Vous êtes sur la page 1sur 45

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-21438 September 28, 1966

AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents. Lichauco, Picazo and Agcaoili for petitioner. Bengzon Villegas and Zarraga for respondent R. Carrascoso.

SANCHEZ, J.: The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit. On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner. The case is now before us for review on certiorari. The facts declared by the Court of Appeals as " fully supported by the evidence of record", are: Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March 30, 1958. On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager

that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff reluctantly gave his "first class" seat in the plane.3 1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision. Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based"; 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it". 7 A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were laid before the court and passed upon by it. 15

Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement of the ultimate facts as found by the court ... and essential to support the decision and judgment rendered thereon". 16 They consist of the court's "conclusions" with respect to the determinative facts in issue". 17 A question of law, upon the other hand, has been declared as "one which does not call for an examination of the probative value of the evidence presented by the parties." 18 2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the questions of fact. 20 With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment. 3. Was Carrascoso entitled to the first class seat he claims? It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would depend upon the availability of first class seats. These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right to, first class seats on the "definite" segments of his journey, particularly that from Saigon to Beirut". 21 And, the Court of Appeals disposed of this contention thus: Defendant seems to capitalize on the argument that the issuance of a firstclass ticket was no guarantee that the passenger to whom the same had been issued, would be accommodated in the first-class compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first-class reservation. We are not impressed by such a reasoning. We cannot understand how a reputable firm like defendant airplane company could have the indiscretion to give out tickets it never meant to honor at all. It received the corresponding amount in payment of first-class tickets and yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course of business that the company should know whether or riot the tickets it issues are to be honored or not.22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus: On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows: Q. In these tickets there are marks "O.K." From what you know, what does this OK mean? A. That the space is confirmed. Q. Confirmed for first class? A. Yes, "first class". (Transcript, p. 169) xxx xxx xxx

Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class ticket without any reservation whatever. Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation defendant had a verbal understanding with plaintiff that the "first class" ticket issued to him by defendant would be subject to confirmation in Hongkong. 23 We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised by the assignments of error and all questions that might have been raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error". 25 We reached this policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the basis of the conclusions of the trial court. 26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the covenants in the ticket. The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the Manager". 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat? 4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad faith;31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on this issue are: 3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration, the latter acting as general agents for and in behalf of the defendant, under which said contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, ... . 4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff with defendant's employees. 5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff has been compelled by defendant's employees

to leave the First Class accommodation berths at Bangkok after he was already seated. 6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila. 32 xxx xxx xxx

2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00. 33 xxx xxx xxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion. Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals declared: That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by the purser of the plane in his notebook which notation reads as follows:

"First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene", and by the testimony of an eye-witness, Ernesto G. Cuento, who was a copassenger. The captain of the plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of the case, or yet to secure his disposition; but defendant did neither. 37 The Court of appeals further stated Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then safely ensconsced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters "O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows: "Q How does the person in the ticket-issuing office know what reservation the passenger has arranged with you? A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959) In this connection, we quote with approval what the trial Judge has said on this point: Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right" to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove "any better", nay, any right on the part of the "white man" to the "First class" seat that the plaintiff was occupying and for which he paid and was issued a corresponding "first class" ticket. If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily proven it by having

taken the testimony of the said Manager by deposition, but defendant did not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that the Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his "first class" seat because the said Manager wanted to accommodate, using the words of the witness Ernesto G. Cuento, the "white man".38 It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist class compartment - just to give way to another passenger whose right thereto has not been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose." 39 And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First Instance, thus: The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the "first class" seat that he was occupying to, again using the words of the witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this "white man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying, duly paid for, and for which the corresponding "first class" ticket was issued by the defendant to him.40 5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law.41 For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the Civil Code says: ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42

6. A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages. Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. 44 Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment under threat of ejection, though the language used was not insulting and she was not ejected." 46 And this, because, although the relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract may be also a tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the mental suffering of said passenger.1awphl.nt Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier a case ofquasi-delict. Damages are proper. 7. Petitioner draws our attention to respondent Carrascoso's testimony, thus Q You mentioned about an attendant. Who is that attendant and purser? A When we left already that was already in the trip I could not help it. So one of the flight attendants approached me and requested from me my ticket and I said, What for? and she said, "We will note that you transferred to the tourist class". I said, "Nothing of that kind. That is tantamount to accepting my transfer." And I also said, "You are not going to note anything there because I am protesting to this transfer". Q Was she able to note it?

A No, because I did not give my ticket. Q About that purser? A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I went to the pantry that was next to me and the purser was there. He told me, "I have recorded the incident in my notebook." He read it and translated it to me because it was recorded in French "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene." Mr. VALTE I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your Honor. COURT I will allow that as part of his testimony. 49 Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook reading "First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony is admissible. 49a Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae. At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was made, the deposition of the purser could have cleared up the matter. We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary damages in contracts and quasi- contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept. And this, in addition to moral damages.54 9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion well exercised as it was here should not be disturbed. 10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees. The task of fixing these amounts is primarily with the trial court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof. 57 On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to affirm the same. Costs against petitioner. So ordered. Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ., concur. Bengzon, J.P., J., took no part.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-14257 July 31, 1959

THE PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. BIENVENIDO A. TAN as Judge of the Court of First Instance of Manila. Br. XIII, PACITA MADRIGAL-GONZALES, ANGELITA CENTENO, JULIA CARPIO, CALIXTO HERMOSA, and CRISPULA R. PAGARAN aliasPULA, respondents. Assistant Fiscal Apolinar Tolentino, Prosecutors Norberto J. Quisumbing and Antonio Villegas for petitioner.

Gonzalo W. Gonzales and Bausa, Ampil and Suarez for respondent Pacita M. Gonzales. Estanislao A. Fernandez for the other respondents. LABRADOR, J.: In Criminal Case No. 36885 of the Court of First Instance of Manila, respondents Pacita Madrigal-Gonzales and others charged with the crime of falsification of the public documents, in their capacities as public officials and employees, by having made it appear that certain relief supplies and/or merchandise were purchased by Pacita Madrigal-Gonzales for distribution to calamity indigents or sufferers, in such quantities and at such prices and from such business establishments or persons as are made to appear in the said public documents, when in fact and in truth, no such distributions of such relief and supplies as valued and supposedly purchased by said Pacita Madrigal Gonzales in the public and official documents had ever been made. In order to prove the charge of falsification, the prosecution presented to a witness a booklet of receipts, which was marked Exh. "D", containing value invoices numbered 101301 to 101400 of the Metro Drug Corporation, Magallanes corner Jakosalem, Cebu City. The booklet contained the triplicate copies, and according to said witness the original invoices were sent to Manila office of the company, the duplicates to the customers, so that the triplicate copies remained in the booklet. Witness further explained that in preparing receipts for sales, two carbons were used between the three sheets, the original, the duplicate and triplicate so that the duplicates and the triplicates were filed out by the use of the carbons in the course of the preparation and signing of the originals. The witness giving the testimony was the salesman who issued a triplicates marked as Exh. "D-1". As the witness was explaining the figures or words appearing on the triplicates, Hon. Bienvenido M. Tan, then presiding in the court below, interrupted the proceeding holding that the triplicates are not admissible unless it is first proven that the originals were lost and can not be produced. Said the court: Triplicates are evidence when it is proven first that the original is lost cannot be produced. But as the witness has alleged that the original is in the Manila Office, why not produce the original? Another witness, accountant of the Metro Drug Corporation in Manila, was also called by the prosecution to testify. He declared that sales in the provinces were reported to the Manila office of the Metro Drug Corporation, and that the originals of the sales invoices are transmitted to the main office in support of cash journal sheets, but that the original practice of keeping the original white copies no longer prevails as the originals are given to the customers, while only the duplicate or pink copies are submitted to the central office in Manila. Testifying on certain cash journal sheets, Exhs. "A", "A-1" to "A10" he further declared that he received these from the Metro Drug Corporation, Cebu

branch, and that the said cash journal sheets contained the sales made in the Cebu branch. After the cross-examination of this last witness, the prosecution again went back to the identification of the triplicate invoice, Exh. "D-1", already above referred to. It was at this stage that the judge below told the prosecution that the law applicable is Section 46, Rule 123 of the Rules of Court, which requires the production of the originals. In response to the above ruling, the special prosecutor claimed that the evidence of the prosecution would not be able to secure the production of the originals on account of their loss. In view of the above circumstances, the prosecution announced its intention to file a petition for certiorari against the ruling of the court below to which the court below to which the court below agreed. Hence this petition. It is alleged that the invoice sought to be introduced, which were produced by the use of carbon sheets, and which thereby produced a facsimile of the originals, including the figures and the signatures on the originals, are regarded as duplicate originals and may introduced as such, even without accounting for the non-production of the originals. The decision of the question is far from difficult. The admissibly of duplicates or triplicates has long been a settled question and we need not elaborate on the reasons for the rule. This matter has received consideration from the foremost commentator on the Rules of Court thus: "When carbon sheets are inserted between two or more sheets of writing paper so that the writing of a contract upon the outside sheet, including the signature of the party to be charged thereby, produces 2 facsimile upon the sheets beneath, such signature being thus reproduced by the same stroke of the pen which made the surface or exposed impression, all of the sheets so written on are regarded as duplicate originals and either of them may be introduced in evidence as such without accounting for the nonproduction of the others." (Moran, 1952 ed., p. 444.) It has also been in favor of the petitioner by US in the case of People vs. Quinones, 44 Off. Gaz., No. 5, 1520, 1525, thus: It is argued in the second assignment of error that the confession Exhibit B is not admissible because it is merely a carbon copy. The said confession Exhibit B, being a carbon copy of the original and bearing as it does the signature of the appellant, is admissible in evidence and possess all the probative value of the original, and the same does not require an accounting for the non-production of the original. (Sec 47, Rule 123, Rules of Court). Two principal authors on the law on evidence have sustained the theory of the admissibility of duplicate originals, as follows:

