed of Sale, it was incumbent on the petitioners to adduce in evidence the original or a copy of the deed consistent with Section 3, Rule 130 of the Rules of Court. In the absence of the said document, the exhortations of petitioners regarding the existence of said deed of sale must fail.

Wherefore, premises considered, the instant petition is Denied for lack of merit and the decision of the Court of Appeals dated 27 February 2003 affirming in toto the decision of the trial court dated 18 August 1997 is likewise Affirmed. Costs against petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIO Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBANChief JusticeChairperson

CONSUELO YNARES-SANTIAGOAssociate Justice

MA. ALICIA AUSTRIA-MARTINEZAsscociate Justice

ROMEO J. CALLEJO, SR. Associate Justice


Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBANChief Justice

Footnotes

1 Rollo, Annex D, pp. 53-58.

2 Id., pp. 54-55.

3 Folder of Exhibits, Exhibit A-1, p. 2.

4 Rollo, Annex H, pp. 75-76.

5 Folder of Exhibits, Exhibit 10, p. 25.

6 Id., Exhibit 9, p. 24.



9 Rollo, Annex E, pp. 59-63.


11 Penned by Judge Teodoro Tapia Riel.

12 Rollo, p. 50.

13 Docketed as CA-G.R. CV No. 58602; Penned by Associate Justice Danilo B. Pine with Associate Justices Eugenio s. Labitoria and Renato C. Dacudao, concurring; Id., pp. 37-42.

14 Id., pp. 40-41.

15 Id., p. 52.

16 Id., p. 136.

17 Francisco v. Court of Appeals, 377 Phil. 368, 378 (1999); Vda. de Roxas v. Court of Appeals, 227 Phil. 72, 77 (1986); Republic of the Phils. v. Intermediate Appellate Court, 229 Phil. 20, 25 (1986); Cabatbat Lim v. Intermediate Appellate Court, G.R. No. L-69679, 18 October 1988, 166 SCRA 451, 456.


19 TSN, 18 September 1995, pp. 4-7.

20 Id., p. 16.

21 REVISED RULES OF COURT, Rule 131, Section 3(m).

22 Bartolome v. Intermediate Appellate Court, G.R. No. 76792, 12 March 1990, 183 SCRA 102, 112; Del Rosario v. Republic of the Phils., 432 Phil. 824, 838 (2002); Seriña v. Caballero, G.R. No. 127382, 17 August 2004, 436 SCRA 593, 604.

23 Director of Lands v. Intermediate Appellate Court, G.R. No. 73246, 2 March 1993, 219 SCRA 339, 348; Rivera v. Court of Appeals, 314 Phil. 57, 63 (1995); San Miguel Corp. v. Court of Appeals, G.R. No. 57667, 28 May 1990, 185 SCRA 722, 725; Heirs of Brusas v. Court of Appeals, 372 Phil. 47, 55 (1999).

24 TSN, 28 February 1995, p. 7.

25 Id., p. 9.

26 Id., p. 13.

27 Id., 22.

28 TSN, 17 May 1995, p. 4.

29 Id., p. 9.

30 Santos v. Santos, 396 Phil. 928, 940-941 (2000).

31 Republic v. Court of Appeals, 327 Phil. 852, 875 (1996).

32 Santos v. Santos, supra note 30, pp. 941-942 (citations omitted).

33 Rollo, pp. 46-49.



Manila

EN BANC

G.R. No. L-5028 November 26, 1952

FELIPE CABAGUE and GERONIMO CABAGUE, plaintiffs-appellants, vs.MATIAS AUXILIO and SOCORRO AUXILIO, defendants-appellees.

Generoso F. Obusan for appellants.Pedro M. Tagala for appellees.

BENGZON, J.:

According to the Rules of Court parol evidence is not admissible to prove an agreement made upon the consideration of marriage other than a mutual promise to marry.1 This litigation calls for application of that rule.

In the justice of the peace court of Basud, Camarines Norte, Felipe Cabague and his son Geronimo sued the defendant Matias Auxilio and his daughter Socorro to recover damages resulting from defendants' refusal to carry out the previously agreed marriage between Socorro and Geronimo.

The complaint alleged, in short: (a) that defendants promised such marriage to plaintiffs, provided the latter would improve the defendants' house in Basud and spend for the wedding feast and the needs of the bride; (b) that relying upon such promises plaintiffs made the improvement and spent P700; and (c) that without cause defendants refused to honor their pledged word.

The defendants moved to dismiss, arguing that the contract was oral, unenforceable under the rule of evidence hereinbefore mentioned. And the court dismissed the case. On appeal to the Court of First Instance, the plaintiffs reproduced their complaint and defendants reiterated their motion to dismiss. From an order of dismissal this appeal was perfected in due time and form.

It should be observed preliminarily that, under the former rules of procedure, when the complaint did not state whether the contract sued on was in writing or not, the statute of frauds could be no ground for demurrer. Under the new Rules "defendant may now present a motion to dismiss on the ground that the contract was not in writing, even if such fact is not apparent on the face of the complaint. The fact may be proved by him." (Moran Rules of Court 2d ed. p. 139 Vol. I.)

There is no question here that the transaction was not in writing. The only issue is whether it may be proved in court.

The understanding between the plaintiffs on one side and the defendants on the other, really involves two kinds of agreement. One, the agreement between Felipe Cabague and the defendants in consideration of the marriage of Socorro and Geronimo. Another, the agreement between the two lovers, as "a mutual promise to marry". For breach of that mutual promise to marry, Geronimo may sue Socorro for damages. This is such action, and evidence of such mutual promise is admissible.2 However Felipe Cabague's action may not prosper, because it is to enforce an agreement in consideration of marriage. Evidently as to Felipe Cabague and Matias Auxilio this action could not be maintained on the theory of "mutual promise to marry".3 Neither may it be regarded as action by Felipe against Socorro "on a mutual promise to marry."

Consequently, we declare that Geronimo may continue his action against Socorro for such damages as may have resulted from her failure to carry out their mutual matrimonial promises.

Wherefore this expediente will be returned to the lower court for further proceedings in accordance with this opinion. So ordered.

Paras, C.J., Pablo, Padilla, Montemayor, Jugo, Bautista Angelo and Labrador, JJ., concur.

Footnotes

1 Rule 123, Sec. 21 (c).

2 This is different from the situation in Atienza vs. Castillo (40 Off. Gaz., p. 2048) wherein the groom litigated against his bride and her parents for breach of matrimonial promise. We hold in that case that the promise could not be proved orally because the bridegroom was suing to enforce a contract "between his parents and those of the bride."

3 Cf. Domalagan vs. Bolifer, 33 Phil., 471.



Manila

SECOND DIVISION

G.R. No. 96405 June 26, 1996

BALDOMERO INCIONG, JR., petitioner, vs.COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS, respondents.

ROMERO, J.:p

This is a petition for review on certiorari of the decision of the Court of Appeals affirming that of the Regional Trial Court of Misamis Oriental, Branch 18, 1 which disposed of Civil Case No. 10507 for collection of a sum of money and damages, as follows:

WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is adjudged solidarily liable and ordered to pay to the plaintiff Philippine Bank of Communications, Cagayan de Oro City, the amount of FIFTY THOUSAND PESOS (P50,000.00), with interest thereon from May 5, 1983 at 16% per annum until fully paid; and 6% per annum on the total amount due, as liquidated damages or penalty from May 5, 1983 until fully paid; plus 10% of the total amount due for expenses of litigation and attorney's fees; and to pay the costs.

The counterclaim, as well as the cross claim, are dismissed for lack of merit.

SO ORDERED.

Petitioner's liability resulted from the promissory note in the amount of P50,000.00 which he signed with Rene C. Naybe and Gregorio D. Pantanosas on February 3, 1983, holding themselves jointly and severally liable to private respondent Philippine Bank of Communications, Cagayan de Oro City branch. The promissory note was due on May 5, 1983.

Said due date expired without the promissors having paid their obligation. Consequently, on November 14, 1983 and on June 8, 1984, private respondent sent petitioner telegrams demanding payment thereof. 2 On December 11, 1984 private respondent also sent by registered mail a final letter of demand to Rene C. Naybe. Since both obligors did not respond to the demands made, private respondent filed on January 24, 1986 a complaint for collection of the sum of P50,000.00 against the three obligors.

On November 25, 1986, the complaint was dismissed for failure of the plaintiff to prosecute the case. However, on January 9, 1987, the lower court reconsidered the dismissal order and required the sheriff to serve the summonses. On January 27, 1987, the lower court dismissed the case against defendant Pantanosas as prayed for by the private respondent herein. Meanwhile, only the summons addressed to petitioner was served as the sheriff learned that defendant Naybe had gone to Saudi Arabia.

In his answer, petitioner alleged that sometime in January 1983, he was approached by his friend, Rudy Campos, who told him that he was a partner of Pio Tio, the branch manager of private respondent in Cagayan de Oro City, in the falcata logs operation business. Campos also intimated to him that Rene C. Naybe was interested in the business and would contribute a chainsaw to the venture. He added that, although Naybe had no money to buy the equipment, Pio Tio had assured Naybe of the approval of a loan he would make with private respondent. Campos then persuaded petitioner to act as a "co-maker" in the said loan. Petitioner allegedly acceded but with the understanding that he would only be a co-maker for the loan of P50,000.00.

Petitioner alleged further that five (5) copies of a blank promissory note were brought to him by Campos at his office. He affixed his signature thereto but in one copy, he indicated that he bound himself only for the amount of P5,000.00. Thus, it was by trickery, fraud and misrepresentation that he was made liable for the amount of P50,000.00.

In the aforementioned decision of the lower court, it noted that the typewritten figure "-- 50,000 --" clearly appears directly below the admitted signature of the petitioner in the promissory note. 3 Hence, the latter's uncorroborated testimony on his limited liability cannot prevail over the presumed regularity and fairness of the transaction, under Sec. 5 (q) of Rule 131. The lower court added that it was "rather odd" for petitioner to have indicated in a copy and not in the original, of the promissory note, his supposed obligation in the amount of P5,000.00 only. Finally, the lower court held that, even granting that said limited amount had actually been agreed upon, the same would have been merely collateral between him and Naybe and, therefore, not binding upon the private respondent as creditor-bank.

The lower court also noted that petitioner was a holder of a Bachelor of Laws degree and a labor consultant who was supposed to take due care of his concerns, and that, on the witness stand, Pio Tio denied having participated in the alleged business venture although he knew for a fact that the falcata logs operation was encouraged by the bank for its export potential.

Petitioner appealed the said decision to the Court of Appeals which, in its decision of August 31, 1990, affirmed that of the lower court. His motion for reconsideration of the said decision having been denied, he filed the instant petition for review on certiorari.

On February 6, 1991, the Court denied the petition for failure of petitioner to comply with the Rules of Court and paragraph 2 of CircularNo. 1-88, and to sufficiently show that respondent court had committed any reversible error in its questioned decision. 4 His motion for the reconsideration of the denial of his petition was likewise denied with finality in the Resolution of April 24, 1991. 5 Thereafter, petitioner filed a motion for leave to file a second motion for reconsideration which, in the Resolution of May 27, 1991, the Court denied. In the same Resolution, the Court ordered the entry of judgment in this case. 6

Unfazed, petitioner filed a notion for leave to file a motion for clarification. In the latter motion, he asserted that he had attached Registry Receipt No. 3268 to page 14 of the petition in compliance with Circular No. 1-88. Thus, on August 7, 1991, the Court granted his prayer that his petition be given due course and reinstated the same. 7

Nonetheless, we find the petition unmeritorious.

Annexed to the petition is a copy of an affidavit executed on May 3, 1988, or after the rendition of the decision of the lower court, by Gregorio Pantanosas, Jr., an MTCC judge and petitioner's co-maker in the promissory note. It supports petitioner's allegation that they were induced to sign the promissory note on the belief that it was only for P5,000.00, adding that it was Campos who caused the amount of the loan to be increased to P50,000.00.

The affidavit is clearly intended to buttress petitioner's contention in the instant petition that the Court of Appeals should have declared the promissory note null and void on the following grounds: (a) the promissory note was signed in the office of Judge Pantanosas, outside the premises of the bank; (b) the loan was incurred for the purpose of buying a second-hand chainsaw which cost only P5,000.00; (c) even a new chainsaw would cost only P27,500.00; (d) the loan was not approved by the board or credit committee which was the practice, as it exceeded P5,000.00; (e) the loan had no collateral; (f) petitioner and Judge Pantanosas were not present at the time the loan was released in contravention of the bank practice, and (g) notices of default are sent simultaneously and separately but no notice was validly sent to him. 8 Finally, petitioner contends that in signing the promissory note, his consent was vitiated by fraud as, contrary to their agreement that the loan was only for the amount of P5,000.00, the promissory note stated the amount of P50,000.00.

The above-stated points are clearly factual. Petitioner is to be reminded of the basic rule that this Court is not a trier of facts. Having lost the chance to fully ventilate his factual claims below, petitioner may no longer be accorded the same opportunity in the absence of grave abuse of discretion on the part of the court below. Had he presented Judge Pantanosas affidavit before the lower court, it would have strengthened his claim that the promissory note did not reflect the correct amount of the loan.

Nor is there merit in petitioner's assertion that since the promissory note "is not a public deed with the formalities prescribed by law but . . . a mere commercial paper which does not bear the signature of . . . attesting witnesses," parol evidence may "overcome" the contents of the promissory note. 9 The first paragraph of the parol evidence rule 10 states:

When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.

Clearly, the rule does not specify that the written agreement be a public document.

What is required is that the agreement be in writing as the rule is in fact founded on "long experience that written evidence is so much more certain and accurate than that which rests in fleeting memory only, that it would be unsafe, when parties have expressed the terms of their contract in writing, to admit weaker evidence to control and vary the stronger and to show that theparties intended a different contract from that expressed in the writing signed by them." 11 Thus, for the parol evidence rule to apply, a written contract need not be in any particular form, or be signed by both parties. 12 As a general rule, bills, notes and other instruments of a similar nature are not subject to be varied or contradicted by parol or extrinsic evidence. 13

By alleging fraud in his answer, 14 petitioner was actually in the right direction towards proving that he and his co-makers agreed to a loan of P5,000.00 only considering that, where a parol contemporaneous agreement was the inducing and moving cause of the written contract, it may be shown by parol evidence. 15 However, fraud must be established by clear and convincing evidence, mere preponderance of evidence, not even being adequate. 16Petitioner's attempt to prove fraud must, therefore, fail as it was evidenced only by his own uncorroborated and, expectedly, self-serving testimony.

Petitioner also argues that the dismissal of the complaint against Naybe, the principal debtor, and against Pantanosas, his co-maker, constituted a release of his obligation, especially because the dismissal of the case against Pantanosas was upon the motion of private respondent itself. He cites as basis for his argument, Article 2080 of the Civil Code which provides that:

The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor, they cannot be subrogated to the rights, mortgages, and preferences of the latter.

It is to be noted, however, that petitioner signed the promissory note as a solidary co-maker and not as a guarantor. This is patent even from the first sentence of the promissory note which states as follows:

Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY promise to pay to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of Cagayan de Oro, Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos, Philippine Currency, together with interest . . . at the rate of SIXTEEN (16) per cent per annum until fully paid.

A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, and each creditor is entitled to demand the whole obligation. 17 on the other hand, Article 2047 of the Civil Code states:

By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.

If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such a case the contract is called a suretyship. (Emphasis supplied.)

