Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION

EDSA SHANGRI-LA HOTEL AND RESORT, INC., RUFO B. COLAYCO, RUFINO L. SAMANIEGO, KUOK KHOON CHEN, and KUOK KHOON TSEN, Petitioners,

G.R. No. 145842

Present:

CARPIO MORALES, J., - versus Acting Chairperson, TINGA, VELASCO, JR., BF CORPORATION, Respondent. REYES, and BRION, JJ.

x ------------------------------------------- x
Additional member as per April 16, 2008 Zero Backlog Raffle.

CYNTHIA ROXAS-DEL CASTILLO, G.R. No. 145873 Petitioner,

- versus -

Promulgated: BF CORPORATION, Respondent. June 27, 2008

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DECISION

VELASCO, JR., J.:

Before us are these two (2) consolidated petitions for review under Rule 45 to nullify certain issuances of the Court of Appeals (CA).

In the first petition, docketed as G.R. No. 145842, petitioners Edsa Shangrila Hotel and Resort, Inc. (ESHRI), Rufo B. Colayco, Rufino L. Samaniego, Kuok

Khoon Chen, and Kuok Khoon Tsen assail the Decision1[1] dated November 12, 1999 of the CA in CA-G.R. CV No. 57399, affirming the Decision2[2] dated September 23, 1996 of the Regional Trial Court (RTC), Branch 162 in Pasig City in Civil Case No. 63435 that ordered them to pay jointly and severally respondent BF Corporation (BF) a sum of money with interests and damages. They also assail the CA Resolution dated October 25, 2000 which, apart from setting aside an earlier Resolution3[3] of August 13, 1999 granting ESHRIs application for restitution and damages against bond, affirmed the aforesaid September 23, 1996 RTC Decision.

In the second petition, docketed as G.R. No. 145873, petitioner Cynthia Roxas-del Castillo also assails the aforementioned CA Decision of November 12, 1999 insofar at it adjudged her jointly and severally liable with ESHRI, et al. to pay the monetary award decreed in the RTC Decision.

Both petitions stemmed from a construction contract denominated as Agreement for the Execution of Builders Work for the EDSA Shangri -la Hotel Project4[4] that ESHRI and BF executed for the construction of the EDSA
1[1] Rollo (G.R. No. 145842), pp. 96-122. Penned by Associate Justice Omar U. Amin and concurred in by Associate Justices Bernardo P. Abesamis and Jose L. Sabio, Jr. 2[2] Id. at 163-192. 3[3] Id. at 450-454. 4[4] Id. at 143-148.

Shangri-la Hotel starting May 1, 1991. Among other things, the contract stipulated for the payment of the contract price on the basis of the work accomplished as described in the monthly progress billings. Under this arrangement, BF shall submit a monthly progress billing to ESHRI which would then re-measure the work accomplished and prepare a Progress Payment Certificate for that months progress billing.5[5]

In a memorandum-letter dated August 16, 1991 to BF, ESHRI laid out the collection procedure BF was to follow, to wit: (1) submission of the progress billing to ESHRIs Engineering Department; (2) following-up of the preparation of the Progress Payment Certificate with the Head of the Quantity Surveying Department; and (3) following-up of the release of the payment with one Evelyn San Pascual. BF adhered to the procedures agreed upon in all its billings for the period from May 1, 1991 to June 30, 1992, submitting for the purpose the required Builders Work Summary, the monthly progress billings, including an evaluation of the work in accordance with the Project Managers Instructions (PMIs) and the detailed valuations contained in the Work Variation Orders (WVOs) for final remeasurement under the PMIs. BF said that the values of the WVOs were contained in the progress billings under the section Change Orders.6[6]

5[5] Id. at 97-98. 6[6] Id. at 98-99.

From May 1, 1991 to June 30, 1992, BF submitted a total of 19 progress billings following the procedure agreed upon. Based on Progress Billing Nos. 1 to 13, ESHRI paid BF PhP 86,501,834.05.7[7]

According to BF, however, ESHRI, for Progress Billing Nos. 14 to 19, did not re-measure the work done, did not prepare the Progress Payment Certificates, let alone remit payment for the inclusive periods covered. In this regard, BF claimed having been misled into working continuously on the project by ESHRI which gave the assurance about the Progress Payment Certificates already being processed.

After several futile attempts to collect the unpaid billings, BF filed, on July 26, 1993, before the RTC a suit for a sum of money and damages.

In its defense, ESHRI claimed having overpaid BF for Progress Billing Nos. 1 to 13 and, by way of counterclaim with damages, asked that BF be ordered to refund the excess payments. ESHRI also charged BF with incurring delay and turning up with inferior work accomplishment.

The RTC found for BF

7[7] Id. at 100.

On September 23, 1996, the RTC, on the main finding that BF, as plaintiff a quo, is entitled to the payment of its claim covered by Progress Billing Nos. 14 to 19 and to the retention money corresponding to Progress Billing Nos. 1 to 11, with interest in both instances, rendered judgment for BF. The fallo of the RTC Decision reads:

WHEREFORE, defendants [EHSRI], Ru[f]o B. Colayco, Rufino L. Samaniego, Cynthia del Castillo, Kuok Khoon Chen, and Kuok Khoon Tsen, are jointly and severally hereby ordered to: 1. Pay plaintiff the sum of P24,780,490.00 representing unpaid construction work accomplishments under plaintiffs Progress Billings Nos. 14-19; 2. Return to plaintiff the retention sum of P5,810,000.00; 3. Pay legal interest on the amount of P24,780,490.80 representing the construction work accomplishments under Progress Billings Nos. 14-19 and on the amount of P5,810,000.00 representing the retention sum from date of demand until their full Payment; Pay plaintiff P1,000,000.00 as moral damages, P1,000,000.00 as exemplary damages, P1,000,000.00 as attorneys fees, and cost of the suit.8[8]

4.

According to the RTC, ESHRIs refusal to pay BFs valid claims constituted evident bad faith entitling BF to moral damages and attorneys fees.

8[8] Supra note 2, at 192.

ESHRI subsequently moved for reconsideration, but the motion was denied by the RTC, prompting ESHRI to appeal to the CA in CA-G.R. CV No. 57399.

Pending the resolution of CA-G.R. CV No. 57399, the following events and/or incidents transpired: (1) The trial court, by Order dated January 21, 1997, granted BFs motion for execution pending appeal. ESHRI assailed this order before the CA via a petition for certiorari, docketed as CA-G.R. SP No. 43187.9[9] Meanwhile, the branch sheriff garnished from ESHRIs bank account in the Philippine National Bank (PNB) the amount of PhP 35 million.

(2) On March 7, 1997, the CA issued in CA-G.R. SP No. 43187 a writ of preliminary injunction enjoining the trial court from carrying out its January 21, 1997 Order upon ESHRIs posting of a PhP 1 million bond. In a supplemental resolution issued on the same day, the CA issued a writ of preliminary mandatory injunction directing the trial court judge and/or his branch sheriff acting under him (a) to lift all the garnishments and levy made under the enjoined order of execution pending appeal; (b) to immediately return the garnished deposits to PNB instead of delivering the same to ESHRI; and (c) if the garnished deposits have been delivered to BF, the latter shall return the same to ESHRIs deposit account.

