[A.C. No. 4219.

December 8, 2003]
LOTHAR SCHULZ, complainant, vs. ATTY. MARCELO G.FLORES,
respondent.FACTS:
Atty. Flores knew too little of the provisions and application of PD No. 1508 which mandates that
all disputes, except those specifically cited (the dispute between Lothar Schulz and Wilson Ong
not included), between and among residents of the same city or municipality should be brought
first under the system of barangay conciliation before recourse to the court can be allowed.
Because of respondent’s transgressions, his client was haled to court as part-defendant.
Respondent also refused to return petitioner’s money in spite of his meager service.

Held: GUILTY of negligence and incompetence. SUSPENDED for (6) months. RETURN the
money of complainant with interest. STERNLY WARNED that a commission of the same or
similar act in the future will be dealt with more severely. The breach of respondent’s sworn duty as
a lawyer and of the ethical standards he was strictly to honor and observe has been sufficiently
established. Respondent has fallen short of the competence and diligence required of every
member of the Bar.
*****
CANON 17
. – A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE MINDFUL OF THE
TRUST AND CONFIDENCE REPOSED IN HIM.
CANON 18
. – A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE
Rule 18.03
– A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection there with shall
render him liable. Respondent erred in not returning complainant’s money despite demands after his failure to
file the case and his devious act of compelling complainant to sign a document stating that he has no financial
obligation to complainant in exchange of the return of complainant’s papers. This conduct violated the following
Canon:
CANON 15.
– A LAWYER SHALL OBSERVE CANDOR, FAIRNESS, AND LOYALTY IN ALL HIS DEALINGS
ANDTRANSACTIONS WITH HIS CLIENT.
Rule 16.03.
– A lawyer shall deliver the funds and property of client when due or upon demand. The failure of an attorney to
return the client’s money upon demand gives rise to the presumption that he has misappropriated it for his own
use to the prejudice and violation of the trust reposed in him by the client. It is not only a gross violation of the
general morality as well as of professional ethics; it also impairs public confidence in the legal profession and
deserves punishment. In short, it is settled that the unjustified withholding of money belonging to his client, as in
this case, warrants the imposition of disciplinary action. A lawyer must conduct himself, especially in his dealings
with his clients, with integrity in a manner that is beyond reproach. His relationship with his clients should be
characterized by the highest degree of good faith and fairness.
 FIRST DIVISION

A.C. No. 4219 December 8, 2003

LOTHAR SCHULZ, complainant,

RESOLUTION

YNARES-SANTIAGO, J.:

Only recently, we stressed that membership in the bar is a privilege burdened with conditions. A high
sense of morality, honesty and fair dealing is expected and required of a member of the bar. Rule
1.01 of the Code of Professional Responsibility provides that "a lawyer shall not engage in unlawful,
dishonest, immoral or deceitful conduct." The nature of the office of a lawyer requires that he shall
be of good moral character. This qualification is not only a condition precedent to the admission to
the legal profession, but its continued possession is essential to maintain one’s good standing in the
profession. Furthermore, implicit in a vocation characterized by professionalism is a certain level of
1

competence and dedication. Far from measuring up to the norms of conduct set in the Code, the
2

respondent charged in this case, in fact, breached his avowed duty as a lawyer and the ethical
standards he was strictly bound to observe.

On March 22, 1994, Lothar Schulz, a German national filed a verified complaint for disbarment
against Atty. Marcelo G. Flores of Dumaguete City, Negros Oriental. He alleged that sometime in
3

December 1992, he engaged the services of respondent for the purposes of filing a complaint
against Wilson Ong for revocation of contract and damages for the latter’s failure to deliver the jeep
he sold to complainant within the stipulated period. Respondent advised him that there was no need
to refer the complaint for barangay conciliation. Three months later, respondent instructed him to file
his complaint with the Lupon Tagapayapa of Tabuc-tubig, Dumaguete City. Wilson Ong refused to
appear at the conciliation hearings, arguing that the Lupon of Tabuc-tubig had no jurisdiction over his
person because he was a resident of Barangay Banilad. Complainant thus brought the complaint
before the Barangay Captain of Banilad. By that time, however, complainant learned that Wilson
Ong had already filed a case for Specific Performance against him before the Regional Trial Court of
Negros Oriental, Brang 31, entitled "Rachel Lisa B. Ong, et al. v. Lothar Schulz," docketed as Civil
Case No. 10527. Complainant argued that respondent’s inordinate delay in acting on his case
resulted in his being defendant rather than a complainant against Wilson Ong.

