FIRST DIVISION

[G.R. No. 172227 : June 29, 2011]

SPOUSES WILFREDO PALADA AND BRIGIDA PALADA,* PETITIONERS, VS. SOLIDBANK CORPORATION AND
SHERIFF MAYO DELA CRUZ, RESPONDENTS.

DECISION

DEL CASTILLO, J.:

Allegations of bad faith and fraud must be proved by clear and convincing evidence. [1]

This Petition for Review on Certiorari [2] under Rule 45 of the Rules of Court assails the January 11, 2006
Decision [3] of the Court of Appeals (CA) in CA-G.R. CV No. 84236 which dismissed the complaint filed by
the petitioners against the respondents and declared as valid the real estate mortgage and certificate of
sale. Also assailed is the April 12, 2006 Resolution [4] which denied the motion for reconsideration
thereto.

Factual Antecedents

In February or March 1997, petitioners, spouses Wilfredo and Brigida Palada, applied for a P3 million loan
broken down as follows: P1 million as additional working capital under the bills discounting line;
P500,000.00 under the bills purchase line; and P1.5 million under the time loan from respondent
Solidbank Corporation (bank). [5]

On March 17, 1997, petitioners received from the bank the amount of P1 million as additional working
capital evidenced by a promissory note [6] and secured by a real estate mortgage [7] in favor of the bank
covering several real properties situated in Santiago City. [8]

Due to the failure of petitioners to pay the obligation, the bank foreclosed the mortgage and sold the
properties at public auction. [9]

On August 19, 1999, petitioners filed a Complaint [10] for nullity of real estate mortgage and sheriff's
certificate of sale [11] with prayer for damages, docketed as Civil Case No. 35-2779, against the bank and
respondent Sheriff Mayo dela Cruz (sheriff) before the Regional Trial Court (RTC) of Santiago City, Branch
35. [12] Petitioners alleged that the bank, without their knowledge and consent, included their properties
covered by Transfer Certificate of Title (TCT) Nos. T-225131 and T-225132, [13] among the list of
properties mortgaged; that it was only when they received the notice of sale from the sheriff in August
1998 that they found out about the inclusion of the said properties; that despite their objection, the sheriff
proceeded with the auction sale; and that the auction sale was done in Santiago City in violation of the
stipulation on venue in the real estate mortgage. [14]

The bank, in its Answer, [15] denied the material allegations of the Complaint and averred that since
petitioners were collaterally deficient, they offered TCT Nos. T-237695, T-237696, T-225131 and T-225132
as additional collateral; [16] that although the said properties were at that time mortgaged to the
Philippine National Bank (PNB), the bank accepted the offer and caused the annotation of the mortgage
in the original copies with the Register of Deeds with the knowledge and consent of petitioners; [17] and
that when petitioners' obligation to PNB was extinguished, they delivered the titles of the four properties
to the bank. [18]

Ruling of the Regional Trial Court

On October 21, 2004, the RTC rendered a Decision [19] declaring the real estate mortgage void for lack of
sufficient consideration. According to the RTC, the real estate mortgage lacks consideration because the
loan contract was not perfected due to the failure of the bank to deliver the full P3 million to petitioners.
[20] The RTC also found the bank guilty of fraud and bad faith, thereby ordering it to pay petitioners moral
and exemplary damages, and attorney's fees. The RTC ruled:

Furthermore, it appears that the defendant unilaterally changed the term and condition of their loan
contract by releasing only P1M of the P3M approved loan. The defendant, in so doing, violated their
principal contract of loan in bad faith, and should be held liable therefor.

Likewise, the defendant bank acted in bad faith when it made it appear that the mortgage was executed
by the plaintiffs on June 16, 1997, when the document was acknowledged before Atty. German Balot,
more so, when it made it appear that the mortgage was registered with the Register of Deeds allegedly
on the same date, when in truth and in fact, the plaintiffs executed said mortgage sometime [in] March,
1997, obviously much earlier than June 16, 1997; for, if indeed the mortgage was executed on said date,
June 16, 1997, it should have been written on the mortgage contract itself. On the contrary, the date and
place of execution [were left blank]. Amazingly, defendant claims that it was the plaintiffs who [had the]
mortgage notarized by Atty. Balot; such claim however is contrary or against its own interest, because,
the defendant should be the most interested party in the genuineness and due execution of material
important papers and documents such as the mortgage executed in its favor to ensure the protection of
its interest embodied in said documents, and the act of leaving the notarization of such a very important
document as a mortgage executed in its favor is contrary to human nature and experience, more so
against its interest; hence, the claim is untrue.

Moreover, the defendant also appears to have been motivated by bad faith amounting to fraud when it
was able to register the mortgage with the Register of Deeds at the time when the collateral certificates
of titles were still in the custody and possession of another mortgagee bank (PNB) due also to an
existing/subsisting mortgage covering the same. Definitely, the defendant resorted to some machinations
or fraudulent means in registering the contract of mortgage with the Register of Deeds. This should not
be countenanced.

Thus, on account of defendant's bad faith, plaintiffs suffered mental anguish, serious anxiety, besmirched
reputation, wounded feelings, moral shock and social humiliation, which entitle them to the award of
moral damages, more so, that it was shown that defendants' bad faith was the proximate cause of these
damages plaintiffs suffered.

xxxx

WHEREFORE, with all the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs
and against the defendant as follows:
1. DECLARING as null and void the undated real estate mortgage between the plaintiffs and the defendant,
appearing as Doc. No. 553; Page No. 29; Book No. 28; Series of 1997; (Exhibits "B" for the plaintiffs, Exhibit
"1" for the defendant);

2. Likewise DECLARING as null and void the Sheriff's Foreclosure and the Certificate of Sale, dated October
7, 1998 (Exhibit "F" to "F-3");

3. ORDERING the defendant to pay the plaintiffs the following damages:

a) Php 1,000,000.00, moral damages;

b) Php 500,000.00, exemplary damages; and
c) Php 50,000.00, Attorney's fee; and

4. ORDERING the defendant to pay the cost of litigation, including plaintiffs' counsel's court appearance
at Php1,500.00 each.

SO ORDERED. [21]

Ruling of the Court of Appeals

On appeal, the CA reversed the ruling of the RTC. The CA said that based on the promissory note and the
real estate mortgage contract, the properties covered by TCT Nos. T-225131 and T-225132 were
mortgaged to secure the loan in the amount of P1 million, and not the P3 million loan applied by
petitioners. [22] As to the venue of the auction sale, the CA declared that since the properties subject of
the case are in Santiago City, the holding of the auction sale in Santiago City was proper [23] pursuant to
Sections 1 [24] and 2 [25] of Act No. 3135. [26] The CA likewise found no fraud or bad faith on the part of
the bank to warrant the award of damages by the RTC, thus:

The List of Properties Mortgaged printed at the dorsal side of the real estate mortgage contract
particularly includes the subject parcels of land covered by TCT No. T-225132 and TCT No. T-225131.
Below the enumeration, the signatures of [petitioners] clearly appear. The document was notarized
before Notary Public German M. Balot. We therefore find no cogent reason why the validity of the real
estate mortgage covering the two subject properties should not be sustained.

Settled is the rule in our jurisdiction that a notarized document has in its favor the presumption of
regularity, and to overcome the same, there must be evidence that is clear, convincing and more than
merely preponderant; otherwise the document should be upheld. Clearly, the positive presumption of the
due execution of the subject real estate mortgage outweighs [petitioners'] bare and unsubstantiated
denial that the parcels of land covered by TCT Nos. T-225132 and T-225131 were among those intended
to secure the loan of One Million Pesos. Their imputation of fraud among the officials of [the bank] is
weak and unpersuasive. x x x

xxxx

We also note why despite the alleged non-approval of [petitioners'] application for additional loan, the
owner's copy of TCT Nos. T-225131 and T-225132 remained in the possession of [the bank]. [Petitioners']
claim that they were still hoping to obtain an additional loan in the future appears to this court as a weak
explanation. The continued possession by the bank of the certificates of title merely supports the bank's
position that the parcels of land covered by these titles were actually mortgaged to secure the payment
of the One Million Peso loan.

xxxx

WHEREFORE, in view of the foregoing, the assailed decision of the Regional Trial Court, Branch 35 of
Santiago City in Civil Case No. 35-2779 is hereby ANNULLED and SET ASIDE and a new one entered:

(1) DISMISSING the complaint filed by the plaintiffs-appellees against the defendants-appellants; and

(2) Declaring VALID the questioned real estate mortgage and certificate of sale.

SO ORDERED. [27]

On February 1, 2006, petitioners moved for reconsideration but the CA denied the same in its Resolution
dated April 12, 2006. [28]

Issues

Hence, the present recourse, where petitioners allege that:

(A)

THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN ANNULLING OR REVERSING
THE FINDINGS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY THEREBY IN EFFECT
DISMISSING THE COMPLAINT FILED BY THE PETITIONERS AGAINST RESPONDENTS SOLIDBANK
CORPORATION AND SHERIFF MAYO DELA CRUZ.

(B)

THE COURT OF APPEALS ERRED IN DECLARING VALID THE REAL ESTATE MORTGAGE EXECUTED BETWEEN
THE PETITIONERS AND RESPONDENT SOLIDBANK CORPORATION AND IN SUSTAINING THE VALIDITY OF
THE CERTIFICATE OF SALE ISSUED BY RESPONDENT SHERIFF MAYO DELA CRUZ.

(C)

THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE FINDINGS OF FACTS OF BRANCH 35, REGIONAL
TRIAL COURT OF SANTIAGO CITY. [29]

Simply put, the core issue in this case is the validity of the real estate mortgage and the auction sale.

Petitioners' Arguments

Petitioners echo the ruling of the RTC that the real estate mortgage and certificate of sale are void because
the bank failed to deliver the full amount of the loan. They likewise impute bad faith and fraud on the
part of the bank in including TCT Nos. T-225131 and T-225132 in the list of properties mortgaged. They
insist that they did not sign the dorsal portion of the real estate mortgage contract, which contains the
list of properties mortgaged, because at that time the dorsal portion was still blank; [30] and that TCT Nos.
T-225131 and T-225132 were not intended to be included in the list of mortgaged properties because
these titles were still mortgaged with the PNB at the time the real estate mortgage subject of this case
was executed. [31] Moreover, they claim that they delivered the titles of these properties to the bank as
additional collateral for their additional loans, and not for the P1 million loan. [32]

Respondent bank's Arguments

The bank denies petitioners' allegations of fraud and bad faith and argues that the real estate mortgage
which was properly notarized enjoys the presumption of regularity. [33] It maintains that TCT Nos. T-
225131 and T-225132 were mortgaged as additional collateral for the P1 million loan. [34]

Our Ruling

The petition is bereft of merit.

The loan contract was perfected.

Under Article 1934 [35] of the Civil Code, a loan contract is perfected only upon the delivery of the object
of the contract.

In this case, although petitioners applied for a P3 million loan, only the amount of P1 million was approved
by the bank because petitioners became collaterally deficient when they failed to purchase TCT No. T-
227331 which had an appraised value of P1,944,000.00. [36] Hence, on March 17, 1997, only the amount
of P1 million was released by the bank to petitioners. [37]

Upon receipt of the approved loan on March 17, 1997, petitioners executed a promissory note for the
amount of P1 million. [38] As security for the P1 million loan, petitioners on the same day executed in
favor of the bank a real estate mortgage over the properties covered by TCT Nos. T-237695, T-237696, T-
237698, T-143683, T-143729, T-225131 and T-225132. Clearly, contrary to the findings of the RTC, the
loan contract was perfected on March 17, 1997 when petitioners received the P1 million loan, which was
the object of both the promissory note and the real estate mortgage executed by petitioners in favor of
the bank.

Claims of fraud and bad faith are

unsubstantiated.

Petitioners claim that there was fraud and bad faith on the part of the bank in the execution and
notarization of the real estate mortgage contract.

We do not agree.

There is nothing on the face of the real estate mortgage contract to arouse any suspicion of insertion or
forgery. Below the list of properties mortgaged are the signatures of petitioners. [39] Except for the bare
denials of petitioner, no other evidence was presented to show that the signatures appearing on the
dorsal portion of the real estate mortgage contract are forgeries.

Likewise flawed is petitioners' reasoning that TCT Nos. T-225131 and T-225132 could not have been
included in the list of properties mortgaged as these were still mortgaged with the PNB at that time.
Under our laws, a mortgagor is allowed to take a second or subsequent mortgage on a property already
mortgaged, subject to the prior rights of the previous mortgages. [40]

As to the RTC's finding that "the x x x bank acted in bad faith when it made it appear that the mortgage
was executed by the [petitioners] on June 16, 1997, when the document was acknowledged before Atty.
German, x x x when in truth and in fact, the [petitioners] executed said mortgage sometime in March,
1997 x x x," we find the same without basis. A careful perusal of the real estate mortgage contract would
show that the bank did not make it appear that the real estate mortgage was executed on June 16, 1997,
the same day that it was notarized, as the date of execution of the real estate mortgage contract was left
blank. [41] And the mere fact that the date of execution was left blank does not prove bad faith. Besides,
any irregularity in the notarization or even the lack of notarization does not affect the validity of the
document. Absent any clear and convincing proof to the contrary, a notarized document enjoys the
presumption of regularity and is conclusive as to the truthfulness of its contents. [42]

All told, we find no error on the part of the CA in sustaining the validity of the real estate mortgage as well
as the certificate of sale.

WHEREFORE, the petition is hereby DENIED. The assailed January 11, 2006 Decision of the Court of
Appeals and its April 12, 2006 Resolution in CA-G.R. CV No. 84236 are hereby AFFIRMED.

SO ORDERED.

374 Phil. 692

GONZAGA_REYES, J.:

Assailed in these petitions for review on certiorari is the decision[1] of the eleventh division of the Court
of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992 affirming in toto the decision of
Branch 24 of the Regional Trial Court of Laguna in Civil Case No. B-1766 dated February 22, 1989,[2] and
the resolution dated December 29, 1992 denying petitioner R & B Insurance Corporation's (R & B
Insurance) motion for reconsideration. As the factual antecedents and issues are the same, we shall
decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of land, identified
as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It
was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. On
March 22, 1947 Jose Hemedes executed a document entitled "Donation Inter Vivos With Resolutory
Conditions"[3] whereby he conveyed ownership over the subject land, together with all its improvements,
in favor of his third wife, Justa Kauapin, subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of
the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document
conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage
contained in a public instrument as above provided, the title to the property shall automatically revert to
the legal heirs of the DONOR in common.
Pursuant to the first condition abovementioned, Justa Kausapin executed on September 27, 1960 a "Deed
of Conveyance of Unregistered Real Property by Reversion"[4] conveying to Maxima Hemedes the subject
property under the following terms -

That the said parcel of land was donated unto me by the said Jose Hemedes, my deceased husband, in a
deed of "DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS" executed by the donor in my favor,
and duly accepted by me on March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in the said deed of "DONATION INTER
VIVOS WITH RESOLUTORY CONDITIONS," as follows:

"(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of
the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document
conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage
contained in a public instrument as above provided, the title to the property shall automatically revert to
the legal heirs of the DONOR in common."

That, wherefore, in virtue of the deed of donation above mentioned and in the exercise of my right and
privilege under the terms of the first resolutory condition therein contained and hereinabove reproduced,
and for and in consideration of my love and affection, I do hereby by these presents convey, transfer, and
deed unto my designee, MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and
resident of No. 15 Acacia Road, Quezon City, who is one of the children and heirs of my donor, JOSE
HEMEDES, the ownership of, and title to the property hereinabove described, and all rights and interests
therein by reversion under the first resolutory condition in the above deed of donation; Except the
possession and enjoyment of the said property which shall remain vested in me during my lifetime, or
widowhood and which upon my death or remarriage shall also automatically revert to, and be transferred
to my designee, Maxima Hemedes.

Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title over
the subject unregistered land. Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198[5] was
issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on
June 8, 1962, with the annotation that "Justa Kausapin shall have the usufructuary rights over the parcel
of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband Raul Rodriguez
constituted a real estate mortgage over the subject property in its favor to serve as security for a loan
which they obtained in the amount of P6,000.00. On February 22, 1968, R & B Insurance extrajudicially
foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it became due on August
2, 1964. The land was sold at a public auction on May 3, 1968 with R & B Insurance as the highest bidder
and a certificate of sale was issued by the sheriff in its favor. Since Maxima Hemedes failed to redeem the
property within the redemption period, R & B Insurance executed an Affidavit of Consolidation dated
March 29, 1974 and on May 21, 1975 the Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198
and issued Transfer Certificate of Title (TCT) No. 41985 in the name of R & B Insurance. The annotation of
usufruct in favor of Justa Kausapin was maintained in the new title.[6]
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed
a "Kasunduan" on May 27, 1971 whereby she transferred the same land to her stepson Enrique D.
Hemedes, pursuant to the resolutory condition in the deed of donation executed in her favor by her late
husband Jose Hemedes. Enrique D. Hemedes obtained two declarations of real property - in 1972, and
again, in 1974, when the assessed value of the property was raised. Also, he has been paying the realty
taxes on the property from the time Justa Kausapin conveyed the property to him in 1971 until 1979. In
the cadastral survey of Cabuyao, Laguna conducted from September 8, 1974 to October 10, 1974, the
property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the name of Enrique
Hemedes. Enrique Hemedes is also the named owner of the property in the records of the Ministry of
Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and Construction
Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an affidavit affirming the conveyance
of the subject property in favor of Enrique D. Hemedes as embodied in the "Kasunduan" dated May 27,
1971, and at the same time denying the conveyance made to Maxima Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery)
who, even before the signing of the contract of lease, constructed two warehouses made of steel and
asbestos costing about P10,000,000.00 each. Upon learning of Asia Brewery's constructions upon the
subject property, R & B Insurance sent it a letter on March 16, 1981 informing the former of its ownership
of the property as evidenced by TCT No. 41985 issued in its favor and of its right to appropriate the
constructions since Asia Brewery is a builder in bad faith. On March 27, 1981, a conference was held
between R & B Insurance and Asia Brewery but they failed to arrive at an amicable settlement.

On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted
that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-198 and that, as such,
she has the right to appropriate Asia Brewery's constructions, to demand its demolition, or to compel Asia
Brewery to purchase the land. In another letter of the same date addressed to R & B Insurance, Maxima
Hemedes denied the execution of any real estate mortgage in favor of the latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint[7] with the Court of First
Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R & B Insurance and/or
the reconveyance to Dominium of the subject property. Specifically, the complaint alleged that Dominium
was the absolute owner of the subject property by virtue of the February 28, 1979 deed of sale executed
by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced
by the "Kasunduan" dated May 27, 1971. The plaintiffs asserted that Justa Kausapin never transferred the
land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration proceedings
initiated by Maxima Hemedes.

After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in favor
of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of which states

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null and void and
ineffective;
(b) Declaring Dominium Realty and Construction Corporation the absolute owner and possessor of the
parcel of land described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for and/or under them to respect such ownership and
possession of Dominium Realty and Construction Corporation and to forever desist from asserting adverse
claims thereon nor disturbing such ownership and possession; and

(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No. 41985 in the
name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer certificate of title in the
name of Dominium Realty and Construction Corporation. No pronouncement as to costs and attorney's
fees.[8]

Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision. On September 11,
1992 the Court of Appeals affirmed the assailed decision in toto and on December 29, 1992, it denied R &
B Insurance's motion for reconsideration. Thus, Maxima Hemedes and R & B Insurance filed their
respective petitions for review with this Court on November 3, 1992 and February 22, 1993, respectively.

In G.R. No. 107132[9] , petitioner Maxima Hemedes makes the following assignment of errors as regards
public respondent's ruling

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE
IN DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY
REVERSION EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA HEMEDES.

II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS VOID AND OF NO LEGAL EFFECT
THE "KASUNDUAN" DATED 27 MAY 1971 EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT
ENRIQUE HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN
FAVOR OF RESPONDENT DOMINIUM REALTY AND CONSTRUCTION CORPORATION.

III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS ENRIQUE AND
DOMINIUM IN BAD FAITH.

IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT ORIGINAL CERTIFICATE OF TITLE
NO. (0-941) 0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA HEMEDES NULL AND VOID.

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN WAS OBTAINED BY PETITIONER
MAXIMA HEMEDES FROM RESPONDENT R & B INSURANCE CORPORATION.
VI

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL ESTATE MORTGAGE OVER THE
SUBJECT PROPERTY WAS EXECUTED BY PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B
INSURANCE CORPORATION.

VII

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID TITLE COVERING THE SUBJECT
PROPERTY IS THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER
MAXIMA HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R
& B INSURANCE CORPORATION.[10]

Meanwhile, in G.R. No. 108472[11] , petitioner R & B Insurance assigns almost the same errors, except
with regards to the real estate mortgage allegedly executed by Maxima Hemedes in its favor. Specifically,
R & B Insurance alleges that:

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE CIVIL CODE.

II

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE KASUNDUAN BY AND
BETWEEN JUSTA KAUSAPIN AND ENRIQUE NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY
OF A DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION CEDED THE SUBJECT
PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS EARLIER.

III

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE AFFIDAVIT OF REPUDIATION
OF JUSTA KAUSAPIN NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE
SAME SOME TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR
OF MAXIMA.

IV

RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE COMPLAINT OF ENRIQUE AND
DOMINIUM HAS PRESCRIBED AND/OR THAT ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.

RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT IN GOOD FAITH.

VI

RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED FOR BY R & B IN ITS
COUNTERCLAIM AND CROSSCLAIM.[12]
The primary issue to be resolved in these consolidated petitions is which of the two conveyances by Justa
Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively
transferred ownership over the subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes on the
strength of the "Deed of Conveyance of Unregistered Real Property by Reversion" executed by Justa
Kausapin. Public respondent upheld the trial court's finding that such deed is sham and spurious and has
"no evidentiary value under the law upon which claimant Maxima Hemedes may anchor a valid claim of
ownership over the property." In ruling thus, it gave credence to the April 10, 1981 affidavit executed by
Justa Kausapin repudiating such deed of conveyance in favor of Maxima Hemedes and affirming the
authenticity of the "Kasunduan" in favor of Enrique D. Hemedes. Also, it considered as pivotal the fact
that the deed of conveyance in favor of Maxima Hemedes was in English and that it was not explained to
Justa Kausapin, although she could not read nor understand English; thus, Maxima Hemedes failed to
discharge her burden, pursuant to Article 1332 of the Civil Code, to show that the terms thereof were fully
explained to Justa Kausapin. Public respondent concluded by holding that the registration of the property
on the strength of the spurious deed of conveyance is null and void and does not confer any right of
ownership upon Maxima Hemedes. [13]

Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any credence since she is
obviously a biased witness as it has been shown that she is dependent upon Enrique D. Hemedes for her
daily subsistence, and she was most probably influenced by Enrique D. Hemedes to execute the
"Kasunduan" in his favor. She also refutes the applicability of article 1332. It is her contention that for
such a provision to be applicable, there must be a party seeking to enforce a contract; however, she is not
enforcing the "Deed of Conveyance of Unregistered Real Property by Reversion" as her basis in claiming
ownership, but rather her claim is anchored upon OCT No. (0-941) 0-198 issued in her name, which
document can stand independently from the deed of conveyance. Also, there exist various circumstances
which show that Justa Kausapin did in fact execute and understand the deed of conveyance in favor of
Maxima Hemedes. First, the "Donation Intervivos With Resolutory Conditions" executed by Jose Hemedes
in favor of Justa Kausapin was also in English, but she never alleged that she did not understand such
document. Secondly, Justa Kausapin failed to prove that it was not her thumbmark on the deed of
conveyance in favor of Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected
to the request of Maxima Hemedes' counsel to obtain a specimen thumbmark of Justa Kausapin.[14]

Public respondent's finding that the "Deed of Conveyance of Unregistered Real Property By Reversion"
executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by the factual
findings in this case.. It is grounded upon the mere denial of the same by Justa Kausapin. A party to a
contract cannot just evade compliance with his contractual obligations by the simple expedient of denying
the execution of such contract. If, after a perfect and binding contract has been executed between the
parties, it occurs to one of them to allege some defect therein as a reason for annulling it, the alleged
defect must be conclusively proven, since the validity and fulfillment of contracts cannot be left to the will
of one of the contracting parties.[15]

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed upon the deed of
conveyance would have easily cleared any doubts as to whether or not the deed was forged, the records
do not show that such evidence was introduced by private respondents and the lower court decisions do
not make mention of any comparison having been made.[16] It is a legal presumption that evidence
willfully suppressed would be adverse if produced.[17] The failure of private respondents to refute the
due execution of the deed of conveyance by making a comparison with Justa Kausapin's thumbmark
necessarily leads one to conclude that she did in fact affix her thumbmark upon the deed of donation in
favor of her stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed of conveyance is
misplaced for there are strong indications that she is a biased witness. The trial court found that Justa
Kausapin was dependent upon Enrique D. Hemedes for financial assistance.[18] Justa Kausapin's own
testimony attests to this fact -

Atty. Conchu:

Q: Aling Justa, can you tell the Honorable Court why you donated this particular property to Enrique
Hemedes?

A: Because I was in serious condition and he was the one supporting me financially.

Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique Hemedes?

A: Yes Sir.

(TSN pp. 19 and 23, November 17, 1981)[19]

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial support. The
transcripts state as follows:

Atty. Mora:

Now you said that Justa Kausapin has been receiving from you advances for food, medicine & other
personal or family needs?

E. Hemedes:

A: Yes.

Q: Was this already the practice at the time this "Kasunduan" was executed?

A: No that was increased, no, no, after this document.

xxx xxx xxx

Q: And because of these accommodations that you have given to Justa Kausapin; Justa Kausapin has in
turn treated you very well because she's very grateful for that, is it not?

A: I think that's human nature.

Q: Answer me categorically, Mr. Hemedes she's very grateful?

A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984)[20]

A witness is said to be biased when his relation to the cause or to the parties is such that he has an
incentive to exaggerate or give false color to his statements, or to suppress or to pervert the truth, or to
state what is false.[21] At the time the present case was filed in the trial court in 1981, Justa Kausapin was
already 80 years old, suffering from worsening physical infirmities and completely dependent upon her
stepson Enrique D. Hemedes for support. It is apparent that Enrique D. Hemedes could easily have
influenced his aging stepmother to donate the subject property to him. Public respondent should not have
given credence to a witness that was obviously biased and partial to the cause of private respondents.
Although it is a well-established rule that the matter of credibility lies within the province of the trial court,
such rule does not apply when the witness' credibility has been put in serious doubt, such as when there
appears on the record some fact or circumstance of weight and influence, which has been overlooked or
the significance of which has been misinterpreted.[22]

Finally, public respondent was in error when it sustained the trial court's decision to nullify the "Deed of
Conveyance of Unregistered Real Property by Reversion" for failure of Maxima Hemedes to comply with
article 1332 of the Civil Code, which states:

When one of the parties is unable to read, or if the contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been
fully explained to the former.

Article 1332 was intended for the protection of a party to a contract who is at a disadvantage due to his
illiteracy, ignorance, mental weakness or other handicap.[23] This article contemplates a situation
wherein a contract has been entered into, but the consent of one of the parties is vitiated by mistake or
fraud committed by the other contracting party.[24] This is apparent from the ordering of the provisions
under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is taken. Article 1330
states that -

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is
voidable.

This is immediately followed by provisions explaining what constitutes mistake, violence, intimidation,
undue influence, or fraud sufficient to vitiate consent.[25] In order that mistake may invalidate consent,
it should refer to the substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.[26] Fraud, on the other hand,
is present when, through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to.[27] Clearly, article
1332 assumes that the consent of the contracting party imputing the mistake or fraud was given, although
vitiated, and does not cover a situation where there is a complete absence of consent.

In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of Unregistered Real
Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts that it was only during the hearing
conducted on December 7, 1981 before the trial court that she first caught a glimpse of the deed of
conveyance and thus, she could not have possibly affixed her thumbmark thereto.[28] It is private
respondents' own allegations which render article 1332 inapplicable for it is useless to determine whether
or not Justa Kausapin was induced to execute said deed of conveyance by means of fraud employed by
Maxima Hemedes, who allegedly took advantage of the fact that the former could not understand English,
when Justa Kausapin denies even having seen the document before the present case was initiated in 1981.

It has been held by this Court that "… mere preponderance of evidence is not sufficient to overthrow a
certificate of a notary public to the effect that the grantor executed a certain document and acknowledged
the fact of its execution before him. To accomplish this result, the evidence must be so clear, strong and
convincing as to exclude all reasonable controversy as to the falsity of the certificate, and when the
evidence is conflicting, the certificate will be upheld."[29] In the present case, we hold that private
respondents have failed to produce clear, strong, and convincing evidence to overcome the positive value
of the "Deed of Conveyance of Unregistered Real Property by Reversion" a notarized document. The mere
denial of its execution by the donor will not suffice for the purpose.

In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule that
Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the subject property.
Justa Kausapin sought to transfer to her stepson exactly what she had earlier transferred to Maxima
Hemedes the ownership of the subject property pursuant to the first condition stipulated in the deed of
donation executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null and void for
the purported object thereof did not exist at the time of the transfer, having already been transferred to
his sister.[30] Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a
nullity for the latter cannot acquire more rights than its predecessor-in-interest and is definitely not an
innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which
it relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his being
designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna and in the records
of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a certificate of title, which is
an absolute and indefeasible evidence of ownership of the property in favor of the person whose name
appears therein.[31] Particularly, with regard to tax declarations and tax receipts, this Court has held on
several occasions that the same do not by themselves conclusively prove title to land.[32]

We come now to the question of whether or not R & B Insurance should be considered an innocent
purchaser of the land in question. At the outset, we note that both the trial court and appellate court
found that Maxima Hemedes did in fact execute a mortgage over the subject property in favor of R & B
Insurance. This finding shall not be disturbed because, as we stated earlier, it is a rule that the factual
findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to respect, and
should not be disturbed on appeal.[33]

In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated that the fact
that the certificate of title of the subject property indicates upon its face that the same is subject to an
encumbrance, i.e. usufructuary rights in favor of Justa Kausapin during her lifetime or widowhood, should
have prompted R & B Insurance to "...investigate further the circumstances behind this encumbrance on
the land in dispute," but which it failed to do. Also, public respondent considered against R & B Insurance
the fact that it made it appear in the mortgage contract that the land was free from all liens, charges,
taxes and encumbrances.[34]

R & B Insurance alleges that, contrary to public respondent's ruling, the presence of an encumbrance on
the certificate of title is not reason for the purchaser or a prospective mortgagee to look beyond the face
of the certificate of title. The owner of a parcel of land may still sell the same even though such land is
subject to a usufruct; the buyer's title over the property will simply be restricted by the rights of the
usufructuary. Thus, R & B Insurance accepted the mortgage subject to the usufructuary rights of Justa
Kausapin. Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title and
search for any hidden defect or inchoate right which could defeat its right thereto, it would not have
discovered anything since the mortgage was entered into in 1964, while the "Kasunduan" conveying the
land to Enrique D. Hemedes was only entered into in 1971 and the affidavit repudiating the deed of
conveyance in favor of Maxima Hemedes was executed by Justa Kausapin in 1981.[35]

We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a mortgagee in good
faith.

It is a well-established principle that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.[36] An innocent purchaser for value[37] is one who
buys the property of another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or before he has notice
of the claim of another person.[38]

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT dose not
impose upon R & B Insurance the obligation to investigate the validity of its mortgagor's title. Usufruct
gives a right to enjoy the property of another with the obligation of preserving its form and substance.[39]
The usufructuary is entitled to all the natural, industrial and civil fruits of the property[40] and may
personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a
gratuitous title, but all the contracts he may enter into as such usufructuary shall terminate upon the
expiration of the usufruct.[41]

Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary.[42] The
owner of the property maintains the or the power to alienate, encumber, transform, and even destroy
the same.[43] This right is embodied in the Civil Code, which provides that the owner of property the
usufruct of which is held by another, may alienate it, although he cannot alter the property's form or
substance, or do anything which may be prejudicial to the usufructuary.[44]

There is no doubt that the owner may validly mortgage the property in favor of a third person and the law
provides that, in such a case, the usufructuary shall not be obliged to pay the debt of the mortgagor, and
should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable
to the usufructuary for whatever the latter may lose by reason thereof.[45]

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not sufficient
cause to require R & B Insurance to investigate Maxima Hemedes' title, contrary to public respondent's
ruling, for the reason that Maxima Hemedes' ownership over the property remained unimpaired despite
such encumbrance. R & B Insurance had a right to rely on the certificate of title and was not in bad faith
in accepting the property as a security for the loan it extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the certificate of
title and investigate the title of its mortgagor, still, it would not have discovered any better rights in favor
of private respondents. Enrique D. Hemedes and Dominium base their claims to the property upon the
"Kasunduan" allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we have already stated
earlier, such contract is a nullity as its subject matter was inexistent. Also, the land was mortgaged to R &
B Insurance as early as 1964, while the "Kasunduan" was executed only in 1971 and the affidavit of Justa
Kausapin affirming the conveyance in favor of Enrique D. Hemedes was executed in 1981. Thus, even if R
& B Insurance investigated the title of Maxima Hemedes, it would not have discovered any adverse claim
to the land in derogation of its mortgagor's title. We reiterate that at no point in time could private
respondents establish any rights or maintain any claim over the land.

