RULE 17 – DISMISSAL OF ACTIONS (with Amendements)

G.R. No. 232189 March 7, 2018

ALEX RAUL B. BLAY, Petitioner

vs.
CYNTHIA B. BANA, Respondent

FACTS:

On September 17, 2014, petitioner Alex Blay filed before the RTC a Petition
for Declaration of Nullity of Marriage, seeking that his marriage to
respondent Cynthia Bana be declared null and void on account of his
psychological incapacity pursuant to Article 36 of the Family Code.7
Subsequently, respondent filed her Answer with Compulsory Counterclaim
dated December 5, 2014.

However, petitioner later lost interest over the case, and thus, filed a
Motion to Withdraw his petition. In her comment/opposition thereto,
respondent invoked Section 2, Rule 17 of the Rules of Court
(alternatively, Section 2, Rule 17), and prayed that her counterclaims be
declared as remaining for the court's independent adjudication. In turn,
petitioner filed his reply, averring that respondent's counterclaims are barred
from being prosecuted in the same action due to her failure to file a
manifestation therefor within fifteen (15) days from notice of the Motion
to Withdraw, which - according to petitioner - was required under the same
Rules of Court provision. In particular, petitioner alleged that respondent
filed the required manifestation only on March 30, 2015. However,
respondent's counsel received a copy of petitioner's Motion to Withdraw on
March 11, 2015; hence, respondent had only until March 26, 2015 to
manifest before the trial court her desire to prosecute her counterclaims in
the same action.

PROCEDURAL HISTORY:

In an Order dated May 29, 2015, the RTC granted petitioner’s Motion to

Withdraw petition. Further, it declared respondent's counterclaim "as
remaining for independent adjudication" and as such, gave petitioner
fifteen (15) days to file his answer thereto.

Dissatisfied, petitioner filed a motion for reconsideration, which was denied

in an Order dated March 3, 2016. Thus, he elevated the matter to the CA via
a petition for certiorari,  praying that the RTC Orders be set aside to the
extent that they allowed the counterclaim to remain for independent
adjudication before the same trial court.

In a Decision dated February 23, 2017, the CA dismissed the petition for lack
of merit. It found no grave abuse of discretion on the part of the RTC,
holding that under Section 2, Rule 17 of the Rules of Court, if a counterclaim
has been filed by the defendant before the service upon him of the
petitioner’s motion for dismissal, the dismissal shall be limited to the
complaint.

ISSUE:
Whether or not the CA erred in upholding the RTC Orders declaring
respondent's counterclaim for independent adjudication before the same trial
court

RULES:

Section 2, Rule 17 of the Rules of Court provides for the procedure relative
to counterclaims in the event that a complaint is dismissed by the court at
the plaintiffs instance, viz. :

Section 2. Dismissal upon motion of plaintiff. - Except as

provided in the preceding section, a complaint shall not be dismissed
at the plaintiffs instance save upon approval of the court and upon
such terms and conditions as the court deems proper. If a
counterclaim has been pleaded by a defendant prior to the
service upon him of the plaintiff's motion for dismissal, the
dismissal shall be limited to the complaint. The dismissal shall
be without prejudice to the right of the defendant to prosecute
his counterclaim in a separate action unless within fifteen (15)
days from notice of the motion he manifests his preference to
have his counterclaim resolved in the same action. Unless
otherwise specified in the order, a dismissal under this paragraph shall
be without prejudice. A class suit shall not be dismissed or
compromised without the approval of the court.

It is hornbook doctrine in statutory construction that "[t]he whole and every

part of the statute must be considered in fixing the meaning of any of its
parts and in order to produce a harmonious whole. A statute must be so
construed as to harmonize and give effect to all its provisions whenever
possible. In short, every meaning to be given to each word or phrase must
be ascertained from the context of the body of the statute since a word or
phrase in a statute is always used in association with other words or phrases
and its meaning may be modified or restricted by the latter."

APPLICATION:

As per the second sentence of the provision, if a counterclaim has been

pleaded by the defendant prior to the service upon him of the plaintiff's
motion for the dismissal - as in this case - the rule is that the dismissal shall
be limited to the complaint. Commentaries on the subject elucidate that
"[i]nstead of an ‘action’ shall not be dismissed, the present rule uses the
term ‘complaint’. A dismissal of an action is different from a mere dismissal
of the complaint. For this reason, since only the complaint and not the action
is dismissed, the defendant inspite of said dismissal may still prosecute his
counterclaim in the same acton."

However, as stated in the third sentence of Section 2, Rule 17, if the

defendant desires to prosecute his counterclaim in the same action, he is
required to file a manifestation within fifteen (15) days from notice of the
motion. Otherwise, his counterclaim may be prosecuted in a separate action.
As explained by renowned remedial law expert, former Associate Justice
Florenz D. Regalado, in his treatise on the matter:
Under this revised section, where the plaintiff moves for the dismissal of the
complaint to which a counterclaim has been interpose, the dismissal shall be
limited to the complaint. Such dismissal shall be without prejudice to the
right of the defendant to either prosecute his counterclaim in a separate
action or to have the same resolved in the same action. Should he opt for
the first alternative, the court should render the corresponding order
granting and reserving his right to prosecute his claim in a separate
complaint. Should he choose to have his counterclaim disposed of in the
same action wherein the complaint had been dismissed, he must manifest
within 15 days from notice to him of plaintiff's motion to dismiss. x x x27

In this case, the CA confined the application of Section 2, Rule 17 to that

portion of its second sentence which states that the "dismissal shall be
limited to the complaint." Evidently, the CA ignored the same provision's
third sentence, which provides for the alternatives available to the defendant
who interposes a counterclaim prior to the service upon him of the plaintiff's
motion for dismissal. As may be clearly inferred therefrom, should the
defendant desire to prosecute his counterclaim, he is required to manifest
his preference therefor within fifteen (15) days from notice of the plaintiff's
motion to dismiss. Failing in which, the counterclaim may be prosecuted only
in a separate action.

The rationale behind this rule is not difficult to discern: the passing of the
fifteen (15)-day period triggers the finality of the court's dismissal of the
complaint and hence, bars the conduct of further proceedings, i.e., the
prosecution of respondent's counterclaim, in the same action. Thus, in order
to obviate this finality, the defendant is required to file the required
manifestation within the aforesaid period; otherwise, the counterclaim may
be prosecuted only in a separate action.

By narrowly reading Section 2, Rule 17 of the Rules of Court, the CA clearly

violated the foregoing principle and in so doing, erroneously sustained the
assailed RTC Orders declaring respondent’s counterclaim "as remaining for
independent adjudication" despite the latter's failure to file the required
manifestation within the prescribed fifteen (15)-day period. As petitioner
aptly points out:

[I]f the intention of the framers of the Rules of Court is a blanket

dismissal of the complaint ALONE if a counterclaim has been pleaded
prior to the service of the notice of dismissal then there is NO EVIDENT
PURPOSE for the third (3rd) sentence of Sec. 2, Rule 17.

xxxx

[I]t is clearly an ABSURD conclusion if the said provision

will direct the defendant to manifest within fifteen (15) days
from receipt of the notice of dismissal his preference to
prosecute his counterclaim in the SAME ACTION when the
same AUTOMATICALLY REMAINS. If the automatic survival of
the counterclaim and the death of the complaint as being ruled
by the Court of Appeals in its questioned Decision is indeed true,
then the third sentence should have required defendant to
manifest that he will prosecute his counterclaim in
 a SEPARATE [and not - as the provision reads - in the
same] ACTION. (Emphases and underscoring in the original)

CONLCUSION:

Erroneous RTC Orders, must be reversed. As it should be, the RTC should
have only granted petitioner's Motion to Withdraw and hence, dismissed his
Petition for Declaration of Nullity of Marriage, without prejudice to, among
others, the prosecution of respondent's counterclaim in a separate action.

Rule 18 – PRE-TRIAL (with Amendments)

[ G.R. No. 203287, April 05, 2017 ]
RENATO S.D. DOMINGO ON HIS OWN BEHALF AND ON BEHALF OF HIS CO-
HEIRS OF THE LATE SPOUSES FELICIDAD DE DOMINGO AND MACARIO C.
DOMINGO, PETITIONERS, VS. SPOUSES ENGRACIA D. SINGSON AND
MANUEL F. SINGSON, RESPONDENTS.
[G.R. No. 207936]
HEIRS OF SPOUSES FELICIDAD S.D. DOMINGO AND MACARIO DOMINGO
NAMELY, CONSOLACION D. ROMERO, RAFAEL S.D. DOMINGO, RAMON S.D.
DOMINGO, JOSEFINA D. BORJA, ROSARIO S.D. DOMINGO, AND RENATO
RAMIRO S.D. DOMINGO, PETITIONERS, VS. ENGRACIA D. SINGSON,
ESTELITA I. CABALLES, AND THE REGISTER OF DEEDS, SAN JUAN CITY,
METRO MANILA, RESPONDENTS.