SEC. 386. . . . the best evidence rule is that rule which requires the highest grade of evidence obtainable to prove a disputed fact. p. 616. A "duplicate sales slip" (People vs. Stone, 349 III. 52, 181 N. E. 648) has been held to be primary evidence, p. 616. SEC. 420. Duplicate originals. Where letters are produced by mechanical means and, concurrently with the original, duplicate are produced, as by placing carbon paper and writing on the exposed surface at the same time, all are duplicate originals, and any one of them may introduced in evidence without accounting for the nonproduction of the other. Citing International Harvester Co. vs. Elfstrom, 101 Minn. 263, 112 N. W. 252. See also 12 L.R.A.(N.S.) 343, People of Hauke, 335 II, 217, 167 N. E. 1; State vs. Keife, 165 La. 47, 115 So. 363; Taylor vs. Com. 117 Va. 909, 85 S.E. 499. (Wharton's Criminal Evidence, Vol. I, p. 661). SEC. 100. Carbon copies, however, when made at the same time and on the same machine as the original, are duplicate originals, and these have been held to be as much primary evidence as the originals. Citings U.S. vs. Manton, 107 Fed. (2d) 834, denied 309 U. S. 664, 84 L. ed. 1012; O'Shea vs. U.S. 93 F. (2d) 169; Leonard vs. State, 36 Ala. App. 397, 58 So. (2d) 138; State vs. Lee, 173 La. 770, 138 So. 662; Newman vs. State 65 Ga. App. 288, 16 S. E. (2d) 87. (Underhill's Criminal Evidence, 5th ed., Vol. I, p. 168.) We find that the ruling of the court below to the effect that the triplicates formed by the used of carbon papers are not admissible in evidence, without accounting first for the loss of the originals is incorrect and must be reversed. The court below is hereby ordered to proceed in the trial of the case in accordance with this ruling. No cost. So ordered. Bengzon, Padilla, Montemayor, Bautista Angelo, Concepcion, Endencia and Barrera, JJ., concur.

FIRST DIVISION [G.R. No. 80505 : December 4, 1990.] 192 SCRA 28 THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. MARIO TANDOY y LIM,Defendant-Appellant. DECISION CRUZ, J.:

The decision of the Regional Trial Court of Makati, Branch 133 dated October 13, 1987, convicting Mario Tandoy of the crime of violation of Art. II, Sec. 4 of Rep. Act No. 6425 known as the Dangerous Drugs Act of 1972, is before us on appeal. The information against the accused-appellant read as follows: That on or about the 27th day of May 1986, in the Municipality of Makati, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused without being authorized by law, did then and there willfully, unlawfully and feloniously sell eight (8) pieces of dried marijuana flowering tops, two (2) pieces of dried marijuana flowering tops and crushed dried marijuana flowering tops, which are prohibited drug, for and in consideration of P20.00. Upon arraignment, Tandoy entered a plea of not guilty. After trial, Judge Buenaventura J. Guerrero rendered a decision the dispositive portion of which declared: WHEREFORE, the Court finds Mario Tandoy y Lim guilty beyond reasonable doubt of violation of Sec. 4, Art. II, Rep. Act No. 6425, as amended, and is hereby sentenced to life imprisonment and to pay a fine of P20,000.00 and cost.: nad The marijuana confiscated in this case is declared confiscated and forfeited and ordered turned over to the Dangerous Drugs Board for proper disposal. SO ORDERED. The accused-appellant raises the following assignment of errors in this appeal: 1. The Court a quo erred in finding accused guilty beyond reasonable doubt of the crime charged despite lack of evidence to prove that he sold marijuana to the poseur-buyer. 2. The Court a quo erred in admitting in evidence against the accused Exh. "E-2-A" which is merely a xerox copy of the P10.00 bill allegedly used as buy-bust money. The evidence of the prosecution may be summarized as follows: On May 27, 1986, at about 3:30 p.m. Lt. Salido, Jr. of the Makati Police Station dispatched Pfc. Herino de la Cruz, and Detectives Pablo R. Singayan, Nicanor Candolesas, Luisito de la Cruz, Estanislao Dalumpines, Antonio Manalastas and Virgilio Padua to conduct a buy-bust operation at Solchuaga St., Barangay Singkamas, Makati.

The target area was a store along the said street, and Singayan was to pose as the buyer. He stood alone near the store waiting for any pusher to approach. The other members of the team strategically positioned themselves. Soon, three men approached Singayan. One of them was the accused-appellant, who said without preamble: "Pare, gusto mo bang umiskor?" Singayan said yes. The exchange was made then and there two rolls/pieces of marijuana for one P10.00 and two P5.00 bills marked ANU (meaning Anti-Narcotics Unit). The team then moved in and arrested Tandoy. Manalastas and Candolesas made a body search of the accused-appellant and took from him the marked money, as well as eight more rolls/foils of marijuana and crushed leaves.: nad The arresting officers brought Tandoy to the Office of the Anti-Narcotics Unit, Makati Police Station, for investigation by Detective Marvin Pajilan. The accused-appellant chose to remain silent after having been informed of his constitutional rights. These events were narrated under oath by De la Cruz, Singayan and Pajilan. 1 Microscopic, chemical and chromotographic examination was performed on the confiscated marijuana by Raquel P. Angeles, forensic chemist of the National Bureau of Investigation, who later testified that the findings were positive. The marijuana was offered as an exhibit. 2 As might be expected, the accused-appellant had a different story. His testimony was that from 1:30 to 4:00 p.m. of the day in question, he was playing "cara y cruz" with 15 other persons along Solchuaga St. when somebody suddenly said that policemen were making arrests. The players grabbed the bet money and scampered. However, he and a certain Danny (another "cara y cruz" player) were caught and taken to the Narcotics Command headquarters in Makati. There they were mauled and warned that if they did not point to their fellow pushers, they would rot in jail. The accused-appellant denied he had sold marijuana to Singayan and insisted the bills taken from him were the bet money he had grabbed at the "cara y cruz" game. 3 The trial court, which had the opportunity to observe the demeanor of the witnesses and to listen to their respective testimonies, gave more credence to the statements of the arresting officers. Applying the presumption that they had performed their duties in a regular manner, it rejected Tandoy's uncorroborated allegation that he had been manhandled and framed. Tandoy had not submitted sufficient evidence of his charges, let alone his admission that he had no quarrel with the peace officers whom he had met only on the day of his arrest. In People v. Patog, 4 this Court held:

When there is no evidence and nothing to indicate the principal witness for the prosecution was actuated by improper motives, the presumption is that he was not so actuated and his testimony is entitled to full faith and credit. Tandoy submits that "one will not sell this prohibited drug to another who is a total stranger until the seller is certain of the identity of the buyer." The conjecture must be rejected.: nad In People v. Paco, 5 this Court observed: Drug-pushing when done on a small level as in this case belongs to that class of crimes that may be committed at anytime and at any place. After the offer to buy is accepted and the exchange is made, the illegal transaction is completed in a few minutes. The fact that the parties are in a public place and in the presence of other people may not always discourage them from pursuing their illegal trade as these factors may even serve to camouflage the same. Hence, the Court has sustained the conviction of drug pushers caught selling illegal drugs in a billiard hall (People v. Rubio, G.R. No. 66875, June 19, 1986, 142 SCRA 329; People v. Sarmiento, G.R. No. 72141, January 12, 1987, 147 SCRA 252), in front of a store (People vs. Khan, supra) along a street at 1:45 p.m. (People v. Toledo, G.R. No. 67609, November 22, 1985, 140 SCRA 259), and in front of a house (People v. Policarpio, G.R. No. 69844, February 23, 1988). As the Court has also held, "What matters is not an existing familiarity between the buyer and the seller but their agreement and the acts constituting the sale and delivery of the marijuana leaves." 6 Under the second assigned error, the accused-appellant invokes the best evidence rule and questions the admission by the trial court of the xerox copy only of the marked P10.00 bill. The Solicitor General, in his Comment, correctly refuted that contention thus: This assigned error centers on the trial court's admission of the P10.00 bill marked money (Exh. E-2-A) which, according to the appellant, is excluded under the best evidence rule for being a mere xerox copy. Apparently, appellant erroneously thinks that said marked money is an ordinary document falling under Sec. 2, Rule 130 of the Revised Rules of Court which excludes the introduction of secondary evidence except in the five (5) instances mentioned therein.:-cralaw The best evidence rule applies only when the contents of the document are the subject of inquiry. Where the issue is only as to whether or not such document was actually executed, or exists, or in the circumstances relevant to or surrounding its execution, the best evidence rule does not apply and

testimonial evidence is admissible. (Cf. Moran, op. cit., pp. 76-77; 4 Martin, op. cit., p. 78.) Since the aforesaid marked money was presented by the prosecution solely for the purpose of establishing its existence and not its contents, other substitutionary evidence, like a xerox copy thereof, is therefore admissible without the need of accounting for the original. Moreover, the presentation at the trial of the "buy-bust money" was not indispensable to the conviction of the accused-appellant because the sale of the marijuana had been adequately proved by the testimony of the police officers. So long as the marijuana actually sold by the accused-appellant had been submitted as an exhibit, the failure to produce the marked money itself would not constitute a fatal omission. We are convinced from the evidence on record that the prosecution has overcome the constitutional presumption of innocence in favor of the accused-appellant with proof beyond reasonable doubt of his guilt. He must therefore suffer the penalty prescribed by law for those who would visit the scourge of drug addiction upon our people. WHEREFORE, the appeal is DISMISSED and the challenged decision AFFIRMED in toto, with costs against the accused-appellant.: nad SO ORDERED

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-5791 December 17, 1910 THE UNITED STATES, plaintiff-appellee, vs. BERNARDO GREGORIO and EUSTAQUIO BALISTOY, defendants-appellants. Albert E. Somersille, for appellant Gregorio. Cayetano Hipolito, for appellant Balistoy. Attorney-General Villamor, for appellee.


