G.R. No.

144208             September 11, 2007
EFREN TANDOG, FELIX TANDOG, FELIPE TANDOG, JOSEFINO TANDOG, HELEN
TANDOG, CATALINA TANDOG, ROMEO TANDOG, DOMINGO TANDOG, CATALINA
SANTOS, MARIA BAUTISTA CATANYAG, ARTEMIO CATANYAG, ANGELES
CATANYAG, APOLONIA CATANYAG, ADORACION CATANYAG, ARCELY CATANYAG,
and AMPARO CATANYAG, all represented by EFREN TANDOG, petitioners,
vs.
RENATO MACAPAGAL, SPOUSES ALFONSO and MARINA CALDERON, and the
LANDS MANAGEMENT BUREAU, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Also, they have been paying the corresponding realty taxes. She does not know petitioners
who are all strangers in the place.
Before the hearing of the case, or on July 20, 1993, petitioners and Macapagal entered into a
Compromise Agreement.2 Petitioners acknowledged therein his ownership of the portions of
the land consisting of 18,787 square meters covered by OCT No. P-665. This agreement was
approved by the trial court.
After petitioners had presented their evidence, spouses Calderon filed a demurrer to
evidence. In an Order dated March 20, 1995, the trial court granted their motion and
dismissed the complaint.
On appeal by petitioners, the Court of Appeals rendered a Decision dated July 31, 2000
affirming the Order of the trial court dismissing their complaint. The appellate court held:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure,
as amended, assailing the Decision1 dated July 31, 2000 of the Court of Appeals in CA-G.R.
CV No. 57812.
The facts as found by the Court of Appeals are:
The subject of the controversy is a land consisting of 147,991 square meters situated at Sitio
Inarawan, Barangay Inuman, San Isidro, Antipolo City.
Under Article 476 of the Civil Code, a claimant must show that there is an instrument,
record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt,
question or shadow upon the owner’s title to or interest in real property. The ground
or reason for filing a complaint for quieting of title must therefore be "an instrument,
record, claim, encumbrance or proceeding." Under the maxim "expresio unius est
exclusio alterius," these grounds are exclusive so that other reasons outside of the
purview of these reasons may not be considered valid for the same action. (Titong v.
CA, G.R. No. 111141, March 6, 1998)

The above-named petitioners claim that they and their predecessors-in-interest have been in
actual, open, continuous, exclusive, and notorious possession of the land since time
immemorial. They trace their rights to Casimiro Policarpio, unmarried, who died in 1945. He
was survived by his nephews and nieces, now deceased, except Maria Bautista Catanyag.
She and Casimiro’s grand nieces and grand nephews (herein petitioners) have continued
possessing and cultivating the land.
When petitioners decided to apply for the judicial registration of the property, they found that
portions of the land have been occupied by spouses Alfonso and Marina Calderon and
Renato Macapagal, respondents. According to petitioners, spouses Calderon used falsified
documents to justify their possession of 20,116 square meters of the land which they sold to
the government. For his part, Renato Macapagal applied for and was granted Free Patent
No. 045802-1165 which led to the issuance to him of Original Certificate of Title (OCT) No. P-
665 over an area of 18,787 square meters. Because of these incidents, petitioners filed with
the Regional Trial Court, Bracnh 73, Antipolo City a complaint for quieting of title, docketed as
Civil Case No. 92-2418.
Respondent Marina Calderon, in her answer, specifically denied petitioners’ allegations in
their complaint. She alleged that she and her husband bought their property in 1958 and,
since then, have been in possession of the same. They planted trees and crops thereon.
Hence, this present petition.
The appellants had nothing to show for this. The most that they did was to mark a
DEED OF ABSOLUTE SALE OF REAL PROPERTY & OR RIGHTS OR INTERESTS
THEREIN as Exh. "D" and a SPECIAL POWER OF ATTORNEY as Exh. "E", which
allegedly are the falsified documents used by the appellees as basis for their claim
over the subject lot. x x x
xxx
Under Section 34 of Rule 132 of the Rules of Court, it is clear that for the evidence to
be considered, the same must be formally offered. Corollarily, the mere fact that a
particular document is identified and marked as an exhibit does not mean that it has
already been offered as part of the evidence of a party. (Vda de Oñate v. CA, G.R.
116149, Nov. 23, 1995) Any evidence which a party desires to submit for the
consideration of the court must formally be offered by him, otherwise it is excluded
and rejected. x x x
It does not help either that the testimonies presented are on the whole hearsay and
unreliable as to the existence and right of the amorphous Casimero Policarpio and
the hereditary link between him and the appellants.
Petitioners contend that the allegations of spouses Calderon that they purchased their
property and Macapagal’s claim that he applied for a Free Patent are judicial admissions
which they (petitioners) consider as cloud upon their interest in the disputed property. NO
The petition must fail.
Article 476 of the Civil Code provides:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
As a general rule, a cloud which may be removed by suit to quiet title is not created by mere
verbal or parol assertion of ownership of or an interest in property. This rule is subject to
qualification, where there is a written or factual basis for the asserted right. Thus, a claim of
right based on acquisitive prescription or adverse possession has been held to constitute a
removable cloud on title.3
While petitioners alleged that respondents’ claim of adverse possession is a cloud on their
(petitioners’) interest in the land, however, such allegation has not been proved. The alleged
falsified documents relied upon by respondents to justify their possession were merely
marked as exhibits but were never formally offered in evidence by petitioners. We have
consistently ruled that documents which may have been marked as exhibits during the
hearing, but which were not formally offered in evidence, cannot be considered as evidence,
nor can they be given any evidentiary value.4
WON the testimonies about the existence of Casimiro can be considered as declarations
about pedigree. NO
It is important that petitioners must first establish their legal or equitable title to, or interest in
the real property which is the subject matter of the action.5 Petitioners failed to do so.
Parenthetically, they did not present any evidence to prove that Casimiro Policarpio "existed"
and that he is their predecessor-in-interest. Their testimonies can not be considered
declarations about pedigree. In order that pedigree may be proved by acts or declarations of
relatives under Section 39 of the Revised Rules of Evidence, it is necessary that (a) the actor
or declarant is dead or unable to testify; (b) the act or declaration is made by a person related
to the subject by birth or marriage; (c) the relationship between the declarant or the actor and
the subject is shown by evidence other than such act or declaration; and (d) the act or
declaration was made ante litem motam, or prior to the controversy.6
Records show that petitioners failed to establish by evidence any or all the above requisites.
WHEREFORE, we DENY the petition and AFFIRM the assailed Decision of the Court of
Appeals in CA-G.R. CV No. 57812. Costs against petitioners.
SO ORDERED.
G.R. No. 148220               June 15, 2005
ROSENDO HERRERA, petitioner,
vs.
ROSENDO ALBA, minor, represented by his mother ARMI A. ALBA, and HON. NIMFA
CUESTA-VILCHES, Presiding Judge, Branch 48, Regional Trial Court,
Manila, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 to set aside the Decision2 dated 29 November 2000 of the Court
of Appeals ("appellate court") in CA-G.R. SP No. 59766. The appellate court affirmed two
Orders3 issued by Branch 48 of the Regional Trial Court of Manila ("trial court") in SP No. 98-
88759. The Order dated 3 February 2000 directed Rosendo Herrera ("petitioner") to submit to
deoxyribonucleic acid ("DNA") paternity testing, while the Order dated 8 June 2000 denied
petitioner’s motion for reconsideration.
The Facts
On 14 May 1998, then thirteen-year-old Rosendo Alba ("respondent"), represented by his
mother Armi Alba, filed before the trial court a petition for compulsory recognition, support
and damages against petitioner. On 7 August 1998, petitioner filed his answer with
counterclaim where he denied that he is the biological father of respondent. Petitioner also
denied physical contact with respondent’s mother.
Respondent filed a motion to direct the taking of DNA paternity testing to abbreviate the
proceedings. To support the motion, respondent presented the testimony of Saturnina C.
Halos, Ph.D. When she testified, Dr. Halos was an Associate Professor at De La Salle
University where she taught Cell Biology. She was also head of the University of the
Philippines Natural Sciences Research Institute ("UP-NSRI"), a DNA analysis laboratory. She
was a former professor at the University of the Philippines in Diliman, Quezon City, where
she developed the Molecular Biology Program and taught Molecular Biology. In her
testimony, Dr. Halos described the process for DNA paternity testing and asserted that the
test had an accuracy rate of 99.9999% in establishing paternity.4
Petitioner opposed DNA paternity testing and contended that it has not gained acceptability.
Petitioner further argued that DNA paternity testing violates his right against self-
incrimination.
The Ruling of the Trial Court
In an Order dated 3 February 2000, the trial court granted respondent’s motion to conduct
DNA paternity testing on petitioner, respondent and Armi Alba. Thus:
In view of the foregoing, the motion of the petitioner is GRANTED and the relevant
individuals, namely: the petitioner, the minor child, and respondent are directed to
undergo DNA paternity testing in a laboratory of their common choice within a period of
thirty (30) days from receipt of the Order, and to submit the results thereof within a period of
ninety (90) days from completion. The parties are further reminded of the hearing set on 24
February 2000 for the reception of other evidence in support of the petition.
IT IS SO ORDERED.5 (Emphasis in the original)
Petitioner filed a motion for reconsideration of the 3 February 2000 Order. He asserted that
"under the present circumstances, the DNA test [he] is compelled to take would be
inconclusive, irrelevant and the coercive process to obtain the requisite specimen…,
unconstitutional."
In an Order dated 8 June 2000, the trial court denied petitioner’s motion for reconsideration.
On 18 July 2000, petitioner filed before the appellate court a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure. He asserted that the trial court rendered the Orders
dated 3 February 2000 and 8 June 2000 "in excess of, or without jurisdiction and/or with
grave abuse of discretion amounting to lack or excess of jurisdiction." Petitioner further
contended that there is "no appeal nor any [other] plain, adequate and speedy remedy in the
ordinary course of law." Petitioner maintained his previous objections to the taking of DNA
paternity testing. He submitted the following grounds to support his objection:
1. Public respondent misread and misapplied the ruling in Lim vs. Court of Appeals
(270 SCRA 2).
2. Public respondent ruled to accept DNA test without considering the limitations on,
and conditions precedent for the admissibility of DNA testing and ignoring the serious
constraints affecting the reliability of the test as admitted by private respondent’s
"expert" witness.
3. Subject Orders lack legal and factual support, with public respondent relying on
scientific findings and conclusions unfit for judicial notice and unsupported by experts
in the field and scientific treatises.
4. Under the present circumstances the DNA testing petitioner [is] compelled to take
will be inconclusive, irrelevant and the coercive process to obtain the requisite
specimen from the petitioner, unconstitutional.7
The Ruling of the Court of Appeals
On 29 November 2000, the appellate court issued a decision denying the petition and
affirming the questioned Orders of the trial court. The appellate court stated that petitioner
merely desires to correct the trial court’s evaluation of evidence. Thus, appeal is an available
remedy for an error of judgment that the court may commit in the exercise of its jurisdiction.
The appellate court also stated that the proposed DNA paternity testing does not violate his
right against self-incrimination because the right applies only to testimonial compulsion.
Finally, the appellate court pointed out that petitioner can still refute a possible adverse result
of the DNA paternity testing. The dispositive portion of the appellate court’s decision reads:
WHEREFORE, foregoing premises considered, the Petition is
hereby DENIED DUE COURSE, and ordered dismissed, and the challenged orders of the
Trial Court AFFIRMED, with costs to Petitioner.
SO ORDERED.8
Petitioner moved for reconsideration, which the appellate court denied in its Resolution dated
6 23 May 2001.9
Issues
Petitioner raises the issue of whether a DNA test is a valid probative tool in this jurisdiction to
determine filiation. Petitioner asks for the conditions under which DNA technology may be
integrated into our judicial system and the prerequisites for the admissibility of DNA test
results in a paternity suit.10
Petitioner further submits that the appellate court gravely abused its discretion when it
authorized the trial court "to embark in [sic] a new procedure xxx to determine filiation despite
the absence of legislation to ensure its reliability and integrity, want of official recognition as
made clear in Lim vs. Court of Appeals and the presence of technical and legal constraints in
respect of [sic] its implementation."11 Petitioner maintains that the proposed DNA paternity
testing violates his right against self-incrimination.12
The Ruling of the Court
The petition has no merit.
Before discussing the issues on DNA paternity testing, we deem it appropriate to give an
overview of a paternity suit and apply it to the facts of this case. We shall consider the
requirements of the Family Code and of the Rules of Evidence to establish paternity and
filiation.
An Overview of the Paternity and Filiation Suit
Filiation proceedings are usually filed not just to adjudicate paternity but also to secure a legal
right associated with paternity, such as citizenship,13 support (as in the present case), or
inheritance. The burden of proving paternity is on the person who alleges that the putative
father is the biological father of the child. There are four significant procedural aspects of a
traditional paternity action which parties have to face: a prima facie case, affirmative
defenses, presumption of legitimacy, and physical resemblance between the putative father
and child.14
A prima facie case exists if a woman declares that she had sexual relations with the putative
father. In our jurisdiction, corroborative proof is required to carry the burden forward and shift
it to the putative father.15
There are two affirmative defenses available to the putative father. The putative father may
show incapability of sexual relations with the mother, because of either physical absence or
impotency.16 The putative father may also show that the mother had sexual relations with
other men at the time of conception.
A child born to a husband and wife during a valid marriage is presumed legitimate. 17 The
child’s legitimacy may be impugned only under the strict standards provided by law.18
Finally, physical resemblance between the putative father and child may be offered as part of
evidence of paternity. Resemblance is a trial technique unique to a paternity proceeding.
However, although likeness is a function of heredity, there is no mathematical formula that
could quantify how much a child must or must not look like his biological father.19 This kind of
evidence appeals to the emotions of the trier of fact.
In the present case, the trial court encountered three of the four aspects. Armi Alba,
respondent’s mother, put forward a prima facie case when she asserted that petitioner is
respondent’s biological father. Aware that her assertion is not enough to convince the trial
court, she offered corroborative proof in the form of letters and pictures. Petitioner, on the
other hand, denied Armi Alba’s assertion. He denied ever having sexual relations with Armi
Alba and stated that respondent is Armi Alba’s child with another man. Armi Alba countered
petitioner’s denial by submitting pictures of respondent and petitioner side by side, to show
how much they resemble each other.
Paternity and filiation disputes can easily become credibility contests. We now look to the law,
rules, and governing jurisprudence to help us determine what evidence of incriminating acts
on paternity and filiation are allowed in this jurisdiction.
Laws, Rules, and Jurisprudence Establishing Filiation
The relevant provisions of the Family Code provide as follows:
ART. 175.  Illegitimate children may establish their illegitimate filiation in the same way and on
the same evidence as legitimate children.
xxx
ART. 172. The filiation of legitimate children is established by any of the following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
The Rules on Evidence include provisions on pedigree. The relevant sections of Rule 130
provide:
SEC. 39.  Act or declaration about pedigree.—The act or declaration of a person deceased, or
unable to testify, in respect to the pedigree of another person related to him by birth or
marriage, may be received in evidence where it occurred before the controversy, and the
relationship between the two persons is shown by evidence other than such act or
declaration. The word "pedigree" includes relationship, family genealogy, birth, marriage,
death, the dates when and the places where these facts occurred, and the names of the
relatives. It embraces also facts of family history intimately connected with pedigree.
SEC. 40. Family reputation or tradition regarding pedigree.—The reputation or tradition
existing in a family previous to the controversy, in respect to the pedigree of any one of its
members, may be received in evidence if the witness testifying thereon be also a member of
the family, either by consanguinity or affinity. Entries in family bibles or other family books or
charts, engraving on rings, family portraits and the like, may be received as evidence of
pedigree.
This Court’s rulings further specify what incriminating acts are acceptable as evidence to
establish filiation. In Pe Lim v. CA,20 a case petitioner often cites, we stated that the issue of
paternity still has to be resolved by such conventional evidence as the
relevant incriminating verbal and written acts by the putative father. Under Article 278 of the
New Civil Code, voluntary recognition by a parent shall be made in the record of birth, a will,
a statement before a court of record, or in any authentic writing. To be effective, the claim of
filiation must be made by the putative father himself and the writing must be the writing of the
putative father.21 A notarial agreement to support a child whose filiation is admitted by the
putative father was considered acceptable evidence.22 Letters to the mother vowing to be a
good father to the child and pictures of the putative father cuddling the child on various
occasions, together with the certificate of live birth, proved filiation.23 However, a student
permanent record, a written consent to a father’s operation, or a marriage contract where the
putative father gave consent, cannot be taken as authentic writing. 24 Standing alone, neither a
certificate of baptism25 nor family pictures26 are sufficient to establish filiation.
So far, the laws, rules, and jurisprudence seemingly limit evidence of paternity and filiation to
incriminating acts alone. However, advances in science show that sources of evidence of
paternity and filiation need not be limited to incriminating acts. There is now almost universal
scientific agreement that blood grouping tests are conclusive on non-paternity, although
inconclusive on paternity.27
In Co Tao v. Court of Appeals,28 the result of the blood grouping test showed that the
putative father was a "possible father" of the child. Paternity was imputed to the putative
father after the possibility of paternity was proven on presentation during trial of facts and
circumstances other than the results of the blood grouping test.
In Jao v. Court of Appeals,29 the child, the mother, and the putative father agreed to submit
themselves to a blood grouping test. The National Bureau of Investigation ("NBI") conducted
the test, which indicated that the child could not have been the possible offspring of the
mother and the putative father. We held that the result of the blood grouping test was
conclusive on the non-paternity of the putative father.
The present case asks us to go one step further. We are now asked whether DNA analysis
may be admitted as evidence to prove paternity.
DNA Analysis as Evidence
DNA is the fundamental building block of a person’s entire genetic make-up. DNA is found in
all human cells and is the same in every cell of the same person. Genetic identity is unique.
Hence, a person’s DNA profile can determine his identity.30
DNA analysis is a procedure in which DNA extracted from a biological sample obtained from
an individual is examined. The DNA is processed to generate a pattern, or a DNA profile, for
the individual from whom the sample is taken. This DNA profile is unique for each person,
except for identical twins.31 We quote relevant portions of the trial court’s 3 February 2000
Order with approval:
Everyone is born with a distinct genetic blueprint called DNA (deoxyribonucleic acid). It is
exclusive to an individual (except in the rare occurrence of identical twins that share a single,
fertilized egg), and DNA is unchanging throughout life. Being a component of every cell in the
human body, the DNA of an individual’s blood is the very DNA in his or her skin cells, hair
follicles, muscles, semen, samples from buccal swabs, saliva, or other body parts.
The chemical structure of DNA has four bases. They are known
as A (adenine), G (guanine), C (cystosine) and T (thymine). The order in which the four
bases appear in an individual’s DNA determines his or her physical makeup. And since DNA
is a double-stranded molecule, it is composed of two specific paired bases, A-T or T-
A and G-C or C-G. These are called "genes."
Every gene has a certain number of the above base pairs distributed in a particular
sequence. This gives a person his or her genetic code. Somewhere in the DNA framework,
nonetheless, are sections that differ. They are known as "polymorphic loci," which are the
areas analyzed in DNA typing (profiling, tests, fingerprinting, or analysis/DNA
fingerprinting/genetic tests or fingerprinting). In other words, DNA typing simply means
determining the "polymorphic loci."
How is DNA typing performed? From a DNA sample obtained or extracted, a molecular
biologist may proceed to analyze it in several ways. There are five (5) techniques to conduct
DNA typing. They are: the RFLP (restriction fragment length polymorphism); "reverse dot
blot" or HLA DQ a/Pm loci which was used in 287 cases that were admitted as evidence by
37 courts in the U.S. as of November 1994; mtDNA process; VNTR (variable number tandem
repeats); and the most recent which is known as the PCR-([polymerase] chain reaction)
based STR (short tandem repeats) method which, as of 1996, was availed of by most
forensic laboratories in the world. PCR is the process of replicating or copying DNA in an
evidence sample a million times through repeated cycling of a reaction involving the so-called
DNA polymerize enzyme. STR, on the other hand, takes measurements in 13 separate
places and can match two (2) samples with a reported theoretical error rate of less than one
(1) in a trillion.
Just like in fingerprint analysis, in DNA typing, "matches" are determined. To illustrate, when
DNA or fingerprint tests are done to identify a suspect in a criminal case, the evidence
collected from the crime scene is compared with the "known" print. If a substantial amount of
the identifying features are the same, the DNA or fingerprint is deemed to be a match. But
then, even if only one feature of the DNA or fingerprint is different, it is deemed not to have
come from the suspect.
As earlier stated, certain regions of human DNA show variations between people. In each of
these regions, a person possesses two genetic types called "allele", one inherited from each
parent. In [a] paternity test, the forensic scientist looks at a number of these variable regions
in an individual to produce a DNA profile. Comparing next the DNA profiles of the mother and
child, it is possible to determine which half of the child’s DNA was inherited from the mother.
The other half must have been inherited from the biological father. The alleged father’s profile
is then examined to ascertain whether he has the DNA types in his profile, which match the
paternal types in the child. If the man’s DNA types do not match that of the child, the man
is excluded as the father. If the DNA types match, then he is not excluded as the
father.32 (Emphasis in the original)
Although the term "DNA testing" was mentioned in the 1995 case of People v. Teehankee,
Jr.,33 it was only in the 2001 case of Tijing v. Court of Appeals34 that more than a passing
mention was given to DNA analysis. In Tijing, we issued a writ of habeas corpus against
respondent who abducted petitioners’ youngest son. Testimonial and documentary evidence
and physical resemblance were used to establish parentage. However, we observed that:
Parentage will still be resolved using conventional methods unless we adopt the modern and
scientific ways available. Fortunately, we have now the facility and expertise in using DNA
test for identification and parentage testing. The University of the Philippines Natural Science
Research Institute (UP-NSRI) DNA Analysis Laboratory has now the capability to conduct
DNA typing using short tandem repeat (STR) analysis. xxx For it was said, that courts should
apply the results of science when completely obtained in aid of situations presented, since to
reject said result is to deny progress. Though it is not necessary in this case to resort to DNA
testing, in [the] future it would be useful to all concerned in the prompt resolution of parentage
and identity issues.
Admissibility of DNA Analysis as Evidence Yes, admissible
The 2002 case of People v. Vallejo35 discussed DNA analysis as evidence. This may be
considered a 180 degree turn from the Court’s wary attitude towards DNA testing in the
1997 Pe Lim case,36 where we stated that "DNA, being a relatively new science, xxx has not
yet been accorded official recognition by our courts." In Vallejo, the DNA profile from the
vaginal swabs taken from the rape victim matched the accused’s DNA profile. We affirmed
the accused’s conviction of rape with homicide and sentenced him to death. We declared:
In assessing the probative value of DNA evidence, therefore, courts should consider, among
other things, the following data: how the samples were collected, how they were handled, the
possibility of contamination of the samples, the procedure followed in analyzing the samples,
whether the proper standards and procedures were followed in conducting the tests, and the
qualification of the analyst who conducted the tests.37
Vallejo discussed the probative value, not admissibility, of DNA evidence. By 2002, there
was no longer any question on the validity of the use of DNA analysis as evidence. The Court
moved from the issue of according "official recognition" to DNA analysis as evidence to the
issue of observance of procedures in conducting DNA analysis.
In 2004, there were two other cases that had a significant impact on jurisprudence on DNA
testing: People v. Yatar38 and In re: The Writ of Habeas Corpus for Reynaldo de
Villa.39 In Yatar, a match existed between the DNA profile of the semen found in the victim
and the DNA profile of the blood sample given by appellant in open court. The Court,
following Vallejo’s footsteps, affirmed the conviction of appellant because the physical
evidence, corroborated by circumstantial evidence, showed appellant guilty of rape with
homicide. In De Villa, the convict-petitioner presented DNA test results to prove that he is not
the father of the child conceived at the time of commission of the rape. The Court ruled that a
difference between the DNA profile of the convict-petitioner and the DNA profile of the
victim’s child does not preclude the convict-petitioner’s commission of rape.
In the present case, the various pleadings filed by petitioner and respondent refer to two
United States cases to support their respective positions on the admissibility of DNA analysis
as evidence: Frye v. U.S.40 and Daubert v. Merrell Dow Pharmaceuticals.41 In Frye v. U.S.,
the trial court convicted Frye of murder. Frye appealed his conviction to the Supreme Court of
the District of Columbia. During trial, Frye’s counsel offered an expert witness to testify on the
result of a systolic blood pressure deception test42 made on defendant. The state Supreme
Court affirmed Frye’s conviction and ruled that "the systolic blood pressure deception test has
not yet gained such standing and scientific recognition among physiological and
psychological authorities as would justify the courts in admitting expert testimony deduced
from the discovery, development, and experiments thus far made." The Frye standard of
general acceptance states as follows:
Just when a scientific principle or discovery crosses the line between the experimental and
demonstrable stages is difficult to define. Somewhere in this twilight zone the evidential force
of the principle must be recognized, and while courts will go a long way in admitting expert
testimony deduced from a well recognized scientific principle or discovery, the thing from
which the deduction is made must be sufficiently established to have gained general
acceptance in the particular field in which it belongs.
In 1989, State v. Schwartz43 modified the Frye  standard. Schwartz was charged with
stabbing and murder. Bloodstained articles and blood samples of the accused and the victim
were submitted for DNA testing to a government facility and a private facility. The prosecution
introduced the private testing facility’s results over Schwartz’s objection. One of the issues
brought before the state Supreme Court included the admissibility of DNA test results in a
criminal proceeding. The state Supreme Court concluded that:
While we agree with the trial court that forensic DNA typing has gained general acceptance in
the scientific community, we hold that admissibility of specific test results in a particular case
hinges on the laboratory’s compliance with appropriate standards and controls, and the
availability of their testing data and results.44
In 1993, Daubert v. Merrell Dow Pharmaceuticals, Inc.45 further modified the Frye-
Schwartz  standard. Daubert was a product liability case where both the trial and appellate
courts denied the admissibility of an expert’s testimony because it failed to meet
the Frye standard of "general acceptance." The United States Supreme Court ruled that in
federal trials, the Federal Rules of Evidence have superseded the Frye  standard. Rule 401
defines relevant evidence, while Rule 402 provides the foundation for admissibility of
evidence. Thus:
Rule 401. "Relevant evidence" is defined as that which has any "tendency to make the
existence of any fact that is of consequence to the determination of the action more probable
or less probable than it would be without the evidence.
Rule 402. All relevant evidence is admissible, except as otherwise provided by the
Constitution of the United States, by Act of Congress, by these rules, or by other rules
prescribed by the Supreme Court pursuant to statutory authority. Evidence which is not
relevant is not admissible.
Rule 702 of the Federal Rules of Evidence governing expert testimony provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge,
skill, experience, training, or education, may testify thereto in the form of an opinion or
otherwise.
Daubert  cautions that departure from the Frye standard of general acceptance does not
mean that the Federal Rules do not place limits on the admissibility of scientific evidence.
Rather, the judge must ensure that the testimony’s reasoning or method is scientifically valid
and is relevant to the issue. Admissibility would depend on factors such as (1) whether the
theory or technique can be or has been tested; (2) whether the theory or technique has been
subjected to peer review and publication; (3) the known or potential rate of error; (4) the
existence and maintenance of standards controlling the technique’s operation; and (5)
whether the theory or technique is generally accepted in the scientific community.
Another product liability case, Kumho Tires Co. v. Carmichael,46 further modified
the Daubert standard. This led to the amendment of Rule 702 in 2000 and which now reads
as follows:
If scientific, technical or other specialized knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge,
skill, experience, training, or education, may testify thereto in the form of an opinion or
otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the
product of reliable principles and methods, and (3) the witness has applied the principles and
methods reliably to the facts of the case.
We now determine the applicability in this jurisdiction of these American cases. Obviously,
neither the Frye-Schwartz  standard nor the Daubert-Kumho standard is controlling in the
Philippines.47 At best, American jurisprudence merely has a persuasive effect on our
decisions. Here, evidence is admissible when it is relevant to the fact in issue and is not
otherwise excluded by statute or the Rules of Court. 48 Evidence is relevant when it has such a
relation to the fact in issue as to induce belief in its existence or non-existence.49 Section 49
of Rule 130, which governs the admissibility of expert testimony, provides as follows:
The opinion of a witness on a matter requiring special knowledge, skill, experience or training
which he is shown to possess may be received in evidence.
This Rule does not pose any legal obstacle to the admissibility of DNA analysis as evidence.
Indeed, even evidence on collateral matters is allowed "when it tends in any reasonable
degree to establish the probability or improbability of the fact in issue."50
Indeed, it would have been convenient to merely refer petitioner to our decisions in Tijing,
Vallejo  and Yatar to illustrate that DNA analysis is admissible as evidence.  In our
jurisdiction, the restrictive tests for admissibility established by Frye-Schwartz and Daubert-
Kumho go into the weight of the evidence.
Probative Value of DNA Analysis as Evidence
Despite our relatively liberal rules on admissibility, trial courts should be cautious in giving
credence to DNA analysis as evidence. We reiterate our statement in Vallejo:
In assessing the probative value of DNA evidence, therefore, courts should consider, among
other things, the following data: how the samples were collected, how they were handled, the
possibility of contamination of the samples, the procedure followed in analyzing the samples,
whether the proper standards and procedures were followed in conducting the tests, and the
qualification of the analyst who conducted the tests.51]
We also repeat the trial court’s explanation of DNA analysis used in paternity cases:
In [a] paternity test, the forensic scientist looks at a number of these variable regions in an
individual to produce a DNA profile. Comparing next the DNA profiles of the mother and child,
it is possible to determine which half of the child’s DNA was inherited from the mother. The
other half must have been inherited from the biological father. The alleged father’s profile is
then examined to ascertain whether he has the DNA types in his profile, which match the
paternal types in the child. If the man’s DNA types do not match that of the child, the man
is excluded as the father. If the DNA types match, then he is not excluded as the father.52
It is not enough to state that the child’s DNA profile matches that of the putative father. A
complete match between the DNA profile of the child and the DNA profile of the putative
father does not necessarily establish paternity. For this reason, following the highest standard
adopted in an American jurisdiction,53 trial courts should require at least 99.9% as a minimum
value of the Probability of Paternity ("W") prior to a paternity inclusion. W is a numerical
estimate for the likelihood of paternity of a putative father compared to the probability of a
random match of two unrelated individuals. An appropriate reference population database,
such as the Philippine population database, is required to compute for W. Due to the
probabilistic nature of paternity inclusions, W will never equal to 100%. However, the
accuracy of W estimates is higher when the putative father, mother and child are subjected to
DNA analysis compared to those conducted between the putative father and child alone.54
DNA analysis that excludes the putative father from paternity should be conclusive proof of
non-paternity. If the value of W is less than 99.9%, the results of the DNA analysis should be
considered as corroborative evidence. If the value of W is 99.9% or higher, then there
is refutable presumption of paternity.55 This refutable presumption of paternity should be
subjected to the Vallejo standards.
Right Against Self-Incrimination
Section 17, Article 3 of the 1987 Constitution provides that "no person shall be compelled to
be a witness against himself." Petitioner asserts that obtaining samples from him for DNA
testing violates his right against self-incrimination. Petitioner ignores our earlier
pronouncements that the privilege is applicable only to testimonial evidence. Again, we quote
relevant portions of the trial court’s 3 February 2000 Order with approval:
Obtaining DNA samples from an accused in a criminal case or from the respondent in a
paternity case, contrary to the belief of respondent in this action, will not violate the right
against self-incrimination. This privilege applies only to evidence that is "communicative" in
essence taken under duress (People vs. Olvis, 154 SCRA 513, 1987). The Supreme Court
has ruled that the right against self-incrimination is just a prohibition on the use of physical or
moral compulsion to extort communication (testimonial evidence) from a defendant, not an
exclusion of evidence taken from his body when it may be material. As such, a defendant can
be required to submit to a test to extract virus from his body (as cited in People vs. Olvis,
Supra); the substance emitting from the body of the accused was received as evidence for
acts of lasciviousness (US vs. Tan Teng, 23 Phil. 145); morphine forced out of the mouth was
received as proof (US vs. Ong Siu Hong, 36 Phil. 735); an order by the judge for the witness
to put on pair of pants for size was allowed (People vs. Otadora, 86 Phil. 244); and the court
can compel a woman accused of adultery to submit for pregnancy test (Villaflor vs. Summers,
41 Phil. 62), since the gist of the privilege is the restriction on "testimonial compulsion."56
The policy of the Family Code to liberalize the rule on the investigation of the paternity and
filiation of children, especially of illegitimate children, is without prejudice to the right of the
putative parent to claim his or her own defenses.57 Where the evidence to aid this
investigation is obtainable through the facilities of modern science and technology, such
evidence should be considered subject to the limits established by the law, rules, and
jurisprudence.
WHEREFORE, we DISMISS the petition. We AFFIRM the Decision of the Court of Appeals
dated 29 November 2000 in CA-G.R. SP No. 59766. We also AFFIRM the Orders dated 3
February 2000 and 8 June 2000 issued by Branch 48 of the Regional Trial Court of Manila in
Civil Case No. SP-98-88759.
G.R. No. 140422 August 7, 2006
MERCEDES CRISTOBAL CRUZ, ANSELMO A. CRISTOBAL and ELISA CRISTOBAL
SIKAT, Petitioners,
vs.
EUFROSINA CRISTOBAL, FLORENCIO CRISTOBAL, JOSE CRISTOBAL, HEIRS OF
NORBERTO CRISTOBAL and THE COURT OF APPEALS, Respondents.
 