9[9] Rollo (G.R. No. 145842), p. 101.

(3) By a Decision dated June 30, 1997 in CA-G.R. SP No. 43187, the CA set aside the trial courts January 21, 1997 Order. The CA would later deny BFs motion for reconsideration.

(4) Aggrieved, BF filed before this Court a petition for review of the CA Decision, docketed as G.R. No. 132655.10[10] On August 11, 1998, the Court affirmed the assailed decision of the CA with the modification that the recovery of ESHRIs garnished deposits shall be against BFs bond.11[11]

We denied the motions for reconsideration of ESHRI and BF.

(5) Forthwith, ESHRI filed, and the CA by Resolution of August 13, 1999 granted, an application for restitution or damages against BFs bo nd. Consequently, BF and Stronghold Insurance Co., Inc., the bonding company, filed separate motions for reconsideration.

On November 12, 1999, in CA-G.R. CV No. 57399, the CA rendered a Decision resolving (1) the aforesaid motions of BF and its surety and (2) herein petitioners appeal from the trial courts Decision dated September 23, 1996. This
10[10] Id. at 102. 11[11] Id. at 377-386; BF Corporation v. ESHRI, G.R. No. 132655, August 11, 1998, 294 SCRA 109.

November 12, 1999 Decision, finding for BF and now assailed in these separate recourses, dispositively reads:

WHEREFORE, premises considered, the decision appealed from is AFFIRMED in toto. This Courts Resolution dated 13 August 1999 is reconsidered and set aside, and defendants-appellants application for restitution is denied for lack of merit. SO ORDERED.12[12]

The CA predicated its ruling on the interplay of two main reasons. First, the issues the parties raised in their respective briefs were, for the most part, factual and evidentiary. Thus, there is no reason to disturb the case disposition of the RTC, inclusive of its award of damages and attorneys fees and the reasons underpinning the award. Second, BF had sufficiently established its case by preponderance of evidence. Part of what it had sufficiently proven relates to ESHRI being remiss in its obligation to re-measure BFs later work accomplishments and pay the same. On the other hand, ESHRI had failed to prove the basis of its disclaimer from liability, such as its allegation on the defective work accomplished by BF.

12[12] Supra note 1, at 121.

Apropos ESHRIs entitlement to the remedy of restitution or reparation arising from the execution of the RTC Decision pending appeal, the CA held that such remedy may peremptorily be allowed only if the executed judgment is reversed, a situation not obtaining in this case.

Following the denial by the CA, per its Resolution13[13] dated October 25, 2000, of their motion for reconsideration, petitioners are now before the Court, petitioner del Castillo opting, however, to file a separate recourse.

G.R. No. 145842

In G.R. No. 145842, petitioners ESHRI, et al. raise the following issues for our consideration:

I. Whether or not the [CA] committed grave abuse of discretion in disregarding issues of law raised by petitioners in their appeal [particularly in admitting in evidence photocopies of Progress Billing Nos. 14 to 19, PMIs and WVOs]. II. Whether or not the [CA] committed grave abuse of discretion in not holding respondent guilty of delay in the performance of its obligations and, hence, liable for liquidated damages [in view that respondent is guilty of delay and that its works were defective].

13[13] Rollo (G.R. No. 145842), p. 124.

III. Whether or not the [CA] committed grave abuse of discretion in finding petitioners guilty of malice and evidence bad faith, and in awarding moral and exemplary damages and attorneys fees to respondent. IV. Whether or not the [CA] erred in setting aside its Resolution dated August 13, 2000.14[14]

The petition has no merit.

Prefatorily, it should be stressed that the second and third issues tendered relate to the correctness of the CAs factual determinations, specifically on whether or not BF was in delay and had come up with defective works, and whether or not petitioners were guilty of malice and bad faith. It is basic that in an appeal by certiorari under Rule 45, only questions of law may be presented by the parties and reviewed by the Court.15[15] Just as basic is the rule that factual findings of the CA, affirmatory of that of the trial court, are final and conclusive on the Court and may not be reviewed on appeal, except for the most compelling of reasons, such as when: (1) the conclusion is grounded on speculations, surmises, or conjectures; (2) the inference is manifestly mistaken, absurd, or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) such findings are contrary to the admissions of both parties; and (7) the CA manifestly overlooked certain relevant evidence and

14[14] Id. at 24-25. 15[15] Allied Banking Corporation v. Quezon City Government, G.R. No. 154126, October 11, 2005, 472 SCRA 303, 316; Bangko Sentral ng Pilipinas v. Santamaria, G.R. No. 139885, January 13, 2003, 395 SCRA 84, 92.

undisputed facts, that, if properly considered, would justify a different conclusion.16[16]

In our review of this case, we find that none of the above exceptions obtains. Accordingly, the factual findings of the trial court, as affirmed by the CA, that there was delay on the part of ESHRI, that there was no proof that BFs work was defective, and that petitioners were guilty of malice and bad faith, ought to be affirmed.

Admissibility of Photocopies of Progress Billing Nos. 14 to 19, PMIs and WVOs

Petitioners fault the CA, and necessarily the trial court, on the matter of the admission in evidence of the photocopies of Progress Billing Nos. 14 to 19 and the complementing PMIs and the WVOs. According to petitioners, BF, before being allowed to adduce in evidence the photocopies adverted to, ought to have laid the basis for the presentation of the photocopies as secondary evidence, conformably to the best evidence rule. Respondent BF, on the other hand, avers having complied with the layingthe-basis requirement. Defending the action of the courts below in admitting into evidence the photocopies of the documents aforementioned, BF explained that it
16[16] Dungaran v. Koschnicke, G.R. No. 161048, August 31, 2005, 468 SCRA 676, 685; Larena v. Mapili, G.R. No. 146341, August 7, 2003, 408 SCRA 484.

could not present the original of the documents since they were in the possession of ESHRI which refused to hand them over to BF despite requests.

We agree with BF. The only actual rule that the term best evidence denotes is the rule requiring that the original of a writing must, as a general proposition, be produced17[17] and secondary evidence of its contents is not admissible except where the original cannot be had. Rule 130, Section 3 of the Rules of Court enunciates the best evidence rule:

SEC. 3. Original document must be produced; exceptions. When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases: (a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror; (b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice; (Emphasis added.)

Complementing the above provision is Sec. 6 of Rule 130, which reads:

SEC. 6. When original document is in adverse partys custody or control. If the document is in the custody or under control of the adverse party, he must have reasonable notice to produce it. If after such notice and after satisfactory 17[17] Consolidated Bank and Trust Corporation (SOLIDBANK) v. Del Monte Motor Works, Inc., G.R. No. 143338, July 29, 2005, 465 SCRA 117, 131; citing McCormick, HANDBOOK OF THE LAW ON EVIDENCE 409 (1954).

proof of its existence, he fails to produce the document, secondary evidence may be presented as in the case of loss.

Secondary evidence of the contents of a written instrument or document refers to evidence other than the original instrument or document itself.18[18] A party may present secondary evidence of the contents of a writing not only when the original is lost or destroyed, but also when it is in the custody or under the control of the adverse party. In either instance, however, certain explanations must be given before a party can resort to secondary evidence.