Appeals were interposed by the defendants Bernardo Gregorio and Eustaquio Balistoy from the judgment rendered in the two causes prosecuted, No. 1574, against Bernardo Gregorio, and No. 1575, against Eustaquio Balistoy, which were consolidated and in which but one judgment was rendered, and forwarded to this court and registered under No. 5791. In the suit instituted by Pedro Salazar, as a creditor, against Eustaquio Balistoy, in the justice of the peace court of Libog, for the payment of a certain sum of money, judgment was rendered, on April 4, 1908, wherein the debtor was sentenced to pay to the plaintiff P275.92, with interest thereon, and the costs. For the execution of the said judgment, two rural properties belonging to the debtor were attached and the 27th of May, 1908, was set as the date for the sale and adjudication of the said attached properties to the highest bidder. On the 18th of the same month, Bernardo Gregorio requested the deputy sheriff to exclude the said realty from the attachment, alleging that he was the owner of the land situated in Tambogon, one of the properties levied upon, 400 brazas in circumference, situate in the pueblo of Bacacay, the location and boundaries of which are expressed in his petition, for the reason that he had acquired it by purchase from the judgment debtor, Balistoy, in 1905, prior to the filing of the complaint. By reason of this claim and petition the judgment creditor, Salazar, had to give a bond, in view of which the sheriff proceeded with the sale of the said property, and of another, also attached for the sum of P300, and both were adjudicated to the judgment creditor, according to the certificate, Exhibit C.lawphil.net In order that the claim of intervention presented to the sheriff might prosper, Bernardo Gregorio attached thereto the document Exhibit D, at the end of which and among other particulars appears the memorandum dated in Libog as of February 22, 1905, and signed by Eustaquio Balistoy, Lorenzo Gregorio, and Cirilo Valla, and in which Balistoy states that he bought the land referred to in the said document from Luis Balistoy and sold it to Bernardo Gregorio for P300, wherefore he signed as such vendor. The charge consists in that Balistoy, with intent to injure his creditor, Pedro Salazar, and for the purpose of avoiding the attachment and sale of one of the properties belonging to him, to secure the payment of the judgment obtained by his creditor in the aforementioned suit, did, with disregard of the truth in the narration of the facts, execute or write the said memorandum whereby, on February 25, 1905, he made or simulated a conveyance of one of the attached properties in favor of the said Bernardo Gregorio, according to the aforesaid copy, when in fact the said memorandum was written in April, 1908. For the foregoing reasons a complaint was filed in each of the two aforesaid causes in the Court of First Instance of Albay, charging each of the defendants with the crime of the falsification of a private document, and proceedings having been instituted in both causes, which were afterwards, by agreement of the parties thereto, consolidated, the court, on November 6, 1909, pronounced in both of them the judgment appealed from, written in duplicate, whereby Balistoy was sentenced to the penalty of one year eight months and twenty-one days of presidio correccional, to the accessory penalties, to pay

a fine of 1,501 pesetas, and, in case of nonpayment thereof through insolvency, to suffer the corresponding subsidiary imprisonment, provided it should not exceed onethird of the principal sentence, and to pay the costs incurred in cause No. 1575; and likewise, Bernardo Gregorio was sentenced to the penalty of three months and eleven days of arresto mayor, to pay a fine of 1,980 pesetas, and, in case of insolvency, to the corresponding subsidiary imprisonment, with the provision that it should not exceed one-third of the principal penalty, to the accessory punishments, and to pay the costs occasioned by cause No. 1574. From these sentences the defendants, respectively, appealed. This case concerns the falsity of a document alleged to have been written on a date prior to the one when it actually was prepared, which instrument simulates the sale of a parcel of land by its owner to a third party, with the intent to defraud the creditor who, through proper judicial process, solicited and obtained the attachment and sale of the said property in order, with the proceeds of such sale, to recover the amount which the owner of the land owed him. The sale was recorded in a memorandum, made upon a private document, according to the alleged copy of the latter presented at trial which belonged to the owner of land; and, notwithstanding the fact that the sheriff, who carried out the proceedings of attachment and sale, testified to his having seen the original of the said document, or at least the original memorandum of the conveyance, the only record that could be of use to the intervener, who claimed a lien on the land which was to be sold at public auction; certainly the mere exhibition of a copy of an unauthenticated private document could not legally produce the effect of suspending the sale of the said land, inasmuch as such copy is not sufficient proof of the right of the intervener and opponent, being e mere copy of a private document whose legality has not been proven. In the charge filed in this cause against the vendor and the vendee of the land in question, it is stated that these parties, the defendants, simulated the said memorandum of sale or conveyance of the land with the intent to injure the creditor, Pedro Salazar; but as the original document, setting forth the said memorandum, was not presented, but merely a copy thereof, and furthermore, as it could not be ascertained who had the original of the document containing the memorandum in question, nor the exact date when the latter was written; the said memorandum, presumed to be simulated and false, was not literally compared by the sheriff who testified that he had seen its original for but a few moments, nor by any officer authorized by law to certify to documents and proceedings such as are recorded in notarial instruments, nor even by two witnesses who might afterwards have been able to testify before the court that the copy exhibited was in exact agreement with its original; therefore, on account of these deficiencies, doubt arises as to whether the original of the document, Exhibit D, really existed at all, and whether the memorandum at the foot of the said exhibit is an exact copy of that alleged to have been written at the end of the said original document. lawphil.net

In criminal proceedings for the falsification of a document, it is indispensable that the judges and courts have before them the document alleged to have been simulated, counterfeited, or falsified, in order that they may find, pursuant to the evidence produced in the cause, whether or not the crime of falsification was committed, and also, at the same time, to enable them to determine the degree of each defendant's liability in the falsification under prosecution. Through the lack of the original document containing the memorandum alleged to be false, it is improper to hold, with only a copy of the said original in view, that the crime prosecuted was committed; and although, judging from the testimony of the witnesses who were examined in the two consolidated causes, there is reason to entertain much doubt as to the defendants' innocence, yet, withal, this case does not furnish decisive and conclusive proof of their respective guilt as coprincipals of the crime charged. Defendants in a criminal cause are always presumed to be innocent until their guilt be fully proven, and, in case of reasonable doubt and when their guilt is not satisfactorily shown, they are entitled to a judgment of acquittal. In view of the evidence produced in both of the aforesaid criminal causes, said causes can only be terminated by such a finding. For the foregoing reasons, it is proper, in our opinion, with a reversal of the judgment appealed from, to acquit, and we hereby do acquit Eustaquio Balistoy and Bernardo Gregorio, with the costs of both instances de oficio. So ordered. Arellano, C.J., Mapa, Johnson, Carson and Moreland, JJ., conc

epublic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-35366 August 5, 1931

THE PROVINCIAL FISCAL OF PAMPANGA, petitioner, vs. HERMOGENES REYES, Judge of First Instance of Pampanga, and ANDRES GUEVARRA, respondents. Provincial Fiscal Daza in his own behalf. Monico R. Mercado for respondent judge. Francisco Lazatin for respondent Guevarra. VILLAMOR, J.:

