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1. Sps. Afulugencia vs. Metrobank, G.R. No. 185145, Feb.

5, 2014;

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION 1

G.R. No. 185145 February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,


vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court, Regional
Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.

DECISION

DEL CASTILLO, J.:

Section 6,1 Rule 25 of the Rules of Court (Rules) provides that "a party not served with
written interrogatories may not be compelled by the adverse party to give testimony in
open court, or to give a deposition pending appeal." The provision seeks to prevent
fishing expeditions and needless delays. Its goal is to maintain order and facilitate the
conduct of trial.

Assailed in this Petition for Review on Certiorari2 are the April 15, 2008 Decision3 of the
Court of Appeals (CA) in CA-G.R. SP No. 99535 which dismissed petitioners' Petition for
Certiorari for lack of merit and its October 2, 2008 Resolution4 denying petitioners'
Motion for Reconsideration.5

Factual Antecedents

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint 6 for nullification
of mortgage, foreclosure, auction sale, certificate of sale and other documents, with
damages, against respondents Metropolitan Bank & Trust Co. (Metrobank) and
Emmanuel L. Ortega (Ortega) before the Regional Trial Court (RTC) of Malolos City,
where it was docketed as Civil Case No. 336-M-2004 and assigned to Branch 7.

Metrobank is a domestic banking corporation existing under Philippine laws, while


Ortega is the Clerk of Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners
filed a Motion for Issuance of Subpoena Duces Tecum Ad Testificandum7 to require
Metrobank’s officers8 to appear and testify as the petitioners’ initial witnesses during the
August 31, 2006 hearing for the presentation of their evidence-in-chief, and to bring
the documents relative to their loan with Metrobank, as well as those covering the
extrajudicial foreclosure and sale of petitioners’ 200-square meter land in Meycauayan,
Bulacan covered by Transfer Certificate of Title No. 20411 (M). The Motion contained a
notice of hearing written as follows:

NOTICE

The Branch Clerk of Court


Regional Trial Court
Branch 7, Malolos, Bulacan 2

Greetings:

Please submit the foregoing motion for the consideration and approval of the Hon.
Court immediately upon receipt hereof.

(signed)
Vicente C. Angeles9

Metrobank filed an Opposition10 arguing that for lack of a proper notice of hearing, the
Motion must be denied; that being a litigated motion, the failure of petitioners to set a
date and time for the hearing renders the Motion ineffective and pro forma; that
pursuant to Sections 1 and 611 of Rule 25 of the Rules, Metrobank’s officers – who are
considered adverse parties – may not be compelled to appear and testify in court for
the petitioners since they were not initially served with written interrogatories; that
petitioners have not shown the materiality and relevance of the documents sought to
be produced in court; and that petitioners were merely fishing for evidence.

Petitioners submitted a Reply12 to Metrobank’s Opposition, stating that the lack of a


proper notice of hearing was cured by the filing of Metrobank’s Opposition; that
applying the principle of liberality, the defect may be ignored; that leave of court is not
necessary for the taking of Metrobank’s officers’ depositions; that for their case, the
issuance of a subpoena is not unreasonable and oppressive, but instead favorable to
Metrobank, since it will present the testimony of these officers just the same during the
presentation of its own evidence; that the documents sought to be produced are
relevant and will prove whether petitioners have paid their obligations to Metrobank in
full, and will settle the issue relative to the validity or invalidity of the foreclosure
proceedings; and that the Rules do not prohibit a party from presenting the adverse
party as its own witness.

Ruling of the Regional Trial Court

On October 19, 2006, the trial court issued an Order13 denying petitioners’ Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum, thus:

The motion lacks merit.

As pointed out by the defendant bank in its opposition, the motion under consideration
is a mere scrap of paper by reason of its failure to comply with the requirements for a
valid notice of hearing as specified in Sections 4 and 5 of Rule 15 of the Revised Rules
of Court. Moreover, the defendant bank and its officers are adverse parties who cannot
be summoned to testify unless written interrogatories are first served upon them, as
provided in Sections 1 and 6, Rule 25 of the Revised Rules of Court.

In view of the foregoing, and for lack of merit, the motion under consideration is hereby
DENIED.

SO ORDERED.14
3

Petitioners filed a Motion for Reconsideration15 pleading for leniency in the application of
the Rules and claiming that the defective notice was cured by the filing of Metrobank’s
Opposition, which they claim is tantamount to notice. They further argued that
Metrobank’s officers – who are the subject of the subpoena – are not party-defendants,
and thus do not comprise the adverse party; they are individuals separate and distinct
from Metrobank, the defendant corporation being sued in the case.

In an Opposition16 to the Motion for Reconsideration, Metrobank insisted on the


procedural defect of improper notice of hearing, arguing that the rule relative to
motions and the requirement of a valid notice of hearing are mandatory and must be
strictly observed. It added that the same rigid treatment must be accorded to Rule 25,
in that none of its officers may be summoned to testify for petitioners unless written
interrogatories are first served upon them. Finally, it said that since a corporation may
act only through its officers and employees, they are to be considered as adverse
parties in a case against the corporation itself.

In another Order17 dated April 17, 2007, the trial court denied petitioners’ Motion for
Reconsideration. The trial court held, thus:

Even if the motion is given consideration by relaxing Sections 4 and 5, Rule 15 of the
Rules of Court, no such laxity could be accorded to Sections 1 and 6 of Rule 25 of the
Revised Rules of Court which require prior service of written interrogatories to adverse
parties before any material and relevant facts may be elicited from them more so if the
party is a private corporation who could be represented by its officers as in this case. In
other words, as the persons sought to be subpoenaed by the plaintiffs-movants are
officers of the defendant bank, they are in effect the very persons who represent the
interest of the latter and necessarily fall within the coverage of Sections 1 and 6, Rule
25 of the Revised Rules of Court.

In view of the foregoing, the motion for reconsideration is hereby denied.

SO ORDERED.18

Ruling of the Court of Appeals

Petitioners filed a Petition for Certiorari19 with the CA asserting this time that their
Motion for Issuance of Subpoena Duces Tecum Ad Testificandum is not a litigated
motion; it does not seek relief, but aims for the issuance of a mere process. For these
reasons, the Motion need not be heard. They likewise insisted on liberality, and the
disposition of the case on its merits and not on mere technicalities. 20 They added that
Rule 2121 of the Rules requires prior notice and hearing only with respect to the taking
of depositions; since their Motion sought to require Metrobank’s officers to appear and
testify in court and not to obtain their depositions, the requirement of notice and
hearing may be dispensed with. Finally, petitioners claimed that the Rules – particularly
Section 10,22 Rule 132 – do not prohibit a party from presenting the adverse party as its
own witness.

On April 15, 2008, the CA issued the questioned Decision, which contained the following
decretal portion: 4

WHEREFORE, the petition is DISMISSED for lack of merit. The assailed orders dated
October 19, 2006 and April 17, 2007 in Civil Case No. 336-M-2004 issued by the RTC,
Branch 7, Malolos City, Bulacan, are AFFIRMED. Costs against petitioners.

SO ORDERED.23

The CA held that the trial court did not commit grave abuse of discretion in issuing the
assailed Orders; petitioners’ Motion is a litigated motion, especially as it seeks to
require the adverse party, Metrobank’s officers, to appear and testify in court as
petitioners’ witnesses. It held that a proper notice of hearing, addressed to the parties
and specifying the date and time of the hearing, was required, consistent with Sections
4 and 5,24 Rule 15 of the Rules.

The CA held further that the trial court did not err in denying petitioners’ Motion to
secure a subpoena duces tecum/ad testificandum, ratiocinating that Rule 25 is quite
clear in providing that the consequence of a party’s failure to serve written
interrogatories upon the opposing party is that the latter may not be compelled by the
former to testify in court or to render a deposition pending appeal. By failing to serve
written interrogatories upon Metrobank, petitioners foreclosed their right to present the
bank’s officers as their witnesses.

