SECOND DIVISION 0.

0743 gram, and four empty sachets

containing shabu residue, without having
JUNIE MALLILLIN Y. LOPEZ, G.R. No. 172953 been previously authorized by law to
Petitioner, possess the same.

Present: CONTRARY TO LAW.[8]

QUISUMBING, J., Petitioner entered a negative plea.[9] At the ensuing

- versus - Chairperson, trial, the prosecution presented Bolanos, Arroyo and Esternon as
witnesses.
CARPIO MORALES,
TINGA, Taking the witness stand, Bolanos, the leader of the
VELASCO, JR., and raiding team, testified on the circumstances surrounding the
PEOPLE OF THE PHILIPPINES, BRION, JJ. search as follows: that he and his men were allowed entry into
Respondent. the house by petitioner after the latter was shown the search
Promulgated: warrant; that upon entering the premises, he ordered Esternon
and barangay kagawad Licup, whose assistance had previously
April 30, 2008 been requested in executing the warrant, to conduct the search;
that the rest of the police team positioned themselves outside
x ---------------------------------------------------------------------------------x the house to make sure that nobody flees; that he was observing
DECISION the conduct of the search from about a meter away; that the
search conducted inside the bedroom of petitioner yielded five
TINGA, J.: empty plastic sachets with suspected shabu residue contained in
a denim bag and kept in one of the cabinets, and two plastic
The presumption of regularity in the performance of official sachets containing shabu which fell off from one of the pillows
functions cannot by its lonesome overcome the constitutional searched by Esternona discovery that was made in the presence
presumption of innocence. Evidence of guilt beyond reasonable of petitioner.[10] On cross examination, Bolanos admitted that
doubt and nothing else can eclipse the hypothesis of during the search, he was explaining its progress to petitioners
guiltlessness. And this burden is met not mother, Norma, but that at the same time his eyes were fixed on
by bestowing distrust on the innocence of the accused but by the search being conducted by Esternon. [11]
obliterating all doubts as to his culpability.
Esternon testified that the denim bag containing the
empty plastic sachets was found behind the door of the bedroom
In this Petition for Review[1] under Rule 45 of the Rules and not inside the cabinet; that he then found the two filled
of Court, Junie Malillin y Lopez (petitioner) assails the sachets under a pillow on the bed and forthwith called
Decision[2] of the Court of Appeals dated 27 January 2006 as well on Gallinera to have the items recorded and marked. [12] On cross,
as its Resolution[3] dated 30 May 2006 denying his motion for he admitted that it was he alone who conducted the search
reconsideration. The challenged decision has affirmed the because Bolanos was standing behind him in the living room
Decision[4] of the Regional Trial Court (RTC) of Sorsogon City, portion of the house and that petitioner handed to him the
Branch 52[5] which found petitioner guilty beyond reasonable things to be searched, which included the pillow in which the
doubt of illegal possession of methamphetamine hydrochloride, two sachets of shabu were kept;[13] that he brought the seized
locally known as shabu, a prohibited drug. items to the Balogo Police Station for a true inventory, then to
the trial court[14] and thereafter to the laboratory.[15]
The antecedent facts follow.

On the strength of a warrant[6] of search and seizure issued by Supt. Lorlie Arroyo (Arroyo), the forensic chemist who
the RTC of Sorsogon City, Branch 52, a team of five police officers administered the examination on the seized items, was
raided the residence of petitioner in presented as an expert witness to identify the items submitted to
Barangay Tugos, Sorsogon City on 4 February 2003. The team was the laboratory. She revealed that the two filled sachets were
headed by P/Insp. Catalino Bolanos (Bolanos), with PO3 Roberto positive of shabu and that of the five empty sachets, four were
Esternon (Esternon), SPO1 Pedro Docot, SPO1 Danilo Lasala and positive of containing residue of the same substance. [16] She
SPO2 Romeo Gallinera (Gallinera) as members. The further admitted that all seven sachets were delivered to the
searchconducted in the presence of barangay kagawad laboratory by Esternon in the afternoon of the same day that the
warrant was executed except that it was not she but rather a
Delfin Licup as well as petitioner himself, his wife Sheila and his certain Mrs. Ofelia Garcia who received the items from Esternon
mother, Normaallegedly yielded two (2) plastic sachets at the laboratory.[17]
of shabu and five (5) empty plastic sachets containing residual
morsels of the said substance. The evidence for the defense focused on the irregularity
of the search and seizure conducted by the police operatives.
Accordingly, petitioner was charged with violation of Petitioner testified that Esternon began the search of the
Section 11,[7] Article II of Republic Act No. 9165, otherwise known bedroom with Licup and petitioner himself inside. However, it
as The Comprehensive Dangerous Drugs Act of 2002, in a was momentarily interrupted when one of the police officers
criminal information whose inculpatory portion reads: declared to Bolanos that petitioners wife, Sheila, was tucking
something inside her underwear. Forthwith, a lady officer arrived
That on or about the 4 th day of to conduct the search of Sheilas body inside the same
February 2003, at about 8:45 in the bedroom. At that point, everyone except Esternon was asked to
morning in step out of the room. So, it was in his presence that Sheila was
Barangay Tugos, Sorsogon City, searched by the lady officer. Petitioner was then asked by a
Philippines, the said accused did then and police officer to buy cigarettes at a nearby store and when he
there willfully, unlawfully and feloniously returned from the errand, he was told that nothing was found on
have in his possession, custody and Sheilas body.[18] Sheila was ordered to transfer to the other
control two (2) plastic sachets of bedroom together with her children.[19]
methamphetamine hydrochloride
[or] shabu with an aggregate weight of
 Petitioner asserted that on his return from the errand,
he was summoned by Esternon to the bedroom and
once inside, the officer closed the door and asked him to lift the
mattress on the bed. And as he was doing as told, Esternon
stopped him and ordered him to lift the portion of the
headboard. In that instant, Esternon showed him sachet
of shabuwhich according to him came from a pillow on the bed.
[20]
Petitioners account in its entirety was corroborated in its
material respects by Norma, barangay kagawad Licup and Sheila
in their testimonies. Norma and Sheila positively declared that
petitioner was not in the house for the entire duration of the
search because at one point he was sent by Esternon to the store
to buy cigarettes while Sheila was being searched by the lady
officer.[21] Licup for his part testified on the circumstances
surrounding the discovery of the plastic sachets. He recounted
that after the five empty sachets were found, he went out of the
bedroom and into the living room and after about three minutes,
Esternon, who was left inside the bedroom, exclaimed that he
had just found two filled sachets. [22]
On 20 June 2004 the trial court rendered its Decision
declaring petitioner guilty beyond reasonable doubt of the
offense charged. Petitioner was condemned to prison for twelve
years (12) and one (1) day to twenty (20) years and to pay a fine
of P300,000.00.[23] The trial court reasoned that the fact
that shabu was found in the house of petitioner was prima
facie evidence of petitioners animus possidendi sufficient to
convict him of the charge inasmuch as things which a person
possesses or over which he exercises acts of ownership are
presumptively owned by him. It also noted petitioners failure to
ascribe ill motives to the police officers to fabricate charges
against him.[24]
Aggrieved, petitioner filed a Notice of Appeal.[25] In his
Appeal Brief[26] filed with the Court of Appeals, petitioner called
the attention of the court to certain irregularities in the manner
by which the search of his house was conducted. For its part, the
Office of the Solicitor General (OSG) advanced that on the
contrary, the prosecution evidence sufficed for petitioners
conviction and that the defense never advanced any proof to
show that the members of the raiding team was improperly
motivated to hurl false charges against him and hence the
presumption that they had regularly performed their duties
should prevail.[27]
On 27 January 2006, the Court of Appeals rendered the
assailed decision affirming the judgment of the trial court but
modifying the prison sentence to an indeterminate term of
twelve (12) years as minimum to seventeen (17) years as
maximum.[28] Petitioner moved for reconsideration but the same
was denied by the appellate court. [29] Hence, the instant petition
which raises substantially the same issues.
In its Comment,[30] the OSG bids to establish that the
raiding team had regularly performed its duties in the conduct of
the search.[31] It points to petitioners incredulous claim that he
was framed up by Esternon on the ground that the discovery of
the two filled sachets was made in his and Licups presence. It
likewise notes that petitioners bare denial cannot defeat the
positive assertions of the prosecution and that the same does
not suffice to overcome the prima facie existence
of animus possidendi.
This argument, however, hardly holds up to what is
revealed by the records.
Prefatorily, although the trial courts findings of fact are
entitled to great weight and will not be disturbed on appeal, this
rule does not apply where facts of weight and substance have
been overlooked, misapprehended or misapplied in a case under
appeal.[32] In the case at bar, several circumstances obtain which,
if properly appreciated, would warrant a conclusion different
from that arrived at by the trial court and the Court of Appeals.
Prosecutions for illegal possession of prohibited drugs
necessitates that the elemental act of possession of a prohibited
substance be established with moral certainty, together with the
fact that the same is not authorized by law. The dangerous drug
itself constitutes the very corpus delict of the offense and the
fact of its existence is vital to a judgment of conviction.
[33]
Essential therefore in these cases is that the identity of the
prohibited drug be established beyond doubt. [34] Be that as it
may, the mere fact of unauthorized possession will not suffice to
create in a reasonable mind the moral certainty required to
sustain a finding of guilt. More than just the fact of possession,
the fact that the substance illegally possessed in the first place is
the same substance offered in court as exhibit must also be
established with the same unwavering exactitude as that
requisite to make a finding of guilt. The chain of custody
requirement performs this function in that it ensures that
unnecessary doubts concerning the identity of the evidence are
removed.[35]
As a method of authenticating evidence, the chain of
custody rule requires that the admission of an exhibit be
preceded by evidence sufficient to support a finding that the
matter in question is what the proponent claims it to be. [36] It
would include testimony about every link in the chain, from the
moment the item was picked up to the time it is offered into
evidence, in such a way that every person who touched the
exhibit would describe how and from whom it was received,
where it was and what happened to it while in the witness
possession, the condition in which it was received and the
condition in which it was delivered to the next link in the
chain. These witnesses would then describe the precautions
taken to ensure that there had been no change in the condition
of the item and no opportunity for someone not in the chain to
have possession of the same.[37]
While testimony about a perfect chain is not always the
standard because it is almost always impossible to obtain, an
unbroken chain of custody becomes indispensable and essential
when the item of real evidence is not distinctive and is not
readily identifiable, or when its condition at the time of testing or
trial is critical, or when a witness has failed to observe its
uniqueness.[38] The same standard likewise obtains in case the
evidence is susceptible to alteration, tampering,
contamination[39] and even substitution and exchange. [40] In other
words, the exhibits level of susceptibility to fungibility, alteration
or tamperingwithout regard to whether the same is advertent or
otherwise notdictates the level of strictness in the application of
the chain of custody rule.
Indeed, the likelihood of tampering, loss or mistake
with respect to an exhibit is greatest when the exhibit is small
and is one that has physical characteristics fungible in nature and
similar in form to substances familiar to people in their daily
lives.[41] Graham vs. State[42] positively acknowledged this
danger. In that case where a substance later analyzed as
heroinwas handled by two police officers prior to examination
who however did not testify in court on the condition and
whereabouts of the exhibit at the time it was in their
possessionwas excluded from the prosecution evidence, the
court pointing out that the white powder seized could have been
indeed heroin or it could have been sugar or baking powder. It
ruled that unless the state can show by records or testimony, the
continuous whereabouts of the exhibit at least between the time
it came into the possession of police officers until it was tested in
the laboratory to determine its composition, testimony of the
state as to the laboratorys findings is inadmissible.[43]
A unique characteristic of narcotic substances is that
they are not readily identifiable as in fact they are subject to
scientific analysis to determine their composition and nature.
The Court cannot reluctantly close its eyes to the likelihood, or at
least the possibility, that at any of the links in the chain of
custody over the same there could have been tampering,
alteration or substitution of substances from other casesby
accident or otherwisein which similar evidence was seized or in
which similar evidence was submitted for laboratory testing.
Hence, in authenticating the same, a standard more stringent
than that applied to cases involving objects which are readily
identifiable must be applied, a more exacting standard that
entails a chain of custody of the item with sufficient
completeness if only to render it improbable that the original
item has either been exchanged with another or been
contaminated or tampered with.
A mere fleeting glance at the records readily raises
significant doubts as to the identity of the sachets
of shabu allegedly seized from petitioner. Of the people who
came into direct contact with the seized objects, only Esternon
and Arroyo testified for the specific purpose of establishing the
identity of the evidence. Gallinera, to whom Esternon supposedly
handed over the confiscated sachets for recording and marking,
as well as Garcia, the person to whom Esternon directly handed
over the seized items for chemical analysis at the crime
laboratory, were not presented in court to establish the
circumstances under which they handled the subject items. Any
reasonable mind might then ask the question: Are the sachets
of shabu allegedly seized from petitioner the very same objects
laboratory tested and offered in court as evidence?
The prosecutions evidence is incomplete to provide an
affirmative answer. Considering that it was Gallinera who
recorded and marked the seized items, his testimony in court is
crucial to affirm whether the exhibits were the same items
handed over to him by Esternon at the place of seizure and
acknowledge the initials marked thereon as his own.The same is
true of Garcia who could have, but nevertheless failed, to testify
on the circumstances under which she received the items from
Esternon, what she did with them during the time they were in
her possession until before she delivered the same to Arroyo for
analysis.
The prosecution was thus unsuccessful in discharging its
burden of establishing the identity of the seized items because it
failed to offer not only the testimony of Gallineraand Garcia but
also any sufficient explanation for such failure. In effect, there is
no reasonable guaranty as to the integrity of the exhibits
inasmuch as it failed to rule out the possibility of substitution of
the exhibits, which cannot but inure to its own detriment. This
holds true not only with respect to the two filled sachets but also
to the five sachets allegedly containing morsels of shabu.
Also, contrary to what has been consistently claimed by
the prosecution that the search and seizure was conducted in a
regular manner and must be presumed to be so, the records
disclose a series of irregularities committed by the police officers
from the commencement of the search of petitioners house until
the submission of the seized items to the laboratory for
analysis. The Court takes note of the unrebutted testimony of
petitioner, corroborated by that of his wife, that prior to the
discovery of the two filled sachets petitioner was sent out of his
house to buy cigarettes at a nearby store. Equally telling is the
testimony of Bolanos that he posted some of the members of the
raiding team at the door of petitioners house in order to forestall
the likelihood of petitioner fleeing the scene. By no stretch of
logic can it be conclusively explained why petitioner was sent out
of his house on an errand when in the first place the police
officers were in fact apprehensive that he would flee to evade
arrest. This fact assumes prime importance because the two
filled sachets were allegedly discovered by Esternon immediately
after petitioner returned to his house from the errand, such that
he was not able to witness the conduct of the search during the
brief but crucial interlude that he was away.
It is also strange that, as claimed by Esternon, it was
petitioner himself who handed to him the items to be searched
including the pillow from which the two filled sachets allegedly
fell. Indeed, it is contrary to ordinary human behavior that
petitioner would hand over the said pillow to Esternon knowing
fully well that illegal drugs are concealed therein. In the same
breath, the manner by which the search of Sheilas body was
brought up by a member of the raiding team also raises serious
doubts as to the necessity thereof.The declaration of one of the
police officers that he saw Sheila tuck something in her
underwear certainly diverted the attention of the members of
petitioners household away from the search being conducted by
Esternon prior to the discovery of the two filled sachets. Lest it
be omitted, the Court likewise takes note of Esternons suspicious
presence in the bedroom while Sheila was being searched by a
lady officer. The confluence of these circumstances by any
objective standard of behavior contradicts the prosecutions claim
of regularity in the exercise of duty.
Moreover, Section 21[44] of the Implementing Rules and
Regulations of R.A. No. 9165 clearly outlines the post-seizure
procedure in taking custody of seized drugs. In a language too
plain to require a different construction, it mandates that the
officer acquiring initial custody of drugs under a search warrant
must conduct the photographing and the physical inventory of
the item at the place where the warrant has been
served. Esternon deviated from this procedure. It was elicited
from him that at the close of the search of petitioners house, he
brought the seized items immediately to the police station for
the alleged purpose of making a true inventory thereof, but there
appears to be no reason why a true inventory could not be made
in petitioners house when in fact the apprehending team was
able to record and mark the seized items and there and then
prepare a seizure receipt therefor. Lest it be forgotten, the raiding
team has had enough opportunity to cause the issuance of the
warrant which means that it has had as much time to prepare for
its implementation. While the final proviso in Section 21 of the
rules would appear to excuse non-compliance therewith, the
same cannot benefit the prosecution as it failed to offer any
acceptable justification for Esternons course of action.
Likewise, Esternons failure to deliver the seized items to
the court demonstrates a departure from the directive in the
search warrant that the items seized be immediately delivered to
the trial court with a true and verified inventory of the same,
[45]
as required by Rule 126, Section 12[46] of the Rules of
Court. People v. Go[47] characterized this requirement as
mandatory in order to preclude the substitution of or tampering
with said items by interested parties. [48] Thus, as a reasonable
safeguard, People vs. Del Castllo[49] declared that the approval by
the court which issued the search warrant is necessary before
police officers can retain the property seized and without it, they
would have no authority to retain possession thereof and more
so to deliver the same to another agency. [50] Mere tolerance by
the trial court of a contrary practice does not make the practice
right because it is violative of the mandatory requirements of the
law and it thereby defeats the very purpose for the enactment. [51]
Given the foregoing deviations of police officer
Esternon from the standard and normal procedure in the
implementation of the warrant and in taking post-seizure custody
of the evidence, the blind reliance by the trial court and the
Court of Appeals on the presumption of regularity in the conduct
of police duty is manifestly misplaced. The presumption of
regularity is merely just thata mere presumption disputable by
contrary proof and which when challenged by the evidence
cannot be regarded as binding truth. [52]Suffice it to say that this
presumption cannot preponderate over the presumption of
innocence that prevails if not overthrown by proof beyond
reasonable doubt.[53] In the present case the lack of conclusive
identification of the illegal drugs allegedly seized from petitioner,
coupled with the irregularity in the manner by which the same
were placed under police custody before offered in court,
strongly militates a finding of guilt.
In our constitutional system, basic and elementary is
the presupposition that the burden of proving the guilt of an
accused lies on the prosecution which must rely on the strength
of its own evidence and not on the weakness of the defense. The
rule is invariable whatever may be the reputation of the accused,
for the law presumes his innocence unless and until the contrary
is shown.[54] In dubio pro reo. When moral certainty as to
culpability hangs in the balance, acquittal on reasonable doubt
inevitably becomes a matter of right.

WHEREFORE, the assailed Decision of the Court of

Appeals dated 27 January 2006 affirming with modification the
judgment of conviction of the Regional Trial Court
of Sorsogon City, Branch 52, and its Resolution dated 30 May
2006 denying reconsideration thereof, are REVERSED and SET
ASIDE. Petitioner Junie Malillin y Lopez is ACQUITTED on
reasonable doubt and is accordingly ordered immediately
released from custody unless he is being lawfully held for
another offense.

The Director of the Bureau of Corrections is directed to

implement this Decision and to report to this Court the action
taken hereon within five (5) days from receipt.

SO ORDERED.