The petitioner prays for a writ of mandamus to compel the respondent judge to admit Exhibits A, B, C, and D (attached to the petition), as evidence for the prosecution in criminal cases Nos. 4501 and 4502 of the Court of First Instance of Pampanga. The provincial fiscal of Pampanga filed two informations for libel against Andres Guevarra. The informations alleged that the defendant, with malicious intent, published on page 9 of the weekly paper Ing Magumasid in its issue of July 13, 1930, a squib in verse, of which a translation into Spanish was included therein, intended to impeach the honesty, integrity, and reputation of Clemente Dayrit (information in criminal cause No. 4501) and of Mariano Nepomuceno (information in criminal cause No. 4502). The defendant demurred on the ground of duplicity of informations, he having published only one libelous article in the Ing Magumasid for July 13, 1930. The court overruled the demurrer. A joint trial was held of criminal cases Nos. 4501 and 4502. The fiscal attempted to present as evidence for the prosecution, the aforementioned Exhibits A, B, C, and D, which are copies of the Ing Magumasid containing the libelous article with the innuendo, another article in the vernacular published in the same weekly, and its translation into Spanish. Counsel for the defendant objected to this evidence, which objection was sustained by the court. The respondents answered the petition for mandamus, praying for its dismissal with costs against the petitioner. At the hearing of this case, both parties appeared and moved that they be allowed to present memoranda in lieu of an oral argument, which memoranda are in the record. The petitioner contends that the exhibits in question are the best evidence of the libel, the subject matter of the information, and should therefore be admitted; while the respondents maintain that, inasmuch as the libelous articles were not quoted in the information, said evidence cannot be admitted without amending the information. The prosecution asked for an amendment to the information, but the court denied the petition on the ground that it would impair the rights of the defendant, holding that the omission of the libelous article in the original was fatal to the prosecution. The first question raised here is whether an information charging a libel published in an unofficial language, without including a copy of the libelous article, but only a translation into Spanish, is valid or not. It is true that in United States vs.Eguia and Lozano (38 Phil., 857), it was stated: "The general rule is that the complaint or information for libel must set out the particular defamatory words as published, and a statement of their substance and effect is usually considered insufficient." But this general rule does not exclude certain exceptions, such as, cases where the libel is published in a non-official language. "When the defamation has been published in a foreign tongue, it is proper, and in general, necessary, to set out the communication as it was originally made, with an exact translation into English; and if from the translation no cause of action appears,

it is immaterial that the foreign words were actionable. In some jurisdictions, however, under the influence of the liberality of laws on practice, it is held unnecessary to set out the communication in the foreign language in which it is alleged to have been published, so long as the foreign publication is alleged, with an English translation attached." (37 C. J., 27, sec. 336.) If the libelous article had been published in one of our official languages, English or Spanish, it would have been necessary to follow the general rule; but since the article in question was published in the Pampango dialect, it is sufficient to insert a Spanish translation in the information. The justice of this exception to the general rule becomes more evident if we consider a libelous article published, for instance, in Moro or Chinese, who use characters different from our own. The second question refers to the admissibility of the aforesaid exhibits. The general rules regarding the admissibility of evidence are applicable to cases of libel or slander. The evidence must be relevant, and not hearsay. (37 C.J., 151, sec. 688.) This being so, the rule of procedure which requires the production of the best evidence, is applicable to the present case. And certainly the copies of the weekly where the libelous article was published, and its translation, constitute the best evidence of the libel charged. The newspaper itself is the best evidence of an article published in it. (Bond vs. Central Bank of Georgia, 2 Ga., 92.). The respondent judge undoubtedly has discretion to admit or reject the evidence offered by the fiscal; but in the instant case his refusal to admit such evidence amounts to an abuse of that discretion, which may be controlled by this court by means of mandamus proceedings. In so far as the jurisdiction of this court is concerned, we believe the doctrine is applicable which was held in Orient Insurance Co. vs. Revilla and Teal Motor Co. (54 Phil., 919), namely, that the Supreme Court has jurisdiction to entertain an application for a writ of mandamus to compel a Court of First Instance to permit the attorney of a litigant to examine the entire written communication, when part of the same has been introduced in evidence by the other party. Wherefore, the writ prayed for against the respondent judge of the Court of First Instance of Pampanga should be issued, requiring him to admit Exhibits A, B, C, and D, in question in criminal cases Nos. 4501 and 4502 of that court, and it is so ordered, without special pronouncement of costs. Avancea, C.J., Johnson, Street, Malcolm, Romualdez, Villa-Real and Imperial, JJ., concur.

December 24, 1915 G.R. No. L-10824 E. MICHAEL & CO., INC., plaintiff-appellant,

vs. ADRIANO ENRIQUEZ, defendant-appellee. Sepulveda, Pelaez and Espina for appellant. No appearance for appellee. MORELAND, J.: This is an appeal from a judgment of the Court of First Instance of Cebu dismissing the action after trial on the ground that the plaintiff did not prove facts sufficient to constitute a cause of action. We are of the opinion that the judgment must be reversed and a new trial ordered. The action is based on a sale with a right to repurchase made by Adriano Enriquez in favor of E. Michael and E. Michael & Co., sociedad en comandita, of which appellant claims to be the successor, by reason of an instrument, duly executed and delivered by said companies to appellant, transferring property, business and assets of every kind, including the land which is the subject of this litigation. It is alleged in the complaint that the time to repurchase having expired, the title to the property became absolute in appellant and that it is accordingly the owner of the land described in said instruments. On the trial appellant sought to prove the execution and delivery of the conveyance transferring to it the land described in the sale with right to repurchase. The trial court prevented appellant from the proving the fact. Appellant also attempted to prove the fact that the instrument so executed and delivered was lost, it being his purpose to lay the basis for the introduction of secondary evidence as to its contents. The trial court also prevented appellant from proving that fact. While the efforts of appellants counsel to prove the execution and delivery were at times rather informal and inartificial and objections to such questions were properly sustained, at others the questions put for the purpose of proving those facts were well framed and answer should have been allowed to them; but, even in such cases, the trial court also sustained objections to the questions and the evidence sought to be adduced was excluded. The same may be said with respect to the attempts to establish the loss of the document. Exceptions were taken by plaintiffs counsel to all adverse rulings of the court respecting the admission of evidence tending to establish the execution and delivery and the subsequent loss of the document in question, thus laying them proper foundation for the bringing up the rulings of the court on those matters.

Trial courts do well in refusing at all times to permit the introduction of incompetent evidence and particularly secondary evidence of the contents of written instruments unless the facts required by the Code of Civil Procedure as the conditions precedent for such evidence are clearly shown to exist. Section 321 of the Code provides: An original writing must be produced and proved, except as otherwise provided in this Act. If it has been lost, proof of the loss must first be made before evidence can be given of its contents. Upon such proof being made, together with proof of the due execution of the writing, its contents may be proved by a copy or by a recital of its contests in some authentic document, or by the recollection of a witness. As will be seen from this section, the writing itself must be produced unless it has been lost or destroyed in which case, before its contents may be proved by other evidence, it must be shown by the person offering the secondary evidence (1) that the document was duly executed and delivered, where delivery is necessary, and (2) that it has been lost or destroyed. The execution and delivery of the document may be established by the person or persons who executed it, by the person before whom its execution was acknowledged, or by any person who was present and saw it executed and delivered or who, after its execution and delivery, saw it and recognized the signatures; or by a person to whom the parties to the instruments had previously confessed the execution thereof. The destruction of the instrument may be proved by any person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or by anyone who has made, in the judgment of the court, a sufficient examination in the place where the document or papers of similar character are usually kept by the person in whose custody the document lost was, and has been unable to find it; or who has made any other investigation which is sufficient to satisfy the court that the instrument is indeed lost. If it appears, on an attempt to prove the loss, that the document is in fact in existence, then the proof of the loss or destruction fails and secondary evidence is inadmissible unless section 322 of the Code of Civil Procedure should be applicable. After proper proof of the due execution and delivery of the instrument and its loss or destruction, oral evidence may be give of its contents by any person who signed the document, or who read it, or who heard it read knowing, or it being proved from other sources, that the document so read was the one in question. Such evidence may also be given by any person who was present when the contents of the document were talked over between the parties thereto to such an extent as to give him reasonably full information as to its contents; or the contents may be proved by any person to whom the parties

to the instrument have confessed or stated the contents thereof; or by a copy thereof; or by a recital of its contents in some authentic document. Objections were sustained by the trial court to several question put by appellants counsel relative to the due execution and delivery of the instrument of transfer between the partnership of E. Michael & Co., sociedad en comandita, and appellant, on the ground that counsel, in an attempt to identify the document to which his question referred, described or characterized it as an instrument of transfer or cession. Counsel, if he had desired to identify the instrument to which the question referred, might have done better, perhaps, if he asked the witness if he knew of the execution of an instrument between appellant and its predecessor in interest relating to the lands described in the complaint or to the property and business of E. Michael & Co., sociedad en comandita, instead of asking him if he knew of the execution of a document between appellant and his predecessors in interest transferring the lands in question, or the property and business of E. Michael & Co., sociedad en comandita, the appellant. Having obtained an affirmative answer to the question indicated counsel could then have shown how the witness came to know of the execution or existence of the document, and, if such circumstances disclosed that the witness was sufficiently acquainted with the facts, he would have been allowed to testify to its execution and delivery. After this had been done the document might then have been presented for identification and when identified, offered in evidence. If its contents showed that it referred to the lands described in the complaint, its admissibility would have been instantly evident. The mere fact that counsel for appellant, in putting his question to the witness, characterized or described the instrument as one of transfer, while objectionable, was not sufficient to cut him off altogether from proving the execution and delivery of the document if other requisites were present. While it is always best to avoid characterizations of that kind, its harm is minimized where the case is tried before a court instead of a jury, the court well knowing that it cannot accept the characterization as evidence but must go to the document itself or the evidence of its contents to determine its nature and legal effect. Trial courts should not be so strict with reference to matters of the character under discussion as to cause a miscarriage of justice; but on the other hand, they should see to it that they are not imposed on by the introduction of fabricated testimony and that injustice shall not result from an evasion of the rules of evidence by designing persons. We are of the opinion on the whole record that proper questions, tending to the production of very material and competent evidence, were put by

plaintiffs counsel, objections to which were sustained by the trial court; and that the error thus committed was not cure by subsequent questions and answers or by the introduction of the same evidence in different manner or form. The judgment must be reversed and a new trial ordered without costs in this instance. So ordered. Arellano, C.J., Torres, Carson, Trent and Araullo, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 83377 February 9, 1993 BASILIO DE VERA, LUIS DE VERA, FELIPE DE VERA, HEIRS OF EUSTAQUIA DE VERA-PAPA represented by GLICERIA PAPA-FRANCISCO, et al., petitioners, vs. SPOUSES MARIANO AGUILAR and LEONA V. AGUILAR, respondents. Pablo M. Gancayaco for petitioners. De Mesa, Villarica & Associates for respondents.

