G.R. No. 3810, U.S. v. Orera, 11 Phil.

596

the Penal Code, should be that of presidio correccional in its minimum and
medium degrees, and a fine, plus the corresponding indemnification for the
damage caused, which in the present case was P1, the price of the true ticket.

October 18, 1907

G.R.
No.
3810
THE
UNITED
STATES, plaintiff-appellee,
vs.
DAMIAN ORERA (alias KIM CUAN), defendant-appellant.
Del-Pan,
Ortigas
and
Attorney-General Araneta for appellee.

Fisher

for

appellant.

We, therefore, sentence Damian Orera (alias Kim Cuan) to one year, eleven
months, and twenty one days ofpresidio correccional, and to pay a fine of 625
pesetas, as imposed in the judgment, with the accessory penalty provided for in
article 58, the indemnification of P1 to the offended party, or, in default thereof, to
subsidiary imprisonment, and the payment of the costs of both instances. So
ordered.
Torres, Johnson, Willard and Tracey, JJ., concur.

ARELLANO, C.J.:
Damian Orera (alias Kim Cuan) was convicted by the Court of First Instance of the
city of Manila, of the crime charged in the complaint, namely, of having falsified,
to the damages of a Chinese theatrical company of the Philippine Islands, called
Eng Ning, "a Chinese theater ticket which entitled the bearer thereof to admission
to a performance held in the theater of the above company at Manila, on the 7th
of October, 1906, by counterfeiting and simulating the signature and rubric of Eng
Ning on the ticket the same figures, letters, dragons, ornaments and signatures,
as placed by Eng Ning and the above mentioned Chinese theatrical company . . ."
The accused was sentenced to be imprisoned at the Insular Prison of Bilibid for the
period of six months and one day, to pay a fine of 625 pesetas, Philippine
currency, and the costs of the suit, from which the judgment the accused
appealed.
The appeal having been heard, this court holds:
1. That, in effect, as argued by the appellant, he could not be convicted of the
falsification of six tickets, as declared and held in the judgment appealed from,
inasmuch as the complaint was restricted to one ticket only.
2. That the court below did not err in qualifying such ticket as a document in order
to prosecute and punish the crime of falsification, the subject-matter of the
complaint, because if, according to the authority cited by the appellant, a
document is a "deed, instrument or other duly authorized paper by which
something is proved, evidenced or set forth," and a private document is,
according to another authority cited by the appellant, "every deed or instrument
executed by a private person, without the intervention of a public notary or of
other person legally authorized, by which document some disposition or
agreement is proved, evidenced or set forth," it follows that the ticket in question,
being an authorized document evidencing an agreement for the rent of a place in
a theater to enable the possessor to witness a theatrical performance, is a private
document.
The error has been in the penalty imposed, an error which necessarily must be
remedied by this court in the present appeal, in order that the judgment may be in
conformity with the law. Said penalty, according to the provisions of article 304 of

G.R. No. L-9181

November 28, 1955

THE PEOPLE OF THE PHILIPPINES, petitioner,

vs.
THE HON. NICASIO YATCO, Judge of the Court of First Instance of Rizal, Quezon City
Branch, and JUAN CONSUNJI and ALFONSO PANGANIBAN, respondents.
Office of the Solicitor General Ambrosio Padilla, Solicitor Meliton G. Soliman, City
Attorney Pedro R. Revilla and Assistant City Attorney Julian E. Lustre for petitioner.
Estanislao A. Fernandez, Augusto Ilagan, Claro T. Almeda and Rufino Navarro for
respondents.
REYES, J.B.L., J.:
In an amended information filed by the City Attorney of Quezon City on March 22,
1955, Juan Consunji, Alfonso Panganiban, and another whose identity is still
unknown, were charged with having conspired together in the murder of one Jose
Ramos (Criminal Case No. Q-1637 of the Court of First Instance of Quezon City).
Trial of the case started on May 3, 1955, and in several hearings the prosecution
had been presenting its evidence. During the progress of the trial on May 18,
1955, while the prosecution was questioning one of its witnesses, Atty. Arturo
Xavier of the National Bureau of Investigation, in connection with the making of a
certain extra-judicial confession (allegedly made before him) by defendant Juan
Consunji to the witness, counsel for the other defendant Alfonso Panganiban
interposed a general objection to any evidence on such confession on the ground
that it was hearsay and therefore incompetent as against the other accused
Panganiban. The Court below ordered the exclusion of the evidence objected to,
but on an altogether different ground: that the prosecution could not be permitted
to introduce the confessions of defendants Juan Consunji and Alfonso Panganiban
to prove conspiracy between them, without prior proof of such conspiracy by a
number of definite acts, conditions, and circumstances. Thereafter, according to
the transcript, the following remarks were made:
FISCAL LUSTRE:
May we know from counsel if he is also objecting to the admissibility of the
confession of Consunji as against the accused Consunji himself?
COURT:
That would be premature because there is already a ruling of the Court that you
cannot prove a confession unless you prove first conspiracy thru a number of
indefinite acts, conditions and circumstances as required by law. Annex "B" of the
petition, p. 9
The prosecution then moved in writing for a reconsideration of the order of
exclusion, but again the motion was denied. Wherefore, this petition for certiorari
was brought before this Court by the Solicitor General, for the review and
annulment of the lower Court's order completely excluding any evidence on the

extrajudicial confessions of the accused Juan Consunji and Alfonso Panganiban

without prior proof of conspiracy.
We believe that the lower Court committed a grave abuse of discretion in ordering
the complete exclusion of the prosecution's evidence on the alleged confessions
of the accused Juan Consunji at the stage of the trial when the ruling was made.
Section 14, Rule 123, Rules of Court, is specific as to the admissibility of the
extrajudicial confession of an accused, freely and voluntarily made, as evidence
against him.
SEC. 14. Confession. The declaration of an accused expressly acknowledging
the truth of his guilt as to the offense charged, may be given in evidence against
him.
Under the rule of multiple admissibility of evidence, even if Consunji's confession
may not be competent as against his co-accused Panganiban, being hearsay as to
the latter, or to prove conspiracy between them without the conspiracy being
established by other evidence, the confession of Consunji was, nevertheless,
admissible as evidence of the declarant's own guilt (U. S. vs. Vega, 43 Phil. 41;
People vs. Bande, 50 Phil. 37; People vs. Buan, 64 Phil. 296), and should have
been admitted as such.
The rule cited by the Court below in support of its exclusion of the proffered
evidence is Sec. 12 of Rule 123, providing that:
The act or declaration of a conspirator relating to the conspiracy and during its
existence may be given in evidence against the co-conspirator after the
conspiracy is shown by evidence other than such act or declaration.
Manifestly, the rule refers to statements made by one conspirator during the
pendency of the unlawful enterprises ("during its existence") and in furtherance of
its object, and not to a confession made, as in this case, long after the conspiracy
had been brought to an end (U. S. vs. Empeinado, 9 Phil., 613; U. S. vs.
Raymundo, 14 Phil., 416; People vs. Badilla, 48 Phil., 718; People vs. Nakpil, 52
Phil., 985).
Besides, the prosecution had not yet offered the confessions to prove conspiracy
between the two accused, nor as evidence against both of them. In fact, the
alleged confessions (both in writing and in tape recordings) had not yet even been
identified (the presentation of Atty. Xavier was precisely for the purpose of
identifying the confessions), much less formally offered in evidence. For all we
know, the prosecution might still be able to adduce other proof of conspiracy
between Consunji and Panganiban before their confessions are formally offered in
evidence. Assuming, therefore, that section 12 of Rule 123 also applies to the
confessions in question, it was premature for the respondent Court to exclude
them completely on the ground that there was no prior proof of conspiracy.
It is particularly noteworthy that the exclusion of the proferred confessions was
not made on the basis of the objection interposed by Panganiban's counsel, but

upon an altogether different ground, which the Court issued motu proprio.
Panganiban's counsel objected to Consunji's confession as evidence of the guilt of
the other accused Panganiban, on the ground that it was hearsay as to the latter.
But the Court, instead of ruling on this objection, put up its own objection to the
confessions that it could not be admitted to prove conspiracy between Consunji
and Panganiban without prior evidence of such conspiracy by a number of
indefinite acts, conditions, circumstances, etc. and completely excluded the
confessions on that ground. By so doing, the Court overlooked that the right to
object is a mere privilege which the parties may waive; and if the ground for
objection is known and not reasonably made, the objection is deemed waived and
the Court has no power, on its own motion, to disregard the evidence (Marcella vs.
Reyes, 12 Phil., 1).

cause is prosecuted to the Supreme Court upon appeal, this Court then has all the
material before it necessary to make a correct judgment.
There is greater reason to adhere to such policy in criminal cases where questions
arise as to admissibility of evidence for the prosecution, for the unjustified
exclusion of evidence may lead to the erroneous acquittal of the accused or the
dismissal of the charges, from which the People can no longer appeal.
Wherefore, the order excluding the confessions of the accused Juan Consunji and
Alfonso Panganiban is annulled and set aside and the Court below is directed to
proceed with the trial in accordance with law and this opinion. Costs against
respondents Juan Consunji and Alfonso Panganiban. So ordered.

We see no need for the present to discuss the question of the admissibility of the
individual extrajudicial confessions of two or more accused for the purpose of
establishing conspiracy between them through the identity of the confessions in
essential details. After all, the confessions are not before us and have not even
been formally offered in evidence for any purpose. Suffice it to say that the lower
Court should have allowed such confessions to be given in evidence at least as
against the parties who made them, and admit the same conditionally to establish
conspiracy, in order to give the prosecution a chance to get into the record all the
relevant evidence at its disposal to prove the charges. At any rate, in the final
determination and consideration of the case, the trial Court should be able to
distinguish the admissible from the inadmissible, and reject what, under the rules
of evidence, should be excluded.
Once more, attention should be called to the ruling of this Court in the case of
Prats & Co. vs. Phoenix Insurance Co., 52 Phil., 807, 816-817:
In the course of long experience we have observed that justice is most effectively
and expeditiously administered in the courts where trial objections to the
admission of proof are received with least favor. The practice of excluding
evidence on doubtful objections to its materiality or technical objections to the
form of the questions should be avoided. In a case of any intricacy it is impossible
for a judge of first instance, in the early stages of the development of the proof, to
know with any certainty whether testimony is relevant or not; and where there is
no indication of bad faith on the part of the Attorney offering the evidence, the
court may as a rule safely accept the testimony upon the statement of the
attorney that the proof offered will be connected later. Moreover, it must be
remembered that in the heat of the battle over which the presides, a judge of first
instance may possibly fall into error in judging of the relevancy of proof where a
fair and logical connection is in fact shown. When such a mistake is made and the
proof is erroneously ruled out, the Supreme Court, upon appeal, often finds itself
embarrassed and possibly unable to correct the effects of the error without
returning the case for a new trial, a step which this Court is always very loath to
take. On the other hand, the admission of proof in a court of first instance, even if
the question as to its form, materiality, or relevancy is doubtful, can never result
in much harm to either litigant, because the trial judge is supposed to know the
law; and it is duty, upon final consideration of the case, to distinguish the relevant
and material from the irrelevant and immaterial. If this course is followed and the

G.R. No. 105813 September 12, 1994

CONCEPCION M. CATUIRA, petitioner, vs.

COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

BELLOSILLO, J.:
Is the testimony of a witness inadmissible in evidence if not formally offered at the
time the witness is called to testify, as required in Sec. 35, in relation to Sec. 34,
Rule 132, of the Revised Rules on Evidence? 1
On 8 June 1990, two (2) Informations for estafa were filed against petitioner
Concepcion M. Catuira with the Regional Trial Court of Calamba, Laguna, for
having issued two (2) checks in payment of her obligation to private complainant
Maxima Ocampo when petitioner had no sufficient funds to cover the same, which
checks upon presentment for payment were dishonored by the drawee bank. 2
After the prosecution had presented its evidence, petitioner Concepcion M. Catuira
filed a Motion to Dismiss (by way of Demurrer to Evidence) under Sec. 15, Rule
119, of the 1985 Revised Rules on Criminal Procedure. 3 Petitioner contended that
the testimony of private respondent Ocampo was inadmissible in evidence since it
was not properly introduced when she was called to testify as mandated in Sec.
35, Rule 132, of the Revised Rules on Evidence. Petitioner also argued that even if
the testimony of private respondent was considered, the evidence of the
prosecution still failed to prove that the checks were issued in payment of an
obligation.

questions which have been asked. 7 As a general rule, the proponent must show
its relevancy, materiality and competency. Where the proponent offers evidence
deemed by counsel of the adverse party to be inadmissible for any reason, the
latter has the right to object. But such right is a mere privilege which can be
waived. Necessarily, the objection must be made at the earliest opportunity, lest
silence when there is opportunity to speak may operate as a waiver of objections.
8
Thus, while it is true that the prosecution failed to offer the questioned testimony
when private respondent was called to the witness stand, petitioner waived this
procedural error by failing to object at the appropriate time, i.e., when the ground
for objection became reasonably apparent the moment private respondent was
called to testify without any prior offer having been made by the proponent. Most
apt is the observation of the appellate court:

On 26 July 1991, the trial court denied the motion to dismiss for lack of merit. On
18 Oct 1991, it likewise denied the motion to reconsider its denial of the motion to
dismiss.

