SECOND DIVISION

[G.R. No. 138084. April 10, 2002.]

MALAYAN INSURANCE, CO., INC. , petitioner, vs . PHILIPPINE NAILS

AND WIRES CORPORATION , respondent.

Castillo & Poblador for petitioner.

Agustin S. Sundiam for respondent.

SYNOPSIS

Respondent herein insured against all risks its shipment with petitioner. For
shipment delivery shortage, respondent claimed insurance from the petitioner, but the
later refused to pay. Respondent then led a complaint against petitioner for sum of
money representing lost or undelivered cargo. Because of petitioner's failure to le its
answer on time, respondent moved to declare petitioner in default. The trial court
granted the motion. Eventually, petitioner led its answer with compulsory
counterclaim. Upon motion by the respondent, the trial court expunged from the
records the answer for late ling. The trial court rendered a judgment by default.
Thereafter, it granted the motion to execute judgment pending appeal and issued
therein the corresponding writ. However, the writ of execution was stayed by the trial
court because the Court of Appeals granted a temporary restraining order resulting
from a petition for certiorari led before the appellate court. The Court of Appeals in its
decision held that the trial court did not abuse its discretion nor err when it expunged
the answer from the records because petitioner answered way beyond the prescribed
period. It further held that the respondent's witness Jeanne King, was a competent
witness. Petitioner's motion for reconsideration was denied, hence, this petition for
review. CIAHaT

The Supreme Court granted the petition and reversed and set aside the decision
of the Court of Appeals. According to the Court, the respondent's cause of action was
founded on breach of insurance contract covering cargo consisting of imported steel
billets. To hold petitioner liable, respondent has to prove its importation of steel billets
and the actual steel billets delivered to and received by the importer (herein
respondent). Respondent's witness was not quali ed to testify on the shortage in the
delivery of the imported steel billets since she had no personal knowledge of the actual
steel billets received. Her testimony on steel billets received was hearsay. It has no
probative value even if not objected to at the trial. The respondent's documentary
exhibits were private documents and thus, their due execution and authenticity need be
proved before they can be admitted in evidence, in which the respondent failed to do.
Thus the Court found no sufficient competent evidence to prove petitioner's liability.

SYLLABUS

REMEDIAL LAW; EVIDENCE; PRIVATE DOCUMENT; REQUIREMENTS FOR

ADMISSION THEREOF AS EVIDENCE; NOT PRESENT IN CASE AT BAR. — Under Section 20,
Rule 132, Rules of Court, before a private document is admitted in evidence, it must be
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 authenticated either by the person who executed it, the person before whom its execution
was acknowledged, any person who was present and saw it executed, or who after its
execution, saw it and recognized the signatures, or the person to whom the parties to the
instruments had previously confessed execution thereof. In this case, respondent admits
that King was none of the aforementioned persons. She merely made the summary of the
weight of steel billets based on the unauthenticated bill of lading and the SGS report. Thus,
the summary of steel billets actually received had no proven real basis, and King's
testimony on this point could not be taken at face value. Under the rules on evidence,
documents are either public or private. Private documents are those that do not fall under
any of the enumerations in Section 19, Rule 132 of the Rules of Court. Section 20 of the
same law, in turn, provides that before any private document is received in evidence, its
due execution and authenticity must be proved either by anyone who saw the document
executed or written, or by evidence of the genuineness of the signature or handwriting of
the maker.