FACTS:
The spouses Macario C. Domingo (Macario) and Felicidad S.D. Domingo
(Felicidad) (Spouses Domingo) are the parents of respondent Engracia D.
Singson (Engracia) and petitioners Renato S.D. Domingo (Renato) and his
co-heirs whom he represents herein, namely: Consolacion D. Romero
(Consolacion), Josefina D. Borja, and Rafael, Ramon, and Rosario, all
surnamed Domingo (collectively, the petitioners).[5]
During their lifetime, the Spouses Domingo owned a parcel of land, situated
in F. Sevilla Street, San Juan, Metro Manila, covered by Transfer Certificate
of Title (TC1) No. 32600 (23937) 845-R,[6] and the house built thereon
(subject property). Macario died on February 22, 1981, while Felicidad died
on September 14, 1997.[7]
It appears that on September 26, 2006, Engracia filed with the Metropolitan
Trial Court of Manila a complaint for ejectment/unlawful detainer, docketed
as Civil Case No. 9534, against Consolacion, Rosario, Rafael, and Ramon.
Engracia claimed that she is the absolute owner of the subject property,
having bought the same from the Spouses Domingo as evidenced by an
Absolute Deed of Sale dated June 6, 2006. She likewise averred that TCT
No. 32600 (23937) 845-R was already cancelled and TCT No. 12575[10]
covering the subject property was already issued under her name. The
petitioners only learned of the supposed sale of the subject property when
they received the summons and a copy of Engracia's complaint in Civil Case
No. 9534.
Consequently, on July 31, 2006, the petitioners filed a complaint with the
Regional Trial Court (RTC) of Pasig City, which sought the nullity of the sale.
They alleged that the Absolute Deed of Sale dated June 6, 2006, upon which
Engracia bases her ownership of the subject property, was a nullity since the
signatures of their parents appearing thereon as the supposed vendors were
forged. The case was docketed as Civil Case No. 70898 and was raffled to
Branch 160 of the RTC.
Meanwhile, on February 28, 2007, Renato, Consolacion, and Ramon filed a
Joint Affidavit Complaint with the Office of the City Prosecutor (OCP) of Pasig
City, claiming that Engracia falsified the signatures of their parents in the
Absolute Deed of Sale and, thus, charging her with the crimes of falsification
of public document, estafa, and use of falsified documents. Consequently, on
May 6, 2008, the OCP filed an Information with the RTC, charging Spouses
Engracia and Manuel Singson (Spouses Singson) with the crime of estafa
through falsification of public documents. The case was docketed as Criminal
Case No. 137867 and was raffled to Branch 264 of the RTC.
On July 11, 2008, the Spouses Singson filed a Motion to Suspend
Proceedings Due to Prejudicial Question with the RTC in Criminal Case No.
137867. They alleged that the validity and genuineness of the Absolute Deed
of Sale, which is the subject of Civil Case No. 70898 then still pending with
the RTC Branch 160, are determinative of their guilt of the crime charged.
[16] Accordingly, they prayed that the proceedings in Criminal Case No.
137867 be suspended pursuant to Section 6 of Rule 111 of the Rules of
Court.[17] The private prosecutor filed an opposition to the motion, stating
that Criminal Case No. 137867 can proceed independently from Civil Case
No. 70898 pursuant to Article 33 of the Civil Code, in relation to Section 3 of
Rule 111 of the Rules of Court.
PROCEDURAL HISTORY:
On February 12, 2010, the RTC Branch 264, issued an Order in Criminal
Case No. 137867, which granted the motion to suspend the proceedings filed
by the Spouses Singson. The private prosecutor sought a reconsideration of
the Order dated February 12, 2010, but it was denied by the RTC in its
Order dated June 7, 2011.
Unperturbed, the petitioners filed a petition for certiorari with the CA,
docketed as CA-G.R. SP No. 122054, claiming that the RTC gravely abused
its discretion when it directed the suspension of the proceedings in Criminal
Case No. 137867 on the ground of prejudicial question. They pointed out
that the bases of their respective claims in both Civil Case No. 70898 and
Criminal Case No. 137867 are the forged signatures of their deceased
parents. They claimed that where both a civil and criminal case arising from
the same facts are filed in court, the criminal case takes precedence.
On August 31, 2012, the CA rendered a Decision in CA-G.R. SP No. 122054,
which denied the petition for certiorari. The CA opined that all the elements
of a prejudicial question under Sections 6 and 7 of Rule 111 of the Rules of
Court are present; hence, the RTC did not abuse its discretion when it
directed the suspension of Criminal Case No. 137867.[26]
Meanwhile, Civil Case No. 70898 was initially set for pre-trial conference on
February 7, 2008. However, upon motion of Engracia, the pre-trial was reset
on March 6, 2008. During the pre-trial conference on March 6, 2008,
Engracia moved that Rafael be substituted by his heirs since he had already
died on October 15, 2007.[30] Thus, the RTC issued an Order[31] dated
March 6, 2008 directing the petitioners to comment on Engracia's motion to
substitute Rafael as plaintiff in the case below. On April 8, 2008, Engracia
filed a Motion to Dismiss the case on the ground that the petitioners failed to
substitute the heirs of Rafael as plaintiff in the case. The motion to dismiss
was consequently denied by the RTC in its Order dated November 12, 2008
for lack of merit.
The continuation of the pre-trial conference, which has been sidelined
pending the resolution of Engracia's motion to dismiss, was then set on
March 19, 2009. On March 12, 2009, Engracia's counsel, with her
conformity, withdrew his appearance as counsel in the case. During the pre-
trial conference on March 19, 2009, the petitioners and their counsel
appeared. Engracia was likewise present although without her new counsel.
Accordingly, pre-trial was again reset on June 1, 2009 to afford Engracia
time to secure the services of a new counsel.
Thereafter, Atty. Tristram B. Zoleta entered his appearance for Engracia and
moved that the pre-trial conference on June 1, 2009 be reset on July 13 or
20, 2009. However, Judge Amelia A. Fabros (Judge Fabros) was reassigned
to Muntinlupa City and Judge Myrna V. Lim-Verano (Judge Lim-Verano) was
named to replace Judge Fabros as Presiding Judge of Branch 160. On June
17, 2010, Judge Lim-Verano, having previously presided over Criminal Case
No. 137867, recused herself from adjudicating Civil Case No. 70898. Civil
Case No. 70898 was subsequently raffled to Branch 264 of the RTC then
presided by Judge Leoncio M. Janolo, Jr. (Judge Janolo). On July 15, 2010,
Judge Janolo issued an Order,setting the pre-trial of the case on August 25,
2010.
On August 12, 2010, the petitioners' counsel moved to reset the pre-trial on
September 15, 2010 due to previously scheduled hearings in the trial courts
of Malolos City and Parañaque City.Accordingly, the pre-trial was reset on
October 6, 2010. On October 6, 2010, the respective counsels of the parties
jointly agreed to reset the pre-trial on December 9, 2010. However, the pre-
trial scheduled on December 9, 2010 was again reset on January 24, 2011.
On December 27, 2010, the petitioners filed a motion, which sought to
exclude Rafael as being represented by Renato. They averred that they were
unable to effect a substitution of the heirs of Rafael as plaintiffs in the case
since they could not locate them.
On January 27, 2011, the petitioners' counsel failed to appear and the pre-
trial was reset on March 24, 2011. In the morning of March 23, 2011, the
petitioners' counsel informed Renato that he would not be able to attend the
pre-trial conference since he was indisposed and asked the latter to go to
the RTC and request for a resetting of the hearing. When the case was
called, the petitioners and their counsel failed to appear, which thus
prompted Engracia's counsel to move for the dismissal of the complaint and
be given time to file the proper pleading. Thus, the RTC gave Engracia's
counsel 10 days within which to file a motion to dismiss. The continuation of
the pre-trial was reset on May 26, 2011.
On April 5, 2011, Engracia filed a motion to dismiss in compliance with the
RTC's directive. During the pre-trial on May 26, 2011, the RTC gave the
parties' respective counsels, upon their request, five days to file a comment
on the motion to dismiss and a reply to such comment, after which time the
motion to dismiss is deemed submitted for resolution.
On July 29, 2011, the RTC Branch 264 issued an Order in Civil Case No.
70898, dismissing the petitioners' complaint due to their and their
counsel's repeated failure to appear during the scheduled pre-trial
hearing dates.
The petitioners then filed an appeal with the CA, docketed as CA-G.R. CV No.
98026, insisting that the RTC erred in dismissing their complaint on a mere
technicality. They also claimed that Engracia's motion to dismiss is but a
mere scrap of paper since the same did not comply with Sections 4, 5 and 6
of Rule 15 of the Rules of Court. The CA, in its Decision dated June 28, 2013
in CA-G.R. CV No. 98026, affirmed the RTC's dismissal of the petitioners'
complaint.

ISSUE/s:
1. whether the proceedings in Criminal Case No. 137867 were properly
suspended on the ground of prejudicial question;
2. whether the dismissal of the petitioners' complaint in Civil Case No.
70898 due to failure to prosecute was proper.
RULES:
1st ISSUE
A prejudicial question is understood in law to be that which arises in a
case the resolution of which is a logical antecedent of the issue involved in
said case and the cognizance of which pertains to another tribunal. The
doctrine of prejudicial question comes into play generally in a situation
where civil and criminal actions are pending and the issues involved
in both cases are similar or so closely related that an issue must be
pre-emptively resolved in the civil case before the criminal action can
proceed. The rationale behind the principle of prejudicial question is to avoid
two conflicting decisions.
For a civil action to be considered prejudicial to a criminal case as to cause
the suspension of the criminal proceedings until the final resolution of the
civil case, the following requisites must be present: (1) the civil case
involves facts intimately related to those upon which the criminal
prosecution would be based; (2) in the resolution of the issue or
issues raised in the civil action, the guilt or innocence of the accused
would necessarily be determined; and (3) jurisdiction to try said
question must be lodged in another tribunal.

