San Luis vs. Rojas

The rules on depositions under Rule 23 of the Rules of Court are to be accorded broad and liberal treatment, and no distinction or restriction exists as to who may avail of deposition-taking; the testimony of any person may be taken by deposition upon oral examination or written interrogatories at the instance of any party, and the admissibility of such deposition at trial is governed solely by the exceptions listed in Section 4(c) of Rule 23, including the circumstance that the witness is out of the Philippines, provided the absence was not procured by the proponent.

Berdex International, Inc., a foreign corporation organized under United States law with its principal office in San Francisco, California, filed a complaint for a sum of money against petitioner Ramon Gerardo B. San Luis in the Regional Trial Court of Pasig City. Berdex alleged that it had advanced funds to San Luis in 1997, initially intended partly as a loan and partly for the purchase of shares in Seanet and Seabest Corporations. When no shares were transferred, the parties agreed to treat all advances as a loan payable over three years, with an acceleration clause upon default. San Luis denied the existence of a personal loan, asserting that the amounts were received for Berdex's investment in Seanet and that a corporation he had established—Fuegomar Traders, Inc.—had assumed the obligation. After pre-trial, Berdex moved to take the depositions of its witnesses—all American citizens residing in the United States—through written interrogatories, citing distance, advanced age of one witness, and safety concerns following the September 11, 2001 attacks.

• Nature of the Action: Berdex International, Inc., a foreign corporation with principal office in San Francisco, California, USA, filed a complaint for a sum of money against San Luis in the RTC of Pasig City. Berdex alleged it was suing to enforce rights arising from an isolated transaction with San Luis.

• The Alleged Loan: Berdex claimed that in June 1997, San Luis received certain amounts of money from it, partly intended as advances or a loan and partly for the purchase of 40% shares in Seanet and Seabest Corporations. No shares were ever transferred to Berdex. The parties subsequently agreed to treat all payments as a loan to San Luis, with a proposal for payment within three years and an acceleration clause. San Luis later refused to sign a formal loan contract but confirmed the loan to Berdex's auditors on August 8, 2000. Only US$20,000.00 was paid; no further payments were made despite repeated demands. Berdex prayed for payment of US$150,335.75 plus interest and attorney's fees.

• San Luis's Version: San Luis, a seafood trader, admitted receiving US$141,944.71 from Berdex but contended the money was intended to buy 70% of Seanet Corporation's outstanding shares on Berdex's behalf, with the balance representing Berdex's stockholder advances. After Seanet suffered substantial losses and to maintain good business relations, San Luis offered that Fuegomar Traders, Inc.—a company he subsequently established—would purchase Berdex's stock investment in Seanet at cost. While documentation was being finalized, San Luis gave US$20,000.00 on behalf of Fuegomar, which Berdex later mischaracterized as an admission of personal liability.

• The Motion for Deposition: On April 4, 2002, after pre-trial and with trial set for May 3, 2002, Berdex moved to take depositions through written interrogatories of all its witnesses—all American citizens residing or holding office in the United States. Berdex alleged that one witness was of advanced age making travel difficult, and that there was a perceived danger to American travelers in the aftermath of the September 11, 2001 terrorist attacks. It argued that factual issues were limited, making written interrogatories ideal to save judicial time and prevent delays.

• San Luis's Opposition: San Luis opposed the motion, arguing that: (a) the documentary evidence attached to Berdex's complaint did not support its claim but rather supported San Luis's position; (b) proving an oral contract required a strict standard; (c) deposition by written interrogatories would deprive the trial court of the opportunity to observe witness demeanor; (d) his right to cross-examine would be prejudiced because cross-interrogatories severely limit the scope and spontaneity of cross-examination; (e) it was doubtful whether the witnesses would give testimony under the sanction of Philippine perjury laws; and (f) the travel-safety claim was frivolous given the absence of evidence that the U.S. government had prohibited travel to the Philippines.

• RTC Orders: The RTC granted Berdex's motion in an Order dated May 9, 2002, finding it appropriate and sanctioned by the rules on deposition-taking. San Luis's Motion for Reconsideration was denied on July 3, 2002.

• Grave Abuse of Discretion by the CA: Petitioner argued that the CA acted with grave abuse of discretion when it dismissed his petition for certiorari on mere technicalities despite substantial compliance with procedural requirements. The deficiencies—absence of an affidavit of service, blurred annexes, and non-attachment of certain pleadings filed before the RTC—were either excusable, subsequently cured, or immaterial to the resolution of the core issue. Petitioner maintained that the affidavit of service could be dispensed with in cases of personal service where the receiving parties' official stamps appear on the petition, that the blurred copies were due to inadvertent reproduction, and that he had attached the pleadings he believed were important and relevant.