While a guarantor may bind himself solidarily with the principal debtor, the liability of a guarantor is different from that of a solidary debtor. Thus, Tolentino explains:

A guarantor who binds himself in solidum with the principal debtor under the provisions of the second paragraph does not become a solidary co-debtor to all intents and purposes. There is a difference between a solidary co-debtor and a fiador in solidum (surety). The latter, outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted, retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while a solidary co-debtor has no other rights than those bestowed upon him in Section 4, Chapter 3, Title I, Book IV of the Civil Code. 18

Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and several obligations. Under Art. 1207 thereof, when there are two or more debtors in one and the same obligation, the presumption is that the obligation is joint so

that each of the debtors is liable only for a proportionate part of the debt. There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. 19

Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable, any one, some or all of them may be proceeded against for the entire obligation. 20 The choice is left to the solidary creditor to determine against whom he will enforce collection. 21 Consequently, the dismissal of the case against Judge Pontanosas may not be deemed as having discharged petitioner from liability as well. As regards Naybe, suffice it to say that the court never acquired jurisdiction over him. Petitioner, therefore, may only have recourse against his co-makers, as provided by law.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.

Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.

Footnotes

1 Presided by Judge Senen C. Peñaranda.

2 Exhs. D-1 & D.

3 Exh. A.

4 Rollo, p. 30.

5 Ibid., p. 37.

6 Ibid., p. 46.

7 Ibid., p. 50.

8 Petition, pp. 6-7.

9 Petition, p. 9; Rollo, p. 14.

10 Sec. 9, Rule 130, Rules of Court.

11 FRANCISCO, THE RULES OF COURT OF THE PHILIPPINES, Vol. VII, Part I, 1990 ed., p. 179.

12 32A C.J.S. 269.

13 Ibid., at p. 251.

14 Record, p. 38.

15 FRANCISCO, supra, p. 193.

16 Cu v. Court of Appeals, G.R. No. 75504, April 2, 1991, 195 SCRA 647, 657 citing Carenan v. Court of Appeals, G.R. No. 84358, May 31, 1989 and Centenera v. Garcia Palicio, 29 Phil. 470 (1915).

17 TOLENTINO, CIVIL CODE OF THE PHILIPPINES, Vol. IV, 1991 ed., p. 217.

18 Supra, Vol. V, 1992 ed., p. 502.

19 Sesbreño v. Court of Appeals, G.R. No. 89252, May 24, 1993, 222 SCRA 466, 481.

20 Art. 1216, Civil Code; Ouano Arrastre Service, Inc. v. Aleonar, G.R. No. 97664, October 10, 1991, 202 SCRA 619, 625.

21 Dimayuga v. Phil. Commercial & Industrial Bank, G.R. No. 42542, August 5,1991, 200 SCRA 143, 148citing PNB v. Independent Planters Association Inc.,L-28046, May 16, 1983, 122 SCRA 113.



Manila

SECOND DIVISION

G.R. No. 123102 February 29, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.MADELO ESPINA Y CAÑASARES, accused-appellant.

QUISUMBING, J.:

On appeal is the decision dated September 4, 1995, of the Regional Trial Court of Bulacan, Branch 141 convicting appellant of the crime of murder, sentencing him to suffer the penalty of reclusion perpetua, and ordering him to pay the heirs of the victim the amounts of P100,000.00, as indemnity, P15,000.00 as funeral expenses, and P50,000.00 as damages.

Appellant, a 17 year-old jeepney conductor, was charged with murder for the killing of Ma. Nympha Belen y Melano, a 21 year-old mental retardate.

The facts of the case are as follows:

On July 1, 1993, at about 12:00 in the evening, prosecution witness Tolentino A. Colo was sleeping inside a jeepney parked at a garage in Francisco Homes, San Jose Del Monte, Bulacan. Suddenly, he was awakened when a woman cried out "Aruy!". Colo stood up and saw appellant coming out of a hut located some eight (8) meters away from the garage. Appellant was holding a curved knife in his hand. His t-shirt, hands, and knife were drenched with blood. Colo saw a woman inside the hut fall down on her face. Although it was nighttime, there was a light inside the hut and a mercury lamp some three (3) meters away which cast enough illumination for Colo to recognize appellant and the woman as Ma. Nympha Belen. When appellant saw Colo, he shouted "panglima ire" referring to the victim, and "panganim ka! referring to Colo. Scared out of his wits, Colo immediately jumped out of the window of the jeepney and hid in the roof of a nearby house. Appellant gave chase but when he could not find Colo, he finally gave up and left. Colo remained on the roof for five (5) long hours. At around 6:00 the following morning, he gingerly went down and drove the jeepney in his usual route. On July 2, 1993, at around 7:00 in the evening, Colo was arrested by the police and brought to the station for investigation. The following day, Colo told Mrs. Precila Melanio-Belen, mother of the victim, that it was appellant who killed her daughter.2

On August 3, 1993, appellant was charged with the crime of murder under the following Information:3

I N F O R M A T I O N

The undersigned Asst. Provincial Prosecutor accuses Madelo Espina y Cañasares of the crime of murder, penalized under the provisions of Article 248 of the Revised Penal Code, committed as follows:

That on or about the 1st day of July, 1993, in the municipality of San Jose del Monte, province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the said accused Madelo Espina y Cañasares, armed with a bladed weapon and with intent to kill one Maria Nympha Belen, did then and

there wilfully, unlawfully and feloniously, with evident premeditation, abuse of superior strength and treachery, attack, assault and stab with the said bladed weapon he was then provided the said Maria Nympha Belen, a mentally retarded woman, hitting the latter on the different parts of her body, thereby causing her serious physical injuries which directly caused her death.

CONTRARY TO LAW.

Malolos, Bulacan, August 3, 1993.

Upon arraignment on October 29, 1993, appellant entered a plea of not guilty.4 At the pre-trial conference,5 the sworn statements of Mrs. Precila Melanio-Belen6 and Tolentino Colo,7 the post-mortem examination8 and death certificate of Ma. Nympha Belen9 were marked in evidence.

During trial, the prosecution presented the following witnesses: (1) Mrs. Precila Melanio-Belen, mother of the victim, who testified that her daughter was a mental retardate, and that their family paid more than P15,000.00 for the funeral of the victim;10 (2) Tolentino A. Colo, a jeepney driver, who narrated the events he witnessed in connection with the stabbing incident; (3) SPO3 Rogelio Encina, a member of the Philippine National Police (PNP), San Jose Del Monte, Bulacan, who was tasked to bring to court the knife used in the killing from the Municipal Trial Court of San Jose Del Monte, Bulacan;11 (4) Dr. Juan V. Zaldariaga, Jr., Medico-Legal Officer of the National Bureau of Investigation (NBI), who conducted the post-mortem examination and testified that the victim sustained six (6) stab wounds, five (5) of which were fatal.12

For the defense, appellant himself testified. He stated that in the evening of July 1, 1993, he was having a drinking spree with Jun, Gusing, Panis, Colo, and some others, at the garage in San Jose Del Monte, Bulacan. At around 10:00 P.M., he left the group and being drunk, he decided to sleep inside the parked jeepney in the garage instead of going home. At around 12:10 in the morning, he was awakened by policemen and brought to the police detachment where he was questioned regarding the killing. He told the police that he did not know who killed the victim.13

On September 4, 1995, the trial court rendered a decision14 finding appellant guilty of murder, the dispositive portion of which states:

WHEREFORE, the Court finds the accused Madelo Espina y Cañasares guilty of the crime of Murder, the court hereby imposes upon the accused the penalty of Reclusion Perpetua.

To indemnify the heirs of the victim P100,000.00.

To pay Precila Belen P15,000.00 expenses for wake & burial.

To pay P50,000.00 moral damage.

The accused a detention prisoner, the Provincial Warden of Malolos, Bulacan is ordered to commit the accused to the National Penitentiary immediately upon receipt hereof.

SO ORDERED.15

Hence, the present appeal. Appellant contends that the trial court gravely erred in —

I. . . . GIVING FULL FAITH AND CREDENCE TO THE TESTIMONY OF ALLEGED EYEWITNESS, AND IN NOT ACQUITTING ACCUSED-APPELLANT ON GROUND OF REASONABLE DOUBT.

II. . . . ORDERING ACCUSED-APPELLANT TO INDEMNIFY THE HEIRS OF THE VICTIM IN THE AMOUNT OF P100,000.00; TO PAY THE AMOUNT OF P15,000.00 AS REIMBURSEMENT FOR THE WAKE AND THE BURIAL EXPENSES; AND P50,000.00 AS MORAL DAMAGES.

In his brief,16 appellant assails the credibility of prosecution witness Colo considering that the latter was also a suspect in the killing, and was under detention at the time he gave his statement pointing to appellant as the killer. Further, appellant claims, Colo had a motive in pointing to appellant as the assailant since they had a previous quarrel over money. Appellant also, contends that Colo's behavior after witnessing the incident is not in consonance with normal human behavior, for instead of reporting the matter to the police, he merely went ahead plying his usual jeepney route. Appellant also avers that the murder weapon was not positively identified in court. Lastly, appellant insists that he was convicted on the basis of

insufficient circumstantial evidence. And even assuming that appellant committed the crime, the lower court failed to take into consideration the privileged mitigating circumstance of minority, appellant being only seventeen (17) years old at the time of the commission of the crime.

For the State, the Office of the Solicitor General17 contends that Colo was released after investigation, suggesting the insufficiency of evidence to implicate him. Further, the OSG belies the imputation of ill-motive on the part of Colo to testify against appellant considering that the alleged quarrel over money was brought up to explain why appellant was no longer living with Colo, not why Colo would implicate appellant. The OSG also contends that there is also no standard form of behavior when one is confronted with a shocking incident. Hence, the OSG prays for the affirmance of the conviction for murder since the killing is qualified by abuse of superior strength. But, it recommends that indemnity be reduced to P50,000.00 pursuant to existing jurisprudence.

In sum, the issues center on the credibility of the prosecution witness Colo and the sufficiency of the circumstantial evidence to convict appellant of the crime charged.

Anent the issue of credibility of witnesses, the elementary rule is that appellate courts will generally not disturb the findings of the trial court. The latter is in a better position to decide the question, having heard the witnesses themselves and observed their deportment and manner of testifying during the trial, unless it has plainly overlooked certain facts of substance and value that, if considered, might affect the result of the case.18 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.19 No inconsistencies in Colo's testimony were pointed out by appellant. Neither does appellant contend that the trial court erred in relying on the evidence on record.

Appellant attempts to impeach the testimony at this late stage of the proceeding. The records show that appellant was afforded ample opportunity to cross examine Colo and to demonstrate any falsity or error in his allegedly biased testimony. Appellant failed, however, to undermine Colo's credibility.

The fact that a witness may have been investigated in connection with the commission of the crime and that he had a previous quarrel with appellant are not grounds for disqualification of a witness under Section 20 of Rule 130 of the Rules of Court. By itself, prejudice against an accused cannot warrant the disqualification of witnesses or the total disregard of their testimonies.20 Under the same rule, in general, any person can testify in court, regardless of personal interest in a case. At any rate, these circumstances may affect the credibility of the witness, the assessment of which is within the province of the trial court. Anent his motive in testifying, Colo repeatedly insisted that he offered to testify because he pitied the mother of the victim who could find no witnesses willing to shed light on the death of her daughter.21 The foregoing factors considered, we find no cogent reason to overturn the factual findings of the trial court.

As to the sufficiency of evidence to convict appellant, we have likewise held that direct evidence of the commission of a crime is not the only matrix wherefrom a trial court may draw its conclusion and finding of guilt.22 Under Section 4 of Rule 130 of the Rules of Court, conviction may be had even on circumstantial evidence provided three requisites concur: (1) there is more than one circumstance; (2) the facts from which the inferences are derived are proven: and (3) the combination of all the circumstances is such as to produce a conviction beyond reasonable doubt.

The following circumstances, when pieced together, lead to the ineluctable conclusion that appellant stabbed the victim: (1) Appellant, by his own admission, was at the locus criminis at around the time of stabbing incident.23 (2) He was seen leaving the hut, barely seconds after the killing, by witness Colo.24 (3) He was seen leaving the hut holding a bloodied knife, and his t-shirt and hands drenched with blood.25 (4) The knife, which had one blunt extremity and one sharp extremity, was presented in evidence, was akin to the knife used to inflict the wounds sustained by the victim.26 (5) He was heard exclaiming "pang lima ire" referring to the victim and "pang-anim ka" referring to Colo.27 (6) Appellant, still holding the knife, even chased Colo, but eventually left when he could not find Colo.28

The most incriminating piece of evidence against appellant is Colo's testimony that he saw appellant holding a bloodied curved knife, with his t-shirt and hands drenched with blood, leaving the locus criminis. Thus, in People v.Malimit,29 one of the circumstantial evidence considered in convicting appellant of the crime of Robbery with Homicide is the testimony of two witnesses that they saw appellant holding a blood-stained bolo in his right hand, rushing out of the victim's store mere seconds prior to their discovery of the crime.

For circumstantial evidence to be sufficient to support a conviction, all circumstances must be consistent with each other, consistent with the hypothesis that the accused is guilty, and at the same time inconsistent with the hypothesis that he is innocent and with every other rational hypothesis except that of guilt.30 Thus, conviction based on circumstantial evidence can be upheld, provided the circumstances proven constitute an unbroken chain which leads to one fair and reasonable conclusion that points to the accused, to the exclusion of all others, as the guilty person,31 a conclusion adequately proven in this case.

Appellant's defense of denial is unavailing. For the defense of denial and alibi to prosper, it must be clearly established by positive, clear and satisfactory proof that (1) the accused was somewhere else when the offense was committed, and (2) it was physically impossible for the accused to have been physically present at the scene of the crime or its immediate vicinity at the time of its commission.32 Appellant was right smack in the midst of thelocus criminis at the time of the commission of the crime. Hence, his defense of denial and alibi miserably failed to comply with the strict requirements of time and place.33

As to the crime committed, the Information alleged three qualifying circumstances — abuse of superior strength, evident premeditation, and treachery. The trial court appreciated abuse of superior strength and evident premeditation without specifying which one qualified the crime to murder. We find, however, that only abuse of superior strength qualified the killing to murder.

In several cases,34 we have held that an attack made by a man with a deadly weapon upon an unarmed and defenseless woman constitutes the circumstance of abuse of that superiority which his sex and the weapon used in the act afforded him, and from which the woman was unable to defend herself. This is the exact scenario in this case.

Evident premeditation, however, was not sufficiently proven by the prosecution. The following requisites must be established before evident premeditation may be considered in imposing the proper penalty: (a) the time when the accused determined to commit the crime; (b) an act manifestly indicating that the accused clung to his determination; and (c) a sufficient lapse of time between such determination and execution to allow him to reflect upon the consequences of his act.35 Given the attendant factual circumstances in this case, we find them insufficient to establish evident premeditation.

Treachery likewise did not attend the commission of the crime. The qualifying circumstance of treachery can not be taken into consideration in the absence of evidence showing the manner of attack and what ensued inside the hut. Nobody witnessed the actual killing, only its immediate aftermath. Where treachery is alleged, the manner of attack must be proven.36 It cannot be presumed or concluded merely on the basis of the resulting crime.37 When no particulars are known regarding the manner in which the aggression was made or how the act which resulted in the death of the victim began and developed, it cannot be established from mere supposition that the accused perpetrated the killing with treachery38.

