July 25, 2016

G.R. No. 202514

ANNA MARIE L. GUMABON, Petitioner

vs.
PHILIPPINE NATIONAL BANK, Respondent

DECISION

BRION, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Anna
1

Marie Gumabon (Anna Marie) assailing the December 16, 2011 decision  and June 26, 2012
2

resolution  of the Court of Appeals (CA) in CA-G.R. CV. No. 96289. The CA reversed the Regional
3

Trial Court (RTC)'s ruling  in Civil Case No. Q-04-53432 favoring Anna Marie.
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The Facts

On August 12, 2004, Anna Marie filed a complaint for recovery of sum of money and damages
before the RTC against the Philippine National Bank (PNB) and the PNB Delta branch manager
Silverio Fernandez (Fernandez). The case stemmed from the PNB’s refusal to release Anna Marie’s
money in a consolidated savings account and in two foreign exchange time deposits, evidenced
by Foreign Exchange Certificates of Time Deposit (FXCTD).

In 2001, Anna Marie, together with her mother Angeles and her siblings Anna Elena and Santiago,
(the Gumabons) deposited with the PNB Delta Branch $10,945.28 and $16,830.91, for which they
were issued FXCTD Nos. A-993902  and A-993992,  respectively.
5 6

The Gumabons also maintained eight (8) savings accounts  in the same bank. Anna Marie decided
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to consolidate the eight (8) savings accounts and to withdraw ₱2,727,235.85 from the consolidated
savings account to help her sister’s financial needs.

Anna Marie called the PNB employee handling her accounts, Reino Antonio Salvoro (Salvoro), to
facilitate the consolidation of the savings accounts and the withdrawal. When she went to the bank
on April 14, 2003, she was informed that she could not withdraw from the savings accounts since
her bank records were missing and Salvoro could not be contacted.

On April 15, 2003, Anna Marie presented her two FXCTDs, but was also unable to withdraw against
them. Fernandez informed her that the bank would still verify and investigate before allowing the
withdrawal since Salvoro had not reported for work.

Thus, Anna Marie sent two demand letters  dated April 23 and April 25, 2003 to the PNB.
8

After a month, the PNB finally consolidated the savings accounts and issued a passbook
for Savings Account (SA) No. 6121200.  The PNB also confirmed that the total deposits amounted
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to ₱2,734,207.36. Anna Marie, her mother, and the PNB executed a Deed of Waiver and
Quitclaim dated May 23, 2003  to settle all questions regarding the consolidation of the savings
10

accounts. After withdrawals, the balance of her consolidated savings account was ₱250,741.82.
On July 30, 2003, the PNB sent letters to Anna Marie to inform her that the PNB refused to honor its
obligation under FXCTD Nos. 993902 and 993992,  and that the PNB withheld the release of the
11

balance of ₱250,741.82 in the consolidated savings account.  According to the PNB, Anna Marie
12

pre-terminated, withdrew and/or debited sums against her deposits.

Thus, Anna Marie filed before the RTC a complaint for sum of money and damages against the
PNB and Fernandez. 13

As to the two FXCTDs, Anna Marie contended that the PNB’s refusal to pay her time deposits is
contrary to law.  The PNB cannot claim that the bank deposits have been paid since the certificates
1âwphi1

of the time deposits are still with Anna Marie.

14

As to the consolidated savings account, Anna Marie stated that the PNB had already acknowledged
the account’s balance in the Deed of Waiver and Quitclaim amounting to ₱2,734,207.36. As of
January 26, 2004, the remaining balance was ₱250,741.82. PNB presented no concrete proof that
this amount had been withdrawn.

Anna Marie prayed that the PNB and Fernandez be held solidarily liable for actual, moral, and
exemplary damages, as well as attorney’s fees, costs of suit, and legal interests because of the
PNB’s refusal to honor its obligations.

In its answer,  the PNB argued that: (1) Anna Marie is not entitled to the balance of the consolidated
15

savings account based on solutio indebiti; (2) the PNB already paid the $10,058.01 covered by
FXCTD No. 993902; (3) the PNB is liable to pay only $10,718.87 of FXCTD No. 993992, instead of
the full amount of $17,235.41; and (4) Anna Marie is guilty of contributory negligence. The PNB’s
arguments are discussed below.

First, Anna Marie is not entitled to the alleged balance of ₱250,741.82. The PNB’s investigation
showed that Anna Marie withdrew a total of ₱251,246.81  from two of the eight savings accounts
16

and she used this amount to purchase manager’s check No. 0000760633.  Hence, ₱251,246.81
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should be deducted from the sum agreed upon in the Deed of Waiver and Quitclaim. The PNB
offered photocopies of the PNB’s miscellaneous ticket  and the manager’s check as evidence to
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prove the withdrawals. The PNB argued that unjust enrichment would result if Anna Marie would be
allowed to collect ₱250,741.82 from the consolidated savings account without deducting her
previous withdrawal of ₱251,246.81.

Second, Anna Marie is not entitled to receive $10,058.01 covered by FXCTD No. 993902. Based on
the PNB’s records, Anna Marie pre-terminated FXCTD No. 993902 on March 11, 2002, and used the
deposit, together with another deposit covered by FXCTD No. 993914 (for $8,111.35), to purchase
a foreign demand draft (FX Demand Draft No. 4699831) payable to Anna Rose/Angeles Gumabon.
The PNB presented a facsimile copy of Anna Rose’s Statement of Account (SOA)  from the PNB
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Bank to prove that the amount covered by FXCTD No. 993902 was already paid.

Third, Anna Marie is only entitled to receive $10,718.87 instead of the full amount of $17,235.41
covered by FXCTD No. 993992 because: (a) the amount of $1,950.00 was part of the money used
by Anna Marie to purchase the manager’s check; (2) the amount of $2,566.54 was credited to
Current Account No. 227-810961-8 owned by Anna Marie’s aunt, Lolita Lim; and (3) the amount of
$2,000.00 was credited to Current Account No. 2108107498 of Anna Marie and Savings Account
No. 212-5057333 of Anna Marie/or Angeles or Santiago/or Elena (all surnamed Gumabon). Hence,
these amounts should be deducted from the amount payable to Anna Marie.

Finally, the PNB alleged that Anna Marie was guilty of contributory negligence in her bank dealings.
In her reply,  Anna Marie argued that the best evidence of her withdrawals is the withdrawal slips
20

duly signed by her and the passbooks pertaining to the accounts. PNB, however, failed to show any
of the withdrawal slips and/or passbooks, and also failed to present sufficient evidence that she used
her accounts’ funds.

The RTC Ruling

The RTC ruled in Anna Marie’s favour. 21

The RTC held that the PNB had not yet paid the remaining balance of $10,058.01 under FXCTD No.
993902. Anna Marie’s SOA,  which the PNB relied upon, is a mere photocopy and does not satisfy
22

the best evidence rule. Moreover, there is no indication on the stated amounts in the SOA that the
funds have come from FXCTD No. 993902.  The PNB failed to obtain the deposition of a PNC Bank
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officer or present any other evidence to show that the amounts stated in the SOA came from FXCTD
No. 993902. The RTC also held that the alleged pre-termination of FXCTD No. 993902 on March 11,
2002, is hard to believe since the certificate shows that the last entry was made on March 24, 2003,
with a reflected balance of $10,058.01.

On FXCTD No. 993992, the RTC held that the PNB failed to prove Anna Marie’s alleged
withdrawals. These alleged withdrawals are not reflected at the back of the certificate. Anna Marie’s
ledger was also not presented as evidence to show that several withdrawals had been made against
FXCTD No. 993992.

On the consolidated savings account, the RTC held that the PNB failed to prove that Anna Marie
withdrew the balance of ₱250,741.82. The RTC excluded PNB’s evidence, i.e., photocopies of the
miscellaneous ticket and manager’s check, to prove the alleged withdrawals, since these documents
were just photocopies and thus failed to satisfy the best evidence rule.

The RTC awarded damages to Anna Marie due to the PNB’s mishandling of her account through its
employee, Salvoro. The RTC also held that the PNB failed to establish Anna Marie’s contributory
negligence.

In conclusion, the RTC ordered the PNB to pay Anna Marie these amounts:

(1) Actual damages of:

(a) $10,058.01, as the outstanding balance of FXCTD No. 993902;

(b) $20,244.42, as the outstanding balance of FXCTD No. 993992;and

(c) ₱250,741.82, as the outstanding balance of SA No. 6121200;

(2) ₱100,000.00 as moral damages;

(3) ₱50,000.00 as exemplary damages;

(4) ₱150,000.00 as attorney’s fees; and

(5) Costs of suit.

From this ruling, the PNB appealed before the CA.

The CA Ruling

The CA reversed the RTC’s ruling. 24

The CA held that the PNB had paid the actual amounts claimed by Anna Marie in her complaint. The
CA noted Anna Marie’s suspicious and exclusive dealings with Salvoro and the Gumabons’
instruction to Salvoro to make unauthorized and unrecorded withdrawals. Hence, there are no
entries of withdrawals reflected in Anna Marie’s passbook.

The CA also considered Anna Rose’s SOA as proof that the PNB had paid the remaining balance of
$10,058.01 on FXCTD No. 993902. The CA held that the PNB verified the SOA and it was
corroborated by the affidavit  of the PNB Branch Operations Officer in New York. The CA stated
25

that the RTC should have allowed the taking of the deposition of the PNB bank officer.

The CA also relied on the PNB’s investigation and concluded that the PNB had already paid the
amounts claimed by Anna Marie under FXCTD Nos. 993902 and 993992.

As to Anna Marie’s consolidated savings account, the CA gave credence to the miscellaneous ticket
and the manager’s check presented by the PNB to prove that it had already paid the balance.

Anna Marie moved but failed to obtain reconsideration of the CA’s decision; hence, the present
petition.
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The Petition

Anna Marie filed the present petition for review to question the CA’s decision and resolution which
reversed the RTC’s ruling.

Anna Marie argues that: first, the CA should not have disregarded the RTC’s conclusive
findings; second, the CA erred in considering the PNB New York bank officer’s affidavit because it
was not formally offered as evidence; third, the CA erroneously relied on a foreign demand draft  to
27

prove the PNB’s payment of the amount due under FXCTD No. 993902; fourth, the CA erroneously
considered the miscellaneous ticket and the manager’s check because these documents are mere
photocopies and inadmissible under the best evidence rule; and fifth, the CA’s conclusion about a
purported "connivance" between Anna Marie and Salvoro has no evidentiary basis.

In its comment, the PNB counters that: first, the CA can rectify the RTC’s factual findings since the
RTC committed errors in its appreciation of the evidence; second, the RTC completely ignored the
PNB’s several evidence proving its payment of Anna Marie’s FXCTDs; third, Anna Marie did not
refute the PNB’s allegations of payment; fourth, the CA has the right to review even those exhibits
which were excluded by the RTC; and fifth, the CA correctly ruled that the PNB should not be faulted
about the unrecorded transactions, and that the PNB had done its duty to its depositors when it
conducted investigations and an internal audit of Anna Marie’s accounts.

The Issues

The issue before this Court is whether Anna Marie is entitled to the payment of the following
amounts:

(a) $10,058.01 or the outstanding balance under FXCTD No. 993902;

(b) $20,244.42 for FXCTD No. 993992;

(c) ₱250,741.82 for SA No. 6121200; and

(3) Damages.

Our Ruling

We grant the petition and reverse the CA’s ruling.

The core issue raised in the present petition is a question of fact. As a general rule, a petition for
review under Rule 45 of the Rules of Court covers only questions of law. Questions of fact are not
reviewable and cannot be passed upon by the Court in the exercise of its power to review under
Rule 45.28

There are, however, exceptions to the general rule. Questions of fact may be raised before this
Court in any of these instances: (1) when the findings are grounded entirely on speculations,
surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible;
(3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of
facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are
contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the petitioners main
and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on record. 29

The present case falls under two of the exceptions, particularly that the CA’s findings are contrary to
the RTC’s findings, and that the CA’s findings of fact are premised on absent evidence and
contradicted by the evidence on record.

We note that the CA considered pieces of evidence which are inadmissible under the Rules of Court,
particularly the manager’s check and the corresponding miscellaneous ticket, Anna Rose’s SOA,
and the affidavit of the PNB New York’s bank officer. The inadmissibility of these documents is
explained more fully in the following discussion.

PNB failed to establish the fact of

payment to Anna Marie in FXCTD
Nos. 993902 and 993992, and SA No. 6121200.

It is a settled rule in evidence that the one who alleges payment has the burden of proving it.  The
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burden of proving that the debt had been discharged by payment rests upon the debtor once the
debt’s existence has been fully established by the evidence on record. When the debtor introduces
some evidence of payment, the burden of going forward with the evidence – as distinct from the
burden of proof – shifts to the creditor. Consequently, the creditor has a duty to produce evidence to
show non-payment. 31

In the present case, both the CA and the RTC declared that the PNB has the burden of proving
payment. The lower courts, however, differed in resolving the question of whether the PNB
presented sufficient evidence of payment to shift the burden of evidence to Anna Marie. The RTC
ruled that the PNB failed to do so, after excluding PNB’s evidence, i.e., miscellaneous ticket,
manager’s check, and the affidavit of the PNB New York’s bank officer, based on the rules of
evidence. The CA, on the other hand, considered the excluded evidence and found that the PNB
presented sufficient proof of payment.

i. The PNB’s alleged payment of

the amount covered by SA No.
6121200

The PNB alleged that it had already paid the balance of the consolidated savings account (SA No.
6121200) amounting to P250,741.82. It presented the manager’s check to prove that Anna Marie
purchased the check using the amounts covered by the Gumabon’s two savings accounts which
were later part of Anna Marie’s consolidated savings account. The PNB also presented the
miscellaneous ticket to prove Anna Marie’s withdrawal from the savings accounts.

The RTC denied the admission of the manager’s check and the miscellaneous ticket since the
original copies were never presented.  The PNB moved to tender the excluded evidence and argued
32

that even without the presentation of the original copies, the photocopies are admissible because
they have been identified by Fernandez. 33

Evidence, to be admissible, must comply with two qualifications: (a) relevance and (b) competence.
Evidence is relevant if it has a relation to the fact in issue as to induce a belief in its existence or
nonexistence.  On the other hand, evidence is competent if it is not excluded by the law or by the
34

Rules of Court. 35

One of the grounds under the Rules of Court that determines the competence of evidence is the best
evidence rule. Section 3, Rule 130 of the Rules of Court provides that the original copy of the
document must be presented whenever the content of the document is under inquiry. 36

However, there are instances when the Court may allow the presentation of secondary evidence in
the absence of the original document. Section 3, Rule 130 of the Rules of Court enumerates these
exceptions:

(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.

While the RTC cannot consider the excluded evidence to resolve the issues, such evidence may still
be admitted on appeal provided there has been tender of the excluded evidence under Section 40 of
Rule 132 of the Rules of Court. 37

The PNB cannot simply substitute the mere photocopies of the subject documents for the original
copies without showing the court that any of the exceptions under Section 3 of Rule 130 of the Rules
of Court applies. The PNB’s failure to give a justifiable reason for the absence of the original
documents and to maintain a record of Anna Marie’s transactions only shows the PNB’s dismal
failure to fulfill its fiduciary duty to Anna Marie.  The Court expects the PNB to "treat the accounts of
38

its depositors with meticulous care, always having in mind the fiduciary nature of their
relationship."  The Court explained in Philippine Banking Corporation v. CA,  the fiduciary nature of
39 40

the bank’s relationship with its depositors, to wit:

The business of banking is imbued with public interest. The stability of banks largely depends on the
confidence of the people in the honesty and efficiency of banks. In Simex International (Manila) Inc.
v. Court of Appeals we pointed out the depositor’s reasonable expectations from a bank and the
bank’s corresponding duty to its depositor, as follows:

In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether
such account consists only of a few hundred pesos or of millions. The bank must record every
single transaction accurately, down to the last centavo, and as promptly as possible.  This has
to be done if the account is to reflect at any given time the amount of money the depositor can
dispose of as he sees fit, confident that the bank will deliver it as and to whomever he directs.
(emphasis and underscoring supplied)

Consequently, the CA should not have admitted the subject documents even if the PNB tendered
the excluded evidence.

Notably, the PNB clearly admitted in the executed Deed of Waiver and Quitclaim that it owed Anna
Marie ₱2,734,207.36 under the consolidated savings account. After a number of uncontested
transactions, the remaining balance of Anna Marie’s deposit became ₱250,741.82. The inevitable
conclusion is that PNB’s obligation to pay ₱250,741.82 under SA No. 6121200 subsists.

ii. The PNB’s alleged payment of

the amount covered by FXCTD No. 993902

The PNB claimed that it had already paid the amount of $10,058.01 covered by FXCTD No. 993902.
It presented the foreign demand draft dated March 11, 2002 which Anna Marie allegedly purchased
with the funds of FXCTD No. 993902. In addition, the PNB also presented Anna Rose’s SOA to
show that there was a fund transfer involving the contested amount. To further support its claim, the
PNB annexed the affidavit of the PNB New York’s branch officer about the fund transfer. The PNB,
however, failed to formally offer the affidavit as evidence.

Anna Marie moved for the exclusion of the photocopy of Anna Rose’s SOA for failing to conform to
the best evidence rule. The RTC granted her motion and denied its admission. When the case
reached the CA, the CA stated that the RTC should have considered the evidence in the light of the
PNB’s identification of the SOA as an exact copy of the original and the claim that it is corroborated
by the affidavit of the PNB New York’s bank officer.

The PNB explained that its failure to present the original copy of Anna Rose’s SOA was because the
original was not in the PNB’s possession.

We rule that the SOA is inadmissible because it fails to qualify as relevant evidence. As the RTC
correctly stated, the SOA "does not show which of the amount stated therein came from the funds of
Certificate of Time Deposit No. A-993902." 41

The affidavit of the PNB New York’s bank officer is also inadmissible in the light of the following
self-explanatory provision of the Rules of Court:
"Sec. 34. Offer of evidence. – The court shall consider no evidence which has not been formally
offered. x x x."
42

Formal offer means that the offeror shall inform the court of the purpose of introducing its exhibits
into evidence. Without a formal offer of evidence, courts cannot take notice of this evidence even if
this has been previously marked and identified. 43

In Heirs of Pedro Pasag v. Parocha,  we reiterated the importance of a formal offer of evidence.
44

Courts are mandated to rest their factual findings and their judgment only and strictly upon the
evidence offered by the parties at the trial. The formal offer enables the judge to know the purpose
or purposes for which the proponent is presenting the evidence. It also affords the opposing parties
the chance to examine the evidence and to object to its admissibility. Moreover, it facilitates review
as the appellate court will not be required to review documents not previously scrutinized by the trial
court.

In People v. Napat-a,  People v. Mate,  and Heirs of Romana Saves, et al. v. Escolastico Saves, et
45 46

al.,  we recognized the exceptions from the requirement of a formal offer of evidence, namely: (a)
47

the evidence must have been duly identified by testimony duly recorded; and (b) the evidence must
have been incorporated in the records of the case.

It is unmistakable that the PNB did not include the affidavit of the PNB New York’s bank officer in its
formal offer of evidence to corroborate Anna Rose’s SOA. Although the affidavit was included in the
records and identified by Fernandez, it remains inadmissible for being hearsay. Jurisprudence
dictates that an affidavit is merely hearsay evidence when its affiant or maker did not take the
witness stand.48

In the present case, Fernandez is not the proper party to identify the affidavit executed by the PNB
New York’s bank officer since he is not the affiant. Therefore, the affidavit is inadmissible.

Thus, the PNB failed to present sufficient and admissible evidence to prove payment of the
$10,058.01.This failure leads us to conclude that the PNB is still liable to pay the amount covered by
FXCTD No. 993902.

iii. The PNB’s alleged payment of

the amount covered by FXCTD No. 993992

The PNB alleged that Anna Marie’s claim over FXCTD No. 993992 should only be limited to
$5,857.79. It presented the manager’s check, which admissibility we have heretofore discussed and
settled, and the miscellaneous tickets.

We cannot absolve the PNB from liability based on these miscellaneous tickets alone. As the RTC
correctly stated, the transactions allegedly evidenced by these tickets were neither posted at the
back of Anna Marie’s certificate, nor recorded on her ledger to show that several withdrawals had
been made on the account.

At this point, we remind the PNB of the negotiability of a certificate of deposit as it is a written
acknowledgment by the bank of the receipt of a sum of money on deposit which the bank promises
to pay to the depositor, to the latter’s order, or to some other person or the latter’s order.  To
49

discharge a debt, the bank must pay to someone authorized to receive the payment.  A bank acts at
50

its peril when it pays deposits evidenced by a certificate of deposit, without its production and
surrender after proper indorsement. 51
Again, as the RTC had correctly stated, the PNB should not have allowed the withdrawals, if there
were indeed any, without the presentation of the covering foreign certificates of time deposit. There
are no irregularities on Anna Marie’s certificates to justify the PNB’s refusal to pay the stated
amounts in the certificates when it was presented for payment.

Therefore, the PNB is liable for Anna Marie’s claims since it failed to prove that it had already been
discharged from its obligation.

PNB is liable to Anna Marie for actual, moral, and

exemplary damages as well as attorney’s fees for its
negligent acts as a banking institution.

Since the PNB is clearly liable to Anna Marie for her deposits, the Court now determines PNB’s
liability for damages under existing laws and jurisprudence.

Section 2 of Republic Act No. 8791,  declares the State’s recognition of the "fiduciary nature of
52

banking that requires high standards of integrity and performance." It cannot be overemphasized
that the banking business is impressed with public interest. The trust and confidence of the public to
the industry is given utmost importance.  Thus, the bank is under obligation to treat its depositor’s
53

accounts with meticulous care, having in mind the nature of their relationship.  The bank is required
54

to assume a degree of diligence higher than that of a good father of a family. 55

As earlier settled, the PNB was negligent for its failure to update and properly handle Anna Marie’s
accounts. This is patent from the PNB’s letter to Anna Marie, admitting the error and unauthorized
withdrawals from her account. Moreover, Anna Marie was led to believe that the amounts she has in
her accounts would remain because of the Deed of Waiver and Quitclaim executed by her, her
mother, and PNB. Assuming arguendo that Anna Marie made the contested withdrawals, due
diligence requires the PNB to record the transactions in her passbooks.