It is a well-settled principle that where innocent third persons rely upon the correctness of a certificate of
title and acquire rights over the property, the court cannot just disregard such rights. Otherwise, public
confidence in the certificate of title, and ultimately, the Torrens system, would be impaired for everyone
dealing with registered property would still have to inquire at every instance whether the title has been
regularly or irregularly issued.[46] Being an innocent mortgagee for value, R & B Insurance validly acquired
ownership over the property, subject only to the usufructuary rights of Justa Kausapin thereto, as this
encumbrance was properly annotated upon its certificate of title.

The factual findings of the trial court, particularly when affirmed by the appellate court, carry great weight
and are entitled to respect on appeal, except under certain circumstances.[47] One such circumstance
that would compel the Court to review the factual findings of the lower courts is where the lower courts
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion.[48] Also, it is axiomatic that the drawing of the proper legal
conclusions from such factual findings are within the peculiar province of this Court.[49]

As regards R & B Insurance's prayer that Dominium be ordered to demolish the warehouses or that it be
declared the owner thereof since the same were built in bad faith, we note that such warehouses were
constructed by Asia Brewery, not by Dominium. However, despite its being a necessary party in the
present case, the lower courts never acquired jurisdiction over Asia Brewery, whether as a plaintiff or
defendant, and their respective decisions did not pass upon the constructions made upon the subject
property. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint, while
jurisdiction over the person of a party defendant is acquired upon the service of summons in the manner
required by law or by his voluntary appearance. As a rule, if a defendant has not been summoned, the
court acquires no jurisdiction over his person, and any personal judgment rendered against such
defendant is null and void.[50] In the present case, since Asia Brewery is a necessary party that was not
joined in the action, any judgment rendered in this case shall be without prejudice to its rights.[51]

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same for it has not
alleged nor proven the factual basis for the same. Neither is it entitled to exemplary damages, which may
only be awarded if the claimant is entitled to moral, temperate, liquidated or compensatory damages.[52]
R & B Insurance's claim for attorney's fees must also fail. The award of attorney's fees is the exception
rather than the rule and counsel's fees are not to be awarded every time a party wins a suit. Its award
pursuant to article 2208 of the Civil Code demands factual, legal and equitable justification and cannot be
left to speculation and conjecture.[53] Under the circumstances prevailing in the instant case, there is no
factual or legal basis for an award of attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22, 1989 are
REVERSED. We uphold petitioner R & B Insurance's assertion of ownership over the property in dispute,
as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa Kausapin, which encumbrance
has been properly annotated upon the said certificate of title. No pronouncement as to costs.

SO ORDERED.
374 Phil. 692

GONZAGA_REYES, J.:

Assailed in these petitions for review on certiorari is the decision[1] of the eleventh division of the Court
of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992 affirming in toto the decision of
Branch 24 of the Regional Trial Court of Laguna in Civil Case No. B-1766 dated February 22, 1989,[2] and
the resolution dated December 29, 1992 denying petitioner R & B Insurance Corporation's (R & B
Insurance) motion for reconsideration. As the factual antecedents and issues are the same, we shall
decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of land, identified
as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It
was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. On
March 22, 1947 Jose Hemedes executed a document entitled "Donation Inter Vivos With Resolutory
Conditions"[3] whereby he conveyed ownership over the subject land, together with all its improvements,
in favor of his third wife, Justa Kauapin, subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of
the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document
conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage
contained in a public instrument as above provided, the title to the property shall automatically revert to
the legal heirs of the DONOR in common.

Pursuant to the first condition abovementioned, Justa Kausapin executed on September 27, 1960 a "Deed
of Conveyance of Unregistered Real Property by Reversion"[4] conveying to Maxima Hemedes the subject
property under the following terms -

That the said parcel of land was donated unto me by the said Jose Hemedes, my deceased husband, in a
deed of "DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS" executed by the donor in my favor,
and duly accepted by me on March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in the said deed of "DONATION INTER
VIVOS WITH RESOLUTORY CONDITIONS," as follows:

"(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of
the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document
conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage
contained in a public instrument as above provided, the title to the property shall automatically revert to
the legal heirs of the DONOR in common."

That, wherefore, in virtue of the deed of donation above mentioned and in the exercise of my right and
privilege under the terms of the first resolutory condition therein contained and hereinabove reproduced,
and for and in consideration of my love and affection, I do hereby by these presents convey, transfer, and
deed unto my designee, MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and
resident of No. 15 Acacia Road, Quezon City, who is one of the children and heirs of my donor, JOSE
HEMEDES, the ownership of, and title to the property hereinabove described, and all rights and interests
therein by reversion under the first resolutory condition in the above deed of donation; Except the
possession and enjoyment of the said property which shall remain vested in me during my lifetime, or
widowhood and which upon my death or remarriage shall also automatically revert to, and be transferred
to my designee, Maxima Hemedes.

Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title over
the subject unregistered land. Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198[5] was
issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on
June 8, 1962, with the annotation that "Justa Kausapin shall have the usufructuary rights over the parcel
of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband Raul Rodriguez
constituted a real estate mortgage over the subject property in its favor to serve as security for a loan
which they obtained in the amount of P6,000.00. On February 22, 1968, R & B Insurance extrajudicially
foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it became due on August
2, 1964. The land was sold at a public auction on May 3, 1968 with R & B Insurance as the highest bidder
and a certificate of sale was issued by the sheriff in its favor. Since Maxima Hemedes failed to redeem the
property within the redemption period, R & B Insurance executed an Affidavit of Consolidation dated
March 29, 1974 and on May 21, 1975 the Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198
and issued Transfer Certificate of Title (TCT) No. 41985 in the name of R & B Insurance. The annotation of
usufruct in favor of Justa Kausapin was maintained in the new title.[6]

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed
a "Kasunduan" on May 27, 1971 whereby she transferred the same land to her stepson Enrique D.
Hemedes, pursuant to the resolutory condition in the deed of donation executed in her favor by her late
husband Jose Hemedes. Enrique D. Hemedes obtained two declarations of real property - in 1972, and
again, in 1974, when the assessed value of the property was raised. Also, he has been paying the realty
taxes on the property from the time Justa Kausapin conveyed the property to him in 1971 until 1979. In
the cadastral survey of Cabuyao, Laguna conducted from September 8, 1974 to October 10, 1974, the
property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the name of Enrique
Hemedes. Enrique Hemedes is also the named owner of the property in the records of the Ministry of
Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and Construction
Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an affidavit affirming the conveyance
of the subject property in favor of Enrique D. Hemedes as embodied in the "Kasunduan" dated May 27,
1971, and at the same time denying the conveyance made to Maxima Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery)
who, even before the signing of the contract of lease, constructed two warehouses made of steel and
asbestos costing about P10,000,000.00 each. Upon learning of Asia Brewery's constructions upon the
subject property, R & B Insurance sent it a letter on March 16, 1981 informing the former of its ownership
of the property as evidenced by TCT No. 41985 issued in its favor and of its right to appropriate the
constructions since Asia Brewery is a builder in bad faith. On March 27, 1981, a conference was held
between R & B Insurance and Asia Brewery but they failed to arrive at an amicable settlement.
On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted
that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-198 and that, as such,
she has the right to appropriate Asia Brewery's constructions, to demand its demolition, or to compel Asia
Brewery to purchase the land. In another letter of the same date addressed to R & B Insurance, Maxima
Hemedes denied the execution of any real estate mortgage in favor of the latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint[7] with the Court of First
Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R & B Insurance and/or
the reconveyance to Dominium of the subject property. Specifically, the complaint alleged that Dominium
was the absolute owner of the subject property by virtue of the February 28, 1979 deed of sale executed
by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced
by the "Kasunduan" dated May 27, 1971. The plaintiffs asserted that Justa Kausapin never transferred the
land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration proceedings
initiated by Maxima Hemedes.

After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in favor
of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of which states

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null and void and
ineffective;

(b) Declaring Dominium Realty and Construction Corporation the absolute owner and possessor of the
parcel of land described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for and/or under them to respect such ownership and
possession of Dominium Realty and Construction Corporation and to forever desist from asserting adverse
claims thereon nor disturbing such ownership and possession; and

(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No. 41985 in the
name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer certificate of title in the
name of Dominium Realty and Construction Corporation. No pronouncement as to costs and attorney's
fees.[8]

Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision. On September 11,
1992 the Court of Appeals affirmed the assailed decision in toto and on December 29, 1992, it denied R &
B Insurance's motion for reconsideration. Thus, Maxima Hemedes and R & B Insurance filed their
respective petitions for review with this Court on November 3, 1992 and February 22, 1993, respectively.

In G.R. No. 107132[9] , petitioner Maxima Hemedes makes the following assignment of errors as regards
public respondent's ruling

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE
IN DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY
REVERSION EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA HEMEDES.
II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS VOID AND OF NO LEGAL EFFECT
THE "KASUNDUAN" DATED 27 MAY 1971 EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT
ENRIQUE HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN
FAVOR OF RESPONDENT DOMINIUM REALTY AND CONSTRUCTION CORPORATION.

III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS ENRIQUE AND
DOMINIUM IN BAD FAITH.

IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT ORIGINAL CERTIFICATE OF TITLE
NO. (0-941) 0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA HEMEDES NULL AND VOID.

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN WAS OBTAINED BY PETITIONER
MAXIMA HEMEDES FROM RESPONDENT R & B INSURANCE CORPORATION.

VI

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL ESTATE MORTGAGE OVER THE
SUBJECT PROPERTY WAS EXECUTED BY PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B
INSURANCE CORPORATION.

VII

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID TITLE COVERING THE SUBJECT
PROPERTY IS THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER
MAXIMA HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R
& B INSURANCE CORPORATION.[10]

Meanwhile, in G.R. No. 108472[11] , petitioner R & B Insurance assigns almost the same errors, except
with regards to the real estate mortgage allegedly executed by Maxima Hemedes in its favor. Specifically,
R & B Insurance alleges that:

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE CIVIL CODE.

II

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE KASUNDUAN BY AND
BETWEEN JUSTA KAUSAPIN AND ENRIQUE NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY
OF A DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION CEDED THE SUBJECT
PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS EARLIER.

III

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE AFFIDAVIT OF REPUDIATION
OF JUSTA KAUSAPIN NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE
SAME SOME TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR
OF MAXIMA.

IV

RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE COMPLAINT OF ENRIQUE AND
DOMINIUM HAS PRESCRIBED AND/OR THAT ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.

RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT IN GOOD FAITH.

VI

RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED FOR BY R & B IN ITS
COUNTERCLAIM AND CROSSCLAIM.[12]

The primary issue to be resolved in these consolidated petitions is which of the two conveyances by Justa
Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively
transferred ownership over the subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes on the
strength of the "Deed of Conveyance of Unregistered Real Property by Reversion" executed by Justa
Kausapin. Public respondent upheld the trial court's finding that such deed is sham and spurious and has
"no evidentiary value under the law upon which claimant Maxima Hemedes may anchor a valid claim of
ownership over the property." In ruling thus, it gave credence to the April 10, 1981 affidavit executed by
Justa Kausapin repudiating such deed of conveyance in favor of Maxima Hemedes and affirming the
authenticity of the "Kasunduan" in favor of Enrique D. Hemedes. Also, it considered as pivotal the fact
that the deed of conveyance in favor of Maxima Hemedes was in English and that it was not explained to
Justa Kausapin, although she could not read nor understand English; thus, Maxima Hemedes failed to
discharge her burden, pursuant to Article 1332 of the Civil Code, to show that the terms thereof were fully
explained to Justa Kausapin. Public respondent concluded by holding that the registration of the property
on the strength of the spurious deed of conveyance is null and void and does not confer any right of
ownership upon Maxima Hemedes. [13]

Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any credence since she is
obviously a biased witness as it has been shown that she is dependent upon Enrique D. Hemedes for her
daily subsistence, and she was most probably influenced by Enrique D. Hemedes to execute the
"Kasunduan" in his favor. She also refutes the applicability of article 1332. It is her contention that for
such a provision to be applicable, there must be a party seeking to enforce a contract; however, she is not
enforcing the "Deed of Conveyance of Unregistered Real Property by Reversion" as her basis in claiming
ownership, but rather her claim is anchored upon OCT No. (0-941) 0-198 issued in her name, which
document can stand independently from the deed of conveyance. Also, there exist various circumstances
which show that Justa Kausapin did in fact execute and understand the deed of conveyance in favor of
Maxima Hemedes. First, the "Donation Intervivos With Resolutory Conditions" executed by Jose Hemedes
in favor of Justa Kausapin was also in English, but she never alleged that she did not understand such
document. Secondly, Justa Kausapin failed to prove that it was not her thumbmark on the deed of
conveyance in favor of Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected
to the request of Maxima Hemedes' counsel to obtain a specimen thumbmark of Justa Kausapin.[14]

Public respondent's finding that the "Deed of Conveyance of Unregistered Real Property By Reversion"
executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by the factual
findings in this case.. It is grounded upon the mere denial of the same by Justa Kausapin. A party to a
contract cannot just evade compliance with his contractual obligations by the simple expedient of denying
the execution of such contract. If, after a perfect and binding contract has been executed between the
parties, it occurs to one of them to allege some defect therein as a reason for annulling it, the alleged
defect must be conclusively proven, since the validity and fulfillment of contracts cannot be left to the will
of one of the contracting parties.[15]

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed upon the deed of
conveyance would have easily cleared any doubts as to whether or not the deed was forged, the records
do not show that such evidence was introduced by private respondents and the lower court decisions do
not make mention of any comparison having been made.[16] It is a legal presumption that evidence
willfully suppressed would be adverse if produced.[17] The failure of private respondents to refute the
due execution of the deed of conveyance by making a comparison with Justa Kausapin's thumbmark
necessarily leads one to conclude that she did in fact affix her thumbmark upon the deed of donation in
favor of her stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed of conveyance is
misplaced for there are strong indications that she is a biased witness. The trial court found that Justa
Kausapin was dependent upon Enrique D. Hemedes for financial assistance.[18] Justa Kausapin's own
testimony attests to this fact -

Atty. Conchu:

Q: Aling Justa, can you tell the Honorable Court why you donated this particular property to Enrique
Hemedes?

A: Because I was in serious condition and he was the one supporting me financially.

Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique Hemedes?

A: Yes Sir.

(TSN pp. 19 and 23, November 17, 1981)[19]

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial support. The
transcripts state as follows:
Atty. Mora:

Now you said that Justa Kausapin has been receiving from you advances for food, medicine & other
personal or family needs?

E. Hemedes:

A: Yes.

Q: Was this already the practice at the time this "Kasunduan" was executed?

A: No that was increased, no, no, after this document.

xxx xxx xxx

Q: And because of these accommodations that you have given to Justa Kausapin; Justa Kausapin has in
turn treated you very well because she's very grateful for that, is it not?

A: I think that's human nature.

Q: Answer me categorically, Mr. Hemedes she's very grateful?

A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984)[20]

A witness is said to be biased when his relation to the cause or to the parties is such that he has an
incentive to exaggerate or give false color to his statements, or to suppress or to pervert the truth, or to
state what is false.[21] At the time the present case was filed in the trial court in 1981, Justa Kausapin was
already 80 years old, suffering from worsening physical infirmities and completely dependent upon her
stepson Enrique D. Hemedes for support. It is apparent that Enrique D. Hemedes could easily have
influenced his aging stepmother to donate the subject property to him. Public respondent should not have
given credence to a witness that was obviously biased and partial to the cause of private respondents.
Although it is a well-established rule that the matter of credibility lies within the province of the trial court,
such rule does not apply when the witness' credibility has been put in serious doubt, such as when there
appears on the record some fact or circumstance of weight and influence, which has been overlooked or
the significance of which has been misinterpreted.[22]

Finally, public respondent was in error when it sustained the trial court's decision to nullify the "Deed of
Conveyance of Unregistered Real Property by Reversion" for failure of Maxima Hemedes to comply with
article 1332 of the Civil Code, which states:

When one of the parties is unable to read, or if the contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been
fully explained to the former.

Article 1332 was intended for the protection of a party to a contract who is at a disadvantage due to his
illiteracy, ignorance, mental weakness or other handicap.[23] This article contemplates a situation
wherein a contract has been entered into, but the consent of one of the parties is vitiated by mistake or
fraud committed by the other contracting party.[24] This is apparent from the ordering of the provisions
under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is taken. Article 1330
states that -

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is
voidable.