DANTE O. TINGA
Associate Justce

THIRD DIVISION

PEOPLE OF THE G.R. No. 179029
PHILIPPINES,
Appellee, Present:
CARPIO MORALES, J., Chairperson,
- versus - BRION,
BERSAMIN,
*
ABAD, and
VILLARAMA, JR., JJ.
FELIMON PAGADUAN y
TAMAYO, Promulgated:
Appellant.
August 12, 2010
x-----------------------------------------------------------------------------------------x
DECISION
BRION, J.:
We review the decision[1] of the Court of Appeals (CA) in CA-G.R.
CR-H.C. No. 01597 which affirmed in toto the decision[2] of the
Regional Trial Court (RTC), Branch 27, Bayombong, Nueva Vizcaya,
in Criminal Case No. 4600, finding appellant Felimon
Pagaduan y Tamayo (appellant) guilty beyond reasonable doubt of
illegal sale of shabu, under Section 5, Article II of Republic Act
(R.A.) No. 9165 or the Comprehensive Dangerous Drugs Act of
2002.
BACKGROUND FACTS
The prosecution charged the appellant before the RTC with
violation of Section 5, Article II of R.A. No. 9165 under an
Information that states:
That on or about December 27, 2003 at about 4:30 oclock (sic) in
the afternoon, in the Municipality of Solano, Province of Nueva
Vizcaya, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused did then and there willfully,
unlawfully and feloniously sell, trade, dispense, deliver and give
away 0.01 gram, more or less, of methamphetamine
hydrochloride (shabu), a dangerous drug, as contained in a heat-
sealed transparent plastic sachet to PO3 Peter C. Almarez, a
member of the Philippine Drug Enforcement Agency (PDEA) who
posed as a buyer of shabu in the amount of P200.00, to the
damage and prejudice of the Republic of the Philippines.
CONTRARY TO LAW.[3]
The appellant pleaded not guilty on arraignment. Trial on the
merits, thereafter, followed.
The evidence for the prosecution reveals the following facts.
After having received information that the appellant was selling
illegal drugs in Nueva Vizcaya, Captain Jaime de Vera called, on his
cellular phone, PO3 Peter Almarez and SPO1 Domingo Balido who
were both in Santiago City and informed them of a planned buy-
bust operation. They agreed to meet at the SSS Building near LMN
Hotel in Bayombong, Nueva Vizcaya.[4] On their arrival there,
Captain de Vera conducted a briefing and designated PO3 Almarez
as the poseur buyer. Thereafter, Captain de Vera introduced PO3
Almarez to the police informant (tpster),[5] and gave him (PO3
Almarez) two P100 bills (Exhibits D and E) which the latter marked
with his initials.[6]
After this briefing, the buy-bust team went to Bintawan Road,
Solano, Nueva Vizcaya to conduct the entrapment operation.
[7]
PO3 Almarez and the informant rode a tricycle, while Captain de
Vera and SPO1 Balido followed on board a tinted van. [8] The buy-
bust team arrived at the target area at around 4:30 p.m., and saw
the appellant already waiting for the informant. The informant
approached the appellant and introduced PO3 Almarez to him as
a buyer. PO3 Almarez told the appellant that he
needed shabuworth P200, and inquired from him (appellant) if he
had a stock. The appellant replied in the affirmative, and then
handed one heat-sealed transparent plastic sachet containing
white crystalline substance to PO3 Almarez. PO3 Almarez, in turn,
gave the two pre-marked P100 bills to the appellant.
[9]
Immediately after, PO3 Almarez made the pre-arranged signal
to his companions, who then approached the appellant. Captain
de Vera took the marked money from the appellants right pocket,
and then arrested him.[10] PO3 Almarez, for his part, marked the
sachet with his initials.[11] Thereafter, the buy-bust team brought
the appellant to the Diadi Police Station for investigation.[12]
At the police station, Captain de Vera prepared a request for
laboratory examination (Exh. C).[13] The appellant was transferred
to the Diadi Municipal Jail where he was detained. [14] Two days
later, or on December 29, 2003, PO3 Almarez transmitted the
letter-request, for laboratory examination, and the seized plastic
sachet to the PNP Crime Laboratory, where they were received by
PO2 Fernando Dulnuan.[15] Police Senior Inspector (PSI) Alfredo
Quintero, the Forensic Chemist of the PNP Crime Laboratory,
conducted an examination on the specimen submitted, and found
it to be positive for the presence of shabu (Exh. B).[16]
On the hearing of August 13, 2004, the prosecution offered the
following as exhibits:
Exhibit A the shabu confiscated from the appellant
Exhibit B the report by the PNP Crime Laboratory
Exhibit C the request for laboratory examination
Exhibits D and E the buy-bust money
Exhibit F - the request for laboratory examination received by
Forensic Chemist Quintero
The defense presented a different version of the events,
summarized as follows:
At around 4:30 p.m. of December 27, 2003, Jojo Jose came to the
appellants house and informed him that Captain de Vera was
inviting him to be an asset. The appellant and Jojo boarded a
tricycle and proceeded to the SSS Building where Captain de Vera
was waiting for them.[17] As the tricycle approached the Methodist
Church along Bintawan Road, Jojo dropped his slippers and
ordered the driver to stop. Immediately after, a van stopped in
front of the tricycle; Captain de Vera alighted from the van and
handcuffed the appellant. Captain de Vera brought the appellant
inside the van, frisked him, and took P200 from his pocket.
[18]
Afterwards, Captain de Vera took the appellant to the SSS
Building, where he (Captain de Vera) and the building manager
drank coffee. Captain de Vera then brought the appellant to the
Diadi Municipal Jail where he was detained for almost two days. [19]
On the morning of December 29, 2003, the appellant was
transferred to the Provincial Jail. He signed a document without
the assistance of a lawyer after being told that it would result in
his immediate release.[20]
The RTC, in its decision[21] of August 16, 2005, convicted the
appellant of the crime charged, and sentenced him to suffer the
penalty of life imprisonment. The RTC likewise ordered the
appellant to pay a P500,000.00 fine.
The appellant appealed to the CA, docketed as CA-G.R. CR-H.C.
No. 01597. The CA, in its decision [22] dated May 22, 2007, affirmed
the RTC decision.
The CA found unmeritorious the appellants defense of instigation,
and held that the appellant was apprehended as a result of a
legitimate entrapment operation. It explained that in inducement
or instigation, an innocent person is lured by a public officer or
private detective to commit a crime. In the case at bar, the buy-
bust operation was planned only after the police had received
information that the appellant was selling shabu.
The CA also held that the failure of the police to conduct a prior
surveillance on the appellant was not fatal to the prosecutions
case. It reasoned out that the police are given wide discretion to
select effective means to apprehend drug dealers. A prior
surveillance is, therefore, not necessary, especially when the
police are already accompanied by their informant.
The CA further ruled that the prosecution was able to sufficiently
prove an unbroken chain of custody of the shabu. It explained that
PO3 Almarez sealed the plastic sachet seized from the appellant,
marked it with his initials, and transmitted it to the PNP Crime
Laboratory for examination. PSI Quintero conducted a qualitative
examination and found the specimen positive for the presence
of shabu. According to the CA, the prosecution was able to prove
that the substance seized was the same specimen submitted to
the laboratory and presented in court, notwithstanding that this
specimen was turned over to the crime laboratory only after two
days.
In his brief,[23] the appellant claims that the lower courts erred in
convicting him of the crime charged despite the prosecutions
failure to prove his guilt beyond reasonable doubt. He harps on
the fact that the police did not conduct a prior surveillance on him
before conducting the buy-bust operation.
The appellant further contends that the prosecution failed to
show an unbroken chain of custody in the handling of the seized
drug. He claims that there was no evidence to show when the
markings were done. Moreover, a period of two days had elapsed
from the time the shabu was confiscated to the time it was
forwarded to the crime laboratory for examination.
The Office of the Solicitor General (OSG) counters with the
argument that the chain of custody of the shabu was sufficiently
established. It explained that the shabu was turned over by the
police officers to the PNP Crime Laboratory, where it was found by
the forensic chemist to be positive for the presence of shabu. The
OSG likewise claimed that the appellant failed to rebut the
presumption of regularity in the performance of official duties by
the police. The OSG further added that a prior surveillance is not
indispensable to a prosecution for illegal sale of drugs.[24]
THE COURTS RULING
After due consideration, we resolve to acquit the appellant for the
prosecutions failure to prove his guilt beyond reasonable
doubt. Specifically, the prosecution failed to show that the police
complied with paragraph 1, Section 21, Article II of R.A. No. 9165,
and with the chain of custody requirement of this Act.
The Comprehensive Dangerous Drugs
Act: A Brief Background
R.A. No. 9165 was enacted in 2002 to pursue the States policy to
safeguard the integrity of its territory and the well-being of its
citizenry particularly the youth, from the harmful effects of
dangerous drugs on their physical and mental well-being, and to
defend the same against acts or omissions detrimental to their
development and preservation.
R.A. No. 9165 repealed and superseded R.A. No. 6425, known as
the Dangerous Drugs Act of 1972. Realizing that dangerous drugs
are one of the most serious social ills of the society at present,
Congress saw the need to further enhance the efficacy of the law
against dangerous drugs. The new law thus mandates the
government to pursue an intensive and unrelenting campaign
against the trafficking and use of dangerous drugs and other
similar substances through an integrated system of planning,
implementation and enforcement of anti-drug abuse policies,
programs and projects.[25]
Illegal Sale of Drugs under Section 5
vis--vis the Inventory and Photograph
Requirement under Section 21
In a prosecution for illegal sale of a prohibited drug under Section
5 of R.A. No. 9165, the prosecution must prove the following
elements: (1) the identity of the buyer and the seller, the object,
and the consideration; and (2) the delivery of the thing sold and
the payment therefor. All these require evidence that the sale
transaction transpired, coupled with the presentation in court of
the corpus delict, i.e., the body or substance of the crime that
establishes that a crime has actually been committed, as shown
by presenting the object of the illegal transaction. [26] To remove
any doubt or uncertainty on the identity and integrity of the
seized drug, evidence must definitely show that the illegal drug
presented in court is the same illegal drug actually recovered from
the appellant; otherwise, the prosecution for possession or for
drug pushing under R.A. No. 9165 fails.[27]
The required procedure on the seizure and custody of drugs is
embodied in Section 21, paragraph 1, Article II of R.A. No. 9165,
which states:
(1) The apprehending team having initial custody and control of
the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in
the presence of the accused or the person/s from whom such
items were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be required
to sign the copies of the inventory and be given a copy thereof[.]
This is implemented by Section 21(a), Article II of
the Implementng Rules and Regulatons of R.A. No. 9165, which
reads:
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in
the presence of the accused or the person/s from whom such
items were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be required
to sign the copies of the inventory and be given a copy thereof:
Provided, that the physical inventory and photograph shall be
conducted at the place where the search warrant is served; or at
the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of
warrantless seizures; Provided, further, that non-compliance with
these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.]
Strict compliance with the prescribed procedure is required
because of the illegal drug's unique characteristic rendering it
indistinct, not readily identifiable, and easily open to tampering,
alteration or substitution either by accident or otherwise. [28] The
records of the present case are bereft of evidence showing that
the buy-bust team followed the outlined procedure despite its
mandatory terms. The deficiency is patent from the following
exchanges at the trial:
PROSECUTOR [EMERSON TURINGAN]:
Q: After you handed this buy-bust money to the accused, what
happened next?
[PO3 ALMAREZ:]
A: When the shabu was already with me and I gave him the
money[,] I signaled the two, Captain Jaime de Vera and SPO1
Balido, sir.
xxxx
Q: After you gave that signal, what happened?
A: Then they approached us and helped me in arresting Felimon
Pagaduan, sir.
Q: After Pagaduan was arrested, what happened next?
A: After arresting Pagaduan[,] we brought him directly in Diadi
Police Station, sir.
Q: What happened when you brought the accused to the Police
Station in Diadi?
A: When we were already in Diadi Police Station, we first put him
in jail in the Municipal Jail of Diadi, Nueva Vizcaya, sir.
Q: What did you do with the shabu?
A: The request for laboratory examination was prepared and was
brought to the Crime Lab. of Solano, Nueva Vizcaya, sir.
xxxx
Q: After making the request, what did you do next[,] if any[,] Mr.
Witness?
A: After submission of the request to the Crime Lab.[,] we
prepared our joint affidavit for submission of the case to the
Court, sir.[29]
From the foregoing exchanges during trial, it is evident that the
apprehending team, upon confiscation of the drug, immediately
brought the appellant and the seized items to the police station,
and, once there, made the request for laboratory examination. No
physical inventory and photograph of the seized items were taken
in the presence of the accused or his counsel, a representative
from the media and the Department of Justice, and an elective
official. PO3 Almarez, on cross-examination, was unsure and could
not give a categorical answer when asked whether he issued a
receipt for the shabu confiscated from the appellant.[30] At any
rate, no such receipt or certificate of inventory appears in the
records.
In several cases, we have emphasized the importance of
compliance with the prescribed procedure in the custody and
disposition of the seized drugs. We have repeatedly declared that
the deviation from the standard procedure dismally compromises
the integrity of the evidence. In People v. Morales,[31] we acquitted
the accused for failure of the buy-bust team to photograph and
inventory the seized items, without giving any justifiable ground
for the non-observance of the required procedures. People v.
Garcia[32]likewise resulted in an acquittal because no physical
inventory was ever made, and no photograph of the seized items
was taken under the circumstances required by R.A. No. 9165 and
its implementing rules. In Bondad, Jr. v. People,[33] we also
acquitted the accused for the failure of the police to conduct an
inventory and to photograph the seized items, without justifiable
grounds.
We had the same rulings in People v. Guterrez,[34] People v.
Denoman,[35] People v. Partoza,[36] People v. Robles,[37] and People v.
dela Cruz,[38] where we emphasized the importance of complying
with the required mandatory procedures under Section 21 of R.A.
No. 9165.
We recognize that the strict compliance with the requirements of
Section 21 of R.A. No. 9165 may not always be possible under
field conditions; the police operates under varied conditions, and
cannot at all times attend to all the niceties of the procedures in
the handling of confiscated evidence. For this reason, the last
sentence of the implementing rules provides that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.] Thus, noncompliance with the strict directive of Section
21 of R.A. No. 9165 is not necessarily fatal to the prosecutions
case; police procedures in the handling of confiscated evidence
may still have some lapses, as in the present case. These lapses,
however, must be recognized and explained in terms of
their justifiable grounds, and the integrity and evidentiary value
of the evidence seized must be shown to have been preserved.
[39]
In the present case, the prosecution did not bother to offer any
explanation to justify the failure of the police to conduct the
required physical inventory and photograph of the seized
drugs. The apprehending team failed to show why an inventory
and photograph of the seized evidence had not been made either
in the place of seizure and arrest or at the nearest police station
(as required by the Implementing Rules in case of warrantless
arrests). We emphasize that for the saving clause to apply, it is
important that the prosecution explain the reasons behind the
procedural lapses, and that the integrity and value of the seized
evidence had been preserved.[40] In other words, the justifiable
ground for noncompliance must be proven as a fact. The court
cannot presume what these grounds are or that they even exist.
[41]
The Chain of Custody Requirement
Proof beyond reasonable doubt demands that unwavering
exactitude be observed in establishing the corpus delict - the
body of the crime whose core is the confiscated illicit
drug. Thus, every fact necessary to constitute the crime must be
established. The chain of custody requirement performs this
function in buy-bust operations as it ensures that doubts
concerning the identity of the evidence are removed. [42]
Blacks Law Dictionary explains chain of custody in this wise:
In evidence, the one who offers real evidence, such as the
narcotics in a trial of drug case, must account for the custody of
the evidence from the moment in which it reaches his custody
until the moment in which it is offered in evidence, and such
evidence goes to weight not to admissibility of evidence. Com. V.
White, 353 Mass. 409, 232 N.E.2d 335.
Likewise, Section 1(b) of Dangerous Drugs Board Regulation No. 1,
Series of 2002 which implements R.A. No. 9165 defines chain of
custody as follows:
Chain of Custody means the duly recorded authorized movements
and custody of seized drugs or controlled chemicals or plant
sources of dangerous drugs or laboratory equipment of each
stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
item shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody were made in the course of
safekeeping and use in court as evidence, and the final
disposition[.]
In Malillin v. People,[43] the Court explained that the chain of
custody rule requires that there be testimony about every link in
the chain, from the moment the object seized was picked up to
the time it is offered in evidence, in such a way that every person
who touched it would describe how and from whom it was
received, where it was and what happened to it while in the
witness possession, the condition in which it was received and the
condition in which it was delivered to the next link in the chain.
In the present case, the prosecutions evidence failed to establish
the chain that would have shown that the shabu presented in
court was the very same specimen seized from the appellant.
The first link in the chain of custody starts with the seizure of the
heat-sealed plastic sachet from the appellant. PO3 Almarez
mentioned on cross-examination that he placed his initials on the
confiscated sachet after apprehending the appellant. Notably, this
testimony constituted the totality of the prosecutions evidence on
the marking of the seized evidence. PO3 Almarezs testimony,
however, lacked specifics on how he marked the sachet and who
witnessed the marking. In People v. Sanchez, we ruled that the
marking of the seized items to truly ensure that they are the same
items that enter the chain and are eventually the ones offered in
evidence should be done (1) in the presence of the apprehended
violator (2) immediately upon confiscation. In the present case,
nothing in the records gives us an insight on the manner and
circumstances that attended the marking of the confiscated
sachet. Whether the marking had been done in the presence of
the appellant is not at all clear from the evidence that merely
mentioned that the evidence had been marked after the
appellants apprehension.
The second link in the chain of custody is its turnover from the
apprehending team to the police station. PO3 Almarez testified
that the appellant was brought to the Diadi Police Station after his
arrest. However, he failed to identify the person who had control
and possession of the seized drug at the time of its transportation
to the police station. In the absence of clear evidence, we cannot
presume that PO3 Almarez, as the poseur buyer, handled the
seized sachet to the exclusion of others - during its transfer from
the place of arrest and confiscation to the police station. The
prosecution likewise failed to present evidence pertaining to the
identity of the duty desk officer who received the plastic sachet
containing shabu from the buy-bust team. This is particularly
significant since the seized specimen was turned over to the PNP
Crime Laboratory only after two days. It was not, therefore,
clear who had temporary custody of the seized items during this
significant intervening period of time. Although the records show
that the request for laboratory examination of the seized plastic
sachet was prepared by Captain de Vera, the evidence does not
show that he was the official who received the marked plastic
sachet from the buy-bust team.
As for the subsequent links in the chain of custody, the records
show that the seized specimen was forwarded by PO3 Almarez to
the PNP Crime Laboratory on December 29, 2003, where it was
received by PO2 Dulnuan, and later examined by PSI Quintero.
However, the person from whom PO3 Almarez received the seized
illegal drug for transfer to the crime laboratory was not identified.
As earlier discussed, the identity of the duty desk officer who
received the shabu, as well as the person who had temporary
custody of the seized items for two days, had not been
established.
Suffice it to say that this presumption cannot preponderate over
the presumption of innocence that prevails if not overthrown by
proof beyond reasonable doubt. In the present case the lack of
conclusive identification of the illegal drugs allegedly seized from
petitioner, coupled with the irregularity in the manner by which
the same were placed under police custody before offered in
court, strongly militates a finding of guilt.
We are not unmindful of the pernicious effects of drugs in our
society; they are lingering maladies that destroy families and
relationships, and engender crimes. The Court is one with all the
agencies concerned in pursuing an intensive and unrelenting
campaign against this social dilemma. Regardless of how much we
want to curb this menace, we cannot disregard the protection
provided by the Constitution, most particularly the presumption
of innocence bestowed on the appellant. Proof beyond
reasonable doubt, or that quantum of proof sufficient to produce
moral certainty that would convince and satisfy the conscience of
those who act in judgment, is indispensable to overcome this
constitutional presumption. If the prosecution has not proved, in
the first place, all the elements of the crime charged, which in this
case is the corpus delict, then the appellant deserves no less than
an acquittal.
WHEREFORE, premises considered, we hereby REVERSE and SET
ASIDE the May 22, 2007 Decision of the Court of Appeals in CA-
G.R. CR-H.C. No. 01597.Appellant Felimon Pagaduan y Tamayo is
hereby ACQUITTED for failure of the prosecution to prove his guilt
beyond reasonable doubt. He is ordered
immediately RELEASED from detention unless he is confined for
another lawful cause.
Let a copy of this Decision be furnished the Director, Bureau of
Corrections, Muntinlupa City for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five days from receipt of
this Decision.
SO ORDERED.
ARTURO D. BRION
Associate Justice

The procedural lapses mentioned above show the glaring gaps in

the chain of custody, creating a reasonable doubt whether the
drugs confiscated from the appellant were the same drugs that
were brought to the crime laboratory for chemical analysis, and
eventually offered in court as evidence. In the absence of
concrete evidence on the illegal drugs bought and sold, the body
of the crime the corpus delict has not been adequately proven.
[44]
In effect, the prosecution failed to fully prove the elements of
the crime charged, creating reasonable doubt on the appellants
criminal liability.

Presumption of Regularity in the Performance of Official Duties

In sustaining the appellants conviction, the CA relied on the

evidentiary presumption that official duties have been regularly
performed. This presumption, it must be emphasized, is not
conclusive.[45] It cannot, by itself, overcome the constitutional
presumption of innocence. Any taint of irregularity affects the
whole performance and should make the presumption
unavailable. In the present case, the failure of the apprehending
team to comply with paragraph 1, Section 21, Article II of R.A. No.
9165, and with the chain of custody requirement of this Act
effectively negates this presumption. As we explained in Malillin v. FIRST DIVISION
People:[46]
G.R. No. 180284, September 11, 2013
The presumption of regularity is merely just that - a NARCISO SALAS, Pettoners, v. ANNABELLE
mere presumption disputable by contrary proof and which when MATUSALEM, Respondent.
challenged by the evidence cannot be regarded as binding truth. DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari which seeks
to reverse and set aside the Decision1dated July 18, 2006 and
Resolution2 dated October 19, 2007 of the Court of Appeals (CA)
in CA-G.R. CV No. 64379.
The factual antecedents:
On May 26, 1995, Annabelle Matusalem (respondent) filed a
complaint for Support/Damages against Narciso Salas (petitioner)
in the Regional Trial Court (RTC) ofCabanatuan City (Civil Case No.
2124-AF).
Respondent claimed that petitioner is. the father of her son
Christian Paulo Salas who was born on December 28, 1994.
Petitioner, already 56 years old at the time, enticed her as she
was then only 24 years old, making her believe that he is a
widower. Petitioner rented an apartment where respondent
stayed and shouldered all expenses in the delivery of their child,
including the cost of caesarian operation and hospital
confinement. However, when respondent refused the offer of
petitioner’s family to take the child from her, petitioner
abandoned respondent and her child and left them to the mercy
of relatives and friends. Respondent further alleged that she
attempted suicide due to depression but still petitioner refused
to support her and their child.
Respondent thus prayed for support pendente lite and monthly
support in the amount of P20,000.00, as well as actual, moral
and exemplary damages, and attorney’s fees.
Petitioner filed his answer4 with special and affirmative defenses
and counterclaims. He described respondent as a woman of
loose morals, having borne her first child also out of wedlock
when she went to work in Italy. Jobless upon her return to the
country, respondent spent time riding on petitioner’s jeepney
which was then being utilized by a female real estate agent
named Felicisima de Guzman. Respondent had seduced a senior
police officer in San Isidro and her charge of sexual abuse against
said police officer was later withdrawn in exchange for the
quashing of drug charges against respondent’s brother-in-law
who was then detained at the municipal jail. It was at that time
respondent introduced herself to petitioner whom she pleaded
for charity as she was pregnant with another child. Petitioner
denied paternity of the child Christian Paulo; he was motivated
by no other reason except genuine altruism when he agreed to
shoulder the expenses for the delivery of said child, unaware of
respondent’s chicanery and deceit designed to “scandalize” him
in exchange for financial favor.
At the trial, respondent and her witness Grace Murillo testified.
Petitioner was declared to have waived his right to present
evidence and the case was considered submitted for decision
based on respondent’s evidence.
Respondent testified that she first met petitioner at the house of
his “kumadre” Felicisima de Guzman at Bgy. Malapit, San Isidro,
Nueva Ecija. During their subsequent meeting, petitioner told her
he is already a widower and he has no more companion in life
because his children are all grown-up. She also learned that
petitioner owns a rice mill, a construction business and a housing
subdivision (petitioner offered her a job at their family-owned
Ma. Cristina Village). Petitioner at the time already knows that
she is a single mother as she had a child by her former boyfriend
in Italy. He then brought her to a motel, promising that he will
take care of her and marry her. She believed him and yielded to
his advances, with the thought that she and her child will have a
better life. Thereafter, they saw each other weekly and petitioner
gave her money for her child. When she became pregnant with
petitioner’s child, it was only then she learned that he is in fact
not a widower. She wanted to abort the baby but petitioner
opposed it because he wanted to have another child.5
On the fourth month of her pregnancy, petitioner rented an
apartment where she stayed with a housemaid; he also provided
for all their expenses. She gave birth to their child on December
28, 1994 at the Good Samaritan Hospital in Cabanatuan City.
Before delivery, petitioner even walked her at the hospital room
and massaged her stomach, saying he had not done this to his
wife. She filled out the form for the child’s birth certificate and
wrote all the information supplied by petitioner himself. It was
also petitioner who paid the hospital bills and drove her baby
home. He was excited and happy to have a son at his advanced
age who is his “look-alike,” and this was witnessed by other
boarders, visitors and Grace Murillo, the owner of the apartment
unit petitioner rented. However, on the 18th day after the baby’s
birth, petitioner went to Baguio City for a medical check-up. He
confessed to her daughter and eventually his wife was also
informed about his having sired an illegitimate child. His family
then decided to adopt the baby and just give respondent money
so she can go abroad. When she refused this offer, petitioner
stopped seeing her and sending money to her. She and her baby
survived through the help of relatives and friends. Depressed,
she tried to commit suicide by drug overdose and was brought to
the hospital by Murillo who paid the bill. Murillo sought the help
of the Cabanatuan City Police Station which set their meeting
with petitioner. However, it was only petitioner’s wife who
showed up and she was very mad, uttering unsavory words
against respondent.6
Murillo corroborated respondent’s testimony as to the payment
by petitioner of apartment rental, his weekly visits to respondent
and financial support to her, his presence during and after
delivery of respondent’s baby, respondent’s attempted suicide
through sleeping pills overdose and hospitalization for which she
paid the bill, her complaint before the police authorities and
meeting with petitioner’s wife at the headquarters. 7
On April 5, 1999, the trial court rendered its decision8 in favor of
respondent, the dispositive portion of which
reads:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiff and against the defendant as follows:
1. Ordering the defendant to give as monthly support of
TWO THOUSAND (P2,000.00) PESOS for the child
Christian Paulo through the mother;
2. Directing the defendant to pay the plaintiff the sum of
P20,000.00 by way of litigation expenses; and
3. To pay the costs of suit.
SO ORDERED.9
Petitioner appealed to the CA arguing that: (1) the trial court
decided the case without affording him the right to introduce
evidence on his defense; and (2) the trial court erred in finding
that petitioner is the putative father of Christian Paulo and
ordering him to give monthly support.
By Decision dated July 18, 2006, the CA dismissed petitioner’s
appeal. The appellate court found no reason to disturb the trial
court’s exercise of discretion in denying petitioner’s motion for
postponement on April 17, 1998, the scheduled hearing for the
initial presentation of defendant’s evidence, and the motion for
reconsideration of the said order denying the motion for
postponement and submitting the case for decision.
On the paternity issue, the CA affirmed the trial court’s ruling
that respondent satisfactorily established the illegitimate filiation
of her son Christian Paulo, and consequently no error was
committed by the trial court in granting respondent’s prayer for
support. The appellate court thus
held:chanRoblesvirtualLawlibrary
Christian Paulo, in instant case, does not enjoy the benefit of a
record of birth in the civil registry which bears acknowledgment
signed by Narciso Salas. He cannot claim open and continuous
possession of the status of an illegitimate child.
It had been established by plaintiff’s evidence, however, that
during her pregnancy, Annabelle was provided by Narciso Salas
with an apartment at a rental of P1,500.00 which he paid for
(TSN, October 6, 1995, p. 18). Narciso provided her with a
household help with a salary of P1,500.00 a month (TSN, October
6, 1995, ibid). He also provided her a monthly food allowance of
P1,500.00 (Ibid, p. 18). Narciso was with Annabelle at the
hospital while the latter was in labor, “walking” her around and
massaging her belly (Ibid, p. 11). Narciso brought home Christian
Paulo to the rented apartment after Annabelle’s discharge from
the hospital. People living in the same apartment units were
witnesses to Narciso’s delight to father a son at his age which
was his “look alike”. It was only after the 18th day when Annabelle
refused to give him Christian Paulo that Narciso withdrew his
support to him and his mother.
Said testimony of Annabelle aside from having been
corroborated by Grace Murillo, the owner of the apartment
which Narciso rented, was never rebutted on record. Narciso did
not present any evidence, verbal or documentary, to repudiate
plaintiff’s evidence.
In the cases of Lim vs. CA (270 SCRA 1) and Rodriguez vs. CA (245
SCRA 150), the Supreme Court made it clear that Article 172 of
the Family Code is an adaptation of Article 283 of the Civil Code.
Said legal provision provides that the father is obliged to
recognize the child as his natural child x x “3) when the child has
in his favor any evidence or proof that the defendant is his
father”.
In fact, in Ilano vs. CA (230 SCRA 242, 258-259), it was held that–
“The last paragraph of Article 283 contains a blanket provision
that practically covers all the other cases in the preceding
paragraphs. ‘Any other evidence or proof’ that the defendant is
the father is broad enough to render unnecessary the other
paragraphs of this article. When the evidence submitted in the
action for compulsory recognition is not sufficient to meet [the]
requirements of the first three paragraphs, it may still be enough
under the last paragraph. This paragraph permits hearsay and
reputation evidence, as provided in the Rules of Court, with
respect to illegitimate filiation.”
As a necessary consequence of the finding that Christian Paulo is
the son of defendant Narciso Salas, he is entitled to support from
the latter (Ilano vs. CA, supra).
It “shall be demandable from the time the person who has the
right to recover the same needs it for maintenance x x.” (Art.
203, Family Code of the Philippines).10
Petitioner filed a motion for reconsideration but it was denied by
the CA.
Hence, this petition submitting the following
arguments:chanRoblesvirtualLawlibrary
1. THE VENUE OF THE CASE WAS IMPROPERLY LAID BEFORE THE
REGIONAL TRIAL COURT OF CABANATUAN CITY CONSIDERING
THAT BOTH PETITIONER AND RESPONDENT ARE ACTUAL
RESIDENTS OF BRGY. MALAPIT, SAN ISIDRO, NUEVA ECIJA.
2. THE HONORABLE COURT OF APPEALS ERRED IN
PRONOUNCING THAT PETITIONER WAS AFFORDED THE FULL
MEASURE OF HIS RIGHT TO DUE PROCESS OF LAW AND IN
UPHOLDING THAT THE TRIAL COURT DID NOT GRAVELY ABUSE
ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DECIDED THE INSTANT CASE WITHOUT
AFFORDING PETITIONER THE RIGHT TO INTRODUCE EVIDENCE IN
HIS DEFENSE.
3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT THE FILIATION OF CHRISTIAN PAULO WAS DULY
ESTABLISHED PURSUANT TO ARTICLE 175 IN RELATION TO
ARTICLE 172 OF THE FAMILY CODE AND EXISTING
JURISPRUDENCE AND THEREFORE ENTITLED TO SUPPORT FROM
THE PETITIONER.11
We grant the petition.
It is a legal truism that the rules on the venue of personal actions
are fixed for the convenience of the plaintiffs and their witnesses.
Equally settled, however, is the principle that choosing the venue
of an action is not left to a plaintiff’s caprice; the matter is
regulated by the Rules of Court.12
In personal actions such as the instant case, the Rules give the
plaintiff the option of choosing where to file his complaint. He
can file it in the place (1) where he himself or any of them
resides, or (2) where the defendant or any of the defendants
resides or may be found.13 The plaintiff or the defendant must be
residents of the place where the action has been instituted at the
time the action is commenced.14
However, petitioner raised the issue of improper venue for the
first time in the Answer itself and no prior motion to dismiss
based on such ground was filed. Under the Rules of Court before
the 1997 amendments, an objection to an improper venue must
be made before a responsive pleading is filed. Otherwise, it will
be deemed waived.15 Not having been timely raised, petitioner’s
objection on venue is therefore deemed waived.
As to the denial of the motion for postponement filed by his
counsel for the resetting of the initial presentation of defense
evidence on April 17, 1998, we find that it was not the first time
petitioner’s motion for postponement was denied by the trial
court.
Records disclosed that after the termination of the testimony of
respondent’s last witness on November 29, 1996, the trial court
as prayed for by the parties, set the continuation of hearing for
the reception of evidence for the defendant (petitioner) on
January 27, February 3, and February 10, 1997. In the Order
dated December 17, 1996, petitioner was advised to be ready
with his evidence at those hearing dates earlier scheduled. At the
hearing on January 27, 1997, petitioner’s former counsel, Atty.
Rolando S. Bala, requested for the cancellation of the February 3
and 10, 1997 hearings in order to give him time to prepare for his
defense, which request was granted by the trial court which thus
reset the hearing dates to March 3, 14 and 17, 1997. On March 3,
1997, upon oral manifestation by Atty. Bala and without
objection from respondent’s counsel, Atty. Feliciano Wycoco, the
trial court again reset the hearing to March 14 and 17, 1997.
With the non-appearance of both petitioner and Atty. Bala on
March 14, 1997, the trial court upon oral manifestation by Atty.
Wycoco declared their absence as a waiver of their right to
present evidence and accordingly deemed the case submitted for
decision.16
On July 4, 1997, Atty. Bala withdrew as counsel for petitioner and
Atty. Rafael E. Villarosa filed his appearance as his new counsel
on July 21, 1997. On the same date he filed entry of appearance,
Atty. Villarosa filed a motion for reconsideration of the March 14,
1997 Order pleading for liberality and magnanimity of the trial
court, without offering any explanation for Atty. Bala’s failure to
appear for the initial presentation of their evidence. The trial
court thereupon reconsidered its March 14, 1997 Order, finding it
better to give petitioner a chance to present his evidence. On
August 26, 1997, Atty. Villarosa received a notice of hearing for
the presentation of their evidence scheduled on September 22,
1997. On August 29, 1997, the trial court received his motion
requesting that the said hearing be re-set to October 10, 1997 for
the reason that he had requested the postponement of a hearing
in another case which was incidentally scheduled on September
22, 23 and 24, 1997. As prayed for, the trial court reset the
hearing to October 10, 1997. On said date, however, the hearing
was again moved to December 15, 1997. On February 16, 1998,
the trial court itself reset the hearing to April 17, 1998 since it
was unclear whether Atty. Wycoco received a copy of the
motion.17
On April 17, 1998, petitioner and his counsel failed to appear but
the trial court received on April 16, 1998 an urgent motion to
cancel hearing filed by Atty. Villarosa. The reason given by the
latter was the scheduled hearing on the issuance of writ of
preliminary injunction in another case under the April 8, 1998
Order issued by the RTC of Gapan, Nueva Ecija, Branch 36 in Civil
Case No. 1946. But as clearly stated in the said order, it was the
plaintiffs therein who requested the postponement of the
hearing and it behoved Atty. Villarosa to inform the RTC of Gapan
that he had a previous commitment considering that the April
17, 1998 hearing was scheduled as early as February 16, 1998.
Acting on the motion for postponement, the trial court
denied for the second tme petitioner’s motion for
postponement. Even at the hearing of their motion for
reconsideration of the April 17, 1998 Order on September 21,
1998, Atty. Villarosa failed to appear and instead filed another
motion for postponement. The trial court thus ordered that the
case be submitted for decision stressing that the case had long
been pending and that petitioner and his counsel have been
given opportunities to present their evidence. It likewise denied
a second motion for reconsideration filed by Atty. Villarosa, who
arrived late during the hearing thereof on December 4, 1998. 18
A motion for continuance or postponement is not a matter of
right, but a request addressed to the sound discretion of the
court. Parties asking for postponement have absolutely no right
to assume that their motions would be granted. Thus, they must
be prepared on the day of the hearing.19 Indeed, an order
declaring a party to have waived the right to present evidence for
performing dilatory actions upholds the trial court’s duty to
ensure that trial proceeds despite the deliberate delay and
refusal to proceed on the part of one party.20
Atty. Villarosa’s plea for liberality was correctly rejected by the
trial court in view of his own negligence in failing to ensure there
will be no conflict in his trial schedules. As we held in Tiomico v.
Court of Appeals21:chanRoblesvirtualLawlibrary
Motions for postponement are generally frowned upon by Courts
if there is evidence of bad faith, malice or inexcusable negligence
on the part of the movant. The inadvertence of the defense
counsel in failing to take note of the trial dates and in belatedly
informing the trial court of any conflict in his schedules of trial or
court appearances, constitutes inexcusable negligence. It should
be borne in mind that a client is bound by his counsel’s conduct,
negligence and mistakes in handling the case. 22
With our finding that there was no abuse of discretion in the trial
court’s denial of the motion for postponement filed by
petitioner’s counsel, petitioner’s contention that he was deprived
of his day in court must likewise fail. The essence of due process
is that a party is given a reasonable opportunity to be heard and
submit any evidence one may have in support of one’s defense.
Where a party was afforded an opportunity to participate in the
proceedings but failed to do so, he cannot complain of
deprivation of due process. If the opportunity is not availed of, it
is deemed waived or forfeited without violating the
constitutional guarantee.23
We now proceed to the main issue of whether the trial and
appellate courts erred in ruling that respondent’s evidence
sufficiently proved that her son Christian Paulo is the illegitimate
child of petitioner.
Under Article 175 of the Family Code of the Philippines,
illegitimate filiation may be established in the same way and on
the same evidence as legitimate children.
Article 172 of the Family Code of the
Philippines states:chanRoblesvirtualLawlibrary
The filiation of legitimate children is established by any of the
following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or
a private handwritten instrument and signed by the parent
concerned.
In the absence of the foregoing evidence, the legitimate filiation
shall be proved by:
(1) The open and continuous possession of the status of a
legitimate child; or
(2) Any other means allowed by the Rules of Court and special
laws. (Underscoring supplied.)
Respondent presented the Certificate of Live Birth24 (Exhibit “A-
1”) of Christian Paulo Salas in which the name of petitioner
appears as his father but which is not signed by him. Admittedly,
it was only respondent who filled up the entries and signed the
said document though she claims it was petitioner who supplied
the information she wrote therein.
We have held that a certificate of live birth purportedly
identifying the putative father is not competent evidence of
paternity when there is no showing that the putative father had a
hand in the preparation of the certificate. 25 Thus, if the father did
not sign in the birth certificate, the placing of his name by the
mother, doctor, registrar, or other person is incompetent
evidence of paternity.26 Neither can such birth certificate be
taken as a recognition in a public instrument 27 and it has no
probative value to establish filiation to the alleged father.28
As to the Baptismal Certificate29 (Exhibit “B”) of Christian Paulo
Salas also indicating petitioner as the father, we have ruled that
while baptismal certificates may be considered public
documents, they can only serve as evidence of the
administration of the sacraments on the dates so specified. They
are not necessarily competent evidence of the veracity of entries
therein with respect to the child’s paternity. 30
The rest of respondent’s documentary evidence consists of
handwritten notes and letters, hospital bill and photographs
taken of petitioner and respondent inside their rented apartment
unit.
Pictures taken of the mother and her child together with the
alleged father are inconclusive evidence to prove
paternity.31 Exhibits “E” and “F”32 showing petitioner and
respondent inside the rented apartment unit thus have scant
evidentiary value. The Statement of Account33 (Exhibit “C”) from
the Good Samaritan General Hospital where respondent herself
was indicated as the payee is likewise incompetent to prove that
petitioner is the father of her child notwithstanding petitioner’s
admission in his answer that he shouldered the expenses in the
delivery of respondent’s child as an act of charity.
As to the handwritten notes34 (Exhibits “D” to “D-13”) of
petitioner and respondent showing their exchange of
affectionate words and romantic trysts, these, too, are not
sufficient to establish Christian Paulo’s filiation to petitioner as
they were not signed by petitioner and contained no statement
of admission by petitioner that he is the father of said child.
Thus, even if these notes were authentic, they do not qualify
under Article 172 (2) vis-à- vis Article 175 of the Family Code
which admits as competent evidence of illegitimate filiation an
admission of filiation in a private handwritten instrument signed
by the parent concerned.35
Petitioner’s reliance on our ruling in Lim v. Court of Appeals36 is
misplaced. In the said case, the handwritten letters of petitioner
contained a clear admission that he is the father of private
respondent’s daughter and were signed by him. The Court
therein considered the totality of evidence which established
beyond reasonable doubt that petitioner was indeed the father
of private respondent’s daughter. On the other hand, in Ilano v.
Court of Appeals,37 the Court sustained the appellate court’s
finding that private respondent’s evidence to establish her
filiation with and paternity of petitioner was overwhelming,
particularly the latter’s public acknowledgment of his amorous
relationship with private respondent’s mother, and private
respondent as his own child through acts and words, her
testimonial evidence to that effect was fully supported by
documentary evidence. The Court thus ruled that respondent
had adduced sufficient proof of continuous possession of status
of a spurious child.
Here, while the CA held that Christian Paulo Salas could not claim
open and continuous possession of status of an illegitimate child,
it nevertheless considered the testimonial evidence sufficient
proof to establish his filiation to petitioner.
An illegitimate child is now also allowed to establish his claimed
filiation by “any other means allowed by the Rules of Court and
special laws,” like his baptismal certificate, a judicial admission, a
family Bible in which his name has been entered, common
reputation respecting his pedigree, admission by silence, the
testmonies of witnesses, and other kinds of proof admissible
under Rule 130 of the Rules of Court.38Reviewing the records, we
find the totality of respondent’s evidence insufficient to establish
that petitioner is the father of Christian Paulo.
The testimonies of respondent and Murillo as to the
circumstances of the birth of Christian Paulo, petitioner’s
financial support while respondent lived in Murillo’s apartment
and his regular visits to her at the said apartment, though replete
with details, do not approximate the “overwhelming evidence,
documentary and testimonial” presented in Ilano. In that case,
we sustained the appellate court’s ruling anchored on the
following factual findings by the appellate court which was
quoted at length in the ponencia:chanRoblesvirtualLawlibrary
It was Artemio who made arrangement for the delivery of
Merceditas (sic) at the Manila Sanitarium and Hospital. Prior to
the delivery, Leoncia underwent prenatal examination
accompanied by Artemio (TSN, p. 33, 5/17/74). After delivery,
they went home to their residence at EDSA in a car owned and
driven by Artemio himself (id. p. 36).
Merceditas (sic) bore the surname of “Ilano” since birth without
any objection on the part of Artemio, the fact that since
Merceditas (sic) had her discernment she had always known and
called Artemio as her “Daddy” (TSN, pp. 28-29, 10/18/74); the
fact that each time Artemio was at home, he would play with
Merceditas (sic), take her for a ride or restaurants to eat, and
sometimes sleeping with Merceditas (sic) (id. p. 34) and does all
what a father should do for his child — bringing home goodies,
candies, toys and whatever he can bring her which a child enjoys
which Artemio gives to Merceditas (sic) (TSN, pp. 38-39, 5/17/74)
are positive evidence that Merceditas (sic) is the child of Artemio
and recognized by Artemio as such. Special attention is called to
Exh. “E-7” where Artemio was telling Leoncia the need for a “frog
test” to know the status of Leoncia.
Plaintiff pointed out that the support by Artemio for Leoncia and
Merceditas (sic) was sometimes in the form of cash personally
delivered to her by Artemio, thru Melencio, thru Elynia (Exhs. “E-
2” and “E-3”, and “D-6”), or thru Merceditas (sic) herself (TSN, p.
40, 5/17/74) and sometimes in the form of a check as the Manila
Banking Corporation Check No. 81532 (Exh. “G”) and the
signature appearing therein which was identified by Leoncia as
that of Artemio because Artemio often gives her checks and
Artemio would write the check at home and saw Artemio sign
the check (TSN, p. 49, 7/18/73). Both Artemio and Nilda admitted
that the check and signature were those of Artemio (TSN, p. 53,
10/17/77; TSN, p. 19, 10/9/78).
During the time that Artemio and Leoncia were living as husband
and wife, Artemio has shown concern as the father of Merceditas
(sic). When Merceditas (sic) was in Grade 1 at the St. Joseph
Parochial School, Artemio signed the Report Card of Merceditas
(sic) (Exh. “H”) for the fourth and fifth grading period(s) (Exh. “H-
1” and “H-2”) as the parent of Merceditas (sic). Those signatures
of Artemio [were] both identified by Leoncia and Merceditas (sic)
because Artemio signed Exh. “H-1” and “H-2” at their residence
in the presence of Leoncia, Merceditas (sic) and of Elynia (TSN, p.
57, 7/18/73; TSN, p. 28, 10/1/73). x x x.
xxx xxx xxx
When Artemio run as a candidate in the Provincial Board of
Cavite[,] Artemio gave Leoncia his picture with the following
dedication: “To Nene, with best regards, Temiong”. (Exh. “I”). (pp.
19-20, Appellant’s Brief)
The mere denial by defendant of his signature is not sufficient to
offset the totality of the evidence indubitably showing that the
signature thereon belongs to him. The entry in the Certificate of
Live Birth that Leoncia and Artemio was falsely stated therein as
married does not mean that Leoncia is not appellee’s daughter.
This particular entry was caused to be made by Artemio himself
in order to avoid embarrassment.39
In sum, we hold that the testimonies of respondent and Murillo,
by themselves are not competent proof of paternity and the
totality of respondent’s evidence failed to establish Christian
Paulo’s filiation to petitioner.
Time and again, this Court has ruled that a high standard of proof
is required to establish paternity and filiation. An order for
recognition and support may create an unwholesome situation
or may be an irritant to the family or the lives of the parties so
that it must be issued only if paternity or filiation is established
by clear and convincing evidence.40
Finally, we note the Manifestation and Motion41 filed by
petitioner’s counsel informing this Court that petitioner had died
on May 6, 2010.
The action for support having been filed in the trial court when
petitioner was still alive, it is not barred under Article 175 (2) 42 of
the Family Code. We have also held that the death of the
putative father is not a bar to the action commenced during his
lifetime by one claiming to be his illegitimate child.43 The rule on
substitution of parties provided in Section 16, Rule 3 of the 1997
Rules of Civil Procedure, thus applies.
SEC. 16. Death of party; duty of counsel. – Whenever a party to a
pending action dies, and the claim is not thereby extinguished, it
shall be the duty of his counsel to inform the court within thirty
(30) days after such death of the fact thereof, and to give the
name and address of his legal representative or representatives.
Failure of counsel to comply with his duty shall be a ground for
disciplinary action.
The action must be brought within the same period specified in
Article 173, except when the action is based on the second
paragraph of Article 172, in which case the action may be
brought during the lifetime of the alleged parent.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an executor
or administrator and the court may appoint a guardian ad
litem for the minor heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of
thirty (30) days from notice.
If no legal representative is named by the counsel for the
deceased party, or if the one so named shall fail to appear within
the specified period, the court may order the opposing party,
within a specified time to procure the appointment of an
executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the
deceased. The court charges in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.
WHEREFORE, the petition for review on certiorari is GRANTED.
The Decision dated July 18, 2006 and Resolution dated October
19, 2007 of the Court of Appeals in CA-GR. CV No. 64379 are
hereby REVERSED and SET ASIDE. Civil Case No. 2124-AF of the
Regional Trial Court of Cabanatuan City, Branch 26 is DISMISSED.

