Evidence Assignment No.3

THIRD DIVISION
[G.R. No. 175085. June 1, 2016.]

TAN SIOK 1 KUAN and PUTE CHING, petitioners, vs. FELICISIMO "BOY"
HO, RODOLFO C. RETURTA, 2 VICENTE M. SALAS, and LOLITA
MALONZO, respondents.
DECISION
PEREZ, J p:
Before the Court is a Petition for Review on Certiorari 3 assailing the
Decision 4 dated June 29, 2006 and the Resolution 5 dated October 17, 2006
of the Court of Appeals (CA) in CA-G.R. SP No. 92107, which rulings reversed
the Consolidated Decision 6 dated May 6, 2005 of the Regional Trial Court
(RTC) in Civil Case Nos. Q-04-53505 to Q-04-53511 and the Joint
Decision 7 dated July 8, 2004 of the Metropolitan Trial Court (MeTC) in Civil
Case Nos. 30272 to 30278 and, in effect, dismissed for lack of merit the
complaints for unlawful detainer filed by herein petitioners.
Antecedent Facts
The case at bar stems from seven (7) separate complaints for unlawful
detainer filed by petitioners Tan Siu Kuan and Pute Ching against defendants
Avelino Bombita (Bombita), Felix Gagarin (Gagarin), Bernardo Napolitano
(Napolitano), Felicisimo "Boy" Ho (Ho), Rodolfo Returta (Returta), Vicente
Salas (Salas), and Lolita Malonzo (Malonzo).
In their Complaints, 8 petitioners averred that they are the owners of a
parcel of land, along with the improvements therein, located at Apollo Street,
San Francisco del Monte, Quezon City, and covered by Transfer Certificate of
Title (TCT) Nos. 279014 and 279015; that they have been leasing portions of
said property to the defendants since 1972; and that on February 7, 2003 they
notified defendants in writing of their failure to pay rentals, as follows:
- defendant AVELINO BOMBITA that his rentals from
March 1997 to the present have not been paid in the total sum of
Php17,500.00 as of December, 2002;
- defendant FELIX GAGARIN that his rentals from
September 1997 to the present have not been paid in the total sum
of Php16,000.00 as of December, 2002;
- defendant FELICISIMO "BOY" HO that his rentals from
December 1996 to the present have not been paid in the total sum
of Php28,700.00 as of December, 2002;
- defendant LOLITA MALONZO that her rentals from
January, 1997 to the present have not been paid in the total sum of
Php21,600.00 as of December, 2002;
- defendant BERNARDO NAPOLITANO that his rentals from
September, 1997 to the present have not been paid in the total
sum of Php16,000.00 as of December, 2002;
- defendant RODOLFO RETURTA that his rentals from July,
1996 to the present have [not] been [paid in] the total sum of
Php23,700.00 as of December, 2002; and
- defendant VICENTE SALAS [that] his rentals from
August, 1997 to the [present have] not been paid in the total sum
of Php22,750.00 as of December, 2002. 9
Defendants were given ten (10) days to pay the rentals due or else to
vacate the premises and turn over the possession thereof to petitioners, but
defendants allegedly ignored petitioners' demand, warranting the filing of the
complaints for unlawful detainer. 10
1
For their part, Bombita, Gagarin, and Napolitano (defendants) argued that
the lease agreements they have executed with petitioners are void ab
initio, petitioners being Chinese nationals who are not entitled to own real
property in the Philippines. Moreover, they claimed to have been in possession
of the subject premises since 1968 or some 35 years ago, thus plaintiff's action
cannot be one for ejectment or unlawful detainer, but accion
publiciana which must be filed before the RTC. 11
On the other hand, Ho, Returta, Salas, and Malonzo, herein respondents,
maintained that they have been in possession of the subject premises for 37
years without any rentals being paid to any landlord or his agents, and that
there are no existing lease contracts between respondents and petitioners. In
fact, in separate letters to petitioners, in response to the latter's demand
letters, respondents categorically denied renting the subject
premises. 12 Respondents also asserted that they have started possessing
said property in 1966 by building residential houses, and that they have been in
continuous possession since then. Additionally, respondents claimed that
petitioners presented only photocopies of the subject TCTs and that when they
presented such to the Register of Deeds of Quezon City for verification as to
how such were transferred from the mother titles TCT Nos. 12505 and 12506,
said office informed them that there is no single transaction recorded in the
aforesaid mother titles. 13 Lastly, respondents argued that even assuming
that petitioners' titles are authentic, their cause of action should have
been accion publiciana considering that respondents are in possession and
that no lease contract exists between the parties. CAIHTE
After trial, the MeTC-Branch 40, Quezon City ruled in favor of petitioners.
As regards defendants, the MeTC held that they impliedly admitted the
existence of lease contracts between them and petitioners and, as such, they
cannot deny the consequent lessor-lessee relationship following the rule that
a tenant is not permitted to deny the title of his landlord. As regards
respondents, on the other hand, the MeTC ruled that since petitioners were
able to show that the property in question was registered under their name,
and since respondents merely denied the existence of a lessor-lessee
relationship between them and petitioners, petitioners' averments must prevail
following the tenet that in weighing contradictory declarations and
statements, greater weight must generally be given to positive testimony.
Thus, the MeTC disposed of the case in this manner: 14
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the herein plaintiffs TAN SIU KUAN & PUTE
CHING as against all the above named defendants over that certain
property located at Apollo Street, San Francisco del Monte, Quezon
City covered by TRANSFER CERTIFICATE OF TITLE NOS. 270014
and 279015, both of the Registry of Deeds for Quezon City, as
follows:
IN CIVIL CASE NO. 30272:
a. ordering the defendant AVELINO BOMBITA and any and all
persons claiming rights under him [to] vacate the premises in
question, and to peacefully surrender and turn over the possession
of the same unto plaintiffs;
b. ordering said defendant to pay unto plaintiff the sum of
Php250.00 per month starting from February 7, 2003 until they have
completely vacated the premises;
c. ordering said [defendant to] pay unto plaintiff the sum of
Php10,000.00 pesos as and by way of attorney's fees, plus costs of
suit.
2
[a] ordering the defendant FELIX GAGARIN and any and all
persons claiming rights under him to vacate the premises in
c. ordering said defendant to pay unto plaintiff the sum of
suit.
a. ordering the defendant FELICISIMO "[BOY]" HO and any and
all persons [claiming] rights under him to vacate the premises in
c. ordering said defendant to pay unto plaintiff the sum of
suit.
a. ordering the defendant LOLITA MALONZO and any and all
persons claiming rights under her to vacate the premises in
b. ordering said defendant to pay unto plaintiffs the sum of
c. ordering said defendant to pay unto plaintiffs the sum of
suit.