While it is true that the prosecution failed to offer in evidence the testimony of the
complaining witness upon calling her to testify and that it was only after her
testimony and after the petitioner moved that it be stricken that the offer was
made, the respondent Court did not gravely err in not dismissing the case against
the petitioner on the ground invoked. For, she should have objected to the
testimony of the complaining witness when it was not first offered upon calling her
and should not have waited in ambush after she had already finished testifying.
By so doing she did not save the time of the Court in hearing the testimony of the
witness that after all according to her was inadmissible. And for her failure to
make known her objection at the proper time, the procedural error or defect was
waived. 9

On 4 November 1991 petitioner elevated her case to the Court of Appeals through
a petition for certiorari, prohibition and mandamus. In a similar move, the
appellate court rejected her petition and sustained the trial court in its denial of
the motion to dismiss. Hence, this recourse seeking to annul the decision of the
Court of Appeals rendered on 27 February 1992 as well as its resolution of 1 June
1992. 4

Indeed, the rationale behind Sec. 34, Rule 132, is manifest in the minutes of the
Revision of Rules Committee. 10 Thus The new rule would require the testimony
of a witness to offer it at the time the witness is called to testify. This is the best
time to offer the testimony so that the court's time will not be wasted. Since it can
right away rule on whether the testimony is not necessary because it is irrelevant
or immaterial.

Petitioner claims that the Court of Appeals erred when it accepted the testimony
of private respondent despite the undisputed fact that it was not offered at the
time she was called to testify; her testimony should have been stricken off the
record pursuant to Sec. 34, Rule 132, which prohibits the court from considering
evidence which has not been formally offered; and, it was error for respondent
appellate court to declare that petitioner's objection was not done at the proper
time since under Sec. 36, Rule 132, 5 objection to evidence offered orally must be
made immediately after the offer is made. Evidently, petitioner could not have
waived her right to object to the admissibility of the testimony of private
respondent since the rule requires that it must be done only at the time such
testimony is presented and the records plainly show that the opportunity for
petitioner to object only came when the prosecution attempted, albeit belatedly,
to offer the testimony after it has rested its case. 6

If petitioner was genuinely concerned with the ends of justice being served, her
actuations should have been otherwise. Instead, she attempted to capitalize on a
mere technicality to have the estafa case against her dismissed. 11 But even
assuming that petitioner's objection was timely, it was at best pointless and
superfluous. For there is no debating the fact that the testimony of complaining
witness is relevant and material in the criminal prosecution of petitioner for
estafa. It is inconceivable that a situation could exist wherein an offended party's
testimony is immaterial in a criminal proceeding. Consequently, even if the offer
was belatedly made by the prosecution, there is no reason for the testimony to be
expunged from the record. On the contrary, the unoffered oral evidence must be
admitted if only to satisfy the court's sense of justice and fairness and to stress
that substantial justice may not be denied merely on the ground of technicality. 12

The petition is devoid of merit. The reason for requiring that evidence be formally
introduced is to enable the court to rule intelligently upon the objection to the

WHEREFORE, the decision of the Court of Appeals sustaining the order of the
Regional Trial Court of Calamba, Laguna, Br. 35, denying petitioner's motion to
dismiss (by way of demurrer to evidence) is AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 86062

June 6, 1990

INTERPACIFIC TRANSIT, INC., petitioner,

vs.
RUFO AVILES and JOSEPHINE AVILES, respondents.

witness had testified that they were still in the ITI bodega. Neither had it been
shown that the originals had been "recorded in an existing record a certified copy
of which is made evidence by law."
In its order denying the motion for reconsideration, the trial court declared that it
"had resolved the issue of whether the accused has civil obligation to ITI on the
basis of the admissibility in evidence of the xerox copies of the airway bills." 5

Balane, Barican, Cruz, Alampay Law Office for petitioner.

Francisco G. Mendoza private respondents.

CRUZ, J.:
This case hinges on the proper interpretation and application of the rules on the
admissibility of documentary evidence and the viability. of a civil action for
damages arising from the same acts imputed to the defendant in a criminal action
where he has been acquitted.
In the information filed against Rufo and Josephine Aviles, the private respondents
herein, it was alleged that being then sub-agents of Interpacific Transit, Inc. and as
such enjoying its trust and confidence, they collected from its various clients
payments for airway bills in the amount of P204,030.66 which, instead of
remitting it to their principal, they unlawfully converted to their own personal use
and benefit. 1
At the trial, the prosecution introduced photocopies of the airway bills supposedly
received by the accused for which they had not rendered proper accounting. This
was done in, the course of the direct examination of one of the prosecution
witnesses. 2 The defense objected to their presentation, invoking the best
evidence rule. The prosecution said it would submit the original airway bills in due
time. Upon such undertaking, the trial court allowed the marking of the said
documents a s Exhibits "B" to "OO." The e prosecution n did submit the original
airway bills nor did it prove their loss to justify their substitution with secondary
evidence. Nevertheless, when the certified photocopies of the said bills formally
were offered, 3 in evidence, the defense interposed no objection.
In acquitting the accused, Judge Herminio I. Benito of the Regional Trial Court of
Makati rejected the agency theory of the prosecution and held that the
relationship between the petitioner and Rufo Aviles was that of creditor and debtor
only. "Under such relationship,' it declared, "the outstanding account, if any, of the
accused in favor of ITI would be in the nature of an indebtedness, the nonpayment of which does not Constitute estafa." 4
The court' also held that the certified photocopies of the airway by were not
admissible under the rule that "there can be no evidence of a writing the content
of which is the subject of inquiry other' than the writing itself." Loss of the originals
had not been proved to justify the exception to the rule as one of the prosecution

Right or wrong, the acquittal on the merits of the accused can no longer be the
subject of an appeal under the double jeopardy rule. However, the petitioner
seeks to press the civil liability of the private respondents, on the ground that the
dismissal of the criminal action did not abate the civil claim for the recovery of the
amount. More to the point, ITI argues that the evidence of the airways bills should
not have been rejected and that it had sufficiently established the indebtedness of
the private respondents to it.
The Court of Appeals 6 affirmed, the decision of the trial court in toto, adding that
the existing record spoken of in Section 2 (e) and (d) of Rule 130 of the Rules of
Court must be in the custody, of a public officer only. It also declared that:
Since no evidence of civil liability was presented, no necessity existed on the part
of the private respondents to present evidence of payment of an obligation which
was not shown to exist.
The petitioner now asks this Court to annul that judgment as contrary to law and
the facts established at the As in the courts below, it is insisting on the
admissibility of its evidence to prove the civil liability of the private respondents.
We agree with the petitioner. The certified photocopies of the airway bills should
have been considered.
In assessing this evidence, the lower courts confined themselves to the best
evidence rule and the nature of the documents being presented, which they held
did not come under any of the exceptions to the rule. There is no question that the
photocopies were secondary evidence and as such were not admissible unless
there was ample proof of the loss of the originals; and neither were the other
exceptions allowed by the Rules applicable. The trouble is that in rejecting these
copies under Rule 130, Section 2, the respondent court disregarded an equally
important principle long observed in our trial courts and amply supported by
jurisprudence.
This is the rule that objection to documentary evidence must be made at the time
it is formally offered. as an exhibit and not before. Objection prior to that time is
premature.
It is instructive at this paint to make a distinction between Identification of
documentary evidence and its formal offer as an exhibit. The first is done in the
course of the trial and is accompanied by the marking of the evidence an an
exhibit. The second is done only when the party rests its case and not before. The
mere fact that a particular document is Identified and marked as an exhibit does

not mean it will be or has been offered as part of the evidence of the party. The
party may decide to formally offer it if it believes this will advance its cause, and
then again it may decide not to do so at all. In the latter event, the trial court is,
under Rule 132, Section 35, not authorized to consider it.
Objection to the documentary evidence must be made at the time it is formally
offered, not earlier. The Identification of the document before it is marked as an
exhibit does not constitute the formal offer of the document as evidence for the
party presenting it. Objection to the Identification and marking of the document is
not equivalent to objection to the document when it is formally offered in
evidence. What really matters is the objection to the document at the time it is
formally offered as an exhibit.
In the case at bar, the photocopies of the airway bills were objected to by the
private respondents as secondary evidence only when they, were being Identified
for marking by the prosecution. They were nevertheless marked as exhibits upon
the promise that the original airway bills would be submitted later. it is true that
the originals were never produced. Yet, notwithstanding this omission, the defense
did not object when the exhibits as previously marked were formally offered in
evidence. And these were subsequently admitted by the trial court. 7
In People v. Teodoro, 8 a document being Identified by a prosecution witness was
objected to as merely secondary, whereupon the trial judge ordered the testimony
stricken out. This Court, in holding the objection to be premature, said:
It must be noted that the Fiscal was only Identifying the official records of service
of the defendant preparatory to introducing them as evidence. ... The time for the
presentation of the records had not yet come; presentation was to be made after
their Identification. For what purpose and to what end the Fiscal would introduce
them as evidence was not yet stated or disclosed. ... The objection of counsel for
the defendant was, therefore, premature, especially as the Fiscal had not yet
stated for what purpose he would introduce the said records. ...
The time for objecting the evidence is when the same is offered. (Emphasis
supplied).
The objection of the defense to the photocopies of the airway bins while they were
being Identified and marked as exhibits did not constitute the objection it should
have made when the exhibits were formally offered in evidence by the
prosecution. No valid and timely objection was made at that time. And it is no
argument to say that the earlier objection should be considered a continuing
objection under Sec. 37 of Rule 132, for that provision obviously refers to a single
objection to a class of evidence (testimonial or documentary) which when first
offered is considered to encompass the rest of the evidence. The presumption is,
of course, that there was an offer and a seasonable objection thereto. But, to
repeat, no objection was really made in the case before us because it was not
made at the proper time.
It would have been so simple for the defense to reiterate its former objection, this
time seasonably, when the formal offer of exhibits was made. It is curious that it

did not, especially so since the objections to the formal offer of exhibits was made
in writing. In fact, the defense filed no objection at all not only to the photocopies
but to all the other exhibits of the prosecution.
The effect of such omission is obvious. The rule is that evidence not objected to is
deemed admitted and may be validly considered by the court in arriving at its
judgment. 9 This is true even if by its nature the evidence is inadmissible and
would have surely been rejected if it had been challenged at the proper time.
The records certainly would have been the, beet proof of such former conviction.
The certificate was not the best proof. There seems to be no justification for the
presentation of proof of a character. ... Under an objection upon the ground that
the said certificate was not the best proof, it should have been rejected. Once
admitted, however, without objection, even though not admissible under an
objection, we are not inclined now to reject it. If the defendant had opportunely
presented an objection to the admissibility of said certificate, no doubt the
prosecution would have presented the best proof upon the questions to which said
certificate relates. 10
(It) is universally accepted that when secondary or incompetent evidence is
presented and accepted without any objection on the part of the other party, the
latter is bound thereby and the court is obliged to grant it the probatory value it
deserves. 11
We hold therefore that it was erroneous for the lower courts to reject the
photocopies of the airway bills to prove the liability of the private respondents to
the petitioner. While we may agree that there was really no criminal liability that
could attach to them because they had no fiduciary relationship with ITI, the
rejected evidence sufficiently established their indebtedness to the petitioner.
Hence, we must reverse the ruling below that "on account of the inadmissibility of
the prosecution's Exhibits 'B' and 'OO', coupled with the denial made by the
accused, there appears to be no concrete proof of such accountability."
Accoording to Rule 120, Section 2, of the Rules of Court:
In case of acquittal, unless there is a clear showing that the act from which the
civil liability might arise did not exist, the judgment shall make a finding on the
civil liability of the accused in favor of the offended party.
With the admission of such exhibits pursuant to the ruling above made, we find
that there is concrete proof of the defendant's accountability. More than this, we
also disbelieve the evidence of the private respondents that the said airway bills
had been paid for. The evidence consists only of check stubs corresponding to
payments allegedly made by the accused to the ITI, and we find this insufficient.
As it is Aviles who has alleged payment, it is for him to prove that allegation. He
did not produce any receipt of such payment. He said that the cancelled payment
checks had been lost and relied merely on the check stubs, which are self-serving.
The prosecution correctly stressed in its motion for reconsideration that the
accused could have easily secured a certification from the bank that the checks