This is immediately followed by provisions explaining what constitutes mistake, violence, intimidation,
undue influence, or fraud sufficient to vitiate consent.[25] In order that mistake may invalidate consent,
it should refer to the substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.[26] Fraud, on the other hand,
is present when, through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to.[27] Clearly, article
1332 assumes that the consent of the contracting party imputing the mistake or fraud was given, although
vitiated, and does not cover a situation where there is a complete absence of consent.

In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of Unregistered Real
Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts that it was only during the hearing
conducted on December 7, 1981 before the trial court that she first caught a glimpse of the deed of
conveyance and thus, she could not have possibly affixed her thumbmark thereto.[28] It is private
respondents' own allegations which render article 1332 inapplicable for it is useless to determine whether
or not Justa Kausapin was induced to execute said deed of conveyance by means of fraud employed by
Maxima Hemedes, who allegedly took advantage of the fact that the former could not understand English,
when Justa Kausapin denies even having seen the document before the present case was initiated in 1981.

It has been held by this Court that "… mere preponderance of evidence is not sufficient to overthrow a
certificate of a notary public to the effect that the grantor executed a certain document and acknowledged
the fact of its execution before him. To accomplish this result, the evidence must be so clear, strong and
convincing as to exclude all reasonable controversy as to the falsity of the certificate, and when the
evidence is conflicting, the certificate will be upheld."[29] In the present case, we hold that private
respondents have failed to produce clear, strong, and convincing evidence to overcome the positive value
of the "Deed of Conveyance of Unregistered Real Property by Reversion" a notarized document. The mere
denial of its execution by the donor will not suffice for the purpose.

In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule that
Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the subject property.
Justa Kausapin sought to transfer to her stepson exactly what she had earlier transferred to Maxima
Hemedes the ownership of the subject property pursuant to the first condition stipulated in the deed of
donation executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null and void for
the purported object thereof did not exist at the time of the transfer, having already been transferred to
his sister.[30] Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a
nullity for the latter cannot acquire more rights than its predecessor-in-interest and is definitely not an
innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which
it relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his being
designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna and in the records
of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a certificate of title, which is
an absolute and indefeasible evidence of ownership of the property in favor of the person whose name
appears therein.[31] Particularly, with regard to tax declarations and tax receipts, this Court has held on
several occasions that the same do not by themselves conclusively prove title to land.[32]

We come now to the question of whether or not R & B Insurance should be considered an innocent
purchaser of the land in question. At the outset, we note that both the trial court and appellate court
found that Maxima Hemedes did in fact execute a mortgage over the subject property in favor of R & B
Insurance. This finding shall not be disturbed because, as we stated earlier, it is a rule that the factual
findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to respect, and
should not be disturbed on appeal.[33]

In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated that the fact
that the certificate of title of the subject property indicates upon its face that the same is subject to an
encumbrance, i.e. usufructuary rights in favor of Justa Kausapin during her lifetime or widowhood, should
have prompted R & B Insurance to "...investigate further the circumstances behind this encumbrance on
the land in dispute," but which it failed to do. Also, public respondent considered against R & B Insurance
the fact that it made it appear in the mortgage contract that the land was free from all liens, charges,
taxes and encumbrances.[34]

R & B Insurance alleges that, contrary to public respondent's ruling, the presence of an encumbrance on
the certificate of title is not reason for the purchaser or a prospective mortgagee to look beyond the face
of the certificate of title. The owner of a parcel of land may still sell the same even though such land is
subject to a usufruct; the buyer's title over the property will simply be restricted by the rights of the
usufructuary. Thus, R & B Insurance accepted the mortgage subject to the usufructuary rights of Justa
Kausapin. Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title and
search for any hidden defect or inchoate right which could defeat its right thereto, it would not have
discovered anything since the mortgage was entered into in 1964, while the "Kasunduan" conveying the
land to Enrique D. Hemedes was only entered into in 1971 and the affidavit repudiating the deed of
conveyance in favor of Maxima Hemedes was executed by Justa Kausapin in 1981.[35]

We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a mortgagee in good
faith.

It is a well-established principle that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.[36] An innocent purchaser for value[37] is one who
buys the property of another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or before he has notice
of the claim of another person.[38]

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT dose not
impose upon R & B Insurance the obligation to investigate the validity of its mortgagor's title. Usufruct
gives a right to enjoy the property of another with the obligation of preserving its form and substance.[39]
The usufructuary is entitled to all the natural, industrial and civil fruits of the property[40] and may
personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a
gratuitous title, but all the contracts he may enter into as such usufructuary shall terminate upon the
expiration of the usufruct.[41]
Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary.[42] The
owner of the property maintains the or the power to alienate, encumber, transform, and even destroy
the same.[43] This right is embodied in the Civil Code, which provides that the owner of property the
usufruct of which is held by another, may alienate it, although he cannot alter the property's form or
substance, or do anything which may be prejudicial to the usufructuary.[44]

There is no doubt that the owner may validly mortgage the property in favor of a third person and the law
provides that, in such a case, the usufructuary shall not be obliged to pay the debt of the mortgagor, and
should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable
to the usufructuary for whatever the latter may lose by reason thereof.[45]

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not sufficient
cause to require R & B Insurance to investigate Maxima Hemedes' title, contrary to public respondent's
ruling, for the reason that Maxima Hemedes' ownership over the property remained unimpaired despite
such encumbrance. R & B Insurance had a right to rely on the certificate of title and was not in bad faith
in accepting the property as a security for the loan it extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the certificate of
title and investigate the title of its mortgagor, still, it would not have discovered any better rights in favor
of private respondents. Enrique D. Hemedes and Dominium base their claims to the property upon the
"Kasunduan" allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we have already stated
earlier, such contract is a nullity as its subject matter was inexistent. Also, the land was mortgaged to R &
B Insurance as early as 1964, while the "Kasunduan" was executed only in 1971 and the affidavit of Justa
Kausapin affirming the conveyance in favor of Enrique D. Hemedes was executed in 1981. Thus, even if R
& B Insurance investigated the title of Maxima Hemedes, it would not have discovered any adverse claim
to the land in derogation of its mortgagor's title. We reiterate that at no point in time could private
respondents establish any rights or maintain any claim over the land.

It is a well-settled principle that where innocent third persons rely upon the correctness of a certificate of
title and acquire rights over the property, the court cannot just disregard such rights. Otherwise, public
confidence in the certificate of title, and ultimately, the Torrens system, would be impaired for everyone
dealing with registered property would still have to inquire at every instance whether the title has been
regularly or irregularly issued.[46] Being an innocent mortgagee for value, R & B Insurance validly acquired
ownership over the property, subject only to the usufructuary rights of Justa Kausapin thereto, as this
encumbrance was properly annotated upon its certificate of title.

The factual findings of the trial court, particularly when affirmed by the appellate court, carry great weight
and are entitled to respect on appeal, except under certain circumstances.[47] One such circumstance
that would compel the Court to review the factual findings of the lower courts is where the lower courts
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion.[48] Also, it is axiomatic that the drawing of the proper legal
conclusions from such factual findings are within the peculiar province of this Court.[49]

As regards R & B Insurance's prayer that Dominium be ordered to demolish the warehouses or that it be
declared the owner thereof since the same were built in bad faith, we note that such warehouses were
constructed by Asia Brewery, not by Dominium. However, despite its being a necessary party in the
present case, the lower courts never acquired jurisdiction over Asia Brewery, whether as a plaintiff or
defendant, and their respective decisions did not pass upon the constructions made upon the subject
property. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint, while
jurisdiction over the person of a party defendant is acquired upon the service of summons in the manner
required by law or by his voluntary appearance. As a rule, if a defendant has not been summoned, the
court acquires no jurisdiction over his person, and any personal judgment rendered against such
defendant is null and void.[50] In the present case, since Asia Brewery is a necessary party that was not
joined in the action, any judgment rendered in this case shall be without prejudice to its rights.[51]

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same for it has not
alleged nor proven the factual basis for the same. Neither is it entitled to exemplary damages, which may
only be awarded if the claimant is entitled to moral, temperate, liquidated or compensatory damages.[52]
R & B Insurance's claim for attorney's fees must also fail. The award of attorney's fees is the exception
rather than the rule and counsel's fees are not to be awarded every time a party wins a suit. Its award
pursuant to article 2208 of the Civil Code demands factual, legal and equitable justification and cannot be
left to speculation and conjecture.[53] Under the circumstances prevailing in the instant case, there is no
factual or legal basis for an award of attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22, 1989 are
REVERSED. We uphold petitioner R & B Insurance's assertion of ownership over the property in dispute,
as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa Kausapin, which encumbrance
has been properly annotated upon the said certificate of title. No pronouncement as to costs.

SO ORDERED.

[ G.R. No. 1318, April 12, 1904 ]

PRISCA NAVAL ET AL., PLAINTIFFS AND APPELLEES, VS. FRANCISCO ENRIQUEZ ET AL., DEFENDANTS AND
APPELLANTS.

DECISION
MAPA, J.:

November 14, 1885, Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez and Doña
Ciriaca Villanueva, whose estates were at that time still undistributed, by public instrument sold to Don
Victoriano Reyes his interest in both estates, equivalent to a tenth part thereof, for the sum of 7,000
pesos. The deed was executed in this city before Don Enrique Barrera, a notary public, who certified in
the document that the vendor received the said consideration at the time of the execution of the
instrument.
By another instrument executed April 15, 1886, before the same notary, Don Enrique Barrera y Caldes,
Don Victoriano Reyes sold to Doña Carmen de la Cavada this interest in the estates of Don Antonio
Enriquez and Doña Ciriaca Villanueva, which, by the deed above referred to, he had acquired from Don
Jorge Enriquez for the same consideration of 7,000 pesos, which money he received from the purchaser
in the presence of the notary, who so certifies in the deed itself.

The purchaser, Doña Carmen, was the wife of Don Francisco Enriquez, who was the executor and
administrator of the testamentary estate of Don Antonio Enriquez at the dates of the execution of the
two deeds above mentioned.
The plaintiffs demand that these deeds be declared null and void, as well as the contracts evidenced
thereby, apparently solely so far as they refer to the estate of Don Antonio Enriquez, no mention being
made of the estate of Doña Ciriaca Villanueva in the complaint. This relief is prayed for upon the following
grounds:

(1) Because the said contracts were executed without consideration, it being alleged with respect to this
matter that Don Jorge Eririquez did not receive any consideration for the sale made by him in favor of Don
Victoriano Reyes, and that the latter did not receive any sum whatever as a consideration for the sale in
turn executed by him in favor of Doña Carmen de la Cavada. Upon this ground the plaintiffs contend that
the deeds in question were consummated and were executed for the purpose of deceiving and defrauding
Don Jorge Enriquez and his family.

(2) Because Don Victoriano Reyes, the purchaser under tfye first deed, merely acted as an intermediary
at the request and instance of Don Francisco Enriquez for the purpose of subsequently facilitating the
acquisition by Doña Carmen de la Cavada, his wife, of the hereditary share of Don Jorge Enriquez, the real
acquirer being Don Francisco Enriquez, the executor and administrator of the estate of Don Antonio
Enriquez. The conclusion of the plaintiffs is that as such executor Don Francisco Enriquez was unable to
acquire by his own act or that of any intermediary ±he said hereditary portion of Don Jorge Enriquez under
the provisions of paragraph 3 of article 1459 of the Civil Code.

(a) The evidence introduced by the plaintiffs is not sufficient to authorize the conclusion that there was
no consideration for the sales referred to in the complaint. It is true that Victoriano Reyes testified that
he paid nothing to Jorge Enriquez, and received nothing from Carmen de la Cavada as consideration for
either of the sales. But against this statement is the testimony of the notary, Don Enrique Barrera y Caldes,
before whom both contracts were executed, and that of the defendants Francisco Enriquez and Doña
Carmen de la Cavada, who expressly affirm the contrary; and more especially the statement is contrary
to the recitals of the deeds themselves, which confirm the statements of the witnesses last referred to.
The deeds clearly and expressly recite the fact of the receipt by the respective purchasers of the stipulated
price or consideration of 7,000 pesos at the time and place of the execution of the deeds.

These instruments having been executed with all the formalities prescribed by the law, they are admissible
as evidence against the contracting parties and their successors with respect to recitals made therein by
the former. (Art. 1218, Civil Code.) Their evidenciary force can not be overcome except by other evidence
of greater weight, sufficient to overcome the legal presumption of the regularity of acts and contracts
celebrated with all the legal requisites under the safeguard of a notarial certificate. This presumption has
not been rebutted in the present case, in which the evidence against it, consisting of the sole testimony
of Don Victoriano Reyes, which, moreover, is expressly controverted by that of the other witnesses at the
trial, involves the improbable conclusion that the witness, as well as Jorge Enriquez, from whom the
plaintiffs derived title, the notary public, and the attesting witnesses to both instruments consented to
the commission of the grave crime of falsification of public documents for this would be the result were
the statements of the said Victoriano Reyes true without having any interest in so doing or expecting to
derive any benefit from the commission of the crime, the plaintiffs not having alleged or proven the
existence of such an interest on. their part. It appears, on the contrary, from the testimony of Victoriano
Reyes himself that he received no compensation for his participation in the matter.

With respect to Jorge Enriquez, the conclusion, still more improbable if possible, would be that he had
voluntarily and spontaneously taken part in the commission of a grave crime, which not only was not of
the slightest benefit to himself, but the commission of which is supposed to have had for its object the
causing of harm to him. The allegation is that the purpose of the crime was to deprive him, without the
slightest compensation, of his paternal and maternal inheritance, which according to the complaint was
the only possession of himself and his numerous family. This is the most inexplicable and improbable
aspect of the facts alleged in the complaint. It is beyond comprehension, and we can not believe that
Jorge Enriquez, who according to the plaintiffs was absolutely without means of support for himself and
his family, would convey to another his large interest in the estate without receiving any consideration
therefor, and that to do this he would commit the grave crime, of falsification. To justify this conclusion it
would be necessary to suppose that Jorge Enriquez was absolutely devoid of intelligence or that he was
the victim of error, violence, intimidation, or fraud. But these are circumstances which counsel for the
plaintiff have not demonstrated or even sought to demonstrate.

An examination of the evidence leads us to the conclusion that the payment of the consideration of 7,000
pesos expressed in the two deeds in question was actually and really made, and that the allegation of the
plaintiffs that the contracts of sale evidenced by these deeds were made without consideration is
unfounded.

At all events the action of which the plaintiffs might have availed themselves for the purpose of having
those contracts declared void upon that ground, even admitting hypothetically that there was no
consideration, is barred by the statute of limitations, inasmuch as from the date of those contracts down
to the death of Jorge Enriquez, which occurred July 6,1891, more than five years had passed and more
than fifteen before the filing of the complaint on January 9,1902, nothing having been done in the
meantime on the part of the plaintiffs or the person under whom they claim to interrupt the running of
the statute. The action of nullity only lasts four years, counted from the date of the consummation of the
contract, when the action is based, as in this case, upon the absence of consideration. (Art. 1301 of the
Civil Code.)

The contract of sale is consummated by the delivery of the purchase money and of the thing sold. " When
the sale is made by public instrument the execution of the instrument is equivalent to the delivery of the
thing which is the object of the contract, unless from the instrument itself the contrary intention clearly
appears." (Art. 1462, par. 2, Civil Code.) And article 1464 provides that " With respect to incorporeal
property [to which class the hereditary right which was the object of the contracts in question pertains],
the provisions of paragraph 2 of article 1462 shall govern." In the deeds of sale executed by Victoriano
Reyes in favor of Doña Carmen de la Cavada we find the following: " In consequence he (the vendor) by
virtue of this title cedes and conveys all rights which he has or may have to the part of the inheritance
which is the object of this sale, to the end that the purchaser, in the place and stead of the vendor, may
exercise all the acts of ownership corresponding to her right, to which end by means of the delivery of
this instrument and of his other title deeds he makes the transfer necessary to consummate the contract,
which upon his part he declares to be perfect and consummated from this date."

In view of this clause and of the legal provisions above cited, it is evident that the delivery of the things
sold was effected by the mere execution of the deed of sale; and it appearing from the deed itself that
the consideration was delivered to the vendor at the time, and the contrary not having been sufficiently
proven, the conclusion follows that the sale was consummated then and there, and that from that time
the period of four years fixed by law for the prescription of the action of nullity must be counted in this
case.

(b) The thing sold in the two contracts of sale mentioned in the complaint was the hereditary right of Don
Jorge Enriquez, which evidently was not in charge of the executor, Don Francisco Enriquez. Executors,
even in those cases in which they administer the property pertaining to the estate, do not administer the
hereditary rights of any heir. This right is vested entirely in the heirs, who retain it or transmit it in whole
or in part, as they may deem convenient, to some other person absolutely independent of the executor,
whose, authority, whatever powers the testator may have desired to confer upon him, do not and can not
under any circumstances in the slightest degree limit the power of the heirs to dispose of the said right at
will. That right does not form part of the property delivered to the executor for administration.