The Court has established in a number of cases the standard of care required from banks, and the
bank’s liability for the damages sustained by the depositor. The bank is not absolved from liability by
the fact that it was the bank’s employee who committed the wrong and caused damage to the
depositor.  Article 2180 of the New Civil Code provides that the owners and managers of an
56

establishment are responsible for damages caused by their employees while performing their
functions.57

In addition, we held in PNB v. Pike,  that although the bank’s employees are the ones negligent, a
58

bank is primarily liable for the employees’ acts because banks are expected to exercise the highest
degree of diligence in the selection and supervision of their employees.

Indeed, a great possibility exists that Salvoro was involved in the unauthorized withdrawals. Anna
Marie entrusted her accounts to and made her banking transactions only through him. Salvaro’s
unexplained disappearance further confirms this Court’s suspicions. The Court is alarmed that he
was able to repeatedly do these unrecorded transactions without the bank noticing it. This only
shows that the PNB has been negligent in the supervision of its employees.

As to contributory negligence, the Court agrees with the RTC that the PNB failed to substantiate its
allegation that Anna Marie was guilty of contributory negligence.
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to
the harm he has suffered, which falls below the standard to which he is required to conform for his
own protection.  Whether contributory negligence transpired is a factual matter that must be proven.
59

In the present case, Anna Marie cannot be held responsible for entrusting her account with Salvoro.
As shown in the records, Salvoro was the bank’s time deposit specialist. Anna Marie cannot thus be
faulted if she engaged the bank’s services through Salvoro for transactions related to her time
deposits.

The Court also cannot accept the CA’s conclusion that there was connivance between Anna Marie
and Salvoro. This conclusion is simply not supported by the records and is therefore baseless.

In these lights, we hold that Anna Marie is entitled to moral damages of ₱100,000.00. In cases of
breach of contract, moral damages are recoverable only if the defendant acted fraudulently or in bad
faith, or is guilty of gross negligence amounting to bad faith, or in clear disregard of his contractual
obligations.  Anna Marie was able to establish the mental anguish and serious anxiety that she
60

suffered because of the PNB’s refusal to honor its obligations.

Anna Marie is likewise entitled to exemplary damages of ₱50,000.00. Article 2229 of the New Civil
Code imposes exemplary damages by way of example or correction for the public good. To repeat,
banks must treat the accounts of its depositors with meticulous care and always have in mind the
fiduciary nature of its relationship with them.  Having failed to observe these, the award of exemplary
61

damages is justified.

As exemplary damages are awarded herein  and as Anna Marie was compelled to litigate to protect
62

her interests,  the award of attorney’s fees and expenses of litigation of ₱150,000.00 is proper.
63

Finally, we impose legal interest pursuant to the guidelines in Nacar v. Gallery Frames.  We held in
64

that case that for interest awarded on actual and compensatory damages, the interest rate is
imposed as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12% per annum [changed to 6% per
annum starting July 1, 2013] to be computed from default, i.e., from extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.

xxxx

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate
of legal interest x x x shall be 6% per annum from such finality until its satisfaction. x x x

We note that pursuant to the Bangko Sentral ng Pilipinas-Monetary Board Circular No. 799, the legal
interest rate is 6% per annum effective July 1, 2013. The new rate is applicable prospectively; thus,
the 12% per annum shall still apply until June 30, 2013.

In the present case, Anna Marie filed her complaint on August 12, 2004. PNB is therefore liable for
legal interest of 12% per annum from Augus t 12, 2004 until June 30, 2013, and 6% per annum from
July 1, 2013, until its full satisfaction.
WHEREFORE, the petition is GRANTED. The assailed December 16, 2011 decision and June 26,
2012 resolution of the Court of Appeals is hereby reversed. The October 26, 2010 decision of the
Regional Trial Court is REINSTATED with MODIFICATIONS. Thus, the Philippine National Bank
is ORDERED to pay Anna Marie Gumabon the following:

(1) Actual damages of:

(a) $10,058.01, as the outstanding balance of FXCTD No. 993902;

(b) $ 20,244.42, as the outstanding balance of FXCTD No. 993992; and

(c) ₱250,741.82, as the outstanding balance of SA No. 6121200;

(2) Legal interest of twelve percent (12%) per annum of the total actual damages from August 12,
2004 to June 30, 2013, and six percent (6o/o) per annum from July 1, 2013 until full satisfaction;

(3) ₱l00,000.00 as moral damages;

(4) ₱50,000.00 as exemplary damages;

(5) ₱l50,000.00 as attorney's fees; and

(7) Costs of suit.

Let a copy of this Decision be furnished the Financial Consumers Protection Department of the
Bangko Sentral ng Pilipinas, for information and possible action in accordance with the Bangko
Sentral ng Pilipinas' mandate to protect the banking public.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 201011               January 27, 2014

THERESITA, JUAN, ASUNCION, PATROCINIA, RICARDO, and GLORIA, all surnamed

DIMAGUILA, Petitioners,
vs.
JOSE and SONIA A. MONTEIRO, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the August 15,
2011Decision  and the March 5, 2012 Resolution  of the Court of Appeals (CA), in CA-G.R. CV No.
1 2

92707, which affirmed the August 23, 2007 Decision  of the Regional Trial Court, Branch 27, Santa
3

Cruz, Laguna (RTC), in Civil Case No. SC-3108.

The Facts

On July 5, 1993, the respondent spouses, Jose and Sonia Monteiro (Spouses Monteiro), along with
Jose, Gerasmo, Elisa, and Clarita Nobleza, filed their Complaint for Partition and Damages before
the RTC, against the pet1t10ners, Theresita, Juan, Asuncion, Patrocinia, Ricardo, and Gloria
Dimaguila (The Dimaguilas), together with Rosalina, Jonathan, Eve, Sol, Venus, Enrique, Nina,
Princess Arieta, and Evangelina Borlaza. The complaint alleged that all the pmiies were co-owners
and prayed for the pmiition of a residential house and lot located at Gat. Tayaw St., Liliw, Laguna,
with an area of 489 square meters, and covered by Tax Declaration No. 1453. Spouses Monteiro
anchored their claim on a deed of sale executed in their favor by the heirs of Pedro Dimaguila
(Pedro).

In their Answer, the Dimaguilas and the other defendants countered that there was no co-ownership
to speak of in the first place. They alleged that the subject property, then owned by Maria Ignacio
Buenaseda, had long been partitioned equally between her two sons, Perfecto and Vitaliano
Dimaguila, through a Deed of Extrajudicial Partition, with its southern-half portion assigned to
Perfecto and the northern-half portion to Vitaliano. They claimed that they were the heirs of Vitaliano
and that Spouses Monteiro had nothing to do with the property as they were not heirs of either
Perfecto or Vitaliano.

During the course of the proceedings, several incidents were initiated, namely: (a) Motion to Dismiss
for lack of legal capacity to sue of Spouses Monteiro and for lack of cause of action; (b) Motion for
Reconsideration of the Order of denial thereof, which was denied; (c) Motion for Production and
Inspection of Documents; (d) Motion for Reconsideration of the Order granting the same, which was
denied; (e) Motion to Defer Pre-trial; (f) Notice of Consignation by the petitioners in the exercise of
their alleged right of redemption of the share being claimed by the Spouses Monteiro in light of the
deed of sale they produced and claimed to have been executed by the heirs of Pedro in their favor;
(g) Motion to Remove Sonia Monteiro (Sonia) as plaintiff, which was denied; (h) Motion for
Reconsideration thereof, which was also denied; (i) Motion for Clarification and/or Extended
Resolution; and (j) Motion to Suspend Proceedings due to a pending Petition for Certiorari before the
CA assailing several of the RTC orders. The proceedings resumed after the promulgation by the CA
of its April 5, 2000 Resolution in CA-G.R. No. SP 52833, which upheld the assailed RTC orders.

On January 2, 2001, upon resumption of the proceedings, Spouses Monteiro filed their Motion for
Leave to Amend and/or Admit Amended Complaint.  The RTC granted their motion. The amended
4

complaint abandoned the original claim for partition and instead sought the recovery of possession
of a portion of the subject property occupied by the Dimagui as and other defendants, specifically,
the potiion sold to the couple by the heirs of Pedro. Furthermore, only Spouses Monteiro were
retained as plaintiffs and the Dimaguilas as defendants.

In amending their complaint, Spouses Montiero adopted the Dimaguilas' admission in their original
answer that the subject propetiy had already been partitioned between Perfecto and Vitaliano,
through a Deed of Extrajudicial Partition, dated October 5, 1945, and that during their lifetime, the
brothers agreed that Perfecto would become the owner of the southern-hal f portion and Vitaliano of
the northern-half portion, which division was observed and respected by them as well as their heirs
and successors-in-interest.

Spouses Monteiro further averred that Perfecto was survived by Esperanza, Leandro and Pedro,
who had divided the southern-half portion equally amongst themselves, with their respective 1 /3
shares measuring 81.13 square meters each; that Pedro's share pertains to the 1 /3 of the southern-
half immediately adjacent to the northern-half adjudicated to the

Dimaguilas as heirs of Vitaliano; that on September 29, 1992, Pedro's share was sold by his heirs to
them through a Bilihan ng Lahat Naming Karapatan (Bilihan) with the acquiescence of the heirs of
Esperanza and Leandro appearing in an Affidavit of Conformity and Waiver; and that when they
attempted to take possession of the share of Pedro, they discovered that the subject portion was
being occupied by the Dimaguilas.

In their Answer  to the amended complaint, the Dimaguilas admitted that the subject property was
5

inherited by, and divided equally between Perfecto and Vitaliano, but denied the admission in their
original answer that it had been actually divided into southern and nmihern portions. Instead, they
argued that the Extrajudicial Partition mentioned only the division of the subject property "into two
and share and share alike." In effect, they argued the existence of a co-owenrship, contrary to their
original position. The Dimaguilas further argued that the Bilihan did not specify the metes and
bounds of the property sold, in violation of Article 1458 of the Civil Code. Even assuming that such
had been specified, they averred that the sale of a definite portion of a property owned in common
was void since a co-owner could only sell his undivided share in the property.

During the trial, Spouses Monteiro presented Pedrito Adrieta, brother of Sonia Monteiro (Sonia), who
testified that Perfecto was his grandfather and that at the time of Perfecto's death, he had two
properties, one of which was the subject property in Liliw, Laguna, which went to his children,
Esperanza, Leonardo and Pedro. Pedro was survived by his children Pedrito, Theresita, Francisco,
and Luis, who, in turn, sold their rights over the subject property to Sonia.
Sonia testified that she was approached by Pedro's son, Francisco, and was asked if she was
interested in purchasing Pedro's 1/3 share of the southern portion of the Bahay na Sato, and that he
showed her a deed of extrajudicial partition executed by and between Perfecto and Vitaliano, as well
as the tax declaration of the property to prove that the property had already been partitioned
between the two brothers.

Engineer Baltazar F. Mesina testified that he was the geodetic engineer hired by Spouses Monteiro
to survey the property in Liliw, and recounted that he checked the boundary of the subject property,
subdivided the lot into two and came up with a survey plan.

Crisostomo Arves, an employee from the Office of the Municipal Assessor, presented a certified true
copy of the cadastral map of Liliw and a list of claimants/owners.

Dominga Tolentino, a record officer of the Department of Environment and Natural Resources
(DENR), testified that as part of her duties, she certifies and safekeeps the records of surveyed land,
including cadastral maps from the region.

One of the Dimaguilas, Asuncion, was the sole witness for the defendants. She testified that their
first counsel made a mistake when he alleged in their original answer that the property had already
been partitioned into n01ihern and southern portions between the two brothers, as the original
answer had been rushed and they were never given a copy of it. She claimed that the mistake was
only pointed out to her by their new counsel after their former counsel withdrew due to cancer. She
further testified that there was no intention to partition the "bahay na bato" which stood on the
subject property, in order to preserve its historical and sentimental value.

Ruling of the RTC

In its August 23, 2007 Decision, the RTC ruled in favor of Spouses Monteiro and ordered the
Dimaguilas to turn over the possession of the subject 1 /3 portion of the southern-half of the
property, to wit:

WHEREOF, judgment is hereby rendered in favor of the plaintiffs and against the defendants:

a. Ordering the defendants and all persons claiming rights under them to peacefully vacate
and turn-over possession of 1/ 3 of the southern portion of the property covered by Tax
Declaration No. 1453, specifically described as "A" of Lot 877 in the sketch plan marked as
Exhibit "I", within 60 days from the finality of this Decision, failing which let a writ of
possession issue;

b. Ordering the defendants to pay the plaintiffs, jointly and solidarily, the amount of ?500 per
month in the form of rent for the use of the property from July 1993 until the property is
vacated;

c. Ordering the defendants to pay the plaintiffs, jointly and solidarily, attorney's fees of
₱30,000 and litigation expense of ₱20,000.

SO ORDERED. 6

The RTC found that although the extrajudicial partition merely divided the property into two share
and share alike, evidence aliunde was appreciated to show that there was an actual division of the
property into south and north between Perfecto and Vitaliano, and that such partition was observed
and honored by their heirs. These pieces of evidence were the cadastral map of Liliw  and a
7

corresponding list of claimants, which showed that the subject property had long been registered
as ,m,l., Lot 876 (northern-half), claimed by Buenaventura Dimaguila (Buenaventura), an heir of
Vitaliano, . and Lot 877 (southern-half), claimed by Perfecto.

The RTC held that the manner of partition was admitted by the Dimaguilas themselves in their
original answer. It gave no credence to the claim of Asuncion that such admission was an error of
their former counsel and that she was unaware of the contents of their original answer. It noted that
the Dimaguilas had strongly maintained their theory of partition from 1992 when the complaint was
first filed, and only changed their defense in 2001 when Spouses Monteiro filed their amended
complaint. It keenly observed that it was precisely their admission which propelled Spouses Monteiro
to amend their complaint from one of partition to recovery of possession. Thus, the RTC concluded
that there was indeed a partition of the subject property into southern-half and northern-half portions
between Perfecto and Vitaliano and that the Dimaguilas were estopped from denying the same.

As to the authenticity of the Bilihan, where the 1 /3 share of Pedro was sold to Spouses Monteiro,
the RTC found the document to be regular and authentic absent any piece of evidence to the
contrary. It stated that the proper persons to contest the sale were not the Dimaguilas, who were the
heirs of Vitaliano, but the heirs of Perfecto. It noted that the records showed that the heirs of
Esperanza and Leandro (Pedro's siblings), had signified their conformity to the pa1iition and to the
sale of Pedro's 1 /3 portion.

Ruling of the CA

In its assailed August 15, 2011 Decision, the CA affirmed the ruling of the RTC.

The CA found that Spouses Monteiro had established their case by a preponderance of evidence
thru their presentation of the Deed of Extrajudicial Partition,  the cadastral map and the municipal
8

assessor's records.  It noted, more importantly, that the Dimaguilas themselves corroborated the
9

claim of partition in their original answer. It likewise ruled that the petitioners were estopped from
denying their admission of partition after the respondent spouses had relied on their judicial
admission.

The Dimaguilas also insisted on their argument, which was raised before the RTC, but not
addressed, that the Bilihan should not have been admitted as evidence for lack of a documentary
stamp tax, in accordance with Section 201 of the National Internal Revenue Code (N!RC). Citing
Gabucan v. Manta  and Del Rosario v. Hamoy,  the CA, however, ruled that if a document which did
10 11

not bear the required documentary stamp was presented in evidence, the court should require the
proponent to affix the requisite stamp. The CA noted that the RTC had failed to direct Spouses
Monteiro to affix the stamp and merely reminded the presiding judge to be more vigilant on similar
situations in the future. Nonetheless, it held that the petitioners did not possess the necessary
personality to assail the sale between Spouses Monteiro and the heirs of Pedro because it pe1iained
to the southern-half of the property to which they had no claim.

The CA likewise found sufficient basis for the award of rentals as compensatory damages since
Spouses Monteiro were wrongfully deprived of possession of the 1/3 portion of the southern-half of
the subject property. It also upheld the award of attorney's fees and litigation expenses by the RTC,
considering that Spouses Monteiro were compelled to litigate and incur expenses to protect their
rights and interest.

In its assailed March 5, 2012 Resolution, the CA denied the petitioners' motion for reconsideration
for lack of merit.
Hence, this petition.

ASSIGNMENT OF ERRORS

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THERE WAS AN ACTUAL
PARTITION OF THE PROPERTY COVERED BY TAX DECLARATION NO. 1453.

II

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE 1/3 PORTION OF THE
SOUTHERN HALF OF THE PROPERTY WAS SOLD TO THE RESPONDENTS.

III

THE COURT OF APPEALS GRAVELY ERRED IN ADMITTING IN EVIDENCE EXHIBIT C, THE

BIL/HAN NG LAHA T NAMING KARAPATAN.

IV

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE RESPONDENTS ARE
ENTITLED TO RECOVER POSSESSION OF THE 1/3 PORTION OF THE SOUTHERN HALF OF
THE PROPERTY.

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THE PETITIONERS LIABLE FOR
RENTALS FOR THE USE OF THE PROPERTY FROM JULY 1993 UNTIL VACATED.

VI

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THE PETITIONERS LIABLE FOR
ATTORNEY'S FEES AND LITIGATION EXPENSES.

VII

THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO CONSIDER THE

PETITIONERS' SUPPLEMENTAL ANSWER TO AMENDED COMPLAINT AND TO GRANT THE
COUNTERCLAIMS INTERPOSED THEREIN. 12

The Dimaguilas argue that their original allegation regarding the partition of the subject property into
northern and southern portions was a mistake of their former counsel, and it was not their intention
to partition the property because to do so would damage the house thereon. Even assuming an
admission was made, the petitioners aver that such was made only by some, but not all, of the co-
owners; and that partition can only be made by all co-owners, and allowing the admission is
tantamount to effecting partition by only some co-owners. Spouses Monteiro themselves, in their
original complaint, made an admission that they were co-owners of the property and asserted that
there was no partition. The evidence aliunde considered by the RTC, consisting of the cadastral map
and the list of claimants, were timely objected to during the trial as hearsay and a violation of the
best evidence rule.
The petitioners reiterate that the Bilihan should not have been admitted into evidence because it
lacked the documentary stamp tax required by Section 201 of the NIRC, providing that no document
shall be admitted in evidence until the requisite stamps have been affixed thereto. They argue that
the ruling of petitioners' lack of personality to assail the deed of sale is different from the issue of the
deed of sale's admissibility as evidence. They conclude that considering that no documentary stamp
was ever affixed on the deed of sale, such should never have been admitted into evidence and
consequently, should not have been relied upon by the lower courts to prove the sale of 1/3 of the
southern portion; and that considering that the Bilihan is inadmissible as evidence, the respondent
spouses have no basis for their claim to the subject 1/3 portion of the southern-half of the property.
Thus, they insist that the lower courts erred in awarding to Spouses Monteiro the possession of the
subject prope1iy, the rentals, attorney's fees and litigation expenses, and in failing to rule on their
counterclaim for demolition of improvements and payment of damages.

The assignment of errors boils down to two main issues:

I. Whether there was a pa1iition of the subject property; and

2. Whether the 1/3 portion of the southern-half of the subject property was sold to the
respondent spouses.

Ruling of the Court

At the outset, it must be pointed out that the petitioners' assignment of errors calls for the Court to
again evaluate the evidence to determine whether there was a partition of the property and whether
the 1/3 portion of the southern half was sold to the respondent spouses. These clearly entail
questions of fact which are beyond the Court's ambit of review under Rule 45 of the Rules of Court,
especially considering that the findings of fact of the RTC were affirmed by the CA.  On this ground
13

alone, the present petition must be denied. Nonetheless, the Court shall delve into these factual
issues to finally put this case to rest.

Partition of the Subject Property

Spouses Monteiro, as plaintiffs in the original case, had the burden of proof to establish their case by
a preponderance of evidence, which is the weight, credit, and value of the aggregate evidence on
either side, synonymous with the term "greater weight of the evidence." Preponderance of evidence
is evidence which is more convincing to the court as worthy of belief than that which is offered in
opposition thereto. 14

To prove their claim of partition, the respondent spouses presented the following: (1) the Deed of
Extrajudicial Partition, dated October 5, 1945, executed by and between the brothers Perfecto and
Vitaliano; (2) the cadastral map of Liliw Cadm-484,  dated August 6, 1976, showing that the subject
15

property had been divided into southern and northern portions, registered as Lot Nos. 876 and 877;
and (3) the Municipal Assessor's records  showing that the said lots were respectively claimed by
16

Buenaventura and Perfecto.

It is undisputed that the Deed of Extrajudicial Partition stated that Perfecto and Vitaliano agreed "to
divide between them into two and share and share alike" the subject property, including the house
situated thereon. It appears, however, that the property was actually partitioned into definite portions,
namely, southern and northern halves, as reflected in the cadastral map of Liliw, which were
respectively claimed by an heir of Vitaliano and Perfecto himself. It, thus, appears that the subject
property had already been partitioned into definite portions more than 20 years prior to the original
complaint for partition filed in 1993, and that such division had been observed by the brothers' heirs.
As earlier pointed out, the petitioners themselves admitted to this very fact in their original answer, to
wit:

(b) On September 5, 1945 the brothers PERFECTO and VITALIANO DIMAGUILA executed a deed
of EXTRA JUDICIAL PARTITION of the aforedescribed property dividing the same into two (2) equal
parts as indicated in the aforesaid deed as follows, to wit:

xxx

(c) As a result of the foregoing partition and as known by all the parties in this case from the
beginning or as soon as they reached the age of discernment PERFECTO DIMAGUILA became the
sole and exclusive owner of the southern half of the aforedescribed property and VITALIANO
DIMAGUILA became the sole owner of the northern half of the same property; the house that was
built thereon and still existing up to this time was likewise equally divided between the two (2)
DIMAGUILA brothers in accordance with the extrajudicial partition of half equal shares;

xxx

2. In other words, the share of VITALIANO DIMAGUILA in the above described property has already
been long segregated and had passed on to his heirs as is very well known by all the parties in this
case;17

xxx

(Emphases in the Original)

Section 4  of Rule 129 of the Rules of Court provides that an admission made by a pa1iy in the
18

course of the proceedings in the same case does not require proof, and may be contradicted only by
showing that it was made through palpable mistake. The petitioners argue that such admission was
the palpable mistake of their former counsel in his rush to file the answer, a copy of which was not
provided to them. Petitioner Asuncion testified:

Q So, why was that allegations (sic) made in the Answer?

