G.R. No.
L-21438 September 28, 1966 decision of the Court of Appeals shall contain complete findings of fact on all issues properly
AIR FRANCE, petitioner,
vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.
SANCHEZ, J.:
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing
the difference in fare between first class and tourist class for the portion of the trip Bangkok-
Rome, these various amounts with interest at the legal rate, from the date of the filing of the
complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.
On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane
ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects",
with costs against petitioner.
The case is now before us for review on certiorari.
The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left
Manila for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine
Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to
Rome. From Manila to Bangkok, plaintiff travelled in "first class", but at Bangkok, the
Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he
was occupying because, in the words of the witness Ernesto G. Cuento, there was a
"white man", who, the Manager alleged, had a "better right" to the seat. When asked to
vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told
defendant's Manager that his seat would be taken over his dead body; a commotion
ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got
nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot
discussion with the white man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of
May 26, 1959); and plaintiff reluctantly gave his "first class" seat in the plane. 3
1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent
Court of Appeals. Petitioner charges that respondent court failed to make complete findings of
fact on all the issues properly laid before it. We are asked to consider facts favorable to petitioner,
and then, to overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court
of record without expressing therein clearly and distinctly the facts and the law on which it is
based". 5 This is echoed in the statutory demand that a judgment determining the merits of the
case shall state "clearly and distinctly the facts and the law on which it is based"; 6 and that "Every
raised before it". 7
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law,
however, solely insists that a decision state the "essential ultimate facts" upon which the court's
conclusion is drawn. 9 A court of justice is not hidebound to write in its decision every bit and
piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it to
be burdened with the obligation "to specify in the sentence the facts" which a party "considered
as proved". 11 This is but a part of the mental process from which the Court draws the essential
ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion,
may result. So long as the decision of the Court of Appeals contains the necessary facts to warrant
its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts
with respect to the evidence for the defense". Because as this Court well observed, "There is no
law that so requires". 12 Indeed, "the mere failure to specify (in the decision) the contentions of
the appellant and the reasons for refusing to believe them is not sufficient to hold the same
contrary to the requirements of the provisions of law and the Constitution". It is in this setting
that in Manigque, it was held that the mere fact that the findings "were based entirely on the
evidence for the prosecution without taking into consideration or even mentioning the
appellant's side in the controversy as shown by his own testimony", would not vitiate the
judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each
item of evidence presented by, the defeated party, it does not mean that the court has overlooked
such testimony or such item of evidence. 14 At any rate, the legal presumptions are that official
duty has been regularly performed, and that all the matters within an issue in a case were laid
before the court and passed upon by it. 15
Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written
statement of the ultimate facts as found by the court ... and essential to support the decision and
judgment rendered thereon". 16They consist of the court's "conclusions" with respect to the
determinative facts in issue". 17 A question of law, upon the other hand, has been declared as "one
which does not call for an examination of the probative value of the evidence presented by the
parties." 18
2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of
the Court of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the
business of this Court to alter the facts or to review the questions of fact. 20
With these guideposts, we now face the problem of whether the findings of fact of the Court of
Appeals support its judgment.
3. Was Carrascoso entitled to the first class seat he claims?
It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a
first class ticket. But petitioner asserts that said ticket did not represent the true and complete
intent and agreement of the parties; that said respondent knew that he did not have confirmed
reservations for first class on any specific flight, although he had tourist class protection; that,
accordingly, the issuance of a first class ticket was no guarantee that he would have a first class
ride, but that such would depend upon the availability of first class seats.
These are matters which petitioner has thoroughly presented and discussed in its brief before
the Court of Appeals under its third assignment of error, which reads: "The trial court erred in
finding that plaintiff had confirmed reservations for, and a right to, first class seats on the
"definite" segments of his journey, particularly that from Saigon to Beirut". 21
And, the Court of Appeals disposed of this contention thus:
Defendant seems to capitalize on the argument that the issuance of a first-class ticket
was no guarantee that the passenger to whom the same had been issued, would be
accommodated in the first-class compartment, for as in the case of plaintiff he had yet
to make arrangements upon arrival at every station for the necessary first-class
reservation. We are not impressed by such a reasoning. We cannot understand how a
reputable firm like defendant airplane company could have the indiscretion to give out
tickets it never meant to honor at all. It received the corresponding amount in payment
of first-class tickets and yet it allowed the passenger to be at the mercy of its employees.
It is more in keeping with the ordinary course of business that the company should
know whether or riot the tickets it issues are to be honored or not.22
Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's
contention, thus:
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question.
Apart from his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and
defendant's own witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as
follows:
Q. In these tickets there are marks "O.K." From what you know, what does this OK
mean?
A. That the space is confirmed.
Q. Confirmed for first class?
A. Yes, "first class". (Transcript, p. 169)
xxx xxx xxx
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga
that although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject
to confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses.
Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l",
"C" and "C-1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued,
and paid for, a first class ticket without any reservation whatever.
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the
reservation for a "first class" accommodation for the plaintiff was confirmed. The court cannot
believe that after such confirmation defendant had a verbal understanding with plaintiff that the
"first class" ticket issued to him by defendant would be subject to confirmation in Hongkong. 23
We have heretofore adverted to the fact that except for a slight difference of a few pesos in the
amount refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed
by the Court of Appeals in all other respects. We hold the view that such a judgment of affirmance
has merged the judgment of the lower court. 24Implicit in that affirmance is a determination by
the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial
error and "all questions raised by the assignments of error and all questions that might have been
raised are to be regarded as finally adjudicated against the appellant". So also, the judgment
affirmed "must be regarded as free from all error". 25 We reached this policy construction
because nothing in the decision of the Court of Appeals on this point would suggest that its
findings of fact are in any way at war with those of the trial court. Nor was said affirmance by the
Court of Appeals upon a ground or grounds different from those which were made the basis of
the conclusions of the trial court. 26
If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat,
notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air
passenger is placed in the hollow of the hands of an airline. What security then can a passenger
have? It will always be an easy matter for an airline aided by its employees, to strike out the very
stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the
passenger had a schedule to fulfill? We have long learned that, as a rule, a written document
speaks a uniform language; that spoken word could be notoriously unreliable. If only to achieve
stability in the relations between passenger and air carrier, adherence to the ticket so issued is
desirable. Such is the case here. The lower courts refused to believe the oral evidence intended
to defeat the covenants in the ticket.
The foregoing are the considerations which point to the conclusion that there are facts upon
which the Court of Appeals predicated the finding that respondent Carrascoso had a first class
ticket and was entitled to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut
leg of the flight. 27 We perceive no "welter of distortions by the Court of Appeals of petitioner's
statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's
accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an
issue". 29And this because, as petitioner states, Carrascoso went to see the Manager at his office
in Bangkok "to confirm my seat and because from Saigon I was told again to see the
Manager". 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had
no seat? Or, if another had a better right to the seat?
4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is
that Carrascoso's action is planted upon breach of contract; that to authorize an award for moral
damages there must be an averment of fraud or bad faith; 31 and that the decision of the Court of
Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint bearing on
this issue are:
3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines
for a valuable consideration, the latter acting as general agents for and in behalf of the
defendant, under which said contract, plaintiff was entitled to, as defendant agreed to
 furnish plaintiff, First Class passage on defendant's plane during the entire duration of
plaintiff's tour of Europe with Hongkong as starting point up to and until plaintiff's
return trip to Manila, ... .
4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon
to Bangkok, defendant furnished to the plaintiff First Class accommodation but only
after protestations, arguments and/or insistence were made by the plaintiff with
defendant's employees.
5. That finally, defendant failed to provide First Class passage, but instead furnished
plaintiff only Tourist Class accommodations from Bangkok to Teheran and/or
Casablanca, ... the plaintiff has been compelled by defendant's employees to leave the
First Class accommodation berths at Bangkok after he was already seated.
6. That consequently, the plaintiff, desiring no repetition of the inconvenience and
embarrassments brought by defendant's breach of contract was forced to take a Pan
American World Airways plane on his return trip from Madrid to Manila.32
xxx xxx xxx
2. That likewise, as a result of defendant's failure to furnish First Class accommodations
aforesaid, plaintiff suffered inconveniences, embarrassments, and humiliations, thereby causing
plaintiff mental anguish, serious anxiety, wounded feelings, social humiliation, and the like injury,
resulting in moral damages in the amount of P30,000.00. 33
xxx xxx xxx
The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish
plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That
said contract was breached when petitioner failed to furnish first class transportation at
Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso
to leave his first class accommodation berth "after he was already, seated" and to take a seat in
the tourist class, by reason of which he suffered inconvenience, embarrassments and
humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social
humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad
faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and
circumstances set forth therein. 34 The contract was averred to establish the relation between
the parties. But the stress of the action is put on wrongful expulsion.
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed
petitioner on guard on what Carrascoso intended to prove: That while sitting in the plane in
Bangkok, Carrascoso was ousted by petitioner's manager who gave his seat to a white
man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without
objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or
not there is sufficient averment in the complaint to justify an award for moral damages.
Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof to conform
to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals
declared:
That the plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to the
tourist class not only without his consent but against his will, has been sufficiently
established by plaintiff in his testimony before the court, corroborated by the
corresponding entry made by the purser of the plane in his notebook which notation
reads as follows:
"First-class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene",
and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger.
The captain of the plane who was asked by the manager of defendant company at
Bangkok to intervene even refused to do so. It is noteworthy that no one on behalf of
defendant ever contradicted or denied this evidence for the plaintiff. It could have been
easy for defendant to present its manager at Bangkok to testify at the trial of the case,
or yet to secure his disposition; but defendant did neither. 37
The Court of appeals further stated —
Neither is there evidence as to whether or not a prior reservation was made by the
white man. Hence, if the employees of the defendant at Bangkok sold a first-class ticket
to him when all the seats had already been taken, surely the plaintiff should not have
been picked out as the one to suffer the consequences and to be subjected to the
humiliation and indignity of being ejected from his seat in the presence of others.
Instead of explaining to the white man the improvidence committed by defendant's
employees, the manager adopted the more drastic step of ousting the plaintiff who was
then safely ensconsced in his rightful seat. We are strengthened in our belief that this
probably was what happened there, by the testimony of defendant's witness Rafael
Altonaga who, when asked to explain the meaning of the letters "O.K." appearing on the
tickets of plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida
Faustino, another witness for defendant, who was the chief of the Reservation Office of
defendant, testified as follows:
"Q How does the person in the ticket-issuing office know what reservation the
passenger has arranged with you?
A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June
19, 1959)
In this connection, we quote with approval what the trial Judge has said on this point:
Why did the, using the words of witness Ernesto G. Cuento, "white man" have
a "better right" to the seat occupied by Mr. Carrascoso? The record is silent.
 The defendant airline did not prove "any better", nay, any right on the part of
the "white man" to the "First class" seat that the plaintiff was occupying and
for which he paid and was issued a corresponding "first class" ticket.
If there was a justified reason for the action of the defendant's Manager in
Bangkok, the defendant could have easily proven it by having taken the
testimony of the said Manager by deposition, but defendant did not do so; the
presumption is that evidence willfully suppressed would be adverse if
produced [Sec. 69, par (e), Rules of Court]; and, under the circumstances, the
Court is constrained to find, as it does find, that the Manager of the defendant
airline in Bangkok not merely asked but threatened the plaintiff to throw him
out of the plane if he did not give up his "first class" seat because the said
Manager wanted to accommodate, using the words of the witness Ernesto G.
Cuento, the "white man".38
It is really correct to say that the Court of Appeals in the quoted portion first transcribed
did not use the term "bad faith". But can it be doubted that the recital of facts therein
points to bad faith? The manager not only prevented Carrascoso from enjoying his right
to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from
his seat, made him suffer the humiliation of having to go to the tourist class
compartment - just to give way to another passenger whose right thereto has not been
established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a
meaning different from what is understood in law. For, "bad faith" contemplates a "state
of mind affirmatively operating with furtive design or with some motive of self-interest
or will or for ulterior purpose." 39
And if the foregoing were not yet sufficient, there is the express finding of bad faith in
the judgment of the Court of First Instance, thus:
The evidence shows that the defendant violated its contract of transportation
with plaintiff in bad faith, with the aggravating circumstances that defendant's
Manager in Bangkok went to the extent of threatening the plaintiff in the
presence of many passengers to have him thrown out of the airplane to give
the "first class" seat that he was occupying to, again using the words of the
witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager)
wished to accommodate, and the defendant has not proven that this "white
man" had any "better right" to occupy the "first class" seat that the plaintiff
was occupying, duly paid for, and for which the corresponding "first class"
ticket was issued by the defendant to him.40
5. The responsibility of an employer for the tortious act of its employees need not be essayed. It
is well settled in law. 41 For the willful malevolent act of petitioner's manager, petitioner, his
employer, must answer. Article 21 of the Civil Code says:
ART. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the
provisions of Article 2219 (10), Civil Code, moral damages are recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from any other
contractual relation. 43 And this, because of the relation which an air-carrier sustains with the
public. Its business is mainly with the travelling public. It invites people to avail of the comforts
and advantages it offers. The contract of air carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to
be protected against personal misconduct, injurious language, indignities and abuses from such
employees. So it is, that any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier. 44
Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of
contract and a tort, giving a right of action for its agent in the presence of third persons to falsely
notify her that the check was worthless and demand payment under threat of ejection, though
the language used was not insulting and she was not ejected." 46 And this, because, although the
relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act
that breaks the contract may be also a tort". 47 And in another case, "Where a passenger on a
railroad train, when the conductor came to collect his fare tendered him the cash fare to a point
where the train was scheduled not to stop, and told him that as soon as the train reached such
point he would pay the cash fare from that point to destination, there was nothing in the conduct
of the passenger which justified the conductor in using insulting language to him, as by calling
him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the
mental suffering of said passenger.1awphîl.nèt
Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's
action as we have said, is placed upon his wrongful expulsion. This is a violation of public duty
by the petitioner air carrier — a case of quasi-delict. Damages are proper.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —
Q You mentioned about an attendant. Who is that attendant and purser?
A When we left already — that was already in the trip — I could not help it. So one of
the flight attendants approached me and requested from me my ticket and I said, What
for? and she said, "We will note that you transferred to the tourist class". I said, "Nothing
of that kind. That is tantamount to accepting my transfer." And I also said, "You are not
going to note anything there because I am protesting to this transfer".
Q Was she able to note it?
A No, because I did not give my ticket.
 Q About that purser?
A Well, the seats there are so close that you feel uncomfortable and you don't have
enough leg room, I stood up and I went to the pantry that was next to me and the purser
was there. He told me, "I have recorded the incident in my notebook." He read it and
translated it to me — because it was recorded in French — "First class passenger was
forced to go to the tourist class against his will, and that the captain refused to
intervene."
Mr. VALTE —
I move to strike out the last part of the testimony of the witness because the best
evidence would be the notes. Your Honor.
COURT —
9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a
similar judgment for attorneys' fees. The least that can be said is that the courts below felt that it
is but just and equitable that attorneys' fees be given. 55 We do not intend to break faith with the
tradition that discretion well exercised — as it was here — should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the trial court and the Court of
Appeals, thus: P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and
P3,000.00 as attorneys' fees. The task of fixing these amounts is primarily with the trial
court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense suggest
that we give our imprimatur thereto. Because, the facts and circumstances point to the
reasonableness thereof.57
On balance, we say that the judgment of the Court of Appeals does not suffer from reversible
error. We accordingly vote to affirm the same. Costs against petitioner. So ordered.

I will allow that as part of his testimony. 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his
notebook reading "First class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene" is predicated upon evidence [Carrascoso's testimony
above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but the
ouster incident. Testimony on the entry does not come within the proscription of the best
evidence rule. Such testimony is admissible. 49a

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of
the startling occurrence was still fresh and continued to be felt. The excitement had not as yet
died down. Statements then, in this environment, are admissible as part of the res gestae. 50 For,
they grow "out of the nervous excitement and mental and physical condition of the
declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous,
and related to the circumstances of the ouster incident. Its trustworthiness has been
guaranteed. 52 It thus escapes the operation of the hearsay rule. It forms part of the res gestae.