The CA declared that the justification for the rule laid down in Section 6 is that by
failing to seize the opportunity to inquire upon the facts through means available under
the Rules, petitioners should not be allowed to later on burden Metrobank with court
hearings or other processes. Thus, it held:

x x x Where a party unjustifiedly refuses to elicit facts material and relevant to his case
by addressing written interrogatories to the adverse party to elicit those facts, the latter
may not thereafter be compelled to testify thereon in court or give a deposition pending
appeal. The justification for this is that the party in need of said facts having foregone
the opportunity to inquire into the same from the other party through means available
to him, he should not thereafter be permitted to unduly burden the latter with
courtroom appearances or other cumbersome processes. The sanction adopted by the
Rules is not one of compulsion in the sense that the party is being directly compelled to
avail of the discovery mechanics, but one of negation by depriving him of evidentiary
sources which would otherwise have been accessible to him.25

Petitioners filed their Motion for Reconsideration,26 which the CA denied in its assailed
October 2, 2008 Resolution. Hence, the present Petition.
Issues

Petitioners now raise the following issues for resolution:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE


AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE MOTION FOR 5

SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH REQUIREMENTS APPLY


ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.

II

THE COURT OF APPEALS COMMITTED (REVERSIBLE) ERROR IN HOLDING THAT THE


PETITIONERS MUST FIRST SERVE WRITTEN INTERROGATORIES TO RESPONDENT
BANK’S OFFICERS BEFORE THEY CAN BE SUBPOENAED.27

Petitioners’ Arguments

Praying that the assailed CA dispositions be set aside and that the Court allow the
issuance of the subpoena duces tecum/ad testificandum, petitioners assert that the
questioned Motion is not a litigated motion, since it seeks not a relief, but the issuance
of process. They insist that a motion which is subject to notice and hearing under
Sections 4 and 5 of Rule 15 is an application for relief other than a pleading; since no
relief is sought but just the process of subpoena, the hearing and notice requirements
may be done away with. They cite the case of Adorio v. Hon. Bersamin, 28 which held
that –

Requests by a party for the issuance of subpoenas do not require notice to other parties
to the action. No violation of due process results by such lack of notice since the other
1âwphi1

parties would have ample opportunity to examine the witnesses and documents
subpoenaed once they are presented in court.29

Petitioners add that the Rules should have been liberally construed in their favor, and
that Metrobank’s filing of its Opposition be considered to have cured whatever defect
the Motion suffered from.

Petitioners likewise persist in the view that Metrobank’s officers – the subject of the
Motion – do not comprise the adverse party covered by the rule; they insist that these
bank officers are mere employees of the bank who may be called to testify for them.

Respondents’ Arguments

Metrobank essentially argues in its Comment30 that the subject Motion for the issuance
of a subpoena duces tecum/ad testificandum is a litigated motion, especially as it is
directed toward its officers, whose testimony and documentary evidence would affect it
as the adverse party in the civil case. Thus, the lack of a proper notice of hearing
renders it useless and a mere scrap of paper. It adds that being its officers, the persons
sought to be called to the stand are themselves adverse parties who may not be
compelled to testify in the absence of prior written interrogatories; they are not
ordinary witnesses whose presence in court may be required by petitioners at any time
and for any reason.

Finally, Metrobank insists on the correctness of the CA Decision, adding that since
petitioners failed up to this time to pay the witnesses’ fees and kilometrage as required
by the Rules,31 the issuance of a subpoena should be denied.
6
Our Ruling

The Court denies the Petition.

On the procedural issue, it is quite clear that Metrobank was notified of the Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely
Opposition thereto. The technical defect of lack of notice of hearing was thus cured by
the filing of the Opposition.32

Nonetheless, contrary to petitioners’ submission, the case of Adorio cannot apply


squarely to this case. In Adorio, the request for subpoena duces tecum was sought
against bank officials who were not parties to the criminal case for violation of Batas
Pambansa Blg. 22. The situation is different here, as officers of the adverse party
Metrobank are being compelled to testify as the calling party’s main witnesses;
likewise, they are tasked to bring with them documents which shall comprise the
petitioners’ principal evidence. This is not without significant consequences that affect
the interests of the adverse party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand
is not allowed, unless written interrogatories are first served upon the latter. This is
embodied in Section 6, Rule 25 of the Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of
justice, a party not served with written interrogatories may not be compelled by the
adverse party to give testimony in open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless
delays; it is there to maintain order and facilitate the conduct of trial. It will be
presumed that a party who does not serve written interrogatories on the adverse party
beforehand will most likely be unable to elicit facts useful to its case if it later opts to
call the adverse party to the witness stand as its witness. Instead, the process could be
treated as a fishing expedition or an attempt at delaying the proceedings; it produces
no significant result that a prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s
testimony,33 compelling the adverse party to take the witness stand may result in the
calling party damaging its own case. Otherwise stated, if a party cannot elicit facts or
information useful to its case through the facility of written interrogatories or other
mode of discovery, then the calling of the adverse party to the witness stand could only
serve to weaken its own case as a result of the calling party’s being bound by the
adverse party’s testimony, which may only be worthless and instead detrimental to the
calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court
may limit the inquiry to what is relevant, and thus prevent the calling party from
straying or harassing the adverse party when it takes the latter to the stand.
7
Thus, the rule not only protects the adverse party from unwarranted surprises or
harassment; it likewise prevents the calling party from conducting a fishing expedition
or bungling its own case. Using its own judgment and discretion, the court can hold its
own in resolving a dispute, and need not bear witness to the parties perpetrating unfair
court practices such as fishing for evidence, badgering, or altogether ruining their own
cases. Ultimately, such unnecessary processes can only constitute a waste of the
court’s precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as
their initial and main witnesses, and to present documents in Metrobank’s possession as
part of their principal documentary evidence. This is improper. Petitioners may not be
allowed, at the incipient phase of the presentation of their evidence-in-chief at that, to
present Metrobank’s officers – who are considered adverse parties as well, based on the
principle that corporations act only through their officers and duly authorized agents 34 –
as their main witnesses; nor may they be allowed to gain access to Metrobank’s
documentary evidence for the purpose of making it their own. This is tantamount to
building their whole case from the evidence of their opponent. The burden of proof and
evidence falls on petitioners, not on Metrobank; if petitioners cannot prove their claim
using their own evidence, then the adverse party Metrobank may not be pressured to
hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a
failure of justice, be compelled to give testimony in court by the adverse party who has
not served written interrogatories. But what petitioners seek goes against the very
principles of justice and fair play; they would want that Metrobank provide the very
evidence with which to prosecute and build their case from the start. This they may not
be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a
move by petitioners. As one of their causes of action in their Complaint, petitioners
claim that they were not furnished with specific documents relative to their loan
agreement with Metrobank at the time they obtained the loan and while it was
outstanding. If Metrobank were to willingly provide petitioners with these documents
even before petitioners can present evidence to show that indeed they were never
furnished the same, any inferences generated from this would certainly not be useful
for Metrobank. One may be that by providing petitioners with these documents,
Metrobank would be admitting that indeed, it did not furnish petitioners with these
documents prior to the signing of the loan agreement, and while the loan was
outstanding, in violation of the law.
With the view taken of the case, the Court finds it unnecessary to further address the
other issues raised by the parties, which are irrelevant and would not materially alter
the conclusions arrived at.

WHEREFORE, the Petition is DENIED. The assailed April 15, 2008 Decision and October
2, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 99535 are AFFIRMED.

SO ORDERED. 8

G. R. No. 185145, Feb. 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,

vs.

METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court,
Regional Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint for nullification of mortgage,
foreclosure, auction sale, certificate of sale and other documents, with damages, against respondents
Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega (Ortega) before the Regional Trial
Court (RTC) of Malolos City

Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the Clerk of
Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum to require Metrobank’s officers to appear and
testify as the petitioners’ initial witnesses during the August 31, 2006 hearing for the presentation of their
evidence-in-chief, and to bring the documents relative to their loan with Metrobank, as well as those
covering the extrajudicial foreclosure and sale of petitioners’ 200-square meter land in Meycauayan,
Bulacan covered by Transfer Certificate of Title No. 20411.