This conclusion having been reached, we are of the opinion that article 1459 of the Civil Code, cited by
the plaintiffs to show the alleged incapacity of Don Francisco Enriquez as executor of the will of Don
Antonio Enriquez, to acquire by purchase the hereditary right of Jorge Enriquez, has no application to the
present case. The prohibition which paragraph 3 of that article imposes upon executors refers to the
property confided to their care, and does not extend, therefore, to property not falling within this class.
Legal provisions of a prohibitive character must be strictly construed, and should not be extended to cases
not expressly comprised within their text.

Consequently, even upon the supposition that the executor, Don Francisco Enriquez, was the person who
really acquired the hereditary rights of Jorge Enriquez, the sale in question would not for that reason be
invalid, the executor, Don Francisco Enriquez, not being legally incapable of acquiring the hereditary right
in question as the plaintiffs erroneously suppose.

This being so, the question as to whether the money paid by Doña Carmen de la Cavada for the purchase
of the said right was her sole and exclusive property, or whether it was the property of her husband Don
Francisco Enriquez, or whether it was the property of the community of goods existing between them, is
absolutely unimportant, for, be the fact as it may, the Conclusion must always be that the incapacity to
purchase, alleged as one of the legal grounds upon which the complaint rests, does not exist.

Enough has been said to show that the action brought by the plaintiffs is devoid of foundation. It is not,
therefore, necessary to decide the other questions raised by the parties at the trial.

The judgment of the court below is reversed and the complaint dismissed, without costs in either instance.
So ordered.

[ G.R. No. 179786, July 24, 2013 ]

JOSIELENE LARA CHAN, PETITIONER, VS. JOHNNY T. CHAN, RESPONDENT.

DECISION
ABAD, J.:

This case is about the propriety of issuing a subpoena duces tecum for the production and submission in
court of the respondent husband's hospital record in a case for declaration of nullity of marriage where
one of the issues is his mental fitness as a husband.

The Facts and the Case

On February 6, 2006 petitioner Josielene Lara Chan (Josielene) filed before the Regional Trial Court (RTC)
of Makati City, Branch 144 a petition for the declaration of nullity of her marriage to respondent Johnny
Chan (Johnny), the dissolution of their conjugal partnership of gains, and the award of custody of their
children to her. Josielene claimed that Johnny failed to care for and support his family and that a
psychiatrist diagnosed him as mentally deficient due to incessant drinking and excessive use of prohibited
drugs. Indeed, she had convinced him to undergo hospital confinement for detoxification and
rehabilitation.

Johnny resisted the action, claiming that it was Josielene who failed in her wifely duties. To save their
marriage, he agreed to marriage counseling but when he and Josielene got to the hospital, two men
forcibly held him by both arms while another gave him an injection. The marriage relations got worse
when the police temporarily detained Josielene for an unrelated crime and released her only after the
case against her ended. By then, their marriage relationship could no longer be repaired.

During the pre-trial conference, Josielene pre-marked the Philhealth Claim Form1 that Johnny attached
to his answer as proof that he was forcibly confined at the rehabilitation unit of a hospital. The form
carried a physician's handwritten note that Johnny suffered from "methamphetamine and alcohol abuse."
Following up on this point, on August 22, 2006 Josielene filed with the RTC a request for the issuance of a
subpoena duces tecum addressed to Medical City, covering Johnny's medical records when he was there
confined. The request was accompanied by a motion to "be allowed to submit in evidence" the records
sought by subpoena duces tecum.[2]

Johnny opposed the motion, arguing that the medical records were covered by physician-patient privilege.
On September 13, 2006 the RTC sustained the opposition and denied Josielene's motion. It also denied
her motion for reconsideration, prompting her to file a special civil action of certiorari before the Court of
Appeals (CA) in CA-G.R. SP 97913, imputing grave abuse of discretion to the RTC.

On September 17, 2007 the CA[3] denied Josielene's petition. It ruled that, if courts were to allow the
production of medical records, then patients would be left with no assurance that whatever relevant
disclosures they may have made to their physicians would be kept confidential. The prohibition covers
not only testimonies, but also affidavits, certificates, and pertinent hospital records. The CA added that,
although Johnny can waive the privilege, he did not do so in this case. He attached the Philhealth form to
his answer for the limited purpose of showing his alleged forcible confinement.

Question Presented

The central question presented in this case is:

Whether or not the CA erred in ruling that the trial court correctly denied the issuance of a subpoena
duces tecum covering Johnny's hospital records on the ground that these are covered by the privileged
character of the physician-patient communication.

The Ruling of the Court

Josielene requested the issuance of a subpoena duces tecum covering the hospital records of Johnny's
confinement, which records she wanted to present in court as evidence in support of her action to have
their marriage declared a nullity. Respondent Johnny resisted her request for subpoena, however,
invoking the privileged character of those records. He cites Section 24(c), Rule 130 of the Rules of Evidence
which reads:

SEC. 24. Disqualification by reason of privileged communication. The following persons cannot testify as
to matters learned in confidence in the following cases:
xxxx

(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without the
consent of the patient, be examined as to any advice or treatment given by him or any information which
he may have acquired in attending such patient in a professional capacity, which information was
necessary to enable him to act in that capacity, and which would blacken the reputation of the patient.

The physician-patient privileged communication rule essentially means that a physician who gets
information while professionally attending a patient cannot in a civil case be examined without the
patient's consent as to any facts which would blacken the latter's reputation. This rule is intended to
encourage the patient to open up to the physician, relate to him the history of his ailment, and give him
access to his body, enabling the physician to make a correct diagnosis of that ailment and provide the
appropriate cure. Any fear that a physician could be compelled in the future to come to court and narrate
all that had transpired between him and the patient might prompt the latter to clam up, thus putting his
own health at great risk.[4]

1. The case presents a procedural issue, given that the time to object to the admission of evidence, such
as the hospital records, would be at the time they are offered. The offer could be made part of the
physician's testimony or as independent evidence that he had made entries in those records that concern
the patient's health problems.

Section 36, Rule 132, states that objections to evidence must be made after the offer of such evidence for
admission in court. Thus:

SEC. 36. Objection. Objection to evidence offered orally must be made immediately after the offer is
made.

Objection to a question propounded in the course of the oral examination of a witness shall be made as
soon as the grounds therefor shall become reasonably apparent.

An offer of evidence in writing shall be objected to within three (3) days after notice of the offer unless a
different period is allowed by the court.

In any case, the grounds for the objections must be specified.

Since the offer of evidence is made at the trial, Josielene's request for subpoena duces tecum is
premature. She will have to wait for trial to begin before making a request for the issuance of a subpoena
duces tecum covering Johnny's hospital records. It is when those records are produced for examination
at the trial, that Johnny may opt to object, not just to their admission in evidence, but more so to their
disclosure. Section 24(c), Rule 130 of the Rules of Evidence quoted above is about non-disclosure of
privileged matters.

2. It is of course possible to treat Josielene's motion for the issuance of a subpoena duces tecum covering
the hospital records as a motion for production of documents, a discovery procedure available to a litigant
prior to trial. Section 1, Rule 27 of the Rules of Civil Procedure provides:
SEC. 1. Motion for production or inspection; order. Upon motion of any party showing good cause
therefor, the court in which an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving party, of any designated
documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged,
which constitute or contain evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon designated land or other
property in his possession or control for the purpose of inspecting, measuring, surveying, or
photographing the property or any designated relevant object or operation thereon. The order shall
specify the time, place and manner of making the inspection and taking copies and photographs, and may
prescribe such terms and conditions as are just. (Emphasis supplied)

But the above right to compel the production of documents has a limitation: the documents to be
disclosed are "not privileged."

Josielene of course claims that the hospital records subject of this case are not privileged since it is the
"testimonial" evidence of the physician that may be regarded as privileged. Section 24(c) of Rule 130
states that the physician "cannot in a civil case, without the consent of the patient, be examined"
regarding their professional conversation. The privilege, says Josielene, does not cover the hospital
records, but only the examination of the physician at the trial.

To allow, however, the disclosure during discovery procedure of the hospital records the results of tests
that the physician ordered, the diagnosis of the patient's illness, and the advice or treatment he gave him
would be to allow access to evidence that is inadmissible without the patient's consent. Physician
memorializes all these information in the patient's records. Disclosing them would be the equivalent of
compelling the physician to testify on privileged matters he gained while dealing with the patient, without
the latter's prior consent.

3. Josielene argues that since Johnny admitted in his answer to the petition before the RTC that he had
been confined in a hospital against his will and in fact attached to his answer a Philhealth claim form
covering that confinement, he should be deemed to have waived the privileged character of its records.
Josielene invokes Section 17, Rule 132 of the Rules of Evidence that provides:

SEC. 17. When part of transaction, writing or record given in evidence, the remainder admissible. When
part of an act, declaration, conversation, writing or record is given in evidence by one party, the whole of
the same subject may be inquired into by the other, and when a detached act, declaration, conversation,
writing or record is given in evidence, any other act, declaration, conversation, writing or record necessary
to its understanding may also be given in evidence.

But, trial in the case had not yet begun. Consequently, it cannot be said that Johnny had already presented
the Philhealth claim form in evidence, the act contemplated above which would justify Josielene into
requesting an inquiry into the details of his hospital confinement. Johnny was not yet bound to adduce
evidence in the case when he filed his answer. Any request for disclosure of his hospital records would
again be premature.

For all of the above reasons, the CA and the RTC were justified in denying Josielene her request for the
production in court of Johnny's hospital records.
ACCORDINGLY, the Court DENIES the petition and AFFIRMS the Decision of the Court of Appeals in CA-
G.R. SP 97913 dated September 17, 2007.

SO ORDERED.

Regala vs SB

SUMMARY:
Petitioners are partners of the ACCRA Law Firm. One of their clients (allegedly Eduardo Cojuangco)
engaged them to organize corporations and serve as nominees of the client. The PCGG filed a case for
recovery of ill-gotten wealth against Cojuangco. The PCGG allege that the numerous corporations
(including the ones organized by the petitioners for their unnamed client) were organized to serve as
conduit for ill-gotten wealth of Cojuangco and President Marcos. The PCGG impleaded the petitioners as
defendants in the case against Cojuangco. They will only be dropped as defendants if they (1) disclose the
identity of their clients; (2) submit documents substantiating the lawyer-client relationship; and (3) submit
the deeds of assignments that petitioners executed in favor of their clients covering their respective
shareholdings. The petitioners refused to give in to the conditions invoking attorney-client privilege. The
SC agreed with the petitioners and held that the general rule in our jurisdiction as well as in the United
States is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of his client.
There are three principal exceptions to the general rule: (1) where a strong probability exists that revealing
the client’s name would implicate that client in the very activity for which he sought the lawyer’s advice,
(2) where disclosure would open the client to civil liability, and (3) where the government’s lawyers have
no case against an attorney’s client unless, by revealing the client’s name, the said name would furnish
the only link that would form the chain of testimony necessary to convict an individual of a crime, the
client’s name is privileged. The first and third exception applies in this case.

DOCTRINES:
Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of
the privilege when the client’s name itself has an independent significance, such that disclosure would
then reveal client confidences.

The logical nexus between name and nature of transaction is so intimate in this case that it would be
difficult to simply dissociate one from the other. In this sense, the name is as much “communication” as
information revealed directly about the transaction in question itself, a communication which is clearly
and distinctly privileged. A lawyer cannot reveal such communication without exposing himself to charges
of violating a principle which forms the bulwark of the entire attorney-client relationship.

FACTS:
The matters raised herein are an offshoot of the institution of the Complaint on before the Sandiganbayan
by the Republic of the Philippines, through the Presidential Commission on Good Government against
Eduardo M. Cojuangco, Jr., as one of the principal defendants, for the recovery of alleged ill-gotten wealth,
which includes shares of stocks in the named corporations in PCGG Case No. 33.

Among the defendants named in the case are herein petitioners and herein private respondent Raul S.
Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices
(ACCRA Law Firm).
ACCRA Law Firm performed legal services for its clients, which included, among others, the organization
and acquisition of business associations and/or organizations, with the correlative and incidental services
where its members acted as incorporators, or simply, as stockholders. More specifically, in the
performance of these services, the members of the law firm delivered to its client documents which
substantiate the client’s equity holdings, i.e., stock certificates endorsed in blank representing the shares
registered in the client’s name, and a blank deed of trust or assignment covering said shares.

In the course of their dealings with their clients, the members of the law firm acquire information relative
to the assets of clients as well as their personal and business circumstances.

As members of the ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they
assisted in the organization and acquisition of the companies included in Civil Case No. 0033, and in
keeping with the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations
involved in sequestration proceedings.

Respondent Presidential PCGG filed a “Motion to Admit Third Amended Complaint” and “Third Amended
Complaint” which excluded private respondent Raul S. Roco from the complaint in PCGG Case No. 33 as
party-defendant.

Respondent PCGG based its exclusion of private respondent Roco as party-defendant on his undertaking
that he will reveal the identity of the principal/s for whom he acted as nominees/stockholder in the
companies involved in PCGG Case No. 33.

Petitioners ACCRA lawyers subsequently filed their Opposition with Counter-Motion that respondent
PCGG similarly grant the same treatment to them as accorded private respondent Roco.

Respondent PCGG set the following conditions precedent for the exclusion of petitioners, (a) the
disclosure of the identity of its clients; (b) submission of documents substantiating the lawyer-client
relationship; and (c) the submission of the deeds of assignments petitioners executed in favor of its clients
covering their respective shareholdings.

Respondent Sandiganbayan denied the exclusion of petitioners in PCGG Case No. 33, for their refusal to
comply with the conditions required by respondent PCGG. ACCRA lawyers may take the heroic stance of
not revealing the identity of the client for whom they have acted, i.e., their principal, and that will be their
choice. But until they do identify their clients, considerations of whether or not the privilege claimed by
the ACCRA lawyers exists cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves
from the consequences of their acts until they have begun to establish the basis for recognizing the
privilege; the existence and identity of the client.

ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied by the
respondent Sandiganbayan. Hence, the ACCRA lawyers filed this petition for certiorari.

ISSUE:
Whether or not, under the peculiar facts of this case, the attorney-client privilege includes the identity of
the clients? (YES)
RATIO:
The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio
operarum (contract of lease of services) and mandato (contract of agency). In modern day perception of
the lawyer-client relationship, an attorney is more than a mere agent or servant, because he possesses
special powers of trust and confidence reposed on him by his client. A lawyer is also as independent as
the judge of the court, thus his powers are entirely different from and superior to those of an ordinary
agent. Moreover, an attorney also occupies what may be considered as a “quasi-judicial office” since he
is in fact an officer of the Court and exercises his judgment in the choice of courses of action to be taken
favorable to his client.Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct
and duties that breathe life into it, among those, the fiduciary duty to his client which is of a very delicate,
exacting and confidential character, requiring a very high degree of fidelity and good faith, that is required
by reason of necessity and public interest based on the hypothesis that abstinence from seeking legal
advice in a good cause is an evil which is fatal to the administration of justice.

LEGAL BASES OF THE PRIVILEGE

(1) Passed on into various provisions of the Rules of Court, the attorney-client privilege, as currently
worded provides: Rule 130, Sec. 24. Disqualification by reason of privileged communication.—The
following persons cannot testify as to matters learned in confidence in the following cases: x x x An
attorney cannot, without the consent of his client, be examined as to any communication made by the
client to him, or his advice given thereon in the course of, or with a view to, professional employment,
can an attorney’s secretary, stenographer, or clerk be examined, without the consent of the client and his
employer, concerning any fact the knowledge of whichhas been acquired in such capacity.

(2) Further, Rule 138 of the Rules of Court, Section 20 states: It is the duty of an attorney: (e) to maintain
inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept
no compensation in connection with his client’s business except from him or with his knowledge and
approval.

(3) This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides
that: A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence
reposed in him.

(4) Canon 15 of the Canons of Professional Ethics also demands a lawyer’s fidelity to client.

(5) In the constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to
the accused, the right to counsel. If the price of disclosure is too high, or if it amounts to self-incrimination,
then the flow of information would be curtailed thereby rendering the right practically nugatory.

