755 PHIL.

434

FIRST DIVISION

[ G.R. No. 167052, March 11, 2015 ]

BANK OF THE PHILIPPINE ISLANDS SECURITIES CORPORATION,

PETITIONER, VS. EDGARDO V. GUEVARA, RESPONDENT.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review under Rule 45 of the Rules of Court seeking
the reversal and setting aside of the Decision[1] dated December 19, 2003 and
Resolution[2] dated February 9, 2005 of the Court Appeals in CA-G.R. CV No. 69348,
affirming the Decision[3] dated September 11, 2000 of the Regional Trial Court (RTC)
of Makati City, Branch 57 in Civil Case No. 92-1445. The RTC acted favorably on the
action instituted by respondent Edgardo V. Guevara for the enforcement of a foreign
judgment, particularly, the Order[4] dated March 13, 1990 of the United States (U.S.)
District Court for the Southern District of Texas, Houston Division (U.S. District Court),
in Civil Action No. H-86-440, and ordered petitioner Bank of the Philippine Islands
(BPI) Securities Corporation to pay respondent (a) the sum of US$49,500.00 with legal
interest; (b) P250,000.00 attorney’s fees and litigation expenses; and (c) costs of suit.

The facts are culled from the records of the case.

Ayala Corporation, a holding company, and its subsidiaries are engaged in a wide array
of businesses including real estate, financial services, telecommunications, water and
used water, electronics manufacturing services, automotive dealership and
distributorship, business process outsourcing, power, renewable energy, and transport
infrastructure.[5]

In the 1980s, Ayala Corporation was the majority stockholder of Ayala Investment and
Development Corporation (AIDC). AIDC, in turn, wholly owned Philsec Investment
Corporation (PHILSEC), a domestic stock brokerage firm, which was subsequently
bought by petitioner; and Ayala International Finance Limited (AIFL), a Hong Kong
deposit-taking corporation, which eventually became BPI International Finance Limited
(BPI-IFL). PHILSEC was a member of the Makati Stock Exchange and the rules of the
said organization required that a stockbroker maintain an amount of security equal to
at least 50% of a client’s outstanding debt.

Respondent was hired by Ayala Corporation in 1958. Respondent later became the
Head of the Legal Department of Ayala Corporation and then the President of PHILSEC
from September 1, 1980 to December 31, 1983. Thereafter, respondent served as
Vice-President of Ayala Corporation until his retirement on August 31, 1997.

While PHILSEC President, one of respondent’s obligations was to resolve the

outstanding loans of Ventura O. Ducat (Ducat), which the latter obtained separately
from PHILSEC and AIFL. Although Ducat constituted a pledge of his stock portfolio
valued at approximately US$1.4 million, Ducat’s loans already amounted to US$3.1
million. Because the security for Ducat’s debts fell below the 50% requirement of the
Makati Stock Exchange, the trading privileges of PHILSEC was in peril of being
suspended.

Ducat proposed to settle his debts by an exchange of assets. Ducat owned several
pieces of real estate in Houston, Texas, in partnership with Drago Daic (Daic),
President of 1488, Inc., a U.S.-based corporation. Respondent relayed Ducat’s
proposal to Enrique Zobel (Zobel), the Chief Executive Officer of Ayala Corporation.
Zobel was amenable to Ducat’s proposal but advised respondent to send Thomas
Gomez (Gomez), an AIFL employee who traveled often to the U.S., to evaluate Ducat’s
properties.

In December of 1982, Gomez examined several parcels of real estate that were being
offered by Ducat and 1488, Inc. for the exchange. Gomez, in a telex to respondent,
recommended the acceptance of a parcel of land in Harris County, Texas (Harris County
property), which was believed to be worth around US$2.9 million. Gomez further
opined that the “swap would be fair and reasonable” and that it would be better to take
this opportunity rather than pursue a prolonged legal battle with Ducat. Gomez’s
recommendation was brought to Zobel’s attention. The property-for-debt exchange
was subsequently approved by the AIFL Board of Directors even without a prior
appraisal of the Harris County property. However, before the exchange actually closed,
an AIFL director asked respondent to obtain such an appraisal.

William Craig (Craig), a former owner of the Harris County property, conducted the
appraisal of the market value of the said property. In his January 1983 appraisal, Craig
estimated the fair market value of the Harris County property at US$3,365,000.

Negotiations finally culminated in an Agreement,[6] executed on January 27, 1983 in

Makati City, Philippines, among 1488, Inc., represented by Daic; Ducat, represented by
Precioso Perlas (Perlas); AIFL, represented by Joselito Gallardo (Gallardo); and
PHILSEC and Athona Holdings, N. V. (ATHONA), both represented by respondent.
Under the Agreement, the total amount of Ducat’s debts was reduced from US$3.1
million to US$2.5 million; ATHONA, a company wholly owned by PHILSEC and AIFL,
would buy the Harris County property from 1488, Inc. for the price of
US$2,807,209.02; PHILSEC and AIFL would grant ATHONA a loan of US$2.5 million,
which ATHONA would entirely use as initial payment for the purchase price of the
Harris County property; ATHONA would execute a promissory note in favor of 1488,
Inc. in the sum of US$307,209.02 to cover the balance of the purchase price for the
Harris County property; upon its receipt of the initial payment of US$2.5 million from
ATHONA, 1488, Inc. would then fully pay Ducat’s debts to PHILSEC and AIFL in the
same amount; for their part, PHILSEC and AIFL would release and transfer possession
of Ducat’s pledged stock portfolio to 1488, Inc.; and 1488, Inc. would become the new
creditor of Ducat, subject to such other terms as they might agree upon.

The series of transactions per the Agreement was eventually executed. However, after
acquiring the Harris County property, ATHONA had difficulty selling the same. Despite
repeated demands by 1488, Inc., ATHONA failed to pay its promissory note for the
balance of the purchase price for the Harris County property, and PHILSEC and AIFL
refused to release the remainder of Ducat’s stock portfolio, claiming that they were
defrauded into believing that the said property had a fair market value higher than it
actually had.

Civil Action No. H-86-440 before the

U.S. District Court of Southern District
of Texas, Houston Division

On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC, AIFL, and ATHONA
for (a) misrepresenting that an active market existed for two shares of stock included
in Ducat’s portfolio when, in fact, said shares were to be withdrawn from the trading
list; (b) conversion of the stock portfolio; (c) fraud, as ATHONA had never intended to
abide by the provisions of its promissory note when they signed it; and (d) acting in
concert as a common enterprise or in the alternative, that ATHONA was the alter ego of
PHILSEC and AIFL. The suit was docketed as Civil Action No. H-86-440 before the U.S.
District Court.

PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc., Daic, Craig, Ducat,
and respondent, for the recovery of damages and excess payment or, in the
alternative, the rescission of the sale of the Harris County property, alleging fraud,
negligence, and conspiracy on the part of counter-defendants who knew or should have
known that the value of said property was less than the appraisal value assigned to it
by Craig.

Before the referral of the case to the jury for verdict, the U.S. District Court dropped
respondent as counter-defendant for lack of evidence to support the allegations against
him. Respondent then moved in open court to sanction petitioner (formerly PHILSEC),
AIFL, and ATHONA based on Rule 11 of the U.S. Federal Rules of Civil Procedure.[7]

In its Order dated March 13, 1990, the U.S. District Court stated that on February 14,
1990, after trial, the jury returned a verdict for 1488, Inc. In the same Order, the U.S.
District Court ruled favorably on respondent’s pending motion for sanction, thus:
 During the course of the trial, the Court was required to review plaintiff’s
Exhibit No. 91 to determine whether the exhibit should be admitted. After
reviewing the exhibit and hearing the evidence, the Court concluded that
the defendants’ counterclaims against Edgardo V. Guevara are frivolous and
brought against him simply to humiliate and embarrass him. It is the
opinion of the Court that the defendants, Philsec Investment Corporation,
A/K/A BPI Securities, Inc., and Ayala International Finance Limited, should
be sanctioned appropriately based on Fed. R. Civ. P. 11 and the Court’s
inherent powers to punish unconscionable conduct. Based upon the motion
and affidavit of Edgardo V. Guevara, the Court finds that $49,450 is
reasonable punishment.

ORDERED that defendants, Philsec Investment Corporation A/K/A BPI

Securities, Inc., and Ayala International Finance Limited, jointly and
severally, shall pay to Edgardo V. Guevara $49,450 within 30 days of the
entry of this order.[8]

Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as the aforementioned
order of the U.S. District Court for them to pay respondent US$49,450.00; while 1488,
Inc. appealed a post-judgment decision of the U.S. District Court to amend the amount
of attorney’s fees awarded. The appeals were docketed as Case No. 90-2370 before
the U.S. Court of Appeals, Fifth Circuit.

The U.S. Court of Appeals rendered its Decision on September 3, 1991 affirming the
verdict in favor of 1488, Inc. The U.S. Court of Appeals found no basis for the
allegations of fraud made by petitioner, AIFL, and ATHONA against 1488, Inc., Daic,
Craig, and Ducat:

[2] To state a cause of action for fraud under Texas law, a plaintiff must
allege sufficient facts to show:

(1) that a material representation was made;

(2) that it was false;
(3) that when the speaker made it he knew that it was false or
made it recklessly without any knowledge of the truth and
as a positive assertion;
(4) that he made it with the intention that it should be acted on
by the party;
(5) that the party acted in reliance upon it;
(6) that he thereby suffered injury.

Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). We
agree with the district court’s decision to grant a directed verdict against
the defendants. The defendants failed to allege sufficient facts to establish
the elements necessary to demonstrate fraud. In particular, the defendants
have failed to allege any facts that would tend to show that the plaintiff or
any of the third party defendants made a false representation or a
representation with reckless disregard as to its truth.

The Houston real estate market was extremely volatile during the late
1970’s and the early 1980’s. Like a stream of hot air, property values rose
rapidly as the heat and fury generated by speculation and construction
plans mounted, but, just as rapidly, the climate cooled and the high-flying
market came crashing to an all time low. The real estate transaction
involved in this case was certainly affected by this environment of
capriciousness. Moreover, a number of additional variables may have
contributed to the uncertainty of its value. For instance, the land abutted a
two-lane asphalt road that had been targeted by the state for conversion
into a major multi-lane divided highway. Water and sewage treatment
facilities were located near the boundary lines of the property. In addition,
Houston’s lack of conventional zoning ordinances meant that the value of
the property could fluctuate depending upon the use (commercial or
residential) for which the property would ultimately be used.

[3] The fact that the defendants were unable to sell the property at the
price for which it had been appraised does not demonstrate that the plaintiff
or the third party defendants knew that the value of the property was less
than the appraised value, nor does it establish that the opposing parties
were guilty of negligent misrepresentation or negligence.

[4] In support of their allegation of fraud, the defendants rely heavily on a

loan application completed by 1488 shortly before the subject property was
transferred to Athona. See Defendant’s Exhibit 29. At the time, 1488 still
owed approximately $300,000 to Republic of Texas Savings Association on
its original loan for the subject property. The debt had matured and 1488
was planning to move the loan to Home Savings Association of Houston,
that is, take out a loan from Home Savings to pay off the debt to Republic.
1488 had planned to borrow $350,000 for that purpose. A line item on the
Home Savings loan application form asked for the amount of the loan as a
percentage of the appraised value of the land. A figure of thirty-nine
percent was typed into that space, and the defendants suggest that this
proves that the plaintiff knew Craig’s appraisal was erroneous. The
defendants reason that if the $350,000 loan amount was only thirty-nine
percent of the land’s appraised value, then the real estate must have been
worth approximately $897,436.

Although their analysis is sound, the conclusion reached by the defendants

cannot withstand additional scrutiny. At the time that the loan application
was completed, 1488 did not request to have a new appraisal done for the
property. Instead, 1488 planned to use the numbers that had been
generated for a quasi-appraisal done in 1977. The 1977 report purported
only to “supplement” an earlier appraisal that had been conducted in 1974,
and the supplement described its function as estimating market value “for
mortgage loan purposes” only. See Defendant’s Trial Exhibit 4. The two
page supplement was based on such old information that even the Home
Savings Association would not accept it without additional collateral as
security for the loan. See Record on Appeal, Vol. 17 at 5-29 to 5-30. The
loan, however, was never made because the property was transferred to
Athona, and the outstanding loan to Republic was paid off as part of that
transaction. In addition, the loan application itself was never signed by
anyone affiliated with 1488. The district court was correct in dismissing this
argument in support of the defendant’s fraud allegations.

[5] The defendants also allege that the plaintiff and counter defendants
knew that Craig’s appraisal was fraudulent because the purchaser’s
statement signed by their own representative, and the seller’s statement,
signed by the plaintiff, as well as the title insurance policy all recited a
purchase price of $643,416.12. Robert Higgs, general counsel for 1488,
explained that because of the nature of the transaction, 1488, for tax
purposes, wanted the purchase price on the closing statement to reflect
only that amount of cash actually exchanged at the closing as well as the
promissory note given at the closing. See Record on Appeal, Vol. 17 at 5-
127. Although the closing documents recite a purchase price well under the
actual sales price, nothing indicates that any of the parties actually believed
the property to be worth less than the sales amount.