At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It
would have been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it
were really true that no such entry was made, the deposition of the purser could have cleared up
the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant
exemplary damages — in contracts and quasi- contracts. The only condition is that defendant
should have "acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." 53 The
manner of ejectment of respondent Carrascoso from his first class seat fits into this legal precept.
And this, in addition to moral damages.54
171 F.2d 800 (1948)
MEYERS
v.
UNITED STATES.
No. 9797.
United States Court of Appeals District of Columbia Circuit.
Argued June 14, 1948.
Decided November 8, 1948.
Writ of Certiorari Denied February 14, 1949.
*801 Mr. Robert T. Bushnell, of Boston, Mass., with whom Messrs. Russell Hardy and Smith W.
Brookhart, both of Washington, D. C., were on the brief, for appellant.
Mr. George Morris Fay, U. S. Atty., of Washington, D. C., with whom Mr. Edward Molenof, Sp. Asst.
to the Atty. Gen., and Messrs. John W. Fihelly, Sidney S. Sachs and Ross O'Donoghue, Asst. U. S.
Attys., all of Washington, D. C., were on the brief, for appellee.
*802 Before WILBUR K. MILLER, PRETTYMAN and PROCTOR, Circuit Judges.
WILBUR K. MILLER, Circuit Judge.
Bleriot H. Lamarre and the appellant, Bennett E. Meyers, were jointly indicted for violating the
District of Columbia statute[1] which denounces perjury and subornation thereof. Three counts
of the indictment charged Lamarre with as many separate perjuries in his testimony before a
sub-committee of a committee of the United States Senate constituted to investigate the national
defense program, and three more counts accused Meyers of suborning the perjuries of his
codefendant.
Lamarre pleaded guilty to all three charges when he was arraigned on December 19, 1947, a few
days after the return of the indictment. Meyers entered a plea of not guilty and was tried before
a jury in the District Court of the United States for the District of Columbia. At the conclusion of
the government's evidence, he moved for a judgment of acquittal, which the court denied. Meyers
did not take the stand or introduce any evidence. Having been found guilty under each of the
three counts against him, he appeals.
Meyers was an officer in the United States Army. In 1939, while stationed at Wright Field, near
Dayton, Ohio, he organized under the laws of Ohio a corporation called Aviation Electric
Corporation, and paid into its treasury the sum of $500 to cover its authorized capital consisting
of 250 shares of common stock having a par value of $2 each. At his direction, a certificate for
224 shares was issued to Miss June Ballaou, an employee at Wright Field, and the remaining
shares were divided between one David Johnson and one Robert L. Pine. The newly organized
company engaged in manufacturing parts and accessories for airplanes, and soon had on hand
orders from the Signal Corps of the United States Army aggregating about $20,000.
The appellant had become acquainted with Lamarre and his wife as early as 1936 or 1937 and
apparently was fond of them. Late in 1939, he went to see Lamarre in California, where the latter
was employed by an airplane company, and suggested that he come to Dayton to become
associated with Aviation Electric in an executive capacity. The invitation was accepted and in
January, 1940, Lamarre was made secretary-treasurer of the corporation and the Ballaou
certificate for 224 shares was transferred to him without valuable consideration. A few months
thereafter he became president of the company.
From its modest beginning in 1939 the operations of Aviation Electric Corporation expanded
substantially and rapidly. It obtained contracts to furnish parts to large corporations engaged in
producing aircraft for the United States Army. Meyers advanced considerable sums for working
capital and took therefor the company's promissory notes which were secured by the pledge and
delivery to him of certificates, endorsed in blank, evidencing all its capital stock.
The appellant was transferred to Washington in 1941 and the next year became Deputy Chief of
Procurement of Aircraft and Aircraft Parts for the Army Air Force. Meanwhile, Aviation Electric
was operating successfully and profitably so that by the end of 1942 all Meyers' loans had been
repaid. Large profits were earned as long as the war continued, but the termination of actual
hostilities so reduced the demand for its products that the corporation was dissolved in
September, 1946.
Desiring to ascertain whether there had been instances of waste, fraud, corruption,
mismanagement, excessive profits or inefficiency in the nation's war effort, entailing as it did the
hurried expenditure of billions of dollars for national defense, the United States Senate created
the investigating committee to which reference has been made. In the course of an inquiry into
government contracts with a large airplane supplier, the appellant testified before that
committee. It developed during the hearing that Aviation Electric Corporation had been a sub-
contractor on government work and that Lamarre had been its president from 1940 until its
dissolution in 1946. In order to ascertain what connection, if any, the appellant had had with
Aviation Electric, the subcommittee subpoenaed Lamarre, who testified on Saturday, October 4,
and Monday, October 6, in 1947. That testimony *803 brought about the indictment which was
the genesis of the case now before us.
Three of the indictment's counts charged that Lamarre: (1) knowingly and willfully testified
falsely that Meyers "was not financially interested in or connected with the Aviation Electric
Corporation of Dayton and Vandalia, Ohio," during the years 1940 to 1947, inclusive; (2)
knowingly and willfully testified falsely that a Cadillac automobile purchased in Washington by
Meyers, and paid for by Aviation Electric Corporation, was purchased for the corporation and for
its use; (3) knowingly and willfully testified falsely that the sum of $10,000, paid by means of
Aviation Electric's checks, for decorating and furnishing Meyers' Washington apartment "was a
gift from himself, Bleriot H. Lamarre."
Although the appellant was convicted on three counts, each of which charged him with suborning
one of Lamarre's perjuries, he received only one sentence.[2] That being true, the judgment must
be affirmed if appellant was properly convicted on any one of the three counts against him.[3] We
shall consider, nevertheless, appellant's assignments of error with respect to all the counts.
1. As to Meyers' financial interest in or connection with Aviation Electric Corporation.
On this subject, the first count of the indictment includes the following: "* * * In the course of his
[Lamarre's] testimony it became material whether Bennett E. Meyers was financially interested
in or connected with the Aviation Electric Corporation of Dayton and Vandalia, Ohio, during the
years 1940, 1941, 1942, 1943, 1944, 1945, 1946, or 1947; and being questioned in that regard,
Bleriot H. Lamarre on October 4 and October 6, 1947, and in the District of Columbia wilfully and
contrary to his said oath testified falsely that Bennett E. Meyers was not financially interested in
or connected with the Aviation Electric Corporation of Dayton and Vandalia, Ohio, during those
years or any of them, whereas in truth, as Bleriot H. Lamarre knew, Bennet E. Meyers was
financially interested in and connected with the said Aviation Electric Corporation during each
and all the years 1940, 1941, 1942, 1943, 1944, 1945, 1946 and 1947."
Appellant's counsel earnestly assert and ably argue that Lamarre did not testify before the
subcommittee that Meyers was not financially interested in or connected with Aviation Electric;
but that, quite to the contrary, Lamarre told the subcommittee Meyers actually owned the
business. If that contention be well founded, it is a complete defense to the charge that Meyers
suborned the perjury alleged in the first count. It is elementary that one cannot be convicted of
suborning a perjury which was not in fact committed; that is to say, there can be no subornation
of perjury if there was no perjury. It is equally true that one cannot be convicted of suborning
perjury if the alleged perjurious statement actually was not made by the alleged perjuror.
*804 No matter how unorthodox, unpatriotic, reprehensible or criminal the evidence may tend
to show Meyers' conduct to have been, his conviction under the first count cannot stand if
Lamarre did not in fact testify as the count charged that he did. So, at the threshold of our
consideration of the first count, we must decide whether Lamarre in fact told the subcommittee
Meyers was not financially interested in or connected with Aviation Electric. If it be found that
he did so testify, then it will be pertinent to see whether the statement was true or false; and, if
false, whether Meyers suborned it.
Whether Lamarre represented to the subcommittee that Meyers was not financially interested
in or connected with the company is to be determined by finding the meaning or significance
which is fairly attributable to all Lamarre's testimony before the subcommittee. A
stenographically reported record of that testimony was put in evidence and is before us.
Appellant's insistence that Lamarre did not say what the first count charged him with saying, but
said exactly the opposite, is based on the fact that Lamarre was asked this question, "So you
understood all of the time that for all practical purposes, he [Meyers] owned the business?"; and
that Lamarre answered by saying, "That is right," and then continued with other statements to
that effect.
This bit of testimony, taken from its context and read without reference to or consideration of
the remainder of Lamarre's evidence, supports appellant's contention that, regardless of the
truth or falsity of the statement which the first count attributed to Lamarre, he simply did not
say what he is alleged to have said, but definitely stated exactly the contrary. So, if Lamarre's
answer to the quoted question were all he said on the subject, we should have no difficulty in
accepting appellant's argument, and in holding that Lamarre did not commit the first perjury
charged against him and that, therefore, Meyers was wrongly convicted of suborning it.
We turn first to the subcommittee counsel's examination of Lamarre, in the course of which he
made the statement upon which appellant now relies as a defense to the first count, in order to
see whether the context[4] of the statement limits the absolute *805 meaning which it appears to
have when standing alone. The setting in which the statement appears shows that in making it
Lamarre was referring to the occasion in 1940 when a large part of the stock had just been
transferred to him and endorsed back to Meyers to serve as collateral. It is, however, perfectly
clear from the evidence as a whole that Lamarre did not intend to be understood as meaning that
from 1940 until 1947 Meyers was for all practical purposes the owner of the business. For
example, when Lamarre was asked, "It [the stock] belonged to Meyers all the time?", he
answered, "No, sir, it did not." He was then asked, "Well, then, when did it become yours, actually
yours?" and he replied, "When the notes were paid off." He added, "It had always been mine as a
matter of fact."
Even if this were not so, and if it be conceded arguendo that Lamarre unqualifiedly stated with
respect to the entire period involved that Meyers had no financial interest in or connection with
the corporation, it would remain true that he also later testified to the subcommittee that Meyers
had no interest at any time after Lamarre's association with the company began except as a
creditor, and that he ceased to have even that interest after 1942. [5] The criminal nature of
perjury is not removed, the Supreme Court has said, by the fact that the perjurer later in the
proceeding states the truth; that is to say, recantation following perjury does not destroy its
criminality. United States v. Norris, 1937, 300 U.S. 564, 573, 57 S. Ct. 535, 81 L. Ed. 808. We see
no reason why the principle should not apply with even greater force when perjury follows
truthful testimony and so is the last and unrecanted choice of its author. In the present case, even
if the true statement (that Meyers was for all intents and purposes the owner of the business) be
given the full implication and effect which appellant finds in it, and so be regarded as applying to
all the years involved, it was followed by falsehood when Lamarre emphatically and repeatedly
swore Meyers had no sort of interest in the company after 1942. His last choice was perjury.
From the quotations shown in the margin as note 3, it will be observed that, just before making
the statement which appellant says absolves him, Lamarre stated, "I would not say" it was
Meyers' stock. And shortly after having made the statement upon which appellant relies, Lamarre
insisted that the endorsed certificates were held for Meyers only so long as the company owed
him money, that he considered the stock as income to himself, that it did not belong to Meyers all
the time but actually became his [Lamarre's] when the notes were paid.[6] Although he had given
no consideration to Meyers or to any other person *806 for the shares transferred to him at
Meyers' instance, he told the senators, "It had always been mine as a matter of fact" and that he
felt under no obligation to pay Meyers for it.
A reading of all Lamarre's testimony on the subject shows convincingly and beyond any doubt
that he was trying to get the subcommittee to believe Meyers had no actual or beneficial stock
ownership in the company, and that he bore to it merely the relation of creditor, a relation which
ended in 1942. This is true despite the fact that he said he understood Meyers owned the
company for all practical purposes. That statement may not be isolated and thereby given a
meaning wholly different from the clear significance of the testimony considered as a whole.
Appellant himself states the law to be that a charge of perjury "may not be sustained by
the *807 device of lifting a statement of the accused out of its immediate context and thus giving
it a meaning wholly different than that which its context clearly shows." He cites Fotie v. United
States, 8 Cir., 137 F.2d 831, and other cases to the same effect. The principle is sound, but has no
application here. It is the appellant who seeks to sustain his defense "by the device of lifting a
statement of the accused out of its immediate context and thus giving it a meaning wholly
different than that which its context clearly shows." Since a charge of perjury may not be
sustained in that manner, it follows corollarially that a defense to a charge of perjury may not be
established in that fashion.
From the evidence as a whole we have no difficulty in concluding that Lamarre told, and intended
to tell, the subcommittee that Meyers held no stock in the company, either actually or beneficially,
after the shares were issued to Lamarre in 1940; that Meyers had no interest of any kind after
that except he was a creditor and held the capital stock as collateral; and that after 1942 Meyers
had no sort of interest in or connection with the company. Having so determined, it is next
necessary to ascertain whether that statement was false and known to be false to Lamarre when
he testified, so as to stamp it as perjury.
Not only did Lamarre plead guilty to the charge of perjury made against him because of his
representation to the subcommittee that Meyers was not interested in or connected with the
corporation; he also testified fully and freely at Meyers' trial that he had knowingly and willfully
falsified in that respect before the subcommittee, and that in fact Meyers was at all times the real
owner of the company.
Lamarre testified further at the trial that, during the years involved, his own salary as secretary
and treasurer, and later as president, was fixed at sums varying from $20,000 to $30,000 per
annum and that it was so shown on the books of the corporation. Company checks were regularly
drawn to Lamarre's order in payment of his ostensible salary but in fact he was allowed to keep
as his own only a modest compensation. By far the larger part of the salary credited to Lamarre
on the books of the corporation was remitted by him to Meyers, usually in the form of cashiers'
checks. A similar arrangement was followed with respect to the salary of T. E. Readnower,
Lamarre's brother-in-law, whose apparent salary was $18,600, of which some $15,000 went to
Meyers. By this device and other subterfuges, such as the purchase of an automobile and the
furnishing of an apartment, Meyers received more than $150,000 from the company during the
years involved, in addition to the repayment to him of the sums which he advanced from time to
time for working capital. The checks by which Aviation Electric paid the purported salaries, and
the cashiers' checks by which the money was transmitted to Meyers, were in evidence and in our
view constitute sufficient corroboration of Lamarre's testimony that he testified falsely before
the subcommittee.
Meyers' subornation of this perjury was proved by the evidence of Lamarre that on the day
before his first appearance before the subcommittee the appellant instructed him to swear
"Meyers had no financial interest or any other interest other than the money that he had loaned
to the corporation and which had been repaid to him by the middle of 1942." It thus appears that,
contrary to appellant's contention, the evidence showed Lamarre actually made the statements
and representations to the subcommittee which the first count charged; that his testimony was
false and was given knowingly and willfully; and that Meyers suborned the perjury.
2. As to the count which charged Lamarre with perjury concerning the purchase of the
Cadillac automobile.
As to this count[7] the indictment charged the following: "* * * In the course of his [Lamarre's]
testimony on these dates it became material whether a Cadillac automobile which he testified
Bennett E. Meyers had purchased with funds of the Aviation Electric Corporation of Dayton and
Vandalia, Ohio, on or about January 1, 1942, had been purchased for *808 the personal use of
Bennett E. Meyers or for the use of the said Corporation. The fact was, as Bleriot H. Lamarre then
knew, that that automobile had been purchased for the personal use of Bennett E. Meyers. Bleriot
H. Lamarre nevertheless wilfully and contrary to his said oath testified falsely before the
subcommittee on the dates and at the place aforesaid that that Cadillac automobile had been
purchased for the Aviation Electric Corporation and for the use of the Aviation Electric
Corporation." With respect to this charge the appellant makes in his brief the following
categorical comment: "The transcript disclosed that Lamarre had given no testimony whatsoever
that the car had, or had not, `been purchased for the personal use of Bennett E. Meyers or for the
use of the said Corporation.' There is not a word in this transcript of any testimony by Lamarre,
false or true, that the car referred to had been purchased for the personal use of appellant or for
the use of the Corporation." A factual issue is thus raised which is to be resolved by resorting to
the record.
Lamarre swore to the subcommittee that at the end of 1941 he asked General Meyers to buy an
automobile for him and that Meyers did buy in Washington the Cadillac sedan; that it remained
in Washington for several weeks because when he came for it the weather was bad and he was
forced to return to Dayton on a train. He also testified substantially as follows: he left the car with
Meyers until he later was able to transport it to Dayton, where it was used as the company
car[8] by him and Curnutt, Meyers' father-in-law, who also was an Aviation Electric employee.
Aviation Electric paid for the automobile and carried it on its books as an asset until 1944 or
1945, when Curnutt bought it from the company at its then book value of $1,400. The sale was
made because the company had no further use for the car. It is, therefore, plain that Lamarre told
the subcommittee substantially what the second count of the indictment charged.
At the trial Lamarre testified that his statements to the subcommittee were false and that in truth
Meyers telephoned him from Washington and instructed him to send a company check for
approximately $3,000 as he wanted to purchase a Cadillac; that the check was sent and the
automobile was purchased but that the company never had possession of it.
There was ample corroboration of Lamarre's testimony that the automobile was bought for and
used by Meyers. The manager of the garage at Hotel 2400, where Meyers' apartment was located,
testified that early in 1942 the appellant stored in the hotel garage a new 1942 blue Cadillac
which he kept there until he left on August 27, 1944. The car was kept as "live storage," meaning
that it was cleaned nightly and used almost daily by Meyers or his wife. The storage was charged
to Meyers and the garage manager never saw anyone drive the car other than Meyers and his
wife.
Calvin Mettee, who was a corporal in the army, testified he was assigned to the appellant as a
chauffeur in the spring of 1942. He told of the new blue 1942 Cadillac being in the hotel garage
and that it was his duty *809 to see that the car was clean, brushed out and ready to go at all
times. During the year 1942 it was never out of the garage for longer than a week. It bore District
of Columbia license tags during 1942, 1943 and 1944. When Meyers married again in 1943, the
witness was instructed to explain to Mrs. Meyers how to drive the blue Cadillac. Mrs. Meyers
personally used the car in 1943 and at times the witness would drive her on shopping tours or
to social functions. It was stored in the hotel garage thoughout the year 1943 and until the
summer of 1944 when Meyers was transferred to Wright Field. Mettee was transferred there
also. At Meyers' direction he flew in an army airplane from Dayton to Washington in order to
drive the blue Cadillac to Dayton where he delivered it to Meyers' quarters. At appellant's order,
he arranged for the transfer of the title of the automobile from Curnutt to Meyers or his wife. The
car was constantly in appellant's possession while at Wright Field. When Meyers retired from
active service in 1945, he directed Mettee to drive the 1942 Cadillac from Dayton to his residence
at Bayville, Long Island, which was done.
In the latter part of October, 1947, after Mettee had been released from the army, he went from
his home in Rochester, Pennsylvania, to Huntington, New York, to see Meyers, at the latter's
request. At Meyers' suggestion he registered at the hotel under an assumed name. Meyers told
him that he was being investigated and that Lamarre was trying to blackmail him. He asked
Mettee to testify, if he were questioned, that he had obtained from Lamarre authority to drive the
blue Cadillac on the occasions when he did drive it, and to say that during the winter of 1942 and
1943 Lamarre drove the car from Dayton to Washington but due to heavy weather he could not
return and was forced to leave the car in Washington, and that the witness did not know how the
car was taken to Dayton. Meyers told him that if his testimony concerning the automobile turned
out to be of any value he would give him $2,000.
Proof of subornation was furnished when, with respect to a conversation between Meyers and
Lamarre in a hotel lobby on October 3, 1947, Lamarre was asked, "Was there any discussion
about a Cadillac automobile?", to which he answered: "I was to say that the Cadillac automobile
was purchased for the company by Meyers on my instructions and that I had gone to Washington
a few weeks after the car was delivered and I had driven it back to Dayton, and that on several
occasions I had driven the car to Washington, but because of bad weather I had gone back on the
train and it remained here in Washington for some time and then later on when I came in again
I would pick the car up and drive it home." He was then asked, "Was that the truth?", to which he
replied, "No, it was not."
Our conclusion is that the second count was sustained. Lamarre testified to the subcommittee in
the manner charged; his testimony was admitted by him, and otherwise proved, to be false; and
evidence was introduced that Meyers suborned the perjury.
3. As to furnishing and decorating the apartment.
On this subject the pertinent portion of the indictment is as follows: "* * * In the course of his
[Lamarre's] testimony on these dates it became material whether the cost of redecorating the
apartment of Bennett E. Meyers at 2400 Sixteenth Street, N. W., Washington, D. C., in the year
1941, in the approximate amount of $10,000 had been paid for out of the funds of the Aviation
Electric Corporation of Dayton and Vandalia, Ohio. Knowing the facts to be that it had, Bleriot H.
Lamarre wilfully and contrary to his oath falsely testified before the subcommittee on the dates
and at the place aforesaid that the aforesaid redecoration and cost of redecoration of the said
apartment of Bennett E. Meyers was a gift from himself, Bleriot H. Lamarre."
During his appearance before the subcommittee on the morning of Saturday, October 4, 1947,
Lamarre said he had never made Meyers a present of a value of more than $100 and that all gifts
from him and his wife, such as those made at Christmas, amounted to no more than $400. After
lunching with Meyers and one of the latter's attorneys, he volunteered at the beginning *810 of
the afternoon session this statement: "There is one thing I would like to say before we proceed.
That is, you laid a great deal of stress this morning on what you called gifts to General Meyers. I
would like to amplify my statements on that, because at the time I did not consider it a gift, but it
was after General Meyers had come to Washington, he had an apartment decorated, and I paid
for the decoration of that apartment, and the furnishings."[9]
He said to the subcommittee that the cost of furnishing the apartment was paid by Aviation
Electric checks, which was true; but he sought to transform the transaction from a company
expenditure into a personal gift from him by belatedly charging it to his own salary account, after
originally charging it to expense. It was indeed true, therefore, as he told the senators, that the
checks, although drawn by the company, were charged against his personal salary.
At the trial of Meyers, Lamarre admitted the expenditure was by the company and not by him.
His confession was corroborated because the essential falsity of his testimony before the
subcommittee is shown in this: although bookkeeping entries were made to charge $10,000 to
his salary account, that account itself was false, and fraudulently set up.
His actual and comparatively meagre salary could not cover the decorating cost. *811 There was
no real difference in result to the company between the device of setting up a fictitious salary and
remitting most of it to Meyers in cashiers' checks, and the device of charging to a fictitious salary
account company checks drawn for Meyers' personal benefit. The latter was simply another
method of secretly channeling Aviation Electric's money to Meyers. The company's books and
cancelled checks furnish corroboration of Lamarre's testimony that he had sworn falsely with
respect to furnishing the apartment. Moreover, Miss Davis, the decorator, told the jury she dealt
with Meyers only, although Lamarre told the subcommittee he informed her of his desire to
present the appellant with the cost of the decoration. Miss Davis said Meyers told her "that he
would give me checks on a little company that he owned or had an interest in I don't remember
just the words, but they satisfied me enough so that I was willing to take the check." She added
that he gave her the name of the company as "the Aviation Electric Corporation of Dayton or
Vandalia."
Appellant asserts Lamarre's characterization of the payment as a gift was made under the
prodding of the subcommittee; a partially true but wholly immaterial assertion.[10] He originally
and voluntarily described the transaction so that in law and in the fair meaning of language it
amounted to a gift even though he disliked the word. Lamarre was reluctant to use the word "gift"
only because he thought of a gift "as some item you give a man," and his position before the
subcommittee was that the $10,000 was a payment of a moral obligation, a return due because
of Meyers' favors to him. Moreover, as has been pointed out, Lamarre entered a plea of guilty
with respect to this charge. As he had done with respect to the first two counts, Lamarre testified
that he committed this perjury at Meyers' suggestion and solicitation.
From what has been said, we find the third count to have been established. Lamarre gave before
the subcommittee the testimony charged as perjury; its falsity was proved by him and by
corroborative evidence; and there was proof that Meyers suborned it.
In addition to his reasons for reversal which have been discussed and disposed of in the foregoing
portion of this opinion, appellant argues his conviction should be set aside because the
subcommittee before which Lamarre gave his perjured testimony was not lawfully constituted
as such, and therefore was not "a competent tribunal" spoken of by the perjury statute. He
discerns a variance between the indictment's allegation that the Senate committee "on April 19,
1947, created a subcommittee" and the proof from the committee chairman and counsel that a
subcommittee was created in mid-April by the chairman, who announced to the full committee
the names of the senators whom he had appointed as members of it. Appellant says the
subcommitte was invalid because it was not created by a resolution of the full committee. The
argument lacks substance because the evidence shows it is the unvarying practice of the Senate
to follow the method of creating and appointing sub-committees which was employed in this
instance. After consideration of all appellant's points with respect to the subcommittee sitting on
October 4, we conclude that it was legally constituted.
The argument that a quorum was not present on October 4, 1947, because only one of the three
senators then present had been among the five originally appointed in April, obviously confuses
the creation of the subcommittee with the appointment of its personnel. On October 6, 1947,
however, only two senators were present at the hearing. Since they were a minority of the
subcommittee, they could not legally function except to adjourn. For that reason, the testimony
of Lamarre given on that day cannot be considered as perjury nor can appellant be convicted of
suborning it.
*812 But practically all Lamarre's testimony was given on October 4, when a quorum was
present. The proceedings of that day contain the perjurious statements described in all three
counts, and his examination on October 6 was largely repetitious.
A further ground for reversal is the court's alleged error in denying appellant's motion before
trial to dismiss the indictment. It is asserted that the section of the District of Columbia Code,
under which the indictment was laid, "has nothing whatever to do with any perjury or
subornation of perjury committed in connection with an inquiry by a committee of the House of
Representatives or Senate of the United States." In other words, appellant says only the federal
perjury statute, 18 U.S.C.A. §§ 231, 232 [1948 Criminal Code, 18 U.S.C.A. §§ 1621, 1622], was
applicable. To accept the argument would be to overrule our decisions in O'Brien v. United States,
1938, 69 App.D.C. 135, 99 F.2d 368, and Behrle v. United States, 1938, 69 App. D.C. 304, 100 F.2d
714, which we are not prepared to do.
Appellant's assignment of error concerning the court's conduct, his criticism of the court's charge
to the jury, and his complaint concerning government counsel's argument to the jury, do not
impress us as requiring discussion; but we deem it proper to refer, as briefly as possible, to the
proposition advanced in the first division of the dissenting opinion which is filed herewith.
At the opening of the dissent it is said, "The testimony given by Lamarre before the Senate
Committee was presented to the jury upon the trial in so unfair and prejudicial a fashion as to
constitute reversible error."
The reference is to the fact the William P. Rogers, chief counsel to the senatorial committee, who
had examined Lamarre before the subcommittee and consequently had heard all the testimony
given by him before that body, was permitted to testify as to what Lamarre had sworn to the
subcommittee. Later in the trial the government introduced in evidence a stenographic transcript
of Lamarre's testimony at the senatorial hearing.
In his brief here the appellant characterizes this as a "bizarre procedure" but does not assign as
error the reception of Rogers' testimony. The dissenting opinion, however, asserts it was
reversible error to allow Rogers to testify at all as to what Lamarre had said to the subcommittee,
on the theory that the transcript itself was the best evidence of Lamarre's testimony before the
subcommittee.
That theory is, in our view, based upon a misconception of the best evidence rule. As applied
generally in federal courts, the rule is limited to cases where the contents of a writing are to be
proved.[11] Here there was no attempt to prove the contents of a writing; the issue was what
Lamarre had said, not what the transcript contained. The transcript made from shorthand notes
of his testimony was, to be sure, evidence of what he had said, but it was not the only admissible
evidence concerning it. Rogers' testimony was equally competent, and was admissible whether
given before or after the transcript was received in evidence. Statements alleged to be perjurious
may be proved by any person who heard them, as well as by a reporter who recorded them in
shorthand.
A somewhat similar situation was presented in Herzig v. Swift & Co., 146 F.2d 444, decided by
the United States Court of Appeals for the Second Circuit in 1945. In that case the trial court had
excluded oral testimony concerning the earnings of a partnership on the ground that the books
of account were the best evidence. After pointing out the real nature and scope of the best
evidence rule,[12] the court said, 146 F. *813 2d at page 446: "* * * Here there was no attempt to
prove the contents of a writing; the issue was the earnings of a partnership, which for
convenience were recorded in books of account after the relevant facts occurred. Generally, this
differentiation has been adopted by the courts. On the precise question of admitting oral
testimony to prove matters that are contained in books of account, the courts have divided, some
holding the oral testimony admissible, others excluding it. The federal courts have generally
adopted the rationale limiting the `best evidence rule' to cases where the contents of the writing
are to be proved. We hold, therefore, that the district judge erred in excluding the oral testimony
as to the earnings of the partnership."
A contention identical with that made in the dissenting opinion here was rejected by the United
States Court of Appeals for the Second Circuit in 1912 in Brzezinski v. United States, 198 F. 65,
66. In that opinion the court said: "The first fact for the government to prove was the giving of
the testimony charged in the indictment. It called the stenographer who took the notes of the
proceedings before the grand jury. He testified that he took down the questions and answers that
were put to Brzezinski on that day; that he made a transcription in typewriting from the notes,
made this transcription himself, did not dictate it. * * * An assistant United States attorney who
was present in the grand jury room also testified to the substance of what Brzezinski said on that
occasion. It is contended that the court erred in admitting this testimony on the ground that it
was `not the best evidence.' This is a frivolous objection. Any one who has heard an oral
statement made and remembers it may testify to what was said. * * *"
The Court of Appeals for the Third Circuit held, in Re Ko-Ed Tavern, 1942, 129 F.2d 806, 810, the
best evidence rule does not have the application which the dissent here seeks to give it: "As to
Light's half ownership of the bankrupt corporation, William Kochansky, president of the
company, testified at the hearing before the referee that he and Light each owned fifty per cent
of the capital stock of the corporation but that no stock certificates had ever been issued to either
of them. The appellant objected to this testimony on the ground that the books of the bankrupt
corporation were the best evidence of the matter under inquiry and that the parol evidence
offered was inadmissible because the nonproduction of the books had not been satisfactorily
explained. It is quite apparent that the appellant misconceives the scope of the `best evidence'
rule. That rule is applicable when the purpose of proffered evidence is to establish the terms of a
writing. See 4 Wigmore on Evidence, 3rd Ed., § 1178. In this case there was no attempt to prove
by parol either book entries or the terms of written instruments. * * *"
To the same effect is Boitano v. United States, 1925, 7 F.2d 324, 325, in which the Ninth Circuit
said: "* * * it was equally competent to prove that testimony [of the plaintiff in error] by a witness
who was present at the trial and heard the testimony given, regardless of whether the testimony
was reported or whether it was not. 22 C.J. 344."
As we have pointed out, there was no issue as to the contents of the transcript, and the
government was not attempting to prove what it contained; the issue was what Lamarre actually
had said. Rogers was not asked what the transcript contained but what Lamarre's testimony had
been.
After remarking, "* * * there is a line of cases which holds that a stenographic transcript is not
the best evidence of what was said. There is also a legal cliche that the best evidence rule applies
