DBP v.

National Merchandising
Facts:
- DBP filed an action in the CFI against National Merchandising (NAMERCO) and the Sycips to
recover a sum of money amounting to P500K
- The amount sought to be recovered was the unpaid balance due on the 4 promissory notes attached to
the complaint, executed jointly and severally by the defendants
- NAMERCO argues the following:
- That the alleged PN and mortgage contracts did not and do not express the true intent of the parties
thereto ; that the said contracts were merely simulated for the farmers named therein, thus they are
unenforceable
- That the contracts were void and unenforceable because at the time they were executed, the chattels
covered by such mortgage, NAMERCO was not the absolute owner thereof— they had already been
sold to the different farmers or persons
- That the amounts in the PN were in fact payments of DBP to NAMERCO for the benefit and to the
credit of the farmers named in the mortgage contracts
- By the foreclosure proceedings, DBP had renounced and waived whatever right it might have on the
PN or any balance due thereon
- The lower court, however, issued a writ of preliminary attachment against the tractors that were
apparently sold by NAMERCO to the farmers. The writ was, however, quashed upon a MR filed by
NAMERCO
- BACKGROUND FACTS:
- DBP was a bank whose purpose, at that time, was to help in the development of the Philippine
economy. NAMERCO was a domestic corporation engaged in the importation and sale of tractors
and other farm machineries and equipment, whose officers at that time were the Sycips
- John Sycip (president of NAMERCO) sent a letter to President Magsaysay that suggested to
establish Tractor Pools to serve farmers in preparing lands. The letter stated the ff.:
- “in order to enable us to realize this big project, we propose that the Government finances us,
through RFC(now DBP), and against which we shall pledge or secure these machineries until
the obligation is fully paid for”
- DBP now argues that the trial court erred in its determination of the nature of the contract, that the
understanding between the parties was that the tractors were to be sold by NAMERCO to the farmers,
that DBP would advance a loan of 50% of the cost thereof to the farmers, and that the farmers were the
ones to undertake the payment of the amortizations directly to the DBP
- Consequently, they argue that the trial court erred in following this interpretation, DBP is not
entitled to recover any amount from NAMERCO

Issue: Whether the interpretation of the lower court of the contract is correct— No

Held:
- The SC held that the letter written by John Sycip was important in interpreting the contracts subject of
this case. From the excerpt above, it was clear that NAMERCO was the party soliciting financial
assistance from DBP for itself in connection with the acquisition of tractors to enable it to realize its
big project
- NAMERCO’s proposal also provided that once the value of the tractors and implements had been
fully recovered and paid for, both DBP and to them, the ownership of the tractors will go to the
farmers.
- John Sycip also wrote a letter to the chairman of DBP to inquire into the possibility of securing
financial assistance from RFC in order to expand the sales and distribution of agricultural machinery
and implements on installment terms to farmers and small business men in rural areas
- Based on these circumstances, it is clear that NAMERCO expressly obligated itself to sell the tractor
and equipments, to assume payment of 50% of the cost of the tractor and equipment described in the
letter application, to take charge in collecting from the farmers to whom it would sell the tractors, that
NAMERCO assumed the obligation to pay 50% of the cost as well as the repayment of the loan, to

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 take charge in collecting from farmers the amounts corresponding to the amortization on the loan
together with the payment of 50% of the value of the machinery
- It was also found out that to induce DBP to grant said loan, NAMERCO further said in its application
that “we are ready to comply with any condition that DBP may require or impose for the successful
carrying out of this plan of financing”
- The trial court erred in interpreting the contract based solely on the testimony of John Sycip
- If there was any ambiguity in the court’s conclusion, the same may be attributed to the fact that it
failed to consider, that according to the documentary evidence on record, there were involved, in
connection with the proposal submitted by NAMERCO to Magsaysay, 2 separate contracts:
NAMERCO and DBP (lender and borrower) AND between NAMERCO and the farmers.
- While both contracts were interrelated, one did not depend upon the other; much less did they
make the farmers privy to the contract entered exclusively between DBP and NAMERCO and
its co-obligors
- THE CONTRACTS BETWEEN THE BANK, AS LENDER, AND NAMERCO AND ITS CO-
OBLIGORS, AS BORROWERS, ARE CLEAR AND NEED NOT BE CONSTRUED
- John also argues that upon being confronted with the DBP’s demand that the PN be paid, he went to
see Pres. Magsaysay; that after a telephone conversation with a high ranking official of the bank, who
Sycip though was the President, Magsaysay assured him that the chattel mortgages on the tractors, in
case of default, the DBP will go after the farmers
- UNTENABLE. This was a self serving statement as it was intended to free him and his co-obligors
from paying the amount of money that they had borrowed from DBP
- moreover, he could not have listened to what they were talking about over the phone
- The most serious objection against this testimony was that Sycip attributed something to a
dead person who could not rise from his grave to deny the imputation, thus also depriving the
adverse party of the right of confrontation
- To justify disregarding the legal effects and consequences of contracts formally and
voluntarily entered into, the evidence must be clear and convincing and more than merely
preponderant
- moreover, a principal stockholders of NAMERCO, it can be assumed that they were businessmen
of experience and intelligence.
- It must be assumed that they knew what they were doing— it would be difficult to believe that
they have signed 4 PNs representing a verbal assurance of Pres. Magsaysay