The defendants also assert that it was error for the district court to deny
them permission to designate O. Frank McPherson, a Houston appraiser, as
an expert witness after the cutoff date established by a pretrial order for
such designations. The defendants contend that the error prevented them
from presenting facts that would support their fraud allegations. Although
the defendants were allowed to present the testimony of another expert
witness on the subject of valuation, they argue that McPherson’s testimony
was critical because he had performed an appraisal of the property for the
Texas Highway Department close to the time period during which Craig had
made his appraisal. McPherson’s appraisal was performed as part of the
State’s condemnation proceedings that preceded the planned highway
expansion next to the subject property.

xxxx

[9] In their briefs, the defendants fail to provide an adequate explanation

for their failure to identify their expert witness in accordance with the
district court’s pretrial order. This law suit was initiated in 1985, and the
 defendants had until November of 1988 to designate their expert
witnesses. The defendants were aware of the condemnation proceedings,
and they, therefore, had approximately three years to determine the
identity of any appraiser used by the state. The defendants simply failed to
make this inquiry.

Enforcement of the district court’s pretrial order did not leave the
defendants without an expert witness on the issue of valuation, and the
available expert had also conducted appraisals for the Texas Highway
Department in the area surrounding the subject property. x x x

Although the degree of prejudice suffered by the plaintiff due to the late
designation of an expert would not have been great, a district court still has
the discretion to control pretrial discovery and sanction a party’s failure to
follow a scheduling order. See id. at 791. Such action is particularly
appropriate here, where the defendants have failed to provide an adequate
explanation for their failure to identify their expert within the designated
timetable.

xxxx

The defendants failed to produce enough evidence from which fraud could
be inferred to justify the submission of the issue to a jury. Conclusional
allegations or speculation regarding what the plaintiff knew or did not know
concerning the value of the subject property are insufficient to withstand a
motion for a directed verdict. The district court committed no error in
granting the motion.

xxxx

Since the defendants failed to present the district court with any facts that
would tend to show that the plaintiffs committed a fraud against them, their
claim of a conspiracy to commit fraud must also fail.[9]

The U.S. Court of Appeals likewise adjudged that petitioner, AIFL, and ATHONA failed to
prove negligence on the part of 1488, Inc., Daic, Craig, and Ducat in the appraisal of
the market value of the said property:

[10, 11] The defendants have likewise failed to present any facts that
would tend to support their claim of negligent misrepresentation or
negligence. The defendants rely on assumptions and unsupportable
conclusions of law in establishing their case for negligence: “Assuming the
Property’s true value is less than $800,000, it is reasonable to assume that
the counter defendants failed to exercise reasonable care or competence . .
 .” Brief for Athona at 45-46 x x x. A party may not rely on assumptions of
fact to carry their case forward. The defendants have presented no facts to
suggest that the plaintiff was negligent in acquiring its appraisal. The
plaintiff hired Craig, a real estate broker, to perform the appraisal after the
defendants had already given their initial approval for the transaction.
Craig had performed real estate appraisals in the past, and Texas law
permits real estate brokers to conduct such appraisals, see
Tex.Rev.Civ.Stat.Ann. art. 6573a, §2(2)(E) (Vernon Supp. 1988) (Original
version at Tex.Rev.Civ.Stat.Ann. art. 6573a, §4(1)(e) (Vernon 1969). These
facts do not support a claim of negligence.

For the foregoing reasons the district court committed no error in granting a
directed verdict against the counterclaims advanced by the defendants.[10]

The U.S. Court of Appeals, however, vacated the award of exemplary damages in favor
of 1488, Inc. for the fraudulent misrepresentation regarding the marketability of the
two shares of stock in Ducat’s portfolio. Under Texas law, a jury may not award
damages unless it was determined that the plaintiff had also sustained actual
damages. The U.S. Court of Appeals agreed with petitioner, AIFL, and ATHONA that
1488, Inc. brought its suit alleging fraudulent misrepresentation after the two-year
statute of limitation had expired. The misrepresentation issue should never have gone
to the jury. Therefore, the jury’s finding of actual damages is nullified; and since the
jury verdict is left without a specific finding of actual damages, the award of exemplary
damages must be vacated.

The U.S. Court of Appeals also vacated the award of Rule 11 sanctions in favor of
respondent and against petitioner, AIFL, and ATHONA for being rendered without due
process, and remanded the issue to the U.S. District Court:

[18-20] The Rule 11 motion was first made by Guevara on February 14,
1990, and the court immediately ruled on the issue without giving the
defendants an opportunity to prepare a written response. See Record on
Appeal, Vol. 22 at 10-25 to 10-37. Although, the defendants were given an
opportunity to speak, we conclude that the hearing failed to comport with
the requirements of due process, which demand that the defendants be
provided with adequate notice and an opportunity to prepare a response.
See Henderson v. Department of Public Safety and Corrections, 901 F.2d
1288, 1293-94 (5th Cir.1990). Providing specific notice and an opportunity
to respond is particularly important in cases, such as the one before us, in
which the sanctions have been imposed on the clients and not the
attorneys. See Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987)
(“If sanctions are proposed to be imposed on the client, due process will
demand more specific notice because the client is likely unaware of the
existence of Rule 11 and should be given the opportunity to prepare a
 defense.”). A separate hearing is not a prerequisite to the imposition of
Rule 11 sanctions, see Donaldson, 819 F.2d at 1560 n. 12, but the
defendants in this case, should have been given more of an opportunity to
respond to the motion than that provided at the hearing in which the
motion was first raised. Providing the defendant with an opportunity to
mount a defense “on the spot” does not comport with due process. Given
that the defendants were not provided with adequate notice or an
opportunity to be heard, we vacate the award of sanctions and remand so
that the district court can provide the defendants with an adequate
opportunity to be heard.[11]

Finally, the U.S. Court of Appeals similarly vacated the award of attorney’s fees and
remanded the matter to the U.S. District Court for recalculation to conform with the
requirements provided in the promissory note.

In accordance with the Decision dated September 3, 1991 of the U.S. Court of Appeals,
the U.S. District Court issued an Order[12] dated October 28, 1991 giving petitioner,
AIFL, and ATHONA 20 days to formally respond to respondent’s motion for Rule 11
sanctions. Petitioner, AIFL, and ATHONA jointly filed before the U.S. District Court their
opposition to respondent’s motion for Rule 11 sanctions.[13] Respondent filed his reply
to the opposition, to which petitioner, AIFL, and ATHONA, in turn, filed a reply-brief.[14]

In an Order[15] dated December 31, 1991, the U.S. District Court still found
respondent’s motion for Rule 11 sanctions meritorious and reinstated its Order dated
March 13, 1990:

The basis of the Court’s prior decision as well as now is the fact that the
defendants filed suit against Guevara with knowledge that the basis of the
suit was unfounded. In the defendants’ file was an appraisal from an
international appraisal firm, which the defendants refused to disclose during
discovery and was only discovered at a bench conference during a
discussion about appraisers. Based on the defendants’ own appraisers, no
basis existed for a suit by the defendants against their employee.

