BOLETIN C- 10 - SERIE NIF C

BALANCE GENERAL

4.1 SERIE NIF C

4.1.10 BOLETIN C- 10

4 SEC. 4. Use of depositions. – … x x x x

(c) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a distance more than one hundred (100) kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his absence was procured by the party offering the deposition; or (3) that the witness is unable to attend or testify because of age, sickness, infirmity, or imprisonment;

or (4) that the party offering the deposition has been unable to procure the attendance of the witness by subpoena; or (5) upon application and notice, that such exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open court, to allow the deposition to be used; and x x x x

FACTS: Rodrigo Dulay, a naturalized American citizen, alleged in his complaint for recovery of bank deposits, that his brother Godofredo Dulay and nephew Pfeger Dulay immigrated to the US and stayed with him in his home in Claremont, Massachusetts. Godofredo returned to the Philippines because he could not endure the weather. Pfeger stayed behind to take care of Rodrigo. Having nurtured affection for his nephew Pfeger, Rodrigo opened a trust account with the Bank of Boston with a deposit of $230,000.00, with Pfeger as trustee thereof.

Five months later, Pfeger left Rodrigo’s house allegedly to join his girlfriend in California. Rodrigo learned only later that Pfeger actually went back to the Philippines. He briefly returned to the US but returned again to the Philippines where he went on a spending binge. Upon knowing this, Rodrigo verified the status of his account with the Bank of Boston, and to his shock discovered that Pfeger had already emptied the account. Rodrigo claimed that Pfeger used the money to buy several vehicles, loan money to several people, open bank accounts for his siblings, and buy a house and lot and jewelry for his wife. Whatever was left of the account was allegedly transferred to Pfeger’s father, Godofredo.

Rodrigo filed a petition for the issuance of letters rogatory to get the depositions of several witnesses residing abroad. Godofredo and Pfeger moved to be allowed to file cross-examination questions to respondent’s written interrogatories, which the trial court granted.

Godofredo and Pfeger filed a Motion to Dismiss the complaint on the ground of failure to prosecute. This was denied by the trial court (Pangasinan RTC).

It turned out, however, the depositions could not be taken before the Clerk of Court of Massachusetts, but were taken instead before a notary public in New York.

Thereafter, petitioners filed their Motion Reiterating Motion to Dismiss, which was again denied by the RTC in an order. In the same Order, trial court directed Rodrigo to have the written and cross interrogatories taken by the notary public authenticated by the consulate.

Godofredo and Pfeger filed an Omnibus Motion, praying that the written interrogatories be declared inadmissible and reiterating their prayer for the dismissal of the complaint. RTC denied this, saying that the deposition taken before the Notary Public from New York, whose authority was duly certified by the Philippine Consul in New York, substantially complied with the Rules of Court

In their appeal to the CA, Godofredo and Pfeger, the major delays in the litigation of the case were caused by Rodrigo;s failure to send on time the needed documents to the trial court. CA ruled that Rodrigo could not be faulted for the incidental delays in the proceedings, which were after all caused by the refusal of the American tribunal (Clerk of Court of Massachussets) which brushed aside the letters rogatory issued by the trial court.

ISSUE: WON CA erred in denying the appeal of Godofredo and Pfeger to declare inadmissibility of the depositions and dismiss the case for failure to prosecute—NO

RATIO: While the letters rogatory issued by the trial court specifically directed the Clerk of Court of Boston to take the depositions needed in the case, it became impossible to follow

the directive since the Clerk of Court of Boston merely brushed it aside and refused to cooperate. Rodrigo cannot be faulted for the resultant delay brought about by this circumstance.

Neither can the trial court be faulted for allowing the admission of the depositions taken not in strict adherence to its original directive, nor for directing the petitioner to have the depositions authenticated. Obviously, it was not within the trial court’s power, much less the respondent’s to force the Clerk of Court of Boston to have the deposition taken before it.

