Professional Documents
Culture Documents
Bank of The Philippine Islands Securities Corporation vs. Guevara
Bank of The Philippine Islands Securities Corporation vs. Guevara
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* FIRST DIVISION.
343
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Same; Same; Same; Same; 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.—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,
344
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.
345
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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).
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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.
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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 in-
350
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
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curred 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.
351
[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,
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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 num-
353
bers 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
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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.
x x x x
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
355
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
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356
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:
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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
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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.
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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 pretrial 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
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16 Id., at p. 3.
17 Id., at p. 328.
18 Id., at pp. 574, 651, and 665.
19 Id., at p. 636.
20 Id., at pp. 578-580, 589-590, and 619-620.
21 Id., at pp. 581-588.
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Petitioner appealed to the Court of Appeals, assigning the
following errors on the part of the RTC:
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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 pretrial, 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.
x x x x
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
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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
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362
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
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29 Rollo, p. 102.
30 CA Rollo, pp. 180-197.
31 Id., at pp. 250-251.
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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
364
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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
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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
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34 St. Aviation Services Co., Pte., Ltd. v. Grand International Airways, Inc., 535
Phil. 757, 762; 505 SCRA 30, 34 (2006).
367
The Court expounded in Mijares on the application of the
aforequoted provision:
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35 See Regalado, Florenz D., Remedial Law Compendium, Volume II, p. 524
(Ninth Revised edition); citing Perkins v. Benguet Consolidated Mining Co., 93 Phil.
1035 (1953).
368
369
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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)
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370
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37 G.R. No. 196049, June 26, 2013, 700 SCRA 69, 91-92.
371
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.
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38 Philippine Aluminum Wheels, Inc. v. Fasgi Enterprises, Inc., 396 Phil. 893,
909-910; 342 SCRA 722, 735 (2000).
372
373
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:
374
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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
x x x x
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
375
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
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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.
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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 se-
377
Moreover, petitioner is bound by the negligence of its counsel.
The declarations of the Court in Gotesco Properties, Inc. v. Moral42
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
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41 Rollo, p. 176.
42 G.R. No. 176834, November 21, 2012, 686 SCRA 102, 108.
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379
SO ORDERED.
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