• Prejudice from Deposition-Taking: Petitioner contended that grave injustice would result if Berdex, a non-resident foreign corporation, were allowed to have all its foreign witnesses testify through depositions upon written interrogatories taken outside the Philippines to prove an oral contract unsupported by documentary evidence. He argued that this procedure would prevent the trial court from testing witness credibility, curtail his right to cross-examine witnesses effectively, and deny him the protections of Philippine perjury laws over testimony given abroad. He further argued that Berdex, being domiciled abroad without assets in the Philippines, would be beyond the reach of any counterclaim.

• Distinction from Dasmariñas Garments: Petitioner sought to distinguish Dasmariñas Garments, Inc. v. Reyes, arguing that unlike that case where a witness had already testified in court before depositions were sought, Berdex intended to present no live witness at all—only depositions. Further, in Dasmariñas, the existence of the contract was not in issue, whereas in the present case, San Luis denied the existence of any loan contract.

• Wrong Remedy: Respondent Berdex countered that petitioner had resorted to a wrong remedy by filing a petition for certiorari under Rule 65 instead of a petition for review under Rule 45. Since certiorari is not a substitute for an appeal where the latter remedy is available, petitioner could no longer question the CA Resolutions.

• Proper Dismissal by the CA: Respondent maintained that the CA's dismissal was proper because Circular 19-91 permits outright denial of any petition under Rule 65 where there is no proof of service on the lower court. Reliance on the Circular and on Administrative Circular No. 3-96 justified the CA's refusal to reconsider despite subsequent compliance.

• Deposition-Taking Consistent with the Rules: Respondent argued that no grave abuse of discretion was committed by the RTC in allowing deposition-taking, as the order was fully consistent with the applicable rules on discovery and depositions.

• Propriety of Remedy: Whether the petition for certiorari under Rule 65 was the proper remedy to assail the CA Resolutions dismissing the petition outright on procedural grounds.

• Procedural Dismissal: Whether the Court of Appeals committed grave abuse of discretion in dismissing the petition for certiorari on technical grounds—absence of affidavit of service, blurred annexes, and non-attachment of all pleadings filed in the RTC—despite substantial compliance and subsequent cure.

• Deposition-Taking by a Non-Resident Foreign Corporation: Whether Section 1, Rule 23 of the Rules of Court permits a non-resident foreign corporation to have all its foreign witnesses testify through depositions upon written interrogatories taken outside the Philippines to prove an oral contract.

• Scope of Deposition Rules: Whether the rules on deposition draw any distinction based on the residency of the party seeking discovery or the nature of the contract (oral vs. written) sought to be proved.

• Propriety of Remedy: The petition for certiorari under Rule 65 was proper. Where the error assailed is one of jurisdiction or where the act complained of was committed with grave abuse of discretion amounting to lack or excess of jurisdiction, certiorari under Rule 65—not an appeal under Rule 45—is the correct remedy. Because the petition principally assailed the CA's dismissal on procedural grounds involving the court's jurisdiction to entertain the petition, it fell within the ambit of a special civil action for certiorari.

• Procedural Dismissal: The CA committed grave abuse of discretion in hastily dismissing the petition on procedural flaws. The absence of an affidavit of service was not fatal because the petition showed that copies were personally served on the RTC and adverse counsel on September 3, 2002, as evidenced by the parties' official receiving stamps. By analogy, the non-attachment of an affidavit of service is not fatal when registry receipts attached to the petition clearly show that respondents were served copies; actual receipt satisfies the demands of substantial justice. The blurred Annexes "H" and "J" were satisfactorily explained as inadvertent and, in any event, were not necessary to resolve the core issue of whether the RTC gravely abused its discretion. The documents actually attached—Berdex's motion, San Luis's opposition, his motion for reconsideration, and Berdex's opposition thereto—contained the relevant facts and arguments on which the CA could have ruled on the merits; all other pleadings were subsequently submitted with the motion for reconsideration. The CA's reliance on Administrative Circular No. 3-96 was misplaced because that Circular concerns duplicate original or certified true copies of judgments or orders being reviewed—not the other pleadings whose absence was cited. Jurisprudence dictates that subsequent and substantial compliance may warrant relaxation of procedural rules; technicalities must never defeat substantive rights.