only to documentary evidence", the dissenting opinion asserts that the rule is outmoded and that
"the courts ought to establish a new and correct rule." We regard the principle set forth in the
cases which we have cited as being, not a legal cliche, but an established and sound doctrine
which we are not prepared to renounce.
With the best evidence rule shown to be inapplicable, it is clearly seen that it was neither
"preposterously unfair", as the appellant asserts, nor unfair at all, to permit the transcript of
Lamarre's evidence to be introduced after Rogers had testified. *814 Since both methods of
proving the perjury were permissible, the prosecution could present its proof in any order it
chose.
There is no substance in the criticism, voiced by the appellant and in the dissent, of the fact that
Rogers testified early in the unduly protracted trial and the transcript was introduced near its
close. Appellant's counsel had a copy of the transcript from the second day of the trial, and had
full opportunity to study it and to cross-examine Rogers in the light of that study. The mistaken
notion that, had the transcript been first put in evidence, Rogers' testimony would have been
incompetent is, of course, based on the erroneous idea that the best evidence rule had
application.
It is quite clear that Meyers was in no way prejudiced by the order in which the evidence against
him was introduced, nor does it appear that his position before the jury would have been more
favorable had the transcript been offered on an earlier day of the trial.
The matters discussed in the second division of the dissenting opinion have been covered
adequately, we think, in the earlier portion of this opinion.
Since we perceive no prejudicial error in appellant's trial, the judgment entered pursuant to the
jury's verdict will not be disturbed.
Affirmed.
PRETTYMAN, Circuit judge (dissenting).
I am of strong opinion that the judgment in this case should be reversed. I think so for two
reasons.
I. The testimony given by Lamarre before the Senate Committee was presented to the jury upon
the trial in so unfair and prejudicial a fashion as to constitute reversible error.
Lamarre testified before the Committee in executive session, only Senators, Mr. William P.
Rogers, who was counsel to the Committee, the clerk, the reporter, and the witness being present.
An official stenographic record was made of the proceedings. The testimony continued for two
days, and the transcript is 315 typewritten pages. When Meyers was indicted, he moved for a
copy of the transcript. The United States Attorney opposed, on the ground that the executive
proceedings of a Senate Committee are confidential. The court denied Meyers' motion.
When the trial began, the principal witness called by the Government was Mr. Rogers. He was
asked by the United States Attorney, "Now, will you tell the Court and the jury in substance what
the testimony was that the defendant Lamarre gave before the Committee concerning the
Cadillac automobile?" Two counts of the indictment related to this automobile.
The court at once called counsel to the bench and said to the prosecutor: "Of course, technically,
you have the right to proceed the way you are doing. * * * I do not think that is hearsay under the
hearsay rule, but it seems to me * * * that, after all, when you have a prosecution based on perjury,
and you have a transcript of particular testimony on which the indictment is based, that you
ought to lay a foundation for it or ought to put the transcript in evidence, instead of proving what
the testimony was by someone who happens to be present, who has to depend on his memory as
to what was said."
Counsel for the defense, objecting, insisted that the procedure was "preposterously unfair". The
trial judge said that it seemed to him that the transcript ought to be made available to defense
counsel. That was then done, but the prosecutor insisted upon proceeding as he had planned with
the witness.
Mr. Rogers then testified: "I will try to give the substance of the testimony. * * * I am sure your
Honor appreciates that I do not remember exactly the substance of the testimony. The substance
of testimony was this, * * *." And then he gave "in substance" the testimony in respect to the
Cadillac car. The same process was followed in respect to the matters covered by the other counts
of the indictment, i. e., the redecoration of Meyers' apartment and Meyers' interest in the Aviation
Electric Corporation. Defense counsel reserved part of his cross-examination until he could read
the transcript.
*815 The notable characteristics of this testimony of Rogers are important. In each instance, the
"substance" was a short summation, about half a printed page in length. The witness did not
purport to be absolute in his reproduction but merely recited his unrefreshed recollection, and
his recollection on each of the three matters bears a striking resemblance to the succinct
summations of the indictment. It is obvious that what the witness gave as "substance" was an
essence of his own distillation and not an attempt to reproduce the whole of Lamarre's testimony.
There are differences between Rogers' recollection and the transcript which are vital in the case.
The foregoing was on Wednesday, February 25th, the second day of the trial. On Tuesday, March
9th, which was two weeks later and the eleventh day of the trial, the Government, as it was about
to close its case, offered the whole transcript of Lamarre's testimony in evidence as an exhibit,
and it was received without objection. The prosecutor and one of his assistants then read to the
jury such portions of the transcript as they deemed material. Defense counsel then read the
portions which they deemed material.
Upon the reserved cross-examination of Rogers, the following occurred:
"Q. Is it not a fact that nowhere in his testimony did the defendant Lamarre on October 4th or
6th, 1947, testify that Bennett E. Meyers was not financially interested in or connected with the
Aviation Electric Corporation? A. I don't think he ever used those words.
"Q. Is it not a fact that all of his testimony, taken as a whole, negatives such an interpretation?
"Mr. Fay: I think that is purely a question of law.
"The Court: Objection sustained, I do not think that is proper cross-examination."
Defense counsel inquired of Rogers if it were not a fact that "the substance of Lamarre's
testimony with reference to the Cadillac car" was so-and-so. The court interrupted and said that
counsel was asking the witness "to construe" Lamarre's testimony and that since the jury had
heard the testimony read it would have to determine what its meaning was. Counsel for the
defense agreed with that proposition and moved to strike all of Rogers' direct testimony as to
what Lamarre's testimony had been. The court denied the motion, saying that Rogers had not, on
direct, been "interpreting" Lamarre but had stated "the substance", which the court said "is an
entirely different thing". Rogers then answered as to his "recollection", commenting, "I stated at
the outset it is just my recollection." He repeated that comment in effect several times. Finally
counsel asked a specific question as to Lamarre's use of the word "gift" (which we note was the
key word in Count Five), and the prosecutor objected on the ground that "the record [i. e., the
transcript] speaks for itself". The court sustained the objection. A similar question was then
asked, objected to, and the objection sustained. Thereupon counsel dropped that line of
examination.
To my mind, the foregoing procedure was, as defense counsel characterized it, "preposterously
unfair". It lacked the minimum elements of fair play essential to our concept of a fair trial. I reach
my conclusion upon both practical and theoretical considerations. The problem has both aspects.
The practical elements are these: The transcript showed exactly what Lamarre told the
Committee, word for word. But the words and expressions charged to him by the indictment do
not appear in the transcript. Whether he testified as alleged, whether he said what is alleged to
be the truth, or whether he said what is alleged to be false, were matters of inference, or
conclusion, or summation, or "substance", to be gathered from his answers to many questions.
Mr. Rogers was the counsel who interrogated Lamarre before the Committee. The Committee
was the actual complainant in the perjury charge. Rogers was its representative.
Thus, the sum of the practical aspect of the matter is that the prosecutor put to the jury at the
opening of his case, out of the mouth of the complainant, under oath and on the stand, the
complainant's interpretation of the alleged perjured testimony, translating it into approximately
what the indictment attributed to the alleged perjurer. *816 I need not elaborate the tremendous
advantage thus gained by the Government, an advantage later magnified by what occurred on
attempted cross-examination.
The difference between the presentation of elemental facts and the piecing of them together so
as to reach a conclusion is basic.[1] One is evidence and the other argument. The principle runs
through much of the law of evidence.
I doubt that anyone would say that the prosecutor could first have put into evidence the
transcript of Lamarre's testimony and thereafter have produced Rogers to give to the jury from
the witness box his own summation of it. He would have been met with a ruling that "the
transcript speaks for itself". Indeed, exactly that developed. The prosecutor first produced the
oral summation, and it was admitted. Then he produced the transcript. Then, when defense
counsel attempted to cross-examine as to "the substance", he was blocked because of the
presence of the transcript. Can a prosecutor do by so simple and obvious a maneuver that which
the law otherwise forbids as unfair? Can he thus transform into sworn evidence from the box
that which is otherwise only argument from the rail? I do not think so. In the presence of the
unimpeached transcript, even though it was temporarily on counsel table and not yet in the
clerk's hands, summation and interpretation was argument and not evidence.
Nor was the prejudice cured by the availability of the transcript to defense counsel for cross-
examination. If that were so in this case, the same doctrine would admit in evidence any opinion,
or description, or summation of elemental facts otherwise provable in precise accuracy. The
impression given by a succinct summation by a live witness on the stand cannot be corrected or
offset by the later reading of a long, cold record. It is my view that for this exceedingly practical
reason the reception of Rogers' summation in evidence was not permissible.
From the theoretical viewpoint, I realize that there is a line of authority that (absent or
incompetent the original witness) a bystander who hears testimony or other conversation may
testify as to what was said, even though there be a stenographic report.[2] And there is a line of
cases which holds that a stenographic transcript is not the best evidence of what was
said.[3] There is also a legal cliche that the best evidence rule applies only to documentary
evidence.[4] The trial judge in this case was confronted with that authority, and a trial court is
probably not the place to inaugurate a new line of authority. But I do not know why an appellate
court should perpetuate a rule clearly outmoded by scientific development. I know that courts
are reluctant to do so.[5] I recognize the view that such matters should be left to Congress. But
rules of evidence were originally judge-made and are an essential part of the judicial function. I
know of no reason why the judicial branch of Government should abdicate to the legislative
branch so important a part of its responsibility.
I am of opinion, and quite ready to hold, that the rules of evidence reflected by the cases to which
I have just referred are outmoded and at variance with known fact, and that the courts ought to
establish a new and correct rule. The rationale of the so-called "best evidence rule" requires that
a party having available evidence which is relatively certain may not submit evidence which is
far less certain. The law is concerned with the true fact, and with that alone; its procedures are
directed to that *817 objective, and to that alone. It should permit no procedure the sole use of
which is to obscure and confuse that which is otherwise plain and certain.
We need not venture into full discussion of all the principles involved.[6] As between two
observers of an event, the law will not accept the evidence of one and exclude that of the other,
because the law cannot say which is more accurate. But as between a document itself and a
description of it, the law accepts the former and excludes the latter, because the former is certain
and the latter is subject to many frailties. So as between the recollection of the parties to a
contract evidenced by a writing and the writing itself, the law rejects the former and accepts the
latter. To be sure, the writing may be attacked for forgery, alteration or some such circumstance.
But absent such impeachment, the writing is immutable evidence from the date of the event,
whereas human recollection is subject to many infirmities and human recitation is subject to the
vices of prejudice and interest. Presented with that choice, the law accepts the certain and rejects
the uncertain. The repeated statement in cases and elsewhere that the best evidence rule applies
only to documents is a description of practice and not a pronouncement of principle. The
principle is that as between human recollections the law makes no conclusive choice; it makes a
conclusive choice only as between evidence which is certain and that which is uncertain.
It may be remarked at this point that the transcript in the case at bar is a document, not
challenged for inaccuracy or alteration. It possesses every characteristic which the most literal
devotee of established rules of evidence could ascribe to written evidence of a contract as
justification for preference of such writing over the recollection of the parties.
In my view, the court iterates an error when it says that the best evidence rule is limited to cases
where the contents of a writing are to be proved. The purpose of offering in evidence a "written
contract" is not to prove the contents of the writing. The writing is not the contract; it is merely
evidence of the contract. The contract itself is the agreement between the parties. Statutes such
as the statute of frauds do not provide that a contract be in writing; they provide that the contract
be evidenced by a writing, or that a written memorandum of it be made. The writing is offered as
evidence of an agreement, not for the purpose of proving its own contents. A deed to real estate
is different, being actually the instrument of conveyance, although there is authority that it too is
merely evidence of the agreement between the parties.
The doctrine that stenographic notes are not the best evidence of testimony was established
when stenography was not an accurate science. The basis for the decisions is succinctly stated in
the 1892 case quoted as leading by Professor Wigmore: "Stenographers are no more infallible
than any other human beings, and while as a rule they may be accurate, intelligent, and honest,
they are not always so; and therefore it will not do to lay down as a rule that the stenographer's
notes when translated by him are the best evidence of what a witness has said, in such a sense as
to exclude the testimony of an intelligent bystander who has heard and paid particular attention
to the testimony of the witness."[7]
But we have before us no such situation. Stenographic reporting has become highly developed,
and official stenographic reports are relied upon in many of the most important affairs of life.
Even as early as 1909, a court referred to "Experience having demonstrated the impartiality and
almost absolute accuracy of the notes of court stenographers" as the reason for legislation
making admissible as evidence a court stenographer's report.[8] In the present instance, at least,
no one has disputed the correctness of the transcript.
From the theoretical point of view, the case poses this question: Given both (1) an accurate
stenographic transcription of a *818 witness' testimony during a two-day hearing and (2) the
recollection of one of the complainants as to the substance of that testimony, is the latter
admissible as evidence in a trial of the witness for perjury? I think not. To say that it is, is to apply
a meaningless formula and ignore crystal-clear actualities. The transcript is, as a matter of simple,
indisputable fact, the best evidence. The principle and not the rote of the law ought to be applied.
I do not suggest that a stenographer's report is unimpeachable; that question is not here.
I find some support for my view in the authorities. As early as 1878 the Supreme Court, in ruling
upon the problem, seemed to qualify the traditional view. It said that "Where a stenographer has
not been employed, it can rarely happen that anyone can testify to more than the substance of
what was testified * * *." (Italics supplied.)[9] And Volume 2, Section 693, of Wharton's Criminal
Evidence, after discussing the cases, has this to say: "However, since it is a primary rule of
evidence that the best evidence must be produced, it would seem that since practically all
testimony is now taken by stenographers, a transcript of the stenographer's notes would be the
best evidence, and that oral evidence would not be admissible when such transcript could be
obtained." And there is authority to the effect that even where a witness is permitted to give the
substance of prior testimony of another, he must reproduce as accurately as he can the whole of
that testimony and cannot give merely his own summation.[10]
II. The proof did not establish that Lamarre told the Senate Committee what the indictment, in
the first count, says he did, and it established that he told the Committee what the third and fifth
counts say is the truth. What Lamarre told the Committee was, of course, the first factual question
in the prosecution, and thus in the defense, of Meyers.
The indictment charged that Lamarre made three specific false statements to the Senate
Committee.
I take it as elementary that an indictment must allege the commission of an act and not mere
rascality; that the offensive act must be alleged with precision, clarity and certainty; that upon
the trial the Government must prove the commission of the act alleged, and that no other
misdeed, however proved, will support conviction; and that an accused need defend against no
proof except that of the act alleged. The issue now before us cannot be resolved correctly, or
indeed even understood, unless we first note with attentive care exactly what this indictment
says Lamarre told the Senate Committee.
The first count of the indictment charged that Lamarre testified falsely that "Meyers was not
financially interested in or connected with the Aviation Electric Corporation of Dayton and
Vandalia, Ohio, during those years [i. e., 1940, 1941, 1942, 1943, 1944, 1945, 1946 or 1947] or
any of them".
That is a very specific, precise charge. Also it is quite clear and easily understood. It relates to
financial interest or connection of any sort on the part of Meyers in or with the corporation. It
relates to any one of the years 1940-47. Conviction required the Government to prove the
allegation as made. Conversely, Meyers was called upon to defend against the allegation made,
and none other.
First, we note that Lamarre never made the direct assertion in the language the indictment
recites. No one claims that he did. As we have already noted, Mr. Rogers testified, "I don't think
he ever used those words." And when asked, in reference to finances, "So that Lamarre did not
say, in summary, as you understood it, that Meyers had no connection with the company?" Mr.
Rogers replied, "I never said he said that."
Second, we note that Lamarre repeatedly testified to the precise contrary of what the indictment
charged he said. Financial interest in or connection with a corporation is of two principal sorts,
owner and creditor. Lamarre testified that Meyers had both. He told the Committee that Meyers
put up all the money for the stock upon the incorporation. He identified the original
book *819 entry which showed Meyers as the sole original stockholder. He said that the named
incorporators were "dummies". He said that when the stock was transferred on the records to
him (Lamarre), he endorsed it in blank and left it at the company office where Meyers had access
to it. He also testified that Meyers put up any money which the corporation needed and that
Meyers was the sole creditor of the corporation. He even testified flatly, as follows:
Q. "That [the stock transfer to Lamarre] was just a bookkeeping transaction, and you held the
stock and then you endorsed them over to Meyers and he took the certificates, is that correct?
"Mr. Lamarre: Yes.
"[Q.] So you understood all of the time that for all practical purposes he owned the business, did
you not?
"Mr. Lamarre: That is right.
"[Q.] He put all of the money in and he owned all of the stock?
"Mr. Lamarre: That is right."
And again the record shows:
Q. "In other words, without any payment on your part, and he [Meyers] made the arrangement
that you were to endorse them in blank and he would take possession of them, is that correct?
"Mr. Lamarre: Yes."
And again Lamarre testified: "Of course, as I said, the company actually had no money; it was
borrowed from General Meyers."
He testified that at the end of 1941 the corporation owed Meyers $30,000, and he identified a list
which showed that Meyers advanced $58,310 to the corporation, of which amount $20,000 was
advanced in 1942.
The very first questions by defense counsel upon the cross-examination of the witness Rogers at
the trial developed the nub of the matter:
"Q. Mr. Rogers, did I understand you to say that Lamarre testified that he or General Meyers, for
all practical purposes, owned the stock, owned the company: Aviation Electric? A. Well, he said
both ways. He said he was the owner of the stock
"Q. Yes? A. but he said, when we pressed him with questions, in view of the fact that Meyers had
put up all the money and had given the stock in the company, for all practical purposes Meyers
was the owner.
"Q. So that actually, as the testimony was left, he didn't deny that Meyers was, in that sense at
least, interested in the company? A. No.
"Q. And in that sense at least financially interested in the company? A. That is right.
"Q. And he did not deny or state falsely in that sense that Meyers was connected with the
company? A. No."
It is impractical to quote in this opinion the whole of the testimony upon the point. But to my
mind the record of what Lamarre told the Senate Committee conclusively shows that he made
perfectly clear to the Committee, by repeated and unequivocal statements, that Meyers was the
originator and first sole stockholder of the corporation; that when the stock was transferred on
the record to him (Lamarre), he was merely a record holder, having paid nothing for the stock
and having endorsed the certificate in blank and left it physically available to Meyers; that Meyers
was the sole financial backer of the company, and that during the years 1940-42 Meyers was a
creditor of the corporation in large amounts, his loans evidenced by notes and secured by pledge
of all the stock. Throughout his testimony there was no intimation that the corporation had any
financial support of any sort except that of Meyers. Lamarre made many statements and
representations which the record may indicate were false and which he later repudiated. But he
did not, as best I can read the record, even suggest that Meyers had no financial interest in or
connection with the corporation in any of the years 1940-47. And that is what the indictment
says he told the Committee, and that is what the Government had to prove in order to sustain
conviction.
I do not agree with the court that appellant's contention in this connection is based upon one
question and answer. As I understand it, the contention is based upon the *820 whole of
Lamarre's testimony before the Committee, upon many questions and answers. Certainly my
conclusion is.
Neither do I agree with the court's view that if Meyers' interest in the corporation during any of
the years named be established, the conviction must be sustained. Lamarre is alleged by the
indictment to have told the Committee that Meyers had no interest in the corporation during the
years 1940, 1941, 1942, 1943, 1944, 1945, 1946, 1947, or any of them. The Government had to
prove that Lamarre made that statement. If Lamarre told the Committee that Meyers had an
interest during three of the eight years named, he did not say what the indictment says he said.
Upon such proof, conviction under the indictment as drawn could not stand. We cannot rewrite
the indictment so as to allege that Lamarre said something else. It is perfectly true that if Lamarre
made the statement ascribed to him by the indictment, and if it were proved that Meyers had an
interest in any one of those years, Lamarre's perjury would be established. Therein lies the
confusion. It seems to me that the court is thinking about the proof necessary to establish the
falsity of the statement recited in the indictment, whereas the question under consideration at
this point is the proof necessary to establish that Lamarre made the alleged statement. This
particular question is not "Was the alleged statement false?" The question is "Did Lamarre make
the alleged statement?" It seems plain to me that if, as the court finds, Lamarre asserted and never
denied Meyers' interest in some of the years 1940-47, he did not state that Meyers had no interest
in any of those years. The Government has simply failed to prove one of the essentials of its case
under the indictment as drawn.
In the third place, in respect to this count, everybody agrees that Lamarre made it clear to the
Committee that Meyers was a creditor of the corporation in large amounts during the years 1940,
1941 and 1942; that, in fact, he supplied all the money the corporation needed when it was in
need. Upon the trial below, the insistence of the witness Rogers was that Lamarre told the
Committee that Meyers was not financially interested "except as a creditor". The same exception
runs through every claim in the Government's brief before us. The opinion of the court recites
that "Meyers advanced considerable sums for working capital and took therefor the company's
promissory notes which were secured by the pledge and delivery to him of the certificates
evidencing all its capital stock" and that "by the end of 1942 all Meyers' loans had been repaid."
The court finds and recites that Lamarre insisted that the stock "did not belong to Meyers all the
time but actually became his [Lamarre's] when the notes were paid." The notes were paid at the
end of 1942. So the court's view of Lamarre's testimony is that Meyers owned the stock in 1940,
1941 and 1942. The court says that Lamarre tried to persuade the Committee that Meyers bore
to the corporation "merely the relation of creditor"; and the court concludes from the evidence
as a whole that Meyers had no interest "except that he was a creditor and held the capital stock
as collateral".
The unspoken major premise to the Government's contention and the court's position is that a
creditor upon a promissory note of a corporation and pledgee of all its capital stock has no
financial interest in or connection with the corporation. I cannot agree with that proposition. Of
course, the term "interest in" has many meanings, some of them narrow and technical. But we
are not construing a statute, and, moreover, the whole expression before us is "interested in or
connected with". We are examining an allegation in an indictment which purports to recite what
a witness said on the stand in a congressional hearing. The indictment recites that his testimony
was that a certain person had no financial interest in or connection with a corporation. The
witness actually said that the person was a substantial and secured creditor of the corporation.
The witness may have been guilty of perjury, but he clearly was not guilty of the perjury charged
by the indictment.
The second charge against Meyers (Count Three of the indictment) related to a Cadillac
automobile. The charge was premised upon allegations in the indictment that "The fact was, as
Bleriot H. Lamarre then knew, that that automobile had been *821 purchased for the personal
use of Bennett E. Meyers. Bleriot H. Lamarre nevertheless wilfully and contrary to his said oath
testified falsely * * * that that Cadillac automobile had been purchased for the Aviation Electric
Corporation and for the use of the Aviation Electric Corporation."
Thus, the indictment recites, first, what the truth was and, second, what Lamarre told the
Committee. Again we must note with care exactly what the indictment charged. The critical
question posed by its allegations was: For whose use was the car purchased? According to the
indictment, it was perjury to say that the purchase was "for the use" of the corporation because
in truth it was "for the personal use" of Meyers.
The testimony of Lamarre relating to the automobile is comparatively short. It came near the end
of the second day of his testimony. He made no direct statement to the Committee as to whose
use the car was purchased for. His meaning in that respect is a matter of inference. What he said
was that the company had one car, a Cadillac, purchased from the Capitol Cadillac Company in
Washington, where Meyers lived (the corporation was in Dayton and Vandalia, Ohio); that
Meyers picked out the car, bought it and took delivery on it; that Meyers had access to it; that
Meyers had the keys to it; that the car remained in Washington; that Meyers kept it in his garage;
that the car was bought and titled in the company name; that he (Lamarre) was the only officer
in the company who had access to the car; that Meyers made arrangements to get the insurance;
that the car was insured in Washington; that the car cost $3,000 and was sold to Meyers' father-
in-law for $1,400; that it was sold because "We had no further use for it"; that they "had not had
too much use for it." None of these elemental facts has been disputed; as to them Lamarre
testified truthfully before the Committee.
The contention of the Government and the holding of the court is that this factual testimony is so
positive to the effect that the car was purchased "for the use of the Aviation Electric Corporation"
as to make it perjury, since the fact was that the purchase was "for the personal use" of Meyers.
I have some difficulty in drawing a clear line between purchases of cars for the use of a
corporation and purchases of cars by a corporation for the personal use of an officer, or sole
stockholder, or sole creditor. Frequently, it seems to me, the use of the officer, stockholder or
creditor is, in many senses, a use of the corporation. At any rate, it is frequently so considered in
business circles. Be that as it may, I cannot find in Lamarre's testimony a distinction between
company use and Meyers' personal use so clear and sharp as to constitute one a perjury when
the other is the fact. Lamarre certainly told the Committee that Meyers selected the car, arranged
for its purchase, bought it in Washington, kept it in his garage in Washington (the company being
located in Ohio), had the keys, and arranged for the insurance. To my mind, it is a logical and
fairly obvious conclusion from that testimony that the car was purchased for Meyers' use. It
seems to me that what the indictment recites as the truth is as fair an inference as any other from
Lamarre's actual testimony.
The Government and the court put much stress upon Lamarre's reference to the car as the
"Company car" and to his having driven it once from Ohio to Washington. But those scraps of
testimony are not, to my mind, an affirmation that the car was purchased for the use of the
company and not of Meyers.
I can find in Lamarre's testimony no clear inference that the car was purchased for the use of the
corporation in critical contradistinction to a purchase for the use of Meyers. Unless his testimony
was clear in that difference, conviction upon this indictment, as drawn, cannot be sustained. One
is perjury, the other truth, the indictment says. Unless he said one and not the other, prosecution
for this perjury fails.
The problem posed by this phase of the case is not that presented when a witness swears both
truthfully and falsely in the same testimony. That witness may be guilty of perjury in that part of
his testimony which is false, even though on other matters he testifies truthfully, and even though
he recants that which is false. In the case at bar, Lamarre testified to a number of simple facts
about the car, all of *822 which facts are admittedly true. The question is: Did he thereby convey
a false impression? If what he actually said fits what the indictment says was the truth of the
transaction, he is not guilty of perjury. In other words, in my view, if either of two impressions,
one true and the other false, can be gathered from a true recitation of elemental facts, conviction
for perjury fails.
The third count of the indictment charged that Lamarre, knowing that "the cost of redecorating
the apartment of Bennett E. Meyers * * * had been paid for out of the funds of the Aviation Electric
Corporation", testified falsely before the Senate Committee that the cost of the redecoration "was
a gift from himself, Bleriot H. Lamarre."
Again we must note with care what the indictment says. It makes the difference between "paid
for out of the funds of" the corporation and "a gift from himself" the difference between truth and
perjury. I have some doubt as to the validity of the count because of its vagueness; the payment
might be correctly described by both the expressions used. But my dissent does not arise from
that view.
Lamarre clearly, emphatically and in complete detail testified before the Committee that the cost
of redecorating Meyers' apartment was paid for out of the funds of the corporation. No one
disputes that literal fact. He said that the bills were paid by corporation checks, drawn on
corporation bank accounts, and first charged as sales expenses on the corporate books. He
identified the corporate checks. In all these respects he testified to what was the literal, actual
truth, and no one has since alleged otherwise. So far there is, and can be, no dispute but that he
testified to what the indictment says was the truth.
The difficulty arises because it is alleged that Lamarre falsely characterized the transaction as a
gift from himself to Meyers.
Lamarre told the Committee that the cost of redecorating Meyers' apartment ($10,000), having
first been charged on the corporate books as a business expense, was later removed from that
account and entered as a charge against his own salary account. His statements in these respects
were true; that was exactly what was done. The real issue of truth or falsity revolves about the
salary account itself. The Government says that the account was spurious, that Meyers was the
owner of the corporation, that Lamarre never had any such salary, and that the account was
merely a device for siphoning profits to Meyers. But the indictment does not raise that issue. We
cannot rewrite the indictment to charge that whereas the truth was that Meyers owned the
corporation and all its profits, including what was charged as Lamarre's salary, Lamarre falsely
represented that the salary credited to him was his own and that charges against it were gifts by
him.
Much is made of the word "gift". The facts as shown by the record are quite simple. When Lamarre
appeared before the Committee, he was interrogated at length throughout the morning
concerning his and the corporation's relationship with Meyers, during the course of which much
discussion was had of "gifts" from Lamarre to Meyers and from Meyers to Lamarre. The
decorating of the apartment was not mentioned. After the luncheon recess, Lamarre said: "There
is one thing I would like to say before we proceed. That is, you laid a great deal of stress this
morning on what you called gifts to General Meyers. I would like to amplify my statements on
that, because at the time I did not consider it a gift, but it was after General Meyers had come to
Washington, he had an apartment decorated, and I paid for the decoration of that apartment, and
the furnishings." Throughout that afternoon and the next morning, Lamarre was questioned at
great length and in great detail concerning this transaction. He identified the checks and
explained at great length the book entries, and repeatedly reasserted his claim that he caused
this payment because of what Meyers had done for him. Until almost the close of this
interrogation, the expression "gift" was not used. Then the following occurred:
"Mr. Rogers: What do you consider this $10,000 now, and I am not talking about Saturday
morning or Saturday afternoon; I am speaking now about now; what do you consider this
$10,000 was?
*823 "Mr. Lamarre: As I said, it was pretty much, I considered it a moral obligation on my part to
do something for General Meyers because of the things he had done for me.
"Mr. Rogers: Look, you are a college graduate and president of the corporation. You understand
what I mean. Was this $10,000 a repayment for a loan to General Meyers?
"Mr. Lamarre: No, it was not.
"Mr. Rogers: Was it part of any business deal at all?
"Mr. Lamarre: No.
"Mr. Rogers: And it had no consideration.
"Mr. Lamarre: No.
"Mr. Rogers: No legal consideration, so it must have been a gift, is that right?
"Mr. Lamarre: It could have been considered a gift.
"Mr. Rogers: I do not know what it could be; what was it?
but by the whole purport of his testimony. That he perjured himself in other respects is irrelevant
in this prosecution.
I dissent from the decision of the court, because it seems to me to be a departure from the basic
principle that conviction can be had only upon proof of the acts alleged in the indictment.

