Gaw vs. Chua

A check delivery between family members is a loan where the borrower requested it as such, the lender drew it on a personal account, and the alleged profit-share source belonged to another owner at the time of delivery. The P200,000 could not have been an advance on Hagonoy Lumber profits because both parties had renounced their interests in favor of Chua Sioc Huan in 1986, while respondent acquired ownership only in 1990.

Spouses Chua Chin and Chan Chi founded three business enterprises identified as Hagonoy Lumber, Capitol Sawmill Corporation, and Columbia Wood Industries. The couple had seven children, including petitioner Concepcion Chua Gaw, respondent Suy Ben Chua, and their sister Chua Sioc Huan. At the time relevant to the dispute, ownership and operation of the family businesses, particularly Hagonoy Lumber, were governed by succession and intra-family transfers following the father's death.

On June 19, 1986, Chua Chin died leaving his wife Chan Chi and seven children as surviving heirs. At his death, the net worth of Hagonoy Lumber was P415,487.20. On December 8, 1986, the surviving heirs executed a Deed of Extra-Judicial Partition and Renunciation of Hereditary Rights in Favor of a Co-Heir, settling one-half of Hagonoy Lumber on Chan Chi as conjugal share and dividing the other half equivalent to P207,743.60 among Chan Chi and the seven children in equal pro indiviso shares of P25,967.00 each, with Chan Chi and six children voluntarily renouncing and waiving their shares in favor of Chua Sioc Huan.

In May 1988, petitioner Concepcion Chua Gaw and her husband Antonio Gaw asked respondent Suy Ben Chua to lend them P200,000 for construction of their house in Marilao, Bulacan, payable within six months without interest. On June 7, 1988, respondent issued and delivered to the couple's house China Banking Corporation Check No. 240810 for P200,000, which Antonio later encashed. On August 1, 1990, Chua Sioc Huan executed a Deed of Sale over all her rights and interests in Hagonoy Lumber for P255,000 in favor of respondent. The spouses Gaw failed to pay within the agreed period, prompting respondent to send a demand letter dated March 25, 1991 warning of legal action, and thereafter to file a Complaint for Sum of Money alleging a June 7, 1988 loan payable in six months without interest.

According to the spouses Gaw, the P200,000 was not a loan but petitioner's share in the profits of Hagonoy Lumber. They alleged that after transferring to Marilao, petitioner asked respondent for accounting and payment of her profit shares in Capitol Sawmill Corporation, Columbia Wood Industries Corporation, and Hagonoy Lumber, but respondent persuaded her to defer demand to avoid offending their mother and gave P200,000 as her Hagonoy Lumber profit share. Respondent, for his part, denied any demand for accounting, asserted the spouses had no right therein entitling them to accounting, and insisted the amount was accepted as a loan. In an amended counterclaim, the spouses claimed petitioner as compulsory heir was entitled to one-sixth of Hagonoy Lumber worth not less than P500,000 and prayed for accounting and delivery, while respondent invoked the 1986 Deed of Partition vesting sole ownership in Chua Sioc Huan and the 1990 Deed of Sale vesting it in himself. The spouses replied that both documents were mere temporary paper arrangements prepared on counsel's advice pending a final agreement.

During trial the spouses called respondent as adverse witness under Section 10, Rule 132, eliciting testimony over eleven hearings on family ownership, management of Hagonoy Lumber, his sale of Capitol Sawmill shares on January 1, 1991 for P254,000 cash, and his cash payment of P255,000 to Chua Sioc Huan at her Paso de Blas house from funds kept at home from check-rediscounting, not from his Planters, Paluwagan ng Bayan, or China Bank accounts. Petitioner admitted signing the Deed of Partition but claimed the transfer was temporary, confessed no other document showed temporariness, and admitted that after their mother died in 1993 she initiated no action until the counterclaim. Antonio Gaw died on December 10, 1998 of cardio vascular and respiratory failure. The RTC factually found the check came from respondent's own funds as a loan, not remuneration or advance profit share, and that the due execution of the deeds was judicially admitted and uncontested by the parties thereto.

• Adverse Witness Testimony: Petitioner argued that the RTC prejudiced her case by treating respondent's testimony as adverse witness, particularly statements elicited on cross-examination by his own counsel on ownership of Hagonoy Lumber and the lots, as part of her evidence, when an adverse witness does not become her witness and she is not bound by his testimony.
• Loan vs. Profit Share: Petitioner maintained that the P200,000 was not a loan obligation but her share in the profits of Hagonoy Lumber, and that the lower courts overlooked or misinterpreted important facts and circumstances supported by clear and convincing evidence that would change the result.
• Best Evidence Rule and Ownership: Petitioner argued that the RTC erred in admitting mere copies of the Deed of Partition and Deed of Sale to prove respondent's ownership of Hagonoy Lumber in violation of the best evidence rule under Section 3, Rule 130, and that the Deed of Sale was not the result of bona fide negotiations and both deeds did not express the true intention as temporary paper arrangements.