In our jurisdiction, depositions in foreign countries may be taken:

(a) on notice before a secretary of embassy or legation, consul general, consul, vice consul, or consular agent of the Republic of the Philippines;

(b) before such person or officer as may be appointed by commission or under letters rogatory; or

While letters rogatory are requests to foreign tribunals, commissions are directives to officials of the issuing jurisdiction (in this case, the Phils). Generally, a commission is an instrument issued by a court of justice, or other competent tribunal, directed to a magistrate by his official designation or to an individual by name, authorizing him to take the depositions of the witnesses named therein, while a letter rogatory is a request to a foreign court to give its aid, backed by its power, to secure desired information.

Commissions are taken in accordance with the rules laid down by the court issuing the commission, while in letters rogatory, the methods of procedure are under the control of the foreign tribunal.

Leave of court is not required when the deposition is to be taken before a secretary of embassy or legation, consul general, consul, vice-consul or consular agent of the Republic of the Philippines and the defendant’s answer has already been served. However, if the deposition is to be taken in a foreign country where the Philippines has no secretary of embassy or legation, consul general, consul, vice-consul or consular agent, it may be taken only before such person or officer as may be appointed by commission or under letters rogatory

Here, the authentication made by the consul was a ratification of the authority of the notary public who took the questioned depositions. The deposition was, in effect, obtained through a commission, and no longer through letters rogatory.

It must be noted that this move was even sanctioned by the trial court by virtue of its Order. With the ratification of the depositions in issue, there is no more impediment to their admissibility.

Besides, the allowance of the deposition can not be said to have caused any prejudice to the adverse party. They were given the opportunity to cross-examine the witnesses through their cross-interrogatories, which were in turn answered by the deponents. Save for the complaint of delay in the proceedings, petitioners were unable to point out any injury they suffered as a result of the trial court’s action.

I. Failure to answer written interrogatories FELISA M. JARAVATA vs.  MA. DIANA KAROLUS and GRACE V. KUHAIL,

FACTS: Felisa Javarata filed an action for reconveyance and declaration of nullity of titles and damages before the RTC of Olongapo City alleging that she is the lawful owner and actual occupant of a parcel of land situated in Cawag, Subic, Zambales. The said lot, was consolidated with other parcels of land and further subdivided into three lots, namely, Lot 1, Lot 2, and Lot 3. Lot 3 was thereafter titled under Felisa's name in the OCT.

Felisa filed the said complaint claiming that as early as 1950, she and her predecessors-in-interest have been in actual, continuous, open, and public possession of Lots 1, 2, and 3 in the concept of an owner. She alleged that she even had planted and cultivated the subject parcels of land and had declared the same for taxation purposes.

The complaint ensued when Felisa discovered that her relatives, Diana Karolus and Grace Kuhail, fraudulently and illegally secured titles over Lots 1 and 2. Felisa alleged that the two, through fraud and misrepresentation, were able to obtain a Free Patent in their names for which an OCT was issued by the Register of Deeds. Felisa alleged that Lot 1 overlapped with the property registered in the name of Karolus while Lot 2 overlapped with the property registered in the name of Kuhail.

Felisa asserted that the free patents issued to respondents Karolus and Kuhail should be declared null and void ab initio on the grounds that respondents have never been in possession of the contested lots and that they were never qualified to be grantees of free patents, obtained in 1988, on account of their age and citizenship.

Felisa insisted that as early as 1980 she became owner, ipso facto and by operation of law, of the disputed parcels of land on account of her open and continuous possession and cultivation for more than 30 years, her payment of taxes thereon, and her exercise of all attributes of ownership over said properties. Hence, she alleged that the disputed lots ceased to be part of the public domain and beyond the authority of the Director of Lands and the DENR to dispose of or award as free patents to third parties.