"Mr. Lamarre: I told you how I felt about it.

"Senator Cain: Let me ask one question. What could it possibly be considered if it was not an
outright gift for you said you wanted to do something for General Meyers.

"Mr. Lamarre: That is right. In a legal sense, it undoubtedly would be a gift.

"Senator Cain: In what other sense would it be anything other than a gift or a present or a gratuity
to a friend?

"Mr. Lamarre: In my own personal feelings about it, it was that it was, I was sort of obliged to do
that for him, or I wanted to do it for him because of the things that he had done for me.

"Senator Cain: But the transaction in itself has absolutely nothing to do with your corporation
business?

"Mr. Lamarre: That is correct.

"Senator Cain: It happens to have been paid from the corporation?

"Mr. Lamarre: That is correct.

"Senator Cain: But that was never your thought or intention; it was your personal obligation by
personal wish to a personal friend?

"Mr. Lamarre: That is correct."

Upon this record Lamarre's use of the expression "gift" plays little part in the question of perjury.
Lamarre did not urge that expression upon the Committee. He testified to the constituent factual
elements of the transaction. "Gift" was merely an inference, or characterization, which his
interlocutors attempted, with limited success, to put into his mouth.

It is my view that upon examination of the official stenographic transcript of what Lamarre said
to the Senate Committee, the trial court should have directed a verdict of acquittal upon this
indictment. The basic issue presented by the defense was whether Lamarre said what the
indictment alleged that he said. The issue was not what Lamarre said generally or in other
respects. In each of the three instances, the stenographic transcript showed that he told the
Committee what the indictment alleged to be the true fact; not only by a separate chance phrase
G.R. No. L-14257 July 31, 1959
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. BIENVENIDO A. TAN as Judge of the Court of First Instance of Manila. Br. XIII,
PACITA MADRIGAL-GONZALES, ANGELITA CENTENO, JULIA CARPIO, CALIXTO HERMOSA,
and CRISPULA R. PAGARAN alias PULA, respondents.
LABRADOR, J.:
In Criminal Case No. 36885 of the Court of First Instance of Manila, respondents Pacita Madrigal-
Gonzales and others charged with the crime of falsification of the public documents, in their
capacities as public officials and employees, by having made it appear that certain relief supplies
and/or merchandise were purchased by Pacita Madrigal-Gonzales for distribution to calamity
indigents or sufferers, in such quantities and at such prices and from such business
establishments or persons as are made to appear in the said public documents, when in fact and
in truth, no such distributions of such relief and supplies as valued and supposedly purchased by
said Pacita Madrigal Gonzales in the public and official documents had ever been made.
In order to prove the charge of falsification, the prosecution presented to a witness a booklet of
receipts, which was marked Exh. "D", containing value invoices numbered 101301 to 101400 of
the Metro Drug Corporation, Magallanes corner Jakosalem, Cebu City. The booklet contained the
triplicate copies, and according to said witness the original invoices were sent to Manila office of
the company, the duplicates to the customers, so that the triplicate copies remained in the
booklet. Witness further explained that in preparing receipts for sales, two carbons were used
between the three sheets, the original, the duplicate and triplicate so that the duplicates and the
triplicates were filed out by the use of the carbons in the course of the preparation and signing
of the originals. The witness giving the testimony was the salesman who issued a triplicates
marked as Exh. "D-1".
As the witness was explaining the figures or words appearing on the triplicates, Hon. Bienvenido
M. Tan, then presiding in the court below, interrupted the proceeding holding that the triplicates
are not admissible unless it is first proven that the originals were lost and can not be produced.
Said the court:
Triplicates are evidence when it is proven first that the original is lost cannot be
produced. But as the witness has alleged that the original is in the Manila Office, why
not produce the original?
Another witness, accountant of the Metro Drug Corporation in Manila, was also called by the
prosecution to testify. He declared that sales in the provinces were reported to the Manila office
of the Metro Drug Corporation, and that the originals of the sales invoices are transmitted to the
main office in support of cash journal sheets, but that the original practice of keeping the original
white copies no longer prevails as the originals are given to the customers, while only the
duplicate or pink copies are submitted to the central office in Manila. Testifying on certain cash
journal sheets, Exhs. "A", "A-1" to "A-10" he further declared that he received these from the
Metro Drug Corporation, Cebu branch, and that the said cash journal sheets contained the sales
made in the Cebu branch.
After the cross-examination of this last witness, the prosecution again went back to the
identification of the triplicate invoice, Exh. "D-1", already above referred to. It was at this stage
that the judge below told the prosecution that the law applicable is Section 46, Rule 123 of the
Rules of Court, which requires the production of the originals. In response to the above ruling,
the special prosecutor claimed that the evidence of the prosecution would not be able to secure
the production of the originals on account of their loss.
In view of the above circumstances, the prosecution announced its intention to file a petition for
certiorari against the ruling of the court below to which the court below to which the court below
agreed. Hence this petition.
It is alleged that the invoice sought to be introduced, which were produced by the use of carbon
sheets, and which thereby produced a facsimile of the originals, including the figures and the
signatures on the originals, are regarded as duplicate originals and may introduced as such, even
without accounting for the non-production of the originals.
The decision of the question is far from difficult. The admissibly of duplicates or triplicates has
long been a settled question and we need not elaborate on the reasons for the rule. This matter
has received consideration from the foremost commentator on the Rules of Court thus:
"When carbon sheets are inserted between two or more sheets of writing paper so that
the writing of a contract upon the outside sheet, including the signature of the party to
be charged thereby, produces 2facsimile upon the sheets beneath, such signature being
thus reproduced by the same stroke of the pen which made the surface or exposed
impression, all of the sheets so written on are regarded as duplicate originals and either
of them may be introduced in evidence as such without accounting for the
nonproduction of the others." (Moran, 1952 ed., p. 444.)
It has also been in favor of the petitioner by US in the case of People vs. Quinones, 44 Off. Gaz., No.
5, 1520, 1525, thus:
It is argued in the second assignment of error that the confession Exhibit B is not
admissible because it is merely a carbon copy. The said confession Exhibit B, being a
carbon copy of the original and bearing as it does the signature of the appellant, is
admissible in evidence and possess all the probative value of the original, and the same
does not require an accounting for the non-production of the original. (Sec 47, Rule 123,
Rules of Court).
Two principal authors on the law on evidence have sustained the theory of the admissibility of
duplicate originals, as follows:
SEC. 386. . . . the best evidence rule is that rule which requires the highest grade of
evidence obtainable to prove a disputed fact. p. 616. A "duplicate sales slip" (People vs.
Stone, 349 III. 52, 181 N. E. 648) has been held to be primary evidence, p. 616.
 SEC. 420. Duplicate originals. — Where letters are produced by mechanical means and,
concurrently with the original, duplicate are produced, as by placing carbon paper and
writing on the exposed surface at the same time, all are duplicate originals, and any one
of them may introduced in evidence without accounting for the nonproduction of the
other. Citing International Harvester Co. vs. Elfstrom, 101 Minn. 263, 112 N. W. 252. See
also 12 L.R.A.(N.S.) 343, People of Hauke, 335 II, 217, 167 N. E. 1; State vs. Keife, 165 La.
47, 115 So. 363; Taylor vs. Com. 117 Va. 909, 85 S.E. 499. (Wharton's Criminal Evidence,
Vol. I, p. 661).

SEC. 100. Carbon copies, however, when made at the same time and on the same
machine as the original, are duplicate originals, and these have been held to be as much
primary evidence as the originals. Citings U.S. vs. Manton, 107 Fed. (2d) 834, denied 309
U. S. 664, 84 L. ed. 1012; O'Shea vs. U.S. 93 F. (2d) 169; Leonard vs. State, 36 Ala. App.
397, 58 So. (2d) 138; State vs. Lee, 173 La. 770, 138 So. 662; Newman vs. State 65 Ga.
App. 288, 16 S. E. (2d) 87. (Underhill's Criminal Evidence, 5th ed., Vol. I, p. 168.)

We find that the ruling of the court below to the effect that the triplicates formed by the used of
carbon papers are not admissible in evidence, without accounting first for the loss of the originals
is incorrect and must be reversed. The court below is hereby ordered to proceed in the trial of
the case in accordance with this ruling. No cost. So ordered.
Lee M. Seiler, Plaintiff-appellant, v. Lucasfilm, Ltd., Industrial Light and Magic,
Twentiethcentury-fox Film Corporation, George Lucas, Jr.,and Joseph E. Johnston,
Defendants-appellees, 797 F.2d 1504 (9th Cir. 1986)
U.S. Court of Appeals for the Ninth Circuit - 797 F.2d 1504 (9th Cir. 1986)
Argued and Submitted April 17, 1986. Decided Aug. 26, 1986
Elliot L. Bien, Bronson, Bronson & McKinnon, San Francisco, Cal., for plaintiff-appellant.
Joel Boxer, Nutter, Bird, Marella, Boxer, Wolpert & Matz, Los Angeles, Cal., John Keker, Robert
Van Nest, Keker & Brockett, San Francisco, Cal., for defendants-appellees.
Appeal from the United States District Court for the Northern District of California.
Before FARRIS, and BOOCHEVER, Circuit Judges, and KEEP,* District Judge.
FARRIS, Circuit Judge:
Lee Seiler, a graphic artist and creator of science fiction creatures, alleged copyright infringement
by George Lucas and others who created and produced the science fiction movie "The Empire
Strikes Back." Seiler claimed that creatures known as "Imperial Walkers" which appeared in The
Empire Strikes Back infringed Seiler's copyright on his own creatures called "Garthian Striders."
The Empire Strikes Back appeared in 1980; Seiler did not obtain his copyright until 1981.
Because Seiler wished to show blown-up comparisons of his creatures and Lucas' Imperial
Walkers to the jury at opening statement, the district judge held a pre-trial evidentiary hearing.
At the hearing, Seiler could produce no originals of his Garthian Striders nor any documentary
evidence that they existed before The Empire Strikes Back appeared in 1980. The district judge,
applying the best evidence rule, found that Seiler had lost or destroyed the originals in bad faith
under Fed.R.Evid. 1004(1) and denied admissibility of any secondary evidence, even the copies
that Seiler had deposited with the Copyright Office. With no admissible evidence, Seiler then lost
at summary judgment, 613 F. Supp. 1253.
FACTS
Seiler contends that he created and published in 1976 and 1977 science fiction creatures called
Garthian Striders. In 1980, George Lucas released The Empire Strikes Back, a motion picture that
contains a battle sequence depicting giant machines called Imperial Walkers. In 1981 Seiler
obtained a copyright on his Striders, depositing with the Copyright Office "reconstructions" of
the originals as they had appeared in 1976 and 1977.
Seiler contends that Lucas' Walkers were copied from Seiler's Striders which were allegedly
published in 1976 and 1977. Lucas responds that Seiler did not obtain his copyright until one
year after the release of The Empire Strikes Back and that Seiler can produce no documents that
antedate The Empire Strikes Back.
Because Seiler proposed to exhibit his Striders in a blow-up comparison to Lucas' Walkers at
opening statement, the district judge held an evidentiary hearing on the admissibility of the
"reconstructions" of Seiler's Striders. Applying the "best evidence rule," Fed.R.Evid. 1001-1008,
the district court found at the end of a seven-day hearing that Seiler lost or destroyed the
originals in bad faith under Rule 1004(1) and that consequently no secondary evidence, such as
the post-Empire Strikes Back reconstructions, was admissible. In its opinion the court found
specifically that Seiler testified falsely, purposefully destroyed or withheld in bad faith the
originals, and fabricated and misrepresented the nature of his reconstructions. The district court
granted summary judgment to Lucas after the evidentiary hearing.
On appeal, Seiler contends 1) that the best evidence rule does not apply to his works, 2) that if
the best evidence rule does apply, Rule 1008 requires a jury determination of the existence and
authenticity of his originals, and 3) that 17 U.S.C. § 410(c) of the copyright laws overrides the
Federal Rules of Evidence and mandates admission of his secondary evidence.
The appeal was timely; this court has jurisdiction under 28 U.S.C. § 1291. Review of summary
judgment is de novo. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986). The issues presented are
questions of law, reviewable de novo. See United States v. McConney, 728 F.2d 1195, 1201 (9th
Cir. 1984) (en banc).
DISCUSSION
1. Application of the best evidence rule.
The best evidence rule embodied in Rules 1001-1008 represented a codification of longstanding
common law doctrine. Dating back to 1700, the rule requires not, as its common name implies,
the best evidence in every case but rather the production of an original document instead of a
copy. Many commentators refer to the rule not as the best evidence rule but as the original
document rule.
Rule 1002 states: "To prove the content of a writing, recording, or photograph, the original
writing, recording, or photograph is required, except as otherwise provided in these rules or by
Act of Congress." Writings and recordings are defined in Rule 1001 as "letters, words, or
numbers, or their equivalent, set down by handwriting, typewriting, printing, photostating,
photographing, magnetic impulse, mechanical or electronic recording, or other form of data
compilation."
The Advisory Committee Note supplies the following gloss:
Traditionally the rule requiring the original centered upon accumulations of data and
expressions affecting legal relations set forth in words and figures. This meant that the rule was
one essentially related to writings. Present day techniques have expanded methods of storing
data, yet the essential form which the information ultimately assumes for usable purposes is
words and figures. Hence the considerations underlying the rule dictate its expansion to include
computers, photographic systems, and other modern developments.
Some treatises, whose approach seems more historical than rigorously analytic, opine without
support from any cases that the rule is limited to words and figures. 5 Weinstein's Evidence
(1983), p 1001(1) at 1001-11; 5 Louisell & Mueller, Sec. 550 at 285.
We hold that Seiler's drawings were "writings" within the meaning of Rule 1001(1); they consist
not of "letters, words, or numbers" but of "their equivalent." To hold otherwise would frustrate
the policies underlying the rule and introduce undesirable inconsistencies into the application of
the rule.
In the days before liberal rules of discovery and modern techniques of electronic copying, the
rule guarded against incomplete or fraudulent proof. By requiring the possessor of the original
to produce it, the rule prevented the introduction of altered copies and the withholding of
originals. The purpose of the rule was thus long thought to be one of fraud prevention, but
Wigmore pointed out that the rule operated even in cases where fraud was not at issue, such as
where secondary evidence is not admitted even though its proponent acts in utmost good faith.
Wigmore also noted that if prevention of fraud were the foundation of the rule, it should apply to
objects as well as writings, which it does not. 4 Wigmore, Evidence Sec. 1180 (Chadbourn rev.
1972).
The modern justification for the rule has expanded from prevention of fraud to a recognition that
writings occupy a central position in the law. When the contents of a writing are at issue, oral
testimony as to the terms of the writing is subject to a greater risk of error than oral testimony
as to events or other situations. The human memory is not often capable of reciting the precise
terms of a writing, and when the terms are in dispute only the writing itself, or a true copy,
provides reliable evidence. To summarize then, we observe that the importance of the precise
terms of writings in the world of legal relations, the fallibility of the human memory as reliable
evidence of the terms, and the hazards of inaccurate or incomplete duplication are the concerns
addressed by the best evidence rule. See 5 Louisell & Mueller, Federal Evidence, Sec. 550 at 283;
McCormick on Evidence (3d ed. 1984) Sec. 231 at 704; Cleary & Strong, The Best Evidence Rule:
An Evaluation in Context, 51 Iowa L.Rev. 825, 828 (1966).
Viewing the dispute in the context of the concerns underlying the best evidence rule, we conclude
that the rule applies. McCormick summarizes the rule as follows:
[I]n proving the terms of a writing, where the terms are material, the original writing must be
produced unless it is shown to be unavailable for some reason other than the serious fault of the
proponent.
McCormick on Evidence Sec. 230, at 704.
The contents of Seiler's work are at issue. There can be no proof of "substantial similarity" and
thus of copyright infringement unless Seiler's works are juxtaposed with Lucas' and their
contents compared. Since the contents are material and must be proved, Seiler must either
produce the original or show that it is unavailable through no fault of his own. Rule 1004(1). This
he could not do.
The facts of this case implicate the very concerns that justify the best evidence rule. Seiler alleges
infringement by The Empire Strikes Back, but he can produce no documentary evidence of any
originals existing before the release of the movie. His secondary evidence does not consist of true
copies or exact duplicates but of "reconstructions" made after The Empire Strikes Back. In short,
Seiler claims that the movie infringed his originals, yet he has no proof of those originals.
The dangers of fraud in this situation are clear. The rule would ensure that proof of the
infringement claim consists of the works alleged to be infringed. Otherwise, "reconstructions"
which might have no resemblance to the purported original would suffice as proof for
infringement of the original. Furthermore, application of the rule here defers to the rule's special
concern for the contents of writings. Seiler's claim depends on the content of the originals, and
the rule would exclude reconstituted proof of the originals' content. Under the circumstances
here, no "reconstruction" can substitute for the original.
Seiler argues that the best evidence rule does not apply to his work, in that it is artwork rather
than "writings, recordings, or photographs." He contends that the rule both historically and
currently embraces only words or numbers. Neither party has cited us to cases which discuss the
applicability of the rule to drawings.1
To recognize Seiler's works as writings does not, as Seiler argues, run counter to the rule's
preoccupation with the centrality of the written word in the world of legal relations. Just as a
contract objectively manifests the subjective intent of the makers, so Seiler's drawings are
objective manifestations of the creative mind. The copyright laws give legal protection to the
objective manifestations of an artist's ideas, just as the law of contract protects through its
multifarious principles the meeting of minds evidenced in the contract. Comparing Seiler's
drawings with Lucas' drawings is no different in principle than evaluating a contract and the
intent behind it. Seiler's "reconstructions" are "writings" that affect legal relations; their
copyrightability attests to that.
A creative literary work, which is artwork, and a photograph whose contents are sought to be
proved, as in copyright, defamation, or invasion of privacy, are both covered by the best evidence
rule. See McCormick, Sec. 232 at 706 n. 9; Advisory Committee's Note to Rule 1002; 5 Louisell &
Mueller, Sec. 550 at 285 n. 27. We would be inconsistent to apply the rule to artwork which is
literary or photographic but not to artwork of other forms. Furthermore, blueprints, engineering
drawings, architectural designs may all lack words or numbers yet still be capable of copyright
and susceptible to fraudulent alteration. In short, Seiler's argument would have us restrict the
definitions of Rule 1001(1) to "words" and "numbers" but ignore "or their equivalent." We will
not do so in the circumstances of this case.
Our holding is also supported by the policy served by the best evidence rule in protecting against
faulty memory. Seiler's reconstructions were made four to seven years after the alleged originals;
his memory as to specifications and dimensions may have dimmed significantly. Furthermore,
reconstructions made after the release of the Empire Strikes Back may be tainted, even if
unintentionally, by exposure to the movie. Our holding guards against these problems.
2. Rule 1008.
As we hold that the district court correctly concluded that the best evidence rule applies to
Seiler's drawings, Seiler was required to produce his original drawings unless excused by the
exceptions set forth in Rule 1004. The pertinent subsection is 1004(1), which provides:
The original is not required, and other evidence of the contents of a writing, recording, or
photograph is admissible if--
(1) Originals lost or destroyed. All originals are lost or have been destroyed, unless the proponent
lost or destroyed them in bad faith;
In the instant case, prior to opening statement, Seiler indicated he planned to show to the jury
reconstructions of his "Garthian Striders" during the opening statement. The trial judge would
not allow items to be shown to the jury until they were admitted in evidence. Seiler's counsel
reiterated that he needed to show the reconstructions to the jury during his opening statement.
Hence, the court excused the jury and held a seven-day hearing on their admissibility. At the
conclusion of the hearing, the trial judge found that the reconstructions were inadmissible under
the best evidence rule as the originals were lost or destroyed in bad faith. This finding is amply
supported by the record.
Seiler argues on appeal that regardless of Rule 1004(1), Rule 1008 requires a trial because a key
issue would be whether the reconstructions correctly reflect the content of the originals. Rule
1008 provides:
When the admissibility of other evidence of contents of writings, recordings, or photographs
under these rules depends upon the fulfillment of a condition of fact, the question whether the
condition has been fulfilled is ordinarily for the court to determine in accordance with the
provisions of rule 104. However, when an issue is raised (a) whether the asserted writing ever 1976 U.S.Code Cong. & Ad.News 5659, 5772-73. No case has addressed this issue, and Nimmer
existed, or (b) whether another writing, recording, or photograph produced at the trial is the equivocates. 3 Nimmer on Copyright, Sec. 12.11 at 12-78 n. 20.
original, or (c) whether other evidence of contents correctly reflects the contents, the issue is for
We hold that when the deposited copies are subject to evidentiary challenge under the best
the trier of fact to determine as in the case of other issues of fact.2
evidence rule, the copies are not deemed to be incorporated into the certificate and are not
Seiler's position confuses admissibility of the reconstructions with the weight, if any, the trier of therefore automatically admissible under Sec. 410(c). This holding allows admissibility of the
fact should give them, after the judge has ruled that they are admissible. Rule 1008 states, in certificate, so that a party may present presumptive evidence of the validity of the copyright. But
essence, that when the admissibility of evidence other than the original depends upon the the deposited copies, when challenged as not the original documents or true copies, will not share
fulfillment of a condition of fact, the trial judge generally makes the determination of that this admissibility or presumption. We limit this holding to situations involving the best evidence
condition of fact. The notes of the Advisory Committee are consistent with this interpretation in rule, and leave for another case the decision as to whether, under other circumstances, the
stating: "Most preliminary questions of fact in connection with applying the rule preferring the deposited copies may be incorporated in the certificate.
original as evidence of contents are for the judge ... [t]hus the question of ... fulfillment of other
AFFIRMED.
conditions specified in Rule 1004 ... is for the judge." In the instant case, the condition of fact
which Seiler needed to prove was that the originals were not lost or destroyed in bad faith. Had
he been able to prove this, his reconstructions would have been admissible and then their
accuracy would have been a question for the jury. In sum, since admissibility of the
reconstructions was dependent upon a finding that the originals were not lost or destroyed in
bad faith, the trial judge properly held the hearing to determine their admissibility.