Complainant also charged respondent with collecting excessive and unreasonable fees and of
unjustifiably refusing to return his files. He undertook to pay respondent attorney’s fees of P5,000.00
if the case does not reach the court, and P10,000.00 attorney’s fees and P500.00 appearance fees if
it reaches the court. This notwithstanding, respondent alleged in the Answer with Counterclaim which
he prepared on behalf of complainant in Civil Case No. 10527 that his attorney’s fees was
P50,000.00 and appearance fee was P1,000.00 per hearing. When complainant questioned him
about this, respondent explained that it was Wilson Ong who will be made to pay for the said fees.
This, complainant claimed, showed respondent’s deceit and lack of candor in his dealings with the
parties in court.

Further, complainant alleged that since he suspected respondent of not protecting his interest in Civil
Case No. 10527, he instructed respondent to withdraw his appearance as his counsel after the filing
of the answer. Thereafter, he asked respondent to return the amount of P12,000.00 out of the total of
P17,000.00 that he has paid to the latter, inasmuch as the amount of P5,000.00 should be sufficient
compensation for the minimal services rendered by him. Respondent, however, refused to return the
amount to complainant and, instead, demanded additional fees. Complainant’s new counsel wrote a
formal demand letter to respondent which, however, was ignored. This prompted complainant to file
a complaint with the Lupon Tagapayapa of Barangay Bantayan where respondent resided. After the
parties failed to reach a settlement, complainant instituted an action for sum of money against
respondent, docketed as Civil Case No. 10645.

Complainant alleged that respondent offered to return his files provided that he signs a statement
acknowledging that respondent does not owe him anything. Complainant refused, for fear that it
would prejudice the collection suit he filed against respondent. Thus, respondent continued to
unreasonably retain his files.

In support of his charges against respondent, complainant pointed out that respondent was formerly
a Municipal Judge of Siaton, Negros Oriental who was dismissed from the service after the end of
the Marcos regime. He submitted a copy of an Order of the Regional Trial Court of Negros Oriental, ,
4

Branch 34, in Civil Case No. 9142 entitled "Bishop of Dumaguete v. Fausta Pajunar, et al." In that
case, respondent sought the inhibition of the Presiding Judge, Rosendo Bandal, Jr. The latter
inhibited himself but cited in the said Order nine instances of anomalous, illegal and unethical
practices committed by respondent.

In his Comment, respondent alleged that upon accepting the case of complainant, he immediately
5

sent a letter to Wilson Ong demanding that he deliver the jeep to complainant for road test. Ong
6

complied with the demand and allowed complainant to road-test the vehicle, during which he
discovered that the jeep was defective. Respondent thereafter requested Ong to cause the repairs
7

on the jeep. It was only after the negotiations with Ong failed that he advised complainant to proceed
with the filing of his complaint before the Barangay Captain of Tabuc-tubig. At the time, he believed
Tabuc-tubig was the proper venue considering that the South Pacific Metal Works owned by Wilson
Ong was located there.

Respondent claims that complainant was to blame for the fact that Wilson Ong filed his complaint in
court first. He alleged that complainant failed to follow up his case because he was involved in a
traffic accident. Complainant’s inability to attend to his complaint with the Barangay Lupon in Tabuc-
tubig caused the delay thereof.

Anent the attorney’s fees, respondent alleges that complainant agreed to pay him P50,000 as
attorney’s fees, one-half of which is payable upon the filing of the Answer with Counterclaim in Civil
8

Case No. 10527 less the amount of P17,000.00 given as payment for past services. Complainant
also agreed to pay him P1,000.00 per appearance. Hence, respondent avers that complainant still
owed him P8,000.00 to complete the required one-half of the P50,000.00 attorney’s fees, and
P1,000.00 appearance fee for the hearing on April 15, 1993. Respondent further explained that he
was willing to return complainant’s files provided that he sign a receipt acknowledging the turn-over,
but complainant refused to sign.
Respondent admitted that he was once a Municipal Judge of Siaton, Negros Oriental but he decided
to go on optional retirement. During his 17-year stint in the judiciary, he was held in high esteem by
his colleagues and was elected President of the Municipal Judges League of Negros Oriental for 14
consecutive terms. Out of the 15 RTC Judges in Negros Oriental, it is only Judge Bandal who had
shown animosity, hostility and hatred towards him. However, he added that he and Judge Bandal
have reconciled and are now on good terms.