In our view, the trial court correctly allowed the presentation of the photocopied documents in question as secondary evidence. Any suggestion that BF failed to lay the required basis for presenting the photocopies of Progress Billing Nos. 14 to 19 instead of their originals has to be dismissed. The stenographic notes of the following exchanges between Atty. Andres and Atty. Autea, counsel for BF and ESHRI, respectively, reveal that BF had complied with the requirements:

ATTY. ANDRES: During the previous hearing of this case, your Honor, likewise, the witness testified that certain exhibits namely, the Progress Payment Certificates and the Progress Billings the originals of these documents were transmitted to ESHRI, all the originals are in the possession of ESHRI since these are internal documents and I am referring specifically to the Progress Payment Certificates. We requested your Honor, that in order that plaintiff [BF] be allowed to present 18[18] R.J. Francisco, BASIC EVIDENCE 283 (1991).

secondary original, that opposing counsel first be given opportunity to present the originals which are in their possession. May we know if they have brought the originals and whether they will present the originals in court, Your Honor. (Emphasis added.) ATTY. AUTEA: We have already informed our client about the situation, your Honor, that it has been claimed by plaintiff that some of the originals are in their possession and our client assured that, they will try to check. Unfortunately, we have not heard from our client, Your Honor.

Four factual premises are readily deducible from the above exchanges, to wit: (1) the existence of the original documents which ESHRI had possession of; (2) a request was made on ESHRI to produce the documents; (3) ESHRI was afforded sufficient time to produce them; and produce them. (4) ESHRI was not inclined to

Clearly, the circumstances obtaining in this case fall under the exception under Sec. 3(b) of Rule 130. In other words, the conditions sine qua non for the presentation and reception of the photocopies of the original document as secondary evidence have been met. These are: (1) there is proof of the original documents execution or existence; (2) there is proof of the cause of the original documents unavailability; and (3) the offeror is in good faith.19[19] While perhaps not on all fours because it involved a check, what the Court said in Magdayao v. People, is very much apt, thus:

19[19] RULES OF COURT, Rule 130, Sec. 5.

x x x To warrant the admissibility of secondary evidence when the original of a writing is in the custody or control of the adverse party, Section 6 of Rule 130 provides that the adverse party must be given reasonable notice, that he fails or refuses to produce the same in court and that the offeror offers satisfactory proof of its existence. xxxx The mere fact that the original of the writing is in the custody or control of the party against whom it is offered does not warrant the admission of secondary evidence. The offeror must prove that he has done all in his power to secure the best evidence by giving notice to the said party to produce the document. The notice may be in the form of a motion for the production of the original or made in open court in the presence of the adverse party or via a subpoena duces tecum, provided that the party in custody of the original has sufficient time to produce the same. When such party has the original of the writing and does not voluntarily offer to produce it or refuses to produce it, secondary evidence may be admitted.20[20] (Emphasis supplied.)

On the Restitution of the Garnished Funds

We now come to the propriety of the restitution of the garnished funds. As petitioners maintain, the CA effectively, but erroneously, prevented restitution of ESHRIs improperly garnished funds when it nullified its own August 13, 1999 Resolution in CA-G.R. SP No. 43187. In this regard, petitioners invite attention to the fact that the restitution of the funds was in accordance with this Courts final and already executory decision in G.R. No. 132655, implying that ESHRI should
20[20] G.R. No. 152881, August 17, 2004, 436 SCRA 677, 684-685.

be restored to its own funds without awaiting the final outcome of the main case. For ease of reference, we reproduce what the appellate court pertinently wrote in its Resolution of August 13, 1999:

BASED ON THE FOREGOING, the Application (for Restitution/Damages against Bond for Execution Pending Appeal) dated May 12, 1999 filed by [ESHRI] is GRANTED. Accordingly, the surety of [BF], STRONGHOLD Insurance Co., Inc., is ORDERED to PAY the sum of [PhP 35 million] to [ESHRI] under its SICI Bond. x x x In the event that the bond shall turn out to be insufficient or the surety (STRONGHOLD) cannot be made liable under its bond, [BF], being jointly and severally liable under the bond is ORDERED to RETURN the amount of [PhP 35 million] representing the garnished deposits of the bank account maintained by [ESHRI] with the [PNB] Shangri-la Plaza Branch, Mandaluyong City. Otherwise, this Court shall cause the implementation of the Writ of Execution dated April 24, 1998 issued in Civil Case No. 63435 against both [BF], and/or its surety, STRONGHOLD, in case they should fail to comply with these directives.

SO ORDERED.21[21]

Petitioners contention on the restitution angle has no merit, for, as may be recalled, the CA, simultaneously with the nullification and setting aside of its August 13, 1999 Resolution, affirmed, via its assailed November 12, 1999 Decision, the RTC Decision of September 23, 1996, the execution pending appeal of which spawned another dispute between the parties. And as may be recalled further, the appellate court nullified its August 13, 1999 Resolution on the basis of Sec. 5, Rule 39, which provides:
Sec. 5. Effect of reversal of executed judgment. Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the

21[21] Supra note 3, at 453.

trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances.

On the strength of the aforequoted provision, the appellate court correctly dismissed ESHRIs claim for restitution of its garnished deposits, the executed appealed RTC Decision in Civil Case No. 63435 having in fact been upheld in toto.

It is true that the Courts Decision of August 11, 1998 in G.R. No. 132655 recognized the validity of the issuance of the desired restitution order. It bears to emphasize, however, that the CA had since then decided CA-G.R. CV No. 57399, the main case, on the merits when it affirmed the underlying RTC Decision in Civil Case No. 63435. This CA Decision on the original and main case effectively rendered our decision on the incidental procedural matter on restitution moot and academic. Allowing restitution at this point would not serve any purpose, but only prolong an already protracted litigation.

G.R. No. 145873

Petitioner Roxas-del Castillo, in her separate petition, excepts from the CA Decision affirming, in its entirety, the RTC Decision holding her, with the other individual petitioners in G.R. No. 145842, who were members of the Board of

Directors of ESHRI, jointly and severally liable with ESHRI for the judgment award. She presently contends:

I.

THE [CA] ERRED IN NOT DECLARING THAT THE DECISION OF THE TRIAL COURT ADJUDGING PETITIONER PERSONALLY LIABLE TO RESPONDENT VOID FOR NOT STATING THE FACTUAL AND LEGAL BASIS FOR SUCH AWARD. THE [CA] ERRED IN NOT RULING THAT AS FORMER DIRECTOR, PETITIONER CANNOT BE HELD PERSONALLY LIABLE FOR ANY ALLEGED BREACH OF A CONTRACT ENTERED INTO BY THE CORPORATION.

II.

III.

THE [CA] ERRED IN NOT RULING THAT RESPONDENT IS NOT ENTITLED TO AN AWARD OF MORAL DAMAGES. THE [CA] ERRED IN HOLDING PETITIONER PERSONALLY LIABLE TO RESPONDENT FOR EXEMPLARY DAMAGES.

IV.

V.

THE [CA] ERRED IN NOT RULING THAT RESPONDENT IS NOT ENTITLED TO ANY AWARD OF ATTORNEYS FEES.22[22]

First off, Roxas-del Castillo submits that the RTC decision in question violated the requirements of due process and of Sec. 14, Article VII of the Constitution that states, No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based.