The previous judgment entered by this Court is REINSTATED.

The above-quoted Order of the U.S. District Court attained finality as it was no longer
appealed by petitioner, AIFL, and ATHONA.

Through a letter dated February 18, 1992, respondent demanded that petitioner pay
the amount of US$49,450.00 awarded by the U.S. District Court in its Order dated
March 13, 1990. Given the continuous failure and/or refusal of petitioner to comply
with the said Order of the U.S. District Court, respondent instituted an action for the
enforcement of the same, which was docketed as Civil Case No. 92-1445 and raffled to
the RTC of Makati City, Branch 57.

Civil Case No. 92-1445 before

Branch 57 of the RTC of Makati City

In his Complaint for the enforcement of the Order dated March 13, 1990 of the U.S.
District Court in Civil Action No. H-86-440, respondent prayed that petitioner be
ordered to pay:

1. The sum of US$49,450.00 or its equivalent in Philippine Pesos x x x

with interest from date of demand;

2. Attorney’s fees and litigation expenses in the sum of P250,000.00;

3. Exemplary damages of P200,000.00; and

4. Costs of the suit.[16]

In its Amended Answer Ad Cautelam,[17] petitioner opposed the enforcement of the

Order dated March 13, 1990 of the U.S. District Court on the grounds that it was
rendered upon a clear mistake of law or fact and/or in violation of its right to due
process.

In the course of the pre-trial and scheduled trial proceedings, the parties respectively
manifested before the court that they were dispensing with the presentation of their
witnesses since the subject matter of their testimonies had already been stipulated
upon.[18]

Thereafter, the parties formally offered their respective evidence which entirely
consisted of documentary exhibits. Respondent submitted authenticated and certified
true copies of Rule 11 of the U.S. Federal Rules of Civil Procedure;[19] the Orders dated
March 13, 1990, October 28, 1991, and December 31, 1991 of the U.S. District Court
in Civil Action No. H-86-440;[20] the Decision dated September 3, 1991 of the U.S.
Court of Appeals in Case No. 90-2370;[21] and the opposition to respondent’s motion
for Rule 11 sanctions and reply-brief filed by PHILSEC, AIFL, and ATHONA before the
U.S. District Court.[22] Petitioner presented photocopies of pleadings, documents, and
transcripts of stenographic notes in Civil Action No. H-86-440 before the U.S. District
Court;[23] the pleadings filed in other cases related to Civil Case No. 92-1440;[24] and
a summary of lawyer’s fees incurred by petitioner in the U.S.[25] The RTC admitted in
evidence the documentary exhibits of the parties in its Orders dated September 21,
1998 and February 8, 1999,[26] and then deemed the case submitted for decision.

The RTC rendered a Decision on September 11, 2000 with the following dispositive
portion:

WHEREFORE, judgment is hereby rendered in favor of [respondent]

Edgardo V. Guevara ordering [petitioner] BPI Securities Corporation to pay
[respondent] the following:

1. the sum of US$49,500.00 with legal interest from the filing of this
case until fully paid;

2. the sum of P250,000.00 as attorney’s fees and litigation expenses;

and

3. the costs of suit.

An award of exemplary damages for P200,000.00 is denied for being

speculative.[27]

Petitioner appealed to the Court of Appeals, assigning the following errors on the part
of the RTC:

A. The trial court erred in not passing upon the merit or validity of
[petitioner’s] defenses against the enforcement of the foreign
judgment in the Philippines.

Had the trial court considered [petitioner’s] defenses, it would have

concluded that the foreign judgment was not enforceable because it
was made upon a clear mistake of law or fact and/or was made in
violation of the [petitioner’s] right to due process.

B. The trial court erred in not utilizing the standard for determining the
enforceability of the foreign award that was agreed upon by the
parties to this case during the pre-trial, namely, did the defendants in
the Houston case (PHILSEC, AIFL, AND ATHONA) have reasonable
grounds to implead [respondent] in the Houston case based upon the
body of the evidence submitted therein. Thus, whether or not
PHILSEC, AIFL and ATHONA ultimately prevailed against [respondent]
was immaterial or irrelevant; the question only was whether they had
reasonable grounds to proceed against him, for if they had, then there
was admittedly no basis for the Rule 11 award against them by the
Houston Court.
 xxxx

C. In the light of its ruling, the trial court failed to pass upon and resolve
the other issues and/or defenses expressly raised by [petitioner],
including the defense that PHILSEC, AIFL, and ATHONA were deprived
of their right to defend themselves against the Rule 11 sanction and
the main decision because of the prohibitive cost of legal
representation in the us and also because of the gross negligence of
its US counsel. x x x.[28]

In its Decision dated December 19, 2003, the Fifth Division of the Court of Appeals
decreed:

WHEREFORE, the Decision dated 11 September 2000 in Civil Case No. 92-
1445 of the Regional Trial Court of Makati, Branch 57, is hereby AFFIRMED
in all respect with costs against [petitioner].[29]

In its Motion for Reconsideration,[30] petitioner lamented that the Fifth Division of the
Court of Appeals failed to resolve on its own petitioner’s appeal as the Decision dated
December 19, 2003 of the said Division was copied almost verbatim from respondent’s
brief. Thus, petitioner prayed that the Fifth Division of the Court of Appeals recuse
itself from deciding petitioner’s Motion for Reconsideration and that the case be re-
raffled to another division.

The Fifth Division of the Court of Appeals maintained in its Resolution dated May 25,
2004 that the issues and contentions of the parties were all duly passed upon and that
the case was decided according to its merits. The said Division, nonetheless, abstained
from resolving petitioner’s Motion for Reconsideration and directed the re-raffle of the
case.[31]

Petitioner’s Motion for Reconsideration was re-raffled to and subsequently resolved by

the Tenth Division of the Court of Appeals. In its Resolution dated February 9, 2005,
the Tenth Division of the appellate court denied the said Motion for lack of merit.[32]

Hence, petitioner seeks recourse from this Court via the instant Petition for Review,
insisting that the Court of Appeals erred in affirming the RTC judgment which enforced
the Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440.

Petitioner contends that it was not accorded by the Court of Appeals the right to refute
the foreign judgment pursuant to Rule 39, Section 48 of the Rules of Court because the
appellate court gave the effect of res judicata to the said foreign judgment. The Court
of Appeals copied wholesale or verbatim the respondent’s brief without addressing the
body of evidence adduced by petitioner showing that it had reasonable grounds to
implead respondent in Civil Action No. H-86-440.