Metrobank filed an Opposition arguing that for lack of a proper notice of hearing, the Motion must be
denied; that being a litigated motion, the failure of petitioners to set a date and time for the hearing
renders the Motion ineffective and pro forma; that pursuant to Sections 1 and 611 of Rule 25 of the Rules,
Metrobank’s officers – who are considered adverse parties – may not be compelled to appear and testify
in court for the petitioners since they were not initially served with written interrogatories; that petitioners
have not shown the materiality and relevance of the documents sought to be produced in court; and that
petitioners were merely fishing for evidence.
Petitioners submitted a Reply stating that the lack of a proper notice of hearing was cured by the filing of
Metrobank’s Opposition; that applying the principle of liberality, the defect may be ignored; that leave of
court is not necessary for the taking of Metrobank’s officers’ depositions; that for their case, the issuance
of a subpoena is not unreasonable and oppressive, but instead favorable to Metrobank, since it will
present the testimony of these officers just the same during the presentation of its own evidence; that the
documents sought to be produced are relevant and will prove whether petitioners have paid their
obligations to Metrobank in full, and will settle the issue relative to the validity or invalidity of the 9
foreclosure proceedings; and that the Rules do not prohibit a party from presenting the adverse party as its
own witness.

Issue: Whether Or Not THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN


REQUIRING NOTICE AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A
MERE MOTION FOR SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH
REQUIREMENTS APPLY ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF
COURT.

Held: On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of
Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The technical
defect of lack of notice of hearing was thus cured by the filing of the Opposition.

As officers of the adverse party Metrobank are being compelled to testify as the calling party’s main
witnesses; likewise, they are tasked to bring with them documents which shall comprise the petitioners’
principal evidence. This is not without significant consequences that affect the interests of the adverse
party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed,
unless written interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of the
Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party not
served with written interrogatories may not be compelled by the adverse party to give testimony in open
court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there to
maintain order and facilitate the conduct of trial. It will be presumed that a party who does not serve
written interrogatories on the adverse party beforehand will most likely be unable to elicit facts useful to
its case if it later opts to call the adverse party to the witness stand as its witness. Instead, the process
could be treated as a fishing expedition or an attempt at delaying the proceedings; it produces no
significant result that prior written interrogatories might bring.
Besides, since the calling party is deemed bound by the adverse party’s testimony, compelling the adverse
party to take the witness stand may result in the calling party damaging its own case. Otherwise stated, if
a party cannot elicit facts or information useful to its case through the facility of written interrogatories or
other mode of discovery, then the calling of the adverse party to the witness stand could only serve to
weaken its own case as a result of the calling party’s being bound by the adverse party’s testimony, which
may only be worthless and instead detrimental to the calling party’s cause.
10
Another reason for the rule is that by requiring prior written interrogatories, the court may limit the
inquiry to what is relevant, and thus prevent the calling party from straying or harassing the adverse party
when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise
prevents the calling party from conducting a fishing expedition or bungling its own case. Using its own
judgment and discretion, the court can hold its own in resolving a dispute, and need not bear witness to
the parties perpetrating unfair court practices such as fishing for evidence, badgering, or altogether
ruining their own cases. Ultimately, such unnecessary processes can only constitute a waste of the court’s
precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their initial and
main witnesses, and to present documents in Metrobank’s possession as part of their principal
documentary evidence. This is improper. Petitioners may not be allowed, at the incipient phase of the
presentation of their evidence-in-chief at that, to present Metrobank’s officers – who are considered
adverse parties as well, based on the principle that corporations act only through their officers and duly
authorized agents – as their main witnesses; nor may they be allowed to gain access to Metrobank’s
documentary evidence for the purpose of making it their own. This is tantamount to building their whole
case from the evidence of their opponent. The burden of proof and evidence falls on petitioners, not on
Metrobank; if petitioners cannot prove their claim using their own evidence, then the adverse party
Metrobank may not be pressured to hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be
compelled to give testimony in court by the adverse party who has not served written interrogatories. But
what petitioners seek goes against the very principles of justice and fair play; they would want that
Metrobank provide the very evidence with which to prosecute and build their case from the start. This
they may not be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a move by petitioners. As
one of their causes of action in their Complaint, petitioners’ claim that they were not furnished with
specific documents relative to their loan agreement with Metrobank at the time they obtained the loan and
while it was outstanding. If Metrobank were to willingly provide petitioners with these documents even
before petitioners can present evidence to show that indeed they were never furnished the same, any
inferences generated from this would certainly not be useful for Metrobank. One may be that by
providing petitioners with these documents, Metrobank would be admitting that indeed, it did not furnish
petitioners with these documents prior to the signing of the loan agreement, and while the loan was
outstanding, in violation of the law.
2. Republic vs. Sandiganbayan, G.R. No. 188881, April 21, 2014; and

Republic of the Philippines


SUPREME COURT
Baguio City

FIRST DIVISION
11
G.R. No. 188881 April 21, 2014

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR., DOMINADOR R. SANTIAGO,
FERDINAND E. MARCOS, IMELDA MARCOS, BIENVENIDO R. TANTOCO, SR., GLICERIA R.
TANTOCO, AND MARIA LOURDES TANTOCO-PINEDA, Respondents.

DECISION

SERENO, CJ:

This Petition for Certiorari under Rule 65 of the Rules of Court seeks to nullify the
Sandiganbayan Resolution dated 3 June 2009 in Civil Case No. 0008.1 The Second
Division of the graft court denied admission of Exhibits "MMM" to "AAAAAAA" in the
Formal Offer of Evidence filed by petitioner Republic.2

Twenty four years ago, the Republic, through the Presidential Commission on Good
Government (PCGG), commenced a complaint3 for "reconveyance, reversion,
accounting, restitution and damages" against Bienvenido R. Tantoco, Jr. (Tantoco ),
Dominador R. Santiago (Santiago), Ferdinand E. Marcos, Imelda, R. Marcos, Bienvenido
R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-Pineda. Instead of filing
an Answer, respondents Tantoco and Santiago filed a "Motion To Strike Out Some
Portions of the Complaint and For Bill of Particulars," which were both denied for lack of
bases.

On 27 July 1989, Tantoco and Santiago filed with the Sandiganbayan a pleading
denominated "Interrogatories to Plaintiff." A month later, they filed both an "Amended
Interrogatories to Plaintiff" and a Motion for Production and Inspection of Documents.
This time, the Sandiganbayan admitted the Amended Interrogatories and granted the
Motion for Production and Inspection of Documents. When the PCGG elevated the issue
to the Supreme Court, this Court, through then Justice Andres R. Narvasa, affirmed the
Orders of the Sandiganbayan in this wise:

The Court finally finds that, contrary to the petitioner's theory, there is good cause for
the production and inspection of the documents subject of the motion dated August 3,
1989. Some of the documents are, according to the verification of the amended
complaint, the basis of several of the material allegations of said complaint. Others,
admittedly, are to be used in evidence by the plaintiff. It is matters such as these into
which inquiry is precisely allowed by the rules of discovery, to the end that the parties
may adequately prepare for pre-trial and trial. xxx.
xxxx

WHEREFORE, the petition is DENIED, without pronouncement as to costs. The


temporary restraining order issued on October 27, 1989 is hereby LIFTED AND SET
ASIDE. SO ORDERED.4

Pre-trial commenced, and from 3 January to 14 July 1993, the PCGG produced
documents pre-marked as Exhibit "A" to "LLL" before Atty. Renato T. Bocar and 12
respondents’ counsel.5 On 10 September 1996, the pre-trial was declared closed.6 On 23
and 25 September 1996, the temporary markings of Exhibits "A" to "LLL," together with
their sub-markings, were adopted. However, over the objections of respondents
Tantoco and Santiago, the PCGG produced and caused the pre-marking of additional
documents, Exhibits "MMM" to "AAAAAAA."7

Tantoco and Santiago filed a "Motion under Rule 29 of the Rules of Court," claiming that
the additional documents were never produced at the discovery proceedings and
praying that petitioner be sanctioned for contempt. The Sandiganbayan denied the
motion on 17 February 1997 (First Resolution).8 Trial proceeded; however, new
documents not shown at discovery were still being marked. Tantoco and Santiago again
filed a "Motion to Ban Plaintiff From Offering Exhibits Not Earlier Marked During the
Discovery Proceedings," which the graft court denied on 29 May 2002.9

Petitioner filed its Formal Offer of Evidence on 16 March 2007.10 On 15 January 2008,
the Sandiganbayan ruled that with the exception of some documents, 11 "all Exhibits...
are denied admission. The due execution and authenticity of these documents remain
challenged since the prosecution failed to show otherwise."12 On petitioners’ Motion for
Reconsideration, the Sandiganbayan partly relented and admitted Exhibits "MMM" to
"AAAAAAA" (Second Resolution).13 As certified to by the Chief Administrative Officer of
the PCGG,14 Exhibits "MMM" to "AAAAAAA" were turned over to its Legal Division and
include the following:

Exh. MMM Memorandum for Hon. Teodoro Pena, signed by Juan C. Xerox
Tuvera
NNN Undated handwritten letter purportedly written by Glecy R. No remarks whether
Tantoco original or photocopy
OOO Letter to Ferdinand E. Marcos from Bienvenido Tantoco with No remarks whether
handwritten marginal note dated 8 May 1982 original or photocopy
PPP Undated letter to "Mam" from "Glecy" Xerox
QQQ (missing) (missing)
RRR Proclamation No. 50 dated Dec. 15, 1986, signed by Pres. From APT
Corazon Aquino
RRR Complaint filed by RP thru Asset Privatization Trust (APT) Xerox
against Rustan Investment & Management Corporation
SSS Administrative Order No. 14 dated Feb. 3, 1987 signed by From APT
Pres. Corazon Aquino
SSS Answer with Compulsory Counterclaim filed by Rustan Xerox
Investment & Management Corporation
TTT Contract dated Feb. 27, 1987 by and between RP and DEBP No remarks whether
original or photocopy
TTT Order- Civil Case No. 89-5268, RP v. Rustan Investment From APT
UUU Order- Civil Case No. 89-5268, RP v. Rustan Investment From APT 13

VVV (missing) (missing)


WWW Eastern Inspection Bureau for Phil. Eagle Mines, Inc. dated From APT
Oct. 18, 1989
XXX Letter dated Dec. 20, 1990 for Asset Privatization Trust from Xerox
Dominador R. Santiago
YYY- YYY- 22 Articles of Incorporation of Rustan Investment Xerox
&Management Corp. dated Feb. 21, 1966
YYY-23- YYY- Certificate of Filing of Amended Articles of Incorporation Xerox
33 dated Nov. 20, 1981
ZZZ NBI Questioned Documents Report No. 729-1101 dated Jan. Original
21, 2002
AAAA-1 Undated, handwritten note signed by Ferdinand Marcos Malacañang Lib
AAAA-2 Memo for the Pres. Dated 23 Jul 79 with handwritten Malacañang Lib
markings
AAAA-3 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-4 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-5 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-6 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-7 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-8-11 Handwritten note dated Dec. 28, 1978 Office of the President Malacañang Lib
stationery paper
AAAA-12-17 Handwritten note Office of the President stationery paper Malacañang Lib
AAAA-18 Handwritten note dated Jan. 7, 1978 Office of the President Malacañang Lib
stationery paper
AAAA-19-25 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-27-29 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-30-34 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
AAAA-35-41 Handwritten note Office of the President stationery paper Malacañang Lib
(undated)
BBBB-1a-1b Microfilm of "Questioned" documents No remarks whether
original or photocopy
14
BBBB-2-7 Microfilm of "Questioned" documents No remarks whether
original or photocopy
BBBB-8-12 Microfilm of "Questioned" documents No remarks whether
original or photocopy
BBBB-13-20 Microfilm of "Questioned" documents No remarks whether
original or photocopy
BBBB-21-28 Microfilm of "Questioned" documents No remarks whether
original or photocopy
BBBB-29-33 Microfilm of "Questioned" documents No remarks whether
original or photocopy
CCCC-1-11 Executive Summary of Phil. Eagle Mines, Inc. Xerox
DDDD-1-28 SEC Records of Phil. Eagle Mines, Inc. Xerox
EEEE-1-13 TSN – Evelyn Singson Xerox
FFFF-1-13 Affidavit of Evelyn R. Singson dated Aug. 18, 1986 Xerox
GGGG-1-6 SBTC (Security Bank and Trust Company) bank documents/ PCGG Lib
credit ticket/ certificate of deposit/telegraphic transfer/ telex/
money transfer
HHHH-1-9 SBTC debit tickets/ transmittal documents/ telexes PCGG Lib
IIII-1-5 SBTC debit tickets/ telexes/ wire transfers PCGG Lib
JJJJ-1-7 SBTC debit tickets/ wire transfers/ telexes/ transmittal letters PCGG Lib
KKKK-1-4 SBTC debit tickets/ transmittal documents/ Irving Trust PCGG Lib
documents
LLLL-1-4 SBTC debit tickets/ transmittal documents/ Irving Trust PCGG Lib
documents
MMMM-1-3 SBTC debit tickets/ transmittal documents/ Irving Trust PCGG Lib
documents
NNNN-1-3 SBTC debit tickets/ transmittal documents/ Irving Trust PCGG Lib
documents
OOOO-1-6 SBTC debit tickets/ transmittal documents/ Irving Trust PCGG Lib
documents
PPPP-1-2 SBTC money transfers/ telex PCGG Lib
QQQQ-1-2 SBTC money transfers/ telex PCGG Lib
RRRR-1-2 SBTC debit tickets/ money transfers/ telex PCGG Lib
SSSS- SSSS-2 SBTC debit tickets/ money transfer/ Irving Trust documents PCGG Lib
TTTT-1-4 SBTC debit tickets/ money transfer/ telex/ Irving Trust PCGG Lib
documents
UUUU-1-4 SBTC debit tickets/ money transfer/ telex/ Irving Trust PCGG Lib
documents 15

VVVV-1-5 SBTC debit tickets/ money transfer/ telegraphic transfer/ PCGG Lib
Irving Trust documents
WWWW-1-3 SBTC debit tickets/ telex/ Irving Trust documents PCGG Lib
XXXX-1-5 SBTC debit tickets/ money transfer/ telegraphic transfer/ PCGG Lib
Irving Trust documents
YYYY-1-3 SBTC debit tickets/ money transfer/ Irving Trust documents PCGG Lib
ZZZZ to ZZZZ- SBTC debit tickets/ telegraphic transfer PCGG Lib
1
AAAAA-1-3 SBTC debit tickets/ telex/ telegraphic transfer PCGG Lib
BBBBB-1-16 SBTC credit ticket/ debit ticket/ money transfer/ telegraphic PCGG Lib
transfer, etc.
CCCCC-1-10 SBTC credit ticket/ debit ticket/ money transfer/ telegraphic PCGG Lib
transfer, etc.
DDDDD- SBTC debit tickets/ telegraphic transfer PCGG Lib
DDDDD-1
EEEEE-1-6 SBTC credit ticket/ debit ticket/ telex PCGG Lib
FFFFF-1-5 SBTC document/ credit ticket/ debit ticket/ telex PCGG Lib
HHHHH-1-7 SBTC certificate of deposit/ debit & credit ticket/ money PCGG Lib
transfer/ telex
IIIII-1-6 SBTC debit & credit tickets/ money & wire transfers PCGG Lib
JJJJJ-1-3 SBTC debit & credit tickets/ telex PCGG Lib
KKKKK-1-4 SBTC credit ticket/ money transfer/ telex PCGG Lib
LLLLL-1-4 SBTC Certificate of Deposit/ debit & credit tickets/ telex PCGG Lib
MMMMM-1- SBTC debit & credit tickets/ certificate of deposits/ telex PCGG Lib
11
NNNNN-1-5 SBTC debit & credit tickets/ telex PCGG Lib
OOOOO-1-6 SBTC Certificate of Deposit/ debit & credit tickets/ telex PCGG Lib
PPPPP-1-2 SBTC credit ticket/ debit advise/ telegraphic transfer PCGG Lib
QQQQQ-1-5 SBTC Certificate of Deposit/ debit & credit tickets/ telex PCGG Lib
RRRRR-1-10 SBTC Certificate of Deposit/ debit & credit tickets/ telex PCGG Lib
SSSSS-1-5 SBTC Certificate of Deposit/ debit & credit tickets/ telex/ PCGG Lib
debit advise
TTTTT-1-28 Affidavit of Apolinario K. Medina dated July 23, 1987 Xerox
UUUUU-1-21 Affidavit of Dominador Pangilinan dated July 24, 1987 Xerox
VVVVV Memo for Comm Ruben Carranza, Jr. from Dir. Danilo R.V. Xerox
Daniel dated June 6, 2003 16

