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SALAS v. STA.

MESA MARKET CORPORATION [SMMC] AND HEIRS OF DOMINGO 2007 / Corona / Public documents Primitivo Domingo and Ernesto Salas had a letter-agreement (15 Oct 1984). Domingo handed the management of his estate (including SMMC) to Salas. Salas, as estate manager, was tasked to ensure SMMC's viability and profitability by redeveloping the Sta. Mesa market and restructuring the finances. Domingo bound himself to transfer 30% of SMMC's stock to Salas as part of his compensation. If Salas fails to achieve the minimum monthly market revenue of P350k, he has to return the shares of stock. Domingo (in his capacity as SMMC chairman) and Salas (in his personal capacity and as chairman of Inter-Alia Management Corporation) formalized their agreement under a property and financial management contract (28 Dec 1984). SMMC, under Salas, leased the Sta. Mesa market to Malaca Realty. However, it became apparent that Malaca was financially incapable of improving the market--Malaca was actually unable to pay the monthly rent! SMMC terminated the lease contract. The SMMC board became dissatisfied with Salas, so SMMC ended the management contract with Salas and Inter-Alia. Salas filed an action for specific performance and damages against SMMC and Domingo. Salas: SMMC's monthly market revenue surpassed P350k, yet Domingo refused to comply with his obligation. Domingo: Salas is not entitled to the shares. SMMC suffered additional losses and incurred new liabilities [P1.9M~] over the 21 months under Salas' management. RTC ruled in favor of Salas. Copies of SMMC's audited financial statements [audited FS] showing an improvement in the corporation's monthly average gross income was considered by the court. SMMC's monthly gross income was increased, and the P350k target was surpassed. Domingo was ordered to deliver the shares to Salas. CA held that RTC erred in admitting the copies of audited FS, so it reversed the RTC's ruling. Salas failed to prove the authenticity of the audited financial statements. o SMMC's external auditor was not presented to testify on the documents' genuineness and due execution. o Salas only presented a memorandum prepared by a member of his management team attesting to the increase in revenue. The audited FS were self-serving AND hearsay. Salas' argument Amado Domingo (SMMC VP and heir of Domingo) testified that the audited FS presented were copies of those submitted to BIR and SEC for purposes of tax payments, compliance with reportorial requirements. Hence, A. Domingo admitted genuineness and due execution, which made authentication unnecessary. ISSUE & HOLDING WON the copies of audited FS are public or private documents. Private documents, because they were mere copies and NOT certified true copies WON the copies of audited FS should be admitted in evidence. NO, due to lack of proper authentication Rule 132, Section 19. Classes of documents.--For the purpose of their presentation in evidence, documents are either public or private. Public documents are: The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country; Documents acknowledged before a notary public except last wills and testaments; and Public records, kept in the Philippines, of private documents required by law to be entered therein. All other writings are private.

Financial statements show the fiscal condition of a particular entity within a specified period. The financial statements prepared by external auditors who are CPAs are audited. Financial statements, whether audited or not, as a general rule, are private documents. They become public documents once they are filed with a government office pursuant to law. Whether a document is public or private is relevant in determining its admissibility as evidence. Public documents are admissible in evidence even without further proof of their due execution and genuineness. Private documents are inadmissible in evidence unless they are properly authenticated. Rule 132, Section 20. Proof of private documents.--Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either: By anyone who saw the document executed or written; or By evidence of the genuineness of the signature or handwriting of the maker. Any other private document need only be identified as that which it is claimed to be. Rule 132, Section 27. Public record of a public document.--An authorized public record of a private document may be proved by the original record, or by a copy thereof, attested by the legal custodian of the record, with an appropriate certificate that such officer has the custody. Neither party claimed that the copies presented were certified true copies of audited FS obtained or secured from BIR or SEC, which would have been public documents. There was no authentication. What usually happens: A witness positively testifies that a document presented as evidence is genuine and has been duly executed, or that the document is neither spurious nor counterfeit nor executed by mistake or under duress. In this case: Salas merely presented a memorandum. o While there is no fixed criterion as to what constitutes competent evidence to establish authenticity, the best proof available must be presented. o The best proof would have been the testimony of a representative of SMMC's external auditor who prepared the audited FS. PETITION DENIED. CA DECISION AND RESOLUTION AFFIRMED.