Petitioner asserts that the U.S. District Court committed a clear mistake of law and fact
in its issuance of the Order dated March 13, 1990, thus, said Order is unenforceable in
this jurisdiction. Petitioner discusses in detail its evidence proving that respondent,
together with 1488, Inc., Ducat, Craig, and Daic, induced petitioner to agree to a
fraudulent deal. Petitioner points out that respondent had the duty of looking for an
independent and competent appraiser of the market value of the Harris County
property; that instead of choosing an unbiased and skilled appraiser, respondent
connived with 1488, Inc., Ducat, and Daic in selecting Craig, who turned out to be the
former owner of the Harris County property and a close associate of 1488, Inc. and
Daic; and that respondent endorsed to petitioner Craig’s appraisal of the market value
of the Harris County property, which was overvalued by more than 400%.

According to petitioner, it had reasonable grounds to implead respondent in Civil Action

No. H-86-440 so the sanction imposed upon it under Rule 11 of the U.S. Federal Rules
of Civil Procedure was unjustified. Petitioner additionally argues that there is no basis
for the U.S. District Court to impose upon it the Rule 11 sanction as there is nothing in
the said provision which allows “the imposition of sanctions for simply bringing a
meritless lawsuit.” If the Rule 11 sanction was imposed upon petitioner as punishment
for impleading a party (when it had reasonable basis for doing so) and not prevailing
against said party, then, petitioner claims that such a sanction is against Philippine
public policy and should not be enforced in this jurisdiction. Settled in this jurisdiction
that there should be no premium attached to the right to litigate, otherwise parties
would be very hesitant to assert a claim in court.

Petitioner further alleges that it was denied due process in Civil Action No H-86-440
because: (1) the U.S. District Court imposed the Rule 11 sanction on the basis of a
single document, i.e., the letter dated September 26, 1983 of Bruce C. Bossom, a
partner at Jones Lang Wooton, a firm of chartered surveyors and international real
estate consultants, addressed to a Mr. Senen L. Matoto of AIFL (marked as Exhibit 91
before the U.S. District Court), which was never admitted into evidence; (2) in said
letter, Jones Lang Wooton was “soliciting a listing agreement” and in which the “said
firm unilaterally, without being asked as to the value of the [Harris County] property,
indicated a value for the [same] which approximate[d] with the value given in the
Craig appraisal,” hence, it cannot be used as basis to conclude that petitioner, AIFL,
and ATHONA assented to Craig’s appraisal of the Harris County property; (3) the
counsel who represented petitioner, AIFL, and ATHONA in Civil Action No. H-86-440
before the U.S. District Court was grossly ignorant and/or negligent in the prosecution
of their counterclaims and/or in proving their defenses, such as when said counsel
failed to present an expert witness who could have testified as to the actual market
value of the Harris County property or when said counsel failed to discredit
respondent’s credibility despite the availability of evidence that respondent had been
previously fined by the Philippine Securities and Exchange Commission for “stock
manipulation;” and (4) the excessive and unconscionable legal fees charged by their
U.S. counsel effectively prevented them from making further appeal.

The Court finds the Petition bereft of merit.

In Mijares v. Rañada,[33] the Court extensively discussed the underlying principles for
the recognition and enforcement of foreign judgments in Philippine jurisdiction:

There is no obligatory rule derived from treaties or conventions that

requires the Philippines to recognize foreign judgments, or allow a
procedure for the enforcement thereof. However, generally accepted
principles of international law, by virtue of the incorporation clause of the
Constitution, form part of the laws of the land even if they do not derive
from treaty obligations. The classical formulation in international law sees
those customary rules accepted as binding result from the combination two
elements: the established, widespread, and consistent practice on the part
of States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element
is a belief that the practice in question is rendered obligatory by the
existence of a rule of law requiring it.

While the definite conceptual parameters of the recognition and

enforcement of foreign judgments have not been authoritatively
established, the Court can assert with certainty that such an undertaking is
among those generally accepted principles of international law. As earlier
demonstrated, there is a widespread practice among states accepting in
principle the need for such recognition and enforcement, albeit subject to
limitations of varying degrees. The fact that there is no binding universal
treaty governing the practice is not indicative of a widespread rejection of
the principle, but only a disagreement as to the imposable specific rules
governing the procedure for recognition and enforcement.

Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether
statutory or jurisprudential, adopted in various foreign jurisdictions. In the
Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules
of Court which has existed in its current form since the early 1900s.
Certainly, the Philippine legal system has long ago accepted into its
jurisprudence and procedural rules the viability of an action for enforcement
of foreign judgment, as well as the requisites for such valid enforcement, as
derived from internationally accepted doctrines. Again, there may be
distinctions as to the rules adopted by each particular state, but they all
prescind from the premise that there is a rule of law obliging states to allow
 for, however generally, the recognition and enforcement of a foreign
judgment. The bare principle, to our mind, has attained the status of opinio
juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and

requisites outlined in Section 48, Rule 39 derive their efficacy not merely
from the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court,
and could very well be abrogated or revised by the high court itself. Yet the
Supreme Court is obliged, as are all State components, to obey the laws of
the land, including generally accepted principles of international law which
form part thereof, such as those ensuring the qualified recognition and
enforcement of foreign judgments. (Citations omitted.)

It is an established international legal principle that final judgments of foreign courts of

competent jurisdiction are reciprocally respected and rendered efficacious subject to
certain conditions that vary in different countries.[34] In the Philippines, a judgment or
final order of a foreign tribunal cannot be enforced simply by execution. Such
judgment or order merely creates a right of action, and its non-satisfaction is the cause
of action by which a suit can be brought upon for its enforcement.[35] An action for
the enforcement of a foreign judgment or final order in this jurisdiction is governed by
Rule 39, Section 48 of the Rules of Court, which provides:

SEC. 48. Effect of foreign judgments or final orders. – The effect of a

judgment or final order of a tribunal of a foreign country, having jurisdiction
to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment
or final order is conclusive upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or

final order is presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence of a

want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.

The Court expounded in Mijares on the application of the aforequoted provision:

There is an evident distinction between a foreign judgment in an action in

rem and one in personam. For an action in rem, the foreign judgment is
deemed conclusive upon the title to the thing, while in an action in
personam, the foreign judgment is presumptive, and not conclusive, of a
right as between the parties and their successors in interest by a
subsequent title. However, in both cases, the foreign judgment is
susceptible to impeachment in our local courts on the grounds of want of
jurisdiction or notice to the party, collusion, fraud, or clear mistake of law or
fact. Thus, the party aggrieved by the foreign judgment is entitled to
defend against the enforcement of such decision in the local forum. It is
essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its
efficacy.

It is clear then that it is usually necessary for an action to be filed in

order to enforce a foreign judgment, even if such judgment has
conclusive effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an opportunity to challenge the
foreign judgment, and in order for the court to properly determine
its efficacy. Consequently, the party attacking a foreign judgment
has the burden of overcoming the presumption of its validity.