WWWWW-1 Letter dated Dec. 8, 1982 to Gallery Bleue from Richard Xerox
Lynch (Hammer Galleries), unsigned
XXXXX to 1 Invoice dated Dec. 8, 1982 for Gallery Bleue total Xerox
$545,000.00
YYYYY-1-2 Invoice dated Dec. 8, 1982 for Gallery Bleue total Xerox
$545,000.00 signed by Mrs. Tantoco
ZZZZZ Letter dated Dec. 8, 1982 to Gallery Bleue Xerox
AAAAAA-1-3 Fe R. Gimenez- Bankers’ Trust Check #485 dated Dec. 8, Xerox
1982 pay to Hammer Galleries
BBBBBB-1-2 Memo for Comm Ruben Carranza, Jr. from Dir. Danilo Xerox
CCCCCC-1-2 Knoedler-Modarco S.A. – New York for Gallery Bleue dated Xerox
July 20, 1983
DDDDDD-1-5 Citibank, N.A. debit advice for $810,005.00 Xerox
EEEEEE-1-4 Citibank, N.A. cashier’s check #38865 dated Nov. 22, 1983 Xerox
for $810,000.00
FFFFFF-1-3 Letter dated Nov. 22,1983 to Mrs. Tantoco from Peter Xerox
Sansone of Knoedler-Modarco
GGGGGG-1- 26 Declaration of Oscar M. Carino dated June 23, 1987 Original
HHHHHH-1-2 Agreement between Leslie R. Samuels and Gliceria R. Xerox
Tantoco
IIIIII to 1 Bankers’ Trust Company Check #02002598 dated Sept. 3, Xerox
1981 for $1,000,000.00
JJJJJJ to 1 Letter dated Sept. 4, 1981 from Alan Forster of Sotheby’s Xerox
KKKKKK-1-3 Bankers’ Trust Check #02002282 dated Sept. 18, 1981 for Xerox
$4,950,000.00
LLLLLL-1-2 Hammer Galleries’ Invoice dated Dec. 9, 1982 for Gallery Xerox
Bleue total $323,000.00
MMMMMM- 1- Bankers’ Trust Check #200 for Hammer Galleries dated Dec. Xerox
3 20, 1982 for $323,000.00 issued by Fe Gimenez
NNNNNN-1-2 Hammer Galleries’ Commercial Invoice dated Dec. 27, 1982 Xerox
for Gallery Bleue
OOOOOO-1 Bankers Trust Statement of Account Xerox
PPPPPP-1-4 Credit Suisse/ Trinidad Foundation/ Debit Advice/ Xerox
$480,015.79
QQQQQQ-1-4 Credit Suisse/ Palmy Foundation/ Debit Advice/$700,006 Xerox
RRRRRR-1-3 Credit Suisse/ Palmy Foundation/ Debit Xerox
Advice/$2,000,005.62
SSSSSS Certificate of the Swiss Authority executing request for Xerox 17
documents/ Peter Cossandy
SSSSSS-1 Certificate of Authenticity of Business Records/ Martin Xerox
Grossman
SSSSSS-2 List of documents numbered by the Examining Magistrate/ Xerox
Peter Cossandy
TTTTTT-1-10 Letter dated Feb. 3, 1984 for Mrs. Gliceria Tantoco Re: Xerox
Glockhurst Corp.
UUUUUU-1 Debit Advice for Php3,241,393.00 Xerox
VVVVVV-1-3 Traders’ Royal Bank Manager’s Check #00671 dated July Xerox
28,1981 for Php3, 241,393.00
WWWWWW- 1 Traders’ Royal Bank Debit Advise for Php4,283,440.29 Xerox
XXXXXX-1-3 TRB Manager’s Check #001282 for Php3,200,000.00 Xerox
YYYYYY-1-3 Letter from Rico Tantoco dated 5/6/82 to Fe Xerox
ZZZZZZ-1-4 Status of Holdings in Phil. Eagle Mines, Inc. (PEMI) grand Xerox
total of Php2,640,351.90
AAAAAAA- 1- Affidavit of Rolando Gapud dated Aug. 1, 1987 with annexes PCGG Lib
105

Respondents, in turn, filed their Motion for Reconsideration, to which the graft court
issued the assailed Resolution, stating:

After a thorough review of the circumstances, this Court is convinced that it is fair and
just to grant defendants’ Motion under Rule 29 of the Rules of Court filed on October 1,
1996 and to sanction the plaintiff for its deliberate refusal and failure to comply with
the directive of this Court which was confirmed no less (sic) by the Supreme Court. The
plaintiff must be prevented from offering in evidence all the documents that were not
produced and exhibited at the time the plaintiff was under a directive to do so, i.e.
Exhibits "MMM" to "AAAAAAA" xxx. In arriving at this conclusion, the Court is not
unmindful of the fact that the exhibits involved have not passed the test of admissibility
in any event.15

Petitioner Republic now raises the sole issue of whether or not the Sandiganbayan
committed grave abuse of discretion in excluding the documents due to petitioner’s own
failure to produce them at the pre-trial.

We deny the petition.


After a careful scrutiny of the records, We find that in excluding Exhibits "MMM" to
"AAAAAAA," the Sandiganbayan properly exercised its discretion over evidence formally
offered by the prosecution. Nothing therein shows that the court gravely exceeded its
jurisdiction. For the reviewing court to interfere with the exercise of discretion by the
lower court, the petitioner must show that the former's action was attended by grave
abuse of discretion, defined as a capricious and whimsical exercise of judgment,
equivalent to lack of jurisdiction; or the exercise of power in an arbitrary manner by
reason of passion, prejudice, or personal hostility, so patent or so gross as to amount 18
to an evasion of a positive duty, to a virtual refusal to perform the mandated duty, or
to act at all in contemplation of the law.16

Petitioner would have us reverse the Sandiganbayan solely because the latter
purportedly made contrary rulings in its earlier Resolutions. The Republic invokes the
First Resolution, specifically the graft court’s view that the exclusion of the Exhibits
"would be too technical," since their non-production "could be attributed to
inadvertence rather than willful disobedience." However, this First Resolution merely
disposed of respondents’ Motion to cite petitioner in contempt. It does not constitute an
irrevocable stamp of admissibility.

Petitioner conveniently disregards the basic rule of evidence, namely, that the issue of
the admissibility of documentary evidence arises only upon formal offer thereof. This is
why objection to the documentary evidence must be made at the time it is formally
offered, and not earlier.17 Accordingly, the Court ruled in Interpacific Transit, Inc. v.
Aviles as follows:

x x x. The identification of the document before it is marked as an exhibit does not


constitute the formal offer of the document as evidence for the party presenting it.
Objection to the identification and marking of the document is not equivalent to
objection to the document when it is formally offered in evidence. What really matters
is the objection to the document at the time it is formally offered as an exhibit.

xxxx

It would have been so simple for the defense to reiterate its former objection, this time
seasonably, when the formal offer of exhibits was made. It is curious that it did not,
especially so since the objections to the formal offer of exhibits was made in writing. In
fact, the defense filed no objection at all not only to the photocopies but to all the other
exhibits of the prosecution.18 (Emphases supplied)

Seasonable objection to the subject "Exhibits" can only be properly made upon formal
offer. The Sandiganbayan acknowledged that Tantoco and Santiago had been consistent
in reiterating their objections. The court even clarified in its First Resolution that their
"Motion Filed Under Rule 29," was but in pursuance of their continuing objection to the
marking of evidence not produced at discovery. Hence, nothing in the said Resolution
can be read as a ruling on its admissibility. Its dispositive portion clearly states: "Under
all these circumstances, there is no basis for the Court to declare plaintiff in contempt
of court and it would be too much of a technicality to bar it from introducing the
additional exhibits in evidence."19
The Second Resolution, while issued after petitioner had submitted its Formal Offer of
Evidence, noted that all the documents contained therein were photocopies.20 It stated
that a mere certification from the Clerk of Court that they "appear to be the original
copy" would not suffice. The Sandiganbayan still admitted them as evidence, yet the
only reason cited for doing so was liberality, viz: "There is nothing in the rules which
categorically prohibits the admission of additional documentary evidence when called
for as a case progress [sic]. What is clear is that it is the Court’s discretion to allow or
disallow its reception."21 Thus, the Sandiganbayan fittingly corrected itself when once 19
and for all, it excluded the photocopies in its latest Resolution.