22[22] Rollo (G.R. No. 145873), p. 16.

Roxas-del Castillos threshold posture is correct. Indeed, the RTC decision in question, as couched, does not provide the factual or legal basis for holding her personally liable under the premises. In fact, only in the dispositive portion of the decision did her solidary liability crop up. And save for her inclusion as party defendant in the underlying complaint, no reference is made in other pleadings thus filed as to her liability.

The Court notes that the appellate court, by its affirmatory ruling, effectively recognized the applicability of the doctrine on piercing the veil of the separate corporate identity. Under the circumstances of this case, we cannot allow such application. A corporation, upon coming to existence, is invested by law with a personality separate and distinct from those of the persons composing it. Ownership by a single or a small group of stockholders of nearly all of the capital stock of the corporation is not, without more, sufficient to disregard the fiction of separate corporate personality.23[23] Thus, obligations incurred by corporate officers, acting as corporate agents, are not theirs but direct accountabilities of the corporation they represent. Solidary liability on the part of corporate officers may at times attach, but only under exceptional circumstances, such as when they act with malice or in bad faith.24[24] Also, in appropriate cases, the veil of corporate fiction shall be disregarded when the separate juridical personality of a corporation is abused or used to commit fraud and perpetrate a social injustice, or used as a

23[23] Union Bank of the Philippines v. Ong, G.R. No. 152347, June 21, 2006, 491 SCRA 581, 602. 24[24] Petron Corporation v. National Labor Relations Commission, G.R. No. 154532, October 27, 2006, 505 SCRA 596, 613-614.

vehicle to evade obligations.25[25] In this case, no act of malice or like dishonest purpose is ascribed on petitioner Roxas-del Castillo as to warrant the lifting of the corporate veil.

The above conclusion would still hold even if petitioner Roxas-del Castillo, at the time ESHRI defaulted in paying BFs monthly progress bill, was still a director, for, before she could be held personally liable as corporate director, it must be shown that she acted in a manner and under the circumstances contemplated in Sec. 31 of the Corporation Code, which reads:

Section 31. Directors or trustees who willfully or knowingly vote for or assent to patently unlawful acts of the corporation or acquire any pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis ours.)

We do not find anything in the testimony of one Crispin Balingit to indicate that Roxas-del Castillo made any misrepresentation respecting the payment of the bills in question. Balingit, in fact, testified that the submitted but unpaid billings were still being evaluated. Further, in the said testimony, in no instance was bad faith imputed on Roxas-del Castillo.

25[25] Enriquez Security Services, Inc. v. Cabotaje, G.R. No. 147993, July 21, 2006, 496 SCRA 169, 175.

Not lost on the Court are some material dates. As it were, the controversy between the principal parties started in July 1992 when Roxas-del Castillo no longer sat in the ESHRI Board, a reality BF does not appear to dispute. In fine, she no longer had any participation in ESHRIs corporate affairs when what basically is the ESHRI-BF dispute erupted. Familiar and fundamental is the rule that contracts are binding only among parties to an agreement. Art. 1311 of the Civil Code is clear on this point:

Article 1311. Contracts take effect only between the parties, their assigns and heirs, except in cases where the rights and obligations are not transmissible by their nature, or by stipulation or by provision of law.

In the instant case, Roxas-del Castillo could not plausibly be held liable for breaches of contract committed by ESHRI nor for the alleged wrongdoings of its governing board or corporate officers occurring after she severed official ties with the hotel management.

Given the foregoing perspective, the other issues raised by Roxas-del Castillo as to her liability for moral and exemplary damages and attorneys fees are now moot and academic.

And her other arguments insofar they indirectly impact on the liability of ESHRI need not detain us any longer for we have sufficiently passed upon those concerns in our review of G.R. No. 145842.

WHEREFORE, the petition in G.R. No. 145842 is DISMISSED, while the petition in G.R. No. 145873 is GRANTED. Accordingly, the appealed Decision dated November 12, 1999 of the CA in CA-G.R. CV No. 57399 is AFFIRMED with MODIFICATION that the petitioner in G.R. No. 145873, Cynthia Roxas-del Castillo, is absolved from any liability decreed in the RTC Decision dated September 23, 1996 in Civil Case No. 63435, as affirmed by the CA.

SO ORDERED.

PRESBITERO J. VELASCO, JR. Associate Justice

Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION

G.R. No. 72121 February 6, 1991 RAFAEL PAGSUYUIN and PEREGRINA PAGSUYUIN-SUBIDO, petitioners, vs. INTERMEDIATE APPELLATE COURT and SALUD PAGSUYUIN, respondents. R. G. Carlos & Associates Law Offices for petitioners. Aurea Aragon-Casiano for private respondent.

PARAS, J.:p In this petition for review on certiorari, petitioners seek to reverse and set aside the decision 1 of the Intermediate Appellate Court (now Court of Appeals) dated June 6, 1985 in AC G.R. No. CV-67019 entitled "Salud Pagsuyuin vs. Rafael Pagsuyuin, et al." affirming with modification the decision 2 of the then Court of First Instance (now RTC) of Zambales, Branch I in Civil Case No. 2139-0 entitled "Salud Pagsuyuin v. Rafael Pagsuyuin et al." for annulment of document, damages with preliminary injunction. Records show that private respondent Salud Pagsuyuin and petitioners Peregrina Pagsuyuin-Subido and Rafael Pagsuyuin are first cousins. Sometime in August, 1974, one Mrs. Gregoria B. Schlander, then a resident of Olongapo City and an acquaintance of private respondent Salud Pagsuyuin was able to secure a loan in the amount of P165,000.00 with the Manila Banking Corporation at Olongapo City upon a security of a real estate mortgage of property belonging to Salud Pagsuyuin consisting of two (2) two-storey buildings: the first two-storey building has an area of 114 square meters and the second two-storey building has an area of 98 square meters, as well as the commercial lot (Lot 3114, TS-308, Olongapo Townsite Subdivision) with an area of 339 square meters upon which these two (2) two-storey buildings are erected, which loan was obtained by the said Mrs. Gregoria B. Schlander upon a forged power of attorney allegedly signed by Salud Pagsuyuin ( Rollo, Annex "D", Amended Record on Appeal, p. 54; pp. 6-7). On December 1975, Salud Pagsuyuin was informed that her property had been mortgaged by Mrs. Gregoria B. Schlander in favor of said bank and she immediately