• Deposition-Taking by a Non-Resident Foreign Corporation: Section 1, Rule 23 draws no distinction or restriction as to who may avail of deposition-taking. The rule unequivocally provides that "the testimony of any person, whether a party or not, may be taken, at the instance of any party, by depositions upon oral examination or written interrogatories." The fact that Berdex is a non-resident foreign corporation is immaterial. Depositions serve as a device for ascertaining facts relative to the issues of the case, enabling parties to obtain the fullest possible knowledge of the issues and facts before trial. Deposition discovery rules are to be accorded broad and liberal treatment; they should not be unduly restricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of law.

• Scope of Deposition Rules — Oral Contracts and Witness Credibility: Nothing in the rules on deposition limits their use to cases involving written contracts or precludes their use where an oral contract is alleged. The admissibility of a deposition for trial purposes under Section 4(c) of Rule 23 turns on the existence of an exceptional circumstance—such as the witness being outside the Philippines—not on the nature of the underlying contract. Deposition-taking is a recognized departure from the accepted and usual mode of examining witnesses in open court where demeanor can be observed; the procedure is not rendered illegal on that account. The deponent's physical absence falls precisely within one of the exceptions the law permits. As to cross-examination, Section 25 of Rule 23 fully accords a party the opportunity to serve cross-interrogatories, re-direct interrogatories, and re-cross interrogatories, with sufficient fullness and freedom to protect the adverse party's rights. The argument that Philippine perjury sanctions would not apply to witnesses abroad and that any counterclaim against Berdex would be unenforceable was deemed premature and conjectural, not appropriate for judicial determination at the discovery stage. The admissibility of the deposition is distinct from its probative value; the latter is to be determined at the appropriate time.

• Liberal Construction of Deposition Discovery Rules — Deposition discovery rules under Rule 23 of the Rules of Court must be accorded broad and liberal treatment. They are intended as a means to compel disclosure of relevant facts resting in the knowledge of a party or other person, enabling parties to learn all material and relevant facts before trial so that pleadings and motions are not undermined by inadequate factual foundation and all relevant facts are clearly and completely laid before the court. Restrictions are appropriate only upon a showing that the examination is conducted in bad faith; in a manner that unreasonably annoys, embarrasses, or oppresses the deponent or party; or the inquiry touches upon irrelevant matters or encroaches upon recognized privileges.

• Use of Depositions in Lieu of Oral Testimony — Under Section 4(c), Rule 23 of the Rules of Court, a deposition may be used for any purpose without the deponent being called to the witness stand if the court finds: (1) that the witness is dead; (2) that the witness resides more than one hundred (100) kilometers from the place of trial or is out of the Philippines, unless the absence was procured by the party offering the deposition; (3) that the witness is unable to attend because of age, sickness, infirmity, or imprisonment; (4) that the proponent has been unable to procure attendance by subpoena; or (5) that exceptional circumstances exist making it desirable, in the interest of justice and with due regard to the importance of oral testimony in open court, to allow the deposition. The circumstance that the witness is out of the Philippines independently justifies the use of a deposition, and no distinction is drawn based on the residency of the party seeking discovery or the oral or written character of the contract in issue.

• Distinction Between Admissibility and Probative Value — The admissibility of evidence must not be equated with its weight. Admissibility depends on relevance and competence, while weight pertains to evidence already admitted and its tendency to convince and persuade. A ruling allowing deposition-taking does not preclude a subsequent determination of the deposition's probative value at the appropriate stage of the proceedings.

• Substantial Compliance and Liberal Application of Procedural Rules — Rules of procedure are mere tools intended to facilitate, not frustrate, the attainment of justice. A strict and rigid application must be eschewed when it would subvert the primary objective of enhancing fair trials and expediting justice. Technicalities should never be used to defeat substantive rights. The non-attachment of an affidavit of service is not fatal when registry receipts or official receiving stamps on the petition clearly establish that respondents were actually served copies; actual receipt satisfies the demands of substantial justice.

• Proper Remedy from CA Dismissal on Procedural Grounds — Where a petition is dismissed by the Court of Appeals on grounds involving procedural flaws that implicate the court's jurisdiction to entertain the petition—rather than on the merits—the correct remedy is a petition for certiorari under Rule 65, not an appeal by certiorari under Rule 45. The distinction lies between an error of judgment (reviewable by appeal) and an error of jurisdiction or grave abuse of discretion (correctible by certiorari).