This Court discusses the contents and implications of the two earlier Resolutions,
because petitioner simply has no other argument supporting its claim to reverse the
Sandiganbayan. For those documents introduced in evidence as proof of their contents,
the assailed Resolution stated that petitioner has not made any effort whatsoever to
explain why it submitted mere photocopies. When the subject of inquiry is the content
of a document, submission of a certified true copy is justified only in clearly delineated
instances such as the following:

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.22

Nothing on record shows, and petitioner itself makes no claim, that the Exhibits fall
under any of the exceptions to the Best Evidence rule. Secondary evidence of the
contents of writings is admitted on the theory that the original cannot be produced by
the party who offers the evidence within a reasonable time by the exercise of
reasonable diligence. Even then, the general rule is that secondary evidence is still not
admissible until the non-production of the primary evidence has been sufficiently
accounted for.23

The Separate Opinion concurs in our dismissal of the petition for failure to show that
the Sandiganbayan committed grave abuse of discretion. However, it disagrees with the
latter’s misapplication of the Best Evidence Rule. While the Sandiganbayan provided
several reasons for its ultimate exclusion of the documents, it did not distinguish: 1)
Which particular documents are to be excluded for violation of the Best Evidence Rule;
and 2) Which of the remaining ones it has treated as private documents that lacked
proper authentication. The detailed analysis of each piece of evidence vis-à-vis the
purpose for which they were presented falls squarely under the purview and
competence of the trial court. The Supreme Court cannot substitute its own conclusions
for the factual determinations of the trial court. It is not the function of this Court to
examine, review or evaluate the evidence. Absent any showing of grave abuse of
discretion, as discussed above, this Court is then constrained to uphold the reasons
forwarded by the Sandiganbayan.

The authority of the trial court to control its own discovery processes cannot be
undermined. In this case, the Sandiganbayan’s exercise of this power is neither
whimsical nor oppressive. A writ of certiorari is available only to review final judgments
or decrees, and will be refused where there has been no final judgment or order and 20
the proceeding for which the writ is sought is still pending and undetermined in the
lower tribunal. Pursuant to this rule, it has been held that certiorari will not lie to review
or correct discovery orders made prior to trial.24

As for the documentary evidence which are purportedly transmittal letters, petitioner
remains unable to prove their due execution and authenticity. We subscribe to the view
forwarded by the Sandiganbayan in its Second Resolution, which we quote below:

The fact that the documents were certified as true copies of the original by the PCGG
does not enhance its admissibility. These documents have remained private even if it is
in the custody of the PCGG. What became public are not the private documents
(themselves) but the recording of it in the PCGG. For, "while public records kept in the
Philippines, of private writings are also public documents...the public writing is not the
writing itself but the public record thereof. Stated otherwise, if a private writing itself is
inserted officially into a public record, its record, its recordation, or its incorporation into
the public record becomes a public document, but that does not make the private
writing itself a public document so as to make it admissible without
authentication."25 (Citation omitted, emphasis supplied.)

Aside from lack of authentication and failure to present the originals of these
documents, what ultimately tipped the scales against petitioner in the view of the graft
court was the former’s lack of forthrightness in complying with the Supreme Court
directive. The Sandiganbayan said:

Thereafter, it did not take long in the process of the presentation of plaintiff’s evidence
before it became apparent that plaintiff’s exhibits consist mostly of documents which
have not been exhibited during the discovery proceedings despite the directive of this
Court as confirmed by the Supreme Court. Plaintiff’s failure to offer a plausible
explanation for its concealment of the main bulk of its exhibits even when it was under
a directive to produce them and even as the defendants were consistently objecting to
the presentation of the concealed documents gives rise to a reasonable [inference] that
the plaintiff, at the very outset, had no intention whatsoever of complying with the
directive of this Court.26

Petitioner failed to obey the mandate of G.R. No. 90478, which remains an important
case on pre-trial and discovery measures to this day; the rationale of these rules,
especially on the production of documents, must be constantly kept in mind by the bar:

The message is plain. It is the duty of each contending party to lay before the court the
facts in issue-fully and fairly; i.e., to present to the court all the material and relevant
facts known to him, suppressing or concealing nothing, nor preventing another party,
by clever and adroit manipulation of the technical rules of pleading and evidence, from
also presenting all the facts within his knowledge.

xxxx

The truth is that "evidentiary matters" may be inquired into and learned by the parties
before the trial. Indeed, it is the purpose and policy of the law that the parties - before
the trial if not indeed even before the pre-trial - should discover or inform themselves 21
of all the facts relevant to the action, not only those known to them individually, but
also those known to adversaries; in other words, the desideratum is that civil trials
should not be carried on in the dark; and the Rules of Court make this ideal possible
through the deposition-discovery mechanism set forth in Rules 24 to 29. xxx.

xxxx

x x x. (I)t is the precise purpose of discovery to ensure mutual knowledge of all the
relevant facts on the part of all parties even before trial, this being deemed essential to
proper litigation. This is why either party may compel the other to disgorge whatever
facts he has in his possession; and the stage at which disclosure of evidence is made is
advanced from the time of trial to the period preceding it.27 (Emphasis supplied)

After failing to submit the documentary evidence during discovery, when it was clearly
ordered by both the Sandiganbayan and the Supreme Court to do so, petitioner also
repeatedly failed to prove the due execution and authenticity of the documents. Having
failed in its belated attempts to assuage the Sandiganbayan through the submission of
secondary evidence, petitioner may not use the present forum to gain relief under the
guise of Rule 65.

WHEREFORE, in view of the foregoing, we deny the instant Petition for lack of merit.
The Resolution of the Sandiganbayan in Civil Case No. 0008 (dated 3 June 2009) is
AFFIRMED.

SO ORDERED.
3. Eagleridge Dev't. Corp. vs. Cameron Granville 3 Asset Mgt. Inc. G.R. No. 204700, Nov. 24, 2014

Republic of the Philippines


SUPREME COURT
Manila

SPECIAL THIRD DIVISION


22
G.R. No. 204700 November 24, 2014

EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I.


OBEN, Petitioners,
vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., Respondent.

RESOLUTION

LEONEN, J.:

For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's motion for
reconsideration1 of our April 10, 2013 decision,2 which reversed and set aside the Court
of Appeals' resolutions3 and ordered respondent to produce the Loan Sale and Purchase
Agreement (LSPA) dated April 7, 2006, including its annexes and/or attachments, if
any, in order that petitioners may inspect or photocopy the same.

Petitioners Eagleridge Development Corporation, Marcelo N. Naval, and Crispin I. Oben


filed on June 7, 2013 their motion to ad.mit attached opposition. 4 Subsequently,
respondent filed its reply5 and petitioners their motion to admit attached rejoinder.6

The motion for reconsideration raises the following points:

(1) The motion for production was filed out of time;7

(2) The production of the LSPA would violate the parol evidence rule; and8

(3) The LSPA is a privileged and confidential document.9

Respondent asserts that there was no "insistent refusal" on its part to present the
LSPA, but that petitioners filed their motion for production way out of time, even
beyond the protracted pre-trial period from September 2005 to 2011.10 Hence,
petitioners had no oneto blame but themselves when the trial court denied their motion
as it was filed only during the trial proper.11

Respondent further submits that "Article 1634 [of the] Civil Code had been
inappropriately cited by [p]etitioners"12inasmuch as it is Republic Act No. 9182 (Special
Purpose Vehicle Act) that is applicable.13 Nonetheless, even assuming that Article 1634
is applicable, respondent argued that petitioners are: 1) still liable to pay the whole of
petitioner Eagleridge Development Corporation’s (EDC) loanobligation, i.e.,
₱10,232,998.00 exclusive of interests and/or damages;14 and 2) seven (7) years late in
extinguishing petitioner EDC’s loan obligation because pursuant to Article 1634, they
should have exercised their right of extinguishment within 30 days from the
substitution of Export and Industry Bank or EIB (the original creditor) by respondent in
December 2006.15 According to respondent, the trial court order "granting the
substitution constituted sufficient judicial demand as contemplated under Article
1634."16 Also, maintaining that the LSPA is immaterial or irrelevant to the case,
respondent contends that the "[o]rder of substitution settled the issue of [respondent’s]
standing before the [c]ourt and its right to fill in the shoes of [EIB]."17 It argues that the 23
production of the LSPA will neither prevent respondent from pursuing its claim of
10,232,998.00, exclusive of interests and penalties, from petitioner EDC, nor write off
petitioner EDC’s liability to respondent.18 The primordial issue of whether petitioners
owe respondent a sum of money via the deed of assignment can allegedly "be readily
resolved by application of Civil Code provisions and/or applicable jurisprudence and not
by the production/inspection of the LSPA[.]"19 Respondent also argues that "a
consideration is not always a requisite [in assignment of credits, and] an assignee may
maintain an action based on his title and it is immaterial whether ornot he paid any
consideration [therefor][.]"20