2nd ISSUE
Under the Rules of Court, the parties and their counsel are mandated to
appear at the pre-trial. Pre-trial cannot be taken for granted. It is not a mere
technicality in court proceedings for it serves a vital objective: the
simplification, abbreviation and expedition of the trial, if not indeed its
dispensation. Thus, the failure of a party to appear at the pre-trial has
adverse consequences. If the absent party is the plaintiff, then his case
shall be dismissed, which shall be with prejudice, unless otherwise
ordered by the court. If it is the defendant who fails to appear, then the
plaintiff is allowed to present his evidence ex parte and the court shall
render judgment on the basis thereof.
It should be stressed that procedural rules are not to be disregarded or
dismissed simply because their non-observance may have resulted in
prejudice to a party's substantive rights. Like all rules they are to be
followed, except only when for the most persuasive of reasons they may be
relaxed to relieve a litigant of an injustice not commensurate with the
degree of his thoughtlessness in not complying with the procedure
prescribed.
APPLICATION:
1st ISSUE
Based on the issues raised in both Civil Case No. 70898 and Criminal Case
No. 137867 against the Spouses Singson, and in the light of the foregoing
concepts of a prejudicial question, there indeed appears to be a prejudicial
question in the case at bar. The defense of the Spouses Singson in the civil
case for annulment of sale is that Engracia bought the subject property from
her parents prior to their demise and that their signatures appearing on the
Absolute Deed of Sale are true and genuine. Their allegation in the civil case
is based on the very same facts, which would be necessarily determinative
of their guilt or Innocence as accused in the criminal case.
If the signatures of the Spouses Domingo in the Absolute Deed of Sale are
genuine, then there would be no falsification and the Spouses Singson would
be innocent of the offense charged. Otherwise stated, a conviction on
Criminal Case No. 137867, should it be allowed to proceed ahead, would be
a gross injustice and would have to be set aside if it were finally decided in
Civil Case No. 70898 that indeed the signatures of the Spouses Domingo
were authentic.
The petitioners' reliance on Section 3 of Rule 111 of the Rules of Court, in
relation to Article 33 of the Civil Code, is misplaced. Section 3 provides that
a civil action for damages in cases provided under Articles 32, 33, 34 and
2176 of the Civil Code, which may also constitute criminal offenses, may
proceed independently of the criminal action. In instances where an
independent civil action is permitted, the result of the criminal action,
whether of acquittal or conviction, is entirely irrelevant to the civil action.
The concept of independent civil actions finds no application in this case.
Clearly, Civil Case No. 70898 is very much relevant to the proceedings in
Criminal Case No. 137867. To stress, the main issue raised in Civil Case No.
70898, i.e., the genuineness of the signature of the Spouses Domingo
appearing in the Absolute Deed of Sale, is intimately related to the charge of
estafa through falsification of public document in Criminal Case No. 137867;
the resolution of the main issue in Civil Case No. 70898 would necessarily be
determinative of the guilt or innocence of the Spouses Singson.
Accordingly, the RTC Branch 264 correctly suspended the proceedings in
Criminal Case No. 137867 on the ground of prejudicial question since, at the
time the proceedings in the criminal case were suspended, Civil Case No.
70898 was still pending.
2nd ISSUE
Civil Case No. 70898 was initially set for pre-trial on February 7, 2008. In
July 2010, after more than two years, Civil Case No. 70898, which was still
in the pre-trial stage, was re-raffled to Branch 264 presided by Judge
Janolo; the latter immediately scheduled the pre-trial on August 25, 2010.
What transpired thereafter is a series of resetting of the hearing due to the
failure of the petitioners and/or their counsel to appear during the scheduled
pre-trial dates. During the scheduled pre-trial on March 23, 2011, the
petitioners and their counsel again failed to appear without informing the
RTC of the reason for their non-appearance. Clearly, the petitioners' wanton
disregard of scheduled pre-trial indeed justified the dismissal of their
complaint.
It should be stressed that procedural rules are not to be disregarded or
dismissed simply because their non-observance may have resulted in
prejudice to a party's substantive rights. Like all rules they are to be
followed, except only when for the most persuasive of reasons they may be
relaxed to relieve a litigant of an injustice not commensurate with the
degree of his thoughtlessness in not complying with the procedure
prescribed.
The petitioners have not shown any persuasive reason, which would justify a
relaxation of the rules on pre-trial. That the petitioners' counsel was
supposedly indisposed during the pre-trial on March 23, 2011 does not
excuse the petitioners themselves from attending the pre-trial. Moreover,
the petitioners have failed to advance any valid justification for their and
their counsel's failure to attend the previously scheduled pre-trial hearings.
Accordingly, the trial court could not be faulted for dismissing the complaint
under Section 5 of Rule 18 of the Rules of Court.
The petitioners' claim that the motion to dismiss filed by Engracia with the
RTC is a mere scrap of paper for her failure to comply with the mandatory
provisions of Sections 4, 5 and 6 of Rule 15 of the Rules of Court is without
merit. Said sections provide that:
Sec. 4. Hearing of motion. Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion
shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing
thereof shall be served in such a manner as to ensure its receipt by the
other party at least three (3) days before the date of hearing, unless the
court for good cause sets the hearing on shorter notice.
Sec. 5. Notice of hearing. The notice of hearing shall be addressed to all
parties concerned, and shall specify the time and date of the hearing which
must not be later than ten (10) days after the filing of the motion.
Sec. 6. Proof of service necessary. No written motion set for hearing shall be
acted upon by the court without proof of service thereof.
That the notice of hearing is addressed to the petitioners' counsel and not to
the petitioners directly is immaterial and would not be a cause to consider
the same defective. The requirement under Section 4 of Rule 15 of the Rules
of Court that the notice be addressed to the opposing party is merely
directory; what matters is that adverse party had sufficient notice of
the hearing of the motion. Further, even if the notice of hearing in the
motion to dismiss failed to state the exact date of hearing, the defect was
cured when the RTC considered the same in the hearing that was held on
May 26, 2011 and by the fact that the petitioners, through their counsel,
were notified of the existence of the said motion.
Anent the supposed lack of proof of service of the motion to dismiss upon
the petitioners, suffice it to state that a copy of the said motion was served
upon and received by the petitioners' counsel on April 15, 2011. The
petitioners were duly given the full opportunity to be heard and to argue
their case when the RTC required them to file a comment to the motion to
dismiss during the hearing on May 26, 2011, which they did on May 30,
2011. "What the law really eschews is not the lack of previous notice of
hearing but the lack of opportunity to be heard"
Considering, however, that the complaint in Civil Case No. 70898 had
already been dismissed with prejudice on account of the petitioners' and
their counsel's persistent failure to appear during the scheduled pre-trial
hearings, the proceedings in Criminal Case No. 137867 should now proceed.
There is no longer any prejudicial question in Criminal Case No. 137867
since the complaint in Civil Case No. 70898 had been dismissed without
definitely resolving the question of whether the signatures of the Spouses
Domingo in the Absolute Deed of Sale are genuine. Thus, it is up for the RTC
Branch 264, in Criminal Case No. 137867, to resolve the said issue.
CONCLUSION:
CA decision is affirmed and RTC Br 264 is directed to proceed with the
criminal case
RULE 19 – INTERVENTION (with Amendments)
G.R. No. 157583 September 10, 2014
FRUMENCIO E. PULGAR, Petitioner,
vs.
THE REGIONAL TRIAL COURT OF MAUBAN, QUEZON, BRANCH 64,
QUEZON POWER (PHILIPPINES) LIMITED, CO., PROVINCE OF QUEZON, and
DEPARTMENT OF FINANCE, Respondents.
FACTS:
Sometime in 1999, the Municipal Assessor of Mauban, Quezon issued 34 tax
declarations on the buildings and machinery comprising the Mauban Plant –
a coal-fired electric generation facility owned and operated by respondent
Quezon Power (Philippines) Limited, Co. (QPL) – and thereby assessed it
with a total market value of 29,626,578,291.00 and, hence, 500 Million,
more or less, in realty taxes per annum. The Municipal Assessor maintained
that the Mauban Plant was completed and already operational in October
1999.Subsequently, or on May 18, 2000, QPL filed with the Municipal
Assessor a sworn statement declaring that the said properties had a value of
only ₱15,055,951,378.00. 15 billion
On March 16 and 23, 2001, QPL tendered to the Municipal Assessor the
amount of ₱60,223,805.51 (60.2M)as first quarter installment of the realty
taxes on the plant, which the latter rejected. Hence, QPL filed a Complaint
for Consignation and Damages before the RTC against the Province of
Quezon, the Municipal Assessor and Municipal Treasurer of Mauban, Quezon,
and the Provincial Assessor and Provincial Treasurer of Quezon (defendants),
docketed as Civil Case No. 0587-M, depositing to the RTC the above-stated
amount in payment of the first quarter realty tax for 2001. Albeit classified
as a consignation and damages case, QPL essentially protested the Municipal
Assessor’s assessment for, among others, its lack of legal authority to make
such assessment and its supposed non-compliance with the prescribed
valuation process.
For their part, defendants averred, among others, that QPL was estopped
from denying the authority of the Municipal Assessor since it previously paid
realty taxes for its properties for the year 2001 based on the assessment of
the latter.
On January 28, 2002, Pulgar filed a Motion for Leave to Admit Answer-in-
Intervention and Answer-in-Intervention (motion for intervention), alleging,
among others, that as a resident and taxpayer of Quezon Province, he has
an interest in the aggressive collection of realty taxes against QPL. By way of
counterclaim, he prayed for the award of moral damages and attorney’s
fees, anchoring the same on the "mindless disturbance of the forest and
marine environment whereon the power plant of [QPL] stands."
Pulgar’s motion was initially granted and his Answer-in Intervention
was admitted.
Sometime in June 2002, QPL and the Province of Quezon agreed to submit
their dispute before the Secretary of Finance, which resulted in a Resolution
dated August 30, 2002 where the basic issues between the principal parties
were passed upon.
PROCEDURAL HISTORY:
In an Order dated December 2, 2002, the RTC dismissed Civil Case No.
0587-M for lack of jurisdiction in the absence of a payment of the tax
assessed under protest, which requirement QPL attempted to skirt by
alleging in its complaint that it is the very authority of the Municipal Assessor
to impose the assessment and the treasurer to collect the tax that it was
questioning. Declaring that QPL’s complaint essentially challenged the
amount of the taxes assessed, the RTC ruled that it is the Local Board of
Assessment Appeals that had jurisdiction over the complaint.
Consequently, it also dismissed Pulgar’s motion for intervention since with
the dismissal of the main case, the same had no leg to stand on.
Aggrieved, Pulgar filed a motion for reconsideration which was, however,
denied in an Order18 dated March 13, 2003, hence, this petition.
ISSUE:
Whether or not the RTC erred in dismissing Pulgar’s motion for intervention
as a consequence of the dismissal of the main case. While acknowledging
the RTC’s lack of jurisdiction, Pulgar nonetheless prays that the Court pass
upon the correctness of the Municipal Assessor’s assessment of QPL’s realty
taxes, among others.
RULES/APPLICATION:
Jurisdiction over an intervention is governed by jurisdiction over the main
action. Accordingly, an intervention presupposes the pendency of a suit in a
court of competent jurisdiction.
In this case, Pulgar does not contest the RTC's dismissal of Civil Case No.
0587-M for lack of jurisdiction, but oddly maintains his intervention by
asking in this appeal a review of the correctness of the subject realty tax
assessment. This recourse, the Court, however, finds to be improper since
the RTC's lack of jurisdiction over the main case necessarily resulted in the
dismissal of his intervention. In other words, the cessatiori of the principal
litigation - on jurisdictional grounds at that - means that Pulgar had, as a
matter of course, lost his right to intervene. Verily, it must be borne in mind
that:
[I]ntervention is never an independent action, but is ancillary and
supplemental to the existing litigation. Its purpose is not to obstruct nor x
x x unnecessarily delay the placid operation of the machinery of trial, but
merely to afford one not an original party, yet having a certain right or
interest in the pending case, the opportunity to appear and be joined so he
could assert or protect such right or interests.
Otherwise stated, the right of an intervenor should only be in aid of
the right of the original party. Where the right of the latter has ceased to
exist, there is nothing to aid or fight for; hence, the right of intervention
ceases.
Petition is DENIED.
RULE 21 – Subpoena (with Amendments)
A.M. No. 981-CFI July 29, 1977
GIL GEÑORGA, complainant,
vs.
HON. PEDRO C. QUITAIN, District Judge of the Court of First
Instance of Masbate, Branch II, Masbate, Masbate, respondent.

Facts:
It was the issuance of a warrant of arrest against complainant Dr. Gil
Geñorga the former municipal health officer of Claveria, Masbate, thereafter
assigned to Tayasan Negros Oriental, for his failure to appear as government
medico-legal witness in a pending murder case before respondent Judge
Pedro C. Quitain of the Court of First Instance of Masbate, that started the
train of events leading to this administrative complaint for grave abuse of
authority and conduct unbecoming a judge. The excuse offered for such non-
appearance was the fact that he had previously sent a telegram to
respondent Judge seeking information as to whether he would be
reimbursed for the traveling expenses to be incurred and that he had
received no reply. As a result thereof, he "terribly suffered from the
humiliation of having been arrested and confined in the headquarters of the
Philippine Constabulary as if [he] were a criminal, from May 9, 1975 to May
14, 1975 when, upon [his] repeated pleas that [he] was not going to escape,
the Provincial Commander o f Negros Oriental, allowed [him] to proceed to
Masbate alone at [his] own expense." 1 That he did, and he was able to
testify.
Respondent Judge then dictated in open court the order for his release.
Thereafter, in the chambers of the latter, when he sought to explain why he
f to appear, he complained that he was ignored and treated with
discourtesy. That was the basis for his charge of conduct unbecoming a
district judge. Respondent Judge was required to comment on such
complaint. He submitted an eight-page explanation, the relevant portion of
which follows: "Clearly, this charge stemmed from the order of arrest issued
by the undersigned against the complainant for his failure to appear in Court
on March 5, 1975, in spite of a subpoena duly served upon him as a
government witness in the case hereinabove mentioned. True, the
complainant addressed a telegram to the undersigned, in exact words, to
wit: "[Advice undersigned agrave (sic) party Masbate Masbate province
shoulder traveling expenses per them appear government witness Azanares
case March 5 ... Dr. Geñorga]." True, the undersigned did not make any
reply because it was the honest conviction of the undersigned that he is not
duty bound to make any inquiry for the complainant, much less advice the
complainant in any manner, not to mention the fact that the telegram
carried the tone of an order. It lacked the element of courtesy since the
telegram did not sound as a request. It is also true that the complainant did
not appear in Court on March 5, 1975 that he might testify as tie last
witness for the prosecution. Hence, on March 5, 1975, the undersigned, on
motion of the Fiscal, ordered the complainant arrested.
There is no doubt that the complainant received the subpoena issued by the
undersigned requiring him to appear on March 5, 1975 so he could not
testify for the government. This is borne out by the records of the
case." 2 Further: "In passing, may it be said that as a national employee, the
complainant knows that he is entitled to traveling expenses, per diems and
official time, every time he complies with a subpoena. This must he the
reason why he secured from the Clerk of Court a Certificate of Appearance
which was accordingly issued to him. ... May it be said further, that if in the
past the complainant had not been reimbursed his expenses which he had
incurred in similar instances, the reason could only be that the claim for
reimbursement had not been legally and vigorously pursued." 3 As to the
allegation that his conduct in chambers when complainant was explaining his
inability to appear was unbecoming a judge, respondent Judge stated the
following: "In fairness to the complainant, the undersigned does not hesitate
to state that the complainant was very courteous when he was talking to the
undersigned in chambers. Certainly, the undersigned had no reason to be
discourteous, as he was not in fact so, to the complainant. On the contrary,
after hearing the complainant's explanation, the undersigned told the
complainant that the respondent, while sympathizing with the complainant
for the latter's experiences (sic) of having spent his own funds for trips made
as a witness in criminal cases, there was no way out of the predicament
except to obey the subpoena. And after considering the complainant's
explanation, the undersigned issued an order in chambers accepting the
explanation as satisfactory and ordering at the same time the immediate
release of the complainant. The issuance of the said order is inconsistent
with the claim of complainant that his explanation made in chambers was
ignored by the undersigned."
PROCEDURAL HISTORY:
The matter was then referred to the Acting Assistant Judicial Consultant
Lorenzo Relova of the Court of Appeals for study, report and
recommendation. In a memorandum submitted to the Court dated June 29,
1977, after setting forth the above facts and in the light of People v.
Montejo, 5 he recommended that the charges be dismissed. He explained
why: "It is submitted, therefore, that Respondent cannot be administratively
held liable. To hold otherwise would be allowing a [disregard] of the coercive
power of the courts to compel attendance in court of cited witnesses.
(Section 5 (e) of Rule 135 of the Rules of Court). This is not to mention the
very satisfactory explanation of the Respondent on all the charges imputed
against him. Furthermore, Complainant was furnished a copy of the
comment/explanation of Respondent as early as July 15, 1975, but up to
now, no reply was ever received by the Court from Complainant. It would
seem that Complainant is satisfied of the explanation of respondent Judge."
ISSUE:
Whether a court of first instance hearing a criminal case may compel by
subpoena the attendance of a witness in his sala in Zamboanga City, when
the known address of such witness is at Montalban, Rizal.
RULES AND APPLICATION:
It was argued that under the Rules of Court, 7 a witness is not bound to
attend a hearing if held outside the province he resides unless the distance
be less than 50 kilometers from his residence to the place of trial. Such
contention did not command the assent of this Court. Thus: "It is loathe to
clip what undoubtedly is the inherent power of the Court to compel the
attendance of persons to testify ii a case pending therein. Section 9 of Rule
23 is the interpreted to apply solely to civil cases, A recognition of such
power in a court of first instance conducting the trial of an accused may be
gleaned from principle that justifies it when satisfied 'by proof or oath, that
there is reason to believe that a material witness for the prosecution will not
appear and testify when required,' to order that he 'give bail in sum as [it]
may deem proper for such appearance. Upon refusal to give bail, the court
must commit him to prison until he complies or is legally discharged.' Under
the circumstances, in view of the serious handicap to which the prosecution
would thus be subjected in proving its case, the order of respondent judge
denying the motion for an order of arrest or a citation for contempt in the
alternative, b on a clear misapprehension of the Rules of Court, could be
viewed as amounting to grave abuse of discretion. It would follow then that
respondent Judge should decide said motion without taking into
consideration Section 9 of Rule 23." 8 What was done by Judge Quitain
was, therefore, within his discretion. There was no grave abuse of
authority. Nor can the accusation of conduct unbecoming a judge be
taken seriously. In Bartolome v. De Borja, 9 it was held: "As far as the
behavior of a trial judge is concerned, however, it is not realistic to
assume, considering the nature and the burden laid on his shoulders,
that he will at all times personify equanimity."10 Even if his conduct in
chambers did not live up fully then to the demands of politeness and
courtesy, disciplinary action does not lie. Moreover, as shown in the
memorandum of Acting Judicial Consultant, the fact that he did not even
bother to refute the allegation of respondent Judge that he behaved as
gentleman should during their talk in chambers may justifiably lead to the
inference that complainant, on calmer reflection with his resentment
diminishing with the passage of time may have decided not to press this
particular accusation anymore.
CONCLUSION:
Administrative complaint against respondent Judge Pedro C. Quitain is
dismissed for lack of merit.

