G.R. No. 157766 - Salas vs. Sta. Mesa Market Corp.

On October 15, 1984, Primitivo E. Domingo executed a notarized letter-agreement appointing Ernesto L. Salas as manager of his estate and Sta. Mesa Market Corporation (SMMC). Domingo bound himself to transfer 30% of SMMC’s subscribed and paid-up capital stock to Salas on or before June 30, 1985, provided SMMC’s monthly revenue reached at least ₱350,000; otherwise, Salas would return the shares.
On December 28, 1984, they formalized this arrangement through a property and financial management contract, under which Salas (in his personal capacity and as chairman of Inter-Alia Management Corporation) took over SMMC’s operations and leased the Sta. Mesa market to Malaca Realty Corporation.

Malaca Realty defaulted on rent and proved financially incapable of improving the market, leading SMMC to terminate the lease and to end Salas’s management contract.
On June 8, 1987, Salas filed in the RTC of Quezon City an action for specific performance and damages, alleging he had achieved the ₱350,000 monthly-revenue target yet Domingo refused to deliver the agreed shares. Domingo (later substituted by his heirs) countered that Salas’s management caused additional losses and new liabilities totaling ₱1,935,995.06 over 21 months.

On August 21, 1995, the RTC ruled for Salas, relying on SMMC’s audited financial statements showing average monthly gross income rising from ₱251,790 in 1984 to ₱409,794 in 1985, and ordered delivery of the 30% shares.
On April 30, 2001, the Court of Appeals reversed, holding the audited statements inadmissible hearsay due to lack of proper authentication, and dismissed the complaint. A motion for reconsideration was denied on April 3, 2003.
Salas filed a petition for review on certiorari under Rule 45, which is before the Supreme Court.

Whether the audited financial statements of SMMC were properly authenticated and thus admissible to prove that the monthly revenue exceeded ₱350,000.
Whether an adverse party’s testimony that financial statements were regularly submitted to the BIR and SEC constitutes an admission obviating the need for formal authentication.