Capital Insurance v. Sadang

Facts:
- Capital Insurance subscribed to a bond in the amount of P42K in behalf of Mateo Pinto and in favor of
Macondray Farms (the Farm) to guarantee the payment of rentals of the fishpond and other obligations
of Mateo as contained in the lease agreement
- Mateo and other defendants, Sadang and Lachica, executed an indemnity agreement and a deed of real
estate mortgage over their properties to protect the interest of Capital Insurance
- Mateo failed to pay the rentals. The Farm recovered the said rentals from Capital as surety of Mateo.
Thereafter, Mateo et al failed to reimburse Capital
- Capital filed a civil case against Mateo et al for the collection of the said amounts it paid to the Farm
- As agreed upon in a civil case, the mortgage properties were to be sold, and this is without prejudice to
Capital filing a separate civil action if the amount was deficient
- After applying he proceeds of the foreclosure sale, there was still a deficiency. Capital contends that by
virtue of the indemnity agreement and REM, defendants are liable for the deficiency
- Defendants argue that their liability under the REM is limited to the first P20K that might be incurred
under the bond
- And that since Mateo actually paid the Farm in the amount of P19.7K, they are liable only to pay
P300
- Lower court ruled in favor of defendants
- The following stipulation is the subject of the dispute:

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 - “this mortgage is constituted to indemnify the mortgagee for any damage, cost, expense and charges
of whatever kind and nature that it may incur or sustain as a consequence of having acted as surety
on the bond referred to above, and or its substitution, modification, alteration, change and/or
renewals. That liability secured by the above properties is limited to the first P20K that might be
incurred under the bond issued in favor of the Farm”
- Capital’s interpretation: stressed the general statement of appellee’s liability as it appears in the
contract: to indemnify the mortgagee for any damage, etc and charges of whatever kind it might
sustain as a consequence of having acted as surety
- That Mateo paid the Farm the sum of 19.7K BEFORE he became in default, no liability
attached to Capital under it bond for the amount, and hence it should not be considered as part
of, or applied to, the first P20k that might be incurred under the bond which defined the limit
of defendants’ obligation

Issue: Whether the trial court erred in interpreting the contract— No

Held:
- The real intention of the parties was revealed by the testimony of Sadang concerning the circumstances
which led to the inclusion of the mentioned stipulation
- Sadang agreed to be an indemnitor only on the condition that he would answer “for the first P20K of
the total P42K bond” and that the moment the first 20K is paid the bonding company automatically
releases his responsibility to them
- IF THE MORTGAGE CONTRACT AS ACTUALLY DRAFTED SEEMS TO BE VAGUE,
THE DOUBT MUST BE RESOLVED AGAINST CAPITAL, WHOSE LAWYER PREPARED
THE DOCUMENT, AND IN ACCORDANCE WITH THE REAL INTENTION OF THE
PARTIES AS EXPLAINED BY DEFENDANTS

People v. Gabatin
Facts:
- Richard and Conrado Gabatin, together with Pepe Sebastian (dead), armed with sharp pointed
instruments and a bottle of beer, killed Danilo Oreña .
- Only Conrado was arraigned in this case, Ricardo remained at large.
- Conrado pleaded not guilty. Trial court found him guilty.
- In this case, Conrado is alleging that the trial court erred in finding that there was implied conspiracy
among him, Richard and Pepe
- The prosecution presented 3 witnesses (Domniador Oreña, Fernando Decilos and Ceferino Castro):
- Danilo attended a dance, where he was requested by the Kabataang Barangay to sell some social
boxes.
- While Danilo was going around the dance floor soliciting bids for the social boxes, Conrado threw
bottles of beer at Danilo causing him to hit the floor. Conrado shouted to his son, Richard and
brother in law Pepe to “take out his life”. Thereafter, they started stabbing Danilo and immediately
left the scene
- Conrado denied having taken part in the crime. He argued that he stayed in his house the whole night
and claimed that only Richard attended the dance, and that the 2 witnesses testified just because they
were relatives of the victim
- The defense also presented Johnny Lagutan who testified that he went to the dance and stayed there
for 3 hours before the incident but did not see Conrado. On cross-examination, the witness stated
that he was not able to see who participated in the commotion as he left immediately after it started