G.R. No. 185145               February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA

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

FACTS:
Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint6 for
nullification of mortgage, foreclosure, auction sale, certificate of sale and
other documents, with damages, against respondents Metropolitan Bank &
Trust Co. (Metrobank) and Emmanuel L. Ortega (Ortega) before the Regional
Trial Court (RTC) of Malolos City, where it was docketed as Civil Case No.
336-M-2004 and assigned to Branch 7.

Metrobank is a domestic banking corporation existing under Philippine laws,

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

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

Metrobank filed an Opposition10 arguing that for lack of a proper notice of

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

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

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

PROCEDURAL HISTORY:

On October 19, 2006, the trial court issued an Order13 denying petitioners’

Motion for Issuance of Subpoena Duces Tecum Ad Testificandum, thus: The
motion lacks merit.

As pointed out by the defendant bank in its opposition, the motion under
consideration is a mere scrap of paper by reason of its failure to comply with
the requirements for a valid notice of hearing as specified in Sections 4 and
5 of Rule 15 of the Revised Rules of Court. Moreover, the defendant bank
and its officers are adverse parties who cannot be summoned to testify
unless written interrogatories are first served upon them, as provided in
Sections 1 and 6, Rule 25 of the Revised Rules of Court. In view of the
foregoing, and for lack of merit, the motion under consideration is hereby
DENIED.SO ORDERED.14

Petitioners filed a Motion for Reconsideration15 pleading for leniency in the

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

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

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

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

Even if the motion is given consideration by relaxing Sections 4 and 5, Rule

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

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

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

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

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

x x x Where a party unjustifiedly refuses to elicit facts material and relevant

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

Petitioners filed their Motion for Reconsideration,26 which the CA denied in its

assailed October 2, 2008 Resolution. Hence, the present Petition.

ISSUES:

1. Whether THE CA COMMITTED REVERSIBLE ERRORS IN

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

2. Whether THE CA COMMITTED (REVERSIBLE) ERROR IN HOLDING

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

RULES AND APPLICATION:

The Court denies the Petition.

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

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

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

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

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

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

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

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

Another reason for the rule is that by requiring prior written interrogatories,
the court may limit the inquiry to what is relevant, and thus prevent the
calling party from straying or harassing the adverse party when it takes the
latter to the stand.

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

In the present case, petitioners seek to call Metrobank’s officers to the

witness stand as their initial and main witnesses, and to present documents
in Metrobank’s possession as part of their principal documentary evidence.
This is improper. Petitioners may not be allowed, at the incipient phase of
the presentation of their evidence-in-chief at that, to present Metrobank’s
officers – who are considered adverse parties as well, based on the principle
that corporations act only through their officers and duly authorized
agents34 – as their main witnesses; nor may they be allowed to gain access
to Metrobank’s documentary evidence for the purpose of making it their
own. This is tantamount to building their whole case from the evidence of
their opponent. The burden of proof and evidence falls on petitioners,
not on Metrobank; if petitioners cannot prove their claim using their
own evidence, then the adverse party Metrobank may not be
pressured to hang itself from its own defense.

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

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

With the view taken of the case, the Court finds it unnecessary to further
address the other issues raised by the parties, which are irrelevant and
would not materially alter the conclusions arrived at. Petition is DENIED.
CA’s decision is AFFIRMED.

RULE 22 – COMPUTATION OF TIME

G.R. No. 157020               June 19, 2013

REINIER PACIFIC INTERNATIONAL SHIPPING, INC. and NEPTUNE

SHIP MANAGEMENT SVCS., PTE., LTD., Petitioners,
vs.
CAPTAIN FRANCISCO B. GUEVARRA, Respondents.
FACTS:

On May 3, 2000 petitioner Reinier Pacitic International Shipping, Inc.

(Reinier Shipping), as agent of Neptune Ship Management Services, PTE,
Limited, hired respondent Captain Francisco B. Guevarra to work as master
of MY NOL SHEDAR. In the course of his work on board, Reinier Shipping
sent him Notice, relieving him of command of the vessel upon the insistence
of its chatterers and owners. As a result, Guevarra tiled a case for illegal
dismissal and damages against Reinier Shipping and its principal.

Reinier Shipping countered that Guevarra had been negligent in the

discharge of his duties as ship master. One of the vessel’s hatch covers was
damaged when it was discharging coal in Alabama, U.S.A. As a result, the
charterers were forced to shoulder the repair costs. Reinier had no choice
but yield to the demands of the chatterers for Guevarra’s replacement.

PROCEDURAL HISTORY:

The Labor Arbiter found Guevarra’s dismissal illegal and ordered Reinier
Shipping and its principal to jointly and severally pay him the US$11,316.00
that represent his salaries for the remaining balance of the contract plus
attorney’s fees of US$1,131.60. The Labor Arbiter found that Reinier
Shipping denied Guevarra his right to due process since it did not give him
the opportunity to be heard. Guevarra claims that the damage to the vessel
had been caused by cargo-handling stevedores. Reinier Shipping did not
bother to ascertain his guilt; it merely invoked the demand of the chatterers
and vessel owners that he be replaced.

Reinier Shipping appealed to the National Labor Relations Commission

(NLRC) but on February 22, 2002 the latter affirmed the Labor Arbiter’s
decision.

The due date to file a petition for special civil action of certiorari before the
Court of Appeals (CA) fell on July 26, 2002, a Friday, but Reinier Shipping
succeeded in obtaining an extension of 15 days, which period counted from
July 26 began to run on July 27, a Saturday, and fell due on August 10, a
Saturday. Reinier Shipping filed its petition on the following Monday, August
12, 2002.

On November 11, 2002 the CA dismissed the petition for having been filed
out of time.1 The CA ruled that Reinier Shipping violated Supreme Court’s
A.M. 00-2-14-SC. Since August 10, 2002, the last day of the extended
period, fell on a Saturday, automatic deferment to the next working day did
not apply and Reinier Shipping should have filed its petition before August
10, a Saturday, considering that the court is closed on Saturdays.

ISSUE:

Whether or not the CA erred in dismissing its petition for having been filed
out of time.

RULES AND APPLICATION:

A.M. 00-2-14-SC clarifies the application of Section 1, Rule 22 of the Rules
of Court when the last day on which a pleading is due falls on a Saturday,
Sunday, or legal holiday and the original period is extended.2 The
clarification states:

Whereas, the aforecited provision applies in the matter of filing of pleadings

in courts when the due date falls on a Saturday, Sunday, or legal holiday, in
which case, the filing of the said pleading on the next working day is deemed
on time;

Whereas, the question has been raised if the period is extended ipso jure to
the next working day immediately following where the last day of the period
is a Saturday, Sunday or legal holiday so that when a motion for extension
of time is filed, the period of extension is to be reckoned from the next
working day and not from the original expiration of the period;

NOW THEREFORE, the Court Resolves, for the guidance of the Bench and the
Bar, to declare that Section 1, Rule 22 speaks only of "the last day of the
period" so that when a party seeks an extension and the same is granted,
the due date ceases to be the last day and hence, the provision no longer
applies. Any extension of time to file the required pleading should therefore
be counted from the expiration of the period regardless of the fact that said
due date is a Saturday, Sunday or legal holiday. (Emphasis supplied)

Reinier Shipping’s last day for filing its petition fell on July 26, a
Friday.1âwphi1 It asked for a 15-day extension before the period lapsed and
this was granted. As it happened, 15 days from July 26 fell on August 10, a
Saturday. The CA held that Reinier Shipping should have filed its petition
before August 10 (Saturday) or at the latest on August 9 (Friday) since, in
an extended period, the fact that the extended due date (August 10) falls on
a Saturday is to be "disregarded." Reinier Shipping has no right to move the
extended due date to the next working day even if such due date fell on a
Saturday. Since the courts were closed on August 10 (Saturday), Reinier
Shipping should have filed its petition, according to the CA, not later than
Friday, August 9.

But this is obviously wrong since it would mean compelling Reinier Shipping
to file its petition one day short of the 15-day extension granted it. That
would unjustly deprive it of the full benefit of that extension. Since its new
due date fell on a Saturday when courts are close, however, the clear
language of Section 1, Rule 21, applies. This gives Reinier Shipping up to
Monday (August 12), the next working day, within which to file its petition.

The clarification provided in A.M. 00-2-14-SC actually covers a situation

where the due date falls on a Saturday, Sunday, or holiday. Precisely, what
such clarification wanted to address is the erroneous claim that "the period
of extension" in such a case "is to be reckoned from the next working day
and not from the original expiration of the period." The correct rule,
according to the clarification, is that "any extension of time to file the
required pleading should x x x be counted from the expiration of the period
regardless of the fact that said due date is a Saturday, Sunday or legal
holiday."
For example, if a pleading is due on July 10 and this happens to be a
Saturday, the time for filing it shall not run, applying Section 1 of Rule
21, on July 10 (Saturday) nor on July 11 (Sunday) but will resume to run
on the next working day, which is July 12 (Monday). The pleading will
then be due on the latter date. If the period is extended by 10 days,
such 10 days will be counted, not from July 12 (Monday) but from the
original due date, July 10 (Saturday) "regardless of the fact that said
due date is a Saturday." Consequently, the new due date will be 10 days
from July 10 or precisely on July 20. As stated above, the situation of
Reinier Shipping is different.

CONCLUSION:

The Court REVERSES and SETS ASIDE the Court of Appeals' Resolutions and
DIRECTS it to give due course to petitioner Reinier Pacific International
Shipping, Inc.'s petition before it.

RULE 23 – DEPOSITIONS PENDING ACTION (with Amendments)

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.

FACTS:

For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's

motion for reconsideration of our April 10, 2013 decision, which reversed
and set aside the Court of Appeals' resolutions 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. Subsequently, respondent filed its reply and petitioners their
motion to admit attached rejoinder.