CAMPOS, JR., J.: This is a petition for review on certiorari of the decision * of the Court of Appeals dated November 27, 1987 in CA-GR CV No. 07448 entitled, "Basilio de Vera, Luis de Vera, Felipe de Vera, Heirs of Eustaquia de Vera-Papa, represented by Gliceria PapaFrancisco, and Heirs of Maria de Vera-Torres, represented by Luis V. Torres, plaintiffsappellees versus Spouses Mariano Aguilar and Leona V. Aguilar, defendantsappellants", which reversed the decision ** of the Regional Trial Court of Bulacan, Third Judicial Region, Branch 14, for failure of petitioners to prove the loss or destruction of the original deed of sale and of all its duplicate original copies. The undisputed facts are as follows:

Petitioners Basilio, Luis, Felipe, Eustaquia and Maria, all surnamed de Vera and respondent Leona, married to respondent Mariano Aguilar, are the children and heirs of the late Marcosa Bernabe who died on May 10, 1960. In her lifetime, Marcosa Bernabe owned the disputed parcel of land situated in Camalig, Meycauayan, Bulacan, with an area of 4,195 square meters, designated as Cadastral Lot No. 3621, Cad. 337, Case No. 4, Meycauayan Cadastre. The disputed property was mortgaged by petitioners Basilio and Felipe de Vera to a certain Atty. Leonardo Bordador. When the mortgage had matured, the respondents redeemed the property from Atty. Leonardo Bordador and in turn Marcosa Bernabe sold the same to them as evidenced by a deed of absolute sale dated February 11, 1956. On February 13, 1956, the respondents registered the deed with the Registry of Deeds of Bulacan resulting in the cancellation of the tax declaration in the name of Marcosa Bernabe and the issuance of another in the name of the Aguilars. Since then and up to the present, the Aguilars have been paying taxes on the land. On July 20, 1977, respondent Mariano Aguilar was issued a free patent to the land on the basis of which Original Certificate of Title No. P-1356(M) was issued in his name. On September 1, 1980, the petitioners wrote to the respondents claiming that as children of Marcosa Bernabe, they were co-owners of the property and demanded partition thereof on threats that the respondents would be charged with perjury and/or falsification. The petitioners also claimed that the respondents had resold the property to Marcosa Bernabe on April 28, 1959. On September 27, 1980, the respondents wrote in reply to the petitioners that they were the sole owners of the disputed parcel of land and denied that the land was resold to Marcosa Bernabe. True to petitioners' threat, they filed a falsification case against the respondents. However, on March 31, 1981, Assistant Provincial Fiscal Arsenio N. Mercado of Bulacan recommended dismissal of the charge of falsification of public document against the respondents for lack of a prima facie case. On March 26, 1981, petitioners filed a suit for reconveyance of the lot covered by Original Certificate of Title No. P-1356(M). On July 31, 1985, the trial court rendered its decision *** the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered ordering defendants: 1. To reconvey the property in question to the plaintiffs; 2. To pay plaintiffs P10,000.00 as litigation expenses;

3. To pay plaintiffs P5,000.00 as exemplary damages; 4. To pay P10,000.00 as attorney's fees. SO ORDERED. 1 In ruling in favor of the petitioners, the trial court admitted, over the objection of the respondents, Exhibit A purporting to be a xeroxed copy of an alleged deed of sale executed on April 28, 1959 by the respondents selling, transferring and conveying unto Marcosa Bernabe the disputed parcel of land for and in consideration of P1,500.00. Not contented with the decision, respondents appealed to the Court of Appeals contending that they never sold back to Marcosa Bernabe the disputed parcel of land. Furthermore, respondents contended that since the petitioners have failed to produce the original of the alleged deed of sale dated April 28, 1959, the same was not the best evidence of the alleged sale hence it should have been excluded and should not have been accorded any evidentiary value. On the other hand, the petitioners claimed that the existence of the document of sale dated April 28, 1959 had been duly established by the testimony of the notary public before whom it was acknowledged and by Luis de Vera who was present during its execution and that the loss of the original document had been proven by the testimony of the representatives of the offices of the National Archives and the Provincial Assessor of Bulacan. On November 29, 1987, the Court of Appeals rendered its decision reversing the trial court's decision. It found that the loss or destruction of the original deed of sale has not been duly proven by the petitioners. Hence, secondary evidence, i.e., presentation of the xeroxed copy of the alleged deed of sale is inadmissible. Hence this petition. The crux of this case is whether or not the petitioners have satisfactorily proven the loss of the original deed of sale so as to allow the presentation of the xeroxed copy of the same. We rule in the negative. Section 4 of Rule 130 (now Section 5, Rule 130) of the Rules of Court on Secondary Evidence states: Sec. 4. Secondary evidence when original is lost or destroyed. When the original writing has been lost or destroyed, or cannot be produced in court, upon proof of its execution and loss or destruction, or unavailability, its contents may be proved by a copy, or by a recital of its contents in some authentic document, or by the recollection of witnesses.

Secondary evidence is admissible when the original documents were actually lost or destroyed. But prior to the introduction of such secondary evidence, the proponent must establish the former existence of the instrument. The correct order of proof is as follows: Existence; execution; loss; contents although this order may be changed if necessary in the discretion of the court. The sufficiency of proof offered as a predicate for the admission of an alleged lost deed lies within the judicial discretion of the trial court under all the circumstances of the particular case. 2 A reading of the decision of the trial court shows that it merely ruled on the existence and due execution of the alleged deed of sale dated April 28, 1959. It failed to look into the facts and circumstances surrounding the loss or destruction of the original copies of the alleged deed of sale. In the case at bar, the existence of an alleged sale of a parcel of land was proved by the presentation of a xeroxed copy of the alleged deed of absolute sale. In establishing the execution of a document the same may be established by the person or persons who executed it, by the person before whom its execution was acknowledged, or by any person who was present and saw it executed or who, after its execution, saw it and recognized the signatures; or by a person to whom the parties to the instrument had previously confessed the execution thereof. 3 We agree with the trial court's findings that petitioners have sufficiently established the due execution of the alleged deed of sale through the testimony of the notary public to wit: Preponderance of evidence clearly disclosed the facts that Atty. Ismael Estela prepared Exhibit A. Atty. Emiliano Ibasco, Jr. positively identified the signatures appearing therein to be that (sic) of the spouses and witnesses Luis de Vera and Ismael Estela, in his capacity as Notary Public who ratified the document. 4 After the due execution of the document has been established, it must next be proved that said document has been lost or destroyed. The destruction of the instrument may be proved by any person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or by any one who had made, in the judgment of the court, a sufficient examination in the place or places where the document or papers of similar character are usually kept by the person in whose custody the document lost was, and has been unable to find it; or who has made any other investigation which is sufficient to satisfy the court that the instrument is indeed lost. 5 However, all duplicates or counterparts must be accounted for before using copies. For, since all the duplicates or multiplicates are parts of the writing itself to be proved, no excuse for non-production of the writing itself can be regarded as established until it appears that all of its parts are unavailable (i.e. lost, retained by the opponent or by a third person or the like). 6

In the case at bar, Atty. Emiliano Ibasco, Jr., notary public who notarized the document testified that the alleged deed of sale has about four or five original copies. 7 Hence, all originals must be accounted for before secondary evidence can be given of any one. This petitioners failed to do. Records show that petitioners merely accounted for three out of four or five original copies. In reversing the trial court, the respondent Court of Appeals considered the following points: Asked on the witness stand where the original of the document (Exhibit A) was, plaintiff-appellee Luis de Vera answered that it was with the Provincial Assessor in Malolos, Bulacan, whereupon the appellees reserved its (sic) right to present it in evidence (p. 11, tsn., August 11, 1981, Steno, Tecson). The same question propounded to the same witness at the next hearing, he replied that in the early part of 1976 his sister Maria borrowed from him the original document and a certified true copy thereof and brought them to the Office of the Register of Deeds in Malolos "for the purpose of having it registered;" and that when she returned she told him that the original copy of the document was submitted to that office "and it (the property) was transferred in the name of Marcosa Bernabe instead of Mariano Aguilar" (p. 8, tsn., December 10, 1981, Steno, Crisostomo; p. 9, tsn., Mar. 16, 1982, Steno, Vallarta). Indeed, upon the appellees' own evidence the original of the deed of sale in question, a purported xerox copy and certified true copy of which are marked as Exhibits A and B, has not been lost or destroyed. It was submitted to the Office of the Register of Deeds of Malolos for registration. The appellees, therefore, should have asked the office to produce it in court and if it could not be produced for one reason or another should have called the Register of Deeds or his representative to explain why. That they failed to do. The loss or destruction of the original of the document in question has not, therefore, been established. Hence, secondary evidence of it is inadmissible . . . . Neither did the testimony of notary public Ibasco, Jr. to the effect that he did not have a copy of the deed of sale in question because his files were burned when his office at Ronquillo Street, Manila was gutted by fire in 1971 and 1972 (p. 4, tsn., November 10, 1981, Steno, Crisostomo) establish the loss or destruction of the original document in question. What was lost or destroyed in the custody of Atty. Ibasco, Jr. was but one of the duplicate original copies on file with him. Nor did the testimony of Hipolito Timoteo, representative of the Assessor's Office of Bulacan, to the effect that he failed to see the deed of absolute sale annotated on the simple copy of tax declaration No. 15412 (p. 7, tsn., Aug. 12, 1982, Steno, Vallarta) and of David Montenegro, Jr. of the National Archives to the effect that his office had no copy of the document in question because the

notary public might not have submitted a copy thereof; or that it was lost or destroyed during the transmittal; and that most of the record before 1960 were destroyed by termites (pp. 8-12, tsn., Oct. 5, 1982, Steno, Tecson), prove loss or destruction of the original and of all the duplicate original copies of the document in question. 8 We find no cogent reason to rule otherwise. WHEREFORE, the decision of the Court of Appeals dated November 27, 1987 is hereby AFFIRMED. SO ORDERED. Narvasa, C.J., Feliciano, Regalado and Nocon, JJ., concur.


