Santamaria vs. Cleary

A non-resident foreign plaintiff residing abroad who elects to file a civil suit in the Philippines is allowed to take his deposition outside the country to be used as his direct testimony under Rule 23, Section 4(c)(2) of the Rules of Court on the ground that he is "out of the Philippines," and the trial court's denial of such motion constitutes grave abuse of discretion absent a substantial reason or legal excuse constituting "good cause" under Rule 23, Section 16.

Thomas Cleary, an American citizen and resident of Los Angeles, California, filed a Complaint for specific performance and damages before the Regional Trial Court of Cebu against Miranila Land Development Corporation, Manuel S. Go, Ingrid Sala Santamaria, Astrid Sala Boza, and Kathryn Go-Perez. The dispute arose from a Stock Purchase and Put Agreement involving shares of stock for which Cleary paid US$191,250.00. Paragraph 9.02 of the Agreement granted Cleary the sole discretion to elect the venue for filing any action, allowing him to choose between courts in California, the United States District Court for the Central District of California, or the courts of the Philippines. Cleary elected to file the case in Cebu, and the defendants filed their respective Answers with Compulsory Counterclaims.

• Thomas Cleary is an American citizen with an office address in California who entered into a Stock Purchase and Put Agreement with the petitioners in 1999.
• Cleary filed a Complaint before the Regional Trial Court of Cebu on January 10, 2002, for specific performance and damages involving shares of stock for which he paid US$191,250.00.
• Paragraph 9.02 of the Agreement provided that any suit may be brought in California courts, United States District Court for the Central District of California, or Philippine courts, as Cleary may elect in his sole discretion, with the parties waiving any other preferential jurisdiction by reason of domicile.
• Cleary elected to file the case in Cebu and stipulated in his pre-trial brief that he would testify "either on the witness stand or by oral deposition" and expressed intent to avail of modes of discovery.
• On January 22, 2009, Cleary filed a Motion for Court Authorization to Take Deposition before the Consulate-General of the Philippines in Los Angeles, praying that his deposition be taken and used as his direct testimony on the ground that he was "out of the Philippines."
• Petitioners Santamaria and Boza opposed the motion, arguing that the right to take deposition is not absolute, that Cleary deprived the court of the opportunity to observe his demeanor, and that requiring them to attend a deposition in the United States would be costly, time-consuming, and unfair.
• Petitioner Go-Perez filed a separate Opposition, arguing that oral deposition was not intended for discovery purposes if Cleary deposed himself as plaintiff, and that Cleary should submit himself to Philippine procedures and testify before the Regional Trial Court of Cebu.
• The trial court denied the motion on June 5, 2009, ruling that depositions are not meant to be a substitute for actual testimony in open court and that as the plaintiff who was not suffering from any impairment, it would be best for Cleary to appear in court and testify under oath.
• The Court of Appeals granted Cleary's Petition for Certiorari on August 10, 2010, holding that Rule 23, Section 1 allows the taking of depositions regardless of whether the deponent is a party, and that it was immaterial that Cleary was the plaintiff himself.

• The right to take deposition is not absolute but subject to the restrictions under Rule 23, Section 16 of the Rules of Court requiring "good cause" for protective orders.
• Citing Northwest Airlines v. Cruz, absent any compelling or valid reason, the witness must personally testify in open court according to Rule 132, Section 1.
• Cleary chose to file suit in the Philippines and should therefore submit himself to Philippine court procedures, including the requirement for open-court testimony where the judge may observe witness demeanor.
• The proposed deposition is not for discovery purposes since Cleary is the plaintiff deposing himself, making it improper to substitute for open-court testimony.
• Requiring petitioners to attend a deposition in the United States would be costly, time-consuming, disadvantageous, and extremely unfair to Filipino litigants.
• The Court of Appeals erred in granting certiorari because it only found "error" rather than grave abuse of discretion amounting to lack of jurisdiction, citing Triplex Enterprises v. PNB-Republic Bank and Yu v. Reyes-Carpio.
• Written interrogatories are insufficient substitutes for open-court testimony and cross-examination.
• Cleary's mere allegation that he resides "out of the Philippines" does not warrant departure from the open-court trial procedure under Rule 132, Section 1.