The motion for reconsideration raises the following points:

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

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

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

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. Hence, petitioners had no oneto blame but themselves when
the trial court denied their motion as it was filed only during the trial proper.
Respondent further submits that "Article 1634 [of the] Civil Code had been
inappropriately cited by [p]etitioners" inasmuch as it is Republic Act No.
9182 (Special Purpose Vehicle Act) that is applicable. 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., ₱10,232,998.00 exclusive of
interests and/or damages; 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. According to respondent, the trial court order
"granting the substitution constituted sufficient judicial demand as
contemplated under Article 1634." 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]." It argues that the production of the
LSPA will neither prevent respondent from pursuing its claim of
10,232,998.00, exclusive of interests and penalties, from petitioner EDC, nor
write off petitioner EDC’s liability to respondent. 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[.]" 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][.]"

Respondent also contends that: (1) the production of the LSPA will violate
the parol evidence rule under Rule 130, Section 9 of the Rules of Court; (2)
the LSPA is a privileged/confidential bank document; 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[.]"

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" 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."

Further, assuming that there was a valid transfer of the loan obligation of
petitioner EDC, Article 1634 is applicable and, therefore, petitioners must be
informed of the actual transfer price, which information may only be
supplied by the LSPA. Petitioners argue that the substitution of respondent
in the case a quowas "not sufficient ‘demand’as contemplated under Article
1634 of the Civil Code inasmuch as respondent Cameron failed . . . to inform
petitioner EDC of the price it paid for the [transfer of the] loan
obligation," which made it "impossible for petitioners to reimburse what was
paid for the acquisition of the . . . loan obligation [of EDC]." 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."

Petitioners add that the amount of their liability to respondent is one of the
factual issues to be resolved as stated in the November 21, 2011 pretrial
order of the Regional Trial Court, which makes the LSPA clearly relevant and
material to the disposition of the case.31

Petitioners next argue that the parol evidence rule is not applicable to them
because they were not parties tothe deed of assignment, and "they cannot
be prevented from seeking evidence to determine the complete terms of the
Deed of Assignment." 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.”

In reply, respondent argues that "[petitioners] cannot accept and reject the
same instrument at the same time." 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]," 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."

ISSUE/S:

1. Whether the production/inspection of documents may be availed even

beyond pre-trial.

2. Whether petitioner has right to extinguish their debt.

3. Whether LSPA is a confidential document.

4. Whether alternative defenses are allowed.

RULES AND APPLICATION:

First Issue:

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

SECTION 1. Motion for production or inspection order — Upon motion of any

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

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

since the rules are silent asto the period within which modes of discovery (in
that case, written interrogatories) may still be requested, it is necessary to
determine: (1) the 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. 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."

In Dasmariñas Garments, Inc. v. Reyes, 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." 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." 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" and, thus, facilitating
an amicable settlement or expediting the trial of the case.

Technicalities in pleading should be avoided in order to obtain substantial

justice. In Mutuc v. Judge Agloro, 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. 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."

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.

Article 1634 of the New Civil Code is applicable

Contrary to respondent’s stance, Article 1634 of the Civil Code on

assignment of credit in litigation is applicable.

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

Sec. 13. Nature of Transfer. – All sales or transfers of NPAs to an SPV shall
be in the 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.

Second Issue

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, and it referred
to Cameron Granville Asset Management (SPV-AMC), Inc., as the assignee,
and not respondent Cameron Granville 3 Asset Management, Inc. 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." 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. Therefore, it was important for petitioners to
determine for sure the proper assignee of the EIB credit or who to pay, in
order to effectively extinguish their debt.

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

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

Respondent insists that the transfer price of the EIB credit is ₱10,232,998.00
(the actual amount and value of the credit), and that petitioners should have
paid the said amount within 30 days from the December 8, 2006 order of
the Regional Trial Court approving its substitution of EIB. 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. Hence, they cannot be
prevented from seeking evidence to determine the complete terms of the
deed of assignment.

Even assuming that Rule 130, Section 9 is applicable, an exception to the

rule under the second paragraph 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 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.

Third Issue

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" (pursuant to the Secrecy of Bank
Deposits Act); (e) national security matters and intelligence
information; and (f) criminal matters. Nonetheless, the LSPA does not
fall within any of these classes of information. Moreover, the privileges 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.1âwphi1 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 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[.]" It strains reason why the LSPA,
which by law must be a public instrument to be binding against third persons
such as petitioners-debtors, is privileged and confidential.

Fourth Issue

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."

Motion for reconsideration is DENIED WITH FINALITY.

G.R. No. 197122

INGRID SALA SANTAMARIA and ASTRID SALA BOZA, Petitioners,

vs.
THOMAS CLEARY, Respondent.

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

G.R. No. 197161

KATHRYN GO-PEREZ, Petitioner,
vs.
THOMAS CLEARY, Respondent.

FACTS:

On January 10, 2002, Cleary, an American citizen with office address in

California, filed a Complaint6 for specific performance and damages against
Miranila Land Development Corporation, Manuel S. Go, Ingrid Sala
Santamaria (Santamaria), Astrid Sala Boza (Boza), and Kathryn Go-Perez
(Go-Perez) before the Regional Trial Court of Cebu.

The Complaint involved shares of stock of Miranila Land Development

Corporation, for which Cleary paid US$191,250.00.7 Cleary sued in
accordance with the Stock Purchase and Put Agreement he entered into with
Miranila Land Development Corporation, Manuel S. Go, Santamaria, Boza,
and Go-Perez. Paragraph 9.02 of the Agreement provides:

Any suit, action or proceeding with respect to this Agreement may be

brought in (a) the courts of the State of California, (b) the United States
District Court for the Central District of California, or (c) the courts of the
country of Corporation’s incorporation, as Cleary may elect in his sole
discretion, and the Parties hereby submit to any such suit, action proceeding
or judgment and waives any other preferential jurisdiction by reason of
domicile.8

Cleary elected to file the case in Cebu.

Santamaria, Boza, and Go-Perez filed their respective Answers with

Compulsory Counterclaims.9 The trial court then issued a notice of pre-trial
conference dated July 4, 2007.10
In his pre-trial brief, Cleary stipulated that he would testify "in support of the
allegations of his complaint, either on the witness stand or by oral
deposition."11 Moreover, he expressed his intent in availing himself "of the
modes of discovery under the rules."12

On January 22, 2009, Cleary moved for court authorization to take

deposition.13 He prayed that his deposition be taken before the Consulate-
General of the Philippines in Los Angeles and be used as his direct
testimony.14

Santamaria and Boza opposed the Motion and argued that the right to take
deposition is not absolute. They claimed that Cleary chose the Philippine
system to file his suit, and yet he deprived the court and the parties the
opportunity to observe his demeanor and directly propound questions on
him.17

Go-Perez filed a separate Opposition,18 arguing that the oral deposition was

not intended for discovery purposes if Cleary deposed himself as
plaintiff.19 Since he elected to file suit in the Philippines, he should submit
himself to the procedures and testify before the Regional Trial Court of
Cebu.20 Moreover, Go-Perez argued that oral deposition in the United States
would prejudice, vex, and oppress her and her co-petitioners who would
need to incur costs to attend.

The trial court denied Cleary’s Motion for Court Authorization to Take
Deposition in the Order22 dated June 5, 2009. It held that depositions are not
meant to be a substitute for actual testimony in open court. As a rule, a
deponent must be presented for oral examination at trial as required under
Rule 132, Section 1 of the Rules of Court. "As the supposed deponent is the
plaintiff himself who is not suffering from any impairment, physical or
otherwise, it would be best for him to appear in court and testify under
oath[.]"23 The trial court also denied reconsideration.24

Cleary elevated the case to the Court of Appeals.

On August 10, 2010, the Court of Appeals granted Cleary’s Petition

for Certiorari and reversed the trial court’s ruling.25 It held that Rule 23,
Section 1 of the Rules of Court allows the taking of depositions, and that it is
immaterial that Cleary is the plaintiff himself.26 It likewise denied
reconsideration.27

Hence, the present Petitions were filed.

Petitioners Ingrid Sala Santamaria and Astrid Sala Boza maintain in their
appeal that the right of a party to take the deposition of a witness is not
absolute.28 Rather, this right is subject to the restrictions provided by Rule
23, Section 1629 of the Rules of Court and jurisprudence.30 They
cite Northwest Airlines v. Cruz,31 in that absent any compelling or valid
reason, the witness must personally testify in open court according to the
general rules on examination of witnesses under Rule 132 of the Rules of
Court.32

Likewise, petitioners Santamaria and Boza submit that Cleary cannot, for his
sole convenience, substitute his open-court testimony by having his
deposition taken in the United States.33 This will be very costly, time-
consuming, disadvantageous, and extremely unfair to petitioners and their
counsels who are based in the Philippines.34

Petitioners Santamaria and Boza argue that the proposed deposition in this
case is not for discovery purposes as Cleary is the plaintiff himself.35 The
Court of Appeals Decision gives foreigners undue advantage over Filipino
litigants in cases under similar circumstances, where the parties and the
presiding judge do not have the opportunity to personally examine and
observe the conduct of the testifying witness.36 Thus, the court’s suggestion
for written interrogatories is also not proper as open-court testimony is
different from mere serving of written interrogatories.37

Lastly, petitioners Santamaria and Boza claim that Cleary’s sole allegation
that he is a resident "out of the Philippines" does not warrant departure from
open-court trial procedure under Rule 132, Section 1 of the Rules of Court.38

In her Petition, petitioner Kathryn Go-Perez makes two (2) arguments. First,
she contends that granting a petition under Rule 65 involves a finding of
grave abuse of discretion, but the Court of Appeals only found "error" in the
trial court orders.39 She cites Triplex Enterprises v. PNB-Republic
Bank40 and Yu v. Reyes-Carpio,41 in that a writ of certiorari is restricted to
extraordinary cases where the act of the lower court is void.42 It is designed
to correct errors of jurisdiction and not errors of judgment.43 People v.
Hubert Webb44 has held that the use of discovery procedures is directed to
the sound discretion of the trial judge and certiorari will be issued only to
correct errors of jurisdiction.45 It cannot correct errors of procedure or
mistakes in the findings or conclusions by the lower court.46

Second, petitioner Go-Perez submits that the Court of Appeals erred in

disregarding Rule 23, Section 16 of the Rules of Court, which imposes limits
on the right to take deposition.47 Cleary’s self-deposition in the United
States, which is not for discovery purposes, is oppressive, vexatious, and
bordering on harassment.48 The Court of Appeals also erred in ignoring
applicable jurisprudence such as Northwest, where this Court found that the
deposition taken in the United States was to accommodate the petitioner’s
employee who was there, and not for discovery purposes. Thus, the general
rules on examination of witnesses under Rule 132 of the Rules of Court
should be observed.

Lastly, petitioner Go-Perez contends that the Court of Appeals ignored Rule
132, Section 1 of the Rules of Court, which provides that a witness must
testify in open court.50 That Cleary is the plaintiff himself is material as there
is nothing for him to discover when he deposes himself.51

On the other hand, respondent Thomas Cleary maintains that Rule 23,
Section 4 of the Rules of Court on the taking of deposition applies.52 He is
"out of the Philippines" as an American citizen residing in the United States.
This is true even when he entered the Stock Purchase and Put Agreement
with petitioners in 1999 and filed the case in 2009.53 Cleary
cites Dasmariñas Garments v. Reyes54 and San Luis v. Rojas.55 The trial
court even "previously scheduled the hearing subject to the notice from the
Department of Foreign Affairs for the taking of deposition."56 However, this
was later disallowed upon petitioners’ opposition.57
Respondent submits that the rules on depositions do not authorize nor
contemplate any intervention by the court in the process. All that is required
under the rules is that "reasonable notice" be given "in writing to every other
party to the action[.]"58 Thus, the trial court’s discretion in ruling on whether
a deposition may be taken is not unlimited.59

Respondent adds that this Court has allowed the taking of testimonies
through deposition in lieu of their actual presence at trial.60 He argues that
with the new rules, depositions serve as both a method of discovery and a
method of presenting testimony.61 That the court cannot observe a
deponent’s demeanor is insufficient justification to disallow deposition.
Otherwise, no deposition can ever be taken as this objection is common to
all depositions.62

Respondent contends that Northwest does not apply as the deposition in

that case was found to have been improperly and irregularly taken.63

Lastly, respondent argues that the presiding judge of the trial court acted
with grave abuse of discretion in denying his Motion for Court Authorization
to Take Deposition.64 That he is an American residing in the United States is
undisputed. The trial court even issued the Order dated January 13, 2009
directing him to inform the court of the "steps he . . . has taken and the
progress of his request for a deposition taking filed, if any, with the
Department of Justice."65 In later disallowing the deposition as he is "not
suffering from any impairment, physical or otherwise," the presiding judge
acted in an arbitrary manner amounting to lack of jurisdiction.66 The
deposition sought is in accordance with the rules. The expenses in attending
a deposition proceeding in the United States cannot be considered as a
substantial reason to disallow deposition since petitioners may send cross-
interrogatories. 