The trial court erred ill appreciating nighttime as a generic aggravating circumstance. Nighttime only becomes an aggravating circumstance when (1) it is especially sought by the offender; (2) it is taken advantage of by him; or (3) it facilitates the commission of the crime by ensuring the offender's immunity from capture.39 Here, other than the time of the crime, there is nothing else to suggest that appellant deliberately availed himself or took advantage of the circumstances of nighttime. Further, when the place of the crime is illuminated by light, as in this case, nighttime is not aggravating.40

In sum, we find the crime committed by appellant to be murder because killing was qualified by abuse of superior strength. At the time of the commission of the crime, the penalty for murder was reclusion temporal maximum to death.41 Appellant having been born on May 16, 1976,42 he was 17 years, 1 month and 15 days old, at the time of the commission of the crime. The existence of the privileged mitigating circumstance of minority requires the imposition of the penalty next lower in degree43 which is prision mayor maximum to reclusion temporal medium. Applying the Indeterminate Sentence Law, the maximum penalty to be imposed upon appellant shall be taken from the medium period of the imposable penalty, which is reclusion temporal minimum, while the minimum shall be taken from the penalty next lower in degree, which is prision correccional maximum to prision mayor medium.

As to the amount of damages, the death indemnity should be lowered to P50,000.00 pursuant to existing jurisprudence.44 As to actual damages, the records do not contain any receipts for the funeral expenses incurred by the family of the victim. The mother of the victim likewise did not testify as to the moral damages sustained as a result of the death of her daughter. Hence, for lack of competent proof, we cannot award either actual or moral damages.45

WHEREFORE, the decision of the trial court finding appellant Madelo Espina y Cañasares guilty beyond reasonable doubt of the crime of murder is hereby AFFIRMED WITH MODIFICATION regarding the penalty imposed so that appellant is hereby sentenced to an indeterminate prison term of four (4) years, ten (10) months and twenty (20) days of prision correccional maximum as minimum, to twelve (12) years, four (4) months and ten (10) days of reclusion temporal minimum as maximum, to pay the heirs of the victim the amount of P50.000.00 as death indemnity, and to pay the costs.1âwphi1.nêt

SO ORDERED.

Bellosillo, Mendoza and De Leon, Jr., JJ., concur.Buena, J., is on official leave.

Footnotes

1 Judge Felipe N. Villajuan, Jr., presiding.

2 TSN (Belen), December 13, 1993, p. 16; TSN (Colo), December 13, 1993, pp. 20-50; TSN, January 24, 1994, pp. 8-10, 23.

3 Records, pp. 1-2.

4 Id. at 17.

5 Id. at 25.

6 Exhibit "A", "A-1"; Records, p. 91.

7 Exhibit "B", "B-1"; Records, p. 92.

8 Exhibit "C", "C-1"; Records, p. 93.

9 Exhibit "D"; Records, p. 94.

10 TSN, December 13, 1993, pp. 7-8, 13-14.

11 TSN, January 24, 1994, pp. 30-31.

12 TSN, October 14, 1994, pp. 10-11; Autopsy Report, Exhibit "H," "H-1'' to "H-3," Records, p. 102.

13 TSN, February 20, 1995, pp. 3-12; TSN, April 5, 1995, pp. 2-5.

14 Records, pp. 116-119.

15 Records, p. 119.

16 Rollo, pp. 24-36.

17 Appellee's Brief, Rollo, pp. 47-76.

18 People v. Naguita, G.R. No. 130091, August 30, 1999, p. 11, People v. Hubilla, Jr., 252 SCRA 471, 478 (1996); People v. Gomez, 251 SCRA 455, 465 (1995); People v. Bantisil, 249 SCRA 367, 376 (1995).

19 People v. Malimit, 264 SCRA 167, 175 (1996).

20 People v. Maldo, G.R. No. 131347, May 19, 1999, p. 11.

21 TSN, December 13, 1993 (Colo), p. 40.

22 People v. Lopez, G.R. No. 131151, August 25, 1999, p. 4; People v. Danao, 253 SCRA 146, 150-151 (1996).

23 TSN, February 20, 1995, p. 3.

24 TSN, December 13, 1993 (Colo), pp. 21, 23.

25 TSN, December 13, 1993 (Colo), pp. 31, 43.

26 TSN, October 14, 1994, p. 8.

27 TSN, December 13, 1993, p. 23.

28 Id. at 49-50.

29 264 SCRA 167, 172, 178 (1996).

30 People v. Lopez, G.R. No. 131151, August 25, 1999, p. 4; People v. De Guia, 280 SCRA 141 (1997).

31 People v. Lopez, G.R. No. 131151, August 25, 1999, p. 6; People v. Bionat, 278 SCRA 454, 467 (1997); People v. Grefaldia, 273 SCRA 591, 605 (1997); People v. Salvame, 270 SCRA 766, 773 (1997); People v. Villaran, 269 SCRA 630, 635 (1997); People v. Tabag, 268 SCRA 115, 127 (1997).

32 People v. Francisco, G.R. No. 110873, September 23, 1999, p. 8; People v. Baniel, 275 SCRA 472, 483 (1997); People v. Patawaran, 274 SCRA 130, 139 (1997); People v. Henson, 270 SCRA 634, 640 (1997).

33 People v. Bernaldez, 294 SCRA 317, 331 (1998).

34 People v. Amoto, 111 SCRA 39, 46 (1982); People v. Braña, 30 SCRA 307, 315 (1969); People v. Reyes, 20 SCRA 304, 307 (1967); People v. Guzman, 107 Phil. 1122, 1127 (1960); People v. Quesada, 62 Phil. 446, 450; United States v. Consuelo, 13 Phil. 612, 614 (1909).

35 People v. Marcelino, et. al., G.R. No. 126269, October 1, 1999, pp. 10-11; People v. Gutierrez, Jr., 302 SCRA 643, 664 (1999); People v. Realin, 301 SCRA 495, 513 (1999).

36 People v. Tambis, G.R. No. 124452, July 28, 1999, p. 8; People v. Santillana. G.R. No. 127815, June 9, 1999, p. 15, People v. Asis, 286 SCRA 64, 74 (1998).

37 Ibid.

38 People v. Sioc, G.R. No. 66508, November 24, 1999, p. 11; People v. Bahenting, G.R. No. 127659, February 24, 1999, pp. 9-11; People v. Sumuoy, 263 SCRA 460, 469-470 (1996).

39 People v. Monsayac, G.R. No. 126787, May 24, 1999, p. 13.

40 People v. Gailo, G.R. No. 116233, October 13, 1999, p. 14; People v. Bato, 21 SCRA 1445, 1448 (1967).

41 As amended by R.A. No. 7659, which took effect on December 31, 1993, murder is now punishable withreclusion perpetua to death.

42 TSN, February 20, 1995, p. 5.

43 Art. 68, second par. of the Revised Penal Code.

44 People v. Verde, 302 SCRA 690, 707 (1999); People v. Espanola, 271 SCRA 689, 716 (1997).

45 People v. Guillermo, 302 SCRA 257, 275 (1999); People v. Noay, 296 SCRA 292, 308 (1998).



Manila

THIRD DIVISION

G.R. No. 117401 October 1, 1998

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.BERNARDO QUIDATO, JR., accused-appellant.

ROMERO, J.:

Before us is an appeal from the judgment of the Regional Trial Court of Davao, Branch 4, dated March 2, 1994, finding accused-appellant Bernardo Quidato, Jr. guilty of the crime of parricide.

On January 17, 1989, accused-appellant was charged with the crime of parricide before the Regional Trial Court of Davao. The information reads as follows:

The undersigned accuses BERNARDO QUIDATO, JR. of the crime of Parricide under Article 246 of the Revised Penal Code, committed as follows:

That on or about September 17, 1988, in the Municipality of Kaputian, Province of Davao, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating and mutually helping with Reynaldo Malita and Eddie Malita, who are charged for (sic) Murder in a separate information, did then and there wilfully, unlawfully and criminally, with the use of a bolo and an iron bar, assault, hack and stab his father, Bernardo Quidato, Sr., on the different parts of his body, thereby inflicting upon him wounds which caused his death, and further causing actual, moral and compensatory damage to the heirs of the victim.

Contrary to law. 1

Accused-appellant's case was tried jointly with the murder case filed against his co-accused Reynaldo Malita and Eddie Malita who, however, withdrew their "not guilty" plea during the trial and were accordingly sentenced. Thus, only accused-appellant's case was tried on the merits.

The prosecution, in offering its version of the facts, presented as its witnesses accused-appellant's brother Leo Quidato, appellant's wife Gina Quidato, as well as Patrolman Lucrecio Mara. Likewise, the prosecution offered in evidence affidavits containing the extra-judicial confessions of Eddie Malita and Reynaldo Malita. The two brothers were, however, not presented by the prosecution on the witness stand. Instead, it presented Atty. Jonathan Jocom to prove that the two were assisted by counsel when they made their confessions. Similarly, the prosecution presented MTC Judge George Omelio who attested to the due and voluntary execution of the sworn statements by the Malita brothers.

Based on the foregoing pieces of evidence, the prosecution's version of the facts is as follows:

Bernardo Quidato, Sr. was the father of accused-appellant Bernardo Quidato, Jr. and Leo Quidato. Being a widower, Bernardo lived alone in his house at Sitio Libod, Brgy. Tagbaobo, Kaputian, Davao. He owned sixteen hectares of coconut land in the area.

On September 16, 1988, Bernardo, accompanied by his son, herein accused-appellant, and two hired hands, Reynaldo Malita and Eddie Malita, went to Davao City to sell 41 sacks of copra. After selling the copra, Bernardo paid the Malita brothers for their labor, who thereafter left. Bernardo and accused-appellant went back to Sitio Libod that same day. 2

According to Gina Quidato, on the evening of the next day, September 17, 1988, accused-appellant and the Malita brothers were drinking tuba at their house. She overheard the trio planning to go to her father-in-law's house to get money from the latter. She had no idea, however, as to what later transpired because she had fallen asleep before 10:00 p.m. 3 Accused-appellant objected to Gina Quidato's testimony on the ground that the same was prohibited by the marital disqualification rule found in Section 22 of Rule 130 of the Rules of Court. 4 The judge, acknowledging the applicability of the so-called rule, allowed said testimony only against accused-appellant's co-accused, Reynaldo and Eddie.

As adverted to earlier, the Malita brothers confessed to their participation in the crime, executing affidavits detailing how Bernardo was killed. Their version shows that Eddie had been living with accused-appellant for the past four years. At around 6:00 p.m. of September 17, 1988, accused-appellant asked Reynaldo to come to the former's house to discuss an important matter. Upon Reynaldo's arrival at accused-appellant's house, he saw that his brother Eddie was already there. They started drinking beer. The Malita brothers alleged that it was at this juncture that accused-appellant proposed that they rob and kill his father. They went to Bernardo's house only at 10:00 p.m., after the rain had stopped. Reynaldo brought along a bolo. Upon reaching the house, accused-appellant knocked on the door, asking his father to let them in. When Bernardo opened the door, Eddie rushed in and knocked the old man down. Reynaldo then hacked Bernardo on the nape and neck. Accused-appellant and Eddie ransacked Bernardo's aparador looking for money but they found none; so, the three of them left.

The body of Bernardo was discovered the next day by accused-appellant's son, who had gone there to call hisLolo for breakfast. The cause of death, as stated in Bernardo's death certificate was "hypovolemic shock secondary to fatal hacking wound on the posterior neck area." 5

On September 27, 1988, Leo Quidato confronted his brother regarding the incident and learned that Reynaldo and Eddie Malita were the ones responsible for Bernardo's death. The two were promptly arrested by the police. Aside from arresting the latter two, however, the police also arrested accused-appellant.

On September 29, 1988, the Malita brothers were interrogated by Patrolman Lucrecio Mara at the Kaputian Police Station. When Mara apprised them of their constitutional rights, including their right to counsel, they signified their intent to confess even in the absence of counsel. Aware that the same would be useless if given in the absence of counsel, Mara took down the testimony of the two but refrained from requiring the latter to sign their affidavits. Instead, he escorted the Malita brothers to Davao City and presented them, along with their unsigned affidavits, to a CLAO (now PAO) lawyer, Jonathan Jocom. 6

Informed of the situation, Atty. Jocom conferred with Reynaldo and Eddie, again advising the two of their constitutional rights. The CLAO lawyer explained the contents of the affidavits, in Visayan, to the Malita brothers, who affirmed the veracity and voluntary execution of the same. Only then did Reynaldo and Eddie affix their signatures on the affidavits. 7

In his defense, accused-appellant denied the allegations of the Malita brothers. He claimed that the Malita brothers were not at his house on the evening of September 17, 1988. They, however, passed by his house at around 10:00 p.m. and asked him to come with them to his father's house, threatening him with harm if he refused. Out of fear, he led the way to Bernardo's house and even knocked on the latter's door until Bernardo opened the same. In the ensuing commotion, he scampered away, but in his confusion, reached his house only at around 11:00 p.m., although the same was only about one hundred fifty meters away from Bernardo's house. He did not call for help. Eddie arrived a while later. Accused-appellant claimed not to have seen the actual killing, having run away earlier. He, however, admitted finding a bolo, encrusted with blood, at his house. He turned the same over to his brother, who, in turn, surrendered the same to the police. Accused-appellant did not feel uneasy having Eddie around even if he knew of the latter's participation in the crime. 8

After due trial, the court a quo rendered the following judgment:

WHEREFORE, IN THE LIGHT OF THE FOREGOING, the court finds the accused, Bernardo Quidato, Jr., guilty beyond reasonable doubt as a co-principal in the offense of Parricide which falls under Article 246 (of the Revised Penal Code), for the death of his father, Bernardo Quidato, Sr., and accordingly, is hereby sentenced by this court to suffer the penalty of RECLUSION PERPETUA, with all the accessory penalties provided by law and to indemnify the other heirs of Bernardo Quidato, Sr., the amount of P50,000.00, in accordance with current case doctrines of the Supreme Court, and to pay the costs.

SO ORDERED. 9

From the aforesaid judgment of conviction, appellant interposed the present appeal, assigning the following errors:

1. THE TRIAL COURT ERRED IN GIVING CREDENCE TO THE EXTRAJUDICIAL CONFESSIONS OF REYNALDO MALITA (EXH. C) AND EDDIE MALITA (EXH. D) IN

CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHTS OF THE ACCUSED-APPELLANT TO CONFRONT WITNESSES.

2. THE TRIAL COURT ERRED IN FINDING (THE) EXISTENCE OF CONSPIRACY IN THE CASE AT BAR.

3. THE TRIAL COURT ERRED IN DISREGARDING THE DEFENSE RAISED BY THE ACCUSED AND DISREGARDING (ANY) ILL-MOTIVE OF REYNALDO AND EDDIE MALITA IN KILLING THE VICTIM.

Accused-appellant must be acquitted.

In indicting accused-appellant, the prosecution relied heavily on the affidavits executed by Reynaldo and Eddie. The two brothers were, however, not presented on the witness stand to testify on their extra-judicial confessions. The failure to present the two gives these affidavits the character of hearsay. It is hornbook doctrine that unless the affiants themselves take the witness stand to affirm the averments in their affidavits, the affidavits must be excluded from the judicial proceeding, being inadmissible hearsay. 10 The voluntary admissions of an accused made extrajudicially are not admissible in evidence against his co-accused when the latter had not been given an opportunity to hear him testify and cross-examine him. 11

The Solicitor General, in advocating the admissibility of the sworn statements of the Malita brothers, cites Section 30, Rule 130 of the Rules of Court which provides that "[t]he act or declaration of a conspirator relating to the conspiracy and during its existence, may be given in evidence against the co-conspirator after the conspiracy is shown by evidence other than such act or declaration." The inapplicability of this provision is clearly apparent. The confessions were made after the conspiracy had ended and after the consummation of the crime. Hence, it cannot be said that the execution of the affidavits were acts or declarations made during the conspiracy's existence.