GENERAL RULE: A LAWYER MAY NOT INVOKE THE PRIVILEGE AND REFUSE TO DIVULGE THE NAME OR
IDENTITY OF HIS CLIENT
As a matter of public policy, a client’s identity should not be shrouded in mystery. Under this premise, the
general rule in our jurisdiction as well as in the United States is that a lawyer may not invoke the privilege
and refuse to divulge the name or identity of his client. The reasons advanced for the general rule are well
established.
First, the court has a right to know that the client whose privileged information is sought to be protected
is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationship has been established. The
attorney-client privilege does not attach until there is a client.

Third, the privilege generally pertains to the subject matter of the relationship.

Finally, due process considerations require that the opposing party should, as a general rule, know his
adversary. A party suing or sued is entitled to know who his opponent is. He cannot be obliged to grope
in the dark against unknown forces.

FIRST EXCEPTION: WHERE A STRONG PROBABILITY EXISTS THAT REVEALING THE CLIENT’S NAME WOULD
IMPLICATE THAT CLIENT IN THE VERY ACTIVITY FOR WHICH HE SOUGHT THE LAWYER’S ADVICE.
In Ex-Parte Enzor, the unidentified client, an election official, informed his attorney in confidence that he
had been offered a bribe to violate election laws or that he had accepted a bribe to that end. The lawyer
was cited for contempt for her refusal to reveal his client’s identity before a grand jury. Reversing the
lower court’s contempt orders, the state supreme court held that under the circumstances of the case,
and under the exceptions described above, even the name of the client was privileged.

U.S. v. Hodge and Zweig involved federal grand jury proceedings inquiring into the activities of the
“Sandino Gang,” a gang involved in the illegal importation of drugs in the United States. The respondents,
law partners, represented key witnesses and suspects including the leader of the gang, Joe Sandino. In
connection with a tax investigation, the IRS issued summons to Hodge and Zweig, requiring them to
produce documents and information regarding payment received by Sandino on behalf of any other
person, and vice versa. The lawyers refused to divulge the names. The Ninth Circuit of the United States
Court of Appeals, upholding non-disclosure under the facts and circumstances of the case. In order to
promote freedom of consultation of legal advisors by clients, the apprehension of compelled disclosure
from the legal advisors must be removed; hence, the law must prohibit such disclosure except on the
client’s consent.

SECOND EXCEPTION: WHERE DISCLOSURE WOULD OPEN THE CLIENT TO CIVIL LIABILITY.
In Neugass v. Terminal Cab Corporation, Neugass, the plaintiff, suffered injury when the taxicab she was
riding, owned by respondent corporation, collided with a second taxicab, whose owner was unknown.
Plaintiff brought action both against defendant corporation and the owner of the second cab, identified
in the information only as John Doe. It turned out that when the attorney of defendant corporation
appeared on preliminary examination, the fact was somehow revealed that the lawyer came to know the
name of the owner of the second cab when a man, a client of the insurance company, prior to the
institution of legal action, came to him and reported that he was involved in a car accident. It was apparent
under the circumstances that the man was the owner of the second cab. The New York Supreme Court
allowed the lawyer’s claim to the effect that he could not reveal the name of his client because this would
expose the latter to civil litigation.

In the case of Matter of Shawmut Mining Company, the lawyer involved was required by a lower court to
disclose whether he represented certain clients in a certain transaction. The purpose of the court’s
request was to determine whether the unnamed persons as interested parties were connected with the
purchase of properties involved in the action. The lawyer refused and brought the question to the State
Supreme Court. Upholding the lawyer’s refusal to divulge the names of his clients the court held:

If it can compel the witness to state, as directed by the order appealed from, that he represented certain
persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their
version of the litigation.

THIRD EXCEPTION: THE NAME WOULD FURNISH THE ONLY LINK THAT WOULD FORM THE CHAIN OF
TESTIMONY NECESSARY TO CONVICT AN INDIVIDUAL OF A CRIME, THE CLIENT’S NAME IS PRIVILEGED.
In Baird vs. Korner, a lawyer was consulted by the accountants and the lawyer of certain undisclosed
taxpayers regarding steps to be taken to place the undisclosed taxpayers in a favorable position in case
criminal charges were brought against them by the U.S. Internal Revenue Service (IRS). No investigation
was then being undertaken by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers
delivered to Baird the sum of $12,706.85, which had been previously assessed as the tax due, and another
amount of money representing his fee for the advice given. Baird then sent a check for $12,706.85 to the
IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his clients. The IRS
demanded that Baird identify the lawyers, accountants, and other clients involved. The Ninth Circuit Court
of Appeals held that Baird could not be forced to reveal the names of clients who employed him. The
court emphasized the exception that a client’s name is privileged when so much has been revealed
concerning the legal services of the client’s identity exposes him to possible investigation and sanction by
government agencies. The Court held:

The voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or
penalties are due than the sum previously paid, if any. It indicates a feeling of guilt for non-payment of
taxes, though whether it is criminal guilt is undisclosed. But it may well be the link that could form the
chain of testimony necessary to convict an individual of a federal crime.

FIRST AND THIRD EXCEPTIONS ARE APPLICABLE IN THIS CASE

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that
the instant case falls under at least two exceptions to the general rule.

First, disclosure of the alleged client’s name would lead to establish said client’s connection with the very
fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects
the subject matter or the substance (without which there would be no attorney-client relationship).

The key lies in the three specific conditions laid down by the PCGG which constitutes petitioners’ ticket to
non-prosecution should they accede thereto:

(1) the disclosure of the identity of its clients;

(2) submission of documents substantiating the lawyer-client relationship; and
(3) the submission of the deeds of assignment petitioners executed in favor of their clients covering their
respective shareholdings.

From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the
petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and
set-up of the corporations in question. In turn, petitioners gave their professional advice in the form of,
among others, the aforementioned deeds of assignment covering their clients’ shareholdings.

There is no question that the preparation of the aforestated documents was part and parcel of petitioners’
legal service to their clients. More important, it constituted an integral part of their duties as lawyers.
Petitioners, therefore, have a legitimate fear that identifying their clients would implicate them in the very
activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the
aforementioned corporations.

Furthermore, under the third main exception, revelation of the client’s name would obviously provide the
necessary link for the prosecution to build its case, where none otherwise exists. It is the link, in the words
of Baird, that would inevitably form the chain of testimony necessary to convict the (client) of a crime.

DISPOSITIVE:
WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division)
are hereby ANNULLED and SET ASIDE. Respondent Sandiganbayan is further ordered to exclude
petitioners as parties-defendants in SB Civil Case No. 33.

LEE v CA, GR No. 177861

LEE v CA, GR No. 177861

Facts:

The stepmother of the Petitioner is being requested to testify against her in a special proceeding for the
deletion from the certificate of live birth of the petitioner Emma Lee, one of Lee’s other children, the
name Keh and replace the same with the name Tiu to indicate her true mother’s name.

Issue:

Whether or not the stepmother can properly invoke Section 25 Rule 30 of the Rules of Court which reads:

SECTION 25. Parental and filial privilege.- No person may be compelled to testify against his parents, other
direct ascendants, children or other direct descendants.

Ruling:

No, the stepmother cannot invoke.

The privilege cannot apply to them because the rule applies only to “direct” ascendants and descendants,
a family tie connected by a common ancestry. A stepdaughter has no common ancestry by her
stepmother.

639 Phil. 78

ABAD, J.:
This case is about the grounds for quashing a subpoena ad testificandum and a parent's right not to testify
in a case against his children.

The Facts and the Case

Spouses Lee Tek Sheng (Lee) and Keh Shiok Cheng (Keh) entered the Philippines in the 1930s as immigrants
from China. They had 11 children, namely, Rita K. Lee, Leoncio K. Lee, Lucia K. Lee-Ong, Julian K. Lee,
Martin K. Lee, Rosa Lee-Vanderlek, Melody Lee-Chin, Henry K. Lee, Natividad Lee-Miguel, Victoriano K.
Lee, and Thomas K. Lee (collectively, the Lee-Keh children).

In 1948, Lee brought from China a young woman named Tiu Chuan (Tiu), supposedly to serve as
housemaid. The respondent Lee-Keh children believe that Tiu left the Lee-Keh household, moved into
another property of Lee nearby, and had a relation with him.

Shortly after Keh died in 1989, the Lee-Keh children learned that Tiu's children with Lee (collectively, the
Lee's other children) claimed that they, too, were children of Lee and Keh. This prompted the Lee-Keh
children to request the National Bureau of Investigation (NBI) to investigate the matter. After conducting
such an investigation, the NBI concluded in its report:

[I]t is very obvious that the mother of these 8 children is certainly not KEH SHIOK CHENG, but a much
younger woman, most probably TIU CHUAN. Upon further evaluation and analysis by these Agents, LEE
TEK SHENG is in a quandary in fixing the age of KEH SHIOK CHENG possibly to conform with his grand
design of making his 8 children as their own legitimate children, consequently elevating the status of his
second family and secure their future. The doctor lamented that this complaint would not have been
necessary had not the father and his second family kept on insisting that the 8 children are the legitimate
children of KEH SHIOK CHENG.[1]

The NBI found, for example, that in the hospital records, the eldest of the Lee's other children, Marcelo
Lee (who was recorded as the 12th child of Lee and Keh), was born of a 17-year-old mother, when Keh
was already 38 years old at the time. Another of the Lee's other children, Mariano Lee, was born of a 23-
year-old mother, when Keh was then already 40 years old, and so forth. In other words, by the hospital
records of the Lee's other children, Keh's declared age did not coincide with her actual age when she
supposedly gave birth to such other children, numbering eight.

On the basis of this report, the respondent Lee-Keh children filed two separate petitions, one of them
before the Regional Trial Court (RTC) of Caloocan City[2] in Special Proceeding C-1674 for the deletion
from the certificate of live birth of the petitioner Emma Lee, one of Lee's other children, the name Keh
and replace the same with the name Tiu to indicate her true mother's name.

In April 2005 the Lee-Keh children filed with the RTC an ex parte request for the issuance of a subpoena
ad testificandum to compel Tiu, Emma Lee's presumed mother, to testify in the case. The RTC granted
the motion but Tiu moved to quash the subpoena, claiming that it was oppressive and violated Section
25, Rule 130 of the Rules of Court, the rule on parental privilege, she being Emma Lee's stepmother.[3]
On August 5, 2005 the RTC quashed the subpoena it issued for being unreasonable and oppressive
considering that Tiu was already very old and that the obvious object of the subpoena was to badger her
into admitting that she was Emma Lee's mother.
Because the RTC denied the Lee-Keh children's motion for reconsideration, they filed a special civil action
of certiorari before the Court of Appeals (CA) in CA-G.R. SP 92555. On December 29, 2006 the CA rendered
a decision,[4] setting aside the RTC's August 5, 2005 Order. The CA ruled that only a subpoena duces
tecum, not a subpoena ad testificandum, may be quashed for being oppressive or unreasonable under
Section 4, Rule 21 of the Rules of Civil Procedure. The CA also held that Tiu's advanced age alone does not
render her incapable of testifying. The party seeking to quash the subpoena for that reason must prove
that she would be unable to withstand the rigors of trial, something that petitioner Emma Lee failed to
do.

Since the CA denied Emma Lee's motion for reconsideration by resolution of May 8, 2007,[5] she filed the
present petition with this Court.

The Question Presented

The only question presented in this case is whether or not the CA erred in ruling that the trial court may
compel Tiu to testify in the correction of entry case that respondent Lee-Keh children filed for the
correction of the certificate of birth of petitioner Emma Lee to show that she is not Keh's daughter.

The Ruling of the Court

Petitioner Emma Lee claims that the RTC correctly quashed the subpoena ad testificandum it issued
against Tiu on the ground that it was unreasonable and oppressive, given the likelihood that the latter
would be badgered on oral examination concerning the Lee-Keh children's theory that she had illicit
relation with Lee and gave birth to the other Lee children.

But, as the CA correctly ruled, the grounds cited--unreasonable and oppressive--are proper for subpoena
ad duces tecum or for the production of documents and things in the possession of the witness, a
command that has a tendency to infringe on the right against invasion of privacy. Section 4, Rule 21 of the
Rules of Civil Procedure, thus provides:

SECTION 4. Quashing a subpoena. -- The court may quash a subpoena duces tecum upon motion promptly
made and, in any event, at or before the time specified therein if it is unreasonable and oppressive, or the
relevancy of the books, documents or things does not appear, or if the person in whose behalf the
subpoena is issued fails to advance the reasonable cost of the production thereof.

Notably, the Court previously decided in the related case of Lee v. Court of Appeals[6] that the Lee-Keh
children have the right to file the action for correction of entries in the certificates of birth of Lee's other
children, Emma Lee included. The Court recognized that the ultimate object of the suit was to establish
the fact that Lee's other children were not children of Keh. Thus:

It is precisely the province of a special proceeding such as the one outlined under Rule 108 of the Revised
Rules of Court to establish the status or right of a party, or a particular fact. The petitions filed by private
respondents for the correction of entries in the petitioners' records of birth were intended to establish
that for physical and/or biological reasons it was impossible for Keh Shiok Cheng to have conceived and
given birth to the petitioners as shown in their birth records. Contrary to petitioners' contention that the
petitions before the lower courts were actually actions to impugn legitimacy, the prayer therein is not to
declare that petitioners are illegitimate children of Keh Shiok Cheng, but to establish that the former are
not the latter's children. There is nothing to impugn as there is no blood relation at all between Keh Shiok
Cheng and petitioners.[7] (Underscoring supplied)

Taking in mind the ultimate purpose of the Lee-Keh children's action, obviously, they would want Tiu to
testify or admit that she is the mother of Lee's other children, including petitioner Emma Lee. Keh had
died and so could not give testimony that Lee's other children were not hers. The Lee-Keh children have,
therefore, a legitimate reason for seeking Tiu's testimony and, normally, the RTC cannot deprive them of
their right to compel the attendance of such a material witness.

But petitioner Emma Lee raises two other objections to requiring Tiu to come to court and testify: a)
considering her advance age, testifying in court would subject her to harsh physical and emotional
stresses; and b) it would violate her parental right not to be compelled to testify against her stepdaughter.

1. Regarding the physical and emotional punishment that would be inflicted on Tiu if she were compelled
at her age and condition to come to court to testify, petitioner Emma Lee must establish this claim to the
satisfaction of the trial court. About five years have passed from the time the Lee-Keh children sought the
issuance of a subpoena for Tiu to appear before the trial court. The RTC would have to update itself and
determine if Tiu's current physical condition makes her fit to undergo the ordeal of coming to court and
being questioned. If she is fit, she must obey the subpoena issued to her.

Tiu has no need to worry that the oral examination might subject her to badgering by adverse counsel.
The trial court's duty is to protect every witness against oppressive behavior of an examiner and this is
especially true where the witness is of advanced age.[8]

2. Tiu claimed before the trial court the right not to testify against her stepdaughter, petitioner Emma
Lee, invoking Section 25, Rule 130 of the Rules of Evidence, which reads:

SECTION 25. Parental and filial privilege.- No person may be compelled to testify against his parents, other
direct ascendants, children or other direct descendants.

The above is an adaptation from a similar provision in Article 315 of the Civil Code that applies only in
criminal cases. But those who revised the Rules of Civil Procedure chose to extend the prohibition to all
kinds of actions, whether civil, criminal, or administrative, filed against parents and other direct
ascendants or descendants.

But here Tiu, who invokes the filial privilege, claims that she is the stepmother of petitioner Emma Lee.
The privilege cannot apply to them because the rule applies only to "direct" ascendants and descendants,
a family tie connected by a common ancestry. A stepdaughter has no common ancestry by her
stepmother. Article 965 thus provides:

Art. 965. The direct line is either descending or ascending. The former unites the head of the family with
those who descend from him. The latter binds a person with those from whom he descends.

Consequently, Tiu can be compelled to testify against petitioner Emma Lee.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision and resolution of the Court of
Appeals in CA-G.R. SP 92555.
SO ORDERED.

G.R. No. 131636. March 5, 2003]

PEOPLE OF THE PHILIPPINES, appellee, vs. ARTEMIO INVENCION y SORIANO, Appellant.

DECISION

DAVIDE, JR., C.J.:

Before us for automatic review1 is the Decision2 dated 22 September 1997 of the Regional Trial Court of
Tarlac, Tarlac, Branch 65, in Criminal Case No. 9375, finding accused-appellant Artemio Invencion y
Soriano guilty beyond reasonable doubt of the crime of rape committed against his 16-year-old daughter
Cynthia P. Invencion, and sentencing him to suffer the penalty of death and to pay Cynthia the sum of
P50,000 as moral damages and P25,000 as exemplary damages, as well as the costs of suit.

Artemio was charged before the Regional Trial Court of Tarlac with thirteen counts of rape in separate
complaints docketed as Criminal Cases Nos. 9363 to 9375, all dated 17 October 1996. The cases were
consolidated and jointly tried. At his arraignment Artemio entered a plea of not guilty in each case.