Issue: Whether Conrado conspired with the other defendants— Yes

Held:
- The evidence to support the existence of conspiracy need not be direct evidence
- It may be deduced from the mode and manner in which the offense was perpetrated

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 - The conditions attending its commission and the acts executed may be indicative of the common
design to accomplish a criminal purpose and objective
- If there is a chain of circumstances to that effect, then, conspiracy has been established
- In the case at bar, the acts of the accused, starting when Conrado threw the bottle and commanded the
other defendants to kill Danilo and continuing until Richard and Pepe delivered the fatal knife thrusts,
all show a common design to take the life of Danilo
- Conrado argues that there is a question of identity of the person who threw the bottle— there was an
inconsistency between Dominador’s affidavit (Pepe was the one who threw the bott) and his oral
testimony (Conrado threw)
- However, this inconsistency was clarified by Dominador’s testimony (he was not yet able to regain
his feelings from the shock)
- If there is an inconsistency between the affidavit and the testimony, the latter is to be given
more weight since affidavits, being taken ex-parte, are almost always incomplete and
inaccurate
- An affidavit taken ex parte is almost always incomplete and inaccurate, sometimes from
partial suggestions, sometimes from want of suggestions and inquiries without the aid of
which the witness may be unable to recall the connected collateral circumstances necessary
for the correction of the first suggestion of his memory and for his accurate recollection of
all that belongs to the subject
- Conrado also claims that there are inconsistencies in the testimonies of the prosecution witnesses—
Fernando, who was nearer at the scene, never stated that Conrado threw the bottle. Ceferino also made
no mention as to who threw the bottle
- SC held that witnesses possessed with different capacities for observation cannot be expected
to recall with accuracy or uniformity matters connected to the main overt act
- What is important is that one of the prosecution witnesses, Dominador, whose credibility
had not been successfully assailed by Conrado, had positively identified appellant as the
person who had thrown the bottle at the deceased, starting the rapid sequence of act which
culminated in the death of Danilo
- Other Issue: Presence of treachery
- Conrado triggered the attack against unarmed Danilo while the latter was peacefully engaged in
selling social boxes
- The slaying was qualified by treachery as the victim was not able to offer the least resistance to the
sudden assault and the manner of attack tended to avoid every risk to the assailants arising from any
defense which the deceased might have taken
- Other issue: No motive to kill
- Motive is immaterial where the identity of the criminal had been established
- Alibi cannot prevail over the positive identification of the accused by the prosecution
witnesses. For such defense to prosper, the appellant must show that it was physically
impossible for him to have been in the scene of the crime

People v. Bormeo
- While Carmelita Galzote was walking back from selling eggplants and tomatoes when her 2 1/2 year
old daighter, Raylin, who was running with her legs wide apart and crying went up to her.
- Carmelita noticed that Raylin was bleeding from her sex organ she asked the reason for such, and
Raylin just uttered “Tatay” referring the accused common-law husband, Victor
- The following day, Carmelita brought Raylin to a doctor and confirmed Raylin lost her virginity since
there were lacerations found in the hymen, but no external injuries were present
- The prosecution presented Carmelita and the doctor as witnesses. Although it considered as hearsay
Carmelita’s testimony with respect to Raylin’s answer why her private organ was bleeding, the trial
court nevertheless admitted the same
- Trial court and CA found Victor guilty
- Victor now argues the following:
- There was no eyewitness to the alleged rape and the testimony of Carmelita is not conclusive as to
the fact of carnal knowledge

