G.R. No. 128538 February 28, 2001
SCC CHEMICALS CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, STATE INVESTMENT HOUSE, INC., DANILO ARRIETA and LEOPOLDO HALILI, respondent.
QUISUMBING, J.:
Before us is a petition for review, pursuant to Rule
45 of the Rules of Court, of the Decision of the Court of Appeals dated
in November 12, 1996 in CA-G.R. CV No. 45742 entitled "State Investment House, Inc., v. Danilo Arrieta, et al., and SCC Chemical Corporation." The questioned decision affirmed in toto
the decision of the Regional Trial Court of Manila, Branch 33, dated
March 22, 1993, in Civil Case NO. 84-25881, the dispositive portion of
which reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the defendants ordering
the latter to pay jointly and severally the plaintiff the following: a)
To pay plaintiff State Investment House, Inc., the sum of P150,483.16
with interest thereon at 30% per annum reckond (sic) from April, 1984
until the whole amount is fully paid; b) To pay plaintiff an amount
equivalent to 25% of the total amount due and demandable as attorney's
fees and to pay the cost(s) of suit.
SO ORDERED.1
Equally challenged in this petition is the Resolution
of the appellate court dated February 27, 1997, denying SCC Chemicals
Corporation's motion for reconsideration.
The background of this case, as culled from the decision of the Court of Appeals, is as follows:
On December 13, 1983, SCC Chemicals Corporation (SCC
for brevity) through its chairman, private respondent Danilo Arrieta and
vice president, Pablo (Pablito) Bermundo, obtained a loan from State
Investment House Inc., (hereinafter SIHI) in the amount of P129,824.48.
The loan carried an annual interest rate of 30% plus penalty charges of
2% per month on the remaining balance of the principal upon non-payment
on the due date-January 12, 1984. To secure the payment of the loan,
Danilo Arrieta and private respondent Leopoldo Halili executed a
Comprehensive Surety Agreement binding themselves jointly and severally
to pay the obligation on the maturity date. SCC failed to pay the loan
when it matured. SIHI then sent demand letters to SCC, Arrieta and
Halili, but notwithstanding receipt thereof, no payment was made.
On August 2, 1984, SIHI filed Civil Case No. 84-25881
for a sum of money with a prayer for preliminary attachment against
SCC, Arrieta, and Halili with the Regional Trial Court of Manila.
In its answer, SCC asserted SIHI's lack of cause of
action. Petitioner contended that the promissory note upon which SIHI
anchored its cause of action was null, void, and of no binding effect
for lack or failure of consideration.
The case was then set for pre-trial. The parties were
allowed to meet out-of-court in an effort to settle the dispute
amicably. No settlement was reached, but the following stipulation of
facts was agreed upon:
1. Parties agree that this Court has jurisdiction
over the plaintiff and the defendant and that it has jurisdiction to try
and decide this case on its merits and that plaintiff and the defendant
have each the capacity to sue and to be sued in this present action;
2. Parties agree that plaintiff sent a demand letter
to the defendant SCC Chemical Corporation dated April 4, 1984 together
with a statement of account of even date which were both received by the
herein defendant; and
3. Parties finally agree that the plaintiff and the
defendant SCC Chemical Corporation the latter acting through defendants
Danilo E. Arrieta and Pablito Bermundo executed a promissory note last
December 13, 1983 for the amount of P129,824.48 with maturity date on
January 12, 1984.2
The case then proceeded to trial on the sole issue of
whether or not the defendants were liable to the plaintiff and to what
extent was the liability.
SIHI presented one witness to prove its claim. The
cross-examination of said witness was postponed several times due to one
reason or another at the instance of either party. The case was
calendared several times for hearing but each time, SCC or its counsel
failed to appear despite notice. SCC was finally declared by the trial
court to have waived its right to cross-examine the witness of SIHI and
the case was deemed submitted for decision.
On March 22, 1993, the lower court promulgated its decision in favor of SIHI.
Aggrieved by the verdict, SCC elevated the case to the Court of Appeals where it was docketed as CA-G.R. CV No. 45742.
On appeal, SCC contended that SIHI had failed to
show, by a preponderance of evidence, that the latter had a case against
it. SCC argued that the lone witness presented by SIHI to prove its
claim was insufficient as the competency of the witness was not
established and there was no showing that he had personal knowledge of
the transaction. SCC further maintained that no proof was shown of the
genuineness of the signatures in the documentary exhibits presented as
evidence and that these signatures were neither marked nor offered in
evidence by SIHI. Finally, SCC pointed out that the original copies of
the documents were not presented in court.