On August 29, 1994, the Court referred the case to the Integrated Bar of the Philippines (IBP) for
investigation, report and recommendation. 9

On August 9, 2002, respondent filed a Manifestation and Motion alleging that complainant had long
left the country, for which reason the case may be resolved on the basis of the pleadings. 10

The IBP Commission on Bar Discipline submitted a Report dated June 28, 2003 recommending that:
(1) respondent be suspended from the practice of law for six months with a warning that a repetition
of the same or similar acts will merit a more severe penalty; (2) he be ordered to return to
complainant the amount of Twelve Thousand Pesos (P12,000.00) with legal interest; and (3) he
return the papers of complainant which came under his custody during the period of his engagement
as counsel.

In justifying the recommended penalty, the IBP-CBD made the following observations:

[Respondent] was presumed to be knowledgeable on the laws, but in this case, it turned out that
Atty. Flores knew too little of the provisions and application of PD No. 1508 which mandates that all
disputes, except those specifically cited (the dispute between Lothar Schulz and Wilson Ong not
included), between and among residents of the same city or municipality should be brought first
under the system of barangay conciliation before recourse to the court can be allowed.

He was not all certain if the complaint of Lothar Schulz falls under PD No. 1508 or not. As Lothar
Schulz narrated, Atty. Flores told him at first that there was no need for his complaint to be coursed
through the barangay authorities.

Not realizing the need and urgency to avail of PD No. 1508, Atty. Flores found it more important to
spend more than two months to dialogue and confer with Wilson and hope that he could get the
parties to come to an amicable settlement of their differences, an undertaking that only involves a
waste of time and effort as he later realized it because it turned out that Wilson Ong did not appear
to have any genuine intent to make good his obligation to put the jeep in good running condition and
fee from defects because Lothar Schulz and his mechanics found out from the result of the last road
test on the jeep that aside from several defects discovered during previous road tests and which had
remained uncorrected/unrepaired, there are twenty-six more new defects.

It was already March 8, 1992, more than two months after becoming Lothar Schulz’s lawyer that Atty.
Flores reversed position and suddenly prepared a written complaint for the client which he asked the
latter to file with the Barangay Captain of Tabuc-tubig. However, that belated move did not benefit
the cause of his client at all. On the contrary, Atty. Flores even made the problem of delay worse.
Upon the misconception that the proper venue was Tabuc-tubig which was the place where the
assembly/motor shop of Wilson Ong is located, he directed Lothar Schulz to file his complaint there.
That was a wrong advice. Section 3 of PD No. 1508 states that the dispute should be lodged for
conciliation with the barangay where the respondent actually resides. Because PD No. 1508 applies
only to parties who are natural persons, the location of the assembly should of Wilson Ong is of no
consequence to the law. The respondent who could be made a party under PD No. 1508 in this case
is Wilson Ong and the complaint against him must be filed where he resides which is Barangay
Banilad in Dumaguete City. Thus, the complaint of Lothar Schulz was not able to move at all for the
entire duration that it was in Barangay Tabuc-tubig which had no authority over it. Such was the
situation until that barangay was impelled to dismiss the complaint for lack of jurisdiction. It is true
that the complaint was eventually brought to the proper barangay (Banilad), but the Lupon in that
place was no longer in a position to assert its jurisdiction because at that time there was already a
case that Wilson Ong had succeeded to file against Lothar Schulz on the subject of their failed
contract.

xxx xxx x x x.