The witnesses presented by the prosecution in its evidence in chief were Elven Invencion, Eddie Sicat,
Gloria Pagala, Dr. Rosario Fider, and Atty. Florencio Canlas. Presented as rebuttal witnesses were Gloria
Pagala and Celestino Navarro.

Elven Invencion, an 8-year-old grade two pupil of Sapang Tagalog Elementary School in Tarlac, Tarlac,
testified that he is a half-brother of Cynthia and son of Artemio with his second common-law wife.
Sometime before the end of the school year in 1996, while he was sleeping in one room with his father
Artemio, Cynthia, and two other younger brothers, he was awakened by Cynthias loud cries. Looking
towards her, he saw his father on top of Cynthia, doing a pumping motion. After about two minutes, his
father put on his short pants.3cräläwvirtualibräry

Elven further declared that Artemio was a very strict and cruel father and a drunkard. He angrily prohibited
Cynthia from entertaining any of her suitors. Whenever he was drunk, he would maul Elven and quarrel
with his stepfather, Celestino Navarro.4cräläwvirtualibräry

Eddie Sicat, a 40-year-old farmer and neighbor of Artemio in Barangay Sapang Tagalog, Tarlac, Tarlac,
testified that on the second week of March 1996, between 6:00 and 7:00 a.m., while he was passing by
the house of Artemio on his way to the field to catch fish, he heard somebody crying. He then peeped
through a small opening in the destroyed portion of the sawali wall of Artemios house. He saw Cynthia
lying on her back and crying, while her father was on top of her, doing a pumping motion. Eddie observed
them for about fifteen seconds, and then he left and proceeded to the field to catch fish.5 He reported
what he had witnessed to Artemios stepfather, Celestino, later that morning.6cräläwvirtualibräry

Gloria Pagala, the mother of Cynthia and former common-law wife of Artemio, testified that she and
Artemio started living together in Guimba, Nueva Ecija, in February 1969. Out of their common-law
relationship, they had six children, one of whom was Cynthia. In March 1982, she and Artemio parted
ways permanently. Later, Gloria and her children lived in Pura, Tarlac. When Artemios mother died
sometime in 1996, Cynthia lived with Artemio in a small one-room dwelling owned by Celestino and
located in Barangay Sapang Tagalog, Tarlac, Tarlac.7 On 30 August 1996, her son Novelito told her that
Cynthia was pregnant. Gloria then went to the house of Artemio and asked Cynthia about her condition.
The latter confessed that she had been sexually abused by her father. Gloria then went to the office of
the National Bureau of Investigation (NBI) in Tarlac and reported what Artemio had done to their daughter
Cynthia.8cräläwvirtualibräry

Dr. Rosario Fider of Tarlac Provincial Hospital testified that she examined Cynthia on 16 September 1996.
She found Cynthia to be five to six months pregnant and to have incomplete, healed hymenal lacerations
at 3, 5, 8 oclock positions, which could have been caused by sexual intercourse or any foreign body
inserted in her private part.9cräläwvirtualibräry

Atty. Florencio Canlas, an NBI agent, testified that on 18 September 1996, Cynthia, accompanied by her
mother, complained before him and NBI Supervising Agent Rolando Vergara that she was raped by her
father Artemio. She then executed a written statement,10 which she subscribed and sworn to before Atty.
Canlas.11cräläwvirtualibräry

The defense did not present Artemio as a witness. Instead, his counsel de parte, Atty. Isabelo Salamida,
took the witness stand and testified for the defense. He declared that on 24 June 1997 (the same day
when he testified before the court), between 10:45 and 11:00 a.m., he and his secretary went to the house
of Artemio in Barangay Sapang Tagalog. The hut was made of sawali. Its door was padlocked, and its
windows were shut. When he went around the house and tried to peep through the old sawali walls on
the front and left and right sides of the hut, he could not see anything inside the room where Artemio and
his children used to sleep. Although it was then about noontime, it was dark inside.12 Atty. Salamida then
concluded that prosecution witness Eddie Sicat was not telling the truth when he declared having seen
what Artemio did to Cynthia when he peeped through a small opening in the sawali wall of the house in
the early morning sometime on the second week of March 1996.

On rebuttal, Gloria Pagala testified that the house where Artemio used to live was a small hut with some
destroyed portions in its sawali walls. When she went there to visit her children sometime in December
1995, there was a hole in front and at the sidewall of the hut facing a vacant lot where people passed by
to fish in a nearby brook.13 When she went to the place again sometime in September 1996 after she was
informed of Cynthias pregnancy, she noticed that the destroyed portions of the huts sawali walls were
not yet repaired.14cräläwvirtualibräry

The second rebuttal witness Celestino Navarro, stepfather of Artemio, testified that he is the owner of
the small house where Artemio and his children used to reside. At the time that Artemio and his children,
including Cynthia, were living in that house, the huts old sawali walls had some small holes in them, thus
confirming the testimony of Eddie Sicat. After Artemio was arrested on the basis of Cynthias complaint
before the NBI, Celestino made some repairs in the hut by, among other things, placing galvanized iron
sheets to cover the holes at the destroyed portions of the sawali walls. Thereafter, a person named Alvin
occupied the house.15cräläwvirtualibräry

In its Decision of 22 September 1997, the trial court convicted Artemio in Criminal Case No. 9375. It,
however, acquitted him in all the other twelve cases for lack of evidence.

In his Appellants Brief, Artemio contends that the trial court erred in

I
... BELIEVING THE TESTIMONIES OF THE PROSECUTION WITNESSES;

II

NOT DISMISSING THIS CASE FOR FAILURE OF THE PROSECUTION TO PROVE [HIS] GUILT BEYOND
REASONABLE DOUBT.

Artemio attacks the competency and credibility of Elven as a witness. He argues that Elven, as his son,
should have been disqualified as a witness against him under Section 20(c), Rule 130 of the Rules of
Court.16 Besides, Elvens testimony appears not to be his but what the prosecution wanted him to say, as
the questions asked were mostly leading questions. Moreover, Elven had ill-motive in testifying against
him, as he (Artemio) was cruel to him.

In another attempt to cast doubt on the credibility of the prosecution witnesses, Artemio points to the
following inconsistencies in their testimonies: (1) as to the time of the commission of the crime, Elven
testified having seen Artemio on top of his sister one night in March 1996, while Eddie Sicat testified
having seen them in the same position between 6:00 and 7:00 a.m. in the second week of March 1996;
(2) as to the residence of Cynthia in 1996, Gloria testified that the former was living with her in Guimba
from November 1995 to September 1996, while Elven and Eddie declared that she was in Sapang Tagalog
in March 1996; and (3) as to the residence of Artemio, Jr., Gloria stated that he was living with the
appellant, but later she declared that he was living with her in Pura.

Artemio also argues that since his house had no electricity and was dark even at daytime, it was impossible
for Elven and Eddie to see him allegedly doing pumping motion on top of Cynthia. In his Reply Brief, he
likewise urges us to disregard the testimonies of rebuttal witnesses Celestino and Gloria. According to
him, Celestino had an ax to grind against him (Artemio) because he had been badgering Celestino for his
share of the lot where the hut stands, which was owned by Artemios deceased mother. On the other
hand, Gloria wanted to get rid of Artemio because she was already cohabiting with another man.

In the Appellees Brief, the Office of the Solicitor General (OSG) prays for the affirmation of Artemios
conviction and sentence, but recommends that a civil indemnity in the amount of P75,000 be awarded in
addition to the awards of moral and exemplary damages.

We find no cogent reason to overturn the findings of the trial court on the culpability of Artemio.

It is doctrinally settled that the factual findings of the trial court, especially on the credibility of the
witnesses, are accorded great weight and respect and will not be disturbed on appeal. This is so because
the trial court has the advantage of observing the witnesses through the different indicators of
truthfulness or falsehood, such as the angry flush of an insisted assertion, the sudden pallor of a
discovered lie, the tremulous mutter of a reluctant answer, the forthright tone of a ready reply, the furtive
glance, the blush of conscious shame, the hesitation, the yawn, the sigh, the candor or lack of it, the scant
or full realization of the solemnity of an oath, or the carriage and mien.17 This rule, however, admits of
exceptions, as where there exists a fact or circumstance of weight and influence that has been ignored or
misconstrued by the court, or where the trial court has acted arbitrarily in its appreciation of the facts.18
We do not find any of these exceptions in the case at bar.
As to the competency of Elven to testify, we rule that such is not affected by Section 25, Rule 130 of the
Rules of Court,19 otherwise known as the rule on filial privilege. This rule is not strictly a rule on
disqualification because a descendant is not incompetent or disqualified to testify against an ascendant.20
The rule refers to a privilege not to testify, which can be invoked or waived like other privileges. As
correctly observed by the lower court, Elven was not compelled to testify against his father; he chose to
waive that filial privilege when he voluntarily testified against Artemio. Elven declared that he was
testifying as a witness against his father of his own accord and only to tell the truth.21cräläwvirtualibräry

Neither can Artemio challenge the prosecutions act of propounding leading questions on Elven. Section
10(c) of Rule 132 of the Rules of Court22 expressly allows leading questions when the witness is a child of
tender years like Elven.

The alleged ulterior motive of Elven in testifying against his father also deserves scant consideration. Such
insinuation of ill-motive is too lame and flimsy. As observed by the OSG, Elven, who was of tender age,
could not have subjected himself to the ordeal of a public trial had he not been compelled by a motive
other than to bring to justice the despoiler of his sisters virtue. There is no indication that Elven testified
because of anger or any ill-motive against his father, nor is there any showing that he was unduly
pressured or influenced by his mother or by anyone to testify against his father. The rule is that where
there is no evidence that the principal witness for the prosecution was actuated by improper motive, the
presumption is that he was not so actuated and his testimony is entitled to full
credence.23cräläwvirtualibräry

We find as inconsequential the alleged variance or difference in the time that the rape was committed,
i.e., during the night as testified to by Elven, or between 6:00 and 7:00 a.m. per the testimony of Eddie.
The exact time or date of the commission of rape is not an element of the crime. What is decisive in a rape
charge is that the commission of the rape by the accused has been sufficiently proved. Inconsistencies
and discrepancies as to minor matters irrelevant to the elements of the crime cannot be considered
grounds for acquittal.24 In this case, we believe that the crime of rape was, indeed, committed as testified
to by Elven and Eddie.

The alleged inconsistencies in the testimonies of both Elven and Gloria do not impair the credibility of
these witnesses. We agree with the trial court that they are minor inconsistencies, which do not affect
the credibility of the witnesses. We have held in a number of cases that inconsistencies in the testimonies
of witnesses that refer to minor and insignificant details do not destroy the witnesses credibility.25 On
the contrary, they may even be considered badges of veracity or manifestations of truthfulness on the
material points in the testimonies. What is important is that the testimonies agree on essential facts and
substantially corroborate a consistent and coherent whole.26cräläwvirtualibräry

Artemios allegation that it was impossible for both Elven and Eddie to have seen and witnessed the crime
because the room was dark even at daytime was convincingly disputed by rebuttal witnesses Gloria Pagala
and Celestino Navarro. Furthermore, as observed by the OSG, even if the hut was without electricity, Elven
could not have been mistaken in his identification of Artemio because he had known the latter for a long
time. Moreover, Elven was at the time only two meters away from Cynthia and Artemio. Even without
sufficient illumination, Elven, who was jostled out of his sleep by Cynthias loud cry, could observe the
pumping motion made by his father.27cräläwvirtualibräry

The alleged ill-motives on the part of Gloria and Celestino were not sufficiently proved. Nothing in the
records suggests any reason that would motivate Gloria to testify falsely against Artemio, who is the father
of her other children. Moreover, we have repeatedly held that no mother would subject her child to the
humiliation, disgrace, and trauma attendant to the prosecution for rape if she were not motivated solely
by the desire to have the person responsible for her childs defilement incarcerated.28 As for Celestino,
he testified that the lot where the hut stands is owned by his daughter Erlinda, and not by Artemios
mother.29 At any rate, even without Celestinos testimony, Artemios conviction would stand.

The remaining issue for our resolution is the correctness of the penalty of death imposed by the trial court.
The death penalty was imposed because of the trial courts appreciation of the special qualifying
circumstances that Artemio is the father of the victim and the latter was less than 18 years old at the time
the crime was committed.

Article 335 of the Revised Penal Code, as amended by R.A. No. 7659, which is the governing law in this
case, pertinently reads:

Article 335. When and how rape is committed.

The crime of rape shall be punished by reclusion perpetua.

...

The death penalty shall also be imposed if the crime of rape is committed with any of the following
circumstances:

1. when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, step-
parent, guardian, relative by consanguinity or affinity within the third civil degree, or the common-law
spouse of the parent of the victim.

To justify the imposition of the death penalty in a rape committed by a father on a daughter, the minority
of the victim and her relationship with the offender, which are special qualifying circumstances, must be
alleged in the complaint or information and proved by the prosecution during the trial by the quantum of
proof required for conviction. The accusatory portion of the complaint in Criminal Case No. 9375 reads as
follows:

That on or about the month of March 1996 at Sapang Tagalog, Municipality of Tarlac, Province of Tarlac,
Philippines, and within the jurisdiction of this Honorable Court, the said accused Artemio S. Invencion did
then and there willfully, unlawfully and feloniously by using force and intimidation have carnal knowledge
of his daughter Cynthia P. Invencion who was sixteen (16) years old, in their house.

CONTRARY TO LAW.30cräläwvirtualibräry

Although the relationship of Cynthia with her father Artemio was alleged in the complaint and duly
established by evidence during trial, the allegation in the complaint regarding her age was not clearly
proved.

In the very recent case of People v. Pruna,31 we set the guidelines in appreciating age either as an element
of the crime or as a qualifying circumstance:
1. The best evidence to prove the age of the offended party is an original or certified true copy of the
certificate of live birth of such party.

2. In the absence of a certificate of live birth, similar authentic documents such as baptismal certificate
and school records which show the date of birth of the victim would suffice to prove age.

3. If the certificate of live birth or authentic document is shown to have been lost or destroyed or
otherwise unavailable, the testimony, if clear and credible, of the victims mother or a member of the
family either by affinity or consanguinity who is qualified to testify on matters respecting pedigree such
as the exact age or date of birth of the offended party pursuant to Section 40, Rule 130 of the Rules on
Evidence shall be sufficient under the following circumstances:

a. If the victim is alleged to be below 3 years of age and what is sought to be proved is that she is less than
7 years old;

b. If the victim is alleged to be below 7 years of age and what is sought to be proved is that she is less than
12 years old;

c. If the victim is alleged to be below 12 years of age and what is sought to be proved is that she is less
than 18 years old.

4. In the absence of a certificate of live birth, authentic document, or the testimony of the victims mother
or relatives concerning the victims age, the complainants testimony will suffice provided that it is expressly
and clearly admitted by the accused.

5. It is the prosecution that has the burden of proving the age of the offended party. The failure of the
accused to object to the testimonial evidence regarding age shall not be taken against him.

6. The trial court should always make a categorical finding as to the age of the victim.

In the present case, no birth certificate or any similar authentic document was presented and offered in
evidence to prove Cynthias age. The statement in the medical certificate showing Cynthias age is not proof
thereof, since a medical certificate does not authenticate the date of birth of the victim. Moreover,
pursuant to Pruna, Glorias testimony regarding Cynthias age was insufficient, since Cynthia was alleged
to be 16 years old already at the time of the rape and what is sought to be proved is that she was then 18
years old. Moreover, the trial court did not even make a categorical finding on Cynthias minority. Finally,
the silence of Artemio or his failure to object to the testimonial evidence regarding Cynthias age could not
be taken against him.

It must be stressed that the severity of death penalty, especially its irreversible and final nature once
carried out, makes the decision-making process in capital offenses aptly subject to the most exacting rules
of procedure and evidence.32 Accordingly, in the absence of sufficient proof of Cynthias minority, Artemio
cannot be convicted of qualified rape and sentenced to suffer the death penalty. He should only be
convicted of simple rape and meted the penalty of reclusion perpetua.

As regards the civil liability of Artemio, the awards of moral damages in the amount of P50,000 and
exemplary damages in the amount of P25,000 are insufficient. Civil indemnity, which is mandatory upon
the finding of the fact of rape,33 should also be awarded. In simple rape, the civil indemnity for the victim
shall not be less than P50,000.

WHEREFORE, the decision of the Regional Trial Court, Branch 65, Tarlac, Tarlac, in Criminal Case No. 9375
is hereby AFFIRMED with the modification that that accused Artemio Invencion y Soriano is held guilty
beyond reasonable doubt as principal of the crime of simple rape, and is sentenced to suffer the penalty
of reclusion perpetua and to pay the victim Cynthia Invencion the sums of P50,000 as indemnity; P50,000
as moral damages; and P25,000 as exemplary damages.