allegedly issued to ITI had been honored. No such certification was presented. In
short, the private respondents failed to establish their allegation that payment for
the airway bills delivered to them had been duly remitted to ITI.
In Padilla v. Court of Appeals, 12 we held:
There appear to be no sound reasons to require a separate civil action to still be
filed considering that the facts to be proved in the civil case have already been
established in the criminal proceedings where the accused was acquitted. He was,
in fact, exonerated of the charge. The constitutional presumption of innocence
called for more vigilant efforts on the part of prosecuting attorneys and defense
counsel, a keener awareness by all witnesses of the serious implications of
perjury, and a more studied consideration by the judge of the entire records and
of applicable statutes and precedents. To require a separate civil action simply
because the accused was I acquitted would mean needless clogging of court
dockets and unnecessary duplication of litigation with all its attendant loss of
time, effort, and money on the part of all concerned.
By the same token, we find that remand of this case to, the trial court for further
hearings would be a needless waste of time and effort to the prejudice of the
speedy administration of justice. Applying the above ruling, we hereby declare
therefore, on the basis of the evidence submitted at the trial as reflected in the
records before us, that the private respondents are liable to the petitioner in the
sum of P204,030.66, representing the cost of the airway bills.
WHEREFORE, the petition is GRANTED. The challenged decision of the Court of
Appeals is SET ASIDE and a new one is rendered ORDERING the private
respondents to. pay to the petitioner the sum of P204,030.66, with 6% interest
from November 16, 1981, plus the costs of this suit.
SO ORDERED.

G.R. No. 140944

April 30, 2008

RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator of the

Estate of the deceased JOSE P. FERNANDEZ, petitioner,
vs.

COURT OF TAX
respondents.

APPEALS

and

COMMISSIONER

OF

INTERNAL

REVENUE,

Less: Deductions (Sch. 4)

187,822,576.06

DECISION
Net Conjugal Estate
NACHURA, J.:
NIL
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules
of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2
dated April 30, 1999 which affirmed the Decision3 of the Court of Tax Appeals
(CTA) dated June 17, 1997.4

Less: Share of Surviving Spouse

NIL.

The Facts

Net Share in Conjugal Estate

On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition for the
probate of his will5 was filed with Branch 51 of the Regional Trial Court (RTC) of
Manila (probate court).[6] The probate court then appointed retired Supreme
Court Justice Arsenio P. Dizon (Justice Dizon) and petitioner, Atty. Rafael Arsenio P.
Dizon (petitioner) as Special and Assistant Special Administrator, respectively, of
the Estate of Jose (Estate). In a letter7 dated October 13, 1988, Justice Dizon
informed respondent Commissioner of the Bureau of Internal Revenue (BIR) of the
special proceedings for the Estate.

NIL
xxx
Net Taxable Estate
NIL.
Estate Tax Due

Petitioner alleged that several requests for extension of the period to file the
required estate tax return were granted by the BIR since the assets of the estate,
as well as the claims against it, had yet to be collated, determined and identified.
Thus, in a letter8 dated March 14, 1990, Justice Dizon authorized Atty. Jesus M.
Gonzales (Atty. Gonzales) to sign and file on behalf of the Estate the required
estate tax return and to represent the same in securing a Certificate of Tax
Clearance. Eventually, on April 17, 1990, Atty. Gonzales wrote a letter9 addressed
to the BIR Regional Director for San Pablo City and filed the estate tax return10
with the same BIR Regional Office, showing therein a NIL estate tax liability,
computed as follows:
COMPUTATION OF TAX
Conjugal Real Property (Sch. 1)
P10,855,020.00
Conjugal Personal Property (Sch.2)
3,460,591.34
Taxable Transfer (Sch. 3)

NIL.11
On April 27, 1990, BIR Regional Director for San Pablo City, Osmundo G. Umali
issued Certification Nos. 2052[12] and 2053[13] stating that the taxes due on the
transfer of real and personal properties[14] of Jose had been fully paid and said
properties may be transferred to his heirs. Sometime in August 1990, Justice Dizon
passed away. Thus, on October 22, 1990, the probate court appointed petitioner
as the administrator of the Estate.15
Petitioner requested the probate court's authority to sell several properties
forming part of the Estate, for the purpose of paying its creditors, namely:
Equitable Banking Corporation (P19,756,428.31), Banque de L'Indochine et. de
Suez (US$4,828,905.90 as of January 31, 1988), Manila Banking Corporation
(P84,199,160.46 as of February 28, 1989) and State Investment House, Inc.
(P6,280,006.21). Petitioner manifested that Manila Bank, a major creditor of the
Estate was not included, as it did not file a claim with the probate court since it
had security over several real estate properties forming part of the Estate.16
However, on November 26, 1991, the Assistant Commissioner for Collection of the
BIR, Themistocles Montalban, issued Estate Tax Assessment Notice No. FAS-E-8791-003269,17 demanding the payment of P66,973,985.40 as deficiency estate
tax, itemized as follows:

Gross Conjugal Estate

Deficiency Estate Tax- 1987
14,315,611.34
Estate tax

Exhibits
P31,868,414.48
1.
25% surcharge- late filing
7,967,103.62

Letter dated October 13, 1988 from Arsenio P. Dizon addressed to the
Commissioner of Internal Revenue informing the latter of the special proceedings
for the settlement of the estate (p. 126, BIR records);

late payment
"A"
7,967,103.62
2.
Interest
19,121,048.68

Petition for the probate of the will and issuance of letter of administration filed
with the Regional Trial Court (RTC) of Manila, docketed as Sp. Proc. No. 87-42980
(pp. 107-108, BIR records);

Compromise-non filing
"B" & "B-1"
25,000.00
3.
non payment
25,000.00

Pleading entitled "Compliance" filed with the probate Court submitting the final
inventory of all the properties of the deceased (p. 106, BIR records);

no notice of death

"C"

15.00

4.

no CPA Certificate

Attachment to Exh. "C" which is the detailed and complete listing of the properties
of the deceased (pp. 89-105, BIR rec.);

300.00
"C-1" to "C-17"
Total amount due & collectible
5.
P66,973,985.4018
In his letter19 dated December 12, 1991, Atty. Gonzales moved for the
reconsideration of the said estate tax assessment. However, in her letter20 dated
April 12, 1994, the BIR Commissioner denied the request and reiterated that the
estate is liable for the payment of P66,973,985.40 as deficiency estate tax. On
May 3, 1994, petitioner received the letter of denial. On June 2, 1994, petitioner
filed a petition for review21 before respondent CTA. Trial on the merits ensued.

Claims against the estate filed by Equitable Banking Corp. with the probate Court
in the amount of P19,756,428.31 as of March 31, 1988, together with the Annexes
to the claim (pp. 64-88, BIR records);
"D" to "D-24"
6.

As found by the CTA, the respective parties presented the following pieces of
evidence, to wit:

Claim filed by Banque de L' Indochine et de Suez with the probate Court in the
amount of US $4,828,905.90 as of January 31, 1988 (pp. 262-265, BIR records);

In the hearings conducted, petitioner did not present testimonial evidence but
merely documentary evidence consisting of the following:

"E" to "E-3"
7.

Nature of Document (sic)

Claim of the Manila Banking Corporation (MBC) which as of November 7, 1987

amounts to P65,158,023.54, but recomputed as of February 28, 1989 at a total
amount of P84,199,160.46; together with the demand letter from MBC's lawyer
(pp. 194-197, BIR records);

Certified true copy of the Letter of Administration issued by RTC Manila, Branch
51, in Sp. Proc. No. 87-42980 appointing Atty. Rafael S. Dizon as Judicial
Administrator of the estate of Jose P. Fernandez; (p. 102, CTA records) and
"L"

"F" to "F-3"
14.
8.
Demand letter of Manila Banking Corporation prepared by Asedillo, Ramos and
Associates Law Offices addressed to Fernandez Hermanos, Inc., represented by
Jose P. Fernandez, as mortgagors, in the total amount of P240,479,693.17 as of
February 28, 1989 (pp. 186-187, BIR records);
"G" & "G-1"
9.
Claim of State Investment House, Inc. filed with the RTC, Branch VII of Manila,
docketed as Civil Case No. 86-38599 entitled "State Investment House, Inc.,
Plaintiff, versus Maritime Company Overseas, Inc. and/or Jose P. Fernandez,
Defendants," (pp. 200-215, BIR records);

Certification of Payment of estate taxes Nos. 2052 and 2053, both dated April 27,
1990, issued by the Office of the Regional Director, Revenue Region No. 4-C, San
Pablo City, with attachments (pp. 103-104, CTA records.).
"M" to "M-5"
Respondent's [BIR] counsel presented on June 26, 1995 one witness in the person
of Alberto Enriquez, who was one of the revenue examiners who conducted the
investigation on the estate tax case of the late Jose P. Fernandez. In the course of
the direct examination of the witness, he identified the following:
Documents/Signatures
BIR Record

"H" to "H-16"

1.

10.

Estate Tax Return prepared by the BIR;

Letter dated March 14, 1990 of Arsenio P. Dizon addressed to Atty. Jesus M.
Gonzales, (p. 184, BIR records);

p. 138
2.

"I"
11.
Letter dated April 17, 1990 from J.M. Gonzales addressed to the Regional Director
of BIR in San Pablo City (p. 183, BIR records);

Signatures of Ma. Anabella Abuloc and Alberto Enriquez, Jr. appearing at the lower
Portion of Exh. "1";
-do3.

"J"
12.

Memorandum for the Commissioner, dated July 19, 1991, prepared by revenue
examiners, Ma. Anabella A. Abuloc, Alberto S. Enriquez and Raymund S. Gallardo;
Reviewed by Maximino V. Tagle

Estate Tax Return filed by the estate of the late Jose P. Fernandez through its
authorized representative, Atty. Jesus M. Gonzales, for Arsenio P. Dizon, with
attachments (pp. 177-182, BIR records);

pp. 143-144
4.

"K" to "K-5"
Signature of Alberto S. Enriquez appearing at the lower portion on p. 2 of Exh. "2";
13.
-do-

5.

13.

Signature of Ma. Anabella A. Abuloc appearing at the lower portion on p. 2 of Exh.

"2";

Demand letter (FAS-E-87-91-00), signed by the Asst. Commissioner for Collection

for the Commissioner of Internal Revenue, demanding payment of the amount of
P66,973,985.40; and

-dop. 169
6.
14.
Signature of Raymund S. Gallardo appearing at the Lower portion on p. 2 of Exh.
"2";

Assessment Notice FAS-E-87-91-00

-do-

pp. 169-17022

7.

The CTA's Ruling

Signature of Maximino V. Tagle also appearing on p. 2 of Exh. "2";

On June 17, 1997, the CTA denied the said petition for review. Citing this Court's
ruling in Vda. de Oate v. Court of Appeals,23 the CTA opined that the
aforementioned pieces of evidence introduced by the BIR were admissible in
evidence. The CTA ratiocinated:

-do8.
Summary of revenue Enforcement Officers Audit Report, dated July 19, 1991;
p. 139
9.

Although the above-mentioned documents were not formally offered as evidence

for respondent, considering that respondent has been declared to have waived the
presentation thereof during the hearing on March 20, 1996, still they could be
considered as evidence for respondent since they were properly identified during
the presentation of respondent's witness, whose testimony was duly recorded as
part of the records of this case. Besides, the documents marked as respondent's
exhibits formed part of the BIR records of the case.24

Signature of Alberto Enriquez at the lower portion of Exh. "3";

-do-

Nevertheless, the CTA did not fully adopt the assessment made by the BIR and it
came up with its own computation of the deficiency estate tax, to wit:

10.