No pronouncement as to costs. chanRoblesvirtualLawlibrary

SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin,

and Reyes, JJ., concur.

FIRST DIVISION

G.R. No. 199689 March 12, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
HERMANOS CONSTANTINO, JR. y BINAYUG, a.k.a.
"JOJIT," Accused-Appellant.

DECISION
LEONARDO-DE CASTRO, J.:
This appeal challenges the Decision1 dated July 29, 2011 of the
Court of Appeals in CA-G.R. CR.-H.C. No. 03353, affirming the
Decision2 dated April 15, 2008 of the Regional Trial Court (R TC),
Branch 5 of Tuguegarao City, Cagayan, in Criminal Case No.
10516, which found accused-appellant Hermanos Constantino, Jr.
y Binayug, a.k.a. "Jojit" (Constantino), guilty of the crime of illegal
sale of methamphetamine hydrochloride, more popularly known
as shabu, under Article II, Section 5 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of
2002.
The Information3 filed before the R TC charged Constantino, as
follows:
That on January 20, 2005, in the City of Tuguegarao, Province of
Cagayan and within the jurisdiction of the Honorable Court, the
above-named accused, without authority of law and without
permit to sell, transport, deliver and distribute dangerous drugs,
did then and there willfully, unlawfully and feloniously sell,
transport, distribute and deliver two (2) heat-sealed transparent
plastic sachets containing 0.14 gram of Methamphetamine
Hydrochloride commonly known as "shabu", a dangerous drug to
a member of the PNP, Tuguegarao City who acted as a poseur-
buyer; that after receiving the two (2) plastic sachets, the poseur-
buyer simultaneously handed to the accused the marked money
consisting of one (1) piece of FIVE HUNDRED PESO BILL (₱500.00)
with Serial No. Q₱278070 and five (5) pieces of ONE HUNDRED
PESO BILL with Serial Nos. SM989053, PS724429, XM484584,
BB048002, and EK6900025 or a total of ₱1,000.00 and this led to
the apprehension of the accused and the confiscation of the
dangerous drug together with the buy-bust money by the said
apprehending law enforcers of the Tuguegarao City Police Station
who formed the buy bust team in coordination with the PDEA.
When arraigned on July 8, 2005, Constantino pleaded not guilty
to the crime charged.4 Thereafter, pre-trial and trial on the merits
ensued.
Evidence for the prosecution presented the following version of
events:
On January 20, 2005, at around 2:00 in the afternoon, Police
Superintendent (P/Supt.) Mariano Rodriguez (Rodriquez), the
Chief of Police of Tuguegarao City, received a report from a
confidential informant (CI) that a certain Jojit was selling illegal
drugs in the said city. P/Supt.
Rodriguez immediately formed a buy-bust group composed of
Senior Police Officer (SPO) 2 Noel Taguiam (Taguiam), SPO2
Alexander Tamang (Tamang), SPO1 Arthur Blaquera (Blaquera),
Police Officer (PO) 3 Edwin Hernandez (Hernandez), and PO3
Rolando Domingo (Domingo). PO3 Domingo was designated as
the poseur-buyer. The buy-bust money, consisting of one ₱500.00
bill and five ₱100.00 bills, were dusted with fluorescent powder
and their respective serial numbers were recorded in the police
blotter.5
Around 8:00 in the evening of the same day, the team proceeded
to Reynovilla St., Caritan Centro, Tuguegarao City, the place
where, according to the CI, Jojit was selling shabu. PO3 Domingo
positioned himself beside a street light while the rest of the team
hid behind a nearby concrete fence. After waiting for about 45
minutes, Constantino arrived on board a tricycle. PO3 Domingo
recognized Constantino as the Jojit described by the CI. PO3
Domingo approached Constantino and asked him if he was Jojit.
When Constantino replied in the affirmative, PO3 Domingo next
asked, "Mayroon ka bang stuff?" ("Do you have stuff?") In
response, Constantino inquired of PO3 Domingo how much he
wanted to buy. PO3 Domingo said he wanted to buy ₱1,000.00
worth of shabu, simultaneously handing over the buy-bust
money to Constantino, who, in turn, handed two plastic sachets
to PO3 Domingo. Thereupon, PO3 Domingo turned his cap
backwards, the pre-arranged signal for the consummated sale.
Upon seeing the signal, the other members of the buy-bust team
approached the scene at once and arrested Constantino, from
whom SPO2 Taguiam recovered the buy-bust money. 6
Thereafter, Constantino was brought to the police station where
the recovered drugs and money were turned over to the
investigator, SPO2 Tamang.7 The recovered drugs were then
marked with the initials "A-1" and "A-2." The incident was
recorded in the police blotter with an inventory of the recovered
drugs and money. 8
Later that evening, at around ten o’clock, P/Supt. Rodriguez and
SPO2 Tamang submitted to the Philippine National Police (PNP)
Crime Laboratory Services, Camp Marcelo Adduru, Tuguegarao
City, a request for laboratory examination of two plastic sachets
with white crystalline substance marked as "A-1" and "A-2" to
determine the presence of dangerous drugs;9 as well as both
hands of Constantino, one piece ₱500.00 bill, and five pieces
₱100.00 bills, to determine the presence of the ultra violet
powder.10 Per Chemistry Report No. D-08-200511 and Physical
Identification Report No. PI-04-2005,12 prepared by Police Senior
Inspector (P/SInsp.) Mayra Matote Madria,13 Forensic Chemist,
the contents of the two plastic sachets tested positive for
Methamphetamine Hydrochloride; while the other specimens
tested positive for the presence of bright-yellow ultraviolet
fluorescent powder.
Constantino denied the accusation against him and asserted that
he was merely framed-up.
According to Constantino, at around 8:00 in the evening on
January 20, 2005, he was enjoying a joyride with his friend, Jeff
Abarriao, on the latter’s motorcycle, within the vicinity of Caritan
Centro. After 30 minutes, Constantino decided to go home. While
walking along Reyno or Reynovilla St., two vehicles suddenly
stopped, one in front and the other behind him. Five men, all in
civilian clothes, alighted from the two vehicles. Two of the men
held Constantino’s hands, while another poked a gun at him,
asking him where he came from and ordering him to bring out
the shabu. Constantino answered that he did not know what the
men were talking about. The men then forced Constantino into
one of the vehicles. Inside the vehicle, one of the men frisked
and searched Constantino, and told him that he was being
arrested for selling shabu. The men, who were now apparently
police officers, brought Constantino to the Tuguegarao City Police
Station. At the police station, the police officers took
Constantino’s cellphone and wallet. Also at the police station,
one of the arresting police officers brought out two pieces of
plastic sachets and money and turned it over to one of his
companions. At around 9:30 in the evening, the police officers
brought Constantino to the PNP Crime Laboratory, but nothing
happened because he heard that the person who was supposed
to conduct the examination was not around, so, Constantino was
brought back to the police station.14
The following day, January 21, 2005, the police officers again
brought Constantino to the PNP Crime Laboratory. Along the way,
one of the police escorts forced Constantino to hold a certain
amount of money. Constantino tried to resist but he could not
really do anything because he was handcuffed. After his
examination, Constantino was detained and was told that he was
suspected of selling shabu.
The RTC promulgated its Decision on April 15, 2008, finding
Constantino guilty as charged. The trial court rejected the
arguments of the defense, thus:
1. The Prosecution failed to give a detailed account of the
arrangement with the accused for the purchase of the shabu.
The Court’s response: The testimony of PO3 Domingo was
detailed enough, corroborated by other witnesses. It is the
defense that has failed to show in what crucial detail the
prosecution’s account is wanting.
2. The police officers categorically admitted that they did not
personally know the accused until they were at the alleged place
of transaction.
The Court’s response: Substantive law does not require this; the
rules of evidence do not. Did they know he was Jojit? Yes, from
the description given the informant. Domingo asked whether he
was Jojit. He answered "Yes".
3. The arresting officers failed to comply with the requirements
of Article II, Section 21 of R.A. 9165 that requires that an
inventory be taken and that photographs be taken of the items
seized.
The Court’s comment: The Police Blotter Entry No. 0270
enumerates the items seized. This, the Court holds to be
substantial compliance. Even assuming, without admitting, that
not all the requirements may not have been complied with, these
omissions do not operate to exclude the evidence nor to cause
suppression thereof. They are directory, not mandatory
provisions.
4. The chain of custody was not established with certainty.
The Court’s comment: The chain is not difficult to trace, and has
been established by evidence, thus:
a. Exhibit "B": The police blotter recording that on 20 January
2005 at 2100 hours, mentioning the two sachets of shabu which
according to the blotter the accused admitted he handed over to
Domingo; Domingo had testified that the markings A-1 NBT and
A-2 NBT were placed on the sachets by Investigator Alexander
Tamang;
b. Exhibit "F": Dated January 20, 2005, a request to the PNP
Crime Lab Services for the examination of "two plastic sachet
(sic) with white crystalline substance marked A1 and A2";
c. Exhibit "D": Chemistry Report No. D-08-2005 completed 21
January 2005 reporting a qualitative examination of the contents
of two heat-sealed sachets marked as A1 NBT and A2 NBT and
identifying the substance as "Methamphetamine Hydrochloride".
5. There was no prior coordination with PDEA.
The Court’s response: None was needed. Exhibit "H" clearly
evidences that SPO1 Blaquera was authorized to conduct anti-
drug operations. Domingo also answered the question about
coordination with PDEA when he testified: "During that time 3
representatives of the Intelligence Operatives were deputized in
the PDEA in the persons of Noel Taguiam, Arthur Blaquera and
the Chief of Police."
Hermanos testified in his behalf and his testimony can be
reduced to the following story:
1 He went on a joy-ride that night with his friend aboard a
motorcycle;
2 Tiring, he alighted and started to walk along Reyno Villa Street;
3 He was accosted by police officers who, at the time, he did not
know to be police officers;
4 They took him to the police station and produced the sachets;
5 Next day, while on the way to the Crime Lab, they forced him to
hold marked bills, although he was cuffed.
All told, it is a story that is meant to endeavor to explain the
circumstances around the accused’s arrest and apprehension. For
one thing, it is self-serving; for another, we are not told any
reason why the police officers should have wanted to apprehend
him – a supposedly guiltless man; third, the Court never heard
the testimony of his friend with whom he was supposed to have
had a joy-ride that night. In sum, his story does not convince this
Court.15(Citations omitted.)
The RTC imposed the following sentence upon Constantino:
WHEREFORE, the Court finds the accused guilty beyond
reasonable doubt of Violation of Sec. 5, Art. II of R.A. 9165 and
sentences him to suffer the penalty of LIFE IMPRISONMENT and
a fine of ₱500,000.00.16
Maintaining his innocence, Constantino appealed to the Court of
Appeals, arguing that:
1. The trial court gravely erred in giving full credence to the
testimonies of the prosecution witnesses despite the patent
irregularities in the conduct of the buy-bust operation.
2. The trial court gravely erred in convicting accused-appellant
despite the prosecution’s failure to establish that chain of
custody of the drug specimens allegedly confiscated from the
accused-appellant.
3. The trial court gravely erred in convicting the accused-
appellant despite the prosecution’s failure to establish the
identity of the prohibited drugs constituting the corpus delicti of
the offense.
In its Decision dated July 29, 2011, the Court of Appeals affirmed
in toto the judgment of conviction of the RTC against
Constantino. The appellate court held that Constantino’s defense
of frame-up was not worthy of credence as his version of the
incident was not at all corroborated.
Constantino was caught in flagrante delicto selling shabu to PO3
Domingo, who acted as the poseur-buyer, therefore, he was
legally arrested without a warrant. The appellate court also found
that the chain of custody of the shabu had been preserved from
the time said drugs were confiscated from Constantino to the
time the same drugs were delivered to the crime laboratory and
thereafter retrieved and presented as evidence before the trial
court. Lastly, the appellate court stressed that between the
positive and categorical declarations of the prosecution
witnesses, on one hand, and the unsubstantial denial or negative
statements of the appellant, on the other hand, the former
generally prevails; and that negative averments, unsubstantiated
by clear and convincing evidence, deserve no weight in law,
especially vis-a-vis the time-tested presumption of regularity of
performance of official duty on the part of the apprehending
officers.
In the end, the Court of Appeals decreed:
WHEREFORE, the Decision of the Regional Trial Court of
Tuguegarao City, Branch 5, dated 15 April 2008, in Criminal Case
No. 10516, is AFFIRMED.17
Consequently, Constantino comes before this Court seeking the
reversal of his conviction by the trial court and the Court of
Appeals.
In his Supplemental Brief, Constantino contests his conviction,
averring inconsistencies in the testimonies of the prosecution
witnesses, particularly, on the circumstances of the marking of
the two plastic sachets containing shabu allegedly confiscated
from him. Different people claim to have made the marking
"NBT" on the two plastic sachets and gave various explanations
as to what the initials "NBT" stand for. In short, Constantino
argues that the prosecution failed to establish a crucial link in the
chain of custody of the shabu in this case.
The appeal is impressed with merit.
Admittedly, denial is an inherently weak defense, consistently
viewed with disfavor by the courts, being a self-serving negative
evidence. In view, however, of the constitutional presumption
that an accused is innocent until the contrary is proven beyond
reasonable doubt, the burden lies on the prosecution to
overcome such presumption by presenting the required quantum
of evidence. In so doing, the prosecution must rest on its own
merits and must not rely on the weakness of the defense. 18
In a prosecution for the sale of a dangerous drug, the following
elements must be proven: (1) the identity of the buyer and the
seller, the object, and the consideration; and (2) the delivery of
the thing sold and the payment therefor. Simply put, "[in]
prosecutions for illegal sale of shabu, what is material is the
proof that the transaction or sale actually took place, coupled
with the presentation in court of the corpus delicti as
evidence."19 And in the prosecution of these offenses, the
primary consideration is to ensure that the identity and integrity
of the seized drugs and other related articles have been
preserved from the time they were confiscated from the accused
until their presentation as evidence in court.20
Article II, Section 21(1) of Republic Act No. 9165 lays down the
procedure to be followed in the seizure and custody of
dangerous drugs:
Section 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. – The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the drugs shall, immediately after seizure and confiscation,
physically inventory and photograph the same in the presence of
the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a
representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to
sign the copies of the inventory and be given a copy thereof[.]
Article II, Section 21(a) of the Implementing Rules and
Regulations (IRR) of Republic Act No. 9165 describes in more
detail how the foregoing procedure is to be applied:
SECTION 21. Custody and Disposition of Confiscated, Seized
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in
the presence of the accused or the person/s from whom such
items were confiscated and/or seized, or his/her representative
or counsel, a representative from the media and the Department
of Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy
thereof; Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest office of
the apprehending officer/team, whichever is practicable, in case
of warrantless seizures; Provided, further, that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.]
While police officers are enjoined to strictly comply with the
procedure prescribed by law, the IRR also explicitly excuses non-
compliance under justifiable grounds, but only if the integrity
and evidentiary value of the seized items have been properly
preserved by the apprehending officers. The integrity and
evidentiary value of seized items are properly preserved for as
long as the chain of custody of the same are duly established.
Section 1(b) of Dangerous Drugs Board Regulation No. 1, series of
2002,21 defines "chain of custody" as follows:
Chain of Custody means the duly recorded authorized
movements and custody of seized drugs or controlled chemicals
or plant sources of dangerous drugs or laboratory equipment of
each stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
item shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody were made in the course of
safekeeping and use in court as evidence, and the final
disposition.
In Mallillin v. People,22 the Court discussed how the chain of
custody of seized items is established:
As a method of authenticating evidence, the chain of custody
rule requires that the admission of an exhibit be preceded by
evidence sufficient to support a finding that the matter in
question is what the proponent claims it to be. It would include
testimony about every link in the chain, from the moment the
item was picked up to the time it is offered into evidence, in such
a way that every person who touched the exhibit would describe
how and from whom it was received, where it was and what
happened to it while in the witness’ possession, the condition in
which it was received and the condition in which it was delivered
to the next link in the chain. These witnesses would then
describe the precautions taken to ensure that there had been no
change in the condition of the item and no opportunity for
someone not in the chain to have possession of the same.
(Citations omitted.)
Thus, the following links must be established in the chain of
custody in a buy-bust situation: first, the seizure and marking, if
practicable, of the illegal drug recovered from the accused by the
apprehending officer; second, the turn over of the illegal drug
seized by the apprehending officer to the investigating officer;
third, the turn over by the investigating officer of the illegal drug
to the forensic chemist for laboratory examination; and fourth,
the turn over and submission of the marked illegal drugs seized
from the forensic chemist to the court.23
After a careful scrutiny of the testimonies of the prosecution
witnesses, the Court finds glaring inconsistencies affecting the
integrity of the shabu purportedly confiscated from Constantino.
The inconsistent testimonies of PO3 Domingo, PO3 Hernandez,
and P/SInsp. Tulauan as to who, when, and where the two plastic
sachets of shabu were marked lead the Court to question
whether the two plastic sachets of shabu identified in court were
the very same ones confiscated from Constantino. The doubtful
markings already broke the chain of custody of the seized shabu
at a very early stage.
To recall, the first crucial link in the chain of custody is seizure
and marking of the illegal drug. In this case, PO3 Domingo, as
poseur-buyer, received two plastic sachets of shabu from
Constantino in exchange for ₱1,000. However, PO3 Domingo
himself did not put any markings on the two plastic sachets of
shabu. Instead, upon arrival of the buy-bust team with
Constantino at the police station, PO3 Domingo turned over the
two plastic sachets of shabu to the investigator, SPO2 Tamang,
who was also a member of the buy-bust team. PO3 Domingo
testified that it was SPO2 Tamang who put the marking "NBT" on
the said sachets of shabu. Below are the excerpts from PO3
Domingo’s testimony:
Q If that plastic sachets which was sold to you by Hermanos
Constantino is shown to you will you be able to identify the
same?
A Yes, ma’am.
Q How were you able to identify the plastic sachets?
A There is an initials (sic), ma’am.
Q What initials are you referring to?
A A-1 initial NBT and A-2 initial NBT.
Q Who placed those initials in the plastic sachets?
A The Investigator, ma’am.
Q And who is the investigator?
A Alexander Tamang, ma’am.
Q Where did he place those initials?
A In the police station after the apprehension,
ma’am.24 (Emphasis supplied.)
However, PO3 Hernandez, another member of the buy-bust
team, categorically pointed to SPO2 Taguiam, also a member of
the buy-bust team, as the one who put the marking "NBT" on the
plastic sachets upon the team’s return to the police station, thus:
PROS. NICOLAS:
Q During the buy bust operation you stated that the accused
handed to the poseur buyer in the person of PO3 Rolando
Domingo two plastic sachets containing as you claimed
methamphetamine hydrochloride, have you seen these plastic
sachets at that time when they handed to PO3 Rolando
Domingo?
A Yes, sir.
Q If these two plastic sachets will be shown to you again today
will you be able to tell that these two plastic sachets were the
same plastic sachets that were handed by the accused to PO3
Rolando Domingo?
A Yes, sir.
Q I am showing to you these two plastic sachets kindly tell us if
these are the plastic sachets that were handed to PO3 Rolando
Domingo?
A These are the ones, sir.
Q Why do you say that these are the two plastic sachets handed
by the accused?
A Because I was there and I saw the accused handed the two
plastic sachets to PO3 Rolando Domingo, sir.
Q Why do you know that these are the same plastic sachets?
A These are the ones, sir.
Q Mr. Witness, there are markings on these two plastic sachets,
do you know whose markings are these?
xxxx
A It was Noel B. Taguiam, sir.
The witness is pointing to the marking NBT partly hidden.
COURT:
Q Who is Noel B. Taguiam?
A A member of the buy bust team also, sir.
PROS. NICOLAS:
Q You stated this NBT was placed by one Noel B. Taguiam, why identity of the drugs actually seized from Constantino during the
do you know that he was the one who placed this? buy-bust and the ones presented before the trial court, especially
A Because I was present during that time when he placed his considering that three different people, during the interval,
initial, sir. supposedly received and marked the same. To clarify the matter,
Q Do you know when this Noel B. Taguiam placed those initials the prosecution could have presented as witness either SPO2
on those two plastic sachets? Tamang or SPO2 Taguiam to directly validate the marking in
A After we conducted the buy bust operation, sir. court, but unfortunately, the prosecution chose to dispense with
Q How soon Noel B. Taguiam placed those initials after the the testimonies of both officers. This omission diminished the
conduct of the buy bust operation? importance of the markings as the reference point for the
A After a few hours, sir. subsequent handling of the evidence. As a consequence, an
Q Where did he place those initials? objective person could now justifiably suspect the shabu
A In our office, sir.25 (Emphasis supplied.) ultimately presented as evidence in court to be planted or
To complicate things even further, P/SInsp Tulauan, 26 the Forensic contaminated.30
Chemist, also declared before the trial court that the marking The failure of the prosecution to establish the evidence’s chain of
"NBT" on the two plastic sachets of shabu were made by SPO3 custody is fatal to its case as the Court can no longer consider or
Nelson B. Tamaray (Tamaray), the duty officer who received the even safely assume that the integrity and evidentiary value of the
specimens at the crime laboratory. P/SInsp. Tulauan testified: confiscated dangerous drug were properly preserved. 31
PROS. ISRAEL: In light of the foregoing, Constantino is acquitted of the crime
Q When you received these two specimens Madam Witness, will charged, not because the Court accords credence to his defense
you please tell us the physical appearance of these items when of frame-up, but because the prosecution failed to discharge its
you received the same? burden of proving his guilt beyond reasonable doubt.
A They were heat-sealed and with markings "A-1" and "A-2," WHEREFORE, the appeal is GRANTED. The Decision dated July 29,
your Honor. 2011 of the Court of Appeals in CA-G.R. CR.-H.C. No. 03353,
B And will you please point to us these markings "A-1" and "A-2" affirming the Decision dated April 15, 2008 of the Regional Trial
when you received these items Madam Witness? Court, Branch 5 of Tuguegarao City, Cagayan, in Criminal Case No.
A This is the markings "A-1" and "A-2," Ma’am. 10516, is REVERSED and SET ASIDE. Appellant Hermanos
INTERPRETER: Constantino, Jr. y Binayug, a.k.a. "Jojit," is ACQUITTED for failure
The witness is pointing to the markings "A-1" and "A-2" with the of the prosecution to prove his guilt beyond reasonable doubt
use of a black pentel pen. and is ORDERED to be immediately released from detention
PROS. ISRAEL: unless he is confined for another lawful cause.
Q There is another marking in this plastic sachet Madam Witness
marked as NBT, what is this marking all about? SO ORDERED.
A That is the marking of SPO3 Nelson B. Tamaray, Ma’am.
Q Is he authorized to make the necessary marking which was TERESITA J. LEONARDO-DE CASTRO
requested to be examined Madam Witness? Associate Justice
A Yes, Ma’am because he is the one who received the specimen
from the one who deliver it, Ma’am.
Q In this second plastic sachet Madam Witness which you
identified earlier, that there is a marking "A-1," there is another
marking NBT, what is this marking all about Madam Witness?
A That is the marking of SPO3 Nelson B. Tamaray,
Ma’am.27 (Emphases supplied.)
On cross-examination, P/SInsp. Tulauan confirmed her previous
declaration that SPO3 Tamaray had claimed making the marking
on the sachets of shabu:
Atty. Aquino
Madam Witness, with respect to that marking made which are
"A1" and "A-2", they are not your markings, is it not?
A Yes, sir.
Q And with respect also to that NBT marked and placed in that
exhibit which you have earlier identified, you did not see this
duty officer placed his markings thereon, is it not?
A Yes sir but I asked him who placed that marking and he said
that he was the one who placed the initial NBT, sir.28
The Court already emphasized in People v. Zakaria 29 the
importance of marking the seized item right after seizure:
Crucial in proving the chain of custody is the marking of the
seized dangerous drugs or other related items immediately after
they are seized from the accused, for the marking upon seizure is
the starting point in the custodial link that succeeding handlers of
the evidence will use as reference point. Moreover, the value of
marking of the evidence is to separate the marked evidence from
the corpus of all other similar or related evidence from the time
of seizure from the accused until disposition at the end of Republic vs Mupas, 769 SCRA 384
criminal proceedings, obviating switching, "planting" or
contamination of evidence. A failure to mark at the time of taking Facts:
of initial custody imperils the integrity of the chain of custody Asia’s Emerging Dragon Corp. (AEDC) submitted an unsolicited
that the law requires.1âwphi1 (Citation omitted.) proposal to the Government – through the Department of
Herein, the prosecution is completely silent as to why PO3 Transportation and Communications (DOTC) and the Manila
Domingo, the poseur-buyer, despite having immediate custody of International Airport Authority (MIAA) – for the construction and
the two plastic sachets of shabu purchased from Constantino, development of the NAIA-IPT III under a build-operate-and-
failed to immediately mark the seized drugs before turning over transfer (BOT) arrangement.
the custody of the same to another police officer. This lapse in On the other hand, Paircargo Consortium – composed of People’s
procedure opened the door for confusion and doubt as to the Air Cargo and Warehousing Co., Inc. (Paircargo), Philippine Air
and Grounds Services, Inc. (PAGS), and Security Bank Corporation
(Security Bank) – submitted its competitive proposal to the
Prequalification Bids and Awards Committee (PBAC).Paircargo
Consortum offered to pay the Government a total of P17.75
billion as guaranteed payment for 27 years while AEDC offered to
pay the Government a total of P135 million for the same period.