[G.R. No. 149454. May 28, 2004]



[G.R. No. 149507. May 28, 2004]

CASA MONTESSORI INTERNATIONALE, petitioner, vs. BANK OF THE PHILIPPINE ISLANDS, respondent. DECISION PANGANIBAN, J.: By the nature of its functions, a bank is required to take meticulous care of the deposits of its clients, who have the right to expect high standards of integrity and performance from it. Among its obligations in furtherance thereof is knowing the signatures of its clients. Depositors are not estopped from questioning wrongful withdrawals, even if they have failed to question those errors in the statements sent by the bank to them for verification.

The Case Before us are two Petitions for Review[1] under Rule 45 of the Rules of Court, assailing the March 23, 2001 Decision[2] and the August 17, 2001 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 63561. The decretal portion of the assailed Decision reads as follows: WHEREFORE, upon the premises, the decision appealed from is AFFIRMED with the modification that defendant bank [Bank of the Philippine Islands (BPI)] is held liable only for one-half of the value of the forged checks in the amount of P547,115.00 after deductions subject to REIMBURSEMENT from third party defendant Yabut who is likewise ORDERED to pay the other half to plaintiff corporation [Casa Montessori Internationale (CASA)].[4] The assailed Resolution denied all the parties Motions for Reconsideration.

The Facts The facts of the case are narrated by the CA as follows: On November 8, 1982, plaintiff CASA Montessori International[5] opened Current Account No. 0291-0081-01 with defendant BPI[,] with CASAs President Ms. Ma. Carina C. Lebron as one of its authorized signatories. In 1991, after conducting an investigation, plaintiff discovered that nine (9) of its checks had been encashed by a certain Sonny D. Santos since 1990 in the total amount of P782,000.00, on the following dates and amounts: Check No. 1. 2. 3. 4. 5. 6. 7. 8. 839700 839459 839609 839549 839569 729149 729129 839684 Date April 24, 1990 Nov. 2, 1990 Oct. 17, 1990 April 7, 1990 Sept. 23, 1990 Mar. 22, 1990 Mar. 16, 1990 Dec. 1, 1990 Amount P 43,400.00 110,500.00 47,723.00 90,700.00 52,277.00 148,000.00 51,015.00 140,000.00



Mar. 2, 1990 Total -P

98,985.00 782,600.00[6]

It turned out that Sonny D. Santos with account at BPIs Greenbelt Branch [was] a fictitious name used by third party defendant Leonardo T. Yabut who worked as external auditor of CASA. Third party defendant voluntarily admitted that he forged the signature of Ms. Lebron and encashed the checks. The PNP Crime Laboratory conducted an examination of the nine (9) checks and concluded that the handwritings thereon compared to the standard signature of Ms. Lebron were not written by the latter. On March 4, 1991, plaintiff filed the herein Complaint for Collection with Damages against defendant bank praying that the latter be ordered to reinstate the amount of P782,500.00[7] in the current and savings accounts of the plaintiff with interest at 6% per annum. On February 16, 1999, the RTC rendered the appealed decision in favor of the plaintiff.[8]

Ruling of the Court of Appeals Modifying the Decision of the Regional Trial Court (RTC), the CA apportioned the loss between BPI and CASA. The appellate court took into account CASAs contributory negligence that resulted in the undetected forgery. It then ordered Leonardo T. Yabut to reimburse BPI half the total amount claimed; and CASA, the other half. It also disallowed attorneys fees and moral and exemplary damages. Hence, these Petitions.[9]

Issues In GR No. 149454, Petitioner BPI submits the following issues for our consideration: I. The Honorable Court of Appeals erred in deciding this case NOT in accord with the applicable decisions of this Honorable Court to the effect that forgery cannot be presumed; that it must be proved by clear, positive and convincing evidence; and that the burden of proof lies on the party alleging the forgery. II. The Honorable Court of Appeals erred in deciding this case not in accord with applicable laws, in particular the Negotiable Instruments Law (NIL) which precludes CASA, on account of its own negligence, from asserting its forgery claim against BPI, specially taking into account the absence of any negligence on the part of BPI.[10]

In GR No. 149507, Petitioner CASA submits the following issues: 1. The Honorable Court of Appeals erred when it ruled that there is no showing that [BPI], although negligent, acted in bad faith x x x thus denying the prayer for the award of attorneys fees, moral damages and exemplary damages to [CASA]. The Honorable Court also erred when it did not order [BPI] to pay interest on the amounts due to [CASA]. 2. The Honorable Court of Appeals erred when it declared that [CASA] was likewise negligent in the case at bar, thus warranting its conclusion that the loss in the amount of P547,115.00 be apportioned between [CASA] and [BPI] x x x.[11] These issues can be narrowed down to three. First, was there forgery under the Negotiable Instruments Law (NIL)? Second, were any of the parties negligent and therefore precluded from setting up forgery as a defense? Third, should moral and exemplary damages, attorneys fees, and interest be awarded? The Courts Ruling The Petition in GR No. 149454 has no merit, while that in GR No. 149507 is partly meritorious.

First Issue: Forged Signature Wholly Inoperative Section 23 of the NIL provides: Section 23. Forged signature; effect of. -- When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right x x x to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.[12] Under this provision, a forged signature is a real[13] or absolute defense,[14] and a person whose signature on a negotiable instrument is forged is deemed to have never become a party thereto and to have never consented to the contract that allegedly gave rise to it.[15] The counterfeiting of any writing, consisting in the signing of anothers name with intent to defraud, is forgery.[16] In the present case, we hold that there was forgery of the drawers signature on the check. First, both the CA[17] and the RTC[18] found that Respondent Yabut himself had voluntarily admitted, through an Affidavit, that he had forged the drawers signature and

encashed the checks.[19] He never refuted these findings.[20] That he had been coerced into admission was not corroborated by any evidence on record.[21] Second, the appellate and the trial courts also ruled that the PNP Crime Laboratory, after its examination of the said checks,[22] had concluded that the handwritings thereon -- compared to the standard signature of the drawer -- were not hers.[23] This conclusion was the same as that in the Report[24] that the PNP Crime Laboratory had earlier issued to BPI -- the drawee bank -- upon the latters request. Indeed, we respect and affirm the RTCs factual findings, espec ially when affirmed by the CA, since these are supported by substantial evidence on record. [25]

Voluntary Admission Not Violative of Constitutional Rights The voluntary admission of Yabut did not violate his constitutional rights (1) on custodial investigation, and (2) against self-incrimination. In the first place, he was not under custodial investigation.[26] His Affidavit was executed in private and before private individuals.[27] The mantle of protection under Section 12 of Article III of the 1987 Constitution[28] covers only the period from the time a person is taken into custody for investigation of his possible participation in the commission of a crime or from the time he is singled out as a suspect in the commission of a crime although not yet in custody.[29] Therefore, to fall within the ambit of Section 12, quoted above, there must be an arrest or a deprivation of freedom, with questions propounded on him by the police authorities for the purpose of eliciting admissions, confessions, or any information.[30] The said constitutional provision does not apply to spontaneous statements made in a voluntary manner[31] whereby an individual orally admits to authorship of a crime.[32] What the Constitution proscribes is the compulsory or coercive disclosure of incriminating facts.[33] Moreover, the right against self-incrimination[34] under Section 17 of Article III[35] of the Constitution, which is ordinarily available only in criminal prosecutions, extends to all other government proceedings -- including civil actions, legislative investigations,[36] and administrative proceedings that possess a criminal or penal aspect[37] -- but not to private investigations done by private individuals. Even in such government proceedings, this right may be waived,[38] provided the waiver is certain; unequivocal; and intelligently, understandingly and willingly made.[39] If in these government proceedings waiver is allowed, all the more is it so in private investigations. It is of no moment that no criminal case has yet been filed against Yabut. The filing thereof is entirely up to the appropriate authorities or to the private individuals upon whom damage has been caused. As we shall also explain later, it is not mandatory for CASA -- the plaintiff below -- to implead Yabut in the civil case before the lower court.