3. Does 17 U.S.C. § 410(c) require the admissibility of the copies of Seiler's work deposited at the
Copyright Office?
Since Seiler's drawings are within the best evidence rule, we must address the question whether
Sec. 410(c) of the Copyright Act mandates their admission in evidence. Section 410(c) states:

In any judicial proceedings the certificate of a registration made before or within five years after
first publication of the work shall constitute prima facie evidence of the validity of the copyright
and of the facts stated in the certificate. The evidentiary weight to be accorded the certificate of
a registration made thereafter shall be within the discretion of the court.
Lucas and the district court opinion rely on cases which construe this section as raising a
rebuttable presumption of a valid copyright.3 See Durham Industries, Inc. v. Tomy Corp., 630
F.2d 905, 908 (2d Cir. 1980). What Lucas and the district court ignore, however, is the previous
threshold question of the admissibility of the certificate. They are correct that, once admitted, the
certificate and its presumptive validity may be rebutted and defeated, even at a summary
judgment. Carol Barnhart, Inc. v. Economy Cover Corp., 594 F. Supp. 364 (E.D.N.Y. 1984), reh'g.
denied, 603 F. Supp. 432 (1985), aff'd., 773 F.2d 411 (2d Cir. 1985).
There is no support, however, for denying outright the admission of the certificate. While neither
the cases nor Nimmer address the point, the language of Sec. 410(c) requires automatic
admission of the certificate. This conclusion is strengthened by reference to the language of Sec.
410(c)'s predecessor, Sec. 209 of the 1909 Act, which provided that the registration certificate
"shall be admitted in any court as prima facie evidence of the facts stated therein." 3 Nimmer on
Copyright, Sec. 12.11 at 12-77 n. 2.
Even though the certificate itself is admissible under Sec. 410(c), the statute is unclear as to the
admissibility of the copies deposited with the Copyright Office. Congress may have intended to
mandate admissibility only of the certificate, or it may have deemed the deposited copies to be
incorporated into the certificate and therefore admissible as well. The legislative history does
not clarify Congress' intentions. See H.R.Rep. No. 1476, 94th Cong., 2d Sess. 156-57, reprinted in
[G.R. No. 80505 : December 4, 1990.]
192 SCRA 28
THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. MARIO TANDOY y
LIM, Defendant-Appellant.
DECISION
CRUZ, J.:
The decision of the Regional Trial Court of Makati, Branch 133 dated October 13, 1987, convicting
Mario Tandoy of the crime of violation of Art. II, Sec. 4 of Rep. Act No. 6425 known as the
Dangerous Drugs Act of 1972, is before us on appeal.
The information against the accused-appellant read as follows:
That on or about the 27th day of May 1986, in the Municipality of Makati, Metro Manila,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused
without being authorized by law, did then and there willfully, unlawfully and feloniously sell
eight (8) pieces of dried marijuana flowering tops, two (2) pieces of dried marijuana flowering
tops and crushed dried marijuana flowering tops, which are prohibited drug, for and in
consideration of P20.00.
Upon arraignment, Tandoy entered a plea of not guilty. After trial, Judge Buenaventura J.
Guerrero rendered a decision the dispositive portion of which declared:
WHEREFORE, the Court finds Mario Tandoy y Lim guilty beyond reasonable doubt of
violation of Sec. 4, Art. II, Rep. Act No. 6425, as amended, and is hereby sentenced to life
imprisonment and to pay a fine of P20,000.00 and cost.: nad
The marijuana confiscated in this case is declared confiscated and forfeited and ordered
turned over to the Dangerous Drugs Board for proper disposal.
SO ORDERED.
The accused-appellant raises the following assignment of errors in this appeal:
1. The Court a quo erred in finding accused guilty beyond reasonable doubt of the crime
charged despite lack of evidence to prove that he sold marijuana to the poseur-buyer.
2. The Court a quo erred in admitting in evidence against the accused Exh. "E-2-A"
which is merely a xerox copy of the P10.00 bill allegedly used as buy-bust money.
The evidence of the prosecution may be summarized as follows:
On May 27, 1986, at about 3:30 p.m. Lt. Salido, Jr. of the Makati Police Station dispatched Pfc.
Herino de la Cruz, and Detectives Pablo R. Singayan, Nicanor Candolesas, Luisito de la Cruz,
Estanislao Dalumpines, Antonio Manalastas and Virgilio Padua to conduct a buy-bust operation
at Solchuaga St., Barangay Singkamas, Makati.
The target area was a store along the said street, and Singayan was to pose as the buyer. He stood
alone near the store waiting for any pusher to approach. The other members of the team
strategically positioned themselves. Soon, three men approached Singayan. One of them was the
accused-appellant, who said without preamble: "Pare, gusto mo bang umiskor?" Singayan said
yes. The exchange was made then and there — two rolls/pieces of marijuana for one P10.00 and
two P5.00 bills marked ANU (meaning Anti-Narcotics Unit).
The team then moved in and arrested Tandoy. Manalastas and Candolesas made a body search
of the accused-appellant and took from him the marked money, as well as eight more rolls/foils
of marijuana and crushed leaves.: nad
The arresting officers brought Tandoy to the Office of the Anti-Narcotics Unit, Makati Police
Station, for investigation by Detective Marvin Pajilan. The accused-appellant chose to remain
silent after having been informed of his constitutional rights.
These events were narrated under oath by De la Cruz, Singayan and Pajilan. 1 Microscopic,
chemical and chromotographic examination was performed on the confiscated marijuana by
Raquel P. Angeles, forensic chemist of the National Bureau of Investigation, who later testified
that the findings were positive. The marijuana was offered as an exhibit. 2
As might be expected, the accused-appellant had a different story. His testimony was that from
1:30 to 4:00 p.m. of the day in question, he was playing "cara y cruz" with 15 other persons along
Solchuaga St. when somebody suddenly said that policemen were making arrests. The players
grabbed the bet money and scampered. However, he and a certain Danny (another "cara y cruz"
player) were caught and taken to the Narcotics Command headquarters in Makati. There they
were mauled and warned that if they did not point to their fellow pushers, they would rot in jail.
The accused-appellant denied he had sold marijuana to Singayan and insisted the bills taken from
him were the bet money he had grabbed at the "cara y cruz" game. 3
The trial court, which had the opportunity to observe the demeanor of the witnesses and to listen
to their respective testimonies, gave more credence to the statements of the arresting officers.
Applying the presumption that they had performed their duties in a regular manner, it rejected
Tandoy's uncorroborated allegation that he had been manhandled and framed. Tandoy had not
submitted sufficient evidence of his charges, let alone his admission that he had no quarrel with
the peace officers whom he had met only on the day of his arrest.
In People v. Patog, 4 this Court held:
When there is no evidence and nothing to indicate the principal witness for the prosecution was
actuated by improper motives, the presumption is that he was not so actuated and his testimony
is entitled to full faith and credit.
Tandoy submits that "one will not sell this prohibited drug to another who is a total stranger
until the seller is certain of the identity of the buyer."
The conjecture must be rejected.: nad
In People v. Paco, 5 this Court observed:
Drug-pushing when done on a small level as in this case belongs to that class of crimes that may
be committed at anytime and at any place. After the offer to buy is accepted and the exchange is
made, the illegal transaction is completed in a few minutes. The fact that the parties are in a public
place and in the presence of other people may not always discourage them from pursuing their
illegal trade as these factors may even serve to camouflage the same. Hence, the Court has
sustained the conviction of drug pushers caught selling illegal drugs in a billiard hall (People v.
Rubio, G.R. No. 66875, June 19, 1986, 142 SCRA 329; People v. Sarmiento, G.R. No. 72141, January
12, 1987, 147 SCRA 252), in front of a store (People vs. Khan, supra) along a street at 1:45 p.m.
(People v. Toledo, G.R. No. 67609, November 22, 1985, 140 SCRA 259), and in front of a house
(People v. Policarpio, G.R. No. 69844, February 23, 1988).
As the Court has also held, "What matters is not an existing familiarity between the buyer and
the seller but their agreement and the acts constituting the sale and delivery of the marijuana
leaves." 6
Under the second assigned error, the accused-appellant invokes the best evidence rule and
questions the admission by the trial court of the xerox copy only of the marked P10.00 bill.
The Solicitor General, in his Comment, correctly refuted that contention thus:
This assigned error centers on the trial court's admission of the P10.00 bill marked money (Exh.
E-2-A) which, according to the appellant, is excluded under the best evidence rule for being a
mere xerox copy. Apparently, appellant erroneously thinks that said marked money is an
ordinary document falling under Sec. 2, Rule 130 of the Revised Rules of Court which excludes
the introduction of secondary evidence except in the five (5) instances mentioned therein.:-
cralaw
The best evidence rule applies only when the contents of the document are the subject of inquiry.
Where the issue is only as to whether or not such document was actually executed, or exists, or
in the circumstances relevant to or surrounding its execution, the best evidence rule does not
apply and testimonial evidence is admissible. (Cf. Moran, op. cit., pp. 76-77; 4 Martin, op. cit., p.
78.)
Since the aforesaid marked money was presented by the prosecution solely for the purpose of
establishing its existence and not its contents, other substitutionary evidence, like a xerox copy
thereof, is therefore admissible without the need of accounting for the original.
Moreover, the presentation at the trial of the "buy-bust money" was not indispensable to the
conviction of the accused-appellant because the sale of the marijuana had been adequately
proved by the testimony of the police officers. So long as the marijuana actually sold by the
accused-appellant had been submitted as an exhibit, the failure to produce the marked money
itself would not constitute a fatal omission.
We are convinced from the evidence on record that the prosecution has overcome the
constitutional presumption of innocence in favor of the accused-appellant with proof beyond
reasonable doubt of his guilt. He must therefore suffer the penalty prescribed by law for those
who would visit the scourge of drug addiction upon our people.
WHEREFORE, the appeal is DISMISSED and the challenged decision AFFIRMED in toto, with costs
against the accused-appellant.: nad
SO ORDERED
G.R. No. L-5791 December 17, 1910
THE UNITED STATES, plaintiff-appellee,
vs.
BERNARDO GREGORIO and EUSTAQUIO BALISTOY, defendants-appellants.
TORRES, J.:
Appeals were interposed by the defendants Bernardo Gregorio and Eustaquio Balistoy from the
judgment rendered in the two causes prosecuted, No. 1574, against Bernardo Gregorio, and No.
1575, against Eustaquio Balistoy, which were consolidated and in which but one judgment was
rendered, and forwarded to this court and registered under No. 5791.
In the suit instituted by Pedro Salazar, as a creditor, against Eustaquio Balistoy, in the justice of
the peace court of Libog, for the payment of a certain sum of money, judgment was rendered, on
April 4, 1908, wherein the debtor was sentenced to pay to the plaintiff P275.92, with interest
thereon, and the costs. For the execution of the said judgment, two rural properties belonging to
the debtor were attached and the 27th of May, 1908, was set as the date for the sale and
adjudication of the said attached properties to the highest bidder. On the 18th of the same month,
Bernardo Gregorio requested the deputy sheriff to exclude the said realty from the attachment,
alleging that he was the owner of the land situated in Tambogon, one of the properties levied
upon, 400 brazas in circumference, situate in the pueblo of Bacacay, the location and boundaries
of which are expressed in his petition, for the reason that he had acquired it by purchase from
the judgment debtor, Balistoy, in 1905, prior to the filing of the complaint. By reason of this claim
and petition the judgment creditor, Salazar, had to give a bond, in view of which the sheriff
proceeded with the sale of the said property, and of another, also attached for the sum of P300,
and both were adjudicated to the judgment creditor, according to the certificate, Exhibit
C.lawphil.net
In order that the claim of intervention presented to the sheriff might prosper, Bernardo Gregorio
attached thereto the document Exhibit D, at the end of which and among other particulars
appears the memorandum dated in Libog as of February 22, 1905, and signed by Eustaquio
Balistoy, Lorenzo Gregorio, and Cirilo Valla, and in which Balistoy states that he bought the land
referred to in the said document from Luis Balistoy and sold it to Bernardo Gregorio for P300,
wherefore he signed as such vendor.
The charge consists in that Balistoy, with intent to injure his creditor, Pedro Salazar, and for the
purpose of avoiding the attachment and sale of one of the properties belonging to him, to secure
the payment of the judgment obtained by his creditor in the aforementioned suit, did, with
disregard of the truth in the narration of the facts, execute or write the said memorandum
whereby, on February 25, 1905, he made or simulated a conveyance of one of the attached
properties in favor of the said Bernardo Gregorio, according to the aforesaid copy, when in fact
the said memorandum was written in April, 1908.
For the foregoing reasons a complaint was filed in each of the two aforesaid causes in the Court
of First Instance of Albay, charging each of the defendants with the crime of the falsification of a
private document, and proceedings having been instituted in both causes, which were
afterwards, by agreement of the parties thereto, consolidated, the court, on November 6, 1909,
pronounced in both of them the judgment appealed from, written in duplicate, whereby Balistoy
was sentenced to the penalty of one year eight months and twenty-one days of presidio
correccional, to the accessory penalties, to pay a fine of 1,501 pesetas, and, in case of nonpayment
thereof through insolvency, to suffer the corresponding subsidiary imprisonment, provided it
should not exceed one-third of the principal sentence, and to pay the costs incurred in cause No.
1575; and likewise, Bernardo Gregorio was sentenced to the penalty of three months and eleven
days of arresto mayor, to pay a fine of 1,980 pesetas, and, in case of insolvency, to the
corresponding subsidiary imprisonment, with the provision that it should not exceed one-third
of the principal penalty, to the accessory punishments, and to pay the costs occasioned by cause
No. 1574. From these sentences the defendants, respectively, appealed.
This case concerns the falsity of a document alleged to have been written on a date prior to the
one when it actually was prepared, which instrument simulates the sale of a parcel of land by its
owner to a third party, with the intent to defraud the creditor who, through proper judicial
process, solicited and obtained the attachment and sale of the said property in order, with the
proceeds of such sale, to recover the amount which the owner of the land owed him.
The sale was recorded in a memorandum, made upon a private document, according to the
alleged copy of the latter presented at trial which belonged to the owner of land; and,
notwithstanding the fact that the sheriff, who carried out the proceedings of attachment and sale,
testified to his having seen the original of the said document, or at least the original
memorandum of the conveyance, the only record that could be of use to the intervener, who
claimed a lien on the land which was to be sold at public auction; certainly the mere exhibition
of a copy of an unauthenticated private document could not legally produce the effect of
suspending the sale of the said land, inasmuch as such copy is not sufficient proof of the right of
the intervener and opponent, being e mere copy of a private document whose legality has not
been proven.
In the charge filed in this cause against the vendor and the vendee of the land in question, it is
stated that these parties, the defendants, simulated the said memorandum of sale or conveyance
of the land with the intent to injure the creditor, Pedro Salazar; but as the original document,
setting forth the said memorandum, was not presented, but merely a copy thereof, and
furthermore, as it could not be ascertained who had the original of the document containing the
memorandum in question, nor the exact date when the latter was written; the said memorandum,
presumed to be simulated and false, was not literally compared by the sheriff who testified that
he had seen its original for but a few moments, nor by any officer authorized by law to certify to
documents and proceedings such as are recorded in notarial instruments, nor even by two
witnesses who might afterwards have been able to testify before the court that the copy exhibited
was in exact agreement with its original; therefore, on account of these deficiencies, doubt arises
as to whether the original of the document, Exhibit D, really existed at all, and whether the
memorandum at the foot of the said exhibit is an exact copy of that alleged to have been written
at the end of the said original document. lawphil.net
In criminal proceedings for the falsification of a document, it is indispensable that the judges and
courts have before them the document alleged to have been simulated, counterfeited, or falsified,
in order that they may find, pursuant to the evidence produced in the cause, whether or not the
crime of falsification was committed, and also, at the same time, to enable them to determine the
degree of each defendant's liability in the falsification under prosecution. Through the lack of the
original document containing the memorandum alleged to be false, it is improper to hold, with
only a copy of the said original in view, that the crime prosecuted was committed; and although,
judging from the testimony of the witnesses who were examined in the two consolidated causes,
there is reason to entertain much doubt as to the defendants' innocence, yet, withal, this case
does not furnish decisive and conclusive proof of their respective guilt as coprincipals of the
crime charged. Defendants in a criminal cause are always presumed to be innocent until their
guilt be fully proven, and, in case of reasonable doubt and when their guilt is not satisfactorily
shown, they are entitled to a judgment of acquittal. In view of the evidence produced in both of
the aforesaid criminal causes, said causes can only be terminated by such a finding.

For the foregoing reasons, it is proper, in our opinion, with a reversal of the judgment appealed
from, to acquit, and we hereby do acquit Eustaquio Balistoy and Bernardo Gregorio, with the
costs of both instances de oficio. So ordered.
G.R. No. L-35366 August 5, 1931
THE PROVINCIAL FISCAL OF PAMPANGA, petitioner,
vs.
HERMOGENES REYES, Judge of First Instance of Pampanga, and ANDRES
GUEVARRA, respondents.
VILLAMOR, J.:
The petitioner prays for a writ of mandamus to compel the respondent judge to admit Exhibits A,
B, C, and D (attached to the petition), as evidence for the prosecution in criminal cases Nos. 4501
and 4502 of the Court of First Instance of Pampanga.
The provincial fiscal of Pampanga filed two informations for libel against Andres Guevarra. The
informations alleged that the defendant, with malicious intent, published on page 9 of the weekly
paper Ing Magumasid in its issue of July 13, 1930, a squib in verse, of which a translation into
Spanish was included therein, intended to impeach the honesty, integrity, and reputation of
Clemente Dayrit (information in criminal cause No. 4501) and of Mariano Nepomuceno
(information in criminal cause No. 4502).
The defendant demurred on the ground of duplicity of informations, he having published only
one libelous article in the Ing Magumasid for July 13, 1930. The court overruled the demurrer.
A joint trial was held of criminal cases Nos. 4501 and 4502. The fiscal attempted to present as
evidence for the prosecution, the aforementioned Exhibits A, B, C, and D, which are copies of
the Ing Magumasid containing the libelous article with the innuendo, another article in the
vernacular published in the same weekly, and its translation into Spanish. Counsel for the
defendant objected to this evidence, which objection was sustained by the court.
The respondents answered the petition for mandamus, praying for its dismissal with costs
against the petitioner.
At the hearing of this case, both parties appeared and moved that they be allowed to present
memoranda in lieu of an oral argument, which memoranda are in the record.
The petitioner contends that the exhibits in question are the best evidence of the libel, the subject
matter of the information, and should therefore be admitted; while the respondents maintain
that, inasmuch as the libelous articles were not quoted in the information, said evidence cannot
be admitted without amending the information. The prosecution asked for an amendment to the
information, but the court denied the petition on the ground that it would impair the rights of the
defendant, holding that the omission of the libelous article in the original was fatal to the
prosecution.
The first question raised here is whether an information charging a libel published in an
unofficial language, without including a copy of the libelous article, but only a translation into
Spanish, is valid or not. It is true that in United States vs. Eguia and Lozano (38 Phil., 857), it was
stated: "The general rule is that the complaint or information for libel must set out the particular
defamatory words as published, and a statement of their substance and effect is usually
considered insufficient." But this general rule does not exclude certain exceptions, such as, cases
where the libel is published in a non-official language. "When the defamation has been published
in a foreign tongue, it is proper, and in general, necessary, to set out the communication as it was
originally made, with an exact translation into English; and if from the translation no cause of
action appears, it is immaterial that the foreign words were actionable. In some jurisdictions,
however, under the influence of the liberality of laws on practice, it is held unnecessary to set out
the communication in the foreign language in which it is alleged to have been published, so long
as the foreign publication is alleged, with an English translation attached." (37 C. J., 27, sec. 336.)
If the libelous article had been published in one of our official languages, English or Spanish, it
would have been necessary to follow the general rule; but since the article in question was
published in the Pampango dialect, it is sufficient to insert a Spanish translation in the
information. The justice of this exception to the general rule becomes more evident if we consider
a libelous article published, for instance, in Moro or Chinese, who use characters different from
our own.
The second question refers to the admissibility of the aforesaid exhibits. The general rules
regarding the admissibility of evidence are applicable to cases of libel or slander. The evidence
must be relevant, and not hearsay. (37 C.J., 151, sec. 688.) This being so, the rule of procedure
which requires the production of the best evidence, is applicable to the present case. And
certainly the copies of the weekly where the libelous article was published, and its translation,
constitute the best evidence of the libel charged. The newspaper itself is the best evidence of an
article published in it. (Bond vs. Central Bank of Georgia, 2 Ga., 92.).
The respondent judge undoubtedly has discretion to admit or reject the evidence offered by the
fiscal; but in the instant case his refusal to admit such evidence amounts to an abuse of that
discretion, which may be controlled by this court by means of mandamus proceedings. In so far
as the jurisdiction of this court is concerned, we believe the doctrine is applicable which was held
in Orient Insurance Co. vs. Revilla and Teal Motor Co. (54 Phil., 919), namely, that the Supreme
Court has jurisdiction to entertain an application for a writ of mandamus to compel a Court of
First Instance to permit the attorney of a litigant to examine the entire written communication,
when part of the same has been introduced in evidence by the other party.
Wherefore, the writ prayed for against the respondent judge of the Court of First Instance of
Pampanga should be issued, requiring him to admit Exhibits A, B, C, and D, in question in criminal
cases Nos. 4501 and 4502 of that court, and it is so ordered, without special pronouncement of
costs.
G.R. No. L-28999 May 24, 1977
COMPAÑIA MARITIMA, plaintiff-appellee,
vs.
ALLIED FREE WORKERS UNION, SALVADOR T. LLUCH, MARIANO LL. BADELLES,
individually and in their capacities as President and Vice-President, respectively of the
Allied Free Workers Union, NICANOR HALEBAS and LAURENTINO LL. BADELLES,
individually and officers of Allied Free Workers Union, defendants-appellants.
AQUINO, J.:
Antecedents. - Since the onset in 1954 of litigation between the parties herein, this is the fifth case
between them that has been elevated to this Court. The incidents preceding the instant appeal
are as follows:
On August 11, 1952 the Compañia Maritima and the Allied Free Workers Union entered into a
written contract whereby the union agreed to perform arrastre and stevedoring work for the
consignees. vessels at Iligan City. The contract was to be effective for one month counted from
August 12, 1952.
It was stipulated that the company could revoke the contract before the expiration of the term if
the union failed to render proper service. The contract could be renewed by agreement of the
parties (Exh. J).
At the time the contract was entered into, the union had just been organized. Its primordial desire
was to find work for its members. The union agreed to the stipulation that the company
would not be liable for the payment of the services of the union "for the loading, unloading and
deliveries of cargoes" and that the compensation for such services would be paid "by the owners
and consigness of the cargoes" as "has been the practice in the port of Iligan City" (Par. 2 of Exh.
J).
The union found out later that that stipulation was oppressive and that the company was unduly
favored by that arrangement.
Under the contract, the work of the union consisted of arrastre and stevedoring service. Arrastre,
a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf
or between the establishment of the consignee or shipper and the ship's tackle. The service is
usually performed by longshoremen.
On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or
between the ship's tackle and the holds of the vessel.
The shippers and consignees paid the union oth for the arrastre work. They refused to pay for
the stevedoring service. They claimed that the shipowner was the one obligated to pay for the
stevedoring service because the bill of lading provided that the unloading of the cargo was at the
shipowner's expense (Exh. 1).
On the other hand, the company refused to pay for the stevedoring service because the contract
(Exh. J) explicitly provided that the compensation for both arrastre and stevedoring work should
be paid by the shippers and consignees, as was the alleged practice in Iligan City, and that the
shipowner would not be liable for the payment of such services.
Thus, the issue of whether the company should pay for the stevedoring service became a sore
point of contention between the parties. The union members labored under the impression that
they were not being compensated for their stevedoring service as distinguished from arrastre
service.
Although the arrastre and stevedoring contract (Exh. J) was disadvantageous to the union, it did
not terminate the contract because its members were in dire need of work and work, which was
not adequately compensated, was preferable to having no work at all (204, 214-5, 226-7 tsn May
20, 1960).
Upon the expiration of the one-month period, the said contract was verbally renewed. The
company allowed the union to continue performing arrastre and stevedoring work.
On July 23, 1954 the union sent a letter to the company requesting that it be recognized as the
exclusive bargaining unit to load and unload the cargo of its vessels at Iligan City. The company
ignored that demand. So, the union filed on August 6, 1954 in the Court of Industrial Relations
(CIR) a petition praying that it be certified as the sole collective bargaining unit.
Despite that certification case, the company on August 24, 1954 served a written notice on the
union that, in accordance with payment of the 1952 contract, the same would be terminated on
August 31, 1954. Because of that notice, the union on August 26, 1954 filed in the CIR charges of
unfair labor practice against the company.
On August 31, 1954 the company entered into a new stevedoring and arrastre contract with the
Iligan Stevedoring Association. On the following day, September 1, the union members picketed
the wharf and prevented the Iligan Stevedoring Association from performing arrastre and
stevedoring work. The picket lasted for nine days.
On September 8, 1954 the company sued the union and its officers in the Court of First Instance
of Lanao for the rescission of the aforementioned 1952 contract, to enjoin the union from
interfering with the loading and unloading of the cargo, and for the recovery of damages.
On the following day, September 9, the lower court issued ex parte a writ of preliminary
injunction after the company had posted a bond in the sum of P20,000. A few hours lateron that
same day the union was allowed to file a counterbond. The injunction was lifted. The union
members resumed their arrastre and stevedoring work.
Later, the union assailed in a prohibition action in this Court the jurisdiction of the trial court to
entertain the action for damages, and injunction.
A majority of this Court held that the lower court had jurisdiction to issue the injunction and to
take cognizance of the damage suit filed by the company but that the injunction was void because
it was issued ex parte and the procedure laid down in section 9(d) of Republic Act No. 875 was
not followed by the trial court (Allied Free Workers Union vs. Judge Apostol, 102 Phil. 292, 298).
After trial, the lower court rendered a decision dated December 5, 1960, amended on January 11,
1961, (1) declaring the arrastre and stevedoring contract terminated on August $1, 1954; (2)
dismissing the union's counterclaim; (3) ordering the union and its officers to pay solidarily to
the company P520,000 as damages, with six percent interest per annum from September 9, 1954,
when the complaint. was filed; (4) permanently enjoining the union from performing any
arrastre and stevedoring work for the company at Iligan City, and (5) requiring the union to post
a supersedeas bond in the sum of P520,000 to stay execution.
The union filed a motion for reconsideration. On the other hand, the company filed a motion for
the execution pending appeal of the money judgment. It filed another motion for the immediate
issuance of a writ of injunction. That second motion was filed in the municipal court of Iligan City
in view of the absence of the District Judge.
The municipal court issued the writ of injunction. However, this Court set it aside because it was
not an interlocutory order and no special reasons were adduced to justify its issuance (Allied
Free Workers Union vs. Judge Estipona, 113 Phil. 748).
The union on January 6, 1961 had perfected an appeal from the lower court's original decision. It
did not appeal from the amended decision. On March 24, 1962 the lower court issued an order
declaring its amended decision final and executory in view of the union's failure to appeal
therefrom. The court directed the clerk of court to issue a writ of execution. That order was
assailed by the union in a certiorari action filed in this Court. A preliminary injunction was issued
by this Court to restrain the execution of the judgment.
On May 16, 1962 this Court dissolved the injunction at the instance of the company which had
filed a counterbond. Thereupon, the 225 members of the union yielded their ten-year old jobs to
the new set of workers contracted by the company.
The certiorari incident was decided on June 30, 1966. This Court noted that the lower court
amended its decision for the purpose of correcting certain errors and omissions which were not
substantial in character and that its amended decision was served upon the parties after the
union had perfected its appeal from the original decision.
Under those circumstances, this Court held that the union's appeal should be given due coarse,
subject to the amendment of its record on appeal. This Court reserved to the members of the
union the right to secure restitution under sections 2 and 5, Rule 39 of the Rules of Court (Allied
Free Workers Union vs. Estipona, L-19651, June 30, 1966,17 SCRA 513, 64 O.G. 2701).
Pursuant to that reservation, the union on December 16, 1966 filed a motion for restitution,
praying that its 225 members be restored to their jobs and that the company be ordered to pay
P 1,620,000 as damages, consisting of the lost earnings during the four-years period from May 8,
1962 to May 8, 1966.
On the other hand, the company in its motion of January 18, 1967 reiterated its 1960 motion for
the execution of the lower court's judgment as to the damages, of P520,000 and the permanent
injunction.
Later, the company called the lower court's attention to this Court's decision dated January 31,
1967. In that decision, this Court affirmed the CIR's decision holding that the company did not
commit any unfair labor practice and reversed the CIR's directive that a certification election be
held to determine whether the union should be the exonemtod bargaining unit. This Court held
that the union could not act as a collective bargaining unit because the union was an independent
contractor and its members were not employees of the company (Allied Free Workers Union vs.
Compañia Maritima, L-22951-2 and L-22971, 19 SCRA 258).
The lower court in its order of April 25, 1967 (1) denied the union's motion for restitution and
to stay execution of its amended decision on January 11, 1961 and (2) required the union to file
a supersedeas bond in the sum of P100,000 within thirty days from notice. The bond was reduced
to P50,000 in the lower court's order of August 16, 1967. The union posted the bond on August
24,1967.
The lower court approved the union's amended record on appeal in its order of October 6, 1967.
The union appealed directly to this Court because the amount involved exceeds P200,000. The
appeal was perfected before Republic Act No. 5440 took effect on September 9,1968.
Other proceedings. - The company in its original complaint prayed that the union and its officials
be ordered to pay actual damages, amounting to P15,000 for the union's failure to load and
unload cargo in and from the consignees. vessels from September 1 to 8, 1954; P50,000 as
damages, due to the union's inefficiency in performing arrastre and stevedoring work "during
the latter part of the existence" of the contract; P50,000 as moral and exemplary damages, (not
supported by any allegation in the body of the complaint) and P5,000 as attorney's Considering
(10-12, Record on Appeal).
On September 15, 1954 the company added a fourth cause ofaction to its complaint. It alleged
that by reason of the acts of harassment and obstruction perpetrated by the union in the loading
and unloading ofcargo the company suffered additional damage in the form of lost and unrealized
freight and passenger charges in the amount of P10,000 for September 9 and 10, 1954 (66,
Record on Appeal).
On November 2, 1954 the company attached to its motion for the revival of the injunction against
the union an auditor's report dated September 15, 1954 wherein it was indicated that the
company lost freight revenues amounting to P178,579.20 during the period from January 1 to
September 7, 1954 (121-143, Record on Appeal).
On November 27, 1954 the company filed another motion for the restoration of the injunction. The trial court did not bother to make a breakdown of the alleged damages, totalling P450,000.
In support of that motion the company attached a trip operation report showing the unloaded The reports of the two hired accountants, Demetrio S. Jayme and M. J. Siojo, show the following
cargoes on the consignees. vessels, when they docked at Iligan City on September 14, 19, 22 and alleged damages, in the aggregate amount of P349,245.37 (not P412,663.17, as erroneously
26 and October 3 and 5, 1954, as well as the delays in their departure (157-162, Record on added by the consignees. counsel, 161,163-4 tsn March 11, 1960):
Appeal).
TABULATION OF ALLEGED
On March 5, 1955 the company added a fifth cause ofaction too its complaint. It alleged that
during the period from September 12 to December 28, 1954 it lost freight charges on unloaded DAMAGES CLAIMED BY COMPAÑIA MARITIMA
cargoes in the sum of P62,680.12, as shown in a detailed statement, and that it incurred an
estimated amount of P20,000 for overhead expenses. for the delay in the dismissal of its vessels
attributable to the union's unsatisfactory stevedoring and arrastre work (225-229, 237-8, (1) Freight for 74,751 bags of fertilizer
Record on Appeal).
allegedly booked for shipment in the
Also on March 5, 1955 the union answered the original and supplemental complaints. It denied
company's vessels but loaded in other vessels
that its members had rendered inefficient service. It averred that the termination of the contract
was prompted by the consignees. desire to give the work to the Iligan Stevedoring Association during the period from Jan. 1 to August 31,
which the company had allegedly organized and subsidized. The union filed a counterclaim for
P200,000 as compensation for its services to the company and P500,000 as other damages, (239- 1954, Statement A in Exh. A, CPA Jayme's
252, Record on Appeal).
report......................................................... P29,900.40
On March 9, 1960 the company filed a third supplemental complaint, It alleged that the
continuation of the stevedoring and arrastre work by the union for the company from 1955 to (2) Lost freight on other shutout cargoes
date had caused losses to the company at the rate of P25,000 annually in the form of lost freight
for January 1 to August 31, 1954, Statement A
on shutout cargoes and the expenses. for the equipment used to assist the union members in
performing their work (320-3, Record on Appeal).
in Exh. A, of CPA Jayme ......................... 4,339.64