Hence, DOTC awarded the project to Paircargo Consortium (that
later organized itself as PIATCO). A Concession Agreement with
PIATCO for the construction, development, and operation of the
NAIA-IPT III under a build-operate-transfer scheme was made to
authorized PIATCO to build, operate, and maintain the NAIA-IPT
III during the concession period of twenty-five (25) years.
On March 31, 2000, PIATCO engaged the services of Takenaka
and Asahikosan to aid in constructing the project. However,
PIATCO defaulted on its obligation to pay Takenaka and
Asahikosan pursuant to their respective contracts. Takenaka and
Asahikosan agreed to defer PIATCO’s payments until June 2003.
In 2002, President Gloria Macapagal Arroyo declared in her
speech that the Government would not honor the PIATCO
contracts. On the same day, Takenaka and Asahikosan notified
PIATCO that they were suspending the construction of the NAIA-
IPT III for PIATCO’s failure to provide adequate security.
September 17, 2002, petitioners Demosthenes Agan, et al., asked
the Court to nullify the PIATCO contracts, and to prohibit the
DOTC and the MIAA from implementing these contracts for being
contrary to law. The case, entitled Agan v. PIATCO, was docketed
as G.R. No. 15500.
May 5, 2003, the Court nullified the PIATCO contracts after
finding that Paircargo Consortium (that later incorporated
into PIATCO) was not a duly pre-qualified bidder for failure to
meet the minimum equity requirements for the NAIA-IPT III
project.
Security Bank (member of the Paircargo Consortium) invested its
entire net worth in a single undertaking or enterprise in
gross violation of Section 21-B of the General Banking
Act (which limits a commercial bank’s equity investment,
whether allied or non-allied, to fifteen percent (15%) of its net
worth).
PIATCO contracts contained provisions that substantially
departed from the draft Concession Agreement
December 21, 2004, the Government filed a complaint for
expropriation of the NAIA-IPT III before the RTC of Pasay, Branch
11
RTC issued a writ of possession in favor of the Government.
Citing City of Manila v. Serrano,23 the RTC held that that it had the
ministerial duty to issue a writ of possession upon: (1) the filing
of the complaint for expropriation sufficient in form and
substance, and (2) the Government’s deposit of the amount
equivalent to the property’s assessed value, pursuant to Rule 67
of the Rules of Court
January 4, 2005, the RTC modified its December 21, 2004 order
and directed: (1) the Land Bank to immediately release to PIATCO
the amount of US$62,343,175.7725cralawred that would be
deducted from the just compensation; (2) the Government to
submit to the RTC a Certificate of Availability of Funds for the
payment of just compensation; and (3) the Government to
maintain and preserve the NAIA-IPT III pending the expropriation
proceedings and the full payment of just compensation. The RTC
likewise prohibited the Government from performing acts of
ownership over the NAIA-IPT III such as awarding concessions or
leasing any part of the NAIA-IPT III to other parties
RTC appointed three Commissioners28 to determine just
compensation without consulting the Government and PIATCO
Republic v. Gingoyon Case, G.R. No. 166429
Government, et al., filed a petition for certiorari with the Court
assailing the validity of the January 4, 7, and 10, 2005 orders of
the RTC in the expropriation case
, the Court did not recognize the London awards in favor of
Takenaka and Asahikosan. Under Section 48, Rule 39 of the Rules
of Court, a foreign judgment would not bind Philippine courts
unless the judgment is recognized and enforced in this
jurisdiction. Philippine courts may annul a foreign judgment for
lack of jurisdiction, lack of notice to the party, collusion, fraud,
clear mistake of law or fact, or when the foreign judgment is
contrary to public policy
PIATCO, as builder of the NAIA-IPT III, must first receive just
compensation in accordance with law and equity before the
Government may take over the NAIA-IPT
Government should not pay for the portions of the NAIA-IPT III
that were defective – as per rtc
 (a) failed structural elements in the NAIA-IPT III;
(b) inferior quality of material works;
(c) constructed areas that are unnecessary to the use of
an international airport terminal;
(d) cost of seismic and gravity load structural retrofits
for the failed elements;
(e) cost of completing the items listed in the JAC project
status summary report of February 28, 2003; and
(f) cost of seismic and gravity load structural retrofits
for the failed elements in the elevated roadway
structures.
RTC stated that just compensation is limited to the value of the
improvement at the time of the filing of the expropriation
complaint. The payment of just compensation does not include
the right to be compensated of the franchise to operate the
airport, and the increased value of improvements due to inflation
rate.
PIATCO, Takenaka, and Asahikosan sought to nullify the RTC
decision for alleged violation of their right to due process. They
complained that they were only furnished copies of the BOC
Final Report only after the promulgation of the May 23, 2011
decision.103 They averred that the RTC violated Sections 7 and 8,
Rule 67 of the Rules of Court which provide that the clerk of
court shall serve copies of the commissioners’ report on all
interested parties, with notice that they be allowed ten days
within which to file objections to the findings of the report, if
they so desire
the offer to pay through an escrow account is not equivalent to
direct payment. PIATCO further denied the Government’s
allegations that there were several claimants on the just
compensation
RTC ruled that it has residual jurisdiction to adjudicate the
Government’s Manifestation and Motion considering that the
motion was filed prior to the parties’ filing of the Notice of
Appeal. The RTC opined that the Manifestation and Motion was
akin to a motion for execution pending appeal. The Manifestation
and Motion showed the Government’s intent to voluntarily
comply with the May 23, 2011 decision which was pending
appeal before the CA. Under Section 9, Rule 41 of the Rules of
Court, the RTC has the residual power to issue orders for the
protection and preservation of the parties’ rights, and to order
the execution of a decision pending appeal. Furthermore, Section
6, Rule 136 of the Rules of Court provides that courts have
incidental power to issue orders that are necessary to effectuate
their judgments.
The CA Rulings
CA upheld the validity of the RTC’s May 23, 2011 decision. The
CA ruled that the parties did not need to be furnished the BOC
Final Report since RA 8974 is silent on the appointment of the
BOC, as held in Gingoyon.
However, the CA modified the RTC rulings and arrived at its own
formula of the NAIA-IPT III’s replacement cost
The CA likewise observed that PIATCO’s summarized computation
of attendant costs was self-serving and unsubstantiated by
relevant evidence.
CA further ordered Takenaka and Asahikosan to share in the
expenses of the BOC. Since Takenaka and Asahikosan’s inputs on
the construction costs of the NAIA-IPT III were heard by the RTC,
they should share in the expenses of the BOC.
Upon finality of judgment, interest on the sum due by then shall
be at 6% per annum until fully paid pursuant to BSP Circular No.
799, series of 2013 which took effect on 01 July 2013, and which
effectively modified the interest rate rulings in Eastern Shipping
Lines, Inc. v. Court of Appeals. Eastern Shipping was the basis of
the Court’s earlier imposition of a 12% interest from finality of
judgment.
The Action to Enforce the London Awards, Civil Case No. 06-171
In a decision dated September 6, 2010, the RTC recognized the
validity of the London awards in Claim Nos. HT-04-248 and HT-
05-269 and declared these awards as enforceable in the
Philippine jurisdiction. The RTC thus ordered PIATCO to pay
Takenaka and Asahikosan the sum of $85.7
million.124cralawrednad
G.R. No. 209917 is the Government’s petition for review
on certorari128 to partially reverse the CA’s August 22, 2013
Amended Decision129 and its October 29, 2013 Resolution130 in
CA-G.R. CV No. 98029.
G.R. No. 209696 is a petition for review on certorari filed by
Takenaka and Asahikosan to partially reverse the CA’s August 22,
2013 Amended Decision and its October 29, 2013 Resolution in
CA-G.R. CV No. 98029.131cralawrednad
G.R. No. 209731 is PIATCO’s petition for review on certorari to
reverse the CA’s August 22, 2013 Amended Decision, and
October 29, 2013 Resolution in CA-G.R. CV No.
98029.132cralawrednad
G.R. Nos. 209917, 209696 & 209731 originally arose from the
Government’s complaint for expropriation of the NAIA-IPT III
filed with the RTC of Pasay, Branch 117 in Civil Case No. 04-0876.
The main issue before the Court in these petitions is
the valuation of the just compensation due for the Government’s
expropriation of the NAIA-IPT III.
G.R. No. 181892 is the Government’s petition for certorari with
prayer for the issuance of a temporary restraining
order,133 assailing the May 3, 2007, May 18, 2008; and January 7,
2008 orders of the RTC of Pasay City, Branch 117 in Civil Case No.
04-0876.134cralawrednad
This petition likewise arose from the Government’s complaint for
expropriation of the NAIA-IPT III. The main issue in this petition is
the propriety of the appointment of DG Jones and Partners as an
independent appraiser of the NAIA-IPT III.
G.R. No. 202166 is PIATCO’s petition for review on certorari135 to
assail the CA’s March 13, 2012 decision136 and May 31, 2012
Resolution137 in CA-G.R. CV No. 96502. The petition arose from
Takenaka and Asahikosan’s action to enforce the London awards
before the RTC of Makati, Branch 143 in Civil Case No. 06-171. As
previously mentioned, this case was not consolidated with the
four (4) cases above and shall thus be separately ruled upon by
the Court.
The Government’s Position (G.R. Nos. 209917, 209731, and
209696)
partially reverse the CA rulings and to deduct from the
replacement cost of US$300,206,693.00 the following items:
(a) depreciation in the amount of US$36,814,612.00; and
(b) PIATCO’s non-compliance with contract specifications in the
amount of US$113,944,044.0
Whether the Government may take property for public purpose
or public use upon the issuance and the effectivity of the writ of
possession
Held:
The parties were afforded procedural
due process despite their non-receipt
of the BOC Final Report prior to
the promulgation of the RTC’s
May 23, 2011 Decision.
Rule 67 of the Rules of Court provides that the clerk of court shall
serve copies of the commissioners’ final report on all interested
parties upon the filing of the report. Each party shall have ten
days within which to file their objections to the report’s findings
Upon the expiration of the ten-day period or after all the parties
have filed their objections and after hearing, the trial court may:
(a) accept the report and render judgment in accordance
therewith; (b) for cause shown, recommit the report to the
commissioners for further report of facts; (c) set aside the report
and appoint new commissioners; (d) partially accept the report;
and (e) make such order or render such judgment as shall secure
to the plaintiff the property essential to the exercise of his right
of expropriation; and to the defendant, the just compensation for
the property so taken.
We rule that the parties’ failure to receive the Final Report did
not render the May 23, 2011 Decision null and void.
The essence of procedural due process is the right to be
heard.172 The procedural due process requirements in an eminent
domain case are satisfied if the parties are given the opportunity
to present their evidence before the commissioners whose
findings (together with the pleadings, evidence of the parties,
and the entire record of the case) are reviewed and considered
by the expropriation court. It is the parties’ total failure to
present evidence on just compensation that renders the trial
court’s ruling void. The opportunity to present evidence during
the trial remains to be the vital requirement in the observance of
due process
The mere failure of the RTC’s clerk of court to send the parties
copies of the BOC Final Report is not substantial enough under
the attendant circumstances to affect and nullify the whole
proceedings. Litigation is not a game of technicalities
The power of eminent domain is
a fundamental state power that is
inseparable from sovereignty.Eminent domain is a fundamental
state power that is inseparable from sovereignty. It is the power
of a sovereign state to appropriate private property within its
territorial sovereignty to promote public welfare. The exercise of
this power is based on the State’s primary duty to serve the
common need and advance the general welfare. 174 It is an
inherent power and is not conferred by the Constitution.175 It is
inalienable and no legislative act or agreement can serve to
abrogate the power of eminent domain when public necessity
and convenience require its exercise.176cralawrednad
The decision to exercise the power of eminent domain rests with
the legislature which has the exclusive power to prescribe how
and by whom the power of eminent domain is to be exercised.
Thus, the Executive Department cannot condemn properties for
its own use without direct authority from the Congress.
Just compensation is the full and
fair equivalent of the property taken from the
owner by the condemnor.
In cases where the fair market value of the property is difficult
to ascertain, the court may use other just and equitable market
methods of valuation in order to estimate the fair market value
of a property
The Court cannot consider
the additional evidence submitted by Takenaka
and Asahikosan before the Court of Appeals
At the outset, we rule that we cannot consider Takenaka and
Asahikosan’s attachments in their (1) Motion for Submission of
Additional Documents dated July 30, 2013;260 (2) Supplemental
Motion for Submission of Additional Documents dated October
3, 2012;261 and (3) Second Supplemental Motion for Submission
of Additional Documents dated April 11, 2013 in CA G.R. No. CV-
98029.262 These attachments sought to refute the Government’s
position that the NAIA-IPT III suffered from massive structural
defects.
Takenaka and Asahikosan posit that they could have submitted
reports before the trial court to show that the design of the
NAIA-IPT III was structurally sound if the RTC had only furnished
the parties copies of the BOC Final Report and afforded them the
opportunity to file a Comment on the Final Report.
Under Section 3, Rule 6 of the Internal Rules of the CA, the CA
may receive evidence in the following
cases:ChanRoblesvirtualLawlibrary
(a) In actions falling within its original jurisdiction, such as (1)
certiorari, prohibition and mandamus, (2) annulment of
judgment or final order, (3) quo warranto, (4) habeas corpus, (5)
amparo, (6) habeas data, (7) anti-money laundering, and (8)
application for judicial authorization under the Human Security
Act of 2007;
(b) In appeals in civil cases where the Court grants a new trial
on the ground of newly discovered evidence, pursuant to Sec.
12, Rule 53 of the Rules of Court;
(c) In appeals in criminal cases where the Court grants a new trial
on the ground of newly discovered evidence, pursuant to Sec. 12,
Rule 124 of the rules of Court; and
(d) In appeals involving claims for damages arising from
provisional remedies. (Emphasis supplied)
This provision qualifies the CA’s power to receive evidence in the
exercise of its original and appellate jurisdiction under Section 9
of BP 129, as amended:ChanRoblesvirtualLawlibrary
Sec. 9. Jurisdiction. — The Court of Appeals shall
exercise:ChanRoblesvirtualLawlibrary
xxxx
The Court of Appeals shall have the power to try cases and
conduct hearings, receive evidence, and perform any and all acts
necessary to resolve factual issues raised in cases falling within
its original and appellate jurisdiction, including the power to
grant and conduct new trials or further proceedings. Trials or
hearings in the Court of Appeals must be continuous and must
be completed within three (3) months, unless extended by the
Chief Justice.
Since Takenaka and Asahikosan filed an ordinary appeal pursuant
to Rule 41 in relaton to Rule 44 of the Rules of Court, the CA
could only have admitted newly discovered evidence. Contrary to
Takenaka and Asahikosan’s claim, the attachments to the motions
are not newly discovered evidence. Newly discovered evidence is
evidence that could not, with reasonable diligence, have been
discovered and produced at the trial, and which, if presented,
would probably alter the result.263cralawrednad
We find it hard to believe that Takenaka and Asahikosan could
only have possibly secured the attachments after the trial court
had rendered its decision. With the exercise of reasonable
diligence, Takenaka and Asahikosan could have produced these
documents before the BOC since they were fully aware that the
Government presented evidence on the alleged structural
defects of the NAIA-IPT III.
Equiponderance of evidence on
the alleged structural defects of the NAIA-IPT
III favors PIATCO, Takenaka and Asahikosan.
Nonetheless, even without considering and/or giving probative
value to the additional evidence presented by Takenaka and
Asahikosan before the CA, this Court finds that the Government
failed to establish by preponderance of evidence that the NAIA-
IPT III suffered from structural defects.
Under Section 3, Rule 131 of the Rules of Court, it is presumed
that a person is innocent of wrong;265 that a person takes
ordinary care of his concerns;266that private transactions have
been fair and regular;267 and that the ordinary course of business
has been followed.268cralawrednad
Based on these presumptions, we presume that Takenaka and
Asahikosan built the NAIA-IPT III in accordance with the
specifications required under the Onshore Construction Contract
and Offshore Procurement Contract. We also presume that the
NAIA-IPT III is structurally sound and compliant with the
applicable building codes and other laws at the time it was
designed and built.
However, these presumptions are merely disputable
presumptions and may be overcome by contradicting evidence.
The burden of proof lies with the Government to prove by
preponderance of evidence that the NAIA-IPT III suffered from
structural defects. “Preponderance of evidence” is the weight,
credit, and value of the aggregate evidence on either side and is
usually considered to be synonymous with the term “greater
weight of evidence” or “greater weight of credible
evidence.”269cralawrednad
In determining where the preponderance of evidence or superior
weight of evidence on the issues involved lies, the court may
consider all the facts and circumstances of the case, the witness’
manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the
nature of the facts to which they testify, the probability of their
testimony, their interest or want of interest, and also their
personal credibility in so far as the same may legitimately appear
during trial. The court may also consider the number of
witnesses, although preponderance does not necessarily lie with
the greater number.270cralawrednad
The Government’s burden of proof to show that the NAIA-IPT III
is indeed defective does not shift to its adverse parties. The
burden of proof remains throughout the trial with the party upon
whom it is imposed.
It is the burden of evidence that shifts from party to party during
trial.271 This means that the burden of going forward with the
evidence is met by the countervailing evidence of PIATCO,
Takenaka and Asahikosan which, in turn, balances the evidence
introduced by the Government. Thereafter, the burden of
evidence shifts back to the Government.
In the present case, the experts and consultants of the
Government, PIATCO, Takenaka and Asahikosa arrived at
conflicting findings regarding the structural integrity of the NAIA-
IPT III. The Government’s experts detailed with particularity the
alleged defects of the NAIA-IPT III, which allegations the experts
of PIATCO, Takenaka and Asahikosan refuted with particularity.
Under the equiponderance of evidence rule, when the scale of
justice shall stand on equipoise and nothing in the evidence
inclines a conclusion to one side or the other, the court will find
for the defendant. 272cralawrednad
If the facts and circumstances are capable of two or more
explanations, one of which is consistent with the allegations of
the plaintiff and the other consistent with the defense of the
defendant, the evidence does not fulfill the requirement of
preponderance of evidence. When the evidence of the parties is
in equipoise, or when there is a doubt as to where the
preponderance of evidence lies, the party with the burden of
proof fails. 273cralawrednad
The reason for this rule is that the plaintiff must rely on the
strength of his evidence and not on the weakness of the
defendant's claim. Thus, even if the evidence of the plaintiff may
be stronger than that of the defendant, there is no
preponderance of evidence on his side when this evidence is
insufficient in itself to establish his cause of
action.274cralawrednad
In the present case, PIATCO, Takenaka and Asahikosan, met the
Government’s allegations regarding the structural integrity of
the NAIA-IPT III.
A reading of the reports of the parties’ respective experts shows
that each party presented an equally persuasive case regarding
the structural soundness or defect of the NAIA-IPT III. The
Government’s case on the alleged structural defect of the NAIA-
IPT III has been met by equally persuasive refutations by the
experts of PIATCO, Takenaka and Asahikosan.
As a matter of law and evidence, the Government’s case
regarding this matter must fail. Since PIATCO, Takenaka and
Asahikosan presented equally relevant and sufficient
countervailing evidence on the structural soundness of the NAIA-
IPT III, the scales of justice tilt in their favor. Neither party
successfully established a case by preponderance of evidence in
its favor; neither side was able to establish its cause of action and
prevail with the evidence it had. As a consequence, we can only
leave them as they are.275cralawrednad
PIATCO’s attendant costs
Under the best evidence rule, when the subject of inquiry relates
to the contents of a document, no evidence shall be admissible
other than the original document itself. In proving the terms of a
written document, the original of the document must be
produced in court.
The best evidence rule ensures that the exact contents of a
document are brought before the court. In deeds, wills, and
contracts, a slight variation in words may mean a great difference
in the rights and obligations of the parties. A substantial hazard
of inaccuracy exists in the human process of making a copy by
handwriting or typewriting. Moreover, with respect to oral
testimony purporting to give the terms of a document from
memory, a special risk of error is present, greater than in the case
of attempts at describing other situations
generally.286cralawrednad
The best evidence rule likewise acts as an insurance against
fraud. If a party is in the possession of the best evidence and
withholds it, and seeks to substitute inferior evidence in its place,
the presumption naturally arises that the better evidence is
withheld for fraudulent purposes that its production would
expose and defeat. The rule likewise protects against misleading
inferences resulting from the intentional or unintentional
introduction of selected portions of a larger set of
writings.287cralawrednad
As exceptions to the best evidence rule , Section 3, Rule 130
of the Rules of Court provides that non-original
documents may be produced in court in the following
cases:ChanRoblesvirtualLawlibrary
(a)When the original has been lost or destroyed, or cannot be
produced in court, without bad faith on the part of the
offeror;
(b When the original is in the custody or under control of the
) party against whom the evidence is offered, and the latter fails
to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other
documents which cannot be examined in court without great
loss of time and the fact sought to be established from them is
only the general result of the whole; and
(d When the original is a public record in the custody of a public
) officer or is recorded in a public office. (Emphasis supplied)
Secondary evidence of the contents of writings is admitted on
the theory that the original cannot be produced by the party who
offers the evidence within a reasonable time by the exercise of
reasonable diligence.288cralawrednad
PIATCO argues that its non-submission of original documents
before the trial court is justified under Section 3 (c), Rule 130 of
the Rules of Court. It points out that a party need not submit the
original when it consists of numerous accounts or other
documents which cannot be examined in court without great loss
of time and the fact sought to be established from them is only
the general result of the whole. PIATCO insists that the lower
courts erred in not giving probative value to the report prepared
by Reyes Tacandong & Co., an auditing firm, validating PIATCO’s
computation of attendant costs. Significantly, Reyes Tacandong
& Co. failed to state that it examined the original documents in
validating PIATCO’s computation of attendant costs.
We agree with PIATCO that it need not submit numerous and
voluminous invoices, official receipts, and other relevant
documents before the trial court to prove the attendant costs
that it incurred in the construction of the NAIA-IPT III. The trial
court may admit a summary of voluminous original
documents, in lieu of original documents, if the party has shown
that the underlying writings are numerous and that an in-court
examination of these documents would be inconvenient. In other
words, Section 3 (c), Rule 130 of the Rules of Court does away
with the item-by-item court identification and authentication of
voluminous exhibits which would only be burdensome and
tedious for the parties and the court.
However, as a condition precedent to the admission of a
summary of numerous documents, the proponent must lay a
proper foundation for the admission of the original documents
on which the summary is based. The proponent must prove that
the source documents being summarized are also admissible if
presented in court.289cralawrednad
In concrete terms, the source documents must be shown to be
original, and not secondary. Furthermore, the source documents
must likewise be accessible to the opposing party so that the
correctness of the summary of the voluminous records may be
tested on cross-examination and/or may be refuted in pleadings.
In ordinary trial-type proceedings, a proper foundation for the
introduction of a summary may be established through the
“testimony of the person who is responsible for the summary's
preparation, or the person who supervised the preparation of
the summary.”290cralawrednad
The primary reason for these procedural foundations is that the
summary of numerous documents is, in strict terms, hearsay
evidence. The trial court should not haphazardly allow a party to
present a summary of numerous documents and immediately
admit and give probative value to such summary without
sufficiently laying these foundations. If the source documents of
the summary are non-original, the trial court would commit a
grave error in admitting and/or giving probative value to the
summary of non-original documents; the evidence admitted
would be double hearsay.291cralawrednad
Furthermore, when a party invokes Section 3 (c), Rule 130 of the
Rules of Court, he does not similarly invoke Section 3 (a), (b),
and/or (d), Rule 130 of the Rules of Court. He does not likewise
claim that the original documents have been lost or
destroyed. The party merely asserts that the numerous
documents cannot be examined in court without great loss of
tme and that the fact sought to be established from these
documents is only the general result of the whole.
Whenever a party seeks an exemption under the best evidence
rule pursuant to Section 3 (c), Rule 130 of the Rules of Court, he
asks permission from the trial court to produce a summary of
numerous documents, whose originals are available to the
adverse party for inspection. He does not ask permission from
the trial court to present in evidence the numerous non-original
documents. Otherwise, the very purpose of Section 3 (c), Rule
130 of the Rules of Court would be defeated. In that case, every
exhibit of non-original documents would be identified,
authenticated, and cross-examined, leading to a tedious and
protracted litigation.
Thus, if a party desires to present photocopies of the original
documents, he must first establish that the presentation of
photocopies is justified under Section 3 (a), (b), and/or (d), Rule
130 of the Rules of Court. He must establish the presence of all
the elements under these provisions.