The rules are silent as to what initiatory procedure must be undertaken in

order to enforce a foreign judgment in the Philippines. But there is no
question that the filing of a civil complaint is an appropriate measure for
such purpose. A civil action is one by which a party sues another for the
enforcement or protection of a right, and clearly an action to enforce a
foreign judgment is in essence a vindication of a right prescinding either
from a “conclusive judgment upon title” or the “presumptive evidence of a
right.” Absent perhaps a statutory grant of jurisdiction to a quasi-judicial
body, the claim for enforcement of judgment must be brought before the
regular courts.

There are distinctions, nuanced but discernible, between the cause of action
arising from the enforcement of a foreign judgment, and that arising from
the facts or allegations that occasioned the foreign judgment. They may
pertain to the same set of facts, but there is an essential difference in the
right-duty correlatives that are sought to be vindicated. For example, in a
complaint for damages against a tortfeasor, the cause of action emanates
from the violation of the right of the complainant through the act or
omission of the respondent. On the other hand, in a complaint for the
enforcement of a foreign judgment awarding damages from the
same tortfeasor, for the violation of the same right through the
same manner of action, the cause of action derives not from the
tortious act but from the foreign judgment itself.

More importantly, the matters for proof are different. Using the above
 example, the complainant will have to establish before the court the
tortious act or omission committed by the tortfeasor, who in turn is allowed
to rebut these factual allegations or prove extenuating circumstances.
Extensive litigation is thus conducted on the facts, and from there the right
to and amount of damages are assessed. On the other hand, in an action
to enforce a foreign judgment, the matter left for proof is the
foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally
restricted to a review of jurisdiction of the foreign court, the service
of personal notice, collusion, fraud, or mistake of fact or law. The
limitations on review [are] in consonance with a strong and
pervasive policy in all legal systems to limit repetitive litigation on
claims and issues. Otherwise known as the policy of preclusion, it
seeks to protect party expectations resulting from previous
litigation, to safeguard against the harassment of defendants, to
insure that the task of courts not be increased by never-ending
litigation of the same disputes, and – in a larger sense – to promote
what Lord Coke in the Ferrer’s Case of 1599 stated to be the goal of
all law: “rest and quietness.” If every judgment of a foreign court
were reviewable on the merits, the plaintiff would be forced back on
his/her original cause of action, rendering immaterial the
previously concluded litigation.[36] (Emphases supplied, citations
omitted.)

Also relevant herein are the following pronouncements of the Court in Minoru Fujiki v.
Marinay[37]:

A petition to recognize a foreign judgment declaring a marriage void does

not require relitigation under a Philippine court of the case as if it were a
new petition for declaration of nullity of marriage. Philippine courts
cannot presume to know the foreign laws under which the foreign
judgment was rendered. They cannot substitute their judgment on
the status, condition and legal capacity of the foreign citizen who is
under the jurisdiction of another state. Thus, Philippine courts can
only recognize the foreign judgment as a fact according to the rules
of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign

judgment or final order against a person creates a “presumptive evidence of
a right as between the parties and their successors in interest by a
subsequent title.” Moreover, Section 48 of the Rules of Court states that
“the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
 law or fact.” Thus, Philippine courts exercise limited review on
foreign judgments. Courts are not allowed to delve into the merits
of a foreign judgment. Once a foreign judgment is admitted and
proven in a Philippine court, it can only be repelled on grounds
external to its merits, i.e., “want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.” The rule
on limited review embodies the policy of efficiency and the
protection of party expectations, as well as respecting the
jurisdiction of other states. (Emphases supplied, citations omitted.)

As the foregoing jurisprudence had established, recognition and enforcement of a

foreign judgment or final order requires only proof of fact of the said judgment or final
order. In an action in personam, as in the case at bar, the foreign judgment or final
order enjoys the disputable presumption of validity. It is the party attacking the
foreign judgment or final order that is tasked with the burden of overcoming its
presumptive validity.[38] A foreign judgment or final order may only be repelled on
grounds external to its merits, particularly, want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.

The fact of a foreign final order in this case is not disputed. It was duly established by
evidence submitted to the RTC that the U.S. District Court issued an Order on March
13, 1990 in Civil Action No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay
respondent the sum of US$49,450.00 as sanction for filing a frivolous suit against
respondent, in violation of Rule 11 of the U.S. Federal Rules of Civil Procedure. The
said Order became final when its reinstatement in the Order dated December 31, 1991
of the U.S. District Court was no longer appealed by petitioner, AIFL, and/or ATHONA.

The Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440
is presumptive evidence of the right of respondent to demand from petitioner the
payment of US$49,450.00 even in this jurisdiction. The next question then is whether
petitioner was able to discharge the burden of overcoming the presumptive validity of
said Order.

The Court rules in the negative.

In complete disregard of the limited review by Philippine courts of foreign judgments or

final orders, petitioner opposes the enforcement of the Order dated March 13, 1990 of
the U.S. District Court on the very same allegations, arguments, and evidence
presented before and considered by the U.S. District Court when it rendered its verdict
imposing the Rule 11 sanction against petitioner. Petitioner attempts to convince the
Court that it is necessary to look into the merits of the Order dated March 13, 1990
because the U.S. District Court committed clear mistake of law and fact in issuing the
same. The Court, however, is not convinced. A Philippine court will not substitute its
own interpretation of any provision of the law or rules of procedure of another country,
nor review and pronounce its own judgment on the sufficiency of evidence presented
before a competent court of another jurisdiction. Any purported mistake petitioner
attributes to the U.S. District Court in the latter’s issuance of the Order dated March
13, 1990 would merely constitute an error of judgment in the exercise of its legitimate
jurisdiction, which could have been corrected by a timely appeal before the U.S. Court
of Appeals.

Petitioner cannot insist that the RTC and the Court of Appeals resolve the issue of
whether or not petitioner, AIFL, and ATHONA had reasonable grounds to implead
respondent as a counter-defendant in Civil Action No. H-86-440. Although petitioner
submitted such an issue for resolution by the RTC in its Pre-Trial Brief, the RTC did not
issue any pre-trial order actually adopting the same. In addition, petitioner was also
unable to lay the basis, whether in U.S. or Philippine jurisdiction, for the use of the
“reasonable grounds standard” for determining a party’s liability for or exemption from
the sanctions imposed for violations of Rule 11 of the U.S. Federal Rules of Civil
Procedure. Equally baseless is petitioner’s assertion that the Rule 11 sanction is
contrary to public policy and in effect, puts a premium on the right to litigate. It bears
to stress that the U.S. District Court imposed the Rule 11 sanction upon petitioner,
AIFL, and ATHONA for their frivolous counterclaims against respondent intended to
simply humiliate and embarrass respondent; and not because petitioner, AIFL, and
ATHONA impleaded but lost to respondent.