Likewise, the manner by which the affidavits were obtained by the police render the same inadmissible in evidence even if they were voluntarily given. The settled rule is that an uncounseled extrajudicial confession without a valid waiver of the right to counsel — that is, in writing and in the presence of counsel — is inadmissible in evidence. 12It is undisputed that the Malita brothers gave their statements to Patrolman Mara in the absence of counsel, although they signed the same in the presence of counsel the next day. As ruled in People vs. Compil: 13

[T]he belated arrival of a CLAO (now PAO) lawyer the following day even if prior to the actual signing of the uncounseled confession does not cure the defect (of lack of counsel) for the investigators were already able to extract incriminatory statements from accused-appellant . . . Thus, in People vs. De Jesus (213 SCRA 345 [1992]) we said that admissions obtained during custodial interrogations without the benefit of counsel although later reduced to writing and signed in the presence of counsel are still flawed under the Constitution.

With regard to Gina Quidato's testimony, the same must also be disregarded, accused-appellant having timely objected thereto under the marital disqualification rule. As correctly observed by the court a quo, the disqualification is between husband and wife, the law not precluding the wife from testifying when it involves other parties or accused. 14 Hence, Gina Quidato could testify in the murder case against Reynaldo and Eddie, which was jointly tried with accused-appellant's case. This testimony cannot, however, be used against accused-appellant directly or through the guise of taking judicial notice of the proceedings in the murder case without violating the marital disqualification rule. "What cannot be done directly cannot be done indirectly" is a rule familiar even to law students.

Given the inadmissibility in evidence of Gina Quidato's testimony, as well as of Reynaldo and Eddie's extrajudicial confessions, nothing remains on record with which to justify a judgment unfavorable to accused-appellant. Admittedly, accused-appellant's defense, to put it mildly, is dubious. His alleged acquiescence to the demand of the Malita brothers to accompany them to his father's house on the strength of the latter's verbal threats, his incredulous escape from the clutches of the two, his inexplicable failure to return home immediately, his failure to seek assistance from the authorities, the fact that Eddie stayed with him immediately after the incident, and the nine-day lacuna between the killing and his pointing to the Malita brothers as the culprits, all suggest a complicity more than that of an unwilling participant. Yet, suspicion, no matter how strong, should not sway judgment, it being an accepted axiom that the prosecution cannot rely on the weakness of the defense to gain a conviction, but must establish beyond reasonable doubt every circumstance essential to the guilt of the accused. 15 This the prosecution has failed to demonstrate.

WHEREFORE, the appeal is hereby GRANTED and the decision of the Regional Trial Court of Davao City in Criminal Case No. 89-9 dated March 2, 1994, is REVERSED and SET ASIDE. Accused-appellant Bernardo Quidato, Jr. is hereby

ACQUITTED on ground of reasonable doubt. Consequently, let the accused be immediately released from his place of confinement unless there is reason to detain him further for any other legal or valid cause. With costs de oficio.

SO ORDERED.

Kapunan and Purisima, JJ., concur.

Narvasa, C.J., is on leave.

Footnotes

1 Original Record, p. 2.

2 TSN, September 30, 1993, p. 6-7.

3 TSN, November 28, 1991, p. 10-11.

4 Sec. 22. Disqualification by reason of marriage. — During their marriage, neither the husband nor the wife may testify for or against the other without the consent of the affected spouse, except in a civil case by one against the other, or in a criminal case for a crime committed by one against the other or the latter's direct descendants or ascendants.

5 Original Record, p. 68.

6 TSN, April 26, 1990, p. 35-44.

7 TSN, August 28, 1991. p. 12-17.

8 TSN, September 30, 1993, p. 6-26.

9 Original Record, p. 159-160.

10 People vs. Manhuyod, G.R. No. 124676, May 20, 1998.

11 People vs. Surigawan, 228 SCRA 458 (1993); People vs. Ferry, 66 Phil. 310 (1938): People vs. Badilla, 48 Phil. 718 (1926).

12 Constitution, Article III, Sec. 12(1) and (3); People vs. Cabintoy, 247 SCRA 442 (1995).

13 244 SCRA 135 (1995).

14 TSN, November 28, 1991, p. 5.

15 Duran vs. CA. 71 SCRA 68 (1976).


Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 132081 November 26, 2002

JOEL M. SANVICENTE, petitioner, vs.PEOPLE OF THE PHILIPPINES, respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

Petitioner was charged with homicide for the killing of one Dennis Wong y Chua. On June 11, 1995, at around 5:30 p.m., petitioner fatally shot the victim outside the Far East Bank along Katipunan Avenue, Loyola Heights, Quezon City after the latter allegedly attempted to rob him of a large amount of cash which he had just withdrawn from the automatic teller machine.1

Responding policemen found the lifeless body of the victim at the parking space in front of the Far East Bank and Trust Company Branch along Katipunan Road, Loyola Heights, Quezon City. Recovered at the scene were five empty caliber .45 shells, two live caliber .45 bullets and an ATM card in the name of Violeta Sanvicente.2

On June 13, 1995, police authorities located petitioner’s car in Barrio Malapit, San Isidro, Nueva Ecija and took custody thereof.

Petitioner’s counsel, Atty. Leonardo A. Valmonte, turned over to Police Station 9 petitioner’s .45 caliber Mark IV pistol bearing Serial No. 5504095. He also wrote a letter addressed to P/Major Antonio Diaz, Station Commander of PNP Station 9, CPDC, Anonas Road, Quezon City which reads as follows:

This is in connection with the alleged death of one Dennis Wong that occurred in Katipunan Ave., Q.C., in the afternoon of June 11, 1995.

According to my client, Joel Sanvicente, on said date, place and hour above he just withdrew from the Far East Bank and Trust Co., Katipunan branch a large amount of cash. On his way out of the bank, said victim immediately attacked him to grab the money he has just withdrew (sic). My said client pulled out his gun (duly licensed with Permit to Carry) and fired a warning shot upwards. Still the deceased continued his attack and grabbed his gun. After a brief struggle, my client was forced to shoot the deceased in the defense of his person and money. My client will submit a formal statement during the proper preliminary investigation, if needed.

On June 13, 1995, my client’s car (Mercedes Benz with plate no. TFU 736) was taken by your operatives led by Capt. Alejandro Casanova and [is] now in your custody.

In view of the untoward incident, my client suffered serious anxiety and depression and was advised to undergo medical treatment and confinement at the Delos Santos Hospital in Rodriguez Ave., Q. C. My client would have no objection if you assigned police escort/guard under your supervision pending his confinement.

For all intense (sic) & purposes, this letter shall serve as a voluntary surrender, without admission of guilt on the part of my client.3

At his arraignment, petitioner pleaded not guilty.4

During the trial, the prosecution presented Ballistics Report No. B-046-95, stating that slugs recovered from the crime scene, on the one hand, and cartridge cases fired from petitioner’s caliber .45 Mark IV pistol, on the other hand, were fired from the same firearm.5 The Medico-Legal Officer who conducted the autopsy on the deceased failed to appear at the trial. In order to dispense with her testimony, petitioner admitted the due execution and genuineness of the medico-legal report. After trial, the prosecution filed its Formal Offer of Exhibits,6 which included the above-quoted letter of petitioner’s counsel to P/Maj. Antonio Diaz, marked as Exhibit LL. The trial court admitted all the prosecution’s exhibits in its Order dated August 27, 1996.7

Meanwhile, petitioner begged leave to file a demurrer to evidence, which was granted by the trial court.8 Hence, on August 29, 1996, petitioner filed a Motion To Dismiss (On Demurrer to Evidence),9 based on the following grounds: (1) the lack of positive identification of the accused is a fatal omission warranting dismissal; (2) prosecution’s evidence are totally hearsay/incompetent, hence, inadmissible and the guilt of the accused was not proven by positive evidence beyond reasonable doubt.

On October 7, 1996, the trial court issued an Order dismissing the case together with the civil aspect thereof for insufficiency of evidence.10

The prosecution filed a motion for reconsideration,11 which was denied on the ground, among others, that with the dismissal of the case double jeopardy had set in.12

The prosecution filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 43697. In a Decision dated July 25, 1997,13 the appellate court nullified the October 7, 1996 Order of the trial court. Petitioner’s motion for reconsideration14 was likewise denied in a Resolution dated January 2, 1998.15

Hence, the instant petition.

In reversing the trial court’s Order dismissing the criminal case against petitioner, the Court of Appeals found that the trial court committed grave abuse of discretion in preventing the prosecution from establishing the due execution and authenticity of Exhibit LL which, it claimed, "positively identified petitioner as the perpetrator of the crime charged."16

Under Rule 119, Section 23 of the Revised Rules of Criminal Procedure, as amended, the trial court may dismiss the action on the ground of insufficiency of evidence upon a demurrer to evidence filed by the accused with or without leave of court. In resolving accused’s demurrer to evidence, the court is merely required to ascertain whether there is competent or sufficient evidence to sustain the indictment or support a verdict of guilt.17

The grant or denial of a demurrer to evidence is left to the sound discretion of the trial court and its ruling on the matter shall not be disturbed in the absence of a grave abuse of discretion.18 Significantly, once the court grants the demurrer, such order amounts to an acquittal and any further prosecution of the accused would violate the constitutional proscription on double jeopardy.19 This constitutes an exception to the rule that the dismissal of a criminal case made with the express consent of the accused or upon his own motion bars a plea of double jeopardy.20 The finality-of-acquittal rule was stressed thus in People v. Velasco:21

The fundamental philosophy highlighting the finality of an acquittal by the trial court cuts deep into the "humanity of the laws and in jealous watchfulness over the rights of the citizens, when brought in unequal contest with the State xxx."22 Thus Green expressed the concern that "(t)he underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence, is that the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent, he may be found guilty."23

It is axiomatic that on the basis of humanity, fairness and justice, an acquitted defendant is entitled to the right of repose as a direct consequence of the finality of his acquittal. The philosophy underlying this rule establishing the absolute nature of acquittals is "part of the paramount importance criminal justice system attaches to the protection of the innocent against wrongful conviction."24 The interest in the finality-of-acquittal rule, confined exclusively to verdicts of not guilty, is easy to understand: it is a need for "repose", a desire to know the exact extent of one’s liability.25 With this right of repose, the criminal justice system has built in a protection to insure that the innocent, even those whose innocence rests upon a jury’s leniency, will not be found guilty in a subsequent proceeding.26

Given the far-reaching scope of an accused’s right against double jeopardy, even an appeal based on an alleged misappreciation of evidence will not lie.27 The only instance when double jeopardy will not attach is when the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction, such as where the prosecution was denied the opportunity to present its case,28 or where the trial was a sham.29 However, while certiorari may be availed of to correct an erroneous acquittal, the petitioner in such an extraordinary proceeding must clearly demonstrate that the trial court blatantly abused its authority to a point so grave as to deprive it of its very power to dispense justice.30

In the instant case, petitioner filed a demurrer to evidence after the prosecution adduced its evidence and rested its case. The trial court subsequently dismissed the case after finding that the evidence presented by the prosecution was insufficient to support the charge against petitioner. The prosecution, which relied primarily on Exhibit LL as the basis for the indictment against petitioner, however, contested the dismissal of the case allegedly because the trial court prevented it from further identifying the genuineness and due execution of said document "in the manner that it wanted."31

The crux of the problem lies in the confusion between the due execution of a piece of documentary evidence vis-à-vis the truth of its contents. Likewise at the core of the dilemma is the fundamental distinction between an admission and a confession. The prosecution maintains that the letter, Exhibit LL, constituted a confession and argues thus: "What better evidence is there to positively identify the perpetrator of the crime than the confession of the petitioner himself, freely and

voluntarily given, assisted by counsel?"32According to the prosecution, this "extrajudicial confession constitutes the strongest evidence of guilt."33

An admission is defined under Rule 130, Section 26 of the Rules of Court as the act, declaration or omission of a party as to a relevant fact. A confession, on the other hand, under Rule 130, Section 33 is the declaration of an accused acknowledging his guilt of the offense charged or any offense necessarily included therein.

More particularly, a confession "is a declaration made at any time by a person, voluntarily and without compulsion or inducement stating or acknowledging that he had committed or participated in the commission of a crime. The term admission, on the other hand, is usually applied in criminal cases to statements of fact by the accused which do not directly involve an acknowledgment of the guilt of the accused or of criminal intent to commit the offense with which he is charged."34

In short, in a confession, an accused acknowledges his guilt; while there is no such acknowledgment of guilt in an admission.35 Only recently in People v. Licayan,36 the Court distinguished "confession" and "admission" in this wise:

A confession is an acknowledgment in express terms, by a party in a criminal case, of his guilt of the crime charged, while an admission is a statement by the accused, direct or implied, of facts pertinent to the issue, and tending, in connection with proof of other facts, to prove his guilt. In other words, an admission is something less than a confession,and is but an acknowledgment of some fact or circumstance which in itself is insufficient to authorize a conviction, and which tends only to establish the ultimate fact of guilt. (Emphasis ours) 37

There is no question that the letter dated June 14, 1995 is an admission, not a confession, because of the unmistakable qualification in its last paragraph that –

For all intense (sic) & purposes, this letter shall serve as a voluntary surrender, without admission of guilt on the part of my client. . . (Emphasis and italics supplied).

With the foregoing distinctions in mind, the trial court correctly rejected the prosecution’s motion to have Exhibit LL further identified "in the manner that it wanted,"38 i.e., through the proposed testimony of petitioner’s counsel, Atty. Valmonte, who incidentally refused to testify. Aside from covering a subject which squarely falls within the scope of "privileged communication", it would, more importantly, be tantamount to converting the admission into a confession.

It can not be denied that the contents of Exhibit LL, particularly with regard to the details of the shooting communicated by petitioner to Atty. Valmonte, is privileged because it is connected with the business for which petitioner retained the services of the latter.39 More specifically, said communication was relayed by petitioner to Atty. Valmonte in order to seek his professional advice or assistance in relation to the subject matter of the employment, or to explain something in connection with it, so as to enable him to better advice his client or manage the litigation.40

Pertinent to this is Section 24 (b) of Rule 130 of the Rules of Court, to wit:

SEC. 24. Disqualification by reason of privileged communication. – The following persons cannot testify as to matters learned in confidence in the following cases:

x x x x x x x x x

(b) An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment nor can an attorney’s secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity; x x x.

It is worthy to note that the prosecution did not summon petitioner himself to testify although he too was a signatory of Exhibit LL. Apparently, it was aware that petitioner could well invoke his right against self-incrimination and refuse to answer its questions. The prosecution then attempted to draw out what it could not constitutionally extract from his lawyer. Yet, and as stated previously, said Exhibit LL had earlier been admitted in evidence by the trial court in its Order dated August 27, 1996. What was objectionable was the prosecution’s sole reliance on the document without proof of other facts to establish its case against petitioner because of its mistaken assumption that the same was a confession.

Significantly, the prosecution was neither barred nor prevented by the trial court from establishing the genuineness and due execution of the document through other means. Rule 132, Section 20of the Rules of Court provides the following means of authenticating the document:

SEC. 20. Proof of private document. – Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

Thus, the due execution of a document can be proved through the testimony of: (1) the person/s who executed it; (2) the person before whom its execution was acknowledged; or (3) any person who was present and saw it executed and delivered or who, after its execution and delivery, saw it and recognized the signatures therein or by a person to whom the parties to the instrument previously confirmed the execution thereof.41

Thus, respondent could have called to the witness stand P/Maj. Antonio Diaz, the addressee of Exhibit LL, to identify the said document since it was supposedly delivered to him personally. Samples of the signatures appearing on the document which can be readily obtained or witnesses who are familiar with them could have also been presented. The prosecution did not. Neither did it subpoena P/Senior Inspector Alejandro M. Casanova, who prepared the detailed Police Report of the incident used as the basis of the inquest proceedings, nor were any eyewitnesses presented, notwithstanding that there appeared to be at least two eyewitnesses to the incident.