A May be, (sic) in his rush to file the Answer, Atty. Paredes filed the same without giving us a
copy ... 19

This contention is unacceptable. It is a purely self-serving claim unsupported by any iota of

evidence. Bare allegations, unsubstantiated by evidence, are not equivalent to proof.  Furthermore,
20

the Court notes that this position was adopted by the petitioners only almost eight (8) years after
their original answer was filed, in response to the amended complaint of the respondent spouses. In
their original answer to the complaint for partition, their claim that there was already a partition into
northern-half and southern-half portions, was the very essence of their defense. It was precisely this
admission which moved the respondent spouses to amend their complaint. The petitioners cannot
now insist that the very foundation of their original defense was a palpable mistake.

Article 1431  of the Civil Code provides that through estoppel, an admission is rendered conclusive
21

upon the person making it, and cannot be denied or disproved as against the person relying thereon.
The respondent spouses had clearly relied on the petitioners' admission and so amended their
original complaint for partition to one for recovery of possession of a portion of the subject property.
Thus, the petitioners are now estopped from denying or attempting to prove that there was no
partition of the property.

Considering that an admission does not require proof, the admission of the petitioners would actually
be sufficient to prove the partition even without the documents presented by the respondent
spouses. If anything, the additional evidence they presented only served to corroborate the
petitioners' admission.

The petitioners argue that they timely objected to the cadastral map and the list of claimants
presented by the respondent spouses, on the ground that they violated the rule on hearsay and the
best evidence rule.

Anent the best evidence rule, Section 3( d) of Rule 130 of the Rules of Court provides that when the
subject of inquiry is the contents of a document, no evidence shall be admissible other than the
original document itself, except when the original is a public record in the custody of a public officer
or is recorded in a public office.  Section 7 of the same Rule provides that when the original of a
22

document is in the custody of a public officer or is recorded in a public office, its contents may be
proved by a certified copy issued by the public officer in custody thereof.  Section 24 of Rule 132
23

provides that the record of public documents may be evidenced by a copy attested by the officer
having the legal custody or the record. 24

Certified true copies of the cadastral map of Liliw and the corresponding list of claimants of the area
covered by the map were presented by two public officers. The first was Crisostomo Arves, Clerk III
of the Municipal Assessor's Office, a repository of such documents. The second was Dominga
Tolentino, a DENR employee, who, as a record officer, certifies and safekeeps records of surveyed
land involving cadastral maps. The cadastral maps and the list of claimants, as ce1iified true copies
of original public records, fall under the exception to the best evidence rule.

As to the hearsay rule, Section 44 of Rule 130 of the Rules of Court similarly provides that entries in
official records are an exception to the rule.  The rule provides that entries in official records made in
25

the performance of the duty of a public officer of the Philippines, or by a person in the performance
of a duty specially enjoined by law, are prima facie evidence of the facts therein stated. The
necessity of this rule consists in the inconvenience and difficulty of requiring the official's attendance
as a witness to testify to the innumerable transactions in the course of his duty. The document's
trustworthiness consists in the presumption of regularity of performance of official duty. 26

Cadastral maps are the output of cadastral surveys. The DENR is the department tasked to execute,
supervise and manage the conduct of cadastral surveys.  It is, therefore, clear that the cadastral
27

map and the corresponding list of claimants qualify as entries in official records as they were
prepared by the DENR, as mandated by law. As such, they are exceptions to the hearsay rule and
are primafacie evidence of the facts stated therein.

Even granting that the petitioners had not admitted the partition, they presented no evidence to
contradict the evidence of the respondent spouses. Thus, even without the admission of the
petitioners, the respondent spouses proved by a preponderance of evidence that there had indeed
been a partition of the subject property.

Sale of 1/3 Portion of the Southern-half

To prove that 1/3 of the southern-half portion of the subject property was sold to them, Spouses
Monteiro presented a deed of sale entitled Bilihan ng Lahat Naming Karapatan,  dated September
28

29, 1992, wherein Pedro's share was sold by his heirs to them, with the acquiescence of the heirs of
Esperanza and Leandro in an Affidavit of Conformity and Waiver.  The petitioners argue that the
29

Bilihan should not have been admitted into evidence because it lacked the documentary stamp tax
required by Section 201 of the NIRC.

On August 29, 1994, the petitioners filed a motion for the production and/or inspection of
documents,  praying that Spouses Monteiro be ordered to produce the deed of sale, which they
30

cited as the source of their rights as co-owners. On November 20, 1995, Spouses Monteiro
submitted their compliance,  furnishing the RTC and the petitioners with a copy  of the Bilihan. On
31 32

January 3, 1996, the petitioners filed a notice of consignation,  manifesting that they had attempted
33

to exercise their right of redemption as co-owners of the 1/3 portion of the southern half of the
property under Article 1623  of the Civil Code by sending and tendering payment of redemption to
34

Spouses Monteiro, which was, however, returned.

By filing the notice of consignation and tendering their payment for the redemption of the 1/3 portion
of the southern-half of the property, the petitioners, in effect, admitted the existence, due execution
and validity of the Bilihan. Consequently, they are now estopped from questioning its admissiblity in
evidence for relying on such for their right of redemption. Additionally, the Court notes that the
copy  of the Bilihan which was originally submitted by Spouses Monteiro with its compliance filed on
35

November 20, 1995, does in fact bear a documentary stamp tax. It could only mean that the
documentary stamp tax on the sale was properly paid. The Bilihan was, therefore, properly admitted
into evidence and considered by the RTC.

In any case, as correctly held by the lower cou1is, the petitioners, as heirs of Vitaliano, who inherited
the northern-half po1iion of the subject property, do not possess the necessary personality to assail
the sale of the southern-half portion between Spouses Monteiro and the heirs of Pedro.  They are
1âwphi1

not real parties-in-interest who stand to be benefited or injured by the sale of the 1/3 portion of the
southern-half over which they have absolutely no right. As correctly ruled by the courts below, only
fellow co-owners have the personality to assail the sale, namely, the heirs of Pedro's siblings,
Esperanza and Leandro. They have, however, expressly aquiesced to the sale and waived their right
to the property in the affidavit presented by Spouses Monteiro.  As such, the petitioners have no
36

right to their counterclaims of demolition of improvements and payment of damages.

With Spouses Monteiro having sufficiently proved their claim over the subject I /3 portion of the
southern-half of the prope1iy through the Bilihan, the lower courts did not err in awarding
possession, rentals, attorney's fees, and litigation expenses to them.

The Court, however, finds that the award of rentals should be reckoned from January 2, 2001, the
date the Spouses Monteiro filed their Amended Complaint seeking recovery of the subject portion.
Interest at the rate of 6% per annum shall also be imposed on the total amount of rent due from
finality of this Decision until fully paid.
37

WHEREFORE, the petition is DENIED. The August 15, 2011 Decision and the March 15, 2012
Resolution of the Court of Appeals, in CA-G .R. CV No. 92707 are AFFIRMED with MODIFICATION,
in that:

a. The award of rent at the rate of ₱500.00 per month shall be reckoned from January 2,
2001 until the property is vacated; and

b. Interest at the rate of 6% per annum shall be imposed on the total amount of rent due from
finality of this Decision until fully paid.

SO ORDERED.
 SECOND DIVISION

G.R. No. 159288             October 19, 2004

JOHNSON LEE, petitioner,
vs.
PEOPLE OF THE PHILIPPINES and NEUGENE MARKETING, INC., respondents.

DECISION

CALLEJO, SR., J.:

NEUGENE Marketing, Inc. (NMI) was incorporated on January 27, 1978 with funds provided by the
Uy Family. It had an authorized capital stock of ₱3 million divided into 30,000 shares with a par
value of ₱100 per share. The original incorporators, with their corresponding number of shares and
the amounts thereof, are as follows:

Johnson Lee 600 ₱ 60,000.00

Lok Chun Suen 1,200 120,000.00
Charles O. Sy 1,800 180,000.00
Eugenio Flores, Jr. 2,100 210,000.00
Arsenio Yang, Jr. 300 30,000.00

TOTAL 6,000 ₱600,000.00

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

There were two stock dividend declarations, one on June 7, 1980 in the amount of
₱60,000.00 and another on May 2, 1981 for ₱40,000.00. On May 15, 1986 Eugenio Flores,
Jr. assigned/divested himself of his shares in favor of Sonny Moreno, 1,050 shares; Arsenio
Yang, Jr., 700 shares and Charles O. Sy, 700 shares.1

On June 11, 1987, the NMI sold and delivered to the Victorias Milling Company, Inc. (VMCI), in
Victorias, Negros Occidental, 77,500 pieces of empty white bags for the price of ₱565,750.00. NMI
issued Charge Invoice No. 08092 dated June 11, 1987 to VMCI covering said sale. On June 18,
1987, VMCI purchased 100,000 pieces of empty white bags from NMI for ₱730,000.00 for which
NMI issued Charge Invoice No. 0810.3 On June 25, 1987, VMCI again purchased 28,000 pieces of
empty white bags from NMI for the price of ₱204,400.00 and the latter issued Charge Invoice No.
08114 dated June 25, 1987. In payment of said purchases from NMI, VMCI drew and issued two
Bank of the Philippine Islands (BPI) Checks: Check No. 068706 dated August 3, 1987 in the amount
of ₱565,750.005 and Check No. 068993 dated August 19, 1987 in the amount of ₱934,400.00.6 Both
checks were payable to the order of NMI.
On October 13, 1987, stockholders owning two-thirds (2/3) of the subscribed capital stock of NMI
voted to call a stockholders’ meeting. One of the items in the agenda was the dissolution of the
corporation.

Pursuant thereto, a special stockholders’ meeting was held on October 24, 1987 in Bacolod City.
The following stockholders, who were also directors, were present and voted to dissolve the
corporation:

Name of Stockholders Number of Shares

Arsenio Yang, Jr. 1,050 <="" td=""
Charles Sy 2,800 style="font-
size: 14px;
Lok Chun Suen 1,400 text-
decoration:
none; color:
rgb(0, 0,
Total 5,250 128); font-
family:
arial,
verdana;">

Accordingly, notices were again sent to all stockholders of record, all of whom properly
acknowledged the said notices, that a meeting was to be held on November 30, 1987 to consider the
dissolution of the corporation. Again the stockholders who attended the October 24, 1987 meeting
were present. Upon motion duly seconded, the dissolution was approved. Per Resolution of the
Board of Directors, the law firm of Reyes, Treyes & Fudolin Law Office was appointed as trustee to
collect all the receivables of the corporation.

At the time of the approval of the dissolution of the corporation on November 30, 1987, the shares of
each stockholder were as follows:

Name of Stockholders Total as of Nov. 30.

Johnson Lee, 600 (subscription); 60

(June 7, 1980 stock dividend); 40
(May 2, 1981 stock dividend) --------- 700 shares

Lok Chun Suen, 1,200 (subscription); 120

(June 7, 1980 stock dividend); 80
(May 2, 1981 stock dividend) ---------- 1,400 shares

Charles O. Sy, 1800 (subscription); 180

(June 7, 1980 stock dividend); 120
(May 2, 1981 stock dividend); 700
(acquisition from Eugenio Flores ---------- 2,800 shares

Arsenio Yang, Jr., 300 (subscription); 30 1,050 shares

(June 7, 1980 stock dividend); 20
(May 2, 1981 stock dividend); 700
 (acquisition from Eugenio Flores) --------

Sonny Moreno, 1,050 (acquisition

From Eugenio Flores) ----------------------- 1,050 shares

Total ---------------------------------- 7,000 shares

Pursuant to Section 11 of the Corporation Code, the Securities and Exchange Commission
approved the dissolution of the corporation on March 1, 1988 subject to compliance of the
requirements, such as the sending of notices to stockholders and publication thereof in a newspaper
of general circulation, among others.

On March 22, 1988, Johnson Lee, Sonny Moreno, Leoncio Tan and Nicanor Martin filed a petition
with the Securities and Investigation Clearing Department (SICD) of the Commission praying, among
other things, for the annulment or nullification of the Certification of Filing of Resolution of Voluntary
Dissolution of NMI for being contrary to law and its by-laws.

In the meantime, the trustee wrote the petitioner, Johnson Lee, on March 8, 1988 requesting him to
turn over to it the ₱1,500,150.00 he received in payment of the empty bags sold by NMI to VCMI.
However, he failed to do so.7

A verified complaint for three (3) counts of estafa was filed against the petitioner and Sonny Moreno
with the City Prosecutor’s Office. Appended to the complaint were photocopies of Charge Invoice
Nos. 0809, 0810, and 0811, issued by NMI to VMCI.

During the requisite preliminary investigation, the petitioner and Moreno submitted their counter-
affidavits. The counter-affidavit of the petitioner consisted of five pages.8 After the investigation, two
(2) Amended Informations were filed against the petitioner and Moreno, with the Regional Trial Court
(RTC) of Negros Occidental. Except as to the particulars of the checks, the accusatory portions of
the two Informations are identical, thus:

That sometime in the month of August 1987, in the City of Bacolod, Philippines, and within
the jurisdiction of this Honorable Court, the herein accused, Johnson Lee, being then the
President and Sonny Moreno, the General Manager of Neugene Marketing, Inc., with the
duty and responsibility to collect, turn over and deliver their collections to the herein offended
party, Neugene Marketing, Inc., a corporation organized and existing by and under the laws
of the Philippines, represented herein by its Trustees, Roger Reyes, Ernesto Treyes, and
Eutiquio Fudolin, the said accused conspiring, confederating, and acting in concert far from
complying with the aforementioned obligation having collected the amount of ₱565,750.00
covered by BPI Check No. 068766 (sic) dated August 3, 1987 as payment of Victorias Milling
Company, a customer of the herein offended party, with intent of gain, and with
unfaithfulness or abuse of confidence failed and refused to deliver the aforementioned
amount to the herein offended party, up to the present, in spite of proper demands, but
instead, did, then and there willfully, unlawfully and feloniously convert[ed] and/or
misappropriated the same to their personal use and benefit to the damage and prejudice of
the herein offended party in the aforementioned amount of FIVE HUNDRED SIXTY-FIVE
THOUSAND SEVEN HUNDRED FIFTY (₱565,750.00) PESOS, Philippine Currency.

Act contrary to law.9

The cases were docketed as Criminal Cases Nos. 10010 and 10011.
During the trial, the original copies of Charge Invoice Nos. 0809, 0810 and 0811, and of BPI Check
Nos. 068766 and 068993 were not in the custody of the prosecution.

To prove the loss, destruction or non-availability of the original copies of the charge invoices and
checks, as well as the authenticity and due execution thereof, the prosecution presented Ban Hua
Flores, who testified that she saw the two checks in the office of the petitioner at the Singson
Building, Plaza Moraga, Sta. Cruz, Manila. Sometime in 1987, she went to the office of the VMCI
and inquired if it still had copies of the two checks and the clerk thereat informed her that it would be
difficult to locate the checks as they were stored in the bodega, where many other checks were
kept.10 Flores also testified that the signatures at the dorsal portion of the checks were those of the
petitioner, the President of NMI, with whom she had been working, and that he indorsed and
deposited the same on September 4, 1987 with the Solidbank, instead of the BPI Plaza Cervantes
branch in Manila, the official depository bank of NMI. According to Flores, she was able to secure
microfilm copies of the checks from Solidbank, and was sure that the copies of the checks and
invoices were faithful reproductions of the original copies thereof.11

Testifying for the prosecution in obedience to a subpoena issued by the court, Merlita Bayaban,
Manager for Corporate Affairs of VMCI, declared that the records section of VMCI, which had
custody of all checks and other corporate records, was near her office. She testified that the checks,
including their other records, were lost during the flood in 1985.12 She also testified on the
Certification13 issued by Carolina Diaz, the Comptroller of VMCI, confirming the loss of the two
checks. She, however, admitted that she did not see the original copies of the checks14 and that she
was not a signatory thereto.15

Thereafter, the prosecution formally offered in evidence the counter-affidavit of the petitioner during
the preliminary investigation, as well as the charge invoices and checks, viz.

"G" NMI Charge Invoice No. 0809 dated To prove that Victorias Milling Co., Inc. (VMC)
June 11, 1987 ordered 77,500 pieces of empty bags from NMI
on June 11, 1987 and that these bags were
delivered to VMC.

"H" NMI Charge Invoice No. 0810 dated To prove that VMC ordered 100,000 pieces of
June 18, 1987 empty bags from NMI on June 18, 1987 and that
these bags were delivered to VMC.

"I" NMI Charge Invoice No. 0811 dated To prove that VMC ordered 28,000 pieces of
June25, 1987 empty bags from NMI on June 25, 1987 and that
these bags were delivered to VMC.

"J" Demand letter dated March 8, 1988 To prove that in 1988, NMI made a demand upon
signed by Atty. Roger Z. Reyes the accused for the delivery of the amount of
₱1,500,150.00 representing VMC’s payment for
the delivery of the empty bags mentioned in
Exhibits "G," "H" and "I."

"J-1" Signature appearing above the To prove the genuineness, authenticity and due
typewritten name "Roger Z. Reyes" execution of Exhibit "J."
duly identified by the prosecution
witness, Mrs. Ban Hua Flores as the
signature of Atty. Roger Z. Reyes
 "K" Bank of the Philippine Village To prove that VMC made a check payable to
Extension Check No. 068706 dated Islands (BPI) Legaspi NMI, in the amount of
August3, 1987 ₱565,750.00 ₱565,750, as payment to NMI for the delivery of
the empty bags mentioned in Exhibits "G," "H"
and in the amount of "I."

"K-1" Signature found on the dorsal side of To prove that the accused Lee received and was
Exhibit "K" which Mrs. Flores in possession of Exhibit "K" and that he indorsed
identified as the signature of and deposited the same.
accused Johnson Lee.

"K-2" Rubberstamp showing the name of To prove that Exhibit "K" was deposited by
"Solidbank" side of Exhibit "K" accused Lee in the Solidbank which is not
appearing on the dorsal the official depository
bank of NMI, the official NMI depository bank
being the BPI Plaza Cervantes Branch.

"L" BPI Legaspi Village Extension To prove that VMC made a check payable to NMI
Check No. 068993 dated Aug. 19, in the amount of ₱934,400, as payment to NMI
1987 amount of ₱934,400.00 for the delivery of the empty bags in the
mentioned in Exhibits "G, "H" and "I."

"L-1" Signature found on the dorsal side of To prove that the accused Lee received and was
Exhibit "L" which Mrs. Flores in possession of Exhibit "L" and that he indorsed
identified as the signature of and deposited the same.
accused Lee

"L-2" Rubberstamp showing the name of To prove that Exhibit "L" was deposited by
"Solidbank" appearing on dorsal side accused Lee in the Solidbank which is not the
of Exh. "L" official depository bank of NMI, the official NMI
depository bank being the BPI Plaza Cervantes
Branch.16

The prosecution also offered in evidence the counter-affidavit of the petitioner during the preliminary
investigation, as follows:

"O" Counter-Affidavit dated September To prove that the proceeds of Exhibit "K" and "L"
9, 1988 signed and submitted by in the total amount of ₱1,500.150 are in the
Johnson Lee possession and control of the accused and that
both refused to in B.C.-I.S. No. 88-347, deliver
the same to NMI despite consisting of 5 pages
demand

"O-1" Signature found on page 5 of Exhibit To prove the genuineness, due above the
"O" execution and authenticity of typewritten which both of the accused also
Exhibit "O", name "Johnson Lee" admitted.

"O-2" Paragraph 6 of Exhibit "O" found on Same purpose as in Exhibit "O".

page 2 thereof.17
The accused objected to the admission of the photocopies of the checks and charge invoices on the
ground that the best evidence were the original copies thereof. On April 12, 2002, the trial court
issued an Order admitting the counter-affidavit of the petitioner, as well as the photocopies of the
checks and charge invoices, on the ground that the prosecution had adduced preponderant
evidence that the original copies of the said charges and checks were lost, destroyed or non-
available.18 The accused filed a motion for reconsideration of the order, claiming that the prosecution
failed to prove the authenticity and due execution of the offered documents, a prerequisite to the
admission thereof as secondary evidence. They also filed a Motion for Leave to File a Demurrer to
Evidence. The trial court denied both motions.

In a petition for certiorari under Rule 65 of the Rules of Court filed with the Court of Appeals, the
petitioner alleged that -

Respondent judge committed grave abuse of discretion equivalent to lack or excess of

jurisdiction, in admitting in evidence the People’s documentary evidence, consisting of mere
unauthenticated photocopies, in flagrant violation of the Best Evidence Rule (Sec. 3, 4, 5 and
6, Rule 130), despite the repeated vehement objections of the petitioner, thereby wantonly
refusing to exclude such clearly inadmissible evidence, which actuation as embodied in his
two (2) assailed Orders, is capricious, whimsical and patently erroneous, 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, and the remedy of ordinary appeal would not afford petitioner
adequate and expeditious relief, for while available eventually, such remedy is cumbersome
for it requires petitioner to undergo a useless and time-consuming trial, and thus becomes an
oppressive exercise of judicial authority; hence, the imperative necessity for the issuance of
a temporary restraining order or preliminary injunction requiring respondent judge to refrain
from further proceeding with Crim. Cases Nos. 10010 and 10011 until the Petition shall have
been disposed of, otherwise, failure of justice is sure to ensue.19

On March 14, 2003, the Court of Appeals rendered judgment dismissing the petition for lack of
merit.20

The Court of Appeals ruled that the charge invoices and the checks were not the best evidence to
prove receipt by the accused of the amounts allegedly misappropriated; hence, the best evidence
rule does not apply. It also held that even if the contents of the checks were the subject of inquiry,
based on the proofs adduced by the prosecution, such checks are admissible in evidence. The Court
of Appeals declared that, in any event, the prosecution proved the loss or destruction or non-
availability of the checks and charge invoices. The petitioner’s motion for reconsideration of the
decision suffered the same fate.

The petitioner then sought relief from this Court, in a petition for review on certiorari, and raises the
following issues:

1. CAN (sic) PRIVATE DOCUMENT OFFERED AS AUTHENTIC BE RECEIVED IN

EVIDENCE WITHOUT PROOF OF ITS DUE EXECUTION AND AUTHENTICITY?

