Case Summary (G.R. No. 159127)
Petitioner
Ramon Gerardo B. San Luis denied an alleged oral loan obligation asserted by Berdex International, Inc. He contended that funds he received were for investment and that subsequent transactions involved Fuegomar Traders, Inc., a company he set up, which was to assume and pay certain obligations.
Respondent
Berdex International, Inc. sued petitioner in the RTC for a sum of money, alleging that payments made to petitioner were advances and loans (including alleged agreement to treat payments as loan and an alleged confirmation of that loan to auditors). Berdex sought US$150,335.75 plus interest and attorney’s fees.
Key Dates (case events prior to final Supreme Court disposition)
- July 12, 2001: Berdex filed complaint in RTC (Civil Case No. 68530).
- January 11, 2002: Pre-trial conference terminated; case set for trial.
- April 4, 2002: Berdex filed Motion to Authorize Deposition-Taking Through Written Interrogatories.
- May 9, 2002: RTC granted Berdex’s motion.
- July 3, 2002: RTC denied petitioner’s motion for reconsideration of its May 9, 2002 Order.
- September 11, 2002 and May 20, 2003: Court of Appeals dismissed petitioner’s petition for certiorari and denied reconsideration respectively (grounds: procedural noncompliance).
(Note: the final Supreme Court decision date is addressed in the Supreme Court Decision heading below.)
Applicable Law and Governing Rules
- 1987 Philippine Constitution (applicable constitutional framework for cases decided in 1990 or later).
- Rules of Court concerning depositions and discovery: Rule 23 (previously Rule 24) on depositions and Rule 132 on examination of witnesses in open court. Key provisions discussed include Section 1 and Section 4(c)(2) of Rule 23 and Section 1 and Section 47 of Rule 132.
- Supreme Court jurisprudence cited in the decision: Donato v. Court of Appeals; Fortich v. Corona; Dasmariñas Garments, Inc. v. Reyes; Republic v. Sandiganbayan; and other discovery-related precedents referenced in the opinion.
Factual Background — Allegations and Pleadings
Berdex alleged in the complaint that petitioner had received funds in June 1997 for advances and purchases of shares in Seanet and Seabest Corporations but failed to transfer shares and instead agreed that the amounts be treated as petitioner’s loan. Berdex alleged petitioner paid only US$20,000 and confirmed the loan to Berdex’s auditors on August 8, 2000. Petitioner denied these allegations, asserting that the funds were for purchase of shares and later advances on behalf of Seanet, that Fuegomar Traders, Inc. would assume payment, and that the US$20,000 payment was made on behalf of Fuegomar — not an admission of personal liability.
Procedural History in the Trial Court
After pre-trial, Berdex moved to take depositions by written interrogatories because its witnesses were all U.S. residents and travel to the Philippines was assertedly impractical or dangerous (post-September 11, 2001). The RTC granted the motion on May 9, 2002, and denied petitioner’s motion for reconsideration on July 3, 2002. Petitioner sought relief from the Court of Appeals, which dismissed his petition for certiorari for procedural defects, and later denied reconsideration.
Issues Presented to the Supreme Court
Petitioner raised two principal issues: (1) whether the Court of Appeals gravely abused its discretion in dismissing his petition for certiorari on technical procedural grounds despite substantial compliance, and (2) whether the CA gravely abused its discretion by allowing Berdex (a non-resident foreign corporation) to prove an alleged oral contract through depositions by written interrogatories taken outside the Philippines, thereby depriving petitioner of a fair opportunity for cross-examination and preventing the RTC from observing witness demeanor.
Arguments of the Parties
- Petitioner: Argued substantial compliance with procedural requirements, explained absence of an affidavit of service and blurred annexes as inadvertent or unnecessary to the core issue, and insisted that allowing written interrogatory depositions of foreign witnesses would prejudice his right to observe demeanor and conduct effective cross-examination, particularly where an oral contract (allegedly requiring strict proof) was at issue.
- Berdex (and RTC): Argued petitioner pursued the proper remedy and that depositions by written interrogatories were permitted under the Rules of Court, particularly given that all proposed witnesses resided in the United States. The CA emphasized procedural defects in petitioner’s petition as grounds for dismissal.
Threshold Procedural Ruling by the Supreme Court
The Supreme Court found petitioner’s use of a Rule 65 petition proper because the CA’s outright dismissal on procedural grounds implicated jurisdictional concerns and potential grave abuse of discretion. Concerning the alleged procedural defects (missing affidavit of service, blurred annexes, and non-attachment of RTC pleadings), the Court concluded that: (a) the absence of an affidavit of service was not fatal where proof of actual service (receiving stamps) was present; (b) blurred annexes (Annexes H and J) were satisfactorily explained and, in any event, were not essential to resolve the narrow issue presented; and (c) the absence of all RTC pleadings did not prevent the CA from deciding on the specific question before it because the motion, opposition, and motion for reconsideration contained the relevant facts and arguments. The Court held that strict technicalities should not defeat substantial justice and that subsequent substantial compliance can justify relaxation of procedural requirements.