• "Depositions serve as a device for ascertaining the facts relative to the issues of the case. The evident purpose is to enable the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before civil trials and thus prevent the said trials from being carried out in the dark." — This passage articulates the foundational policy rationale for liberal discovery, cited from Republic v. Sandiganbayan.

• "Time and again, this Court has reiterated the doctrine that the rules of procedure are mere tools intended to facilitate the attainment of justice, rather than frustrate it. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party." — This frequently cited passage encapsulates the Court's consistent stance on the liberal construction of procedural rules in service of substantial justice.

• "Unequivocally, the rule does not make any distinction or restriction as to who can avail of deposition. The fact that private respondent is a non-resident foreign corporation is immaterial." — This passage establishes the universality of access to deposition remedies under Rule 23.

• "The admissibility of evidence should not be equated with weight of evidence. The admissibility of evidence depends on its relevance and competence while the weight of evidence pertains to evidence already admitted and its tendency to convince and persuade." — This doctrinal statement clarifies the distinct analytical stages for evaluating evidence, drawn from Ayala Land, Inc. v. Tagle.

• Dasmariñas Garments, Inc. v. Reyes, G.R. No. 108229, August 24, 1993, 225 SCRA 622 — Followed and applied as controlling precedent on deposition-taking abroad. The Court relied on this case's exhaustive discussion of the purposes of discovery depositions, the exceptional circumstances under Section 4, Rule 24 (now Rule 23) permitting use of depositions at trial without the deponent appearing in open court, the procedure for taking depositions in foreign jurisdictions, and the principle that depositions taken abroad are not illegal or inadmissible merely because they depart from the accepted mode of examining witnesses in open court. Petitioner's attempt to distinguish this case on the facts was rejected.

• Donato v. Court of Appeals, G.R. No. 129638, December 8, 2003, 417 SCRA 216 — Followed for the proposition that where the error assailed is one of jurisdiction or grave abuse of discretion, certiorari under Rule 65—not appeal under Rule 45—is the proper remedy.

• Philippine Amusement and Gaming Corporation v. Angara, G.R. No. 142937, November 15, 2005, 475 SCRA 41 — Followed for the doctrine that non-attachment of an affidavit of service is not fatal where registry receipts or official stamps show actual service and receipt by the adverse parties.

• Republic v. Sandiganbayan, G.R. No. 90478, November 21, 1991, 204 SCRA 212 — Cited for the principles that depositions are devices for ascertaining facts to prevent trials from being conducted in the dark, and that limitations on discovery arise only upon a showing of bad faith, irrelevance, or privilege.

• Ayala Land, Inc. v. Tagle, G.R. No. 153667, August 11, 2005, 466 SCRA 521 — Followed for the distinction between admissibility and probative value of evidence.

• Valdecantos v. People, G.R. No. 148852, September 27, 2006, 503 SCRA 474 — Cited for the rule that subsequent and substantial compliance may warrant relaxation of procedural rules.

• Section 1, Rule 23, Rules of Court (Depositions pending action, when may be taken) — Reproduced verbatim in the decision, this provision establishes that the testimony of any person, whether a party or not, may be taken at the instance of any party by deposition upon oral examination or written interrogatories. Applied to hold that no distinction exists as to who may avail of deposition-taking; the non-resident foreign corporation status of Berdex was immaterial.

• Section 4(c)(2), Rule 23, Rules of Court (Use of depositions) — Permits the use of a deposition for any purpose if the court finds 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." Applied to justify the RTC's order, as Berdex's witnesses were all Americans residing in the United States—plainly "out of the Philippines."

• Section 25, Rule 23, Rules of Court (Depositions upon written interrogatories; service of notice and of interrogatories) — Governs the procedure for cross-interrogatories, re-direct interrogatories, and re-cross interrogatories, with specified time periods for each. Applied to hold that petitioner's right to cross-examine was fully protected, as the rules accord him sufficient opportunity to submit cross-interrogatories with "fullness and freedom."

• Section 3, Rule 46, in relation to Section 1, Rule 65, Rules of Court — The CA relied on these provisions as the basis for dismissing the petition for non-compliance with formal requirements. The Supreme Court found that the CA's rigid application of these provisions, without regard to substantial compliance and actual service, constituted grave abuse of discretion.

Ynares-Santiago (Chairperson), Chico-Nazario, Nachura, and Reyes, JJ., concurred.

N/A — The decision was unanimous; no dissenting opinions were recorded.