Conjugal Real Property

Signature of Ma. Anabella A. Abuloc at the lower portion of Exh. "3";

P 5,062,016.00

-do-

Conjugal Personal Prop.

11.

33,021,999.93

Signature of Raymond S. Gallardo at the lower portion of Exh. "3";

Gross Conjugal Estate

-do-

38,084,015.93

12.

Less: Deductions

Signature of Maximino V. Tagle at the lower portion of Exh. "3";

26,250,000.00

-do-

Net Conjugal Estate

P 11,834,015.93
Less: Share of Surviving Spouse

Fernandez are hereby ordered to pay to respondent the amount of P37,419,493.71

plus 20% interest from the due date of its payment until full payment thereof as
estate tax liability of the estate of Jose P. Fernandez who died on November 7,
1987.

5,917,007.96
SO ORDERED.26
Net Share in Conjugal Estate
P 5,917,007.96

Aggrieved, petitioner, on March 2, 1998, went to the CA via a petition for

review.27

Add: Capital/Paraphernal

The CA's Ruling

Properties P44,652,813.66

On April 30, 1999, the CA affirmed the CTA's ruling. Adopting in full the CTA's
findings, the CA ruled that the petitioner's act of filing an estate tax return with
the BIR and the issuance of BIR Certification Nos. 2052 and 2053 did not deprive
the BIR Commissioner of her authority to re-examine or re-assess the said return
filed on behalf of the Estate.28

Less: Capital/Paraphernal Deductions

44,652,813.66
Net Taxable Estate
P 50,569,821.62
============
Estate Tax Due P 29,935,342.97
Add: 25% Surcharge for Late Filing

On May 31, 1999, petitioner filed a Motion for Reconsideration29 which the CA
denied in its Resolution30 dated November 3, 1999.
Hence, the instant Petition raising the following issues:
1. Whether or not the admission of evidence which were not formally offered by
the respondent BIR by the Court of Tax Appeals which was subsequently upheld by
the Court of Appeals is contrary to the Rules of Court and rulings of this Honorable
Court;

7,483,835.74
Add: Penalties for-No notice of death
15.00

2. Whether or not the Court of Tax Appeals and the Court of Appeals erred in
recognizing/considering the estate tax return prepared and filed by respondent
BIR knowing that the probate court appointed administrator of the estate of Jose P.
Fernandez had previously filed one as in fact, BIR Certification Clearance Nos.
2052 and 2053 had been issued in the estate's favor;

No CPA certificate
300.00

3. Whether or not the Court of Tax Appeals and the Court of Appeals erred in
disallowing the valid and enforceable claims of creditors against the estate, as
lawful deductions despite clear and convincing evidence thereof; and

Total deficiency estate tax

P 37,419,493.71
============

4. Whether or not the Court of Tax Appeals and the Court of Appeals erred in
validating erroneous double imputation of values on the very same estate
properties in the estate tax return it prepared and filed which effectively bloated
the estate's assets.31

exclusive of 20% interest from due date of its payment until full payment thereof
[Sec. 283 (b), Tax Code of 1987].25
Thus, the CTA disposed of the case in this wise:
WHEREFORE, viewed from all the foregoing, the Court finds the petition
unmeritorious and denies the same. Petitioner and/or the heirs of Jose P.

The petitioner claims that in as much as the valid claims of creditors against the
Estate are in excess of the gross estate, no estate tax was due; that the lack of a
formal offer of evidence is fatal to BIR's cause; that the doctrine laid down in Vda.
de Oate has already been abandoned in a long line of cases in which the Court
held that evidence not formally offered is without any weight or value; that
Section 34 of Rule 132 of the Rules on Evidence requiring a formal offer of
evidence is mandatory in character; that, while BIR's witness Alberto Enriquez

(Alberto) in his testimony before the CTA identified the pieces of evidence
aforementioned such that the same were marked, BIR's failure to formally offer
said pieces of evidence and depriving petitioner the opportunity to cross-examine
Alberto, render the same inadmissible in evidence; that assuming arguendo that
the ruling in Vda. de Oate is still applicable, BIR failed to comply with the
doctrine's requisites because the documents herein remained simply part of the
BIR records and were not duly incorporated in the court records; that the BIR
failed to consider that although the actual payments made to the Estate creditors
were lower than their respective claims, such were compromise agreements
reached long after the Estate's liability had been settled by the filing of its estate
tax return and the issuance of BIR Certification Nos. 2052 and 2053; and that the
reckoning date of the claims against the Estate and the settlement of the estate
tax due should be at the time the estate tax return was filed by the judicial
administrator and the issuance of said BIR Certifications and not at the time the
aforementioned Compromise Agreements were entered into with the Estate's
creditors.32
On the other hand, respondent counters that the documents, being part of the
records of the case and duly identified in a duly recorded testimony are
considered evidence even if the same were not formally offered; that the filing of
the estate tax return by the Estate and the issuance of BIR Certification Nos. 2052
and 2053 did not deprive the BIR of its authority to examine the return and assess
the estate tax; and that the factual findings of the CTA as affirmed by the CA may
no longer be reviewed by this Court via a petition for review.33
The Issues
There are two ultimate issues which require resolution in this case:
First. Whether or not the CTA and the CA gravely erred in allowing the admission
of the pieces of evidence which were not formally offered by the BIR; and
Second. Whether or not the CA erred in affirming the CTA in the latter's
determination of the deficiency estate tax imposed against the Estate.

The CTA and the CA rely solely on the case of Vda. de Oate, which reiterated this
Court's previous rulings in People v. Napat-a35 and People v. Mate36 on the
admission and consideration of exhibits which were not formally offered during the
trial. Although in a long line of cases many of which were decided after Vda. de
Oate, we held that courts cannot consider evidence which has not been formally
offered,37 nevertheless, petitioner cannot validly assume that the doctrine laid
down in Vda. de Oate has already been abandoned. Recently, in Ramos v.
Dizon,38 this Court, applying the said doctrine, ruled that the trial court judge
therein committed no error when he admitted and considered the respondents'
exhibits in the resolution of the case, notwithstanding the fact that the same were
not formally offered. Likewise, in Far East Bank & Trust Company v. Commissioner
of Internal Revenue,39 the Court made reference to said doctrine in resolving the
issues therein. Indubitably, the doctrine laid down in Vda. De Oate still subsists in
this jurisdiction. In Vda. de Oate, we held that:
From the foregoing provision, it is clear that for evidence to be considered, the
same must be formally offered. Corollarily, the mere fact that a particular
document is identified and marked as an exhibit does not mean that it has already
been offered as part of the evidence of a party. In Interpacific Transit, Inc. v. Aviles
[186 SCRA 385], we had the occasion to make a distinction between identification
of documentary evidence and its formal offer as an exhibit. We said that the first
is done in the course of the trial and is accompanied by the marking of the
evidence as an exhibit while the second is done only when the party rests its case
and not before. A party, therefore, may opt to formally offer his evidence if he
believes that it will advance his cause or not to do so at all. In the event he
chooses to do the latter, the trial court is not authorized by the Rules to consider
the same.
However, in People v. Napat-a [179 SCRA 403] citing People v. Mate [103 SCRA
484], we relaxed the foregoing rule and allowed evidence not formally offered to
be admitted and considered by the trial court provided the following requirements
are present, viz.: first, the same must have been duly identified by testimony duly
recorded and, second, the same must have been incorporated in the records of
the case.40

The Courts Ruling

The Petition is impressed with merit.
Under Section 8 of RA 1125, the CTA is categorically described as a court of
record. As cases filed before it are litigated de novo, party-litigants shall prove
every minute aspect of their cases. Indubitably, no evidentiary value can be given
the pieces of evidence submitted by the BIR, as the rules on documentary
evidence require that these documents must be formally offered before the
CTA.34 Pertinent is Section 34, Rule 132 of the Revised Rules on Evidence which
reads:
SEC. 34. Offer of evidence. The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified.

From the foregoing declaration, however, it is clear that Vda. de Oate is merely
an exception to the general rule. Being an exception, it may be applied only when
there is strict compliance with the requisites mentioned therein; otherwise, the
general rule in Section 34 of Rule 132 of the Rules of Court should prevail.
In this case, we find that these requirements have not been satisfied. The assailed
pieces of evidence were presented and marked during the trial particularly when
Alberto took the witness stand. Alberto identified these pieces of evidence in his
direct testimony.41 He was also subjected to cross-examination and re-cross
examination by petitioner.42 But Albertos account and the exchanges between
Alberto and petitioner did not sufficiently describe the contents of the said pieces
of evidence presented by the BIR. In fact, petitioner sought that the lead
examiner, one Ma. Anabella A. Abuloc, be summoned to testify, inasmuch as
Alberto was incompetent to answer questions relative to the working papers.43

The lead examiner never testified. Moreover, while Alberto's testimony identifying
the BIR's evidence was duly recorded, the BIR documents themselves were not
incorporated in the records of the case.
A common fact threads through Vda. de Oate and Ramos that does not exist at
all in the instant case. In the aforementioned cases, the exhibits were marked at
the pre-trial proceedings to warrant the pronouncement that the same were duly
incorporated in the records of the case. Thus, we held in Ramos:
In this case, we find and so rule that these requirements have been satisfied. The
exhibits in question were presented and marked during the pre-trial of the case
thus, they have been incorporated into the records. Further, Elpidio himself
explained the contents of these exhibits when he was interrogated by
respondents' counsel...
xxxx
But what further defeats petitioner's cause on this issue is that respondents'
exhibits were marked and admitted during the pre-trial stage as shown by the PreTrial Order quoted earlier.44
While the CTA is not governed strictly by technical rules of evidence,45 as rules of
procedure are not ends in themselves and are primarily intended as tools in the
administration of justice, the presentation of the BIR's evidence is not a mere
procedural technicality which may be disregarded considering that it is the only
means by which the CTA may ascertain and verify the truth of BIR's claims against
the Estate.46 The BIR's failure to formally offer these pieces of evidence, despite
CTA's directives, is fatal to its cause.47 Such failure is aggravated by the fact that
not even a single reason was advanced by the BIR to justify such fatal omission.
This, we take against the BIR.
Per the records of this case, the BIR was directed to present its evidence48 in the
hearing of February 21, 1996, but BIR's counsel failed to appear.49 The CTA
denied petitioner's motion to consider BIR's presentation of evidence as waived,
with a warning to BIR that such presentation would be considered waived if BIR's
evidence would not be presented at the next hearing. Again, in the hearing of
March 20, 1996, BIR's counsel failed to appear.50 Thus, in its Resolution51 dated
March 21, 1996, the CTA considered the BIR to have waived presentation of its
evidence. In the same Resolution, the parties were directed to file their respective
memorandum. Petitioner complied but BIR failed to do so.52 In all of these
proceedings, BIR was duly notified. Hence, in this case, we are constrained to
apply our ruling in Heirs of Pedro Pasag v. Parocha:53
A formal offer is necessary because judges are mandated to rest their findings of
facts and their judgment only and strictly upon the evidence offered by the parties
at the trial. Its function is to enable the trial judge to know the purpose or
purposes for which the proponent is presenting the evidence. On the other hand,
this allows opposing parties to examine the evidence and object to its
admissibility. Moreover, it facilitates review as the appellate court will not be
required to review documents not previously scrutinized by the trial court.