2. CAN SECONDARY EVIDENCE BE ADMITTED WITHOUT PROOF OF ITS LOSS

OR UNAVAILABILITY AND EXECUTION OF THE ORIGINAL?

3. DID THE COURT OF APPEALS ERR WHEN IT RULED THAT THE FAILURE TO
PRODUCE THE ORIGINAL OF A DOCUMENTARY EVIDENCE, CONSISTING OF
PRIVATE INSTRUMENTS DOES NOT VIOLATE THE BEST EVIDENCE RULE,
INASMUCH AS RECEIPT BY THE PETITIONER OF THE AMOUNT ALLEGEDLY
 MISAPPROPRIATED MAY BE PROVED BY EVIDENCE OTHER THAN THE
ORIGINAL OF THE SAID PRIVATE DOCUMENTS?

4. IS THE FINDING OF THE COURT OF APPEALS THAT THE FACT OF LOSS OR

DESTRUCTION OF THE CHECKS AND THE CHARGE INVOICES HAS BEEN
ESTABLISHED BY OTHER EVIDENCE, DEVOID OF SUPPORT BY THE
EVIDENCE ON RECORD AND IS, THEREFORE, A BARE CONCLUSION OR A
FINDING BASED ON SURMISE AND CONJECTURES?

5. IS ANOTHER FINDING, IN THE FORM OF ASSUMPTION, OF THE COURT OF

APPEALS THAT SINCE THE WITNESSES FOR THE PROSECUTION ARE
OFFICERS WITH AUTHORITY TO KEEP THE QUESTIONED DOCUMENTS, THEY
NECESSARILY TOOK AND CONDUCTED A THOROUGH SEARCH FOR THE
MISSING DOCUMENTS, A MERE CONJECTURE OR SURMISE OR A FINDING
GROUNDED ENTIRELY ON SPECULATION?

6. DID THE COURT OF APPEALS VIOLATE THE DICTUM OF THE COLD

NEUTRALITY OF AN IMPARTIAL JUDGE WHEN IT DENIED PETITIONER’S
MOTION FOR INHIBITION GROUNDED ON ITS DISPLAY OF UNDUE INTERESTS
AND WHEN A MEMBER THEREOF HAS SEEN IT FIT AND APPROPRIATE TO
RECUSE HERSELF?21

The petitioner avers that the prosecution failed to prove the loss, destruction or non-availability of the
original copies of the checks and charge invoices; that diligent efforts were undertaken to locate the
original copies of the checks and invoices; and that said efforts were futile. He asserts that the
witness competent to prove the loss or destruction of the original of the checks would be the records
custodian of VMCI. Bayaban was not a competent witness thereon, considering that she merely
testified that the clerk of the VMCI failed to locate the original copies of the checks because the latter
was lazy to search for the same. The petitioner posits that the prosecution failed to prove the due
execution and authenticity of the charge invoices and the two checks through the testimonies of
Flores and Bayaban. He contends that Bayaban even admitted that she was not privy to and had no
knowledge of the execution of the said checks and of the signatories of the checks. The petitioner
further avers that, although the appellate court held that the photocopies of the checks were
admissible in evidence based on other proofs adduced by the prosecution, it failed to specify the
other proofs adverted to by it.

In its Comment on the petition, the Office of the Solicitor General asserts that through the testimony
of Bayaban, the due execution and authenticity of the checks were proved by the prosecution as well
as the admissions of the petitioner in his counter-affidavit during the preliminary investigation. It
further averred that through the testimonies of Bayaban and Flores, it proved, with reasonable
certainty, the loss or destruction of the original copies of the checks and the charge invoices.

The issues for resolution are as follows: (a) whether or not the petition at bar is the proper remedy of
the petitioner; and (b) whether or not the trial court committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction in admitting in evidence the photocopies of the checks
and charge invoices in lieu of the original copies thereof.

The Ruling of the Court

In People v. Court of Appeals,22 we held that for a petition for certiorari or prohibition to be granted, it
must set out and demonstrate, plainly and distinctly, all the facts essential to establish a right to a
writ.23 The petitioner must allege in his petition and establish facts to show that any other existing
remedy is not speedy or adequate24 and that (a) the writ is directed against a tribunal, board or
officer exercising judicial or quasi-judicial functions; (b) such tribunal, board or officer has acted
without or in excess of jurisdiction, or with grave abuse of discretion amounting to excess or lack of
jurisdiction; and, (c) there is no appeal or any plain, speedy and adequate remedy in the ordinary
course of law.25

The trial court acts without jurisdiction if it does not have the legal power to determine the case;
there is excess of jurisdiction where the respondent, being clothed with the power to determine the
case, oversteps its authority as determined by law. There is grave abuse of discretion where the
public respondent acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of its
judgment as to be said to be equivalent to lack of jurisdiction.26 Mere abuse of discretion is not
enough. A remedy is plain, speedy and adequate if it will promptly relieve the petitioner from the
injurious effects of that judgment and the acts of the tribunal or inferior court.27 A petition for certiorari
cannot co-exist with an appeal or any other adequate remedy. The existence and the availability of
the right to appeal are antithetical to the availment of the special civil action for certiorari. These two
remedies are mutually exclusive.28

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only
errors of jurisdiction. It is not to stray at will and resolve questions or issues beyond its competence
such as errors of judgment. Errors of judgment of the trial court are to be resolved by the appellate
court in the appeal by and of error or via a petition for review on certiorari under Rule 45 of the Rules
of Court, as amended. Certiorari will issue only to correct errors of jurisdiction. It is not a remedy to
correct errors of judgment.29 An error of judgment is one in which the court may commit in the
exercise of its jurisdiction, and which error is reversible only by an appeal. Error of jurisdiction is one
where the act complained of was issued by the court without or in excess of jurisdiction and which
error is correctible only by the extraordinary writ of certiorari.30 Certiorari will not be issued to cure
errors made by the trial court in its appreciation of the evidence of the parties, its conclusions
anchored on the said findings and its conclusions of law thereon.31 As long as the court acts within its
jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more
than mere errors of judgment, correctible by an appeal if the aggrieved party raised factual and legal
issues; or a petition for review under Rule 45 of the Rules of Court if only questions of law are
involved.32

In this case, there is no dispute that the RTC had jurisdiction over the cases filed by the public
respondent against the petitioner for estafa. The Order admitting in evidence the photocopies of the
charge invoices and checks was issued by the RTC in the exercise of its jurisdiction. Even if
erroneous, the same is a mere error of judgment and not of jurisdiction. Additionally, the admission
of secondary evidence in lieu of the original copies predicated on proof of the offeror of the
conditions sine qua non to the admission of the said evidence is a factual issue addressed to the
sound discretion of the trial court.33 Unless grave abuse of discretion amounting to excess or lack of
jurisdiction is shown to have been committed by the trial court, the resolution of the trial court
admitting secondary evidence must be sustained. The remedy of the petitioner, after the admission
of the photocopies of the charge invoices and the checks, was to adduce his evidence, and if after
trial, he is convicted, to appeal the decision to the appropriate appellate court. Moreover, under Rule
45 of the Rules of Court, as amended, only questions of law may be properly raised.

In the final analysis, the threshold issue in this case is whether or not the prosecution adduced
evidence, testimonial and documentary, to prove the predication to the admission of the photocopies
of the charge invoices34 and of the checks.35 The petitioner posits that the prosecution failed to
discharge its burden, in contrast to the claim of the prosecution that it succeeded in doing so. In
resolving the petition at bar, the court will have to delve into and calibrate the testimonial and
documentary evidence adduced by the parties in the trial court, which the court is proscribed to do
under Rule 45 of the Rules of Court. This was the ruling of the Court in Johnson Lee v. People:36

In other words, certiorari will issue only to correct errors of jurisdiction and not to correct
errors of procedure or mistakes in the court’s findings and conclusions. An interlocutory order
may be assailed by certiorari or prohibition only when it is shown that the court acted without
or in excess of jurisdiction or with grave abuse of discretion. However, this Court generally
frowns upon this remedial measure as regards interlocutory orders. To tolerate the practice
of allowing interlocutory orders to be the subject of review by certiorari will not only delay the
administration of justice but will also unduly burden the courts.

We find that the allegations of the petitioners are not sufficient grounds to qualify as abuse of
discretion warranting the issuance of a writ of certiorari. The petitioners present factual
contentions to absolve them from the criminal charge of estafa. The criminal cases concern
corporate funds petitioners allegedly received as payment for plastic bought by Victorias
Milling Corporation from NMI. They refused to turn over the money to the trustee after NMI’s
dissolution on the ground that they were keeping the money for the protection of the
corporation itself. Thus, the elements of misappropriation and damage are absent. They
argue that there is no proof that, as officers of the corporation, they converted the said
amount for their own personal benefit. They likewise claim that they already turned the
money over to the majority stockholder of the defunct corporation.

Clearly, the said allegations are defenses that must be presented as evidence in the hearing
of the criminal cases. They are inappropriate for consideration in a petition for certiorari
before the appellate court inasmuch as they do not affect the jurisdiction of the trial court
hearing the said criminal cases but instead are defenses that might absolve them from
criminal liability. A petition for certiorari must be based on jurisdictional grounds because, as
long as the respondent court acted with jurisdiction, any error committed by it in the exercise
thereof will amount to nothing more than an error of judgment which can be reviewed or
corrected on appeal.

Moreover, the petition for certiorari before the Court of Appeals was premature for the reason
that there were other plain and adequate remedies at law available to the petitioners. Under
Section 3(a) of Rule 117 of the Revised Rules of Criminal Procedure, the accused can move
to quash the information on the ground that the facts do not constitute an offense. There is
no showing that the petitioners, as the accused in the criminal cases, ever filed motions to
quash the subject informations or that the same were denied. It cannot then be said that the
lower court acted without or in excess of jurisdiction or with grave abuse of discretion to
justify recourse to the extraordinary remedy of certiorari or prohibition.

But it must be stressed that, even if petitioners did file motions to quash, the denial thereof
would not have automatically given rise to a cause of action under Rule 65 of the Rules of
Court. The general rule is that, where a motion to quash is denied, the remedy is not
certiorari but to go to trial without prejudice to reiterating the special defenses involved in
said motion, and if, after trial on the merits an adverse decision is rendered, to appeal
therefrom in the manner authorized by law. And, even in the exceptional case where such
denial may be the subject of a special civil action for certiorari, a motion for reconsideration
must first be filed to give the trial court an opportunity to correct its error. Finally, even if a
motion for reconsideration was filed and denied, the remedy under Rule 65 would still be
unavailable absent any showing of the grounds provided for in Section 1 thereof. The petition
before the Court of Appeals, subject of this appeal, did not allege any of such grounds.
 Furthermore, a petition for review under Rule 45 of the 1997 Revised Rules of Civil
Procedure before this Court only allows questions of law. Inasmuch as petitioners’ defenses
alleging circumstances that negate misappropriation definitely require appreciation of facts,
i.e., testimonial and documentary evidence, this Court cannot assess the merit of the said
claims.37

Moreover, the factual findings of the Court of Appeals are conclusive on the Court unless the
petitioner is able to establish that the findings of facts of the appellate court are not supported by or
are contrary to the evidence; or if the appellate court ignored, misconstrued or misinterpreted vital
facts and circumstances, which, if considered, could change or even reverse the outcome of the
case. In this, the petitioner failed.

Rule 130, Section 3 of the Revised Rules of Court reads:

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;

(d) When the original is a public record in the custody of a public officer or is
recorded in a public office.

Before the onset of liberal rules of discovery, and modern technique of electronic copying,
the best evidence rule was designed to guard against incomplete or fraudulent proof and the
introduction of altered copies and the withholding of the originals. But the modern justification
for the rule has expanded from the prevention of fraud to a recognition that writings occupy a
central position in the law. The importance of the precise terms of writings in the world of
legal relations, the fallibility of the human memory as reliable evidence of the terms, and the
hazards of inaccurate or incomplete duplicate are the concerns addressed by the best
evidence rule.38

The rule does not apply to proof of facts collateral to the issues such as the nature, appearance or
condition of physical objects or to evidence relating to a matter which does not come from the
foundation of the cause of action or defense; or when a party uses a document to prove the
existence of an independent fact, as to which the writing is merely collated or incidental.39

The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or
destruction of the original without bad faith on the part of the proponent/offeror which can be shown
by circumstantial evidence of routine practices of destruction of documents;40 (b) the proponent must
prove by a fair preponderance of evidence as to raise a reasonable inference of the loss or
destruction of the original copy; and (c) it must be shown that a diligent and bona fide but
unsuccessful search has been made for the document in the proper place or places.41 It has been
held that where the missing document is the foundation of the action, more strictness in proof is
required than where the document is only collaterally involved.42

If the document is one in which other persons are also interested, and which has been placed in the
hands of a custodian for safekeeping, the custodian must be required to make a search and the
fruitlessness of such search must be shown, before secondary evidence can be admitted.43 The
certificate of the custody of the document is incompetent to prove the loss or destruction thereof.
Such fact must be proved by some person who has knowledge of such loss.44

The proponent is also burdened to prove the due execution or existence of the original as provided
in Rule 130, Section 5 of the Revised Rules of Court:

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

Rule 132, Section 20 of the Revised Rules of Court provides the procedure on how the
authenticity and due execution of a private document which is offered as authentic may be
proved:

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.

The testimony of an eyewitness as to the execution of a private document must be positive.

He must state that the document was actually executed by the person whose name is
subscribed thereto.45 The admission of that party against whom the document is offered, of
the authenticity and due execution thereof, is admissible in evidence to prove the existence,
authenticity and due execution of such document.

In this case, there is no dispute that the original copies of the checks were returned to VMCI after the
same were negotiated and honored by the drawee bank. The originals of the charge invoices were
kept by VMCI. There is also no dispute that the prosecution offered the photocopies of the invoices
in evidence to prove the contents thereof, namely that: (a) VMCI purchased 203,500 empty bags
from NMI for the total price of ₱1,500,150.00; (b) VMCI received the said goods in good order and
condition; and (c) NMI charged VMCI for the purchase price of said goods. The prosecution offered
the checks to prove the contents thereof as well as the following: (a) VMCI drew and delivered the
checks to the NMI; (b) the said checks were endorsed by the petitioner; and (c) the said checks were
deposited by the petitioner with the Solidbank which was not the official depository of NMI. Thus, the
prosecution was burdened to prove the loss, destruction or its inability to produce in court without
bad faith on its part of the original copies of the said invoices and checks without bad faith on its
part.
We agree with the petitioner that the Certification signed by Carolina Diaz was inadmissible in
evidence against him because of the failure of the prosecution to present her as witness and to
testify on said certification.

However, the records show that, in obedience to the subpoena duces tecum and ad testificandum
issued by the trial court directing the VMCI to produce the originals of the checks and the charge
invoices, Bayaban, the Manager for Corporate Affairs of VMCI, testified that all its records, including
the charge invoices and checks, were destroyed seven years ago in a flash flood which occurred on
November 28, 1995, and that such loss/destruction was known to all the employees of VMCI,
including herself:

FISCAL ESQUILLA:

Q Please inform this Honorable Court how were you able to appear this afternoon in
connection with this case?

A The Legal Department, through the instruction of our Chief Operating Officer, inquired from
our Accounting through our comptroller, Carolina S. Diaz to produce the original copies of
the two (2) checks which was mentioned in the subpoena issued by Prosecutor Esquilla. And
then, through my direct Boss, the Chief Accountant, Mrs. Melanie Roa, instructed me to look
into the two (2) checks. And since the record is under my Department, I immediately asked
my subordinate to look for it. And, in fact, she was also under my supervision when we
looked for the document. And I have already knowledge during the November 28, 1995 due
to flash flood, we lost our records. And in fact, we have declaration to the Bureau of Internal
Revenue (BIR). And we also exhausted some means to look for the documents, but we
really cannot produce the original copies of the checks, even the Xerox, no more copies of
the checks as requested.

Q Madam Witness, when you said that you instructed your subordinate to look for the record,
specifically, the records being asked in the subpoena, the original copies of the checks,
these two (2) checks, will you please inform this Honorable Court where these records in
1995 including these checks, of course, have been kept by your office?

A It is kept at the Records Section Office just near my table. It is just over there. It is just over
there. The distance is very near. We have the vault power cards and all old records were
kept are downstairs and the new ones are kept upstairs. So, we don’t anticipate the flood
and because that was the first time that we were hit by that flash flood.

Q So, you want to impress this Honorable Court that those records which were kept
downstairs your office were carried or destroyed by this flash flood which occurred in 1995 is
that correct or is that what you mean?

A Yes, Your Honor.

…
Q And can you say that if these two (2) checks, subject of this case now, were there
downstairs and was destroyed by the 1995 flash flood, can you say that before this
Honorable Court?

A Yes, Your Honor.

Q Aside from these checks downstairs which were destroyed by this flash flood, what were
the other records that were kept there that were lost also?

A All our Bank Vouchers, some of our General Ledgers. Actually, I cannot memorize it, but in
our declaration to the Bureau of Internal Revenue (BIR) we have listings of those documents
which were damaged by flash flood.

Q Alright, Madam Witness. So, when this subpoena/subpoena (sic) duces tecum was
received by Victorias Milling Company, addressed to the Chief Operating Officer, do I get
from you that this was referred to the Legal Affairs of VICMICO?

A Yes, Your Honor.

COURT:

Slowly, the stenographer may not be able to catch up with you.

FISCAL ESQUILLA:

I see. Sorry, Your Honor. And from the Legal Affairs, where did it proceed, this subpoena or
this was referred to by the Legal Affairs to whom?

WITNESS:

A To Mrs. Carolina Diaz, the Comptroller.

FISCAL ESQUILLA:

Q You mentioned that she is your immediate Boss?

A I have also, next to her, Mrs. Melanie Roa, and I am next to her.

Q And you are holding office there at VICMICO together with the Comptroller, Carolina Diaz?

A We are in the same building.

Q And does she has a cubicle of her own?

A Yes, Your Honor.

Q And your table up to her cubicle, how far is your table from her cubicle?

A They are very near. I can see from my place her office and I can see anytime she went in
and out of the room. Maybe from here up to that next room.

COURT:

About 25 to 30 meters, more or less.

FISCAL ESQUILLA:

Q And, Madam Witness, may I know from you that who requested you to testify because this
Certification bears the signature of Mrs. Diaz?

A Ah, Mrs. Diaz, in fact, ah – there is a Memo from the Legal Affairs that we will submit the
Certification to the Honorable Court and the Memo was addressed to Mrs. Diaz. And there
was a note from Mrs. Diaz to my direct Boss, the Chief Accountant, and then I was tasked by
my immediate Boss to attend to this.

Q How were you able to secure a Certification?

A A Certification was issued also upon our recommendation to the Chief Accountant that we
cannot produce anymore the original copies of the said document.

Q Who gave you that Certification so that you can bring that today in Court?

A Marie Melanie G. Roa.

Q Do you have with you now the Certification?

A Yes, Your Honor.

Q And you are showing the original copy of the Certification?

A Yes, Your Honor.

Q I show to you the Certification dated December 6, 2001 issued by Carolina Diaz,
Comptroller. Do you know whose signature is this?

A That is the signature of Mrs. Carolina S. Diaz.

Q How do you know that this is her signature?

A I’m very much familiar with her signature because in our day to day undertakings in the
office, I can see this in the checks she signed, and in the Office Memorandum. And, in fact, I
also prepare some of the communications for her signature.
Q For the record, Madam Witness, will you please read the first paragraph of that
Certification issued by Carolina Diaz?

A "Victorias Milling Co., Inc. Certification. This is to certify that Victorias Milling Co., Inc. no
longer have the original copies of the BPI, Legaspi Village, Extension Office, Legaspi St.,
Makati, Metro Manila, Check No. 068766 dated August 3, 1987 and Check No. 068993
dated August 19, 1987 as the same were destroyed by flash flood that hit the province of
Negros Occidental particularly the City of Victorias on November 28, 1995."

FISCAL ESQUILLA:

Your Honor, may I request that this Certification be marked as our Exhibit "X" temporarily.

COURT:

Mark it.

FISCAL ESQUILLA:

And then the signature as identified by this witness, of her immediate Boss, be encircled and
marked as Exhibit "X-1."

COURT:

Mark it.

COURT INTERPRETER:

Your last Exhibit is Exhibit "Y."

FISCAL ESQUILLA:

I will change my Exhibit from Exhibit "X" and "X-1" to "Z" and "Z-1." No further, Your Honor.

COURT:

Do you want to cross?

ATTY. MAGDAMIT:

Yes, Your Honor.

COURT:

Alright, cross for the accused Moreno. We will give the Manila lawyer the first shot.

CROSS-EXAMINATION OF THE

WITNESS MERLITA T. BAYABAN

CONDUCTED BY ATTY. SIMEON M.

MAGDAMIT.

ATTY. MAGDAMIT

Q Madam Witness, when you received the subpoena, it contained a photocopy of the checks
that were being requested, is that correct?

(At this juncture, there is no answer from the witness)

ATTY. MAGDAMIT: (Follow-up question)

Q Did it already contain a copy of the photocopy?

A Ah. Attached to the subpoena.

Q Have you seen this photocopy when you received the subpoena? You did not see?

A Ah, actually, the subpoena was directed to the Legal.

Q You did not see. You did not see the photocopy?

May I know the point of Compañero, Your Honor.

WITNESS: (Answers before Atty. Magdamit)

A I remember it was presented to me by Mrs. Diaz.

ATTY. MAGDAMIT

Q Mrs. Diaz. So, let me just clear this up. The subpoena did not immediately go to the Legal,
it was presented to you by Mrs. Diaz?

A No, it was presented by the Legal to our Comptroller. Then . . .

...

COURT:

Q And then to?

A And then to me.

Q There is an initial, "MGR." Do you know who is that?

A That is Mrs. Melanie G. Roa, our Chief Accountant.

 Q And from then, when it reached you, you were the ones who sorted through the files, were
you the one?

A Ah, my subordinate.

Q Ah, you were not the one?

A No, Your Honor.

Q Now, but you were certain – I withdraw that question. When you received the subpoena
with the attached document, were you already aware that the records, the original, were
destroyed or you were not yet aware?