Contrary to the claims of petitioner, both the RTC and the Court of Appeals carefully
considered the allegations, arguments, and evidence presented by petitioner to repel
the Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440.
Worthy of reproducing herein are the following portions of the RTC judgment:

[Petitioner’s] contention that the judgment sought to be enforced herein is

violative of its right to due process and contrary to public policy because the
Houston Court relied upon Exhibit 91 (which is [petitioner BPI Securities’]
Exh. “1” in this case) and the US Court disregarded the evidence on record
in the Houston Action is unavailing. Whether or not said Exhibit 91
(petitioner’s Exh. “1”) is inadmissible or is not entitled to any
weight is a question which should have been addressed to the US of
Court of Appeals by [petitioner]. To ask a Philippine court to pass
upon the admissibility or weight of Exh. 91 is violative of our public
policy not to substitute our judgment for that of a competent court
of another jurisdiction.

[Petitioner] does not deny the fact that the judgment awarding sanctions
based on [Rule 11 of the U.S.] Federal Rules of Civil Procedure was elevated
to the United States Court of Appeals for the Fifth Circuit which remanded
the case to the District Court precisely to give [petitioner] a reasonable
opportunity to be heard. After remand, the District Court ordered
[petitioner] to file its response to the motion of [respondent] for sanctions
and after the filing of their respective briefs, the District Court reinstated
the former judgment.

Certainly, under these circumstances, the claim of violation of due process

cannot be sustained since [petitioner] was given reasonable opportunity to
present its side before the imposition of sanctions.

xxxx

[Petitioner] likewise argued that the US District Court committed a clear

mistake of law or fact and in support thereof presented Exhibits “10” to
“18” to establish that the fair market value of the Houston property in
January 1983 was no longer US$800,000.00 by the admissions against
interest of 1488 itself, of Craig who submitted the fraudulent appraisal, and
by the previous owners of the said property and to “show that [respondent]
Guevara was either directly involved in the conspiracy against the Houston
defendants in submitting to the latter a fraudulent appraisal of W. Craig (or
was at least responsible to the Houston defendants for the injury that they
suffered) and that the Houston defendants had reasonable basis to implead
him as a defendant in the Houston Case on account of his participation in
the conspiracy or his fault of responsibility for the injury suffered by them.”

However, none of these documents show that [respondent] had any

participation nor knowledge in the execution, custody or other intervention
with respect to the said. Thus, said Exhibits “10” to “18” are
irrelevant and immaterial to the issue of the enforceability of a
foreign judgment. It must be emphasized that the imposition of the
sanctions under [Rule 11 of the U.S.] Federal Rules of Civil
Procedure did not flow from the merits of the civil case in the US
District Court but from the lack of even an iota of evidence against
[respondent] Guevara. To quote the US District Court:

THE COURT

xxxx

I am disturbed about that. I don’t see any evidence at all in this

case, after listening to all of this evidence, that there ever was a
lawsuit that could have been brought against Guevara, and even
after all of the discovery was done, there was still no evidence of
a conspiracy. There is no evidence of any conspiracy to this
good day that he could have been, but there is no proof of it,
and that’s what we base these lawsuits on. That’s what the Rule
11 is designed to do, to deal with the circumstance.
 So, I brought it up to Mr. Guevara because I know the
frustration, and irrespective as to whether or not he brought it
up, it would have been my position, my own position as an
officer of this Court to sanction the defendants in this case. That
is my opinion, that they are to be sanctioned because they have
brought all of the power that they have in the Philippines to bear
and put pressure on this man so that he would have to come
over 10,000 miles to defend himself or to hire lawyers to defend
himself against a totally frivolous claim.[39] (Emphases
supplied.)

As for petitioner’s contention that the Fifth Division of the Court of Appeals, in its
Decision dated December 19, 2003, copied verbatim or wholesale from respondent’s
brief, the Court refers to its ruling in Halley v. Printwell, Inc.,[40] thus:

It is noted that the petition for review merely generally alleges that starting
from its page 5, the decision of the RTC “copied verbatim the allegations of
herein Respondents in its Memorandum before the said court,” as if “the
Memorandum was the draft of the Decision of the Regional Trial Court of
Pasig,” but fails to specify either the portions allegedly lifted verbatim from
the memorandum, or why she regards the decision as copied. The omission
renders the petition for review insufficient to support her contention,
considering that the mere similarity in language or thought between
Printwell’s memorandum and the trial court’s decision did not necessarily
justify the conclusion that the RTC simply lifted verbatim or copied from the
memorandum.

It is to be observed in this connection that a trial or appellate judge may

occasionally view a party’s memorandum or brief as worthy of due
consideration either entirely or partly. When he does so, the judge may
adopt and incorporate in his adjudication the memorandum or the parts of it
he deems suitable, and yet not be guilty of the accusation of lifting or
copying from the memorandum. This is because of the avowed objective of
the memorandum to contribute in the proper illumination and correct
determination of the controversy. Nor is there anything untoward in the
congruence of ideas and views about the legal issues between himself and
the party drafting the memorandum. The frequency of similarities in
argumentation, phraseology, expression, and citation of authorities between
the decisions of the courts and the memoranda of the parties, which may
be great or small, can be fairly attributable to the adherence by our courts
of law and the legal profession to widely know nor universally accepted
precedents set in earlier judicial actions with identical factual milieus or
posing related judicial dilemmas. (Citations omitted.)
The Court is unmoved by petitioner’s allegations of denial of due process because of its
U.S. counsel’s exorbitant fees and negligence. As aptly pointed out by respondent in
his Memorandum:

On the specific claim that petitioner has been denied legal representation in
the United States in view of the exorbitant legal fees of US counsel,
petitioner is now estopped from asserting that the costs of litigation
resulted in a denial of due process because it was petitioner which
impleaded Guevara. If petitioner cannot prosecute a case to its final
stages, then it should not have filed a counterclaim against Guevara in the
first place. Moreover, there is no showing that petitioner could not find a
less expensive counsel. Surely, petitioner could have secured the services
of another counsel whose fees were more “affordable.”[41]

Moreover, petitioner is bound by the negligence of its counsel. The declarations of the
Court in Gotesco Properties, Inc. v. Moral[42] is applicable to petitioner:

The general rule is that a client is bound by the acts, even mistakes, of his
counsel in the realm of procedural technique. The basis is the tenet that an
act performed by counsel within the scope of a “general or implied
authority” is regarded as an act of the client. While the application of this
general rule certainly depends upon the surrounding circumstances of a
given case, there are exceptions recognized by this Court: “(1) where
reckless or gross negligence of counsel deprives the client of due process of
law; (2) when its application will result in outright deprivation of the client’s
liberty or property; or (3) where the interests of justice so require.”