DECISION

QUISUMBING , J : p

This petition for review seeks the reversal of the decision dated September 30,
1998, of the Court of Appeals in CA-G.R. CV No. 45547, a rming the decision dated
December 10, 1993, of the Regional Trial Court of Pasig, Metro Manila, Branch 163, and the
resolution dated March 25, 1999, of the Court of Appeals denying the petitioner's motion
for reconsideration. 1
Respondent Philippine Nails and Wires Corporation insured against all risks its
shipment of 10,053.400 metric tons of steel billets valued at P67,156,300 with petitioner
Malayan Insurance Company Inc. The shipment delivered was short by 377.168 metric
tons. For this shortage, respondent claimed insurance for P2,698,637.04, representing the
value of undelivered steel billets, plus customs duties, taxes and other charges paid by
respondent. Petitioner refused to pay.
On July 28, 1993, respondent led a complaint against petitioner for sum of money
with the RTC of Pasig representing said lost and/or undelivered cargo. Petitioner moved to
dismiss the complaint on the grounds that it failed to state a cause of action, and that it
was led in the wrong venue. The motion was denied. It thus led a petition for prohibition
with the Court of Appeals. This was also denied. Upon motion for reconsideration, the
petition was reinstated. However, it was eventually dismissed by the Court of Appeals, and
its dismissal became final and executory.
On September 8, 1993, respondent led a motion to admit an amended complaint
which the trial court granted. It sent petitioner summons and a copy of the complaint on
October 13, 1993 and also gave petitioner until October 31, 1993 to file its answer.
On November 4, 1993, respondent moved to declare petitioner in default. The trial
court granted and allowed the presentation of evidence ex parte before the branch clerk of
court. Respondent presented its lone witness, Jeanne King.
On November 11, 1993, petitioner led its answer with compulsory counterclaim.
Upon motion by the respondent, the trial court expunged from the records the answer for
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 late filing.
On December 10, 1993, the trial court rendered a judgment by default which reads:
WHEREFORE, premises considered, Judgment is hereby rendered in favor
of plaintiff and against defendant, ordering the latter to pay the following:
1. P2,532,926.53 representing the insured value of the lost and/or not
delivered 377.168 metric tons of steel billets plus legal rate of interest from
date of filing of this complaint until fully paid;

2. Fifteen (15) percent of the amount awarded to plaintiff as attorney's fees;

and

3. Cost of suit.

SO ORDERED. 2

Respondent moved to execute judgment pending appeal. The trial court granted the
motion. Meanwhile, petitioner filed its notice of appeal which was given due course.
Pursuant to the grant of the motion for execution, the trial court issued the
corresponding writ. Petitioner led a petition for certiorari with prayer for a temporary
restraining order to enjoin the implementation of the writ. The Court of Appeals granted
the prayer for the temporary restraining order. The writ of execution was likewise stayed
by the trial court which favorably considered petitioner's urgent motion to stay execution
pending appeal and to approve the supersedeas bond.
Pursuant to the notice of appeal, the entire records of the case were elevated to the
Court of Appeals, where petitioner argued that the trial court erred in rendering judgment
by default notwithstanding that issues were joined by petitioner's ling of an answer; in
awarding damages to respondent based on unauthenticated documentary evidence and
hearsay; and in admitting documentary evidence which is irregular in nature and not in
accordance with the Rules of Court.
The Court of Appeals concurred with the trial court and disposed the case thus:
WHEREFORE, premises considered, there being no reversible error
committed by the lower court, the judgment appealed from is hereby AFFIRMED in
toto. 3
The Court of Appeals held that the trial court did not abuse its discretion nor err
when it expunged the answer from the records because petitioner answered way beyond
the prescribed period. It further held that respondent's witness, Jeanne King, was a
competent witness because she personally prepared the documentary evidence and had
personal knowledge of the allegations in the complaint. In addition, the appellate court
said that conclusions and ndings of fact of the trial courts were entitled to great weight
on appeal and should not be disturbed unless for strong and cogent reasons, which were
not present in this case. Lastly, the absence of a written report by the branch clerk of court
on the ex parte proceedings did not necessarily deny petitioner due process. Nothing in
the Rules of Court stated that the absence of the commissioner's written report nulli ed a
judgment by default. The appellate court observed that if there was a defect, such was
only procedural that can be waived. Besides, petitioner was declared in default because of
its own failure to answer within the prescribed period. It cannot claim denial of due
process because it was given the opportunity to be heard. cTCEIS