DECISION
CHICO-NAZARIO, J.:
This Petition assails the Decision 1 of the Court of Appeals dated 22 July 1999 in CA-G.R. CV
No. 56402, affirming in toto the Decision of the Regional Trial Court (RTC) of Pasig City,
Branch 156, in Civil Case No. 65035 entitled, "Mercedes Cristobal, Anselmo A. Cristobal and
Elisa Cristobal Sikat vs. Eufrosina Cristobal, Florencio Cristobal, Jose Cristobal, Heirs of
Norberto Cristobal and The Register of Deeds, San Juan, M.M."
Facts of the case are as follows:
Petitioners (Mercedes Cristobal, Anselmo Cristobal, the heirs of the deceased Socorro
Cristobal, and Elisa Cristobal-Sikat) claim that they are the legitimate children of
Buenaventura Cristobal during his first marriage to Ignacia Cristobal. On the other hand,
private respondents (Norberto, Florencio, Eufrosina and Jose, all surnamed Cristobal) are
also the children of Buenaventura Cristobal resulting from his second marriage to Donata
Enriquez.
On 18 June 1926, Buenaventura Cristobal purchased a parcel of land with an area of 535
square meters located at 194 P. Parada St., Sta. Lucia, San Juan, Metro Manila, covered by
Transfer Certificate of Title (TCT) No. 10878-2 (the subject property).
Sometime in the year 1930, Buenaventura Cristobal died intestate.
More than six decades later, petitioners learned that private respondents had executed an
extrajudicial partition of the subject property and transferred its title to their names.
Petitioners filed a petition in their barangay to attempt to settle the case between them and
private respondents, but no settlement was reached. Thus, a Complaint 2 for Annulment of
Title and Damages was filed before the RTC by petitioners against private respondents to
recover their alleged pro-indiviso shares in the subject property. In their prayer, they sought
the annulment of the Deed of Partition executed by respondents on 24 February 1948; the
cancellation of TCTs No. 165132, No. 165133, No. 165134 and No. 165135 issued in the
individual names of private respondents; re-partitioning of the subject property in accordance
with the law of succession and the payment of P1,000,000.00 as actual or compensatory
damages; P300,000.00 as moral damages; P50,000.00 as attorney’s fees and P100,000.00
as exemplary damages.
To prove their filiation with the deceased Buenaventura Cristobal, the baptismal certificates of
Elisa, 3 Anselmo, 4 and the late Socorro 5 were presented. In the case of Mercedes who was
born on 31 January 1909, she produced a certification 6 issued by the Office of the Local Civil
Registrar of San Juan, Metro Manila, attesting to the fact that records of birth for the years
1901, 1909, 1932 to 1939, 1940, 1943, and 1948 were all destroyed due to ordinary wear and
tear.
The testimonies of the parties as summarized by the trial court are as follows:
Witness [petitioner Elisa] further testified that her mother died when she was only one year
and seven months old. She lived with the sister of her father because the latter married his
second wife, Donata Enriquez. Her brother Anselmo and sister Socorro lived with their father
and the latter’s family in the subject property at P. Parada St., San Juan, Metro Manila.
She claimed that when their father died on February 12, 1930, his brother Anselmo stayed
with her and her auntie while Socorro stayed with their eldest sister, Mercedes, who was then
married.
Meanwhile, when her stepmother Donata Enriquez died, the children from the second
marriage lived with them and her aunt Martina Cristobal.
Witness testified that she is now residing at No. 194 P. Parada St., Sta. Lucia, San Juan,
Metro Manila, the property subject of the present litigation. She has been living in the said
property since 1948. She claimed that there are other houses in the area particularly those
which belong to her half brothers and sisters which were now converted into factories.
She claimed that out of the five hundred thirty-five (535) square meters she occupies only
thirty-six (36) square meters of the subject lot.
She testified that the [private respondents] divided the property among themselves without
giving the [petitioners] their share. She said that she was offered by [private respondent]
Eufrosina to choose between a portion of the land in question or money because one of the
children of defendant Jose Cristobal wanted to construct an apartment on the lot. She said
that she will have to ask the opinion of her other brothers and sisters.
Thereafter witness testified that she made an inquiry regarding the land and she found out
that the property belonging to their father Buenaventura Cristobal had been transferred to the
defendants as evidenced by transfer certificates of title issued under the names of Florencio
Cristobal (Exhibit "E"), Norberto Cristobal (Exhibit "F"), Eufrosina Cristobal (Exhibit "G") and
Jose Cristobal (Exhibit "H").
She declared that she felt bad when she learned that the title to the property belonging to her
father had been transferred to her half brothers and sisters with the exclusion of herself and
the other children from the first marriage.
She filed a petition in the barangay to settle the issue among themselves, however, no
settlement was reached therein. This prompted the [petitioners] to file the present case.
On cross-examination, [petitioner] Elisa Cristobal Sikat admitted that she was aware that the
subject property was owned by her father Buenaventura Cristobal even before the latter died.
She likewise stated that the [private respondents] are the ones paying the real estate tax due
on the lot.
Ester Santos testified for the [petitioners]. In her "Sinumpaang Salaysay" she claimed that
she was a neighbor of Mercedes, Anselmo, Socorro, Elisa, Norberto, Florencio, Eufrosina
and Jose Cristobal in San Juan, Metro Manila. She said that she knows that Mercedes,
Anselmo, Socorro and Elisa are the children of Buenaventura Cristobal from the latter’s first
marriage and the Norberto, Florencio, Eufrosina, and Jose are the children of Buenaventura
Cristobal from the latter’s second marriage.
The said witness testified that Buenaventura Cristobal and his first family lived right across
where she stayed.
Witness corroborated the testimony of Elisa Cristobal Sikat regarding that the fact that
Martina Cristobal is the sister of Buenaventura Cristobal. The said sister of Buenaventura
Cristobal allegedly took care of Elisa. Anselmo and Socorro were taken care of by
Buenaventura Cristobal and the latter’s second wife, Donata Enriquez, at P. Parada St., San
Juan, Metro Manila.
When Buenaventura Cristobal died Anselmo was taken care of by Martina Cristobal together
with Elisa. Socorro on the other hand lived with Mercedes who was then married.
Witness testified that she and Elisa were classmates from Grade I until they finished high
school at the Philippine School of Commerce in Manila.
When the second wife of Buenaventura Cristobal died, Martina Cristobal took care of
Norberto, Florencio, Eufrosina and Jose Cristobal.
Witness said that the brothers and sisters from the first and second marriages lived together
with their aunt Martina Cristobal for a long time.
When Elisa got married, she and her husband built their house on the lot located at 194 P.
Parada St., San Juan, Metro Manila. Until at present, Elisa and her family lives in the said
vicinity.
Witness Ester Santos declared that the children from the second marriage namely Norberto,
Eufrosina, Florencio and Jose built their houses and factory at 194 P. Parada St., San Juan,
Metro Manila.
She said that the children from the first and second marriages of Buenaventura Cristobal had
a harmonious relationship until sometime in 1994 when [petitioners] and Elisa Cristobal’s
grandchildren were called "squatters" by the [private respondents] and their grandchildren for
residing in the subject parcel of land.
On cross-examination, witness Ester Santos said she cannot recall the name of the first wife
of Buenaventura Cristobal and that she only knew them to be married although she is not
aware of the date when they were married.
[Petitioners] presented Jose Cristobal to bolster the claim that they are brothers and sisters of
the [private respondents].
He claimed that the only time when he became aware that [petitioners] are his brothers and
sisters was when he lived with their aunt Martina.
He said that the reason why they were giving a portion of the lot in question to Elisa Cristobal
Sikat was because the [private respondents] want her to have a piece of property of her own
and is not an admission that she is their sister.
[Private respondents] on the other hand presented Eufrosina Cristobal as their first witness.
She testified that her parents, Buenaventura Cristobal and Donata Enriquez were married on
March 24, 1919 at San Felipe Neri, Mandaluyong, Metro Manila. Out of the said union,
Norberto, Florentino, Eufrosina and Jose Cristobal were born.
The witness professed that on June 18, 1926, her parents were able to buy a certain property
containing five hundred thirty-five (535) square meters.
Said witness claimed that her brother Norberto died on September 20, 1980 leaving his wife
Marcelina and children Buenaflor and Norberto, Jr.
The witness presented marked as Exhibit "33" for Norberto, Exhibit "34" for Florencio, Exhibit
"35" for Eufrosina and Exhibit "36’ for Jose the birth certificates of her brothers and sisters.
On February 24, 1948, Eufrosina admitted having executed an Extrajudicial Partition (Exhibit
"D-4") with her brothers and sisters of the property left by their parents.
She declared that since her father died in 1930, Elisa, Mercedes, and Anselmo never
asserted their alleged right over the property subject of the present litigation.
She claimed that the [private respondents] have been paying all the taxes due on the parcel
of land and that title to the property has been subdivided under their respective names.
On cross-examination, she said that when their parents passed away they were taken care of
by their aunt Martina who was the sister of her father. She testified that she addressed Elisa
Cristobal as "Kaka" and that since the time they were kids, she had known that the
[petitioners] are their brothers and sisters. 7
After trial on the merits, the trial court rendered a judgment 8 on 11 July 1997, dismissing the
case, ruling that petitioners failed to prove their filiation with the deceased Buenaventura
Cristobal as the baptismal and birth certificates presented have scant evidentiary value and
that petitioners’ inaction for a long period of time amounts to laches.
Not satisfied, petitioners sought recourse in the Court of Appeals which, in its
Decision 9 dated 22 July 1999, ruled that they were able to prove their filiation with the
deceased Buenaventura Cristobal thru "other means allowed by the Rules of Court and
special laws," but affirmed the ruling of the trial court barring their right to recover their share
of the subject property because of laches.
Hence, this Petition anchored on the sole ground that:
RESPONDENT COURT GRIEVOUSLY ERRED IN APPLYING THE PRINCIPLE OF
LACHES TO THE CASE AT BAR RESULTING AS IT DOES TO GROSS INJUSTICE AND
INEQUITY WHICH ARE EXACTLY THE VERY EVILS SOUGHT TO BE PREVENTED BY
SUCH PRINCIPLE 10
The petition is impressed with merit. We agree with petitioners that the Court of Appeals
committed reversible error in upholding the claim of private respondents that they acquired
ownership of the entire subject property and that the claim of petitioners to the subject
property was barred by laches.
Before anything else, it must be noted that the title of the original complaint filed by petitioners
before the RTC was denominated as "Annulment of Title and Damages"; nevertheless, the
complaint prayed for the following:
1. Declaring the Extrajudicial Partition executed by the defendants NORBERTO CRISTOBAL,
FLORENCIO CRISTOBAL, EUFROCINA CRISTOBAL and JOSE CRISTOBAL on February
24, 1948 as null and void for being fraudulent contrary to law on succession.
2. Canceling the following Transfer Certificates of Titles issued by the Register of Deeds for
the Province of Rizal to wit:
(a) TCT No. 165132 issued in the name of FLORENCIO CRISTOBAL married to MAURA
RUBIO;
(b) TCT No. 165133 issued in the name of NORBERTO CRISTOBAL, married to PAULINA
IBANEZ;
(c) TCT No. 165134 issued in the name of EUFROCINA CRISTOBAL married to
FORTUNATO DELA GUERRA; and
(d) TCT No. 165135 issued in the name of JOSE CRISTOBAL married to ADELAIDA IBANEZ
and/or TCT No. 3993- ( if TCT No. 165035 was cancelled and in lieu thereof to
ISABELITA/MA. VICTORIA, EMMA, MA. CRISTINA, JOSELITO and NELIA, all surnamed
CRISTOBAL and children of JOSE CRISTOBAL, one of the defendants.)
3. Re-partitioning the subject property left by deceased BUENAVENTURA CRISTOBAL
according to the law on succession applicable at the time of his death.
4. Awarding ONE-HALF of the subject property to herein plaintiffs as their lawful portions in
the inheritance.
5. Ordering the defendants to pay to the plaintiffs the following sums of money, to wit:
a. P1,000,000.00 as actual or compensatory damages
b. P300,000.00 as moral damages
c. P50,000.00 as attorney’s fees
d. P100,000.0 as exemplary damages 11
While the title of the complaint alone implies that the action involves property rights to a piece
of land, the afore-quoted prayer in the complaint reveals that, more than property rights, the
action involves hereditary or successional rights of petitioners to their deceased father’s
estate solely, composed of the subject property.
Thus, even if the original complaint filed by petitioners before the RTC is denominated as
"Annulment of Title and Damages," we find it practicable to rule on the division of the subject
property based on the rules of succession as prayed for in the complaint, considering that the
averments in the complaint, not the title are controlling. 12
To arrive at the final resolution of the instant Petition and the lone assignment of error therein,
the following need to be resolved first: (1) whether or not petitioners were able to prove their
filiation with the deceased Buenaventura Cristobal; YES
(2) whether or not the petitioners are bound by the Deed of Partition of the subject property
executed by the private respondents; (3) whether or not petitioners’ right to question the Deed
of Partition had prescribed; and (4) whether or not petitioners’ right to recover their share of
the subject property is barred by laches.
Undeniably, the foregoing issues can be resolved only after certain facts have been
established. Although it is settled that in the exercise of the Supreme Court’s power of review,
the findings of facts of the Court of Appeals are conclusive and binding on the Supreme
Court, there are recognized exceptions to this rule, namely: (1) when the findings are
grounded entirely on speculation, surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when in making the findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellee and the appellant;
(7) when the findings are contrary to the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioner’s main and reply briefs are not disputed by the
respondent; (10) when the findings of facts are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which if properly
considered, would justify a different conclusion. 13 Since exceptions (4) and (11) are present
in the case at bar, this Court shall make its own determination of the facts relevant for the
resolution of the case.
The initial fact that needs to be established is the filiation of petitioners with the deceased
Buenaventura Cristobal.
Article 172 of the Family Code provides:
Art. 172. The filiation of legitimate children is established by any of the following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) the open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
"Any other means allowed by the Rules of Court and Special Laws," may consist of the child’s
baptismal certificate, a judicial admission, a family bible in which the child’s name has been
entered, common reputation respecting the child’s pedigree, admission by silence, the
testimony of witnesses, and other kinds of proof of admission under Rule 130 of the Rules of
Court. 14
In the present case, the baptismal certificates of Elisa, 15 Anselmo, 16 and the late
Socorro 17 were presented. Baptismal certificate is one of the acceptable documentary
evidence to prove filiation in accordance with the Rules of Court and jurisprudence. In the
case of Mercedes, who was born on 31 January 1909, she produced a certification 18 issued
by the Office of the Local Civil Registrar of San Juan, Metro Manila, attesting to the fact that
records of birth for the years 1901, 1909, 1932 to 1939, 1940, 1943, and 1948 were all
destroyed due to ordinary wear and tear.
Petitioners likewise presented Ester Santos as witness who testified that petitioners enjoyed
that common reputation in the community where they reside as being the children of
Buevaventura Cristobal with his first wife. Testimonies of witnesses were also presented to
prove filiation by continuous possession of the status as a legitimate child. 19
In contrast, it bears to point out that private respondents were unable to present any proof to
refute the petitioners’ claim and evidences of filiation to Buenaventura Cristobal.
The foregoing evidence thus suffice to convince this Court that petitioners are, indeed,
children of the late Buenaventura Cristobal during the first marriage.
As to the validity of the Deed of Partition of the subject property executed by the private
respondents among themselves to the exclusion of petitioners, the applicable rule is Section
1, Rule 74 of the Rules of Court, which states:
The fact of the extrajudicial settlement or administration shall be published in a newspaper of
general circulation in the manner provided in the next succeeding section; but no extrajudicial
settlement shall be binding upon any person who has not participated therein or had no
notice thereof. (Underscoring supplied)
Under the said provision, without the participation of all persons involved in the proceedings,
the extrajudicial settlement is not binding on said persons. 20 In the case at bar, since the
estate of the deceased Buenaventura Cristobal is composed solely of the subject property,
the partition thereof by the private respondents already amounts to an extrajudicial settlement
of Buenaventura Cristobal’s estate. The partition of the subject property by the private
respondents shall not bind the petitioners since petitioners were excluded therefrom.
Petitioners were not aware of the Deed of Partition executed by private respondents among
themselves in 1948. Petitioner Elisa became aware of the transfer and registration of the
subject property in the names of private respondents only in 1994 when she was offered by
private respondent Eufrocina to choose between a portion of the subject property or money,
as one of the children of private respondent Jose wanted to construct an apartment on the
subject property. 21 This led petitioner Elisa to inquire as to the status of the subject property.
She learned afterwards that the title to the subject property had been transferred to the
names of private respondents, her half brothers and sisters, to the exclusion of herself and
her siblings from the first marriage of Buenaventura Cristobal. The Deed of Partition excluded
four of the eight heirs of Buenaventura Cristobal who were also entitled to their respective
shares in the subject property. Since petitioners were not able to participate in the execution
of the Deed of Partition, which constitutes as an extrajudicial settlement of the estate of the
late Buenaventura Cristobal by private respondents, such settlement is not binding on
them. 22 As the extrajudicial settlement executed by the private respondents in February 1948
did not affect the right of petitioners to also inherit from the estate of their deceased father, it
was incorrect for the trial and appellate court to hold that petitioners’ right to challenge the
said settlement had prescribed. Respondents defense of prescription against an action for
partition is a vain proposition. Pursuant to Article 494 of the Civil Code, "no co-owner shall be
obliged to remain in the co-ownership. Such co-owner may demand at anytime the partition of
the thing owned in common, insofar as his share is concerned." In Budlong v. Bondoc, 23 this
Court has interpreted said provision of law to mean that the action for partition is
imprescriptible. It cannot be barred by prescription. For Article 494 of the Civil Code explicitly
declares: "No prescription shall lie in favor of a co-owner or co-heirs as long as he expressly
or impliedly recognizes the co-ownership." 24
Considering that the Deed of Partition of the subject property does not affect the right of
petitioners to inherit from their deceased father, this Court shall then proceed to divide the
subject property between petitioners and private respondents, as the rule on succession
prescribes.
It appears that the 535 square meters subject property was a conjugal property of
Buenaventura Cristobal and Donata Enriquez, the second wife, as the property was
purchased in 1926, during the time of their marriage. 25 Upon the deaths of Buenaventura in
1930 and Donata in 1936, both deaths occurring before the enactment of the New Civil Code
in 1950, all the four children of the first marriage and the four children of the second marriage
shall share equally in the subject property in accordance with the Old Civil Code. Absent any
allegation showing that Buenaventura Cristobal left any will and testament, the subject
property shall be divided into eight equal parts pursuant to Articles 921 26 and 931 27 of the
Old Civil Code on intestate succession, each receiving 66.875 square meters thereof.
At the time of death of Buenaventura Cristobal in 1930, Donata was only entitled to the
usufruct of the land pursuant to Article 834 of the Old Civil Code, which provides:
ART. 834. A widower or widow who, on the death of his or her spouse, is not divorced, or
should be so by the fault of the deceased, shall be entitled to a portion in usufruct equal to
that corresponding by way of legitime to each of the legitimate children or descendants who
has not received any betterment.
If only one legitimate child or descendant survives, the widow or widower shall have the
usufruct of the third availment for betterment, such child or descendant to have the naked
ownership until, on the death of the surviving spouse, the whole title is merged in him.
Donata’s right to usufruct of the subject property terminated upon her death in 1936. defeat justice or perpetuate an injustice. Neither should its application be used to prevent the
rightful owners of a property from recovering what has been fraudulently registered in the
Accordingly, the pro-indiviso shares of Buenaventura Cristobal’s eight children and their name of another. 30
heirs, by right of representation, upon his death in 1930, are as follows:
Considering that (1) petitioners were unlawfully deprived of their legal participation in the
(1) Mercedes Cristobal- 66.875 square meters partition of the subject property; (2) this case has dragged on for more than a decade, and (3)
undoubtedly, petitioners sustained injury but the exact amount of which, unfortunately, was
not proved, we find it reasonable to grant in petitioners’ favor nominal damages. Nominal
(2) Amselmo Crostobal- 66.875 square meters
damages is adjudicated in order that a right of the plaintiff, which has been violated and
invaded by defendant, may be vindicated and recognized, and not for the purpose of
(3) Socorrro Crostobal- 66.875 square meters indemnifying the plaintiff for any loss suffered. 31 Where these are allowed, they are not
treated as an equivalent of a wrong but simply in recognition of the existence of a technical
(4) Elisa Crostobal-Sikat- 66.875 square meters injury. The amount to be awarded as such damages should at least be commensurate to the
injury sustained by the petitioners considering the concept and purpose of said
(5) Norberto Cristobal-66.875 square meters damages. 32 Such award is given in view of the peculiar circumstances cited and the special
reasons extant in the present case; 33
(6) Florencio Cristobal-66.875 square meters
WHEREFORE, in view of the foregoing, this Court rules as follows:
(7) Eufrocina Cristobal-66.875 square meters
(1) The Petition is GRANTED, and the assailed Decision of the Court of Appeals is hereby
(8) Jose Cristobal - 66.875 square meters REVERSED and SET ASIDE;