It must be borne in mind that in a criminal trial, it is the prosecution that determines the charges to be filed and how the legal and factual elements in the case shall be utilized as components of the information.42 Stated differently, the determination of what evidence to adduce to bolster a successful prosecution of a criminal offense is the exclusive domain of prosecutorial discretion. Indeed, courts generally can not interfere with the prosecutor’s discretion as to control over criminal prosecutions.43 However, it is the court which ultimately determines whether such evidence is sufficient to sustain an indictment, thus, the care with which the prosecution must build up its case against the accused can not be gainsaid because, as has been stated time and again, in any criminal prosecution, the State must rely on the strength of its own evidence and not on the weakness of the evidence of the defense.44

Viewed vis-a-vis the foregoing lapses detailed above, the prosecution’s insistence to have Exhibit LL admitted "in the manner it wanted" shows only too clearly a subtle but shrewd scheme to cover up for the foregoing procedural missteps and to cut evidentiary corners to build its case at the expense of the defense. This cannot be countenanced. An accused should not be prejudiced for the failure of the prosecution to discharge its burden of overcoming the constitutional presumption of innocence and to establish the guilt of the accused beyond reasonable doubt.45 Indeed, if the prosecution fails to discharge the burden, then it is not only the accused’s right to be freed, it is even more the court’s constitutional duty to acquit him.46

If at all, the foregoing acts of the prosecution underscores just how careless and haphazard it had been in building up a case against the petitioner. For such, it has nothing but itself to blame if the trial court in assaying the proof it adduced found the same wanting. It will neither be allowed to sweep its procedural miscues under the rug, so to speak, on the pretext that it was denied due process when the trial court supposedly prevented it from presenting Exhibit LL. To be more precise, the trial court had admitted Exhibit LL in evidence but rejected the further admission of the document "in the manner that it wanted." Verily, the prosecution can not have its cake and eat it too.

Moreover, we agree with the trial court that the letter marked as Exhibit LL is hearsay inasmuch as its probative force depends in whole or in part on the competency and credibility of some person other than the witness by whom it is sought to produce it.47 The term as used in the law of evidence "signifies all evidence which is not founded upon the personal knowledge of the witness from whom it is elicited, and which consequently does not depend wholly for its credibility and weight upon the confidence which the court may have in him. Its value, if any, is measured by the credit to be given to some third persons not sworn as witnesses to that fact and consequently not subject to cross-examination."48 In short, it is "the evidence not of what the witness knows himself but of what he has heard from others."49 Thus, in one case we stated that "[w]hen evidence is based on what was supposedly told the witness, the same is without any evidentiary weight being patently hearsay."50 In the case at bar, it is noteworthy that the statements in the letter were made by petitioner’s counsel, who even began his narration of the events with the phrase: "According to my client."51

In holding that petitioner was identified as the person who committed the offense, the appellate court relied on the following circumstances: (1) he admitted responsibility therefor through Exhibit LL, which was signed by him and his counsel; (2) he surrendered even before the issuance of the warrant of arrest; (3) his gun was also surrendered to the police authorities by his counsel; (4) empty shells recovered at the scene of the crime matched his gun; and (5) the letter-referral of P/Senior Inspector Alejandro Casanova to Quezon City Prosecutor indicated that petitioner was under the custody of the policeman on detail supposedly to guard him at the hospital.52

With regard to the first circumstance, suffice it to state that, as has lengthily been discussed earlier, Exhibit LL is merely an admission and not a confession. In fact, petitioner specifically denied criminal intent therein. By and of itself it is insufficient to support a conviction unless it is considered in connection with other proof to establish the ultimate fact of guilt.

The second and third incidents actually support petitioner’s innocence because were he indeed guilty of the felony, he would not likely have surrendered even before the warrant was issued for his arrest. Courts go by the biblical truism that the "the wicked flee when no man pursueth but the righteous are as bold as a lion."53

The fourth event merely proves the fact that the empty shells recovered from the crime scene were fired from the surrendered gun. It, however, does not answer the penultimate question of who actually pulled the trigger of the firearm.

Lastly, the appellate court’s reading of the letter-referral,54 mentioning that petitioner had been placed under the custody of a policeman, was inaccurate. As explained by Atty. Valmonte in Exhibit LL, the policeman was actually requested for petitioner’s personal safety owing to the untoward incident which caused petitioner serious anxiety and depression, and for which he had to undergo treatment and confinement.55

All told, we find no grave abuse on the part of the trial court in dismissing the charges against petitioner.

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The decision of the Court of Appeals dated July 25, 1997 and the Resolution dated January 2, 1998 in CA-G.R. SP No. 43697 are REVERSED and SET ASIDE.

SO ORDERED.

Vitug, (Acting Chairman), Carpio, and Azcuna, JJ., concur.Davide, Jr., C.J., (Chairman), on official leave.

Footnotes

1 Record, p. 11.

2 Ibid., pp. 20 - 20-A.

3 Id., p. 21.

4 Id., p. 40.

5 Id., p. 228.

6 Id., pp. 217-259.

7 Id., p. 284.

8 Id., p. 292.

9 Id., pp. 286-291.

10 Id., pp. 308-310.

11 Id., pp. 311-332.

12 Id., pp. 361-362.

13 Rollo, pp. 107-119.

14 Ibid., pp. 120-141.

15 Id., pp. 150-151.

16 Id., p. 183; Comment, p. 11.

17 Gutib v . Court of Appeals , 312 SCRA 365 [1999].

18 Te v. Court of Appeals, 346 SCRA 327 [2000].

19 Ong v. People, 342 SCRA 372, 387 [2000]; People v. City Court of Silay, 74 SCRA 247 [1976].

20 Almario v . Court of Appeals, G.R. No. 127772 , March 22, 2001; People v. Bans, 239 SCRA 48, 55 [1994]; People v. Gines, 197 SCRA 481 [1991]; People v. Quizada, 160 SCRA 516 (1988).

21 340 SCRA 207, 242 [2000].

22 Citing U.S. v. Sanges, 144 U.S. 310.

23 Citing 355 U.S. 1842, L Ed. 2d 199, 61 A.L.R. 2d 1119.

24 Citing Stern, Government Appeals of Sentences: a Constitutional Response to Arbitrary and Unreasonable Sentences, 18 Am. Crim. L. Rev. 51, 69 [1980].

25 Citing Paul Western, The Three Faces of Double Jeopardy: Reflections on Government Appeals of Criminal Sentences, 78 Mich. L. Rev. 1001, 1018, 1022 [1980].

26 Comments, Tulane Law Review, The Proposed Federal Criminal Code and the Government’s Right to Appeal Sentences: After the Supreme Court’s Green Light –Dare We Proceed? [Vol. 56, No. 2, Feb. 1982, at p. 702].

27 Palu-ay v . Court of Appeals , 293 SCRA 358 [1998]; People v. Velasco, supra.

28 Gorion v. RTC of Cebu, Br. 17, 213 SCRA 138 [1992]; People v. Bocar, 138 SCRA 166 [1985]; Portugal v. Reantaso, 167 SCRA 712 [1988]; People v. Albano, 163 SCRA 511 [1988]; Saldaña v. CA, 190 SCRA 396 [1990]; People v. CA, 101 SCRA 450 [1980].

29 Galman v. Sandiganbayan, 144 SCRA 43 [1986].

30 People v. Sandiganbayan, et al., G.R. No. 140633, February 4, 2002, citing People v . Court of Appeals , 308 SCRA 687 [1999].

31 Comment, pp. 12-13; Rollo, pp. 184-185.

32 Comment, p. 20, Rollo, p. 192.

33 Ibid., p. 20; p. 194, citing People v. Lachica, 132 SCRA 230 [1984].

34 Francisco V.J., Revised Rules of Court, Vol. VII, Part I, 1997 ed., p. 303, citing U.S. v. Corrales, 23 Phil. 362, 365-366 [1912].

35 People v. Sevilla, 339 SCRA 625, 652 [2000].

36 G.R. No. 144422, February 28, 2002.

37 Citing Wharton’s Criminal Evidence § 337 (12th ed. 1955).

38 Comment, pp. 12-13, Rollo, pp. 184-185.

39 Francisco V.J., Revised Rules of Court, supra, p. 274.

40 Ibid., citing 58 Am. Jur. 270-271.

41 Republic v. Court of Appeals, 73 SCRA 148, 158 [1976].

42 People v. Pajo, 348 SCRA 492, 522 [2000], citing People v . Perez , 296 SCRA 17, 35 [1998].

43 Venus v. Desierto, 298 SCRA 196, 214 [1998], citing Crespo v. Mogul, 151 SCRA 462, 468 [1987].

44 People v . Clemente , 316 SCRA 789 [1999]; People v. Paloma, 279 SCRA 352 [1997].

45 People v . Comesario , 306 SCRA 400 [1999].

46 People v . Muleta , 309 SCRA 148 [1999].

47 Francisco V.J., Revised Rules of Court, supra, p. 513, citing 31 C.J.S. 919.

48 Ibid., citing Underhill Evidence, p. 68.

49 Id., citing Woodroffe’s Law on Evidence, 9th ed. 512.

50 People v. Villaran, 269 SCRA 630, 637 [1997], citing People v. Del Rosario, 234 SCRA 246 [1994].

51 Record, p. 21.

52 CA-G.R. SP No. 43697 Decision, p. 9; Rollo, p. 115.

53 People v . Cañedo , 335 SCRA 81, 97 [2000].

54 Record, pp. 5-9.

55 Ibid., p. 21.



Manila

EN BANC

G.R. No. 180643 March 25, 2008

ROMULO L. NERI, petitioner, vs.SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS, SENATE COMMITTEE ON TRADE AND COMMERCE, AND SENATE COMMITTEE ON NATIONAL DEFENSE AND SECURITY, respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

At bar is a petition for certiorari under Rule 65 of the Rules of Court assailing the show cause Letter1 dated November 22, 2007 and contempt Order2 dated January 30, 2008 concurrently issued by respondent

Senate Committees on Accountability of Public Officers and Investigations,3 Trade and Commerce,4 and National Defense and Security5 against petitioner Romulo L. Neri, former Director General of the National Economic and Development Authority (NEDA).

The facts, as culled from the pleadings, are as follows:

On April 21, 2007, the Department of Transportation and Communication (DOTC) entered into a contract with Zhong Xing Telecommunications Equipment (ZTE) for the supply of equipment and services for the National Broadband Network (NBN) Project in the amount of U.S. $ 329,481,290 (approximately P16 Billion Pesos). The Project was to be financed by the People's Republic of China.

In connection with this NBN Project, various Resolutions were introduced in the Senate, as follows:

(1) P.S. Res. No. 127, introduced by Senator Aquilino Q. Pimentel, Jr., entitled RESOLUTION DIRECTING THE BLUE RIBBON COMMITTEE AND THE COMMITTEE ON TRADE AND INDUSTRY TO INVESTIGATE, IN AID OF LEGISLATION, THE CIRCUMSTANCES LEADING TO THE APPROVAL OF THE BROADBAND CONTRACT WITH ZTE AND THE ROLE PLAYED BY THE OFFICIALS CONCERNED IN GETTING IT CONSUMMATED AND TO MAKE RECOMMENDATIONS TO HALE TO THE COURTS OF LAW THE PERSONS RESPONSIBLE FOR ANY ANOMALY IN CONNECTION THEREWITH AND TO PLUG THE LOOPHOLES, IF ANY IN THE BOT LAW AND OTHER PERTINENT LEGISLATIONS.

(2) P.S. Res. No. 144, introduced by Senator Mar Roxas, entitled Á RESOLUTION URGING PRESIDENT GLORIA MACAPAGAL ARROYO TO DIRECT THE CANCELLATION OF THE ZTE CONTRACT

(3) P.S. Res. No. 129, introduced by Senator Panfilo M. Lacson, entitled RESOLUTION DIRECTING THE COMMITTEE ON NATIONAL DEFENSE AND SECURITY TO CONDUCT AN INQUIRY IN AID OF LEGISLATION INTO THE NATIONAL SECURITY IMPLICATIONS OF AWARDING THE NATIONAL BROADBAND NETWORK CONTRACT TO THE CHINESE FIRM ZHONG XING TELECOMMUNICATIONS EQUIPMENT COMPANY LIMITED (ZTE CORPORATION) WITH THE END IN VIEW OF PROVIDING REMEDIAL LEGISLATION THAT WILL PROTECT OUR NATIONAL SOVEREIGNTY, SECURITY AND TERRITORIAL INTEGRITY.

(4) P.S. Res. No. 136, introduced by Senator Miriam Defensor Santiago, entitled RESOLUTION DIRECTING THE PROPER SENATE COMMITTEE TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, ON THE LEGAL AND ECONOMIC JUSTIFICATION OF THE NATIONAL BROADBAND NETWORK (NBN) PROJECT OF THE NATIONAL GOVERNMENT.

At the same time, the investigation was claimed to be relevant to the consideration of three (3) pending bills in the Senate, to wit:

1. Senate Bill No. 1793, introduced by Senator Mar Roxas, entitled AN ACT SUBJECTING TREATIES, INTERNATIONAL OR EXECUTIVE AGREEMENTS INVOLVING FUNDING IN THE PROCUREMENT OF INFRASTRUCTURE PROJECTS, GOODS, AND CONSULTING SERVICES TO BE INCLUDED IN THE SCOPE AND APPLICATION OF PHILIPPINE PROCUREMENT LAWS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 9184, OTHERWISE KNOWN AS THE GOVERNMENT PROCUREMENT REFORM ACT, AND FOR OTHER PURPOSES;

2. Senate Bill No. 1794, introduced by Senator Mar Roxas, entitled AN ACT IMPOSING SAFEGUARDS IN CONTRACTING LOANS CLASSIFIED AS OFFICIAL DEVELOPMENT ASSISTANCE, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8182, AS AMENDED BY REPUBLIC ACT NO. 8555, OTHERWISE KNOWN AS THE OFFICIAL DEVELOPMENT ASSISTANCE ACT OF 1996, AND FOR OTHER PURPOSES; and

3. Senate Bill No. 1317, introduced by Senator Miriam Defensor Santiago, entitled AN ACT MANDATING CONCURRENCE TO INTERNATIONAL AGREEMENTS AND EXECUTIVE AGREEMENTS.

Respondent Committees initiated the investigation by sending invitations to certain personalities and cabinet officials involved in the NBN Project. Petitioner was among those invited. He was summoned to appear and testify on September 18, 20, and 26 and October 25, 2007. However, he attended only the September 26 hearing, claiming he was "out of town" during the other dates.

In the September 18, 2007 hearing, businessman Jose de Venecia III testified that several high executive officials and power brokers were using their influence to push the approval of the NBN Project by the NEDA. It appeared that the Project was initially approved as a Build-Operate-Transfer (BOT) project but, on March 29, 2007, the NEDA acquiesced to convert it into a government-to-government project, to be financed through a loan from the Chinese Government.

On September 26, 2007, petitioner testified before respondent Committees for eleven (11) hours. He disclosed that then Commission on Elections (COMELEC) Chairman Benjamin Abalos offered him P200 Million in exchange for his approval of the NBN Project. He further narrated that he informed President Arroyo about the bribery attempt and that she instructed him not to accept the bribe. However, when probed further on what they discussed about the NBN Project, petitioner refused to answer, invoking "executive privilege". In particular, he refused to answer the questions on (a) whether or not President Arroyo followed up the NBN Project,6 (b) whether or not she directed him to prioritize it,7 and (c) whether or not she directed him to approve.8

Unrelenting, respondent Committees issued a Subpoena Ad Testificandum to petitioner, requiring him to appear and testify on November 20, 2007.