Under these two constitutional provisions, [t]he Bill of Rights [40] does not concern itself with the relation between a private individual and another individual. It governs the relationship between the individual and the State.[41] Moreover, the Bill of Rights is a charter of liberties for the individual and a limitation upon the power of the [S]tate.[42] These rights[43] are guaranteed to preclude the slightest coercion by the State that may lead the accused to admit something false, not prevent him from freely and voluntarily telling the truth.[44] Yabut is not an accused here. Besides, his mere invocation of the aforesaid rights does not automatically entitle him to the constitutional protection. [45] When he freely and voluntarily executed[46] his Affidavit, the State was not even involved. Such Affidavit may therefore be admitted without violating his constitutional rights while under custodial investigation and against self-incrimination.

Clear, Positive and Convincing Examination and Evidence The examination by the PNP, though inconclusive, was nevertheless clear, positive and convincing. Forgery cannot be presumed.[47] It must be established by clear, positive and convincing evidence.[48] Under the best evidence rule as applied to documentary evidence like the checks in question, no secondary or substitutionary evidence may inceptively be introduced, as the original writing itself must be produced in court.[49] But when, without bad faith on the part of the offeror, the original checks have already been destroyed or cannot be produced in court, secondary evidence may be produced.[50] Without bad faith on its part, CASA proved the loss or destruction of the original checks through the Affidavit of the one person who knew of that fact [51] -Yabut. He clearly admitted to discarding the paid checks to cover up his misdeed. [52] In such a situation, secondary evidence like microfilm copies may be introduced in court. The drawers signatures on the microfilm copies were compared wi th the standard signature. PNP Document Examiner II Josefina de la Cruz testified on crossexamination that two different persons had written them.[53] Although no conclusive report could be issued in the absence of the original checks, [54] she affirmed that her findings were 90 percent conclusive.[55] According to her, even if the microfilm copies were the only basis of comparison, the differences were evident.[56] Besides, the RTC explained that although the Report was inconclusive, no conclusive report could have been given by the PNP, anyway, in the absence of the original checks. [57] This explanation is valid; otherwise, no such report can ever be relied upon in court. Even with respect to documentary evidence, the best evidence rule applies only when the contents of a document -- such as the drawers signature on a check -- is the subject of inquiry.[58] As to whether the document has been actually executed, this rule does not apply; and testimonial as well as any other secondary evidence is admissible.[59] Carina Lebron herself, the drawers authorized signatory, testified many times that she had never signed those checks. Her testimonial evidence is admissible;

the checks have not been actually executed. The genuineness of her handwriting is proved, not only through the courts comparison of the questioned handwritings an d admittedly genuine specimens thereof,[60] but above all by her. The failure of CASA to produce the original checks neither gives rise to the presumption of suppression of evidence[61] nor creates an unfavorable inference against it.[62] Such failure merely authorizes the introduction of secondary evidence [63] in the form of microfilm copies. Of no consequence is the fact that CASA did not present the signature card containing the signatures with which those on the checks were compared.[64] Specimens of standard signatures are not limited to such a card. Considering that it was not produced in evidence, other documents that bear the drawers authentic signature may be resorted to.[65] Besides, that card was in the possession of BPI -- the adverse party. We have held that without the original document containing the allegedly forged signature, one cannot make a definitive comparison that would establish forgery; [66] and that a comparison based on a mere reproduction of the document under controversy cannot produce reliable results.[67] We have also said, however, that a judge cannot merely rely on a handwriting experts testimony,[68] but should also exercise independent judgment in evaluating the authenticity of a signature under scrutiny. [69] In the present case, both the RTC and the CA conducted independent examinations of the evidence presented and arrived at reasonable and similar conclusions. Not only did they admit secondary evidence; they also appositely considered testimonial and other documentary evidence in the form of the Affidavit. The best evidence rule admits of exceptions and, as we have discussed earlier, the first of these has been met.[70] The result of examining a questioned handwriting, even with the aid of experts and scientific instruments, may be inconclusive; [71] but it is a non sequitur to say that such result is not clear, positive and convincing. The preponderance of evidence required in this case has been satisfied.[72]

Second Issue: Negligence Attributable to BPI Alone Having established the forgery of the drawers signature, BPI -- the drawee -- erred in making payments by virtue thereof. The forged signatures are wholly inoperative, and CASA -- the drawer whose authorized signatures do not appear on the negotiable instruments -- cannot be held liable thereon. Neither is the latter precluded from setting up forgery as a real defense.

Clear Negligence in Allowing Payment Under a Forged Signature

We have repeatedly emphasized that, since the banking business is impressed with public interest, of paramount importance thereto is the trust and confidence of the public in general. Consequently, the highest degree of diligence[73] is expected,[74] and high standards of integrity and performance are even required, of it.[75] By the nature of its functions, a bank is under obligation to treat the accounts of its depositors with meticulous care,[76] always having in mind the fiduciary nature of their relationship.[77] BPI contends that it has a signature verification procedure, in which checks are honored only when the signatures therein are verified to be the same with or similar to the specimen signatures on the signature cards. Nonetheless, it still failed to detect the eight instances of forgery. Its negligence consisted in the omission of that degree of diligence required[78] of a bank. It cannot now feign ignorance, for very early on we have already ruled that a bank is bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged.[79] In fact, BPI was the same bank involved when we issued this ruling seventy years ago.

Neither Waiver nor Estoppel Results from Failure to Report Error in Bank Statement The monthly statements issued by BPI to its clients contain a notice worded as follows: If no error is reported in ten (10) days, account will be correct. [80] Such notice cannot be considered a waiver, even if CASA failed to report the error. Neither is it estopped from questioning the mistake after the lapse of the ten-day period. This notice is a simple confirmation[81] or circularization -- in accounting parlance -that requests client-depositors to affirm the accuracy of items recorded by the banks.[82] Its purpose is to obtain from the depositors a direct corroboration of the correctness of their account balances with their respective banks. [83] Internal or external auditors of a bank use it as a basic audit procedure[84] -- the results of which its clientdepositors are neither interested in nor privy to -- to test the details of transactions and balances in the banks records.[85] Evidential matter obtained from independent sources outside a bank only serves to provide greater assurance of reliability[86] than that obtained solely within it for purposes of an audit of its own financial statements, not those of its client-depositors. Furthermore, there is always the audit risk that errors would not be detected [87] for various reasons. One, materiality is a consideration in audit planning;[88] and two, the information obtained from such a substantive test is merely presumptive and cannot be the basis of a valid waiver.[89] BPI has no right to impose a condition unilaterally and thereafter consider failure to meet such condition a waiver. Neither may CASA renounce a right[90] it has never possessed.[91] Every right has subjects -- active and passive. While the active subject is entitled to demand its enforcement, the passive one is duty-bound to suffer such enforcement.[92]

On the one hand, BPI could not have been an active subject, because it could not have demanded from CASA a response to its notice. Besides, the notice was a measly request worded as follows: Please examine x x x and report x x x. [93] CASA, on the other hand, could not have been a passive subject, either, because it had no obligation to respond. It could -- as it did -- choose not to respond. Estoppel precludes individuals from denying or asserting, by their own deed or representation, anything contrary to that established as the truth, in legal contemplation.[94] Our rules on evidence even make a juris et de [95] jure presumption that whenever one has, by ones own act or omission, intentionally and deliberately led another to believe a particular thing to be true and to act upon that belief, one cannot -- in any litigation arising from such act or omission -- be permitted to falsify that supposed truth.[96] In the instant case, CASA never made any deed or representation that misled BPI. The formers omission, if any, may only be deemed an innocent mistake oblivious to the procedures and consequences of periodic audits. Since its conduct was due to such ignorance founded upon an innocent mistake, estoppel will not arise. [97] A person who has no knowledge of or consent to a transaction may not be estopped by it.[98] Estoppel cannot be sustained by mere argument or doubtful inference x x x.[99] CASA is not barred from questioning BPIs error even after the lapse of the period given in the notice.

Loss Borne by Proximate Source of Negligence For allowing payment[100] on the checks to a wrongful and fictitious payee, BPI -- the drawee bank -- becomes liable to its depositor-drawer. Since the encashing bank is one of its branches,[101] BPI can easily go after it and hold it liable for reimbursement.[102] It may not debit the drawers account[103] and is not entitled to indemnification from the drawer.[104] In both law and equity, when one of two innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss or who put it into the power of the third person to perpetrate the wrong.[105] Proximate cause is determined by the facts of the case.[106] It is that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.[107] Pursuant to its prime duty to ascertain well the genuineness of the signatures of its client-depositors on checks being encashed, BPI is expected to use reasonable business prudence.[108] In the performance of that obligation, it is bound by its internal banking rules and regulations that form part of the contract it enters into with its depositors.[109]

Unfortunately, it failed in that regard. First, Yabut was able to open a bank account in one of its branches without privity;[110] that is, without the proper verification of his corresponding identification papers. Second, BPI was unable to discover early on not only this irregularity, but also the marked differences in the signatures on the checks and those on the signature card. Third, despite the examination procedures it conducted, the Central Verification Unit[111] of the bank even passed off these evidently different signatures as genuine. Without exercising the required prudence on its part, BPI accepted and encashed the eight checks presented to it. As a result, it proximately contributed to the fraud and should be held primarily liable [112] for the negligence of its officers or agents when acting within the course and scope of their employment. [113] It must bear the loss.

CASA Not Negligent in Its Financial Affairs In this jurisdiction, the negligence of the party invoking forgery is recognized as an exception[114] to the general rule that a forged signature is wholly inoperative.[115] Contrary to BPIs claim, however, we do not find CASA negligent in handling its financial affairs. CASA, we stress, is not precluded from setting up forgery as a real defense.