The Court will now determine whether petitioners’ right to their shares in the subject property (2) Petitioners are RECOGNIZED and DECLARED as children of the late Buenaventura
can be barred by laches. Cristobal from his first marriage to Ignacia Cristobal;

Respondents’ defense of laches is less than convincing. Laches is the negligence or (3) The Deed of Partition executed by private respondents is DECLARED not binding upon
omission to assert a right within a reasonable time, warranting a presumption that the party petitioners who were not notified or did not participate in the execution thereof;
entitled to assert it has abandoned it or declined to assert it. It does not involve mere lapse or
passage of time, but is principally an impediment to the assertion or enforcement of a right, (4) The subject property, covered by TCTs No. 165132, No. 165133, 165134, and No.
which has become under the circumstances inequitable or unfair to permit. 28 165135, in the name of private respondents consisting of 535 square meters is ORDERED to
be partitioned and distributed in accordance with this Decision and appropriate certificates of
In our view, the doctrine of laches does not apply in the instant case. Note that upon title be issued in favor of each of the recognized heirs of the late Cristobal Buenaventura, and
petitioner Elisa’s knowledge in 1994 that the title to the subject property had been transferred
to the private respondents to the exclusion of herself and her siblings from the first marriage (5) Petitioners are AWARDED the amount of ONE HUNDRED THOUSAND (P100,000.00)
of Buenaventura Cristobal, petitioners filed in 1995 a petition with their barangay to settle the PESOS as damages, to be paid by private respondents.
case among themselves and private respondents, but since no settlement was had, they
lodged a complaint before the RTC on 27 March 1995, to annul private respondents’ title over Costs against private respondents.
the land. There is no evidence showing failure or neglect on their part, for an unreasonable
and unexplained length of time, to do that which, by exercising due diligence, could or should SO ORDERED.
have been done earlier. The doctrine of stale demands would apply only where for the reason
of the lapse of time, it would be inequitable to allow a party to enforce his legal rights.
G.R. No. 205412, September 09, 2015
Moreover, absence any strong or compelling reason, this Court is not disposed to apply the
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ADRIAN GUTING Y
doctrine of laches to prejudice or defeat the rights of an owner. 29 Laches is a creation of
TOMAS, Accused-Appellant.
equity and its application is controlled by equitable considerations. Laches cannot be used to
DECISION market with Emerlito Guting (Emerlito), Jose and Flora's other son (accused-appellant's
brother), who was then driving a tricycle for hire. While waiting for Flora and Emerlito, PO1
LEONARDO-DE CASTRO, J.: Macusi, SPO2 Hermosado, and SPO2 Felipe inquired from the neighbors if anybody had
witnessed the crime, but no one did. When Flora and Emerlito arrived, they entered the
house and saw Jose's lifeless body with blood still oozing from his wounds. Immediately,
For Our consideration is an appeal from the Decision1 dated May 23, 2012 of the Court of
Flora and Emerlito brought Jose to the hospital where he was pronounced dead on arrival.
Appeals in CA-G.R. CR.-H.C. No. 04596, which affirmed the Decision2 dated June 24, 2010
Subsequently, Flora and Emerlito executed their respective Sinumpaang Salaysay and filed a
of the Regional Trial Court (RTC), Camiling, Tarlac, Branch 68, in Criminal Case No. 06-93,
case for Parricide against accused-appellant.6
finding accused-appellant Adrian Guting y Tomas guilty of the crime of Parricide under Article
246 of the Revised Penal Code.
On cross-examination, PO1 Macusi divulged that when the knife was given to him by PO1
3 Torre for safekeeping, he did not ask accused-appellant if it was the knife he used to kill his
In an Information  dated August 1, 2006, docketed as Criminal Case No. 06-93, accused-
father. Neither did accused-appellant mention to PO1 Macusi that it was the knife he used in
appellant was charged before the RTC with Parricide, allegedly committed as follows:
stabbing Jose. All that accused-appellant said was, "Sinaksak ko po yong tatay ko! Napatay
ko na po!" PO1 Macusi also admitted that he did not request for the examination of the knife
That on or about 4:50 in the rainy afternoon of July 30, 2006 at Plaridel St., Poblacion B. because it was clean; any trace or stain of blood on it would have been washed away by the
Camiling, Tarlac, Philippines and within the jurisdiction of this Honorable Court, the said rains at that time. PO1 Macusi was further questioned as to why he did not put into writing
accused, did then and there willfully, unlawfully and feloniously, and with evident accused-appellant's admission that he killed his father, and PO1 Macusi explained that it
premeditation, that is, having conceived and deliberated to kill his own father Jose Guting y escaped his mind as he was still new at the job then and he was carried away by the fast flow
Ibarra, 67 years old, married, while inside their residential house, and armed with a bladed of events.7
weapon, suddenly and unexpectedly stabbed several times the victim, employing means,
manner and form in the execution thereof which tender directly and specially to insure its Flora conceded that she was not present when Jose, her husband, was killed by accused-
commission without danger to the person of said accused, the result of which attack was that appellant, their son. Flora only learned of the stabbing incident and accused-appellant's
said victim received multiple stab wounds on his body which directly caused his surrender from the police officers of the Camiling Police Station. Flora declared that she
instantaneous death. spent for the wake and burial of Jose and that Jose, who was a tricycle driver, had been
When arraigned on September 19, 2006, accused-appellant pleaded not guilty to the crime earning around P200.00 a day at the time of his death. 8
charged.4 Thereafter, pre-trial and trial on the merits ensued.
Doctor Valentin Theodore Lomibao (Dr. Lomibao) conducted the autopsy of Jose's body. Dr.
Below is a summary of the prosecution witnesses' testimonies. Lomibao reported that Jose suffered around 39 stab wounds on the head, neck, thorax,
abdomen, and extremities. Jose's internal organs were heavily damaged by the stab wounds,
Police Officer (PO1) Fidel Torre (Torre) testified that on the rainy afternoon of July 30, 2005, resulting in his instantaneous death. Dr. Lomibao also showed several pictures of Jose's body
at around 5:00 o'clock, he and PO1 Alexis Macusi (Macusi) were standing in front of the which were taken before he conducted the autopsy.9
Camiling Police Station when accused-appellant, all wet from the rain and with a bladed
weapon in his hand, suddenly approached them and told them that he had stabbed his father. Accused-appellant opted not to present any evidence in his defense.
Hearing accused-appellant's statement, PO1 Torre immediately got the bladed weapon from
accused-appellant and turned it over to PO1 Macusi for proper disposition.5 The RTC promulgated its Decision on June 24, 2010 finding accused-appellant guilty of
Parricide based on his verbal admission that he killed his father, Jose. Even assuming that
PO1 Macusi corroborated PO1 Torre's testimony. PO1 Macusi narrated that accused- accused-appellant's admission was inadmissible in evidence, the RTC adjudged that the
appellant suddenly appeared before them at the Police Station, all wet and holding a knife. prosecution was still able to establish sufficient circumstantial evidence which, taken
Accused-appellant proclaimed that his father was already dead. Unsuspecting, PO1 Macusi collectively, pointed to accused-appellant as the perpetrator of the brutal killing of his father.
asked who killed accused-appellant's father. Accused-appellant answered, "Sinaksak ko po The dispositive portion of the RTC judgment reads:
yong tatay ko! Napatay ko na po!" PO1 Torre then got the knife from accused-appellant and WHEREFORE, accused Adrian Guting y Tomas is hereby found guilty beyond reasonable
gave it to PO1 Macusi. PO1 Macusi placed the knife in the custodian cabinet in the Police doubt of the offense of Parricide punishable under Article 246 of the Revised Penal Code, as
Station. Thereafter, PO1 Macusi, Senior Police Officer (SPO) 2 Eliseo Hermosado amended and hereby sentences him to a penalty of Reclusion Perpetua.
(Hermosado), and SPO2 Noli Felipe (Felipe) went to the residence of Jose Guting (Jose),
accused-appellant's father, to verify the reported crime, while other police officers informed Accused is likewise ordered to pay the heirs of the victim the amount of P50,000.00 as civil
Flora Guting (Flora), Jose's wife (also accused-appellant's mother), who was still in the
indemnity, another amount of P50,000.00 as moral damages, and still another amount of
P30,000.00 as temperate damages.10
Accused-appellant appealed his conviction before the Court of Appeals, docketed as CA-G.R.
CR.-H.C. No. 04596. The appellate court promulgated its Decision on May 23, 2012,
decreeing thus:
WHEREFORE, the appeal is DENIED. The Decision of the Regional Trial Court of Camiling,
Tarlac, Branch 68 convicting herein accused-appellant Adrian Guting y Tomas for the crime
of Parricide under Article 246 of the Revised Penal Code is AFFIRMED.11
Hence, accused-appellant comes before us via the instant appeal with the same assignment
of errors he raised before the Court of Appeals, to wit:
I
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT ON
THE BASIS OF HIS EXTRAJUDICIAL ADMISSION.
II
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT ON
THE BASIS OF INSUFFICIENT CIRCUMSTANTIAL EVIDENCE.
III
THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY
BEYOND REASONABLE DOUBT OF THE CRIME CHARGED DESPITE THE
PROSECUTION'S FAILURE TO OVERTHROW THE CONSTITUTIONAL PRESUMPTION
OF INNOCENCE IN HIS FAVOR.12
We find no merit in accused-appellant's appeal.
Accused-appellant argues that his oral confession to PO1 Torre and PO1 Macusi, without the
assistance of counsel, is inadmissible in evidence for having been made in blatant violation of
his constitutional right under Article III, Section 12 of the 1987 Constitution.
Section 12, paragraphs 1 and 3, Article III (Bill of Rights) of the 1987 Constitution mandate
that:
SEC. 12. (1) Any person under investigation for the commission of an offense shall have the
right to be informed of his right to remain silent and to have competent and independent
counsel preferably of his own choice. If the person cannot afford the services of counsel, he
must be provided with one. These rights cannot be waived except in writing and in the
presence of counsel.
x x x x
(3) Any confession or admission obtained in violation of this or Section 17 hereof shall be
inadmissible in evidence against him.13
The "investigation" in Section 12, paragraph 1, Article III of the 1987 Constitution pertains to
"custodial investigation." Custodial investigation commences when a person is taken into
custody and is singled out as a suspect in the commission of a crime under investigation and
the police officers begin to ask questions on the suspect's participation therein and which
tend to elicit an admission.14 As we expounded in People v. Marra15:
Custodial investigation involves any questioning initiated by law enforcement officers after a
person has been taken into custody or otherwise deprived of his freedom of action in any
significant way. It is only after the investigation ceases to be a general inquiry into an
unsolved crime and begins to focus on a particular suspect, the suspect is taken into custody,
and the police carries out a process of interrogations that lends itself to eliciting incriminating
statements that the rule begins to operate. (Citation omitted.)
Applying the foregoing definitions, accused-appellant was not under custodial investigation
when he admitted, without assistance of counsel, to PO1 Torre and PO1 Macusi that he
stabbed his father to death. Accused-appellant's verbal confession was so spontaneously and
voluntarily given and was not elicited through questioning by the police authorities. It may be
true that PO1 Macusi asked accused-appellant who killed his father, but PO1 Macusi only did
so in response to accused-appellant's initial declaration that his father was already dead. At
that point, PO1 Macusi still had no idea who actually committed the crime and did not
consider accused-appellant as the suspect in his father's killing. Accused-appellant was also
merely standing before PO1 Torre and PO1 Macusi in front of the Camiling Police Station and
was not yet in police custody.
Accused-appellant cites in support of his argument People v. Cabintoy,16 where we held that
an uncounselled extrajudicial confession without a valid waiver of the right to counsel - that is,
in writing and in the presence of counsel - is inadmissible in evidence. The situation of
accused-appellants in Cabintoy is not similar to that of accused-appellant herein. The
accused-appellants in Cabintoy, when they executed their extrajudicial confessions without
assistance of counsel, were already suspects under custodial investigation by the San Mateo
Police for robbery with homicide committed against a taxi driver. Accused-appellant in the
instant case, on his own volition, approached unsuspecting police officers standing in front of
the police station with a knife in his hand and readily confessed to stabbing his father to
death. Accused-appellant was arrested and subjected to custodial investigation by the police
officers only after his confession.
Hence, herein accused-appellant's confession, even if done without the assistance of a
lawyer, is not in violation of his constitutional right under Section 12, paragraph 1, Article III of
the 1987 Constitution. The present case is more akin to People v. Andan17 wherein we
allowed into evidence the uncounselled confession of therein accused-appellant given under
the following circumstances:
Under these circumstances, it cannot be successfully claimed that appellant's confession
before the mayor is inadmissible. It is true that a municipal mayor has "operational
supervision and control" over the local police and may arguably be- deemed a law
enforcement officer for purposes of applying Section 12 (1) and (3) of Article III of the
Constitution. However, appellant's confession to the mayor was not made in response to any
interrogation by the latter. In fact, the mayor did not question appellant at all. No police
authority ordered appellant to talk to the mayor. It was appellant himself who spontaneously,
freely and voluntarily sought the mayor for a private meeting. The mayor did not know that
appellant was going to confess his guilt to him. When appellant talked with the mayor as a
confidant and not as a law enforcement officer, his uncounselled confession to him did not
violate his constitutional rights. Thus, it has been held that the constitutional procedures on
custodial investigation do not apply to a spontaneous statement, not elicited through
questioning by the authorities, but given in an ordinary manner whereby appellant orally
admitted having committed the crime. What the Constitution bars is the compulsory
disclosure of incriminating facts or confessions. The rights under Section 12 are guaranteed
to preclude the slightest use of coercion by the state as would lead the accused to admit
something false, not to prevent him from freely and voluntarily telling the truth. Hence, we
hold that appellant's confession to the mayor was correctly admitted by the trial court.
WON accused-appellant’s testimony is admissible. YES, part of the res gestae
Moreover, accused-appellant's verbal confession that he stabbed his father to death made to
PO1 Torre and PO1 Macusi, established through the testimonies of said police officers, falls
under Rule 130, Section 26 of the Rules of Court, which provides that "[t]he act, declaration
or omission of a party as to a relevant fact may be given in evidence against him." This rule is
based upon the notion that no man would make any declaration against himself, unless it is
true.18 Accused-appellant's declaration is admissible for being part of the res gestae. A
declaration is deemed part of the res gestae and admissible in evidence as an exception to
the hearsay rule when these three requisites concur: (1) the principal act, the res gestae, is a
startling occurrence; (2) the statements were made before the declarant had time to contrive
or devise; and (3) the statements concern the occurrence in question and its immediately
attending circumstances.19 All the requisites are present in this case. Accused-appellant had
just been through a startling and gruesome occurrence, that is, his father's death. Accused-
appellant made the confession to PO1 Torre and PO1 Macusi only a few minutes after and
while he was still under the influence of said startling occurrence, before he had the
opportunity to concoct or contrive a story. In fact, accused-appellant seemed to still be in
shock when he walked to the Police Station completely unmindful of the rain and the knife in
his hand, and headed directly to PO1 Torre and PO1 Macusi, who were standing in front of
the Police Station, to confess to stabbing his father to death. The police officers who
immediately went to the house of Jose, accused-appellant's father, found Jose's lifeless body
with blood still oozing from his stab wounds. As res gestae, accused-appellant's spontaneous
statement is admissible in evidence against him.
Accused-appellant's confession was further corroborated by the circumstantial evidence.
To justify a conviction upon circumstantial evidence, the combination of circumstances must
be such as to leave no reasonable doubt in the mind as to the criminal liability of the
accused.20 Rule 133, Section 4 of the Rules of Court enumerates the conditions when
circumstantial evidence is sufficient for conviction, thus:
SEC. 4.  Circumstantial Evidence, when sufficient. - Circumstantial evidence is sufficient for
conviction if:chanRoblesvirtualLawlibrary
(a) There is more than one circumstance;ChanRoblesVirtualawlibrary
(b) The facts from which the inferences are derived are proven; and
(c) The combination of all circumstances is such as to produce conviction beyond reasonable
doubt.
The RTC, affirmed by the Court of Appeals, found that the aforequoted requisites have been
satisfied in this case given the following circumstantial evidence:
1. On or about 4:50 o'clock in the afternoon of July 30, 2006, the victim was stabbed to death.
2. Thirty minutes later, [accused-appellant] personally went to Camiling Police Station and
surrendered himself and the bladed weapon he used in killing his father to the police
authorities of the said police station.
3. When his mother learned about the incident, [accused-appellant] did nothing to appease
his responding mother. "It has always been said that criminal case are primarily about human
nature." Here is a case of a son doing nothing to explain the death of his father to his grieving
mother. Such inaction is contrary to human nature.
4. When he was detained after police investigation, [accused-appellant] did not object to his
continued detention.
These circumstances constitute an unbroken chain which leads to one fair and reasonable
conclusion that points to accused-appellant, to the exclusion of all others, as the guilty
person.21 The incriminating collage of facts against accused-appellant was created by
circumstantial evidence anchored on the credible and unbiased testimony of the prosecution's
witnesses. We will not disturb but shall accord the highest respect to the findings of the RTC
on the issue of credibility of the witnesses and their testimonies, it having had the opportunity
to observe their deportment and manner of testifying during the trial. 22
Article 246 of the Revised Penal Code defines Parricide as follows:
Art. 246. Parricide. - Any person who shall kill his father, mother, or child, whether legitimate
or illegitimate, or any of his ascendants, or descendants, or his spouse, shall be guilty of
parricide and shall be punished by the penalty of reclusion perpetua to death.
Parricide is committed when: (1) a person is killed; (2) the deceased is killed by the accused;
and (3) the deceased is the father, mother, or child, whether legitimate or illegitimate, or a
legitimate other ascendant or other descendant, or the legitimate spouse of the accused. The
key element in Parricide - other than the fact of killing - is the relationship of the offender to
the victim.23 All the elements are present in this case. Jose, the victim, was killed by accused-
appellant, his own son. Accused-appellant's birth certificate, which was presented before the
RTC, establishes that accused-appellant was the legitimate son of Jose and Flora.
The crime of Parricide is punishable by the indivisible penalties of reclusion perpetua to
death. With one mitigating circumstance, namely, voluntary surrender, and no aggravating
circumstance, the imposition of the lesser penalty of reclusion perpetua on accused-appellant
was proper.
We modify though the monetary awards imposed by the RTC and affirmed by the Court of
Appeals. When death occurs due to a crime, the following damages may be awarded: (1) civil
indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) until fully paid.
moral damages; (4) exemplary damages; and (5) temperate damages. 24
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR.-H.C. No. 04596, finding
Prevailing jurisprudence pegs the amount of civil indemnity and moral damages awarded to accused-appellant, Adrian Guting y Tomas, GUILTY beyond reasonable doubt of the crime of
the heirs of the victim of Parricide at P75,000.00 each.25 The temperate damages awarded by Parricide, is hereby AFFIRMED with MODIFICATIONS. Accused-appellant is sentenced to
the RTC in the amount of P30,000.00 should be decreased to P25,000.00 to also conform suffer the penalty of reclusion perpetua and to pay the heirs of the victim the amounts of
with the latest jurisprudence.26 It is fitting to additionally award exemplary damages in the sum P75,000.00 as civil indemnity, P75,000.00 as moral damages, P25,000.00 as temperate
of P30,000.00 considering the presence of the qualifying circumstance of relationship. damages, P30,000.00 as exemplary damages, and P316,455.00 as compensation for loss of
earning capacity. All monetary awards for damages shall be subject to interest of six percent
Damages for the loss of earning capacity of Jose should be awarded as well given the (6%) per annum from date of finality of this Decision until they are fully paid.
testimony of his wife, Flora, on this particular fact. We refer to our pronouncements in People
v. Verde27 that: SO ORDERED.chanroblesvirtuallawlibrary
The heirs are also entitled to damages for the loss of earning capacity of the deceased
Francisco Gealon. The fact that the prosecution did not present documentary evidence to G.R. No. 208749               November 26, 2014
support its claim for damages for loss of earning capacity of the deceased does not preclude
recovery of said damages. The testimony of the victim's wife, Delia Gealon, as to the earning PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
capacity of her husband Francisco Gealon sufficiently establishes the basis for making such vs.
an award. It was established that Francisco Gealon was 48 years old at the time of his death ANECITO ESTIBAL y CALUNGSAG, Accused-Appellant.
in 1991. His average income was P200.00 a day. Hence, in accordance with the American
Expectancy Table of Mortality adopted in several cases decided by this Court, the loss of his
earning capacity is to be calculated as follows: DECISION

To be able to claim damages for loss of earning capacity despite the non-availability of REYES, J.:
documentary evidence, there must be oral testimony that: (a) the victim was self-employed
earning less than the minimum wage under current labor laws and judicial notice was taken of
the fact that in the victim's line of work, no documentary evidence is available; or (b) the For automatic review is the Decision1 dated March 25, 2013 of the Court of Appeals (CA) in
victim was employed as a daily wage worker earning less than the minimum wage under CA-G.R. CR-H.C. No. 05374, which upheld the Decision2 dated November 24, 2011 of the
current labor laws.28 Regional Trial Court (RTC) of Pasig City (stationed in Taguig City), Branch 69, in Criminal
Case No. 139521, convicting Anecito Estibal y Calungsag (accused-appellant) of the crime of
In the case at bar, Jose was 67 years old at the time of his death and was earning a daily Rape under Article 266-A(2), in relation to Article 266-B(5)(1) of the Revised Penal Code, as
wage of P200.00 as a tricycle driver, which was below the P252.00 to P263.50 minimum amended by Republic Act (R.A.) No. 83533 and in further relation to Section 5(a) of R.A. No.
wage rate for non-agriculture under Wage Order No. 11 dated June 16, 2005 for Region III. 8369.4
We take judicial notice that there is no documentary evidence available to establish the daily
earning capacity of a tricycle driver. We thus compute the award of damages for the loss of The falloof the RTC decision reads:
Jose's earning capacity as follows:
Gross WHEREFORE, finding accused Anecito Estibal y Calungsag guilty beyond reasonable doubt
Net earning life less living expenses (50% of gross annual
= x annual - of Rape, he is hereby sentenced to suffer the penalty of Reclusion Perpetua without eligibility
capacity (x) expectancy income)
income for parole in lieu of the death penalty; and to pay AAA5 the amount of PhP 75,000.00 as civil
    indemnity; PhP 75,000.00 as moral damages, and PhP 25,000.00 as exemplary damages.
x = 2(80-67) x [73,000.00-36,500.00]
           3 SO ORDERED.6 (Citation omitted)
   
  = 8.67 x 36,500.00
Antecedent Facts
   
  = P316,455.00
Finally, in conformity with current policy, we impose interest on all monetary awards for The accusatory portion of the Information7 for rape against the accused-appellant filed on
damages at the rate of six percent (6%) per annum from the date of finality of this Decision February 6, 2009 reads:
That on or about the 5th day of February, 2009 in the City of Taguig, Philippines and within
the jurisdiction of this Honorable Court, the above-named accused, while taking advantage of
his moral authority and ascendancy and with his intention to gratify his sexual desire upon his
daughter [AAA], by means of force, violence and intimidation did then and there willfully,
unlawfully and feloniously succeed in having sexual intercourse with the latter against her will
and consent, the said crime having been attended by the qualifying circumstances of
relationship and minority, as the said accused being the natural father of the victim, a thirteen
(13)[-]year[-]old, a minor atthe time of the commission of the crime, which is aggravated by
the circumstances of abuse of superior strength and dwelling, all to the damageand prejudice
of the said victim [AAA].
CONTRARY TO LAW.8
The accused-appellant, 43 years old, pleaded not guilty upon arraignment on March 9, 2009.
But during the pre-trial, BBB, wife of the accused-appellant and mother of AAA, the minor
victim, disclaimed any further interest to pursue the case. Her reasons were that she pitied
the accused-appellant and, according to her, AAA had already forgiven her father. But having
entered the accused-appellant’s plea, the trial court refused to entertain their desistance.9
At the trial, four witnesses came forward to testify for the prosecution. The testimony of the
first witness, Dr. Jesille Baluyot (Dr. Baluyot) who conducted the medicolegal examination on
AAA, was stipulated by the prosecution and the defense, as follows:
1. That she is a Police Chief Inspector of the PNP particularly assigned at the PNP
Crime Laboratory as Medico Legal Examiner;
2. That she was the one who conducted the medico-legal examination on the minor
victim on February 5, 2009;
3. That she reduced her examination into writing and issued the Initial Medico Legal
Report Case No. R09-288 which Anogenital findings are diagnostic of previous blunt
force or penetrating trauma (to the hymen);
4. And that she also issued other documents in relation to the examination.10
The parties also agreed to stipulate on the testimonies of Michael Estudillo (Estudillo) and
Ronillo Perlas (Perlas), members of the Barangay Security Force (BSF) who arrested the
accused-appellant as he was coming home from work at 6:00 p.m. on February 5, 2009, to
wit:
1. That BSF Michael Estudillo and BSF Ronilo Perlas are members of the Barangay
Security Force x x x;
2. That in the evening of February5, 2009 while they were on duty at x x x, the minor
victim and her mother appeared at their office and reported that the victim was
molested or sexually abused by the accused; and that based on this report, they
proceeded to the house of the perpetrator;
3. That while on their way, they met the accused and informed him about the
complaint of the minor victim and eventually arrested him without the corresponding
warrant of arrest and brought to their office;
4. That based on the incident, they referred the case to the Taguig City Police Station
for proper disposition; and
5. That they have no personal knowledge as to the incident.11
Concerning AAA and BBB, several subpoenas were sent to their address for the taking of
their testimonies, but they never appeared. On April 13, 2010, it was reported to the court that
they had moved out of their house, and subsequent subpoenas were returned unserved.12
The prosecution’s last witness, Police Officer 3 Fretzie S. Cobardo (PO3 Cobardo), was the
officer assigned at the Philippine National Police (PNP) Women and Children Protection
Center of Taguig City. It was she who investigated the above incident and took down the
sworn statement of AAA late in the evening of February 5, 2009. Her testimony was also
stipulated, as follows:
1. that she is a member of the PNP assigned at the Women and Children Protection
Desk, Taguig City Police Station;
2. that she was the investigating officer at the time the accused was brought to the
police station;
3. that she personally encountered the private offended party and the accused;
4. that she brought the private offended party to the PNP Crime Laboratory for Genito
Physical Examination;
5. that she was present at the time the private offended party executed an affidavit
complaint;
6. that she was the one who brought the private offended party and the accused for
inquest proceedings;
7. that she has no personal knowledge as to the incident which gave rise to this case;
 8. that Exhibit "A" was the same document executed by the mother of the victim as Below is the pertinent portion ofPO3 Cobardo’s testimony cited by the RTC:
well as the victim herself before her;
COURT –
9. that Exhibit "G" was the same Medico Legal Report that was transmitted to her by
the PNP Crime Laboratory; Some questions from the Court.