Respondent also contends that: (1) the production of the LSPA will violate the parol
evidence rule21 under Rule 130, Section 9 of the Rules of Court; (2) the LSPA is a
privileged/confidential bank document;22 and (3) under the Special Purpose Vehicle Act,
"the only obligation of both the assignor (bank) and the assignee (the SPV; respondent
Cameron) is to give notice to the debtor (Eagleridge, Naval,and Oben) that its account
has been assigned/transferred to a special purpose vehicle (Sec. 12, R.A. 9182) [and]
[i]t does not require of the special purpose vehicle or the bank to disclose all financial
documents included in the assignment/sale/transfer[.]"23

Finally, respondent points out that the deed of assignment is a contested document.
"Fair play would be violated if the LSPA is produced without [p]etitioners acknowledging
that respondent Cameron Granville 3 Asset Management, Inc. is the real party-in-
interest because petitioners . . . would [thereafter] use . . . the contents of a document
(LSPA) to its benefit while at the same time"24 refuting the integrity of the deed and the
legal personality of respondent to sue petitioners.25

For their part, petitioners counter that their motion for production was not filed out of
time, and "[t]here is no proscription, under Rule 27 or any provision of the Rules of
Court, from filing motions for production, beyond the pre-trial."26

Further, assuming that there was a valid transfer of the loan obligation of petitioner
EDC, Article 1634 is applicable and, therefore, petitioners must be informed of the
actual transfer price, which information may only be supplied by the LSPA.27 Petitioners
argue that the substitution of respondent in the case a quowas "not sufficient
‘demand’as contemplated under Article 1634 of the Civil Code inasmuch asrespondent
Cameron failed . . . to inform petitioner EDC of the price it paid for the [transfer of the]
loan obligation,"28 which made it "impossible for petitioners to reimburse what was paid
for the acquisition of the . . . loan obligation [of EDC]."29 Additionally, petitioners
contend that respondent was not a party to the deed of assignment, but Cameron
Granville Asset Management (SPV-AMC), Inc., hence, "as [to] the actual parties to the
Deed of Assignment are concerned, no such demand has yet been made."30
Petitioners add that the amount of their liability to respondent is one of the factual
issues to be resolved as stated in the November 21, 2011 pretrial order of the Regional
Trial Court, which makes the LSPA clearly relevant and material to the disposition of the
case.31

Petitioners next argue that the parol evidence rule is not applicable to them because
they were not parties tothe deed of assignment, and "they cannot be prevented from
seeking evidence to determine the complete terms of the Deed of 24
Assignment."32 Besides, the deedof assignment made express reference to the LSPA,
hence,the latter cannot be considered as extrinsic to it.33

As to respondent’s invocation that the LSPA is privileged/confidential, petitioners


counter that "it has not been shown that the parties fall under . . . or, at the very least
. . . analogous to [any of the relationships enumerated in Rule 130, Section 124] that
would exempt [respondent] from disclosing information as to their transaction."34

In reply, respondent argues that "[petitioners] cannot accept and reject the same
instrument at the same time."35According to respondent, by allegedly "uphold[ing] the
truth of the contents as well as the validity of [the] Deed of Assignment [in] seeking
the production of the [LSPA],"36 petitioners could no longer be allowed to impugn the
validity of the same deed.37

In their rejoinder, petitioners clarified that their consistent position was always to assail
the validity of the deed of assignment; that alternatively, they invoked the application
of Article 1634 should the court uphold the validity of the transfer of their alleged loan
obligation; and that Rule 8, Section 2 of the Rules of Court "permits parties to set forth
alternative causes of action or defenses."38

We deny the motion for reconsideration.


Discovery mode of
production/inspection of
document may be availed of
even beyond pre-trial upon a
showing of good cause

The availment of a motion for production, as one of the modes of discovery, is not
limited to the pre-trial stage. Rule 27 does not provide for any time frame within which
the discovery mode of production or inspection of documents can be utilized. The rule
only requires leave of court "upon due application and a showing of due cause." 39 Rule
27, Section 1 of the 1997 Rules of Court, states:

SECTION 1. Motion for production or inspection order — Upon motion of any party
showing good cause therefor the court in which an action is pending may (a) order any
party to produce and permit the inspection and copying or photographing, by or on
behalf of the moving party, of any designated documents, papers, books, accounts,
letters, photographs, objects or tangible things, not privileged, which constitute or
contain evidence material to any matter involved in the action and which are in his
possession, custody or control[.] (Emphasis supplied)
In Producers Bank of the Philippines v. Court of Appeals,40 this court held that since the
rules are silent asto the period within which modes of discovery (in that case, written
interrogatories) may still be requested, it is necessary to determine: (1) the purposeof
discovery; (2) whether, based on the stage of the proceedings and evidence presented
thus far, allowing it is proper and would facilitate the disposition of the case; and (3)
whether substantial rights of parties would be unduly prejudiced.41 This court further
held that "[t]he use of discovery is encouraged, for it operates with desirable flexibility
under the discretionary control of the trial court."42 25

In Dasmariñas Garments, Inc. v. Reyes,43 this court declared that depositions, as a


mode ofdiscovery, "may be taken at any time after the institution of any action [as
there is] no prohibition against the taking of depositions after pre-trial."44 Thus:

Dasmariñas also contends that the "taking of deposition is a mode of pretrial discovery
to be availed of before the action comes to trial." Not so. Depositions may be taken at
any time after the institution of any action, whenever necessary or convenient. There is
no rule that limits deposition-taking only to the period of pre-trial or before it; no
prohibition against the taking of depositions after pre-trial. Indeed, the law authorizes
the taking of depositions of witnesses before or after an appeal is taken from the
judgment of a Regional Trial Court "to perpetuate their testimony for use in the event
of further proceedings in the said court" (Rule 134, Rules of Court), and even during
the process of execution of a final and executory judgment (East Asiatic Co. v. C.I.R.,
40 SCRA 521, 544).45

"The modes of discovery are accorded a broad and liberal treatment."46 The evident
purpose of discovery procedures is "to enable the parties, consistent with recognized
privileges, to obtain the fullest possible knowledge of the issues and facts before civil
trials"47 and, thus, facilitating an amicable settlement or expediting the trial of the
case.48

Technicalities in pleading should be avoided in order to obtain substantial justice. In


Mutuc v. Judge Agloro,49 this court directed the bank to give Mutuc a complete
statement asto how his debt was computed, and should he be dissatisfied with that
statement, pursuant to Rule 27 of the Rules of Court, to allow him to inspect and copy
bank records supporting the items in that statement.50 This was held to be "in
consonance with the rules on discovery and the avowed policy of the Rules of Court . . .
to require the parties to lay their cards on the table to facilitate a settlement of the case
before the trial."51

We have determined that the LSPA isrelevant and material to the issue on the validity
of the deed of assignment raised by petitioners in the court a quo, and allowing its
production and inspection by petitioners would be more in keeping with the objectives
of the discovery rules. We find no great practical difficulty, and respondent continuously
fails to allege any, in presenting the document for inspection and copying of petitioners.
On the other hand, to deny petitioners the opportunity to inquire into the LSPA would
bar their access to relevant evidence and impair their fundamental right to due
process.52

Article 1634 of the New Civil Code is applicable


Contrary to respondent’s stance, Article 1634 of the Civil Code on assignment of credit
in litigation is applicable.

Section 13 of the Special Purpose Vehicle Act clearly provides that in the transfer of the
non-performing loans to a special purpose vehicle, "the provisions on subrogation and
assignment of credits under the New Civil Code shall apply." Thus:

Sec. 13. Nature of Transfer. – All sales or transfers of NPAs to an SPV shall be in the 26
nature of a true sale after proper notice in accordance with the procedures asprovided
for in Section 12: Provided, That GFIs and GOCCs shall be subject to existing law on the
disposition of assets: Provided, further, That in the transfer of the NPLs, the provisions
on subrogation and assignment of credits under the New Civil Code shall apply.