Between the conflicting versions given by the parties as to the reason why the papers of Lothar
Schulz had continued to be possessed by Atty. Flores, the version of the complainant appears more
deserving of credence. If the paper which was presented for the signature of Lothar Schulz is really
an acknowledgment to evidence the return of the papers of the case to Lothar Schulz, as the
respondent would have it appear, there is no reason why Lothar Schulz [should] hesitate or refuse to
sign the paper[s] as there is nothing prejudicial to his interest. But certainly if the contents of the
paper presented by Atty. Flores to Lothar Schulz for the purpose of signature involve[s] an admission
on the part of Lothar Schulz that the lawyer is clear on the matter of money accountability, it is
understandable that Lothar Schulz will not sign that paper because his signature will have the effect
of a desistance in his pending civil case for the recovery of the P12,000.00 which he alleged to be an
overcharge on attorney’s fee[s] by Atty. Flores. The continuing possession by Atty. Flores of the
papers of Lothar Schulz can only be compatible with the version that Lothar Schulz presented. Atty.
Flores would not release the papers for they serve as means to harass and/or pressure Lothar
Schulz until the latter is impelled to agree to give up his efforts to pursue Civil Case No. 10645 which
will provide Atty. Flores the assurance that a day may come when he will be made to reimburse the
amount of P12,000.00 previously collected from the former client. 11

The findings and recommendation of the IBP-CBD were thereafter approved and adopted by the IBP
Board of Governors in Resolution No. XVI-2003-109 dated August 30, 2003.

We agree with the findings and conclusions of the Committee on Bar Discipline, as approved by the
IBP Board of Governors. The breach of respondent’s sworn duty as a lawyer and of the ethical
standards he was strictly to honor and observe has been sufficiently established.

Respondent has fallen short of the competence and diligence required of every member of the
Bar. The pertinent Canons of the Code of Professional Responsibility state:
1âwphi1

CANON 17. – A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE
MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM.

CANON 18. – A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE

xxx xxx xxx

Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him and his negligence in
connection therewith shall render him liable.

It is dismaying to note that respondent patently violated his duty as a lawyer in this case. He
committed a serious transgression when he failed to exert his utmost learning and ability to give
entire devotion to his client’s cause. His client had relied upon him to file the complaint with dispatch
so that he would not be preempted by the adverse party. But he failed him. As a consequence of
respondent’s indolence, his client was haled to court as a party-defendant. It therefore behooves this
Court to wield its corrective hand on this inexcusable infraction which caused undeserved and
needless prejudice to his client’s interest, adversely affected the confidence of the community in the
legal profession and eroded the public’s trust in the judicial system. As an attorney, respondent is
sworn to do his level best and to observe full fidelity to the court and his clients.
12

The Court has time and again emphatically stated that the trust and confidence necessarily reposed
by clients requires in the lawyer a high standard and an appreciation of his duty to his clients, his
profession, the courts and the public. Every case an attorney accepts deserves his full attention,
13

diligence, skill and competence, regardless of its importance and whether he accepts it for a fee or
for free. To be sure, any member of the legal fraternity worth his title cannot afford to practice the
14

profession in a lackadaisical manner.

Likewise, respondent erred in not returning complainant’s money despite demands after his failure to
file the case and his devious act of compelling complainant to sign a document stating that he has
no financial obligation to complainant in exchange of the return of complainant’s papers. This
conduct violated the following Canon:

CANON 15. – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS, AND LOYALTY IN ALL HIS
DEALINGS AND TRANSACTIONS WITH HIS CLIENT.

Rule 16.03. – A lawyer shall deliver the funds and property of client when due or upon demand. x x
x.

Where a client gives money to his lawyer for a specific purpose, such as to file an action, appeal an
adverse judgment, consummate a settlement, or pay the purchase price of a parcel of land, the
lawyer should, upon failure to take such step and spend the money for it, immediately return the
money to his client. The fact that a lawyer has a lien for his attorney’s fees on the money in his
15

hands collected for his client does not relieve him from the obligation to make a prompt
accounting. Neither is a lawyer entitled to unilaterally appropriate his client’s money for himself by
16

the mere fact alone that the client owes him attorney’s fees.17

The failure of an attorney to return the client’s money upon demand gives rise to the presumption
that he has misappropriated it for his own use to the prejudice and violation of the trust reposed in
him by the client. It is not only a gross violation of the general morality as well as of professional
18

ethics; it also impairs public confidence in the legal profession and deserves punishment. In short, it
19

is settled that the unjustified withholding of money belonging to his client, as in this case, warrants
the imposition of disciplinary action. 20

A lawyer must conduct himself, especially in his dealings with his clients, with integrity in a manner
that is beyond reproach. His relationship with his clients should be characterized by the highest
degree of good faith and fairness. 21