a. ordering the defendant BERNARDO NAPOLITANO and any
[and all] persons claiming rights under him to vacate the premises
in question, and to peacefully surrender and turn over the
possession of the same unto plaintiffs;
Php10,000.00 pesos as and by way of attorney's fee[s], plus costs of
suit.
a. ordering the defendant RODOLFO RETURTA and any and all
3
suit.
-and-
[a] ordering the defendant VICENTE SALAS and any and all
completely vacated the premises; and
suit.
SO ORDERED.
Upon appeal, the RTC-Branch 87, Quezon City affirmed the MeTC.
According to the RTC, the "defendant's common defense is that the complaint
states no cause of action against them on the grounds that plaintiffs are
[C]hinese nationals, hence, not entitled to own real properties in the
Philippines; occupancy since 1968, hence, the action should have been accion
publiciana; and absence of lessor/lessee relationship." 15 Said court then
went on to address these issues, as follows: "Relative to the first three
assigned errors, the Court finds that the matters have been thoroughly and
judiciously passed upon by the court a quo in arriving at the subject decision,
hence, this Court finds no compelling reason to disturb the same." 16
Thus, the RTC ruled: 17
In sum, the Court finds no reversible error in the decision of
the court a quo and hereby affirms the same en toto.
Costs against the defendant.
SO ORDERED.
On motion, the RTC issued a Writ of Execution dated January 16,
2006. 18 On February 24, 2006, the subject premises were turned over to
petitioners. 19
In the meantime, on November 18, 2005, respondents timely filed their
appeal before the CA, questioning the jurisdiction of the MeTC over the
consolidated cases, the finding of a lessor-lessee relationship between
petitioners and respondents in violation of the principle of res inter alios
acta, and the non-dismissal of the case despite the failure of petitioners and
their counsel to attend the pre-trial conference. 20
Petitioners, on the other hand, averred that the assailed decision has
already become final and executory for failure to file the Joint Motion for
Reconsideration of the RTC Decision within the prescribed period and, in fact,
a writ of execution has already been issued. Alternatively, they argued that
since respondents refused to pay their rentals from 1997 to present, and
since non-payment of rent is a valid ground for ejectment, then the lower
courts were correct in ruling in their favor. 21
4
After evaluating the merits of the case, the CA reversed the RTC.
Although the CA upheld the jurisdiction of the MeTC, saying that the
allegations in the complaints make a case for unlawful detainer and that the
complaints were filed within one year from respondents' receipt of the demand
letters, it nevertheless agreed with respondents that petitioners have
materially failed to prove their right to eject respondents on the strength of
being lessors. Moreover, the CA sustained respondents' invocation of the
principle of res inter alios acta. DETACa
Thus, the CA held: 22
WHEREFORE, the Consolidated Decision dated May 6, 2005
of the Regional Trial Court, Branch 87, Quezon City is
hereby REVERSED and SET ASIDE. In its stead, a new one is
entered dismissing the actions for unlawful detainer for lack of
merit.
SO ORDERED. 23 (Citation omitted.)
The Present Petition
Petitioners filed the present petition for review on certiorari, raising the
following issues:
I. THE CONSOLIDATED DECISION DATED 6 MAY 2005 OF THE
REGIONAL TRIAL COURT OF QUEZON CITY BRANCH 87 IN CIVIL
CASE NOS. 04-53507, 53508, 04-53510 and 04-53511, WHICH
AFFIRMED IN TOTO THE EARLIER JOINT DECISION DATED 8 JULY
2004 OF THE METROPOLITAN TRIAL COURT, QUEZON CITY IN
CIVIL CASE NOS. 30272 TO 30278 HAD BECOME FINAL AND
EXECUTORY FOR FAILURE OF RESPONDENTS TO FILE THEIR JOINT
MOTION FOR RECONSIDERATION WITHIN THE REGLEMENTARY
PERIOD OF FIFTEEN (15) DAYS FROM RECEIPT OF THE
DECISION. 24
II. THE TENANCY RELATIONSHIP BETWEEN PETITIONERS
AND RESPONDENTS WAS PROPERLY ESTABLISHED. 25
The Ruling of the Court
Petitioners' arguments do not persuade.
Anent the first issue of whether the Joint Motion for Reconsideration of
the RTC Decision was timely filed, a close review of the records yields the
finding that it was.
Indeed, as capitalized on by petitioners, respondents stated in their Joint
Motion for Reconsideration that they received the Decision dated May 6, 2005
on May 15, 2005, and that they filed the Joint Motion for Reconsideration only
on June 29, 2005. 26 However, as explained by respondents, the statement
that they received the RTC Decision on May 15, 2005 was inadvertent and
erroneous. 27 The records, particularly the certified true copies of the registry
return slips from the RTC, 28 show that the RTC Decision was simultaneously
mailed by the RTC to the parties only on June 7, 2005. Thus, as correctly
maintained by respondents, they could not have received the RTC Decision on
May 15, 2005 or before the said decision was mailed to them. Respondents
then clarified that they received the RTC Decision on June 15, 2005. 29 As
such, the filing of the Joint Motion for Reconsideration on June 29, 2005 was
timely and the RTC Decision was not yet final and executory.
As to the second issue of whether a lessor-lessee relationship between
the parties was properly established, the evidence on record generates a
negative conclusion.
5
Except for petitioners' bare claims, they have not shown any evidence of
a lease between them and respondents, be it express or implied. As keenly
observed by the CA, there was no mention of how and when the alleged
contract of lease started, there was no proof of prior payment of rentals or
any prior demand for such payment considering petitioners' allegation that
respondents failed to pay rentals since 1997 and that the case was instituted
only in 2003.
Moreover, there is merit in respondents' invocation of the principle of res
inter alios acta or that principle which states that "the right of a party cannot
be prejudiced by an act, declaration or omission of another, except as
hereinafter provided, among which are: (1) admission by third party, (2)
admission by co-partner or agent, (3) admission by conspirator, and (4)
admission by privies." 30
In the case of Tamargo v. Awingan, 31 the Court expounded on the
rationale behind the principle of res inter alios acta. Citing People v. vda. De
Ramos, the Court held that:
(O)n a principle of good faith and mutual convenience, a man's
own acts are binding upon himself, and are evidence against him.
So are his conduct and declarations. Yet it would not only be rightly
inconvenient, but also manifestly unjust, that a man should be
bound by the acts of mere unauthorized strangers; and if a party
ought not to be bound by the acts of strangers, neither ought their
acts or conduct be used as evidence against him.
In the present case, petitioners failed to establish that the
defendants' 32 alleged implied admission of a lessor-lessee relationship falls
under the exceptions to the principle of res inter alios acta as to make such
admission binding upon respondents. Although defendants and respondents
were all defendants in the complaints for unlawful detainer filed by petitioners,
it is very clear that defendants and respondents espoused different defenses.
Contrary to defendants' position, respondents, as early as the filing of their
response to petitioners' demand letter, firmly and consistently denied the
existence of any lease contract between them and petitioners over the subject
land.
WHEREFORE, finding no reversible error in the assailed rulings, the
Court resolves to DENY the present petition. Accordingly, the Decision dated
June 29, 2006 and the Resolution dated October 17, 2006 of the Court of
Appeals are hereby AFFIRMED and the complaints for unlawful detainer filed
by petitioners Tan Siu Kuan and Pute Ching against respondents Felicisimo
"Boy" Ho, Rodolfo Returta, Vicente Salas, and Lolita Malonzo are DISMISSED.
SO ORDERED. (Tan Siok Kuan v. Ho, G.R. No. 175085, [June 1, 2016])
THIRD DIVISION
[G.R. No. 196557. June 15, 2016.]
GREGORIO "TONGEE" BALAIS, JR., petitioner, vs. SE'LON by
AIMEE, AMELITA REVILLA and ALMA BELARMINO, respondents.
DECISION
PERALTA, J p:
This is a Petition for Review Certiorari 1 under Rule 45 of the Rules of
Court seeking the reversal of the Decision 2 dated February 25, 2011 and
Resolution 3 dated April 19, 2011 of the Court of Appeals, respectively, in CA-
G.R. SP No. 114899 entitled "Se'lon by Aimee and/or Amelita Revilla and Alma
Belarmino v. NLRC and Gregorio "Tongee" Balais, Jr." TIADCc
6
The instant petition stemmed from a complaint for illegal dismissal, non-
payment of 13th month pay, damages and attorney's fees filed by Gregorio
"Tongee" Balais, Jr. (Balais) against Se'lon by Aimee, Amelita Revilla and
Alma Belarmino before the NLRC.
Balais narrated that he was Salon de Orient's senior hairstylist and make-
up artist from October 16, 2004 until November 26, 2007 when respondent
Amelita Revilla (Revilla) took over the business. Revilla, however, retained his
services as senior hairstylist and make-up artist. Under the new management,
Salon De Orient became Se'lon by Aimee and respondent Alma
Belarmino (Belarmino) was appointed as its salon manager, who was in-
charge of paying the employees' wages, dismissing erring employees, and
exercising control over them. Balais, on the other hand, being the senior
hairstylist and make-up artist, allegedly had the discretion to choose from
among the junior hairstylist who should assist him in servicing his clients, as
customarily observed in beauty salons. He worked during the 10am-7pm shift
or 11am-8pm shift, six (6) days a week with Sunday as his regular rest day for
a monthly salary of Php18,500.00 paid every two (2) weeks. In June 2008, his
salary was reduced to Php15,000.00. Balais claimed that his working
relationship with respondents had been harmonious until the evening of July 1,
2008 when Belarmino dismissed him without due process, in the following
manner:
Belarmino angrily shouted: "You get out of this Company! I do
not need you here at Se'lon by Aimee!"
Balais Jr.,calmly replied: "Ibigay mo ang 13th month ko and
sweldo ko, at separation pay."
Belarmino angrily replied: "Maghabla ka kahit saan na korte
at haharapin kita."
Balais Jr. responded: "Maski ang Jollibee nagbibigay nang
13th month pay, sweldo and separation pay pag may tinatanggal na
empleyado!"
Belarmino retorted: "Eh di doon ka magtrabaho sa Jollibee
kasi doon nagbibigay sila nang 13th month pay, sweldo at
separation pay pag may tinatanggal na empleyado."
Balais felt humiliated as he was berated in front of his co-workers. The
next day, he did not report for work anymore and instead filed the complaint
before the NLRC.
For their part, respondents alleged that it was known to all their
employees that one of the salon's policies was for junior stylists to take turns
in assisting any of the senior stylists for purposes of equalizing commissions.
However, Belarmino was told that Balais failed to comply with this policy as
the latter allegedly gave preference to only two (2) junior stylists, disregarding
the other two (2) junior stylists. When Belarmino asked Balais for explanation,
the latter allegedly snapped and retorted that he would do whatever he
wanted. Belarmino reminded him of the salon's policy and his duty to comply
with it but petitioner allegedly insisted he would do as he pleased and if they
can no longer take it, they would have to dismiss him. After the incident,
Balais sued them and never reported back to work.
Respondents insisted that Balais was not terminated from employment
but he instead abandoned his work. Respondents explained that even
assuming that he was indeed dismissed, there was a valid ground therefor as
his acts amounted to serious misconduct against a superior and willful
disobedience to reasonable policy related to his work.
7
On February 11, 2009, the Labor Arbiter rendered a Decision 4 holding
respondents liable for illegal dismissal. It gave credence and weight to Balais'
version that he was dismissed without cause and notice for merely defending
his decision to avail of the services of some selected junior stylist of his
choice.
Aggrieved, respondents appealed the decision before the NLRC.
On February 19, 2010, the NLRC affirmed in toto the findings of the
Labor Arbiter, declaring petitioner to be illegally dismissed. 5 It ratiocinated
that Se'lon by Aimee failed to prove that the act of petitioner amounted to
gross insubordination. Other than respondents' bare denial of illegal dismissal,
the same was unsubstantiated by a clear and convincing evidence. The NLRC
further pointed out that respondents failed to produce a copy of the supposed
salon policy on the rule of rotation of junior stylists, thus, the veracity of the
allegation of insubordination against Balais failed to convince.
Respondents moved for reconsideration, but the same was denied in a
Resolution dated April 22, 2010.
Thus, before the Court of Appeals, respondents filed a Petition
for Certiorari with Prayer for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction seeking to annul or modify the Resolutions
of the NLRC.
On February 25, 2011, the Court of Appeals granted the petition and
reversed and set aside the NLRC Decision and rendered a
Decision 6 sustaining petitioner's dismissal as valid and required respondents
to pay Balais his accrued 13th month pay and unpaid salaries.
Petitioner moved for reconsideration, but was denied in a Resolution
dated April 19, 2011. Thus, the instant petition for review on certiorari raising
the following issues: AIDSTE
I
WHETHER THE COURT OF APPEALS HAS DECIDED A
QUESTION OF SUBSTANCE BY DECLARING THE PETITIONER AS
VALIDLY DISMISSED WHICH IS NOT IN ACCORD WITH LAW AND
APPLICABLE DECISION OF THE SUPREME COURT.
II
WHETHER THE COURT OF APPEALS HAS DEPARTED FROM
THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
AND CONTRARY TO THE FINDINGS OF THE LABOR ARBITER AND
NLRC. 7
We find merit in the petition.
The Court's jurisdiction in cases brought before it from the CA
via Rule 45 of the Rules of Court is generally limited to reviewing errors of
law. The Court is not the proper venue to consider a factual issue as it is not a
trier of facts. This rule, however, is not ironclad and a departure therefrom
may be warranted where the findings of fact of the CA are contrary to the
findings and conclusions of the NLRC and the LA, as in this case. In this
regard, there is therefore a need to review the records to determine which of
them should be preferred as more conformable to evidentiary facts. 8 In the
instant case, the conflict between the NLRC's and the CA's factual findings as
shown in the records of this case prompts the Court to evaluate such findings
anew.
Whether there was a valid dismissal.
8
The principle echoed and re-echoed in our jurisprudence is that
the onus of proving that the employee was dismissed for a just cause rests on
the employer, and the latter's failure to discharge that burden would result in a
finding that the dismissal is unjustified. 9
In the instant case, a perusal of the records would show that both parties
presented their own versions of stories, not necessarily contradicting but
nonetheless lacking in some material points.
Balais alleged that he was illegally dismissed as his dismissal was
allegedly made verbally and without due process of law. Yet, Balais failed to
explain what possibly prompted said termination or even the likely motive for
the same. He nevertheless submitted the Affidavits of Gemma Guerero 10 and
Marie Gina A. Toralde, 11 to prove his allegation.
Respondents, on the other hand, alleged that there was no illegal
dismissal as it was Balais himself who did not report to work, thus, he
abandoned his work.
Interestingly, however, both parties never denied that there was an
altercation between them. Without admitting that he violated the salon policy
of rotation of the junior stylists, Balais maintained that said policy runs
counter with customary salon practice which allows senior hairstylists to
choose their preferred junior stylist to assist them. For their part, supplemental
to their claim of abandonment, respondents averred that assuming that Balais
was dismissed, they insisted that there was a valid ground therefor as he was
disrespectful and insubordinate due to his failure to comply with the salon's
policy.
Noteworthy is the fact that respondents never denied that the incident
narrated by Balais actually happened. In Solas v. Power & Telephone Supply
Phils., Inc., 12 this silence constitutes an admission that fortifies the truth of
the employee's narration. While respondents were evasive on the complete
details of how the reported incident of termination transpired, they never
categorically denied that said incident happened or the fact that Belarmino
uttered: "get out of this company! I do not need you here." Belarmino
attempted to sidestep the fact that she actually said it, yet, raised the defense
that assuming she had indeed verbally terminated Balais, she was justified in
doing so because of the disrespect shown to her.
Under the rules of evidence, if an allegation is not specifically denied or
the denial is a negative pregnant, the allegation is deemed admitted. 13 In
fine, the fact that respondents are even raising their own justification for the
alleged verbal dismissal means that the said verbal dismissal actually
transpired. If in the first place, said incident of verbal dismissal truly never
happened, there is nothing to assume anymore or to justify. The fact that
Belarmino was offering justification for her action, it follows that indeed said
incident of verbally dismissing Balais on-the-spot actually happened.
Putting two versions of the story together, considering that none of the
parties categorically deny that an altercation erupted between them which
resulted in the dismissal of Balais, and the tenor of Belarmino's statements
leaving no room for interpreting it other than a verbal dismissal, we are
inclined to believe that there was indeed a dismissal.
This being the case, having established that there was dismissal, it
becomes axiomatic that respondents prove that the dismissal was valid.
Respondents averred that there was abandonment as Balais failed to
report back to work the following day after the incident.
In this regard, this Court finds that respondents failed to establish that
Balais abandoned his work. To constitute abandonment, two elements must
9
concur: (a) the failure to report for work or absence without valid or justifiable
reason, and (b) a clear intention to sever the employer-employee relationship,
with the second element as the more determinative factor and being
manifested by some overt acts. 14 Mere absence is not sufficient. The
employer has the burden of proof to show a deliberate and unjustified refusal
of the employee to resume his employment without any intention of returning.
Respondents, other than their bare allegation of abandonment, failed to prove
that these two elements were met. It cannot be said that Balais failed to
report back to work without justifiable reason as in fact he was told that he
was no longer wanted in the salon. AaCTcI
Moreover, we likewise note the high improbability of petitioner
intentionally abandoning his work, taking into consideration his length of
service, i.e.,18 years of service with the salon. It does not make sense for an
employee who had worked for his employer for 18 years would just abandon
his work and forego whatever benefits he may be entitled, unless he was made
to believe or was told that he was already terminated.
Respondents cannot discharge the burden of proving a valid dismissal by
merely alleging that they did not dismiss Balais; neither can they escape
liability by claiming that Balais abandoned his work. When there
is no showing of a clear, valid and legal cause for the termination of
employment, the law considers it a case of illegal dismissal.
Thus, respondents, presumably thinking that their claim of abandonment
holds no water, it likewise manifested that assuming Balais was indeed
terminated, there was a valid ground therefor because of his insubordination.
We disagree.
Willful disobedience of the employer's lawful orders, as a just cause for
the dismissal of an employee, envisages the concurrence of at least two
requisites: (1) the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse
attitude;" and (2) the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been
engaged to discharge. 15
It must be likewise stressed anew that the burden of proving the
insubordination as a just and valid cause for dismissing an employee rests on
the employer and his failure to do so shall result in a finding that the dismissal
is unjustified.
In this case, the salon policy of rotating the junior stylists who will assist
the senior stylist appears to be reasonable, lawful, made known to petitioner
and pertained to his duty as senior hairstylist of respondent. However, if we
will look at Balais' explanation for his alleged disobedience thereto, it likewise
appears to be reasonable and lawful, to wit:
xxx xxx xxx
The duty of the Senior Stylist has the overall function in seeing
to it that the service accorded to the client is excellent, thus, he
has the right to refuse service of a junior stylist whom he thinks
that such junior stylist cannot give equal or over and above the
service that he can give to the client, thus his refusal to obey the
respondent does not constitute a just cause for the treatment given
by respondent to herein respondent (sic).
xxx xxx xxx
The fact alone that Balais failed to comply with the salon policy does not
establish that his conduct in failing to comply with the salon's policy had been
willful, or characterized by a wrongful and perverse attitude. Balais'
10
justification maybe adverse to that of the salon's policy but it was neither
willful nor characterized by a perverse attitude. We take note that the alleged
non-compliance with the salon policy was brought to the attention of Balais for
the first time only during the said incident. There was no showing of prior
warnings as to his non-compliance. While respondents wield a wide latitude of
discretion in the promulgation of policies, rules and regulations on work-
related activities of its employees, these must, however, be fair and
reasonable at all times, and the corresponding sanctions for violations thereof,
when prescribed, must be commensurate thereto as well as to the degree of
the infraction. Given that Balais' preference on who will assist him is based on
the junior stylists' competence, the same should have been properly taken into
account in the imposition of the appropriate penalty for violation of the
rotation policy. Suspension would have sufficed to caution him and other
employees who may be wont to violate the same policy.
In adjudging that the dismissal was grounded on a just and valid cause,
the totality of infractions or the number of violations committed during the
period of employment shall be considered in determining the penalty to be
imposed upon an erring employee. 16 Let it not be forgotten that what is at
stake is the means of livelihood, the name, and the reputation of the employee.
To countenance an arbitrary exercise of the management's prerogative to
terminate an employee is to negate the employee's constitutional right to
security of tenure.
Whether the dismissal was effected with due process of law.
Under Article 277 (b) of the Labor Code, the employer must send the
employee who is about to be terminated, a written notice stating the cause/s
for termination and must give the employee the opportunity to be heard and to
defend himself.
Article 277 of the Labor Code provides, inter alia:
(a) ...
(b) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal except for a
just and authorized cause and notice under Article 283 of
this Code,the employer shall furnish the worker whose employment