went to verify the accuracy of the information which she found to be true, but then, Mrs. Schlander had already absconded and left for the United States (Rollo, Ibid., p. 46). As the loan indicated hereinabove was not paid at maturity, the Manila Banking Corporation at Olongapo City started to foreclose the mortgaged properties extrajudicially (Rollo, Ibid., p.7). To protect, her interest on her property, Salud Pagsuyuin filed suit in the Court of First Instance of Olongapo City, Branch III, Civil Case No. 1918-0 against the Manila Banking Corporation, Mrs. Gregoria B. Schlander and her husband Mr. Schlander, including the City Sheriff of Olongapo City, to annul the said real estate mortgage with a prayer for preliminary injunction (Rollo, Ibid., p. 8). Petitioners Rafael Pagsuyuin and Peregrina Pagsuyuin-Subido, brother and sister and first cousins of Salud Pagsuyuin, offered to the latter to settle the bank loan so as to keep her peace of mind and to retain the ownership of her mortgaged properties ( Rollo, Ibid., p. 47). The three cousins, namely Peregrina, Rafael and Salud, went to the Manila Banking Corporation to inquire about the possibility of an amicable settlement of the loan, and it was at this juncture that the petitioners told Salud Pagsuyuin that they would help her in settling her mortgage loan if petitioner Peregrina Pagsuyuin-Subido will stay free of charge in the leased premises and that Salud Pagsuyuin will repay whatever amount will be advanced by the petitioners to Salud with interest (Rollo, Ibid., p. 48). Consequently, two (2) documents were allegedly executed involving the transfer of the properties of Salud Pagsuyuin to Peregrina Pagsuyuin-Subido and Rafael Pagsuyuin. These documents were:
1) Deed of Assignment (morning version) stating that Salud Pagsuyuin allegedly transferred her properties for and in consideration of the amount of P256,362.95, and that the amount of P30,000.00 will be delivered to Salud Pagsuyuin upon signing the instrument, which was allegedly signed in the morning of September 13, 1976 ( Rollo, Petition, pp. 13-16); 2) Deed of Assignment (afternoon version) stating that Salud Pagsuyuin allegedly transferred her properties for and in consideration of the amount of P256,362.96 but there was no indication that there will be a down payment of P30,000.00, which was allegedly signed in the afternoon of September 13, 1976 (Rollo, Petition, pp. 1719).

The two (2) documents (Deeds of Assignment) were notarized by Notary Public Edmundo Tubio allegedly on the 13th of September, 1976 in the presence of witnesses Marietta Javier and Federico Javier (Rollo, Petition, pp. 16; 18). Salud Pagsuyuin and her witnesses denied having executed the above deeds of assignment on September 13, 1976 as she was on that date at Alitagtag, Batangas while her instrumental witnesses Federico Javier was working at the U.S. Naval Base, while his wife Marietta Javier was at Olongapo City.

Consequently, on March 1, 1977, an amended complaint was filed by Salud Pagsuyuin before the Court of First Instance of Zambales for the annulment of documents, damages with preliminary injunction, alleging among others, that the signature of private respondent Salud Pagsuyuin and her witnesses, namely; Marietta Pagsuyuin-Javier and Federico Javier in the Deeds of Assignment were obtained thru fraud and trickery perpetrated by the petitioners Rafael Pagsuyuin and Peregrina Pagsuyuin-Subido (Rollo, Annex "D", Amended Record on Appeal, p. 54; pp. 5-19). On March 24, 1977, petitioners filed an answer claiming by way of special defense that it was the private respondent Salud Pagsuyuin who proposed to the petitioners the transfer of all the properties covered by a Real Estate Mortgage (Rollo, Annex "D", Amended Record on Appeal, p. 54; pp. 23-32). On March 21, 1980, the trial court rendered its decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff (Salud) and against the defendants (herein petitioners) as follows: a) Declaring the Deeds of Assignment (Exhs. A and B) as null and void; b) If there was payment of indebtedness in the amount of P226,362.96 to the Manila Bank, the plaintiff is hereby directed to refund the same amount to the defendants with legal interest; c) Ordering all other payments made by the defendants offsetting the plaintiffs indebtedness such as made to Felix Makalintal, Theodore Ilagan, and Irene de Leon, refunded by the plaintiff to the defendants with legal interest; d) Ordering defendants jointly and severally to pay plaintiff the amount of P20,000.00 as moral damages and exemplary damages; and e) Ordering defendants jointly and severally to pay the amount of P20,000.00 as attorney's fees. Defendants' counterclaim are hereby denied. SO ORDERED. (Rollo, Annex "H"; Amended Record on Appeal, p. 54; pp. 69-70).

On Appeal, the Intermediate Appellate Court in its decision dated June 6, 1985, ruled:
WHEREFORE, premises considered, the decision appealed from is affirmed but with the modification of paragraphs b, d, and e of the dispositive portion of the decision to read as follows: b.) Ordering plaintiff to pay defendants the amount of P226,362.96 with legal interest from dates of said payment and expenses paid by the defendants to the Manila Bank;

d.) Ordering defendants jointly and severally to pay plaintiff the amount of P5,000.00 as moral and exemplary damages; and e.) Ordering defendants jointly and severally to pay the amount of P5,000.00 as attorney's fees. With costs against the defendants'. SO ORDERED. (Rollo, Annex "A", Decision, pp. 50-51).

A motion for reconsideration was filed on June 25, 1985, however, it was denied (Rollo, Annex "B", P. 52). Hence, this petition. The main issue in the instant case is whether or not parol evidence is admissible to annul the deed of assignment on the ground of fraud. Petitioners Rafael Pagsuyuin, et al. contend that both lower courts gravely erred in voiding the Deeds of Assignment based upon extrinsic evidence of alleged vitiated consent of the assignor-private respondent Salud Pagsuyuin in defiance of the settled rule of parol evidence that a document reduced to writing is deemed to have contained all such terms and conditions as contemplated by the parties and there can be, between the said parties and their successors in interest, no evidence of the terms of the agreement other than the contents of the writing itself. The contention is untenable. The rule on parol evidence recognizes the following exceptions:
(a) where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings; (b) . . . . (Sec. 7, Rule 130).

As can be clearly gleaned from the foregoing, the rule making a writing the exclusive evidence of the agreement therein stated, is not applicable when the validity of such agreement is the fact in dispute. A contract may be annulled where the consent of one of the contracting parties was procured by mistake, fraud, intimidation, violence or undue influence (Art. 1330, New Civil Code). In fact, as early as 1919 in the case of Bough v. Cantiveros, 40 Phil. 209, this Court laid down the rule that where the validity of the agreement is the issue, parol evidence may be introduced to establish illegality or fraud. In the case at bar, petitioners relied heavily on the fact of notarial certification of the Deeds of Assignment by Notary Public Edmundo Tubio allegedly on the 13th of

September, 1976 in the presence of witnesses Marietta Pagsuyuin-Javier and Federico Javier to deflect the admissibility of parol evidence. On the other hand, private respondent's evidence clearly shows that on September 7, 1976 a document was brought to her at the Manila International, Airport, which she signed that same evening (when she returned to her house) in the presence of witnesses Federico and Marietta Javier but they were not given copies thereof ( Rollo, pp. 72-76). Then on September 8, 1976 at around 6:00 a.m., Rafael Pagsuyuin went to the house of the private respondent Salud Pagsuyuin with more documents for signature. Relying on the assurances of petitioner Rafael that the same were additional copies of the documents they had signed in the evening of September 7, 1976 (TSN, Hearing of May 9, 1978, pp. 9-13; Rollo, pp. 73-74), Salud and her witnesses signed without reading as petitioner Rafael was in a hurry (TSN, Hearing of January 31, 1978; Rollo, pp. 74-75) and he only showed them the latter portion and refused to show the contents of the documents (TSN, Hearing of October 13, 1977; Rollo, pp. 75-76). After he had obtained their signatures, Rafael left the house of Salud again without leaving any copy of the document (TSN, Hearing of January 31, 1978, Ibid.). As it turned out, the documents were denominated as Deeds of Assignment, contrary to the intent of private respondent. These testimonies were never satisfactorily rebutted by the petitioners. At this juncture, the findings of the trial court which were affirmed by the appellate court are quoted with approval:
. . . the instruments of sale (Exh. "A" and "B") lacked the valid consent of the transferor Salud Pagsuyuin as there was fraud enlisted in making plaintiff sign the documents without understanding the contents thereof. The authenticity and genuineness of the documents were attacked because . . . . . defendants vitiated consent in the preparation and execution of said documents as plaintiff was misled into believing the same is a deed of mortgage instead of a deed of assignment. The evidence had proven that plaintiff was tricked and deceived into signing two (2) deeds of assignment which was not her intention to do so (sic).