Therefore, we agree with the evaluation of the IBP-CBD and find that respondent’s acts warrant the
imposition of disciplinary sanctions against him. The recommended penalty of six months
suspension from the practice of law is well-taken. 1âwphi1

WHEREFORE, in view of all the foregoing, respondent Atty. MARCELO G. FLORES is found guilty
of negligence and incompetence, and is SUSPENDED from the practice of law for a period of six (6)
months effective immediately. He is ordered to RETURN to complainant Lothar Schulz the amount of
Twelve Thousand Pesos (P12,000.00) with legal interest from the date of promulgation of this
Resolution, and all papers which came into his custody as a result of having served as counsel for
said complainant. Respondent is further STERNLY WARNED that a commission of the same or
similar act in the future will be dealt with more severely.

Let copies of this Resolution be entered in the record of respondent and served on the IBP, as well
as on the Court Administrator who shall circulate it to all courts for their information and guidance.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Panganiban, Carpio, and Azcuna, JJ., concur.

Republic of the Philippines

FIRST DIVISION

G.R. No. 85423 May 6, 1991

JOSE TABUENA, petitioner,

Ramon Dimen for petitioner.

CRUZ, J.:

The petitioner faults the decision of the trial court, as affirmed by the respondent court, for lack of
basis. It is argued that the lower courts should not have taken into account evidence not submitted
by the private respondent in accordance with the Rules of Court.

The subject of the dispute is a parcel of residential land consisting of about 440 square meters and
situated in Poblacion, Makato, Aklan. In 1973, an action for recovery of ownership thereof was filed
in the Regional Trial Court of Aklan by the estate of Alfredo Tabernilla against Jose Tabuena, the
herein petitioner. After trial, judgment was rendered in favor of the plaintiff and the defendant was
required to vacate the disputed lot.1

As the trial court found, the lot was sold by Juan Peralta, Jr. sometime in 1926 to Alfredo Tabernilla
while the two were in the United States. Tabernilla returned to the Philippines in 1934, and Damasa
Timtiman, acting upon her son Juan's instruction, conveyed the subject land to Tabernilla. At the
same time, she requested that she be allowed to stay thereon as she had been living there all her
life. Tabernilla agreed provided she paid the realty taxes on the property, which she promised to do,
and did. She remained on the said land until her death, following which the petitioner, her son and
half-brother of Juan Peralta, Jr., took possession thereof. The complaint was filed when demand was
made upon Tabuena to surrender the property and he refused, claiming it as his own.

The trial court rejected his defense that he was the absolute owner of the lot, which he inherited from
his parents, who acquired it even before World War II and had been living thereon since then and
until they died. Also disbelieved was his contention that the subject of the sale between Peralta and
Tabernilla was a different piece of land planted to coconut trees and bounded on three sides by the
Makato River.

Tabuena appealed to the respondent court, complaining that, in arriving at its factual findings, the
trial court motu proprio took cognizance of Exhibits "A", "B" and "C", which had been marked by the
plaintiff but never formally submitted in evidence. The trial court also erred when, to resolve the
ownership of the subject lot, it considered the proceedings in another case involving the same
parties but a different parcel of land.

The said exhibits are referred to in the pre-trial order as follows:

Plaintiff proceeded to mark the following exhibits: Exh. "A", letter dated October 4, 1921
addressed in Makato, Capiz, Philippines; Exh. "A-1", paragraph 2 of the letter indicating that
the amount of P600.00—the first P300.00 and then another P300.00 as interest since
October 4, 1921; Exh. "A-2", is paragraph 3 of the letter; Exh. "B", a Spanish document; Exh.
"C", deed of conveyance filed by Tomasa Timtiman and Alfredo Tabernilla in 1923; and Exh.
"C-1", paragraph 4 of Exh. "C".

In sustaining the trial court, the respondent court held that, contrary to the allegations of the
appellant, the said exhibits were in fact formally submitted in evidence as disclosed by the transcript
of stenographic notes, which it quoted at length. The challenged decision also upheld the use by the
2

trial court of testimony given in an earlier case, to bolster its findings in the second case.

