G.R. No. 204289 - Mancol, Jr. vs. Development Bank of the Philippines

Case Summary (G.R. No. 204289)

Factual Background

Petitioner negotiated to purchase a residential lot with a two-storey building covered by TCT No. 2041 located at Navarro Street, Calbayog City, which DBP offered for negotiated sale on October 13, 2004 with a purchase price of P1,326,000. Petitioner executed a Special Power of Attorney appointing his father, Fernando Mancol, Sr., to represent and negotiate the sale. By Official Receipt No. 3440018 dated October 13, 2004, an initial payment of P265,200 was made in the name of Fernando Mancol, Jr. and paid by his father.

Negotiation and Sale Transactions

Petitioner paid the balance of P1,060,800 evidenced by Official Receipt No. 3440451 dated December 10, 2004, and DBP, through its branch manager, executed a Deed of Absolute Sale in favor of Petitioner. On December 21, 2004, Petitioner deposited P99,450 with DBP for payment of capital gains tax and documentary stamp tax, acknowledged by Official Receipt No. 3440537. Sometime later DBP returned the pertinent sale documents and issued Manager’s Check No. 0000956475 for P99,450 to Petitioner, prompting dispute over whether DBP had agreed to effect transfer of the title and eject occupants.

Plaintiff’s Complaint and Relief Sought

On August 24, 2006 Petitioner filed a Complaint for damages for breach of contract before the RTC, alleging that DBP had verbally agreed to arrange and effect the transfer of the Torrens title in his name, including payment of CGT and DST, and to eject the occupants. Petitioner claimed BIR computations for taxes and surcharges totaling P160,700.88 and sought judgment holding DBP liable for those amounts, damages, attorney’s fees, and return of the Manager’s Check for P99,450.

DBP’s Answer and Counterclaim

Respondent denied that the Deed of Absolute Sale or the negotiated sale rules obligated it to effect registration or eject occupants and pleaded that bank policy did not require it to register instruments of sale. By counterclaim Respondent alleged that Petitioner breached the sale terms by failing to assume financial obligations related to writs of possession and sought damages, attorney’s fees, and costs of suit in the amount of P200,000.

Trial Proceedings and Testimony

The RTC declared Respondent in default on February 20, 2007 for failure of counsel to appear at pretrial. At trial Petitioner produced testimony from Rodel Villanueva, who stated that on the order of an attorney of DBP he delivered to BIR-Catbalogan a check for P99,450 and certain documents, and from Fernando Mancol, Sr., who testified that, by virtue of the SPA, he signed negotiation documents and that DBP verbally agreed to facilitate transfer of title, pay the CGT, and remove occupants, although he admitted the alleged oral undertaking contradicted the written negotiated rules.

RTC Decisions and Orders

The RTC initially rendered a decision on April 14, 2008 in favor of Petitioner, ordering DBP to return P99,450, to pay surcharges or interest on CGT and DST as determined by the BIR from June 12, 2005 until payment, and to pay attorney’s fees of P15,000, while dismissing DBP’s counterclaim. After reconsideration, on June 13, 2008 the RTC granted DBP’s motion and dismissed the complaint. Petitioner moved for reconsideration, renewing the claim of a contemporaneous verbal agreement through his father. On November 4, 2008 the RTC denied the motion but modified its prior order to direct DBP to return P99,450 with six percent interest per annum from December 21, 2004 until return. DBP’s subsequent motion for reconsideration was denied on April 17, 2009; the RTC noted that DBP had waived the right to contest the return of P99,450 by failing to refute it in the April 14, 2008 decision.

Appeals to the Court of Appeals and Ruling

Both parties appealed to the Court of Appeals. On February 22, 2012 the CA denied the appeals and affirmed the RTC Orders dated June 13, 2008, November 4, 2008, and April 17, 2009, ordering costs to be shared equally. Motions for partial reconsideration by Petitioner and for reconsideration by Respondent were denied by CA Resolution dated September 27, 2012.

Issues on Parol Evidence and Hearsay

The sole contested issue before the Supreme Court was factual: whether the testimonies of Villanueva and Mancol, Sr. established the alleged contemporaneous verbal agreement that Respondent would arrange and effect transfer of the Torrens title in Petitioner’s name and eject occupants. The Court identified the parol evidence rule as central to the dispute and examined whether any exception under Rule 130, Section 9, Rules of Court applied and whether Respondent waived objections to parol evidence by failing to timely object at trial.