In the case of lost or destroyed documents, the offeror of non-

original documents must first prove the following elements
before secondary evidence is admitted before the court: (a) the
existence or due execution of the original; (b) the loss and
destruction of the original, or the reason for its non-production
in court; and (c) the absence of bad faith on the part of the
offeror to which the unavailability of the original can be
attributed. To conclude otherwise is to allow the party to
circumvent the best evidence rule and the requirements under
Section 3 (a), (b), and (d), Rule 130 of the Rules of Court by
merely invoking Section 3 (c), Rule 130 of the Rules of Court.

In the present case, PIATCO attached to its Compliance dated

December 14, 2010, the photocopies of numerous documents,
and the validation of PIATCO’s computation of attendant costs
prepared by Reyes Tacandong & Co., among others. PIATCO
justifies the non-presentment of original documents pursuant
to Section 3 (c), Rule 130 of the Rules of Court.

We affirm the lower courts’ uniform findings that PIATCO failed

to establish its attendant costs. PIATCO failed to establish that
the photocopied documents fall under Section 3 (a), (b), and/or
(d), Rule 130 of the Rules of Court. These photocopied
documents are hearsay evidence. They are mere scraps of paper
and have no weight as basis for the attendant costs of the NAIA-
IPT III.

We likewise cannot give weight to the summary prepared by

Reyes Tacandong & Co. for being double hearsay. Reyes
Tacandong & Co., whose letter was addressed to PIATCO and not
to the trial court, did not state in its report that it examined the
original documents allegedly proving attendant costs. Moreover,
in a letter dated December 14, 2010, Reyes Tacandong & Co
stated it does not “express any assurance on the attendant
costs:”
We have performed the procedures agreed with Philippine
International Air Terminals, Co., (“the Company”) with respect to
the Company’s attendant costs incurred in building NAIA
Terminal 3 from 1997 to 2004. Our engagement was undertaken
in accordance with the Philippine Standard on Related Services
applicable to agreed-upon procedures engagements.
xxxx

The sufficiency of the procedures is solely the responsibility of

the specified users of the report. Consequently, we make no
representation regarding the sufficiency of the procedures either
for the purpose for which this report has been requested or for
any other purpose.

Because the procedures do not constitute either an audit or a

review of financial statements made in accordance with
Philippine Standards on Auditing, we do not express any
assurance on the attendant costs. (Emphasis supplied)

G.R. No. 205590, September 02, 2015

PHILIPPINE NATIONAL BANK, Pettoner,

v. GAYAM. PAS IMIO, Respondent.

DECISION
VELASCO JR., J.:

In this petition for review under Rule 45, the Philippine National
Bank (PNB) assails and seeks to set aside the January 23, 2013
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 94079
dismissing petitioner's appeal from the decision of the Regional
Trial Court (RTC) of Parañaque City, Branch 196, which ruled for
respondent Ligaya Pasimio (Pasimio) in an action for a sum of
money she commenced thereat against the bank.
The Facts
From the petition, the comment thereon, their respective
annexes, and other pleadings filed by the parties, the Court
gathers the following relevant
On May 19, 2005, Pasimio filed suit against PNB for the recovery
of a sum of money and damages before the RTC of Parañaque
City. In her complaint,2 docketed as Civil Case No. CV-05-0195
and eventually raffled to Branch 196 of the court, she alleged
having a peso and dollar time deposit accounts with PNB in the
total amount of P4,322,057.57 and US$5,170.80, respectively;
that both investment placements have matured; and when she
sought to withdraw her deposit money with accrued interests,
PNB refused to oblige.
In its Answer with Counterclaim, 3 with annexes, PNB admitted
the fact of deposit placement for the amount aforestated. But it
claimed that Pasimio is without right to insist on their
withdrawal, the deposited amount having already been used in
payment of her outstanding loan obligations to the bank. PNB
narrated how the set off of sort came about: Pasimio and her
husband took out three "loans against deposit hold-out" 4 from
the PNB Sucat branch, as follows: a Three Million One Hundred
Thousand Peso (P3,100,000) loan on March 21, 2001; a One
Million Seven Hundred Thousand Peso (P1,700,000) loan on April
2, 2001; and a Thirty-One Thousand One Hundred US Dollar
(US$31,1 00) loan on December 7, 2001.
PNB further alleged the following: (1) each loan accommodation
was secured by a deposit account of Pasimio; (2) the proceeds of
the first and second loans were released to and received by the
Pasimio spouses in the form of PNB Manager's Checks (MCs)
while the proceeds of the third loan were released and received
in cash; (3) the loan proceeds were acknowledged by Pasimio in
corresponding notarized promissory notes (PNs) and Disclosure
Statements of Loan/Credit Transaction; (4) Pasimio then re-lent
the proceeds of the third loan to a certain Paolo Sun; (5) contrary
to Pasimio's allegations on maturing deposit instruments, she in
fact renewed/rolled over her placements several times; and (6)
Pasimio had failed to pay her outstanding loan obligations forcing
the bank to apply her deposits to the unpaid loans pursuant to
the legal compensation arrangement embodied in the "hold-out"
proviso under Clause 5 of the PN.5
To this answer, Pasimio filed her reply and answer to
counterclaim alleging facts she would also later venture to prove.
During the trial following the joinder of issues, Pasimio denied
obtaining any loan from PNB, let alone receiving the
corresponding loan proceeds. While conceding signing certain
documents which turned out to be the Peso Loans Against
Peso/FX Deposit Loan Applications, the Promissory Notes and
Hold-out on Savings Deposit/Peso/FX Time Deposit and
Assignment of Deposit Substitute and the Disclosure Statements
of Loan/Credit Transaction (Loan Documents), she professed not
understanding what they really meant. She agreed to affix her
signature on these loan documents in blank or in an incomplete
state, she added, only because the PNB Sucat branch manager,
Teresita Gregorio (Gregorio), and Customer Relations Officer,
Gloria Miranda (Miranda), led her to believe that what she was
signing were related to new high-yielding PNB products.
Pasimio would also deny re-lending the loan proceeds to Paolo
Sun. She asserted in this regard that Gregorio repaired to her
residence with a duly accomplished affidavit detailing the re-
lending event and urged her to sign the same if she wished to
recover her placements.
In all, Pasimio depicted herself as victim of a nefarious lending
scam, orchestrated by Gregorio and Miranda who PNB had
ordered dismissed following the exposure of their involvement in
anomalous loan transactions with unsuspecting PNB depositors.
Pasimio submitted the following as
evidence:chanRoblesvirtualLawlibrary
1. Passbook for PNB Mint Placement No. 61281001164164
(same as PNB Mint Placement No. 6128100115590) - to
prove that she invested P3,100,000 with PNB-Sucat
under PNB Mint Placement No.
6128100115590;ChanRoblesVirtualawlibrary
2. Passbook for PNB Mint Placement No. 61281001164688
(same as PNB Mint Placement No. 6128100115632) - to
prove that she invested P1,700,000 with PNB-Sucat
under PNB Mint Placement No.
6128100115632;ChanRoblesVirtualawlibrary
3. Certificate of Time Deposit for $CTD No.
6628100116575 - to prove that she invested
US$5,160.84 with PNB-Sucat under Certificate of Time
Deposit $CTD No. 66281001
16575;ChanRoblesVirtualawlibrary
4. Letter dated April 22, 2004 addressed to the PNB Sucat
branch manager to prove that she made a demand for
the release of her
investments;ChanRoblesVirtualawlibrary
5. Letters dated July 21, 2004 from PNB's Internal Auditor
to Pasimio -to prove that PNB confirmed her deposits
and investment with PNB-Sucat but that she corrected
entries pertaining to their amounts and denied having a
deposit hold-out on any of her
investments;ChanRoblesVirtualawlibrary
6. Engagement letter dated February 2, 2005 from the law
firm Rondain & Mendiola;ChanRoblesVirtualawlibrary
7. An unsigned affidavit - to prove that Gregorio had
prepared an affidavit to make it appear that Pasimio
and other depositors entered into loan agreements
with a certain Paolo Sun, to cover her (Gregorio's) illegal
schemes and that Gregorio went to the homes of these
depositors begging them to sign the affidavit as she was
already being audited by PNB's main office;6 and
8. A Memorandum on Irregular Lending Operation on
Loans vs. Deposit Hold-Out (Sucat Branch) dated
February 18, 2003 detailing the alleged modus
operandi of Gregorio and Miranda and stating that the
latter were dismissed for their involvement in shady
loan practices.7
On the other hand, PNB offered the following for purposes as
stated:chanRoblesvirtualLawlibrary
1. Peso Loans Against Peso/FX Deposit Loan Application
Form dated March 21, 2001 - to prove that Pasimio
applied for a PNB loan and voluntarily executed a loan
application form dated March 21, 2001 for the amount:
of P3,100,000 secured by her own PNB Mint Account
No. 612810011393 as loan
collateral;ChanRoblesVirtualawlibrary
2. PN and Hold-out on Peso/FX Savings Deposit/Peso/FX
Time Deposit and Assignment of Deposit Substitute
dated March 21, 2001 - to prove that Pasimio's P
3,100,000 loan was supported with a PN which she and
her husband voluntarily signed and executed on March
21, 2001 and that she renewed the said loan on
different dates;ChanRoblesVirtualawlibrary
3. Disclosure Statement of Loan/Credit Transaction dated
March 21, 2001 - to prove that Pasimio's loan for
P3,100,000 was also supported with a Disclosure
Statement, a copy of which she acknowledged to have
received prior to the consummation of the credit
transaction, where she voluntarily agreed to the terms
and conditions of her loan by signing the said
statement;ChanRoblesVirtualawlibrary
4. MC No. 0000166650 dated March 21, 2001 for
P3,049,188.94 - to prove that Pasimio encashed this
check and received the proceeds of her P3,100,000
loan, net of bank charges;ChanRoblesVirtualawlibrary
5. Peso Loans Against Peso/FX Deposit Loan
Application/Approval Form dated April 2, 2001 - to
 prove that Pasimio applied for another loan on April 2,
2001 in the amount of PI,700,000 and that the same
was secured by Pasimio's own PNB Mint Account No.
6128100113429. As in the first loan, Pasimio also
voluntarily affixed her signature on the
document;ChanRoblesVirtualawlibrary
6. PN and Hold-out on Peso/FX Savings Deposit/Peso/FX
Time Deposit and Assignment of Deposit Substitute
dated April 2, 2001 - to prove that Pasimio's second
loan of LP1,700,000 is supported by a PN which she
voluntarily signed and executed on April 2, 2001
together with her husband and that she renewed the
said loan on different dates;ChanRoblesVirtualawlibrary
7. Disclosure Statement of Loan/Credit Transaction dated
April 2, 2001 - to prove that Pasimio's loan for
P1,700,000 was also supported with a Disclosure
Statement, a copy of which she acknowledged to have
received prior to the consummation of the credit
transaction, where she voluntarily agreed to the terms
and conditions of her loan by signing the said
statement;ChanRoblesVirtualawlibrary
8. MC No. 0000166682 dated April 2, 2001 in the amount
of P1,672,797.50 - to prove that Pasimio encashed this
check and received the proceeds of her P1,700,000
loan, net of bank charges;ChanRoblesVirtualawlibrary
9. Peso Loans Against Peso/FX Deposit Loan
Application/Approval Form dated December 7, 200 - to
prove that Pasimio applied for a US$31,100 loan which
her own PNB FX CTD No. 6628100115637
(US$20,393.78) and CTD No. 6628100115716
(US$10,766.25) secured as collateral. As in the first two
loans, Pasimio also voluntarily affixed her signature on
the document;ChanRoblesVirtualawlibrary
10. PN and Hold-Out on Peso/FX Savings Deposit/Peso/FX
Time Deposit and Assignment of Deposit Substitute
dated December 7, 2001 - to prove that Pasimio's US$3
1,100 loan is supported by a PN note which she and her
husband voluntarily signed and executed on December
7, 2001 and that she renewed the said loan on different
dates;ChanRoblesVirtualawlibrary
11. Disclosure Statement of Loan/Credit Transaction dated
December 7, 2001 - to prove that Pasimio's loan for US
$31,100 was also supported with a Disclosure
Statement, a copy of which she acknowledged to have
received prior to the consummation of the credit
transaction, where she voluntarily agreed to the terms
and conditions of her loan by signing the said
statement;ChanRoblesVirtualawlibrary
12. Miscellaneous Ticket dated December 7, 2001 in the
amount of US$30,981.28 - to prove that Pasimio
received the proceeds of her US$31,100 loan, net of
bank charges;ChanRoblesVirtualawlibrary
13. Bills Payment Form dated July 26, 2004 - to prove that
her failure to settle her peso/dollar loan obligations was
subsequently settled by offsetting the available balance
of her deposit accounts that were used as collaterals
against these loans, in accordance with the PNs she
executed;ChanRoblesVirtualawlibrary
14. Demand letter addressed to Pasimio dated July 5, 2004
signed by Noel R. Millares on behalf of the bank -- to
prove that PNB demanded payment of her loans in the
aggregate amount of P4,623,458.03 and US$5,277.34
which had already become due and
payable;ChanRoblesVirtualawlibrary
15. Pasimio's Affidavit dated April 10, 2003 - to prove
Pasimio's execution of an affidavit lending US$3 1,100
to Paolo Sun;ChanRoblesVirtualawlibrary
16. Pasimio's letter dated February 25, 2003 - to prove that
the Pasimios effected a change in their PNB Mint
Account Nos. deposited at PNB Sucat from the old
account number 6128100113393 to the new account
number 6128100116464 (pertaining to the deposit of
F3,100,000); and from the old account number
6128100113429 to the new account number
61281001.16488 (pertaining to the deposit of
P1,700,000);ChanRoblesVirtualawlibrary
17. PNB Mint Savings Account Passbook with Serial No.
046783 - to prove that the deposit covered by this
passbook in the amount of P3,100,000 was used as
collateral for Pasimio's f3,100,000 loan. As proof of this
fact, the passbook is stamped with the notation "HOLD-
OUT" to indicate a withdrawal restriction on this
account;ChanRoblesVirtualawlibrary
18. PNB Mint Savings Account Passbook with Serial Number
046781 - to prove that the deposit covered by this,
passbook in the amount of P1,700,000 was used as
collateral for Pasimio's P1,700,000 loan. As proof of this
fact, the passbook is stamped with the notation "HOLD-
OUT" to indicate a withdrawal restriction on this
account;ChanRoblesVirtualawlibrary
19. Portion of PNB Mint Passbook stamped "Hold Out" - to
prove that the savings account covered by this
passbook is under a hold-out
restriction;ChanRoblesVirtualawlibrary
20. Pasimio's Certificate of Time Deposit Ledger for PNBig
Savings Account No. 222-5476838-7 - to prove that
Pasimio opened an account with PNB-Sucat on March
21, 2001 under Account No. 222- 5476838-7 which was
constituted as collateral of the P3,100,000
loan;ChanRoblesVirtualawlibrary
21. PNBig Savings Account from October 29, 2003 up to
May 3, 2004 - to prove that Pasimio opened an account
with PNB-Sucat under Account No. 281-5254913 which
constituted as collateral for the P1,700,000
loan;ChanRoblesVirtualawlibrary
22. The Certificate of Deposit Ledger from June 4, 2001 to
July 25, 2004 - to prove that the amounts covered by
this deposit document were used as collateral for
Pasimio's dollar loan of
US$31,100;ChanRoblesVirtualawlibrary
23. CTD dated June 4, 2001 in the amount of US$34,030.18
- to prove that Pasimio was issued a Certificate of Time
Deposit for the amount of US$34,030.18 with an annual
interest rate of 4.5%;ChanRoblesVirtualawlibrary
24. CTD dated July 27, 2001 in the amount of US$20,187.10
- to prove that Pasimio was issued a Certificate of Time
Deposit for the amount of US$20,187.10 with an annual
interest rate of 4.125%;ChanRoblesVirtualawlibrary
25. CTD dated December 23, 2003 in the amount of
US$5,136.03 - to prove that Pasimio had an existing
dollar time deposit with PNB which she used as
collateral for the dollar hold-out loan that she took out.
The dollar certificate is stamped with a notation that
reads "HOLD-OUT";ChanRoblesVirtualawlibrary
26. Statement of Account (SOA) - to prove that PNB-Sucat
issued a SOA for Pasimio's Dollar Hold-Out Loan, which
showed an outstanding balance of US$5,100. This SOA
was used as basis for the offsetting of Pasimio's past
due loan obligation with her PNB Mint Account as
collateral; and
27. Statement of Account (SOA) - to prove that PNB-Sucat
issued a SOA for Pasimio's Dollar Hold-Out Loan, which
showed an outstanding balance of P4,321,781.06. This
SOA was used as basis for the offsetting of Pasimio's
past due loan obligation with her PNB Mint Account as
collateral.8
RTC Decision
On October 30, 2009, the RTC' rendered judgment9 in favor of
Pasimio, as plaintiff, disposing:cralawlawlibrary
WHEREFORE, premises considered, this court finds the Complaint
dated May 16, 2005 with merit, and Defendant, Philippine
National Bank is ordered to pay plaintiff, LIGAYA M. P[A]SIMIO[,]
the amount of x x x (P3,100,000.00), x x x (P1,222,000.00) and x x
x (US$5,170), respectively, representing her peso/dollar time
deposit placements with said bank, with legal interest on said
amounts, and, the amount of x x x (P180,000.00) representing
attorney's fees, and costs.
SO ORDERED.10
The disposition is predicated on the postulate that Pasimio had
proven by convincing evidence that she did not obtain any loan
accommodation from PNB. As a corollary, the trial court held that
there was no evidence snowing the release by PNB of the loan
proceeds to Pasimio. Pushing the point, the RTC stated that the
transaction documents were highly questionable for the reasons
stated in some detail in its decision to be reproduced by the CA in
its assailed decision.
Therefrom, PNB appealed to the CA, the recourse docketed as
CA-GR. CV No. 94079.
CA Decision
In its assailed Decision dated January 23, 2013, the CA affirmed
that the RTC, to wit:chanRoblesvirtualLawlibrary
WHEREFORE, the instant appeal is DENIED. The Decision dated
30 October 2009 rendered by the [RTC], Branch 196, Parañaque
City in Civil Case No. 05-0195 is hereby AFFIRMED. 11
Even as it found and declared PNB's bank personnel grossly
negligent and their transactions with Pasimio highly
unacceptable,12 the appellate court held that no loan proceeds
were ever released to Pasimio, thus sustaining the RTC
appreciation of the evidence thus presented on the matter by
Pasimio.13 The CA wrote:cralawlawlibrary
Hence, We are one with the RTC when it ruled that there was no
release of proceeds of bank loans to plaintiff-appellee [Pasimio],
viz:
No release of proceeds of purported bank loans to plaintiff. The
evidence at hand does not show that any amount of the loans, if
there were any, were ever released by [PNB] to plaintiff.
The [PNB] presented a miscellaneous ticket dated December 7,
2001 for the discounted amount of x x x (US$ 30,981.28)
attending the release of such funds over the purported third loan
in the amount of x x x (US$ 31.100.00) extended to plaintiff and
as affecting her FX dollar time deposits. This document remains
to be a simple ticket advice and | would] not amount to fact of
payment of loan proceeds in the absence of any cogent and
better evidence which is available to (he bank. There is no
statement of account or a corresponding check document
presented to compliment such ticket advice to clearly show an
amount was debited from the account of the bank to ably pay off
the amount of the loan proceeds. The miscellaneous ticket
standing by itself is no[t] an adequate proof of fact of payment of
a loan x x x.
The [PNB] presented a document for Manager Check No. 166650
dated March 21, 2001 at a discounted amount of x x x
(P3,049,188.94) to prove the possible release of proceeds of a
first loan allegedly secured by plaintiff for the amount of x x x
(P3,100,000.00). Looking over the dorsal portion of the check, it
is highly unnatural and irregular that the very check in question
does not have a machine printed validation of the transaction to
reflect the debit entry of the account from which the release "of
funds might have been secured. With exception to the stamp
marking and a few signatures at the back of the check, it
becomes highly inconceivable for a bank teller to forget a
machine validation of a check, not unless the checks was not
properly cleared but was only received by the teller. The check
standing out as evidence docs not proffer (that the amount
indicated therein was properly released for the purpose, to only
draw a farce conclusion that it was properly transacted and funds
was indeed released to plaintiff.
The [PNB] presented a document for Manager Check No. 166682
dated April 2, 2001 in the discounted amount of x x x
(P1,679,797.50) to prove the alleged release of proceeds of a
second loan allegedly secured by plaintiff for the amount x x x
(P1,700,000.00). Looking over the dorsal portion of the check,
the machine validation entry by the teller reads of entry '005 502
281 02AP01 PCOUT 1,672,797.50 A N 14021226' in comparison
with the front portion of the very check does not tally with the
check no. '166682' neither the checking account from which the
amount is drawn at reference number '00-281-022222-2' which
makes it an invalid validation entry and will not prove the fact
that debited amounts were made from the bank account number
'00-281-022222-2' [to cover the release to plaintiff of proceeds]
of the second loan. There being no explanation by the very bank
employees presented by the bank on the discrepancy of the
teller validation entries with the checking account used to
possible pay off the release of loan proceeds, there can be no
indication that the loan was properly paid for to plaintiff.
Simply stated, there is really no loan ever released by defendant
bank in favor of plaintiff to engage the operative right to hold-out
on the deposits of the latter.14
chanrobleslaw
On a related matter, the CA found, as highly irregular, the PNB
personnel's act of securing Pasimio's signature and consent to
have the proceeds of the US$3 1,100 loan re-lent to Paolo Sun. ft
expounded:cralawlawlibrary
Second, it can be gleaned from the facts of the case that [PNB]
was able to obtain the signature and assent of plaintiff-appellee
in re-lending the loan proceeds to a certain Paolo Sun, in a
manner not in accordance with the ordinary course of business
of banks. According to plaintiff-appellee, Bank Manager Gregorio
went to her house for her to sign a document, telling her that it
was the only way for plaintiff-appellee to get her money back by
re-lending her money deposits with [PNB] to a certain Paolo Sun
whom she does not know. Plaintiff-appellee also contends that
she was not aware that the document she signed was notarized.
For that alone, the action performed by the bank manager in the
transactions is definitely exposed to a high incident of
negligence. It bears stressing that banks must exercise the
highest degree of diligence and by doing the transactions outside
the bank without any proper explanation of the consequences of
the document to be signed by plaintiff-appellee as client of the
bank is reprehensible x x x. The bank personnel misrepresented
the true nature of the transaction which deprived plaintiff-
appellee to evaluate the consequences of the transaction offered
to her by the bank personnel of [PNB].15chanrobleslaw
And agreeing with the RTC on what it viewed as the questionable
nature of the transactions PNB entered into with Pasimio, as
purportedly evidenced by a combination of related
circumstances reflecting documentary tampering, the CA quoted
with approval the ensuing excerpts from the RTC's
decision:cralawlawlibrary
The transaction documents are highly questionable. The loan
application form dated March 21, 2001 over the purported first
peso loan in the amount of x x x (P3,100,000.00) which was
verified with a notary public on April 30, 2001 did not utilize any
residence certificate of plaintiff x x x which also missed out for a
residence certificate number in the promissory note dated March
21, 2001, the same former document carried bolder typewritten
entries for the names of depositors but faint entries for the
amountand the security deposit account which only shows that
such entries were made on different dates using different
typesets compounded by the column side for the verified
balance of deposit and the recommendation of interest were left
unfilled. Which circumstances bring in a question on the validity
and veracity of the loan documents when in fact the entries and
the missing items thereto [do] not speak well of a fully
accomplished and perfected loan document between the parties.
Sad to say, this court cannot even believe [PNB's] witness, Edna
Palomares in stating that she checked the entries [in] the loan
approval form be lore she placed her signature considering there
are valuable and important entries that are left unfulfilled by a
bank officer as herself to even downgrade her line of credibility
on the true circumstances to the execution of such document.