The trial court continued:

The person who could have enlightened this court as to the disputed facts is none other than Rafael Pagsuyuin himself, but said witness developed cold feet and discontinued declaring against the plaintiff, most probably because of deep-rooted fear of being discovered falsifying the truth and experiencing the fangs of guilty conscience, he broke completely down in court and could not continue his declaration against his cousin the herein plaintiff, so that his counsel withdrew him as a witness and his entire testimony was disregarded by this court. Judging from his demeanor and attitude, the court had very well observed that he could not explain the dubious circumstances that characterized the transfer of the property between him and the plaintiff. The failure of defendant Rafael Pagsuyuin to give testimony was a fatal defect that torpedoed the efforts of the defendants and witnesses to prove the defense that there was a valid transfer of the properties. (C.A. Decision, Rollo, pp. 40-51).

While the writing itself may have been accompanied by the most solemn formalities, no instrument is so sacred when tainted with fraud as to place it beyond the scrutiny of

extrinsic evidence. This evidence overcomes the known presumption fraus est odiosa et non praesumenda (Yturralde v. Vagilidad, 28 SCRA 393 [1969]). The testimonies of private respondent Salud Pagsuyuin and her two instrumental witnesses which have not been satisfactorily rebutted by the petitioners Rafael Pagsuyuin, et al. have made out a case of fraud by evidence clear, convincing and more than merely preponderant. Moreover, it is axiomatic that the factual findings of the trial Court and Court of Appeals are entitled to great respect (Vda. de Roxas v. IAC, 143 SCRA 77 [1987]), that "it is a fundamental rule in criminal as well as in civil cases that in the matter of credibility of witnesses the findings of the trial court are given great weight and the highest degree of respect by the appellate court (People v. Sarol, 139 SCRA 125 [1985]), unquestionably because the trial judge is in a superior position to gauge the credibility of those who take the witness seat before him. He has the opportunity to size up the appearance, the demeanor, the manner of testifying, the probability or improbability of the testimony, of the witnessed. Indeed, the trial court has a first hand advantage to assess the value to be given the testimony of a witness (Yturralde v. Vagilidad, supra). Petitioners Rafael Pagsuyuin, et. al., also assign as error the grant of moral and exemplary damages plus attorney's fees in favor of private respondent Salud Pagsuyuin. As shown in the records of the case, the trial court and respondent Court of Appeals are in unison as to the findings of the former that a sufficient cause of action had been proved by overwhelming preponderance of evidence of the private respondent as against the petitioners Rafael Pagsuyuin, et al. For moral damages to be awarded, it is essential that the claimant must have satisfactorily proved during the trial the existence of the factual basis of the damages and its causal connection with adverse party's acts. This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer (Makabili v. Court of Appeals, 157 SCRA 253 [1988]). The wrongful act attributable to the petitioners the employment of fraud is the proximate cause of the mental anguish suffered by private respondent Salud Pagsuyuin. PREMISES CONSIDERED, the decision of the Intermediate Appellate Court dated June 6, 1985 is AFFIRMED. SO ORDERED. Melencio-Herrera, Padilla, Sarmiento and Regalado JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-48727 September 30, 1982 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. JOSEPH LEONES y DUCUSIN alias JESSIE, defendant-appellant.

GUERRERO, J.: This is an appeal from the decision of the Court of First Instance of La Union, Branch I, convicting the accused-appellant, Joseph Leones y Ducusin, of the crime of rape charged in the following information, to wit:
The undersigned offended party after having been duly sworn to an oath in accordance with law hereby accuses JOSEPH LEONES y DUCUSIN alias Jessie of the crime of RAPE, committed as follows: That on or about the 22nd day of April, 1973, in the Municipality of San Fernando, Province of La Union, Philippines, and within the jurisdiction of this Honorable Court, said accused Joseph Leones y Ducusin alias Jessie, by means of violence and use of force compelled the offended party to swallow tablets and consequently thereafter while she fell into semi-consciousness the said accused wilfully, unlawfully and feloniously have carnal knowledge of the complainant Irene Dulay against her will in the house of the accused. CONTRARY TO LAW, with the aggravating circumstance of abuse of confidence. San Fernando, La Union, May 8,1973. (SGD.) IRENE DULAY Offended Party WITH MY CONFORMITY: (SGD.) GAUDENCIO DULAY (Father of the Offended Party)

and sentencing him to suffer the penalty of reclusion perpetua and to pay the cost. The facts are narrated in the People's brief as follows:

Complainant Irene Dulay was a salesgirl employed in the store of Mr. & Mrs. Pepito Leones at San Fernando, La Union where she resided. On April 22, 1973, the complainant who had headache stayed in her room. Earlier that day, the members of the Leones family, including the accused-appellant Joseph Leones and his sister Elizabeth, had gone to nearby beach resort for a picnic. At about past noon the appellant and Elizabeth returned to their house. While there, the appellant and Elizabeth entered the room where complainant was lying down and forced her to take three tablets dissolved in a spoon which according to them were aspirin. The complainant refused to take the tablets but was forced to do so when the appellant held her mouth while his sister pushed the medicine. Then the appellant and Elizabeth left the room and after a while the complainant felt dizzy. Later, the appellant returned to the complainant's room and took of her panty. Then the appellant went on top of her. The complainant tried to push him but as she was weak and dizzy, the appellant succeeded in abusing her (pp. 2-8,15-16, tsn, June 27, 1975). At about 4:30 P.M. of the same date, Natividad Leones, the stepmother of the appellant, found the complainant unconscious near her room without any panty on. She was then taken to the La Union Provincial Hospital by the driver of the Leones family (pp. 3-5, tsn, June 10, 1976). When admitted to the hospital at about 6:00 P.M. of the same date (April 22, 1973), the complainant was semiconscious, incoherent and hysterical. She refused to talk and to be examined by the doctors. She was irritated when approached by a male figure (Exhibit "B", Records, pp. 280-281). The complainant was first attended to by Dr. Antonino Estioco who found out that she had vaginal bleeding (Exhibit "2", Records, p. 786). The complainant was then referred to Dr. Fe Cayao who was informed by Dr. Estioco that she might have been a victim of rape (p. 28, tsn, May 15, 1974). In the presence of the complainant's father, Dr. Cayao examined her on April 26, 1973 after which she issued a medical certificate with the following findings: 1. Presence of erythema of the vestibular portion of external genitalia; 2. Healing lacerations of the hymen at 2 o'clock and 10 o'clock; 3. Easily admit one finger with pain; 4. Unclotted blood at the vaginal cavity; 5. Smear exam for sperm cell-negative; 6. D'plococci-negative 7. Florence test-reagent not available. (Exhibit "A", Records, p. 3).