A Very much aware that the records were destroyed by the flash flood because it was not
only in that case that we were tasked to look for the documents. There were also Examiners
from the Bureau of Internal Revenue who asked for the documents prior to 1995 and that’s
our reason, we cannot produce the documents.

Q Now, wait. Were you the only one who was aware that this file was destroyed or was it a
matter that was known in your company?

A It was known to everybody.

Q It was known?

A Yeah.

Q So, can you conclude that just upon receiving the subpoena and looking at the photocopy
of the checks, you would immediately know that this was among the files that was destroyed
by the flood?

A Yes, because of the date, 1995.

Q So, despite that knowledge, it still went through the process and you still looked for it, is
that correct?

A Yes, Your Honor.

Q So, despite of your knowledge that it was destroyed, you still looked for it?

A Yeah, we still looked for it because there might be some files to prove that it was really our
check issuance. So even our files, even our Bank Recon, we cannot produce it.46

Contrary to the claim of the petitioner, the prosecution adduced preponderant evidence to prove the
existence, the due execution and the authenticity of the said checks and charge invoices consisting
of the admission of no less than the petitioner in his counter-affidavit. The petitioner admitted therein
that he received the total amount of ₱1,500,150.00 from VMCI in full payment of the delivery and
sale of the empty bags by NMI to VMCI and that the said amount was in the custody of the said
corporation, thus:
 6. That the collection by the Corporation of the amount of ₱1,500,150.00 is a valid act of the
corporation; that it is the full and complete and just payment for the three deliveries of plastic
materials by the Neugene Marketing, Inc to Victorias Milling Company on June 11, 1987,
June 18, 1987 and June 25, 1987 when I was and I am still the President and Mr. Sonny
Moreno, General Manager of the Neugene Marketing, Inc. and that the said Victorias Milling
Company paid in full and payments were made to the Corporation and it is only a legitimate
act of the Neugene Marketing, Inc. in the regular course of business to receive payment for
the obligations of its customers to the Corporation;

7. That with respect to the demand letter addressed to me to turn over aforesaid
₱1,500,150.00, the said amount is money of the Neugene Marketing, Inc. and the
corporation is the legitimate possessor thereof and that Reyes, Treyes, and Fudolin Law
Firm has no right or authority to make the demand letter; and that it is the corporation that
holds the money and that personally, neither I nor Sonny Moreno can just take the money to
give to Reyes, Treyes and Fudolin Law Firm which cannot be trusted and which is an
unauthorized entity to receive, hold and possess said funds or to file this case;

8. That the amount of ₱1,500,150.00 the corporate funds of the Neugene Marketing, Inc.
unless authorized by the members of the Board of Directors, neither I nor Sonny Moreno can
dispose of the said sum of money and it is the corporation that is holding the said amount
and holding it to answer for corporation expenses on its business operations and to answer
for obligations to its creditors including the claims of Sonny Moreno and myself for unpaid
compensation, salaries, fringe benefits, allowances and shares in the profits of the
Corporation; and that therefore, it is beyond our authority or power to refuse the turn over or
to turn over the aforesaid amount; and that if there is evidence of the malicious and criminal
intent to appropriate the same for personal benefit that is more applicable to Reyes, Treyes
and Fudolin who apparently without any legal authority and illegally posing as a trustee when
as a matter of fact, they have never been appointed or designated a[s] trustee by the
Neugene Marketing, Inc.; and therefore, complainants should be the one held criminally
responsible for the illegal "dissolution" of the Neugene Marketing, Inc., and for which they will
be charged with the corresponding action for falsification and perjury for having been able to
secure a Certification of Dissolution from the Securities and Exchange Commission by
means of false pretenses and representations;47

It bears stressing that the counter-affidavit of the petitioner was adduced in evidence by the
prosecution precisely to prove the existence, authenticity and due execution of the original of the
said charge invoices and checks and the trial court admitted the same for the said purpose.

By his counter-affidavit, the petitioner, in effect, admitted the allegations of the affidavit-complaint of
the trustee of NMI:

a. Sometime on June 11, 1987, June 18, 1987 and June 25, 1987, respectively, NEUGENE
MARKETING, INC. made three (3) deliveries of plastic materials to Victorias Milling
Company, Victorias, Negros Occidental totalling ₱1,500,150.00 covered by Charge invoices
…

b. Aforesaid charge invoices were subsequently paid by Victorias Milling Company in full and
payments delivered to Johnson Lee and/or Sonny Moreno, as President and General
Manager of Neugene Marketing, Inc.

c. As Trustee of Neugene Marketing, Inc., the Reyes, Treyes & Fudolin Law Firm sent a
demand letter addressed to Johnson Lee to turn over aforesaid ₱1,500,150.00. …
 d. As of the date of this Affidavit-Complaint, Johnson Lee and/or Sonny Moreno have failed
to deliver aforesaid sum to the herein trustee contrary to law.

4. Johnson Lee and/or Sonny Moreno have no authority whatsoever to withhold aforesaid
sum of ₱1,500,150.00 and their refusal to turn over aforesaid amount is evidence of a
malicious and criminal intent to appropriate the same for their own personal benefit.48

With the admissions of the petitioner in his counter-affidavit, the prosecution even no longer needed
to adduce evidence aliunde to prove the existence, due execution and the authenticity of the charge
invoices and the checks.

All told then, the prosecution mustered the requisite quantum of evidence to prove the predicates to
the admission of the photocopies of the charge invoices and checks.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision of the Court of
Appeals is AFFIRMED. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 199149               January 22, 2013

LIWAYWAY VINZONS-CHATO, Petitioner,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and ELMER E.
PANOTES, Respondents.

x-----------------------x

G.R. No. 201350

ELMER E. PANOTES, Petitioner,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and LIWAYWAYVINZONS-
CHATO, Respondents.

DECISION

PERLAS -BERNABE, J.:

Before us are consolidated cases involving the use of the picture images of ballots as the equivalent
of the original paper ballots for purposes of determining the true will of the electorate in the Second
Legislative District of Camarines Norte in the May 10, 2010 elections, which was "the maiden run for
full automation,"1 as authorized by Republic Act (R.A.) No. 93692 amending R.A. No. 8436 that
called for the adoption of an automated election system in national and local elections.

The Factual Antecedents

Liwayway Vinzons-Chato (Chato) renewed her bid in the May 10, 2010 elections as representative
of the Second Legislative District of Camarines Norte, composed of the seven (7) Municipalities of
Daet, Vinzons, Basud, Mercedes, Talisay, San Vicente, and San Lorenzo, with a total of 205
clustered precincts. She lost to Elmer E. Panotes (Panotes) who was proclaimed the winner on May
12, 2010 having garnered a total of 51,707 votes as against Chato's 47,822 votes, or a plurality of
3,885 votes,3 summarized in the petition4 as follows:

1âwphi1
  No. of votes for No. of votes for
Municipality Panotes Chato
Daet 18,085 15,911
Vinzons 8,107 6,713
Basud 7,879 6,527
Mercedes 7,739 9,333
Talisay 5,015 4,190
San Vicente 2,359 2,453
San Lorenzo 2,520 2,695
TOTAL 51,707 47,822

On May 24, 2010, Chato filed an electoral protest before the House of Representatives Electoral
Tribunal (HRET), which was docketed as HRET Case No. 10-040, assailing the results in all the 160
clustered precincts in four (4) municipalities, namely: Daet, Vinzons, Basud and Mercedes.5 No
counter-protest was interposed by Panotes.

Pursuant to Rule 37 of the 2011 Rules of the HRET, Chato designated forty (40) pilot clustered
precincts, equivalent to 25% of the total number of protested clustered precincts, in which revision of
ballots shall be conducted. The initial revision of ballots, conducted on March 21 - 24, 2011, showed
a substantial discrepancy between the votes of the parties per physical count vis-a-vis their votes
per election returns in the following precincts of the Municipalities of Basud and Daet:6

Based

  Votes for Chato Votes for Panotes

Clustered
Precinct Per Per Gain Per Per Gain
No. Election Physical or Election Physical or
Returns Count -Loss Returns Count -Loss
6 166 183 17 268 164 - 104
7 119 134 15 206 85 - 121
8 70 81 11 239 133 - 106
15 87 105 18 193 100 - 93
19 148 191 43 239 138 - 101
25 233 261 28 399 251 - 148
 27 263 287 24 366 214 - 152

Daet

  Votes for Chato Votes for Panotes

Clustered
Precinct Per Per Gain Per Per Gain
No. Election Physical or Election Physical or
Returns Count -Loss Returns Count -Loss
2 269 295 26 354 157 - 197
7 243 275 32 363 2 - 361
17 183 202 19 269 36 - 233
23 281 318 37 440 334 - 106
24 223 261 38 341 227 - 114
25 202 229 27 391 343 - 48
31 258 284 26 407 305 - 102
32 243 267 24 521 511 - 10
40 259 293 34 373 96 - 277
41 226 260 34 348 54 - 294
44 294 313 19 404 357 - 47
56 287 309 22 399 320 - 79
60 153 182 29 252 77 - 175

On March 24, 2011, Panotes lost no time in moving7 for the suspension of the proceedings in the
case, and praying that a preliminary hearing be set in order to determine first the integrity of the
ballots and the ballot boxes used in the elections. He further urged that, should it be shown during
such hearing that the ballots and ballot boxes were not preserved, the HRET should direct the
printing of the picture images of the ballots of the questioned precincts stored in the data storage
device for said precincts.

The motion was prompted by certain irregularities8 in the condition of the ballot boxes subject of the
revision, which Panotes described as follows:

Outer condition:

a. The top cover of the ballot box is loose and can be lifted, so the election documents – e.g.
ballots, minutes of voting, election returns – can be taken out.

b. In some ballot boxes, when the key was inserted into the padlock, the upper portion of the
lock disconnected from its body, which means that the lock had been previously tampered
with.
 c. In the municipalities where Petitioner (Panotes) was able to seal the ballot boxes with
packing tape, this tape seal was broken/cut/sliced, which means that the ballot boxes had
been opened prior to the initial revision.

d. Some of the self-locking security seal was not properly attached.

Inner condition:

a. The contents of the ballot box – e.g. ballots and the documents – were in total disarray,
which means that it was tampered with.

b. Some of the Minutes of Voting and Election Returns were MISSING and only the ballots
were found inside the ballot box.

c. The ballots were unnecessarily folded and/or crumpled in the clustered precincts where
the votes of (Panotes) were substantially reduced.

Consequently, in its Resolution9 No. 11-208, the HRET directed the copying of the picture image files
of ballots relative to the protest, which was scheduled to commence on April 25, 2011 and everyday
thereafter until completion.10 Chato, however, moved11 for the cancellation of the decryption and
copying of ballot images arguing inter alia that there was no legal basis therefor and that the HRET
had not issued any guidelines governing the exercise thereof.

Notwithstanding, the decryption and copying proceeded as scheduled.

Chato then filed an Urgent Motion to Prohibit the Use by Protestee of the Decrypted and Copied
Ballot Images in the Instant Case12 reiterating the lack of legal basis for the decryption and copying
of ballot images inasmuch as no preliminary hearing had been conducted showing that the integrity
of the ballots and ballot boxes was not preserved. She cited Section 10(d) of the HRET Guidelines
on the Revision of Ballots, which reads:

(d) When it has been shown, in a preliminary hearing set by the parties or by the Tribunal, that the
integrity of the ballots and ballot boxes used in the May 10, 2010 elections was not preserved, as
when there is proof of tampering or substitutions, the Tribunal shall direct the printing of the picture
images of the ballots of the subject precinct stored in the data storage device for the same precinct.
The Tribunal shall provide a non-partisan technical person who shall conduct the necessary
authentication process to ensure that the data or image stored is genuine and not a substitute. It is
only upon such determination that the printed picture image can be used for the revision, (as
amended per Resolution of February 10, 2011).

Moreover, Chato alleged that the ballot images were taken from polluted Compact Flash (CF) cards.
Atty. Anne A. Romero-Cortez (Atty. Cortez), the Camarines Norte Provincial Elections Supervisor,
was said to have admitted during canvassing proceedings that the CF cards for the Municipalities of
Labo, Vinzons and Basud were defective and had to be replaced. The pertinent portion of the
Transcript of Stenographic Notes (TSN) taken during the canvassing proceedings for President and
Vice-President held on June 2, 2010 is reproduced hereunder:

REP. VINZONS-CHATO: Yes, I requested the presence of the other two members because the
information that I gathered would be that there was a time log of about six hours where you would
stop the canvassing, and the information that we got from our lawyers there was that there were
certain cards that had no memory and had to be reconfigured from some precincts, and that, in the
meantime, you stopped the canvassing and resumed after six hours.

ATTY. ROMERO-CORTEZ: This is what happened. Because of the municipalities of Labo, Vinzons,
and Basud, there were CF cards that had to be replaced because they were defective.

REP. VINZONS-CHATO: But, that was after the voting had closed, right? The voting had closed and
those cards were defective and you had to replace them.

ATTY. ROMERO-CORTEZ: To my recollection, Your Honor, that was during May 10.13

Panotes, on the other hand, stressed in his Opposition14 to the foregoing motion that the decryption
and copying of the ballot images was at the behest of the HRET itself, acting through Atty. Marie
Grace T. Javier-Ibay, who formally requested on February 10, 2011 the copying of the picture image
files of ballots and election returns in 13 election protests pending before it. Should he then decide to
use the decrypted and copied ballot images, there is nothing in the HRET rules that prohibit the
same.

With respect to the allegation that certain defective CF cards were replaced, Panotes argued15 that it
was during the election day, May 10, 2010, that the CF cards were found to be not working so they
had to be re-configured. Consequently, the voting in some precincts in the Municipalities of Labo,
Vinzons and Basud started late, but the voting period was extended accordingly. For this reason, the
canvassing before the Provincial Board of Canvassers was halted in order to wait for the
transmission of the results from the Municipal Board of Canvassers, which could not be done until
each and every clustered precinct was duly accounted for.

The case was subsequently set for preliminary hearing on May 27, 2011 in order to determine the
integrity of the CF cards used in the questioned elections.16 In said hearing, Chato presented the
following witnesses: (1) Oscar Villafuerte, Vice-Chairman of the Provincial Board of Canvassers of
Camarines Norte; (2) Reynaldo Mago, a media practitioner; and (3) Angel Abria, an Information
Technology (IT) expert.17

On June 8, 2011, the HRET issued the assailed Resolution18 No. 11-321 denying Chato's Urgent
Motion to Prohibit the Use by Protestee of the Decrypted and Copied Ballot Images in the Instant
Case on the ground that she failed to show proof that the CF cards used in the twenty (20) precincts
in the Municipalities of Basud and Daet with substantial variances were not preserved or were
violated. The Tribunal stressed that, since Atty. Cortez was not presented in court to clarify the
matter of the alleged replacement of CF cards, it remained unclear whether the replacement was
done before or after the elections, and which precincts were involved. Moreover, the testimonies of
the witnesses that were actually presented were found to be irrelevant and immaterial.

Significantly, the HRET declared that, although the actual ballots used in the May 10, 2010 elections
are the best evidence of the will of the voters, the picture images of the ballots are regarded as the
equivalent of the original, citing Rule 4 of the Rules on Electronic Evidence, which reads:

Sec. 1. Original of an electronic document. – An electronic document shall be regarded as

the equivalent of an original document under the Best Evidence Rule if it is a printout or
output readable by sight or other means, shown to reflect the data accurately.

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

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

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

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

Aggrieved, Chato filed a Motion for Reconsideration19, which was denied in the Resolution20 No. 11-
487 dated September 15, 2011. The HRET categorically held that:

x x x (T)he votes determined after the revision in the 20 precincts in Basud and Daet, which yielded
reversal of votes, cannot be relied upon, as they do not reflect the true will of the electorate. Hence,
the Tribunal has to rely on what is reflected in the election returns and/or statement of votes by
precinct the same being the best evidence of the results of the election in said precincts in lieu of the
altered ballots.

The Issues

G.R. No. 199149

In this petition for certiorari and prohibition with prayer for a temporary restraining order and/or writ of
prohibitory injunction, Chato claims that the HRET committed grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing Resolution No. 11-321 dated June 8, 2011 and Resolution
No. 11-487 dated September 15, 2011. Her petition is anchored on the following grounds:

I.

THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-321 (DATED 08 JUNE
2011) REGARDED THE PICTURE IMAGES OF THE BALLOTS AS THE EQUIVALENT OF
THE ORIGINAL, AND USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – DESPITE
THE FACT THAT UNDER REPUBLIC ACT NO. 9369 THE PICTURE IMAGES OF THE
BALLOTS ARE NOT THE "OFFICIAL BALLOTS" SINCE THE AUTOMATED ELECTION
SYSTEM (AES) USED DURING THE MAY 2010 ELECTIONS WAS PAPER BASED.

II.

THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-321 (DATED 08 JUNE
2011) REGARDED THE PICTURE IMAGES OF THE BALLOTS AS THE EQUIVALENT OF
THE ORIGINAL, AND USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – EVEN IF THE
PICTURE IMAGES OF THE BALLOTS CANNOT BE REGARDED AS THE EQUIVALENT
OF THE ORIGINAL PAPER BALLOTS UNDER THE RULES ON ELECTRONIC EVIDENCE.
IN THE FIRST PLACE, THE RULES ON ELECTRONIC EVIDENCE DO NOT EVEN APPLY
TO THE PICTURE IMAGES OF THE BALLOTS.
 III.

THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-321 (DATED 08 JUNE
2011) REGARDED THE PICTURE IMAGES OF THE BALLOTS AS THE EQUIVALENT OF
THE ORIGINAL, AND USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – EVEN IF
UNDER THE ELECTRONIC COMMERCE ACT OF 2000, THE PICTURE IMAGES OF THE
PAPER BALLOTS ARE NOT THE EQUIVALENT OF THE ORIGINAL PAPER BALLOTS.

IV.

THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-321 (DATED 08 JUNE
2011) REGARDED THE PICTURE IMAGES OF THE BALLOTS AS THE EQUIVALENT OF
THE ORIGINAL, AND USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – EVEN IF
PETITIONER HAS SHOWN BY SUBSTANTIAL EVIDENCE THAT THE CF CARDS USED
IN THE MAY 2010 ELECTIONS WERE NOT PRESERVED OR WERE VIOLATED.

V.

THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-321 (DATED 08 JUNE
2011) REGARDED THE PICTURE IMAGES OF THE BALLOTS AS THE EQUIVALENT OF
THE ORIGINAL, AND USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – EVEN IF
THERE IS NO LEGAL BASIS FOR THE HONORABLE TRIBUNAL TO CONSIDER THE
PICTURE IMAGE OF THE BALLOTS AS EVIDENCE, SINCE SUCH PICTURE IMAGES
ARE NOT EVEN RECOGNIZED AND THEIR APPRECIATION ARE NOT PROVIDED FOR,
UNDER THE OMNIBUS ELECTION CODE.

VI.

THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO. 11-487 (DATED 15
SEPTEMBER 2011) DESPITE THE PENDENCY OF THE COMELEC INVESTIGATION ON
THE MAIN CF CARD FOR CLUSTERED PRECINCT 44 OF THE MUNICIPALITY OF DAET.

VII.

THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO. 11-487 (DATED 15
SEPTEMBER 2011) BASED ON VILLAFUERTE VS. JACOB (15 HRET REPORT 754),
WHICH IS ONLY AN HRET CASE WHICH HAS NO PRECEDENTIAL VALUE.

VIII.

THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO. 11-321 (DATED 08
JUNE 2011) AND RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER 2011) – IN
CONTRAVENTION OF CASE LAW THAT THERE SHOULD BE A FULL BLOWN TRIAL
CONCERNING THE INTEGRITY OF THE BALLOTS.21

G.R. No. 201350

After the initial revision of the pilot protested clustered precincts, Chato moved,22 as early as March
24, 2011, for the revision of ballots in all of the protested clustered precincts arguing that the results
of the revision of twenty-five percent (25%) of said precincts indicate a reasonable recovery of votes
in her favor. On May 12, 2011, she filed a second motion23 reiterating her prayer for the
continuance of the revision. The HRET denied the motion "until the Tribunal shall have determined
the merit or legitimacy of the protest, relative to the revised forty (40) pilot protested clustered
precincts."24 For the same reason, the HRET denied two (2) other similar motions25 filed by Chato.

However, on March 22, 2012, the HRET issued the assailed Resolution26 No. 12-079 directing the
continuation of the revision of ballots in the remaining seventy-five percent (75%) protested clustered
precincts, or a total of 120 precincts. Expectedly, Panotes moved27 for reconsideration of Resolution
No. 12-079, which was denied in the Order28 dated April 10, 2012 for lack of merit. The HRET further
warned that any attempt on the part of the revisors to delay the revision proceedings or to destroy
the integrity of the ballots and other election documents involved, including but not limited to,
marking or tearing of ballots shall be sufficient ground(s) for immediate disqualification.

