E. Michael & Co., Inc. vs. Adriano Enriquez

Where an original writing is lost, secondary evidence of its contents is admissible only after proof of the due execution and delivery of the instrument, where delivery is necessary, and proof of its loss or destruction; a trial court may not exclude well-framed questions tending to establish these requisites merely because counsel characterized the instrument as one of transfer.

Adriano Enriquez executed a sale with a right to repurchase in favor of E. Michael and E. Michael & Co., sociedad en comandita. E. Michael & Co., Inc. claimed to be the successor in interest of those entities through an instrument transferring their property, business, and assets, including the land subject of the sale. The dispute implicated Section 321 of the Code of Civil Procedure, which governs the production of original writings and the admission of secondary evidence of their contents when the original is lost or destroyed.

Adriano Enriquez executed a sale with a right to repurchase in favor of E. Michael and E. Michael & Co., sociedad en comandita. E. Michael & Co., Inc. claimed to be the successor in interest of those entities by virtue of an instrument duly executed and delivered by them transferring to it their property, business, and assets of every kind, including the land that became the subject of the litigation. The complaint alleged that the time to repurchase had expired, that title to the property had thereby become absolute in appellant, and that appellant was accordingly the owner of the land described in the instruments.

At trial, appellant sought to prove the execution and delivery of the conveyance transferring to it the land described in the sale with right to repurchase. The trial court prevented appellant from proving that fact. Appellant also attempted to prove that the instrument had been lost, intending to lay the basis for the introduction of secondary evidence as to its contents. The trial court likewise prevented appellant from proving that fact.

The efforts of appellant’s counsel to prove execution and delivery were at times informal and inartificial, and objections to such questions were properly sustained. At other times, however, the questions put for the purpose of proving those facts were well framed and answers should have been allowed, but the trial court sustained objections and excluded the evidence sought. The same occurred with respect to the attempts to establish the loss of the document. Exceptions were taken by plaintiff’s counsel to all adverse rulings respecting the admission of evidence tending to establish the execution and delivery and the subsequent loss of the document, thus laying the proper foundation for bringing up those rulings.

After trial, the Court of First Instance of Cebu dismissed the action on the ground that the plaintiff did not prove facts sufficient to constitute a cause of action. The plaintiff appealed from that judgment.

• Proof of Execution and Delivery: Appellant maintained that it should have been allowed to prove the execution and delivery of the instrument by which E. Michael and E. Michael & Co., sociedad en comandita, transferred to it the property, business, and assets, including the land subject of the sale with right to repurchase.
• Proof of Loss for Secondary Evidence: Appellant argued that it should have been permitted to prove the loss of the instrument in order to lay the basis for the introduction of secondary evidence as to its contents.
• Erroneous Exclusion of Evidence: Appellant contended that the trial court erred in sustaining objections to proper questions and in excluding material and competent evidence, and that the judgment dismissing the action should be reversed.

• Proof of Execution and Delivery: Whether the trial court erred in excluding evidence tending to prove the due execution and delivery of the instrument of transfer from E. Michael and E. Michael & Co., sociedad en comandita, to appellant.
• Proof of Loss: Whether the trial court erred in excluding evidence of the loss of the instrument, thereby preventing appellant from laying the basis for secondary evidence of its contents under Section 321 of the Code of Civil Procedure.
• Reversal and New Trial: Whether the judgment dismissing the action should be reversed and a new trial ordered.

• Proof of Execution and Delivery: Yes. Proper questions tending to prove due execution and delivery were material and competent, and the trial court erred in sustaining objections to them.
• Proof of Loss: Yes. Evidence of loss was necessary to lay the basis for secondary evidence under Section 321, and its exclusion was error.
• Reversal and New Trial: Reversed and new trial ordered. The error was not cured by subsequent questions or by introducing the same evidence in another manner or form.

• Proof of Execution and Delivery: Section 321 of the Code of Civil Procedure requires the original writing to be produced and proved, except as otherwise provided. If the writing has been lost, proof of loss must first be made before evidence of its contents may be given. Before secondary evidence may be admitted, the offeror must show (1) due execution and delivery of the document, where delivery is necessary, and (2) loss or destruction. The Court noted that execution and delivery may be established by the persons who executed the document, the person before whom its execution was acknowledged, a person present who saw it executed and delivered or who after execution and delivery saw it and recognized the signatures, or a person to whom the parties had previously confessed execution. Although some of appellant’s questions were informal and properly objected to, other questions were well framed and should have been allowed. The mere fact that counsel characterized the instrument as one of transfer, while objectionable, did not justify cutting off proof of execution and delivery if the other requisites were present; in a court trial, the harm of such characterization is minimized because the court knows it cannot accept the characterization as evidence. Trial courts should not be so strict as to cause a miscarriage of justice, though they must guard against fabricated testimony and evasion of the rules of evidence.
• Proof of Loss: The Court further explained that destruction of the instrument may be proved by any person knowing the fact. Loss may be shown by any person who knew the fact of its loss, or by anyone who made, in the judgment of the court, a sufficient examination in the place where the document or papers of similar character are usually kept by the person in whose custody the lost document was, and was unable to find it, or who made any other investigation sufficient to satisfy the court that the instrument is indeed lost. If it appears that the document is in fact in existence, proof of loss or destruction fails and secondary evidence is inadmissible unless Section 322 of the Code of Civil Procedure applies. After proper proof of due execution and delivery and loss or destruction, oral evidence of contents may be given by specified witnesses or by a copy or recital in an authentic document. The trial court prevented appellant from proving loss, and this exclusion was error.
• Reversal and New Trial: On the whole record, proper questions tending to the production of very material and competent evidence were put by plaintiff’s counsel, objections to which were sustained by the trial court. The error was not cured by subsequent questions and answers or by the introduction of the same evidence in a different manner or form. The judgment was therefore reversed and a new trial ordered without costs in that instance.