is sought to be terminated a written notice containing a statement
of causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines
set by the Department of Labor and Employment. . . .
In particular, Rule XXIII, Book V of the Omnibus Rules Implementing the
Labor Code states:
Sec. 2. Standards of due process: requirements of notice .— In
all cases of termination of employment, the following standards of
due process shall be substantially observed:
1. For termination of employment based on just causes
as defined in Article 282 of the Code:
(a) A written notice served on the employee
specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity
within which to explain his side;
(b) A hearing or conference during which the
employee concerned, with the assistance of
counsel if the employee so desires, is given
11
opportunity to respond to the charge, present his
evidence or rebut the evidence presented against
him; and
(c) A written notice of termination served on the
employee indicating that upon due consideration of
all the circumstances, grounds have been
established to justify his termination.
Thus, to effect the dismissal of an employee, the law requires not only
that there be just and valid cause as provided under Article 282 of the Labor
Code. It likewise enjoins the employer to afford the employee the opportunity
to be heard and to defend himself. On the latter aspect, the employer is
mandated to furnish the employee with two (2) written notices: (a) a written
notice containing a statement of the cause for the termination to afford the
employee ample opportunity to be heard and defend himself with the
assistance of his representative, if he so desires; (b) if the employer decides to
terminate the services of the employee, the employer must notify him in
writing of the decision to dismiss him, stating clearly the reason
therefor. TCAD
Here, a perusal of the records revealed that, indeed, Belarmino's manner
of verbally dismissing Balais on-the-spot fell short of the two-notice
requirement. There was no showing of prior warnings on Balais' alleged non-
compliance with the salon policy. There was no written notice informing him
of his dismissal as in fact the dismissal was done verbally and on-the-spot.
Respondents failed to furnish Balais the written notice apprising him of the
charges against him, as prescribed by the Labor Code. There was no attempt
to serve a notice of dismissal on Balais. Consequently, he was denied due
process of law accorded in dismissals.
Reliefs of Illegally Dismissed Employees
Having established that Balais was illegally dismissed, the Court now
determines the reliefs that he is entitled to and their extent. Under the law and
prevailing jurisprudence, "an illegally dismissed employee is entitled to
reinstatement as a matter of right." Aside from the instances provided under
Articles 283 17 and 284 18 of the Labor Code, separation pay is, however,
granted when reinstatement is no longer feasible because of strained
relations between the employer and the employee. In cases of illegal
dismissal, the accepted doctrine is that separation pay is available in lieu of
reinstatement when the latter recourse is no longer practical or in the best
interest of the parties. 19
However, other than the strained relationship between the parties, it
appears that respondent salon had already ceased operation of its business,
thus, reinstatement is no longer feasible. Consequently, the Court awards
separation pay to the petitioner equivalent to one (1) month pay for every year
of service, with a fraction of at least six (6) months considered as one (1)
whole year, from the time of her illegal dismissal up to the finality of this
judgment, as an alternative to reinstatement. 20
Also, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time their actual compensation was withheld
from them up to the time of their actual reinstatement but if reinstatement
is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Accordingly, the petitioner
is entitled to an award of full backwages from the time he was illegally
dismissed up to the finality of this decision. 21
12
Balais is likewise entitled to attorney's fees in the amount of 10% of the
total monetary award pursuant to Article 111 22 of the Labor Code. It is
settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorney's fees is
legally and morally justifiable. Finally, legal interest shall be imposed on the
monetary awards herein granted at the rate of six percent (6%) per
annum from the finality of this judgment until fully paid. 23
WHEREFORE, in consideration of the foregoing, the petition
is GRANTED.The Decision dated February 25, 2011 and the Resolution dated
April 19, 2011 of the Court of Appeals in CA-G.R. SP No. 114899 are
hereby REVERSED and SET ASIDE.
The respondents are hereby declared GUILTY OF ILLEGAL DISMISSAL
AND ARE hereby ORDERED to pay the petitioner, Gregorio Balais, Jr.,the
following:
(a) separation pay in lieu of actual reinstatement equivalent
to one (1) month pay for every year of service, with a fraction of at
least six (6) months considered as one (1) whole year from the time
of his dismissal up to the finality of this Decision;
(b) full backwages from the time of his illegal dismissal up to
the finality of this Decision; and
(c) attorney's fees equivalent to ten percent (10%) of the total
monetary award.
The monetary awards herein granted shall earn legal interest at the rate of six
percent (6%) per annum from the date of the finality of this Decision until fully
paid. The case is REMANDED to the Labor Arbiter for the computation of
petitioner's monetary award. SO ORDERED. (Balais, Jr. v. Se'Lon, G.R. No.
196557, [June 15, 2016])
SECOND DIVISION
[G.R. No. 196470. April 20, 2016.]
ROSARIO VICTORIA and ELMA PIDLAOAN, petitioners, vs. NORMITA
JACOB PIDLAOAN, HERMINIGILDA PIDLAOAN and EUFEMIA
PIDLAOAN, respondents.
DECISION
BRION, J p:
We resolve the petition for review on certiorari filed by petitioners to
challenge the March 26, 2010 decision 1 and March 15, 2011 resolution of
the Court of Appeals (CA) in CA-G.R. CV No. 89235. The Regional Trial
Court's (RTC) ruled that Elma Pidlaoan (Elma) donated only half of the
property to Normita Jacob Pidlaoan (Normita). The CA reversed the RTC's
decision and ruled that Elma donated her entire property to Normita. The Court
is called upon to ascertain the true nature of the agreement between Elma and
Normita.
THE ANTECEDENTS
The petitioners Rosario Victoria (Rosario) and Elma lived together since
1978 until Rosario left for Saudi Arabia.
In 1984, Elma bought a parcel of land with an area of 201 square meters
in Lucena City and was issued Transfer Certificate of Title (TCT) No. T-
50282. 2 When Rosario came home, she caused the construction of a house
on the lot but she left again after the house was built. 3
Elma allegedly mortgaged the house and lot to a certain Thi Hong
Villanueva in 1989. 4 When the properties were about to be foreclosed, Elma
13
allegedly asked for help from her sister-in-law, Eufemia Pidlaoan (Eufemia), to
redeem the property. 5 On her part, Eufemia called her daughter abroad,
Normita, to lend money to Elma. Normita agreed to provide the funds. 6
Elma allegedly sought to sell the land. 7 When she failed to find a buyer,
she offered to sell it to Eufemia or her daughter. 8
On March 21, 1993, Elma executed a deed of sale entitled "Panananto
ng Pagkatanggap ng Kahustuhang Bayad" transferring the ownership of the lot
to Normita. 9 The last provision in the deed of sale provides that Elma shall
eject the person who erected the house and deliver the lot to Normita. 10 The
document was signed by Elma, Normita, and two witnesses but it was not
notarized. ASEcHI
When Elma and Normita were about to have the document notarized, the
notary public advised them to donate the lot instead to avoid capital gains
tax. 11 On the next day, Elma executed a deed of donation in Normita's favor
and had it notarized. TCT No. T-50282 was cancelled and TCT No. T-70990
was issued in Normita's name. 12 Since then, Normita had been paying the
real property taxes over the lot but Elma continued to occupy the house.
Rosario found out about the donation when she returned to the country a
year or two after the transaction. 13
In 1997, the petitioners filed a complaint for reformation of contract,
cancellation of TCT No. T-70990, and damages with prayer for preliminary
injunction against Eufemia, Normita, and Herminigilda Pidlaoan (respondents).
The petitioners argued that: first, they co-owned the lot because both of
them contributed the money used to purchase it; second, Elma and Normita
entered into an equitable mortgage because they intended to constitute a
mortgage over the lot to secure Elma's loan but they executed a deed of sale
instead; and third, the deed of donation was simulated because Elma
executed it upon the notary public's advice to avoid capital gains tax. 14
In their answer, the respondents admitted that the deed of donation was
simulated and that the original transaction was a sale. 15 They argued,
however, that there was no agreement to constitute a real estate mortgage
on the lot. 16
The RTC ruled that Rosario and Elma co-owned the lot and the
house. 17 Thus, Elma could only donate her one-half share in the lot. 18
Hence, the respondents appealed to the CA.
THE CA RULING
The CA reversed the RTC's decision and dismissed the petitioners'
complaint.
The CA held that Elma and Normita initially entered into two agreements:
a loan and a sale. They entered into a loan agreement when Elma had to pay
Thi Hong Villanueva to redeem the property. Thereafter, Elma sold the property
to Normita. They subsequently superseded the contract of sale with the
assailed deed of donation.
The CA also held that the deed of donation was not simulated. It was
voluntarily executed by Elma out of gratitude to Normita who rescued her by
preventing the foreclosure of the lot. Moreover, the deed of donation, being a
public document, enjoys the presumption of regularity. Considering
that no conclusive proof was presented to rebut this presumption, the deed of
donation is presumed valid.
The CA denied the petitioners' motion for reconsideration; hence, this
petition.
14
THE PETITIONERS' ARGUMENTS
In their petition, the petitioners argue that: (1) Rosario is a co-owner
because she caused the construction of the house, which has a higher market
value than the lot; (2) the deed of donation is simulated; (3) the transaction
was a mere equitable mortgage; and (4) the CA unduly disturbed the RTC's
factual findings. The petitioners emphasize that the respondents have
consistently admitted in their answer that the deed of donation was simulated;
therefore, the CA should not have reversed the RTC's decision on that point.
In their three-page comment, the respondents insist that the CA correctly
dismissed the complaint. They stressed that the petitioners were the ones who
argued that the deed of donation was simulated but the CA ruled otherwise.
Furthermore, the petition involves questions of facts and law outside the
province of the Supreme Court. Hence, the petition must be dismissed.
THE COURT'S RULING
We PARTIALLY GRANT the petition.
The issues before the Court are: (1) whether Rosario is a co-owner; (2)
whether the deed of donation was simulated; and (3) whether the transaction
between Elma and Normita was a sale, a donation, or an equitable mortgage.
Considering that these issues are inter-related, we shall jointly discuss and
resolve them.
At the outset, we note that the issues raised by the petitioners in the
present case require a review of the factual circumstances. As a rule, only
questions of law may be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court.
The Court distinguished between a question of law and a question of fact
in a number of cases. A question of law arises when there is doubt on what
the law is on a certain set of fact, while a question of fact exists when there is
doubt as to the truth or falsity of the alleged facts. 19 For a question to be one
of law, it must not involve an examination of the probative value of the
evidence presented by the litigants. 20 If the issue invites a review of the
evidence on record, the question posed is one of fact. 21
The factual findings of the CA are conclusive and binding and are not
reviewable by the Court, unless the case falls under any of the recognized
exceptions. 22 One of these exceptions is when the findings of the RTC and
the CA are contradictory, as in the present case.
By granting the appeal and dismissing the petitioners' complaint, the CA
effectively ruled that the transfer of ownership involved the entire lot rather
than only half of it as the RTC held. The lower courts' differing findings provide
us sufficient reason to proceed with the review of the evidence on
record. 23 ITAaHc
First, we rule that Elma transferred ownership of the entire lot to
Normita.
One who deals with property registered under the Torrens system has a
right to rely on what appears on the face of the certificate of title and need not
inquire further as to the property's ownership. 24 A buyer is charged with
notice only of the claims annotated on the title. 25 The Torrens system was
adopted to best guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. 26
In the present case, the records of the case show that
Elma alone purchased the lot in 1984 from its previous
owners. 27 Accordingly, TCT No. T-50282 was issued solely in her name.
15
Thus, Normita bought the lot relying on the face of the TCT that Elma
and no other person owned it.
We acknowledge that registration under the Torrens system does not
create or vest title. A certificate of title merely serves as an evidence of
ownership in the property. Therefore, the issuance of a certificate of title does
not preclude the possibility that persons not named in the certificate may be
co-owners of the real property, or that the registered owner is only holding the
property in trust for another person. 28
In the present case, however, the petitioners failed to present proof of
Rosario's contributions in purchasing the lot from its previous owners. The
execution of the transfer documents solely in Elma's name alone militate
against their claim of co-ownership. Thus, we find no merit in the petitioners'
claim of co-ownership over the lot.
At this point, we address the petitioners' claim that Rosario co-owned the
lot with Elma because the value of the house constructed by Rosario on it is
higher than the lot's value. We find this argument to be erroneous.
We hold that mere construction of a house on another's land does not
create a co-ownership. Article 484 of the Civil Code provides that co-ownership
exists when the ownership of an undivided thing or right belongs to different
persons. Verily, a house and a lot are separately identifiable properties and
can pertain to different owners, as in this case: the house belongs to Rosario
and the lot to Elma.
Article 448 of the Civil Code provides that if a person builds on another's
land in good faith, the land owner may either: (a) appropriate the works as his
own after paying indemnity; or (b) oblige the builder to pay the price of the
land. The law does not force the parties into a co-ownership. 29 A builder is in
good faith if he builds on a land believing himself to be its owner and is
unaware of the defect in his title or mode of acquisition. 30
As applied in the present case, Rosario's construction of a house on the
lot did not create a co-ownership, regardless of the value of the house.
Rosario, however, is not without recourse in retrieving the house or its value.
The remedies available to her are set forth in Article 448 of the Civil Code.
Second, on the nature of the transaction between Elma and Normita , we
find that the deed of donation was simulated and the parties' real intent was to
enter into a sale.
The petitioners argue that the deed of donation was simulated and that
the parties entered into an equitable mortgage. 31 On the other hand, the
respondents deny the claim of equitable mortgage 32 and argue that they
validly acquired the property via sale. 33 The RTC ruled that there was
donation but only as to half of the property. The CA agreed with the
respondents that the deed of donation was not simulated, relying on the
presumption of regularity of public documents.
We first dwell on the genuineness of the deed of donation. There are two
types of simulated documents — absolute and relative. A document is
absolutely simulated when the parties have no intent to bind themselves at
all, while it is relatively simulated when the parties concealed their true
agreement. 34 The true nature of a contract is determined by the parties'
intention, which can be ascertained from their contemporaneous and
subsequent acts. 35
In the present case, Elma and Normita's contemporaneous and
subsequent acts show that they were about to have the contract of sale
notarized but the notary public ill-advised them to execute a deed of donation
instead. Following this advice, they returned the next day to have a deed of
16
donation notarized. Clearly, Elma and Normita intended to enter into a sale
that would transfer the ownership of the subject matter of their contract but
disguised it as a donation. Thus, the deed of donation subsequently executed
by them was only relatively simulated.
The CA upheld the deed of donation's validity based on the principle that
a notarized document enjoys the presumption of regularity. This presumption,
however, is overthrown in this case by the respondents' own admission in their
answer that the deed of donation was simulated.
Judicial admissions made by a party in the course of the proceedings are
conclusive and do not require proof. 36 Notably, the respondents explicitly
recognized in their answer that the deed of donation was simulated upon the
notary public's advice and that both parties intended a sale. 37
In paragraphs 5 and 6 of the answer, 38 the respondents stated thus:
5. That defendants admit the allegations in paragraph 9 which
readily acknowledges that there was indeed an agreement to sell
the property of plaintiff, Elma Pidlaoan to defendant, Normita
Pidlaoan (Normita, for brevity) for which a Deed of Absolute Sale
was drafted and executed;
6. That defendants admit the simulation of the Deed of
Donation in paragraph 10 of the Complaint, but deny the remainder,
the truth being that Elma Pidlaoan herself offered her property for
sale in payment of her loans from Normita. (Emphasis
supplied) CHTAIc
Having admitted the simulation, the respondents can no longer deny it
at this stage. The CA erred in disregarding this admission and upholding the
validity of the deed of donation.
Considering that the deed of donation was relatively simulated, the
parties are bound to their real agreement. 39 The records show that the
parties intended to transfer the ownership of the property to Normita by
absolute sale. This intention is reflected in the unnotarized document
entitled "Panananto ng Pagkatanggap ng Kahustuhang Bayad." 40
We have discussed that the transaction was definitely not one of
donation. Next, we determine whether the parties' real transaction was a sale
or an equitable mortgage.
The petitioners insist that the deed of sale is an equitable mortgage
because: (i) the consideration for the sale was grossly inadequate; (ii) they
remained in possession of the property; (iii) they continuously paid the water
and electric bills; (iv) the respondents allowed Victoria to repay the "loan"
within three months; 41 (v) the respondents admitted that the deed of
donation was simulated; and (vi) the petitioners paid the taxes even after the
sale.
Notably, neither the CA nor the RTC found merit in the petitioners' claim
of equitable mortgage. We find no reason to disagree with these conclusions.
An equitable mortgage is one which, although lacking in some formality
or other requisites demanded by statute, nevertheless reveals the intention of
the parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law. 42 Articles 1602 and 1604 of the Civil Code
provide that a contract of absolute sale shall be presumed an equitable
mortgage if any of the circumstances listed in Article 1602 is attendant.
Two requisites must concur for Articles 1602 and 1604 of the Civil Code
to apply: one, the parties entered into a contract denominated as a contract of
17
sale; and two, their intention was to secure an existing debt by way of
mortgage. 43
In the present case, the unnotarized contract of sale between Elma and
Normita is denominated as "Panananto ng Pagkatanggap ng Kahustuhang
Bayad." 44 Its contents show an unconditional sale of property between Elma
and Normita. The document shows no intention to secure a debt or to grant a
right to repurchase. Thus, there is no evidence that the parties agreed to
mortgage the property as contemplated in Article 1602 of the Civil Code.
Clearly, the contract is not one of equitable mortgage.
Even assuming that Article 1602 of the Civil Code applies in this case,
none of the circumstances are present to give rise to the presumption of
equitable mortgage. One, the petitioners failed to substantiate their claim that
the sale price was unusually inadequate. 45 In fact, the sale price of
P30,000.00 is not unusually inadequate compared with the lot's market value
of P32,160 as stated in the 1994 tax declaration. Two, the petitioners
continued occupation on the property was coupled with the respondents'
continuous demand for them to vacate it. Third, no other document was
executed for the petitioners to repurchase the lot after the sale contract was
executed. Finally, the respondents paid the real property taxes on the
lot. 46 These circumstances contradict the petitioners' claim of equitable
mortgage.
A review of the sale contract or the "Panananto ng Pagkatanggap ng
Kahustuhang Bayad" shows that the parties intended no equitable mortgage.
The contract even contains Elma's undertaking to remove Rosario's house on
the property. 47 This undertaking supports the conclusion that the parties
executed the contract with the end view of transferring full ownership over the
lot to Normita.
In sum, we rule that based on the records of the case, Elma and Normita
entered in a sale contract, not a donation. Elma sold the entire property to
Normita. Accordingly, TCT No. T-70990 was validly issued in Normita's name.
WHEREFORE, we hereby PARTIALLY GRANT the petition. The March 26,
2010 decision and March 15, 2011 resolution of the Court of Appeals in CA-
G.R. CV No. 89235 are hereby AFFIRMED with the MODIFICATION that the
parties entered into a contract of sale, not a donation, and that petitioner Elma
Pidlaoan sold the whole disputed property to respondent Normita Jacob
Pidlaoan. Costs against the petitioners.
SO ORDERED. (Victoria v. Pidlaoan, G.R. No. 196470, [April 20, 2016], 785
PHIL 476-491)
THIRD DIVISION
[G.R. No. 204700. April 10, 2013.]
EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL
and CRISPIN I. OBEN, petitioners,vs.CAMERON GRANVILLE 3 ASSET
MANAGEMENT, INC., respondent.
DECISION
LEONEN, J p:
All documents mentioned in a Deed of Assignment transferring the credit of
the plaintiff in a pending litigation should be accessible to the defendant through
a Motion for Production or Inspection of Documents under Rule 27 of the Rules of
Court. Litigation is not a game of skills and stratagems. It is a social process that
should allow both parties to fully and fairly access the truth of the matters in
litigation.
18
Before this Court is a Petition under Rule 45, seeking to review the August
29, 2012 1 and November 27, 2012 2 Resolutions of the Third Division of the
Court of Appeals. The Resolutions dismissed petitioners' Rule 65 Petition and
affirmed the Resolutions dated March 28, 2012 3 and May 28, 2012 4 of the
Regional Trial Court, Branch 60, Makati City denying petitioners' motion for
production/inspection.
The pertinent facts are as follows: 5
Petitioners Eagleridge Development Corporation (EDC), and sureties Marcelo