• Rule 23, Section 4(c)(2) of the Rules of Court expressly allows the use of depositions of witnesses who are "out of the Philippines," and this applies to him as an American citizen residing in the United States.
• Rule 23, Section 1 does not distinguish or restrict who may avail of depositions, making it immaterial that he is the plaintiff himself.
• The rules on depositions do not contemplate court intervention in the process; all that is required is "reasonable notice" in writing to every other party.
• Depositions serve a dual function as both a method of discovery and a method of presenting testimony, citing Dasmariñas Garments v. Reyes and Jonathan Landoil International Co. Inc. v. Spouses Mangundadatu.
• Northwest Airlines is inapplicable because the deposition in that case was improperly and irregularly taken, unlike the present case where the issue is the denial of the right to take deposition.
• The trial court acted with grave abuse of discretion in denying the motion based on arbitrary premises (that Cleary should submit to Philippine processes and that he had no physical impairment) that ignored the clear provisions of Rule 23, Section 4(c)(2).
• The objection that the court cannot observe the deponent's demeanor is common to all depositions and would render nugatory the provisions allowing depositions if accepted as a ground for denial.
• The expense of attending the deposition in the United States is not a substantial reason to disallow it, as petitioners may utilize cross-interrogatories under Rule 23, Section 25.

• Procedural Issues:
  • Whether the Court of Appeals correctly granted the petition for certiorari under Rule 65 despite finding only "error" rather than grave abuse of discretion amounting to lack of jurisdiction
• Substantive Issues:
  • Whether Rule 23, Section 16 (protective orders) applies to prohibit the taking of deposition in this case
  • Whether Rule 23, Section 4(c)(2) applies to allow a non-resident foreign plaintiff to take deposition abroad for use as direct testimony
  • Whether the taking of deposition by a plaintiff for use as direct testimony is proper when not intended solely for discovery purposes

• Procedural:
  • The Court held that the Court of Appeals correctly granted certiorari because the trial court committed grave abuse of discretion in denying the motion. The trial court's denial was based on arbitrary premises—that Cleary should submit himself to Philippine court processes since he elected to file there, and that he was not suffering from any physical impairment—which did not constitute "good cause" under Rule 23, Section 16. The trial court ignored the clear applicability of Rule 23, Section 4(c)(2) and acted in a manner amounting to lack of jurisdiction.
• Substantive:
  • Rule 23, Section 1 allows "utmost freedom" in the taking of depositions without distinction as to whether the deponent is a party or not, or whether the party taking the deposition is a plaintiff or defendant. The fact that Cleary is the plaintiff is immaterial.
  • Rule 23, Section 16 protective orders, including an order that deposition shall not be taken, may only be issued after notice and for "good cause shown." Good cause requires a substantial reason or legal excuse supported by particular and specific demonstration of facts, not merely conclusory allegations. Cost, inconvenience, and the fact that the deponent is the plaintiff himself do not constitute good cause to completely deny the taking of deposition.
  • There is a crucial distinction between the taking of depositions (which is subject to utmost freedom) and the use of depositions (which is subject to restrictions under Section 4). The fact that a witness is available to testify is not a ground to prohibit the taking of his deposition; it is only a ground to object to the use of the deposition at trial.
  • Rule 23, Section 4(c)(2) applies to any witness who is "out of the Philippines," regardless of whether the deponent is the plaintiff, and does not require physical impairment, age, sickness, or infirmity.
  • Depositions serve a dual function: as a method of discovery and as a method of presenting testimony. The argument that depositions by plaintiffs are improper simply because they are not for discovery purposes is erroneous.
  • Objections to admissibility and weight of evidence are reserved for trial under Rule 23, Sections 6 and 29, and do not justify prohibiting the taking of the deposition itself.