10. that she was the one who received the Initial Medico-Legal Report.13 Q PO3 Cobardo[,] you were the one who investigated the minor victim in this case?

On clarificatory questioning by the court, PO3 Cobardo narrated how she was trained to A Yes[,] Your Honor.
prepare for her assignment as desk officer at the PNP Women and Children Protection
Center; that during her investigation of AAA and BBB, they were both crying; that without Q Could you tell the Court what is the appearance of the victim at the time of the
being asked leading questions and without being coached by her mother, AAA, 13 years old investigation?
and a first-year high school student, revealed in detail how the accused-appellant abused her
for several years and how he raped her that morning of February 5, 2009; that AAA told that
the first time she was raped by her father was when she was in Grade III, but this was the first A At that time Your Honor the victim was together with her mother, they were crying.
time she was telling anyone about the rapes; that BBB told PO3 Cobardo that she could not
imagine how her husband could commit such an outrage against their own daughter; that Q Both were crying?
from her own observations of AAA’s demeanor, PO3 Cobardo was convinced that she was
telling the truth.14 A Yes[,] Your Honor.

The accused-appellant’s defense consisted mainly of denial. From his testimony, the court Q When you conducted the investigation[,] the mother was present?
learned that the accused-appellant, his wife BBB and their two children, AAA and CCC,
livedin a one-room house in Taguig City; that he and his wife were employed as security A Yes[,] Your Honor, the mother was present.
guards in Taguig City; that on February 4, 2009, his wife was on night duty and came home
the next morning; that on the night of the alleged rape, he and his two children retired for the
Q You were aware of course when you inquired the age of the minor?
night at around midnight, and thus, he could not have sexually abused his daughter AAA
between 1:00 a.m. and 2:00 a.m. on February 5, 2009; that he and his wife used to fight
about her brothers Romulo and Rey Santos, whom he now suspected of influencing AAA to A Yes[,] Your Honor.
file the complaint for rape against him, although he treated themas his own brothers; that he
was arrested by the Barangay Tanodat 6:00 p.m. on February 5, 2009 as he was coming Q When she narrated the incident[,] was she coached by the mother?
from work.15
A No[,] Your Honor, the victim was not coached by the mother. It was the victim who
Relying on PO3 Cobardo’s testimony of what AAA narrated to her, the RTC considered the stated all the incident.
spontaneity of the declarations made by AAA as confirmed by PO3 Cobardoas part of the res
gestae, and convicted the accused-appellant. The court said: Q Did you make, did you use leading questions in conducting, propounding the
questions?
Thus, the court considers the spontaneity of the declarations made by AAA as confirmed by
PO3 Cobardo. Moreover, there is nothing on record that would compel the court to believe A No[,] Your Honor.
that said prosecution witness has improper motive to falsely testify against the accused-
appellant. Accordingly, it shall uphold the presumption of regularity in the performance of her Q How did you ask the victim? Was it in a question and answer where first you will
duties. Further, the testimony of PO3 Cobardo was corroborated by the findings of Dr. Jesille ask the victim to narrate the incident?
Baluyot of a shallow healed lacerations at 4 and 8 o’clock and deep healed laceration at5
o’clock positions in the hymen of AAA which Anogenital findings are diagnostic of previous
blunt force or penetrating trauma.16 (Citations omitted) A Yes[,] Your Honor. First I asked the victim to narrate the incident.
Q And then you propounded question in the question and answer form? WITNESS

A Yes[,] Your Honor. Yes[,] Your Honor.

Q After obtaining all the facts relative to the incident? COURT –

A Yes[,] Your Honor. Q Are you convinced that the victim is telling the truth?

Q And you found out that, was that the first time that the incident happened or A Yes[,] Your Honor, I am convinced.
several times already?
Q Why are you convinced? Convinced based on your questions that you
A During that interview[,] Your Honor[,] I found out that the victim was sexually propounded, why are you convinced?
abused by her father several times when she was in Grade III.
A Because for a father and daughter relationship it’s not good, it’s not easy to
Q You mentioned that the victim and her mother during your investigation were both accused [sic] your father of sexual abuse.
crying?
Q So judging from the appearance of the minor she would be able to tell the Court
A Yes[,] Your Honor[.] that she is telling the truth?

Q Did you inquire why? A Yes[,] Your Honor.

A The mother told me that she could not imagine that her husband molested their Q How many seminars have you attended relative to on how to conduct examination
daughter. on child abuse?

Q How about the daughter? Did you inquire? Did you allow her some time to rest? A Many times already[,] Your Honor.

A She was crying[,] Your Honor[,] since it was her first time to reveal the incident. x x x x17

Q So you asked her why she was crying? Significantly, it appears from the sworn statement,18 executed by AAA before PO3 Cobardo,
that she first revealed her ordeal to her cousin DDD that same afternoon of February 5, 2009.
A Yes[,] Your Honor. With DDD’s help, BBB confronted her daughter AAA, who told her that the accused-appellant
did not only rape her that morning, but had sexually abused her several times since she was
in Grade III.
Q Because, I notice, actually I noticed in the preliminary question you stated "hindi
ako magagalit, kahit ano ang sasabihin mo sa akin, naiintindihan mo ba lahat ng
sinabi ko". It may be a preliminary question because you have attended seminars on Appeal to the CA
this. Is that right?
On appeal to the CA, the accused-appellant maintained that due to the absence of AAA’s
A Yes[,] Your Honor. testimony, the prosecution failed to establish the circumstances proving beyond reasonable
doubt that he raped his daughter; that the testimonies of the prosecution witnesses PO3
Cobardo, BSF Estudillo and BSF Perlas, not being themselves victims or witnesses to the
COURT –
"startling occurrence" of rape, cannot create the hearsay exception of res gestae [literally,
"things done"]; and, that the medical findings of Dr. Baluyot do not prove that he had carnal
So judging from the preliminary question[,] I know that you had undergone seminars knowledge of AAA but only that she had had sexual relations.
on how to conduct questions on child abuse cases.
In its appellee’s brief, the Office of Solicitor General (OSG) asserted that although AAA did
not personally testify, and none of the prosecution witnesses had any direct knowledge of the
sexual molestation of AAA by the accused-appellant, his guilt was fully established by
circumstantial evidence. In particular, the OSG argued that the testimony of PO3 Cobardo
concerning what AAA narrated to her during her investigation was part of the res gestae
pursuant to Rule 130 of the Rules of Court. The OSG reasoned that AAA had just undergone
a startling occurrence at the time she told PO3 Cobardo that she had been raped by her
father that morning, a statement which PO3 Cobardo found spontaneous and credible; that
the gap between the sexual assault and the time when AAA made her narration to PO3
Cobardo was too short to permit fabrication by AAA of such a serious accusation against her
own father; and, that AAA made the charge in the presence of her mother could only have
lent credence to her claim. Moreover, the claim of rape by AAA is corroborated by Dr.
Baluyot’s finding that she has genital lacerations, in contrast to the accused-appellant’s only
defense of a general and uncorroborated denial.
The appellate court agreed withthe RTC and the OSG that the testimonies of the three
prosecution witnesses, PO3 Cobardo, BSF Estudillo and BSF Perlas, form part of the res
gestae, although none of them was a participant, victim or spectator to the crime. According
to the CA, "they heard what [AAA] said when she reported the sexual abuse committed
against her by accused-appellant Estibal."19 To further quote the CA:
Thus, in this case, even if prosecution witnesses BSF Estudillo, BSF Perlas and PO3
Cobardo were not present during the startling occurrence experienced by AAA, they heard
what she said when she reported the sexual abuse committed against her by accused-
appellant Estibal. There is no merit to the argument of accused-appellant Estibal that, since
prosecution witnesses BSF Estudillo, BSF Perlas and PO3 Cobardo were "neither
participants or victims or spectators to the crime of rape being charged against the accused-
appellant" their testimonies could not be considered as part of the res gestae.
The testimonies of said prosecution witnesses comply with the above-mentioned requisites,
viz., there is no question that the sexual abuse committed by accused-appellant Estibal
against her daughter AAA was a startling occurrence and a traumatic experience, at that; she
had no opportunity to contrive or devise falsehood when she reported the crime to BSF
Estudillo and BSF Perlas and narrated the incident to PO3 Cobardo hours after the incident;
and, the statements she made was relative to her sexual abuse by accused-appellant Estibal
and its attending circumstances.
There might be an intervening period between the time the crime of rape was committed and
the first time it was reported by AAA to the prosecution witnesses. However, said intervening
period of less than twenty-four (24) hours is so short a time for AAA to fully recover physically
and emotionally from such a traumatic and harrowing experience, considering her tender age
of only thirteen (13) years and the fact that her abuser is her own biological father.
Res gestae refers to statements made by the participants or the victims of, or the spectators
to, a crime immediately before, during, or after its commission. These statements are a
spontaneous reaction or utterance inspired by the excitement of the occasion, without any
opportunity for the declarant to fabricate a false statement. An important consideration is
whether there intervened, between the occurrence and the statement, any circumstance
calculated to divert the mind and thus restore the mental balance of the declarant; and afford
an opportunity for deliberation.
Indeed, the statements made by AAA before BSF Estudillo, BSF Perlas and PO3 Cobardo
were spontaneous and her utterances were inspired by the excitement of the occasion,
without any opportunity to fabricate a false statement.
There is, of course, no hard and fast rule by which spontaneity may be determined although a
number of factors have been considered, including, but not always confined to: (1) the time
that has lapsed between the occurrence of the act or transaction and the making of the
statement, (2) the place where the statement is made, (3) the condition of the declarant when
the utterance is given, (4) the presence or absence of intervening events between the
occurrence and the statement relative thereto, and (5) the nature and the circumstances of
the statement itself. The Supreme Court, in People v. Manhuyod, has explained the import of
the first four factors; thus: "x x x (C)ases are not uniform as to the interval of time that should
separate the occurrence of the startling event and the making of the declaration. What is
important is that the declarations were voluntarily and spontaneously made ‘so nearly
contemporaneous as to be in the presence of the transaction which they illustrate or explain,
and were made under such circumstances as necessarily to exclude the ideas of design or
deliberation.’
"As to the second factor, it may be stressed that ‘a statement made, or an act done, at a
place some distance from the place where the principal transaction occurred will not ordinarily
possess such spontaneity as would render it admissible.’
"Anent the third factor, ‘[a] statement will ordinarily be deemed spontaneous if, at the time
when it was made, the conditions of the declarant was such as to raise an inference that the
effect of the occurrence on his mind still continued, as where he had just received a serious
injury, was suffering severe pain, or was under intense excitement. Conversely, a lack of
spontaneity may be inferred from the cool demeanor of declarant, his consciousness of the
absence of all danger, his delay in making a statement until witnesses can be procured, or
from the fact that he made a different statement prior to the one which is offered in evidence.’
"With regard to the fourth factor, what is to be considered is whether there intervened
between the event or transaction and the making of the statement relative thereto, any
circumstance calculated to divert the mind of the declarant which would thus restore his
mental balance and afford opportunity for deliberation."20 (Citations omitted)
Automatic review by the Supreme Court
Without the res gestae exception, the evidence of the prosecution would consist mainly of
hearsay statements by PO3 Cobardo, BSF Estudillo and BSF Perlas all reiterating what AAA
allegedly told them. The same question, whether res gestaeas an exception to the hearsay
rule must be appreciated from the factual circumstances of the case,NO
is now before this Court in this automatic review.
To pardon her father, AAA chose to ignore the trial court’s subpoenas to testify in her rape
complaint, thus leaving missing a vital component in the prosecution’s case, her eyewitness
account. But in itself, her pardon would not have worked the dismissal of the rape case since
it was given after the complaint was filed in court.
AAA never appeared at the trial proper despite several subpoenas for her to testify, and
subsequent subpoenas could not be served after her family moved to a new but unknown
address on April 13, 2010. Recall that at the pre-trial, BBB told the court that she was no
longer interested in pursuing the case against the accused-appellant since her daughter had
already pardoned him. It has, however, been held that even if it is construed as a pardon,
AAA’s desistance is not by itself a ground to dismiss the complaint for rape against the
accused-appellant once the complaint has been instituted in court.21
In People v. Bonaagua,22 the accused tried to invoke the affidavit of desistance executed by
the minor victim’smother stating that they would no longer pursue the rape cases against him.
But the high court pointed out that since R.A. No. 8353, or the Anti-Rape Law, took effect in
1997, rape is no longer considered a crime against chastity. Having been reclassified as a
crime against persons, it is no longer considered a private crime, or one which cannot be
prosecuted except upon a complaint filed by the aggrieved party. Thus, pardon by the
offended party of the offender will not extinguish his criminal liability.
"As a rule, a recantation or an affidavit of desistance is viewed with suspicion and reservation.
Jurisprudence has invariably regarded such affidavit as exceedingly unreliable, because it
can easily be secured from a poor and ignorant witness, usually through intimidation or for
monetary consideration. Moreover, there is always the probability that it would later on be
repudiated, and criminal prosecution would thus be interminable."23
The gravity of the crime of rape and its imposable penalty, vis-á-vis the ease with which a
charge of rape can be made, compels the Supreme Court to conduct a thorough review of
rape every conviction.
A charge of rape by its very nature often must be resolved by giving primordial consideration
to the credibility of the victim’s testimony.24 Because conviction may rest solely thereon, the
victim’s testimony must be credible, natural, convincing, and consistent with human nature
and the normal course of things,25 it must be scrutinized with utmost caution, and
unavoidably, the victim’s credibility must be put on trial as well.26
But if for some reason the complainant fails or refuses to testify, as in this case, then the
court must consider the adequacy of the circumstantial evidence established by the
prosecution. In People v. Canlas,27 the Court said:
Where the court relies solely on circumstantial evidence, the combined effect of the pieces of
circumstantial evidence must inexorably lead to the conclusion that the accused is guilty
beyond reasonable doubt. Conviction must rest on nothing less than moral certainty, whether
it proceeds from direct or circumstantial evidence.28
xxxx
x x x Circumstantial evidence is that evidence which proves a fact or series of facts from
which the facts in issue may be established by inference. It is founded on experience,
observed facts and coincidences establishing a connection between the known and proven
facts and the facts sought to be proved. Conviction may be warranted on the basis of
circumstantial evidence provided that: (1) there is more than one circumstance; (2) the facts
from which the inferences are derived are proven; and (3) the combination of all the
circumstances is such as to produce a conviction beyond reasonable doubt. With respect to
the third requisite, it is essential that the circumstantial evidence presented must constitute an
unbroken chain which leads one to a fair and reasonable conclusion pointing to the accused,
to the exclusion of others, as the guilty person.29 (Citations omitted)
The Court is called upon to review the verdict of conviction below, keeping in mind the
following principles as guidance: (1) an accusation for rape can be made with facility, while
the accusation is difficult to prove, it is even more difficult for the accused, albeit innocent, to
disprove; (2) considering that, in the nature of things, only two persons are usually involved in
the crime of rape, the testimony of the complainant must be scrutinized with extreme care;
and (3) the evidence for the prosecution must succeed or fail on its own merits, and cannot
be allowed to derive strength from the weakness of the evidence for the defense.30
In essence, the res gestaeexception to the hearsay rule provides that the declarations must
have been "voluntarily and spontaneously made so nearly contemporaneous as to be in the
presence of the transaction which they illustrate and explain, and weremade under such
circumstances as necessarily to exclude the idea of design or deliberation."
Section 36 of Rule 130 of the Rules of Court provides that "a witness can testify only to those
facts which he knows of his personal knowledge; that is, which are derived from his own
perception, except as otherwise provided in these rules." Res gestae, one of eleven (11)
exceptions to the hearsay rule, is found in Section 42 of Rule 130, thus:
Sec. 42. Part of res gestae. – Statements made by a person while a startling occurrence is
taking place orimmediately prior or subsequent thereto with respect to the circumstances
thereof, may be given in evidence as part of the res gestae. So, also, statements
accompanying an equivocal act material to the issue, and giving it a legal significance may be
received as part of the res gestae.
In People v. Ner,31 this Court elaborated on Section 36 of Rule 130 as follows:
[T]hat declarations which are the natural emanations or outgrowths of the act or occurrence in
litigation, although not precisely concurrent in point of time, if they were yet voluntarily and
spontaneously madeso nearly contemporaneous as to be in the presence of the transaction
which they illustrate and explain, and weremade under such circumstances as necessarily to
exclude the idea of design or deliberation, must, upon the clearest principles of justice, be
admissible as part of the act or transaction itself.32 (Italics in the original)
The Court enumerated three essential requisites for the admissibility of a given statement as
part of res gestae, to wit:
All that is required for the admissibility of a given statement as part of res gestae,is that it be
made under the influence of a startling event witnessed by the person who made the
declaration before he had time to think and make up a story, or to concoct or contrive a
falsehood, or to fabricate an account, and without any undue influence in obtaining it, aside
from referring to the event in question or its immediate attending circum[s]tances.33 (Citations
omitted)
There are then three essential requisites to admit evidence as part of the res gestae, namely:
(1) that the principal act, the res gestae, be a startling occurrence; (2) the statements were
made before the declarant had the time to contrive or devise a falsehood; and (3) that the
statements must concern the occurrence in question and its immediate attending
circumstances.34
In People v. Dianos,35 the Court acknowledged that there are no hard and fast rules in
determining the spontaneity of a declaration, but at least five factors have been considered:
By res gestae, exclamations and statements made by either the participants, victims, or
spectators to a crime, immediately before, during or immediately after the commission of the
crime, when the circumstances are such that the statements constitute nothing but
spontaneous reaction or utterance inspired by the excitement of the occasion there being no
opportunity for the declarant to deliberate and to fabricate a false statement become
admissible in evidence against the otherwise hearsay rule of inadmissibility. x x x.
There is, of course, no hard and fast rule by which spontaneity may be determined although a
number of factors have been considered, including, but not always confined to, (1) the time
that has lapsed between the occurrence of the act or transaction and the making of the
statement, (2) the place where the statement is made, (3) the condition of the declarant when
the utterance is given, (4) the presence or absence of intervening events between the
occurrence and the statement relative thereto, and (5) the nature and the circumstances of
the statement itself. x x x.36 (Citations omitted and italics in the original)
In People v. Jorolan,37 the Court emphasized that there must be no intervening circumstances
between the res gestae occurrence and the time the statement was made ascould have
afforded the declarant an opportunity for deliberation or reflection; in other words, the
statement was unreflected and instinctive:
An important consideration is whether there intervened between the occurrence and the
statement any circumstance calculated to divert the mind of the declarant, and thus restore
his mental balance and afford opportunity for deliberation. His statement then cannot be
regarded as unreflected and instinctive, and isnot admissible as part of the res gestae. An
example is where he had been talking about matters other than the occurrence in question or
directed his attention to other matters.38 (Citation omitted and emphasis ours)
In People v. Salafranca,39 the Court cited two tests in applying the res gestaerule: a) the act,
declaration or exclamation is so intimately interwoven or connected with the principal fact
orevent that it characterizes as to be regarded as a part of the transaction itself; and b) the
said evidence clearly negatives any premeditation or purpose to manufacture testimony.
The term res gestae has been defined as "those circumstances which are the undesigned
incidents of a particular litigated act and which are admissible when illustrative of such act." In
a general way, res gestae refers to the circumstances, facts, and declarations that grow out
of the main fact and serve to illustrate its character and are so spontaneous and
contemporaneous with the main fact asto exclude the idea of deliberation and fabrication.
The rule on res gestae encompasses the exclamations and statements made by either the
participants, victims, or spectators to a crime immediately before, during, or immediately after
the commission of the crime when the circumstances are such that the statements were
made as a spontaneous reaction or utterance inspired by the excitement of the occasion and
there was no opportunity for the declarant to deliberate and to fabricate a false statement.
The test of admissibility of evidence as a part of the res gestaeis, therefore, whether the act,
declaration, or exclamation is so intimately interwoven or connected with the principal fact or
event that it characterizes as to be regarded as a part of the transaction itself, and also
whether it clearly negatives any premeditation or purpose to manufacture
testimony.40 (Citations omitted, emphasis ours and italics in the original)
By way of illustration, in People v. Villarama,41 the 4-year-old rape victim did not testify, but
the accused, an uncle of the victim, was convicted on the basis of what the child told her
mother. The Court said:
The critical factor is the ability or chance to invent a story of rape. At her age, the victim could
not havehad the sophistication, let alone the malice, to tell her mother that her uncle made
her lie down, took off her panties and inserted his penis inside her vagina.
The shock of an unwelcome genital penetration on a woman is unimaginable, more so to a
four-year-old child. Such a brutal experience constituted unspeakable trauma. The fact that
Elizabeth was still crying when her parents arrived reinforces the conclusion that she was still
in a traumatic state when she made the statements pointing to appellant.
xxxx
x x x [I]n Contreras, the victim’s statement that she had been sexually molested by the
accused was not received under the res gestae exception to the hearsay rule, because her
statement did not refer to the incident witnessed by Nelene but to a general pattern of
molestation of her and her companions by the accused. In contrast, Elizabeth’s declaration to
her mother regarding the then just concluded assault were so full of details specific to the
incident that there could be no doubt she was referring to the same incident witnessed by
Ricardo Tumulak.42
In People v. Velasquez,43 the 2-year-old rape victim told her mother the following: a) "Si
Tatang kakayan na ku pu." ("Tatang has been doing something to me."); and b) "I-tatang kasi,
kinayi ne pu ing pekpek ku kaya masakit ya." ("Because Tatang has been doing something to
my private part, that is why it hurts.") The girl then showed her mother her private part, which
was swollen and oozing with pus, and then she gestured by slightly opening or raising her
right foot, and using her right finger, to show what the accused had done to it. 44 The Court
ruled:
We hold, therefore, that Aira’s statements and acts constitute res gestae, as it was made
immediately subsequent to a startling occurrence, uttered shortly thereafter by her with
spontaneity, without prior opportunity to contrive the same. Regail’s account of Aira’s words
and, more importantly, Aira’s gestures, constitutes independently relevant statements distinct
from hearsay and admissible not as to the veracity thereof but to the fact that they had been
thus uttered.
Under the doctrine of independently relevant statements, regardless of their truth or falsity,
the fact that such statements have been made is relevant. The hearsay rule does not apply,
and the statements are admissible as evidence. Evidence as to the making of such statement
is not secondary but primary, for the statement itself may constitute a fact in issue or be
circumstantially relevant as to the existence of such a fact.45 (Citation omitted)
In People v. Lupac,46 the Court accepted as part of res gestae the 10-year-old victim’s
denunciation ofher uncle to a neighbor whom she met soon after she managed to get away
from her uncle after the rape, uttering the words "hindot" and "inano ako ni Kuya Ega."47
In People v. Moreno,48 shortly after the three accused left the house where the complaining
victims workedas maids, the maids told their employers, who had just arrived, that they had
been raped. The employers testified in court on these statements. The Court held that the
maids’ statements were part of res gestae since they were spontaneously made as soon as
the victims had opportunity to make them without threat to their lives. The Court said:
This exception is based on the belief that such statements are trustworthy because made
instinctively, "while the declarant’s mental powers for deliberation are controlled and stilled by
the shocking influence of a startling occurrence, so that all his utterances at the time are the
reflex products of immediate sensual impressions, unaided by retrospective mental action."
Said natural and spontaneous utterances are perceived to be more convincing than the
testimony of the same person on the witness stand.49 (Citations omitted)
But in People v. Contreras,50 the accused was acquitted in one of several statutory rape
charges because, among other things, the prosecution failed to present the victim, a 6-year-
old girl, and the court found that her alleged res gestae statement referred not to the incident
or circumstance testified to by the witness but rather to a general patternof molestation which
she and her companions had endured for some time already.
AAA’s statements to the barangay tanodand the police do not qualify as part ofres gestae in
view of the missing element of spontaneity and the lapse of an appreciable time between the
rape and the declarations which afforded her sufficient opportunity for reflection.
In People v. Manhuyod, Jr.,51 the Court stressed that in appreciating res gestaethe element of
spontaneity is critical. Although it was acknowledged that there is no hard and fast rule to
establish it, the Court cited a number of factors to consider, already mentioned in Dianos.The
review of the facts below constrains this Court to take a view opposite that of the RTC and
the CA.
It is of particular significance to note that in her sworn statement to the police, AAA admitted
that she first revealed her ordeal of sexual abuse to her cousin DDD in the afternoon of
February 5, 2009, although her mother BBB had returned from her overnight guard duty that
morning. Shocked by what AAA told him, DDD relayed to BBB "na may problema [si AAA]."
BBB thus confronted her, and AAA in her own words narrated that, "kaya kinausap na po ako
ni Mama kung ano ang problema ko kaya sinabi ko na po ang ginawa sa akin ni Papa ko po
kaya nalaman na lahat ni Mama ang panggagahasa sa akin ni Papa."52
After an anguished silence of five years, finally AAA found the courage to reveal to her
mother her heart-rending saga of sexual abuse by her own father. Emboldened by her cousin
DDD’s moral support, AAA told her mother that she had been hiding her dark secret since
Grade III. But as soon as BBB learned, events quickly took their logical course. With BBB
now leading the way, BBB and AAA sought the help of the barangay tanodthat same day
between 5:00 p.m. and 6:00 p.m. to have the accused-appellant arrested. At around 6:00
p.m., they were able to arrest him as he was coming home. Later that night, AAA
accompanied by BBB gave her statement to PO3 Cobardo of the PNP women’s desk.
AAA’s revelation to DDD and BBB set off an inexorable chain of events that led to the arrest
of the accused-appellant. There is no doubt, however, that there was nothing spontaneous,
unreflected or instinctive about the declarations which AAA made to the barangay tanodand
later that night to the police. Her statements werein fact a re-telling of what she had already
confessed to her mother earlier that afternoon; this time however, her story to the tanods and
the police was in clear, conscious pursuit of a newly formed resolve, exhorted by her mother,
to see her father finally exposed and put behind bars. AAA made her declarations to the
authorities precisely because she was seeking their help to punish the accused-appellant.
There was then nothing spontaneous about her so-called res gestaenarrations, even as it is
remarkable to note that while AAA was giving her said statements to the police, her father
was already being held in detention, and the investigation was conducted exactly to
determine if there was a basis to hold him for trial for rape.
Res gestae speaks of a quick continuum of related happenings, starting with the occurrence
of a startling event which triggered it and including any spontaneous declaration made by a
witness, participant or spectator relative to the said occurrence. The cases thisCourt has cited
invariably reiterate that the statement must be an unreflected reaction of the declarant,
undesigned and free of deliberation. In other words, the declarant is spontaneously moved
merely to express his instinctive reaction concerning the startling occurrence, and not to
pursue a purpose or design already formed in his mind. In People v. Sanchez,53 the Court be
labored to explain that startling events "speak for themselves, giving out their fullest meaning
through the unprompted language of the participants:"54
Res gestae means the "things done." It "refers to those exclamations and statements made
by either the participants, victims, or spectators to a crime immediately before, during, or
immediately after the commission of the crime, when the circumstances are such that the
statements were made as a spontaneous reaction or utterance inspired by the excitement of
the occasion and there was no opportunity for the declarant to deliberate and to fabricate a
false statement." A spontaneous exclamation is defined as "a statement or exclamation made
immediately after some exciting occasion by a participant or spectator and asserting the
circumstances of that occasion as it isobserved by him. The admissibility of such exclamation
is based on our experience that, under certain external circumstances of physical or mental
shock, a stress of nervous excitement may be produced in a spectator which stills the
reflective faculties and removes their control, so that the utterance which then occurs is a
spontaneous and sincere response to the actual sensations and perceptions already
produced by the external shock. Since this utterance is made under the immediate and
uncontrolled domination of the senses, rather than reason and reflection, and during the brief
period when consideration of self-interest could not have been fully brought to bear,’ the
utterance may be taken as expressing the real belief of the speaker as to the facts just
observed by him." In a manner of speaking, the spontaneity of the declaration is such that the
declaration itself may be regarded as the event speaking through the declarant ratherthan the
declarant speaking for himself. Or, stated differently, "x x x the events speak for themselves,
giving out their fullest meaning through the unprompted language of the participants. The
spontaneous character of the language is assumed to preclude the probability ofits
premeditation or fabrication. Its utterance on the spur of the moment is regarded, with a good
dealof reason, as a guarantee of its truth.55 (Citations omitted)
The RTC and the CA held that the inculpatory statements of AAA to the barangay tanodand
the police are part of the res gestae occurrence of the rape. This is error. It is obvious that
AAA had by then undergone a serious deliberation, prodded by her mother, whose own
outrage as the betrayed wife and grieving mother so emboldened AAA that she finally
resolved to emerge from her fear of her father. Here then lies the crux of the matter: AAA had
clearly ceased to act unthinkingly under the immediate influence of her shocking rape by her
father, and was now led by another powerful compulsion, a new-found resolve to punish her
father.
Hearsay evidence is accorded no probative value for the reason that the original declarant
was not placed under oath or affirmation, nor subjected to cross-examination by the defense,
except in a few instances as where the statement is considered part of the res gestae.
This Court has a situation where the incriminatory statements allegedly made by AAA were
conveyed to the trial court not by AAA herself but by PO3 Cobardo, BSF Estudillo and BSF
Perlas. In particular, PO3 Cobardo made a summation of what she claims was AAA’s
narration of her ordeal, along with her own observations of her demeanor during the
investigation. But unless the prosecution succeeded in invoking res gestae, their testimonies
must be dismissed as hearsay, since AAA’s statements were not subjected to cross-
examination consistent with the constitutional right of the accused-appellant to confront the
evidence against him.
Hearsay testimony is devoid of probative value, and unless it is part of res gestae, the
appealed decision runs contrary to the well-settled rule against admitting hearsay evidence,
aptly described as "evidence not of what the witness knows himself but of what he has heard
from others."56 The hearsay rule puts in issue the trustworthiness and reliability of hearsay
evidence, since the statement testified to was not given under oath or solemn affirmation, and
more compellingly, the declarant was not subjected to cross examination by the opposing
party to testhis perception, memory, veracity and articulateness, on whose reliability the
entire worth of the out-of-court statement depends.57 It is an immemorial rule that a witness
can testify only as to his own personal perception or knowledge of the actual facts or events.
His testimony cannot be proof as to the truth of what he learned or heard from others.58 But
equally important, Section 14(2) of the Bill of Rights guarantees that "[i]n all criminal
prosecutions, the accused shall x x x enjoy the right x x x to meet the witnesses face to face x
x x." By allowing the accused to test the perception, memory, and veracity of the witness, the
trial court is able to weigh the trustworthiness and reliability of his testimony. There is no
gainsaying that the right to confront a witness applies with particular urgency in criminal
proceedings, for at stake is a man’s personal liberty, universally cherished among all human
rights.
In Patula v. People,59 the Court rendered a helpful disquisition on hearsay evidence, why it
must be rejected and treated as inadmissible, and how it can be avoided:
To elucidate why the Prosecution’s hearsay evidence was unreliable and untrustworthy, and
thus devoid of probative value, reference is made to Section 36 of Rule 130, Rules of Court, a
rule that states that a witness can testify only to those facts that she knows of her personal
knowledge; that is, which are derived from her own perception, except as otherwise provided
in the Rules of Court. The personal knowledge of a witness isa substantive prerequisite for
accepting testimonial evidence that establishes the truth of a disputed fact. A witness bereft
of personal knowledge of the disputed fact cannot be called upon for that purpose because
her testimony derives its value not from the credit accorded to her as a witness presently
testifying but from the veracity and competency of the extra judicial source of her information.
In case a witness is permitted to testify based on what she has heard another person say
about the facts in dispute, the person from whom the witness derived the information on the
facts in dispute is not in court and under oathto be examined and cross-examined. The
weight of such testimony then depends not upon the veracity of the witness but upon the
veracity of the other person giving the information to the witness without oath. The
information cannot be tested because the declarant is not standing in court as a witness and
cannot, therefore, be cross-examined.
It is apparent, too, thata person who relates a hearsay is not obliged to enter into any
particular, to answer any question, to solve any difficulties, to reconcile any contradictions, to
explain any obscurities, to remove any ambiguities; and that she entrenches herself in the
simple assertion that she was told so, and leaves the burden entirely upon the dead or absent
author. Thus, the rule against hearsay testimony rests mainly on the ground that there was no
opportunity to cross-examine the declarant. The testimony may have been given under oath
and before a court of justice, but if it is offered against a party who is afforded no opportunity
to cross-examine the witness, it is hearsay just the same.
Moreover, the theory of the hearsay rule is that when a human utterance is offered as
evidence of the truth of the fact asserted, the credit of the assertor becomes the basis of
inference, and, therefore, the assertion can be received as evidence only whenmade on the
witness stand, subject to the test of cross-examination. However, if an extrajudicial utterance
is offered, not as an assertion to prove the matter asserted but without reference to the truth
of the matter asserted, the hearsay rule does not apply. For example, in a slander case, if a
prosecution witness testifies that he heard the accused say that the complainant was a thief,
this testimony is admissible not to prove that the complainant was really a thief, but merely to
show that the accused uttered those words. This kind of utterance is hearsay in character but
is not legal hearsay. The distinction is, therefore, between (a)the fact that the statement was
made, to which the hearsay rule does not apply, and (b)the truth of the facts asserted in the
statement, to which the hearsay rule applies.
Section 36, Rule 130 of the Rules of Court is understandably not the only rule that explains
why testimony that is hearsay should be excluded from consideration. Excluding hearsay also
aims to preserve the right of the opposing party to cross-examine the original declarant
claiming to have a direct knowledge of the transaction or occurrence. If hearsay is allowed,
the right stands tobe denied because the declarant is not in court. It is then to be stressed
that the right to cross-examine the adverse party’s witness, being the only means of testing
the credibility of witnesses and their testimonies, is essential to the administration of justice.
To address the problem of controlling inadmissible hearsay as evidence to establish the truth
in a dispute while also safeguarding a party’s right to cross-examine her adversary’s witness,
the Rules of Court offers two solutions. The first solution is to require that allthe witnesses in
a judicial trial or hearing be examined only in court under oath or affirmation. Section 1, Rule
132 of the Rules of Courtformalizes this solution, viz.:
"Section 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 ofanswer, the
answers of the witness shall be given orally."
The second solution is to require that allwitnesses be subject to the cross-examination by the
adverse party. Section 6, Rule 132 of the Rules of Court ensures this solution thusly:
"Section 6. Cross-examination; its purpose and extent.—Upon the termination of the direct
examination, the witness may be cross-examined by the adverse party as to any matters
stated in the direct examination, or connected therewith, with sufficient fullness and freedom
to test his accuracy and truthfulness and freedom from interest or bias, or the reverse, and to
elicit all important facts bearing upon the issue."
Although the second solution traces its existence to a Constitutional precept relevant to
criminal cases, i.e., Section 14, (2), Article III, of the 1987 Constitution, which guarantees
that: "In all criminal prosecutions, the accused shall x x x enjoy the right x x x to meet the
witnesses face to face x x x," the rule requiring the cross-examination by the adverse party
equally applies to non-criminal proceedings.
We thus stress that the rule excluding hearsay as evidence is based upon serious concerns
about the trustworthiness and reliability of hearsay evidence due to its not being given under
oath or solemn affirmation and due to its not being subjected to cross-examination by the
opposing counsel to test the perception, memory, veracity and articulateness of the out-of-
court declarant or actor upon whose reliability the worth of the out of-court statement
depends.60 (Citations omitted, emphasis ours and italics in the original)
When inculpatory facts are susceptible of two or more interpretations, one of which is
consistent with the innocence of the accused, the evidence does not fulfill or hurdle the test of
moral certainty required for conviction.
It is well-settled, to the pointof being elementary, that when inculpatory facts are susceptible
to two or more interpretations, one of which is consistent with the innocence of the accused,
the evidence does not fulfill or hurdle the test of moral certainty required for conviction. 61 A
forced application of the res gestae exception below results if the Court says that AAA’s
incriminatory statements were spontaneous and thus part of a startling occurrence. It
produces an outright denial of the right of the accused-appellant to be presumed innocent
unless proven guilty, not to mention that he was also denied his right to confront the
complainant. As the Court held in People v. Ganguso:62
An accused has in his favor the presumption of innocence which the Bill of Rights
guarantees.1âwphi1 Unless his guilt is shown beyond reasonable doubt, he must be
acquitted. This reasonable doubt standard is demanded by the due process clause of the
Constitution which protects the accused from conviction except upon proof beyond
reasonable doubt of every fact necessary to constitute the crime with which he is charged.
The burden of proof is on the prosecution, and unless it discharges that burden the accused
need not even offer evidence in his behalf, and he would be entitled to an acquittal. Proof
beyond reasonable doubt does not, of course, mean such degree of proof as excluding the
possibility of error, produces absolute certainty. Moral certainty only is required, or that
degree of proof which produces conviction in an unprejudiced mind. The conscience must be This Petition for Review on Certiorari1 assails the December 18, 2009 Decision2 of the Court
satisfied that the accused is responsible for the offense charged.63 (Citations omitted) of Appeals (CA) in CA-G.R. CV No. 89346, which affirmed with modification the May 31, 2006
Decision3 of the Regional Trial Court (RTC), Branch 141 Makati City. The RTC dismissed the
This Court’s views are not a condonation of the bestiality of the accused-appellant but only Complaint4 for Sum of Money, which petitioner Land Bank of the Philippines (Land Bank) filed
indicate that there is reasonable doubt as to his guilt entitling him to acquittal. As the Court against respondent Emmanuel C. Oñate (Oñate), and ordered Land Bank to return the
stated in People v. Ladrillo:64 amount of ₱1,471,416.52 it unilaterally debited from his accounts. On separate appeals by
both parties, the CA affirmed the RTC Decision with modification that Land Bank was further
ordered to pay Oñate the sums of ₱60,663,488.11 and US$3,210,222.85 representing the
Rape is a very emotional word, and the natural human reactions to it are categorical:
undocumented withdrawals and drawings from his trust accounts with 12% per annum
sympathy for the victim and admiration for her in publicly seeking retribution for her
interest compounded annually from June 21, 1991 until fully paid.
outrageous misfortune, and condemnation of the rapist. However, being interpreters of the
law and dispensers of justice, judges must look at a rape charge without those proclivities
and deal with it withextreme caution and circumspection. Judges must free themselves of the Also assailed is the CA’s May 27, 2010 Resolution5 denying Land Bank’s Motion for
natural tendency to be overprotective of every woman decrying her having been sexually Reconsideration.6
abused and demanding punishment for the abuser. While they ought to be cognizant of the
anguish and humiliation the rape victim goes through as she demands justice, judges should Factual Antecedents
equally bear in mind that their responsibility is to render justice based on the law. 65 (Citation
omitted) Land Bank is a government financial institution created under Republic Act No. 3844.7 From
1978 to 1980, Oñate opened and maintained seven trust accounts with Land Bank, more
It needs no elaboration that in criminal litigation, the evidence of the prosecution must stand particularly described as follows:
or fall on its own merits and cannot draw strength from the weakness of the defense.66 "[T]he
burden ofproof rests on the [S]tate. The accused, ifhe so chooses, need notpresent evidence.
Trust Account No. Date Opened Beginning Balance
He merely has to raise a reasonable doubt and whittle away from the case of the prosecution.
The constitutional presumption of innocence demands no less,"67 even as it also demands no 01-014 09.07.78 ₱250,000.008
less than a moral certainty of his guilt.68
01-017 11.16.78 1,312,896.009
WHEREFORE, accused-appellant Anecito Estibal y Calungsag is hereby ACQUITTED. His 01-024 02.23.79 900,000.0010
immediate RELEASE from detention is hereby ORDERED, unless he is being held for
another lawful cause. Let a copy of this Decision be furnished to the Director of the Bureau of 01-075 10.08.79 500,000.0011
Corrections, Muntinlupa City for immediate implementation, who is then directed to report to
this Court the action he has taken within five (5) days from receipt hereof. 01-082 10.25.79 200,001.0012
01-089 03.18.80 43.9813
SO ORDERED.
01-125 03.13.80 188,161.0014
G.R. No. 192371               January 15, 2014
Each trust account was covered by an Investment Management Account (IMA) with Full
LAND BANK OF THE PHILIPPINES, Petitioner, Discretion15 and has a corresponding passbook where deposits and withdrawals were
vs. recorded. Pertinent portions common to the IMAs read:
EMMANUEL OÑATE, Respondent.
You [Land Bank] are appointed as my agent with full powers and discretion, subject only to
DECISION the following provisions:

DEL CASTILLO, J.: 1. You are authorized to hold, invest and reinvest the Fund and keep the same
invested, in your sole discretion, without distinction between principal and income, in
any assets which you deem advisable, without being restricted to those of the
character authorized for fiduciaries under any present or future law.
2. You shall have full power and authority:
(a) to treat all the Fund as one aggregate amount for purposes of investment,
and to deposit all or any part thereof with a reputable bank including your
own commercial banking department;
(b) to pay all costs, expenses and charges incurred in connection with the
administration, preservation, maintenance and protection of the Fund and to
charge the same to the Fund;
(c) to vote in person or by proxy on any stocks, bonds or other securities held
by you, for my/our account;
(d) to borrow money for the Fund (from your banking department or from
others) with or without giving securities from the Fund;
(e) to cause any asset of the Fund to be issued, held or registered in your
name or in the name of your nominee, or in such form that title will pass by
delivery, provided your records shall indicate the true ownership of such
assets;
(f) to hold the Fund in cash and to invest the same in fixed income
placements traded and sold by your own Money Market Division; and
(g) to sign all documents pertinent to the transaction which you will make in
behalf of this Account.
3. All actions taken by you hereunder shall be for my account and risk. Except for
willful default or gross misconduct, you shall not be liable for any loss or depreciation
in the value of the assets of the Fund arising from any cause whatsoever.
4. You shall maintain accurate records of all investments, receipts, disbursements
and other transactions of the Account. Records relating thereto shall be open at all
reasonable times to inspection and audit by me either personally or through duly
authorized representatives. Statements consisting of a balance sheet, portfolio
analysis, statement of income and expenses, and summary of investment changes
are to be sent to me/us quarterly.
I/We shall approve such accounting by delivering in writing to you a
statement to that effect or by failure to express objection to such accounting
in writing delivered to you within thirty (30) days from my receipt of the
accounting.
Upon your receipt of a written approval of the accounting, or upon the
passage of said period of time within which objections may be filed, without
written objections having been delivered to you, such accounting shall be
deemed to be approved, and you shall be released and discharged as to all
items, matters and things set forth in such accounting as if such accounting
had been settled and allowed by a decree of a court of competent
jurisdiction, in an action or proceeding in which you and I were
parties.16 (Emphasis supplied)
In a letter17 dated October 8, 1981, however, Land Bank demanded from
Oñate the return of ₱4 million it claimed to have been inadvertently deposited
to Trust Account No. 01-125 as his additional funds but actually represents
the total amount of the checks issued to Land Bank by its corporate
borrowers as payment for their pre-terminated loans. Oñate refused. To
settle the matter, a meeting was held, but the parties failed to reach an
agreement. Since then, the issue of "miscrediting" remained unsettled. Then
on June 21, 1991, Land Bank unilaterally applied the outstanding balance in
all of Oñate’s trust accounts against his resulting indebtedness by reason of
the "miscrediting" of funds. Although it exhausted the funds in all of Oñate’s
trust accounts, Land Bank was able to debit the amount of ₱1,528,583.48
only.18
Proceedings before the Regional Trial Court
To recoup the remaining balance of Oñate’s indebtedness, Land Bank filed a
Complaint19 for Sum of Money seeking to recover the amount of
₱8,222,687.8920 plus interest at the legal rate of 12% per annum computed
from May 15, 1992 until fully paid. Pertinent portions of Land Bank’s
Complaint reads:
5. By virtue of the Deeds of Revocable Trust executed on January 9, 1989 21 [sic] and
February 5, 198922 [sic] by Philippine Virginia Tobacco Administration (PVTA) and
Philippine Virginia Tobacco Board (PVTB), LANDBANK likewise became a Trustee of
certain funds belonging to PVTA and PVTB.
6. As authorized under the [Deeds] of Revocable Trust, on October 10, 1980,
LANDBANK invested ₱4 Million of the trust accounts of PVTA and PVTB, through a
direct lending scheme to the following companies:
(a) Republic Telephone Company, Inc. (RETELCO), under Promissory Note
No. 1145 dated October 10, 1980, for ₱1,021,250.00 with maturity date on
November 24, 1980, subject to automatic roll-over up to October 10, 1981 at
17% interest per annum.
 (b) Philippine Blooming Mills Company, Inc. (PBM), under Promissory Note
(unnumbered) dated October 10, 1980, for ₱1,021,250.00, with maturity date
on November 24, 1980, subject to automatic roll-over up to October 10,
1981, at 17% interest per annum;
(c) Cheng Ban Yek (CBY), under Promissory Note (unnumbered) dated
October 10, 1980, for ₱1,023,138.89, with maturity date on November 28,
1980, subject to automatic roll-over up to October 10, 1981, at 17% interest
per annum;
(d) Philippine Tobacco Filters Corporation (PHILTOFIL), under Promissory
Note (unnumbered) dated October 10, 1980, for ₱1,021,250.00, with maturity
date on November 24, 1980, subject to automatic roll-over up to October 10,
1981, at 17% interest per annum.
xxxx
7. Pursuant to such direct loan transactions granted to the aforementioned
companies, LANDBANK issued four (4) cashier’s checks for ₱1 Million each payable
to RETELCO, PBM, CBY, and PHILTOFIL x x x
8. On or about November 24 and 28, 1980, the aforesaid borrowers (RETELCO,
PBM, CBY, AND PHILTOFIL), pre-terminated their corresponding loans and paid
their respective obligations in the form of checks payable to LANDBANK and
delivered by [Oñate’s] representative, Mr. Eduardo Polonio.
9. When the checks were delivered, [Oñate] fraudulently misrepresented to
LANDBANK that they were [Oñate’s] additional capital contribution to his personal
trust account. On the basis of this misrepresentation, LANDBANK credited the
payments made by the aforementioned corporate borrowers to [Oñate’s] Trust
Account No. 01-125.
10. After the payments were credited to his personal trust account, Oñate proceeded
to withdraw the same, to the damage and prejudice of LANDBANK as the owner
thereof.23
In his Answer (With Compulsory Counterclaim),24 Oñate asserted that the setoff was without
legal and factual bases. He specifically denied any knowledge or involvement in the
transaction between Land Bank and its clients Philippine Virginia Tobacco Administration
(PVTA) and Philippine Virginia Tobacco Board (PVTB). He also denied that he made
fraudulent misrepresentation to induce the bank to deposit to his Trust Account No. 01-125 as
his additional capital the payments allegedly tendered by the bank’s corporate borrowers. He
maintained that all the funds in his accounts came from legitimate sources and that he was
totally unaware of and had nothing to do with the alleged "miscrediting." While Oñate
admitted having received the October 8, 1981 demand letter, he argued that he did not
acquiesce thereto and, in fact, disputed the same during a meeting with an officer of Land
Bank. He also refuted Land Bank’s claim that it formally demanded for the return of the
disputed amount as the September 3, 1991 letter25 it alluded to is not a demand letter. It was
sent in response to his counsel’s letter requesting for an accounting of his trust accounts.
By way of compulsory counterclaim, Oñate pointed out that per Balance Sheets26 as of June
30, 1982 the funds in his trust accounts already totaled ₱35,555,464.78. And as of January
1993, the accumulated balance of his accounts reached ₱229,222,160.25 and $3,472,683.94
computed as follows:
With interest at the rate of eighteen percent (18%) compounded every ninety (90) days from
the third quarter of 1982 to January, 1993, the trustor’s equity of ₱35,555,464.78 has earned
interest in the amount of ₱193,666,695.47. Adding the trustor’s equity to the aforesaid
accrued interest thereon, [Oñate’s] peso deposits [in] his trust accounts with plaintiff bank
have an accumulated balance of ₱229,222,160.25 as of January 1993 .
But that is not all. [Oñate’s] dollar deposits to Trust Account No. 01-014 (which is for an
"Undisclosed Principal") from the period July-September, 1980 alone, already amounted to
$1,690,943.78. x x x
With interest at the rate of six percent (6%) compounded every ninety (90) days from the first
quarter of 1981, the said dollar deposits have earned interest of $1,781,740.16 up to January,
1993. Thus, [Oñate’s] dollar deposits [in] Trust Account No. 01-014 have an aggregate
balance of $3,472,683.94 as of January 1993.27
Hence, even if the amount of ₱8,222,687.89 as of May 15, 1992 is deducted from the
outstanding balance of his trust accounts as of January 1993, the bank still owes him
₱220,999,472.36 on top of his dollar deposits amounting to $3,472,683.94.
Oñate prayed that a judgment be issued dismissing the Complaint and ordering Land Bank to
pay him:
i) The sum of ₱220,999,472.36, representing the outstanding balance on the peso
deposits [of Oñate’s] various trust accounts as of January 1993, with interest thereon
from said date at the rate of eighteen percent (18%) compounded every ninety (90)
days, until the said amount is fully paid;
ii) The sum of $3,472,683.94, representing the aggregate balance as of January
1993 on [Oñate’s] dollar deposits [in] Trust Account No. 01-014, with interest thereon
from said date at the rate of six percent (6%) compounded every ninety (90) days,
until the said amount is fully paid;
iii) The sum of ₱100,000,000.00 as and by way of moral damages;
 iv) The sum of ₱50,000,000.00 as and by way of exemplary damages; and
v) The sum of ₱15,000,000.00, or 20% of all sums collected, whichever is higher, as
and for attorney's fees, the further sum of ₱3,000.00 as appearance fee for each
hearing attended, and such other sums that may be proved during the trial as
litigation expenses.28
Upon Oñate’s motion, the RTC issued an Order29 dated May 27, 1994, creating a Board of
Commissioners (the Board) for the purpose of examining the records of Oñate’s seven trust
accounts, as well as to determine the total amount of deposits, withdrawals, funds invested,
earnings, and expenses incurred. It was composed of Atty. Engracio M. Escasinas, the Clerk
of Court of the RTC of Makati City, as the Chairman; and, Atty. Ma. Cristina C. Malab and Ms.
Adeliza M. Jaranilla representing Land Bank and Oñate, respectively, as members.
30 31
Initially, the Board submitted three reports.  But for clarity, the trial court ordered  the Board
to reconvene and to submit a consolidated report furnishing copies of the same to both
parties, who were given 10 days from receipt thereof to file their respective comments
thereto. The Board complied and on August 16, 2004 submitted its consolidated report. 32 As
summarized by the RTC, the said consolidated report revealed that there were
undocumented and over withdrawals and drawings33 from Oñate’s trust accounts:
Thus, the Commissioners’ Report showed that the total amount of drawings and withdrawals
from each account without withdrawal slips are as follows:
In Trust Account No. 01-014, there was a total withdrawals [sic] without withdrawal slips but
reflected in the passbook in the amount of ₱45,103,297.33 and this account showed a
negative balance of ₱40,367,342.34. On the dollar deposit under the same trust account,
there was a total [withdrawal] without withdrawal slips but reflected in the passbook in the
amount of $3,210,222.85.
In Trust Account No. 01-017, there was a total withdrawal without withdrawal slips in the
amount of ₱2,682,088.58 and there was an over withdrawal of ₱11,738,470.53 and
$30,000.00.
In Trust Account No. 01-024, there was a total withdrawal without withdrawal slips of
₱900,000.00 and over withdrawal of ₱13,310,328.01.
In Trust Account No. 01-075, there was a total withdrawal of ₱500,000.00 without withdrawal
slips and there was a negative balance of ₱33,342,132.64 and $286,399.34 on the dollar
account.
In Trust Account No. 01-082, the total amount of withdrawal without withdrawal slips but
reflected in the passbook was ₱1,782,741.86 and there was an over withdrawal of
₱14,031.63.
In Trust Account No. 01-089, there was a total withdrawal without withdrawal slips in the
amount of ₱5,054,809.00 but the report indicated that there was a negative balance of
₱1,296,441.92.
In Trust Account No. 01-125, there was a total withdrawal without withdrawal slips in the
amount of ₱4,640,551.34 and there was a negative balance of ₱58,327,459.23.34
On even date, the Board also submitted a Manifestation35 informing the RTC that its findings
as to the outstanding balance of each trust account may not be accurate considering that it
was not given ample opportunity to collate and sort out the documents related to each trust
account and that there may have been double take up of accounts since the documents
previously reviewed may have been considered again in subsequent reports.
In his Comment,36 Oñate asserted that the undocumented withdrawals mentioned in the
consolidated report should not be considered as cash outflows. Rather, they should be
treated as unauthorized transactions and the amounts subject thereof must be credited back
to his accounts.
Land Bank did not file any comment or objection to the Board’s consolidated comment.
During the pre-trial conference, the parties agreed that they would submit the case for
decision based on the reports of the Board after they have submitted their respective
memoranda. They also stipulated on the following issues for resolution of the RTC:
1. Whether x x x Oñate could claim on Trust Account Nos. 01-014 and 01-017 which
were opened for an undisclosed principal;
2. Whether x x x the undocumented withdrawals and drawings are considered valid
and regular and, conversely, if in the negative, whether x x x such amounts shall be
credited [back] to the accounts.37
In his Memorandum38 filed on July 12, 2005, Oñate reiterated that Land Bank should be held
liable for the undocumented withdrawals and drawings. For its part, Land Bank posited, inter
alia, that Trust Account Nos. 01-014 and 01-017 should be excluded from the computation of
Oñate’s counterclaim considering his allegation that said accounts are owned by an
undisclosed principal whom/which he failed to join as indispensable party. Land Bank further
theorized that Oñate must answer for the negative balances as revealed by the Board’s
reports.39
Thereafter, the case was submitted for decision.
Ruling of the Regional Trial Court
On May 31, 2006, the RTC rendered a Decision40 dismissing Land Bank’s Complaint for its
failure to establish that the amount of ₱4,086,888.89 allegedly "miscredited" to Oñate’s Trust
Account No. 01-125 actually came from the investments of PVTA and PVTB. Hence, the RTC
ordered Land Bank to restore the total amount of ₱1,471,416.52 which the bank unilaterally
debited from Oñate’s five trust accounts.41
With regard to Oñate’s counterclaim for the recovery of ₱220,999,472.36, as well as the
alleged US$3,472,683.94 balance of his dollar deposits in Trust Account No. 01-014, the
RTC ruled that under the IMAs, Land Bank had the authority to withdraw funds (as in fact it
was at all times in possession of the passbooks) from Oñate’s accounts even without a letter
of instruction or withdrawal slip coming from Oñate. It thus gave weight to the entries in the
passbooks since the same were made in the ordinary course of business. The RTC also
ruled that Oñate is deemed to have approved the entries in the statements of account that
were sent to him as he never interposed any objection thereto within the period given him to
do so.
Anent Land Bank’s claim for the negative balances, the RTC likewise denied the same for
Land Bank never sought them in its Complaint. Moreover, being the manager of the funds
and keeper of the records, the RTC held that Land Bank should not have allowed further
withdrawals if there were no more funds.
The RTC likewise debunked Land Bank’s argument that Oñate’s counterclaim with respect to
Trust Account Nos. 01-014 and 01-017 should be dismissed for his failure to join his
undisclosed principal. According to the RTC, Land Bank should have earlier invoked such
defense when it filed its answer to the counterclaim. Also, if it is true that said accounts are
not owned by Oñate, then the bank had no right to apply the funds in said accounts as
payment for the alleged personal indebtedness of Oñate.
The dispositive portion of the RTC’s Decision reads:
WHEREFORE, in view of all the foregoing, decision is hereby rendered dismissing the
complaint and ordering [Land Bank] to pay [Oñate] the total amount of ₱1,471,416.52
representing the total amount of funds debited from the five (5) trust accounts of the
defendant with legal rate of interest of 12% per annum, compounded yearly, effective on 21
June 1991 until fully paid.
No pronouncement as to costs.
SO ORDERED.42
Land Bank filed a Motion for Reconsideration.43 In an Order44 dated July 11, 2006, however,
the RTC denied the same.
Both parties appealed to the CA.
Ruling of the Court of Appeals
In its December 18, 2009 Decision,45 the CA denied Land Bank’s appeal and granted that of
Oñate. The CA affirmed the RTC’s ruling that Land Bank failed to establish the source of the
funds it claimed to have been erroneously credited to Oñate’s account. With respect to
Oñate’s appeal, the CA agreed that he is entitled to the unaccounted withdrawals which, as
found by the Board, stood at ₱60,663,488.11 and $3,210,222.85. 46 The CA’s ruling is
anchored on the bank’s failure to observe Sections X401 and X425 of the Bangko Sentral ng
Pilipinas Manual of Regulation for Banks (MORB) requiring it to give full disclosure of the
services it offered and conduct its dealings with transparency, as well as to render reports
that would sufficiently apprise its clients of the significant developments in the administration
of their accounts. Aside from allowing undocumented withdrawals, the CA likewise noted that
Land Bank failed to keep an accurate record and render an accounting of Oñate’s accounts.
For the CA, the entries in the passbooks are not sufficient because they do not specify where
the funds withdrawn from Oñate’s accounts were invested.
The dispositive portion of the CA’s Decision reads:
WHEREFORE, the appeal of plaintiff-appellant Land Bank is DENIED.
The appeal of defendant-appellant Emmanuel Oñate is hereby partially GRANTED.
Accordingly, the May 31, 2006 Decision of the Regional Trial Court, Branch 141, Makati City
is hereby MODIFIED in that, in addition to the previous grant of ₱1,471,416.52 representing
the total amount of funds debited from defendant-appellant Oñate’s trust accounts, plaintiff-
appellant Land Bank is hereby ordered to pay defendant-appellant Oñate the sum of
₱60,663,488.11 and $3,210,222.85 representing the undocumented withdrawals it debited
from the latter’s trust account with interest at the rate of 12% per annum, compounded yearly
from June 21, 1991 until fully paid.
SO ORDERED.47
Land Bank filed a Motion for Reconsideration.48 In a Resolution49 dated May 27, 2010,
however, the CA denied its motion. Hence, Land Bank filed the instant Petition for Review on
Certiorari based on the following issues:
Issues
1. WHETHER X X X THE ENTRIES IN THE PASSBOOK ISSUED BY LBP IN
OÑATE’S TRUST ACCOUNT (EXPRESS TRUST) COVERED BY AN INVESTMENT
MANAGEMENT AGREEMENT (IMA) WITH FULL DISCRETION ARE SUFFICIENT
TO MEET THE "RULE ON PRESUMPTION OF REGULARITY OF ENTRIES IN THE
COURSE OF BUSINESS" PROVIDED FOR UNDER SECTION 43, RULE 130 OF
THE RULES OF COURT.
 2. WHETHER X X X OÑATE IS ENTITLED TO CLAIM FOR ₱1,471,416.52 WHICH
IS NOT PLEADED AS COUNTERCLAIM IN HIS ANSWER PURSUANT TO
SECTION 2, RULE 9 OF THE RULES OF COURT.
3. WHETHER X X X OÑATE IS ENTITLED TO THE AWARD OF ₱60,663,488.11
AND $3,210,222.85 REPRESENTING THE ALLEGED UNDOCUMENTED
WITHDRAWALS DEBITED FROM HIS TRUST ACCOUNTS ON THE GROUND OF
LBP’S ALLEGED FAILURE TO MEET THE STANDARDS SET FORTH UNDER THE
2008 MANUAL ON REGULATIONS FOR BANKS (MORB) ISSUED BY BSP.
4. WHETHER X X X OÑATE MAY SUE [ON] TRUST ACCOUNT NOS. 01-014 AND
01-017 OPENED FOR AN UNDISCLOSED PRINCIPAL WITHOUT JOINING HIS
UNDISCLOSED PRINCIPAL.
5. WHETHER X X X THE AWARD OF INTEREST TO OÑATE AT THE RATE OF
TWELVE PERCENT (12%) PER ANNUM, COMPOUNDED YEARLY FROM JUNE
21, 1991 UNTIL FULLY PAID, IS VIOLATIVE OF ARTICLE 1959 OF THE CIVIL
CODE.50
Land Bank’s Arguments
Land Bank disputes the ruling of both lower courts that it failed to prove the fact of
"miscrediting" the amount of ₱4,086,888.89 to Oñate’s Trust Account No. 01-125 as the
deposit slips pertaining thereto were not presented. Land Bank maintains that in trust
accounts the passbooks are always in the bank’s possession so that it can record the cash
inflows and outflows even without the corresponding deposit or withdrawal slips. Citing
Section 43, Rule 130 of the Rules of Court, it asserts that the entries in the passbooks must
be accepted as proof of the regularity of the transactions reflected in the trust accounts,
including the "miscrediting" of ₱4,086,888.89, for they were made in the regular course of
business. In addition, said entries are supported by demand letters dated October 8,
198151 and September 3, 1991,52 as well as a Statement of Account53 as of May 15, 1992.
Land Bank avers that Oñate never questioned the statements of account and the reports it
presented to him and, hence, he is deemed to have approved all of them.
Land Bank also imputes error on the lower courts in ordering the restoration of the amount of
₱1,471,416.52 it debited from Oñate’s five trust accounts because he never sought it in his
Answer.
Petitioner bank vigorously argues that Oñate is not entitled to the undocumented withdrawals
amounting to ₱60,663,488.11 and $3,210,222.85. According to Land Bank, in holding it liable
for the said amounts, the CA erroneously relied on the 2008 MORB which was not yet in
existence at the time the transactions subject of this case were made or even at the time
when Land Bank filed its Complaint. In any case, Land Bank insists that it made proper
accounting and apprised Oñate of the status of his investments in accordance with the terms
of the IMAs. In its demand letter54 dated September 3, 1991 Land Bank made a full disclosure
that the total outstanding balance of all the trust accounts amounted to ₱1,471,416.52, but
that the same was setoff to recoup the "miscredited" funds. It faults Oñate for not interposing
any objection as his silence constitutes as his approval after 30 days from receipt thereof.
Land Bank asseverates that Oñate could have also inspected and audited the records of his
accounts at any reasonable time. But he never did.
Land Bank likewise faults the CA in treating the undocumented withdrawals as unauthorized
transactions as the Board’s reports do not state anything to that effect. It claims that the CA’s
reliance on the consolidated report in awarding the extremely huge amounts of
₱60,663,488.11 and $3,210,222.85 is a grievous mistake because the Board itself already
manifested that said report "may not be accurate." Consequently too, Land Bank asserts that
the reports of the Board cannot prevail over the entries in the passbooks which were made in
the regular course of business.
Land Bank further states that as computed by the Board, the amount of negative balances in
Oñate’s accounts reached ₱131,747,487.02 and $818,674.71.55 It thus proposes that if the
CA awarded to Oñate the undocumented withdrawals on the basis of the Board’s reports,
then it should have also awarded to Land Bank said negative balances or over withdrawals
as reflected in the same reports. After all, Oñate admitted in his Answer that all withdrawals
from his trust accounts were done in the ordinary course of business.
Furthermore, Land Bank claims that it argued before the CA that Oñate cannot sue on Trust
Account Nos. 01-014 and 01-017. While Oñate alleged that said accounts were opened for
an undisclosed principal, he did not, however, join as an indispensable party said principal in
violation of Section 3, Rule 3 of the Rules of Court. 56 Unfortunately, the CA sidestepped the
issue and proceeded to grant Oñate the unaccounted withdrawals from said accounts in the
aggregate amounts of ₱47,785,385.91 and $3,210,222.85. Following Quilatan v. Heirs of
Lorenzo Quilatan,57 Land Bank insists that this case should be remanded to the trial court
even if the issue of failure to implead an indispensable party was raised for the first time in a
Motion for Reconsideration of the trial court’s Decision.
Finally, Land Bank questions the ruling of the CA imposing 12% per annum rate of interest. It
contends that trust accounts are in the nature of "Express Trust" and not in the nature of a
regular deposit account where a debtor-creditor relationship exists between the bank and its
depositor. It was not indebted to Oñate but merely held and managed his funds. There being
no loan or forbearance of money involved, in the absence of stipulation, the applicable rate of
interest is only 6% per annum. Land Bank claims that the CA further erred when it
compounded the 12% interest even in the absence of any such stipulation.
Oñate’s Arguments
In opposing the Petition, Oñate argues that the issues raised by Land Bank involve factual
matters not proper in a petition for review on certiorari. He posits that the Petition does not fall
under any of the exceptions where this Court could review factual issues.
As to Land Bank’s allegation that he cannot claim the funds without divulging and impleading
as an indispensable party his undisclosed principal, Oñate points out that in his Answer (With
Compulsory Counterclaim) he alleged that Trust Account Nos. 01-014 and 01-017 were
opened for an "undisclosed principal." Yet Land Bank did not controvert his allegation. It is,
therefore, too late in the day for Land Bank to invoke non-joinder of principal as an
indispensable party. Besides, when he executed the IMAs, he was acting for himself and on
behalf of an undisclosed principal. Hence, he could claim and recover the amounts owing not
only to himself but also to his undisclosed principal.
Oñate likewise asserts that Land Bank, as uniformly found by both lower courts, failed to
prove by preponderance of evidence the fact of "miscrediting." As to the demand letters
adverted to by Land Bank, Oñate asserts that the lower courts did not consider the same
because they were not formally offered. Land Bank also failed to present competent and
sufficient evidence that he admitted his indebtedness on account of the "miscrediting" of
funds. Since Land Bank failed to prove the fact of "miscrediting" it had no right to debit any
amount from his accounts and must restore whatever funds it had debited therefrom. Oñate
also denies having failed to seek the return of the funds debited from his account.
Oñate further claims that in 1982 his peso trust accounts had a total balance of
₱35,555,464.78 while the dollar trust accounts had a balance of US$1,690,943.78. Since
then, however, he never received any report or update regarding his accounts until the bank
sent him financial reports dated June 30, 1991 indicating that the balances of his trust
accounts had been unilaterally setoff. According to Oñate, Land Bank’s failure to keep an
accurate record of his accounts and to make proper accounting violate several circulars of the
Central Bank.58 Hence, it is only proper to require the bank to return the undocumented
withdrawals which, as found by the Board, amount to ₱60,663,488.11 and $3,210,222.82. In
addition, Oñate points out Land Bank’s failure to keep an accurate record of his accounts as
shown by the huge amounts of unsupported withdrawals and drawings which constitutes
willful default if not gross misconduct in violation of the IMAs which, in turn, makes the bank
liable for its actions.
Anent Land Bank’s invocation that the entries in the passbook made in the ordinary course of
business are presumed correct and regular, Oñate argues that such presumption does not
relieve the trustee, Land Bank in this case, from presenting evidence that the undocumented
withdrawals and drawings were authorized. In any case, the presumption invoked by Land
Bank does not lie as one of its elements – that the entrant must be deceased or unable to
testify – is lacking. Land Bank cannot also excuse itself for failing to regularly submit to him
accounting reports as, anyway, he was free to inspect the records at any reasonable day.
Oñate emphasizes that it is the duty of the bank to keep him updated with significant
developments in his accounts.
In refutation of Land Bank’s claim to negative balances and over withdrawals, Oñate posits
that the bank cannot benefit from its own negligence in mismanaging the trust accounts.
Lastly, Oñate defends the CA’s grant of 12% per annum rate of interest as under BSP
Circular No. 416, said rate shall be applied in cases where money is transferred from one
person to another and the obligation to return the same or a portion thereof is adjudged. In
any event, Land Bank is estopped from disputing said rate for Land Bank itself applied the
same 12% per annum rate of interest when it sought to recover the amount allegedly
"miscredited" to his account. As to the compounding of interest, Oñate claims that the parties
intended that interest income shall be capitalized and shall form part of the principal.
Our Ruling
We deny the Petition.
The issues raised are factual and do not
involve questions of law.
From the very start the issues involved in this case are factual – the very reason why the RTC
created a Board of Commissioners to assist it in examining the records pertaining to Oñate’s
accounts and determine the respective cash inflows and outflows in said accounts.
Thereafter, the parties agreed to submit the case based on the Board’s reports. And when the
controversy reached the CA, the appellate court basically conducted an "assiduous
assessment of the evidentiary records."59 No question of law was ever raised for
determination of the lower courts. Now, Land Bank practically beseeches us to assess the
probative weight of the documentary evidence on record to resolve the same basic issues of
(i) whether Land Bank "miscredited" ₱4,086,888.89 to Trust Account No. 01-125 and (ii)
"whether x x x the undocumented withdrawals and drawings are considered valid and regular
and, conversely, if in the negative, whether x x x such amounts shall be credited to the
accounts."60
These issues could be resolved by consulting the evidence extant on records, such as the
IMAs, the passbooks, the letters of instructions, withdrawal and deposit slips, statements of
account, and the Board’s reports. Land Bank’s heavy reliance on Section 43, Rule 130 of the
Rules of Court61 also attests to the factual nature of the issues involved in this case. "Well-
settled is the rule that in petitions for review on certiorari under Rule 45, only questions of law
can be raised."62 In Velayo-Fong v. Spouses Velayo,63 we defined a question of law as
distinguished from a question of fact:
A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts.
For a question to be one of law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue
must rest solely on what the law provides on the given set of circumstances. Once it is clear
that the issue invites a review of the evidence presented, the question posed is one of fact.
Thus, the test of whether a question is one of law or of fact is not the appellation given to
such question by the party raising the same; rather, it is whether the appellate court can
determine the issue raised without reviewing or evaluating the evidence, in which case, it is a
question of law; otherwise, it is a question of fact. (Italics supplied)
While there are recognized exceptions64 to this rule, none exists in this case.
Anent Land Bank’s contention that the determination of whether the CA erred in retroactively
applying the 2008 MORB poses a legal question, the same deserves scant consideration.
True, the CA included in its ratio decidendi a discussion on the 2008 MORB to give emphasis
to the duties of banks to keep an accurate record and regularly apprise their clients of the
status of their accounts. But the issue of whether Land Bank failed to comply with those
duties can be resolved even without the MORB as the same duties are also imposed on Land
Bank by the IMAs, the contract that primarily governs the parties in this case. "As a general
rule, a contract is the law between the parties. Thus, ‘from the moment the contract is
perfected, the parties are bound not only to the fulfilment of what has been expressly
stipulated but also to all consequences which, according to their nature, may be in keeping
with good faith, usage and law.’ Also, ‘the stipulations of the contract being the law between
the parties, courts have no alternative but to enforce them as they were agreed [upon] and
written’ x x x."65
Based on the factual milieu of this case even without touching on the MORB, we found that
Land Bank still failed to perform its bounden duties to keep accurate records and render
regular accounting. We also found no cogent reason to disturb the other factual findings of
the CA.
Land Bank failed to prove that the
"miscredited" funds came from the
proceeds of the pre-terminated loans of
its corporate borrowers. YES
Land Bank argues that the entries in the passbooks were made in the regular course of
business and should be accepted as prima facie evidence of the facts stated therein. But
before entries made in the course of business may qualify under the exception to the hearsay
rule and given weight, the party offering them must establish that: (1) the person who made
those entries is dead, outside the country, or unable to testify; (2) the entries were made at,
or near the time of the transaction to which they refer; (3) the entrant was in a position to
know the facts stated therein; (4) the entries were made in the professional capacity or in the
course of duty of the entrant; and, (5) the entries were made in the ordinary or regular course
of business or duty.66
Here, Land Bank has neither identified the persons who made the entries in the passbooks
nor established that they are already dead or unable to testify as required by Section
43,67 Rule 130 of the Rules of Court. Also, and as correctly opined by the CA, "[w]hile the
deposit entries in the bank’s passbook enjoy a certain degree of presumption of regularity x x
x," the same do "not indicate or explain the source of the funds being deposited or withdrawn
from an individual account."68 They are mere prima facie proof of what are stated therein –
the dates of the transactions, the amounts deposited or withdrawn, and the outstanding
balances. They do not establish that the total amount of ₱4,086,888.89 deposited in Oñate’s
Trust Account No. 01-125 in November 1980 came from the proceeds of the pre-terminated
loans of Land Bank’s corporate borrowers. It would be too presumptuous to immediately
conclude that said amount came from the checks paid to Land Bank by its corporate
borrowers just because the maturity dates of the loans coincided with the dates said total
amount was deposited. There must be proof showing an unbroken link between the proceeds
of the pre-terminated loans and the amount allegedly "miscredited" to Oñate’s Trust Account
No. 01-125. As a bank and custodian of records, Land Bank could have easily produced
documents showing that its borrowers pre-terminated their loans, the checks they issued as
payment for such loans, and the deposit slips used in depositing those checks. But it did not.
Land Bank did not also bother to explain how Oñate or his representative, Eduardo Polonio
(Polonio), obtained possession of the checks when, according to it, the corporate borrowers
issued the checks in its name as payment for their loans.69 Under paragraph 8 of its
Complaint, Land Bank alleged that its corporate borrowers "paid their respective obligations
in the form of checks payable to LANDBANK x x x".70 If it is true, then why were the checks
credited to Oñate’s account? Unless subsequently endorsed to Oñate, said checks can only
be deposited in the account of the payee appearing therein. We cannot thus lend credence to
Land Bank’s excuse that the proximate cause of the alleged "miscrediting" was the fraudulent
representation of Polonio, for assuming that the latter indeed employed fraudulent
machinations, with the degree of prudence expected of banks, Land Bank and its tellers could
have easily detected that Oñate was not the intended payee. In Traders Royal Bank v. Radio
Philippines Network, Inc.,71 we held that petitioner bank was remiss in its duty and obligation
for accepting and paying a check to a person other than the payee appearing on the face of
the check sans valid endorsement. Consequently, it was made liable for its own negligence
and in disregarding established banking rules and procedures.
We are also groping in the dark as to the number of checks allegedly deposited by Polonio to
Oñate’s Trust Account No. 01-125. According to Land Bank, the entire amount of
₱4,086,888.89 represents the proceeds of the pre-terminated loans of four of its clients,
namely, RETELCO, PBM, CBY and PHILTOFIL. But it could only point to two entries made
on two separate dates in the passbook as reproduced below:
Date WITHDRAWAL DEPOSIT BALANCE
xxx   xxx ₱250,704.60
24NOV80   159,000.00 409,704.60
24NOV80   3,063,750.00CK 3,473,454.60
24NOV80 42,000.00   3,431,454.60
25NOV80   275,923.75 CK 3,707,378.35
25NOV 80 1,235,962.00   2,471,416.35 Land Bank was remiss in performing
its duties under the IMAs and as a
26NOV80   193,800.00 CK 2,665,216.35 banking institution.
26NOV80   250,000.00 CK 2,915,216.35
The contractual relation between Land Bank and Oñate in this case is primarily governed by
      2,915,216.35 the IMAs. Paragraph 4 thereof expressly imposed on Land Bank the duty to maintain
accurate records of all his investments, receipts, disbursements and other transactions
26NOV80     2,915,216.35 relating to his accounts. It also obliged Land Bank to provide Oñate with quarterly balance
    321,188.38 CK 3,236,404.73 sheets, statements of income and expenses, summary of investments, etc. Thus:

26NOV80 1,373,167.00   1,863,237.73 4. You shall maintain accurate records of all investments, receipts, disbursements and other
transactions of the Account. Records relating thereto shall be open at all reasonable times to
27NOV80   1,021,250.00 CK 2,884,487.73
inspection and audit by me either personally or through duly authorized representatives.
28NOV80   70,833.33 CK 2,955,321.06
Statements consisting of a balance sheet, portfolio analysis, statement of income and
27NOV80 919,300.00   2,036,021.06
expenses, and summary of investment changes are to be sent to me/us quarterly.
28NOV80   1,023,138.89 CK 3,059,159.9572
I/We shall approve such accounting by delivering in writing to you a statement to that effect or
by failure to express objections to such accounting in writing delivered to you within thirty (30)
Were there only two checks issued as payment for the separate loans of these four different
days from my receipt of the accounting.
entities? These hanging questions only confirm the correctness of the lower courts’ uniform
conclusion that Land Bank failed to prove that the amount allegedly "miscredited" to Oñate’s
account came from the proceeds of the pre-terminated loans of its clients. It is worth Upon your receipt of a written approval of the accounting, or upon the passage of said period
emphasizing that in civil cases, the party making the allegations has the burden of proving of time within which objections may be filed, without written objections having been delivered
them by preponderance of evidence. Mere allegation is not sufficient.73 to you, such accounting shall be deemed to be approved, and you shall be released and
discharged as to all items, matters and things set forth in such accounting as if such
accounting had been settled and allowed by a decree of a court of competent jurisdiction, in
As a consequence of its failure to prove
an action or proceeding in which you and I were parties.75 (Emphasis supplied)
the source of the claimed "miscredited"
funds, Land Bank had no right to debit
the total amount of ₱1,471,416.52 and These are the obligations of Land Bank which it should have faithfully complied with in good
must, therefore, restore the same. faith.76 Unfortunately, Land Bank failed in its contractual duties to maintain accurate records
of all investments and to regularly furnish Oñate with financial statements relating to his
accounts. Had Land Bank kept an accurate record there would have been no need for the
In view of the above, Land Bank’s argument that the lower courts erred in ordering the return
creation of a Board of Commissioners or at least the latter’s work would have been a lot
of the amount of ₱1,471,416.52 it debited from Oñate’s five trust accounts since he did not
easier and more accurate. But because of Land Bank’s inefficient record keeping, the Board
seek such relief in his Answer as a counterclaim, falls flat on its face. The order to restore the
performed the tedious task of trying to reconcile messy and incomplete records. The
debited amount is consistent with the lower courts’ ruling that Land Bank failed to prove that
lackadaisical attitude of Land Bank in keeping an updated record of Oñate’s accounts is
the amount of ₱4,086,888.89 was "miscredited" to Oñate’s account and, hence, it had no
aggravated by its reluctance to accord the Board full and unrestricted access to the records
right to seek reimbursement or debit any amount from his accounts in payment therefor.
when it was conducting a review of the accounts upon the orders of the trial court. Thus, in its
Manifestation77 dated August 16, 2004, the Board informed the trial court that its report
Without such right, Land Bank should return the amount of ₱1,471,416.52 it debited from pertaining to outstanding balances may not be accurate because "the documents were then
Oñate’s accounts in its attempt to recoup what it allegedly lost due to "miscrediting." in the custody of Land Bank and the documents to be reviewed by the Board at a designated
Moreover, contrary to Land Bank’s assertion, Oñate contested the bank’s application of the hearing depended on what was released by the then handling lawyer of Land Bank." They
balance of his trust accounts in payment for the allegedly "miscredited" amount in his Answer were "not given the opportunity to collate/sort-out the documents related to each trust
(With Compulsory Counterclaim) for being "without any factual and legal [bases]."74 account"78 and "the folders being reviewed contained documents related to different trust
accounts."79 As a result, "[t]here may have been double take up of accounts since the In every case, the depositor expects the bank to treat his account with the utmost fidelity,
documents previously reviewed may have been repeatedly considered in the reports."80 whether such account consists only of a few hundred pesos or of millions. The bank must
record every single transaction accurately, down to the last centavo and as promptly as
For its failure to faithfully comply with possible. This has to be done if the account is to reflect at any given time the amount of
its obligations under the IMAs and for money the depositor can dispose of as he sees fit, confident that the bank will deliver it as
having agreed to submit the case on the and to whomever he directs. x x x
basis of the reports of the Board of
Commissioners, the latter’s findings are The point is that as a business affected with public interest and because of the nature of its
binding on Land Bank. functions, the bank is under obligations to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. x x x (Emphasis
Because of Land Bank’s failure to keep an updated and accurate record of Oñate’s account, supplied)
it would have been difficult, if not impossible, to determine with some degree of accuracy the
outstanding balances in Oñate’s accounts. Indeed, the creation of a Board of Commissioners As to the conceded inaccuracies in the reports, we cannot allow Land Bank to benefit
was a significant development in this case as it facilitated the examination of the records and therefrom. Time and again, we have cautioned banks to spare no effort in ensuring the
helped in the determination of the balances in each of Oñate’s accounts. In a span of four integrity of the records of its clients.82 And in Philippine National Bank v. Court of
years, the Board held 60 meetings and scoured the voluminous and scattered records of Appeals,83 we held that "as between parties where negligence is imputable to one and not to
subject accounts. In the course thereof, it found several undocumented withdrawals and over the other, the former must perforce bear the consequences of its neglect." In this case, the
withdrawals. Thereafter, the Board submitted its consolidated report, to which Land Bank did Board could have submitted a more accurate report had Land Bank faithfully complied with its
not file its comment despite having been given the opportunity to do so. It did not question the duty of maintaining a complete and accurate record of Oñate’s accounts. But the Board could
result of the examinations conducted by the Board, particularly the Board’s computation of not find and present the corresponding slips for the withdrawals reflected in the passbooks. In
the outstanding balance in each account, the existence of undocumented and over addition, and as earlier mentioned, Land Bank was less than cooperative when the Board
withdrawals, and how often the bank sent Oñate statements of account. In fact, during the was examining the records of Oñate’s accounts. It did not give the Board enough leeway to
pre-trial conference, Land Bank agreed to submit the case based on the reports of the Board. go over the records systematically or in orderly fashion. Hence, we cannot allow Land Bank
to benefit from possible inaccuracies in the reports.
Consequently, we found no cogent reason to deviate from the same course taken by the CA
– give weight to the consolidated report of the Board and treat it as competent and sufficient Neither does Oñate’s failure to exercise his rights to inspect the records and audit his
evidence of what are stated therein. After all, the dearth of evidentiary documents that could accounts excuse the bank from sending the required notices, for under the IMAs it behooved
have shed light on the alleged unintended crediting and unexplained withdrawals was brought upon Land Bank to keep him fully informed of the status of his investments by sending him
about by Land Bank’s failure to maintain accurate records as required by the IMAs. In Simex regular reports and statements. Oñate’s failure to inspect the record of his accounts should
International (Manila), Inc. v. Court of Appeals,81 we elucidated on the nature of banking neither be construed as his waiver to be furnished with updates on his accounts nor authority
business and the responsibility of banks: for the bank to make undocumented withdrawals. As aptly opined by the CA:

The banking system is an indispensable institution in the modern world and plays a vital role
in the economic life of every civilized nation. Whether as mere passive entities for the
safekeeping and saving of money or as active instruments of business and commerce, banks
have become an ubiquitous presence among the people, who have come to regard them with
respect and even gratitude and, most of all, confidence. Thus, even the humble wage-earner
has not hesitated to entrust his life’s savings to the bank of his choice, knowing that they will
be safe in its custody and will even earn some interest for him. The ordinary person, with
equal faith, usually maintains a modest checking account for security and convenience in the
settling of his monthly bills and the payment of ordinary expenses. As for business entities
like the petitioner, the bank is a trusted and active associate that can help in the running of
their affairs, not only in the form of loans when needed but more often in the conduct of their
day-to-day transactions like the issuance or encashment of checks.
x x x The least that Land Bank could have done was to keep a detailed quarterly report on
[its] file. In this case, Land Bank did away with this procedure that made [its] records a
complete mess of voluminous and meaningless records of numerous folders containing more
than 7,600 leaves/pages and some 90 passbooks, with 1,355 leaves/pages of entries,
corresponding to the seven (7) Trust Accounts.
The passbook entries alone are insufficient compliance with Land Bank’s duty to keep
"accurate records of all investments, receipts, disbursements and other transactions of the
Account." These passbooks do not inform what investments were made on the funds
withdrawn. Moreover, these passbook entries do not show if the amounts purported to have
been invested were indeed received by the concerned entity, facility, or borrower. From these
entries alone, Oñate would have no way of knowing where his money went.84
But Land Bank next postulates that if Oñate is entitled to the undocumented withdrawals on Land Bank knew from the start and
the basis of the reports of the Board, then it should also be entitled to the negative balances admitted during trial that Trust
or over withdrawals as reflected in the same reports. Account Nos. 01-014 and 01-017 do not
belong to Oñate; hence, it should not
We cannot agree for a number of reasons. First, as earlier discussed, Land Bank is guilty of have debited any amount therefrom to
negligence while Oñate (at least insofar as over withdrawals are concerned) is not. Had Land compensate for the alleged personal
Bank maintained an accurate record, it would have readily detected and prevented over indebtedness of Oñate.
withdrawals. But without any qualms, Land Bank asks for the negative balances, unmindful
that such claim is actually detrimental to its cause because it amounts to an admission that it Land Bank claims that Oñate cannot sue on Trust Account Nos. 01-014 and 01-017 without
allowed over withdrawals. As aptly observed by the CA: joining as an indispensable party his undisclosed principal.

Corollarily, the Court cannot allow Land Bank to recover the negative balances from Oñate’s
trust accounts. Examining the Commissioners’ Report, the Court notes that the funds of
Oñate’s trust accounts became seriously depleted due to the unaccounted withdrawals that
Land Bank charged against his accounts. At any rate, those negative balances on Oñate’s
accounts show Land Bank’s inefficient performance in managing his trust accounts.
Reasonable bank practice and prudence [dictate] that Land Bank should not have authorized
the withdrawal of various sums from Oñate’s accounts if it would result to overwithdrawals. x
x x85
Second, Land Bank never prayed for the recovery of the negative balances in its Complaint.
It is settled that courts cannot grant a relief not prayed for in the pleadings or in excess of
what is being sought by the party. x x x Due process considerations require that judgments
must conform to and be supported by the pleadings and evidence presented in court. In
Development Bank of the Philippines v. Teston,86 this Court expounded that:
Due process considerations justify this requirement. It is improper to enter an order which
exceeds the scope of relief sought by the pleadings, absent notice which affords the opposing
party an opportunity to be heard with respect to the proposed relief. The fundamental purpose
of the requirement that allegations of a complaint must provide the measure of recovery is to
prevent surprise to the defendant.87
Last, during the pre-trial conference, the issue of the validity of undocumented withdrawals
was properly put into issue. The parties also agreed, as a collateral issue, that should it
appear that the bank was not authorized to make the undocumented withdrawals, the next
issue for consideration would be whether the amount subject thereof should be credited back
to Oñate’s accounts.88 The case of negative balances as alluded to by Land Bank, however,
is different. It was never put into issue during the pre-trial conference. In Caltex (Philippines),
Inc. v. Court of Appeals,89 we held that "to obviate the element of surprise, parties are
expected to disclose at a pre-trial conference all issues of law and fact which they intend to
raise at the trial, except such as may involve privileged or impeaching matters. The
determination of issues at a pre-trial conference bars the consideration of other questions on
appeal." Land Bank interposed its claim to the negative balances for the first time only when it
filed its Memorandum with the RTC.
But if anyone in this case is guilty of failing to join an indispensable party, it is Land Bank that
first committed a violation. The IMAs covering Trust Account Nos. 01-014 and 01-017
attached as Annexes "A"90 and "B,"91 respectively, of Land Bank’s Complaint clearly state that
Oñate signed the same "FOR: UNDISCLOSED PRINCIPAL." As party to the said IMAs, Land
Bank knew and ought not to forget that Oñate is merely an agent and not the owner of the
funds in said accounts. Yet Land Bank garnished the total amount of ₱792,595.25 from Trust
Account Nos. 01-014 and 01-017 to answer for the alleged personal indebtedness of Oñate.
Worse, when Land Bank filed its Complaint for Sum of Money, it did not implead said
undisclosed principal or inform the trial court thereof. Now that Oñate is seeking the
restoration of the amounts debited and withdrawn without withdrawal slips from said
accounts, Land Bank is invoking the defense of failure to implead an indispensable party. We
cannot allow Land Bank to do this. As aptly observed by the trial court:
Under the circumstances obtaining, it is highly unfair, unjust and iniquitous, to dismiss the suit
with respect to the two Trust Accounts after [Land Bank] had garnished the balances of said
accounts to pay the alleged indebtedness of [Oñate] allegedly incurred by the erroneous
crediting of ₱4 million to x x x Trust Account No. 01-125 which does not appear to be owned
by an undisclosed principal. Trust Account No. 01-125 is [Oñate’s] personal trust account with
plaintiff. Stated differently, [Land Bank] having now recognized and admitted that Trust
Account Nos. 01-014 and 01-017 were not owned by [Oñate], it has perforce no right, nay
unlawful for it, to apply the funds in said accounts to pay the alleged indebtedness of
[Oñate’s] personal account. Equity and justice so demand that the funds be restored to Trust
Account Nos. 01-014 and 01-017.92
Oñate protested the contents of the
statements of account at the earliest
opportunity.
As to Land Bank’s insistence that Oñate is deemed to have accepted the contents of the
statements of account for his failure to manifest his objection thereto within 30 days from
receipt thereof, it should be recalled that from the time the alleged "miscrediting" occurred in
November 1980, the first communication coming from Land Bank was its letter dated October
8, 1981.93 This, however, was the subject of a failed negotiation between the parties. Besides,
said letter can hardly be considered as an statement that would apprise Oñate of the status of
 his investments. It is not "a balance sheet, portfolio analysis, statement of income and Statement of Income and Expenses 06.30.91 10,437.22
expenses or a summary of investment changes" as contemplated in paragraph 4 of the IMAs. Balance Sheet 06.30.91 39,659.56
It is a demand letter seeking the return of the alleged "miscredited" amount. The same goes
true with Land Bank’s letter dated September 3, 1991. As can be readily seen from its 01-082 Statement of Income and Expenses 06.30.91 59.75
opening paragraph, said letter is in response to Oñate’s "demand" for information regarding Balance Sheet 06.30.91 70.28
the offsetting,94 which Oñate protested and is now one of the issues involved in this case. In
fine, it cannot be said that Oñate approved and adopted the outstanding balances in his 01-125 Schedule of Investment 06.30.91 44,055.72
accounts for his failure to object to the contents of those letters within the 30-day period Statement of Income and Expenses 06.30.91 10,079.16
allotted to him under the IMAs. Balance Sheet 06.30.91 60,920.42