• Loan and No Right to Accounting: Respondent countered that the spouses never demanded accounting of Capitol Sawmill Corporation, Columbia Wood Industries, and Hagonoy Lumber, that they had no right therein entitling them to accounting, and that the P200,000 was given to and accepted as a loan and not as a share in Hagonoy Lumber.
• Ownership Through Partition and Sale: Respondent argued that Chua Sioc Huan became sole owner of Hagonoy Lumber under the December 8, 1986 Deed of Partition and he became sole owner when he bought it from her under the August 1, 1990 Deed of Sale, defeating any claim to accounting or one-sixth share.

• Adverse Witness Testimony: Whether the RTC erred in considering as petitioner's evidence the testimony of respondent when called as adverse party under Section 10, Rule 132, including testimony elicited on cross-examination by his own counsel.
• Nature of the P200,000: Whether the P200,000 delivered by China Banking Corporation check was a loan obligation or petitioner's share in the profits of Hagonoy Lumber.
• Best Evidence Rule: Whether mere copies of the Deed of Partition and Deed of Sale were inadmissible under the best evidence rule to prove respondent's ownership of Hagonoy Lumber.

• Adverse Witness Testimony: No. Any misattribution was harmless error because preponderance is determined from the entirety of the evidence regardless of who presented it, and uncontradicted adverse testimony retains probative weight unless rebutted or impeached.
• Nature of the P200,000: No, it was not a profit share. It was a loan, as shown by the check, the personal account used, and the fact that neither party owned Hagonoy Lumber when the check was delivered.
• Best Evidence Rule: No. Copies were admissible because due execution was admitted, contents were not genuinely disputed, and the rule applies only when contents are the subject of inquiry.

• Adverse Witness Testimony: In civil cases the plaintiff must establish the case by preponderance of evidence on the strength of his own evidence, but the delineation of evidence per party barely matters since the court considers the entirety of the evidence from both sides. A party calling an adversary may impeach him in all respects as if called by the adverse party, except by bad character, and while not vouching for veracity, is bound by uncontradicted and unrebutted testimony in the sense that contradiction requires other evidence, with such testimony given proper weight if not impeached or contradicted. Here petitioner failed to discredit respondent's account of sole ownership, admitted signing the Partition, offered no document proving temporariness, and raised ownership only by counterclaim after 1993, so the testimony was properly weighed and due process requiring consideration of entire evidence was satisfied.
• Nature of the P200,000: A check with written entries could prove a loan transaction, and entrepreneurial success or bank access does not negate borrowing. The profit-share claim was implausible because the December 8, 1986 Partition, signed by petitioner, made Chua Sioc Huan sole owner; thus on June 7, 1988 neither petitioner nor respondent had interest or right to profits, with respondent acquiring ownership only on August 1, 1990. Delivery by personal check rather than business account further negated an advance on business profits. Concurrent RTC and CA factual findings, supported by more credible evidence than petitioner's self-serving uncorroborated testimony, are accorded great respect and finality on review under Rule 45 absent contrariety or lack of evidentiary support, neither present here.
• Best Evidence Rule: Notarization converted the deeds into public documents admissible without further proof of authenticity, entitled to full faith and credit, presumed regular, and given full force absent strong, complete and conclusive proof of falsity. The best evidence rule under Rule 130, Section 3 applies only when contents are the subject of inquiry, not when only execution, existence, or surrounding circumstances are in issue, where testimonial or substitutionary evidence is admissible; production may also be dispensed with when the opponent does not bona fide dispute contents and no useful purpose would be served. Petitioner admitted signing and due execution of the Partition and failed to specifically deny the Sale's genuineness under Rule 8, contesting only alleged contemporaneous temporary intent, which cannot override written terms that are deemed to contain all agreements and must be construed from contractual language rather than unilateral post facto assertions.