N. Naval (Naval) and Crispin I. Oben (Oben) are the defendants in a collection suit
initiated by Export and Industry Bank (EIB) through a Complaint 6 dated
February 9, 2005, and currently pending proceedings before the Regional Trial
Court (RTC), Branch 60, Makati City. 7
By virtue of a Deed of Assignment 8 dated August 9, 2006, EIB transferred

EDC's outstanding loan obligations of P10,232,998.00 to respondent Cameron
Granville 3 Asset Management, Inc. (Cameron), a special purpose vehicle, thus:
For value received and pursuant to the (a) Loan Sale and
Purchase Agreement dated as of 7 April 2006 (the "LSPA"),made and
executed by Export and Industry Bank,as Seller ("Seller"),and
by Cameron Granville Asset Management (SPV-AMC),Inc. (the
"Purchaser"),and (b) the Deed of Absolute Sale dated 9 August 2006
(the "Deed") made and executed by and between Seller and
Purchaser, Seller hereby absolutely sells, assigns and conveys to
Purchaser, on a "without recourse" basis, all of its rights, title and
interests in the following Loan: TCacIE
EAGLERIDGE DEVELOPMENT CORPORATION with an

outstanding loan obligation of Php10,232,998.00 covered by an
unregistered Deed of Assignment of Receivables.
xxx xxx xxx
Defined terms used but not otherwise defined herein have the
meaning given to them in the LSPA. 9
Thereafter, Cameron filed its Motion to Substitute/Join EIB dated
November 24, 2006, which was granted by the trial court.
On February 22, 2012, petitioners filed a Motion for

Production/Inspection 10 of the Loan Sale and Purchase Agreement
(LSPA) dated April 7, 2006 referred to in the Deed of Assignment.
Respondent Cameron filed its Comment 11 dated March 14, 2012 alleging
that petitioners have not shown "good cause" for the production of the LSPA and
that the same is allegedly irrelevant to the case a quo.
In response, petitioners filed on March 26, 2012 their Reply. 12 Petitioners

explained that the production of the LSPA was for "good cause". They pointed
out that the claim of Cameron is based on an obligation purchased after litigation
had already been instituted in relation to it. They claimed that pursuant to Article
1634 of the New Civil Code 13 on assignment of credit, the obligation subject of
the case a quo is a credit in litigation, which may be extinguished by
reimbursing the assignee of the price paid therefor, the judicial costs incurred
and the interest of the price from the day on which the same was paid. Article
1634 provides:
When a credit or other incorporeal right in litigation is sold, the

debtor shall have a right to extinguish it by reimbursing the assignee
for the price the latter paid therefor, the judicial costs incurred by
19
him, and the interest on the price from the day on which the same
was paid.
As petitioners' alleged loan obligations may be reimbursed up to the extent of

the amount paid by Cameron in the acquisition thereof, it becomes necessary
to verify the amount of the consideration from the LSPA, considering that
the Deed of Assignment was silent on this matter. DTIcSH
In its Resolution 14 dated March 28, 2012, the trial court denied
petitioners' motion for production for being utterly devoid of merit. It ruled that
there was failure to show "good cause" for the production of the LSPA and
failure to show that the LSPA is material or contains evidence relevant to an
issue involved in the action.
Aggrieved, petitioners filed on April 25, 2012, their Motion for

Reconsideration. 15 They argued that the application of Article 1634 of the Civil
Code is sanctioned by Section 12, Article III of Republic Act No. 9182,
otherwise known as the Special Purpose Vehicle Law (SPV Law). Section 12
provides:
SECTION 12. Notice and Manner of Transfer of Assets . —

(a) No transfer of NPLs to an SPV shall take effect unless the FI
concerned shall give prior notice, pursuant to the Rules of Court,
thereof to the borrowers of the NPLs and all persons holding prior
encumbrances upon the assets mortgaged or pledged. Such notice
shall be in writing to the borrower by registered mail at their last
known address on file with the FI. The borrower and the FI shall be
given a period of at most ninety (90) days upon receipt of notice,
pursuant to the Rules of Court, to restructure or renegotiate the loan
under such terms and conditions as may be agreed upon by the
borrower and the FIs concerned.
(b) The transfer of NPAs from an FI to an SPV shall be subject to

prior certification of eligibility as NPA by the appropriate regulatory
authority having jurisdiction over its operations which shall issue its
ruling within forty-five (45) days from the date of application by the
FI for eligibility.
(c) After the sale or transfer of the NPLs, the transferring FI shall
inform the borrower in writing at the last known address of the fact
of the sale or transfer of the NPLs.
They alleged that the production of the LSPA — which would inform them
of the consideration for the assignment of their loan obligation — is relevant to
the disposition of the case.
Respondent Cameron filed its Comment/Opposition 16 dated April 30, 2012

reiterating that the production of the LSPA was immaterial, to which, petitioners
filed, on May 14, 2012, their Reply. 17 Petitioners insisted the materiality of
inquiring about the contents of the LSPA,as the consideration for any transfer of
the loan obligation of petitioner EDC should be the basis for the claim against
them. HEScID
The trial court denied petitioners' motion for reconsideration in its

Resolution dated May 28, 2012.
On July 27, 2012, petitioners filed their Petition for Certiorari with the
Court of Appeals (CA),to nullify and/or set aside the RTC's Resolutions dated
March 28, 2012 and May 28, 2012.
20
In its Resolution dated August 29, 2012, the CA (Third Division) dismissed
the petition for lack of petitioner Oben's verification and certification against
forum shopping and failure to attach a copy of the complaint.
Petitioners' subsequent motion for reconsideration 18 dated September 20,

2012, was likewise denied in the CA's November 27, 2012 Resolution.
Hence this instant petition.
The resolution of this case revolves around the following issues: (1) whether
the CA erred in dismissing the petition on technicality, i.e.,on a defective
verification and certification against forum shopping and the attachment to the
petition of a mere machine copy of the complaint; and (2) whether the RTC
gravely abused its discretion in denying the production and/or inspection of
the LSPA.
We agree with petitioner, that the appellate court erred in ruling that Oben's
Verification and Certification was defective for lack of a Board Resolution
authorizing Oben to sign on behalf of petitioner EDC. Oben executed and signed
the Verification and Certification in his personal capacity as an impleaded party
in the case, and not as a representative of EDC. We note that an earlier
Verification and Certification signed by Naval, for himself and as a representative
of EDC, and a Secretary Certificate containing his authority to sign on behalf of
EDC, were already filed with the appellate court together with the petition
for certiorari. 19 As such, what was only lacking was Oben's Verification and
Certification as pointed out in the August 29, 2012 Resolution of the CA. cADEHI
On the other hand, contrary to petitioners' assertion, a reading of the CA

Resolution dated November 27, 2012 shows that the appellate court merely noted
the belated attachment of a machine copy, not a certified true copy, of the
complaint to petitioners' motion for reconsideration. Although not expressly
stated, the machine copy of the complaint is in fact acceptable, as Rule 65
provides that one may attach to the petition mere machine copies of other
relevant documents and pleadings. 20 More importantly, the CA's dismissal of
the petition for certiorari was anchored on its finding that there was no grave
abuse of discretion on the part of the RTC in denying the production of the LSPA,
that the errors committed by Judge Ruiz were, if at all, mere errors of judgment
correctible not by the extraordinary writ of certiorari and an ordinary appeal
would still be available in the action below for sum of money. 21
An appeal would not have adequately remedied the situation because, in

that case, the court would have rendered its decision without giving the
petitioners the opportunity to make use of the information that the LSPA would
have supplied as a result of the court allowing the production of the LSPA.If, on
appeal, public respondent reversed its decision, the reversal would result in the
case being retried in the lower court, which would unnecessarily delay the
resolution of the case and burden the parties with additional litigation expense.
Having resolved the issue on the supposed technical defects, we go on to

discuss the second issue.
Section 1, Rule 27 of the 1997 Rules of Court, states:
Section 1. Motion for production or inspection; order .— Upon

motion of any party showing good cause therefor, the court in which
an action is pending may a) order any party to produce and permit
the inspection and copying or photographing, by or on behalf of the
moving party, of any designated documents, papers, books,
accounts, letters, photographs, objects or tangible things, not
privileged, which constitute or contain evidence material to any
21
matter involved in the action and which are in his possession,
custody or control; ...
The provision on production and inspection of documents is one of the

modes of discovery sanctioned by the Rules of Court in order to enable not only
the parties, but also the court to discover all the relevant and material facts in
connection with the case pending before it. 22 HDCTAc
Generally, the scope of discovery is to be liberally construed so as to

provide the litigants with information essential to the fair and amicable
settlement or expeditious trial of the case. 23 All the parties are required to lay
their cards on the table so that justice can be rendered on the merits of the
case. 24
Although the grant of a motion for production of document is admittedly

discretionary on the part of the trial court judge, nevertheless, it cannot be
arbitrarily or unreasonably denied because to do so would bar access to relevant
evidence that may be used by a party-litigant and hence, impair his fundamental
right to due process. 25
The test to be applied by the trial judge in determining the relevancy of

documents and the sufficiency of their description is one of reasonableness and
practicability. 26
According to the trial court, there is no need for the production of

the LSPA in order to apprise the petitioners of the amount of consideration paid
by respondent in favor of EIB and that it is enough that the Deed of
Assignment has been produced by Cameron showing that it has acquired the
account of the petitioners pursuant to the SPV Law. 27
We find the Petition impressed with merit.
The question was whether respondent had acquired a valid title to the
credit, i.e.,EDC's outstanding loan obligation, and whether it had a right to claim
from petitioners. In fact, petitioners had maintained in their motions before the
trial court the nullity or non-existence of the assignment of credit purportedly
made between respondent and EIB (the original creditor).
As respondent Cameron's claim against the petitioners relies entirely on the

validity of the Deed of Assignment, it is incumbent upon respondent Cameron to
allow petitioners to inspect all documents relevant to the Deed, especially those
documents which, by express terms, were referred to and identified in
the Deed itself. The LSPA, which pertains to the same subject matter — the
transfer of the credit to respondent is manifestly useful to petitioners'
defense. DEHcTI
Furthermore, under Section 17, Rule 132 of the 1997 Rules of Court, when
part of a writing or record is given in evidence by one party, the whole of the
same subject may be inquired into by the other, and when a detached writing or
record is given in evidence, any other writing or record necessary to its
understanding may also be given in evidence. Since the Deed of Assignment was
produced in court by respondent and marked as one of its documentary exhibits,
the LSPA which was made a part thereof by explicit reference and which is
necessary for its understanding may also be inevitably inquired into by
petitioners.
In this light, the relevance of the LSPA sought by petitioners is readily

apparent. Fair play demands that petitioners must be given the chance to
examine the LSPA. Besides, we find no great practical difficulty, and
respondent did not allege any, in presenting the document for inspection and
copying of the petitioners.
22
Incidentally, the legal incidents of the case a quo necessitates the
production of said LSPA.
Section 13 of the SPV Law clearly provides that "in the transfer of the Non-
Performing Loans (NPLs), the provisions on subrogation and assignment of credits
under the New Civil Code shall apply." The law does not exclude the application
of Article 1634 of the New Civil Code to transfers of NPLs by a financial
institution to a special purpose vehicle. Settled is the rule in statutory
construction that "when the law is clear, the function of the courts is simple
application." Besides, it is within the power of an SPV to restructure, condone,
and enter into other forms of debt settlement involving NPLs.
Also, Section 19 of the SPV Law expressly states that redemption periods
allowed to borrowers under the banking law, the rules of court and/or other laws
are applicable. Hence, the equitable right of redemption allowed to a debtor
under Article 1634 of the Civil Code is applicable. cDEICH
Therefore, as petitioners correctly pointed out, they have the right of legal
redemption by paying Cameron the transfer price plus the cost of money up to the
time of redemption and the judicial costs.
Certainly, it is necessary for the petitioners to be informed of the actual

consideration paid by the SPV in its acquisition of the loan, because it would be
the starting point for them to negotiate for the extinguishment of their obligation.
As pointed out by the petitioners, since the Deed of Assignment merely
states "For value received", the appropriate information may be supplied by
the LSPA. It is self-evident that in order to be able to intelligently match the
price paid by respondent for the acquisition of the loan, petitioner must be
provided with the necessary information to enable it to make a reasonably
informed proposal. Because of the virtual refusal and denial of the production of
the LSPA,petitioners were never accorded the chance to reimburse respondent
of the consideration the latter has paid.
Consequently, this Court finds and so holds that the denial of the Motion for
Production despite the existence of "good cause," relevancy and materiality for
the production of the LSPA was unreasonable and arbitrary constituting grave
abuse of discretion on the part of the trial court. Hence, certiorari properly lies
as a remedy in the present case.
Discretionary acts will be reviewed where the lower court or tribunal has
acted without or in excess of its jurisdiction, where an interlocutory order does
not conform to the essential requirements of law and may reasonably. cause
material injury throughout subsequent proceedings for which the remedy of
appeal will be inadequate, or where there is a clear or serious abuse of
discretion. 28 The exercise of discretion pertaining to discovery will be set
aside where there is abuse, or the trial court's disposition of matters of discovery
was improvident and affected adversely the substantial rights of a
party. 29 After all, the discretion conferred upon trial courts is a sound
discretion which should be exercised with due regard to the rights of the parties
and the demands of equity and justice. 30
Indeed, the insistent refusal of respondent to produce the LSPA is

perplexing and unacceptable to this Court. Respondent even asserts that if
petitioner EDC thinks that the LSPA will bolster its defense, then it should secure
a copy of the document from the Bangko Sentral ng Pilipinas and not from
respondent, because allegedly the document was not marked by respondent as
one of its exhibits. 31 IcDHaT
In light of the general philosophy of full discovery of relevant facts, the

unreceptive and negative attitude by the respondent is abominable. The rules on
23
discovery are accorded broad and liberal interpretation precisely to enable the
parties to obtain the fullest possible knowledge of the issues and facts, including
those known only to their adversaries, in order that trials may not be carried on in
the dark. 32
Undoubtedly, the trial court had effectively placed petitioners at a great

disadvantage inasmuch as respondent effectively suppressed relevant documents
related to the transaction involved in the case a quo. Furthermore, the remedies
of discovery encouraged and provided for under the Rules of Court to be able to
compel the production of relevant documents had been put to naught by the
arbitrary act of the trial court.
It must be remembered that "litigation is essentially an abiding quest for

truth undertaken not by the judge alone, but jointly with the parties. Litigants,
therefore, must welcome every opportunity to achieve this goal; they must act in
good faith to reveal documents, papers and other pieces of evidence material to
the controversy." 33 Courts, as arbiters and guardians of truth and justice, must
not countenance any technical ploy to the detriment of an expeditious settlement
of the case or to a fair, full and complete determination on its merits.
WHEREFORE,the instant petition is GRANTED.The August 29, 2012 and