In their answer, respondents Karolus and Kuhail claimed, that the issuance of free patents in their names was made in accordance with law and without any fraud or misrepresentation; that the areas covered by their OCTs do not overlap with any area covered by Felisa's property; and that they had been in possession of the parcels of land until they were partially disposed by Felisa and her counsel.

Respondents also filed a third-party complaint against Rudegelio D. Tacorda, Felisa’s counsel.

Felisa then served upon the respondents and their counsel two separate and different sets of written interrogatories. Respondents filed their objection to the written interrogatories but the RTC denied the same. Tacorda likewise served upon respondents separate and different sets of written interrogatories.

Thereafter, Felisa and Tacorda filed a joint omnibus motion primarily to compel the respondents to fully and completely answer their written interrogatories. Respondents however, failed to fully answer the written interrogatories both in the principal action as well as in the third party complaint.

Hence, the RTC declared respondents in default in accordance with Rule 29, Section 3 (c) of the ROC and rendered judgment in favor of Felisa. The RTC declared Felisa as the lawful and true owner of the parcels of land known as Lot nos. 1 and 2 and declared the OCTs in the name of the

respondents, null and void.

Aggrieved, respondents filed a notice of appeal before the CA. The CA reversed the decision of the RTC and dismissed the complaint of Felisa. Hence, this petition.

Issues: Whether or not the CA erred in setting aside the RTC’s default judgment considering that respondents did not fully answer the written interrogatories served upon them. – No

Held: The CA was correct in holding that the RTC erred in rendering a judgment by default against the defendants for refusal or failure to answer written interrogatories, without first requiring an application by the proponent to compel an answer. This is the requisite procedure under Section 1 of Rule 29 of the 1997 Rules of Civil Procedure.

Nevertheless, the CA erred in proceeding to decide the case on the merits since there was as yet no trial or presentation of evidence in the court a quo. Petitioner's prayer to affirm the trial court's default decision does not mean that there was a trial. The decision of the trial court was based on constructive admissions by the defendants of the allegations of the plaintiff due to the court's application of the sanction for not answering the written interrogatories. In reversing the application of the sanction, the CA should have given the parties a chance to substantiate by evidence their respective claims at the trial court. This is particularly true with respect to the plaintiff's claim of physical possession for more than 30 years, regarding which the CA said that clear and convincing evidence was required but wanting. The wrong procedure followed by the trial court effectively aborted a trial and presentation of evidence.

The case was therefore ordered remanded to the RTC for trial and/or further proceedings.

J. Consequences of failure to answer interrogatories

ZEPEDA v. CHINA BANKING CORP.

FACTS: Spouses Zepeda obtained a loan of P5.8 million from Chinabank. The loan was secured by a REM over their parcel of land.

The Zepedas had difficulty paying their loan obligations so they requested for loan restructuring, which was allegedly granted by Chinabank. Later on however, they were surprised when Chinabank extrajudicially foreclosed the subject property in October 2001. The spouses failed to redeem the property and ownership wazs consolidated in the bank’s favor.

So in Feb 2003, the spouses filed a complaint for nullification of foreclosure proceedings and loan documents with damages against CHinabank. They aver that the foreclosure proceedings should be annulled for falure to comply with the posting and publication requirements. They also claim that they signed the REM and promissory note in blank but were not given a copy, and that interest rates were unilaterally fixed.

Chinabank filed an Answer with affirmative defenses and counterclaim. It also filed a set of WRITTEN INTERROGATORIES with 20 questions.

The bank’s affirmative defenses were denied by the TC and ordered the Clerk of Court to set the pre-trial conference for marking of parties’ documentary evidence.

Bank filed a petition for certiorari (r65) with CA for refusal to consider the affirmative defenses AND when petitioners FAILED TO ANSWER the written interrogatories. CA granted, ruled in favor of bank and dismissed the complaint.

ISSUE: W/N the complaint should be dismissed for failure of petitioners spouses Zepeda to answer Chinabank’s written interrogatories as provided in Sec 3c of Rule 29.