Costs de oficio.

SO ORDERED.

Facts:

Artemio Invencion was charged before the RTC of Tarlac with thirteen counts of rape committed against
his 16-year-old daughter, Cynthia (his daughter with his first common-law-wife, Gloria Pagala).

During the trial, the prosecution presented Elven Invencion, the son of Artemio with his second common-
law wife. Elven testified that that sometime before the end of the school year in 1996, while he was
sleeping in one room with his father, Cynthia, and two other younger brothers, he was awakened by
Cynthia’s loud cries. Looking towards her, he saw his father on top of Cynthia, doing a pumping motion.

After about two minutes, his father put on his short pants. Elven further testified that Artemio was a very
strict and cruel father and a drunkard. He angrily prohibited Cynthia from entertaining any of her suitors.

The trial court convicted Artemio for one count of rape. Artemio challenges the competency and
credibility of Elven as a witness. He argues that Elven, as his son, should have been disqualified as a witness
against him under pursuant to the rule on filial privilege.

Issue:

Should Elven Invencion be disqualified as a witness pursuant to the rule on filial privilege?

Held:

No. The competency of Elven to testify is not affected by Section 25, Rule 130 of the Rules of Court,
otherwise known as the rule on “filial privilege.” This rule is not strictly a rule on disqualification because
a descendant is not incompetent or disqualified to testify against an ascendant. The rule refers to a
privilege not to testify, which can be invoked or waived like other privileges. As correctly observed by the
lower court, Elven was not compelled to testify against his father; he chose to waive that filial privilege
when he voluntarily testified against Artemio. Elven declared that he was testifying as a witness against
his father of his own accord and only “to tell the truth.” Hence, his testimony is entitled to full credence.
(People vs. Invencion, G.R. No. 131636. March 5, 2003)

Felicito Sanson, et al. vs. Court of Appeals - GR No. 127745 Case Digest
Facts:

Felicito Sanson filed a special proceeding for the settlement of the estate of Juan See. Sanson claimed that
the deceased was indebted to him in the amount of Php 603, 000.00 and to his sister Caledonia Sanson-
Saquin in the amount of Php 320,000.00. also petitioner Eduardo Montinola and his mother filed separate
claims against the estate alleging that the deceased owed them Php50,000 and Php 150, 000, respectively.
During the trial, Caledonia and Felicito Sanson testified that they had transaction with the deceased
evidenced by six checks issued by the deceased before he died and that after his death, Felicito and
Caledonia presented the checks to the bank for payment but were dishonored due to the closure of the
account. The same transaction happened to Eduardo and Angeles Montionola but when they presented
the check to the bank, it was dishonored. Demand letters were sent to the heirs of the deceased but the
checks remained unsettled.

Issue:

Whether or not presumption of consideration may be rebutted even if the heirs did not present any
evidence to controvert it.

Held:

When the fact was established by a witness that it was the deceased who signed the checks and in fact
who entered into the transaction, the genuineness of the deceased signature having been shown, the
latter is prima facie presumed to have been a party to the check for value, following Section 24 of NIL
which provides that “every negotiable instrument is deemed prima facie to have been issued for a
valuable consideration; and every person whose signature appears thereon to have become a party
thereto for value.”

Since the prima facie presumption was not rebutted or contradicted by the heirs, it has become
conclusive.
TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C. CONCEPCION, ROGELIO A.
VINLUAN, VICTOR P. LAZATIN and EDUARDO U. ESCUETA, Petitioners, -versus- THE HONORABLE
SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES, ACTING THROUGH THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT, and RAUL S. ROCO, Respondents. G.R. No. 105938 September
20, 1996, EN BANC, Kapunan, J.

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that
the instant case falls under the first and third exception. The attorney-client privilege, as currently worded
in the Rules of Court provides the disqualification by reason of privileged communication.

FACTS:

The Presidential Commission on Good Government (PCGG), raised a complaint before the Sandiganbayan
(SB) against Eduardo M. Cojuangco, Jr. and Teodoro Regala and his partners in the ACCRA law firm, for
the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named corporations in
PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco,
et al."

During the course of the proceedings, PCGG filed a "Motion to Admit Third Amended Complaint" which
excluded private respondent Raul S. Roco from the complaint on his undertaking that he will reveal the
identity of the principal/s for whom he acted as nominee/stockholder.

In their answer to the Expanded Amended Complaint, ACCRA lawyers requested that PCGG similarly grant
the same treatment to them as accorded Roco. The PCGG has offered to the ACCRA lawyers the same
conditions availed of by Roco but the ACCRA lawyers have refused to disclose the identities of their clients.
ACCRA lawyers filed the petition for certiorari, invoking that the Honorable Sandiganbayan gravely abused
its discretion.

ISSUE:

Whether or not client’s identity in a case involving and acquiring companies allegedly sourced from ill-
gotten wealth is privileged and disclosure of such is unethical.

RULING:

YES. The court held that the client identity in this case is privileged. As a matter of public policy, a client's
identity should not be shrouded in mystery. This general rule is however qualified by some important
exceptions:

1) Client identity is privileged where a strong probability exists that revealing the client's name would
implicate that client in the very activity for which he sought the lawyer's advice.

2) Where disclosure would open the client to civil liability

3) Where the government's lawyers have no case against an attorney's client unless, by revealing the
client's name, the said name would furnish the only link that would form the chain of testimony necessary
to convict an individual of a crime.
The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that
the instant case falls under the first and third exception. The attorney-client privilege, as currently worded
in the Rules of Court provides the disqualification by reason of privileged communication. Rule 138 of the
Rules of Court further emphasizes the importance of maintaining client confidence. Furthermore, this
duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility. Canon 15 of the Canons
of Professional Ethics also demands a lawyer's fidelity to client. The Resolutions of respondent
Sandiganbayan are hereby annulled and set aside.

PEOPLE OF THE PHILIPPINES, Appellee, -versus- ARTEMIO INVENCION y SORIANO, Appellant G.R. No.
131636. March 5, 2003, EN BANC, Davide, J.

The filial privilege rule is not strictly a rule on disqualification because a descendant is not incompetent or
disqualified to testify against an ascendant. The rule refers to a privilege not to testify, which can be
invoked or waived like other privileges.

FACTS:

Artemio Invencion was charged before the RTC of Tarlac with thirteen counts of rape committed against
his 16-year-old daughter, Cynthia (his daughter with his first common-law-wife, Gloria Pagala).

During the trial, the prosecution presented Elven Invencion, the son of Artemio with his second common-
law wife. Elven testified that that sometime before the end of the school year in 1996, while he was
sleeping in one room with his father, Cynthia, and two other younger brothers, he was awakened by
Cynthia’s loud cries. Looking towards her, he saw his father on top of Cynthia, doing a pumping motion.

After about two minutes, his father put on his short pants. Elven further testified that Artemio was a very
strict and cruel father and a drunkard. He angrily prohibited Cynthia from entertaining any of her suitors.

The trial court convicted Artemio for one count of rape. Artemio challenges the competency and
credibility of Elven as a witness. He argues that Elven, as his son, should have been disqualified as a witness
against him under pursuant to the rule on filial privilege.

ISSUE:

Whether or not Elven Invencion should be disqualified as a witness pursuant to the rule on filial privilege?

RULING:

NO. The competency of Elven to testify is not affected by Section 25, Rule 130 of the Rules of Court,
otherwise known as the rule on “filial privilege.” This rule is not strictly a rule on disqualification because
a descendant is not incompetent or disqualified to testify against an ascendant. The rule refers to a
privilege not to testify, which can be invoked or waived like other privileges. As correctly observed by the
lower court, Elven was not compelled to testify against his father; he chose to waive that filial privilege
when he voluntarily testified against Artemio. Elven declared that he was testifying as a witness against
his father of his own accord and only “to tell the truth.” Hence, his testimony is entitled to full credence.
MAXIMO ALVAREZ, Petitioner, -versus- SUSAN RAMIREZ, Respondent. G.R. No. 143439 October 14, 2005
THIRD DIVISION, Sandoval- Gutierrez, J.

When an offense directly attacks, or directly and vitally impairs, the conjugal relation, it comes within the
exception to the statute that one shall not be a witness against the other except in a criminal prosecution
for a crime committee (by) one against the other.’"

Obviously, the offense of arson attributed to petitioner, directly impairs the conjugal relation between
him and his wife Esperanza. His act, as embodied in the Information for arson filed against him, eradicates
all the major aspects of marital life such as trust, confidence, respect and love by which virtues the
conjugal relationship survives and flourishes.

FACTS:

Susan Ramirez is the complaining witness in for arson pending before the RTC Malabon City. The accused
is Maximo Alvarez, herein petitioner. He is the husband of Esperanza G. Alvarez, sister of respondent.

On June 21, 1999, the private prosecutor called Esperanza Alvarez to the witness stand as the first witness
against Alvarez. Petitioner and his counsel raised no objection. However, after the direct examination,
petitioner, through counsel, filed a motion to disqualify Esperanza from testifying against him pursuant to
Rule 130 of the Revised Rules of Court on marital disqualification.

ISSUE:

Whether or not Esperanza Alvarez can testify against her husband in the criminal case for arson

RULING:

YES. Section 22, Rule 130 of the Revised Rules of Court provides:

"Sec. 22. Disqualification by reason of marriage. – During their marriage, neither the husband nor the wife
may testify for or against the other without the consent of the affected spouse, except in a civil case by
one against the other, or in a criminal case for a crime committed by one against the other or the latter’s
direct descendants or ascendants."

The reasons given for the rule are:

1. There is identity of interests between husband and wife;

2. If one were to testify for or against the other, there is consequent danger of perjury;

3. The policy of the law is to guard the security and confidences of private life, even at the risk of an
occasional failure of justice, and to prevent domestic disunion and unhappiness; and

4. Where there is want of domestic tranquility there is danger of punishing one spouse through the hostile
testimony of the other.
But like all other general rules, the marital disqualification rule has its own exceptions, both in civil actions
between the spouses and in criminal cases for offenses committed by one against the other.

Like the rule itself, the exceptions are backed by sound reasons which, in the excepted cases, outweigh
those in support of the general rule. For instance, where the marital and domestic relations are so strained
that there is no more harmony to be preserved nor peace and tranquility which may be disturbed, the
reason based upon such harmony and tranquility fails. In such a case, identity of interests disappears and
the consequent danger of perjury based on that identity is non-existent. Likewise, in such a situation, the
security and confidences of private life, which the law aims at protecting, will be nothing but ideals, which
through their absence, merely leave a void in the unhappy home.

‘The rule that the injury must amount to a physical wrong upon the person is too narrow; and the rule
that any offense remotely or indirectly affecting domestic harmony comes within the exception is too
broad. The better rule is that, when an offense directly attacks, or directly and vitally impairs, the conjugal
relation, it comes within the exception to the statute that one shall not be a witness against the other
except in a criminal prosecution for a crime committee (by) one against the other.’"

Obviously, the offense of arson attributed to petitioner, directly impairs the conjugal relation between
him and his wife Esperanza. His act, as embodied in the Information for arson filed against him, eradicates
all the major aspects of marital life such as trust, confidence, respect and love by which virtues the
conjugal relationship survives and flourishes.

FELICITO G. SANSON, CELEDONIA SANSON-SAQUIN, ANGELES A. MONTINOLA, EDUARDO A. MONTINOLA,

JR., Petitioners-appellants, -versus- HONORABLE COURT OF APPEALS, FOURTH DIVISION and MELECIA T.
SY, as Administratrix of the Intestate Estate of the Late Juan Bon Fing Sy, Respondents-appellees. G.R. No.
127745, April 22, 2003, THIRD DIVISION, CARPIO MORALES, J.:

The Dead Man’s Statute renders incompetent: 1) parties to a case; 2) their assignors; or 3) persons in
whose behalf a case is prosecuted. The rule is exclusive and cannot be construed to extend its scope by
implication so as to disqualify persons not mentioned therein. Mere witnesses who are not included in
the above enumeration are not prohibited from testifying as to a conversation or transaction between
the deceased and a third person, if he took no active part therein.

In any event, what the Dead Man’s Statute proscribes is the admission of testimonial evidence upon a
claim which arose before the death of the deceased. The incompetency is confined to the giving of
testimony. Since the separate claims of Sanson and Celedonia are supported by checksdocumentary
evidence, their claims can be prosecuted on the bases of said checks.

FACTS:

On February 7, 1990, herein petitioner-appellant Felicito G. Sanson, in his capacity as creditor, filed before
the RTC of Iloilo City a petition for the settlement of the estate of Juan Bon Fing Sy. Sanson claimed that
the deceased was indebted to him and to his sister Celedonia Sanson-Saquin (Celedonia). Petitioners-
appellants Eduardo Montinola, Jr. and his mother Angeles later filed separate claims against the estate,
alleging that the deceased also owed them.
The RTC appointed Melecia T. Sy, surviving spouse of the deceased, as administratrix of his estate. During
the hearing of the claims against the estate, Sanson, Celedonia, and Jade Montinola, wife of claimant
Eduardo Montinola, Jr., testified on the transactions that gave rise thereto, thus:

Sanson, in support of the claim of his sister Celedonia, testified that she had a transaction with the
deceased which is evidenced by six checks issued by him before his death

Celedonia, in support of the claim of her brother Sanson, testified that she knew that the deceased
issued five checks to Sanson in settlement of a debt;

Jade, in support of the claims of her husband Eduardo Montinola, Jr. and mother-in-law Angeles,
testified that on separate occasions, the deceased borrowed from her husband and mother-in-law,

Such testimony was over the objection of the administratrix who invoked Section 23, Rule 130 of the
Revised Rules of Court otherwise known as the Dead Man’s Statute which reads:

SEC. 23. Disqualification by reason of death or insanity of adverse party.—Parties or assignors of parties
to a case, or persons in whose behalf a case is prosecuted, against an executor or administrator or other
representative of a deceased person, or against a person of unsound mind, upon a claim or demand
against the estate of such deceased person or against such person of unsound mind, cannot testify as to
any matter of fact occurring before the death of such deceased person or before such person became of
unsound mind.

Finding that the Dead Man’s Statute does not apply to the witnesses who testified in support of the subject
claims against the estate, the trial court issued an Order against the estate. Thus, the administratrix
Melecia Sy appealed.

ISSUE:

Whether or not the Dead Man’s Statute is applicable

RULING:

NO. As for the administratrix’s invocation of the Dead Man’s Statute, the same does not likewise lie. The
rule renders incompetent: 1) parties to a case; 2) their assignors; or 3) persons in whose behalf a case is
prosecuted. The rule is exclusive and cannot be construed to extend its scope by implication so as to
disqualify persons not mentioned therein. Mere witnesses who are not included in the above
enumeration are not prohibited from testifying as to a conversation or transaction between the deceased
and a third person, if he took no active part therein.

Jade is not a party to the case. Neither is she an assignor nor a person in whose behalf the case is being
prosecuted. She testified as a witness to the transaction. In transactions similar to those involved in the
case at bar, the witnesses are commonly family members or relatives of the parties. Should their
testimonies be excluded due to their apparent interest as a result of their relationship to the parties, there
would be a dearth of evidence to prove the transactions. In any event, as will be discussed later,
independently of the testimony of Jade, the claims of the Montinolas would still prosper on the basis of
their documentary evidence—the checks.
Further, Petitioners argue that the testimonies of Sanson and Celedonia as witnesses to each other’s claim
against the deceased are not covered by the Dead Man’s Statute. The administratrix, on the other hand,
cites the ruling of the Court of Appeals in its decision on review, the pertinent portion of which reads:

The more logical interpretation is to prohibit parties to a case, with like interest, from testifying in each
other’s favor as to acts occurring prior to the death of the deceased.

Since the law disqualifies parties to a case or assignors to a case without distinguishing between testimony
in his own behalf and that in behalf of others, he should be disqualified from testifying for his co-parties.
The law speaks of "parties or assignors of parties to a case." Apparently, the testimonies of Sanson and
Saquin on each other’s behalf, as co-parties to the same case, falls under the prohibition.

But Sanson’s and Celedonia’s claims against the same estate arose from separate transactions. Sanson is
a third party with respect to Celedonia’s claim. And Celedonia is a third party with respect to Sanson’s
claim. One is not thus disqualified to testify on the other’s transaction.

In any event, what the Dead Man’s Statute proscribes is the admission of testimonial evidence upon a
claim which arose before the death of the deceased. The incompetency is confined to the giving of
testimony. Since the separate claims of Sanson and Celedonia are supported by checksdocumentary
evidence, their claims can be prosecuted on the bases of said checks.