Role of Independent Auditor The major purpose of an independent audit is to investigate and determine objectively if the financial statements submitted for audit by a corporation have been prepared in accordance with the appropriate financial reporting practices [116] of private entities. The relationship that arises therefrom is both legal and moral. [117] It begins with the execution of the engagement letter[118] that embodies the terms and conditions of the audit and ends with the fulfilled expectation of the auditors ethical [119] and competent performance in all aspects of the audit.[120] The financial statements are representations of the client; but it is the auditor who has the responsibility for the accuracy in the recording of data that underlies their preparation, their form of presentation, and the opinion[121] expressed therein.[122] The auditor does not assume the role of employee or of management in the clients conduct of operations[123] and is never under the control or supervision[124] of the client. Yabut was an independent auditor[125] hired by CASA. He handled its monthly bank reconciliations and had access to all relevant documents and checkbooks. [126] In him was reposed the clients[127] trust and confidence[128] that he would perform precisely those functions and apply the appropriate procedures in accordance with generally accepted auditing standards.[129] Yet he did not meet these expectations. Nothing could be more horrible to a client than to discover later on that the person tasked to detect fraud was the same one who perpetrated it.

Cash Balances Open to Manipulation It is a non sequitur to say that the person who receives the monthly bank statements, together with the cancelled checks and other debit/credit memoranda, shall examine the contents and give notice of any discrepancies within a reasonable time. Awareness is not equipollent with discernment. Besides, in the internal accounting control system prudently installed by CASA, [130] it was Yabut who should examine those documents in order to prepare the bank reconciliations.[131] He owned his working papers,[132] and his output consisted of his opinion as well as the clients financial statements and accompanying notes thereto. CASA had every right to rely solely upon his output -- based on the terms of the audit engagement -- and could thus be unwittingly duped into believing that everything was in order. Besides, [g]ood faith is always presumed and it is the burden of the party claiming otherwise to adduce clear and convincing evidence to the contrary.[133] Moreover, there was a time gap between the period covered by the bank statement and the date of its actual receipt. Lebron personally received the December 1990 bank statement only in January 1991[134] -- when she was also informed of the forgery for the first time, after which she immediately requested a stop payment order. She cannot be faulted for the late detection of the forged December check. After all, the bank account with BPI was not personal but corporate, and she could not be expected to monitor closely all its finances. A preschool teacher charged with molding the minds of the youth cannot be burdened with the intricacies or complexities of corporate existence. There is also a cutoff period such that checks issued during a given month, but not presented for payment within that period, will not be reflected therein. [135] An experienced auditor with intent to defraud can easily conceal any devious scheme from a client unwary of the accounting processes involved by manipulating the cash balances on record -- especially when bank transactions are numerous, large and frequent. CASA could only be blamed, if at all, for its unintelligent choice in the selection and appointment of an auditor -- a fault that is not tantamount to negligence. Negligence is not presumed, but proven by whoever alleges it. [136] Its mere existence is not sufficient without proof that it, and no other cause, [137] has given rise to damages.[138] In addition, this fault is common to, if not prevalent among, small and medium-sized business entities, thus leading the Professional Regulation Commission (PRC), through the Board of Accountancy (BOA), to require today not only accreditation for the practice of public accountancy,[139] but also the registration of firms in the practice thereof. In fact, among the attachments now required upon registration are the code of good governance[140] and a sworn statement on adequate and effective training.[141] The missing checks were certainly reported by the bookkeeper[142] to the accountant[143] -- her immediate supervisor -- and by the latter to the auditor. However,

both the accountant and the auditor, for reasons known only to them, assured the bookkeeper that there were no irregularities. The bookkeeper[144] who had exclusive custody of the checkbooks[145] did not have to go directly to CASAs president or to BPI. Although she rightfully reported the matter, neither an investigation was conducted nor a resolution of it was arrived at, precisely because the person at the top of the helm was the culprit. The vouchers, invoices and check stubs in support of all check disbursements could be concealed or fabricated -even in collusion -- and management would still have no way to verify its cash accountabilities. Clearly then, Yabut was able to perpetrate the wrongful act through no fault of CASA. If auditors may be held liable for breach of contract and negligence,[146] with all the more reason may they be charged with the perpetration of fraud upon an unsuspecting client. CASA had the discretion to pursue BPI alone under the NIL, by reason of expediency or munificence or both. Money paid under a mistake may rightfully be recovered,[147] and under such terms as the injured party may choose.

Third Issue: Award of Monetary Claims

Moral Damages Denied We deny CASAs claim for moral damages. In the absence of a wrongful act or omission, [148] or of fraud or bad faith,[149] moral damages cannot be awarded.[150] The adverse result of an action does not per se make the action wrongful, or the party liable for it. One may err, but error alone is not a ground for granting such damages.[151] While no proof of pecuniary loss is necessary therefor -- with the amount to be awarded left to the courts discretion[152] -- the claimant must nonetheless satisfactorily prove the existence of its factual basis [153] and causal relation[154] to the claimants act or omission.[155] Regrettably, in this case CASA was unable to identify the particular instance -enumerated in the Civil Code -- upon which its claim for moral damages is predicated.[156] Neither bad faith nor negligence so gross that it amounts to malice[157] can be imputed to BPI. Bad faith, under the law, does not simply connote bad judgment or negligence;[158] it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud.[159] As a general rule, a corporation -- being an artificial person without feelings, emotions and senses, and having existence only in legal contemplation -- is not entitled to moral damages,[160]because it cannot experience physical suffering and mental anguish.[161] However, for breach of the fiduciary duty required of a bank, a corporate client may claim such damages when its good reputation is besmirched by such breach,

and social humiliation results therefrom.[162] CASA was unable to prove that BPI had debased the good reputation of,[163] and consequently caused incalculable embarrassment to, the former. CASAs mere allegation or supposition thereof, without any sufficient evidence on record,[164] is not enough.

Exemplary Damages Also Denied We also deny CASAs claim for exemplary damages. Imposed by way of correction[165] for the public good,[166] exemplary damages cannot be recovered as a matter of right.[167] As we have said earlier, there is no bad faith on the part of BPI for paying the checks of CASA upon forged signatures. Therefore, the former cannot be said to have acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.[168] The latter, having no right to moral damages, cannot demand exemplary damages.[169] Attorneys Fees Granted Although it is a sound policy not to set a premium on the right to litigate,[170] we find that CASA is entitled to reasonable attorneys fees based on factual, legal, and equitable justification.[171] When the act or omission of the defendant has compelled the plaintiff to incur expenses to protect the latters interest,[172] or where the court deems it just and equitable,[173] attorneys fees may be recovered. In the present case, BPI persistently denied the claim of CASA under the NIL to recredit the latters account for the value of the forged checks. This denial constrained CASA to incur expenses and exert effort for more than ten years in order to protect its corporate interest in its bank account. Besides, we have already cautioned BPI on a similar act of negligence it had committed seventy years ago, but it has remained unrelenting. Therefore, the Court deems it just and equitable to grant ten percent (10%)[174] of the total value adjudged to CASA as attorneys fees.

Interest Allowed For the failure of BPI to pay CASA upon demand and for compelling the latter to resort to the courts to obtain payment, legal interest may be adjudicated at the discretion of the Court, the same to run from the filing[175] of the Complaint.[176] Since a court judgment is not a loan or a forbearance of recovery, the legal interest shall be at six percent (6%) per annum.[177] If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of x x x legal interest, which is six

percent per annum.[178] The actual base for its computation shall be on the amount finally adjudged,[179] compounded[180] annually to make up for the cost of money[181] already lost to CASA. Moreover, the failure of the CA to award interest does not prevent us from granting it upon damages awarded for breach of contract.[182] Because BPI evidently breached its contract of deposit with CASA, we award interest in addition to the total amount adjudged. Under Section 196 of the NIL, any case not provided for shall be governed by the provisions of existing legislation or, in default thereof, by the rules of the law merchant.[183] Damages are not provided for in the NIL. Thus, we resort to the Code of Commerce and the Civil Code. Under Article 2 of the Code of Commerce, acts of commerce shall be governed by its provisions and, in their absence , by the usages of commerce generally observed in each place; and in the absence of both rules, by those of the civil law.[184] This law being silent, we look at Article 18 of the Civil Code, which states: In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by its provisions. A perusal of these three statutes unmistakably shows that the award of interest under our civil law is justified. WHEREFORE, the Petition in GR No. 149454 is hereby DENIED, and that in GR No. 149507 PARTLY GRANTED. The assailed Decision of the Court of Appeals is AFFIRMED with modification: BPI is held liable for P547,115, the total value of the forged checks less the amount already recovered by CASA from Leonardo T. Yabut, plus interest at the legal rate of six percent (6%) per annum -- compounded annually, from the filing of the complaint until paid in full; and a ttorneys fees of ten percent (10%) thereof, subject to reimbursement from Respondent Yabut for the entire amount, excepting attorneys fees. Let a copy of this Decision be furnished the Board of Accountancy of the Professional Regulation Commission for such action as it may deem appropriate against Respondent Yabut. No costs. SO ORDERED. Ynares-Santiago, Carpio, and Azcuna, JJ., concur. Davide, Jr., C.J., (Chairman), on official leave.