November 27, 2012 resolutions of the Court of Appeals are REVERSED and SET
ASIDE,and respondents are ORDERED to produce the Loan Sale and Purchase
Agreement dated April 7, 2006, including its annexes and/or attachments, if any,
in order that petitioners may inspect and/or photocopy the same.
SO ORDERED.
||| (Eagleridge Development Corp. v. Cameron Granville 3 Asset Management,

Inc., G.R. No. 204700, [April 10, 2013], 708 PHIL 693-709)
SPECIAL THIRD DIVISION

[G.R. No. 204700. November 24, 2014.]
EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL
and CRISPIN I. OBEN, petitioners, vs. CAMERON GRANVILLE 3
ASSET MANAGEMENT, INC., respondent.
RESOLUTION
LEONEN, J p:
For resolution is respondent Cameron Granville 3 Asset Management,
Inc.'s motion for reconsideration 1 of our April 10, 2013 decision, 2 which
reversed and set aside the Court of Appeals' resolutions 3 and ordered
respondent to produce the Loan Sale and Purchase Agreement (LSPA) dated
April 7, 2006, including its annexes and/or attachments, if any, in order that
petitioners may inspect or photocopy the same.
Petitioners Eagleridge Development Corporation, Marcelo N. Naval, and
Crispin I. Oben filed on June 7, 2013 their motion to admit attached
opposition. 4 Subsequently, respondent filed its reply 5 and petitioners their
motion to admit attached rejoinder. 6
The motion for reconsideration raises the following points:
(1) The motion for production was filed out of time; 7
(2) The production of the LSPA would violate the parol

evidence rule; and 8
(3) The LSPA is a privileged and confidential document. 9
24
Respondent asserts that there was no "insistent refusal" on its part to
present the LSPA, but that petitioners filed their motion for production way out
of time, even beyond the protracted pre-trial period from September 2005 to
2011. 10 Hence, petitioners had no one to blame but themselves when the
trial court denied their motion as it was filed only during the trial proper. 11
Respondent further submits that "Article 1634 [of the] Civil Code had
been inappropriately cited by [p]etitioners" 12 inasmuch as it is Republic
Act No. 9182 (Special Purpose Vehicle Act) that is
applicable. 13 Nonetheless, even assuming that Article 1634 is applicable,
respondent argued that petitioners are: 1) still liable to pay the whole of
petitioner Eagleridge Development Corporation's (EDC) loan obligation, i.e.,
P10,232,998.00 exclusive of interests and/or damages; 14 and 2) seven (7)
years late in extinguishing petitioner EDC's loan obligation because pursuant
to Article 1634, they should have exercised their right of extinguishment within
30 days from the substitution of Export and Industry Bank or EIB (the original
creditor) by respondent in December 2006. 15 According to respondent, the
trial court order "granting the substitution constituted sufficient judicial
demand as contemplated under Article 1634." 16
Also, maintaining that the LSPA is immaterial or irrelevant to the case,
respondent contends that the "[o]rder of substitution settled the issue of
[respondent's] standing before the [c]ourt and its right to fill in the shoes of
[EIB]." 17 It argues that the production of the LSPA will neither prevent
respondent from pursuing its claim of P10,232,998.00, exclusive of interests
and penalties, from petitioner EDC, nor write off petitioner EDC's liability to
respondent. 18 The primordial issue of whether petitioners owe respondent a
sum of money via the deed of assignment can allegedly "be readily resolved by
application of Civil Code provisions and/or applicable jurisprudence and not
by the production/inspection of the LSPA[.]" 19 Respondent also argues that
"a consideration is not always a requisite [in assignment of credits, and] an
assignee may maintain an action based on his title and it is immaterial
whether or not he paid any consideration [therefor][.]" 20 HASTCa
Respondent also contends that: (1) the production of the LSPA will
violate the parol evidence rule 21 under Rule 130, Section 9 of the Rules of
Court; (2) the LSPA is a privileged/confidential bank document; 22 and (3)
under the Special Purpose Vehicle Act, "the only obligation of both the
assignor (bank) and the assignee (the SPV; respondent Cameron) is to give
notice to the debtor (Eagleridge, Naval, and Oben) that its account has been
assigned/transferred to a special purpose vehicle (Sec. 12, R.A. 9182) [and] [i]t
does not require of the special purpose vehicle or the bank to disclose all
financial documents included in the assignment/sale/transfer[.]" 23
Finally, respondent points out that the deed of assignment is a contested
document. "Fair play would be violated if the LSPA is produced without
[p]etitioners acknowledging that respondent Cameron Granville 3 Asset
Management, Inc. is the real party-in-interest because petitioners . . . would
[thereafter] use . . . the contents of a document (LSPA) to its benefit while at
the same time" 24 refuting the integrity of the deed and the legal personality
of respondent to sue petitioners. 25
For their part, petitioners counter that their motion for production was
not filed out of time, and "[t]here is no proscription, under Rule 27 or any
provision of the Rules of Court, from filing motions for production, beyond the
pre-trial." 26
Further, assuming that there was a valid transfer of the loan obligation of
petitioner EDC, Article 1634 is applicable and, therefore, petitioners must be
informed of the actual transfer price, which information may only be supplied
25
by the LSPA. 27 Petitioners argue that the substitution of respondent in the
case a quo was "not sufficient 'demand' as contemplated under Article 1634
of the Civil Code inasmuch as respondent Cameron failed . . . to inform
petitioner EDC of the price it paid for the [transfer of the] loan
obligation," 28 which made it "impossible for petitioners to reimburse what
was paid for the acquisition of the . . . loan obligation [of
EDC]." 29 Additionally, petitioners contend that respondent was not a party to
the deed of assignment, but Cameron Granville Asset Management (SPV-AMC),
Inc., hence, "as [to] the actual parties to the Deed of Assignment are
concerned, no such demand has yet been made." 30
Petitioners add that the amount of their liability to respondent is one of
the factual issues to be resolved as stated in the November 21, 2011 pre-trial
order of the Regional Trial Court, which makes the LSPA clearly relevant and
material to the disposition of the case. 31
Petitioners next argue that the parol evidence rule is not applicable to
them because they were not parties to the deed of assignment, and "they
cannot be prevented from seeking evidence to determine the complete terms
of the Deed of Assignment." 32 Besides, the deed of assignment made
express reference to the LSPA, hence, the latter cannot be considered as
extrinsic to it. 33
As to respondent's invocation that the LSPA is privileged/confidential,
petitioners counter that "it has not been shown that the parties fall under . . .
or, at the very least . . . analogous to [any of the relationships enumerated
in Rule 130, Section 124] that would exempt [respondent] from disclosing
information as to their transaction." 34
In reply, respondent argues that "[petitioners] cannot accept and reject
the same instrument at the same time." 35 According to respondent, by
allegedly "uphold[ing] the truth of the contents as well as the validity of [the]
Deed of Assignment [in] seeking the production of the [LSPA]," 36 petitioners
could no longer be allowed to impugn the validity of the same deed. 37
In their rejoinder, petitioners clarified that their consistent position was
always to assail the validity of the deed of assignment; that alternatively, they
invoked the application of Article 1634 should the court uphold the validity of
the transfer of their alleged loan obligation; and that Rule 8, Section 2 of
the Rules of Court "permits parties to set forth alternative causes of action or
defenses." 38
We deny the motion for reconsideration.
Discovery mode of production/inspection of document may be availed of even
beyond pretrial upon a showing of good cause
The availment of a motion for production, as one of the modes of
discovery, is not limited to the pre-trial stage. Rule 27 does not provide for
any time frame within which the discovery mode of production or inspection of
documents can be utilized. The rule only requires leave of court "upon due
application and a showing of due cause." 39 Rule 27, Section 1 of the 1997
Rules of Court, states:
SECTION 1. Motion for production or inspection order. — Upon
motion of any party showing good cause therefor the court in which
an action is pending may (a) order any party to produce and permit
the inspection and copying or photographing, by or on behalf of the
moving party, of any designated documents, papers, books,
accounts, letters, photographs, objects or tangible things, not
privileged, which constitute or contain evidence material to any
26
matter involved in the action and which are in his possession,
custody or control[.] (Emphasis supplied)
In Producers Bank of the Philippines v. Court of Appeals , 40 this court

held that since the rules are silent as to the period within which modes of
discovery (in that case, written interrogatories) may still be requested, it is
necessary to determine: (1) the purpose of discovery; (2) whether, based on
the stage of the proceedings and evidence presented thus far, allowing it is
proper and would facilitate the disposition of the case; and (3) whether
substantial rights of parties would be unduly prejudiced. 41 This court further
held that "[t]he use of discovery is encouraged, for it operates with desirable
flexibility under the discretionary control of the trial court." 42 DIAcTE
In Dasmariñas Garments, Inc. v. Reyes, 43 this court declared that
depositions, as a mode of discovery, "may be taken at any time after the
institution of any action [as there is] no prohibition against the taking of
depositions after pre-trial." 44 Thus:
Dasmariñas also contends that the "taking of deposition is a
mode of pretrial discovery to be availed of before the action comes to
trial." Not so. Depositions may be taken at any time after the
institution of any action, whenever necessary or convenient. There
is no rule that limits deposition-taking only to the period of pre-trial
or before it; no prohibition against the taking of depositions after
pre-trial. Indeed, the law authorizes the taking of depositions of
witnesses before or after an appeal is taken from the judgment of a
Regional Trial Court "to perpetuate their testimony for use in the
event of further proceedings in the said court" (Rule 134, Rules of
Court), and even during the process of execution of a final and
executory judgment (East Asiatic Co. v. C.I.R., 40 SCRA 521, 544). 45
"The modes of discovery are accorded a broad and liberal

treatment." 46 The evident purpose of discovery procedures is "to enable the
parties, consistent with recognized privileges, to obtain the fullest possible
knowledge of the issues and facts before civil trials" 47 and, thus, facilitating
an amicable settlement or expediting the trial of the case. 48
Technicalities in pleading should be avoided in order to obtain
substantial justice. In Mutuc v. Judge Agloro, 49 this court directed the bank
to give Mutuc a complete statement as to how his debt was computed, and
should he be dissatisfied with that statement, pursuant to Rule 27 of
the Rules of Court, to allow him to inspect and copy bank records supporting
the items in that statement. 50 This was held to be "in consonance with
the rules on discovery and the avowed policy of the Rules of Court . . . to
require the parties to lay their cards on the table to facilitate a settlement of
the case before the trial." 51
We have determined that the LSPA is relevant and material to the issue
on the validity of the deed of assignment raised by petitioners in the court a
quo, and allowing its production and inspection by petitioners would be more
in keeping with the objectives of the discovery rules. We find no great
practical difficulty, and respondent continuously fails to allege any, in
presenting the document for inspection and copying of petitioners. On the
other hand, to deny petitioners the opportunity to inquire into the LSPA would
bar their access to relevant evidence and impair their fundamental right to due
process. 52
Article 1634 of the New Civil Code is applicable
Contrary to respondent's stance, Article 1634 of the Civil Code on
assignment of credit in litigation is applicable.
27
Section 13 of the Special Purpose Vehicle Act clearly provides that in
the transfer of the non-performing loans to a special purpose vehicle, "the
provisions on subrogation and assignment of credits under the New Civil Code
shall apply." Thus:
Sec. 13. Nature of Transfer. — All sales or transfers of NPAs to
an SPV shall be in the nature of a true sale after proper notice in
accordance with the procedures as provided for in Section
12: Provided, That GFIs and GOCCs shall be subject to existing law
on the disposition of assets: Provided, further, That in the transfer of
the NPLs, the provisions on subrogation and assignment of credits
under the New Civil Code shall apply.
Furthermore, Section 19 of the Special Purpose Vehicle Act expressly

states that redemption periods allowed to borrowers under the banking law,
the Rules of Court, and/or other laws are applicable. Hence, the right of
redemption allowed to a debtor under Article 1634 of the Civil Code is
applicable to the case a quo.
Accordingly, petitioners may extinguish their debt by paying the
assignee-special purpose vehicle the transfer price plus the cost of money up
to the time of redemption and the judicial costs.
Petitioners' right to extinguish their debt has not yet lapsed
Petitioners' right to extinguish their debt under Article 1634 on
assignment of credits has not yet lapsed. The pertinent provision is reproduced
here:
Art. 1634. When a credit or other incorporeal right in litigation
is sold, the debtor shall have a right to extinguish it by reimbursing
the assignee for the price the latter paid therefor, the judicial costs
incurred by him, and the interest on the price from the day on which
the same was paid.
A credit or other incorporeal right shall be considered in

litigation from the time the complaint concerning the same is
answered.
The debtor may exercise his right within thirty days from the
date the assignee demands payment from him. (Emphasis supplied)
Under the last paragraph of Article 1634, the debtor may extinguish his or
her debt within 30 days from the date the assignee demands payment. In this
case, insofar as the actual parties to the deed of assignment are
concerned, no demand has yet been made, and the 30-day period did not
begin to run. Indeed, petitioners assailed before the trial court the validity of
the deed of assignment on the grounds that it did not comply with the
mandatory requirements of the Special Purpose Vehicle Act, 53 and it
referred to Cameron Granville Asset Management (SPV-AMC), Inc., as the
assignee, and not respondent Cameron Granville 3 Asset Management, Inc. 54
The law requires that payment should be made only "to the person in
whose favor the obligation has been constituted, or his [or her] successor in
interest, or any person authorized to receive it." 55 It was held that payment
made to a person who is not the creditor, his or her successor-in-interest, or a
person who is authorized to receive payment, even through error or good faith,
is not effective payment which will bind the creditor or release the debtor from
the obligation to pay. 56 Therefore, it was important for petitioners to
determine for sure the proper assignee of the EIB credit or who to pay, in order
to effectively extinguish their debt.
28
Moreover, even assuming that respondent is the proper assignee of the
EIB credit, petitioners could not exercise their right of extinguishment because
they were not informed of the consideration paid for the assignment. 57
Respondent must, pursuant to Article 1634 of the Civil Code, disclose
how much it paid to acquire the EIB credit, so that petitioners could make the
corresponding offer to pay, by way of redemption, the same amount in final
settlement of their obligation. HITEaS
Respondent insists that the transfer price of the EIB credit is
P10,232,998.00 (the actual amount and value of the credit), and that
petitioners should have paid the said amount within 30 days from the
December 8, 2006 order of the Regional Trial Court approving its substitution
of EIB. 58 Petitioners believe otherwise, and as the deed of assignment was
silent on the matter, it becomes necessary to verify the amount of the
consideration from the LSPA.
Assuming indeed that respondent acquired the EIB credit for a lesser
consideration, it cannot compel petitioners to pay or answer for the entire
original EIB credit, or more than what it paid for the assignment.
Under the circumstances of this case, the 30-day period under Article
1634 within which petitioners could exercise their right to extinguish their
debt should begin to run only from the time they were informed of the actual
price paid by the assignee for the transfer of their debt.
Parol evidence rule is not applicable
Claiming further the impropriety of allowing the production of the LSPA,
respondent contends that the presentation of the document and its annexes
would violate the parol evidence rule in Rule 130, Section 9:
SEC. 9. Evidence of written agreements. — When the terms of
an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement.
However, a party may present evidence to modify, explain or