On November 12, 1996, the appellate court affirmed in toto the judgment appealed from.
On December 11, 1996 SCC filed its motion for
reconsideration, which the Court of Appeals denied in its resolution
dated February 27, 1997.
Hence, petitioner's recourse to this Court relying on the following assignments of error:
I
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT PRIVATE RESPONDENT PROVED ITS CAUSE OF ACTION AND OVERCAME
IT'S BURDEN OF PROOF.
II
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AWARDING ATTORNEY'S FEES TO THE PRIVATE RESPONDENT.
We find the pertinent issues submitted for resolution to be:
(1) Whether or not the Court of Appeals made an error
of law in holding that private respondent SIHI had proved its cause of
action by preponderant evidence; and
(2) Whether or not the Court of Appeals erred in upholding the award of attorney's fees to SIHI.
Anent the first issue, petitioner contends
that SIHI introduced documentary evidence through the testimony of a
witness whose competence was not established and whose personal
knowledge of the truthfulness of the facts testified to was not
demonstrated. It argues that the same was in violation of Sections 363 and 48,4 Rule
130 of the Rules of Court and it was manifest error for the Court of
Appeals to have ruled otherwise. In addition, SCC points out that the
sole witness of SIHI did not profess to have seen the document presented
in evidence executed or written by SCC. Thus, no proof of its
genuineness was adduced. SIHI thus ran afoul of Section 2,5
Rule 132 of the Rules of Court, which requires proof of due execution
and authenticity of private documents before the same can be received as
evidence. Petitioner likewise submits that none of the signatures
affixed in the documentary evidence presented by SIHI were offered in
evidence. It vehemently argues that such was in violation of the
requirement of Section 34,6 Rule 132 of the Rules of Court.
It was thus an error of law on the part of the appellate court to
consider the same. Finally, petitioner posits that the non-production of
the originals of the documents presented in evidence allows the
presumption of suppression of evidence provided for in Section 3 (e),7 Rule 131 of the Rules of Court, to come into play.
Petitioner's arguments lack merit; they fail to persuade us.
We note that the Court of Appeals found that SCC
failed to appear several times on scheduled hearing dates despite due
notice to it and counsel. On all those scheduled hearing dates,
petitioner was supposed to cross-examine the lone witness offered by
SIHI to prove its case. Petitioner now charges the appellate court with
committing an error of law when it failed to disallow the admission in
evidence of said testimony pursuant to the "hearsay rule" contained in
Section 36, Rule 130 of the Rules of Court.
Rule 130, Section 36 reads:
SEC. 36. Testimony generally confined to personal knowledge; hearsay excluded.
– A witness can testify only to those facts which he knows of his
personal knowledge; that is, which are derived from his own perception,
except as otherwise provided in these rules.
Petitioner's reliance on Section 36, Rule 130 of the
Rules of Court is misplaced. As a rule, hearsay evidence is excluded and
carries no probative value.8 However, the rule does admit of an exception. Where a party failed to object to hearsay evidence, then the same is admissible.9
The rationale for this exception is to be found in the right of a
litigant to cross-examine. It is settled that it is the opportunity to
cross-examine which negates the claim that the matters testified to by a
witness are hearsay.10 However, the right to cross-examine
may be waived. The repeated failure of a party to cross-examine the
witness is an implied waiver of such right. Petitioner was afforded
several opportunities by the trial court to cross-examine the other
party's witness. Petitioner repeatedly failed to take advantage of these
opportunities. No error was thus committed by the respondent court when
it sustained the trial court's finding that petitioner had waived its
right to cross-examine the opposing party's witness. It is now too late
for petitioner to be raising this matter of hearsay evidence.
Nor was the assailed testimony hearsay. The Court of
Appeals correctly found that the witness of SIHI was a competent witness
as he testified to facts, which he knew of his personal knowledge.
Thus, the requirements of Section 36, Rule 130 of the Rules of Court as
to the admissibility of his testimony were satisfied.
