Westmont Investment Corporation vs. Francia

A petition for review under Rule 45 is limited to questions of law, and the findings of fact of the Court of Appeals are final and conclusive; where no contract of agency is established by evidence—there being no proof of consent, representation, or authorization by the purported principal—the party that received the investment funds is solely liable to return them, and documents not formally offered in the trial court may not be considered on appeal.

Westmont Investment Corporation (Wincorp) was the financial investment arm of Westmont Bank, offering interest rates three to five percent higher than regular bank rates. Amos P. Francia, Jr. was enticed by Lalaine Alcaraz, the bank manager of Westmont Bank's Meycauayan, Bulacan branch, to invest with Wincorp. He invited his sister Cecilia Zamora and brother Benjamin Francia (collectively, the Francias) to join him. Pearlbank Securities, Inc. (Pearlbank) was a separate corporate entity that Wincorp later identified as the supposed borrower of the Francias' funds through Confirmation Advices, though Pearlbank never signed or acknowledged those documents. The dispute arose when the Francias' investments matured but were not returned, prompting a collection suit against both Wincorp and Pearlbank.

Sometime in 1999, Amos P. Francia, Jr. was enticed by Lalaine Alcaraz, the bank manager of Westmont Bank's Meycauayan, Bulacan branch, to invest with Westmont Investment Corporation (Wincorp), the bank's financial investment arm, which was offering interest rates three to five percent higher than regular bank rates. Convinced by the promise of a good return, Amos invited his sister Cecilia Zamora and brother Benjamin Francia to join him. Together, they placed investments in the amounts of ₱1,420,352.72 and ₱2,522,745.34 with Wincorp, in consideration of a net interest rate of 11% over a 43-day spread. Wincorp, through Westmont Bank, issued Official Receipt Nos. 470844 and 470845, both dated January 27, 2000, evidencing the transactions.

When the 43-day placement matured, the Francias sought to retire their investments but were told that Wincorp had no funds. Instead, Wincorp "rolled over" their placements and issued Confirmation Advices extending the placements for another 34 days. These Confirmation Advices indicated the name of the borrower as Pearlbank Securities, Inc. (Pearlbank), with maturity values of ₱1,435,108.61 and ₱2,548,953.86 and a due date of April 13, 2000. On April 13, 2000, the Francias again attempted to recover their principal plus interest but were once more frustrated.

Constrained, the Francias demanded from Pearlbank the return of their investments. Several attempts to settle proved futile. On March 27, 2001, the Francias filed a Complaint for Collection of Sum of Money and Damages against both Wincorp and Pearlbank before the RTC, Branch 56, Makati City. During pre-trial, the parties stipulated that the Francias did not have personal knowledge as to whether Pearlbank indeed borrowed the funds invested by them from Wincorp, and that the Confirmation Advices indicating Pearlbank as borrower did not bear the signature or acknowledgment of Pearlbank.

After the Francias presented their evidence—principally the testimony of Amos Francia, Jr. and the documentary exhibits including the Official Receipts and Confirmation Advices—Wincorp was given the opportunity to present its defense but failed to do so. On March 7, 2003, three days before the scheduled hearing, Wincorp filed a written motion to postpone, citing the unavailability of its witness Antonio T. Ong due to a congressional hearing and the unavailability of substitute witness Atty. Nemesio Briones due to a prior commitment at the SEC. The RTC denied the motion and deemed Wincorp to have waived its right to present evidence. Pearlbank thereafter filed a Demurrer to Evidence, which the RTC granted on January 12, 2004, dismissing the complaint against Pearlbank. The case was submitted for decision as to Wincorp.

The RTC found that the Francias had established their cause of action against Wincorp by preponderance of evidence: the investments were placed with Wincorp, evidenced by Official Receipts issued by Wincorp through Westmont Bank, and Wincorp failed to return the funds upon maturity. The RTC held Wincorp solely liable, ordering payment of ₱3,984,062.47 plus 11% per annum interest from March 10, 2000, and 10% attorney's fees. The CA affirmed with modification, adjusting the interest computation start date to April 13, 2000 and reducing attorney's fees to a fixed ₱100,000.00. The CA found that no contract of agency was proven, that Pearlbank's receipt of the funds was never established, and that all documents Wincorp attached to its pleadings before the CA could not be given weight because they were not formally offered as evidence in the trial court.