• Secondary Evidence of Written Instruments — Under Section 321 of the Code of Civil Procedure, an original writing must be produced and proved except as otherwise provided. If lost, proof of loss must first be made before evidence of contents. Upon proof of loss and due execution, contents may be proved by a copy, recital in an authentic document, or recollection of a witness. The Court applied this by holding that the trial court should have allowed proof of execution and delivery and loss to lay the basis for secondary evidence.
• Requisites for Admission of Secondary Evidence — Before secondary evidence of contents may be admitted, the offeror must show (1) due execution and delivery of the document, where delivery is necessary; and (2) loss or destruction of the document. The Court found the trial court erred in preventing appellant from proving these requisites.
• Proof of Due Execution and Delivery — May be established by the persons who executed the document, the person before whom its execution was acknowledged, any person present who saw it executed and delivered or who after execution and delivery saw it and recognized the signatures, or a person to whom the parties previously confessed execution. The Court used this to show the evidence appellant sought was competent.
• Proof of Loss or Destruction — Destruction may be proved by any person knowing the fact. Loss may be shown by any person knowing the fact, or by anyone who made a sufficient examination where the document is usually kept and could not find it, or who made other sufficient investigation satisfying the court. If the document is in fact in existence, proof of loss fails and secondary evidence is inadmissible unless Section 322 applies. The Court held exclusion of such proof was error.
• Oral Evidence of Contents After Proper Proof — After proper proof of due execution and delivery and loss or destruction, oral evidence of contents may be given by any person who signed, read, or heard it read knowing it was the document; by a person present when contents were talked over to give reasonably full information; by a person to whom parties confessed or stated contents; or by a copy or recital in an authentic document. The Court outlined these modes in reversing.
• Characterization of Instrument in Questions — The mere fact that counsel characterized or described the instrument as one of transfer, while objectionable, is not sufficient to cut off proof of execution and delivery if other requisites are present; in a court trial, the harm is minimized because the court knows it cannot accept the characterization as evidence. The Court applied this to find the trial court too strict.
• Trial Court’s Duty on Evidence — Trial courts should not be so strict as to cause a miscarriage of justice, but must ensure they are not imposed upon by fabricated testimony and that injustice does not result from evasion of evidence rules. The Court balanced these concerns in ordering a new trial.

• "An original writing must be produced and proved, except as otherwise provided in this Act. If it has been lost, proof of the loss must first be made before evidence can be given of its contents. Upon such proof being made, together with proof of the due execution of the writing, its contents may be proved by a copy or by a recital of its contests in some authentic document, or by the recollection of a witness." — This is the Court’s quotation of Section 321 of the Code of Civil Procedure; it states the statutory foundation for secondary evidence of a lost writing.
• "As will be seen from this section, the writing itself must be produced unless it has been lost or destroyed in which case, before its contents may be proved by other evidence, it must be shown by the person offering the secondary evidence (1) that the document was duly executed and delivered, where delivery is necessary, and (2) that it has been lost or destroyed." — This passage states the two requisites for admitting secondary evidence, which the trial court prevented appellant from establishing.
• "The mere fact that counsel for appellant, in putting his question to the witness, characterized or described the instrument as one of transfer, while objectionable, was not sufficient to cut him off altogether from proving the execution and delivery of the document if other requisites were present." — This holds that a lawyer’s characterization of the instrument does not bar proof of execution and delivery when the other requisites are otherwise present.
• "Trial courts should not be so strict with reference to matters of the character under discussion as to cause a miscarriage of justice; but on the other hand, they should see to it that they are not impose on by the introduction of fabricated testimony and that injustice shall not result from an evasion of the rules of evidence by designing persons." — This balances the duty of trial courts to avoid undue strictness against the need to guard against fabricated testimony and evasion of evidentiary rules.

• Section 321, Code of Civil Procedure — Requires the original writing to be produced and proved; if lost, proof of loss must first be made before evidence of contents may be given; upon proof of loss and due execution, contents may be proved by a copy, recital in an authentic document, or recollection of a witness. The Court applied it to hold that appellant should have been allowed to prove execution and delivery and loss to lay the basis for secondary evidence.
• Section 322, Code of Civil Procedure — Mentioned as an exception when proof of loss fails because the document is in fact in existence; secondary evidence is inadmissible unless Section 322 applies. The Court did not elaborate on its contents or apply it further.

Morel, J., wrote the opinion. Arellano, C.J., Torres, Carson, Trent, and Araullo, JJ., concurred.