Panotes is now before Us via the instant petition for certiorari and prohibition alleging grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the HRET in issuing Resolution
No. 12-079 and Order dated April 10, 2012 considering that –

1.THE HONORABLE TRIBUNAL ALREADY CATEGORICALLY RULED IN ITS OWN

RESOLUTION NO. 11-487 THAT THE VOTES DETERMINED IN THE REVISION CANNOT
BE RELIED UPON SINCE THEY ARE THE PRODUCT OF ALTERED BALLOTS;

2.THE ISSUES RESOLVED IN RESOLUTION NO. 11-487 DATED SEPTEMBER 8, 2011

AND THOSE IN RESOLUTION NO. 12-079 DATED MARCH 22, 2012 ARE
INTERRELATED;

3.PURSUANT TO THE RULING OF THIS MOST HONORABLE COURT IN THE CASE OF

VARIAS VS. COMELEC (G.R. NO. 189078 FEBRUARY 11, 2010), THE RESULTS OF THE
REVISION OF QUESTIONABLE BALLOTS CANNOT PREVAIL OVER ELECTION
RETURNS;

4.THE PICTURE IMAGE OF THE BALLOTS MAY BE USED AS PROOF OF THE

INTEGRITY OF THE PAPER BALLOTS;

5.RESOLUTION NO. 12-079 HAS NO LEGAL AND FACTUAL BASES TO STAND ON

BECAUSE PRIVATE RESPONDENT FAILED TO ESTABLISH THE MERIT OR
LEGITIMARY [sic] OF HER PROTEST CONSIDERING THAT SHE FAILED TO MAKE A
REASONABLE RECOVERY OR MUCH LESS, ANY RECOVERY AT ALL;

6.RESOLUTION NO. 12-079 IS CONTRADICTORY TO THE FINDINGS OF THE PUBLIC

RESPONDENT HRET IN ITS RESOLUTION NO. 11-487;

7.THE PENDENCY OF THE PETITION FOR CERTIORARI FILED BY PRIVATE

RESPONDENT BEFORE THE SUPREME COURT IS A PRELIMINARY MATTER THAT
MUST BE RESOLVED FIRST BEFORE THE HONORABLE TRIBUNAL MAY ORDER THE
REVISION OF THE REMAINING 75% OF THE PROTESTED PRECINCTS;

8.THE RELIABILITY OF THE COMPACT FLASH CARDS HAS NOT BEEN SHOWN TO BE
QUESTIONABLE;
 9.THE RESULT OF THE RECOUNT CANNOT BE USED TO OVERTURN THE RESULTS
AS REFLECTED IN THE ELECTION RETURNS BECAUSE THE BALLOTS IN EP CASE
NO. 10-040 HAVE BEEN TAMPERED.29

The Ruling of the Court

"It is hornbook principle that our jurisdiction to review decisions and orders of electoral tribunals is
exercised only upon showing of grave abuse of discretion committed by the tribunal;" otherwise, we
shall not interfere with the electoral tribunal’s exercise of its discretion or jurisdiction. "Grave abuse
of discretion has been defined as the capricious and whimsical exercise of judgment, or the exercise
of power in an arbitrary manner, where the abuse is so patent and gross as to amount to an evasion
of positive duty."30

The acts complained of in these cases pertain to the HRET’s exercise of its discretion, an exercise
which we find to be well within the bounds of its authority and, therefore, beyond our power to restrict
or curtail.

G.R. No. 199149

Chato assails in this petition the following issuances of the HRET: (1) Resolution No. 11-321 dated
June 8, 2011 denying her Urgent Motion to Prohibit the Use by Protestee of the Decrypted and
Copied Ballot Images in the Instant Case; and (2) Resolution No. 11-487 dated September 15, 2011
denying her Motion for Reconsideration of Resolution No. 11-321.

The crucial issue posed by Chato is whether or not the picture images of the ballots may be
considered as the "official ballots" or the equivalent of the original paper ballots which the voters
filled out. She maintains that, since the automated election system (AES) used during the May 10,
2010 elections was paper-based,31 the "official ballot" is only the paper ballot that was printed by the
National Printing Office and/or the Bangko Sentral ng Pilipinas pursuant to Section 15 of R.A. No.
8436, as amended by R.A. No. 9369, which reads in part as follows:

Sec.15. Official Ballot. – x x x

xxxx

With respect to a paper-based election system, the official ballots shall be printed by the National
Printing Office and/or the Bangko Sentral ng Pilipinas at the price comparable with that of private
printers under proper security measures which the Commission shall adopt. The Commission may
contact the services of private printers upon certification by the National Printing Office/Bangko
Sentral ng Pilipinas that it cannot meet the printing requirements. Accredited political parties and
deputized citizen's arms of the Commission shall assign watchers in the printing, storage and
distribution of official ballots.

xxxx

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

An automated election system, or AES, is a system using appropriate technology which has been
demonstrated in the voting, counting, consolidating, canvassing, and transmission of election result,
and other electoral process.32 There are two types of AES identified under R.A. No. 9369: (1) paper-
based election system; and (2) direct recording electronic election system. A paper-based election
system, such as the one adopted during the May 10, 2010 elections, is the type of AES that "use
paper ballots, records and counts votes, tabulates, consolidates/canvasses and transmits
electronically the results of the vote count."33 On the other hand, direct recording electronic election
system "uses electronic ballots, records, votes by means of a ballot display provided with
mechanical or electro-optical component that can be activated by the voter, processes data by
means of computer programs, record voting data and ballot images, and transmits voting results
electronically."34

As earlier stated, the May 10, 2010 elections used a paper-based technology that allowed voters to
fill out an official paper ballot by shading the oval opposite the names of their chosen candidates.
Each voter was then required to personally feed his ballot into the Precinct Count Optical Scan
(PCOS) machine which scanned both sides of the ballots simultaneously,35 meaning, in just one
pass.36 As established during the required demo tests, the system captured the images of the ballots
in encrypted format which, when decrypted for verification, were found to be digitized
representations of the ballots cast.37

We agree, therefore, with both the HRET and Panotes that the picture images of the ballots, as
scanned and recorded by the PCOS, are likewise "official ballots" that faithfully captures in electronic
form the votes cast by the voter, as defined by Section 2 (3) of R.A. No. 9369. As such, the printouts
thereof are the functional equivalent of the paper ballots filled out by the voters and, thus, may be
used for purposes of revision of votes in an electoral protest.

It bears stressing that the digital images of the ballots captured by the PCOS machine are stored in
an encrypted format in the CF cards.38 "Encryption is the process of encoding messages (or
information) in such a way that eavesdroppers or hackers cannot read it, but that authorized parties
can. In an encryption scheme, the message or information (referred to as plaintext) is encrypted
using an encryption algorithm, turning it into an unreadable ciphertext. This is usually done with the
use of an encryption key, which specifies how the message is to be encoded. Any adversary that
can see the ciphertext, should not be able to determine anything about the original message. An
authorized party, however, is able to decode the ciphertext using a decryption algorithm, that usually
requires a secret decryption key, that adversaries do not have access to."39

Despite this security feature, however, the possibility of tampering or substitution of the CF cards did
not escape the HRET, which provided in its Guidelines on the Revision of Ballots that:

Sec. 11. Printing of the picture images of the ballots in lieu of photocopying. – Unless it has been
shown, in a preliminary hearing set by the parties or motu propio, that the integrity of any of the
Compact Flash (CF) Cards used in the May 10, 2010 elections was not preserved or the same was
violated, as when there is proof of tampering or substitution, the Tribunal, in lieu of photocopying of
ballots upon any motion of any of the parties, shall direct the printing of the picture image of the
ballots of the subject precinct stored in the data storage device for the same precinct. The Tribunal
shall provide a non-partisan technical person who shall conduct the necessary authentication
process to ensure that the data or image stored is genuine and not a substitute.

Accordingly, the HRET set the instant case for preliminary hearing on May 27, 2011, and directed
Chato, the protestant, to present testimonial and/or documentary evidence to show proof that the
integrity of the CF cards used in the May 10, 2010 elections was not preserved or was violated.40

However, in the assailed Resolution No. 11-321, the HRET found Chato's evidence insufficient. The
testimonies of the witnesses she presented were declared irrelevant and immaterial as they did not
refer to the CF cards used in the 20 precincts in the Municipalities of Basud and Daet with
substantial variances. Pertinent portions of the transcripts of stenographic notes during the May 27,
2011 preliminary hearing are quoted hereunder:41

REYNANTE B. MAGO:

Q: Do you have any knowledge regarding the municipalities of Basud and Daet?

A: Wala po kasi hindi naman yung ang aking bet [sic, should have been "beat", a journalistic jargon
for the reporter's official place of assignment]

Q: Wala kang nalalaman regarding the municipalities of Basud and Daet?

A: Wala po.

Q: Are you sure?

A: Sure na sure po kasi hindi ko naman po yun bet [sic] noong mga panahon na yun. Wala po akong
direct na knowledge o participation regarding that during the time of election period.

PROVINCIAL PROSECUTOR OSCAR J. VILAFUERTE:

Q: Before proceeding with your testimony, I would ask if you have any knowledge about the election
regarding the municipalities of Basud and Daet?

A: Well, as the Vice-Chairman of the Provincial Board of Canvassers, Your Honor, in the last May
10, 2010 elections, yes.

Q: Regarding the last CF cards?

A: No. We are just limited to the reception of the election results.

Q: So, with regard to the CF cards in the municipalities of Basud and Daet, you do not have any
knowledge at all?

A: Personally, no, because it does not affect us, Your Honor.

MR. ANGEL S. AVERIA, JR:

Q: Will you be testifying regarding CF cards involving the municipalities of Daet and Basud?

A: Not specific to those municipalities.

Q: Sa Daet, wala?

A: Wala.

Q: Sa Basud, wala?

A: Wala ho. The reports I wrote for CENPEG is on a national scale.

To substitute our own judgment to the findings of the HRET will doubtless constitute an intrusion into
its domain and a curtailment of its power to act of its own accord on its evaluation of the evidentiary
weight42 of testimonies presented before it. Thus, for failure of Chato to discharge her burden of
proving that the integrity of the questioned CF cards had not been preserved, no further
protestations to the use of the picture images of the ballots as stored in the CF cards should be
entertained.

Moreover, after having participated and presented her evidence at the May 27, 2011 preliminary
hearing, Chato cannot now be heard to complain that the proceedings therein did not amount to a
full blown trial on the merits required in the case of Tolentino v. COMELEC43 for weighing the
integrity of ballots.

Her allegation with respect to the pendency of the COMELEC investigation on the main CF card for
Clustered Precinct 44 of the Municipality of Daet, which was previously ordered by the HRET itself
when the election officer submitted only the back-up CF card that did not, however, contain picture
images of the ballots,44 could not in the least bit affect the resolution of this case. As correctly pointed
out by the HRET, the same concerns only one (1) precinct out of the 20 precincts with substantial
variances.45 At any rate, the following explanation46 proferred by the HRET should put the issue to
rest, viz:

x x x On November 2, 2011, John Rex C. Laudiangco of the COMELEC Law Department, filed
Comelec's Compliance with Manifestation and Motion to Admit the Attached Fact-Finding
Investigation Report explaining the delay in the conduct of the investigation which was duly
conducted on October 7, 2011, and submitting therewith a comprehensive Fact-Finding Investigation
Report on the said investigation which was docketed in the Law Department as Case No. FF.INV.
(LD) 11-46 entitled "In the Matter of Investigation on What Happened to the Main CF (Compact
Flash) card for Clustered Precinct No. 44 for the Municipality of Daet, Camarines Norte."

In sum, the investigation revealed that the main CF Card for CP No. 44 of the Municipality of Daet
could possibly be located inside the ballot box of the Municipal Board of Canvassers (MBOC) of
Daet, Camarines Norte (serial no. CE-07-166991), after having been allegedly submitted in an
improvised envelope, by the Board of Election Inspectors (BEI) of said CP 44 to the MBOC. It was,
therefore, recommended that said ballot box be opened to retrieve the said CF card.

Accordingly, in her January 6, 2012 letter to public respondent, Atty. Anne A. Romero-Cortez
submitted certain documents relative to the opening of the ballot box of the MBOC of Daet,
Camarines Norte (serial no. CE-07-166991) so the main CF Card for CP 44 of Daet may be
retrieved and its custody turned over to the Election Records and Statistics Department (ERSD),
COMELEC.

Likewise, in her January 6, 2012 letter to public respondent, ERSD Director Ester L. Villaflor-Roxas
requested that a representative from public respondent be present on the day to witness the
verification and backing-up of the contents of the main CF card for CP No. 44 of Daet, Camarines
Norte.

Verily, the case of the alleged missing CF Card for Clustered Precinct No. 44 is no mystery at all.

G.R. No. 201350

In the main, Panotes ascribes grave abuse of discretion on the part of the HRET in ordering the
continuation of the revision of ballots in the remaining 75% of the protested clustered precincts
despite having previously ruled that the votes determined after the revision in the 20 precincts in the
Municipalities of Basud and Daet, which yielded reversal of votes, cannot be relied upon, as they do
not reflect the true will of the electorate.

The Constitution mandates that the HRET "shall be the sole judge of all contests relating to the
election, returns and qualifications" of its members. By employing the word "sole", the Constitution is
emphatic that the jurisdiction of the HRET in the adjudication of election contests involving its
members is intended to be its own – full, complete and unimpaired.47 The Tribunal, thus,
unequivocally asserted its exclusive control in Rule 7 of the 2011 HRET Rules, as follows:

Rule 7. Exclusive Control of Functions. – The Tribunal shall have exclusive control, direction, and
supervision of all matters pertaining to its own functions and operation.

There can be no challenge, therefore, to such exclusive control absent any clear showing, as in this
case, of arbitrary and improvident use by the Tribunal of its power that constitutes a denial of due
process of law, or upon a demonstration of a very clear unmitigated error, manifestly constituting
such grave abuse of discretion that there has to be a remedy therefor.48

Contrary to Panotes' posturing, there existed legal and factual bases for the revision of the remaining
75% of the protested clustered precincts. Rule 37 of the 2011 HRET Rules clearly provides that,
after post-revision determination of the merit or legitimacy of the protest, the Tribunal may proceed
with the revision of the ballots in the remaining contested precincts, thus:

Rule 37. Post-Revision Determination of the Merit or Legitimacy of Protest Prior to Revision of
Counter-Protest; Pilot Precincts; Initial Revision. – Any provision of these Rules to the contrary
notwithstanding, as soon as the issues in any contest before the Tribunal have been joined, the
Protestant, in case the protest involves more than 50% of the total number of precincts in the district,
shall be required to state and designate in writing within a fixed period at most twenty five (25%)
percent of the total number of precincts involved in the protest which said party deems as best
exemplifying or demonstrating the electoral irregularities or fraud pleaded by him; and the revision of
the ballots or the examination, verification or re-tabulation of election returns and/or reception of
evidence shall begin with such pilot precincts designated. Otherwise, the revision of ballots or the
examination, verification and re-tabulation of election returns and/or reception of evidence shall
begin with all the protested precincts. The revision of ballots or the examination, verification and re-
tabulation of election returns in the counter-protested precincts shall not be commenced until the
Tribunal shall have determined through appreciation of ballots or election documents and/or
reception of evidence, which reception shall not exceed ten (10) days, the merit or legitimacy of the
protest, relative to the pilot protested precincts. Based on the results of such post-revision
determination, the Tribunal may dismiss the protest without further proceedings, if and when no
reasonable recovery was established from the pilot protested precincts, or proceed with the revision
of the ballots or the examination, verification and re-tabulation of election returns in the remaining
contested precincts.

Panotes argues that Chato had not made a reasonable recovery in the initial revision of ballots in the
25% pilot protested clustered precincts and, as such, the HRET should have dismissed the protest in
accordance with the aforequoted provision instead of ordering further the revision of the remaining
75% of the protested clustered precincts. 1âwphi1

It should be pointed out, however, that the provision in question is couched in the permissive term
"may" instead of the mandatory word "shall." Therefore, it is merely directory, and the HRET is not
without authority to opt to proceed with the revision of ballots in the remaining contested precincts
even if there was no reasonable recovery made by the protestant in the initial revision.
In the assailed Resolution49 No. 12-079, the HRET justified its action by its need "to re-examine what
appears to be a peculiar design to impede the will of the electorate," and that a revision of all the
protested clustered precincts will allow it "to see the whole picture of the controversy." Thus said the
HRET:

The evidence as presented by the parties involving the twenty-five percent (25%) pilot protested
clustered precincts is still insufficient to justify an indubitable conclusion. There are still material
issues that should be taken into account. The substantial increase in the number of ballots for
protestant and the substantial decrease in the number of ballots for protestee after comparing the
election returns with the physical counts of the ballots are prima facie findings that should not be
trivialized. Also, the reliability of the compact flash cards including its admissibility was raised by the
protestant as an area of concern which needs precise and definitive ruling by the Tribunal. A
complete disavowal of the constitutional duty will be debased if the Tribunal is not going to see the
whole picture of the controversy. After all, the revision proceedings will not unduly toll the precious
time of the Tribunal. All of the ballot boxes involved in this protest are already in the custody of the
Tribunal and will not require sizeable manpower to revise it.

At the risk of unduly encroaching on the exclusive prerogative of the HRET as the sole judge of
election contests involving its members, we cannot substitute our own judgment for that of the HRET
on the issues of whether the evidence presented during the initial revision could affect the officially
proclaimed results and whether the continuation of the revision proceedings could lead to a
determination of the true will of the electorate. 50

In any case, as pointed out by the HRET, the revision proceedings for the remaining 75% protested
clustered precincts had already been conducted from May 2-9, 2012 thereby rendering the issue
moot and academic.

Having, thus, established the futility of Panotes' case, we need not belabor the other issues raised in
this petition.

WHEREFORE, the petitions are hereby DISMISSED for lack of merit.

SO ORDERED.
 SECOND DIVISION

G.R. No. 150155             September 1, 2004

SPOUSES RAMON and FELICISIMA DIOSO, petitioners,

vs.
SPOUSES TOMAS and LEONORA CARDEÑO, respondents.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari filed by the Spouses Ramon and Felicisima Dioso,
seeking the reversal of the Court of Appeals’ Resolution1 dated September 28, 2001 in CA-G.R. CV
No. 63265, denying their motion for reconsideration/new trial. In the assailed resolution, the
appellate court, likewise, reiterated its Decision dated May 9, 2001 substantially affirming the
decision of the Regional Trial Court (RTC) of San Pedro, Laguna, Branch 31, dismissing the
petitioners’ complaint for specific performance and/or easement of right of way.

The factual antecedents of the case are as follows:

Lot 248-A, the property subject of the complaint for specific performance and/or easement of
right of way, is one of three sublots of Lot 248 located along F. Gomez St., Sta. Rosa,
Laguna. Lot 248-A has a total area of 222 square meters and was originally owned by
Magno Eraña, the father of petitioner Felicisima Eraña Dioso, respondent Leonora Eraña
Cardeño and their other sisters, namely, Natividad, Julieta and Encarnacion. Upon Magno
Eraña’s death, Lot 248-A was adjudicated in favor of respondent Leonora Eraña Cardeño, et
al.2

Lot 248-A was later on partitioned into two, whereby the outer portion along F. Gomez St. became
the property of the respondents, Spouses Tomas and Leonora Eraña Cardeño. The respondents
built a house thereon sometime in 1972. The interior portion of Lot 248-A became the property of
Encarnacion Eraña Javel (now deceased), one of the sisters of respondent Leonora Cardeño and
petitioner Felicisima Dioso. Subsequently, Encarnacion sold her portion to Felicidad Legaspi who, in
turn, sold the same to the petitioners, Spouses Ramon and Felicisima Dioso.

The petitioners had also built a house of light materials on the adjacent land, Lot 248-B, then owned
by Frisco Eraña. There is an existing pathway or alley on this lot which the petitioners use as their
outlet to F. Gomez St. After they bought Encarnacion’s property, the petitioners wanted to construct
a new house at the interior portion of Lot 248-A. They then demanded that they be given a right of
way or an outlet to F. Gomez St., claiming that they were entitled thereto under the Pinanumpaang
Salaysay executed between respondent Leonora Cardeño and Encarnacion Javel, the petitioners’
predecessor-in-interest, on May 29, 1977. The said document states in part:

Na, kami ang siyang nagmamay-ari ng loteng may numirong 248-A na may sukat [na] 222
square meters. Na, ang nasabing lote ay nasa tabi ng kamalig ni G. AVEL SILVA sa daang
Gov. F. Gomez ng bayang ito;

Na, ako (ENCARNACION E. JAVEL) ay pumapayag na ang nasabing lote ay hatiin at ang
harapan ng nasabing lote ay pinauubaya ko na sa aking kapatid na si LEONORA E.
CARDEÑO at ang likuran ng lote ay sa akin;

Na, ako (LEONORA E. CARDEÑO) bilang pagbibigay sa akin ng aking kapatid

(ENCARNACION E. JAVEL) na mapunta sa akin ang harapan ng nasabing lote ay
binibigyan ko naman ng daang tao sa tagiliran nitong lote upang madaanan ng aking kapatid
patungo sa likuran ng nasabing lote na kanyang kaparte;

Dahil sa ako (LEONORA E. CARDEÑO) ay walang kaukulang salapi para mabili ang kaparti
ng aking kapatid na si ENCARNACION E. JAVEL sa nasabing lote ay binibigyan ko siya
(ENCARNACION E. JAVEL) ng karapatan na maipagbili niya ang kanyang kaparti ng
nasabing lote na may numirong 248-A na may sukat na 111 square meters.3

When the respondents refused to give them the right of way, the petitioners filed with the RTC of
San Pedro, Laguna, Branch 31, a complaint for specific performance and/or easement of right of
way with damages, docketed as Civil Case No. B-4515. The petitioners prayed that the respondents
be directed to comply with or perform their obligation under the Pinanumpaang Salaysay and grant
the petitioners a right of way, and to pay them damages.

In their answer to the complaint, the respondents specifically denied the genuineness and due
execution of the Pinanumpaang Salaysay, alleging that it was falsified. According to the
respondents, respondent Leonora Cardeño and Encarnacion Javel could not have claimed co-
ownership over Lot 248-A to the exclusion of their other siblings as early as 1977 when
the Pinanumpaang Salaysay was supposedly executed, because it was only on August 27, 1992
that the other siblings waived or renounced their shares over the said property in favor of respondent
Leonora Cardeño and Encarnacion Javel. The respondents, thus, urged the trial court to dismiss the
complaint.

After due proceedings, the trial court rendered its Decision4 dated April 23, 1999 and ruled in favor of
the respondents. The trial court held that the petitioners’ evidence did not support their claim that
respondent Leonora Cardeño and Encarnacion Javel executed the Pinanumpaang Salaysay or
entered into an agreement granting the latter, the petitioners’ predecessor-in-interest, a right of way.
The trial court noted that the petitioners presented only a photocopy or machine copy of the
purported document, and, during the trial, failed to lay the foundation or prepare the basis for the
admission of secondary evidence to prove the contents thereof. Moreover, according to the trial
court, even on the assumption that a voluntary easement of right of way existed on the respondents’
property, the petitioners were obliged to pay them indemnity therefor. Since the petitioners were not
willing to pay such indemnity, the trial court concluded that their action to compel the respondents to
grant them a right of way must fail. The trial court, thus, dismissed the complaint and ordered the
petitioners to pay the respondents the sum of ₱30,000 as attorney’s fees.

Aggrieved, the petitioners elevated the case to the Court of Appeals (CA). After evaluation of the
respective pleadings filed by the parties and the evidence on record, the CA rendered the
Decision5 dated May 9, 2001 substantially affirming that of the trial court’s. The appellate court,
however, deleted the attorney’s fees awarded in favor of the respondents for lack of factual and legal
justification.