• No Cause of Action Against Wincorp: Petitioner maintained that the Francias had no cause of action against Wincorp because the evidence on record showed that the actual beneficiary of the loan proceeds was Pearlbank, not Wincorp.
• Contract of Agency: Petitioner argued that a contract of agency existed between Wincorp and the Francias, with the latter authorizing the former as their agent to lend money to Pearlbank, and that the two Confirmation Advices presented as evidence by the Francias were competent proof that Pearlbank was the recipient of the loan proceeds.
• Substantial Justice: Petitioner contended that substantial justice dictated that the evidence proffered by Wincorp should be considered to determine who among the parties was liable to the Francias.
• Erroneous Offer of Evidence and Parol Evidence Rule: Petitioner argued before the CA that the Francias made an erroneous offer of evidence, as the documents were offered to prove what was contrary to their content, and that there was a violation of the parol evidence rule.

• Reviewability Under Rule 45: Whether the Court of Appeals was correct in finding Wincorp solely liable to pay the Francias, which presents a factual issue not reviewable under Rule 45.
• Existence of Contract of Agency: Whether a contract of agency existed between the Francias and Wincorp such that Wincorp's liability was merely that of an agent brokering a loan to Pearlbank.
• Admissibility of Unoffered Documents: Whether documents not formally offered as evidence in the trial court may be considered on appeal.

• Reviewability Under Rule 45: No. The issue is factual in nature, and the findings of fact of the CA are final and conclusive; a petition for review under Rule 45 covers only questions of law, and no exception to this rule was established.
• Existence of Contract of Agency: No. The principal-agent relationship between the Francias and Wincorp was not duly established by evidence; the elements of consent, representation, and authorization by Pearlbank were all absent.
• Admissibility of Unoffered Documents: No. Documents not formally offered as evidence in the trial court cannot be given probative weight on appeal, as consideration would deny opposing parties the right to examine and rebut them.

• Reviewability Under Rule 45: A petition for review under Rule 45 covers only questions of law. A question of law exists when the doubt centers on what the law is on a certain state of facts; a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. The core issue—whether the CA was correct in finding Wincorp solely liable—was plainly factual, as it required assessing which party received and benefited from the investment funds. While exceptions exist (e.g., findings grounded on speculation, grave abuse of discretion, misappreciation of facts, findings contrary to the trial court), none was shown to apply. The CA's factual findings were therefore final and conclusive, and the Court found no cogent reason to deviate from the general rule.

• Existence of Contract of Agency: Under Article 1868 of the Civil Code, a contract of agency requires that a person binds himself to render service or to do something in representation of another with the latter's consent. Its elements are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; and (4) the agent acts within the scope of his authority. None of these elements was proven. The records were bereft of any showing that Wincorp merely brokered the loan transactions between the Francias and Pearlbank. Pearlbank did not authorize Wincorp to borrow money for it, nor was there any ratification, express or implied, of the transaction. The Confirmation Advices, while bearing Pearlbank's name as purported borrower, did not bear Pearlbank's signature or acknowledgment, and no promissory note executed by Pearlbank was presented. The Francias consistently stated they dealt only with Wincorp and had no personal knowledge whether Pearlbank received the funds. Furthermore, Pearlbank had initiated several cases against Wincorp questioning the latter's acts of naming it as borrower of investor funds, reinforcing the conclusion that no agency relationship existed.

• Admissibility of Unoffered Documents: Section 34, Rule 132 of the Rules of Court provides that the court shall consider no evidence which has not been formally offered, and the purpose for which the evidence is offered must be specified. The function of a formal offer is to enable the trial judge to know the purpose of the evidence and to allow opposing parties to examine and object. All documents attached by Wincorp to its motion for reconsideration before the RTC and to its brief before the CA were not formally offered as evidence during trial. To consider them at the appellate stage would deny the other parties the right to rebut them. Additionally, Wincorp was given ample opportunity to file its Comment/Objection to the Francias' formal offer of evidence but chose not to do so; it could no longer belatedly challenge the admissibility or purpose of that evidence.

• Rule 45 Limited to Questions of Law — A petition for review on certiorari under Rule 45 covers only questions of law; questions of fact are not reviewable. The distinction: a question of law exists when the doubt centers on what the law is on a certain state of facts; a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. The findings of fact of the Court of Appeals are final and conclusive. The Court enumerated ten exceptions: (1) findings grounded entirely on speculations, surmises, or conjectures; (2) inference manifestly mistaken, absurd, or impossible; (3) grave abuse of discretion; (4) judgment based on misappreciation of facts; (5) conflicting findings of fact; (6) findings contrary to admissions of both parties; (7) findings contrary to those of the trial court; (8) conclusions without citation of specific evidence; (9) facts in the petition not disputed by the respondent; (10) findings premised on supposed absence of evidence and contradicted by the evidence on record. None of these exceptions was found to apply.

• Elements of Contract of Agency (Article 1868, Civil Code) — In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter's consent. The underlying principle is representation—extending the personality of the principal. The four elements are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority. All four must concur; absence of any element negates the existence of agency.