add to the terms of the written agreement if he puts in issue in his
pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the

written agreement;
(b) The failure of the written agreement to express the true

intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or

their successors in interest after the execution of the written
agreement.
The term "agreement" includes wills.
We disagree.
The parol evidence rule does not apply to petitioners who are not
parties to the deed of assignment and do not base a claim on it. 59 Hence,
they cannot be prevented from seeking evidence to determine the complete
terms of the deed of assignment.
29
Even assuming that Rule 130, Section 9 is applicable, an exception to
the rule under the second paragraph is when the party puts in issue the
validity of the written agreement, as in the case a quo.
Besides, what is forbidden under the parol evidence rule is the
presentation of oral or extrinsic evidence, not those expressly referred to in
the written agreement. "[D]ocuments can be read together when one refers to
the other." 60 By the express terms of the deed of assignment, it is clear that
the deed of assignment was meant to be read in conjunction with the LSPA.
As we have stated in our decision, Rule 132, Section 17 61 of the Rules
of Court allows a party to inquire into the whole of the writing or record when
a part of it is given in evidence by the other party. Since the deed of
assignment was produced in court by respondent and marked as one of its
documentary exhibits, the LSPA which was made a part thereof by explicit
reference and which is necessary for its understanding may also be inquired
into by petitioners.
The LSPA is not privileged and confidential in nature
Respondent's contention that the LSPA is privileged and confidential is
likewise untenable.
Indeed, Rule 27 contains the proviso that the documents sought to be
produced and inspected must not be privileged against disclosure. Rule 130,
Section 24 describes the types of privileged communication. These are
communication between or involving the following: (a) between husband and
wife; (b) between attorney and client; (c) between physician and patient; (d)
between priest and penitent; and (e) public officers and public interest.
Privileged communications under the rules of evidence is premised on
an accepted need to protect a trust relationship. It has not been shown that
the parties to the deed of assignment fall under any of the foregoing
categories.
This court has previously cited other privileged matters such as the
following: "(a) editors may not be compelled to disclose the source of
published news; (b) voters may not be compelled to disclose for whom they
voted; (c) trade secrets; (d) information contained in tax census returns; . . . (d)
bank deposits" 62 (pursuant to the Secrecy of Bank Deposits Act); (e)
national security matters and intelligence information; 63 and (f) criminal
matters. 64 Nonetheless, the LSPA does not fall within any of these classes of
information. Moreover, the privilege is not absolute, and the court may compel
disclosure where it is indispensable for doing justice.
At any rate, respondent failed to discharge the burden of showing that
the LSPA is a privileged document. Respondent did not present any law or
regulation that considers bank documents such as the LSPA as classified
information. Its contention that the Special Purpose Vehicle Act 65 only
requires the creditor-bank to give notice to the debtor of the transfer of his or
her account to a special purpose vehicle, and that the assignee-special
purpose vehicle has no obligation to disclose other financial documents
related to the sale, is untenable. The Special Purpose Vehicle Act does not
explicitly declare these financial documents as privileged matters. Further, as
discussed, petitioners are not precluded from inquiring as to the true
consideration of the assignment, precisely because the same law in relation to
Article 1634 allows the debtor to extinguish its debt by reimbursing the
assignee-special purpose vehicle of the actual price the latter paid for the
assignment.
An assignment of a credit "produce[s] no effect as against third persons,
unless it appears in a public instrument[.]" 66 It strains reason why the LSPA,
30
which by law must be a public instrument to be binding against third persons
such as petitioners-debtors, is privileged and confidential.
Alternative defenses are allowed under the Rules
Finally, respondent's contention that petitioners cannot claim the validity
and invalidity of the deed of assignment at the same time is untenable.
The invocation by petitioners of Article 1634, which presupposes the
validity of the deed of assignment or the transfer of the EIB credit to
respondent, even if it would run counter to their defense on the invalidity of the
deed of assignment, is proper and sanctioned by Rule 8, Section 2 of
the Rules of Court, which reads:
SEC. 2. Alternative causes of action or defenses. — A party
may set forth two or more statements of a claim or defense
alternatively or hypothetically, either in one cause of action or
defense or in separate causes of action or defenses. When two or
more statements are made in the alternative and one of them if made
independently would be sufficient, the pleading is not made
insufficient by the insufficiency of one or more of the alternative
statements. (Emphasis supplied)
All told, respondent failed to allege sufficient reasons for us to reconsider

our decision. Verily, the production and inspection of the LSPA and its annexes
fulfill the discovery-procedures objective of making the trial "less a game of
blind man's buff and more a fair contest with the basic issues and facts
disclosed to the fullest practicable extent." 67
WHEREFORE, the motion for reconsideration is DENIED WITH
FINALITY. DCHaTc
SO ORDERED.
||| (Eagleridge Development Corp. v. Cameron Granville 3 Asset Management,
Inc., G.R. No. 204700 (Resolution), [November 24, 2014], 747 PHIL 791-811)
SECOND DIVISION
[G.R. No. 183872. November 17, 2014.]
OWEN PROSPER A. MACKAY, petitioner, vs. SPOUSES DANA
CASWELL and CERELINA CASWELL, respondents.
DECISION
DEL CASTILLO, J p:
This Petition for Review on Certiorari 1 assails the April 30, 2008
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 97146 which
granted the Petition for Review 3 filed therewith, reversed and set aside the
October 31, 2006 Decision 4 of the Regional Trial Court (RTC), Branch 70, Iba,
Zambales in Civil Case No. RTC-2426-I, and reinstated the June 29, 2006
Decision 5 of the Municipal Trial Court (MTC), San Narciso, Zambales in Civil
Case No. 538. The MTC Decision dismissed petitioner Owen Prosper A.
Mackay's (Owen) claims against respondents spouses Dana Caswell and
Cerelina Caswell (the Caswells) and ordered him to pay the latter P46,205.00
representing the expenses they incurred for the rectification of the defective
work he did for them. The Petition also assails the July 24, 2008
Resolution 6 of the CA denying Owen's Motion for Reconsideration 7 thereto.
31
Factual Antecedents
In their search for someone who could provide electrical installation
service in their newly built home in San Narciso, Zambales, the Caswells asked
the sole distributor of electricity in the area, Zambales II Electric Cooperative
(Zameco II), thru its sub-office manager, Engr. Victor Pulangco (Engr.
Pulangco), how much its service for the installation would be. Engr. Pulangco
quoted an estimate of P456,000.00.
However, the Caswells hired Owen who offered to do the job for only
P250,000.00. With the help of Cesar Badua (Badua) and Albert Galeng, Owen
claimed that the installation was completed and ready for power service
connection as of August 1998. By then, the Caswells had paid him
P227,000.00.
At Cerelina Caswell's (Cerelina) request, Zameco II inspected the
installation work and tested the distribution transformers. 8 The inspection
showed the following defects as specified in Engr. Pulangco's letter dated
August 11, 1998: 9
I. For A-5 Construction
a. No guying
b. Improper use of deadend materials for neutral line
c. Lack of armor tape
d. Lack of clamp loop deadend materials
e. No locknuts on all bolts. EDATSI
II. For A-2 construction
a. Improper use of materials for pole top pin
b. Lack of pole top pin
c. No guying
d. Improper use of materials for neutral line
e. Wrong phasing of pole top pin
f. Lack of armor rod (single & double support)
III. For Grounding:
a. [Substandard] grounding wire
b. Wrong installation of pole grounding wire
c. Lack of grounding rods
V. Tapping Point:
Lack of use cut-out with lightning arrester combination at the

tapping point.
VI. For Transformer Installation:
Wrong distance of the transformer from the neutral line. 10
Because of the deficiencies and other incomplete requirements, Zameco

II refused to provide energization to the Caswell home. The Caswells thus
looked for Owen but he could not be found. Hence, they were constrained to
ask Zameco II to correct all the problems it found. After the single phase
distribution system was completed in accordance with the standard
32
specifications of Zameco II in January 1999, 11 only then did the Caswells
finally have electricity.
On September 4, 1998, the Caswells executed a Joint Affidavit 12 to
charge Owen and his group of swindling them of P227,000.00. The Caswells
alleged that Owen and his group misrepresented themselves to be people from
the National Power Corporation (NAPOCOR). By reason of the
misrepresentation, the Caswells suffered damage as the electrical installation
made were replete with deficiencies such that no electricity can properly
flow to their house. This led to the filing of an Estafa case under Article 315
paragraph 2 (a) of the Revised Penal Code 13 against Owen, docketed as
Criminal Case No. RTC-2533-I. 14 However, on ground of reasonable doubt,
Owen was acquitted on May 15, 2003. 15
Still unpaid for the remaining P23,000.00 for his installation work, Owen
in turn filed a Complaint 16 for Collection of Sum of Money with Damages
against the Caswells before the MTC, docketed as Civil Case No. 538. TcHCIS
Owen alleged that out of the P250,000.00 contract price for the
installation of an electrical line, the Caswells have only paid him P227,000.00.
He thus wanted to recover from the Caswells the remaining balance of
P23,000.00, as well as damages on account of sleepless nights, serious
anxiety and social humiliation he suffered due to the Caswells' malicious filing
of estafa case against him.
The Caswells, on the other hand, maintained that Owen is not entitled to
any money. They pointed out that Owen failed to finish the job and walked out
of the contract. Hence, they are the ones entitled to reimbursement of
expenses incurred to correct Owen's defective work. As proof of their
expenses, the Caswells submitted as evidence a) Engr. Pulangco's handwritten
receipt of P15,400.00 as partial payment for the materials needed to correct
the deficiencies in Owen's installation work; 17 b) an undated Sales
Invoice No. 2029 issued by Peter A. Eduria Enterprises itemizing nine
electrical materials, Dana Caswell (Dana) bought, their quantities, and the
total price of P53,805.00.00 n 18 and; c) a list of all the materials obtained for
Zameco's corrective work with the corresponding unit prices, labor cost and
the total price charged. 19
Owen and Badua testified that they rectified all the discrepancies that
Zameco II found. After the corrections, Owen informed Engr. Pulangco that the
Caswell home was ready for electrical connection. He did not know what Engr.
Pulangco did next. Owen likewise asserted that he even reminded Cerelina to
submit to Zameco II all the documentary requirements for power
connection. 20
Ruling of the Municipal Trial Court
Finding the contract entered into by the parties to be a contract for a
piece of work, the MTC relied upon Article 1715 of the Civil Code, viz.:
The contractor shall execute the work in such a manner that it
has the qualities agreed upon and has no defects which destroy or
lessen its value or fitness for its ordinary or stipulated use. Should
the work be not of such quality, the employer may require that the
contractor remove the defect or execute another work. If the
contractor fails or refuses to comply with this obligation, the
employer may have the defect removed or another work executed, at
the contractor's cost.
The MTC held that since it was proven that the work of Owen suffers
from deficiencies, the Caswells, pursuant to the above-quoted provision, have
the right to require him to remove the defect or execute another work. It did
33
not give credence to Owen's claim that he corrected the deficiencies for lack
of evidence to substantiate the same. The MTC likewise held that the Caswells
had no chance to demand from Owen the removal of the defect or the
execution of another work as he was then nowhere to be found. On the other
hand, the Caswells' evidence clearly showed that they caused the Zameco II
people to rectify the defects for which they spent P69,205.00. DCaEAS
By virtue of Article 1167 21 of the Civil Code, the MTC ruled that the
said P69,205.00 should be borne by Owen. From the P69,205.00, the said court
then deducted the P23,000.00 Owen was seeking to collect from the Caswells.
The dispositive portion of the MTC's June 29, 2006 Decision 22 reads:
WHEREFORE, viewed from all the foregoing, judgment is hereby
rendered in favor of the [Caswells] and against [Owen] as follows:
1. Dismissing [Owen's] claims for lack of merit, and
2. Ordering [Owen] to pay the [Caswells] the amount of

P46,205.00 representing the rectification cost.
SO ORDERED. 23
Owen appealed to the RTC.

Ruling of the Regional Trial Court
In a Decision 24 dated October 31, 2006, the RTC reversed and set aside
the MTC Decision. The RTC opined that the Caswells should have first filed a
judicial action for specific performance where there could have been an
exhaustive determination of the quality and acceptability of Owen's
installation work. By immediately resorting to the service of Zameco II, the
Caswells never afforded Owen the opportunity to correct the deficiencies in
accordance with Article 1715 of the Civil Code.It noted Cerelina's testimony
during the trial before the MTC where she was asked if she confronted Owen
about the unfinished work. She answered that Owen did not come to her so
she went to Zameco II when she could no longer wait for electricity. 25
Furthermore, the RTC was convinced that Owen kept up his end of the
bargain as shown by Engr. Pulangco's testimony on cross-examination that
even without replacing the fuse cut-out connection, electricity will still flow
smoothly and will function in the Caswell home. 26
Opining that Owen must be given what is actually due him, the RTC
disposed of the case as follows:
WHEREFORE, the decision of the Municipal Trial Court of San
Narciso is reversed and set aside and judgment is hereby rendered as
follows:
1. Ordering the defendants to pay unto the plaintiff the amount

of Twenty Three Thousand Pesos (P23,000.00) representing the
balance of the price or consideration for his services in the
installation of electrical lines in the defendants' home, with legal
interest at the rate of six percent (6%) [per annum] from the time of
the filing of the complaint until it is fully paid;
2. Ordering the defendants to pay to the plaintiff moral

damages in the amount of TWENTY FIVE THOUSAND PESOS
(P25,000.00) for their willful non-compliance with their contractual
obligation to the plaintiff, and exemplary damages in the amount of
TWENTY THOUSAND PESOS (P20,000.00) by way of example or
correction for the public good;
34
3. Ordering the defendants[,] spouses DANA and CERELINA
CASWELL[,] to pay attorney's fees to the plaintiff in the amount of
THIRTY THOUSAND PESOS (P30,000.00), the latter having been haled
to court to enforce his contractual rights;
[4.] Ordering the defendants to pay the costs of this suit.
SO ORDERED. 27 HIETAc
Refusing to accept the RTC judgment and heavily relying on the MTC
Decision, the Caswells elevated the case to the CA by way of a Petition for
Review. 28
Ruling of the Court of Appeals
In its Decision 29 of April 30, 2008, the CA reinstated the MTC Decision.
It reasoned:
The RTC opined that [the Caswells] should have given the
contractor the chance to rectify the flaw in his work. To Our mind,
however, the effort to communicate with [Owen] effectively served
as [the Caswells'] request for the former to rectify the flaws in the
contracted work. In fact, [the Caswells'] act of demanding that
[Owen] secure the permit and to subject the transformer to testing
can already be construed as a substantial compliance with Article
1715. It must be emphasized that it was [Owen's] refusal to secure
the necessary permits and to comply with the requirements of
Zameco [II] as well as his refusal to communicate with [the
Caswells] that impelled the latter to file a case for estafa against
him. Had he been willing to make good his obligation, then it would
not have been necessary for [the Caswells] to file the said criminal
case. Instead of complying with his end of the bargain, [Owen] opted
to file a case for collection of sum of money with damages. Thus, any
effort to require [Owen] either to rectify his flawed work or to remove
the same would have been futile since [Owen's] act of demanding
payment through the said complaint showed his belief that his work
in the house was done.
Clearly, the RTC erred in stating that [the Caswells'] failure to

file an action for specific performance led to the presumption that
[Owen] performed his obligations in accordance with their
agreement. Said presumption could not have prevailed in view of the
nature of the contracted work, the ultimate goal of which was to
have electricity flowing into [the Caswell] house. Thus, the thing
speaks for itself. Res ipsa loquitur. This, the RTC failed to consider.
Therefore, this Court finds the decision of the MTC more in accord
with law and jurisprudence. 30
His Motion for Reconsideration 31 having been denied by the