Court’s Analysis on Admissibility and Probative Value

The Court agreed with the CA that although Respondent had been declared in default and thus waived the right to interpose timely objections to the testimony, admissibility did not equate to persuasive weight. The Court reiterated that admissible evidence must still satisfy relevance and competence and that probative weight depends on the witness’s personal knowledge. Citing Section 36, Rule 130, the Court held that a witness may testify only to facts of which he has personal knowledge and that testimony based on what a witness has heard from others constitutes hearsay and lacks probative value for proving the truth of the matter asserted.

Evaluation of Witness Testimony

Applying these principles, the Court found Villanueva’s testimony to be hearsay and devoid of personal knowledge regarding any verbal agreement between Petitioner and DBP because his testimony concerned orders he received to deliver documents and not to the actual perfection of a contemporaneous agreement. The Court similarly found Mancol, Sr.’s testimony insufficient to prove a binding oral agreement personally made with DBP on behalf of Petitioner, noting the absence of evidence that Mancol, Sr. personally negotiated or witnessed the alleged oral undertaking and emphasizing that statements recounting such absent personal participation amounted to hearsay.

Authority of Attorney-in-Fac

Case Syllabus (G.R. No. 204289)

Parties and Procedural Posture

FERNANDO MANCOL, JR., PETITIONER filed a Petition for Review on Certiorari to the Supreme Court assailing the Court of Appeals' decision and resolution in CA-G.R. CEB-CV No. 03030.
DEVELOPMENT BANK OF THE PHILIPPINES, RESPONDENT opposed the petition and defended the rulings of the Regional Trial Court, Branch 31, Calbayog City, in Civil Case No. 923.
The Court of Appeals issued a Decision dated February 22, 2012 and a Resolution dated September 27, 2012 which affirmed the RTC Orders dated June 13, 2008, November 4, 2008 and April 17, 2009.
The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals' Decision and Resolution.

Key Facts

Respondent scheduled an Invitation to Bid for Negotiated Sale on October 13, 2004 for a residential lot with two-storey building covered by TCT No. 2041 and assessed at a purchase price of P1,326,000.
Petitioner executed a Special Power of Attorney appointing his father, Fernando Mancol, Sr., to represent and negotiate the sale and to sign necessary papers.
Petitioner paid an initial amount of P265,200 evidenced by O.R. No. 3440018 and paid the balance of P1,060,800 as evidenced by O.R. No. 3440451, after which the bank executed a Deed of Absolute Sale in petitioner’s favor.
Petitioner deposited P99,450 with Respondent on December 21, 2004 as a purported payment for capital gains tax and documentary stamp tax, as evidenced by O.R. No. 3440537.
Petitioner alleged that during negotiations Respondent orally agreed to arrange and effect transfer of the Torrens title in petitioner’s name, including payment of CGT, and to eject occupants from the property.
Respondent later returned the pertinent sale documents and issued a Manager's Check for P99,450 and denied obligation to effect registration or eject occupants.
The BIR issued a computation showing tax and documentary obligations and penalties totaling PHP 160,700.88 and which increased to PHP 183,553.61 as of March 7, 2007.

Procedural History

Petitioner filed a Complaint for damages for breach of contract against Respondent on August 24, 2006 before the RTC, Branch 31, Calbayog City.
The RTC declared Respondent in default on February 20, 2007 for failure of counsel to appear during pre-trial.
The RTC rendered a Decision on April 14, 2008 in favor of Petitioner ordering return of P99,450, payment of surcharges/interests on CGT and DST as determined by the BIR, and attorney's fees of P15,000, and dismissed Respondent's counterclaim.
On motion for reconsideration, the RTC granted Respondent's motion and dismissed petitioner’s complaint on June 13, 2008, but later modified its order on November 4, 2008 to direct Respondent to return P99,450 with six percent interest per annum from December 21, 2004 until return.
The RTC denied further reconsideration by order dated April 17, 2009 and both parties appealed to the Court of Appeals.
The Court of Appeals denied both appeals by Decision dated February 22, 2012 and denied motions for reconsideration by Resolution dated September 27, 2012.
Petitioner elevated the case to the Supreme Court by petition for review on certiorari which the Court denied.

Issues

Whether the testimonies of Rodel Villanueva and Fernando Mancol, Sr. had probative value to prove the alleged contemporaneous verbal agreement that Respondent would effect transfer of title and eject occupants.
Whether the alleged oral agreement was admissible under the exceptions to the parol evidence rule as embodied in Rule 130, Section 9.
Whether the Special Power