Plaintiff company's evidence. - Jose C. Teves, the consignees. branch manager at Iligan City, (3) Lost freight on shutout cargoes for
testified that on August 24, 1954 he terminated the arrastre and stevedoring contract with the
union (Exh. J) upon instruction of the head office. The contract was terminated in order to avoid September 2 to 7, 1954 booked for shipment in
further losses to the company caused by the union's inefficient service (85-86 tsn March 11,
1960). M. V. Mindoro, Panay and Masterhead Knot,

Statement B in Exh. A, CPA Jayme's report... 6,167.16

After the termination of the contract, the members of the union allegedly harassed the company
with the help of goons. The cargoes could not be unloaded in spite of the fact that the company (4) Losses sustained in voyages of M.V.
had sought the protection of the law-enforcing authorities (88). The consignees. last recourse
was to go to court. (89). Panay and Mindoro in four voyages from

The company supposedly suffered losses as a result of the union's inefficient service since September 4 to 11, 1954, with estimates,
September 1, 1954 (91). Teves hired auditors to ascertain the losses suffered by the company
Statement B, Exh. A............................... 3,764.50
during the period from January 1 to September 11, 1954.
(5) Other estimated losses for the said
The trial court awarded actual damages, amounting to P450,000 on the basis of the auditor's
reports, Exhibits A to I. It did not carefully examine the said exhibits. Contrary to the trial court's voyages of M.V. Panay and Mindoro for the
impression, Exhibits B, C and D are not auditors' reports.
same period, based on interviews of parties at

the wharf, Statement B, Exh. A............... 10,000.00

(6) Additional subsistence expenses. for the
M.V. Mindoro and Panay due to the delays in
their dismissal from January 1 to August 31,
1954 as certified by the pursers of the two
vessels, Statement C, Exh. A.....................
(7) Estimated loss in freight and passenger
revenue for the period from January 1 to
August 31, 1954, based on 1953 freight revenue
for the same period Statement D, Exh. A.....
(8) Estimated loss in passenger fares for
the period from September to December 31,
1954, Statement D, Exh. A.......................
(9) Lost freight charges from September
12 to December 28, 1954, as certified by the
chief clerk of the consignees. Iligan office. Exh.
B.............................................................
(10) Estimated overhead expenses for
delay of vessels in port, Exh. B.................
(11) Forklift operating expenses. for 1955,
consisting of salaries and maintenance
expenses, Exh. E- 1....................................
(12) Lost freight revenue for 1955, Exh. E-
2...............................................................
(13) Forklift operating expenses. for 1956,
Exh. F- 1...................................................
(14) Lost freight revenue for 1956, Exh. F-2
(15) Forklift operating expenses. for 1957,
Exh. G- 1................................................... 8,259.08
(16) Lost freight revenue for 1957, Exh. G-
2.................................................................... 14,538.10
4,407.50 (17) Forklift operating expenses. for 1958,
Exh. H-1................................................... 7,503.45
(18) Lost freight revenue for 1958, Exh. H-
2............................................................. 10,193.46
100,000.00 (19) Forklift operating expenses. for 1959,
Exh. I-1.................................................... 8,745.35
(20) Lost freight revenue for 1959, Exh. I-2 7,959.83
20,000.00 T OT A L - P349,245.37
We tabulated the alleged damages, to show that the trial court's award to the company of
P450,000 as damages, is not supported by the evidence. On the other hand, the statement of the
consignees. counsel that the damages, totalled P412,663.17 (162- 164 tsn March 11, 1960) is
wrong.
62,680.12
Teves, the consignees. branch manager, submitted a statement (Exh. K) showing the alleged cost
of three forklifts, 200 pieces of pallet boards, 530 pieces of wire rope slings and two pieces of
tarpaulins in the total sum of P27,215. In that statement, he claims that the damages, to the
20,000.00 company by reason of the depreciation of the said items of equipment amounted to P38,835 or
more than the cost thereof.
The company's counsel, in his summary of the damages, ignored the alleged damages, of P38,835
indicated by Teves in Exhibit K. The consignees. counsel relied oth on the auditors' reports,
Exhibits A and E to I and on Exhibit B, the chief clerk's statement. As already noted, those
5,677.54
documents show that the total damages, claimed by the company amounted to P349,245.37.
The best evidence on the cost of the said equipment would have been the sales invoices instead
17,838.78 of the oral testimony of Teves. He did not produce the sales invoices.
Teves further testified that Salvador T. Lluch was the president of the union; Nicanor Halibas, the
3,520.90
treasurer; Mariano Badelles, the general manager, and Luarentino Badelles, a vice president.
3,849.56 Appellants' statement of facts. - To sustain their appeal, the appellants made the following
exceedingly short and deficient recital of the facts:
 Sometime in the month of August, 1954, defendant, Allied Free Workers
Union filed an unfair labor practice case against defendant (should be
plaintiff) and its branch manager, Mr. Jose Teves, with the Court of Industrial
Relations, Manila, and docketed as Case No. 426-UPL: defendant union also
filed a petition for certification election docketed as Case No, 175-MC against
plaintiff; defendant union also filed a notice of strike dated August 27, 1954;
the Secretary of Labor wired the public defender, Iligan City, on August 27,
1954 (see annexes 1-4, motion to dismiss, Record on Appeal, pp. 54-65).
To counteract these legitimate moves of labor, plaintiff filed the complaint
docketed as Civil Case No. 577 in the Court of First Instance of Lanao (now
Lanao del Norte) for damages, and/or resolution of contract with writ of
preliminary injunction, On a decision adverse to their interests, defendants
take this appeal.
On the question of jurisdiction taken before this Honorable Tribunal in G.R.
No. L-8876, it was held:
... for the instant case merely refers to the recovery of damages, occasioned by
the picketing undertaken by the members of the union and the rescission of
the arrastre and stevedoring contract previously entered into between the
parties.
The appellants did not discuss their oral and documentary evidence. *
First assignment of error. - The appellants contend that the trial court erred in awarding to the
company actual damages, amounting to P450,000, moral damages, of P50,000 and attorney's
Considering of P20,000, and in holding that the four officers of the union are solidarily liable for
the said damages.
Appellants' counsel assailed the award of actual damages, on the ground that the auditors'
reports, on which they were based, were hearsay.
After analyzing the nature of the damages, awarded, how the same were computed, and the
trustworthiness of the company's evidence, we find the first assignment of error meritorious.
We have already stress that, on the basis of the reports of the two accountants, the damages,
claimed by the complaint as a matter of simple addition, does not reach the sum of P 450,000
fixed by the trial court. The damages, shown in the accountants' reports and in the statement
made by the consignees. chief clerk (who did not testify) amount to P349,245.37, or much less
than P450,000.
The company argues that the accountants' reports are admissible in evidence because of the rule
that "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
oth the general result of the whole", the original writings need not be produced (Sec. 2[e], Rule
130, Rules of Court).
That rule cannot be applied in this case because the voluminous character of the records, on
which the accountants' reports were based, was not duly established (U. S. vs. Razon and Tayag,
37 Phil. 856, 861; 29 Am Jur 2nd 529).
It is also a requisite for the application of the rule that the records and accounts should be made
accessible to the adverse party so that the company, of the summary may be tested on cross-
examination (29 Am Jur 2nd 517-8; 32A C.J.S. 111).
What applies to this case is the general rule "that an audit made by, or the testimony of, a private
auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or
the like" (Anno 52 ALR 1266).
That general rule cannot be relaxed in this case because the company failed to make a
preliminary showing as to the difficulty or impossibility attending the production of the records
in court and their examination and analysis as evidence by the court (29 Am Jur 2nd 529).
A close scrutiny of the accountants' reports reveals their lack of probative value. The propriety
of allowing the different items of damages, is discussed below.
Unrealized freight and passenger revenue for 1954 ascertained by Accountant Demetrio S. Jayme. -
In his report (Exh. A, pp. 134 to 147, Record on Appeal), Jayme used the pronouns "we" and "our"
and made reference to the examination made by the "auditors" and his accounting office.
He did not disclose the names of other "auditors" who assisted him in making the examination of
the consignees. records.
He gave the impression that he was an independent accountant hired by the company to make a
"special investigation" of the consignees. losses for the period from January 1 to September 7,
1954.
The truth is that Jayme was a "personal friend" of Teves, the consignees. branch manager at Iligan
City. Teves was the consignees. principal witness in this case. He verified the complaint. herein.
He signed for the company the stevedoring and arrastre contract which he later rescinded. In
fact, Teves intervened in the drafting of the contract. It was his Idea that the company should not
pay the arrastre and stevedoring Considering and that those charges should be borne by the
shippers and consignees.
Jayme was not only the friend of Teves but was also his co-employee. Jayme was the consignees.
branch manager at Ozamis City and later at Cagayan de Oro City (217-8 tsn May 20, 1960; Exh.
12). He suppressed that fact in his report of examination. Apparently, the practice of accounting
was his sideline or he practised accounting and, as the saying goes, he moonlighted as the
consignees. branch manager. Obviously, Jayme would be biased for the company. He violated a
rule of the accountants' code of ethics by not disclosing in his report of examination that he was
an employee of the company (84 tsn June 2, 1960).
Accountant Jayme allegedly found from the consignees. records at Iligan City that its freight and
passenger revenue for the eight- month period from January 1 to August 31, 1953 amounted to
P373,333.14 and that for the same period in 1954, that revenue amounted to P470,716.29, or an
increase of P97,383.12 (Statement D of Exh. A, 145, Record on Appeal).
Jayme interpreted those figures as signifying that the company would have realized more
revenue if the union had rendered better service. He reasoned out that there was a big volume of
business in Iligan City due to the Maria Cristina Fertilizer Plant, Iligan Steel Mill and NPC
Hydroelectric Plant. He imagined that the consignees. freight revenue during the first eight
months of 1954 could have amounted to at least P600,000 and that since it actually realized oth
P 470,716.29, its loss of freight revenue for that period could be "conservatively" estimated at
least P100,000 (item 7 of the tabulation of damages).
He stated that he attached to his report on the comparative statement of gross revenue a
certificate of the captain of the vessel Panay showing the delays in its dismissal in Iligan City as
indicated in its logbook. No such document was attached to Jayme's report.
And from the fact that the total fares received by the company during the eight-month period
were reduced in the sum of P3,951.58 (Jayme fixed the reduction at the round figure of P4,000),
he calculated that the company suffered a loss of at least P20,000 in passenger revenue up to
December 31, 1954 (Item 8 of the tabulation of damages).
Jayme also included in his report (a) damages, amounting to P10,000 as his estimate of losses
supposedly "based on interviews with disinterested parties at the wharf and city proper
customers"; (b) damages, amounting to P3,764.50 allegedly suffered in the operation of the
vessels Mindoro and Panay from September 4 to 11, 1954, consisting of extra meals, expenses.
for unloading cargo, estimated loss in passage revenue for four voyages, and estimated loss from
14 re-routed freights to competing vessels" (consisting of rice, corn and bananas), and (e) the
sum of P4,407.50 as alleged additional subsistence incurred for the crew of
the Panay and Mindoro from January 1 to August 31, 1954 (items 4, 5 and 6 of the tabulation of
damages). The records of the purser and chief steward were allegedly examined in ascertaining
those damages.
It would not be proper to allow Jayme's estimates as recoverable damages. They are not
supported by reliable evidence. They can hardly be sanctioned by the "generally accepted
auditing standards" alluded to in Jayme's report. The pertinent records of the company should
have been produced in court. The purser and steward did not testify.
The rule is that the auditor's summary should not include his conclusions or inferences (29 Am
Jur 2d 519). His opinion is not evidence.
The trial court unreservedly gave credence to the conjectures of Jayme. Obviously, his inflated
guesses are inherently speculative and devoid of probative value. Furthermore, his estimate of
the unrealized freight revenue for January 1 to August 31, 1954 overlapped with his computation
of the lost freight for the unloaded 74,751 bags of fertilizer and other cargoes covering the same
period (Statement A of Exh. A).
The foregoing discussion shows Jayme's unreliable modus operandi in ascertaining the 1954
losses which the company claimed to have suffered in consequence of the union's alleged
inefficiency or poor service. It is noteworthy that those losses were not averred with particularity
and certitude in the consignees. complaint.
The same observations apply with equal cogency to the damages, amounting to P40,407.20 as
lost freight revenue also for the year 1954 (items 1 to 3 of the tabulation of damages) which were
computed by Accountant Jayme.
Those items refer to (1) the sum of P29,900.40 as lost freight revenue on 74,751 bags of fertilizer,
already mentioned, which were booked for shipment in the consignees. vessels from January 1
to August 31, 1954 but which were allegedly loaded in other vessels; (2) P4,339.64 as unrealized
freight revenue for other cargoes booked in the consignees. vessels but not loaded therein during
the same eight-month period, and (3) P6,167,16 as unrealized freight revenue on shutout cargoes
not loaded in the consignees. vessels during the six-day period from September 2 to 7, 1954.
Jayme allegedly based his computations on the records of the company which were not produced
in court. The union objected to Jayme's report as inadmissible under the hearsay rule or as not
being the best evidence.
Even if the presentation of the records themselves as exhibits should have been dispensed with,
yet the complaint to show good faith and fair dealing, could have brought the records in court
(manifests, bills of lading, receipts for the freights, if any, etc.) and enabled the court and the
union's counsel and its expert accountant to verify the accuracy of Jayme's summaries.
Photostatic copies of some manifests and bills of lading proving that the company was not able
to collect the stipulated freight on the alleged shutout cargoes should have been proforma. in
evidence as supporting papers for Jayme's report. No such exhibits were presented.
The flaw or error in relying merely on Jayme's summaries is that, as pointed out by witness
Mariano LL. Badelles, cargoes might be shutout due to causes other than the supposed
inefficiency of the union. He testified that cargoes were shutout deliberately by the company
because they could not be loaded in one vessel (for example, 50,000 bags of fertilizer), or a
shipper had no allotment, or because the company did not want to load cargoes like bananas
(189-194 tsn May 20, 1960). Jayme's summaries did not take into account the probability that a
part of the cargo booked in the consignees. vessel for a certain date might not have been loaded
on that date but was loaded in another vessel of the company which docked at the port a few
days later, In that case, there would be no loss of freight revenue. The mere shutting out of cargo
in a particular voyage did not ipso facto produce loss of freight revenue.
Our conclusion is that an injustice would be perpetrated if the damages, aggregating P178,579
computed and estimated in the report of Jayme, a biased witness, should be accepted at their face
value.
Damages computed by Salvador M. Magante. - The company also claims as damages, for the period
from September 12 to December 28, 1954 lost freight charges on shutout cargoes in the sum of
P62,680.12, and the sum of P20,000 as "overhead expenses. for delay of vessels in port", as set
forth by Salvador M. Magante, the consignees. chief clerk at Iligan City, in his statement, Exhibit
B (items 9 and 10 of the tabulation of damages).
Magante did not testify on his statement. Instead, accountant Jayme, substituting for Magante,
testified on that statement. Jayme said that he verified the consignees. records on which Magante
based his statement. Jayme assured the court that the figures in Magante's statement were
supported by the consignees. records.
But as to the damages, of P20,000, Jayme said that he could not certify as to their company,
because he had not finished his investigation (33 tsn March 9, 1955). In spite of that admission,
the trial court allowed that item of damages.
The trial court erred in allowing the damages, totalling P82,680.12 because Magante's statement,
Exhibit B, is hearsay. Magante should have been proforma. as a witness. Jayme was not competent
to take his place since the statement was prepared by Magante, not by Jayme. More appropriate
still, the documents and records on which the statement was based should have been proforma.
as evidence or at least brought to the court for examination by the union's counsel and its
accountant. The trial court required the production of the manifests supporting Magante's
statement (85-86 tsn march 9, 1955). Only one such manifest, Exhibit C, was produced. The
nonproduction of the other records was not explained.
Lost freight revenue and operating expenses for the forklifts. - The company claimed as damages,
the sum of P87,986.05 (P151,403.85 as erroneously computed by the consignees. counsel, 163
tsn March 11, 1950) consisting of supposed unrealized freight charges for shutout or unloaded
cargoes for the year 1955 to 1959 (Exh. E to I, Items 11 to 20 of the tabulation of damages).
The claim is covered by the company's third supplemental complaint dated March 9, 1960
wherein it was alleged that due to the acts of the union and its officers the company had suffered
damages, of not less than P25,000 annually since 1955 (320-3, Record on Appeal). That
supplemental complaint was hurriedly filed during the trial as directed by the trial court.
The said damages, were computed in the reports of Miguel J. Siojo, an accountant who, for two
days and nights, March 8 to 10, 1960, or shortly before and during the trial, allegedly examined
the consignees. record at Iligan City, such as its cash book, cash vouchers, reports to the head
office, shipping manifests, and liquidation reports. Those records were not produced in court.
Their nonproduction was not explained. If the accountant was able to summarize the contents of
those records in two days, they could not have been very voluminous. They should have been
offered in evidence.
The alleged expenses. in the operation of the forklifts consisted of (a) the wates of the operators
hired by the company and (b) the cost of gasoline and oil and expenses. for repair.
The company's theory is that under the 1952 contract (Exh. J) the union was obligated to provide
for forklifts in the loading and unloading of cargo. Inasmuch as the union allegedly did not have
forklifts, the complaint to expedite the arrastre and stevedoring work, purchase forklifts, hired
laborers to operate the same, and paid for the maintenance expenses. The company treated those
expenses as losses or damages.
Those alleged damages, amounting to P87,986.05 are in the same category as the depreciation
allowances amounting to P38,835 which the company claimed for the forklifts, pallet boards,
tarpaulins and wire rope slings that it purchased for oth P27,215, We have stated that the
consignees. counsel ignored that depreciation in his recapitulation of the damages, claimed by
the plaintiff.
The union contends that Siojo's reports (Exh. E to I) were inadmissible evidence because they
were hearsay, meaning that the original documents, on which the reports were based, were not
presented in evidence and, therefore, appellants' counsel and the court itself were not able to
gauge the correctness of the figures or data contained in the said reports. The person who had
personal knowledge of the operating expenses. was not examined in court.
We are of the opinion that, to avoid fraud or fabrication, the documents evidencing the alleged
expenses. should have been proforma. in evidence. Siojo's reports were not the best evidence on
the said operating expenses. The explanation of Badelles with respect to shutout cargoes and our
observations on Jayme's summaries are applicable to accountant Siojo's reports.
A more substantial ground for rejecting Siojo's reports is that the said expenses, if really incurred,
cannot be properly treated as darn ages to the company.
The union's witness, Mariano LI. Badelles, testified that the consignees. forklifts were not used
exclusively on the wharf. They were used in the fertilizer and carbide plants. Sometimes, the
union supplied the driver and the gasoline for the operation of the forklifts (174-177 tsn May 20,
1960).
Moreover, as stated earlier, the company was not paying the union a single centavo for arrastre
and stevedoring work. The shippers and consignees paid for the arrastre service rendered by the
union. The union did not receive any compensation for stevedoring work.
The company complained that the union had been rendering unsatisfactory arrastre and
stevedoring services. That grievance was controverted by the union.
The use of the forklifts, tarpaulins pallet boards and wire rope slings immeasurably benefitted
the company. It is not proper nor just that the consignees. investment in those pieces of
equipment should be considered damages, just because it was able to bind the union to a one-
sided contract which exempted it from the payment of arrastre and stevedoring Considering and
which impliedly obligated the union to purchase the said equipment.
If the service rendered by the union members was unsatisfactory, it must be because the poor
stevedores were underfed and underpaid. They were underfed and underpaid because the
company was astute enough to insure that it would obtain stevedoring service without paying
for it.
If to improve the arrastre and stevedoring service, the company had to incur expenses. for the
purchase of forklifts, pallet boards, tarpaulins and wire rope slings and for the operation of the
forklifts, the union should not be required to reimburse the company for those expenses. The
company should bear those expenses. because the same redounded to its benefit.
The trial court erred in ordering the union and its officials to pay the amount of the said expenses.
as damages, to the company.
Moral damages and attorney's fees. - Considering that the consignees. claim for moral damages,
was based on the same facts on which it predicated its claim for actual deduction which we have
found to be groundless, it follows that the company, a juridical person, is not entitled to moral
damages.
Anyway, the company did not plead and prove moral damages. It merely claimed moral damages,
in the prayer of its complaint. That is not sufficient (Darang vs. Ty Belizar, L-19487, January 31,
1967, 19 SCRA 214, 222).
Under the facts of this case, we do not find any justification for awarding attorney's Considering
to the company. Hence, the trial court's award of P20,000 as attorney's Considering is set aside.
Appellants' first assignment of error, although not properly argued by their counsel, should be
sustained.
Other assignments of error. - The union and its officers contend that the lower court erred in
dismissing their counterclaims. Their counsel did not even bother to state in their brief the
amount of the counterclaims.
The union filed counterclaims for P200,000 as compensation for stevedoring services from
August, 1952 to March 4, 1955; P500,000 as deduction P10,000 as attorney's Considering and
P5,000 as premium on the counterbond (251-2, Record on Appeal). In their supplemental
counterclaim, they demanded P500,000 as stevedoring charges for the period from March 4,
1955 to March 4, 1960 and additional damages, of P10,000 (308-10, Record on Appeal). The trial
court dismissed the said counterclaims.
The appellants in their three-sentence argument in support of their counterclaims alleged that
the company's bill of lading provided that the unloading of the cargoes was at the consignees.
expense (Exh. 1); that the company had not paid the sum of P500,000 as compensation for the
stevedoring services rendered by the laborers up to 1960, and that the stipulation in the arrastre
contract, "that the Compañia Maritima shall not be liable for the payment of the services rendered
by the Allied Free Workers Union for the loading and deliveries of cargoes as same is payable by
the owners and consignees of cargoes, as it has been the practice in the port of Iligan City" (Exh.
J, pp. 14, 334, 359, 500 Record on Appeal), was 'non- operative" and void, "being contrary to
morals and public policy".
That superficial argument is not well-taken. The printed stipulation in the bill of lading was
superseded by the contractual stipulation. The contract was prepared by the union officials. As
already noted, it was stipulated in the contract that the stevedoring and arrastre charges should
be paid by the shippers and consignees in consonance with the practice in Iligan City. That
stipulation was binding and enforceable.
The supposed illegality of that stipulation was not squarely raised by the union and its officials
in their answer. They merely averred that the contract did not express the true agreement of the
parties. They did not sue for reformation of the instrument evidencing the contract. The lower
court did not err in dismissing defendants' counterclaims.
The other two errors assigned by the appellants, namely, that the lower court erred in issuing a
permanent injunction against them and in executing its decision pending appeal, are devoid of
merit.
The appellants invoke section 9(d) of the Magna Carta of Labor regarding the issuance of
injunctions. That section has no application to this case because it was definitively ruled by this
Court in the certification and unfair labor practice cases that there is no employer-employee
relationship between the company and the stevedores. (They work under the cabo system).
The lower court did not execute the money aspect of its judgment. It merely required the
defendants to file a supersedeas bond of P50,000.
As to the injunction, it should be recalled that it was this Court which, in its resolution of May 16,
1962 in the execution and appeal incident (L-19651, 17 SCRA 513), allowed the company to
terminate the stevedoring and arrastre work of the union and to use another union to perform
that work.
The company had the contractual right to terminate the 1952 contract (Taylor vs. Uy Teng Piao,
43 Phil. 873). The lower court did not err in sustaining the consignees. rescission of the contract
and in enjoining the union from performing arrastre and stevedoring work.
WHEREFORE, that portion of the trial court's judgment declaring the arrastre and stevedoring
contract terminated, permanently enjoining the union and its officials from performing arrastre
and stevedoring work for the vessels of the Compañia Maritima, and dismissing defendants'
counterclaim is affirmed.
The lower court's award of damages, is reversed and set aside. No costs.
SO ORDERED.
G.R. No. L-23893 October 29, 1968
VILLA REY TRANSIT, INC., plaintiff-appellant,
vs.
EUSEBIO E. FERRER, PANGASINAN TRANSPORTATION CO., INC. and PUBLIC SERVICE
COMMISSION,defendants.
EUSEBIO E. FERRER and PANGASINAN TRANSPORTATION CO., INC., defendants-appellants.
PANGASINAN TRANSPORTATION CO., INC., third-party plaintiff-appellant,
vs.
JOSE M. VILLARAMA, third-party defendant-appellee.
ANGELES, J.:
This is a tri-party appeal from the decision of the Court of First Instance of Manila, Civil Case No.
41845, declaring null and void the sheriff's sale of two certificates of public convenience in favor
of defendant Eusebio E. Ferrer and the subsequent sale thereof by the latter to defendant
Pangasinan Transportation Co., Inc.; declaring the plaintiff Villa Rey Transit, Inc., to be the lawful
owner of the said certificates of public convenience; and ordering the private defendants, jointly
and severally, to pay to the plaintiff, the sum of P5,000.00 as and for attorney's fees. The case
against the PSC was dismissed.
The rather ramified circumstances of the instant case can best be understood by a chronological
narration of the essential facts, to wit:
Prior to 1959, Jose M. Villarama was an operator of a bus transportation, under the business
name of Villa Rey Transit, pursuant to certificates of public convenience granted him by the
Public Service Commission (PSC, for short) in Cases Nos. 44213 and 104651, which authorized
him to operate a total of thirty-two (32) units on various routes or lines from Pangasinan to
Manila, and vice-versa. On January 8, 1959, he sold the aforementioned two certificates of public
convenience to the Pangasinan Transportation Company, Inc. (otherwise known as Pantranco),
for P350,000.00 with the condition, among others, that the seller (Villarama) "shall not for a
period of 10 years from the date of this sale, apply for any TPU service identical or competing
with the buyer."
Barely three months thereafter, or on March 6, 1959: a corporation called Villa Rey Transit, Inc.
(which shall be referred to hereafter as the Corporation) was organized with a capital stock of
P500,000.00 divided into 5,000 shares of the par value of P100.00 each; P200,000.00 was the
subscribed stock; Natividad R. Villarama (wife of Jose M. Villarama) was one of the incorporators,
and she subscribed for P1,000.00; the balance of P199,000.00 was subscribed by the brother and
sister-in-law of Jose M. Villarama; of the subscribed capital stock, P105,000.00 was paid to the
treasurer of the corporation, who was Natividad R. Villarama.
In less than a month after its registration with the Securities and Exchange Commission (March
10, 1959), the Corporation, on April 7, 1959, bought five certificates of public convenience, forty-
nine buses, tools and equipment from one Valentin Fernando, for the sum of P249,000.00, of
which P100,000.00 was paid upon the signing of the contract; P50,000.00 was payable upon the
final approval of the sale by the PSC; P49,500.00 one year after the final approval of the sale; and
the balance of P50,000.00 "shall be paid by the BUYER to the different suppliers of the SELLER."
The very same day that the aforementioned contract of sale was executed, the parties thereto
immediately applied with the PSC for its approval, with a prayer for the issuance of a provisional
authority in favor of the vendee Corporation to operate the service therein involved.1 On May 19,
1959, the PSC granted the provisional permit prayed for, upon the condition that "it may be
modified or revoked by the Commission at any time, shall be subject to whatever action that may
be taken on the basic application and shall be valid only during the pendency of said application."
Before the PSC could take final action on said application for approval of sale, however, the Sheriff
of Manila, on July 7, 1959, levied on two of the five certificates of public convenience involved
therein, namely, those issued under PSC cases Nos. 59494 and 63780, pursuant to a writ of
execution issued by the Court of First Instance of Pangasinan in Civil Case No. 13798, in favor of
Eusebio Ferrer, plaintiff, judgment creditor, against Valentin Fernando, defendant, judgment
debtor. The Sheriff made and entered the levy in the records of the PSC. On July 16, 1959, a public
sale was conducted by the Sheriff of the said two certificates of public convenience. Ferrer was
the highest bidder, and a certificate of sale was issued in his name.
Thereafter, Ferrer sold the two certificates of public convenience to Pantranco, and jointly
submitted for approval their corresponding contract of sale to the PSC. 2 Pantranco therein
prayed that it be authorized provisionally to operate the service involved in the
said two certificates.
The applications for approval of sale, filed before the PSC, by Fernando and the Corporation, Case
No. 124057, and that of Ferrer and Pantranco, Case No. 126278, were scheduled for a joint
hearing. In the meantime, to wit, on July 22, 1959, the PSC issued an order disposing that during
the pendency of the cases and before a final resolution on the aforesaid applications, the
Pantranco shall be the one to operate provisionally the service under the twocertificates
embraced in the contract between Ferrer and Pantranco. The Corporation took issue with this
particular ruling of the PSC and elevated the matter to the Supreme Court, 3 which decreed, after
deliberation, that until the issue on the ownership of the disputed certificates shall have been
finally settled by the proper court, the Corporation should be the one to operate the lines
provisionally.
On November 4, 1959, the Corporation filed in the Court of First Instance of Manila, a complaint
for the annulment of the sheriff's sale of the aforesaid two certificates of public convenience (PSC
Cases Nos. 59494 and 63780) in favor of the defendant Ferrer, and the subsequent sale thereof
by the latter to Pantranco, against Ferrer, Pantranco and the PSC. The plaintiff Corporation
prayed therein that all the orders of the PSC relative to the parties' dispute over the said
certificates be annulled.
In separate answers, the defendants Ferrer and Pantranco averred that the plaintiff Corporation
had no valid title to the certificates in question because the contract pursuant to which it acquired
them from Fernando was subject to a suspensive condition — the approval of the PSC — which
has not yet been fulfilled, and, therefore, the Sheriff's levy and the consequent sale at public
auction of the certificates referred to, as well as the sale of the same by Ferrer to Pantranco, were
valid and regular, and vested unto Pantranco, a superior right thereto.
Pantranco, on its part, filed a third-party complaint against Jose M. Villarama, alleging that
Villarama and the Corporation, are one and the same; that Villarama and/or the Corporation was
disqualified from operating the two certificates in question by virtue of the aforementioned
agreement between said Villarama and Pantranco, which stipulated that Villarama "shall not for
a period of 10 years from the date of this sale, apply for any TPU service identical or competing
with the buyer."
Upon the joinder of the issues in both the complaint and third-party complaint, the case was tried,
and thereafter decision was rendered in the terms, as above stated.
As stated at the beginning, all the parties involved have appealed from the decision. They
submitted a joint record on appeal.
Pantranco disputes the correctness of the decision insofar as it holds that Villa Rey Transit, Inc.
(Corporation) is a distinct and separate entity from Jose M. Villarama; that the restriction clause
in the contract of January 8, 1959 between Pantranco and Villarama is null and void; that the
Sheriff's sale of July 16, 1959, is likewise null and void; and the failure to award damages in its
favor and against Villarama.
Q. Doctor, I want to go back again to the incorporation of the Villa Rey Transit, Inc.
You heard the testimony presented here by the bank regarding the initial opening
deposit of ONE HUNDRED FIVE THOUSAND PESOS, of which amount Eighty-Five
Thousand Pesos was a check drawn by yourself personally. In the direct examination
you told the Court that the reason you drew a check for Eighty-Five Thousand Pesos
was because you and your wife, or your wife, had spent the money of the stockholders
given to her for incorporation. Will you please tell the Honorable Court if you knew at
the time your wife was spending the money to pay debts, you personally knew she was
spending the money of the incorporators?
A. You know my money and my wife's money are one. We never talk about those
things.
Q. Doctor, your answer then is that since your money and your wife's money are one
money and you did not know when your wife was paying debts with the incorporator's
money?