These consolidated Petitions seek a review of the Court of Appeals Decision

reversing the trial court’s ruling and allowing Cleary to take his deposition in
the United States. 

ISSUE/S:

1. Whether the limitations for the taking of deposition under Rule 23,
Section 16 of the Rules of Court apply in this case; and
2. Whether the taking of deposition under Rule 23, Section 4(c)(2) of the
Rules of Court applies to a non-resident foreigner plaintiff’s direct
testimony.1âwphi1

RULES AND APPLICATION:

Utmost freedom governs the taking of depositions to allow the widest scope
in the gathering of information by and for all parties in relation to their
pending case.68 The relevant section in Rule 23 of the Rules of Court
provides:

RULE 23
DEPOSITIONS PENDING ACTION
SECTION 1. Depositions pending action, when may be taken. – By leave of
court after jurisdiction has been obtained over any defendant or over
property which is the subject of the action, or without such leave after an
answer has been served, the testimony of any person, whether a party
or not, may be taken, at the instance of any party, by deposition
upon oral examination or written interrogatories.  The attendance of
witnesses may be compelled by the use of a subpoena as provided in Rule
21. Depositions shall be taken only in accordance with these Rules. The
deposition of a person confined in prison may be taken only by leave of court
on such terms as the court prescribes. (Emphasis supplied)

As regards the taking of depositions, Rule 23, Section 1 is clear that the
testimony of any person may be taken by deposition upon oral examination
or written interrogatories at the instance of any party.

San Luis explained that this provision "does not make any distinction or
restriction as to who can avail of deposition." Thus, this Court found it
immaterial that the plaintiff was a non-resident foreign corporation and that
all its witnesses were Americans residing in the United States.70

On the use of depositions taken, we refer to Rule 23, Section 4 of the Rules
of Court. This Court has held that "depositions may be used without the
deponent being actually called to the witness stand by the proponent, under
certain conditions and for certain limited purposes." These exceptional cases
are enumerated in Rule 23, Section 4(c) as follows:

SEC 4. Use of depositions. – At the trial or upon the hearing of a motion or

an interlocutory proceeding, any part or all of a deposition, so far as
admissible under the rules of evidence, may be used against any party who
was present or represented at the taking of the deposition or who had due
notice thereof, in accordance with any one of the following provisions:

....

(c) The deposition of a witness, whether or not a party, may be used by any
party for any purpose if the court finds: (1) that the witness is dead; or (2)
that the witness resides at distance more than one hundred (100)
kilometers from the place of trial or hearing, or is out of the
Philippines, unless it appears that his absence was procured by the
party offering the deposition;  or (3) that the witness is unable to attend
or testify because of age, sickness, infirmity, or imprisonment; or (4) that
the party offering the deposition has been unable to procure the attendance
of the witness by subpoena; or (5) upon application and notice, that such
exceptional circumstances exist as to make it desirable, in the interest of
justice and with due regard to the importance of presenting the testimony of
witnesses orally in open court, to allow the deposition to be used[.]
(Emphasis supplied)

The difference between the taking of depositions and the use of depositions

taken is apparent in Rule 23, which provides separate sections to govern
them. Jurisprudence has also discussed the importance of this distinction
and its implications:
The availability of the proposed deponent to testify in court does not
constitute "good cause" to justify the court’s order that his deposition shall
not be taken. That the witness is unable to attend or testify is one of the
grounds when the deposition of a witness may be used in court during the
trial. But the same reason cannot be successfully invoked to prohibit the
taking of his deposition.

The right to take statements and the right to use them in court have
been kept entirely distinct. The utmost freedom is allowed in taking
depositions; restrictions are imposed upon their use. As a result,
there is accorded the widest possible opportunity for knowledge by
both parties of all the facts before the trial.  Such of this testimony as
may be appropriate for use as a substitute for viva voce examination may
be introduced at the trial; the remainder of the testimony, having served its
purpose in revealing the facts to the parties before trial, drops out of the
judicial picture.

. . . [U]nder the concept adopted by the new Rules, the deposition serves
the double function of a method of discovery —with use on trial not
necessarily contemplated — and a method of presenting testimony.
Accordingly, no limitations other than relevancy and privilege have been
placed on the taking of depositions, while the use at the trial is subject to
circumscriptions looking toward the use of oral testimony wherever
practicable. (Emphasis supplied)

The rules and jurisprudence support greater leeway in allowing the parties
and their witnesses to be deposed in the interest of collecting information for
the speedy and complete disposition of cases.

In opposing respondent’s Motion for Court Authorization to Take Deposition,

petitioners contest at the deposition-taking stage. They maintain that the
right to take deposition is subject to the restrictions found in Rule 23,
Section 16 of the Rules of Court on orders for the protection of parties and
deponents.

Rule 23, Section 16 of the Rules of Court is on orders for the protection of
parties and deponents from annoyance, embarrassment, or
oppression.1âwphi1 The provision reads:

SEC. 16. Orders for the protection of parties and deponents. — After notice
is served for taking a deposition by oral examination, upon motion
seasonably made by any party or by the person to be examined and for
good cause shown, the court in which the action is pending may make an
order that the deposition shall not be taken, or that it may be taken only at
some designated place other than that stated in the notice, or that it may be
taken only on written interrogatories, or that certain matters shall not be
inquired into, or that the scope of the examination shall be held with no one
present except the parties to the action and their officers or counsel, or that
after being sealed the deposition shall be opened only by order of the court,
or that secret processes, developments, or research need not be disclosed,
or that the parties shall simultaneously file specified documents or
information enclosed in sealed envelopes to be opened as directed by the
court or the court may make any other order which justice requires to
protect the party or witness from annoyance, embarrassment, or
oppression. (Emphasis supplied)

The provision includes a full range of protective orders, from designating the
place of deposition, limiting those in attendance, to imposing that it be taken
through written interrogatories. At the extreme end of this spectrum would
be a court order that completely denies the right to take deposition. This is
what the trial court issued in this case.

While Section 16 grants the courts power to issue protective orders, this
grant involves discretion on the part of the court, which "must be exercised,
not arbitrarily, capriciously or oppressively, but in a reasonable manner and
in consonance with the spirit of the law, to the end that its purpose may be
attained."

A plain reading of this provision shows that there are two (2) requisites
before a court may issue a protective order: (1) there must be notice; and
(2) the order must be for good cause shown. In Fortune Corporation v.
Court of Appeals,75 this Court discussed the concept of good cause as used in
the rules:

The matter of good cause is to be determined by the court in the exercise of

judicial discretion. Good cause means a substantial reason—one that
affords a legal excuse. Whether or not substantial reasons exist is for the
court to determine, as there is no hard and fast rule for determining the
question as to what is meant by the term "for good cause shown."

The requirement, however, that good cause be shown for a protective order
puts the burden on the party seeking relief to show some plainly
adequate reasons for the order. A particular and specific demonstration
of facts, as distinguished from conclusory statements, is required to
establish good cause for the issuance of a protective order. What
constitutes good cause furthermore depends upon the kind of
protective order that is sought.

In light of the general philosophy of full discovery of relevant facts and the
board statement of scope in Rule 24, and in view of the power of the court
under Sections 16 and 18 of said Rule to control the details of time, place,
scope, and financing for the protection of the deponents and parties, it is
fairly rare that it will be ordered that a deposition should not be
taken at all. All motions under these subparagraphs of the rule must be
supported by "good cause" and a strong showing is required before a party
will be denied entirely the right to take a deposition. A mere allegation,
without proof, that the deposition is being taken in bad faith is not a
sufficient ground for such an order. Neither is an allegation that it will
subject the party to a penalty or forfeiture. The mere fact that the
information sought by deposition has already been obtained through a bill of
particulars, interrogatories, or other depositions will not suffice, although if it
is entirely repetitious a deposition may be forbidden. The allegation that the
deponent knows nothing about the matters involved does not justify
prohibiting the taking of a deposition, nor that whatever the witness knows
is protected by the "work product doctrine," nor that privileged information
or trade secrets will be sought in the course of the examination, nor that all
the transactions were either conducted or confirmed in writing.76 (Emphasis
supplied, citations omitted)

Thus, we consider the trial court’s explanation for its denial of respondent’s
Motion for Court Authorization to Take Deposition. The trial court’s Order
was based on two (2) premises: first, that respondent should submit himself
to our court processes since he elected to seek judicial relief with our courts;
and second, that respondent is not suffering from any impairment and it is
best that he appear before our courts considering he is the plaintiff himself.

On the first premise, apparent is the concern of the trial court in giving
undue advantage to non-resident foreigners who file suit before our courts
but do not appear to testify. Petitioners support this ruling. They contend
that the open-court examination of witnesses is part of our judicial system.
Thus, there must be compelling reason to depart from this procedure in
order to avoid suits that harass Filipino litigants before our courts. Moreover,
they argue that it would be costly, time-consuming, and disadvantageous for
petitioners and their counsels to attend the deposition to be taken in Los
Angeles for the convenience of respondent.

In the Stock Purchase and Put Agreement, petitioners and respondent alike
agreed that respondent had the sole discretion to elect the venue for filing
any action with respect to it.

Paragraph 9.02 of the Agreement is clear that the parties "waive any other
preferential jurisdiction by reason of domicile."80 If respondent filed the suit
in the United States—which he had the option to do under the Agreement—
this would have been even more costly, time-consuming, and
disadvantageous to petitioners who are all Filipinos residing in the
Philippines. There is no question that respondent can file the case before our
courts. With respondent having elected to file suit in Cebu, the bone of
contention now is on whether he can have his deposition taken in the United
States. The trial court ruled that respondent should consequently submit
himself to the processes and procedures under the Rules of Court.

Respondent did avail himself of the processes and procedures under the
Rules of Court when he filed his Motion. He invoked Rule 23, Section 4(c)(2)
of the Rules of Court and requested to have his deposition taken in Los
Angeles as he was "out of the Philippines."

Moreover, Rule 23, Section 1 of the Rules of Court no longer requires leave
of court for the taking of deposition after an answer has been served.
According to respondent, he only sought a court order when the Department
of Foreign Affairs required one so that the deposition may be taken before
the Philippine Embassy or Consulate.

That neither the presiding judge nor the parties will be able to personally
examine and observe the conduct of a deponent does not justify denial of
the right to take deposition. This objection is common to all
depositions. Allowing this reason will render nugatory the provisions in the
Rules of Court that allow the taking of depositions.
As suggested by the Court of Appeals, the parties may also well agree to
take deposition by written interrogatories to afford petitioners the
opportunity to cross-examine without the need to fly to the United States.

The second premise is also erroneous. That respondent is "not suffering from
any impairment, physical or otherwise" does not address the ground raised
by respondent in his Motion. Respondent referred to Rule 23, Section 4(c)(2)
of the Rules of Court, in that he was "out of the Philippines." This Section
does not qualify as to the condition of the deponent who is outside the
Philippines.

Petitioners argue that the deposition sought by respondent is not for

discovery purposes as he is the plaintiff himself.86 To support their
contention, they cite Northwest, where this Court held that Rule 132 of the
Rules of Court—on the examination of witnesses in open court—should be
observed since the deposition was only to accommodate the petitioner’s
employee who was in the United States, and not for discovery purposes.87

Jurisprudence has discussed how "[u]nder the concept adopted by the new
Rules, the deposition serves the double function of a method of discovery—
with use on trial not necessarily contemplated—and a method of presenting
testimony." The taking of depositions has been allowed as a departure from
open-court testimony. Jonathan Landoil International Co. Inc. v. Spouses
Mangundadatu89 is instructive:

The Rules of Court and jurisprudence, however, do not restrict a deposition

to the sole function of being a mode of discovery before trial. Under certain
conditions and for certain limited purposes, it may be taken even after trial
has commenced and may be used without the deponent being actually called
to the witness stand. In Dasmariñas Garments v. Reyes, we allowed the
taking of the witnesses’ testimonies through deposition, in lieu of their actual
presence at the trial.