• Preponderance of evidence in civil cases — The plaintiff must establish the case by preponderance of evidence on the strength of his own evidence and not on the weakness of the defendant's evidence, with preponderance determined from all facts and circumstances culled from the entirety of the evidence regardless of who presented it. Applied to hold that attribution of respondent's adverse testimony to petitioner did not change the outcome.
• Calling and impeachment of adverse witness — A party calling an adverse party as witness may impeach him in all respects as if called by the adverse party, except by evidence of bad character, and is bound by uncontradicted or unrebutted testimony unless contradicted by other evidence or impeached, without being precluded from rebuttal. Applied to sustain weight given to respondent's ownership testimony which petitioner failed to rebut.
• Finality of concurrent factual findings on review — Findings of fact of the Court of Appeals affirming the trial court are accorded great respect, even finality, with only errors of law reviewable under Rule 45, except where findings are contrary or unsupported by evidence. Applied to decline disturbance of the loan finding fully accordant between RTC and CA.
• Check as evidence of indebtedness — A check, whose entries are in writing, could prove a loan transaction. Applied together with personal-account issuance to characterize the P200,000 check as a loan rather than profit distribution.
• Notarized documents as public documents — Notarization converts a private document into a public document admissible without further proof of authenticity, entitled to full faith and credit, presumed regular as to due execution, and given full effect absent strong, complete and conclusive proof of falsity or nullity. Applied to uphold the Deed of Partition and Deed of Sale.
• Best evidence rule; parol evidence — Under Rule 130, Section 3, the original is required only when contents are the subject of inquiry; where only execution, existence, or surrounding circumstances are in issue, testimonial or substitutionary evidence is admissible, and production may be dispensed with when contents are not bona fide disputed. When terms are reduced to writing, the agreement is deemed to contain all terms and no evidence thereof other than contents is admissible between parties and successors. Applied to admit deed copies and reject the alleged temporary oral arrangement.

• "The rule is that the plaintiff must rely on the strength of his own evidence and not upon the weakness of the defendant's evidence." — States the civil burden rule used to deem attribution of adverse testimony harmless since the whole evidence is weighed.
• "Preponderance of evidence is then determined by considering all the facts and circumstances of the case, culled from the evidence, regardless of who actually presented it." — Defines how preponderance is assessed, supporting consideration of testimony irrespective of offering party.
• "It is entitled to full faith and credit upon its face." — Describes the evidentiary status of notarized documents, applied to the Partition and Sale deeds.
• "when the terms of an agreement have been reduced to writing, it is deemed to contain all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement." — States the parol-evidence principle rejecting petitioner's claim of a contemporaneous temporary arrangement contradicting the deeds.

• Supreme Transliner, Inc. vs. Court of Appeals, 421 Phil. 692, 699 (2001) — Cited for the rule on preponderance and reliance on strength of plaintiff's evidence in assessing harmless attribution of testimony.
• Pacheco vs. Court of Appeals, G.R. No. 126670, December 2, 1999, 319 SCRA 595, 603 — Cited to support that a check may be evidence of indebtedness.
• Tan vs. Villapaz, G.R. No. 160892, November 22, 2005, 475 SCRA 721, 730 — Cited to support that a written check could prove a loan transaction.
• Tigno vs. Aquino, G.R. No. 129416, November 25, 2004, 444 SCRA 61, 75 — Cited for notarization converting a private document into an admissible public document.
• Citibank, N.A. vs. Sabeniano, G.R. No. 156132, October 12, 2006, 504 SCRA 378, 458 — Cited for the limitation of the best evidence rule to inquiries into contents.
• Estrada vs. Desierto, G.R. No. 146710-15, April 3, 2001, 356 SCRA 108, 138 — Cited for dispensing with original production when contents are not bona fide disputed.
• Arwood Industries, Inc. vs. D.M. Consunji, Inc., G.R. No. 142277, December 11, 2002, 394 SCRA 11 — Cited for binding effect of entire evidence and that the contract is the best evidence of parties' intention.
• Union Refinery Corporation vs. Tolentino, G.R. No. 155653, September 30, 2005, 471 SCRA 613, 618 — Cited for review limited to errors of law under Rule 45.

• Section 11 and Section 12, Rule 132, Revised Rules on Evidence — Govern impeachment of an adverse party's witness by contradictory evidence, bad reputation for truthfulness, or prior inconsistent statements, but not by particular wrongful acts or bad character. Applied to allow impeachment of respondent as adverse witness while preserving weight of unrebutted testimony.
• Section 3, Rule 130, Revised Rules of Court — Requires production of the original document when contents are the subject of inquiry, subject to exceptions for loss, opponent's custody, voluminous records, and public records. Applied to hold copies admissible where contents were not genuinely in issue.
• Section 9, Rule 130, Rules of Court — Provides that a written agreement is deemed to contain all terms with no other evidence admissible between parties and successors. Applied to reject the alleged oral temporary arrangement contradicting the deeds.
• Section 8, Rule 8, Rules of Court — Requires specific denial of genuineness and due execution of actionable documents. Applied to treat the Deed of Sale as effectively admitted for failure to specifically deny.

Ynares-Santiago (Chairperson), J., Austria-Martinez, J., Chico-Nazario, J., and Reyes, J., concur.