Strict adherence to the said rule is not a trivial matter. The Court in Constantino v.
Court of Appeals ruled that the formal offer of one's evidence is deemed waived
after failing to submit it within a considerable period of time. It explained that the
court cannot admit an offer of evidence made after a lapse of three (3) months
because to do so would "condone an inexcusable laxity if not non-compliance with
a court order which, in effect, would encourage needless delays and derail the
speedy administration of justice."
Applying the aforementioned principle in this case, we find that the trial court had
reasonable ground to consider that petitioners had waived their right to make a
formal offer of documentary or object evidence. Despite several extensions of
time to make their formal offer, petitioners failed to comply with their
commitment and allowed almost five months to lapse before finally submitting it.
Petitioners' failure to comply with the rule on admissibility of evidence is
anathema to the efficient, effective, and expeditious dispensation of justice.
Having disposed of the foregoing procedural issue, we proceed to discuss the
merits of the case.
Ordinarily, the CTA's findings, as affirmed by the CA, are entitled to the highest
respect and will not be disturbed on appeal unless it is shown that the lower
courts committed gross error in the appreciation of facts.54 In this case, however,
we find the decision of the CA affirming that of the CTA tainted with palpable error.
It is admitted that the claims of the Estate's aforementioned creditors have been
condoned. As a mode of extinguishing an obligation,55 condonation or remission
of debt56 is defined as:
an act of liberality, by virtue of which, without receiving any equivalent, the
creditor renounces the enforcement of the obligation, which is extinguished in its
entirety or in that part or aspect of the same to which the remission refers. It is an
essential characteristic of remission that it be gratuitous, that there is no
equivalent received for the benefit given; once such equivalent exists, the nature
of the act changes. It may become dation in payment when the creditor receives a
thing different from that stipulated; or novation, when the object or principal
conditions of the obligation should be changed; or compromise, when the matter
renounced is in litigation or dispute and in exchange of some concession which
the creditor receives.57
Verily, the second issue in this case involves the construction of Section 7958 of
the National Internal Revenue Code59 (Tax Code) which provides for the allowable
deductions from the gross estate of the decedent. The specific question is whether
the actual claims of the aforementioned creditors may be fully allowed as
deductions from the gross estate of Jose despite the fact that the said claims were
reduced or condoned through compromise agreements entered into by the Estate
with its creditors.
"Claims against the estate," as allowable deductions from the gross estate under
Section 79 of the Tax Code, are basically a reproduction of the deductions allowed

under Section 89 (a) (1) (C) and (E) of Commonwealth Act No. 466 (CA 466),
otherwise known as the National Internal Revenue Code of 1939, and which was
the first codification of Philippine tax laws. Philippine tax laws were, in turn, based
on the federal tax laws of the United States. Thus, pursuant to established rules of
statutory construction, the decisions of American courts construing the federal tax
code are entitled to great weight in the interpretation of our own tax laws.60

Rules on Special Proceedings wherein the term "claims" required to be presented

against a decedent's estate is generally construed to mean debts or demands of a
pecuniary nature which could have been enforced against the deceased in his
lifetime, or liability contracted by the deceased before his death.71 Therefore, the
claims existing at the time of death are significant to, and should be made the
basis of, the determination of allowable deductions.

It is noteworthy that even in the United States, there is some dispute as to

whether the deductible amount for a claim against the estate is fixed as of the
decedent's death which is the general rule, or the same should be adjusted to
reflect post-death developments, such as where a settlement between the parties
results in the reduction of the amount actually paid.61 On one hand, the U.S. court
ruled that the appropriate deduction is the "value" that the claim had at the date
of the decedent's death.62 Also, as held in Propstra v. U.S., 63 where a lien
claimed against the estate was certain and enforceable on the date of the
decedent's death, the fact that the claimant subsequently settled for lesser
amount did not preclude the estate from deducting the entire amount of the claim
for estate tax purposes. These pronouncements essentially confirm the general
principle that post-death developments are not material in determining the
amount of the deduction.

WHEREFORE, the instant Petition is GRANTED. Accordingly, the assailed Decision

dated April 30, 1999 and the Resolution dated November 3, 1999 of the Court of
Appeals in CA-G.R. S.P. No. 46947 are REVERSED and SET ASIDE. The Bureau of
Internal Revenue's deficiency estate tax assessment against the Estate of Jose P.
Fernandez is hereby NULLIFIED. No costs.
SO ORDERED.

On the other hand, the Internal Revenue Service (Service) opines that post-death
settlement should be taken into consideration and the claim should be allowed as
a deduction only to the extent of the amount actually paid.64 Recognizing the
dispute, the Service released Proposed Regulations in 2007 mandating that the
deduction would be limited to the actual amount paid.65
G.R. No. 152866
In announcing its agreement with Propstra,66 the U.S. 5th Circuit Court of Appeals
held:
We are persuaded that the Ninth Circuit's decision...in Propstra correctly apply the
Ithaca Trust date-of-death valuation principle to enforceable claims against the
estate. As we interpret Ithaca Trust, when the Supreme Court announced the dateof-death valuation principle, it was making a judgment about the nature of the
federal estate tax specifically, that it is a tax imposed on the act of transferring
property by will or intestacy and, because the act on which the tax is levied occurs
at a discrete time, i.e., the instance of death, the net value of the property
transferred should be ascertained, as nearly as possible, as of that time. This
analysis supports broad application of the date-of-death valuation rule.67
We express our agreement with the date-of-death valuation rule, made pursuant
to the ruling of the U.S. Supreme Court in Ithaca Trust Co. v. United States.68 First.
There is no law, nor do we discern any legislative intent in our tax laws, which
disregards the date-of-death valuation principle and particularly provides that
post-death developments must be considered in determining the net value of the
estate. It bears emphasis that tax burdens are not to be imposed, nor presumed
to be imposed, beyond what the statute expressly and clearly imports, tax
statutes being construed strictissimi juris against the government.69 Any doubt
on whether a person, article or activity is taxable is generally resolved against
taxation.70 Second. Such construction finds relevance and consistency in our

October 6, 2010

THE HEIRS OF ROMANA SAVES, namely: FIDELA ALMAIDA, EMILIANO ALMAIDA,

JESUS ALMAIDA, CATALINA ALMAIDA, ALFREDO RAMOS, GINA RAMOS, LUZ
ALMAIDA, ANITA ALMAIDA, PETRA GENERAL, EDNA GENERAL, ESTHER ALMAIDA,
DIONISIA ALMAIDA, CORNELIA ALMAIDA, FELIMON ALMAIDA (represented by
SINFROSA ALMAIDA); The Heirs of RAFAELA SAVES, namely: JULIANA DIZON,
HILARIA DIZON, JOVENCIO DIZON, MAURA DIZON, BABY DIZON & ULDARICO
AMISTOSO (represented by ULDARICO AMISTOSO); The Heirs of JANUARIA SAVES,
namely: FELICIDAD MARTINEZ, MARLOU MARTINEZ, ROWENA MARTINEZ, BABY LOU
MARTINEZ, BOBERT MARTINEZ, JERRY MARTINEZ (represented by FELICIDAD
MARTINEZ); The Heirs of MAXIMO SAVES, namely: ELPIDIO AMIGO, CELESTINA
DEMETRIA AMIGO, MEREN (daughter of SEVERA SAVES), FRUTO ROSARIO
(represented by ELPIDIO AMIGO); The Heirs of BENEDICTA SAVES, namely:
AUTEMIA JUCOM, CATALINA JUCOM, DOLORES JUCOM, SERGIA JUCOM, BENEDICTA
JUCOM, JOSEFINA JUCOM, FLORDIVIDA REMETILLO, FELINA REMETILLO and ANNA
MARIE REMETILLO, (represented by AUTEMIA JUCOM), Petitioners,
vs.
THE HEIRS OF ESCOLASTICO SAVES, namely: REMEDIOS SAVES-ADAMOS, LUZ
SAVES-HERNANDEZ and DODONG SAVES, and ENRIQUETA CHAVES-ABELLA,
Respondents.
DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court from
the Decision1 promulgated on June 28, 2001 by the Court of Appeals, in CA-G.R.
CV No. 51058, entitled "The Heirs of Romana Saves, et al. v. The Heirs of
Escolastico Saves, et al.," reversing the Decision2 dated May 23, 1995 of the
Regional Trial Court (RTC) of Dumaguete City, Branch 39 in Civil Case No. 7678, in
favor of the petitioners.
The facts of this case as narrated in the assailed Court of Appeals Decision are as
follows:
Sometime on January 1921, several persons filed their respective claims before
the then, Court of First Instance of the province of Oriental Negros for the titling of
the respective lots they occupy, among them were Severo Chaves and Benedicta
Chaves, who filed their claim for Lot No. 382, to be titled in their names, together
with Escolastico Saves, Maximo Saves, Romana Saves, Rafaela Saves, and
Januaria Saves, in Cadastral Case No. 15.
On April 22, 1921, a Decision was rendered by the court, adjudicating several
parcels of land to different claimants, among the lots adjudicated, were as follows:
1. Lote No. 382 Se adjudica pro indiviso y en partes
Benedicta Saves, Escolastico Saves, Romana Saves,
Januaria Saves y Maximo Saves finado en la proindiviso
uno. La parte que corresponde a los difuntos Romana
perteneceran a sus hijos respectivos;

iguales a los hermanos

finado Rafaela Saves,
de una sixta parte cada
Saves y Maximo Saves

2. Lote No. 383 Se adjudica con las mejores existentes en el a la acciedad

conyugal formada por Escolastico Saves y Gaudencia Valencia;
3. Lote No. 386 Se adjudica con las mejoras ixistentes en el a la acciedad
conyugal formada por Escolastico Saves y Gaudencia Valencia;
Also on April 22, 1921, Decree No. 177831 was issued by the United States of
America for the Court of First Instance of the Province of Negros ordering the
registration of Lot No. 382 in the names of Benedicta Saves, Escolastica Saves,
the sons of Romana Saves, deceased, Rafaela Saves, Januaria Saves, and the sons
of Maximo Saves, deceased.
Thereafter, Severo Saves died intestate, leaving his wife, Teresa Ramirez, his four
(4) surviving children, and the heirs of his two children who predeceased him.

On June 30, 1941, a Deed of Sale was executed by the heirs of Romana Saves,
namely: Sinforosa Alimayda, Juan Alimayda, Vicente Alimayda, Felimon Alimayda
and Porferia Alimayda; the sole heir of Rafaela Saves, Pablo Saves Dizon; and the
sole heir of Escolastico Saves, Teodoro Saves, their respective 1/6 share in Lot No.
382, or 3/6 of the property, to Gaudencia Valencia.
On June 6, 1947, Benedicta Saves and Marcela Saves, the sole heir of Maximo
Saves, sold their respective 1/6 share in Lot No. 382, also to Gaudencia Valencia,
or 2/6 of the property, as embodied in a Deed of Absolute Sale.
Considering that all the 1/6 share, rights, and participation of each co-owner in Lot
No. 382 were already sold to Gaudencia Valencia, she initiated the titling of the
said property under her name in a Motion for Issuance of Transfer Certificate of
Title before the Court of First Instance of Negros Oriental. Subsequently, Transfer
Certificate of Title No. 148 was issued by the Register of Deeds for Negros Oriental
in the name of Gaudencia Valencia.
Sometime in 1961, Gaudencia Valencia sold the entire property to Enriqueta
Chavez Abella, and Transfer Certificate of Title No. 110 was issued in the name of
Enriqueta Chavez, who was married to Charles Abella.1avvphi1
In 1979, Meleriana Saves, who was then residing in Cebu, wrote her relatives in
Negros Oriental, the herein appellees, asking them to verify from the Register of
Deeds information pertaining to Lot 382, as they were among the heirs entitled to
said property.
On March 17, 1981, a case for Reconveyance, Partition, and Damages was filed
before the Regional Trial Court of Negros Oriental by plaintiffs-appellees, alleging,
inter alia, that Lot No. 382 was fraudulently acquired by Gaudencia Valencia, and
that Gaudencia Valencia fictitiously sold the lot to her grandchild Enriqueta
Chaves Abella.
The complaint was amended twice by plaintiffs considering that the original
plaintiffs and defendants were all deceased.
The parties failed to arrive to an amicable settlement during the pre-trial stage,
but have agreed to exclude Lot 386 in the litigation and limited the issues as to
the ownership of lots 382 and 383, thus, trial ensued.3 (Citations omitted.)
The trial court rendered a Decision in favor of the petitioners, the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing considerations, judgment is rendered

On June 21, 1941, Adelaida S. Martinez and Felicidad S. Martinez, who were the
heirs of Januaria Saves, who predeceased them, sold their 1/6 share in Lot No. 382
to a certain Gaudencia Valencia evidenced by a public instrument, with Doc. No.
1029, Page 46, Book IV, Series of 1941, of the notarial register, per allegation in a
Motion for the Issuance of Transfer Certificate of Title, filed by Gaudencia Valencia.