Citing Section 3,6 Rule 130 of the Rules of Court, the CA opined that the best evidence of the
contents of a document is the original document itself; in the absence of a clear showing that the
original writing has been lost or destroyed or cannot be produced in court, the photocopy submitted,
in lieu thereof, must be disregarded, being unworthy of any probative value and being inadmissible
in evidence.

The appellate court further cited Section 57 of the same Rule and observed that the petitioners failed
to show proof as to the reasons for the unavailability of the original copy of the Pinanumpaang
Salaysay. The petitioners’ witness, Veneranda Legaspi, merely testified that she did not know why
only a photocopy of the said document was given to her by her mother, Felicidad Legaspi, from
whom the petitioners acquired the interior one-half portion of Lot 248-A.

The CA thus affirmed the finding of the RTC that the petitioners’ claim of a right of way had no legal
basis, in view of their failure to prove the due execution of the Pinanumpaang Salaysay under which
respondent Leonora Cardeño allegedly granted a right of way in favor of the petitioners’
predecessor-in-interest. Moreover, by the petitioners’ refusal to pay indemnity to the respondents,
the latter could not be compelled to grant them the voluntary easement of right of way. The
dispositive portion of the appellate court’s decision reads:

WHEREFORE, foregoing premises considered and pursuant to applicable jurisprudence and

law on the matter, the decision dated April 23, 1999 of the court a quo is AFFIRMED with
modification. The award of damages and attorney’s fees is deleted. No costs.

SO ORDERED.8

Thereafter, the petitioners filed with the appellate court a motion for reconsideration/new trial,
alleging that it erred in adopting the factual findings of the court a quo. According to the petitioners,
the CA should have made its own findings of facts. The petitioners, likewise, submitted to the
appellate court Tax Declaration No. 51637 for the year 1992 covering Lot 248-A in the name of
respondent Leonora Cardeño where, at the dorsal portion thereof, the following annotation was
written:

Revision of T.D. No. 15976 based in PINANUMPAANG SALAYSAY NG PAGHAHATI –

pagbabahaging labas sa hukuman na may pagtalikod sa kabahagi.9

The petitioners alleged that this document was newly discovered evidence, the consideration of
which could alter the outcome of the case. They also averred that the document proved the
existence of the Pinanumpaang Salaysay. In their supplement to the motion for new trial, the
petitioners additionally submitted a photocopy of the Pinanumpaang Salaysay, this time certified by
the Municipal Assessor of Sta. Rosa, Laguna as having been verified with the original document
kept by Encarnacion Javel. The Municipal Assessor, likewise, certified that the Pinanumpaang
Salaysay had been presented to the Office of the Municipal Assessor in connection with the
issuance of respondent Leonora Cardeño’s Tax Declaration Nos. 51637 and 51638 covering Lot
248-A. Also submitted by the petitioners was the affidavit of Magtanggol Yldeso, one of the
witnesses to the Pinanumpaang Salaysay, attesting to the circumstances surrounding its execution
and identifying the signatures appearing thereon.
However, in the assailed Resolution of September 28, 2001, the appellate court denied the
petitioners’ motion for reconsideration/new trial. In so ruling, the CA reasoned that the documents
proffered by the petitioners, i.e., Tax Declaration No. 51637, Yldeso’s affidavit and the Municipal
Assessor’s certification, could not be considered as newly discovered evidence. According to the
CA, had the petitioners exercised due diligence in securing these documents, they could have easily
been made available at the time of the filing of the complaint or even before the case was elevated
to it. The dispositive portion of the assailed CA resolution reads:

WHEREFORE, premises above considered, the motion for reconsideration/new trial is

hereby DENIED and our May 9, 2001 Decision is REITERATED and AFFIRMED.

SO ORDERED.10

The petitioners now seek relief from this Court, alleging that the appellate court erred in denying their
motion for reconsideration/new trial. They maintain that the CA should have admitted in evidence the
photocopy of the Pinanumpaang Salaysay which was duly certified by the Municipal Assessor of
Sta. Rosa as a faithful reproduction of the original document. After all, according to the petitioners,
this document merely confirms the existence and due execution of the Pinanumpaang Salaysay, a
photocopy of which was already made part of the records of the proceedings in the trial court.

According to the petitioners, the fact that respondent Leonora Cardeño’s 1992 Tax Declaration
which contained the annotation on the existence of the Pinanumpaang Salaysay was not presented
as evidence during trial was excusable negligence on the part of their former counsel. The
petitioners pray that this omission be excused and that they not be held bound thereby. Finally, the
petitioners insist that they were able to establish by secondary evidence during trial the existence of
the Pinanumpaang Salaysay and the fact of its loss or unavailability.

The preliminary issue that needs to be resolved by this Court is whether the appellate court
committed a reversible error in denying the petitioners’ motion for reconsideration/new trial.

On this score, we affirm the ruling of the Court of Appeals.

For newly-discovered evidence to be a ground for new trial, the concurrence of the following
requisites must be established: (a) the evidence is discovered after trial; (b) the evidence could not
have been discovered and produced during trial even with the exercise of reasonable diligence; and
(c) the evidence is material and not merely corroborative, cumulative or impeaching and is of such
weight that if admitted, would probably change the judgment.11 In order that a particular piece of
evidence may be regarded as "newly discovered" for purposes of granting a new trial, it is essential
to show that the offering party exercised reasonable diligence in seeking to locate such evidence
before or during trial, but had nonetheless failed to secure it.12

The newly discovered evidence submitted by the petitioners to the CA does not satisfy the foregoing
requisites. Respondent Leonora Cardeño’s 1992 Tax Declaration already existed long before the
petitioners filed their complaint in 1997. It must be stressed that the said tax declaration is a public
document, and as such, the petitioners could have easily obtained a copy of the same and
presented it during trial. The same holds true for the copy of the Pinanumpaang Salaysay which was
certified by the Municipal Assessor of Sta. Rosa as a faithful reproduction of the original document
kept by Encarnacion Javel.

Thus, the petitioners failed to establish the second requisite of the rule on newly discovered
evidence. The documents belatedly submitted to the appellate court were already in existence at the
time of trial. Had they exercised reasonable diligence, the petitioners could have discovered them
and produced them during trial. Instead, they attribute the omission to the mistake or excusable
negligence of their former counsel. Unfortunately for the petitioners, clients are generally bound by
the mistakes, negligence and omission of their counsel.13

The petitioners argue that they were able to establish the existence of the Pinanumpaang Salaysay
by secondary evidence, and the fact of the loss or unavailability of the original copy thereof despite
the non-admission of the copy certified by the municipal assessor.

Anent this issue, we rule in favor of the petitioners.

Section 3,14 Rule 130 of the Rules of Court, indeed, provides that when the subject of inquiry is the
contents of a document, no evidence shall be admissible other than the original document itself. This
rule, however, admits of exceptions, as Section 5 thereof further states that "[W]hen the original
document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability without bad faith on his part, may prove its
contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of
witnesses in the order stated."

The admission of secondary evidence in case of the loss or unavailability of the original document is
thus warranted upon satisfactory proof of the following: (1) execution or existence of the original; (2)
loss and destruction of the original or its non-production in court; and (3) unavailability of the original
is not due to bad faith on the part of the offeror.15 Proof of the due execution of the document and its
subsequent loss would constitute the foundation for the introduction of secondary evidence.16

Admittedly, in this case, the original document of the Pinanumpaang Salaysay was not presented
during trial. However, the petitioners presented a photocopy thereof, as well as testimonial evidence
to prove its due execution and the loss or unavailability of the original document. Specifically, the
existence and due execution of the Pinanumpaang Salaysay was established by Yldeso, one of the
petitioners’ witnesses, who testified that he was one of the witnesses to the execution thereof and
that his signature appears thereon:

Q Mr. Witness, on May 29, 1977, do you recall if you reported for duty?

A Yes, Sir.

Q Where did you report for duty on that day?

A Police Department of Sta. Rosa, Laguna then I went to the Office of the Mayor as security,
Sir.

Q Are you telling us that as a policeman you were likewise detailed as security of the mayor?

A Yes, Sir, on that day.

Q Who was the mayor that you are referring to?

A Mayor Angel Tiongco, Sir.

Q He was then at that time Mayor of Sta. Rosa?

A You said that you reported on May 29, 1977 and you went to the office of the mayor as
part of your additional job as a policeman, do you recall anything unusual that happened on
that day, if you recall?

ATTY. ZARATE:

The question is very general.

COURT:

Let us see.

A Yes, Sir.

COURT:

What is that unusual incident?

A The family of Encarnacion went to me at my office at the police department, Sir.

Q Do you consider that as [an] unusual incident?

A Yes, Ma’am. That is an unusual incident event (sic) because my grandmother who is their
Aunt told me that they will come and see (sic), Ma’am.

Q When you said they, you are referring to whom?

A Leonora Eraña and Encarnacion Eraña, Ma’am.

Q So you considered that as unusual?

A Yes, Ma’am.

ATTY. FUENTES:

Who is that godmother that you are referring to?

A Felicidad Eraña, Sir.

Q Did your godmother Felicidad tell you that the Eraña sisters is (sic) going to see you at that
time?

A Yes, Sir, that is why I considered that as [an] unusual event.

Q And what was the purpose if Felicidad told you in coming (sic) the Eraña sisters?

A To prepare the Deed of Sale and the right of way which is located at the back, Sir.

COURT:
At the back of what?

A At the back of Leonora (sic), Ma’am.

ATTY. FUENTES:

Did, in fact, the Eraña sisters (sic) see you on that day?

A Yes, Sir, they went there and that they had caused the preparation of [the] Sinumpaang
(sic) Salaysay relative to their agreement.

Q You mentioned the name of Leonora Eraña, do you know her?

A Yes, Sir.

Q If she is in court, will you please point to her?

A (Witness pointing to a woman inside the courtroom who when asked his (sic) name
identified her name (sic) as Leonora Eraña Cardeño).

Q You likewise mentioned the name Encarnacion Eraña?

A Yes, Sir.

Q Please look around the courtroom and point to us if she is around?

A What I know [is that] she is already dead, Sir.

Q What was the request made to you by your godmother if any why the Eraña sisters wanted
to see you on that day?

A They asked me and told me that they are going to prepare a Sinumpaang (sic) Salaysay
relative to their agreement, Sir.

Q Did your godmother tell you who were these sisters who were supposed to prepare that
document?

A Yes, Sir. Leonora and Encarnacion.

Q Do you know, if indeed, that document was prepared?

A Yes, Sir.

Q Do you know the reason why you were requested to be around in the preparation of that
document?

A My godmother asked me to accompany then (sic) that is (sic) the reason why I accompany
(sic) them, Sir.

Q To where did you accompany them?

A To the Office of the Mayor, Sir.

Q And you are referring to Mayor Tiongco?

A Yes, Sir.

Q What happened to the office of the mayor?

A The document was prepared which was signed by them in my presence, in fact, I was a
witness on that and I also signed the document, Sir.

Q Your (sic) claimed Mr. witness that you are a witness to that document, if that document
will be shown to you, will you be able to identify it?

A If my name is there I would be able to identify it, Sir.

COURT:

Show the document.

ATTY. FUENTES:

I am showing to you Mr. Yldeso a Sinumpaang (sic) Salaysay dated May 29, 1977 previously
marked as Exhibit A, please go over and tell us if this is the document you are referring to?

ATTY. ZARATE:

The witness will be incompetent, the document be[ing] presented is [a] different document
being a xerox copy.

ATTY. FUENTES:

This is a xerox copy, we admit that, Your Honor, but we are presenting that as a secondary
evidence.

ATTY. ZARATE:

Therefore, the question has no basis.

ATTY. FUENTES:

Yes, Your Honor, but the second witness we presented, it was explained.

COURT:

Well, anyway, that is not being offered yet, you just make an objection.

ATTY. ZARATE:
Yes, but we have an objection that the witness is incompetent in any identity (sic) as to the
signature would case (sic) only a suggestive device for him to identify.

COURT:

Subject to that observation. Answer.

A Yes, Sir.

ATTY. FUENTES:

You mentioned that you have your signature in this document, can you point in
this Pinanumpaang Salaysay?

ATTY. ZARATE:

General and continuing objection, Your Honor.

A (Witness is pointing to a signature below the typewritten word Nilagdaan which [is] marked
as Exhibit A for the plaintiff[s], xerox copy of Pinanumpaang Salaysay).

ATTY. FUENTES:

When this document was prepared, do you recall if the parties therein signed or affixed their
signature[s]?

A Yes, Sir.

Q When you said yes, which parties you are (sic) referring to who signed this document?

A Encarnacion Eraña and Leonora Eraña, Sir.

Q I am showing to you a signature over the typewritten name Encarnacion Eraña Javel, tell
us if that is the signature of Encarnacion Eraña Javel?

A Yes, Sir. They signed this in my presence but I am not ascertain (sic) if this is the way they
signed but it was in my presence.

Q Likewise, over the typewritten name Leonora Cardeño is a signature, do you know whose
signature is that?

A Yes, Sir. This is the signature of Leonora Cardeño.

Q Why do you know that this is her signature or Leonora (sic)?

A She signed in my presence, Sir.

Q Aside from you, do you recall if there are other witness who was called to be a witness?

A Yes, Sir.
Q Who is the other witness?

A Tomas Cardeño, Sir.

Q Did you see Tomas Cardeño affix his signature in that document?

A After I signed he signed, Sir.

Q I am showing to you a signature, under your oath will you tell us if this is the signature of
Tomas Cardeño?

A Yes, Sir.

Q Can you tell us Mr. witness, where was this document executed?

A They signed that before Mayor Tiongco, Sir.

Q Do you know if Mayor Tiongco affix (sic) his signature in this document?

A Yes, Sir, that is why a copy was given to them.

Q Given copy to whom?

A To Leonora and Encarnacion, Sir.

Q Who gave Leonora and Encarnacion?

A The document was given to me by the Mayor and it was distributed to the parties, Sir.

Q Why did you give copies to them, to Leonora and Encarnacion?

A Because they were the one[s] who executed that, so they have to receive a copy, Sir.

Q Do you recall if Mayor Tiongco at that time subscribed or sign (sic) the document?

A Yes, Sir.

Q Do you know where Mayor Tiongco affix (sic) his signature?

A Yes, Sir.

Q Can you point?

A (Witness pointing to a bottom part of this Exhibit A which is not legible.)

ATTY. FUENTES:
 At this point, Your Honor, we request that this document be marked, the signatures of the
witnesses, Encarnacion Javel, Leonora Cardeño, Tomas Cardeño and that of the mayor be
marked as Exhibits "A-1," "A-2," "A-3," "A-4" and "A-5."

Q When you said Mr. witness that one of the signatory (sic) is Tomas Cardeño, do you know
him personally?

A Yes, Sir.

Q If he is inside the courtroom, will you please point to him?

A (Witness pointing to a man who when asked identified himself as Tomas Pablo Cardeño).

ATTY. FUENTES:

That would be all for the witness, Your Honor.17

Moreover, the unavailability of the original document was established by Veneranda Legaspi,
daughter of Felicidad Legaspi, who bought Encarnacion Eraña’s portion of Lot 248-A and eventually
sold it to the petitioners. She testified that they exerted efforts to locate the original Pinanumpaang
Salaysay, to no avail:

ATTY. FUENTES:

This is a certified xerox copy, can you tell us where is the original or duplicate original of this
document?

A We have exerted effort to locate the original but this is the only copy given to me by my
mother, the xerox copy, Sir.

Q Are you telling us that the one that was given to you by your mother is a xerox copy
already?

A Yes, Sir.

Q Did you not ask why that is a xerox copy?

A No, Sir.

Q And that same xerox copy that you turn over (sic) Mrs. Dioso when you sold the property?

A Yes, Sir.

Q Did not Mrs. Dioso ask you why you turn-over (sic) this Pinanumpaang Salaysay to her?
Why this is only a xerox copy?

ATTY. ZARATE:

Asking for opinion, Your Honor.

 COURT:

Reform.

ATTY. FUENTES:

What was the reaction of Mrs. Dioso when you turn over (sic) to her this document?

A She asked me about the original but I told her I do not know, Sir.18

Further, the Deed of Absolute Sale dated August 13, 1984, executed between Encarnacion Eraña
Javel and Felicidad Eraña Legaspi, covering the former’s portion of Lot 248-A, Annex "B" for the
petitioners and admitted in evidence by the trial court, expressly mentioned the Pinanumpaang
Salaysay, to wit:

That my co-owner LEONORA ERAÑA-CARDEÑO being unable to buy my aliquot share of

the said property and having authorized me to sell the same to my aunt FELICIDAD ERAÑA-
LEGASPI as per written affidavit executed by me and the said Leonora Eraña-Cardeño on
May 29, 1977 at Sta. Rosa, Laguna, subscribed before the Municipal Mayor Angel Z.
Tiongco; NOW, THEREFORE, for and in consideration of the sum of TEN THOUSAND
PESOS (₱10,000.) I do hereby sell, transfer and convey in a manner absolute my share of
the above-described property which is One Hundred Eleven (111) square meters, more or
less in the manner of partition illustrated in the said affidavit annexed hereto forming part and
parcel of this deed to be known as Annex "A"; to FELICIDAD ERAÑA-LEGASPI, her heirs,
successors-in-interest and assigns.19

Clearly then, since there was proof of the due execution of the Pinanumpaang Salaysay, and that,
despite earnest efforts on their part, the petitioners could not produce the original thereof, the
presentation of secondary evidence to prove the contents of the said document was justified.
Furthermore, contrary to the trial court’s findings, the petitioners had sufficiently laid down the basis
for the introduction of secondary evidence.

The rule on the admission of secondary evidence provides that the contents of the original document
may be proved (1) by a copy; (2) by a recital of its contents in some authentic document; or (3) by
the recollection of the witnesses, in the order stated.20 The trial court and the CA, therefore, erred in
denying the admission of a photocopy of the Pinanumpaang Salaysay,21 when the same may be
properly considered as secondary evidence to prove the contents thereof.

Interestingly, except for the perfunctory denial of the due execution of the Pinanumpaang
Salaysay contained in their answer to the complaint, the respondents never categorically denied the
existence or the presence of their signatures thereon when they took the witness stand. In fact,
when the petitioners filed their motion for reconsideration/new trial with the CA, submitting therewith
a copy of the Pinanumpaang Salaysay, certified by the Municipal Assessor of Sta. Rosa as a faithful
reproduction of the original document kept by Encarnacion Javel, the respondents did not refute the
same. Even in their comment and memorandum filed with this Court, the respondents did not
categorically deny the existence and execution of the said document. To the Court’s mind, this is an
indication of the genuineness of the Pinanumpaang Salaysay.

Having established the existence and due execution of the Pinanumpaang Salaysay, the
respondents are obliged to grant the petitioners, as successors-in-interest of Encarnacion Eraña
Javel, a right of way in accordance with the terms thereof.22
WHEREFORE, the petition is GRANTED. The assailed CA Decision dated May 9, 2001 and
Resolution dated September 28, 2001 in CA-G.R. CV No. 63265 are REVERSED and SET ASIDE.
The respondents, Spouses Tomas and Leonora Cardeño, are DIRECTED to grant the petitioners,
Spouses Ramon and Felicisima Dioso, an easement of right of way in accordance with
the Pinanumpaang Salaysay dated May 29, 1977.

SO ORDERED.

FIRST DIVISION

January 30, 2017

G.R. No. 207786

SPOUSES MARCELIAN TAPAYAN and ALICE TAPAYAN, Petitioners,

vs.
PONCEDA M. MARTINEZ, Respondent.

DECISION

CAGUIOA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court (Petition), seeking the
1

reversal of the Decision dated May 30, 2013  (assailed Decision) rendered by the Court of Appeals,
2

Cagayan de Oro City - Twenty-First Division (CA). The assailed Decision stems from a complaint
filed before the Regional Trial Court of Ozamiz City (RTC), by respondent Ponceda Martinez
(Respondent) against petitioners, spouses Marcelian and Alice Tapayan (Petitioners), for Specific
Performance with Damages. 3

The Facts

The parties herein are relatives by affinity. Petitioner Alice Tapayan is the sister of Clark Martinez's
(Clark) wife. Clark is Respondent's son.

Respondent is the registered owner of a parcel of land situated along Pingol Street, Ozamiz City,
covered by Original Certificate of Title (OCT) No. P-1223 (Pingol Property).4 Based on the records, it
appears that two (2) mortgages were constituted over this property - the first in favor of Philippine
National Bank (PNB Mortgage ), and the second in favor of Development Bank of the Philippines
(DBP Mortgage). The particulars of these mortgages are summarized as follows:

Mortgage Parties Purpose

 PNB Mortgage Respondent as mortgagor To secure a One Hundred
and Philippine National Thousand Peso
Bank, Ozamiz Branch (PNB) (₱100,000.00) loan in the
as mortgagee name of Respondent 5

DBP Mortgage Respondent as mortgagor To secure a One Million

and Development Bank of Peso (₱1,000,000.00)
the Philippines, Ozamiz renewable credit line in the
Branch (DBP) as mortgagee name of Petitioners (DBP
Loan) 6

The records further show that Respondent agreed to constitute the DBP Mortgage upon Clark's
request,  and that, in order to release the Pingol Property from the PNB Mortgage, the Petitioners
7

and Respondent agreed to utilize a portion of the proceeds of the DBP Loan to settle the remaining
balance of Respondent's PNB Loan, then amounting to Sixty-Five Thousand Three Hundred Twenty
Pesos and 55/100 (₱65,320.55). 8

Subsequently, the parties herein executed a Deed of Undertaking dated August 29, 1998 (Deed of
Undertaking) in reference to the DBP Mortgage. The Deed of Undertaking bears the following
stipulations, to wit:

1. that the "Second Party [Respondent] has no liability whatsoever insofar as the aforesaid loan
contracted by the First Party [Petitioners] concerned;"

2. that "to secure the aforesaid amount, the First Party [Petitioners] shall execute a second mortgage
in favor of the Second Party [Respondent] over his House and Lot covered by TCT No. T-10143,
situated at Carangan, Ozami[z] City x x x" 9

3. x x x

4. [t]hat in the event the First Party [Petitioners] could not pay the loan and consequently, the
property of the Second Party [Respondent] is foreclosed and is not redeemed by the First Party
[Petitioners] with[in] the one (1) year redemption period; or in case the loan shall be paid by the
Second Party [Respondent] just to save the property from being foreclosed, the First Party
[Petitioners] shall acknowledge as his indebtedness the amount due to the Development Bank of the
Philippines upon foreclosure or the amount paid by the Second Party [Respondent] in paying the
loan, but in either case shall be deducted therefrom the amount of P65,320.55 plus interests and
fees paid by the First [P]arty [Petitioners] to PNB, Ozamiz City[.]   (Emphasis and underscoring
10

omitted)

The DBP Loan was not paid when it fell due.

