G.R. No. 175466 December 23, 2009 worth ₱3,096,405.00.

worth ₱3,096,405.00. With the filing by Far East Bank of the indemnity
bond, the goods claimed were not released and the Pasig Court directed
BANK OF THE PHILIPPINE ISLANDS as successor-in-interest of SMP, Inc. to ventilate its claim of ownership in a vindicatory action under
FAR EAST BANK AND TRUST COMPANY,Petitioner, Section 17, Rule 39 of the Revised Rules of Court. Meanwhile, Far East
vs. Bank obtained a favorable judgment against Clothespak. It has become final
SMP, INC., Respondent. and executory which led to the implementation and enforcement of said
decision against Clothespak’s properties inclusive of the goods earlier
RESOLUTION attached. Hence, the instant case is filed by SMP, Inc. to recover from the
attaching bank the value of the goods it claims ownership and for
damages.1avvphi1
NACHURA, J.:
SMP, Inc. alleges that there was wrongful attachment of the goods for
Before the Court is a petition for review on certiorari under Rule 45 of the
ownership of the same was never transferred to Clothespak. The former
Rules of Court, assailing the Decision1dated August 16, 2006 and the
anchors its claim of ownership over the goods by virtue of the Provisional
Resolution2 dated November 15, 2006 of the Court of Appeals (CA) in CA-
Receipt No. 4476 issued by Sales Executive Maria Teresa Michaela Ong to
G.R. CV No. 86055.
Clothespak with the words, "Materials belong to SMP Inc. until your checks
clear." She testified during the trial that the above words were in her own
The facts of the case, as culled by the CA from the Decision3 dated June 6, handwriting. The said receipt was allegedly issued to Alex Tan of
2005 of the Regional Trial Court (RTC), Branch 92, Quezon City, in Civil Clothespak after the checks, payment for the goods, were issued to her. It is
Case No. Q-97-30372, entitled "SMP, Inc. v. Far East Bank and Trust asserted that despite receipt by Clothespak of the goods, ownership
Company, et al.," are as follows: remained with SMP, Inc. until the postdated checks it issued were cleared.

Sometime in January 1995, Maria Teresa Michaela Ong, as Sales Executive Defendant bank, however, claims that the said provisional receipt was
of SMP, Inc. undertook the acceptance and servicing of a purchase order of falsified to negate the terms of the Sales Invoices. The phrase, "materials
CLOTHESPAK MANUFACTURING PHILS. (Clothespak) for 4,000 bags belong to SMP, Inc. until your checks clear," was only an insertion of
or sacks of General purpose (GPS) polystyrene products. The ordered plaintiff’s representative in her own handwriting. It did not bear the
products were delivered, for which delivery receipts were issued. The total conformity of Clothespak. Further, defendant bank assails the admissibility
selling price of the products amounted to U.S. $118,500.00. As payment, of the receipt for it is a mere triplicate copy; the original and duplicate copies
Clothespak issued postdated checks in favor of plaintiff SMP and delivered were not presented in court, in violation of the Best Evidence Rule. Neither
the same to Maria Teresa Michaela Ong. When the same were deposited by was there secondary evidence presented to conform to the rule.
SMP Inc. on their maturity dates, the drawee bank dishonored and returned
said checks for the reason "Account Closed."
Defendant asserted that the buyer Clothespak had already acquired
ownership over the goods at the time of attachment. As the delivery receipts
In the meantime, a case was filed by herein defendant Far East Bank and clearly showed that the goods had already been delivered and received by
Trust Company against Clothespak for a recovery of sum of money with the buyer subject to the terms and conditions of the sales invoices where it
prayer for issuance of preliminary attachment. The Pasig Court granted and was provided that the sales is (sic) "F.O.B." with the loss and/or damage to
issued the writ dated March 14, 1995 in favor of the plaintiff bank. Real and the goods in transit being for the buyer’s account. As provided by law, the
personal properties of the defendants were levied and attached. ownership of the thing is acquired by the vendee from the moment of
delivery in any of the ways therein specified or in any manner signifying an
Thereafter, on March 28, 1995, SMP, Inc. filed an Affidavit of Third Party agreement that the possession is transferred to the vendee, and the thing sold
Claim in that Civil Case No. 65006, claiming ownership of the 4,000 bags
of General Purpose (GPS) polystyrene products taken at Clothespak factory