Thus, "[d]epositions 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." There can be no
valid objection to allowing them during the process of executing final and
executory judgments, when the material issues of fact have become
numerous or complicated.

In keeping with the principle of promoting the just, speedy and inexpensive
disposition of every action and proceeding, depositions are allowed as a
"departure from the accepted and usual judicial proceedings of
examining witnesses in open court  where their demeanor could be
observed by the trial judge." Depositions are allowed, provided they are
taken in accordance with the provisions of the Rules of Court  (that is,
with leave of court if the summons have been served, without leave of court
if an answer has been submitted); and provided, further, that a
circumstance for their admissibility exists.

....
When a deposition does not conform to the essential requirements of law
and may reasonably cause material injury to the adverse party, its taking
should not be allowed. This was the primary concern in Northwest Airlines v.
Cruz. In that case, the ends of justice would be better served if the witness
was to be brought to the trial court to testify. The locus of the oral
deposition therein was not within the reach of ordinary citizens, as there
were time constraints; and the trip required a travel visa, bookings, and a
substantial travel fare. In People v. Webb, the taking of depositions was
unnecessary, since the trial court had already admitted the Exhibits on which
the witnesses would have testified. (Emphasis supplied)90

Petitioners rely on Northwest in that absent any compelling or valid reason,

the witness must personally testify in open court.91 They add that the more
recent Republic v. Sandiganbayan92 reiterated the rulings
in Northwest;93 specifically, that Northwest emphasized that the "court
should always see to it that the safeguards for the protection of the parties
and deponents are firmly maintained."94 Moreover, "[w]here the deposition is
taken not for discovery purposes, but to accommodate the deponent, then
the deposition should be rejected in evidence." Northwest and Republic are
not on all fours with this case.

Northwest involved a deposition in New York found to have been irregularly

taken. The deposition took place on July 24, 1995, two (2) days before the
trial court issued the order allowing deposition.96 The Consul that swore in
the witness and the stenographer was different from the Consulate Officer
who undertook the deposition proceedings.97 In this case, on the other hand,
deposition taking was not allowed by the trial court to begin with.

In Northwest, respondent Camille Cruz’s opposition to the notice for oral

deposition included a suggestion for written interrogatories as an
alternative.98 This would have allowed cross-interrogatories, which would
afford her the opportunity to rebut matters raised in the deposition in case
she had contentions. However, this suggestion was denied by the trial court
for being time-consuming.99 In this case, petitioners argued even against
written interrogatories for being a mile of difference from open-court
testimony.100

In Republic, the issue involved Rule 23, Section 4(c)(3) of the Rules of Court
in relation to Rule 130, Section 47 on testimonies and depositions at a
former proceeding.101 The deposition of Maurice Bane was taken in London
for one case, and what the court disallowed was its use in another case.102

In sum, Rule 23, Section 1 of the Rules of Court gives utmost freedom in the
taking of depositions. Section 16 on protection orders, which include an
order that deposition not be taken, may only be issued after notice and for
good cause shown. However, petitioners’ arguments in support of the trial
court’s Order denying the taking of deposition fails to convince as good
cause shown.

The civil suit was filed pursuant to an agreement that gave respondent the
option of filing the case before our courts or the courts of California. It would
have been even more costly, time-consuming, and disadvantageous to
petitioners had respondent filed the case in the United States.
Further, it is of no moment that respondent was not suffering from any
impairment. Rule 23, Section 4(c)(2) of the Rules of Court, which was
invoked by respondent, governs the use of depositions taken. This allows the
use of a deposition taken when a witness is "out of the Philippines."

In any case, Rule 23 of the Rules of Court still allows for objections to
admissibility during trial. The difference between admissibility of evidence
and weight of evidence has long been laid down in jurisprudence. These two
are not to be equated. Admissibility considers factors such as competence
and relevance of submitted evidence. On the other hand, weight is
concerned with the persuasive tendency of admitted evidence.

The pertinent sections of Rule 23 on admissibility are:

SEC. 6. Objections to admissibility. – Subject to the provisions of section 29

of this Rule, objection may be made at the trial or hearing to receiving in
evidence any deposition or part thereof for any reason which would require
the exclusion of the evidence if the witness were then present and testifying.

....

SEC. 29. Effect of errors and irregularities in depositions . . . .

....

(c) As to competency and relevancy of evidence. - Objections to the

competency of a witness or the competency, relevancy [sic], or materiality
of testimony are not waived by failure to make them before or during the
taking of the deposition, unless the ground of the objection is one which
might have been obviated or removed if presented at that time[.]

As regards weight of evidence, "the admissibility of the deposition does

not preclude the determination of its probative value at the
appropriate time."  In resorting to depositions, respondent takes the risk
of not being able to fully prove his case.

CONCLUSION:

CA is Correct. Petitions are denied.

RULE 24 – DEPOSITION BEFORE ACTION OR PENDING APPEAL

(WITH AMENDMENTS)

G.R. No. 108229 August 24, 1993

DASMARIÑAS GARMENTS, INC., petitioner,

vs.
HON. RUBEN T. REYES, Judge, Regional Trial Court, Manila, Branch
50, and AMERICAN PRESIDENT LINES, LTD., respondents.

FACTS:

Sometime in September, 1987, in the Regional Trial Court of Manila, the

American President Lines, Ltd. sued Dasmariñas Garments, Inc. to recover
the sum of US $53,228.45 as well as an amount equivalent to twenty-five
percent (25%) thereof as attorney's fees and litigation expenses.

In its answer dated December 1, 1987, Dasmariñas Garments, Inc.

(hereafter, simply Dasmariñas) specifically denied any liability to the plaintiff
(hereafter simply APL), and set up compulsory counterclaims against it.

The case was in due course scheduled for trial on April 27, 1988. On the day
of trial APL presented its first witness whose testimony was completed on
November 12, 1988. The case was reset to May 3, 1989 for reception of the
testimony of two (2) more witnesses in APL's behalf.

At the hearing of May 3, 1989, instead of presenting its witnesses, APL filed
a motion praying that it intended to take the depositions of H. Lee and
Yeong Fang Yeh in Taipei, Taiwan and prayed that for this purpose, a
"commission or letters rogatory be issued addressed to the consul, vice-
consul or consular agent of the Republic of the Philippines in Taipei . . . "
Five (5) days later APL filed an amended motion stating that since the
Philippine Government has no consulate office in Taiwan in view of its "one
China policy," there being in lieu thereof an office set up by the President
"presently occupied by Director Joaquin Roces which is the Asia Exchange
Center, Inc.," it was necessary — and it therefore prayed — "that
commission or letters rogatory be issued addressed to Director Joaquin
Roces, Executive Director, Asian Executive Exchange Center, Inc., Room
901, 112 Chunghsiao, E. Road, Section 1, Taipe, Republic of China, to hear
and take the oral deposition of the aforenamed persons . . . ."

The motion was opposed by Dasmariñas. It contended that (a) the motion
was "fatally defective in that it does not seek . . . that a foreign court
examine a person within its jurisdiction;" (b) issuance of letters rogatory was
unnecessary because the witnesses "can be examined before the Philippine
Court;" and (c) the Rules of Court "expressly require that the testimony of a
witness must be taken orally in open court and not by deposition."

Extensive argument on the matter thereafter followed, through various

pleadings filed by the parties, in the course of which APL submitted to the
Trial Court (a) the letter received by its counsel from Director Joaquin R.
Roces of the Asian Exchange Center, Inc., dated November 20, 1989,
advising that "this Office can only take deposition upon previous authority
from the Department of Foreign Affairs," this being "in consonance with the
Supreme Court Administrative Order requiring courts or judicial bodies to
course their requests through the Department of Foreign Affairs;" and (b) a
letter sent by "fax" to the same counsel by a law firm in Taipei, Lin &
Associates Maritime Law Office, transmitting information inter alia of the
mode by which, under the "ROC Civil Procedure Code," "a copy or an
abridged copy" of documents on file with a Taiwan Court may be obtained.

By Order dated March 15, 1991, the Trial Court resolved the incident in favor
of APL, disposing as follows:

ACCORDINGLY, the motion to take testimonies of plaintiff's

Taiwanese witnesses, Kenneth H. Lee and Yeong Fah Yeh, by
deposition (upon written interrogatories) is hereby GRANTED.
The Court opined that "the Asian Exchange Center, Inc. being the authorized
Philippine representative in Taiwan, may take the testimonies of plaintiff's
witnesses residing there by deposition, but only upon written
interrogatories so as to give defendant the opportunity to cross-examine the
witnesses by serving cross-examination."

Dasmariñas sought reconsideration by motion filed June 25, 1991 on the

following grounds: (1) authority of the Asian Exchange Center, Inc. (AECI)
to take depositions has not been established, it not being one of those so
authorized by the Rules of Court to take depositions in a foreign state; (2)
AECI's articles of incorporation show that it is not vested with any such
authority; (3) to permit deposition-taking by commission without the
authority of the foreign state in which deposition is taken constitutes
infringement of judicial sovereignty; and (4) depositions by written
interrogatories have inherent limitations and are not suitable to matters
dependent on the credibility of witnesses; oral testimony in open court
remains the "most satisfactory method of investigation of facts'" and
"'affords the greatest protection to the rights and liberties of
citizens."

By Order dated July 5, 1991, the motion for reconsideration was denied
because "filed out of time" and being a mere rehash of arguments already
passed upon. In the same Order, APL was directed "to take the necessary
steps to implement the order authorizing the . . . (deposition-taking) of its
witnesses not later than the end of this month, otherwise the Court will
consider inaction or lack of interest as waiver to adduce additional evidence
by deposition."

Dasmariñas instituted a special civil action of certiorari in the Court of

Appeals to nullify the orders of the Trial Court just described. Said Appellate
Court restrained enforcement of the orders of March 15, 1991 and July 5,
1991 "in order to maintain the status quo and to prevent the infliction of
irreparable damage and injury upon the petitioner."

After due proceedings, the Court of Appeals (Third Division) rendered

judgment on September 23, 1992 denying Dasmariñas petition
for certiorari and upholding the challenged orders of the Trial Court. Once
again, Dasmariñas sought reconsideration of an adverse disposition, and
once again, was rebuffed. Its motion for reconsideration was denied in a
Resolution of the Court of Appeals dated December 11, 1992.

Once again Dasmariñas has availed of the remedy of appeal toSC. It has
come to this Court and prays for the reversal of the Appellate Court's
Decision of September 23, 1992 and Resolution dated December 11, 1992.
Once again, it will fail.

ISSUES:

Whether AECI is allowed to take depositions.

RULES AND APPLICATION:

Depositions are chiefly a mode of discovery. They are intended as a means

to compel disclosure of facts resting in the knowledge of a party or other
person which are relevant in some suit or proceeding in court. Depositions,
and the other modes of discovery (interrogatories to parties; requests
for admission by adverse party; production or inspection of
documents or things; physical and mental examination of persons)
are meant to enable a party to learn all the material and relevant facts, not
only known to him and his witnesses but also those known to the adverse
party and the latter's own witnesses. In fine, the object of discovery is to
make it possible for all the parties to a case to learn all the material and
relevant facts, from whoever may have knowledge thereof, to the end that
their pleadings or motions may not suffer from inadequacy of factual
foundation, and all the relevant facts may be clearly and completely laid
before the Court, without omission or suppression.

Depositions are principally made available by law to the parties as a means

of informing themselves of all the relevant facts; they are not therefore
generally meant to be a substitute for the actual testimony in open court of
a party or witness. The deponent must as a rule be presented for oral
examination in open court at the trial or hearing. This is a requirement of
the rules of evidence. Section 1, Rule 132 of the Rules of Court provides:

Sec. 1. Examination to be done in open court. — The

examination of witnesses presented in a trial or hearing shall be
done in open court, and under oath or affirmation. Unless the
witness is incapacitated to speak, or the question calls for a
different mode of answer, the answers of the witness shall be
given orally.