The present case does not fall under the said exceptions. In Amil v. Court
of Appeals, the Court held that “to fall within the exceptional circumstance
relied upon x x x, it must be shown that the negligence of counsel must be
so gross that the client is deprived of his day in court. Thus, “where a party
was given the opportunity to defend [its] interests in due course, [it] cannot
be said to have been denied due process of law, for this opportunity to be
heard is the very essence of due process.” To properly claim gross
negligence on the part of the counsel, the petitioner must show that the
counsel was guilty of nothing short of a clear abandonment of the client’s
cause. (Citations omitted.)

Finally, it is without question that the U.S. District Court, in its Order dated March 13,
1990 in Civil Action No. H-86-440, ordered petitioner, AIFL, and ATHONA to pay
respondent US$49,450.00 as sanction for violating Rule 11 of the U.S. Federal Rules of
Civil Procedure. The Court noticed that throughout its Decision dated September 11,
2000 in Civil Case No. 92-1445, the RTC variably mentioned the amount of Rule 11
sanction imposed by the U.S. District Court as US$49,450.00 and US$49,500.00, the
latter obviously being a typographical error. In the dispositive portion, though, the RTC
ordered petitioner to pay respondent US$49,500.00, which the Court hereby corrects
motu proprio to US$49,450.00 in conformity with the U.S. District Court Order being
enforced.

The Court notes that during the pendency of the instant Petition before this Court,
respondent passed away on August 17, 2007, and is survived and substituted by his
heirs, namely: Ofelia B. Guevara, Ma. Leticia G. Allado, Jose Edgardo B. Guevara, Jose
Emmanuel B. Guevara, and Ma. Joselina G. Gepuela.

WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The Decision
dated December 19, 2003 and Resolution dated February 9, 2005 of the Court Appeals
in CA-G.R. CV No. 69348, affirming the Decision dated September 11, 2000 of the
Regional Trial Court of Makati City, Branch 57 in Civil Case No. 92-1445, is hereby
AFFIRMED with MODIFICATION that petitioner BPI Securities Corporation is
ordered to pay respondent Edgardo V. Guevara the sum of US$49,450.00 or its
equivalent in Philippine Peso, with interest at six percent (6%) per annum from the
filing of the case before the trial court on May 28, 1992 until fully paid.[43]

SO ORDERED.

Sereno, C.J., (Chairperson), Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

[1] Rollo, pp. 87-103; penned by Associate Justice Eugenio S. Labitoria with Associate

Justices Mercedes Gozo-Dadole and Rosmari D. Carandang, concurring.

[2] Id. at 105-112; penned by Associate Justice Marina L. Buzon with Associate Justices

Mario L. Guariña III and Santiago Javier Ranada, concurring.

[3] Id. at 113-117.

[4] Records (Vol. I), pp. 7-9; penned by U.S. District Judge Kenneth M. Hoyt.

[5] http://www.ayala.com.ph/about_us/page/about-ayala (Last visited on March 3,

2015)

[6] Records (Vol. I), pp. 58-69.

[7] Rule 11. Signing of Pleadings, Motions, and Other Papers; Sanctions.
Every pleading, motion, and other paper of a party represented by an attorney shall be
signed by at least one attorney of record in the attorney’s individual name, whose
address shall be stated. A party who is not represented by an attorney shall sign the
party’s pleading, motion, or other paper and state the party’s address. Except when
otherwise specifically provided by rule or statute, pleadings need not be verified or
accompanied by affidavit. The rule in equity that the averments of an answer under
oath must be overcome by the testimony of two witnesses or of one witness sustained
by corroborating circumstances is abolished. The signature of an attorney or party
constitutes a certificate by the signer that the signer has read the pleading, motion, or
other paper, that to the best of the signer’s knowledge, information, and belief formed
after reasonable inquiry it is well grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or reversal of existing law, and
that it is not interposed for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation. If a pleading, motion,
or other paper is not signed, it shall be stricken unless it is signed promptly after the
omission is called to the attention of the pleader or movant. If a pleading, motion, or
other paper is signed in violation of this rule, the court, upon motion or upon its own
initiative, shall impose upon the person who signed it, a represented party, or both, an
appropriate sanction, which may include an order to pay to the other party or parties
the amount of the reasonable expenses incurred because of the filing of the pleading,
motion, or other paper, including a reasonable attorney’s fee. (Records [Vol. I], p.
636.)

[8] Records (Vol. I), p. 9.

[9] Id. at 268-271.

[10] Id. at 271-272.

[11] Id. at 274-275.

[12] Id. at 277-278.

[13] Id. at 279-288.

[14] Id. at 289-298 and 591-598.

[15] Id. at 10-11.

[16] Id. at 3.

[17] Id. at 328.

[18] Id. at 574, 651, and 665.

[19] Id. at 636.

[20] Id. at 578-580, 589-590, and 619-620.

[21] Id. at 581-588.

[22] Id. at 609-618 and 591-598.

[23] Records (Vols. II-V); Exhibits 1-46.

[24] Id.; Exhibits 47-51.

[25] Id.; Exhibit 52.

[26] Records (Vol. I), pp. 575 and 640; 679 and 714.

[27] Rollo, p. 117.

[28] CA rollo, pp. 20-21.

[29] Rollo, p. 102.

[30] CA rollo, pp. 180-197.

[31] Id. at 250-251.

[32] Id. at 260-267.

[33] 495 Phil. 372, 395-397 (2005).

[34] St. Aviation Services Co., Pte., Ltd. v. Grand International Airways, Inc., 535 Phil.

757, 762 (2006).

[35] See Florenz D. Regalado, Remedial Law Compendium, Volume II (Ninth Revised

Edition), p. 524; citing Perkins v. Benguet Consolidated Mining Co., 93 Phil. 1035
(1953).

[36] Mijares v. Rañada, supra note 33 at 383-386.

[37] G.R. No. 196049, June 26, 2013, 700 SCRA 69, 91-92.

[38] Philippine Aluminum Wheels, Inc. v. Fasgi Enterprises, Inc., 396 Phil. 893, 909-

910 (2000).

[39] Rollo, pp. 115-117.

[40] G.R. No. 157549, May 30, 2011, 649 SCRA 116, 130-131.

[41] Rollo, p. 176.

[42] G.R. No. 176834, November 21, 2012, 686 SCRA 102, 108.

[43] Following the guidelines on interest in Eastern Shipping Lines, Inc. v. Court of

Appeals (G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95-97) and Nacar v. Gallery
Frames (G.R. No. 189871, August 13, 2013, 703 SCRA 439, 457-459).

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