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is considered delivered when placed in the control and possession of the said vendor and is not to pass to the vendee until full payment of the purchase
vendee. price.9 In a contract of sale, non-payment of the price is a negative resolutory
condition. In a contract to sell, full payment is a positive suspensive
The main issue presented is whether at the time of the attachment, plaintiff condition. In a contract of sale, the vendor loses and cannot recover
still owned the goods levied upon, or ownership thereof had already passed ownership of the thing sold until and unless the contract of sale is itself
to Clothespak Manufacturing. After carefully studying the different resolved and set aside. In a contract to sell, the title remains with the vendor
contentions of both parties and the pieces of evidence they have submitted, if the vendee does not comply with the condition precedent of making
the Courts (sic) finds in favor of the plaintiff. 4 payment at the time specified in the contract.10 In a contract to sell, the
payment of the purchase price is a positive suspensive condition, the failure
The dispositive portion of the RTC Decision reads: of which is not a breach, casual or serious, but a situation which prevents
the obligation of the vendor to convey title from acquiring an obligatory
force.11
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against defendant Far East Bank and Trust Company (now Bank of the
Philippine Islands), ordering the latter to pay the former the sum of Two In the instant case, ownership of the general purpose polystyrene products
Million Nine Hundred Sixty Three Thousand Forty One Pesos and Fifty was retained by SMP, Incorporated (SMP) until after the checks given as
Three Centavos (₱2,963,041.53) as actual damages, plus costs of suit. payment by Clothespak Manufacturing Philippines (Clothespak) cleared.
This was evidenced by a provisional receipt issued by SMP to Clothespak.
The agreement between SMP and Clothespak involved a contract to sell
SO ORDERED.5
defined under Article 1478 of the Civil Code.
On appeal, the CA affirmed in toto the RTC decision in a Decision6 dated
On the other hand, the stipulation that the loss or destruction of the products
August 16, 2006. Petitioner filed a motion for reconsideration but the CA
during transit is on the account of Clothespak, as buyer of the products, is of
denied the same in a Resolution7 dated November 15, 2006.
no moment. This does not alter the nature of the contract as a contract to
sell. The free on board stipulation on the contract can coexist with the
Hence, this petition. contract to sell. Otherwise stated, the provisions or stipulations in the
contract -- for the reservation of the ownership of a thing until full payment
Petitioner submitted this sole issue for resolution: of the purchase price and for the loss or destruction of the thing would be on
account of the buyer -- are valid and can exist in conjunction with the other.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
ERRED IN RULING THAT THERE WAS A WRONGFUL In order to discredit the claim of ownership by SMP, petitioner questions the
ATTACHMENT THUS AFFIRMING THE DECISION OF THE COURT admissibility of the receipt presented by the former, wherein the ownership
A QUO THAT THE GOODS ATTACHED WERE STILL OWNED BY was reserved for the buyer until after full payment of the purchase price.
SMP, INC., NOT [BY] CLOTHESPACK, WHEN THEY WERE Petitioner claims that the same was inadmissible in evidence and was in
ATTACHED.8 contravention of the best evidence rule. We beg to disagree.

We find the petition bereft of merit. The best evidence rule is the rule which requires the highest grade of
evidence obtainable to prove a disputed fact. Although there are certain
A distinction between a contract to sell and a contract of sale is helpful in recognized exceptions when the subject of inquiry is the contents of a
order to determine the true intention of the parties. In a contract of sale, the document, no evidence shall be admissible other than the original document
title to the property passes to the vendee upon the delivery of the thing sold; itself.12
while in a contract to sell, ownership is, by agreement, reserved for the

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However, in the instant case, contrary to petitioner’s contention, the receipt Sec. 3. Original document must be produced; exceptions.
presented by SMP is deemed as an original, considering that the triplicate — When the subject of inquiry is the contents of a
copy of the provisional receipt was executed at the same time as the other document, no evidence shall be admissible other than the
copies of the same receipt involving the same transaction. Section 4, Rule original document itself, except in the following cases:
130 of the Rules of Court provides:
(a) When the original has been lost or destroyed, or cannot
Sec. 4. Original of document. — be produced in court, without bad faith on the part of the
offeror;
(a) The original of the document is one the contents of which are
the subject of inquiry. (b) When the original is in the custody or under the control
of the party against whom the evidence is offered, and the
(b) When a document is in two or more copies executed at or about latter fails to produce it after reasonable notice;
the same time, with identical contents, all such copies are equally
regarded as originals. (c) When the original consists of numerous accounts or
other documents which cannot be examined in court
(c) When an entry is repeated in the regular course of business, one without great loss of time and the fact sought to be
being copied from another at or near the time of the transaction, all established from them is only the general result of the
the entries are likewise equally regarded as originals. whole; and

WHEREFORE, in view of the foregoing, the instant petition is DENIED for (d) When the original is a public record in the custody of a
lack of merit. The Decision dated August 16, 2006 and the Resolution dated public officer or is recorded in a public office.
November 15, 2006 of the Court of Appeals in CA-G.R. CV No. 86055 are
hereby AFFIRMED.
The Lawphil Project - Arellano Law Foundation
Costs against petitioner.

SO ORDERED.

Footnotes

* Additional member per Special Order No. 805 dated December 4,

1Penned by Associate Justice Enrico A. Lanzanas, with Associate

2
Id. at 35-37.

12 Rules of Court, Section 3, Rule 130, Sec. 3 reads:

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