CA, 32 Owen argues in this Petition for Review on Certiorari that: 1) he has
done the installation job and that it was not his duty but that of the Caswells to
secure the necessary permits from Zameco II; 2) his acquittal in the criminal
case should have been considered; 3) there is no basis for the award of the
rectification costs as the sales receipt for the alleged materials used is
inadmissible and; 4) the Caswells never demanded that he remove the defects
or execute another work in accordance with Article 1715 of the Civil
Code. ACcDEa
Our Ruling
We deny the Petition.
35
Owen failed to execute his work in such a manner that it has no defects
which destroy or lessen its value or fitness for its ordinary or stipulated use.
Owen insists that as far as he is concerned, he had done what was
required of him. i.e., the installation of electrical materials in the Caswell
home. Anent the permits, he avers that securing the same is not part of his
work but is the responsibility of the Caswells.
Considering all the undisputed facts, the Court, however, finds that the
Caswells were not only after securing permits. They suffered other major
problems as shown by their narration in their Joint Affidavit, viz.:
5. That we think they were done in three days, that same week.
The contact man, Owen Mackay, had told us that he would take care
of all permits. He asked us to get a paper done for the permission on
one piece of land. No permits were shown to us. No ZAMECO
authorization [was] ever shown to us. He went to ZAMECO, to tell
them it was ready [for connection]. ZAMECO did not connect
because: (1) no permits [were] requested or [were] given by
ZAMECO; (2) transformer allegedly brand new [and] had to run
through testing laboratory. Owen['s] group [neither] did the testing
nor caused a testing; (3) complete inspection of installation was [yet]
to be done . . .; (4) no installation layout was provided or presented
to ZAMECO; (5) nobody [from Owen's group was] around for 4-5 days
to . . . talk about our problems. Owen called, sent word to [us] and we
have gone down (3) occasions at night to try to find him. The three
did [a] vanishing act. Finally, [they came] to take the transformer for
testing. [The] one day testing told us by Pulangco turned into 1 1/2
weeks . . . . I had to go pick it up myself at test complex. Brought the
transformer home from Castillejos, August [10,] 1998 with the test
results. No response from the people who called themselves
NAPOCOR. After [chasing after] Owen Mackay . . . and [after] empty
promises we were referred to Atty. Pacis, [and] the rest is still
unsettled; 33
These circumstances, together with the deficiencies enumerated in Engr.

Pulangco's August 10, 1998 letter, sufficiently explain the delay in the
energization of the Caswell home. Engr. Pulangco's testimony that electricity
will still work without replacing the fuse cut-out connection is not enough to
negate the fact that Owen's overall work is not satisfactory.
Moreover, Owen, in contending that his acquittal in the estafa case
should have been a factor for a favorable decision in this civil case, relied on a
remark by the RTC that referred to an opinion mentioned in the judgment in the
estafa case, i.e., that the delay in supplying power to the Caswell home could
possibly be due to the resentment harbored by certain employees of Zameco II
as they were not chosen to do the work. 34 A perusal, however, of the
judgment in Criminal Case No. RTC-2533-I 35 would show that this statement
is only a mere obiter. The RTC cannot hinge on this opinion as this is mere
conjecture. Notably, the Zameco II people were not even parties or witnesses
in the estafa case. SDEHCc
Suffice it to say that Owen's job was not only to finish the electrical
installation work. It was likewise his obligation to do quality work and to
provide quality materials to ensure that electricity would flow in the Caswell
home. For the Caswells to avail of this utility, it is definitely expected that the
electrical materials used should meet the technical requirements for a service
entrance as imposed by the only distributor of the electricity in the area,
Zameco II, so that the latter can supply residential electric service efficiently
and safely to the Caswells. However, as shown above, Owen failed to execute
36
his work in such a manner that it has no defects which destroy or lessen its
value or fitness for its ordinary or stipulated use.
The CA correctly ruled that Caswells'
effort to communicate with Owen
effectively served as a demand to rectify
the latter's work.
Under Article 1715 of the Civil Code, if the work of a contractor has
defects which destroy or lessen its value or fitness for its ordinary or
stipulated use, he may be required to remove the defect or execute another
work. If he fails to do so, he shall be liable for the expenses by the employer
for the correction of the work. The demand required of the employer under the
subject provision need not be in a particular form. In the case at bar, we agree
with the CA that Owen was given the opportunity to rectify his work.
Subsequent to Zameco II's disapproval to supply the Caswells electricity for
several reasons, the Court gives credence to the latter's claim that they looked
for Owen to demand a rectification of the work, but Owen and his group were
nowhere to be found. Had Owen really been readily available to the Caswells to
correct any deficiency in the work, the latter would not have entertained the
thought that they were deceived and would not have been constrained to
undergo the rigors of filing a criminal complaint and testifying therein. Without
doubt, the Caswells exercised due diligence when they demanded from Owen
the proper rectification of his work. As correctly held by the CA, the Caswells
substantially complied with the requirement of Article 1715 of the Civil
Code, viz.:
To Our mind, however, the effort to communicate with [Owen]
effectively served as [the Caswells'] request for the former to
rectify the flaws in the contracted work. In fact, [the Caswells'] act
of demanding that [Owen] secure the permit and to subject the
transformer to testing can already be construed as a substantial
compliance with Article 1715. It must be emphasized that it was
[Owen's] refusal to secure the necessary permits and to comply
with the requirements of Zameco [II] as well as his refusal to
communicate with [the Caswells] that impelled the latter to file a
case for estafa against him. Had he been willing to make good his
obligation, then it would not have been necessary for [the Caswells]
to file the said criminal case. Instead of complying with his end of
the bargain, [Owen] opted to file a case for collection of sum of
money with damages. Thus, any effort to require [Owen] either to
rectify his flawed work or to remove the same would have been
futile since [Owen's] act of demanding payment through the said
complaint showed his belief that his work in the house was
done. 36
Furthermore, to require the Caswells to file an action for specific

performance, as opined by the RTC, not only deprives them of hiring someone
else to rectify the work, but also defeats the very purpose of the contracted
work, i.e., to immediately have electricity in their home. In this situation, time
is of the essence. EcATDH
For Owen's failure to provide quality work, he is to reimburse the rectification
costs the Caswells had shouldered as the latter's actual damages; the unpaid
compensation Owen is claiming shall be set-off from the Caswells' monetary
claims supported by receipts.
The Court recognizes that in view of the substandard work done, the
Caswells necessarily incurred expenses by purchasing materials to finally get
a supply of electricity in their home.
37
One is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. 37 "To justify an award of actual
damages, there must be competent proof of the actual amount of loss,
credence can be given only to claims which are duly supported by
receipts." 38 The claimant must prove the actual amount of loss with a
reasonable degree of certainty premised upon competent proof and on the best
evidence obtainable. 39 In the case at bar, we give credence to the
documents relied upon by the CA and the MTC in arriving at the rectification
cost, i.e., a) Engr. Pulangco's handwritten receipt of P15,400.00, to which he
had testified before the court that he had indeed received such amount and b)
the Sales Invoice No. 2029 issued by Peter A. Eduria Enterprises reflecting the
total cost of P53,805.00.00. n
Notably, Owen assails the admissibility of the Sales Invoice, contending
that said document is insufficient to be a basis for computation of damages as
the respective unit price for each item enumerated therein are lacking.
Furthermore, he attempts to highlight that Peter A. Eduria Enterprises is a non-
existing business establishment by submitting the negative certification of a
business name issued by the Department of Trade and Industry, 40 the
certification of no record issued by Business Permit and License Office of
Valenzuela City, 41 and the certification of non-registration of
corporation/partnership by the Securities and Exchange Commission. 42
The failure to indicate the unit price of each item in the sales invoice
does not defeat the claim of the Caswells for reimbursement. In most cases in
the ordinary course of business, sellers issue handwritten receipts that are
perfunctorily filled out without completely stating all the details of the
purchase. This 'flaw' should not be taken against the Caswells. Besides, if the
unit price per item is an issue, a perusal of Dana's separate list 43 will show
the unit prices of the items in the sales invoice. TSIDEa
With regard to the documentary evidence Owen adduced in his attempt to
show the alleged non-existence of Peter A. Eduria Enterprises, the negative
certifications presented however only highlight the probable liability of the
store with the government for non-compliance with business registration.
Regardless of whether the latter had registered itself as a business entity with
the proper authorities, the documents Owen relies upon fail to overcome the
point of the receipt: that a sale of electrical items for installation had
transpired between the Caswells and the seller. With the relevant facts
established that Zameco II rejected the quality of Owen's work and that
rectifications were made by installing the necessary materials to meet the
electric distributor's specifications, the said invoice cannot be considered as
bereft of evidentiary value.
It must be noted en passant that Cerelina herself admitted that the
contract price agreed upon was the lump sum of P250,000.00, and that she
only paid Owen P227,000.00, 44 while the dispositive portion of the MTC
Decision stated that Owen's claims are dismissed, the lower court implies that
the P23,000.00 unpaid compensation he sought to recover from the Caswells
shall not be given directly to him, offsetting the said amount from the
rectification cost that the Caswells had prayed for. In effect, under the
circumstances, we deem this fair and just to measure the actual damages due
the Caswells by reducing the cost they shouldered to repair the defects with
the unpaid amount of the contract price due Owen. CIaHDc
WHEREFORE, the instant petition is DENIED. The April 30, 2008
Decision and July 24, 2008 Resolution of the Court of Appeals in CA-
G.R. SP No. 97146, which reinstated the June 29, 2006 Decision of the
Municipal Trial Court, San Narciso, Zambales, in Civil Case No. 538,
are AFFIRMED in toto. No costs.
38
SO ORDERED. (Mackay v. Spouses Caswell, G.R. No. 183872, [November
17, 2014], 747 PHIL 1-19)
FIRST DIVISION
[G.R. No. 156330. November 19, 2014.]
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO.,
LTD., petitioners, vs. GLOW LAKS ENTERPRISES, LTD., respondent.
DECISION
PEREZ, J p:
This is a Petition for Review on Certiorari 1 filed pursuant to Rule 45 of
the Revised Rules of Court, primarily assailing the 11 December 2002
Resolution rendered by the Special Former Sixteenth Division of the Court of
Appeals in CA-G.R. CV No. 48277, 2 the decretal portion of which states:
WHEREFORE, the appeal is GRANTED and the April 29, 1994
Decision of the Regional Trial Court of Manila, Branch 52 thereof in
Civil Case No. 88-45595, SET ASIDE. Nedlloyd Lijnen B.V. Rotterdam
and The East Asiatic Co., Ltd. are ordered to pay Glow Laks
Enterprises, Ltd. the following:
1. The invoice value of the goods lost worth $53,640.00, or its

equivalent in Philippine currency;
2. Attorney's fees of P50,000.00; and
3. Costs. 3
The Facts
Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a foreign
corporation engaged in the business of carrying goods by sea, whose vessels
regularly call at the port of Manila. It is doing business in the Philippines thru
its local ship agent, co-petitioner East Asiatic Co., Ltd. (East Asiatic).
Respondent Glow Laks Enterprises, Ltd., is likewise a foreign corporation
organized and existing under the laws of Hong Kong. It is not licensed to do,
and it is not doing business in, the Philippines.
On or about 14 September 1987, respondent loaded on board M/S
Scandutch at the Port of Manila a total 343 cartoons of garments, complete
and in good order for pre-carriage to the Port of Hong Kong. The goods covered
by Bills of Lading Nos. MHONX-2 and MHONX-3 4 arrived in good condition in
Hong Kong and were transferred to M/S Amethyst for final carriage to Colon,
Free Zone, Panama. Both vessels, M/S Scandutch and M/S Amethyst, are
owned by Nedlloyd represented in the Philippines by its agent, East Asiatic.
The goods which were valued at US$53,640.00 was agreed to be released to
the consignee, Pierre Kasem, International, S.A., upon presentation of the
original copies of the covering bills of lading. 5 Upon arrival of the vessel at
the Port of Colon on 23 October 1987, petitioners purportedly notified the
consignee of the arrival of the shipments, and its custody was turned over to
the National Ports Authority in accordance with the laws, customs regulations
and practice of trade in Panama. By an unfortunate turn of events, however,
unauthorized persons managed to forge the covering bills of lading and on the
basis of the falsified documents, the ports authority released the goods.
On 16 July 1988, respondent filed a formal claim with Nedlloyd for the
recovery of the amount of US$53,640.00 representing the invoice value of the
shipment but to no avail. 6 Claiming that petitioners are liable for the
misdelivery of the goods, respondent initiated Civil Case No. 88-45595 before
39
the Regional Trial Court (RTC) of Manila, Branch 52, seeking for the recovery of
the amount of US$53,640.00, including the legal interest from the date of the
first demand. 7
In disclaiming liability for the misdelivery of the shipments, petitioners
asserted in their Answer 8 that they were never remiss in their obligation as a
common carrier and the goods were discharged in good order and condition
into the custody of the National Ports Authority of Panama in accordance with
the Panamanian law. They averred that they cannot be faulted for the release
of the goods to unauthorized persons, their extraordinary responsibility as a
common carrier having ceased at the time the possession of the goods were
turned over to the possession of the port authorities.
After the Pre-Trial Conference, trial on the merits ensued. Both parties
offered testimonial and documentary evidence to support their respective
causes. On 29 April 2004, the RTC rendered a Decision 9 ordering the
dismissal of the complaint but granted petitioners' counterclaims. In effect,
respondent was directed to pay petitioners the amount of P120,000.00 as
indemnification for the litigation expenses incurred by the latter. In releasing
the common carrier from liability for the misdelivery of the goods, the RTC
ruled that Panama law was duly proven during the trial and pursuant to the
said statute, carriers of goods destined to any Panama port of entry have to
discharge their loads into the custody of Panama Ports Authority to make
effective government collection of port dues, customs duties and taxes. The
subsequent withdrawal effected by unauthorized persons on the strength of
falsified bills of lading does not constitute misdelivery arising from the fault of
the common carrier. The decretal part of the RTC Decision reads:
WHEREFORE, judgment is rendered for [petitioners] and against
[Respondent], ordering the dismissal of the complaint and ordering
the latter to pay [petitioners] the amount of ONE HUNDRED TWENTY
THOUSAND PESOS (P120,000.00) on their counterclaims.
Cost against [Respondent]. 10
On appeal, the Court of Appeals reversed the findings of the RTC and held
that foreign laws were not proven in the manner provided by Section
24, Rule 132 of the Revised Rules of Court, and therefore, it cannot be given
full faith and credit. 11 For failure to prove the foreign law and custom, it is
presumed that foreign laws are the same as our local or domestic or internal
law under the doctrine of processual presumption. Under the New Civil Code,
the discharge of the goods into the custody of the ports authority therefore
does not relieve the common carrier from liability because the extraordinary
responsibility of the common carriers lasts until actual or constructive delivery
of the cargoes to the consignee or to the person who has the right to receive
them. Absent any proof that the notify party or the consignee was informed of
the arrival of the goods, the appellate court held that the extraordinary
responsibility of common carriers remains. Accordingly, the Court of Appeals
directed petitioners to pay respondent the value of the misdelivered goods in
the amount of US$53,640.00.
The Issues
Dissatisfied with the foregoing disquisition, petitioners impugned the
adverse Court of Appeals Decision before the Court on the following grounds:
I.
THERE IS ABSOLUTELY NO NEED TO PROVE PANAMANIAN LAWS