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 Petitioner's motion for reconsideration was denied, hence, this petition alleging that
the Court of Appeals erred and acted contrary to existing law and jurisprudence in:
I. . . . GIVING PROBATIVE VALUE TO THE PURELY HEARSAY
TESTIMONY OF RESPONDENT'S SOLE WITNESS.
II. . . . AFFIRMING THE DECISION OF THE TRIAL COURT WHICH WAS
BASED ON DOCUMENTARY EVIDENCE ADMITTED WITHOUT BEING
PROPERLY AUTHENTICATED. 4
For resolution now are the following issues: Was Jeanne King's testimony hearsay,
thus without any probative value? Should respondent authenticate the documentary
evidence it submitted at the trial?
On the first issue, petitioner Malayan Insurance Co., Inc., contends that Jeanne King's
testimony was hearsay because she had no personal knowledge of the execution of the
documents supporting respondent's cause of action, such as the sales contract, invoice,
packing list, bill of lading, SGS Report, and the Marine Cargo Policy. Petitioner avers that
even though King was personally assigned to handle and monitor the importation of
Philippine Nails and Wires Corporation, herein respondent, this cannot be equated with
personal knowledge of the facts which gave rise to respondent's cause of action. Further,
petitioner asserts, even though she personally prepared the summary of weight of steel
billets received by respondent, she did not have personal knowledge of the weight of steel
billets actually shipped and delivered.
At the outset, we must stress that respondent's cause of action is founded on
breach of insurance contract covering cargo consisting of imported steel billets. To hold
petitioner liable, respondent has to prove, rst, its importation of 10,053.400 metric tons
of steel billets valued at P67,156,300.00, and second, the actual steel billets delivered to
and received by the importer, namely the respondent. Witness Jeanne King, who was
assigned to handle respondent's importations, including their insurance coverage, has
personal knowledge of the volume of steel billets being imported, and therefore
competent to testify thereon. Her testimony is not hearsay, as this doctrine is de ned in
Section 36, Rule 130 of the Rules of Court. 5
However, she is not quali ed to testify on the shortage in the delivery of the
imported steel billets. She did not have personal knowledge of the actual steel billets
received. Even though she prepared the summary of the received steel billets, she based
the summary only on the receipts prepared by other persons. Her testimony on steel
billets received was hearsay. It has no probative value even if not objected to at the trial. 6
On the second issue, petitioner avers that King failed to properly authenticate
respondent's documentary evidence. Under Section 20, Rule 132, Rules of Court, 7 before a
private document is admitted in evidence, it must be authenticated either by the person
who executed it, the person before whom its execution was acknowledged, any person
who was present and saw it executed, or who after its execution, saw it and recognized the
signatures, or the person to whom the parties to the instruments had previously confessed
execution thereof. In this case, respondent admits that King was none of the
aforementioned persons. She merely made the summary of the weight of steel billets
based on the unauthenticated bill of lading and the SGS report. Thus, the summary of steel
billets actually received had no proven real basis, and King's testimony on this point could
not be taken at face value.

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 Petitioner contends that the Court of Appeals erred in giving imprimatur to the trial
court's ruling with regard to the admission of documentary evidence submitted by
respondent. On this score, we nd petitioner's contention meritorious. Under the rules on
evidence, documents are either public or private. Private documents are those that do not
fall under any of the enumerations in Section 19, Rule 132 of the Rules of Court. 8 Section
2 0 9 of the same law, in turn, provides that before any private document is received in
evidence, its due execution and authenticity must be proved either by anyone who saw the
document executed or written, or by evidence of the genuineness of the signature or
handwriting of the maker. Here, respondent's documentary exhibits are private documents.
They are not among those enumerated in Section 19, thus, their due execution and
authenticity need to be proved before they can be admitted in evidence. With the exception
concerning the summary of the weight of the steel billets imported, respondent presented
no supporting evidence concerning their authenticity. 1 0 Consequently, they cannot be
utilized to prove less of the insured cargo and/or the short delivery of the imported steel
billets. In sum, we find no sufficient competent evidence to prove petitioner's liability. TcHCIS

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated
September 30, 1998 and its resolution on March 25, 1999 in CA-G.R. CV No. 45547 are
REVERSED and SET ASIDE. In lieu thereof, Civil Case No. 63445 is hereby ordered
DISMISSED. IcaHCS

No pronouncement as to costs.
SO ORDERED.
Bellosillo, Mendoza and De Leon, Jr., JJ., concur.

Footnotes
1. Rollo, pp. 12-32.
2. Records, pp. 214-215.
3. Supra, note 1 at 52.
4. Id. at 19.
5. Rule 130, Section 36, Rules of Court: Testimony generally confined to personal
knowledge; hearsay excluded. – A witness can testify only to those facts which he
knows of his personal knowledge; that is, which are derived from his own perception,
except as otherwise provided in these rules.

6. Eugenio vs. Court of Appeals, G.R. No. 103737, 239 SCRA 207, 216 (1994).
7. Rule 132, Section 20. Proof of private document. – Before any private document offered
as authentic is received in evidence, its due execution and authenticity must be proved
either:

(a) By anyone who saw the document executed or written; or

b) By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which is claimed to be. (21a)

8. Rule 132, Section 19. Classes of documents. – For the purpose of their presentation in
evidence, documents are either public or private.
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 Public documents are:

a) The written official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers, whether of the Philippines, or
of a foreign country;

b) Documents acknowledged before a notary public except last wills and

testaments; and

c) Public Records, kept in the Philippines, of private documents required by law to

be entered therein.

All other writings are private. (20a)

9. Supra, note 7.
10. TSN, November 9, 1993, pp. 136-144.

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