Analysis of Administrative Circular No. 3-96 and CA’s Use of Technical Grounds
The Supreme Court determined the CA misapplied Supreme Court Administrative Circular No. 3-96 (June 1, 1996). That circular concerned requirements for duplicate original copies or certified true copies of judgments and resolutions, not the general attaching of pleadings. The Court found the CA’s dismissal for procedural noncompliance to be an impermissible use of technicality where substantial justice and actual receipt of the petition had been shown.
Substantive Legal Question — Permissibility of Deposition by Written Interrogatories of Foreign Witnesses
The Court framed and resolved the principal legal question: whether Section 1, Rule 23 permits a non-resident foreign corporation to have all its witnesses (foreign residents) testify by deposition through written interrogatories taken outside the Philippines to prove an oral contract. The Court’s analysis emphasized that Rule 23 does not restrict who may avail themselves of depositions: the testimony of any person, whether a party or not, may be taken by deposition upon oral examination or written interrogatories, subject to conditions in the rule.
Role and Nature of Depositions under the Rules and Jurisprudence
The Court reiterated established points: depositions are primarily a discovery device to obtain facts before trial and can be taken where the deponent resides, including abroad (with specified officers or consular officials conducting the deposition). Depositions taken abroad are permissible and, under Section 4(c) (now Section 4(c)(2) of Rule 23), may be used at trial if the deponent is out of the Philippines or otherwise unavailable. The Court cited Dasmariñas Garments, Inc. v. Reyes and related rulings explaining that depositions “are chiefly a mode of discovery” and may be used in lieu of in-court testimony under specific exceptions (decedent, out-of-Philippines, infirmity, inability to procure attendance, or exceptional circumstances).
Application of Precedent (Dasmariñas) and the Exceptions to In-Court Testimony
The Court found Dasmariñas controlling: the fact that the deposition was sought during trial and that witnesses resided abroad fit within recognized exceptions allowing depositions to be taken and used. Petitioner’s distinctions from Dasmariñas (e.g., that in Dasmariñas one witness had testified in court and that the contract’s existence there was not disputed) did not, in the Court’s view, materially differentiate the situation because both cases involved trial-stage requests to take depositions abroad for the purpose of proving a monetary claim.
Evidence Admissibility, Hearsay Concern, and Probative Weight
The Court acknowledged that depositions offered at trial in lieu of in-court testimony may be opposed on hearsay grounds and that admissibility is distinct from probative weight. Depositions must meet rules of evidence and relevance; admissibility does not automatically equate with persuasive weight. The Court emphasized that matters concerning the probative value of the depositions should be resolved at the appropriate stage and are not a basis to prevent depositions from being taken.
Cross-Examination Rights and Procedure Under the Rules
The Court addressed petitioner’s concern regarding the limitation of cross-examination to cross-interrogatories and re-cross interrogatories. It noted that Rule 23 (Section 25) affords a structured opportunity for cross-interrogatories (within ten days after service), re-direct, and re-cross interrog
Case Syllabus (G.R. No. 159127)
Facts of the Case
- On July 12, 2001, Berdex International, Inc. (private respondent) filed a complaint for a sum of money against Ramon Gerardo B. San Luis (petitioner) in the Regional Trial Court (RTC), Pasig City, docketed Civil Case No. 68530 (Rollo, pp. 23-26).
- Private respondent alleged it is a foreign corporation organized under the laws of the United States with principal office in San Francisco, California, and that it brought the action to enforce rights arising from an isolated transaction with petitioner.
- Private respondent alleged that in June 1997 petitioner received certain amounts of money from it meant partly as advances or loan and partly for purchase of 40% shares in Seanet and Seabest Corporations; no shares were transferred and the shares remained with petitioner.
- Parties allegedly agreed to treat all payments/advances as petitioner’s loan; petitioner purportedly proposed a three-year repayment period with the agreement that failure to pay any installment would make the entire amount due and demandable.
- Petitioner allegedly refused to sign a formal loan contract; he allegedly confirmed the loan to private respondent’s auditors on August 8, 2000; petitioner allegedly paid only US$20,000.00 and made no further payments despite repeated demands.
- Private respondent prayed for US$150,335.75 plus interest until fully paid and attorney’s fees.