Ferrer, for his part, challenges the decision insofar as it holds that the sheriff's sale is null and A. Because sometimes she uses my money, and sometimes the money given to her
void; and the sale of the two certificates in question by Valentin Fernando to the Corporation, is she gives to me and I deposit the money.
valid. He also assails the award of P5,000.00 as attorney's fees in favor of the Corporation, and
the failure to award moral damages to him as prayed for in his counterclaim. Q. Actually, aside from your wife, you were also the custodian of some of the
incorporators here, in the beginning?
The Corporation, on the other hand, prays for a review of that portion of the decision awarding
only P5,000.00 as attorney's fees, and insisting that it is entitled to an award of P100,000.00 by A. Not necessarily, they give to my wife and when my wife hands to me I did not
way of exemplary damages. know it belonged to the incorporators.

After a careful study of the facts obtaining in the case, the vital issues to be resolved are: (1) Does Q. It supposes then your wife gives you some of the money received by her in her
the stipulation between Villarama and Pantranco, as contained in the deed of sale, that the former capacity as treasurer of the corporation?
"SHALL NOT FOR A PERIOD OF 10 YEARS FROM THE DATE OF THIS SALE, APPLY FOR ANY TPU
SERVICE IDENTICAL OR COMPETING WITH THE BUYER," apply to new lines only or does it A. Maybe.
include existing lines?; (2) Assuming that said stipulation covers all kinds of lines, is such
stipulation valid and enforceable?; (3) In the affirmative, that said stipulation is valid, did it bind
the Corporation? Q. What did you do with the money, deposit in a regular account?

For convenience, We propose to discuss the foregoing issues by starting with the last proposition. A. Deposit in my account.

