Salas v. Sta. Mesa Market Corporation
REITERATIONFacts
The Antecedents: Petitioner Ernesto L. Salas entered into a letter-agreement with Primitivo E. Domingo to manage his estate, including Sta. Mesa Market Corporation (SMMC). Salas was tasked with redeveloping the market and restructuring finances, with compensation of 30% of SMMC's capital stock if a monthly revenue of ₱350,000 was achieved by June 30, 1985. A formal management contract was executed on December 28, 1984. Under Salas's management, SMMC leased the market to Malaca Realty Corporation, which proved financially incapable, leading to lease termination and dissatisfaction with Salas's management. SMMC subsequently terminated its management contract with Salas. Procedural History: Petitioner filed an action for specific performance and damages against SMMC and Domingo, alleging that the revenue target was met and Domingo refused to deliver the shares. Domingo argued that the corporation incurred losses under Salas's management. The Regional Trial Court (RTC) ruled in favor of Salas, finding that he increased SMMC's monthly gross income and exceeded the target, ordering the delivery of shares. The Court of Appeals (CA) reversed the RTC decision, finding the audited financial statements presented by Salas inadmissible due to lack of proper authentication, as no representative of the external auditor testified, and a memorandum from Salas's team was considered hearsay. The CA dismissed the complaint. The Petition: Petitioner seeks to set aside the CA decision and resolution, arguing that Amado Domingo, a vice-president of SMMC and heir of Primitivo Domingo, testified that the audited financial statements were copies submitted to the BIR and SEC, thus admitting their genuineness and due execution, making authentication unnecessary.
Issue(s)
Whether the Court of Appeals erred in reversing the RTC decision and dismissing the complaint, encompassing the admissibility of the audited financial statements. Whether the audited financial statements presented by the petitioner were admissible in evidence despite the lack of formal authentication by the external auditor. Whether the testimony of Amado Domingo constituted an admission of the genuineness and due execution of the audited financial statements.
Ruling
The petition is denied. The decision of the Court of Appeals reversing the RTC decision and dismissing the petitioner's complaint is affirmed.
Ratio Decidendi
On whether the Court of Appeals erred and the admissibility of the audited financial statements: The Court affirmed the ruling of the Court of Appeals that the audited financial statements were inadmissible due to lack of proper authentication. The Court reiterated the general rule that private documents require authentication before they can be received in evidence, as provided under Section 20, Rule 132 of the Rules of Court. Authentication can be done by someone who saw the document executed or written, or by evidence of the genuineness of the signature or handwriting of the maker. The petitioner presented only a memorandum from his management team, which was deemed insufficient. The best proof available would have been the testimony of a representative from SMMC's external auditor, Bejarin Jimenez & Co., who prepared the statements. The Court emphasized that copies of financial statements submitted to the BIR and SEC are considered private documents unless they are certified true copies obtained from these agencies, which would then elevate them to public documents. Since the presented documents were mere copies and not certified true copies, they remained private documents requiring authentication. On the admissibility of the audited financial statements: (This is a restatement of the above point for clarity.) The Court found that the audited financial statements were inadmissible due to lack of proper authentication, as they were private documents requiring authentication under Section 20, Rule 132 of the Rules of Court. The petitioner failed to provide sufficient authentication, such as testimony from the external auditor. On whether Amado Domingo's testimony constituted an admission: The Court found no categorical admission from Amado Domingo regarding the authenticity of the audited financial statements. His testimony merely confirmed that SMMC regularly submitted its audited financial statements to the BIR and SEC for tax and reportorial purposes. This did not amount to an admission that the specific copies presented by the petitioner were true or faithful copies of those submitted to the government agencies. Therefore, the exception to the rule on authentication, which requires admission from the adverse party, was not met. The Court concluded that the petitioner failed to prove the genuineness and due execution of the documents, rendering them inadmissible.
Main Doctrine
Copies of audited financial statements submitted to the Bureau of Internal Revenue (BIR) and the Securities and Exchange Commission (SEC) are considered private documents and require proper authentication for admissibility in evidence, unless they are certified true copies obtained from said government offices. An admission of regular submission of such documents to government agencies does not constitute an admission of their genuineness and due execution.