- Petitioner answered, asserting he is a businessman in seafood trading; he alleged he received a total of US$141,944.71 from private respondent with instructions to deduct US$23,748.00 commission, that the funds were to buy 70% of Seanet shares for private respondent and the balance as advances as Seanet stockholder, which he alleged he complied with.
- Petitioner alleged that after Seanet suffered losses he offered that Fuegomar Traders, Inc. (a company he substantially owned) would pay private respondent’s amounts by purchasing private respondent’s Seanet stock at cost; while documentation was being finalized he allegedly gave US$20,000.00 on behalf of Fuegomar, and the private respondent later characterized the investment as petitioner’s personal loan and treated the US$20,000.00 as admission of personal liability.
Pre-trial and Trial Posture
- The pre-trial conference terminated on January 11, 2002 and the case was set for trial.
- On April 4, 2002, private respondent filed a Motion (To Authorize Deposition-Taking Through Written Interrogatories) stating initial presentation of evidence was set for May 3, 2002 and that all its witnesses were Americans residing in the U.S., one of advanced age, and citing perceived danger to them after the terrorist attacks of September 11, 2001 (noted in the record as "Should be 2001") and that written interrogatories would conserve judicial time and avoid delay (Rollo, pp. 32-33).
- Petitioner opposed the Motion, arguing strict standard in proving oral contracts, prejudice from depriving court of observing witness demeanor, severe limitation of cross-examination by restricting it to cross-interrogatories, doubts whether witnesses abroad would submit under penalties for perjury, and that claims of travel danger and old age were unsupported and unpersuasive (Rollo, pp. 34-38).
RTC Orders
- By Order dated May 9, 2002, the RTC, through Judge Pablito M. Rojas, granted private respondent’s Motion to authorize deposition-taking through written interrogatories, finding the motion appropriate and sanctioned by rules on deposition-taking (Rollo, p. 39).
- Petitioner’s Motion for Reconsideration was denied by the RTC in an Order dated July 3, 2002 (Rollo, p. 47).
Court of Appeals Proceedings and Resolutions
- Petitioner filed a petition for certiorari in the Court of Appeals (CA) with prayer for TRO and/or writ of preliminary injunction, assailing the RTC Orders.
- In a Resolution dated September 11, 2002, the CA dismissed petitioner’s petition on grounds of non-compliance with the requirements of Section 3, Rule 46 in relation to Section 1, Rule 65 of the 1994 Rules of Civil Procedure, citing lack of affidavit of service, blurred annexes (Annex H and Annex J), and omission of pleadings filed before the respondent court (Rollo, p. 20).
- Petitioner moved for reconsideration; in a Resolution dated May 20, 2003, the CA denied the Motion for Reconsideration, holding that misapprehension or unfamiliarity with rules is not excusable and citing SC Administrative Circular No. 3-96 dated June 1, 1996 that subsequent compliance shall not warrant reconsideration.
Issues Raised by Petitioner in the Supreme Court Petition
- Whether the CA committed grave abuse of discretion in dismissing petitioner’s petition for certiorari on mere technicality despite substantial compliance with procedural requirements.
- Whether the CA committed grave abuse of discretion in dismissing the petition despite the uniqueness of the legal issue and the grave injustice to petitioner if private respondent, a non-resident foreign corporation, is allowed to prove an oral contract through deposition by written interrogatories of all its witnesses taken outside the Philippines (Rollo, p. 206).
Petitioner’s Arguments to the Supreme Court
- Petitioner contended the CA focused on technicality rather than substantial justice and that he subsequently complied with all requirements by attaching missing items to his Motion for Reconsideration.
- He explained the failure to attach an affidavit of service as based on his belief that affidavit could be dispensed with when the petition was personally served on parties who received it.
- He explained the blurring of Annex H (a letter dated July 12, 2000 from private respondent to Fuegomar and petitioner requesting confirmation) and Annex J (Seanet Corporation Loan Amortization Schedule) as inadvertence during reproduction of many annexes.
- He justified omission of certain pleadings from the CA petition on the basis that he attached pleadings relevant to the issue presented, and later submitted all pleadings in the Motion for Reconsideration.
- Substantively, petitioner argued that allowing depositions by written interrogatories of foreign witnesses to prove an oral contract lacking documentary support would prevent the RTC from testing witness credibility, would curtail or deny his right of cross-examination, and would prejudice him because of the stricter standard applicable to oral contracts.
Private Respondent’s Contentions to the Supreme Court
- Private respondent argued that petitioner resorted to the wrong remedy, i.e., certiorari under Rule 65 instead of a petition for review under Rule 45, and that certiorari is not a substitute for appeal where appeal is available.
- Private respondent maintained the CA’s dismissal was proper, citing Circular 19-91 that a Rule 65 petition may be denied outright if