Proceedings before the RTC

On September 14, 1999, Respondent filed a complaint for Specific Performance with Damages
(Complaint) against Petitioners before the RTC.  The Complaint sought to compel Petitioners to
11

constitute a mortgage over their house and lot situated in Carangan, Ozamiz City covered by
Transfer Certificate of Title (TCT) No. T-10143 (Carangan Property), in accordance with the
provisions of the Deed of Undertaking. 12
Respondent averred that Petitioners used the proceeds of the DBP Loan exclusively for their own
purposes,   and that since Petitioners failed to pay the DBP Loan, she and her children were
13

constrained to pay DBP the sum of One Million One Hundred Eighty Thousand Two Hundred Pesos
and 10/100 (₱1,180,200.10) to save the Pingol Property from foreclosure.   Notwithstanding this,
14

Petitioners have neither paid their indebtedness nor executed a mortgage over the Carangan
Property to secure the same.  15

The Petitioners denied Respondent's allegations and claimed that the Deed of Undertaking "is a
falsity." 
16

Petitioners argued that the proceeds of the DBP Loan were primarily used as capital for the
construction business that petitioner Marcelian put up with Clark, Mario Delos Reyes, and Richard
Sevilla (collectively, Joint Venturers).   Petitioners supposedly applied for the DBP Loan in
17

furtherance of the verbal agreement among the Joint Venturers, while Respondent freely agreed to
constitute the DBP Mortgage to secure said loan upon Clark's request.   Petitioners further
18

emphasized that a portion of the proceeds of the DBP Loan was used to pay off the balance of
Respondent's PNB Loan.   Moreover, while the DBP Loan was in the nature of a renewable credit
19

line, it was not renewed since Respondent refused to give her written consent for this purpose.  20

On the procedural aspect, Petitioners argued that Respondent's Complaint was premature and
should have been be dismissed outright, since she failed to resort to barangay conciliation
proceedings before filing her Complaint with the RTC. 21

To support their allegations, Petitioners presented a Joint Affidavit executed by Mario Delos Reyes
and Richard Sevilla, attesting to the formation of the joint venture and the conclusion of the verbal
agreement to apply for the DBP Loan in the interest of the Joint Venturers. 22

After trial, the RTC rendered a decision dated September 28, 2009 in favor of Respondent (RTC
Decision), the dispositive portion of which reads:

WHEREFORE premises considered, judgment is hereby rendered ordering defendant spouses Atty.
Marcelian and Alice Tapayan to execute the second mortgage of (sic) their lot and house covered by
Transfer Certificate of Title No. T-10143 located at Carangan, Ozamiz City in favor of plaintiff Mrs.
Ponceda Martinez, unless they reimburse the latter of the total amount of P 1, 180,200.10 paid by
her to the Development Bank of the Philippines, Ozamiz Branch for the redemption of the mortgage,
and requiring defendants to pay to plaintiff the amount of P20,000.00 for attorney's fees.

SO ORDERED. 23

In so ruling, the RTC noted that the Deed of Undertaking was acknowledged before Atty. Emmanuel
V. Chiong, a notary public, and reasoned that since the latter enjoys the presumption of having
performed his duties regularly, Petitioners' claim that the Deed of Undertaking was a falsity must be
rejected.  On such basis, the RTC held that the Deed of Undertaking constitutes a valid and binding
24

contract, which Petitioners are bound to respect. 25

Proceedings before the CA

Aggrieved, Petitioners elevated the case to the CA. In their appeal, Petitioners prayed that the CA
determine (i) whether the RTC validly acquired jurisdiction over the Complaint notwithstanding
Respondent's failure to comply with the Revised Katarungang Pambarangay Law, (ii) whether
Respondent is an accommodation mortgagor, and (iii) whether the Petitioners may be compelled to
constitute a mortgage over the Carangan Property in Respondent's favor.  26

On May 30, 2013, the CA rendered the assailed Decision denying the Petitioners' appeal. The
dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered, the instant appeal is hereby DENIED. The Decision of the

RTC dated 28 September 2009 is hereby AFFIRMED. Defendants-appellants are ordered to
execute the Second Mortgage on their house and lot covered by Transfer Certificate of Title (TCT)
No. T-10143 in favor [of] plaintiff-appellee. Costs against appellants.

SO ORDERED. 27

Contrary to the Petitioners' claim, the CA found that the requirements of the Katarungang
Pambarangay Law were complied with, as evidenced by the Certificate to File Action filed by
the Lupon Tagapamayapa before the RTC on August 16, 2000. 28

Moreover, the CA held that the Deed of Undertaking merits consideration, since Petitioners failed to
overcome the presumption of regularity ascribed to it as a public document.  Thus, on the basis of
29

the stipulations in the Deed of Undertaking, the CA concluded that Respondent indeed stood as
Petitioners' accommodation mortgagor. Hence, Respondent possesses the right to enforce the Deed
of Undertaking and compel Petitioners to comply with its stipulations.  30

Petitioners received a copy of the assailed Decision on June 13, 2013. 31

On June 27, 2013, Petitioners filed a motion praying for an additional period of thirty (30) days within
which to file a petition for review on certiorari before this Court.  Thereafter, on July 26, 2013,
32

Petitioners filed this Petition, ascribing multiple errors to the CA.

Respondent filed her Comment to the Petition on May 30, 2014.  Petitioners filed their Reply on
33

October 17, 2014. 34

On February 26, 2015, the Court received a notice from Respondent's counsel of record, informing
the Court of Respondent's death. The notice identified the Respondent's eight (8) children as her
legal representatives, namely: Clark, Jeff Martinez, Rock Martinez, Gary Martinez, Patricia Martinez
Olson, Eleanor Martinez Fassnacht, Treccie Martinez Kappes, and Sheila Martinez Sachs.  35

Issue

The sole issue for this Court's resolution is whether the CA erred in affirming the R TC Decision
directing Petitioners to execute a mortgage over the Carangan Property in favor of Respondent.

The Court's Ruling

As a rule, only questions of law may be raised in petitions filed under Rule 45,  subject only to
36

recognized exceptions, namely:

(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings
of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues
of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in
the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of
fact are premised on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed
by the parties, which, if properly considered, would justify a different conclusion. x x x  (Emphasis
37

supplied; citations omitted)

The Petition invokes the fourth exception above, and calls on this Court to review the factual findings
of the RTC, which were later affirmed by the CA.

In sum, Petitioners pose that the CA erred when it affirmed the following factual findings of the RTC:

1. The Deed of Undertaking presented by Respondent is genuine, and constitutes a valid

and binding contract enforceable against Petitioners;

2. Petitioners applied for the DBP Loan for their own interest and sole account;

3. Petitioners are bound to reimburse Respondent One Million One Hundred Eighty
Thousand Two Hundred Pesos and 10/100 (₱l,180,200.10) representing the amount she
and her daughters paid to avert the foreclosure of the DBP Mortgage; and

4. To secure the full amount due Respondent, Petitioners are bound to constitute a mortgage
over the Carangan Property, pursuant to the provisions of the Deed of Undertaking.

The Court holds that no misapprehension of facts was committed by both the RTC and the CA so as
to justify deviation from their findings, except only as to the RTC's finding regarding the amount that
Petitioners are bound to reimburse to Respondent.

Petitioners waived their right to object

to the admission of the Deed of
Undertaking on the basis of the best
evidence rule.

In this Petition, Petitioners assert that the R TC and CA erred in ruling that the plain copy of the
Deed of Undertaking was admissible as proof of its contents, in violation of the best evidence rule
under Rule 130 of the Rules of Court.

Petitioners' assertion is erroneous.

The best evidence rule requires that the original document be produced whenever its contents are
the subject of inquiry,  except in certain limited cases laid down in Section 3 of Rule 130. However,
38

to set this rule in motion, a proper and timely objection is necessary. The Court's ruling
in Lorenzana v. Lelina is instructive:
39

The best evidence rule requires that when the subject of inquiry is (sic) the contents of a document,
no evidence is admissible other than the original document itself except in the instances mentioned
in Section 3, Rule 130 of the Revised Rules of Court. As such, mere photocopies of documents are
inadmissible pursuant to the best evidence rule. Nevertheless, evidence not objected to is
deemed admitted and may be validly considered by the court in arriving at its judgment.
Courts are not precluded to accept in evidence a mere photocopy of a document when no
objection was raised when it was formally offered.

In order to exclude evidence, the objection to admissibility of evidence must be made at the proper
time, and the grounds specified. Objection to evidence must be made at the time it is formally
offered. In case of documentary evidence, offer is made after all the witnesses of the party
making the offer have testified, specifying the purpose for which the evidence is being
offered. It is only at this time, and not at any other, that objection to the documentary
evidence may be made. And when a party failed to interpose a timely objection to evidence at
the time they were offered in evidence, such objection shall be considered as waived. This is
true even if by its nature the evidence is inadmissible and would have surely been rejected if it had
been challenged at the proper time. Moreover, grounds for objection must be specified in any
case. Grounds for objections not raised at the proper time shall be considered waived, even if
the evidence was objected to on some other ground. Thus, even on appeal, the appellate
court may not consider any other ground of objection, except those that were raised at the
proper time.  (Emphasis and underscoring supplied; citations omitted)
40

The Court notes that Petitioners failed to object to the admission of the plain copy of the Deed of
Undertaking at the time it was formally offered in evidence before the RTC. In fact, in their Reply,
Petitioners admit that they only raised this objection for the first time before the CA. The relevant
portions of said Reply state:

Instead of arguing against the truth of this established fact, the respondent made an implied
admission of the truth thereof when she shifted instead to raise the argument that petitioner cannot
raise this issue for the first time in this petition. Respondent said:

"I That petitioners have raised issues of facts before this Honorable Court not otherwise raised in the
court a quo."

xxxx

NOTHING CAN BE MORE WRONG!

Petitioner certainly raised the issue covered by Ground I of this Petition in the lower [c]ourt.
Unfortunately, with utmost due respect, it inadvertently escaped the attention of the Honorable Court
of Appeals. It was only very unfortunate that petitioner failed to give it a superlative emphasis
adequate enough so as not to be ignored by the lower court. It can also be reasonably surmised
that the new counsel of respondent may not have perused in detail the appellant's brief in the
Court of Appeals, of which brief brought this issue under the Issue No

"E.1 THERE WERE CIRCUMSTANTIAL EVIDENCE THAT THE DEED OF UNDERTAKING WAS
FALSIFIED."

For easy reference, the averments on pages 31 to 33 of the Appellant's Brief in the Court of

Appeals are hereby repleaded and reiterated as follows:

xxxx

"Aside from the obtaining circumstances earlier discussed herein that the Deed of Undertaking (Exh.
"K") is a falsified document, the records will show that plaintiff caused only a temporary marking of a
machine copy of the same, placed as an annex to the Complaint and in a review of the records,
defendants could not find that plaintiff caused a substitution of the temporarily marked machine copy
with an original thereof, then subsequently marked after being identified by plaintiff witness Ponceda
Martinez. x x x

x x x x"

Verily, it is crystal clear that Ground I is not raised for the first time in this petition. It is admitted,
however, that there was no highest emphasis given to the same as it was placed in the last
pages of the discussion in the appellant's brief. Albeit the inadvertence, it is now given the
greatest emphasis and significance by placing it under Ground I of this Petition because petitioners
rationally and realistically believe that it goes into the heart of this Petition.  (Emphasis and
41

underscoring supplied)

Having failed to timely raise their objection when the Formal Offer of Evidence was filed in the RTC,
Petitioners are deemed to have waived the same. Hence, they are precluded from assailing the
probative value of the plain copy of the Deed of Undertaking.

Petitioners failed to rebut the

presumption of regularity ascribed to
the Deed of Undertaking as a notarized
public document.

Notwithstanding the findings of the RTC and CA, Petitioners still assail the genuineness and due
execution of the Deed of Undertaking before this Court. Petitioners insist that the Deed of
Undertaking is a falsity and should not be given credence.

The Court disagrees.

As correctly held by the R TC and CA, the Deed of Undertaking became a public document by virtue
of its acknowledgment before a notary public. Hence, it enjoys the presumption of regularity, which
can only be overcome by clear and convincing evidence. Thus, in Spouses Santos v. Spouses
Lumbao,   this Court upheld the presumption of regularity, finding the bare denial of petitioners
42

therein insufficient to overcome the same:

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 were
duly notarized before a notary public. It is well-settled that a document acknowledged before a
notary public is a public document that enjoys the presumption of regularity. It is a prima
facie evidence of the truth of the facts stated therein and a conclusive presumption of its
existence and due execution. To overcome this presumption, there must be presented
evidence that is clear and convincing. Absent such evidence, the presumption must be
upheld. In addition, one who denies the due execution of a deed where one's signature appears has
the burden of proving that contrary to the recital in the jurat, one never appeared before the notary
public and acknowledged the deed to be a voluntary act. Nonetheless, in the present
case petitioners' denials without clear and convincing evidence to support their claim of
fraud and falsity were not sufficient to overthrow the above-mentioned presumption; hence,
the authenticity, due execution and the truth of the facts stated in the aforesaid "Bilihan ng Lupa" are
upheld.  (Emphasis and underscoring supplied; citations omitted)
43

While Petitioners vehemently deny participation in the execution of the Deed of Undertaking, they
did not present any evidence to support their claim that their signatures thereon were forged. Hence,
consistent with the ruling of the RTC and CA, the Court upholds the presumption of regularity
ascribed to the Deed of Undertaking.
Petitioners ' claim that they are
accommodation borrowers is
supported by sufficient evidence.

Petitioners claim that they are mere accommodation borrowers who applied for the DBP Loan for
and on behalf of the Joint Venturers, in furtherance of the verbal agreement between and among
petitioner Marcelian and the Joint Venturers. Thus, Petitioners aver that the liability arising from the
non-payment of the DBP Loan should be assumed not by Petitioners Marcelian and Alice, but by
Petitioner Marcelian and the rest of the Joint Venturers - Clark, Mario Delos Reyes and Richard
Sevilla.
44

To support this claim, Petitioners rely on the Joint Affidavit executed by two (2) of the alleged Joint
Venturers - Mario Delos Reyes and Richard Sevilla,  the pertinent portions of which read:
45

1. That we entered into a business venture with Atty. Marcelian C. Tapayan and Clark Martinez,
engaging in the construction business;

2. That the loan obtained by Atty. Marcelian [T]apayan and Mr. Clark Martinez for Pl Million from
DBP, Ozamiz City, was used partly to liquidate the loan of Mrs. Ponceda Martinez for about P65
thousand and the balance was used to finance as additional capital in the construction business [.] 46

Curiously, however, only Mario Delos Reyes testified before the RTC to affirm the statements in the
Joint Affidavit, as Richard Sevilla had allegedly fled to the United States as an undocumented alien. 47

Hence, apart from the statements in the Joint Affidavit affirmed solely by the testimony of Mario
Delos Reyes, which is in turn corroborated only by petitioner Marcelian's self-serving declarations,
the Court finds no other evidence on record to support the existence of the alleged joint venture, and
the verbal agreement of the Joint Venturers in respect of the DBP Loan.

In fact, the theory that Petitioners acted as mere accommodation borrowers is belied by their own
allegations respecting the payment of fees relating to the DBP Loan, which the Court quotes
hereunder:

[P]etitioner Marcelian Tapayan endeavored in good faith to fully pay the interests and fees of the Pl
Million loan with the DBP, Ozamiz City.  The loan is in the nature of a one-year credit line drawable
1avvphi1

against 60 to 150-day promissory notes, and is renewable yearly as long as the interests were paid.
The first release of the loan was on December 27, 1996 via a promissory note 96/109 for
P400,000.00 for 150 days (Exhibit "6") which was extended for another 150 days via an Addendum
to Promissory Note (Exh "7"). The second release was on February 4, 1997 via Promissory Note No.
97-010 for P600,000.00 (Exh "8") for a term of 150 days extended for another 150 days via an
Addendum to Promissory Note (Exh "9"). The admitted documentary exhibits of petitioners
evidently show that the interests and other fees (doc. stamps) were fully paid by petitioners
covering the period from the date of the first loan release on December 27, 1996 and until the
date of the extensions and even beyond the one-year term of the credit line as interests were
paid up to February 28, 1998 as per Exhibits "10" to "27". Further, petitioners also paid the
premium on the insurance coverage of the mortgaged property from May 15, 1997 to May 15,
1998, and in anticipation of the renewal of the credit line, petitioners also paid the insurance
premium covering the period from May 15, 1998 to May 15, 1999, as can be gleaned from
Exhibits "28" to "31". The foregoing facts sufficiently indicated that amid the hard times, petitioners
were up-to-date in the payments of interests and fees covering the promissory notes and extensions
(Exhs. "6" to "9"), which is a basic requirement in the consideration of the renewal of the credit line.
In sum, petitioners exercised utmost good faith in complying with the terms and conditions of the
credit line.  (Emphasis supplied)
48

Petitioners' payment of the interest on the DBP Loan, the insurance premiums corresponding to the
Pingol Property, and other incidental fees solely on their account,  without seeking reimbursement
49

from the alleged Joint Venturers, establishes Petitioners' direct interest in the DBP Loan, and
negates the claim that they are mere accommodation borrowers. Since the proceeds of the DBP
Loan redounded to Petitioners' benefit, they must bear the liability arising from its non-payment, and
comply with the obligations imposed by the Deed of Undertaking executed in connection therewith.

The amount paid to PNB must be

deducted from Petitioners' total liability
in accordance with the provisions of the
Deed.

Petitioners aver that the RTC's determination respecting the amount due Respondent is erroneous,
since it failed to consider the deductions stipulated in the Deed of Undertaking. Hence, Petitioners
submit that should the Court order the execution of a mortgage over the Carangan Property, such
mortgage should only be made to secure the amount of One Million One Hundred Fourteen
Thousand Eight Hundred Seventy-Nine Pesos and 55/100 (₱1,114,879.55),  which represents the
49-a

amount paid by Respondent to DBP to avert the foreclosure of the DBP Mortgage, net of the
deductions stipulated in the Deed of Undertaking.

The Court agrees.

The RTC Decision directed Petitioners to execute a mortgage in favor of Respondent to secure the
amount of One Million One Hundred Eighty Thousand Two Hundred Pesos and 10/100
(₱1,180,200.10), unless Petitioners reimburse Respondent said amount in full.

In so ruling, the RTC completely disregarded the fourth paragraph of the Deed of Undertaking, which
specifically requires Respondent to deduct all prior payments made in favor of PNB from Petitioners'
total liability, thus:

That in the event the First Party could not pay the loan and consequently, the property of the Second
Party is foreclosed and is not redeemed by the First Party with[ in] the one (1) year redemption
period; or in case the loan shall be paid by the Second Party just to save the property from being
foreclosed, the First Party shall acknowledge as his indebtedness the amount due to the
Development Bank of the Philippines upon foreclosure or the amount paid by the Second
Party in paying the loan, but in either case shall be deducted therefrom the amount of
P65,320.55 plus interests and fees paid by the First [P]arty to PNB, Ozamiz City[.]  (Emphasis
50

supplied)

This oversight was adopted by the CA when it affirmed the RTC Decision in toto. The Court now
corrects this error.

Respondent anchors her cause of action on the Deed of Undertaking in its entirety. To allow
Respondent to selectively invoke the validity and enforceability of the provisions that support her
cause, and disregard those that operate against her interests would promote injustice at the expense
of Petitioners.
Notably, Respondent does not deny that a portion of the DBP Loan was in fact utilized to settle part
of her PNB Loan.  Respondent merely avers that such payment was necessary to clear the title of
1âwphi1

the Pingol Property, and that the resolution of such issue would be inconsequential to the ultimate
disposition of the assailed Decision:

Grounds 2 and 3 relied upon by [P]etitioners raise questions of fact so insubstantial that they do not
affect the ultimate disposition of the action that [P]etitioners execute a mortgage on their propert[y] in
favor of [R]espondent. It is an admitted fact x x x that [R]espondent obtained a One Million Peso
bank loan as capital for [P]etitioners' construction business. If [P]etitioners needed to clear
[R]espondent's title of an existing minor lien to be able to use it for their purpose, expenses incurred
for the process were par for the course.  51

This argument is specious, as the actual amount Petitioners are bound to reimburse constitutes the
very same obligation Respondent seeks to secure through the execution of the mortgage subject of
this dispute.

Thus, the Court modifies the assailed Decision, and rules that Sixty-Five Thousand Three Hundred
Twenty Pesos and 55/100 (₱65,320.55) should be deducted from Petitioners' total liability,
representing the reimbursement to be paid by the latter to PNB.  Consequently, the amount
52

Petitioners should reimburse to Respondent is One Million One Hundred Fourteen Thousand Eight
Hundred Seventy-Nine Pesos and 55/100 (₱1,114,879.55).

WHEREFORE, premises considered, the Petition for Review is GRANTED IN PART. The Decision

dated May 30, 2013 of the Court of Appeals in CA-G.R. CV No. 02081-MIN is hereby AFFIRMED
WITH MODIFICATION. Petitioners Marcelian and Alice Tapayan are directed to execute a mortgage
on their house and lot covered by TCT No. T-10143 located at Carangan, Ozamiz City in favor of
Respondent Ponceda Martinez, unless they reimburse the latter the amount of One Million One
Hundred Fourteen Thousand Eight Hundred Seventy-Nine Pesos and 55/100 (₱1,114,879.55).
Petitioners are likewise directed to pay Respondent attorney's fees in the amount of Twenty
Thousand Pesos (₱20,000.00), in accordance with the Decision dated September 28, 2009
rendered by the Regional Trial Court in Civil Case No. OZC-99-38.

SO ORDERED.