1. Dismissing defendants counterclaim;

2. Declaring the Deed of Sale and Deed of Absolute Sale null and void ab initio;
and being derived from a polluted source, whatever documents Gaudencia
Valencia executed in favor of defendant Enriquita Chavez Abella in relation to Lot

No. 382, Dumaguete Cadastre and the issuance of TCT No. 110 covering said lot,
suffers the same legal infirmity that of a total nullity;
3. Ordering defendant Enriquita Chavez Abella to convey and deliver unto the
plaintiffs their shares of Lot No. 382, Dumaguete Cadastre in the proportion of
their respective rights and interests thereto which they are entitled to participate
and succeed from the shares of their predecessors-in-interest who are the original
registered owners of the aforesaid lot; and after which, the parties are ordered to
effect physical division and partition of the lot in question to avoid further
animosity between and among themselves;
4. Ordering defendant Enriquita Chavez Abella to pay plaintiffs P6,000.00 as
litigation expenses and P2,500.00 as plaintiffs counsel court appearances as well
as moral damages in the sum of P120,000.00;
5. Dismissing plaintiffs claim of Lot No. 383, Dumaguete Cadastre, for lack of
merit, the same is originally titled in the name of Escolastico Saves, married to
Gaudencia Valencia; and
6. Defendant Enriquita Chavez Abella is ordered to pay the costs.4 (Citations
omitted.)
Respondents appealed the RTC Decision to the Court of Appeals which reversed
and set aside the same in the herein assailed Court of Appeals Decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Decision dated, May 23, 1995 rendered by
the Regional Trial Court of Negros Oriental, Branch 39, is hereby REVERSED and
SET ASIDE, and a new one entered, declaring Transfer Certificate of Title No. 110
in the name of Enriqueta Chaves Abella as valid and subsisting, and the complaint
filed by the plaintiffs is DISMISSED for lack of merit.5
Petitioners filed a Motion for Reconsideration but this was denied by the Court of
Appeals in a Resolution6 promulgated on March 7, 2002, the dispositive portion of
which reads:
WHEREFORE, the foregoing premises considered, the Motion for Reconsideration is
DENIED for lack of merit.7
Unperturbed by the adverse Court of Appeals Decision, petitioners come before
this Court and raise the following issues:
(a) Can the Court of Appeals, in the exercise of its appellate jurisdiction, consider
as evidence exhibits not formally offered as such by the defendants (now
respondents) in the trial court?
(b) Are exhibits (Exhibits "7", "8" and "13") not formally offered as evidence by the
defendants in the trial court subject to judicial notice by the Court of Appeals for
the purpose of utilizing the same as basis for the reversal of the trial courts
decision?

(c) Is it legally correct to consider a rule of evidence simply as a rule of procedure?

x x x.8
Petitioners also put into issue the failure of the Court of Appeals to consider
respondent Enriquita Chaves-Abella (hereinafter "Abella") a purchaser and
registrant in bad faith9 and the reasonableness of its declaration that, even if
petitioners are indeed co-owners of Lot No. 382, they are already barred due to
the equitable principle of estoppel by laches in asserting their rights over the
same.10
We find the instant petition to be without merit.
The first three issues propounded by petitioners can be summed up into the
question of whether or not the Court of Appeals can consider evidence not
formally offered in the trial court as basis for the herein assailed Court of Appeals
ruling.
Petitioners draw attention to the fact that respondents did not formally offer
Exhibits "7," "8" and "13" at the trial court proceedings. In accordance with
Section 34, Rule 132 of the Revised Rules of Court,11 the trial court did not
consider them as evidence. Despite this, the Court of Appeals allegedly utilized
the same as basis for reversing and setting aside the trial courts decision.
It is a basic procedural rule that the court shall consider no evidence which has
not been formally offered. The purpose for which the evidence is offered must be
specified.12 A formal offer is necessary because judges are mandated to rest their
findings of facts and their judgment only and strictly upon the evidence offered by
the parties at the trial. Its function is to enable the trial judge to know the purpose
or purposes for which the proponent is presenting the evidence. On the other
hand, this allows opposing parties to examine the evidence and object to its
admissibility. Moreover, it facilitates review as the appellate court will not be
required to review documents not previously scrutinized by the trial court.13
However, in People v. Napat-a,14 citing People v. Mate,15 we relaxed the
foregoing rule and allowed evidence not formally offered to be admitted and
considered by the trial court provided the following requirements are present, viz:
first, the same must have been duly identified by testimony duly recorded and,
second, the same must have been incorporated in the records of the case.16
In the case at bar, the records would show that the above requisites have been
satisfactorily complied with respect to Exhibit "7."
With regard to Exhibit "7," which is a document entitled "Motion for the Issuance
of Transfer Certificate of Title" filed by Gaudencia Valencia (hereinafter "Valencia")
in the same trial court that led to the issuance of Transfer Certificate of Title (TCT)
No. 148, the records would show that it is the same document that petitioners
witness Fruto Rosario identified in his March 5, 1984 testimony and marked as
petitioner-plaintiffs Exhibit "I." He testified as follows:

Empleo Here is another document, Mr. Rosario, which appears to be a motion for
issuance of transfer certificate of title, dated March 9, 1948, in 3 pages. Will you
please go over this certified true copy of the motion in Cad. Case No. 1, GLRO Rec.
No. 140, Lot 382, and find out if these are among the documents which you have
obtained in connection with your verification?

Court That is why the motion and which resulted to a certificate of title had only
claim Marcela as a surviving heir of Maximo?
A That is not so, Sir, because what about us the children of Severa?
Court ORDER

A Yes, this is the one, these are among the documents.

Empleo We request that this certified true copy of the motion for issuance of
transfer certificate of title in Cad. Case No. 1, GLRO Rec. No. 140, Lot 382, be
marked as Exhibit "I" for page one; "I-1" for page two and "I-2" for page 3.
Appearing on Exh. I is a third paragraph, which states, "that Maximo Saves, owner
of 1/6 of Lot 382 is now dead, upon his death Marcela Saves is the only heiress
and successor of his rights and interest in and over 1/6 portion of said lot." Do you
understand that?

The hour of noon having come, continuance of the direct examination of fifth
plaintiffs witness Fruto Rosario, as already scheduled, will be done tomorrow at
10:30 a.m.17
Verily, Exhibit "7" was incorporated and made part of the records of this case as a
common exhibit of the parties.18 That only plaintiffs were able to formally offer
the said motion as Exhibit "I" most certainly does not mean that it can only be
considered by the courts for the evidentiary purpose offered by plaintiffs. It is well
within the discretion of the courts to determine whether an exhibit indeed serves
the probative purpose for which it is offered.

A Yes, Sir.
Q Is it true that Maximo Saves left only one heir named Marcela Saves?

Likewise, Exhibit "13," which is TCT No. 11019 or the Torrens title that was issued
to respondent Abella after she bought Lot No. 382 from Valencia, complies with
the requirements enunciated in Napat-a and Mate.

A No, Sir, it is not true.

Q Why is it not true?

The records of the case bear out that Exhibit "13" was identified by respondent
Abella during the continuation of her direct examination on March 15, 1988. This
much was noted even by the trial court in its Decision dated May 23, 1995, to wit:

A Because Maximo had two children, Sir.

Empleo We request that paragraph 3 be marked as Exhibit "I-3".
Court (to witness): Who died ahead Severa or Maximo?
A Maximo, Sir.
Court Who died ahead Marcela or Severa?

During the continuation of the direct examination, witness Enriquita Chavez Abella
testified and identified the TCT No. 110 of Lot No. 382 registered in the name of
Enriquita Chavez which priorly reserved and now marked Exh. "13." x x x.20
(Emphasis supplied.)
Moreover, it cannot be denied that Exhibit "13" was included in the records that
was elevated to the Court of Appeals.21 In fact, the Court of Appeals correctly
noted Abellas testimony regarding this document in resolving petitioners motion
for reconsideration.22

A Severa.
Court Did Severa die before 1948?
A No, Sir, because she died before the war; she died in 1940.
Court So, when this motion for issuance of certificate of title was filed on March
10, 1948, Severa had already died?
A Yes, Sir.

It is likewise worth emphasizing that under the Revised Rules on Evidence, an

admission, verbal or written, made by a party in the course of the proceedings in
the same case, does not require proof such admission may be contradicted only
by showing that it is made through palpable mistake or that no such admission
was made.23
The existence of Exhibit "13" was not only known to petitioners but it was
expressly alleged in their Appellees Brief24 filed with the Court of Appeals and
their Petition for Review25 filed with this Court that Lot No. 382 is registered in the
name of respondent Abella.

Court And when this motion was filed on March 10, 1948, Marcela was still alive?
A Yes.

Indeed, petitioners did not merely acknowledge the existence of TCT No. 110
(respondents Exhibit "13"), but in fact relied upon it in order to put forward their
main theory that the sale from Valencia to respondent Abella is fictitious or void

because, according to petitioners, it appears from the said title that respondent
Abella was supposedly only nine years old at the time of the transaction. Verily, it
is inconsistent for petitioners to claim that Exhibit "13" proves its theory and in
the same breath assail it as inadmissible.

It is a well-settled doctrine that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely on the
certificates of title. He is charged with notice only of such burdens and claims as
are annotated on the certificates.32

Lastly, petitioners present objection to Exhibit "8" hardly deserves any credit.
Exhibit "8" is a rather innocuous document which has no bearing on any of the
significant issues in this case. Its existence was only referred to in the second
paragraph of page 7 of the RTC Decision wherein it is identified as an "Order of the
Hon. Court dated May 11, 1948."26 Though it never formed part of the records of
this case upon appeal, a careful perusal of the assailed Court of Appeals Decision
would reveal that Exhibit "8" was not in any way used or referred to by the Court
of Appeals in arriving at the aforementioned ruling.

In the case at bar, TCT No. 110, which represented proof of respondent Abellas
ownership of Lot No. 382, did not contain any encumbrance or annotation that
was transferred from its title of origin - TCT No. 148. It must be recalled that the
plaintiffs called Abella as one of their witnesses during the trial of this case. It is
Abellas unrebutted testimony, elicited as a hostile witness for the plaintiffs, that
her predecessor-in-interests (Valencias) title was clean when she (Abella)
purchased the property.33 To be sure, the burden to prove that Abella had notice
of any defect in the title of her predecessor lies with the plaintiffs. Plaintiffs failed
to substantiate their contention. On the contrary, their own evidence tended to
prove that Abella was a purchaser in good faith of the property.

Anent the issue of whether or not the Court of Appeals erred in failing to consider
that respondent Abella is a purchaser in bad faith, petitioner insists that "for
failing to exercise prudent (sic) and caution in buying the property in question,"27
respondent Abella is a buyer in bad faith. She did not investigate closely the basis
of the ownership of Gaudencia Valencia, her grandmother, over Lot No. 382 which
a buyer in good faith should have done under the circumstances. She did not even
bother to know the persons from whom her grandmother acquired the parcel in
question. 28
Respondents argue that the issue of good faith or bad faith of Enriquita ChavesAbella was not raised in the Complaint filed by petitioners in the RTC. Petitioners
original theory of the case is that the sale by Gaudencia Valencia to Enriquita
Chaves-Abella was fictitious because the latter was only nine years old at the time
of the sale. However, during trial, it was clearly established by common evidence
that Enriquita was already married to Charles Abella when she bought the lot in
1961, and, as a matter of fact, the purchase money was provided by her husband,
Charles. Confronted with the above situation which completely destroyed their
theory of the case, petitioners switched from their "fictitious sale to a 9-year old"
theory to an entirely different theory, to wit: that Enriquita Chaves-Abella is a
purchaser in bad faith.29
Despite this, the RTC declared that respondent Abella is a purchaser in bad faith
because "[s]he did not investigated (sic) closely the basis of the ownership of
Gaudencia Valencia over Lot No. 382 which a buyer in good faith should have
done under the circumstances."30
The Court of Appeals reversed the above finding and ruled that respondent Abella
is an innocent purchaser for value and in good faith because the "[r]ecords reveal
that appellant derived her title of Lot No. 382 from the title of Gaudencia Valencia,
who sold the entire property to the former. Appellant relied on the face of Transfer
Certificate of Title No. 148 in the name of Gaudencia Valencia, which was free
from any encumbrances or annotation."31
We agree with the Court of Appeals ruling in this regard.