However, in the Letter dated November 15, 2007, Executive Secretary Eduardo R. Ermita requested respondent Committees to dispense with petitioner's testimony on the ground of executive privilege. The pertinent portion of the letter reads:

With reference to the subpoena ad testificandum issued to Secretary Romulo Neri to appear and testify again on 20 November 2007 before the Joint Committees you chair, it will be recalled that Sec. Neri had already testified and exhaustively discussed the ZTE / NBN project, including his conversation with the President thereon last 26 September 2007.

Asked to elaborate further on his conversation with the President, Sec. Neri asked for time to consult with his superiors in line with the ruling of the Supreme Court in Senate v. Ermita, 488 SCRA 1 (2006).

Specifically, Sec. Neri sought guidance on the possible invocation of executive privilege on the following questions, to wit:

a) Whether the President followed up the (NBN) project?

b) Were you dictated to prioritize the ZTE?

c) Whether the President said to go ahead and approve the project after being told about the alleged bribe?

Following the ruling in Senate v. Ermita, the foregoing questions fall under conversations and correspondence between the President and public officials which are considered executive privilege (Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez v. PEA, G.R. 133250, July 9, 2002). Maintaining the confidentiality of conversations of the President is necessary in the exercise of her executive and policy decision making process. The expectation of a President to the confidentiality of her conversations and correspondences, like the value which we accord deference for the privacy of all citizens, is the necessity for protection of the public interest in candid, objective, and even blunt or harsh opinions in Presidential decision-making. Disclosure of conversations of the President will have a chilling effect on the President, and will hamper her in the effective discharge of her duties and responsibilities, if she is not protected by the confidentiality of her conversations.

The context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China. Given the confidential nature in which these information were conveyed to the President, he cannot provide the Committee any further details of these conversations, without disclosing the very thing the privilege is designed to protect.

In light of the above considerations, this Office is constrained to invoke the settled doctrine of executive privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly.

Considering that Sec. Neri has been lengthily interrogated on the subject in an unprecedented 11-hour hearing, wherein he has answered all questions propounded to him except the foregoing questions involving executive privilege, we therefore request that his testimony on 20 November 2007 on the ZTE / NBN project be dispensed with.

On November 20, 2007, petitioner did not appear before respondent Committees. Thus, on November 22, 2007, the latter issued the show cause Letter requiring him to explain why he should not be cited in contempt. The Letter reads:

Since you have failed to appear in the said hearing, the Committees on Accountability of Public Officers and Investigations (Blue Ribbon), Trade and Commerce and National Defense and Security require you to show cause why you should not be cited in contempt under Section 6, Article 6 of the Rules of the Committee on Accountability of Public Officers and Investigations (Blue Ribbon).

The Senate expects your explanation on or before 2 December 2007.

On November 29, 2007, petitioner replied to respondent Committees, manifesting that it was not his intention to ignore the Senate hearing and that he thought the only remaining questions were those he claimed to be covered by executive privilege, thus:

It was not my intention to snub the last Senate hearing. In fact, I have cooperated with the task of the Senate in its inquiry in aid of legislation as shown by my almost 11 hours stay during the hearing on 26 September 2007. During said hearing, I answered all the questions that were asked of me, save for those which I thought was covered by executive privilege, and which was confirmed by the Executive Secretary in his Letter 15 November 2007. In good faith, after that exhaustive testimony, I thought that what remained were only the three questions, where the Executive Secretary claimed executive privilege. Hence, his request that my presence be dispensed with.

Be that as it may, should there be new matters that were not yet taken up during the 26 September 2007 hearing, may I be furnished in advance as to what else I need to clarify, so that as a resource person, I may adequately prepare myself.

In addition, petitioner submitted a letter prepared by his counsel, Atty. Antonio R. Bautista, stating, among others that: (1) his (petitioner) non-appearance was upon the order of the President; and (2) his conversation with President Arroyo dealt with delicate and sensitive national security and diplomatic matters relating to the impact of the bribery scandal involving high government officials and the possible loss of confidence of foreign investors and lenders in the Philippines. The letter ended with a reiteration of petitioner's request that he "be furnished in advance" as to what else he needs to clarify so that he may adequately prepare for the hearing.

In the interim, on December 7, 2007, petitioner filed with this Court the present petition for certiorari assailing the show cause Letter dated November 22, 2007.

Respondent Committees found petitioner's explanations unsatisfactory. Without responding to his request for advance notice of the matters that he should still clarify, they issued the Order dated January 30, 2008, citing him in contempt of respondent Committees and ordering his arrest and detention at the Office of the Senate Sergeant-At-Arms until such time that he would appear and give his testimony. The said Order states:

ORDER

For failure to appear and testify in the Committee's hearing on Tuesday, September 18, 2007; Thursday, September 20, 2007; Thursday, October 25, 2007; and Tuesday, November 20, 2007, despite personal notice and Subpoenas Ad Testificandum sent to and received by him, which thereby delays, impedes and obstructs, as it has in fact delayed, impeded and obstructed the inquiry into the subject reported irregularities, AND for failure to explain satisfactorily why he should not be cited for contempt (Neri letter of 29 November 2007), herein attached) ROMULO L. NERI is hereby cited in contempt of this (sic) Committees and ordered arrested and detained in the Office of the Senate Sergeant-At-Arms until such time that he will appear and give his testimony.

The Sergeant-At-Arms is hereby directed to carry out and implement this Order and make a return hereof within twenty four (24) hours from its enforcement.

SO ORDERED.

On the same date, petitioner moved for the reconsideration of the above Order.9 He insisted that he has not shown "any contemptible conduct worthy of contempt and arrest." He emphasized his willingness to testify on new matters, however, respondent Committees did not respond to his request for advance notice of questions. He also mentioned the petition for certiorari he filed on December 7, 2007. According to him, this should restrain respondent Committees from enforcing the show cause Letter "through the issuance of declaration of contempt" and arrest.

In view of respondent Committees' issuance of the contempt Order, petitioner filed on February 1, 2008 aSupplemental Petition for Certiorari (With Urgent Application for TRO/Preliminary Injunction), seeking to restrain the implementation of the said contempt Order.

On February 5, 2008, the Court issued a Status Quo Ante Order (a) enjoining respondent Committees from implementing their contempt Order, (b) requiring the parties to observe the status quo prevailing prior to the issuance of the assailed order, and (c) requiring respondent Committees to file their comment.

Petitioner contends that respondent Committees' show cause Letter and contempt Order were issued with grave abuse of discretion amounting to lack or excess of jurisdiction. He stresses that his conversations with President Arroyo are "candid discussions meant to explore options in making policy decisions." According to him, these discussions "dwelt on the impact of the bribery scandal involving high government officials on the country's diplomatic relations and economic and military affairs and the possible loss of confidence of foreign investors and lenders in the Philippines." He also emphasizes that his claim of executive privilege is upon the order of the President and within the parameters laid down in Senate v. Ermita10 and United States v. Reynolds.11 Lastly, he argues that he is precluded from disclosing communications made

to him in official confidence under Section 712 of Republic Act No. 6713, otherwise known as Code of Conduct and Ethical Standards for Public Officials and Employees, and Section 2413 (e) of Rule 130 of the Rules of Court.

Respondent Committees assert the contrary. They argue that (1) petitioner's testimony is material and pertinent in the investigation conducted in aid of legislation; (2) there is no valid justification for petitioner to claim executive privilege; (3) there is no abuse of their authority to order petitioner's arrest; and (4) petitioner has not come to court with clean hands.

In the oral argument held last March 4, 2008, the following issues were ventilated:

1. What communications between the President and petitioner Neri are covered by the principle of 'executive privilege'?

1.a Did Executive Secretary Ermita correctly invoke the principle of executive privilege, by order of the President, to cover (i) conversations of the President in the exercise of her executive and policy decision-making and (ii) information, which might impair our diplomatic as well as economic relations with the People's Republic of China?

1.b. Did petitioner Neri correctly invoke executive privilege to avoid testifying on his conversations with the President on the NBN contract on his assertions that the said conversations "dealt with delicate and sensitive national security and diplomatic matters relating to the impact of bribery scandal involving high government officials and the possible loss of confidence of foreign investors and lenders in the Philippines" x x x within the principles laid down in Senate v. Ermita (488 SCRA 1 [2006])?

1.c Will the claim of executive privilege in this case violate the following provisions of the Constitution:

Sec. 28, Art. II (Full public disclosure of all transactions involving public interest)

Sec. 7, Art. III (The right of the people to information on matters of public concern)

Sec. 1, Art. XI (Public office is a public trust)

Sec. 17, Art. VII (The President shall ensure that the laws be faithfully executed)

and the due process clause and the principle of separation of powers?

2. What is the proper procedure to be followed in invoking executive privilege?

3. Did the Senate Committees gravely abuse their discretion in ordering the arrest of petitioner for non-compliance with the subpoena?

After the oral argument, the parties were directed to manifest to the Court within twenty-four (24) hours if they are amenable to the Court's proposal of allowing petitioner to immediately resume his testimony before the Senate Committees to answer the other questions of the Senators without prejudice to the decision on the merits of this pending petition. It was understood that petitioner may invoke executive privilege in the course of the Senate Committees proceedings, and if the respondent Committees disagree thereto, the unanswered questions will be the subject of a supplemental pleading to be resolved along with the three (3) questions subject of the present petition.14 At the same time, respondent Committees were directed to submit several pertinent documents.15

The Senate did not agree with the proposal for the reasons stated in the Manifestation dated March 5, 2008. As to the required documents, the Senate and respondent Committees manifested that they would not be able to submit the latter's "Minutes of all meetings" and the "Minute Book" because it has never been the "historical and traditional legislative practice to keep them."16 They instead submitted the Transcript of Stenographic Notes of respondent Committees' joint public hearings.

On March 17, 2008, the Office of the Solicitor General (OSG) filed a Motion for Leave to Intervene and to Admit Attached Memorandum, founded on the following arguments:

(1) The communications between petitioner and the President are covered by the principle of "executive privilege."

(2) Petitioner was not summoned by respondent Senate Committees in accordance with the law-making body's power to conduct inquiries in aid of legislation as laid down in Section 21, Article VI of the Constitution and Senate v. Ermita.

(3) Respondent Senate Committees gravely abused its discretion for alleged non-compliance with theSubpoena dated November 13, 2007.

The Court granted the OSG's motion the next day, March 18, 2008.

As the foregoing facts unfold, related events transpired.

On March 6, 2008, President Arroyo issued Memorandum Circular No. 151, revoking Executive Order No. 464 and Memorandum Circular No. 108. She advised executive officials and employees to follow and abide by the Constitution, existing laws and jurisprudence, including, among others, the case of Senate v. Ermita17 when they are invited to legislative inquiries in aid of legislation.

At the core of this controversy are the two (2) crucial queries, to wit:

First, are the communications elicited by the subject three (3) questions covered by executive privilege?

And second, did respondent Committees commit grave abuse of discretion in issuing the contempt Order?

We grant the petition.

At the outset, a glimpse at the landmark case of Senate v. Ermita18 becomes imperative. Senate draws in bold strokes the distinction between the legislative and oversight powers of the Congress, as embodied under Sections 21 and 22, respectively, of Article VI of the Constitution, to wit:

SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected.

SECTION 22. The heads of department may upon their own initiative, with the consent of the President, or upon the request of either House, or as the rules of each House shall provide, appear before and be heard by such

House on any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the state or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session.

Senate cautions that while the above provisions are closely related and complementary to each other, they should not be considered as pertaining to the same power of Congress. Section 21 relates to the power to conduct inquiries in aid of legislation. Its aim is to elicit information that may be used for legislation. On the other hand, Section 22 pertains to the power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress' oversight function.19 Simply stated, while both powers allow Congress or any of its committees to conduct inquiry, their objectives are different.

This distinction gives birth to another distinction with regard to the use of compulsory process. Unlike in Section 21, Congress cannot compel the appearance of executive officials under Section 22. The Court's pronouncement in Senate v. Ermita20 is clear:

When Congress merely seeks to be informed on how department heads are implementing the statutes which it has issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in keeping with the separation of powers, states that Congress may only request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is 'in aid of legislation' under Section 21, the appearance is mandatory for the same reasons stated in Arnault.

In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the Constitutional Commission

Ultimately, the power of Congress to compel the appearance of executive officials under section 21 and the lack of it under Section 22 find their basis in the principle of separation of powers. While the executive branch is a co-equal branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to comply with its demands for information. (Emphasis supplied.)

The availability of the power of judicial review to resolve the issues raised in this case has also been settled inSenate v. Ermita, when it held:

As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial power. It may thus be subjected to judicial review pursuant to the Court's certiorari powers under Section 1, Article VIII of the Constitution.

Hence, this decision.

I

The Communications Elicited by the Three (3) Questions are Covered by Executive Privilege

We start with the basic premises where the parties have conceded.

The power of Congress to conduct inquiries in aid of legislation is broad. This is based on the proposition that a legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change.21 Inevitably, adjunct thereto is the compulsory process to enforce it. But, the power, broad as it is, has limitations. To be valid, it is imperative that it is done in accordance with the Senate or House duly published rules of procedure and that the rights of the persons appearing in or affected by such inquiries be respected.

The power extends even to executive officials and the only way for them to be exempted is through a valid claim of executive privilege.22 This directs us to the consideration of the question -- is there a recognized claim of executive privilege despite the revocation of E.O. 464?

A- There is a Recognized Claimof Executive Privilege Despite theRevocation of E.O. 464

At this juncture, it must be stressed that the revocation of E.O. 464 does not in any way diminish our concept of executive privilege. This is because this concept has Constitutional underpinnings. Unlike the United States which has further accorded the concept with statutory status by enacting the Freedom of Information Act23 and theFederal Advisory Committee Act,24 the Philippines has retained its constitutional origination, occasionally interpreted only by this Court in various cases. The most recent of these is the case of Senate v. Ermita where this Court declared unconstitutional substantial portions of E.O. 464. In this regard, it is worthy to note that Executive Ermita's Letter dated November 15, 2007 limits its bases for the claim of executive privilege to Senate v. Ermita,Almonte v. Vasquez,25 and Chavez v. PEA.26 There was never a mention of E.O. 464.

While these cases, especially Senate v. Ermita,27 have comprehensively discussed the concept of executive privilege, we deem it imperative to explore it once more in view of the clamor for this Court to clearly define the communications covered by executive privilege.

The Nixon and post-Watergate cases established the broad contours of the presidential communications privilege.28 In United States v. Nixon,29 the U.S. Court recognized a great public interest in preserving "the confidentiality of conversations that take place in the President's performance of his official duties." It thus considered presidential communications as "presumptively privileged." Apparently, the presumption is founded on the "President's generalized interest in confidentiality." The privilege is said to be necessary to guarantee the candor of presidential advisors and to provide "the President and those who assist him… with freedom to explore alternatives in the process of shaping policies and making decisions and to do so in a way many would be unwilling to express except privately."

In In Re: Sealed Case,30 the U.S. Court of Appeals delved deeper. It ruled that there are two (2) kinds of executive privilege; one is the presidential communications privilege and, the other is the deliberative process privilege. The former pertains to "communications, documents or other materials that reflect presidential decision-making and deliberations and that the President believes should remain confidential." The latter includes 'advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated."

Accordingly, they are characterized by marked distinctions. Presidential communications privilege applies todecision-making of the President while, the deliberative process privilege, to decision-making of executive officials. The first is rooted in the constitutional principle of separation of power and the President's unique constitutional role; the second on common law privilege. Unlike the deliberative process privilege, thepresidential communications privilege applies to documents in their entirety, and covers final and post-decisional materials as well as pre-deliberative ones31 As a consequence, congressional or judicial negation of the presidential communications privilege is always subject to greater scrutiny than denial of thedeliberative process privilege.