BECAUSE THEY HAD BEEN JUDICIALLY ADMITTED. AN ADMISSION
BY A PARTY IN THE COURSE OF THE PROCEEDINGS DOES NOT
REQUIRE PROOF.
40
II.
BY PRESENTING AS EVIDENCE THE [GACETA] OFFICIAL OF

REPUBLICA DE PANAMA NO. 17.596 WHERE THE APPLICABLE
PANAMANIAN LAWS WERE OFFICIALLY PUBLISHED, AND THE
TESTIMONY OF EXPERT WITNESSES, PETITIONERS WERE ABLE TO
PROVE THE LAWS OF PANAMA.
III.
IF WE HAVE TO CONCEDE TO THE COURT OF APPEALS' FINDING

THAT THERE WAS FAILURE OF PROOF, THE LEGAL QUESTION
PRESENTED TO THE HONORABLE COURT SHOULD BE RESOLVED
FAVORABLY BECAUSE THE CARRIER DISCHARGED ITS DUTY
WHETHER UNDER THE PANAMANIAN LAW OR UNDER PHILIPPINE
LAW. 12
The Court's Ruling

We find the petition bereft of merit.
It is well settled that foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to take judicial notice of them.
Like any other fact, they must be alleged and proved. 13 To prove a foreign
law, the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court 14 which read:
SEC. 24. Proof of official record. — The record of public
documents referred to in paragraph (a) of Section 19, when
admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and accompanied, if the
record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in
a foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice-consul, or consular
agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office.
SEC. 25. What attestation of copy must state. — Whenever a

copy of a document or record is attested for the purpose of the
evidence, the attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof, as the case
may be. The attestation must be under the official seal of the
attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court.
For a copy of a foreign public document to be admissible, the following

requisites are mandatory: (1) it must be attested by the officer having legal
custody of the records or by his deputy; and (2) it must be accompanied by a
certificate by a secretary of the embassy or legation, consul general, consul,
vice-consular or consular agent or foreign service officer, and with the seal of
his office. 15 Such official publication or copy must be accompanied, if the
record is not kept in the Philippines, with a certificate that the attesting officer
has the legal custody thereof. 16 The certificate may be issued by any of the
authorized Philippine embassy or consular officials stationed in the foreign
41
country in which the record is kept, and authenticated by the seal of his
office. 17 The attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may be, and must be
under the official seal of the attesting officer. 18
Contrary to the contention of the petitioners, the Panamanian laws,
particularly Law 42 and its Implementing Order No. 7, were not duly proven in
accordance with Rules of Evidence and as such, it cannot govern the rights
and obligations of the parties in the case at bar. While a photocopy of
the Gaceta Official of the Republica de Panama No. 17.596, the Spanish text
of Law 42 which is the foreign statute relied upon by the court a quo to
relieve the common carrier from liability, was presented as evidence during
the trial of the case below, the same however was not accompanied by the
required attestation and certification.
It is explicitly required by Section 24, Rule 132 of the Revised Rules of
Court that a copy of the statute must be accompanied by a certificate of the
officer who has legal custody of the records and a certificate made by the
secretary of the embassy or legation, consul general, consul, vice-consular or
by any officer in the foreign service of the Philippines stationed in the foreign
country, and authenticated by the seal of his office. The latter requirement is
not merely a technicality but is intended to justify the giving of full faith and
credit to the genuineness of the document in a foreign country. 19 Certainly,
the deposition of Mr. Enrique Cajigas, a maritime law practitioner in the
Republic of Panama, before the Philippine Consulate in Panama, is not the
certificate contemplated by law. At best, the deposition can be considered as
an opinion of an expert witness who possess the required special knowledge
on the Panamanian laws but could not be recognized as proof of a foreign law,
the deponent not being the custodian of the statute who can guarantee the
genuineness of the document from a foreign country. To admit the deposition
as proof of a foreign law is, likewise, a disavowal of the rationale of Section
24, Rule 132 of the Revised Rules of Court, which is to ensure authenticity of
a foreign law and its existence so as to justify its import and legal
consequence on the event or transaction in issue.
The above rule, however, admits exceptions, and the Court in certain
cases recognized that Section 25, Rule 132 of the Revised Rules of
Court does not exclude the presentation of other competent evidence to prove
the existence of foreign law. In Willamette Iron and Steel Works v.
Muzzal 20 for instance, we allowed the foreign law to be established on the
basis of the testimony in open court during the trial in the Philippines of an
attorney-at-law in San Francisco, California, who quoted the particular foreign
law sought to be established. 21 The ruling is peculiar to the facts. Petitioners
cannot invoke the Willamette ruling to secure affirmative relief since their so
called expert witness never appeared during the trial below and his deposition,
that was supposed to establish the existence of the foreign law, was
obtained ex-parte.
It is worth reiterating at this point that under the rules of private
international law, a foreign law must be properly pleaded and proved as a fact.
In the absence of pleading and proof, the laws of the foreign country or state
will be presumed to be the same as our local or domestic law. This is known as
processual presumption. 22 While the foreign law was properly pleaded in the
case at bar, it was, however, proven not in the manner provided by Section
24, Rule 132 of the Revised Rules of Court. The decision of the RTC, which
proceeds from a disregard of specific rules cannot be recognized.
Having settled the issue on the applicable Rule, we now resolve the
issue of whether or not petitioners are liable for the misdelivery of goods under
Philippine laws.
42
Under the New Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over goods, according to the circumstances of each
case. 23 Common carriers are responsible for loss, destruction or
deterioration of the goods unless the same is due to flood, storm, earthquake
or other natural disaster or calamity. 24 Extraordinary diligence is that
extreme care and caution which persons of unusual prudence and
circumspection use for securing or preserving their own property or
rights. 25 This expecting standard imposed on common carriers in contract of
carrier of goods is intended to tilt the scales in favor of the shipper who is at
the mercy of the common carrier once the goods have been lodged for the
shipment. 26 Hence, in case of loss of goods in transit, the common carrier is
presumed under the law to have been in fault or negligent. 27
While petitioners concede that, as a common carrier, they are bound to
observe extraordinary diligence in the care and custody of the goods in their
possession, they insist that they cannot be held liable for the loss of the
shipments, their extraordinary responsibility having ceased at the time the
goods were discharged into the custody of the customs arrastre operator,
who in turn took complete responsibility over the care, storage and delivery of
the cargoes. 28
In contrast, respondent, submits that the fact that the shipments were
not delivered to the consignee as stated in the bill of lading or to the party
designated or named by the consignee, constitutes misdelivery thereof, and
under the law it is presumed that the common carrier is at fault or negligent if
the goods they transported, as in this case, fell into the hands of persons who
have no right to receive them.
We sustain the position of the respondent.
Article 1736 and Article 1738 are the provisions in the New Civil
Code which define the period when the common carrier is required to exercise
diligence lasts, viz.:
Article 1736. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in
the possession of, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to
the consignee, or to the person who has a right to receive them,
without prejudice to the provisions of article 1738.
Article 1738. The extraordinary liability of the common carrier

continues to be operative even during the time the goods are stored
in a warehouse of the carrier at the place of destination, until the
consignee has been advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or otherwise
dispose of them.
Explicit is the rule under Article 1736 of the Civil Code that the
extraordinary responsibility of the common carrier begins from the time the
goods are delivered to the carrier. 29 This responsibility remains in full force
and effect even when they are temporarily unloaded or stored in transit, unless
the shipper or owner exercises the right of stoppage in transitu, and
terminates only after the lapse of a reasonable time for the acceptance, of the
goods by the consignee or such other person entitled to receive them. 30
It was further provided in the same statute that the carrier may be
relieved from the responsibility for loss or damage to the goods upon actual or
constructive delivery of the same by the carrier to the consignee or to the
person who has the right to receive them. 31 In sales, actual delivery has
43
been defined as the ceding of the corporeal possession by the seller, and the
actual apprehension of the corporeal possession by the buyer or by some
person authorized by him to receive the goods as his representative for the
purpose of custody or disposal. 32 By the same token, there is actual delivery
in contracts for the transport of goods when possession has been turned over
to the consignee or to his duly authorized agent and a reasonable time is given
him to remove the goods. 33
In this case, there is no dispute that the custody of the goods was never
turned over to the consignee or his agents but was lost into the hands of
unauthorized persons who secured possession thereof on the strength of
falsified documents. The loss or the misdelivery of the goods in the instant
case gave rise to the presumption that the common carrier is at fault or
negligent.
A common carrier is presumed to have been negligent if it fails to prove
that it exercised extraordinary vigilance over the goods it
transported. 34 When the goods shipped are either lost or arrived in damaged
condition, a presumption arises against the carrier of its failure to observe that
diligence, and there need not be an express finding of negligence to hold it
liable. 35 To overcome the presumption of negligence, the common carrier
must establish by adequate proof that it exercised extraordinary diligence over
the goods. 36 It must do more than merely show that some other party could
be responsible for the damage. 37
In the present case, petitioners failed to prove that they did exercise the
degree of diligence required by law over the goods they transported. Indeed,
aside from their persistent disavowal of liability by conveniently posing an
excuse that their extraordinary responsibility is terminated upon release of the
goods to the Panamanian Ports Authority, petitioners failed to adduce
sufficient evidence they exercised extraordinary care to prevent unauthorized
withdrawal of the shipments. Nothing in the New Civil Code, however,
suggests, even remotely, that the common carriers' responsibility over the
goods ceased upon delivery thereof to the custom authorities. To the mind of
this Court, the contract of carriage remains in full force and effect even after
the delivery of the goods to the port authorities; the only delivery that releases
it from their obligation to observe extraordinary care is the delivery to the
consignee or his agents. Even more telling of petitioners' continuing liability
for the goods transported to the fact that the original bills of lading up to this
time, remains in the possession of the notify party or consignee. Explicit on
this point is the provision of Article 353 of the Code of Commerce which
provides:
Article 353. The legal evidence of the contract between the
shipper and the carrier shall be the bills of lading, by the contents of
which the disputes which may arise regarding their execution and
performance shall be decided, no exceptions being admissible other
than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading
which the carrier has issued shall be returned to him, and by virtue of
the exchange of this title with the thing transported, the respective
obligations and actions shall be considered cancelled, unless in the
same act the claim which the parties may wish to reserve be reduced
to writing, with the exception of that provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return

the bill of lading subscribed by the carrier, because of its loss or of
any other cause, he must give the latter a receipt for the goods
44
delivered, this receipt producing the same effects as the return of the
bill of lading.
While surrender of the original bill of lading is not a condition precedent

for the common carrier to be discharged from its contractual obligation, there
must be, at the very least, an acknowledgement of the delivery by signing the
delivery receipt, if surrender of the original of the bill of lading is not
possible. 38 There was neither surrender of the original copies of the bills of
lading nor was there acknowledgment of the delivery in the present case. This
leads to the conclusion that the contract of carriage still subsists and
petitioners could be held liable for the breach thereof.
Petitioners could have offered evidence before the trial court to show
that they exercised the highest degree of care and caution even after the
goods was turned over to the custom authorities, by promptly notifying the
consignee of its arrival at the Port of Cristobal in order to afford them ample
opportunity to remove the cargoes from the port of discharge. We have
scoured the records and found that neither the consignee nor the notify party
was informed by the petitioners of the arrival of the goods, a crucial fact
indicative of petitioners' failure to observe extraordinary diligence in handling
the goods entrusted to their custody for transport. They could have presented
proof to show that they exercised extraordinary care but they chose in vain,
full reliance to their cause on applicability of Panamanian law to local
jurisdiction.
It is for this reason that we find petitioners liable for the misdelivery of
the goods. It is evident from the review of the records and by the evidence
adduced by the respondent that petitioners failed to rebut the prima
facie presumption of negligence. We find no compelling reason to depart
from the ruling of the Court of Appeals that under the contract of carriage,
petitioners are liable for the value of the misdelivered goods.
WHEREFORE, premises considered, the petition is hereby DENIED. The
assailed Resolution of the Court of Appeals is hereby AFFIRMED.
SO ORDERED. (Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks Enterprises,
Ltd., G.R. No. 156330, [November 19, 2014], 747 PHIL 170-187)
45

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THIRD DIVISION

[G.R. No. 175085. June 1, 2016.]

IN CIVIL CASE NO. 30276:

The pertinent facts are as follows: 5

Petitioners Eagleridge Development Corporation (EDC), and sureties Marcelo

By virtue of a Deed of Assignment 8 dated August 9, 2006, EIB transferred

EAGLERIDGE DEVELOPMENT CORPORATION with an

xxx xxx xxx

On February 22, 2012, petitioners filed a Motion for

In response, petitioners filed on March 26, 2012 their Reply. 12 Petitioners

When a credit or other incorporeal right in litigation is sold, the

As petitioners' alleged loan obligations may be reimbursed up to the extent of

Aggrieved, petitioners filed on April 25, 2012, their Motion for

SECTION 12. Notice and Manner of Transfer of Assets . —

(b) The transfer of NPAs from an FI to an SPV shall be subject to

Respondent Cameron filed its Comment/Opposition 16 dated April 30, 2012

The trial court denied petitioners' motion for reconsideration in its

Petitioners' subsequent motion for reconsideration 18 dated September 20,

Hence this instant petition.

On the other hand, contrary to petitioners' assertion, a reading of the CA

An appeal would not have adequately remedied the situation because, in

Having resolved the issue on the supposed technical defects, we go on to

Section 1, Rule 27 of the 1997 Rules of Court, states:

Section 1. Motion for production or inspection; order .— Upon

The provision on production and inspection of documents is one of the

Generally, the scope of discovery is to be liberally construed so as to

Although the grant of a motion for production of document is admittedly

The test to be applied by the trial judge in determining the relevancy of

According to the trial court, there is no need for the production of

We find the Petition impressed with merit.

As respondent Cameron's claim against the petitioners relies entirely on the

In this light, the relevance of the LSPA sought by petitioners is readily

Certainly, it is necessary for the petitioners to be informed of the actual

Indeed, the insistent refusal of respondent to produce the LSPA is

In light of the general philosophy of full discovery of relevant facts, the

Undoubtedly, the trial court had effectively placed petitioners at a great

It must be remembered that "litigation is essentially an abiding quest for

WHEREFORE,the instant petition is GRANTED.The August 29, 2012 and

||| (Eagleridge Development Corp. v. Cameron Granville 3 Asset Management,

SPECIAL THIRD DIVISION

(2) The production of the LSPA would violate the parol

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

In Producers Bank of the Philippines v. Court of Appeals , 40 this court

"The modes of discovery are accorded a broad and liberal

Furthermore, Section 19 of the Special Purpose Vehicle Act expressly

A credit or other incorporeal right shall be considered in

However, a party may present evidence to modify, explain or

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

(b) The failure of the written agreement to express the true

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or

The term "agreement" includes wills.

All told, respondent failed to allege sufficient reasons for us to reconsider

b. Improper use of deadend materials for neutral line

c. Lack of armor tape

d. Lack of clamp loop deadend materials

e. No locknuts on all bolts. EDATSI

II. For A-2 construction

a. Improper use of materials for pole top pin