Case Summary (G.R. No. 214054)
Factual Background
The case arose from a collection action filed by China Banking Corporation against Ever Electrical Manufacturing Company, Inc., certain heirs of Go Tong, Vicente Go, George Go, and Ng Meng Tam in Civil Case No. 08-1028. China Banking Corporation alleged a loan of P5,532,331.63 to Ever secured by two surety agreements each for P5,000,000.00 executed by Vicente, George and Ng Meng Tam. After alleged default, demand letters addressed to George, Vicente and Ng Meng Tam were made but remained unanswered. Ng Meng Tam answered the complaint and pleaded among other defenses that the surety agreements were null and void, were contracts of adhesion, and that no demand letter was received.
Procedural History Through Lower Courts
The RTC initially denied petitioner’s motion to have his affirmative defenses heard as a preliminary matter. The Court of Appeals reversed in part and held a preliminary hearing proper under Rule 16, Section 6, issuing its decision on December 22, 2010, which became final and executory on August 28, 2011. The parties engaged in discovery and, with court approval, served and answered written interrogatories pursuant to Rule 25, Sections 1 and 6. The matter was re-raffled to RTC Branch 139, Makati City for further proceedings.
Events Giving Rise to the Present Controversy
On March 15, 2011, petitioner served written interrogatories to parties and required that Mr. George C. Yap, an account officer of China Bank, answer. Yap executed answers to the interrogatories on June 22, 2011. Petitioner then sought issuance of a subpoena duces tecum and ad testificandum to compel Yap’s testimony and production of documents under Rule 21, alleging the interrogatory answers were evasive. When Yap was presented on April 29, 2014, China Banking Corporation objected, invoking Section 5 of the Judicial Affidavit Rule and arguing that Yap could not be compelled to testify because a judicial affidavit had not been filed.
The Contested Legal Question
The sole legal question presented to the Supreme Court was whether Section 5 of the Judicial Affidavit Rule applies to adverse party witnesses or hostile witnesses, and consequently whether a subpoena may be issued and the witness compelled to testify in open court absent a prior judicial affidavit.
Parties’ Primary Contentions
Petitioner contended that Section 5 expressly excludes adverse party witnesses and hostile witnesses from its scope and that Yap should be called and qualified as a hostile witness pursuant to the Rules of Court. China Banking Corporation argued that Yap had not unjustifiably declined to execute a judicial affidavit and that his answers to written interrogatories effectively served as a judicial affidavit; it further maintained that filing judicial affidavits is mandatory under Section 2(a) of the JAR.
Ruling of the Regional Trial Court
The RTC, in its May 28, 2014 Order, denied petitioner’s motion to examine Yap without a judicial affidavit. The RTC interpreted Section 5 to apply only when the requested witness was neither the adverse party’s witness nor hostile and when the witness unjustifiably declined to execute a judicial affidavit or to produce relevant documents. The RTC found Yap was to be used as an adverse witness and that there was no showing he had unjustifiably declined to execute a judicial affidavit, noting that China Banking Corporation had earlier insisted that the witness’s judicial affidavit be taken. The RTC thus denied the motion. Petitioner’s motion for reconsideration was denied in the RTC’s August 27, 2014 Order which reiterated that the petitioner bore the burden of showing that Section 5 applied and emphasized that Yap had asserted reasonable grounds in opposing compulsion.
Questions Raised in the Petition to the Supreme Court
Petitioner filed a petition for review under Rule 45 arguing that the RTC erred in interpreting Section 5 contrary to its plain wording and to common sense, that the RTC disregarded the rules on mode of discovery for adverse witnesses, and that if the RTC’s interpretation were correct, the JAR should be amended to provide sanctions where an adverse or hostile witness refuses to execute a judicial affidavit.
The Judicial Affidavit Rule and Its Effectivity
The Supreme Court observed that the Judicial Affidavit Rule was promulgated to reduce time in taking witness testimony and took effect January 1, 2013 with application to pending cases pursuant to Section 12 of the JAR. The Court noted that the JAR had full effect January 1, 2014. Because the parties were presenting evidence when the JAR took full effect, the Rule applied to the present collection suit.