We have examined the record and find that the exhibits submitted were not the above-described
documents but Exhibits "X" and "T" and their sub-markings, which were the last will and testament of
Alfredo Tabernilla and the order of probate. It is not at all denied that the list of exhibits does not
include Exhibits "A", "B" and "C". In fact, the trial court categorically declared that "Exhibits "A-1, "A-
2", "B", "C" and "C-l," were not among those documents or exhibits formally offered for admission by
plaintiff-administratrix." This is a clear contradiction of the finding of the appellate court, which seems
to have confused Exhibits "A," "B" and "C" with Exhibits "X" and "Y", the evidence mentioned in the
quoted transcript.

Rule 132 of the Rules of Court provides in Section 35 thereof as follows:

Sec. 35. Offer of evidence.—The court shall consider no evidence which has not been
formally offered. The purpose for which the evidence is offered must be specified.

The mere fact that a particular document is marked as an exhibit does not mean it has thereby
already been offered as part of the evidence of a party. It is true that Exhibits "A," "B" and "C" were
marked at the pre-trial of the case below, but this was only for the purpose of identifying them at that
time. They were not by such marking formally offered as exhibits. As we said in Interpacific Transit,
Inc. vs. Aviles, "At the trial on the merits, the party may decide to formally offer (the exhibits) if it
3

believes they will advance its cause, and then again it may decide not to do so at all. In the latter
event, such documents cannot be considered evidence, nor can they be given any evidentiary
value."

Chief Justice Moran explained the rationale of the rule thus:

. . . The offer is necessary because it is the duty of a judge to rest his findings of facts and
his judgment only and strictly upon the evidence offered by the patties at the trial. 4
We did say in People vs. Napat-a that even if there be no formal offer of an exhibit, it may still be
5

admitted against the adverse party if, first, it has been duly identified by testimony duly recorded
and, second, it has itself been incorporated in the records of the case. But we do not find that these
requirements have been satisfied in the case before us. The trial court said the said exhibits could
be validly considered because, even if they had not been formally offered, one of the plaintiffs
witnesses, Cunegunda Hernandez, testified on them at the trial and was even cross-examined by
the defendant's counsel. We do not agree. Although she did testify, all she did was identify the
documents. Nowhere in her testimony can we find a recital of the contents of the exhibits.

Thus, her interrogation on Exhibit "A" ran:

LEGASPI: That is this Exh. "A" about ?

A The translation of the letter.

Q What is the content of this Exh. "A", the letter of the sister of Juan Peralta to Alfredo
Tabernilla?

Court: The best evidence is the document. Proceed. 6

She also did not explain the contents of the other two exhibits.

The respondent court also held that the trial court committed no reversible error in taking judicial
notice of Tabuena's testimony in a case it had previously heard which was closely connected with
the case before it. It conceded that as a general rule "courts are not authorized to take judicial
notice, in the adjudication of cases pending before them, of the contents of the records of other
cases, even when such cases have been tried or are pending in the same court, and
notwithstanding the fact that both cases may have been heard or are actually pending b before the
same judge. Nevertheless, it applied the exception that:
7

. . . in the absence of objection, and as a matter of convenience to all parties, a court may
properly treat all or any part of the original record of a case filed in its archives as read into
the record of a case pending before it, when, with the knowledge of the opposing party,
reference is made to it for that purpose, by name and number or in some other manner by
which it is sufficiently designated; or when the original record of the former case or any part
of it, is actually withdrawn from the archives by the court's direction, at the request or with the
consent of the parties, and admitted as a part of the record of the case then pending. 8

It is clear, though, that this exception is applicable only when, "in the absence of objection," "with the
knowledge of the opposing party," or "at the request or with the consent of the parties," the case is
clearly referred to or "the original or part of the records of the case are actually withdrawn from the
archives" and "admitted as part of the record of the case then pending." These conditions have not
been established here. On the contrary, the petitioner was completely unaware that his testimony in
Civil Case No. 1327 was being considered by the trial court in the case then pending before it. As
the petitioner puts it, the matter was never taken up at the trial and was "unfairly sprung" upon him,
leaving him no opportunity to counteract.

The respondent court said that even assuming that the trial court improperly took judicial notice of
the other case, striking off all reference thereto would not be fatal to the plaintiff's cause because
"the said testimony was merely corroborative of other evidences submitted by the plaintiff." What
"other evidences"? The trouble with this justification is that the exhibits it intends to corroborate, to
wit, Exhibits "A", "B" and "C", have themselves not been formally submitted.