Because of the lack of facilities in the hospital, Dr. Cayao was not able to make any examination to determine whether drug was given to the complainant. (pp. 23- 24, 1 tsn, May 15, 1974.

The accused-appellant denied the charge imputed to him, claiming that at the time of the alleged rape between 2:00 o'clock and 3:00 o'clock p.m. on April 22, 1973, he was at the beach resort with the other members of the family, namely his sister Elizabeth, his stepmother Natividad Leones, his younger brothers and sisters named Marivic, Theresa, Carol, Pinky and Bongbong together with other companions, for a picnic and had lunch thereat, swimming and picture-taking. As indicated earlier, the trial court, holding that "viewed from all legal aspects of this case, in the light of the recorded evidence, ... is fully convinced that the crime of rape charged in the criminal complaint was committed by the accused. The evidence presented by the prosecution is not only clear and convincing but has established the guilt of the accused beyond reasonable doubt." From this sentence, the accused appeals to Us, strongly submitting that the trial court erred in finding him guilty of the crime charged since the evidence presented against him did not prove his guilt beyond reasonable doubt. At the outset, We note a number of significant facts from the recorded evidence of the prosecution which materially and substantially debunks and derails the theory of the Government and correspondingly impresses considerable merit to the defense. 1. The clinical case record of Irene Dulay's admission and confinement at the Provincial Hospital of La Union, marked Exhibit "2", contain entries which totally and completely belle the claim of the complainant that she was raped by the accused in the afternoon of April 22, 1973. The same is reproduced hereunder:
LA UNION PROVINCIAL HOSPITAL San Fernando, La Union CLINICAL CASE RECORD
Fiscal Yr.: 1973 Adm. No.: 275 File No. or Rec. No. Physician: Physician:

Admitted by:

Dr. Estioco

Approved by:

Ped.:

City

Free: Surg.: Transient free: Govt. free; Prvt. free: Hosp. pay: Off. Hosp. pay: Off. Prvt. pay:

Dept.

Obs.: Classif. Med.:

EENT:

C.U.

Dental:

Name of Patient: Irene Dulay Maiden name: ____________________ Residence: San Fernando, La Union In case of accident or death notify Natividad Leones, (employer) Charge Hosp. Acct. to: _______________________________________ Age: 16 yrs. Single: Married; Widowed: Nationality Fil. Admitted: 6:00 P.M. 4-22-1973 Assgd PR: I Bed by Dr. Estioco Transf: P.M.____19____ to Dept: PR Ward #: ______ Bed # ______ Complaints: Vaginal bleeding Diagnosis in full: Healing lacerated wide at 2 o'clock and 10 o'clock hymen.
Re sul ts: Rec.: Dispos ition:, Dis ch:

Impr v: Unim prov:

Dis d: Ab co nd: 3 : 4 5 P

. M .

Died:

Tra nsf Ho sp.

5 1 2 7 3

Operation: _____________________________________ Anesthesia: _____________________________________ History written by: APPROVED: (SGD.) ESTIOCO (unintelligible) (Resident Physician) Dept. Head The entry written in the above clinical record when Irene Dulay was admitted under the item "Complaints" reads: Vaginal Bleeding, and below this entry appears the Diagnosis-Healing lacerated wide at 2 o'clock and 10 o'clock hymen. Assuming that the victim was raped between 2 and 3 o'clock p.m., April 22, 1973 (the same day she was admitted in the hospital), then the lacerations of the hymen at 2 o'clock and 10 o'clock would not have been described and indicated to be Healing in the clinical case record. It would be described as "laceration fresh" or by similar words like "bloody or new lacerations." There is no instant formula, technique or process known to medical science or by human experience to hasten the healing of a lacerated hymen within three (3) hours or so after defloration. Citing from the book, Legal Medicine by Pedro P. Solis, M.D., Ll B Medico Legal Officer, National Bureau of Investigation, Department (now Ministry) of Justice, We have the following comment on:
Healing time of laceration of the hymen:

Superficial laceration of the hymen may heal in two or three days. More extensive tear may require longer time, usually seven to ten days. Complicated types and those with intervening infection may cause delay in the healing depending upon the extent of the involvement of the surrounding tissue and the degree of infection. Complicated laceration may even require surgical intervention." (p. 302, Emphasis supplied.)

Since there was found laceration, wide, at 2 o'clock and 10 o'clock of the hymen which was then already healing on April 22, 1973, it follows reasonably that the defloration occurred several days before, which may have happened when Irene Dulay took a week-long vacation to her hometown in Pugo, La Union (tsn, p. 10, June 27, 1975) and there is evidence that she had a suitor named Ferdinand Sarmiento who is from nearby Agoo, La Union. And when she returned to the house of her employer in San Fernando, La Union, she had already chest and stomach pains and a headache. The written entries in the clinical case record, Exh. "2", showing the date of her admission in the hospital on April 22, 1973, her complaint of vaginal bleeding and the diagnosis of "Healing lacerated wide at 2 o'clock and 10 o'clock hymen" are prima facie evidence of the facts therein stated, the said entries having been made in official records by a public officer of the Philippines in the performance of his duty especially enjoined by law, which is that of a physician in a government hospital. (Rule 130, See. 38, Rules of Court). In the case at bar, Dr. Antonino Estioco was the admitting physician but unfortunately, he was not presented as a witness for the government. In connection with Exhibit "2", there is one piece of damaging evidence which not only derogates the theory of the prosecution but also cannot be explained by the government, and that is the frank testimony of Dr. Fe Cayao herself, thus:
Q The question is: did you not discover through reading the clinical history of the patient that the woman was not complaining of alleged rape? A It was not indicated here that she was complaining of an alleged rape. Q There was not a single word in the clinical record of the victim that she was the victim of an alleged rape, is that correct? A Yes. (tsn, pp. 27-28, May 15,1974)

2. From the same clinical case record, Exhibit "2", it appears clearly that the alleged victim, Irene Dulay, was having her menstrual period when she was supposedly raped for the Complaint indicated that she had vaginal bleeding. She herself admitted in her testimony that on April 22, 1973, she was having her menstruation. (tsn, p. 9, June 27, 1975). It is quite abnormal and unnatural, almost unheard of in human experience and behavior that a man would have sexual intercourse with a woman then having her menstrual period, as was the admitted condition of the complainant when she was allegedly abused by the accused. And because of this universal abhorrence, taboo and distaste to have sexual contact with a menstruating female and this is so however passionate and lustful the man way be unless he is depraved or demented. We cannot believe that the accused-appellant, a young fourth year college student of civil engineering studying in Baguio City, would break or violate such a taboo by drugging the complainant girl with the help of her sister and afterwards have sex relations with her in her menstrual condition.