Likewise, there is no cogent reason or legal compulsion for respondent Abella to

inquire beyond Valencias title over the property at issue since the latter had been
in possession of Lot No. 382 prior to the sale. Settled is the rule that a buyer of
real property in possession of persons other than the seller must be wary and
should investigate the rights of those in possession, for without such inquiry the
buyer can hardly be regarded as a buyer in good faith and cannot have any right
over the property.34 As pointed out by the assailed Court of Appeals Decision,
Valencia had been occupying the property prior to its sale to respondent Abella.
Herein petitioners were never in possession of the property from the very start,
nor did they have any idea that they were entitled to the fruits of the property not
until co-petitioner Meleriana Saves wrote her relatives, co-petitioners in this case,
about the possibility of having a claim to the property. 35
Neither does the plaintiffs insistence that Exhibits "G" and "H" (the deeds of sale
executed in favor of Valencia) were void support their theory that Abella is a
purchaser in bad faith. To begin with, we agree with the Court of Appeals ruling
that the purported irregularities in Exhibits "G" and "H" relied upon by the trial
court hardly suffice to deem the said contracts as null and void. There is no need
to repeat the Court of Appeals comprehensive and apt discussions on this point
here. What must be highlighted, however, is the fact that Abella had no
participation in the execution of Exhibits "G" and "H" which were signed by the
parties thereto when she was very young. Like any stranger to the said
transactions, it was reasonable for Abella to assume that these public documents
were what they purport to be on their face in the absence of any circumstance to
lead her to believe otherwise.
A purchaser in good faith is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he
has notice of the adverse claims and interest of another person in the same
property.36 Clearly, the factual circumstances surrounding respondent Abellas
acquisition of Lot No. 382 makes her an innocent purchaser for value or a
purchaser in good faith.

Finally, on the issue of whether or not petitioners, in the remote possibility that
they are co-owners of Lot No. 382, are barred from asserting their claims over the
same because of estoppel by laches, petitioners argue that they are not guilty of
unreasonable and unexplained delay in asserting their rights, considering that
they filed the action within a reasonable time after their discovery of the allegedly
fictitious deeds of sale, which evinced Lot No. 382s transfer of ownership to
Valencia, in 1980. They maintain that the delay in the discovery of the simulated
and fictitious deeds was due to the fact that Escolastico Saves with spouse
Valencia committed the acts surreptitiously by taking advantage of the lack of
education of plaintiffs ascendants.37
Respondents counter petitioners claims by underscoring the fact that, since the
1940s when their predecessors-in-interest sold their shares in and over Lot No.
382 up to the filing of this case in 1981, petitioners had never taken possession of
Lot No. 382 nor did they file any claim adverse to the ownership of Gaudencia
Valencia. Since the sale of Lot No. 382 by Valencia to respondent Abella in 1961
up to 1981 when this case was filed, petitioners had continued to sleep on their
professed rights. As found by the Court of Appeals, "[p]laintiffs were never in
possession of the property from the very start, nor did they have any inkling that
they were entitled to the fruits of the property, not until one of the plaintiffs wrote
her relatives about the possibility of being heirs to the property."38
On this issue, we again hold in favor of respondents.
Laches is defined as the failure to assert a right for an unreasonable and
unexplained length of time, warranting a presumption that the party entitled to
assert it has either abandoned or declined to assert it.39 In the case at bar,
plaintiffs, assuming that they or their predecessors-in-interest had rights over the
land in question, obviously neglected to exercise these rights by failing to assert
any adverse claim over the property or demand any share of its fruits for many
years. Not unlike their predecessors, petitioners never interposed any challenge to
Valencias continued possession under title of ownership over Lot No. 382 ever
since the entire property was sold to her in 1947 which led to the issuance of TCT
No. 148 in her name. Likewise, petitioners and their predecessors-in-interest did
not mount any opposition to the sale of Lot No. 382 by Valencia to respondent
Abella in 1961 which prompted the issuance of TCT No. 110. It was not only until
1981, or 34 years from Valencias acquisition of the entire lot and 20 years from
the transfer of ownership over the same to respondent Abella, that petitioners
decided to assert their alleged rights over the property in a proper action in court.
Petitioners contend that the delay is attributable to the surreptitious manner by
which Valencia acquired Lot No. 382 from their predecessors-in-interest but, on
this point, petitioners evidence gravely lacks credibility and weight as shown by
the records. Instead, the evidence thus presented by both parties, as found by the
Court of Appeals, would lean towards the conclusion that petitioners inaction for
the past so many years belies any present conviction on their part that they have
any existing interest over the property at all. Thus, even if we grant that
petitioners are co-owners of the property at issue, it is only fair and reasonable for
this Court to apply the equitable principle of estoppel by laches against them in

order to avoid an injustice to respondent Abella who is the innocent purchaser for
value in this case.40
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated
June 28, 2001 in CA-G.R. CV No. 51058, is hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.

G.R. No. L-27950 July 29, 1971

TORIBIA LAMAGAN, petitioner-appellant,
vs.
HON. RAFAEL DE LA CRUZ, as Judge of the Court of First Instance of Camarines
Sur, and COSME O. FOLLOSCO, respondents-appellees.
Moises C. Kallos for petitioner-appellant.
Reyes & Dy-Liacco for respondent-appellee Cosme O. Follosco.

TEEHANKEE, J.:
Appeal by certiorari from a resolution of the Court of Appeals dismissing the
petition for certiorari filed with said court by appellant seeking to set aside a
formal ruling issued by the Court of First Instance of Camarines Sur during the
course of the trial of the ejectment case below sustaining the adverse party's
objection of evidence preferred * by appellant as defendant therein and indicating
the nature of evidence that would be deemed admissible and competent against
the adverse party's torrens title.
As narrated in the petition itself, a complaint for ejectment and damages was filed
on September 12, 1963 by respondent Cosme O. Follosco as plaintiff against
petitioner Toribia Lamagan and her husband Ambrosio Leonor (now deceased) as
defendants in the lower court presided by respondent judge. 1 Follosco prayed of
the lower court that it order defendants to vacate the 48-hectare portion of his
land "illegally occupied" by them and to restore possession thereof to him. The

disputed portion of land is part of several lots totaling over 500 hectares, of which
Follosco is the registered owner by virtue of original certificate of title No. 178
issued by the Camarines Sur register of deeds in April, 1950.

court to suspend further proceedings in the case below pending her elevation of
the disputed ruling for review by the appellate courts, and respondent court
acceded accordingly.

In answer to Follosco's complaint, petitioner Lamagan and her late husband as

defendants claimed that they and their predecessors-in-interest were in open and
adverse possession of the property since 1890; that Follosco's title was acquired
through fraud and deceit, and that the land should be deemed held in trust by
Follosco for them, and that the suit was brought by Follosco "only after many
years since he obtained his title thereto to hide from defendants' knowledge that
the latter's land was in fact covered by (Follosco's) title." 2 As counterclaim,
defendants prayed for the reconveyance of the disputed land to them on the
theory that the same should be deemed as held in trust by Follosco for them.

Petitioner accordingly filed her petition for certiorari with the Court of Appeals, 3
which handed down its minute resolution of June 21, 1967, dismissing the same
for failure to state a sufficient cause of action for the following principal reasons:
"... (b) in the [respondent court's] resolution of August 15, 1966, the petitioner is
permitted to present evidence which will indubitably show a better right; and (c)
the issue does not appear to be within the ambit of a writ of certiorari." The
appellate court in its August 2, 1967 resolution, denying petitioner's motion for
reconsideration of its dismissal order, further noted that "the counterclaim for
reconveyance has already prescribed (J. M. Tuason & Co., Inc. vs. Adolfo Magangal,
G.R. No. L-15539, January 30, 1962)."

The issues having been joined, Follosco as plaintiff presented through counsel his
evidence, oral and documentary, and closed his case. Defendants then presented
as their first witness petitioner's late husband in support of their defense and
counterclaim for reconveyance. In the course of his direct examination by
petitioner's counsel, Follosco's counsel objected to a question dealing with the
ownership of the land and manifested a continuing objection to all similar
questions which would elicit evidence of alleged ownership of defendants, on the
ground that Follosco's title was already indefeasible and beyond judicial review.
The question was apparently extensively argued and respondent court adjourned
the trial at noon and issued his three-page written resolution of August 15, 1966,
ruling that any claims of defendants based on an alleged pre-existing right prior to
the alleged fraudulent issuance of the title in favor of Follosco was already barred
under section 38 of Act 496 and that since no petition to reopen and review the
decree of registration on the ground of fraud had been filed within one year from
issuance of the decree, Follosco's title had become indefeasible and could no
longer be attacked collaterally. Respondent court therefore ruled that "the court so
resolves that all questions tending to elicit proof of ownership other than those
which will prove a better and earlier issued Torrens Title duly registered in favor of
the defendants or any of the defendants shall be barred and be not heard" and
sustained Follosco's objection to defendants' line of questioning, holding that
"(T)his court, without attempting to decide the case at its present stage, will,
therefore, entertain from the defendants proofs and evidence which will
indomitably (sic) show a better and earlier Torrens Title issued to the defendants,
if there is any."
Petitioner-defendant claims that the effect of respondent court's questioned
resolution was to totally prevent her from adducing at the trial any further
evidence in support of her defense to the action for ejectment and of her
counterclaim for reconveyance of the disputed land, such as her documentary
evidence, allegedly consisting, inter alia, of a possessory information title in the
name of one Mariano Lamagan dated November 21, 1891, deed of sale by
Mariano Lamagan in favor of Nicolas Cambiado dated April 13, 1909, deed of sale
by Nicolas Cambiado in favor of Leoncio Lamagan (petitioner's father) dated
August 7, 1913, tax declarations, etc. Her motion for reconsideration having been
denied by the trial court's order of September 29, 1966, she asked respondent

Hence this appeal to which the Court gave due course on the strength of
petitioner's urgent plea for relief from the "virtual refusal of the trial court to hear
defendants in their defense, violative of due process."
The crux of the issues presented by petitioner-appellant in the appeal is basically
procedural with particular reference to the rules governing the admission or
exclusion of evidence: did the appellate court commit any grave error, correctible
by certiorari, in refusing to review on certiorari the trial court's disputed ruling in
the case below rejecting petitioner's contested evidence and dismissing the
petition filed for the purpose, on the principal ground that such ruling is an
interlocutory matter and any question as to the correctness thereof does not fall
"within the ambit of a writ of certiorari" and may only be reviewed on appeal
taken from a decision rendered on the merits of the case.
The appellate court's dismissal of the petition was in full accord with the rules and
applicable jurisprudence of the Court and must be affirmed.
1.
As petitioner-appellant concedes in her petition and brief, it is beyond
question that rulings of the trial court on procedural questions and on admissibility
of evidence during the course of the trial are interlocutory in nature and may not
be the subject of separate appeal or review on certiorari, but are to be assigned as
errors and reviewed in the appeal properly taken from the decision rendered by
the trial court on the merits of the case. If the rule were otherwise, there simply
would be no end to the trial of cases, for any litigant, not satisfied with the trial
court's ruling admitting or excluding any proferred (sic) oral or documentary
evidence, would then indefinitely tie up the trial while elevating the ruling for
review by the appellate court.
2.
Neither has petitioner made out a case for her claim that she should be
permitted the special recourse of seeking a review of the trial court's ruling by
certiorari, since it virtually ruled out all her evidence in support of her defense to
the ejectment and of her counterclaim for reconveyance, and hence, appeal in
due course was not an adequate remedy.

