Case Summary (G.R. No. L-1716)
Petitioners
– Material Distributors (Phil.), Inc.
– Harry Lyons
Respondents
– Lope Sarreal (plaintiff in civil case)
– Felipe Natividad (trial‐court judge)
Key Dates
• March 24, 1947: Civil complaint filed by Sarreal (amended April 10, 1947 to add Lyons)
• May 27, 1947: Motion for production and inspection of specified books, correspondence and cablegrams
• June 4, 1947: Supplemental motion for originals of Annexes A and B
• July 16, 1947: Trial court grants motions, inspection set for July 24 (later postponed to August 15)
• August 13, 1947: Petitioners move for reconsideration, raising privilege and “fishing expedition” objections
• September 27, 1947: Trial court denies reconsideration
• June 28, 1949: Supreme Court decision
Applicable Law
• 1935 Constitution of the Philippines: Art. III, Sec. 1 (search and seizure) and Sec. 5 (privacy of correspondence)
• Code of Commerce, art. 46 (commercial correspondence)
• Rules of Court, Rule 21, § 1 (production and inspection of documents)
Complaint and Discovery Requests
Sarreal’s complaint demanded P1,256,229.30 on three causes of action. He moved to inspect:
- Material Distributors (Phil.) Inc.’s cash journals, individual ledgers for listed entities, letters and cablegrams exchanged with Wichita head office and Lyons.
- Lyons’s own correspondence, cablegrams and cash journals.
- Originals of Annexes A and B.
Opposition and Trial Court Orders
Petitioners opposed for lack of “good cause,” claiming Code of Commerce protection of correspondence, constitutional privacy and privilege against self-incrimination, and that the motions were a “fishing expedition.” The trial court, after written and oral arguments, granted production and inspection on July 16, 1947; postponed to August 15 due to Lyons’s absence; and denied reconsideration on September 27, 1947.
Supreme Court’s Jurisdiction and Standard
Under Rule 21, § 1(a), a court may order production of any non-privileged document “material to any matter involved” if the moving party shows “good cause.” The high court reviews whether the trial judge exceeded jurisdiction or gravely abused discretion in issuing the orders.
Good Cause for Production and Inspection
The Supreme Court found Sarreal’s motions adequately alleged that the listed books and papers “constitute or contain evidence material to the matters involved,” mirroring the language of Form 11, Appendix to the Rules. The supplemental motion detailed a factual conflict over alleged falsification of Annexes A and B, thereby satisfying “good cause.”
Privilege Against Self-Incrimination
Petitioners argued that production could incriminate them. The Court held that mere inspection and copying of documents, without compelling testimonial identification under oath, does not invoke the constitutional privilege against self-incrimination.
Inviolability of Correspondence
Reliance on Code of Commerce art. 46 and constitutional privacy provisions was unavailing. Article 46 did not bar production in actions between parties, and the
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Facts of the Case
- On March 24, 1947, Lope Sarreal filed a complaint against Material Distributors (Phil.), Inc., seeking a money judgment.
- On April 10, 1947, Sarreal amended the complaint to include Harry Lyons and asserted three causes of action totaling ₱1,256,229.30.
- The amended complaint alleged that petitioners had been remitting proceeds outside the trial court’s jurisdiction and disposing of assets to defraud creditors in Civil Case No. 2059.
Motion for Production and Inspection
- May 27, 1947: Sarreal filed a motion under Rule 21 for production and inspection of documents in the possession of Material Distributors (Phil.), Inc., and Harry Lyons.
- Documents sought from Material Distributors (Phil.), Inc.:
- Cash Receipts Journal and Cash Payments Journal.
- Individual ledgers for specified entities (e.g., British-American Engineering Corporation; Philippine Refinery; Standard Oil Company of New York; Harry Lyons; etc.).
- All letters exchanged with Material Distributors, Inc. (Wichita, Kansas) and with Harry Lyons between October 9, 1946, and March 31, 1947.
- All cablegrams exchanged with Material Distributors, Inc. (Wichita, Kansas) during the same period.
- Documents sought from Harry Lyons:
- Letters and cablegrams exchanged with Material Distributors, Inc. (Wichita, Kansas) between September 14, 1946, and March 24, 1947.
- His Cash Receipts Journal and Cash Payments Journal.
- June 4, 1947: Sarreal filed a supplemental motion to produce the originals of Annexes A and B to the complaint.
Opposition by Petitioners
- June 12, 1947: Petitioners opposed both motions, arguing:
- Sarreal failed to show “good cause,” and the motions amounted to an improper “fishing expedition.”
- Article 46 of the Code of Commerce and the constitutional right to inviolability of correspondence barred production of merchant letters and cablegrams.
- The privilege against self-incrimination was triggered by the supplemental motion regarding Annexes A and B.
- August 13, 1947: Petitioners moved for reconsideration of the July 16 order, reiterating objections to production of correspondence, ledgers, and journals.
Orders of the Trial Court
- July 16, 1947: The trial judge granted Sarreal’s original and