3. When the complainant was investigated by the police, she declared in her affidavit, Exhibit "5", the following answers to these questions:
5. Q Why are you in this office? A I came here with the purpose of giving my voluntary statement in connection with the incident that happened to me in the house of my employer and I want to file a formal complaint against the persons who offended me, sir. 6. Q Who are those persons who offended you, if you know? A They are Joseph alias Jessie and Elizabeth both surnamed Leones, the son and daughter of Mr. Pepito Leones, my employer. 7. Q When did that incident happened? A At about between the hours of 2:00 & 3:00 in the afternoon of April 22, 1973, sir. 8. Q What did these Joseph and Elizabeth do against you? A Because I was suffering headache at that time because it was the first day of my menstrual period, they were inviting me to go with them to Wallace and I told them that I have a headache then later they forced me to take in aspirin tablets, three (3) tablets then after a few seconds, I begun to feel dizzy and halfconscious. 9. Q Do you know if what you have forcely taken and given by the two, Joseph and Elizabeth were really aspirin tablets? A I do not know, but they were white in color similar to aspirin tablets but after I have taken them I felt dizzy then unconscious. 10. Q In what manner did Joseph Leones and Elizabeth Leones force you to take in the tablets? A At about that time and date I mentioned above, I was then lying on my bed in my room at their residence, then Jessie and Elizabeth came in. Joseph alias Jessie took hold of my throat with one hand and pressed it hard that I was almost choked up, his other hand held my both cheeks his thumb and forefinger pressed hard to forcely. open my mouth while Elizabeth held a spoon containing the three (3) tablets then I was told by them to swallow the pills. I could not resist so I swallowed the pills then later I felt dizzy as if the world was turning around.

Thus, it would appear from the above recorded evidence that the accused Joseph Leones and his sister Elizabeth, helped and conspired with each other in the commission of the crime of rape against the offended party, an assumption that is hardly believable for it would lead to the absurb conclusions that Elizabeth was a principal by cooperation and that both Joseph and Elizabeth had planned the rape for they conveniently provided themselves beforehand with the necessary drug. It further appears in the record that the Philippine Constabulary in La Union did not believe the existence of rape when Felicidad Boado reported the incident (tsn, p. 25, June 18, 1974), which disbelief may reasonably be attributed to the unnatural and unusual version of the complainant that another of her own sex had conspired and confabulated in the commission of the alleged defilement.

4. The complainant, Irene Dulay, had declared in her affidavit, Exhibit " 5 ", in answer to question No. 9 that after she had taken the tablets that were white in color similar to aspirin tablets, she felt dizzy, then unconscious. In her testimony at the trial, however, she testified that after she had taken the tablets, she felt dizzy and felt the removal of her panty and that when he went on top of her, he inserted his private parts into her private parts (tsn, pp. 6-7, June 27, 1975), but on cross-exmination, she said that she became unconscious when Joseph Leones was already on top of her (tsn, p. 22, June 27, 1975). If she became unconscious when Leones was on top of her and yet she felt pain when he placed his private parts into hers, then this is incredible for how could she have known what was done to her and how she felt when she was already unconscious as admitted by her. 5. The record is replete with testimonies of the very witnesses of the prosecution itself revealing the irrational, if not immoral behavior and conduct of the complainant which cuts deep into the morality, character and credibility of the complaining witness. To cite a few of her immoral acts, when the police came to visit her, Irene Dulay took hold of the penis, of the policeman (Testimony of Felicidad Boado, tsn, p. 20, June 18, 1974). Whenever she sees a man, she goes after him and takes hold of his hand and places it in her private part (Testimony of Leonida Dulay, p. 5, tsn, Sept. 20, 1974). Sometimes she is seated, sometimes she is standing and there are moments that she goes around and whenever she sees a man, she calls for him and says "darling Jessie" (Cross-examination of Leonida Dulay, tsn, p. 14, Sept. 20, 1974). She even said "have sexual intercourse with me," making particular mention of the person who wanted to do that to her as Joseph Leones (Cross-examination of Leonida Dulay, tsn, pp. 27-28, Sept. 20, 1974). There are times when she gets a pillow and imitates the sexual act (tsn, p. 29, Sept. 20, 1974). There are moments when she takes hold of a pillow, embraces it, and makes movements imitating the sexual act (tsn, Testimony of Leonida Dulay, p. 5, Sept. 20, 1974). 6. The circumstances of persons, time and place attendant in the commission of the crime do not build up the case for the People. On the contrary, We find facts and circumstances which contradict and contravene the theory of the prosecution, rendering it highly improbable and questionable. Thus, the room of the complainant where the alleged rape was committed was at the ground floor of the house where her employer lives with his family and maintains a canteen at the premises, the room being very near the washing place and had a door with only wooden jalousies. There were several persons present in the house at the time of the alleged rape and they were Evelyn Estigoy, the secretary of Natividad Leones, the cook Inocencia Gangad and her daughter, Mantes. With the presence of these persons at the premises and the complainant's room was not secluded nor completely closed, the opportunity to commit the rape is hardly present. More than that the alleged time being between 2:00 o'clock and 3:00 o'clock in the afternoon and with the supposed attendance of the perpetrator's elder sister,

Elizabeth the element of secrecy had been totally ignored or disregarded which is quite unbelievable and incredible in such a crime as rape. Indeed, rape is a most detestable crime. It should be severely and impartially punished. But a rape charge is easy to make, hard to prove and harder to defend by the party accused, though innocent. Experience has shown that unfounded charges of rape have frequently been preferred by women actuated of rape have frequently been preferred by women actuated by some sinister, ulterior or undisclosed motive. Convictions for such crime should not be sustained without clear and convincing proof of guilt. On more than one occasion, it has been pointed out that in crimes against chastity, the testimony of the injured woman should not be received with precipitate credulity. When the conviction depends on any vital point upon her uncorroborated testimony, it should not be accepted unless her sincerity and candor are free from suspicion. A little insight into human nature is of utmost value in judging matters of this kind. (Cornelio Flores, 26 Phil. 262, 268; Ignacio Landicho, 8 ACR 580; Rafael Lacson, CA 53 O.G. 1823; Francisco Salvador, CA 52 O.G. 7290; Lago, CA 45 O.G. 1356; Barbo, 56 SCRA 459; Bay, 27 Phil. 495; Pantaleon Ramos, 35 Phil. 671; Brocal, CA 36 O.G. 857; Topacio, CA 36 O.G. 1358; Fernando Fausto, 51 Phil. 852; cited in Aquino, The Revised Penal Code, 1977 Ed., Vol. III, pp. 1679-1680). After carefully analyzing and weighing the evidence presented by the prosecution in the light of the legal principles above outlined and now well-established in Our jurisprudence and guided by a little insight into human nature, We are persuaded and convinced that the guilt of the accused has not been proven beyond reasonable doubt. That moral certainty or degree of proof which produces conviction in an unprejudiced mind (Rule 133, Section 2, Rules of Court) has not been established by the prosecution. The constitutional mandate that the accused is presumed innocent must prevail and, therefore, the accusedappellant, Joseph Leones, is entitled to an acquittal. WHEREFORE, IN VIEW OF ALL THE FOREGOING, the judgment of conviction is hereby REVERSED and the accused Joseph Leones y Ducusin is ACQUITTED of the crime charged. Costs de oficio. SO ORDERED. Barredo (Chairman), Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ., concur. De Castro, J., took no part.