The true and special function of writ of certiorari was defined by the Court in
Fernando vs. Vasquez 4 thus: "A line must be drawn between errors of judgment
and errors of jurisdiction. An error of judgment is one which the court may commit
in the exercise of its jurisdiction. An error of jurisdiction renders an order or
judgment void or voidable. Errors of jurisdiction are reviewable on certiorari; errors
of judgment, only by appeal. Let us not lose sight of the true function of the writ of
certiorari "to keep an inferior court within the bounds of its jurisdiction or to
prevent it from committing such a grave abuse of discretion amounting to excess
of jurisdiction." And, abuse of discretion must be so grave and patent to justify the
issuance of the writ."
The Court likewise cited therein the exceptional cases where certiorari had been
entertained despite the existence of the remedy of an appeal. "But in those cases,
either public welfare and the advancement of public policy so dictate, or the
broader interests of justice so require, or the orders complained of were found to
be completely null and void, or appeal was not considered the appropriate
remedy, such as in appeals from orders of preliminary attachment or appointment
of receiver." 5 Thus, in People vs. Abalos, 6 the Court granted as an exception a
writ of certiorari against the trial court's ruling rejecting rebuttal evidence for the
prosecution, pointing out that "once the accused has been acquitted, there is no
means to secure a review by appeal, no matter how erroneous the action of the
lower court may have been." No equally compelling reason has been advanced by
petitioner as would place her case within the exceptions.
3.
Petitioner may have reason in law to complain against the trial court's
ruling that it would admit from her only evidence of "a better and earlier issued
torrens title duly registered in favor of the defendants or any of (them)", since it
merely held petitioner's one-year period to reopen the decree in favor of
respondent Follosco on the ground of fraud to have already lapsed, but did not
take into account petitioner's action in equity (by way of her counterclaim) for the
reconveyance of the land on the principle of constructive trust. Such an action
precisely concedes that the adverse party wrongfully succeeded in obtaining a
torrens title but prays that such title should be ordered canceled and reconveyed
in favor of the claimant as the true beneficiary rightfully entitled thereto.
Assuming that the trial court erred in rejecting petitioner's proferred (sic)
evidence, petitioner's recourse is clear under the long established rules, to wit, to
make a formal offer of the evidence under Rule 132, section 35, stating on the
record what a party or witness would have testified to were his testimony not
excluded, as well as attaching to the record any rejected exhibits. The Court has
long noted that "it is the better practice to unite with the record exhibits ... which
have been rejected," 7 and that such rejected or excluded exhibits "should have
been permitted by the judge a quo to be attached to the record even if not
admitted in evidence, so that in case of an appeal ... the court ad quem may thus
be able to examine said exhibits and to judge whether or not their rejection was
erroneous." 8
4.
The validity of the cited rule, i.e. to bring up to the appellate court the
rejected exhibits upon a proper appeal from a decision on the merits of the case,
enabling the appellate court to examine all the exhibits and evidence of record

and judge accordingly whether the trial court erred in rejecting the excluded
exhibits was evident in the very case at bar. Here, petitioner sought to attach to
the records here the exhibits which she intended to present to the trial court but
were ruled out by it. Since there has been no decision rendered as yet by the trial
court and respondent has denounced the proferred (sic) documents as "gross and
careless forgery" 9 which should be passed upon by the trial court in the first
instance, the Court had to order said documents expunged from the records of the
case at bar. 10
Again, respondent has cited the 1953 case of Follosco vs. Director of Lands, 11
wherein the appeal of petitioner Lamagan and her other co-appellants (as
homestead claimants) from the lower court's order denying their petition to set
aside its judgment of August 27, 1948 declaring respondent Follosco the owner of
the land subject of the registration proceedings was turned down by this Court.
This fact places in grave doubt the veracity of petitioner's allegation that Follosco
had sought to hide from her the fact of his having secured title to the land in
question, and appears to provide ample justification for the appellate court's
pronouncement in its August 2, 1967 resolution as to her counterclaim for
reconveyance having "already prescribed."
At any rate, all these questions will have first to be necessarily passed upon and
resolved by the trial court in the decision that it has yet to render which serves
but to demonstrate the impropriety and prematurity of petitioner's present action.
5.
Finally, it seems in order, nevertheless, to reiterate the Court's
admonitions to trial courts, as in Abalos, 12 citing the 1929 case of Prats & Co. vs.
Phoenix Insurance Co., 13 that "(I)n the course of long experience we have
observed that justice is most effectively and expeditiously administered in the
courts where trivial objections to the admission of proof are received with least
favor. The practice of excluding evidence on doubtful objections to its materiality
or technical objections to the form of the questions should be avoided. In a case of
any intricacy it is impossible for a judge of first instance, in the early stages of the
development of the proof, to know with certainty whether testimony is relevant or
not; and where there is no indication of bad faith on the part of the attorney
offering the evidence, the court may as a rule safely accept the testimony upon
the statement of the attorney that the proof offered will be connected later." In
other words, where there is no indication of bad faith on the part of the party
offering the evidence or of a design to unduly prolong the trial, the Court has
counseled trial courts to be liberal in accepting proferred (sic) evidence, since
even if they were to refuse to accept the evidence, the affected party should
nevertheless be allowed to spread the excluded evidence on the record, for review
on appeal, as indicated in paragraph 3 supra.
As pointed out in Prats, supra "the admission of proof in a court of first instance,
even if the question as to its form, materiality, or relevancy is doubtful, can never
result in much harm to either litigant, because the trial judge is supposed to know
the law; and it is its duty, upon final consideration of the case, to distinguish the
relevant and material from the irrelevant and immaterial. If this course is followed
and the cause is prosecuted to the Supreme Court upon appeal, this court then
has all the material before it necessary to make a correct judgment."

In any event, should the trial court exclude evidence that it deems clearly
irrelevant and inadmissible, it should not in the absence of an injunction order
from the appellate courts or of strong compelling reasons above indicated - order
the suspension of the trial pending the outcome of any recourse sought by the
affected party from the higher courts but should continue with the trial and render
in due course its judgment, which may then be properly appealed from. Needless
delay in the trial and determination of the case would thus be avoided, unlike in
the case at bar where the trial court erroneously acceded to suspending the trial
below pending the outcome of this proceeding. It should be sufficient in such
cases that the trial court afford the affected party a reasonable period and
opportunity to secure from the higher courts a preliminary injunction order against
the continuation of the trial, and thereafter proceed with the trial and judgment of
the case upon the party's failure to secure such injunctive order.
ACCORDINGLY, the resolution appealed from is hereby affirmed and the petition is
dismissed. With costs against petitioner
G.R. Nos. L-7771-73

May 31, 1955

PHILIPPINE MOVIE PICTURES WORKERS' ASSOCIATION, petitioner,

vs.
PREMIERE PRODUCTIONS, INC., respondent.
Cid Villaluz and Associates for petitioner.
Ross, Selph, Carrascoso and Janda for respondent.
MONTEMAYOR, J.:
With the view taken by the Court of these cases, there is no need of making a long
and elaborate statement of the facts involved. The petitioner in each of these
cases, Philippine Movie Pictures Workers' Association later referred to as the
Association, is a labor organization whose members were employees and laborers
of the respondent Premiere Productions, Inc., referred to later as the Company, a
corporation engaged in the production of movie pictures. On October 2, 1951,
respondent company filed a petition with the Court of Industrial Relations (CIR) for
permission to lay-off its personnel working in three of its departments, numbering
about 44 on the ground that it was losing in the operation of its business. Judge
Arsenio C. Roldan, presiding judge of the CIR after an ocular inspection of the
company's premises, and after conferring with the personnel he found therein,
granted the petition and the personnel were laid off.
After shutting the studios, the company filed another petition with the CIR for
permission or authority to lease its equipments, studios, and other facilities to
Eddie Infante, Braulio Calma and others. The association objected to the proposed
lease on the ground that it was an attempt by the company to make use of its
properties through other persons which would mean disturbance of the status quo
while the dispute between the association and the company was pending. Then
the company filed a motion to withdraw its petition saying that it was convinced
that the lease of its properties was a mere exercise of its proprietary rights, and
that court permission was unnecessary. The motion was granted. Thereafter, on

February 7, 1952, the company transferred some of its equipment to Polo, Bulacan
to be leased and used as in fact they were used by one Artemio Marquez in the
filming of the picture "Bakas Ng Kahapon". For this action of the company the
association on February 9, 1952, filed an urgent petition with the CIR, incidental
case No. 98 V-8, for contempt and for injunction on the ground that the company
had no right to remove its equipment from its studios to be leased to Marquez
without court authority. Thereafter, the company again leased its equipment and
facilities to one Efren Reyes for the filming of the picture "Larawan Ng Buhay". The
association again filed another urgent petition, incidental case No. 598 V-10, for
contempt and injunction. Again, on March 5, 1952, the company leased its other
sound equipment to one Manuel Vistan for the filming of the picture "Troubador"
and to Artemio Marquez in filming the picture "Boys Town". The association again
filed another petition, incidental case No. 598 V-11, for contempt and injunction.
After the company had answered the three petitions for contempt and injunction,
by agreement of the parties, these three incidental cases were heard jointly.
During the hearing held before Presiding Judge Roldan and in the presence of one
Martin Dolorico, a Commissioner of the CIR, the parties entered into a stipulation
of facts and stated therein their respective contention, after which, both parties
submitted the cases for decision without further evidence. This was on October 7,
1952. However, no decision was immediately rendered because both parties
asked for time to enable them to bargain collectively, the negotiations
commencing in January, 1953 and lasting until July of the same year. In the
meantime, on April 18, 1953, the association filed a "Supplemental petition to
annul lease contracts and for contempt of court and for injunction", and on June
14, 1953, the association filed a "Motion for production of document" under
section 1, Rule 21, of the Rules of Court, alleging that the movie company had in
the meantime entered into other contracts of lease, and asking that Dr. Ciriaco
Santiago, president of the movie company or his representative produce before
the court the contracts referred to for purposes of inspection, copying or
photographing thereof, and to set for hearing the urgent petitions of February 9,
1952 and April 18, 1953 regarding the simulated leases.

Upon motion for reconsideration by the association and over the opposition of the
company, the CIR in banc by resolution dated November 13, 1953, reconsidered
the decision aforementioned and set it aside, as premature, saying that before
rendering a final decision, the court should have awaited further presentation of
evidence on the supplemental petition of April 18, 1953, "so that all ingredients
for the proper disposal of the case would have been complete." The resolution was
penned by Judge Jose Bautista and concurred in by Judges Castillo and Yanson.
Judge Roldan wrote a dissenting opinion concurred in by Judge Juan E. Lanting.
The association has now filed these petitions for review by certiorari, not only of
the decision of Judge Roldan but also of the resolution of the majority of the CIR,
to set the same aside, and for the rendition of another decision holding the leases
entered into by the movie company to be illegal and that the company and its
officers and agents be held to have committed contempt of court in entering into
those leases without authority of the CIR.
The majority of the Tribunal believe that it is unnecessary to go into the merits of
the present cases, because the resolution of the majority of the CIR setting aside
the decision of Judge Roldan, left the cases without any decision to appeal from,
and that said resolution is in the nature of a mere interlocutory order, which is not
subject to appeal.
In view of the foregoing, these petitions for certiorari are hereby denied, and the
cases are ordered remanded to the CIR for further proceedings. No costs.
Pablo, Acting C.J., Bengzon, Bautista Angelo, Labrador, Concepcion, and Reyes,
J.B.L., JJ., concur.

Separate Opinions
REYES, A., J., concurring:

Thereafter, Commissioner Martin Dolorico filed his report, which report was
approved and completely adopted by Judge Roldan in his decision rendered on July
29, 1953, wherein he found that the leases of the equipment, studios and other
properties of the movie company to third parties were not simulated but genuine,
and that they were valid; that it was entirely proper for the movie company to
lease its equipment which was lying idle because of the shutting down of its
studios so as to make money and perhaps enable it to rehabilitate itself financially
and to re-employ the same personnel who had been laid off, that the association
should not object to these leases because it was the understanding at the time
that they were laid off that in case it was later decided by the court that they had
been improperly made to stop working, they would not only be reinstated but they
would also be given backpay for the entire period of the lay-off. As to the
supplemental petition to annul he lease contracts and for contempt of court and
for injunction filed on April 18, 1953 and the motion filed on June 14th, Judge
Roldan held that they would be heard separately from the incidental cases, for
purposes of expediency. The decision ended by denying the three petitions for
injunction and for contempt of court.

For a technical reason the majority want these cases remanded to the Court of
Industrial Relations "for further proceeding." To satisfy a rule of procedure I will not
object. However, I think the remand should be, not for "further proceedings", but
for the specific purpose of having the Court of Industrial Relations, sitting in banc
and without further proceeding for the taking of evidence, render a decision to
take the place of the one it has set aside, and that court should be so advised.
There is need for this caution, because it appears from the resolution appeared
from that the court in banc set aside the decision of the trial judge for the reason
that it was premature, believing "that the trial court should have waited further
presentation of evidence in the aforesaid union's supplemental petition, so that all
ingredients for the proper disposal of the case would have been complete." The
court in banc thus ruled that further evidence should be taken pursuant to the
union's supplemental petition. It should be noted, however, that the union seems
to have already waived presentation of further evidence since it has petitioned
this Court for an order directing the lower court to decide these cases, thus

implying that the cases were being submitted on the evidence already taken. In
the circumstances, a decision is now in order without further proceedings.