Respecting petitioner's other submissions, the same
are moot and academic. As correctly found by the Court of Appeals,
petitioner's admission as to the execution of the promissory note by it
through private respondent Arrieta and Bermundo at pre-trial sufficed to
settle the question of the genuineness of signatures. The admission
having been made in a stipulation of facts at pre-trial by the parties,
it must be treated as a judicial admission. Under Section, 411 Rule 129 of the Rules of Court, a judicial admission requires no proof.
Nor will petitioner's reliance on the "best evidence rule"12
advance its cause. Respondent SIHI had no need to present the original
of the documents as there was already a judicial admission by petitioner
at pre-trial of the execution of the promissory note and receipt of the
demand letter. It is now too late for petitioner to be questioning
their authenticity. Its admission of the existence of these documents
was sufficient to establish its obligation. Petitioner failed to submit
any evidence to the contrary or proof of payment or other forms of
extinguishment of said obligation. No reversible error was thus
committed by the appellate court when it held petitioner liable on its
obligation, pursuant to Article 1159 of the Civil Code which reads:
ART. 1159. Obligations arising from contracts have
the force of law between the contracting parties and should be complied
with in good faith.
On the second issue, petitioner charges the
Court of Appeals with reversible error for having sustained the trial
court'' award of attorney'' fees. Petitioner relies on Radio Communications of the Philippines v. Rodriguez,
182 SCRA 899, 909 (1990), where we held that when attorney's fees are
awarded, the reason for the award of attorney's fees must be stated in
the text of the court's decision. Petitioner submits that since the
trial court did not state any reason for awarding the same, the award of
attorney's fees should have been disallowed by the appellate court.1âwphi1.nêt
We find for petitioner in this regard.
It is settled that the award of attorney's fees is
the exception rather than the rule, hence it is necessary for the trial
court to make findings of fact and law, which would bring the case
within the exception and justify the grant of the award.13
Otherwise stated, given the failure by the trial court to explicitly
state the rationale for the award of attorney's fees, the same shall be
disallowed. In the present case, a perusal of the records shows that the
trial court failed to explain the award of attorney's fees. We hold
that the same should thereby be deleted.
WHEREFORE, the instant petition is PARTLY GRANTED. The decision dated November 12, 1996 of the Court of Appeals is AFFIRMED WITH MODIFICATION that the award of attorney's fees to private respondent SIHI is hereby deleted. No pronouncement as to costs.
SO ORDERED.
Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.
Footnotes:
1 Rollo, p. 33.
2 Id. at 31.
3 "SEC. 36. Testimony generally confined to personal knowledge; hearsay excluded.
– A witness can testify only to those facts which he knows of his
personal knowledge; that is, which are derived from his own perception,
except as otherwise provided in these rules."
4 "SEC. 48. General Rule. – The opinion of a witness is not admissible, except as indicated in the following sections."
5 "SEC. 2. Proceedings to be recorded. –
The entire proceedings of a trial or hearing; including the questions
propounded to a witness and his answers thereto, the statements made by
the judge or any of the parties, counsel, or witnesses with reference to
the case, shall be recorded by means of shorthand or stenotype or by
other means of recording found suitable by the court.
A transcript of the record of the proceedings made by
the official stenographer, stenotypist or recorder and certified as
correct by him shall be deemed prima facie a correct statement of such proceedings."
6 "SEC. 34. Offer of evidence. – The
court shall consider no evidence which has not been formally offered.
The purpose for which the evidence is offered shall be specified."
7 "SEC. 3. Disputable presumptions. – The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence:
xxx
"(e) That evidence willfully suppressed would be adverse if produced."
8 Waterous Drug Corporation v. NLRC, 280 SCRA 735, 745 citing People v. Laurente, 255 SCRA 543, 567 (1996); Batiquin v. Court of Appeals, 258 SCRA 334, 342 (1996) (1997); Eugenio v. Court of Appeals, 239 SCRA 207, 216 citing People v. Valero, L-45283-84, March 19, 112 SCRA 661; 3 Jones on evidence, 2nd Ed., 745. (1994).
9 Krohn v. Court of Appeals, 233 SCRA 146, 154 (1994).
10 San Sebastian College v. Court of Appeals, 197 SCRA 138-146 (1991).
11 "SEC.4. Judicial admissions. – An
admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may
be contradicted only by showing that it was made through palpable
mistake or that no such admission was made."
12 Rules of Court, Rule 130, sec. 3 and 4.
13 Philippine National Bank v. Court of Appeals, 256 SCRA 491, 504 (1996).
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