HELD/RATIO: No. CA erred. Complaint should not be dismissed for failure to answer the written interrogatories.

It should be noted that respondent bank filed a motion to expunge the complaint based on Section 3(c) of Rule 29 which states:

SEC. 3. Other consequences. – If any party or an officer or managing agent of a party refuses to obey an order made under section 1 of this Rule requiring him to answer designated questions, or an order under Rule 27 to produce any document or other thing for inspection, copying, or photographing or to permit it to be done, or to permit entry upon land or other property, or an order made under Rule 28 requiring him to submit to a physical or mental examination, the court may make such orders in regard to the refusal as are just, and among others the following:

x x x x

(c) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party; and

As we have explained in Arellano v. Court of First Instance of Sorsogon,the consequences enumerated in Section 3(c) of Rule 29 would only apply where the party upon whom the written interrogatories is served, refuses to answer a particular question in the set of written interrogatories and despite an order compelling him to answer the particular question, still refuses to obey the order.

In the instant case, petitioners refused to answer the whole set of written interrogatories, not just a particular question. Clearly then, respondent bank should have filed a motion based on Section 5 and not Section 3(c) of Rule 29. Section 5 of Rule 29 reads:

SEC. 5. Failure of party to attend or serve answers. – If a party or an officer or managing agent of a party willfully fails to appear before the officer who is to take his deposition, after being served with a proper notice, or fails to serve answers to interrogatories submitted under Rule 25 after proper service of such interrogatories, the court on motion and notice, may strike out all or any part of any pleading of that party, or dismiss the action or proceeding or any part thereof, or enter a judgment by default against that party, and in its discretion, order him to pay reasonable expenses incurred by the other, including attorney’s fees.

Due to respondent bank’s filing of an erroneous motion, the trial court cannot be faulted for ruling that the

motion to expunge was premature for lack of a prior application to compel compliance based on Section 3.

The imposition of sanctions under Section 5 is within the sound discretion of the trial court. The matter of how, and when, the above sanctions should be applied is one that primarily rests on the sound discretion of the court where the case pending, having always in mind the paramount and overriding interest of justice. For while the modes of discovery are intended to attain the resolution of litigations with great expediency, they are not contemplated, however, to be ultimate causes of injustice.

K. Request for admission not answered SIME DARBY EMPLOYEES ASSOCIATION V. NLRC Facts:

 On Oct 1995, Sime Darby Employees Association (Union) submitted its proposal to Sime Darby (Company) for the remaining 2 years of their then existing CBA. The Company gave its counter-proposal, but the parties failed to reach a mutual settlement.

The Company declared a deadlock in the negotiations and subsequently sought the intervention of DOLE by filing a Notice of CBA Deadlock and Request for Preventive Mediation. The Union objected to the deadlock and filed an opposition to the Assumption of Jurisdiction/Certification to Arbitration.

 The Company filed a Notice of Lockout on June 21, 1995 on the ground of the deadlock in the CB negotiations and sent a Notice of Lock Out Vote to the NCMB. On the other hand, the Union conducted its strike vote referendum and filed its Strike Vote Result to NCMB on July 25, 1991. On Aug 1995, the Company declared and implemented a lockout against all the hourly employees of its tire factory on the ground of sabotage and work slowdown. On Sept.

1995, the Union filed a complaint for illegal lockout before DOLE.

 Meanwhile, on Oct 1995, the stockholders of the Company approved the sale of its tire manufacturing assets and business operations. The Company issued a memorandum dated Oct. 20, 1995 informing all its employees of the plan to sell the tire manufacturing assets and operations. On Oct. 27, 1995, the Company filed w/ DOLE a Closure and Sale of Tire Manufacturing Operation. On Nov. 15, 1995, the Company individually served notices of termination to all its employees, including individual petitioners.

In document Normas internacionales de información financiera de México, Estados Unidos y España un análisis comparativo (página 151-166)