Interpretation of Section 5 of the JAR
The Court analyzed Section 5 of the JAR which provides a remedy by way of subpoena under Rule 21 if the government employee or requested witness "who is neither the witness of the adverse party nor a hostile witness" unjustifiably declines to execute a judicial affidavit or refuses without just cause to make relevant documents available. The Court held that the plain language of Section 5 expressly excludes adverse party witnesses and hostile witnesses from its coverage. The Court applied the doctrine expressio unius est exclusio alterius and concluded that because adverse party witnesses and hostile witnesses are expressly excluded, Section 5 cannot be extended to them even if they decline unjustifiably to execute a judicial affidavit.
Governing Procedure for Adverse and Hostile Witnesses
Because the JAR is silent on the procedure for adverse party witnesses and hostile witnesses, the Court turned to the Rules of Court and the rules of evidence. The Court invoked Rule 132, Section 12, which governs hostile witnesses and permits qualification of a witness as unwilling or hostile by the court upon adequate showing. The Court reaffirmed that before a party may call an adverse party to the witness stand, the calling party must comply with Rule 25, Section 6, requiring prior written interrogatories unless the court allows otherwise for good cause and to prevent failure of justice.
Application to the Present Case
The Court found that the parties had complied with Rule 25, Sections 1 and 6, by serving and answering interrogatories. The RTC had issued subpoenas and called Yap to testify. Given
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Case Syllabus (G.R. No. 214054)
Parties and Procedural Posture
- Ng Meng Tam was the petitioner in a direct Rule 45 petition seeking review of trial court orders denying his motion to examine a witness without a judicial affidavit.
- China Banking Corporation was the respondent and plaintiff in the underlying collection suit that led to the disputed trial court orders.
- The petition assailed the May 28, 2014 and August 27, 2014 Orders of the Regional Trial Court, Branch 139, Makati City denying petitioner’s request to examine a witness without a judicial affidavit.
- The Supreme Court, Third Division, rendered the challenged decision in G.R. No. 214054 on August 5, 2015, with the decision penned by Villarama, Jr., J.
Key Factual Allegations
- China Banking Corporation alleged it extended a loan of P5,532,331.63 to Ever Electrical Manufacturing Company Inc. and relied on two surety agreements executed by Vicente Go, George Go, and Ng Meng Tam each for P5,000,000.00.
- Ng Meng Tam alleged the surety agreements were null and void because they were executed before the loan was allegedly granted in 2004 and asserted they were contracts of adhesion.
- China Banking Corporation averred that Ever defaulted and that demand letters addressed to George, Vicente, and Ng Meng Tam went unanswered.
Prior Proceedings
- China Banking Corporation filed Civil Case No. 08-1028 in the RTC, which was initially raffled to Branch 62, Makati City, and later re-raffled to Branch 139, Makati City.
- The RTC originally denied petitioner’s motion to have affirmative defenses heard, but the Court of Appeals ordered a preliminary hearing under Rule 16, Section 6 in a decision dated December 22, 2010 which became final on August 28, 2011.
- Petitioner served written interrogatories on March 15, 2011 under Rule 25, Sections 1 and 6, and George C. Yap answered those interrogatories on June 22, 2011.
- Petitioner applied for issuance of a subpoena duces tecum and ad testificandum to secure Yap’s attendance, and on April 29, 2014 China Banking Corporation objected invoking Section 5 of the Judicial Affidavit Rule.
- The RTC denied petitioner’s motion to examine Yap without executing a judicial affidavit in its May 28, 2014 Order and denied reconsideration in its August 27, 2014 Order.
Legal Issue Presented
- Whether Section 5 of the Judicial Affidavit Rule applies to an adverse party witness or a hostile witness and thereby bars the calling party from examining such witness in open court absent a judicial affidavit.
Contentions of the Parties
- Ng Meng Tam contended that Section 5 expressly excludes adverse party witnesses and hostile witnesses and that he was entitled to call Yap to qualify him as a hostile witness under the Rules of Court.
- China Banking Corporation contended that Yap did not unjustifia