The same circumstances attend the loan documents that
allegedly covered the second loan in the amount of x x x
(P1,700,000.00) and the third loan in the amount of x x x
(US$31,100.00), and, this court need not discuss further to
emphasize the line of anomalous circumstances attending the
execution and existence of such documents.16(emphasis
added)chanrobleslaw
The CA explained that even if both parties may have been
negligent in the conduct of their respective affairs, PNB cannot
evade liability for its shortcomings. As stressed by the appellate
court, the banking industry is impressed with public interest.
Accordingly, all banks and their personnel are burdened with a
high level of responsibility and expected to be more careful than
ordinary persons. The CA held that since PNB was grossly
negligent, it should bear the consequences:cralawlawlibrary
Third, although it may be argued that both parties seemed to
have been negligent in their own affairs, [PNB] cannot put all the
blame to cover its negligence on plaintiff-appellee. The degree of
care is more paramount and expected with that of banks than
that of an ordinary person.
As the banking industry is impressed with public interest, all bank
personnel are burdened with a high level of responsibility insofar
as care and diligence in the custody and management of funds
are concerned. Banks handle transactions involving millions of
pesos and properties x x x. Indeed, by the very nature of their
work, the degree of responsibility, care and trustworthiness
expected of officials and employees of the bank is tar greater
than those of ordinary officers and employees in the other
business firms.
Unquestionably, [PNB] x x x had the direct obligation to supervise
very closely the employees handling its depositors' accounts, and
should always be mindful of the fiduciary nature of its
relationship with the depositors. Such relationship required it
and its employees to record accurately every single transaction,
and as promptly as possible, considering that the depositors'
accounts should always reflect the amounts of money the
depositors could dispose of as they saw fit x x x. If it fell short of
that obligation, it should bear the responsibility for the
consequences to the depositor x x x.
In this case. [PNB's] personnel were in violation of their duties
and responsibilities as its employees. They have committed gross
negligence in dealing with their bank transactions which
connotes "want of care in the performance of one's duties."
[PNB's] failure to observe basic procedure constituted serial
negligence. The repealed failure to carefully observe the duties of
its personnel clearly showed utter want of care. As gathered from
the records of the case, it was shown that this is not an isolated
transaction as other clients of the bank have been likewise
victimized. Witness Virginia Pollard has stated in her testimony
before the RTC that at one point, she too, was a victim of
irregular bank transactions of the same branch of [PNB] as
offered by its bank personnel. Thus, it was [PNB's] action that
defies the ordinary banking transactions and between an
ordinary person like plaintiff-appellee and a bank like [PNB],
[PNB] carries more burden, which unfortunately, it failed to
overcome.
Verily, from the foregoing instances, (PNB] was indeed grossly
negligent in its transactions with plaintiff-appellee. Even
assuming that plaintiff-appellee was concocting her version of
the facts, We still find irregularities and inconsistencies that have
attributed to the unjustified refusal to return the investment
placement and to the commission of negligence. 17
Finally, the CA would state the observation, citing City trust
Banking Corporaton v. Cruz18and Typoco v. Commission on
Electons,19 that the errors PNB sought reviewed relate to the
RTC's factual findings when the appellate court is not a trier of
facts, necessarily implying that it is improper for the CA under
the premises to do what PNB seeks. The CA explained that 'the
stated doctrine regarding the factual findings of the RTC applies
within force in the instant case."20chanrobleslaw
Issue
Whether or not the CA erred in affirming the RTC Decision
granting Pasimio's complaint for a sum of money.
The Court's Ruling
The findings of Fact of the CA are subject to well-defined
exceptions,21 among which are when such findings are not
supported by substantial evidence, grounded on surmises or
conjectures or are patently arbitrary, binding and conclusive and
this Court will not review them on appeal. This case squarely falls
under the exceptions of the general rule.
The petition is impressed with merit.
The CA has the power to
resolve factual issues
Before proceeding to the main issue of this case, there is a need
to clarify the assailed decision's perplexing but flawed
pronouncement that the CA, not being a trier of facts, is without
competence to review the factual determination of the RTC.
Section 9 of Bates Pambansa Blg. (BP) 129, otherwise known as
the Judiciary Reorganizaton Act of 1980, categorically states that
the CA has, inter alia, the power to try cases, receive evidence
and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction,
thus:cralawlawlibrary
Sec. 9. Jurisdicton. - The Court of Appeals shall
exercise:chanRoblesvirtualLawlibrary
xxxx
The Court of Appeals shall have the power to try cases and
conduct hearings, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within
its original and appellate jurisdiction, including the power to
grant and conduct new trials or further proceedings. Trials or
hearings in the Court of Appeals must be continuous and must
be completed within three (3) months unless extended by the
Chief Justice.chanrobleslaw
To be sure, the cases22 the CA cited to support its adverted
pronouncement are inapposite. In context, the issue involved
in Citytrust and Typoco relates to the nature and extent of this
Court's, and not the CA's, power to review factual findings of
lower courts and administrative agencies in petitions for review
and in original certiorari and prohibition cases.
Clearly, Citytrust and Typoco have been misread and
consequently misapplied.
It is also worthy to note that the appellate court's reliance on the
factual findings of the trial court is hinged on the latter's
firsthand opportunity to hear the witnesses and to observe their
demeanor during the trial. However, when such findings are not
anchored on their credibility and their testimonies, but on the
assessment of documents that are available to appellate
magistrates and subject to their scrutiny, reliance on the trial
courts factual findings finds no application.23
The CA's regrettable cavalier treatment of PNB's appeal is
inconsistent with Rule 41 of the Rules of Court and with the usual
course of judicial proceedings. Be reminded that the parties in
Rule 41 appeal proceedings may raise questions of fact or mixed
questions of fact and law.24 Thus, in insisting that it is not a trier
of facts and implying that it had no choice but to adopt the RTC's
factual findings, the CA shirked from its function as an appellate
court to independently evaluate the merits of this case. To accept
the CA's aberrant stance is to trivialize its review function, but,
perhaps worse, render useless one of the reasons for its
institution.
Pasimio failed to prove her claim
by preponderance of evidence
It is settled that the burden of proof lies with the party who
asserts a right and the quantum of evidence required by law in
civil cases is preponderance of evidence. "Preponderance of
evidence" is the weight, credit, and value of the aggregate
evidence on either side and is usually considered to be
synonymous with the term "greater weight of evidence" or
"greater weight of credible evidence." 25 Section 1, Rule 133 of
the Rules of Court provides:cralawlawlibrary
Section 1. Preponderance of evidence, how determined. - In civil
cases, the party having the burden of proof must establish his
case by a preponderance of evidence. In determining where the
preponderance of evidence or superior weight of evidence on
the issues involved lies, the court may consider all the facts and
circumstances of the case, the witnesses' manner of testifying,
their intelligence, their means and opportunity of knowing the
facts to which they are testifying, the nature of the facts to which
they testify, the probability or improbability of their testimony,
their interest or want of interest, and also their personal
credibility so far as the same may legitimately appear upon the
trial. The court may also consider the number of witnesses,
though the preponderance is not necessarily with the greater
number.chanrobleslaw
Just as settled is the rule that the plaintiff in civil cases must rely
on strength of his or her own evidence and not upon the
weakness of that of the defendant. In the case at bench, this
means that on Pasimio rests the burden of proof and the onus to
produce the required quantum of evidence to support her
cause/s of action.26
With the view we take of the case, Pasimio has failed to
discharge this burden.
There can be no quibbling that Pasimio had, during the time
material, opened and maintained deposit accounts with PNB. For
this purpose, she submitted two passbooks and one certificate of
time deposit to establish her peso and dollar placements with
the bank. However, PNB also succeeded in substantiating its
defense for refusing to release Pasimio's funds by presenting
documents showing that her accounts were, pursuant to hold-
out arrangement, made collaterals for the loans she obtained
from the bank and were eventually used to pay her outstanding
loan obligations. Unfortunately, Pasimio failed to trump PNB's
defense after the burden of evidence shifted back to her.
To recall, PNB, to bolster its case, presented these documents:
loan application forms, PNs and disclosure statements to prove
that Pasimio obtained the disputed bank loans; manager's checks
and a miscellaneous ticket to establish the release of the loan
proceeds to Pasimio; passbooks and a certificate of time deposit
with the stamp "HOLD-OUT" to indicate restrictions on the
withthrawal of Pasimio's deposit; a bills payment form to prove
that Pasimio's deposits were made to pay for her outstanding
obligations in accordance with the provisions of Pasimio's
promissory notes; and a signed and notarized affidavit recounting
that she lent the proceeds of her dollar loan to Paolo Sun.
On the witness stand, PNB's witness Edna Palomares, the bank's
Per Pro Officer, categorically testified having prepared and
processed all. of Pasimio's loan documents, and witnessed
Pasimio and her husband signing the same.27 Palomares also
testified about Pasimio's receipt of the proceeds of the subject
loans and identified the signatures appearing on the dorsal
portion of the PNB manager's checks and miscellaneous ticket
covering the loan processed as genuine signatures of Pasimio.28
Pasimio, on the other hand, denied applying for any loan with
PNB and receiving any loan proceeds or authorizing the bank to
use her deposit as collateral. While admitting to signing certain
papers, she professed unawareness that what she signed were in
fact loan documents as nobody came forward to explain what
they were, adding that she was convinced to sign them only
because she was made to believe by bank officers that the
documents were related to a new PNB high-yielding investment
product.
Unfortunately, the courts a quo chose to disregard all of PNB's
documentary evidence and ruled in favor of Pasimio. This to us is
a blatant mistake on the part of the RTC and the CA because all
that Pasimio put forward against PNB's evidence, for the most
part documentary, were unsubstantiated denials and bare, self-
serving assertions. To borrow from Pecson v. Commission on
Electons,29 citing Almeida v. Court of Appeals,30 the use of wrong
or irrelevant considerations, reliance on clearly erroneous factual
findings or giving too much weight to one factor in deciding an
issue is sufficient to taint a decision-maker's action with grave
abuse of discretion.
As between Pasimio's barefaced denials and Palomares' positive
assertions, the trial court ought to have accorded greater weight
to Palomares' testimony, especially considering that Pasimio
never put in issue the due execution and authenticity of the loan
documents. As between a positive and categorical testimony
which has a truth, on one hand, and a bare denial, on the other,
the former is generally held to prevail.31
ft cannot be stressed enough that Pasimio unequivocally
admitted that the signatures appearing in the Loan
Application/Approval Forms dated March 21, 2001, April 2, 2001
and December 7, 2001,32 in all three Promissory Notes,33 and
the Disclosure Statement dated December 7, 2001 were
hers and her husband's. She also was aware of the
consequences of her act of signing. Her testimonies on
the matter are quoted hereunder:cralawlawlibrary
Atty. Banzuela:
Q: Thank you. Madam Witness, you testified that you signed
these documents which are blank in its details, what do
yon mean by blank in details.
A: Nothing. Blank as in it's a pro-forma form but blank.
Q: Madam Witness, but you read what these documents
were?
A: No, I did not read.
Q: You entrusted to PNB that huge amount of US$31,100,
P1,700,000 and US$3,100 without going through the
documents that you were signing with PNB?
A: That's right.
Q: Why is this so. Madam Witness?
A: Because I trusted the bank, I trusted the employees of the
bank having been a depositor for the past two (2) decades.
Q: But you know. Madam Witness, the consequences of your
acts in signing pro-forma documents?
A: Well, I trusted those people. So...
Q: But you know the consequences of signing blank
documents?
A: Yes.34
Pasimio had tagged as forgeries her signatures appearing in the
Disclosure Statements of March 21, 2001 and April 2, 2001. She,
however, never presented any competent proof to successfully
support her contention. While testimonies of handwriting
experts are not a must to prove forgeries, Pasimio did not submit
any evidence for the RTC to consider and readily conclude that
the signatures in these Disclosure Statements were forged.
Likewise, Pasimio also denied, having appeared before a notary
public to subscribe and swear to the loan documents, but never
substantiated this allegation. It is settled that a notarial
document, guaranteed by public attestation in accordance with
the law, must be sustained in full force and effect, absent strong,
complete, and conclusive proof of its falsity or nullity on account
of some flaw or defect provided by law.35

The RTC and the CA, for unexplained reason, ignored Pasimio's
admissions in her April 10, 2003 Affidavit in which she stated that
she relent the proceeds of the US$31,10 loan to Paolo Sun. A
portion of this affidavit reads:cralawlawlibrary
2. I agreed to lend (lie amount of Dollars: Thirty One Thousand
One Hundred Only ($31,100.00) to PAOLO SUN, payable on an
agreed maturity date and at an agreed interest rate out of a Loan
Against Deposit Holdout that I will secure from PNB using my
time deposits as collateral.
3. PAOLO SUN and I agreed that should ( lend him the proceeds
of my Loan Against Deposit Holdout from PNB, he would pay all
the bank charges and interest on such PNB loan, which he agreed
to do so by authorizing PNB to debit his deposit account for such
amount equivalent to the charges/interest due on my loan.
4. PNB approved my loan application, and so, after I have lent the
loan proceeds to PAOLO SUN, the latter has dutifully and
promptly paid all bank charges and interest under the aforesaid
arrangement;36chanrobleslaw
Again, Pasimio did not deny the due execution of this affidavit.
Rather, she lamely insisted she was only forced to sign this
affidavit upon Gregorio's representations that this was the only
way that she would recover her investments. Pasimio denied
knowing Paolo Sun and having loan arrangements with him. She
would stick to her story that she signed the document under
duress, needing, as she did at that time, money to support a
dying spouse. Gregorio also allegedly divulged that she needed
Pasimio to sign the Affidavit as she (Gregorio) was already being
audited and investigated by the PNB Main office.
As between Pasimio's empty assertions about the above affidavit
and its contents and the categorical statements in the notarized
affidavit detailing her arrangement with PNB and Paolo Sun, the
choice as to which is more credible should be clear and simple. In
fact, Pasimio ought to have been estopped from denying the
contents of that affidavit.
Verily, Pasimio's version of the case taxes credulity. By her own
testimonial account, she is a holder of a BS Commerce degree
and used to work as a personnel director of an advertising
agency.37 It is, therefore, not believable that a person of her
educational attainment and stature, who appeared to be of good
physical and mental health, would simply hand over millions of
pesos, no mean amount by ordinary standards, to a bank and
then blindly sign documents involving her money without
exercising a modicum of care by verifying, or at least taking a
cursory look at what these documents mean. And yet, the
courts a quo chose to close their eyes to these absurdities.
Lest it be overlooked, Pasimio's husband Rene also affixed his
signature on the subject promissory notes and loan application
forms to signify his consent to his wife's financial dealings. There
is no allegation, let alone proof; that Rene did not likewise
understand what he was signing and giving his consent to. These
loan documents have, on their face, the words "Peso Loans
Against Peso/FX Deposit Loan Application/Approval Form,"
"Promissory Note and Hold-out on Peso/FX Savings Deposit/
Peso/FX Time Deposit and Assignment of Deposit Substitute,"
and "Disclosure Statements of Loan/Credit Transaction" printed
in big letters. Thus, it is reasonable to assume that, at first glance,
Pasimio and husband Rene would have been put on notice of
what these documents were. What they signed were pro-
forma bank documents, printed in full but with blanks to be filled
up with specific terms thereof such as loan amount, interest rate,
and security, among others. They were not, in fine, empty white
sheets of paper. It may be that Pasimio was indeed made to sign
the blank spaces of the loan documents. Be that as it may, it is
well-nigh impossible that she had absolutely no idea what they
actually were, she having testified being a PNB depositor for
some twenty years. Indeed, the Court is hard-pressed to believe
that she has not encountered these documents before, just as it
is also hard to imagine that her husband did not notice the titles
of these documents and had no clue what they were.
Pasimio would parlay the idea that she signed certain loan
documents and the April 10, 2003 affidavit under duress or
undue influence. Like her other unsubstantiated assertions, her
allegations of improper influence, duress or fraud practised on
her by bank officers deserve scant consideration. Undue
influence is described under the Civil Code, thus:cralawlawlibrary
Art. 1337. There is undue influence when a person takes
improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice. The
following circumstances shall be considered: the confidential,
family, spiritual and other relations between the parties, or the
fact that the person alleged to have been unduly influenced was
suffering from menial weakness, or was ignorant or in financial
distress.chanrobleslaw
As regards fraud, the Civil Code says:cralawlawlibrary
Art. 1338. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is
induced to enter into a contract which without them, he would
not have agreed to.
Art. 1344. In order that fraud may make a contract voidable, it
should be serious and should not have been employed by both
contracting parties.chanrobleslaw
The employment of fraud, duress, or undue influence is a serious
charge, and to be sustained it must be supported by clear and
convincing proof; it cannot be presumed. 38 There is no allegation
or evidence that Gregorio and Miranda influenced Pasimio by
employing means she could not well resist, and which controlled
her volition and induced her to sign the loan documents and the
April 10, 2003 Affidavit, which otherwise she would not have
executed. Also, there was no evidence showing that Gregorio and
Miranda's influence interfered with Pasimio's exercise of
independent discretion necessary to determine the advantage or
disadvantage of signing these documents.
Then, too, Pasimio failed to prove that Gregorio and Miranda
defrauded her. Taking into consideration the personal conditions
of Pasimio, there is no clear and convincing evidence establishing
serious fraud or deceit, insidious words or machinations on the
part of PNB or its officers, sufficient to impress or lead her into
error;39
It is germane to observe at this juncture that PNB has, in its favor,
certain presumptions which Pasimio failed to overturn. Rule 131,
Sec. 3 of the Rules of Court specifies that a disputable
presumption is satisfactory if uncontradicted and not overcome
by other evidence. Corollary thereto, paragraphs (r) and (s)
thereof read:cralawlawlibrary
SBC. 3. Disputable presumptons.— The following presumptions
are satisfactory if uncontradicted, but may be contradicted and
overcome by other evidence:chanRoblesvirtualLawlibrary
xxxx
(r) That there was sufficient consideration for a contract;
(s) That a negotiable instrument was given or indorsed for a
sufficient consideration;chanrobleslaw
and Sec. 24 of the Negotiable Instruments Law
reads:cralawlawlibrary
SEC. 24. Presumption of consideration.— Every negotiable
instrument is deemed prima facie to have been issued for a
valuable consideration; and every person whose signature
appears thereon to have become a party thereto for
value.chanrobleslaw
Pasimio also failed to overcome the presumptions that a person
takes ordinary care of his concerns,40that private transactions
have been fair and regular,41 and that the ordinary course of
business has been followed.42
Certainly, the trial court erred in saying that Pasimio "had proved
by convincing evidence that she had not secured any loan
accommodations from the defendant bank x x x and, thus, is
entitled for the return of said deposit x x x" and that
"[t]he factum probans to sustain parties cause has been
successfully hurdled and undertaken by plaintiff, in
contradistinction to defendant's mere denial of a transport
obligation, the latter failing to overcome the quantum of
evidence presented by plaintiff to tilt the scale of justice in favor
of plaintiff herein."43 In truth, other than her self-serving
statements, Pasimio had nothing else to show against PNB's
evidence. The greater weight of credible evidence as to whether
Pasimio secured from PNB loans covered by promissory notes
with hold-out provisions is decidedly in favor of petitioner bank.
To be sure, the RTC did not explain its reasons for coming up with
these conclusions and did not even bother to discuss its
evaluation of the merits of Pasimio's evidence. The Court also
notes that the trial court never even declared that, indeed,
Pasimio and her husband were fooled into signing the loan
documents and made to believe that the loan documents were
related to a high-yielding PNB product.
Hence, it may be said that the trial court violated in a sense the
constitutional caveat enjoining courts from rendering a decision
"without expressing therein clearly and distinctly the facts and
the law on which it is based." The RTC had 1 ailed to discharge its
duty to inform parties to litigation on how the case was decided,
with an explanation of the factual and legal reasons that led to
the conclusions of the court.
The dismissal of PNB's petition is
based on mere speculations and
surmises
In denying Pasimio's appeal, the CA adopted verbatim the trial
court's findings that there was no evidence proving Pasimio's
receipt of the loan proceeds and that the loan documents were
highly questionable. The appellate court also reasoned that since
PNB was grossly negligent in transacting with Pasimio, the bank
should suffer the consequences.
In upholding the RTC's finding respecting Pasimio's never having
received any loan proceeds, the CA doubtless disregarded the
rule holding that a promissory note is the best evidence of the
transaction embodied therein; also, to prove the existence of the
loan, there is no need to submit a separate receipt to prove that
the borrower received the loan proceeds.44 Indeed, a promissory
note represents a solemn acknowledgment of a debt and a
formal commitment to repay it on the date and under the
conditions agreed upon by the borrower and the lender. As has
been held, a person who signs such an instrument is bound to
honor it as a legitimate obligation duly assumed by him through
the signature he affixes thereto as a token of his good faith. If he
reneges on his promise without cause, he forfeits the sympathy
and assistance of this Court and deserves instead its sharp
repudiation.45
The Court has also declared that a mere denial of the receipt of
the loan, which is stated in a clear and unequivocal manner in a
public instrument, is not sufficient to assail its validity. To
overthrow the recitals of such instrument, convincing and more
than merely preponderant evidence is necessary. A contrary rule
would throw wide open doors to fraud.46 Following this doctrine,
Pasimio's notarized promissory notes bearing her signature and
that of her husband must be upheld, absent, as here, strong,
complete, and conclusive proof of their nullity.
The promissory notes, bearing Pasimio's signature, speak for
themselves. To repeat, Pasimio has not questioned the
genuineness and due execution of the notes. By signing the
promissory notes, she is deemed to acknowledge receipt of the
corresponding loan proceeds. Withal, she cannot plausibly set up
the defense that she did not apply for any loan, and receive the
value of the notes or any consideration therefor in order to
escape her liabilities under these promissory notes. 47
But the foregoing is not all. PNB presented evidence that
strengthened its allegation on the existence of the loan. Here,
each promissory note was supported by a corresponding loan
application form and disclosure statement, all of which carried
Pasimio's signatures. Isolated from each other, these documents
might not prove the existence of the loan, but when taken
together, collectively, they show that Pasimio took the necessary
steps to contract loans from PNB and was aware of their terms
and conditions.
Further, this Court does not agree that the loan documents were
"highly questionable." The trial court arrived at this conclusion
upon observing that the March 21, 2001, April 2, 2001, and
December 7, 2001 loan application forms and promissory notes
did not bear Pasimio's community tax certificate number and
because it appeared that the blanks for the specific terms of
these loan documents were filled up on different dates
considering that some typewritten entries appeared to be bolder
or darker than the others.
These reasons are specious as they are flimsy.
First, the authenticity of these loan documents should not be
affected merely because their blank spaces appeared to have
been filled up, if that be the case, on different dates, using
different typewriters. As PNB aptly puts it, there is nothing
suspicious or inherently wrong about bank forms being filled up
on different dates since these are usually pre-typed, with the
blanks thereon to be filled up subsequently, depending on the
specific terms of the transaction with a client, and thereafter
presented to the latter for signing.
Second, the absence of Pasimio's community tax certificate
number in : said loan documents neither vitiates the transaction
nor invalidates the document. If at all, such absence renders the
notarization of the loan documents defective. Under the notarial
rules at that time, i.e., Sec. 163 (a) of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, where
an individual subject to the community tax acknowledges any
document before a notary public, it shall be the duty of the
administering officer to require such individual to exhibit the
community tax certificate. The defective notarization of the loan
documents only means that these documents would not be
carrying the evidentiary weight conferred upon it with respect to
its due execution; that they should be treated as a private
document to be examined in appropriate cases under the
parameters of Sec. 20, Rule 132 of the Rules of Court which
provides that "before any private document offered as authentic
is received in evidence, its due execution and authenticity must
be proved either: (a) by anyone who saw the document executed
or written; or (b) by evidence of the genuineness of the signature
or handwriting of the maker x x x." Settled is the rule that a
defective notarization will strip the document of its public
character and reduce it to a private instrument, and the
evidentiary standard of its validity shall be based on
preponderance of evidence.48
It must be stressed that the adverted defective notarization
should not have been made an issue at all in the first place, for
Pasimio already admitted executing the documents in question,
or to put it in another way, she did not deny that the signatures
appearing thereon were hers and her husband's. Thus, the
requirements of Sec. 20, Rule 132 of the Rules of Court have
been sufficiently met and all doubts as to their authenticity and
due execution should have been put to rest.
More importantly, the records do not show that Pasimio alleged
the regoing defects and presented any proof for the trial court to
consider and rule on.