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 - Prosecution failed to establish carnal knowledge and sexual intercourse ; such loss may be caused by
the insertion of another object which the doctor admitted as a possibility
- That the evidence relied upon by the trial court to convict him merely consisted of Carmelita’s
testimony regarding the declaration of the victim, which it considered as part of the res gestae (an
exception to the hearsay rule) and submits that the such testimony should not be given credence
because Raylin’s utterance of Tatay does not convey a categorical directness to the question asked
by Carmelita
- The declaration cannot be considered as part of the res gestae as the same cannot be categorized
within any of its 2 types: spontaneous exclamation and verbal acts
- Fails to meet the 3 requisites for admissibility of a declaration as res gestae:
- There must be a startling occurrence
- It was made before the declarant could contrive or devise
- It must refer to the occurrence in question and its immediately attending circumstances
Issue: Whether Victor is guilty of rape based from the evidence presented— No

Held:
- The prosecution relied solely on the testimonies of Carmelita and the doctor. The victim herself was
not called to the witness stand. Being only 2 and a half years old at that time, she was disqualified
by the RoC Sec. 21, Rule 130 ; by reason of her tender age, she was incapable of perceiving the
facts respecting her ordeal and intelligently making known such perceptions or narrating them
truthfully
- Carmelita was not an eyewitness to the alleged rape. She admitted that only one piece of evidence
she has against the accused is Raylin’s response to her question mentioned earlier
- Carmelita merely concluded that the bleeding resulted from carnal knowledge.
- There exists no evidence to show carnal knowledge in this case. The doctor did not categorically
state that the injury in the hymen could have been caused by a male organ; as a matter of fact, the
prosecutor did not even ask him if it is possible that it could be caused by such an organ— it was the
counsel of the accused that asked the doctor of the possibility of another object to cause the
laceration
- The trial court gave undue weight to the testimony to the word “Tatay” which Raylin uttered
in the answer to Carmelita’s question. Such declaration was hearsay since Raylin was not
presented as a witness and could not be cross-examined; the trial court considered her
statement as part of the res gestae hence deemed admissible being an exception to the hearsay
rule
- 3 elements:
- There must be a startling occurrence
- It was made before the declarant could contrive or devise
- It must refer to the occurrence in question and its immediately attending circumstances
- first 2 requirements can be conceded, the third however is doubtful
- Due to Raylin’s inability to communicate coherently, it is unclear if her utterance of the word tatay
has reference to sexual intercourse

Nombrado v. Hernandez
Facts:
- This is an admin case for disbarment instituted by Ernesto Nombrado against Juanito Hernadez, a
member of the Philippine Bar for malpractice on 2 counts:
- Having appeared as counsel for Crispin Nazareno in a civil case for forcible entry against Aresnio
Pansaon, his former client in a criminal case for serious physical injury wherein Eufemio Velasco,
son of Crispin, was the accused
- For having appeared as counsel for the accused and also for the complaining witness in a criminal
case
- Hernandez was engaged by Aresnio as his counsel in the prosecution of a criminal case for serious
physical injury. In that case, the accused was charged of having mauled Arsenio when the latter was

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 seen within the perimeter of the land being disputed between Arsenio and Eufemio’s father, Crispin
Nazareno. This case was dismissed due to failure of the complaining witness to appear in trial
- Years after this, Crispin engaged the services of Hernandez to file a complaint for forcible entry against
Arsenio involving the same parcel of land which was the root cause of the mauling incident. This case
won in the CFI
- In the disbarment case, Arsenio testified for petitioner, and said that perhaps he lost the forcible entry
case because Hernandez had become privy to valuable information about his claim of ownership of the
parcel of land in question in the court of the attorney-client relationship and must have used such
information against him, including a document obtained by respondent from a notary public
- Hernandez argued that:
- The only info he obtained from Arsenio was about the mauling incident, how it happened, and why
he sustained the injuries
- Did not ask Arsenio for any papers or documents in connection with the criminal case
- In handling the forcible entry case, he did not use against Arsenio any fact or information he
acquired during the attorney client relationship

Issue: Whether Hernandez violated the attorney client privilege— Yes; respondent was reprimanded

Held:
- Even if respondent did not use against his client any information or evidence acquired by him as
counsel, it cannot be denied that he did become privy to information regarding the ownership of the
parcel of land which was later litigate in the forcible entry case, for it was the dispute over the land that
triggered the mauling incident
- Communications between attorney and client are a complicated affair consisting of entangled
relevant and irrelevant secret and well known facts; the mere fact of their previous relationship
should have precluded him from appearing as counsel for the other side in the forcible entry case
- In the second count (involving a theft of large cattle case)
- The respondent’s act of preparing a motion to dismiss and stating in the course of the hearing
thereof that he was intervening in behalf of the complaining party did not constitute
simultaneous appearance in behalf of the contending parties since there was no longer any
conflict to speak of, the complainant having desisted from prosecuting the case against the
accused

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