From what is available on the voluminous records of this case and as borne out by the The patent wide gap between the time Land Bank furnished Oñate with Balance Sheets as of
Board’s consolidated report dated August 16, 2004, the statements which Land Bank sent to June 30, 1982 and the date it sent him an Statement of Income and Expenses, as well as a
Oñate are only the following: Balance Sheet, on March 31, 1990 is a clear and gross violation of the IMAs requiring it to
furnish him with balance sheet, portfolio analysis, statement of income and expenses and the
Based on the Annexes95 attached to Oñate’s Answer (With Compulsory Counterclaim) like, quarterly. As to the reports dated June 30, 1991 and letters subsequent thereto, it should
be noted that during those times Oñate had already interposed his objections to the
outstanding balances of his accounts.96
ITF No. Balance Sheet Total Liabilities and Trustor’s
As of Equity The proper rate of legal interest.
01-014 June 30, 1982 ₱1,909,349.80
Land Bank’s argument that the lower courts erred in imposing 12% per annum rate of interest
01-017 June 30, 1982 6,003,616.35 is likewise devoid of merit. The unilateral offsetting of funds without legal justification and the
01-089 June 30, 1982 551,267.24 undocumented withdrawals are tantamount to forbearance of money. In the analogous case
of Estores v. Supangan,97 we held that "[the] unwarranted withholding of the money which
01-082 June 30, 1982 1,915.28 rightfully pertains to [another] amounts to forbearance of money which can be considered as
an involuntary loan." Following Eastern Shipping Lines, Inc. v. Court of Appeals, 98 therefore,
01-075 June 30, 1982 12,113,262.95 the applicable rate of interest in this case is 12% per annum. Besides, Land Bank is estopped
01-125 June 30, 1982 13,595,271.16 from assailing the award of 12% per annum rate of interest. In its Complaint, Land Bank
arrived at ₱8,222,687.89 as the outstanding indebtedness of Oñate by using the same 12%
01-024 June 30, 1982 1,131,854.20 per annum rate of interest. It was only after the lower courts rendered unfavorable decisions
that Land Bank started to insist that the applicable rate of interest is 6% per annum.
Based on the Consolidated Report
Of equal importance is the determination of when the said 12% per annum rate of interest
should commence.1âwphi1 Recall that both the RTC and the CA reckoned the running of the
ITF No. Report Details Last Date Balances 12% per annum rate of interest from June 21, 1991, or the day Land Bank unilaterally applied
of Report the outstanding balance in all of Oñate’s trust accounts, until fully paid. The compounding of
interest, on the other hand, was based on the provision of the IMAs granting Land Bank "to
01-024 Schedule of Money Market Placement 03.31.82 ₱453,140.69
hold, invest and reinvest the Fund and keep the same invested, in your sole discretion,
01-075 Statement of Income and Expenses 03.31.90 0.00 without distinction between principal and income."
Balance Sheet 03.31.90 1,207,501.69
While we find sufficient basis for the compounding of interest, we find it necessary however to
01-014 Schedule of Money Market Placement 06.30.91 14,767.20
modify the commencement date. In Eastern Shipping,99 it was observed that the
Statement of Income and Expenses 06.31.91 3,267.19
commencement of when the legal interest should start to run varies depending on the factual
Balance Sheet 06.31.91 20,673.58
circumstances obtaining in each case.100 As a rule of thumb, it was suggested that "where the
01-017 Schedule of Investment 06.30.91 38,502.06 demand is established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made 101 (at which time the quantification
of damages may be deemed to have been reasonably ascertained)."102
In the case at bench, while Oñate protested the setting off, no proof was presented that he
formally demanded for the return of the amount so debited prior to the filing of the Complaint.
Quite understandably so because at that time he could not determine with some degree of
certainty the outstanding balances of his accounts as Land Bank neglected on its duty to
keep him updated on the status of his accounts. Land Bank even undertook to furnish him
with "the exact computation"103 of what remains in his accounts after the set off. But this never
happened until Land Bank initiated the Complaint on September 7, 1992. Oñate, on the other
hand, filed his Answer (With Compulsory Counterclaim) on May 26, 1993. In other words, we
cannot reckon the running of the interest prior to the filing of the Complaint or Oñate’s
Counterclaim as no demand prior thereto was made. Neither could the interest commence to
run at the time of filing of any of aforesaid pleadings (as to constitute judicial demand) since
the undocumented withdrawals in the sums of ₱60,663,488.11 and US$3,210,222.85, as well
as the amount actually debited from all of Oñate’s accounts, were determined only after the
Board submitted its consolidated report on August 16, 2004 or more than 10 years after Land
Bank and Oñate filed their Complaint and Answer, respectively. Note too that while Oñate
sought to recover the amount of undocumented withdrawals before the RTC,104 the same was
denied in the latter’s May 31, 2006 Decision. The RTC granted Oñate only the total amount of
funds debited from his trust accounts. It was only when the CA rendered its December 18,
2009 Decision that Oñate was awarded the undocumented withdrawals. Hence, we find it just
and proper to reckon the running of the interest of 12% per annum, compounded yearly, for
the debited amount and undocumented withdrawals on different dates. The debited amount
of ₱1,471,416.52, shall earn interest beginning May 31, 2006 or the day the RTC rendered its
Decision granting said amount to Oñate. As to the undocumented withdrawals of
₱60,663,488.11 and US 3,210,222.85, the legal rate of interest should start to run the day the
CA promulgated its Decision on December 18, 2009.
During the pendency of this case, however, the Monetary Board issued Resolution No. 796
dated May 16, 2013, stating that in the absence of express stipulation between the parties,
the rate of interest in loan or forbearance of any money, goods or credits and the rate allowed
in judgments shall be 6% per annum. Said Resolution is embodied in Bangko Sentral ng
Pilipinas Circular No. 799, Series of2013, which took effect on July 1, 2013. Hence, the 12%
annual interest mentioned above shall apply only up to June 30, 2013. Thereafter, or starting
July 1, 2013, the applicable rate of interest for both the debited amount and undocumented
withdrawals shall be 6% per annum compounded annually, until fully paid.
WHEREFORE, the Petition is hereby DENIED and the December 18, 2009 Decision of the
Court of Appeals in CA-G.R. CV No. 89346 is AFFIRMED with modification in that the interest
of 12% per annum compounded annually, for the debited amount of ₱1,471,416.52 shall
commence to run on May 31, 2006, while the same rate of interest shall apply to the
undocumented withdrawals in the amounts of ₱60,663,488.11 and US 3,210,222.85 starting
December 18 2009. Beginning July 1, 2013, however, the applicable rate of interest on all
amounts awarded shall earn interest at the rate of 6% per annum compounded yearly, until
fully paid.
SO ORDERED.
G.R. No. 158649               February 18, 2013
SPOUSES QUIRINO V. DELA CRUZ and GLORIA DELA CRUZ, Petitioners,
vs.
PLANTERS PRODUCTS, INC., Respondents.
DECISION
BERSAMIN, J.:
If the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. 1 In determining their intention, their
contemporaneous and subsequent acts shall be principally considered.2
Under review on certiorari are the Decision promulgated on April II, 2003 in C.A.-G.R. No. CV
No. 57446,3 whereby the Court of Appeals (CA) affirmed the judgment rendered on October
29, 1997 by the Regional Trial Court, Branch 66, (R TC) in Makati City (ordering the
petitioners liable to pay the respondent the amount of ₱240,335.10 plus 16% interest per
annum commencing from July 9, 1985 until full payment, and the sum of ₱20,000.00 as
attorney's fees and cost of litigation);4 and the resolution promulgated on June 9, 2003,
whereby the CA denied the motion for reconsideration of the petitioners. 5
Antecedents
Spouses Quirino V. Dela Cruz and Gloria Dela Cruz, petitioners herein, operated the
Barangay Agricultural Supply, an agricultural supply store in Aliaga, Nueva Ecija engaged in
the distribution and sale of fertilizers and agricultural chemical products, among others. At the
time material to the case, Quirino, a lawyer, was the Municipal Mayor of Aliaga, Nueva Ecija.6
On March 23, 1978, Gloria applied for and was granted by respondent Planters Products, Inc.
(PPI) a regular credit line of ₱200,000.00 for a 60- day term, with trust receipts as
collaterals.7 Quirino and Gloria submitted a list of their assets in support of her credit
application for participation in the Special Credit Scheme (SCS) of PPI.8 On August 28, 1978,
Gloria signed in the presence of the PPI distribution officer/assistant sales representative two
documents9 labelled "Trust Receipt/Special Credit Scheme," indicating the invoice number,
quantity, value, and names of the agricultural inputs (i.e., fertilizer or agricultural chemicals)
she received "upon the trust" of PPI. Gloria thereby subscribed to specific undertakings, as
follows:
For and in consideration thereof, I/We hereby agree to hold said goods in trust for PPI, as its
property, with liberty to deliver and sell the same for PPI’s account, in favor of farmers
accepted to participate in PPI’s Special Credit Scheme within 60 days from receipt of inputs
from PPI. In case of such delivery and sale, I/We agree to require the execution of a Trust
Agreement by the farmer-participants in my/our favor, which Agreement will in turn be
Assigned by me/us in favor of PPI with Recourse. In the event, I/We cannot deliver/serve to
the farmer-participants all the inputs as enumerated above within 60 days, then I/We agree
that the undelivered inputs will be charged to my/our credit line, in which case, the
corresponding adjustment of price and interests shall be made by PPI.10
Gloria expressly agreed to: (a) "supervise the collection of the equivalent number of cavanes
of palay and/or corn from the farmer-participant" and to "turn over the proceeds of the sale of
the deposited palay and corn as soon as received, to PPI to be applied against the listed
invoices"; (b) "keep said fertilizer and pesticides insured at their full value against fire and
other casualties prior to delivery to farmer-participants, the sum insured to be payable in case
of loss to PPI, with the understanding that PPI is not to be chargeable with the storage,
insurance premium, or any other expenses incurred on said goods"; (c) "keep the said
fertilizer and pesticides, prior to delivery to the farmer-participants, separate and capable of
identification as the property of PPI inside my/our warehouse"; and (d) "require the farmer-
participants to deposit the palay or corn sufficient to cover their respective accounts within 72
hours after the harvest of the farmer-participants" and should the farmer-participants refuse to
make the required deposit, Gloria would notify PPI thereof within 24 hours. For that purpose,
negligence on her part would make her obligation under the Trust Receipt "direct and
primary."11
Gloria further expressly agreed that her obligation as stipulated in the contract would
"continue in force and be applicable to all transactions, notwithstanding any change in the
individuals composing any firm, parties to or concerned x x x whether such change shall arise
from accession of one or more new partners or from the death or cession of any partner or
partners;" that her "liability for payment at maturity of the invoice(s) x x x shall not be
extinguished or modified" by the following, namely: (a) "any priority, act of war, or restriction
on the use, transportation, hypothecation, or disposal thereof imposed by any administrative,
political or legislative enactments, regulations or orders whatsoever"; (b) "government
appropriation of the same, or of any seizure or destruction thereof or damage thereto,
whether insured against or not"; and (c) "any acts or regulation affecting this Trust Receipt or
the inputs subject thereto."12
In addition, Gloria’s obligation included the following terms and conditions, to wit:
All obligations of the undersigned under this Trust Receipt shall bear interest at the rate of
twelve per cent (12%) per annum plus two percent (2%) service charges, reckoned from the
date Dealer delivers to farmer-participants the fertilizer and agchem products. Where I/We
have not delivered within 60 days, interest and service charges shall become effective on the
61st day.
If there are two or more signatories, our obligations hereunder shall in all cases be joint and
several.
All expenses and charges incurred by PPI in re-possession of said fertilizer and agchem
products, and in securing delivery of the same to a bodega or storage place in Manila or at
some other place selected by it shall be for my/our account and shall be repaid to PPI by
me/us.
Should it become necessary for PPI to avail of the services of an attorney-at-law to initiate
legal steps to enforce any or all of its rights under this contract, we jointly and severally, shall
pay to PPI for and as attorney’s fees a sum equivalent to twenty per cent (20%) per annum of
the total amount involved, principal and interest, then unpaid, but in no case less than FIVE
HUNDRED PESOS (₱500.00), exclusive of all costs or fees allowed by law.
In consideration of PPI complying with the foregoing we jointly and severally agree and
undertake to pay on demand to PPI all sums of money which PPI may call upon us to pay
arising out of or pertaining to and/or in any event connected with the default of and/or non-
fulfillment in any respect of the undertaking of the aforesaid.13
Gloria executed three more documents on September 14, 1978,14 and one document each on
September 28, 1978,15 September 18, 1978,16 and September 20, 1978.17 On the
corresponding dates, Gloria filled up customer order forms for fertilizer and agricultural
chemical products.18 Written at the upper portion of each order form was the following:
This invoice is subject to the terms and conditions stipulated in our contract. Under no
circumstance is this invoice to be used as a receipt for payment. Interest at 14% per annum
plus service and handling charges at the rate of 10% per annum shall be charged on all
overdue accounts, and in the event of judicial proceedings to enforce collection, customer
shall pay the Company an amount equivalent to 25% of the amount due for and as attorney’s
fees which in no case shall be less than ₱200 in addition to cost of suit.
The products were released to Gloria under the supervision of Cristina G. Llanera of PPI.
The 60-day credit term lapsed without Gloria paying her obligation under the Trust
Receipt/SCS. Hence, PPI wrote collection letters to her on April 24, 1979 and May 22, 1979.
Receiving no response from her, Inocencio E. Ortega, PPI District Distribution Manager, sent
her on June 8, 1979 a demand letter on her "long overdue account" of ₱191,205,25.19
On February 24, 1979, PPI sent Gloria a credit note for ₱127,930.60 with these particulars:
"To transfer to dealer’s regular line inputs withdrawn VS. SCS line still undelivered to farmers
after 60 days."20 Another credit note, also dated February 24, 1979 and with the same
particulars, indicated the amount of ₱46,622.80.21
The follow-up letter of October 11, 1979 culminated in the final demand letter of May 30, 1980
from Atty. R. M. Rivera, PPI Collection Officer,22 stating that the total accountability of Gloria
as of April 25, 1980 was ₱156,755.00 "plus interest, service charges, and penalty charges,"
all of which she should pay by June 18, 1980. PPI warned that should she fail to do so, PPI
would file the "necessary civil and criminal cases" against her "based on the Trust Receipts."
On November 17, 1981, PPI brought against Quirino and Gloria in the erstwhile Court of First
Instance in Pasig, Metro Manila a complaint for the recovery of a sum of money with prayer
for a writ of preliminary attachment.23 PPI alleged that Gloria had violated the "fiduciary
undertaking in the Trust Receipt agreement covering product withdrawals under the Special
Credit Scheme which were subsequently charged to defendant dealer’s regular credit line;
therefore, she is guilty of fraudulently misapplying or converting to her own use the items
delivered to her as contained in the invoices." It charged that Gloria did not return the goods
indicated in the invoices and did not remit the proceeds of sales.
PPI prayed for judgment holding the petitioners liable for the principal amount of ₱161,203.60
as of October 25, 1981, "inclusive of interest and service charges"; additional "daily interest of
₱80.60 from October 26, 1981 until fully paid"; and 20% of the total amount due as attorney’s
fees. As of July 9, 1985, the statement of account showed a grand total liability of
₱240,355.10.24
In her answer, the petitioners alleged that Gloria was only a marketing outlet of PPI under its
SCS Program, not a dealer primarily obligated to PPI for the products delivered to her; that
she had not collected from the farmers participating in the SCS Program because of the
October 27-28, 1979 typhoon Kading  that had destroyed the participating farmers’ crops; and
that she had paid ₱50,000.00 to PPI despite the failure of the farmers to pay.25
Decision of the RTC
On October 29, 1997, the trial court, then already the RTC, rendered its judgment ordering
the petitioners "to pay the plaintiff the amount of ₱240,335.10 plus 16% interest per
annum commencing from July 9, 1985 until fully paid and the sum of ₱20,000.00 as
attorney’s fees and cost of litigation."26
The RTC found that based on the terms and conditions of the SCS Program, a creditor-
debtor relationship was created between Gloria and PPI; that her liability was predicated on
Section 4 of the Trust Receipts Law (Presidential Decree No. 115) and on the ruling
in Robles v. Court of Appeals27 to the effect that the failure of the entrustee (Gloria) to turn
over to the entruster (plaintiff) the proceeds of the sale of goods covered by the delivery trust
receipts or to return the goods constituted estafa  punishable under Article 315(1)(b) of
the Revised Penal Code; and that the petitioners could not use as a defense the occurrence
of typhoon Kading  because there was no privity of contract between the participating farmers
and PPI.
Ruling of the CA
The petitioners appealed to the CA28 upon the following assignment of errors, to wit:
THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT GLORIA DELA CRUZ
WAS AN ACCREDITED DEALER UNDER THE SPECIAL CREDIT SCHEME AND
PURCHASED ON CREDIT FERTILIZERS AND CHEMICALS FROM PLAINTIFF.
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS ARE PRIMARILY LIABLE
FOR THE FERTILIZERS AND CHEMICALS COVERED BY THE ORDER FORMS,
DELIVERY RECEIPTS AND TRUST RECEIPTS.
THE TRIAL COURT ERRED IN HOLDING THAT THE SPECIAL CREDIT SCHEME/LINE
GRANTED TO DEFENDANT GLORIA DELA CRUZ WAS CONVERTED TO A REGULAR
LINE.
THE TRIAL COURT ERRED IN FINDING FOR THE PLAINTIFF AND NOT FOR THE
DEFENDANTS-APPELLANTS.
On April 11, 2003, the CA affirmed the judgment of the RTC,29 viz:
WHEREFORE, premises considered, the instant appeal is hereby DENIED, and the
impugned Decision dated 29 October 1997 of Regional Trial Court of Makati City, Branch 66
is hereby AFFIRMED in toto. Costs against Defendants-appellants.
SO ORDERED.
The CA held the petitioners liable to PPI "for the value of the fertilizers and agricultural
chemical products covered by the trust receipts" because a creditor-debtor relationship
existed between the parties when, pursuant to the credit line of ₱200,000.00 and the SCS
Program, the petitioners "withdrew several fertilizers and agricultural chemical products on
credit;" that the petitioners then came under obligation to pay the equivalent value of the
withdrawn goods, "or to return the undelivered and/or unused products within the specified
period." It elucidated thus:
The trust receipts covering the said fertilizers and agricultural chemical products under the
special credit scheme, and signed by defendant-appellant Gloria de la Cruz specifically
provides for their direct and primary liability over the same, to wit:
"x x x. In the event, I/We cannot deliver/serve to the farmer-participants all the inputs as
enumerated above within 60 days, then I/We agree that the undelivered inputs will be
charged to my/our regular credit line, in which case, the corresponding adjustment of price
and interest shall be made by PPI."
and in case of failure on the part of Defendants-appellants to liquidate within the specified
period the undelivered or unused fertilizers and agricultural chemical products, its
corresponding value will be charged to the regular credit line of Defendants-appellants, which
was eventually done by Plaintiff-appellee, when it converted and/or credited Defendants-
appellants’ accounts payable under the special credit scheme to their regular credit line as
per "credit notes."
Pursuant to said credit line account and trust receipts, plaintiff-appellee Planters Products,
Inc. and defendants-appellants Spouses de la Cruz are bound to fulfill what has been
expressly stipulated therein. It is well-settled in Barons Marketing Corporation v. Court of
Appeals,30to wit:
"It may not be amiss to state that petitioner’s contract with private respondent has the
force of law between them. Petitioner is thus bound to fulfill what has been expressly
stipulated therein. In the absence of any abuse of right, private respondent cannot be
allowed to perform its obligation under such contract in parts. Otherwise, private respondent’s
right under Article 1248 will be negated, the sanctity of its contract with petitioner defiled. The
principle of autonomy of contracts must be respected." (Emphasis supplied)
Moreover, Defendants-appellants cannot pass their obligation to pay the equivalent value of
the undelivered and/or unused fertilizers and agricultural chemical products under the trust
receipts to the farmers-participants considering that the "contract" was between plaintiff-
appellee Planters Products Inc. and defendants-appellants Quirino and Gloria Dela Cruz, and
the farmers-participants were never privy to the said transaction."31
In their motion for reconsideration,32 the petitioners mainly contended that the farmers as
participants in the SCS, not Gloria, were liable because the inputs had been delivered to
them; that such was the tenor of the demand letters they had sent to the farmers; that PPI
would not have made a second delivery if it had not been satisfied that they (petitioners) had
delivered the products to the farmers, who, however, had not paid their "loan" because of
typhoon Kading  destroying their crops; that in the aftermath of the typhoon, PPI
representatives led by one Noel David had inspected the Municipality of Aliaga, and had
forged an agreement with the petitioners whereby they bound themselves to help PPI "in
collecting from the farmers in the succeeding palay crop their indebtedness;" and that PPI
had subsequently made them the "principal debtor" notwithstanding that they had not
incurred any account with PPI because all the transactions had been "on a cash on delivery
basis or cash withdrawal basis."
On June 9, 2003, the CA denied the petitioners’ motion for reconsideration.
Issues
Hence, the petitioners are now before the Court via  their petition for review on certiorari.
The petitioners ascribe to the CA grave reversible error in affirming the decision of the RTC
notwithstanding that the award to PPI of the amount of ₱240,335.10 plus 16% interest per
annum was based on hearsay evidence, leaving absolutely no other evidence to support the
award. They assail the award of attorney’s fees for its lack of factual and legal bases; and
insist that the CA did not consider "certain facts and circumstances on record which would
otherwise justify a different decision."
Ruling
The appeal has no merit.
I.
Parties entered into a creditor-debtor relationship
The petitioners did not deny that Gloria applied with PPI for a credit line of ₱200,000.00; and
that Gloria signed up for the SCS Program of PPI. The principal issue they now raise is
whether the two transaction documents signed by Gloria expressed the intent of the parties to
establish a creditor-debtor relationship between them. The resolution of the issue is
necessary to resolve the corollary issue of whether the petitioners were liable to PPI for the
value of the fertilizers and agricultural chemical products delivered to Gloria, and, if so, by
how much.
It is apparent, however, that the petitioners are focusing on the evidentiary value of Exhibit V,
the statement of account showing that Gloria was liable in the total amount of ₱240,355.10 as
of July 9, 1985, and are in the process avoiding the pivotal issue concerning the nature of the
contract between them and PPI. Nonetheless, the issue of liability sprang from the terms of
the contractual documents Gloria had signed. For them to question the amount of their
liabilities without explaining why they should not be held liable veritably constituted their tacit
admission of the existence of the loan but assailing only how much they should repay to PPI.
The petitioners aver that "in a surprising turn of events, when it appeared that no further
collection could be had, [PPI] unilaterally and arbitrarily converted and charged its receivables
from the farmers-participants against petitioner’s regular credit line," and PPI thereafter sent
the demand letters to Gloria.33 Considering that the documents signed by Gloria governed the
relationship between her and PPI, the controversy can be resolved only by an examination of
the contractual documents.
As earlier mentioned, Gloria signed the application for credit facilities on March 23, 1978,
indicating that a trust receipt would serve as collateral for the credit line. On August 4, 1978,
Gloria, as "dealer," signed together with Quirino the list of their assets having a total value of
₱260,000.00 (consisting of a residential house and lot, 10-hectare agricultural lands in Aliaga
and Talavera, and two residential lots) that they tendered to PPI "to support our credit
application in connection with our participation to your Special Credit Scheme." 34 Gloria
further signed the Trust Receipt/SCS documents defining her obligations under the
agreement, and also the invoices pursuant to the agreement with PPI, indicating her having
received PPI products on various dates.
These established circumstances comprised by the contemporaneous and subsequent acts
of Gloria and Quirino that manifested their intention to enter into the creditor-debtor
relationship with PPI show that the CA properly held the petitioners fully liable to PPI. The law
of contracts provides that in determining the intention of the parties, their contemporaneous
and subsequent acts shall be principally considered.35 Consequently, the written terms of
their contract with PPI, being clear upon the intention of the contracting parties, should be
literally applied.36
The first circumstance was the credit line of ₱200,000.00 that commenced the business
relationship between the parties. A credit line is really a loan agreement between the parties.
According to Rosario Textile Mills Corporation v. Home Bankers Savings and Trust Co.:37
x x x [A] credit line is "that amount of money or merchandise which a banker, a merchant, or
supplier agrees to supply to a person on credit and generally agreed to in advance." It is a
fixed limit of credit granted by a bank, retailer, or credit card issuer to a customer, to the full
extent of which the latter may avail himself of his dealings with the former but which he must
not exceed and is usually intended to cover a series of transactions in which case, when the
customer’s line of credit is nearly exhausted, he is expected to reduce his indebtedness by
payments before making any further drawings.38
The second circumstance was the offer by Gloria of trust receipts as her collateral for
securing the loans that PPI extended to her.39 A trust receipt is "a security transaction
intended to aid in financing importers and retail dealers who do not have sufficient funds or
resources to finance the importation or purchase of merchandise, and who may not be able to
acquire credit except through utilization, as collateral, of the merchandise imported or
purchased."40 It is a security agreement that "secures an indebtedness and there can be no
such thing as security interest that secures no obligation."41
The third circumstance was the offer of Gloria and Quirino to have their conjugal real
properties beef up the collaterals for the credit line. Gloria signed the list of the properties
involved as "dealer," thereby ineluctably manifesting that Gloria considered herself a dealer of
the products delivered by PPI under the credit line. In this connection, a dealer is "a person
who makes a business of buying and selling goods, especially as distinguished from a
manufacturer, without altering their condition." In other words, a dealer is "one who buys to
sell again."42
The fourth circumstance had to do with the undertakings under the trust receipts. The position
of the petitioners was that the farmers-participants alone were obligated to pay for the goods
delivered to them by Gloria. However, such position had no factual and legal legs to prop it
up. A close look at the Trust Receipt/SCS indicates that the farmer-participants were
mentioned therein only with respect to the duties and responsibilities that Gloria personally
assumed to undertake in holding goods "in trust for PPI." Under the notion of relativity of
contracts embodied in Article 1311 of the Civil Code, contracts take effect only between the
parties, their assigns and heirs. Hence, the farmer-participants, not being themselves parties
to the contractual documents signed by Gloria, were not to be thereby liable.
At this juncture, the Court clarifies that the contract, its label notwithstanding, was not a trust
receipt transaction in legal contemplation or within the purview of the Trust Receipts
Law (Presidential Decree No. 115) such that its breach would render Gloria criminally liable
for estafa. Under Section 4 of the Trust Receipts Law, the sale of goods by a person in the
business of selling goods for profit who, at the outset of the transaction, has, as against the
buyer, general property rights in such goods, or who sells the goods to the buyer on credit,
retaining title or other interest as security for the payment of the purchase price, does not
constitute a trust receipt transaction and is outside the purview and coverage of the law, to
wit:
Section. 4. What constitutes a trust receipt transaction. – A trust receipt transaction, within
the meaning of this Decree, is any transaction by and between a person referred to in this
Decree as the entruster, and another person referred to in this Decree as the entrustee,
whereby the entruster, who owns or holds absolute title or security interests over certain
specified goods, documents or instruments, releases the same to the possession of the
entrustee upon the latter’s execution and delivery to the entruster of a signed document
called a "trust receipt" wherein the entrustee binds himself to hold the designated goods,
documents or instruments in trust for the entruster and to sell or otherwise dispose of the
goods, documents or instruments with the obligation to turn over to the entruster the
proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust
receipt or the goods, documents or instruments themselves if they are unsold or not
otherwise disposed of, in accordance with the terms and conditions specified in the trust
receipt, or for other purposes substantially equivalent to any of the following:
1. In the case of goods or documents, (a) to sell the goods or procure their sale; or
(b) to manufacture or process the goods with the purpose of ultimate
sale: Provided, That, in the case of goods delivered under trust receipt for the
purpose of manufacturing or processing before its ultimate sale, the entruster shall
retain its title over the goods whether in its original or processed form until the
entrustee has complied fully with his obligation under the trust receipt; or (c) to load,
unload, ship or tranship or otherwise deal with them in a manner preliminary or
necessary to their sale; or
2. In case of instruments x x x.
The sale of goods, documents or instruments by a person in the business of selling
goods, documents or instruments for profit who, at the outset of the transaction, has,
as against the buyer, general property rights in such goods, documents or
instruments, or who sells the same to the buyer on credit, retaining title or other
interest as security for the payment of the purchase price, does not constitute a trust
receipt transaction and is outside the purview and coverage of this Decree. (Bold
emphasis supplied.)
In Land Bank v. Perez,43 the Court has elucidated on the coverage of Section 4, supra, to wit:
There are two obligations in a trust receipt transaction. The first is covered by the provision
that refers to money under the obligation to deliver it (entregarla) to the owner of the
merchandise sold. The second is covered by the provision referring to merchandise received
under the obligation to return it (devolverla)  to the owner. Thus, under the Trust Receipts
Law, intent to defraud is presumed when (1) the entrustee fails to turn over the proceeds of
the sale of goods covered by the trust receipt to the entruster; or (2) when the entrustee fails
to return the goods under trust, if they are not disposed of in accordance with the terms of the
trust receipts.
In all trust receipt transactions, both obligations on the part of the trustee exist in the
alternative – the return of the proceeds of the sale or the return or recovery of the goods,
whether raw or processed. When both parties enter into an agreement knowing that the
return of the goods subject of the trust receipt is not possible even without any fault
on the part of the trustee, it is not a trust receipt transaction penalized under Section
13 of P.D. 115; the only obligation actually agreed upon by the parties would be the
return of the proceeds of the sale transaction. This transaction becomes a mere loan,
where the borrower is obligated to pay the bank the amount spent for the purchase of
the goods. (Bold emphasis supplied)
It is not amiss to point out that the RTC even erred in citing Section 4 of the Trust Receipts
Law as its basis for ordering Gloria to pay the total amount of ₱240,355.10. Section 13 of
the Trust Receipts Law considers the "failure of an entrustee to turn over the proceeds of the
sale of the goods, documents or instruments covered by a trust receipt to the extent of the
amount owing to the entruster or as appears in the trust receipt or to return said goods,
documents or instruments if they were not sold or disposed of in accordance with the terms of
the trust receipt" as constituting the crime of estafa  under Article 315 (b) of the Revised
Penal Code. However, had PPI intended to charge Gloria with estafa, it could have then done
so. Instead, it brought this collection suit, a clear indication that the trust receipts were only
collaterals for the credit line as agreed upon by the parties.
To be clear, the obligation assumed by Gloria under the Trust Receipt/SCS involved "the
execution of a Trust Agreement by the farmer-participants" in her favor,  which, in turn, she
would assign "in favor of PPI with recourse" in case of delivery and sale to the farmer-
participants. The term recourse as thus used means "resort to a person who is secondarily
liable after the default of the person who is primarily liable."44 An indorsement "with recourse"
of a note, for instance, makes the indorser a general indorser, because the indorsement is
without qualification. Accordingly, the term with recourse confirms the obligation of a general
indorser, who has the same liability as the original obligor.45 As the assignor "with recourse"
of the Trust Agreement executed by the farmer participating in the SCS, therefore, Gloria
made herself directly liable to PPI for the value of the inputs delivered to the farmer-
participants. Obviously, the signature of the representative of PPI found in the demand letters
Gloria sent to the farmer-participants only indicated that the Trust Agreement was part of the
SCS of PPI.
The petitioners could not validly justify the non-compliance by Gloria with her obligations
under the Trust Receipt/SCS by citing the loss of the farm outputs due to typhoon Kading.
There is no question that she had expressly agreed that her liability would not be
extinguished by the destruction or damage of the crops. The use of the term with
recourse  was, in fact, consonant with the provision of the Trust Receipt/SCS stating that if
Gloria could not deliver or serve "all the inputs" to the farmer-participants within 60 days, she
agreed that "the undelivered inputs will be charged" to her "regular credit line." Under her
arrangement with PPI, the trust receipts were mere securities for the credit line granted by
PPI,46 having in fact indicated in her application for the credit line that the trust receipts were
"collaterals" or separate obligations "attached to any other contract to guaranty its
performance."47
It is worthwhile to note that the application for credit facilities was a form contract that Gloria
filled out only with respect to her name, address, credit limit, term, and collateral. Her act of
signing the application signified her agreement to be bound by the terms of the application,
specifically her acquiescence to use trust receipts as collaterals, as well as by the terms and
conditions of the Trust Receipt/SCS.
In this regard, whether or not the Trust Receipt/SCS was a contract of adhesion apparently
prepared by PPI would neither dilute nor erase her liabilities. A contract of adhesion prepared
by one party, usually a corporation, is generally not a one-sided document as long as the
signatory is not prevented from studying it before signing. Gloria did not show that she was
deprived of that opportunity to study the contract. At any rate, the social stature of the parties,
the nature of the transaction, and the amount involved were also factors to be considered in
determining whether the aggrieved party "exercised adequate care and diligence in studying
the contract prior to its execution."48 Thus, "[u]nless a contracting party cannot read or does
not understand the language in which the agreement is written, he is presumed to know the
import of his contract and is bound thereby." 49 Here, Gloria was married to a lawyer who was
also then the Municipal Mayor of Aliaga. Both of them signed the list of conjugal assets that
they used to support the application for the credit line.
The last circumstance was that the petitioners now focus on the amount of liabilities adjudged
against them by the lower courts. They thereby bolster the finding that they fully knew and
accepted the legal import of the documents Gloria had signed of rendering them personally
liable towards PPI for the value of the inputs granted to the farmer-participants through them.
The finding is further confirmed by her admission of paying to PPI the amount of ₱50,000.00,
which payment, albeit allegedly made grudgingly, solidified the existence of a creditor-debtor
relationship between them. Indeed, Gloria would not have paid that amount except in
acknowledgement of an indebtedness towards PPI.
II.
WON Statement of account was hearsay. YES
The petitioners insist that they could not be held liable for the balance stated in Exhibit V due
to such document being hearsay as a "mere statement of account."50 They argue that Cristina
Llanera, the witness of PPI on the matter, was only a warehouse assistant who was not
shown to be either an accountant, or bookkeeper, or auditor or a person knowledgeable in
accounting. They posit that Llanera’s testimony on Exhibit V was limited to stating that she
had prepared the statement of account contained therein; that she did not affirm the
correctness or veracity of the contents of the document;51 and that, consequently, Exhibit V
had no evidentiary value as proof of their total liability for ₱240,355.10, the amount stated
therein.
We do not agree with the petitioners.
With Exhibit V being a private document, authentication pursuant to the rules on evidence
was a condition for its admissibility.52 Llanera, admittedly the person who had prepared the
document, was competent to testify on the due execution and authenticity of Exhibit V. Such
authentication was done in accordance with Rule 132 of the Rules of Court, whose Section
20 states:
Section 20. Proof of private document. – Before any private document offered as authentic is
received in evidence, its due execution and authenticity must be proved either:
(a)By anyone who saw the document executed or written; or
(b)By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed to be.
Further, the petitioners dispute the contents of Exhibit V by invoking Section 43, Rule 130 of
the Rules of Court, to wit:
Section 43. Entries in the course of business. – Entries made at, or near the time of the
transactions to which they refer, by a person deceased, or unable to testify, who was in a
position to know the facts therein stated, may be received as prima facie evidence, if such
person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business.
The invocation of the rule is misplaced, however, because the rule speaks of a situation
where the person who made the entries is dead or unable to testify, which was not the
situation here. Regardless, we have to point out that entries made in the course of business
enjoy the presumption of regularity.53 If properly authenticated, the entries serve as evidence
of the status of the account of the petitioners. In Land Bank v. Monet’s Export and
Manufacturing Corporation,54 the Court has explained that such entries are accorded unusual
reliability because their regularity and continuity are calculated to discipline record keepers in
the habit of precision; and that if the entries are financial, the records are routinely balanced
and audited; hence, in actual experience, the whole of the business world function in reliance
of such kind of records.
Nor have the petitioners proved that the entries contained in Exhibit V were incorrect and
untruthful. They cannot be permitted to do so now at this stage of final appeal, especially after
the lower courts found and accepted the statement of account contained therein to be
properly authenticated and trustworthy. Indeed, the Court is in no position to review and
overturn the lower courts’ unanimous finding and acceptance without strong and valid
reasons because they involved an issue of fact.55
III.
Interest of 16% per annum, being usurious, must be reversed
The statement of account discloses that the interest rate was 14% per annum for the "SCS
Account – from the invoice date to 7/09/85"; and that the interest rate was 16% per annum  for
the "Reg. Account – from 8/16/80 to 7/09/85." The petitioners assail the interest charged on
the principal obligation as usurious.
The matter of interest, being a question of law, must have to dealt with and resolved.
In 1978, when Gloria and PPI entered into the credit line agreement, the Usury Law  (Act No.
2655) was still in effect. Section 2 of the Usury Law prescribed an interest rate of 12% per
annum on secured loans, while Section 1 provided that "[t]he rate of interest for the loan or
forbearance of any money, goods, or credits and the rate allowed in judgments, in the
absence of express contract as to such rate of interest, shall be six per centum per annum  or
such rate as may be prescribed by the Monetary Board of the Central Bank."
It is noted, of course, that the Usury Law allowed the parties in a loan agreement to exercise
discretion on the interest rate to be charged. Once a judicial demand for payment has been
made, however, Article 2212 of the Civil Code should apply, that is: "Interest due shall earn
legal interest from the time it is judicially demanded, although the obligation may be silent
upon this point."
The Central Bank circulars on interest rates granted to the parties leeway on the rate of
interest agreed upon. In this regard, the Court has said:
The Usury Law had been rendered legally ineffective by Resolution No. 224 dated 3
December 1982 of the Monetary Board of the Central Bank, and later by Central Bank
Circular No. 905 which took effect on 1 January 1983. These circulars removed the ceiling on
interest rates for secured and unsecured loans regardless of maturity. The effect of these
circulars is to allow the parties to agree on any interest that may be charged on a loan. The
virtual repeal of the Usury Law is within the range of judicial notice which courts are bound to
take into account. Although interest rates are no longer subject to a ceiling, the lender does
not have an unbridled license to impose increased interest rates. The lender and the
borrower should agree on the imposed rate, and such imposed rate should be in writing.56
Accordingly, the interest rate agreed upon should not be "excessive, iniquitous,
unconscionable and exorbitant;" otherwise, the Court may declare the rate illegal.57
Considering that the credit line agreement was entered into in 1978, the rate of interest was
still governed by the Usury Law. The 16% per annum interest imposed by the RTC was
erroneous, therefore, because the loan was secured by the Trust Receipt/SCS. In view of
this, 12% per annum  is the legal rate of interest that should apply, to be reckoned from the
filing of the action. This rate accords with Eastern Shipping Lines, Inc. v. Court of
Appeals,58 whereby the Court has defined the following formula for the computation of legal
interest for the guidance of the Bench and the Bar, viz:
TOTAL AMOUNT DUE = [principal – partial payments made] + [interest + interest on
interest], where
Interest = remaining balance x 12% per annum x no. of years from due date until date of sale
to a third party (payment).
Interest on interest = interest computed as of the filing of the complaint x no. of years until
date of sale to a third party (payment).59
Relevantly, the likelihood of the aggregate interest charged exceeding the principal
indebtedness is not remote. In Apo Fruits Corporation v. Land Bank of the Philippines,60 a
case involving just compensation for landholdings with legal interest, however, the Court has
appropriately observed that the realization of such likelihood was not necessarily inequitable
or unconscionable due to its resulting directly from the application of law and jurisprudence,
to wit:
That the legal interest due is now almost equivalent to the principal to be paid is not per se an
inequitable or unconscionable situation, considering the length of time the interest has
remained unpaid – almost twelve long years. From the perspective of interest income, twelve
years would have been sufficient for the petitioners to double the principal, even if invested
conservatively, had they been promptly paid the principal of the just compensation due them.
Moreover, the interest, however enormous it may be, cannot be inequitable and
unconscionable because it resulted directly from the application of law and jurisprudence –
standards that have taken into account fairness and equity in setting the interest rates due for
the use or forbearance of money.
That is true herein. Although this case was commenced in 1981, the decision of the trial court
was rendered only in 1997, or more than 15 years ago. By appealing to the CA and then to
this Court, the petitioners chose to prolong the final resolution of the case; hence, they cannot
complain, but must bear the consequences to them of the application of the pertinent law and
jurisprudence, no matter how unfavorable to them.
IV.
Attorney’s fees to be deleted
In granting attorney’s fees, the RTC merely relied on and adverted to PPI’s allegation that the
failure of the petitioners to comply with their obligations under the contracts had "compelled
[them] to hire the services of a counsel for which it had agreed to an attorney’s fee equivalent
to 25% of the total amount recovered exclusive of appearance fee of ₱1,500.00" as its sole
basis for holding the petitioners liable to pay ₱20,000.00 "as attorneys’ fee and cost of
litigation." In affirming the RTC thereon, the CA did not even mention or deal with the matter
of attorney’s fees in its own decision.
The award of attorney’s fees is deleted because of the absence of any factual and legal
justification being expressly stated by the CA as well as by the RTC. To start with, the Court
has nothing to review if the CA did not tender in its decision any justification of why it was
awarding attorney’s fees. The award of attorney’s fees must rest on a factual basis and legal
justification stated in the body of the decision under review. Absent the statement of factual
basis and legal justification, attorney’s fees are to be disallowed.61 In Abobon v. Abobon,62 the
Court has expounded on the requirement for factual basis and legal justification in order to
warrant the grant of attorney’s fees to the winning party, viz:
As to attorney’s fees, the general rule is that such fees cannot be recovered by a successful
litigant as part of the damages to be assessed against the losing party because of the policy
that no premium should be placed on the right to litigate. Indeed, prior to the effectivity of the
present Civil Code, such fees could be recovered only when there was a stipulation to that
effect. It was only under the present Civil Code that the right to collect attorney’s fees in the
cases mentioned in Article 2208 of the Civil Code came to be recognized. Such fees are now
included in the concept of actual damages.1âwphi1
Even so, whenever attorney’s fees are proper in a case, the decision rendered therein should
still expressly state the factual  basis and legal  justification for granting them. Granting them in
the dispositive portion of the judgment is not enough; a discussion of the factual  basis
and legal justification for them must be laid out in the body of the decision. Considering that
the award of attorney’s fees in favor of the respondents fell short of this requirement, the
Court disallows the award for want of the factual and legal premises in the body of the
decision. The requirement for express findings of fact and law has been set in order to bring
the case within the exception and justify the award of the attorney’s fees. Otherwise, the
award is a conclusion without a premise, its basis being improperly left to speculation and
conjecture.
The lack of any assignment of error upon the matter of attorney’s fees is of no moment, for
the award, being devoid of any legal and factual basis, can be corrected and removed as a
matter of law.
Finally, the petitioners charge that the CA "failed to consider certain facts and circumstances
on record which would otherwise justify a different decision." The "facts and circumstances"
pertained to details relevant to the nature of the agreement of the petitioners, and to the
amount of their liabilities. However, an examination reveals that the "facts and circumstances"
do not warrant a conclusion that they were not debtors of PPI under the credit line
agreement.
WHEREFORE, the Court AFFIRMS the Decision promulgated on April 11, 2003 by the Court
of Appeals, subject to the MODIFICATIONS that: (a) the rate of interest is 12% per
annum reckoned from the filing of the complaint until full payment; and (b) the award of
attorney’s fees is deleted.

The petitioners shall pay the costs of suit.

SO ORDERED.