• Utmost Freedom in Taking Depositions — Rule 23, Section 1 allows the widest scope in gathering information by and for all parties without distinction as to who may avail of depositions. The Court applied this to hold that a plaintiff may take his own deposition and that being "out of the Philippines" is sufficient ground to allow the taking of deposition without requiring physical impairment or other infirmity.
• Distinction Between Taking and Use of Depositions — The right to take depositions (discovery stage) is distinct from the right to use depositions at trial. Restrictions are imposed only on the use of depositions under Rule 23, Section 4, not on their taking. The Court applied this to reject the argument that the plaintiff's availability to testify in court should prevent the taking of his deposition abroad.
• Good Cause for Protective Orders — Under Rule 23, Section 16, a court may issue protective orders including denial of deposition only upon motion seasonably made and for "good cause shown," which requires a substantial reason or legal excuse supported by particular facts, not merely conclusory allegations of annoyance, embarrassment, or oppression.
• Dual Function of Depositions — Depositions serve both as a method of discovery before trial and as a method of presenting testimony at trial under certain conditions. The Court rejected the argument that depositions by plaintiffs are improper simply because they are not for discovery purposes.

• "Utmost freedom governs the taking of depositions to allow the widest scope in the gathering of information by and for all parties in relation to their pending case."
• "The availability of the proposed deponent to testify in court does not constitute 'good cause' to justify the court's order that his deposition shall not be taken. That the witness is unable to attend or testify is one of the grounds when the deposition of a witness may be used in court during the trial. But the same reason cannot be successfully invoked to prohibit the taking of his deposition."
• "The right to take statements and the right to use them in court have been kept entirely distinct. The utmost freedom is allowed in taking depositions; restrictions are imposed upon their use."
• "Good cause means a substantial reason—one that affords a legal excuse. Whether or not substantial reasons exist is for the court to determine, as there is no hard and fast rule for determining the question as to what is meant by the term 'for good cause shown.' The requirement, however, that good cause be shown for a protective order puts the burden on the party seeking relief to show some plainly adequate reasons for the order."
• "That neither the presiding judge nor the parties will be able to personally examine and observe the conduct of a deponent does not justify denial of the right to take deposition. This objection is common to all depositions. Allowing this reason will render nugatory the provisions in the Rules of Court that allow the taking of depositions."

• Northwest Airlines, Inc. v. Cruz — Distinguished; involved a deposition that was irregularly taken (before court authorization was issued) and where the witness was merely being accommodated, not a case where the deponent was "out of the Philippines" under Rule 23, Section 4(c)(2).
• Fortune Corporation v. Court of Appeals — Cited for the definition of "good cause" under Rule 23, Section 16 as requiring a substantial reason or legal excuse, and for the principle that it is rare for courts to order that a deposition should not be taken at all.
• San Luis v. Rojas — Cited for the principle that Rule 23, Section 1 does not make any distinction or restriction as to who can avail of deposition, making it immaterial that the plaintiff is a non-resident foreigner.
• Dasmariñas Garments v. Reyes — Cited for the principle that depositions may be taken at any time after the institution of any action and serve as a departure from the usual judicial proceedings of examining witnesses in open court.
• Jonathan Landoil International Co. Inc. v. Spouses Mangundadatu — Cited for the principle that depositions are not restricted to discovery purposes but may also serve as a method of presenting testimony.
• Republic v. Sandiganbayan — Distinguished; involved the use of a deposition taken in one case for purposes of another case under Rule 23, Section 4(c)(3), not the taking of deposition by a party "out of the Philippines."
• People v. Hubert Webb — Cited by petitioners but distinguished; held that use of discovery procedures is subject to sound discretion of trial judge, but certiorari only lies for errors of jurisdiction, not errors of judgment.

• Rule 23, Section 1 of the Rules of Court — Governs when depositions pending action may be taken; provides that testimony of any person, whether a party or not, may be taken at the instance of any party.
• Rule 23, Section 4(c)(2) of the Rules of Court — Allows the use of deposition of a witness who resides at a distance more than 100 kilometers from the place of trial or is "out of the Philippines."
• Rule 23, Section 16 of the Rules of Court — Provides for orders for the protection of parties and deponents from annoyance, embarrassment, or oppression; requires "good cause shown."
• Rule 23, Section 25 of the Rules of Court — Governs deposition upon written interrogatories; cited as alternative to oral deposition to accommodate defendants' concerns about cost.
• Rule 23, Section 6 of the Rules of Court — Governs objections to admissibility of depositions at trial.
• Rule 132, Section 1 of the Rules of Court — General rule that witnesses must testify in open court; held not to be a bar to taking depositions under Rule 23.