Turning on who are the officials covered by the presidential communications privilege, In Re: Sealed Caseconfines the privilege only to White House Staff that has "operational proximity" to direct presidential decision-making. Thus, the privilege is meant to encompass only those functions that form the core of presidential authority, involving what the court characterized as "quintessential and non-delegable Presidential power," such as commander-in-chief power, appointment and removal power, the power to grant pardons and reprieves, the sole-authority to receive ambassadors and other public officers, the power to negotiate treaties, etc.32

The situation in Judicial Watch, Inc. v. Department of Justice33 tested the In Re: Sealed Case principles. There, while the presidential decision involved is the exercise of the President's pardon power, a non-delegable, core-presidential function, the Deputy Attorney General and the Pardon Attorney were deemed to be too remote from the President and his senior White House advisors to be protected. The Court conceded that

functionally those officials were performing a task directly related to the President's pardon power, but concluded that an organizational test was more appropriate for confining the potentially broad sweep that would result from the In Re: Sealed Case's functional test. The majority concluded that, the lesser protections of the deliberative process privilege would suffice. That privilege was, however, found insufficient to justify the confidentiality of the 4,341 withheld documents.

But more specific classifications of communications covered by executive privilege are made in older cases. Courts ruled early that the Executive has a right to withhold documents that might reveal military or state secrets,34identity of government informers in some circumstances,,35 and information related to pending investigations.36 An area where the privilege is highly revered is in foreign relations. In United States v. Curtiss-Wright Export Corp.37 the U.S. Court, citing President George Washington, pronounced:

The nature of foreign negotiations requires caution, and their success must often depend on secrecy, and even when brought to a conclusion, a full disclosure of all the measures, demands, or eventual concessions which may have been proposed or contemplated would be extremely impolitic, for this might have a pernicious influence on future negotiations or produce immediate inconveniences, perhaps danger and mischief, in relation to other powers. The necessity of such caution and secrecy was one cogent reason for vesting the power of making treaties in the President, with the advice and consent of the Senate, the principle on which the body was formed confining it to a small number of members. To admit, then, a right in the House of Representatives to demand and to have as a matter of course all the papers respecting a negotiation with a foreign power would be to establish a dangerous precedent.

Majority of the above jurisprudence have found their way in our jurisdiction. In Chavez v. PCGG38, this Court held that there is a "governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic and other security matters." In Chavez v. PEA,39 there is also a recognition of the confidentiality of Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. In Senate v. Ermita, the concept of presidential communications privilege is fully discussed.

As may be gleaned from the above discussion, the claim of executive privilege is highly recognized in cases where the subject of inquiry relates to a power textually committed by the Constitution to the President, such as the area of military and foreign relations. Under our Constitution, the President is the repository of the commander-in-chief,40 appointing,41 pardoning,42 and diplomatic43 powers. Consistent with the doctrine of separation of powers, the information relating to these powers may enjoy greater confidentiality than others.

The above cases, especially, Nixon, In Re Sealed Case and Judicial Watch, somehow provide the elements ofpresidential communications privilege, to wit:

1) The protected communication must relate to a "quintessential and non-delegable presidential power."

2) The communication must be authored or "solicited and received" by a close advisor of the President or the President himself. The judicial test is that an advisor must be in "operational proximity" with the President.

3) The presidential communications privilege remains a qualified privilege that may be overcome by a showing of adequate need, such that the information sought "likely contains important evidence" and by the unavailability of the information elsewhere by an appropriate investigating authority.44

In the case at bar, Executive Secretary Ermita premised his claim of executive privilege on the ground that the communications elicited by the three (3) questions "fall under conversation and correspondence between the President and public officials" necessary in "her executive and policy decision-making process" and, that "the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China." Simply put, the bases are presidential communications privilege and executive privilege on matters relating to diplomacy or foreign relations.

Using the above elements, we are convinced that, indeed, the communications elicited by the three (3) questions are covered by the presidential communications privilege. First, the communications relate to a "quintessential and non-delegable power" of the President, i.e. the power to enter into an executive agreement with other countries. This authority of the President to enter into executive agreements without the concurrence of the Legislature has traditionally been recognized in Philippine jurisprudence.45 Second, the communications are "received" by a close advisor of the President. Under the "operational proximity" test, petitioner can be considered a close advisor, being a member of President Arroyo's cabinet. And third, there is no adequate showing of a compelling need that would justify the limitation of the privilege and of the unavailability of the information elsewhere by an appropriate investigating authority.

The third element deserves a lengthy discussion.

United States v. Nixon held that a claim of executive privilege is subject to balancing against other interest. In other words, confidentiality in executive privilege is not absolutely protected by the Constitution. The U.S. Court held:

[N]either the doctrine of separation of powers, nor the need for confidentiality of high-level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances.

The foregoing is consistent with the earlier case of Nixon v. Sirica,46 where it was held that presidential communications are presumptively privileged and that the presumption can be overcome only by mere showing of public need by the branch seeking access to conversations. The courts are enjoined to resolve the competing interests of the political branches of the government "in the manner that preserves the essential functions of each Branch."47 Here, the record is bereft of any categorical explanation from respondent Committees to show a compelling or citical need for the answers to the three (3) questions in the enactment of a law. Instead, the questions veer more towards the exercise of the legislative oversight function under Section 22 of Article VI rather than Section 21 of the same Article. Senate v. Ermita ruled that the "the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation." It is conceded that it is difficult to draw the line between an inquiry in aid of legislation and an inquiry in the exercise of oversight function of Congress. In this regard, much will depend on the content of the questions and the manner the inquiry is conducted.

Respondent Committees argue that a claim of executive privilege does not guard against a possible disclosure of a crime or wrongdoing. We see no dispute on this. It is settled in United States v. Nixon48 that "demonstrated, specific need for evidence in pending criminal trial" outweighs the President's "generalized interest in confidentiality." However, the present case's distinction with the Nixon case is very evident. In Nixon, there is a pending criminal proceeding where the information is requested and it is the demands of due process of law and the fair administration of criminal justice that the information be disclosed. This is the reason why the U.S. Court was quick to "limit the scope of its decision." It stressed that it is "not concerned here with the balance between the President's generalized interest in confidentiality x x x and congressional demands for information." Unlike in Nixon, the information here is elicited, not in a criminal proceeding, but in a legislative inquiry. In this regard, Senate v. Ermita stressed that the validity of the claim of executive privilege depends not only on the ground invoked but, also, on the procedural setting or the context in which the claim is made. Furthermore, in Nixon, the President did not interpose any claim of need to protect military, diplomatic or sensitive national security secrets. In the present case, Executive Secretary Ermita categorically claims executive privilege on the grounds of presidential communications privilege in relation to her executive and policy decision-making process and diplomatic secrets.

The respondent Committees should cautiously tread into the investigation of matters which may present a conflict of interest that may provide a ground to inhibit the Senators participating in the inquiry if later on an impeachment proceeding is initiated on the same subject matter of the present Senate inquiry. Pertinently, in Senate Select Committee on Presidential Campaign Activities v. Nixon,49 it was held that since an impeachment proceeding had been initiated by a House Committee, the Senate Select Committee's immediate oversight need for five presidential tapes should give way to the House Judiciary Committee which has the constitutional authority to inquire into presidential impeachment. The Court expounded on this issue in this wise:

It is true, of course, that the Executive cannot, any more than the other branches of government, invoke a general confidentiality privilege to shield its officials and employees from investigations by the proper governmental institutions into possible criminal wrongdoing. The Congress learned this as to its own privileges in Gravel v. United States, as did the judicial branch, in a sense, in Clark v. United States, and the executive branch itself in Nixon v. Sirica. But under Nixon v. Sirica, the showing required to overcome the presumption favoring confidentiality turned, not on the nature of the presidential conduct that the subpoenaed material might reveal, but, instead, on the nature and appropriateness of the function in the performance of which the material was sought, and the degree to which the material was necessary to its fulfillment. Here also our task requires and our decision implies no judgment whatever concerning possible presidential involvement in culpable activity. On the contrary, we think the sufficiency of the Committee's showing must depend solely on whether the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's functions.

In its initial briefs here, the Committee argued that it has shown exactly this. It contended that resolution, on the basis of the subpoenaed tapes, of the conflicts in the testimony before it 'would aid in a determination whether legislative involvement in political campaigns is necessary' and 'could help engender the public support needed for basic reforms in our electoral system.' Moreover, Congress has, according to the Committee, power to oversee the operations of the executive branch, to investigate instances of possible corruption and malfeasance in office, and to expose the results of its investigations to public view. The Committee says that with respect to Watergate-related matters, this power has been delegated to it by the Senate, and that to exercise its power responsibly, it must have access to the subpoenaed tapes.

We turn first to the latter contention. In the circumstances of this case, we need neither deny that the Congress may have, quite apart from its legislative responsibilities, a general oversight power, nor explore what the lawful reach of that power might be under the Committee's constituent resolution. Since passage of that resolution, the House Committee on the Judiciary has begun an inquiry into presidential impeachment. The investigative authority of the Judiciary Committee with respect to presidential conduct has an express constitutional source. x x x We have been shown no evidence indicating that Congress itself attaches any particular value to this interest.

In these circumstances, we think the need for the tapes premised solely on an asserted power to investigate and inform cannot justify enforcement of the Committee's subpoena.

The sufficiency of the Committee's showing of need has come to depend, therefore, entirely on whether the subpoenaed materials are critical to the performance of its legislative functions. There is a clear difference between Congress' legislative tasks and the responsibility of a grand jury, or any institution engaged in like functions. While fact-finding by a legislative committee is undeniably a part of its task, legislative judgments normally depend more on the predicted consequences of proposed legislative actions and their political acceptability, than on precise reconstruction of past events; Congress frequently legislates on the basis of conflicting information provided in its hearings. In contrast, the responsibility of the grand jury turns entirely on its ability to determine whether there is probable cause to believe that certain named individuals did or did not commit specific crimes. If, for example, as in Nixon v. Sirica, one of those crimes is perjury concerning the content of certain conversations, the grand jury's need for the most precise evidence, the exact text of oral statements recorded in their original form, is undeniable.We see no comparable need in the legislative process, at least not in the circumstances of this case. Indeed, whatever force there might once have been in the Committee's argument that the subpoenaed materials are necessary to its legislative judgments has been substantially undermined by subsequent events. (Emphasis supplied)

Respondent Committees further contend that the grant of petitioner's claim of executive privilege violates the constitutional provisions on the right of the people to information on matters of public concern.50 We might have agreed with such contention if petitioner did not appear before them at all. But petitioner made himself available to them during the September 26 hearing, where he was questioned for eleven (11) hours. Not only that, he expressly manifested his willingness to answer more questions from the Senators, with the exception only of those covered by his claim of executive privilege.

The right to public information, like any other right, is subject to limitation. Section 7 of Article III provides:

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

The provision itself expressly provides the limitation, i.e. as may be provided by law. Some of these laws are Section 7 of Republic Act (R.A.) No. 6713,51 Article 22952 of the Revised Penal Code, Section 3 (k)53 of R.A. No. 3019, and Section 24(e)54 of Rule 130 of the Rules of Court. These are in addition to what our body of jurisprudence classifies as confidential55 and what our Constitution considers as belonging to the larger concept of executive privilege. Clearly, there is a recognized public interest in the confidentiality of certain information. We find the information subject of this case belonging to such kind.

More than anything else, though, the right of Congress or any of its Committees to obtain information in aid of legislation cannot be equated with the people's right to public information. The former cannot claim that every legislative inquiry is an exercise of the people's right to information. The distinction between such rights is laid down in Senate v. Ermita:

There are, it bears noting, clear distinctions between the right of Congress to information which underlies the power of inquiry and the right of people to information on matters of public concern. For one, the demand of a citizen for the production of documents pursuant to his right to information does not have the same obligatory force as a subpoena duces tecum issued by Congress. Neither does the right to information grant a citizen the power to exact testimony from government officials. These powers belong only to Congress, not to an individual citizen.

Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to information.

The members of respondent Committees should not invoke as justification in their exercise of power a right properly belonging to the people in general. This is because when they discharge their power, they do so as public officials and members of Congress. Be that as it may, the right to information must be balanced with and should give way, in appropriate cases, to constitutional precepts particularly those pertaining to delicate interplay of executive-legislative powers and privileges which is the subject of careful review by numerous decided cases.

B- The Claim of Executive Privilegeis Properly Invoked

We now proceed to the issue -- whether the claim is properly invoked by the President. Jurisprudence teaches that for the claim to be properly invoked, there must be a formal claim of privilege, lodged by the head of the department which has control over the matter."56 A formal and proper claim of executive privilege requires a "precise and certain reason" for preserving their confidentiality.57

The Letter dated November 17, 2007 of Executive Secretary Ermita satisfies the requirement. It serves as the formal claim of privilege. There, he expressly states that "this Office is constrained to invoke the settled doctrine of executive privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly." Obviously, he is referring to the Office of the President. That is more than enough compliance. InSenate v. Ermita, a less categorical letter was even adjudged to be sufficient.

With regard to the existence of "precise and certain reason," we find the grounds relied upon by Executive Secretary Ermita specific enough so as not "to leave respondent Committees in the dark on how the requested information could be classified as privileged." The case of Senate v. Ermita only requires that an allegation be made "whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc." The particular ground must only be specified. The enumeration is not even intended to be comprehensive."58The following statement of grounds satisfies the requirement:

The context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People's Republic of China. Given the confidential nature in which these information were conveyed to the President, he cannot provide the Committee any further details of these conversations, without disclosing the very thing the privilege is designed to protect.

At any rate, as held further in Senate v. Ermita, 59 the Congress must not require the executive to state the reasons for the claim with such particularity as to compel disclosure of the information which the privilege is meant to protect. This is a matter of respect to a coordinate and co-equal department.

II

Respondent Committees Committed Grave Abuse of Discretion in Issuing the Contempt Order

Grave abuse of discretion means "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."60

It must be reiterated that when respondent Committees issued the show cause Letter dated November 22, 2007, petitioner replied immediately, manifesting that it was not his intention to ignore the Senate hearing and that he thought the only remaining questions were the three (3) questions he claimed to be covered by executive privilege. In addition thereto, he submitted Atty. Bautista's letter, stating that his non-appearance was upon the order of the President and specifying the reasons why his conversations with President Arroyo are covered by executive privilege. Both correspondences include an expression of his willingness to testify again, provided he "be furnished in advance" copies of the questions. Without responding to his request for advance list of questions, respondent Committees issued the Order dated January 30, 2008, citing him in contempt of respondent Committees and ordering his arrest and detention at the Office of the Senate Sergeant-At-Arms until such time that he would appear and give his testimony. Thereupon, petitioner filed a motion for reconsideration, informing respondent Committees that he had filed the present petition for certiorari.

Respondent Committees committed grave abuse of discretion in issuing the contempt Order in view of five (5) reasons.

First, there being a legitimate claim of executive privilege, the issuance of the contempt Order suffers from constitutional infirmity.

Second, respondent Committees did not comply with the requirement laid down in Senate v. Ermita that the invitations should contain the "possible needed statute which prompted the need for the inquiry," along with "the usual indication of the subject of inquiry and the questions relative to and in furtherance thereof." Compliance with this requirement is imperative, both under Sections 21 and 22 of Article VI of the Constitution. This must be so to ensure that the rights of both persons appearing in or affected by such inquiry are respected as mandated by said Section 21 and by virtue of the express language of Section 22. Unfortunately, despite petitioner's repeated demands, respondent Committees did not send him an advance list of questions.

Third, a reading of the transcript of respondent Committees' January 30, 2008 proceeding reveals that only a minority of the members of the Senate Blue Ribbon Committee was present during the deliberation. 61 Section 18 of the Rules of Procedure Governing Inquiries in Aid of Legislation provides that:

"The Committee, by a vote of majority of all its members, may punish for contempt any witness before it who disobeys any order of the Committee or refuses to be sworn or to testify or to answer proper questions by the Committee or any of its members."