Indeed, any deposition offered to prove the facts therein set out during a
trial or hearing, in lieu of the actual oral testimony of the deponent in open
court, may be opposed and excluded on the ground that it is hearsay; the
party against whom it is offered has no opportunity to cross-examine the
deponent at the time that his testimony is offered. It matters not that that
opportunity for cross-examination was afforded during the taking of the
deposition; for normally, the opportunity for cross-examination must be
accorded a party at the time that the testimonial evidence is actually
presented against him during the trial or hearing.

However, depositions may be used without the deponent being

actually called to the witness stand by the proponent, under certain
conditions and for certain limited purposes. These exceptional
situations are governed by Section 4, Rule 24 of the Rules of Court.

Sec. 4. Use of depositions. — At the trial or upon the hearing of

a motion of an interlocutory proceeding, any part or all of a
deposition, so far as admissible under the rules of evidence, may
be used against any party who was present or represented at
the taking of the deposition or who had due notice thereof, in
accordance with any of the following provisions:

(a) Any deposition may be used by any party for the purpose of
contradicting or impeaching the testimony of deponent as a
witness;
 (b) The deposition of a party or of any one who at the time of
taking the deposition was an officer, director, or managing agent
of a public or private corporation, partnership, or association
which is a party may be used by an adverse party for any
purpose;

(c) The deposition of a witness, whether or not a party, may be

used by any party for any purpose if the court finds: (1) that the
witness is dead; or (2) that the witness if out of the province and
at a greater distance than fifty (50) kilometers from the place of
trial or hearing, or is out of the Philippines, unless it appears that
his absence was procured by the party offering the deposition;
or (3) that the witness is unable to attend to testify because of
age, sickness, infirmity, or imprisonment; or (4) that the party
offering the deposition has been unable to procure the
attendance of the witness by subpoena; or (5) upon application
and notice, that such exceptional circumstances exist as to make
it desirable, in the interest of justice and with due regard to the
importance of presenting the testimony of witnesses orally in
open court, to allow the deposition to be used;

(d) If only part of a deposition is offered in evidence by a party,

the adverse party may require him to introduce all of it which is
relevant to the part introduced, and any party may introduce
any other parts.

The principle conceding admissibility to a deposition when the deponent is

dead, out of the Philippines, or otherwise unable to come to court to testify,
is consistent with another rule of evidence, found in Section 47, Rule 132 of
the Rules of Court.

Sec. 47. Testimony or deposition at a former proceeding. — The

testimony or deposition of a witness deceased or unable to
testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter,
may be given in evidence against the adverse party who had the
opportunity to cross-examine him.

It is apparent then that the deposition of any person may be taken wherever
he may be, in the Philippines or abroad. If the party or witness is in the
Philippines, his deposition "shall be taken before any judge,
municipal or notary public" (Sec. 10, Rule 24, Rules of Court). If in a
foreign state or country, the deposition "shall be taken: (a) on notice
before a secretary or embassy or legation, consul general, consul, vice-
consul, or consular agent of the Republic of the Philippines, or (b) before
such person or officer as may be appointed by commission or under letters
rogatory" (Sec. 11, Rule 24).

Leave of court is not necessary where the deposition is to be taken

before "a secretary or embassy or legation, consul general, consul,
vice-consul, or consular agent of the Republic of the Philippines,"
and the defendant's answer has already been served (Sec. 1 Rule 24). After
answer, whether the deposition-taking is to be accomplished within the
Philippines or outside, the law does not authorize or contemplate any
intervention by the court in the process, all that is required being that
"reasonable notice" be given "in writing to every other party to the
action . . . (stating) the time and place for taking the deposition and the
name and address of each person to be examined, if known, and if the name
is not known, a general description sufficient to identify him or the particular
class or group to which he belongs. . . . " (Sec. 15, Rule 24). The court
intervenes in the process only if a party moves (1) to "enlarge or
shorten the time" stated in the notice (id.), or (2) "upon notice and for good
cause shown," to prevent the deposition-taking, or impose conditions
therefor, e.g., that "certain matters shall not be inquired into" or that the
taking be "held with no one present except the parties to the action and
their officers or counsel," etc. (Sec. 16, Rule 24), or
(3) to terminate the process on motion and upon a showing that "it is being
conducted in bad faith or in such manner as unreasonably to annoy,
embarrass, or oppress the deponent or party" (Sec 18, Rule 24).

Where the deposition is to be taken in a foreign country where the

Philippines has no "secretary or embassy or legation, consul general, consul,
vice-consul, or consular agent," then obviously it may be taken only "before
such person or officer as may be appointed by commission or under letters
rogatory. Section 12, Rule 24 provides as follows:

Sec. 12. Commission or letters rogatory. — A commission or

letters rogatory shall be issued only when necessary or
convenient, on application and notice, and on such terms and
with such directions as are just and appropriate. Officers may be
designated in notices or commissions either by name or
descriptive title and letters rogatory may be addressed "To the
Appropriate Judicial Authority in (here name the country)."

A commission may be defined as "(a)n instrument issued by a court of

justice, or other competent tribunal, to authorize a person to take
depositions, or do any other act by authority of such court or tribunal"
(Feria, J., Civil Procedure, 1969 ed., p. 415, citing Cyclopedic Law
Dictionary, p. 200). Letters rogatory, on the other hand, may be defined
as "(a)n instrument sent in the name and by the authority of a judge or
court to another, requesting the latter to cause to be examined, upon
interrogatories filed in a cause pending before the former, a witness who is
within the jurisdiction of the judge or court to whom such letters are
addressed" (Feria, J., op. cit., citing Cyclopedic Law Dictionary, p. 653).
Section 12, Rule 24 just quoted states that a commission is addressed to
"officers . . . designated . . . either by name or descriptive title,"
while letters rogatory are addressed to some "appropriate judicial
authority in the foreign state." Noteworthy in this connection is the
indication in the Rules that letters rogatory may be applied for and issued
only after a commission has been "returned unexecuted" as is apparent from
Form 21 of the "Judicial Standard Forms" appended to the Rules of Court,
which requires the inclusion in a "petition for letters rogatory" of the
following paragraph, viz.:

xxx xxx xxx

3. A commission issued by this Court on the ______ day of

______, 19__, to take the testimony of (here name the witness
 or witnesses) in (here name the foreign country in which the
testimony is to be taken), before _________________ (name of
officer), was returned unexecuted by __________________ on
the ground that ____________, all of which more fully appears
from the certificate of said __________ to said commission and
made a part hereof by attaching it hereto (or state other facts to
show commission is inadequate or cannot be executed)
(emphasis supplied).

In the case at bar, the Regional Trial Court has issued a commission to the
"Asian Exchange Center, Inc. thru Director Joaquin R. Roces" "to take the
testimonies of . . . Kenneth H. Lee and Yeong Fah Yeh, by deposition (upon
written interrogatories) . . . ." It appears that said Center may, "upon
request and authority of the Ministry (now Department) of Foreign Affairs,
Republic of the Philippines" issue a "Certificate of Authentications" attesting
to the identity and authority of Notaries Public and other public officers of
the Republic of China, Taiwan (eg., the Section Chief, Department of
Consular Affairs of the latter's Ministry of Foreign Affairs) (Annex B of Annex
N of the petition for review on certiorari) — a prima facie showing not
rebutted by petitioner.

It further appears that the commission is to be coursed through the

Department of Foreign Affairs conformably with Circular No. 4 issued by
Chief Justice Claudio Teehankee on April 6, 1987, pursuant to the suggestion
of the Department of Foreign Affairs — directing "ALL JUDGES OF THE
REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL
TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS AND MUNICIPAL
CIRCUIT TRIAL COURTS" "to course all requests for the taking of
deposition of witnesses residing abroad through the Department of
Foreign Affairs" to enable it and "the Philippine Foreign Service
establishments to act on the matter in a judicious and expeditious
manner;" this, "in the interest of justice," and to avoid delay in the
deposition-taking.

Petitioner would however prevent the carrying out of the commission on

various grounds.

The first is that the deposition-taking will take place in "a foreign jurisdiction
not recognized by the Philippines in view of its 'one-China policy.'" This is
inconsequential. What matters is that the deposition is taken before a
Philippine official acting by authority of the Philippine Department of Foreign
Affairs and in virtue of a commission duly issued by the Philippine Court in
which the action is pending, and in accordance, moreover, with the
provisions of the Philippine Rules of Court pursuant to which opportunity for
cross-examination of the deponent will be fully accorded to the adverse
party.

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).

Dasmariñas further claims that the taking of deposition under the

circumstances is a "departure from the accepted and usual judicial
proceedings of examining witnesses in open court where the demeanor could
be observed by the trial judge;" that it is "inherently unfair" to allow APL, "a
foreign entity suing in the Philippines, to present its evidence by mere
deposition of its witnesses away from the 'penetrating scrutiny' of the trial
Judge while petitioner is obligated to bring and present its witnesses in open
court subject to the prying eyes and probing questions of the Judge."

Of course the deposition-taking in the case at bar is a "departure from the

accepted and usual judicial proceedings of examining witnesses in open
court where their demeanor could be observed by the trial judge;" but the
procedure is not on that account rendered illegal nor is the
deposition thereby taken, inadmissible. It precisely falls within one of
the exceptions where the law permits such a situation, i.e., the use of
deposition in lieu of the actual appearance and testimony of the deponent in
open court and without being "subject to the prying eyes and probing
questions of the Judge." This is allowed provided the deposition is taken in
accordance with the applicable provisions of the Rules of Court and the
existence of any of the exceptions for its admissibility — e.g., "that the
witness if out of the province and at a greater distance than fifty (50)
kilometers from the place of trial or hearing, or is out of the Philippines,
unless it appears that his absence was procured by the party offering the
deposition; or . . . that the witness is unable to attend to testify because of
age, sickness, infirmity, or imprisonment, etc." (Sec. 4 Rule 24, supra,
emphasis supplied) — is first satisfactorily established (See Lopez v.
Maceren, 95 Phil. 754).

The Regional Trial Court saw fit to permit the taking of the depositions of the
witnesses in question only by written interrogatories, removing the
proponent's option to take them by oral examination, i.e., by going to Taipei
and actually questioning the witnesses verbally with the questions and
answers and observations of the parties being recorded stenographically.
The imposition of such a limitation, and the determination of the cause
thereof, are to be sure within the Court's discretion. The ostensible reason
given by the Trial Court for the condition — that the deposition be taken
"only upon written interrogatories" — is "so as to give defendant
(Dasmariñas) the opportunity to cross-examine the witnesses by serving
cross-interrogatories." The statement implies that opportunity to cross-
examine will not be accorded the defendant if the depositions were to be
taken upon oral examination, which, of course, is not true. For even if the
depositions were to be taken on oral examination in Taipei, the adverse
party is still accorded full right to cross-examine the deponents by the law,
either by proceeding to Taipei and there conducting the cross-examination
orally, or opting to conduct said cross-examination merely by serving cross-
interrogatories.

One other word. In its Order of July 5, 1991 — denying Dasmariñas motion
for reconsideration of the earlier order dated March 15, 1991 (allowing the
taking of deposition by commission) — one of the reasons adduced by the
Regional Trial Court for the denial was that the motion had been "filed out of
time." Evidently, the Trial Court reached this conclusion because, as the
record discloses, the motion for reconsideration was filed by Dasmariñas on
June 25, 1991, twenty-five (25) days after notice (on May 20, 1991) of the
Order of March 15, 1991 sought to be reconsidered. Denial of the motion on
such a ground is incorrect. In the first place, it appears that there was a
motion for extension of time to file a motion for reconsideration, ending on
June 25, 1991 which was however not acted on or granted by the Court.
More importantly, the order sought to be reconsidered is
an interlocutory  order, in respect of which there is no provision of
law fixing the time within which reconsideration thereof should be
sought.

CONCLUSION:

Petition for certiorari is DISMISSED.