• Formal Offer of Evidence (Section 34, Rule 132) — The court shall consider no evidence which has not been formally offered, and the purpose for which the evidence is offered must be specified. Evidence not formally offered during trial cannot be used for or against a party, nor taken into account on appeal. Failure to make a formal offer within a considerable period constitutes a waiver. The rationale is to enable the trial judge to rest findings of fact and judgment strictly upon evidence offered, to allow opposing parties to examine and object, and to facilitate appellate review.

• Timeliness of Objections to Evidence (Section 36, Rules on Evidence) — Objection to documentary evidence must be made after the evidence is formally offered, specifying the purpose for which it is offered. Objection to oral evidence must be raised at the earliest possible time—after the objectionable question is asked or after the answer is given if the objectionable issue becomes apparent only after the answer. A party given the opportunity to object but which chooses not to do so cannot later challenge the evidence on appeal.

• "In this case, the principal-agent relationship between the Francias and Wincorp was not duly established by evidence. The records are bereft of any showing that Wincorp merely brokered the loan transactions between the Francias and Pearlbank and the latter was the actual recipient of the money invested by the former. Pearlbank did not authorize Wincorp to borrow money for it. Neither was there a ratification, expressly or impliedly, that it had authorized or consented to said transaction." — This passage states the ratio decidendi on the agency issue: the absence of all elements of agency, particularly consent and authorization by the purported principal, defeats Wincorp's defense.

• "All the documents attached by Wincorp to its pleadings before the CA cannot be given any weight or evidentiary value for the sole reason that, as correctly observed by the CA, these documents were not formally offered as evidence in the trial court. To consider them now would deny the other parties the right to examine and rebut them." — This passage articulates the procedural bar that prevented Wincorp from introducing new documentary evidence on appeal, reinforcing the mandatory nature of formal offer under Section 34, Rule 132.

• "Although the subject Confirmation Advices indicate the name of Pearlbank as the purported borrower of the said investments, said documents do not bear the signature or acknowledgment of Pearlbank or any of its officers. This cannot prove the position of Wincorp that it was Pearlbank which received and benefited from the investments made by the Francias. There was not even a promissory note validly and duly executed by Pearlbank which would in any way serve as evidence of the said borrowing." — This passage explains why the Confirmation Advices were insufficient to establish Pearlbank's liability or Wincorp's agency defense: unilateral documents naming a third party as borrower, without that party's signature or acknowledgment, are barren of probative weight as against the named party.

• Microsoft Corporation vs. Maxicorp, Inc., 481 Phil. 550 (2004) — Cited for the established distinction between questions of law and questions of fact: a question of law exists when the doubt centers on what the law is on a certain state of facts; a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. Followed as controlling authority.
• Macasero vs. Southern Industrial Gases Philippines, G.R. No. 178524, January 30, 2009, 577 SCRA 500 — Cited for the enumeration of ten exceptions to the general rule that factual findings of the CA are final and conclusive in a Rule 45 petition. Followed; none of the exceptions was found applicable.
• Eurotech Industrial Technologies, Inc. vs. Cuizon, G.R. No. 167552, April 23, 2007, 521 SCRA 584 — Cited for the definition of contract of agency and its elements under Article 1868 of the Civil Code. Followed in applying the four-element test to determine whether agency existed.
• Heirs of the Deceased Carmen Cruz-Zamora vs. Multiwood International, Inc., G.R. No. 146428, January 19, 2009, 576 SCRA 137 — Cited for the rule on formal offer of evidence under Section 34, Rule 132, and the principle that evidence not formally offered is merely a scrap of paper barren of probative weight. Followed.

• Article 1868, Civil Code — Defines the contract of agency: a person binds himself to render some service or to do something in representation or on behalf of another with the latter's consent. Applied to test whether Wincorp acted as agent for the Francias in lending to Pearlbank; the Court found none of the elements present.
• Section 34, Rule 132, Rules of Court — Provides that the court shall consider no evidence which has not been formally offered, and the purpose for which the evidence is offered must be specified. Applied to bar all documents Wincorp attached to its pleadings before the CA and RTC motion for reconsideration, as these were never formally offered during trial.
• Section 36, Rules on Evidence — Governs the timing of objections to evidence: objection to documentary evidence must be made after formal offer; objection to oral evidence must be made at the earliest possible time. Applied to reject Wincorp's belated challenge to the Francias' evidence, as Wincorp was given the opportunity to object to the formal offer but chose not to.
• Rule 45, Rules of Court — Governs petitions for review on certiorari, limited to questions of law. Applied to hold that the factual issue of Wincorp's sole liability was not reviewable, the CA's findings of fact being final and conclusive.

Justice Diosdado M. Peralta (Acting Chairperson), Justice Roberto A. Abad, Justice Maria Lourdes P. A. Sereno, and Justice Estela M. Perlas-Bernabe concurred.