Case Summary (G.R. No. 157766)
Contractual Engagement and Compensation Terms
On October 15, 1984, Domingo and Salas entered a letter-agreement vesting management of the estate in Salas. Domingo bound himself to transfer 30% of SMMC’s capital stock to Salas on or before June 30, 1985, provided Salas achieved a monthly market revenue of at least ₱350,000. Failure to meet this target would obligate Salas to return any transferred shares. The parties formalized their arrangement on December 28, 1984 under a notarized property and financial management contract.
Management Actions and Lease Termination
Under Salas’s management, SMMC leased the Sta. Mesa market to Malaca Realty Corporation. Malaca proved financially incapable of improving facilities or paying rent. SMMC terminated the lease, and its board, dissatisfied with Salas’s performance, ended his management contract.
Trial Court Proceedings and Findings
On June 8, 1987, Salas sued SMMC and Domingo (later substituted by Domingo’s heirs) for specific performance and damages in the Regional Trial Court (RTC) of Quezon City. He alleged that monthly revenue exceeded ₱350,000 yet respondents withheld the agreed shares. Respondents countered that Salas’s management had generated ₱1,935,995.06 in additional losses. The RTC, relying on audited financial statements, found that gross revenues rose from an average of ₱251,790 in 1984 to ₱409,794 in 1985, thus exceeding the ₱350,000 target. The court ordered respondents to transfer 30% of SMMC’s capital stock to Salas.
Court of Appeals’ Reversal on Authentication Grounds
Respondents appealed. On April 30, 2001, the Court of Appeals (CA) reversed. It held that the trial court erred in admitting copies of audited financial statements without proper authentication. Salas failed to present a representative of the external auditor (Bejarin Jimenez & Co.) to testify on their genuineness and execution. Instead, he submitted a management team memorandum attesting to increased revenues. The CA deemed the statements hearsay and self-serving, dismissed Salas’s complaint, and denied reconsideration.
Issue on Document Authentication
Salas contended that Amado Domingo, vice-president of SMMC and heir, admitted the audited statements’ genuineness by testifying that SMMC regularly filed them with the Bureau of Internal Revenue (BIR) and Securities and Exchange Commission (SEC). Respondents maintained that such testimony did not dispense with the requirement for formal authentication of the copies offered in evidence.
Classification of Documents and Admissibility Rules
Under Rule 132, Sections 19 and 20 of the Rules of Court, documents are public or private. Public documents (including official records) are admissible without proof of execution or genuineness. Private documents require authentication before admission. Audited financial statements become public only when certified true copies are filed with the BIR or SEC pursuant to law; ordinary copies remain private.
Authentication Requirements and Proof
Section 20, Rule 132, mandates that private documents be proved genuine either by a witness to their execution or by evidence of signature authenticity. The best available proof in thi
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Parties and Nature of the Petition
- Petitioner: Ernesto L. Salas, appointed estate manager under a letter-agreement and subsequent management contract.
- Respondents: Sta. Mesa Market Corporation (SMMC) and the heirs of Primitivo E. Domingo.
- Relief Sought: Review on certiorari under Rule 45 to annul the Court of Appeals’ April 30, 2001 decision in CA-G.R. CV No. 50888 and its April 3, 2003 resolution denying reconsideration.
Contractual Arrangements
- October 15, 1984 Letter-Agreement
- Primitivo E. Domingo handed over management of his estate, including SMMC, to Salas.
- Salas tasked to ensure market viability and profitability by redeveloping Sta. Mesa market and restructuring finances.
- Domingo undertook to transfer 30% of SMMC’s subscribed and paid-up capital stock to Salas on or before June 30, 1985, provided monthly market revenues reached at least ₱350,000; failure to meet the target obligated return of the shares.
- December 28, 1984 Management Contract
- Formalized between Domingo (as SMMC chairman) and Salas (in personal capacity and as chairman of Inter-Alia Management Corporation).
- Reinforced the terms of the letter-agreement and vested Salas with management authority.
Lease to Malaca Realty Corporation
- Under Salas’s supervision, SMMC leased Sta. Mesa market to Malaca Realty Corporation.
- Malaca proved financially incapable of improving facilities and defaulted on monthly rent payments.
- SMMC terminated the lease, prompting dissatisfaction with Salas’s management performance.
Termination of Management and Filing of Action
- SMMC’s board ended the management contract with Salas and Inter-Alia.
- June 8, 1987: Salas instituted an action for specific performance and damages in the Regional Trial Court (Quezon City, Civil Case No. Q-51018).
- Allegation: SMMC’s monthly revenue had exceeded ₱350,000 yet respondents