Furthermore, Section 19 of the Special Purpose Vehicle Act expressly states that
redemption periods allowed to borrowers under the banking law, the Rules of Court,
and/or other laws are applicable. Hence, the right of redemption allowed to a debtor
under Article 1634 of the Civil Code is applicable to the case a quo.

Accordingly, petitioners may extinguish their debt by paying the assignee-special


purpose vehicle the transfer price plus the cost of money up to the time of redemption
and the judicial costs.

Petitioners’ right to
extinguish their debt has not
yet lapsed

Petitioners’ right to extinguish their debt under Article 1634 on assignment of credits
has not yet lapsed. The pertinent provision is reproduced here:

Art. 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall
have a right to extinguish it by reimbursing the assignee for the price the latter paid
therefor, the judicial costs incurred by him, and the interest on the price from the day
on which the same was paid. A credit or other incorporeal right shall be considered in
litigation from the time the complaint concerning the same is answered.

The debtor may exercise his right within thirty days from the date the assignee
demands payment from him. (Emphasis supplied)

Under the last paragraph of Article 1634, the debtor may extinguish his or her debt
within 30 days from the date the assignee demands payment. In this case, insofar as
the actual parties to the deed of assignment are concerned, no demand has yet been
made, and the 30-day period did not begin to run. Indeed, petitioners assailed before
the trial court the validity of the deed of assignment on the groundsthat it did not
comply with the mandatory requirements of the Special Purpose Vehicle Act, 53 and it
referred to Cameron Granville Asset Management (SPV-AMC), Inc., as the assignee,
and not respondent Cameron Granville 3 Asset Management, Inc.54 The law requires
that payment should be made only "to the person in whose favor the obligation has
been constituted, or his [or her] successor in interest, or any person authorized to
receive it."55 It was held that payment made to a person who is not the creditor, his or
her successor-in-interest, or a person who is authorized to receive payment, even
through error or good faith, is not effective payment which will bind the creditor or
release the debtor from the obligation to pay.56 Therefore, it was important for
petitioners to determine for sure the proper assignee of the EIB credit or who to pay, in
order to effectively extinguish their debt.

Moreover, even assuming that respondent is the proper assignee of the EIB credit,
petitioners could not exercise their right of extinguishment because they were not 27
informed of the consideration paid for the assignment.57

Respondent must, pursuant to Article 1634 of the Civil Code, disclose how much it paid
to acquire the EIB credit, so that petitioners could make the corresponding offer to pay,
by way of redemption, the same amount in final settlement of their obligation.

Respondent insists that the transfer price of the EIB credit is ₱10,232,998.00 (the
actual amount and value of the credit), and that petitioners should have paid the said
amount within 30 days from the December 8, 2006 order of the Regional Trial Court
approving its substitution of EIB.58 Petitioners believe otherwise, and as the deed of
assignment was silent on the matter, it becomes necessary to verify the amount of the
consideration from the LSPA.

Assuming indeed that respondent acquired the EIB credit for a lesser consideration, it
cannot compel petitioners to pay or answer for the entire original EIB credit, or more
thanwhat it paid for the assignment.

Under the circumstances of this case, the 30-day period under Article 1634 within which
petitioners could exercise their right to extinguish their debt should begin to run only
from the time they were informed of the actual price paid by the assignee for the
transfer of their debt. Parol evidence rule is not applicable

Claiming further the impropriety of allowing the production of the LSPA, respondent
contends that the presentation of the document and its annexes would violate the parol
evidence rule in Rule 130, Section 9:

SEC. 9. Evidence of written agreements.—When the terms of an agreement have been


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

However, a party may present evidence to modify, explain or add to the terms of the
written agreement ifhe puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and
agreement of the parties thereto;

(c) The validity of the written agreement; or


(d) The existence of other terms agreed to by the parties or their successors in
interest after the execution of the written agreement.

The term "agreement" includes wills.

We disagree.

The parol evidence rule does notapply to petitioners who are not parties to the deed of 28

assignment and do not base a claim on it.59 Hence, they cannot be prevented from
seeking evidence to determine the complete terms of the deed of assignment.

Even assuming that Rule 130, Section 9 is applicable, an exception to the rule under
the second paragraph iswhen the party puts in issue the validity of the written
agreement, as in the case a quo.

Besides, what is forbidden under the parol evidence rule is the presentation of oral or
extrinsic evidence, not those expressly referred to in the written agreement.
"[D]ocuments canbe read together when one refers to the other."60 By the express
terms of the deed of assignment, it is clear that the deed of assignment was meant to
be read in conjunction with the LSPA.

As we have stated in our decision, Rule 132, Section 1761 of the Rules of Court allows a
party to inquire into the whole of the writing or record when a part of it is given in
evidence by the other party. Since the deed of assignment was produced in court by
respondent and marked as one of its documentary exhibits, the LSPA which was made
a part thereof by explicit reference and which is necessary for its understanding may
also be inquired into by petitioners.

The LSPA is not privileged


and confidential in nature

Respondent’s contention that the LSPAis privileged and confidential is likewise


untenable.

Indeed, Rule 27 contains the proviso that the documents sought to be produced and
inspected must not be privileged against disclosure. Rule 130, Section 24 describes the
types of privileged communication. These are communication between or involving the
following: (a) between husband and wife; (b) between attorney and client; (c) between
physician and patient; (d) between priest and penitent; and (e) public officers and
public interest.

Privileged communications under the rules of evidence is premised on an accepted need


to protect a trust relationship. It has not been shown that the parties to the deed of
assignment fall under any of the foregoing categories.

This court has previously cited other privileged matters such as the following: "(a)
editors may not be compelled to disclose the source of published news; (b) voters may
not be compelled to disclose for whom they voted; (c) trade secrets; (d) information
contained in tax census returns; . . . (d) bank deposits"62 (pursuant to the Secrecy of
Bank Deposits Act); (e) national security matters and intelligence information;63 and (f)
criminal matters.64 Nonetheless, the LSPA does not fall within any of these classes of
information. Moreover, the privilegeis not absolute, and the court may compel
disclosure where it is indispensable for doing justice.

At any rate, respondent failed to discharge the burden of showing that the LSPA is a
privileged document. Respondent did not present any law or regulation that considers
1âwphi1

bank documents such as the LSPA as classified information. Its contention that the 29
Special Purpose Vehicle Act65 only requires the creditor-bank to give notice to the debtor
of the transfer of his or her account to a special purpose vehicle, and that the assignee-
special purpose vehicle has no obligation to disclose other financial documents related
to the sale, is untenable. The Special Purpose Vehicle Act does not explicitly declare
these financial documents as privileged matters. Further, as discussed, petitioners are
not precluded from inquiring as to the true consideration of the assignment, precisely
because the same law in relation to Article 1634 allows the debtor to extinguish its debt
by reimbursing the assignee-special purpose vehicle of the actual price the latter paid
for the assignment.

An assignment of a credit "produce[s] no effect as against third persons, unless it


appears ina public instrument[.]"66It strains reason why the LSPA, which by law must be
a publicinstrument to be binding against third persons such as petitioners-debtors, is
privileged and confidential.

Alternative defenses are


allowed under the Rules

Finally, respondent’s contention that petitioners cannot claim the validity and invalidity
of the deed ofassignment at the same time is untenable.

The invocation by petitioners of Article 1634, which presupposes the validity of the
deed of assignment orthe transfer of the EIB credit to respondent, even if it would run
counter to their defense on the invalidity of the deed of assignment, is proper and
sanctioned by Rule 8, Section 2 of the Rules of Court, which reads:

SEC. 2. Alternative causes of action or defenses. — A party may set forth two or more
statements of a claim or defense alternatively or hypothetically, either in one causeof
action or defense or in separate causes of action or defenses. When two or more
statements are made in the alternative and one of them if made independently would
be sufficient, the pleading is not made insufficient by the insufficiency of one or more of
the alternative statements. (Emphasis supplied)

All told, respondent failed to allege sufficient reasons for us to reconsider our decision.
Verily, the production and inspection of the LSPA and its annexes fulfill the discovery-
procedures objective of making the trial "less a game of blind man’s buff and morea fair
contest with the basic issues and facts disclosed to the fullest practicable extent."67

WHEREFORE, the motion for reconsideration is DENIED WITH FINALITY.

SO ORDERED.

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