The evidence has disclosed that Villarama, albeit was not an incorporator or stockholder of the Q. Of all the money given to your wife, she did not receive any check?
Corporation, alleging that he did not become such, because he did not have sufficient funds to
invest, his wife, however, was an incorporator with the least subscribed number of shares, and A. I do not remember.
was elected treasurer of the Corporation. The finances of the Corporation which, under all
concepts in the law, are supposed to be under the control and administration of the treasurer Q. Is it usual for you, Doctor, to be given Fifty Thousand Pesos without even asking
keeping them as trust fund for the Corporation, were, nonetheless, manipulated and disbursed what is this?
as if they were the private funds of Villarama, in such a way and extent that Villarama appeared
to be the actual owner-treasurer of the business without regard to the rights of the stockholders.
The following testimony of Villarama,4together with the other evidence on record, attests to that xxx xxx xxx
effect:
JUDGE: Reform the question.
 Q. The subscription of your brother-in-law, Mr. Reyes, is Fifty-Two Thousand Pesos,
did your wife give you Fifty-two Thousand Pesos?
A. I have testified before that sometimes my wife gives me money and I do not know
exactly for what.
The evidence further shows that the initial cash capitalization of the corporation of P105,000.00
was mostly financed by Villarama. Of the P105,000.00 deposited in the First National City Bank
of New York, representing the initial paid-up capital of the Corporation, P85,000.00 was covered
by Villarama's personal check. The deposit slip for the said amount of P105,000.00 was admitted
in evidence as Exh. 23, which shows on its face that P20,000.00 was paid in cash and P85,000.00
thereof was covered by Check No. F-50271 of the First National City Bank of New York. The
testimonies of Alfonso Sancho5 and Joaquin Amansec,6 both employees of said bank, have proved
that the drawer of the check was Jose Villarama himself.
Another witness, Celso Rivera, accountant of the Corporation, testified that while in the books of
the corporation there appears an entry that the treasurer received P95,000.00 as second
installment of the paid-in subscriptions, and, subsequently, also P100,000.00 as the first
installment of the offer for second subscriptions worth P200,000.00 from the original
subscribers, yet Villarama directed him (Rivera) to make vouchers liquidating the sums.7 Thus,
it was made to appear that the P95,000.00 was delivered to Villarama in payment for equipment
purchased from him, and the P100,000.00 was loaned as advances to the stockholders. The said
accountant, however, testified that he was not aware of any amount of money that had actually
passed hands among the parties involved,8 and actually the only money of the corporation was
the P105,000.00 covered by the deposit slip Exh. 23, of which as mentioned above, P85,000.00
was paid by Villarama's personal check.
Further, the evidence shows that when the Corporation was in its initial months of operation,
Villarama purchased and paid with his personal checks Ford trucks for the Corporation. Exhibits
20 and 21 disclose that the said purchases were paid by Philippine Bank of Commerce Checks
Nos. 992618-B and 993621-B, respectively. These checks have been sufficiently established by
Fausto Abad, Assistant Accountant of Manila Trading & Supply Co., from which the trucks were
purchased9 and Aristedes Solano, an employee of the Philippine Bank of Commerce, 10as having
been drawn by Villarama.
Exhibits 6 to 19 and Exh. 22, which are photostatic copies of ledger entries and vouchers showing
that Villarama had co-mingled his personal funds and transactions with those made in the name
of the Corporation, are very illuminating evidence. Villarama has assailed the admissibility of
these exhibits, contending that no evidentiary value whatsoever should be given to them since
"they were merely photostatic copies of the originals, the best evidence being the originals
themselves." According to him, at the time Pantranco offered the said exhibits, it was the most
likely possessor of the originals thereof because they were stolen from the files of the
Corporation and only Pantranco was able to produce the alleged photostat copies thereof.
Section 5 of Rule 130 of the Rules of Court provides for the requisites for the admissibility of
secondary evidence when the original is in the custody of the adverse party, thus: (1) opponent's
possession of the original; (2) reasonable notice to opponent to produce the original; (3)
satisfactory proof of its existence; and (4) failure or refusal of opponent to produce the original
in court.11 Villarama has practically admitted the second and fourth requisites.12As to the third,
he admitted their previous existence in the files of the Corporation and also that he had seen
some of them.13 Regarding the first element, Villarama's theory is that since even at the time of
the issuance of the subpoena duces tecum, the originals were already missing, therefore, the
Corporation was no longer in possession of the same. However, it is not necessary for a party
seeking to introduce secondary evidence to show that the original is in the actual possession of
his adversary. It is enough that the circumstances are such as to indicate that the writing is in his
possession or under his control. Neither is it required that the party entitled to the custody of the
instrument should, on being notified to produce it, admit having it in his possession. 14 Hence,
secondary evidence is admissible where he denies having it in his possession. The party calling
for such evidence may introduce a copy thereof as in the case of loss. For, among the exceptions
to the best evidence rule is "when the original has been lost, destroyed, or cannot be produced in
court."15 The originals of the vouchers in question must be deemed to have been lost, as even the
Corporation admits such loss. Viewed upon this light, there can be no doubt as to the
admissibility in evidence of Exhibits 6 to 19 and 22.
Taking account of the foregoing evidence, together with Celso Rivera's testimony, 16 it would
appear that: Villarama supplied the organization expenses and the assets of the Corporation,
such as trucks and equipment;17 there was no actual payment by the original subscribers of the
amounts of P95,000.00 and P100,000.00 as appearing in the books; 18 Villarama made use of the
money of the Corporation and deposited them to his private accounts;19 and the Corporation paid
his personal accounts.20
Villarama himself admitted that he mingled the corporate funds with his own money.21 He also
admitted that gasoline purchases of the Corporation were made in his name22 because "he had
existing account with Stanvac which was properly secured and he wanted the Corporation to
benefit from the rebates that he received."23
The foregoing circumstances are strong persuasive evidence showing that Villarama has been
too much involved in the affairs of the Corporation to altogether negative the claim that he was
only a part-time general manager. They show beyond doubt that the Corporation is his alter ego.
It is significant that not a single one of the acts enumerated above as proof of Villarama's oneness
with the Corporation has been denied by him. On the contrary, he has admitted them with offered
excuses.
Villarama has admitted, for instance, having paid P85,000.00 of the initial capital of the
Corporation with the lame excuse that "his wife had requested him to reimburse the amount
entrusted to her by the incorporators and which she had used to pay the obligations of Dr.
Villarama (her husband) incurred while he was still the owner of Villa Rey Transit, a single
proprietorship." But with his admission that he had received P350,000.00 from Pantranco for
the sale of the two certificates and one unit,24 it becomes difficult to accept Villarama's
explanation that he and his wife, after consultation,25 spent the money of their relatives (the
stockholders) when they were supposed to have their own money. Even if Pantranco paid the
P350,000.00 in check to him, as claimed, it could have been easy for Villarama to have deposited
said check in his account and issued his own check to pay his obligations. And there is no evidence
adduced that the said amount of P350,000.00 was all spent or was insufficient to settle his prior
obligations in his business, and in the light of the stipulation in the deed of sale between Villarama
and Pantranco that P50,000.00 of the selling price was earmarked for the payments of accounts
due to his creditors, the excuse appears unbelievable.
On his having paid for purchases by the Corporation of trucks from the Manila Trading & Supply
Co. with his personal checks, his reason was that he was only sharing with the Corporation his
credit with some companies. And his main reason for mingling his funds with that of the
Corporation and for the latter's paying his private bills is that it would be more convenient that
he kept the money to be used in paying the registration fees on time, and since he had loaned
money to the Corporation, this would be set off by the latter's paying his bills. Villarama admitted,
however, that the corporate funds in his possession were not only for registration fees but for
other important obligations which were not specified.26
Indeed, while Villarama was not the Treasurer of the Corporation but was, allegedly, only a part-
time manager,27 he admitted not only having held the corporate money but that he advanced and
lent funds for the Corporation, and yet there was no Board Resolution allowing it.28
Villarama's explanation on the matter of his involvement with the corporate affairs of the
Corporation only renders more credible Pantranco's claim that his control over the corporation,
especially in the management and disposition of its funds, was so extensive and intimate that it
is impossible to segregate and identify which money belonged to whom. The interference of
Villarama in the complex affairs of the corporation, and particularly its finances, are much too
inconsistent with the ends and purposes of the Corporation law, which, precisely, seeks to
separate personal responsibilities from corporate undertakings. It is the very essence of
incorporation that the acts and conduct of the corporation be carried out in its own corporate
name because it has its own personality.
The doctrine that a corporation is a legal entity distinct and separate from the members and
stockholders who compose it is recognized and respected in all cases which are within reason
and the law.29 When the fiction is urged as a means of perpetrating a fraud or an illegal act or as
a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement
or perfection of a monopoly or generally the perpetration of knavery or crime, 30 the veil with
which the law covers and isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an aggregation of individuals.
Upon the foregoing considerations, We are of the opinion, and so hold, that the preponderance
of evidence have shown that the Villa Rey Transit, Inc. is an alter ego of Jose M. Villarama, and
that the restrictive clause in the contract entered into by the latter and Pantranco is also
enforceable and binding against the said Corporation. For the rule is that a seller or promisor
may not make use of a corporate entity as a means of evading the obligation of his
covenant.31 Where the Corporation is substantially the alter ego of the covenantor to the
restrictive agreement, it can be enjoined from competing with the covenantee.32
The Corporation contends that even on the supposition that Villa Rey Transit, Inc. and Villarama
are one and the same, the restrictive clause in the contract between Villarama and Pantranco
does not include the purchase of existing lines but it only applies to application for the new lines.
The clause in dispute reads thus:
(4) The SELLER shall not, for a period of ten (10) years from the date of this sale apply
for any TPU service identical or competing with the BUYER. (Emphasis supplied)
As We read the disputed clause, it is evident from the context thereof that the intention of the
parties was to eliminate the seller as a competitor of the buyer for ten years along the lines of
operation covered by the certificates of public convenience subject of their transaction. The word
"apply" as broadly used has for frame of reference, a service by the seller on lines or routes that
would compete with the buyer along the routes acquired by the latter. In this jurisdiction, prior
authorization is needed before anyone can operate a TPU service,33whether the service consists
in a new line or an old one acquired from a previous operator. The clear intention of the parties
was to prevent the seller from conducting any competitive line for 10 years since, anyway, he has
bound himself not to apply for authorization to operate along such lines for the duration of such
period.34
If the prohibition is to be applied only to the acquisition of new certificates of public convenience
thru an application with the Public Service Commission, this would, in effect, allow the seller just
the same to compete with the buyer as long as his authority to operate is only acquired thru
transfer or sale from a previous operator, thus defeating the intention of the parties. For what
would prevent the seller, under the circumstances, from having a representative or dummy apply
in the latter's name and then later on transferring the same by sale to the seller? Since
stipulations in a contract is the law between the contracting parties,
Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith. (Art. 19, New
Civil Code.)
We are not impressed of Villarama's contention that the re-wording of the two previous drafts of
the contract of sale between Villarama and Pantranco is significant in that as it now appears, the
parties intended to effect the least restriction. We are persuaded, after an examination of the
supposed drafts, that the scope of the final stipulation, while not as long and prolix as those in
the drafts, is just as broad and comprehensive. At most, it can be said that the re-wording was
done merely for brevity and simplicity.
The evident intention behind the restriction was to eliminate the sellers as a competitor, and this
must be, considering such factors as the good will35 that the seller had already gained from the
riding public and his adeptness and proficiency in the trade. On this matter, Corbin, an authority
on Contracts has this to say.36
When one buys the business of another as a going concern, he usually wishes to keep it
going; he wishes to get the location, the building, the stock in trade, and the customers.
He wishes to step into the seller's shoes and to enjoy the same business relations with
other men. He is willing to pay much more if he can get the "good will" of the business,
meaning by this the good will of the customers, that they may continue to tread the old
footpath to his door and maintain with him the business relations enjoyed by the seller.
 ... In order to be well assured of this, he obtains and pays for the seller's promise not to
reopen business in competition with the business sold.
As to whether or not such a stipulation in restraint of trade is valid, our jurisprudence on the
matter37says:
The law concerning contracts which tend to restrain business or trade has gone through
a long series of changes from time to time with the changing condition of trade and
commerce. With trifling exceptions, said changes have been a continuous development
of a general rule. The early cases show plainly a disposition to avoid and annul all
contract which prohibited or restrained any one from using a lawful trade "at any time
or at any place," as being against the benefit of the state. Later, however, the rule became
well established that if the restraint was limited to "a certain time" and within "a certain
place," such contracts were valid and not "against the benefit of the state." Later cases,
and we think the rule is now well established, have held that a contract in restraint of
trade is valid providing there is a limitation upon either time or place. A contract,
however, which restrains a man from entering into business or trade without either a
limitation as to time or place, will be held invalid.
The public welfare of course must always be considered and if it be not involved and
the restraint upon one party is not greater than protection to the other requires,
contracts like the one we are discussing will be sustained. The general tendency, we
believe, of modern authority, is to make the test whether the restraint is reasonably
necessary for the protection of the contracting parties. If the contract is reasonably
necessary to protect the interest of the parties, it will be upheld. (Emphasis supplied.)
Analyzing the characteristics of the questioned stipulation, We find that although it is in the
nature of an agreement suppressing competition, it is, however, merely ancillary or incidental to
the main agreement which is that of sale. The suppression or restraint is only partial or limited:
first, in scope, it refers only to application for TPU by the seller in competition with the lines sold
to the buyer; second, in duration, it is only for ten (10) years; and third, with respect to situs or
territory, the restraint is only along the lines covered by the certificates sold. In view of these
limitations, coupled with the consideration of P350,000.00 for just two certificates of public
convenience, and considering, furthermore, that the disputed stipulation is only incidental to a
main agreement, the same is reasonable and it is not harmful nor obnoxious to public service.38 It
does not appear that the ultimate result of the clause or stipulation would be to leave solely to
Pantranco the right to operate along the lines in question, thereby establishing monopoly or
predominance approximating thereto. We believe the main purpose of the restraint was to
protect for a limited time the business of the buyer.
Indeed, the evils of monopoly are farfetched here. There can be no danger of price controls or
deterioration of the service because of the close supervision of the Public Service
Commission.39 This Court had stated long ago,40that "when one devotes his property to a use in
which the public has an interest, he virtually grants to the public an interest in that use and
submits it to such public use under reasonable rules and regulations to be fixed by the Public
Utility Commission."
Regarding that aspect of the clause that it is merely ancillary or incidental to a lawful agreement,
the underlying reason sustaining its validity is well explained in 36 Am. Jur. 537-539, to wit:
... Numerous authorities hold that a covenant which is incidental to the sale and transfer
of a trade or business, and which purports to bind the seller not to engage in the same
business in competition with the purchaser, is lawful and enforceable. While such
covenants are designed to prevent competition on the part of the seller, it is ordinarily
neither their purpose nor effect to stifle competition generally in the locality, nor to
prevent it at all in a way or to an extent injurious to the public. The business in the hands
of the purchaser is carried on just as it was in the hands of the seller; the former merely
takes the place of the latter; the commodities of the trade are as open to the public as
they were before; the same competition exists as existed before; there is the same
employment furnished to others after as before; the profits of the business go as they
did before to swell the sum of public wealth; the public has the same opportunities of
purchasing, if it is a mercantile business; and production is not lessened if it is a
manufacturing plant.
The reliance by the lower court on tile case of Red Line Transportation Co. v. Bachrach41 and
finding that the stipulation is illegal and void seems misplaced. In the said Red Line case, the
agreement therein sought to be enforced was virtually a division of territory between two
operators, each company imposing upon itself an obligation not to operate in any territory
covered by the routes of the other. Restraints of this type, among common carriers have always
been covered by the general rule invalidating agreements in restraint of trade. 42
Neither are the other cases relied upon by the plaintiff-appellee applicable to the instant case.
In Pampanga Bus Co., Inc. v. Enriquez,43the undertaking of the applicant therein not to apply for
the lifting of restrictions imposed on his certificates of public convenience was not an ancillary
or incidental agreement. The restraint was the principal objective. On the other hand, in Red Line
Transportation Co., Inc. v. Gonzaga,44 the restraint there in question not to ask for extension of
the line, or trips, or increase of equipment — was not an agreement between the parties but a
condition imposed in the certificate of public convenience itself.
Upon the foregoing considerations, Our conclusion is that the stipulation prohibiting Villarama
for a period of 10 years to "apply" for TPU service along the lines covered by the certificates of
public convenience sold by him to Pantranco is valid and reasonable. Having arrived at this
conclusion, and considering that the preponderance of the evidence have shown that Villa Rey
Transit, Inc. is itself the alter ego of Villarama, We hold, as prayed for in Pantranco's third party
complaint, that the said Corporation should, until the expiration of the 1-year period
abovementioned, be enjoined from operating the line subject of the prohibition.
To avoid any misunderstanding, it is here to be emphasized that the 10-year prohibition upon
Villarama is not against his application for, or purchase of, certificates of public convenience, but
merely the operation of TPU along the lines covered by the certificates sold by him to Pantranco.
Consequently, the sale between Fernando and the Corporation is valid, such that the rightful
ownership of the disputed certificates still belongs to the plaintiff being the prior purchaser in
good faith and for value thereof. In view of the ancient rule of caveat emptor prevailing in this
jurisdiction, what was acquired by Ferrer in the sheriff's sale was only the right which Fernando,
judgment debtor, had in the certificates of public convenience on the day of the sale.45
Accordingly, by the "Notice of Levy Upon Personalty" the Commissioner of Public Service was
notified that "by virtue of an Order of Execution issued by the Court of First Instance of
Pangasinan, the rights, interests, or participation which the defendant, VALENTIN A. FERNANDO
— in the above entitled case may have in the following realty/personalty is attached or levied
upon, to wit: The rights, interests and participation on the Certificates of Public Convenience
issued to Valentin A. Fernando, in Cases Nos. 59494, etc. ... Lines — Manila to Lingayen, Dagupan,
etc. vice versa." Such notice of levy only shows that Ferrer, the vendee at auction of said
certificates, merely stepped into the shoes of the judgment debtor. Of the same principle is the
provision of Article 1544 of the Civil Code, that "If the same thing should have been sold to
different vendees, the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property."
There is no merit in Pantranco and Ferrer's theory that the sale of the certificates of public
convenience in question, between the Corporation and Fernando, was not consummated, it being
only a conditional sale subject to the suspensive condition of its approval by the Public Service
Commission. While section 20(g) of the Public Service Act provides that "subject to established
limitation and exceptions and saving provisions to the contrary, it shall be unlawful for any public
service or for the owner, lessee or operator thereof, without the approval and authorization of
the Commission previously had ... to sell, alienate, mortgage, encumber or lease its property,
franchise, certificates, privileges, or rights or any part thereof, ...," the same section also provides:
... Provided, however, That nothing herein contained shall be construed to prevent the
transaction from being negotiated or completed before its approval or to prevent the
sale, alienation, or lease by any public service of any of its property in the ordinary
course of its business.
It is clear, therefore, that the requisite approval of the PSC is not a condition precedent for the
validity and consummation of the sale.
Anent the question of damages allegedly suffered by the parties, each of the appellants has its or
his own version to allege.
Villa Rey Transit, Inc. claims that by virtue of the "tortious acts" of defendants (Pantranco and
Ferrer) in acquiring the certificates of public convenience in question, despite constructive and
actual knowledge on their part of a prior sale executed by Fernando in favor of the said
corporation, which necessitated the latter to file the action to annul the sheriff's sale to Ferrer
and the subsequent transfer to Pantranco, it is entitled to collect actual and compensatory
damages, and attorney's fees in the amount of P25,000.00. The evidence on record, however,
does not clearly show that said defendants acted in bad faith in their acquisition of the certificates
in question. They believed that because the bill of sale has yet to be approved by the Public
Service Commission, the transaction was not a consummated sale, and, therefore, the title to or
ownership of the certificates was still with the seller. The award by the lower court of attorney's
fees of P5,000.00 in favor of Villa Rey Transit, Inc. is, therefore, without basis and should be set
aside.
Eusebio Ferrer's charge that by reason of the filing of the action to annul the sheriff's sale, he had
suffered and should be awarded moral, exemplary damages and attorney's fees, cannot be
entertained, in view of the conclusion herein reached that the sale by Fernando to the
Corporation was valid.
Pantranco, on the other hand, justifies its claim for damages with the allegation that when it
purchased ViIlarama's business for P350,000.00, it intended to build up the traffic along the lines
covered by the certificates but it was rot afforded an opportunity to do so since barely three
months had elapsed when the contract was violated by Villarama operating along the same lines
in the name of Villa Rey Transit, Inc. It is further claimed by Pantranco that the underhanded
manner in which Villarama violated the contract is pertinent in establishing punitive or moral
damages. Its contention as to the proper measure of damages is that it should be the purchase
price of P350,000.00 that it paid to Villarama. While We are fully in accord with Pantranco's claim
of entitlement to damages it suffered as a result of Villarama's breach of his contract with it, the
record does not sufficiently supply the necessary evidentiary materials upon which to base the
award and there is need for further proceedings in the lower court to ascertain the proper
amount.
PREMISES CONSIDERED, the judgment appealed from is hereby modified as follows:
1. The sale of the two certificates of public convenience in question by Valentin Fernando to Villa
Rey Transit, Inc. is declared preferred over that made by the Sheriff at public auction of the
aforesaid certificate of public convenience in favor of Eusebio Ferrer;
2. Reversed, insofar as it dismisses the third-party complaint filed by Pangasinan Transportation
Co. against Jose M. Villarama, holding that Villa Rey Transit, Inc. is an entity distinct and separate
from the personality of Jose M. Villarama, and insofar as it awards the sum of P5,000.00 as
attorney's fees in favor of Villa Rey Transit, Inc.;
3. The case is remanded to the trial court for the reception of evidence in consonance with the
above findings as regards the amount of damages suffered by Pantranco; and
4. On equitable considerations, without costs. So ordered.
G.R. No. L-10824 December 24, 1915
E. MICHAEL & CO., INC., plaintiff-appellant,
vs.
ADRIANO ENRIQUEZ, defendant-appellee.
MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of Cebu dismissing the action
after trial on the ground that the plaintiff did not prove facts sufficient to constitute a cause of
action.
We are of the opinion that the judgment must be reversed and a new trial ordered.itc-a1f
The action is based on a sale with a right to repurchase made by Adriano Enriquez in favor of E.
Michael and E. Michael & Co., sociedad en comandita, of which appellant claims to be the
successor, by reason of an instrument, duly executed and delivered by said companies to
appellant, transferring property, business and assets of every kind, including the land which is
the subject of this litigation. It is alleged in the complaint that the time to repurchase having
expired, the title to the property became absolute in appellant and that it is accordingly the owner
of the land described in said instruments. On the trial appellant sought to prove the execution
and delivery of the conveyance transferring to it the land described in the sale with right to
repurchase. The trial court prevented appellant from the proving the fact. Appellant also
attempted to prove the fact that the instrument so executed and delivered was lost, it being his
purpose to lay the basis for the introduction of secondary evidence as to its contents. The trial
court also prevented appellant from proving that fact.
While the efforts of appellant's counsel to prove the execution and delivery were at times rather
informal and inartificial and objections to such questions were properly sustained, at others the
questions put for the purpose of proving those facts were well framed and answer should have
been allowed to them; but, even in such cases, the trial court also sustained objections to the
questions and the evidence sought to be adduced was excluded. The same may be said with
respect to the attempts to establish the loss of the document. Exceptions were taken by plaintiff's
counsel to all adverse rulings of the court respecting the admission of evidence tending to
establish the execution and delivery and the subsequent loss of the document in question, thus
laying them proper foundation for the bringing up the rulings of the court on those matters.
Trial courts do well in refusing at all times to permit the introduction of incompetent evidence
and particularly secondary evidence of the contents of written instruments unless the facts
required by the Code of Civil Procedure as the conditions precedent for such evidence are clearly
shown to exist. Section 321 of the Code provides: "An original writing must be produced and
proved, except as otherwise provided in this Act. If it has been lost, proof of the loss must first be
made before evidence can be given of its contents. Upon such proof being made, together with
proof of the due execution of the writing, its contents may be proved by a copy or by a recital of
its contests in some authentic document, or by the recollection of a witness."
As will be seen from this section, the writing itself must be produced unless it has been lost or
destroyed in which case, before its contents may be proved by other evidence, it must be shown
by the person offering the secondary evidence (1) that the document was duly executed and
delivered, where delivery is necessary, and (2) that it has been lost or destroyed. The execution
and delivery of the document may be established by the person or persons who executed it, by
the person before whom its execution was acknowledged, pr by any person who was present and
saw it executed and delivered or who, after its execution and delivery, saw it and recognized the
signatures; or by a person to whom the parties to the instruments had previously confessed the
execution thereof. The destruction of the instrument may be proved by any person knowing the
fact. The loss may be shown by any person who knew the fact of its loss, or by anyone who has
made, in the judgment of the court, a sufficient examination in the place where the document or
papers of similar character are usually kept by the person in whose custody the document lost
was, and has been unable to find it; or who has made any other investigation which is sufficient
to satisfy the court that the instrument is indeed lost. If it appears, on an attempt to prove the
loss, that the document is in fact in existence, then the proof of the loss or destruction fails and
secondary evidence is inadmissible unless section 322 of the Code of Civil Procedure should be
applicable. After proper proof of the due execution and delivery of the instrument and its loss or
destruction, oral evidence may be give of its contents by any person who signed the document,
or who read it, or who heard it read knowing, or it being proved from other sources, that the
document so read was the one in question. Such evidence may also be given by any person who
was present when the contents of the document were talked over between the parties thereto to
such an extent as to give him reasonably full information as to its contents; or the contents may
be proved by any person to whom the parties to the instrument have confessed or stated the
contents thereof; or by a copy thereof; or by a recital of its contents in some authentic document.
Objections were sustained by the trial court to several question put by appellants counsel relative
to the due execution and delivery of the instrument of transfer between the partnership of E.
Michael & Co., sociedad en comandita, and appellant, on the ground that counsel, in an attempt to
identify the document to which his question referred, described or characterized it as an
instrument of transfer or cession. Counsel, if he had desired to identify the instrument to which
the question referred, might have done better, perhaps, if he asked the witness if he knew of the
execution of an instrument between appellant and its predecessor in interest relating to the lands
described in the complaint or to the property and business of E. Michael & Co., sociedad en
comandita, instead of asking him if he knew of the execution of a document between appellant
and his predecessors in interest transferring the lands in question, or the property and business
of E. Michael & Co., sociedad en comandita, the appellant. Having obtained an affirmative answer
to the question indicated counsel could then have shown how the witness came to know of the
execution or existence of the document, and, if such circumstances disclosed that the witness was
sufficiently acquainted with the facts, he would have been allowed to testify to its execution and
delivery. After this had been done the document might then have been presented for
identification and when identified, offered in evidence. If its contents showed that it referred to
the lands described in the complaint, its admissibility would have been instantly evident.
The mere fact that counsel for appellant, in putting his question to the witness, characterized or
described the instrument as one of transfer, while objectionable, was not sufficient to cut him off
altogether from proving the execution and delivery of the document if other requisites were
present. While it is always best to avoid characterizations of that kind, its harm is minimized
where the case is tried before a court instead of a jury, the court well knowing that it cannot
accept the characterization as evidence but must go to the document itself or the evidence of its
contents to determine its nature and legal effect. Trial courts should not be so strict with
reference to matters of the character under discussion as to cause a miscarriage of justice; but on
the other hand, they should see to it that they are not impose on by the introduction of fabricated
testimony and that injustice shall not result from an evasion of the rules of evidence by designing
persons.1awphil.net

We are of the opinion on the whole record that proper questions, tending to the production of
very material and competent evidence, were put by plaintiff's counsel, objections to which were
sustained by the trial court; and that the error thus committed was not cure by subsequent
questions and answers or by the introduction of the same evidence in different manner or form.

The judgment must be reversed and a new trial ordered without costs in this instance. So
ordered.
G.R. No. 83377 February 9, 1993
BASILIO DE VERA, LUIS DE VERA, FELIPE DE VERA, HEIRS OF EUSTAQUIA DE VERA-PAPA
represented by GLICERIA PAPA-FRANCISCO, et al., petitioners,
vs.
SPOUSES MARIANO AGUILAR and LEONA V. AGUILAR, respondents.
CAMPOS, JR., J.:
This is a petition for review on certiorari of the decision * of the Court of Appeals dated
November 27, 1987 in CA-GR CV No. 07448 entitled, "Basilio de Vera, Luis de Vera, Felipe de Vera,
Heirs of Eustaquia de Vera-Papa, represented by Gliceria Papa-Francisco, and Heirs of Maria de
Vera-Torres, represented by Luis V. Torres, plaintiffs-appellees versus Spouses Mariano Aguilar
and Leona V. Aguilar, defendants-appellants", which reversed the decision ** of the Regional
Trial Court of Bulacan, Third Judicial Region, Branch 14, for failure of petitioners to prove the
loss or destruction of the original deed of sale and of all its duplicate original copies.
The undisputed facts are as follows:
Petitioners Basilio, Luis, Felipe, Eustaquia and Maria, all surnamed de Vera and respondent
Leona, married to respondent Mariano Aguilar, are the children and heirs of the late Marcosa
Bernabe who died on May 10, 1960. In her lifetime, Marcosa Bernabe owned the disputed parcel
of land situated in Camalig, Meycauayan, Bulacan, with an area of 4,195 square meters,
designated as Cadastral Lot No. 3621, Cad. 337, Case No. 4, Meycauayan Cadastre.
The disputed property was mortgaged by petitioners Basilio and Felipe de Vera to a certain Atty.
Leonardo Bordador. When the mortgage had matured, the respondents redeemed the property
from Atty. Leonardo Bordador and in turn Marcosa Bernabe sold the same to them as evidenced
by a deed of absolute sale dated February 11, 1956.
On February 13, 1956, the respondents registered the deed with the Registry of Deeds of Bulacan
resulting in the cancellation of the tax declaration in the name of Marcosa Bernabe and the
issuance of another in the name of the Aguilars. Since then and up to the present, the Aguilars
have been paying taxes on the land.
On July 20, 1977, respondent Mariano Aguilar was issued a free patent to the land on the basis of
which Original Certificate of Title No. P-1356(M) was issued in his name.
On September 1, 1980, the petitioners wrote to the respondents claiming that as children of
Marcosa Bernabe, they were co-owners of the property and demanded partition thereof on
threats that the respondents would be charged with perjury and/or falsification. The petitioners
also claimed that the respondents had resold the property to Marcosa Bernabe on April 28, 1959.
On September 27, 1980, the respondents wrote in reply to the petitioners that they were the sole
owners of the disputed parcel of land and denied that the land was resold to Marcosa Bernabe.
True to petitioners' threat, they filed a falsification case against the respondents. However, on
March 31, 1981, Assistant Provincial Fiscal Arsenio N. Mercado of Bulacan recommended
dismissal of the charge of falsification of public document against the respondents for lack of
a prima facie case.
On March 26, 1981, petitioners filed a suit for reconveyance of the lot covered by Original
Certificate of Title No. P-1356(M).
On July 31, 1985, the trial court rendered its decision *** the dispositive portion of which reads
as follows:
WHEREFORE, judgment is hereby rendered ordering defendants:
1. To reconvey the property in question to the plaintiffs;
2. To pay plaintiffs P10,000.00 as litigation expenses;
3. To pay plaintiffs P5,000.00 as exemplary damages;
4. To pay P10,000.00 as attorney's fees.
SO ORDERED.1
In ruling in favor of the petitioners, the trial court admitted, over the objection of the
respondents, Exhibit A purporting to be a xeroxed copy of an alleged deed of sale executed on
April 28, 1959 by the respondents selling, transferring and conveying unto Marcosa Bernabe the
disputed parcel of land for and in consideration of P1,500.00.
Not contented with the decision, respondents appealed to the Court of Appeals contending that
they never sold back to Marcosa Bernabe the disputed parcel of land. Furthermore, respondents
contended that since the petitioners have failed to produce the original of the alleged deed of sale
dated April 28, 1959, the same was not the best evidence of the alleged sale hence it should have
been excluded and should not have been accorded any evidentiary value. On the other hand, the
petitioners claimed that the existence of the document of sale dated April 28, 1959 had been duly
established by the testimony of the notary public before whom it was acknowledged and by Luis
de Vera who was present during its execution and that the loss of the original document had been
proven by the testimony of the representatives of the offices of the National Archives and the
Provincial Assessor of Bulacan.
On November 29, 1987, the Court of Appeals rendered its decision reversing the trial court's
decision. It found that the loss or destruction of the original deed of sale has not been duly proven
by the petitioners. Hence, secondary evidence, i.e., presentation of the xeroxed copy of the alleged
deed of sale is inadmissible.
Hence this petition.
The crux of this case is whether or not the petitioners have satisfactorily proven the loss of the
original deed of sale so as to allow the presentation of the xeroxed copy of the same.
We rule in the negative.
Section 4 of Rule 130 (now Section 5, Rule 130) of the Rules of Court on Secondary Evidence
states:
Sec. 4. Secondary evidence when original is lost or destroyed. — When the
original writing has been lost or destroyed, or cannot be produced in court,
upon proof of its execution and loss or destruction, or unavailability, its
contents may be proved by a copy, or by a recital of its contents in some
authentic document, or by the recollection of witnesses.
Secondary evidence is admissible when the original documents were actually lost or destroyed.
But prior to the introduction of such secondary evidence, the proponent must establish the
former existence of the instrument. The correct order of proof is as
follows: Existence; execution; loss; contents although this order may be changed if necessary in
the discretion of the court. The sufficiency of proof offered as a predicate for the admission of an
alleged lost deed lies within the judicial discretion of the trial court under all the circumstances
of the particular case.2
A reading of the decision of the trial court shows that it merely ruled on the existence and due
execution of the alleged deed of sale dated April 28, 1959. It failed to look into the facts and
circumstances surrounding the loss or destruction of the original copies of the alleged deed of
sale.
In the case at bar, the existence of an alleged sale of a parcel of land was proved by the
presentation of a xeroxed copy of the alleged deed of absolute sale.
In establishing the execution of a document the same may be established by the person or
persons who executed it, by the person before whom its execution was acknowledged, or by any
person who was present and saw it executed or who, after its execution, saw it and recognized
the signatures; or by a person to whom the parties to the instrument had previously confessed
the execution thereof.3
We agree with the trial court's findings that petitioners have sufficiently established the due
execution of the alleged deed of sale through the testimony of the notary public to wit:
Preponderance of evidence clearly disclosed the facts that Atty. Ismael Estela
prepared Exhibit A. Atty. Emiliano Ibasco, Jr. positively identified the
signatures appearing therein to be that (sic) of the spouses and witnesses Luis
de Vera and Ismael Estela, in his capacity as Notary Public who ratified the
document.4
After the due execution of the document has been established, it must next be proved that said
document has been lost or destroyed. The destruction of the instrument may be proved by any
person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or
by any one who had made, in the judgment of the court, a sufficient examination in the place or
places where the document or papers of similar character are usually kept by the person in
whose custody the document lost was, and has been unable to find it; or who has made any other
investigation which is sufficient to satisfy the court that the instrument is indeed lost.5
However, all duplicates or counterparts must be accounted for before using copies. For, since all
the duplicates or multiplicates are parts of the writing itself to be proved, no excuse for non-
production of the writing itself can be regarded as established until it appears that all of its parts
are unavailable (i.e. lost, retained by the opponent or by a third person or the like).6
In the case at bar, Atty. Emiliano Ibasco, Jr., notary public who notarized the document testified
that the alleged deed of sale has about four or five original copies.7 Hence, all originals must be
accounted for before secondary evidence can be given of any one. This petitioners failed to do.
Records show that petitioners merely accounted for three out of four or five original copies.
In reversing the trial court, the respondent Court of Appeals considered the following points:
Asked on the witness stand where the original of the document (Exhibit A)
was, plaintiff-appellee Luis de Vera answered that it was with the Provincial
Assessor in Malolos, Bulacan, whereupon the appellees reserved its (sic) right
to present it in evidence (p. 11, tsn., August 11, 1981, Steno, Tecson). The same
question propounded to the same witness at the next hearing, he replied that
in the early part of 1976 his sister Maria borrowed from him the original
document and a certified true copy thereof and brought them to the Office of
the Register of Deeds in Malolos "for the purpose of having it registered;" and
that when she returned she told him that the original copy of the document
was submitted to that office "and it (the property) was transferred in the
name of Marcosa Bernabe instead of Mariano Aguilar" (p. 8, tsn., December
10, 1981, Steno, Crisostomo; p. 9, tsn., Mar. 16, 1982, Steno, Vallarta).
Indeed, upon the appellees' own evidence the original of the deed of sale in
question, a purported xerox copy and certified true copy of which are marked
as Exhibits A and B, has not been lost or destroyed. It was submitted to the
Office of the Register of Deeds of Malolos for registration. The appellees,
therefore, should have asked the office to produce it in court and if it could not
be produced for one reason or another should have called the Register of
Deeds or his representative to explain why. That they failed to do. The loss or
destruction of the original of the document in question has not, therefore,
been established. Hence, secondary evidence of it is inadmissible . . . .
Neither did the testimony of notary public Ibasco, Jr. to the effect that he did
not have a copy of the deed of sale in question because his files were burned
when his office at Ronquillo Street, Manila was gutted by fire in 1971 and 1972
(p. 4, tsn., November 10, 1981, Steno, Crisostomo) establish the loss or
 destruction of the original document in question. What was lost or destroyed
in the custody of Atty. Ibasco, Jr. was but one of the duplicate original copies
on file with him. Nor did the testimony of Hipolito Timoteo, representative of
the Assessor's Office of Bulacan, to the effect that he failed to see the deed of
absolute sale annotated on the simple copy of tax declaration No. 15412 (p. 7,
tsn., Aug. 12, 1982, Steno, Vallarta) and of David Montenegro, Jr. of the
National Archives to the effect that his office had no copy of the document in
question because the notary public might not have submitted a copy thereof;
or that it was lost or destroyed during the transmittal; and that most of the
record before 1960 were destroyed by termites (pp. 8-12, tsn., Oct. 5, 1982,
Steno, Tecson), prove loss or destruction of the original and of all the duplicate
original copies of the document in question.8

We find no cogent reason to rule otherwise.

WHEREFORE, the decision of the Court of Appeals dated November 27, 1987 is hereby
AFFIRMED.

SO ORDERED.