Furthermore, the Court does not find sufficient evidence to
support the CA's finding that PNB is guilty of gross negligence
and, thus, must suffer the consequences of its transactions with
Pasimio. In this regard, the CA explained that PNB foiled to
exercise the highest degree of diligence required of banks
because allegedly, Gregorio was able to obtain Pasimio's
signature and assent to re-lend the dollar loan proceeds to Paolo
Sun in a manner not in accordance with the ordinary course of
business of hanks. Also, the appellate court found PNB
reprehensible for doing transactons outside the bank without
any proper explanaton of the consequences of the document to
be signed by [Pasimio] and because the bank
personnel misrepresented the true nature of the transacton.49
between the parties and their successors-in-interest, no evidence
of the terms of the agreement other than the contents of the
writing.50
Under this rule, parol evidence or oral evidence cannot be given
to contradict, change or vary a written document, except if a
party presents evidence to modify, explain, or add to the terms
of a written agreement and puts in issue in his pleadings: (a) an
intrinsic ambiguity, mistake, or imperfection in the written
agreement; (b) the failure of the written agreement to express
the true intent and agreement of the parties; (c) the validity of
the written agreement; and (d) the existence of other terms
agreed to by the parties or their successors-in-interest after the
execution of the written agreement.51

There is no sufficient evidence to support the foregoing. It must Such evidence, however, must be clear and convincing and of
be stressed that these were solely drawn from Pasimio's such sufficient credibility as to overturn the written
testimony that Gregorio went to her house for her to sign the agreement.52 Since no evidence of such nature is before the
April 10, 2003 Affidavit and that the latter told her that the only Court, the documents embodying the loan agreement of the
way she could get her money back was to re-lend her money parties should be upheld.
deposits to Paolo Sun. Other than Pasimio's story, the CA had no WHEREFORE, premises considered, the petition is GRANTED. The
other evidence to bolster these findings. assailed Decision of the Court of Appeals dated January 23, 2013
in CA-G.R. CV No. 94079 is REVERSED and SET ASIDE.
Further, the CA's conclusions that PNB's personnel were in Respondent Ligaya M. Pasimio's complaint in Civil Case No. CV-
violaton of their dutes and responsibilites as its employees; that 05-0195 before the egional Trial Court of Paranaque City, Branch
they committed gross negligence in dealing with their bank 196 is DISMISSED for lack of merit.
transactons; and that the bank repeatedly failed to observe
basic procedures thus, was guilty of serial negligence, are not No costs.
supported by sufficient evidence.
It was wrong for the CA to make the foregoing conclusions SO ORDERED.
merely because another bank client, Virginia Pollard (Pollard),
testified to being a victim of irregular bank transactions of PNB
Sucat. Even if Pollard were telling the truth, her testimony should
not have been considered proof that what she underwent is
what actually transpired between Pasimio and PNB. Res inter
alios acta. Acts and declarations of persons strangers to a suit
should, as a rule, be irrelevant as evidence. Pollard's transaction
with PNB is entirely different and totally unrelated to Pasimio's
dealings with the bank.
What may be true in the case of Pollard may not hold true for
Pasimio. It was quite erroneous for the appellate court to declare
PNB grossly negligent in its transactions with Pasimio when the
only evidence it had discussed on the matter was Pollard's
testimony. It may be true that the PNB was grossly negligent in
dealing with Pollard, but this does not automatically mean that
PNB was grossly negligent toward Pasimio as well. Hence, the CA
had no basis in saying that "[e]ven assuming that [Pasimio] was
concocting her version of the facts, fit] still find[s] irregularities
and inconsistencies that have attributed to the unjustified refusal
to return the investment placement and to the commission of
negligence."

Much is attempted to be made by the Memorandum on Irregular

Lending Operaton on Loans v. Deposit Hold-Out (Sucat
Branch) dated February 18, 2003. The memorandum does not
pertain to Pasimio or her accounts and transactions with the G.R. No. 203984 June 18, 2014
bank, albeit it discusses Garcia and Miranda's sham dealings with
other bank clients. Hence, the memorandum is really not PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
determinative of the critical question of whether or not Pasimio vs.
sought and eventually secured loan accommodations from PNB. MEDARIO CALANTIAO y DIMALANTA, Accused-Appellant.

Here, the RTC and the CA focused on finding trivial Haws and
weaknesses in PNB's evidence and totally disregarded the bank's
most telling proof, foremost of which are the notarized notes Had
the courts a quolooked at and considered the totality of the
bank's evidence, then it would have realized how preposterous
the story that Pasimio spun was, a story featuring, at bottom, a
well-educated, accomplished woman signing several pieces of
bank documents involving millions of pesos, without knowing,
nay even reading, what she is signing.
Finally, it is well to consider this rule: that when the terms of an
agreement have been reduced to writing, it is to be considered
as containing all such terms, and, therefore, there can be,
DECISION
LEONARDO-DE CASTRO, J.:
This is an appeal from the January 1 7, 2012 Decision1 of the Court
of Appeals in CA-G.R. CR.-H.C. No. 04069, affirming in toto the July
23, 2009 Decision2 of the Regional Trial Court (RTC) of Caloocan City,
Branch 127, finding accused-appellant Medario Calantiao y
Dimalanta (Calantiao) guilty beyond reasonable doubt of violating
Section 11, Article II of Republic Act No. 9165 or the Comprehensive
Dangerous Drugs Act of 2002.
On November 13, 2003, Calantiao was charged before the RTC of
violation of Section 11, Article II of Republic Act No. 9165 in an
Information,3 the pertinent portion of which reads: That on or about
the 11th day of November, 2003 in Caloocan City, Metro Manila,
Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, without any authority of law, did then and
there willfully, unlawfully and feloniously have in his possession,
custody and control two (2) bricks of dried marijuana fruiting tops
with a total weight of 997 .9 grams, knowing the same to be a
dangerous drug.
The facts, as synthesized by the RTC and adopted by the Court of
Appeals, are as follows:
EVIDENCE OF THE PROSECUTION
On November 13, 2003[,] at around 5:30 x x x in the afternoon, while
PO1 NELSON MARIANO and PO3 EDUARDO RAMIREZ were on duty, a
certain EDWIN LOJERA arrived at their office and asked for police
assistance regarding a shooting incident. Per report of the latter, it
appears that while driving a towing truck and traversing along EDSA,
Balintawak, Quezon City, he had a traffic dispute (gitgitan) with a
white taxi cab prompting him to follow said vehicle until they
reached along 8th Avenue Street corner C-3 Road, Caloocan City.
Thereat, the passengers of said taxi cab, one of them was accused
Calantiao, alighted and fired their guns. Surprised, Lojera could not
do anything but continued his driving until he reached a police
station nearby where he reported the incident.
The police officers on duty then were PO1 NELSON MARIANO and
PO3 EDUARDO RAMIREZ. PO1 Mariano testified that they
immediately responded to said complaint by proceeding to 5th
Avenue corner 8th Street, Caloocan City where they found the white
taxi. While approaching said vehicle, two armed men alighted
therefrom, fired their guns towards them (police officers) and ran
away. PO1 Mariano and PO3 Ramirez chased them but they were
subdued. PO1 Mariano recovered from Calantiao a black bag
containing two (2) bricks of dried marijuana fruiting tops and a
magazine of super 38 stainless with ammos, while PO3 Ramirez
recovered from Calantiao’s companion [a] .38 revolver.
The suspects and the confiscated items were then turned over to
SPO3 PABLO TEMENA, police investigator at Bagong Barrio Police
Station for investigation. Thereat, PO1 Mariano marked the bricks of
marijuana contained in a black bag with his initials, "NM".
Thereafter, said specimen were forwarded to the PNP Crime
Laboratory for chemical analysis. The result of the examination
conducted by P/SINSP. JESSSE DELA ROSA revealed that the same
was positive for marijuana, a dangerous drug.
The foregoing testimony of PO1 MARIANO was corroborated by PO3
RAMIREZ who testified that he personally saw those bricks of
marijuana confiscated from the accused. He confirmed that he was
with PO1 Mariano when they apprehended said accused and his
companion and testified that while PO1 Mariano recovered from the
accused a black bag containing marijuana, on his part, he confiscated
from accused’s companion a .38 revolver.
MR. CRISENDO AMANSEC, the driver of the taxi where the suspects
boarded was also presented in open court and testified as to what
he knows about the incident. He confirmed that on that date, two (2)
persons boarded on his taxi and upon reaching C-3 Road, they
alighted and fired three (3) shots and ran away.
Aside from the oral testimonies of the witnesses, the prosecution
also offered the following documentary evidence to boost their
charge against the accused:
Exh. "A" – Request for Laboratory Examination dated November 12,
2003
Exh. "B" – Physical Sciences Report No. D-1423-03 dated November
12, 2003
Exh. "C-1" – Picture of First brick of marijuana fruiting tops
Exh. "C-2" – Picture of Second brick of marijuana fruiting tops
Exh. "D" – Referral Slip dated November 12, 2003
Exh. "E" – Pinagsamang Sinumpaang Salaysay dated November 12,
2003 of PO3 Eduardo Ramirez and PO1 Nelson Mariano
Exh. "E-1" – Their respective signatures
Exh. "F" – Sinumpaang Salaysay of Crisendo Amansec (Erroneously
marked as Exh. "E")
EVIDENCE OF THE DEFENSE
The accused offered a different version of the story. According to his
testimony, this instant case originated from a traffic mishap where
the taxi he and his companion Rommel Reyes were riding almost
collided with another car. Reyes then opened the window and made
a "fuck you" sign against the persons on board of that car. That
prompted the latter to chase them and when they were caught in a
traffic jam, PO1 Nelson Mariano, one of the persons on board of that
other car alighted and kicked their taxi. Calantiao and Reyes alighted
and PO1 Mariano slapped the latter and uttered, "Putang ina mo
bakit mo ako pinakyu hindi mo ba ako kilala?" Said police officer
poked his gun again[st] Reyes and when Calantiao tried to grab it,
the gun fired. Calantiao and Reyes were then handcuffed and were
brought to the police station. Thereat, they were subjected to body
frisking and their wallets and money were taken. PO1 Mariano then
prepared some documents and informed them that they will be
charged for drugs. A newspaper containing marijuana was shown to
them and said police officer told them that it would be sufficient
evidence against them. They were detained and subjected to
medical examination before they were submitted for inquest at the
prosecutor’s office.4
Ruling of the RTC
On July 23, 2009, the RTC rendered its Decision giving credence to
the prosecution’s case. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
declaring accused MEDARIO CALANTIAO y DIMALANTA, GUILTY
BEYOND REASONABLE DOUBT of the offense of Violation of Section
11, Article II, R.A. 9165, for illegally possessing997.9 grams of
marijuana fruiting tops. Henceforth, this Court hereby sentences him
to suffer the penalty of life imprisonment and a fine of Five Hundred
Thousand Pesos (Php500,000.00).5
In convicting Calantiao, the RTC held that the illegal drug seized was
admissible in evidence as it was discovered during a body search
after Calantiao was caught in flagrante delicto of possessing a gun
and firing at the police officers. Moreover, the RTC found all the
elements of the offense to have been duly established by the
prosecution.6
Aggrieved, Calantiao appealed7 his conviction to the Court of
Appeals, assigning the following errors:
I
THE COURT A QUOGRAVELY ERRED IN FINDING THE ACCUSED-
APPELLANT GUILTY BEYOND REASONABLE DOUBT FOR VIOLATION OF
SECTION 11, ARTICLE II, REPUBLIC ACT NO. 9165,
NOTWITHSTANDING THE FACT THAT THE ALLEGEDLY SEIZED ITEMS
ARE INADMISSIBLE IN EVIDENCE.
II
THE COURT A QUOGRAVELY ERRED IN CONVICTING THE ACCUSED-
APPELLANT DESPITE THE ARRESTING OFFICERS’ PATENT NON-
COMPLIANCE WITHTHE REQUIREMENTS FOR THE PROPER CUSTODY
OF SEIZED DANGEROUS DRUGS.
III
THE COURT A QUOGRAVELY ERRED IN CONVICTING THE ACCUSED-
APPELLANT DESPITE THE PROSECUTION’S FAILURE TO PROVE THE
PROPER CHAIN OF CUSTODY OF THE SEIZED DANGEROUS DRUGS.8
Ruling of the Court of Appeals
The Court of Appeals found no reason to overturn Calantiao’s
conviction. It found that there was sufficient reason to justify a
warrantless arrest, as the police officers were acting on a legitimate
complaint and had a reasonable suspicion that the persons identified
at the scene were the perpetrators of the offense. Likewise, the
Court of Appeals held that the search and subsequent seizure of the
marijuana in question was lawful and valid, being incidental to a
lawful arrest.9 Finding that all the elements of the charge of illegal
possession of dangerous drugs to be present and duly proven,10 the
Court of Appeals, on January 17, 2012, promulgated its Decision,
affirming in toto the RTC’s ruling.
Undaunted, Calantiao is now before this Court praying for an
acquittal, adding the following arguments in support of his position:
First, the plain view doctrine is not an exception to a search incident
to a valid warrantless arrest.
xxxx
Second, Calantiao did not waive the inadmissibility of the seized
items.
xxxx
Finally, the seized items’ custodial chain is broken.11
In essence, Calantiao is questioning the admissibility of the
marijuana found in his possession, as evidence against him on the
grounds of either it was discovered via an illegal search, or because
its custodial chain was broken.
Ruling of this Court
This Court finds no merit in Calantiao’s arguments.
Search and Seizure of
Marijuana valid
This Court cannot subscribe to Calantiao’s contention that the
marijuana in his possession cannot be admitted as evidence against
him because it was illegally discovered and seized, not having been
within the apprehending officers’ "plain view."12
Searches and seizure incident to a lawful arrest are governed by
Section 13, Rule 126 of the Revised Rules of Criminal Procedure, to
wit:
Section 13.Search incident to lawful arrest.– A person lawfully
arrested may be searched for dangerous weapons or anything which
may have been used or constitute proof in the commission of an
offense without a search warrant.
The purpose of allowing a warrantless search and seizure incident to
a lawful arrest is "to protect the arresting officer from being harmed
by the person arrested, who might be armed with a concealed
weapon, and to prevent the latter from destroying evidence within
reach."13 It is therefore a reasonable exercise of the State’s police
power to protect (1) law enforcers from the injury that may be
inflicted on them by a person they have lawfully arrested; and (2)
evidence from being destroyed by the arrestee. It seeks to ensure
the safety of the arresting officers and the integrity of the evidence
under the control and within the reach of the arrestee.
In People v. Valeroso,14 this Court had the occasion to reiterate the
permissible reach of a valid warrantless search and seizure incident
to a lawful arrest, viz:
When an arrest is made, it is reasonable for the arresting officer to
search the person arrested in order to remove any weapon that the
latter might use in order to resist arrest or effect his escape.
Otherwise, the officer’s safety might well be endangered, and the
arrest itself frustrated. In addition, it is entirely reasonable for the
arresting officer to search for and seize any evidence on the
arrestee’s person in order to prevent its concealment or destruction.
Moreover, in lawful arrests, it becomes both the duty and the right
of the apprehending officers to conduct a warrantless search not
only on the person of the suspect, but also in the permissible area
within the latter’s reach. Otherwise stated, a valid arrest allows the
seizure of evidence or dangerous weapons either on the person of
the one arrested or within the area of his immediate control. The
phrase "within the area of his immediate control" means the area
from within which he might gain possession of a weapon or
destructible evidence. A gun on a table or in a drawer in front of one
who is arrested can be as dangerous to the arresting officer as one
concealed in the clothing of the person arrested. (Citations omitted.)
In Valeroso, however, the Court held that the evidence searched and
seized from him could not be used against him because they were
discovered in a room, different from where he was being detained,
and was in a locked cabinet. Thus, the area searched could not be
considered as one within his immediate control that he could take
any weapon or destroy any evidence against him.15
In the case at bar, the marijuana was found in a black bag in
Calantiao’s possession and within his immediate control. He could
have easily taken any weapon from the bag or dumped it to destroy
the evidence inside it. As the black bag containing the marijuana was
in Calantiao’s possession, it was within the permissible area that the
apprehending officers could validly conduct a warrantless search.
Calantiao’s argument that the marijuana cannot be used as evidence
against him because its discovery was in violation of the Plain View
Doctrine, is misplaced.
The Plain View Doctrine is actually the exception to the
inadmissibility of evidence obtained in a warrantless search incident
to a lawful arrest outside the suspect’s person and premises under
his immediate control. This is so because "[o]bjects in the ‘plain
view’ of an officer who has the right to be in the position to have
that view are subject to seizure and may be presented as
evidence."16 "The doctrine is usually applied where a police officer
is not searching for evidence against the accused, but nonetheless
inadvertently comes across an incriminating object x x x. [It] serves
to supplement the prior justification – whether it be a warrant for
another object, hot pursuit, search incident to lawful arrest, or some
other legitimate reason for being present unconnected with a search
directed against the accused – and permits the warrantless
seizure."17
The Plain View Doctrine thus finds no applicability in Calantiao’s
situation because the police officers purposely searched him upon
his arrest. The police officers did not inadvertently come across the
black bag, which was in Calantiao’s possession; they deliberately
opened it, as part of the search incident to Calantiao’s lawful arrest.
Inventory and Chain of
Custody of Evidence
Calantiao claims that even if the search and seizure were validly
effected, the marijuana is still inadmissible as evidence against him
for failure of the apprehending officers to comply with the rules on
chain of custody, as the item was marked at the police station.18
The pertinent provisions of Republic Act No. 9165 provide as follows:
Section 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous Drugs,
Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. – The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered, for
proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the
drugs shall, immediately after seizure and confiscation, physically
inventory and photograph the same in the presence of the accused
or the person/s from whom such items were confiscated and/or
seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected
public official who shall be required to sign the copies of the
inventory and be given a copy thereof[.]
Its Implementing Rules and Regulations state:
SECTION 21. Custody and Disposition of Confiscated, Seized and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous Drugs,
Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered, for
proper disposition in the following manner:
(a) The apprehending officer/team having initial custody and control
of the drugs shall, immediately after seizure and confiscation,
physically inventory and photograph the same in the presence of the
accused or the person/s from whom such items were confiscated
and/or seized, or his/her representative or counsel, a representative
from the media and the Department of Justice (DOJ), and any
elected public official who shall be required to sign the copies of the
inventory and be given a copy thereof; Provided, that the physical
inventory and photograph shall be conducted at the place where the
search warrant is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures; Provided, further, that
non-compliance with these requirements under justifiable grounds,
as long as the integrity and the evidentiary value of the seized items
are properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.] (Emphasis supplied.)
The defenses of denial and frame-up have been invariably viewed by
this Court with disfavor for it can easily be concocted and is a
common and standard defense ploy in prosecutions for violation of
Dangerous Drugs Act. In order to prosper, the defenses of denial and
frame-up must be proved with strong and convincing evidence. In
the cases before us, appellant failed to present sufficient evidence in
support of his claims. Aside from his self-serving assertions, no
plausible proof was presented to bolster his allegations.24
Hence, as Calantiao failed to show clear and convincing evidence
that the apprehending officers were stirred by illicit motive or failed
to properly perform their duties, their testimonies deserve full faith
and credit.25
WHEREFORE, premises considered, the Court hereby AFFIRMS the
January 17, 2012 Decision of the Court of Appeals in CA-G.R. CR.-H.C.
No. 04069.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

This Court has held that the failure to strictly comply with Section 21,
Article II of Republic Act No. 9165, such as immediately marking
seized drugs, will not automatically impair the integrity of chain of
custody because what is of utmost importance is the preservation of
the integrity and the evidentiary value of the seized items, as these
would be utilized in the determination of the guilt or innocence of
the accused.19

Section 21 and its IRR do not even mention "marking." What they
require are (1) physical inventory, and (2) taking of photographs. As
this Court held in People v. Ocfemia20:

What Section 21 of R.A. No. 9165 and its implementing rule do not
expressly specify is the matter of "marking" of the seized items in
warrantless seizures to ensure that the evidence seized upon
apprehension is the same evidence subjected to inventory and
photography when these activities are undertaken at the police
station rather than at the place of arrest. Consistency with the "chain
of custody" rule requires that the "marking" of the seized items – to
truly ensure that they are the same items that enter the chain and
are eventually the ones offered in evidence – should be done (1) in
the presence of the apprehended violator (2) immediately upon
confiscation.

The prosecution was able to establish the chain of custody of the

seized marijuana from the time the police officers confiscated it, to
the time it was turned over to the investigating officer, up to the time
it was brought to the forensic chemist for laboratory examination.21
This Court has no reason to overrule the RTC and the Court of
Appeals, which both found the chain of custody of the seized drugs G.R. No. 209588 February 18, 2015
to have not been broken so as to render the marijuana seized from
Calantiao inadmissible in evidence. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
Furthermore, unless it can be shown that there was bad faith, ill will, ERIC ROSAURO y BONGCAWIL, Accused-Appellant.
or tampering of the evidence, the presumption that the integrity of
the evidence has been preserved will remain. The burden of showing DECISION
the foregoing to overcome the presumption that the police officers
handled the seized drugs with regularity, and that they properly PEREZ, J.:
discharged their duties is on Calantiao. Unfortunately, Calantiao
failed to discharge such burden.22
For the consideration of the Court is an appeal of the Decision1
dated 19 June 2013 of the Court of Appeals (CA) in CA-G.R. CR-
It is worthy to note that these arguments were only raised by
Calantiao on his appeal. He himself admits this.23 His theory, from H.C. No. 00552- MIN, which affirmed the Judgment2 dated 24
the very beginning, was that he did not do it, and that he was being November 2006 of the Regional Trial Court (RTC), Cagayan de Oro
framed for having offended the police officers. Simply put, his City, Branch 25 in Criminal Case No. 2004-856, finding accused-
defense tactic was one of denial and frame-up. However, those appellant Eric Rosauro y Bongcawil (accused-appellant) guilty
defenses have always been frowned upon by the Court, to wit: beyond reasonable doubt of illegal sale of shabu under Sec. 5,
Article II of Republic Act No. 9165 (R.A. No. 9165) or the
Comprehensive Dangerous Drugs Act of 2002, sentencing him to
suffer the penalty of life imprisonment and ordering him to pay a
fine of ₱500,000.00.
In an Amended Information dated 21 February 2005,3 accused-
appellant was charged with violation of Sec. 5, Art. II of R. A. No.
9165, to wit:
That on the 3rd day of July, 2004at about 5:30 o’clock in the
afternoon, more or less, at Purok 3, Barangay Poblacion,
Municipality of Villanueva, Province of Misamis Oriental,
Republic of the Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, not being
authorized by law to possess and to sell any dangerous drugs,
knowingly, willfully and feloniously, did then and there, sell and
convey to a third person, who acted as a decoy in a buy bust
operation, one (1) sachet of shabu, containing 0.04 grams (sic) of
shabu, which when examined gave POSITIVE result to test for the
presence of Methamphetamine Hydrochloride (Shabu), a
dangerous drug.4
Upon re-arraignment, accused-appellant pleaded not guilty to
the crime charged.5 Thereafter, pre-trial and trial on the merits
ensued.
Based on the records, the prosecution’s version of the facts is as
follows:
On October 13, 2002, on the basis of unconfirmed reports that
accused-appellant Eric Rosauro (Rosauro for brevity) was selling
and distributing drugs, the Provincial Drug Enforcement Unit of
Misamis Oriental conducted a test-buy operation in the
Municipality of Villanueva, Misamis Oriental using a confidential
agent. The confidential agent bought shabu from Rosauro at
Purok 2, Barangay Katipunan, Villanueva, Misamis Oriental. The
substance bought from Rosauro was examined by the PNP crime
laboratory and yielded a positive result for Methamphetamine
Hydrochloride (commonly known as shabu).
On July 3, 2004, the police authorities received information that
again drugs were being distributed at Purok 3, Barangay
Poblacion, Villanueva, Misamis Oriental. Thus, at 5:30 o’clock in
the afternoon, the Provincial Anti-Illegal Drugs Special Operation
Task Unit (PAID-SOTU) elements led by SPO4 Lorenzo Larot and
PO3 Juancho Dizon positioned themselves in the house of their
confidential agent.
There, the PAID-SOTU elements saw Rosauro negotiate with the
confidential agent. In exchange for the one (1) sachet of shabu
given by Rosauro to the confidential agent, the latter gave him a
marked 100-peso bill with serial number YZ7 12579.
After the transaction, Larot and Dizon came out of their hiding
place and arrested Rosauro. Thereafter, the confidential agent
handed the sachet to Larot, who taped it, mark edit with the
marking "Exhibit A", and placed it inside his pocket. He also took
pictures of Rosauro and the drugs. In the police station, he
prepared a Certificate of Inventory and a Request for Laboratory
Examination. Both the drugs and Rosauro were then turned over
to the Crime laboratory.
On the basis of the request made by Larot, Police Chief Inspector
Ma. Leocy Mag-abo, the Forensic Chemical Officer of PNP Crime
Laboratory conducted a laboratory examination on the contents
of the sachet, on accused-appellant, and the marked money. The
examination of the seized item yielded positive result for
methamphetamine hydrochloride (shabu); while the accused-
appellant and the marked money tested positive for the presence
of ultra-violet fluorescent powder.6
For his part, accused-appellant claims that he was merely a
victim of instigation:
Accused-appellant Rosauro, on the other hand, tells a different
tale. He testified that on July 3, 2004, the police asset went to his
house four (4) times and convinced him to do an errand for him.
Rosauro refused to buy shabu as he did not know where to buy
one. It was the confidential informant who told him to buy the
prohibited drug from a certain "Kael" and to deliver it to the
former’s house.It was also the informant who gave the money to
Rosauro to buy the shabu. But Rosauro was not able to meet or
buy directly from Kael because it was a young man who got and
handed to him the shabu on the road. When Rosauro went to the
house of the confidential informant as instructed, he was
arrested by SPO4 Larot and Dizon. The sachet of shabu was not
even recovered from him but from the confidential informant.7
Finding the evidence of the prosecution sufficient to establish the
guilt of accused-appellant, the RTC rendered a judgment of
conviction, viz.:
IN THE LIGHT OF THE FOREGOING, this Court hereby renders
Judgment finding accused ERIC ROSAURO y BONGCAWIL, "guilty"
beyond reasonable doubt of the crime charged in the
information for selling and delivering a sachet of shabu to the
poseur buyer a Violation of Section 5, Article II of R.A. 9165 and
imposes a penalty of life imprisonment and a fine of Five
Hundred Thousand (PhP 500,000.00) Pesos and to pay the cost.
The accused ERIC B. ROSAURO who has undergone preventive
imprisonment shall be credited in the service of his sentence
consisting of deprivation of liberty, with the full time during
which he has undergone preventive imprisonment if the
detention prisoner agrees voluntarily in writing to abide by the
same disciplinary rule imposed upon convicted prisoners, except
those disqualified by law.
The sachet of shabu, Exh. "A" is confiscated and forfeited in favor
of the government to be destroyed in accordance with law.8
Accused-appellant appealed before the CA, assigning a lone
error:
I
THE COURT A QUO GRAVELY ERRED IN CONVICTING THE
ACCUSED-APPELLANT WHEN HIS GUILT WAS NOT PROVEN
BEYOND REASONABLE DOUBT.9
After a review of the records, the CA affirmed the RTC Judgment.
The appellate court ruled that what transpired in the case at bar
was an entrapment and not an instigation;10 that all the
elements of illegal sale of regulated or prohibited drugs were
duly proven;11 that the non-presentation of the confidential
agent in court is not fatal;12 that the inconsistencies in the
testimony of the lone witness of the prosecution do not affect
the result of the case;13 and that the apprehending team was
able to preserve the integrity of the subject drug and that the
prosecution was able to present the required unbroken chain in
the custody of the subject drug.14 Thus, the CA held:
WHEREFORE, the Judgment dated November 24, 2006 of the
Regional Trial Court, Branch 25, Cagayan de Oro City in Criminal
Case No. 2004-856 is hereby AFFIRMED.15
Accused-appellant is now before the Court seeking a review of
his conviction.
After a thorough review of the records, however, we dismiss the
appeal.
It is apropos to reiterate here that where there is no showing
that the trial court overlooked or misinterpreted some material
facts or that it gravely abused its discretion, the Court will not
disturb the trial court’s assessment of the facts and the
credibility of the witnesses since the RTC was in a better position
to assess and weigh the evidence presented during trial. Settled
too is the rule that the factual findings of the appellate court
sustaining those of the trial court are binding on this Court,
unless there is a clear showing that such findings are tainted with
arbitrariness, capriciousness or palpable error.16
The RTC and the CA both found the arrest of accused-appellant
to be the result of a legitimate entrapment procedure, and we
find nothing in the records as to warrant a contrary finding. In
People v. Bartolome,17 we had the occasion to discuss the
legitimacy of a "decoy solicitation," to wit:
It is no defense to the perpetrator of a crime that facilities for its
commission were purposely placed in his way, or that the
criminal act was done at the "decoy solicitation" of persons
seeking to expose the criminal, or that detectives feigning
complicity in the act were present and apparently assisting its
commission. Especially is this true in that class of cases where
the office is one habitually committed, and the solicitation
merely furnishes evidence of a course of conduct.
As here, the solicitation of drugs from appellant by the informant
utilized by the police merely furnishes evidence of a course of
conduct. The police received an intelligence report that appellant
has been habitually dealing in illegal drugs. They duly acted on it
by utilizing an informant to effect a drug transaction with
appellant. There was no showing that the informant induced the
appellant to sell illegal drugs to him.1âwphi1
Similarly, the presentation of an informant as witness is not
regarded as indispensable to the success of a prosecution of a
drug-dealing accused. As a rule, the informant is not presented in
court for security reasons, in view of the need to protect the
informant from the retaliation of the culprit arrested through his
efforts. Thereby, the confidentiality of the informant’s identity is
protected in deference to his invaluable services to law
enforcement. Only when the testimony of the informant is
considered absolutely essential in obtaining the conviction of the
culprit should the need to protect his security be disregarded.18
In the present case, as the buy-bust operation was duly
witnessed by the Provincial Anti-Illegal Drugs Special Operation
Task Unit (PAID-SOTU) elements led by SPO4 Lorenzo Larot (SPO4
Larot) and PO3 Juancho Dizon, their testimonies can take the
place of that of the confidential informant.
As to whether accused-appellant’s guilt was established beyond
reasonable doubt, we rule in the affirmative.
In a catena of cases, this Court laid down the essential elements
to be duly established for a successful prosecution of offenses
involving the illegal sale of dangerous or prohibited drugs, like
shabu, under Section 5, Article II of R.A. No. 9165, to wit: (1) the
identity of the buyer and the seller, the object of the sale, and
the consideration; and (2) the delivery of the thing sold and
payment therefor. Briefly, the delivery of the illicit drug to the
poseur-buyer and the receipt of the marked money by the seller
successfully consummate the buy-bust transaction. What is
material, therefore, is the proof that the transaction or sale
transpired, coupled with the presentation in court of the corpus
delicti.19
Verily, all the elements for a conviction of illegal sale of
dangerous or prohibited drugs were proven by the prosecution:
the identity of accused-appellant as the seller, and that of the
confidential informant as poseur-buyer were established, as well
as the exchange of the sachet of shabu and the marked money. It
was also ascertained that the seized item was positive for shabu,
a dangerous drug, and that the same item was properly
identified in open court by SPO4 Larot. Moreover, the ₱100.00
bill with serial number YZ712579, or the subject marked money,
as well as the living body of the accused-appellant revealed a
positive result for ultraviolet fluorescent powder.
Accused-appellant avers that the prosecution was not able to
prove the corpus delicti, and that the statutory safeguards
provided for in Sec. 21 of R.A. No. 9165 were not followed.
Indeed, as we held in People v. Torres,20 equally important in
every prosecution for illegal sale of dangerous or prohibited
drugs is the presentation of evidence of the seized drug as the
corpus delicti. The identity of the prohibited drug must be proved
with moral certainty. It must also be established with the same
degree of certitude that the substance bought or seized during
the buy-bust operation is the same item offered in court as
exhibit. In this regard, paragraph 1, Section 21, Article II of R. A.
No. 9165 (the chain of custody rule) provides for safeguards for
the protection of the identity and integrity of dangerous drugs
seized, to wit:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. – The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the drugs shall, immediately after seizure and confiscation,
physically inventory and photograph the same in the presence of
the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a
representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to
sign the copies of the inventory and be given a copy thereof.
However, this Court has, in many cases, held that while the chain
of custody should ideally be perfect, in reality it is "almost always
impossible to obtain an unbroken chain." The most important
factor is the preservation of the integrity and the evidentiary
value of the seized items as they will be used to determine the
guilt or innocence of the accused. Hence, the prosecution’s
failure to submit in evidence the physical inventory and
photograph of the seized drugs as required under Article 21 of R.
A. No. 9165, will not render the accused’s arrest illegal or the
items seized from him inadmissible.21
The chain of custody is not established solely by compliance with
the prescribed physical inventory and photographing of the
seized drugs in the presence of the enumerated persons. The
Implementing Rules and Regulations of R. A. No. 9165 on the
handling and disposition of seized dangerous drugs states:
x x x Provided, further, that non-compliance with these
requirements under justifiable grounds, as long as the integrity
and evidentiary value of the seized items are properly preserved
by the apprehending officer/team, shall not render void and
invalid such seizures of and custody over said items.22 (Italics,
emphasis, undescoring omitted)
In the case at bar, after the sale was consummated, the
confidential informant gave the seized item to SPO4 Larot who
placed tape on the sachet and marked it "Exhibit A." Upon
reaching the police station, SPO4 Larot executed the Certificate
of Inventory, as well as the request for laboratory examination.
The request, the specimen, as well as the marked money and
accused-appellant were then brought to the PNP Crime
Laboratory for examination. They were received. by SPO2 Ricardo
Maisog, the Receiving Clerk of the PNP Crime Laboratory Office,
who then forwarded them to Police Inspector Ma. Leocy
Jabonillo Mag-abo, the Forensic Chemical Officer of the PNP
Crime Laboratory.23 Moreover, the seized item was duly
identified by SPO4 Larot in open court as the same item seized
from accused-appellant.
Accused-appellant's guilt having been established, we likewise
affirm the penalty imposed by the RTC and the CA. Under the
law, the offense of illegal sale of shabu carries with it the penalty
of life imprisonment to death and a fine ranging from Five
Hundred Thousand Pesos (₱500,000.00) to Ten Million Pesos
(₱10,000,000.00), regardless of the quantity and purity of the
substance.24 Thus, the RTC and CA were within bounds when
they imposed the penalty of life imprisonment and a fine of Five
Hundred Thousand Pesos (₱500,000.00).