Clearly, the needed vote is a majority of all the members of the Committee. Apparently, members who did not actually participate in the deliberation were made to sign the contempt Order. Thus, there is a cloud of doubt as to the validity of the contempt Order dated January 30, 2008. We quote the pertinent portion of the transcript, thus:

THE CHAIRMAN (SEN. CAYETANO, A). For clarification. x x x The Chair will call either a caucus or will ask the Committee on Rules if there is a problem. Meaning, if we do not have the sufficient numbers. But if we have a sufficient number, we will just hold a caucus to be able to implement that right away because…Again, our Rules provide that any one held in contempt and ordered arrested, need the concurrence of a majority of all members of the said committee and we have three committees conducting this.

So thank you very much to the members…

SEN. PIMENTEL. Mr. Chairman.

THE CHAIRMAN (SEN. CAYETANO,A). May I recognize the Minority Leader and give him the floor, Senator Pimentel.

SEN. PIMENTEL. Mr. Chairman, there is no problem, I think, with consulting the other committees. But I am of the opinion that the Blue Ribbon Committee is the lead committee, and therefore, it should have preference in enforcing its own decisions. Meaning to say, it is not something that is subject to consultation with other committees. I am not sure that is the right interpretation. I think that once we decide here, we enforce what we decide, because otherwise, before we know it, our determination is watered down by delay and, you know, the so-called "consultation" that inevitably will have to take place if we follow the premise that has been explained.

So my suggestion, Mr. Chairman, is the Blue Ribbon Committee should not forget it's the lead committee here, and therefore, the will of the lead committee prevails over all the other, you, know reservations that other committees might have who are only secondary or even tertiary committees, Mr. Chairman.

THE CHAIRMAN (SEN. CAYETANO, A.) Thank you very much to the Minority Leader. And I agree with the wisdom of his statements. I was merely mentioning that under Section 6 of the Rules of the Committee and under Section 6, "The Committee by a vote of a majority of all its members may punish for contempt any witness before it who disobeys any order of the Committee."

So the Blue Ribbon Committee is more than willing to take that responsibility. But we only have six members here today, I am the seventh as chair and so we have not met that number. So I am merely stating that, sir, that when we will prepare the documentation, if a majority of all members sign and I am following the Sabio v. Gordon rule wherein I do believe, if I am not mistaken, Chairman Gordon prepared the documentation and then either in caucus or in session asked the other members to sign. And once the signatures are obtained, solely for the purpose that Secretary Neri or Mr. Lozada will not be able to legally question our subpoena as being insufficient in accordance with law.

SEN. PIMENTEL. Mr. Chairman, the caution that the chair is suggesting is very well-taken. But I'd like to advert to the fact that the quorum of the committee is only two as far as I remember. Any two-member senators attending a Senate committee hearing provide that quorum, and therefore there is more than a quorum demanded by our Rules as far as we are concerned now, and acting as Blue Ribbon Committee, as Senator Enrile pointed out. In any event, the signatures that will follow by the additional members will only tend to strengthen the determination of this Committee to put its foot forward – put down on what is happening in this country, Mr. Chairman, because it really looks terrible if the primary Committee of the Senate, which is the Blue Ribbon Committee, cannot even sanction people who openly defy, you know, the summons of this Committee. I know that the Chair is going through an agonizing moment here. I know that. But nonetheless, I think we have to uphold, you know, the institution that we are representing because the alternative will be a disaster for all of us, Mr. Chairman. So having said that, I'd like to reiterate my point.

THE CHAIRMAN (SEN. CAYETANO, A.) First of all, I agree 100 percent with the intentions of the Minority Leader. But let me very respectfully disagree with the legal requirements. Because, yes, we can have a hearing if we are only two but both under Section 18 of the Rules of the Senate and under Section 6 of the Rules of the Blue Ribbon Committee, there is a need for a majority of all members if it is a case of contempt and arrest. So, I am simply trying to avoid the court rebuking the Committee, which will instead of strengthening will weaken us. But I do agree, Mr. Minority Leader, that we should push for this and show the executive branch that the well-decided – the issue has been decided upon the Sabio versus Gordon case. And it's very clear that we are all allowed to call witnesses. And if they refure or they disobey not only can we cite them in contempt and have them arrested. x x x 62

Fourth, we find merit in the argument of the OSG that respondent Committees likewise violated Section 21 of Article VI of the Constitution, requiring that the inquiry be in accordance with the "duly published rules of procedure." We quote the OSG's explanation:

The phrase 'duly published rules of procedure' requires the Senate of every Congress to publish its rules of procedure governing inquiries in aid of legislation because every Senate is distinct from the one before it or after it. Since Senatorial elections are held every three (3) years for one-half of the Senate's membership, the composition of the Senate also changes by the end of each term. Each Senate may thus enact a different set of rules as it may deem fit. Not having published its Rules of Procedure, the subject hearings in aid of legislation conducted by the 14th Senate, are therefore, procedurally infirm.

And fifth, respondent Committees' issuance of the contempt Order is arbitrary and precipitate. It must be pointed out that respondent Committees did not first pass upon the claim of executive privilege and inform petitioner of their ruling. Instead, they curtly dismissed his explanation as "unsatisfactory" and simultaneously issued the Order citing him in contempt and ordering his immediate arrest and detention.

A fact worth highlighting is that petitioner is not an unwilling witness. He manifested several times his readiness to testify before respondent Committees. He refused to answer the three (3) questions because he was ordered by the President to claim executive privilege. It behooves respondent Committees to first rule on the claim of executive privilege and inform petitioner of their finding thereon, instead of peremptorily dismissing his explanation as "unsatisfactory." Undoubtedly, respondent Committees' actions constitute grave abuse of discretion for being arbitrary and for denying petitioner due process of law. The same quality afflicted their conduct when they (a) disregarded petitioner's motion for reconsideration alleging that he had filed the present petition before this Court and (b) ignored petitioner's repeated request for an advance list of questions, if there be any aside from the three (3) questions as to which he claimed to be covered by executive privilege.

Even the courts are repeatedly advised to exercise the power of contempt judiciously and sparingly with utmost self-restraint with the end in view of utilizing the same for correction and preservation of the dignity of the court, not for retaliation or vindication.63 Respondent Committees should have exercised the same restraint, after all petitioner is not even an ordinary witness. He holds a high position in a co-equal branch of government.

In this regard, it is important to mention that many incidents of judicial review could have been avoided if powers are discharged with circumspection and deference. Concomitant with the doctrine of separation of powers is the mandate to observe respect to a co-equal branch of the government.

One last word.

The Court was accused of attempting to abandon its constitutional duty when it required the parties to consider a proposal that would lead to a possible compromise. The accusation is far from the truth. The Court did so, only to test a tool that other jurisdictions find to be effective in settling similar cases, to avoid a piecemeal consideration of the questions for review and to avert a constitutional crisis between the executive and legislative branches of government.

In United States v. American Tel. & Tel Co.,64 the court refrained from deciding the case because of its desire to avoid a resolution that might disturb the balance of power between the two branches and inaccurately reflect their true needs. Instead, it remanded the record to the District Court for further proceedings during which the parties are required to negotiate a settlement. In the subsequent case of United States v. American Tel. &Tel Co.,65 it was held that "much of this spirit of compromise is reflected in the generality of language found in the Constitution." It proceeded to state:

Under this view, the coordinate branches do not exist in an exclusively adversary relationship to one another when a conflict in authority arises. Rather each branch should take cognizance of an implicit constitutional mandate to

seek optimal accommodation through a realistic evaluation of the needs of the conflicting branches in the particular fact situation.

It thereafter concluded that: "The Separation of Powers often impairs efficiency, in terms of dispatch and the immediate functioning of government. It is the long-term staying power of government that is enhanced by the mutual accommodation required by the separation of powers."

In rendering this decision, the Court emphasizes once more that the basic principles of constitutional law cannot be subordinated to the needs of a particular situation. As magistrates, our mandate is to rule objectively and dispassionately, always mindful of Mr. Justice Holmes' warning on the dangers inherent in cases of this nature, thus:

"some accident of immediate and overwhelming interest…appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend."66

In this present crusade to "search for truth," we should turn to the fundamental constitutional principles which underlie our tripartite system of government, where the Legislature enacts the law, the Judiciary interprets it and the Executive implements it. They are considered separate, co-equal, coordinate and supreme within their respective spheres but, imbued with a system of checks and balances to prevent unwarranted exercise of power. The Court's mandate is to preserve these constitutional principles at all times to keep the political branches of government within constitutional bounds in the exercise of their respective powers and prerogatives, even if it be in the search for truth. This is the only way we can preserve the stability of our democratic institutions and uphold the Rule of Law.

WHEREFORE, the petition is hereby GRANTED. The subject Order dated January 30, 2008, citing petitioner Romulo L. Neri in contempt of the Senate Committees and directing his arrest and detention, is hereby nullified.

SO ORDERED.

Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, Tinga,Chico-Nazario, Velasco, Jr., Nachura, Reyes, Brion, JJ., concur.

Footnotes

1 Rollo, pp. 12-14.

2 Rollo, pp. 85-86. Through the Supplemental Petition for Certiorari (With Urgent Application for Temporary Restraining Order/Preliminary Injunction).

3 Chaired by Hon. Senator Alan Peter S. Cayetano.

4 Chaired by Hon. Senator Manuel A. Roxas II.

5 Chaired by Hon. Senator Rodolfo G. Biazon.

6 Transcript of the September 26, 2007 Hearing of the respondent Committees, pp.91-92.

7 Id., pp. 114-115.

8 Id., pp. 276-277.

9 See Letter dated January 30, 2008.

10 488 SCRA 1 (2006).

11 345 U.S. 1 (1953).

12 Section 7. Prohibited Acts and Transactions. – In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful: x x x

(c) Disclosure and/or misuse of confidential information. -

Public officials and employees shall not use or divulge, confidential or classified information officially known to them by reason of their office and not made available to the public, either:

(1) To further their private interests, or give undue advantage to anyone; or

(2) To prejudice the public interest.

13 SEC. 24. Disqualification by reason of privileged communication. – The following persons cannot testify as to matters learned in confidence in the following cases. (e) A public officer cannot be examined during his term of office or afterwards, as to communications made to him in official confidence, when the court finds that the public interest would suffer by disclosure.

14 TSN of the Oral Argument, March 4, 2008, p. 455.

15 (1) Minutes of all meetings of the three (3) committees held in January and February, 2008; (2) Notice for joint meeting of three (3) committees held on 30 January 2008 duly received by the members of the committees; (3) Minute Books of the three (3) committees; (4) Composition of the three (3) committees; and (5) Other documents required of them in the course of the oral argument.

16 See Manifestation, rollo, pp.170-174.

17 Supra..

18 Supra.

19 Ibid.

20 Ibid.

21 Arnault v. Nazareno, 87 Phil 32 (1950)

22 Senate v. Ermita, p. 58.

23 5 U.S. C. § 552

24 51 U.S. C. app.

25 433 Phil. 506 (2002).

26 G.R. No. 130716, December 9, 1998, (360 SCRA 132 ).

27 Supra.

28 CRS Report for Congress, Presidential Claims of Executive Privilege: History, Law, Practice and Recent Developments at p. 2.

29 418 U.S. 683.

30 In Re: Sealed Case No. 96-3124, June 17, 1997.

31 Id.

32 CRS Report for Congress, Presidential Claims of Executive Privilege: History, Law, Practice and Recent Developments at pp. 18-19.

33 365 F.3d 1108, 361 U.S.App.D.C. 183, 64 Fed. R. Evid. Serv. 141.

34 See United States v. Reynolds, 345 U.S. 1, 6-8 (1953); Chicago v. Airlines, Inc. v. Waterman Steamship Corp., 333 U.S. 103, 111; Totten v. United States, 92 U.S. 105, 106-107 (1875).

35 Roviaro v. United States, 353 U.S. 53, 59-61.

36 See Friedman v. Bache Halsey Stuart Shields, Inc. 738 F. 2d 1336,1341-43 (D.C. Cir. 1984).

37 14 F. Supp. 230, 299 U.S. 304 (1936).

38 360 Phil. 133 (1998).

39 Supra.

40 Section 18, Article VII.



43 Section 20 and 21, Article VII.

44 CRS Report for Congress, Presidential Claims of Executive Privilege: History, Law Practice and Recent Developments, supra..

45 Bernas, S.J., The 1987 Constitution of the Republic of the Philippines, A Commentary, 2003 Ed. p. 903.

46 159 U.S. App. DC. 58, 487 F. 2d 700 (D.C. Cir. 1973).

47 U.S. v. Nixon, 418 U.S. 683 (1974)

48 Supra.

49 498 F. 2d 725 (D.C. Cir.1974).

50 Citing Section 7, Article 3 of the Constitution.

51 Section 7. Prohibited Acts and Transactions. – In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful: x x x

( c) Disclosure and/or misuse of confidential information. - Public officials and employees shall not use or divulge, confidential or classified information officially known to them by reason of their office and not made available to the public, either:

(1) To further their private interests, or give undue advantage to anyone; or

(2) To prejudice the public interest.

52 Article 229. Revelation of secrets by an officer. – Any public officer who shall reveal any secret known to him by reason of his official capacity, or shall wrongfully deliver papers or copies of papers of which he may have charge and which should not be published, shall suffer the penalties of prision correccional in its medium and maximum periods, perpetual special disqualification and a fine not exceeding 2,000 pesos if the revelation of such secrets or the delivery of such papers shall have caused serious damage to the public interest; otherwise, the penalties of prision correccional in its minimum period, temporary special disqualification and a fine not exceeding 500 pesos shall be imposed.

53 Section 3. Corrupt practices of public officers. – In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

(k) Divulging valuable information of a confidential character, acquired by his office or by him on account of his official position to unauthorized persons, or releasing such information in advance of its authorized release date.

54 Sec. 24. Disqualification by reason of privileged communications. – The following persons cannot testify as to matters learned in confidence in the following case: x x x

(a) A public officer cannot be examined during his term of office or afterwards, as to communications made to him in official confidence, when the court finds that the public interest would suffer by the disclosure.

55 In Chavez v. Public Estates Authority, supra., the Supreme Court recognized matters which the Court has long considered as confidential such as "information on military and diplomatic secrets, information affecting national security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused." It also stated that "presidential conversations, correspondences, or discussions during close-door cabinet meetings which, like internal deliberations of the Supreme Court or other collegiate courts, or executive sessions of either House of Congress, are recognized as confidential. Such information cannot be pried-open by a co-equal branch of government.

56 United States v. Reynolds, supra..

57 Unites States v. Article of Drug, 43 F.R.D. at 190.

58 Senate v. Ermita, supra., p. 63.

59 Id., citing U.S. v. Reynolds, 345 U.S. 1, 73 S. Ct. 528, 97 L. Ed. 727, 32 A.L. R. 2d 382 (1953).

60 Freedom from Debt Coalition v. Energy Regulatory Commission, G.R. No. 161113. June 15, 2004.

61 Trancript of the January 30, 2008 proceedings, p. 29.

62 Trancript of the January 30, 2008 Proceeding of the respondent Senate Committees, pp. 26-31.

63 Rodriguez v. Judge Bonifacio, A.M. No. RTJ-99-1510, November 6, 2000, 344 SCRA 519.

64 179 U.S. App. Supp. D.C. 198, 551 F 2d. 384 (1976).

65 567 F 2d 121 (1977).

66 Northern Securities Co. v. United States, 193 U.S. 197, 48 L. Ed. 679, 24 S Ct. 436 (1904).


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