Considering the resultant paucity of the evidence for the private respondent, we feel that the
complaint should have been dismissed by the trial court for failure of the plaintiff to substantiate its
allegations. It has failed to prove that the subject lot was the same parcel of land sold by Juan
Peralta, Jr. to Alfredo Tabernilla and not another property, as the petitioner contends. Even assuming
it was the same lot, there is no explanation for the sale thereof by Juan Peralta, Jr., who was only
the son of Damasa Timtiman. According to the trial court, "there is no question that before 1934 the
land in question belonged to Damasa Timtiman." Juan Peralta, Jr. could not have validly conveyed
title to property that did not belong to him unless he had appropriate authorization from the owner.
No such authorization has been presented.

It is true that tax declarations are not conclusive evidence of ownership, as we have held in many
cases. However, that rule is also not absolute and yields to the accepted and well-known exception.
1âwphi1

In the case at bar, it is not even disputed that the petitioner and his predecessors-in-interest have
possessed the disputed property since even before World War II. In light of this uncontroverted fact,
the tax declarations in their name become weighty and compelling evidence of the petitioner's
ownership. As this Court has held:

While it is true that by themselves tax receipts and declarations of ownership for taxation
purposes are not incontrovertible evidence of ownership they become strong evidence of
ownership acquired by prescription when accompanied by proof of actual possession of the
property.
9

It is only where payment of taxes is accompanied by actual possession of the land covered
by the tax declaration that such circumstance may be material in supporting a claim of
ownership. 10

The tax receipts accompanied by actual and continuous possession of the subject parcels of
land by the respondents and their parents before them for more than 30 years qualify them
to register title to the said subject parcels of land.
11

The Court can only wonder why, if Alfredo Tabernilla did purchase the property and magnanimously
allowed Damasa Timtiman to remain there, he did not at least require her to pay the realty taxes
in his name, not hers. The explanation given by the trial court is that he was not much concerned
with the property, being a bachelor and fond only of the three dogs he had bought from America.
That is specious reasoning. At best, it is pure conjecture. If he were really that unconcerned, it is
curious that he should have acquired the property in the first place, even as dacion en pago. He
would have demanded another form of payment if he did not have the intention at all of living on the
land. On the other hand, if he were really interested in the property, we do not see why he did not
have it declared in his name when the realty taxes thereon were paid by Damasa Timtiman or why
he did not object when the payments were made in her own name.

In comparison, all the acts of Damasa Timtiman and Jose Tabuena indicate that they were the
owners of the disputed property. Damasa Timtiman and her forebears had been in possession
thereof for more than fifty years and, indeed, she herself stayed there until she died. She paid the
12

realty taxes thereon in her own name. Jose Tabuena built a house of strong materials on the
13

lot. He even mortgaged the land to the Development Bank of the Philippines and to two private
14

persons who acknowledged him as the owner. These acts denote ownership and are not consistent
15

with the private respondent's claim that the petitioner was only an overseer with mere possessory
rights tolerated by Tabernilla.
It is the policy of this Court to accord proper deference to the factual findings of the courts below and
even to regard them as conclusive where there is no showing that they have been reached
arbitrarily. The exception is where such findings do not conform to the evidence on record and
appear indeed to have no valid basis to sustain their correctness. As in this case.

The conclusions of the trial court were based mainly on Exhibits "A", "B" and "C", which had not
been formally offered as evidence and therefore should have been totally disregarded, conformably
to the Rules of Court. The trial court also erred when it relied on the evidence submitted in Civil Case
No. 1327 and took judicial notice thereof without the consent or knowledge of the petitioner, in
violation of existing doctrine. Thus vitiated, the factual findings here challenged are as an edifice built
upon shifting sands and should not have been sustained by the respondent court.

Our own finding is that the private respondent, as plaintiff in the lower court, failed to prove his claim
of ownership over the disputed property with evidence properly cognizable under our adjudicative
laws. By contrast, there is substantial evidence supporting the petitioner's contrary contentions that
should have persuaded the trial judge to rule in s favor and dismiss the complaint.

WHEREFORE, the petition is GRANTED. The appealed decision is REVERSED and SET ASIDE,
with costs against the private respondent. It is so ordered.

Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.