WHEREFORE, premises considered, the present appeal is

DISMISSED.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

[ GR No. 212171, Sep 07, 2016 ]

PEOPLE v. MERCURY DELA CRUZ ALIAS 'DEDAY +

DECISION

PEREZ, J.:

We resolve the appeal, filed by accused-appellant Mercury Dela

Cruz alias "Deday," from the 27 September 2013 Decision[1] of
the Court of Appeals (CA) in CA-G.R. CR.-H.C. No. 01103.
In a Decision[2] dated 27 November 2008, the Regional Trial
Court (RTC), Branch 58, Cebu City, found the accused-appellant
guilty of illegal sale of shabu under Sections 5, Article II of
Republic Act (R.A.) No. 9165[3] and sentenced him to suffer the
penalty life imprisonment and to pay a fine of P500,000.00.

The RTC gave full credence to the testimonies of Senior Police
Officer (SPO) 2 Alejandro Batobalanos, Police Officer (PO) 1
Angsgar Babyboy A. Reales, and PO1 Leopoldo Bullido who
conducted the buy-bust operation against the accused-appellant,
and rejected the self-serving defenses of denial and alibi of
accused-appellant and her live-in partner. The RTC noted that the
categorical affirmation of accused-appellant and her live-in
partner that the arresting officers did not demand anything from
them in exchange for the accused-appellant's liberty created the
presumption that the arresting officers were performing their
official functions regularly.[4]
On intermediate appellate review, the CA affirmed in toto the
RTC's ruling. The CA agreed with the RTC in giving weight to the
testimonies of the prosecution witnesses, and held that the
arresting officers complied with the proper procedure in the
custody and disposition of the seized drugs.
Our Ruling
We dismiss the appeal and affirm the accused-appellant's guilt.
We find no reason to reverse the RTC's findings, as affirmed by
the CA. In the same manner as the lower courts, we give full
credit to the positive, spontaneous and straightforward
testimonies of the police officers pointing to accused-appellant
as the seller and possessor of the confiscated shabu.
We have consistently held that in order to secure a conviction for
illegal sale of dangerous drugs, it is necessary that the
prosecution is able to establish the following essential elements:
(1) the identity of the buyer and the seller, the object of the sale
and its consideration; and (2) the delivery of the thing sold and
its payment. What is material is the proof that the transaction or
sale actually took place, coupled with the presentation in court
of the corpus delicti as evidence. The delivery of the illicit drug to
the poseur-buyer and the receipt by the seller of the marked
money successfully consummate the buy-bust transaction.[5]
Here, all the aforesaid elements necessary for accused-
appellant's prosecution have been sufficiently complied with,
indubitably establishing that she has indeed committed the
crime. PO1 Reales testified in detail how he was introduced by
the confidential informant to accused-appellant. The confidential
informant, thereafter, manifested to the accused-appellant their
intention to buy worth P200.00. Upon giving the accused-
appellant the 2 marked P100.00 bills, she, in return, handed to
PO1 Reales a small plastic containing white crystalline substance.
The plastic sachet later on tested positive for the presence of
Methamphetamine Hydrochloride. The testimony given by PO1
Reales was corroborated by SPO1 Batobalonos and PO1 Bullido in
all material details. It is therefore clear beyond any shadow of
doubt that the buy-bust operation had been substantially
completed and consummated. The fact that accused-appellant
was able to evade the arrest immediately after the sale and that
she was arrested only after, by virtue of a warrant of arrest, did
not change the fact that the crime she committed earlier had
been consummated.
We agree with the lower courts that in the absence of any intent
or ill-motive on the part of the police officers to falsely impute
commission of a crime against the accused-appellant, the
presumption of regularity in the performance of official duty is
entitled to great respect and deserves to prevail over the bare,
uncorroborated denial and self-serving claim of the accused of
frame-up.[6]
Also, we reject the appellant's contention that the police officers
failed to comply with the provisions of Section 21, paragraph 1 of
R.A. No. 9165,[7] which provides for the procedure in the
custody and disposition of seized drugs.
After a careful perusal of the records, we agree with the CA that
the prosecution had established the unbroken chain of custody
over the seized drugs. This was established through the
testimonies of the prosecution witnesses, to wit: "At around 7:15
o'clock in the evening of November 10, 2006, PO3 Batobalonos,
PO1 Reales, PO1 Bullido and their civilian asset proceeded to
Sitio Cogon, A. Lopez St., Barangay Labangon. When the team
went inside the interior portion of Sitio Cogon, PO1 Reales
together with the civilian asset approached the house of Dela
Cruz, while PO3 Batobalonos and PO1 Bullido were strategically
hidden more or less ten (10) meters away. The civilian asset
called Dela Cruz and told her that they will buy shabu worth
P200.00. Thereafter, Dela Cruz handed PO1 Reales a small plastic
containing white crystalline substance and in exchange he
handed to the former the P200.00 bills. Upon getting hold of the
money, PO3 Batobalonos and PO1 Bullido, who saw the
consummation of the transaction rushed to the scene. When
PO3 Batobalonos got hold of Dela Cruz, the latter shouted for
help and resisted arrest. Dela Cruz was able to run and so the
team chased her, however, her neighbor Arthur Tabasa Ortega
("Ortega") blocked their way. The team introduced themselves as
policemen but Ortega did not listen, so PO3 Batobalonos fired a
warning shot as the people likewise started to gather around
them. Meanwhile, Dela Cruz was able to evade arrest. The team
then arrested Ortega for obstruction of justice.
On their way to the police station aboard their patrol car, PO1
Reales handed to PO3 Batobalonos the small plastic containing
white crystalline substance which he purchased from Dela Cruz.
Thereafter, upon arrival at the police station, PO3 Batobalonos
marked the seized item with "DDM 11/10/06."
Afterwards, a Request for Laboratory Examination of the seized
item was prepared by PO3 Batobalonos. The Request and the
seized item were delivered to the Regional Crime Laboratory
Office-7, Camp Sotero Cabahug, Gorordo Avenue, Cebu City by
PO1 Reales at around 1:10 o'clock in the morning of November
11, 2006.
Thereafter Forensic Chemist PCI Salinas issued Chemistry Report
No. D-1771-2006,"[8] with the finding that the specimen gave
positive result for the presence of Methamphetamine
hydrochloride.[9]
The confiscated dangerous drug which also constitutes the
corpus delicti of the crime was validly considered by the courts in
arriving at the decision despite the fact that the forensic chemist
who examined it did not testify in court. The relevant portion of
the RTC decision reads:
The presentation of the testimony of Forensic chemist PSI
MUTCHIT G. SALINAS was dispensed with, the defense having
ADMITTED: the existence of the Letter Request dated November
10, 2006 from the PNP Station 10; the existence of one (1) small
plastic pack containing white crystalline substance which is the
subject for examination, however DENIED as to the ownership of
said evidence; the existence and due execution of the Chemistry
Report No. D-1771-2006 executed by witness Mutchit G. Salinas;
that the intended witness is and expert witness who examined
the specimen found to contain the presence of
Methylamphetamine hydrochloride locally known as shabu, a
dangerous drug.[10]
Anent accused-appellant's contention that the drugs were
marked not at the place where she was apprehended but at the
police station and that there was no physical inventory made on
the seized item nor was it photographed, we find the same
untenable. The alleged non-compliance with Section 21 of R.A.
No. 9165 was not fatal to the prosecution's case because the
apprehending team properly preserved the integrity and
evidentiary value of the seized drugs.[11]
Relevant to the instant case is the procedure to be followed in
the custody and handling of the seized dangerous drugs as
outlined in Section 21(a), Article II of the Implementing Rules and
Regulations of R.A. No. 9165, which states:
 prescribes a penalty of life imprisonment to death[19] and a fine
(a) The apprehending officer/team having initial custody and ranging from P500,000.00 to P10,000,000.00 for the sale of any
control of the drugs shall, immediately after seizure and dangerous drug, regardless of the quantity or purity involved.
confiscation, physically inventory and photograph the same in
the presence of the accused or the person/s from whom such WHEREFORE, the decision dated 27 September 2013 of the Court
items were confiscated and/or seized, or his/her representative of Appeals in CA-G.R. CR.-H.C. No. 01103 is hereby AFFIRMED.
or counsel, a representative from the media and the Department
of Justice (DOJ), and any elected public official who shall be SO ORDERED.
required to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest office of
the apprehending officer/team, whichever is practicable, in case
of warrantless seizures; Provided, further, that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.]

The last part of the aforequoted issuance provided the exception

to the strict compliance with the requirements of Section 21 of
R.A. No. 9165. Although ideally the prosecution should offer a
perfect chain of custody in the handling of evidence, "substantial
compliance with the legal requirements on the handling of the
seized item" is sufficient.[12] This Court has consistently ruled
that even if the arresting officers failed to strictly comply with the
requirements under Section 21 of R.A. No. 9165, such procedural
lapse is not fatal and will not render the items seized
inadmissible in evidence.[13] What is of utmost importance is
the preservation of the integrity and evidentiary value of the
seized items, as the same would be utilized in the determination
of the guilt or innocence of the accused.[14] In other words, to
be admissible in evidence, the prosecution must be able to
present through records or testimony, the whereabouts of the
dangerous drugs from the time these were seized from the
accused by the arresting officers; turned-over to the investigating
officer; forwarded to the laboratory for determination of their
composition; and up to the time these are offered in evidence.
For as long as the chain of custody remains unbroken, as in this
case, even though the procedural requirements provided for in
Sec. 21 of R.A. No. 9165 were not faithfully observed, the guilt of
the accused will not be affected.[15]

In the instant case, the failure to strictly comply with the

requirements of Sec. 21 of R.A. No. 9165 was satisfactorily
explained by the apprehending officers. They testified that a
commotion erupted when accused-appellant resisted and
shouted for help while she was being arrested. The commotion
eventually gave accused-appellant the opportunity to run and
elude arrest. The arresting officers further alleged that the
people who gathered around them were already aggressive
prompting them to decide to immediately proceed to the police
station for their safety.[16] In fact, the arresting officers even had
to fire a warning shot and arrest Arthur Tabasa Ortega, the
person who intervened in the arrest of accused-appellant, in
order for them to pacify the people around them.
G.R. No. 181045 July 2, 2014
The integrity of the evidence is presumed to have been SPOUSES EDUARDO and LYDIA SILOS, Ps,
preserved unless there is a showing of bad faith, ill will, or proof vs.
that the evidence has been tampered with. Accused-appellant PHILIPPINE NATIONAL BANK, R.
bears the burden of showing that the evidence was tampered or
meddled with in order to overcome the presumption of DEL CASTILLO, J.:
regularity in the handling of exhibits by public officers and the
presumption that public officers properly discharged their duties. Doctrine: In loan agreements, it cannot be denied that the rate
[17] Accused-appellant in this case failed to present any plausible of interest is a principal conditon, if not the most important
reason to impute ill motive on the part of the arresting officers. component. Thus, any modificaton thereof must be mutually
Thus, the testimonies of the apprehending officers deserve full agreed upon; otherwise, it has no binding effect. Moreover, the
faith and credit.[18] In fact, accused-appellant did not even Court cannot consider a stpulaton grantng a party the opton to
question the credibility of the prosecution witnesses. She simply prepay the loan if said party is not agreeable to the arbitrary
anchored her defense on denial and alibi. interest rates imposed. Premium may not be placed upon a
stpulaton in a contract which grants one party the right to
We affirm the penalties imposed as they are well within the choose whether to contnue with or withdraw from the
ranges provided by law. Section 5, Article II of R.A. No. 9165
agreement if it discovers that what the other party has been
doing all along is improper or illegal.
Facts:
Ps have been in business for about two decades of operating a
department store and buying and selling of ready-to-wear
apparel.
To secure a one-year revolving credit line of P150,000.00
obtained from PNB, Ps constituted in August 1987 a Real Estate
Mortgage over a lot in Kalibo, Aklan. In July 1988,the credit line
was increased to P1.8 million and the mortgage was
correspondingly increased to P1.8 million.
And in July 1989, a Supplement to the Existing Real Estate
Mortgage was executed to cover the same credit line, which was
increased to P2.5 million, and additional security was given in the
form of a 134-square meter lot. In addition, Ps issued eight
Promissory Notes and signed a Credit Agreement. This July 1989
Credit Agreement contained a stipulation on interest which
provides as follows:
1.03. Interest. (a) The Loan shall be subject to interest at the rate
of 19.5% per annum. Interest shall be payable in advance every
one hundred twenty days at the rate prevailing at the time of the
renewal.
(b) The Borrower agrees that the Bank may modify the interest
rate in the Loan depending on whatever policy the Bank may
adopt in the future, including without limitaton, the shifting
from the floatng interest rate system to the fixed interest rate
system, or vice versa. Where the Bank has imposed on the Loan
interest at a rate per annum, which is equal to the Bank’s spread
over the current floatng interest rate, the Borrower hereby
agrees that the Bank may, without need of notce to the
Borrower, increase or decrease its spread over the floatng
interest rate at any tme depending on whatever policy it may
adopt in the future.
The eight Promissory Notes, on the other hand, contained a
stipulation granting PNB the right to increase or reduce interest
rates "within the limits allowed by law or by the Monetary
Board."
The Real Estate Mortgage agreement provided the same right to
increase or reduce interest rates "at any time depending on
whatever policy PNB may adopt in the future."
In August 1991, an Amendment to Credit Agreement was
executed by the parties, with the following stipulation regarding
interest:
1.03. Interest on Line Availments. (a) The Borrowers agree to pay
interest on each Availment from date of each Availment up to
but not including the date of full payment thereof at the rate per
annum which is determined by the Bank to be prime rate plus
applicable spread in effect as of the date of each Availment.
The 9th up to the 17th promissory notes provide for the payment
of interest at the "rate the Bank may at any time without notice,
raise within the limits allowed by law x x x.
On the other hand, the 18th up to the 26th promissory notes –
including PN 9707237, which is the 26th promissory note –
carried the following provision:
x x x For this purpose, I/We agree that the rate of interest herein
stipulated may be increased or decreased for the subsequent
Interest Periods, with prior notce to the Borrower in the event of
changes in interest rate prescribed by law or the Monetary Board
of the Central Bank of the Philippines, or in the Bank’s overall
cost of funds. I/We hereby agree that in the event I/we are not
agreeable to the interest rate fixed for any Interest Period, I/we
shall have the option top repay the loan or credit facility without
penalty within ten (10) calendar days from the Interest Setting
Date.
R regularly renewed the line from 1990 up to 1997, and Ps made
good on the promissory notes, religiously paying the interests
without objection or fail. But in 1997, Ps faltered when the
interest rates soared due to the Asian financial crisis. Ps’ sole
outstanding promissory note for P2.5 million – PN 9707237
executed in July 1997 and due 120 days later or on October 28,
1997 – became past due, and despite repeated demands, Ps
failed to make good on the note.
Incidentally, PN 9707237 provided for the penalty equivalent to
24% per annum in case of default.
PNB prepared a Statement of Account as of October 12, 1998,
detailing the amount due and demandable from Ps in the total
amount of P3,620,541.60.
Despite demand, Ps failed to pay the foregoing amount. Thus,
PNB foreclosed on the mortgage, and on January 14, 1999, the
lots were sold at the auction. The sheriff’s certificate of sale was
registered on March 11, 1999.
More than a year later, or on March 24, 2000, Ps filed Civil Case
No. 5975, seeking annulment of the foreclosure sale and an
accounting of the PNB credit. Ps theorized that after the first
promissory note where they agreed to pay 19.5% interest, the
succeeding stipulations for the payment of interest in their loan
agreements with PNB – which allegedly left to the latter the sole
will to determine the interest rate – became null and void. Ps
added that because the interest rates were fixed by R without
their prior consent or agreement, these rates are void, and as a
result, Ps should only be made liable for interest at the legal rate
of 12%. They claimed further that they overpaid interests on the
credit, and concluded that due to this overpayment of steep
interest charges, their debt should now be deemed paid, and the
foreclosure and sale of TCTs T-14250 and T-16208 became
unnecessary and wrongful. As for the imposed penalty
of P581,666.66, Ps alleged that since the Real Estate Mortgage
and the Supplement thereto did not include penalties as part of
the secured amount, the same should be excluded from the
foreclosure amount or bid price, even if such penalties are
provided for in the final Promissory Note.
In addition, Ps sought to be reimbursed an alleged overpayment
of P848,285.00 made during the period August 21, 1991 to
March 5, 1998, resulting from R’s imposition of the alleged illegal
and steep interest rates. They also prayed to be
awarded P200,000.00 by way of attorney’s fees.
In its Answer, PNB denied that it unilaterally imposed or fixed
interest rates; that Ps agreed that without prior notice, PNB may
modify interest rates depending on future policy adopted by it;
and that the imposition of penalties was agreed upon in the
Credit Agreement. It added that the imposition of penalties is
supported by the all-inclusive clause in the Real Estate Mortgage
agreement which provides that the mortgage shall stand as
security for any and all other obligations of whatever kind and
nature owing to R, which thus includes penalties imposed upon
default or non-payment of the principal and interest on due date.
RTC: Ruled in favor of R
CA: Ruled in favor of R
Issue/Held:
WoN the interest rates imposed by R are null and void- YES
WoN P is estopped from questioning the interest rates because
of their continuous payment thereof w/o opposition- NO
Ratio:
SC cited and discussed numerous cases but the main point of all
the cases is the doctrine stated above.
Any modification in the contract, such as the interest rates,
must be made with the consent of the contracting parties. The
minds of all the parties must meet as to the proposed
modification, especially when it affects an important aspect of
the agreement. In the case of loan agreements, the rate of
interest is a principal condition, if not the most important
component. Thus, any modification thereof must be mutually
agreed upon; otherwise, it has no binding effect.
In the present case, the stipulations in question no longer
provide that the parties shall agree upon the interest rate to be
fixed; -instead, they are worded in such a way that the borrower
shall agree to whatever interest rate R fixes. In credit
agreements covered by the cited cases, it is provided that:
The Bank reserves the right to increase the interest rate within
the limits allowed by law at any time depending on whatever
policy it may adopt in the future: Provided, that, the interest rate
on this accommodation shall be correspondingly decreased in
the event that the applicable maximum interest rate is reduced
by law or by the Monetary Board. In either case, the adjustment
in the interest rate agreed upon shall take effect on the effectivity
date of the increase or decrease in maximum interest rate.
Whereas, in the present credit agreements under scrutiny, it is
stated that:
IN THE JULY 1989 CREDIT AGREEMENT
(b) The Borrower agrees that the Bank may modify the interest
rate on the Loan depending on whatever policy the Bank may
adopt in the future, including without limitation, the shifting
from the floating interest rate system to the fixed interest rate
system, or vice versa. Where the Bank has imposed on the Loan
interest at a rate per annum, which is equal to the Bank’s spread
over the current floating interest rate, the Borrower hereby
agrees that the Bank may, without need of notice to the
Borrower, increase or decrease its spread over the floating
interest rate at any time depending on whatever policy it may
adopt in the future.86 (Emphases supplied)
IN THE AUGUST 1991 AMENDMENT TO CREDIT AGREEMENT
1.03. Interest on Line Availments. (a) The Borrowers agree to pay
interest on each Availment from date of each Availment up to
but not including the date of full payment thereof at the rate per
annum which is determined by the Bank to be prime rate plus
applicable spread in effect as of the date of each
Availment.87 (Emphasis supplied)
Plainly, with the present credit agreement, the element of
consent or agreement by the borrower is now completely
lacking, which makes R’s unlawful act all the more
reprehensible.
Re estoppel:
Accordingly, Ps are correct in arguing that estoppel should not
apply to them, for "[e]stoppel cannot be predicated on an illegal
act. As between the parties to a contract, validity cannot be given
to it by estoppel if it is prohibited by law or is against public
policy."
It appears that by its acts, R violated the Truth in Lending Act, or
Republic Act No. 3765, which was enacted "to protect x x x
citizens from a lack of awareness of the true cost of credit to
the user by using a full disclosure of such cost with a view of
preventing the uninformed use of credit to the detriment of the
national economy."89 The law "gives a detailed enumeration of
the specific information required to be disclosed, among which
are the interest and other charges incident to the extension of
credit."90 Section 4 thereof provides that a disclosure statement
must be furnished prior to the consummation of the transaction,
thus:
SEC. 4. Any creditor shall furnish to each person to whom credit
is extended, prior to the consummation of the transaction, a
clear statement in writing setting forth, to the extent applicable
and in accordance with rules and regulations prescribed by the
Board, the following information:
(1) the cash price or delivered price of the property or service to
be acquired;
(2) the amounts, if any, to be credited as down payment and/or
trade-in;
(3) the difference between the amounts set forth under clauses
(1) and (2);
(4) the charges, individually itemized, which are paid or to be
paid by such person in connection with the transaction but which
are not incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and
centavos; and
(7) the percentage that the finance bears to the total amount to
be financed expressed as a simple annual rate on the outstanding
unpaid balance of the obligation.
Under Section 4(6), "finance charge" represents the amount to
be paid by the debtor incident to the extension of credit such as
interest or discounts, collection fees, credit investigation fees,
attorney’s fees, and other service charges. The total finance
charge represents the difference between (1) the aggregate
consideration (down payment plus installments) on the part of
the debtor, and (2) the sum of the cash price and non-finance
charges.
By requiring the Ps to sign the credit documents and the
promissory notes in blank, and then unilaterally filling them up
later on, R violated the Truth in Lending Act, and was remiss in
its disclosure obligations.