manufacturers

6/23/2015 SUPREMECOURTREPORTSANNOTATEDVOLUME397

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VOL. 397, FEBRUARY 19, 2003 709Manufacturers Hanover Trust Co. vs. Guerrero

G.R. No. 136804. February 19, 2003.*

MANUFACTURERS HANOVER TRUST CO. and/orCHEMICAL BANK, petitioners, vs. RAFAEL MA.GUERRERO, respondent.

Civil Procedure Pleadings and Practice Motions Motion forSummary Judgment A court may grant a summary judgment tosettle expeditiously a case if, on motion of either party, thereappears from the pleadings, depositions, admissions, andaffidavits that no important issues of

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* FIRST DIVISION.

710

710 SUPREME COURT REPORTS ANNOTATED

Manufacturers Hanover Trust Co. vs. Guerrero

fact are involved.A court may grant a summary judgment tosettle expeditiously a case if, on motion of either party, thereappears from the pleadings, depositions, admissions, andaffidavits that no important issues of fact are involved, except theamount of damages. In such event, the moving party is entitled toa judgment as a matter of law. In a motion for summaryjudgment, the crucial question is: are the issues raised in thepleadings genuine, sham or fictitious, as shown by affidavits,depositions or admissions accompanying the motion?



Same Same Same Same Words and Phrases GenuineIssue, Defined.A genuine issue means an issue of fact whichcalls for the presentation of evidence as distinguished from anissue which is fictitious or contrived so as not to constitute agenuine issue for trial.

Same Same Same Same Evidence Foreign Laws Foreignlaws are not a matter of judicial notice.The resolution ofwhether a foreign law allows only the recovery of actual damagesis a question of fact as far as the trial court is concerned sinceforeign laws do not prove themselves in our courts. Foreign lawsare not a matter of judicial notice. Like any other fact, they mustbe alleged and proven.

Same Same Same Same Same Public Documents UnderSection 24 of Rule 132, the record of public documents of asovereign authority or tribunal may be proved by evidence.Under Section 24 of Rule 132, the record of public documents ofa sovereign authority or tribunal may be proved by (1) an officialpublication thereof or (2) a copy attested by the officer having thelegal custody thereof. Such official publication or copy must beaccompanied, if the record is not kept in the Philippines, with acertificate that the attesting officer has the legal custody thereof.The certificate may be issued by any of the authorized Philippineembassy or consular officials stationed in the foreign country inwhich the record is kept, and authenticated by the seal of hisoffice. The attestation must state, in substance, that the copy is acorrect copy of the original, or a specific part thereof, as the casemay be, and must be under the official seal of the attesting officer.

PETITION for review on certiorari of a decision andresolution of the Court of Appeals.

The facts are stated in the opinion of the Court. Sycip, Salazar, Hernandez and Gatmaitan for

petitioners.P.C. Nolasco & Associates for private respondent.

711


CARPIO, J.:



The Case

This is a petition for review under Rule 45 of the Rules ofCourt to set aside the Court of Appeals

1 Decision of August

24, 1998 and Resolution of December 14, 1998 in CAG.R.SP No. 42310

2 affirming the trial courts denial of

petitioners motion for partial summary judgment.

The Antecedents

On May 17, 1994, respondent Rafael Ma. Guerrero(Guerrero for brevity) filed a complaint for damagesagainst petitioner Manufacturers Hanover Trust Co. and/orChemical Bank (the Bank for brevity) with the RegionalTrial Court of Manila (RTC for brevity). Guerrero soughtpayment of damages allegedly for (1) illegally withheldtaxes charged against interests on his checking accountwith the Bank (2) a returned check worth US$18,000.00due to signature verification problems and (3)unauthorized conversion of his account. Guerrero amendedhis complaint on April 18, 1995.

On September 1, 1995, the Bank filed its Answeralleging, inter alia, that by stipulation Guerreros accountis governed by New York law and this law does not permitany of Guerreros claims except actual damages.Subsequently, the Bank filed a Motion for PartialSummary Judgment seeking the dismissal of Guerrerosclaims for consequential, nominal, temperate, moral andexemplary damages as well as attorneys fees on the sameground alleged in its Answer. The Bank contended that thetrial should be limited to the issue of actual damages.Guerrero opposed the motion.

The affidavit of Alyssa Walden, a New York attorney,supported the Banks Motion for Partial SummaryJudgment. Alyssa Waldens affidavit (Walden affidavit forbrevity) stated that Guerreros New York bank accountstipulated that the governing law is

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1 Twelfth Division composed of Justices Consuelo YnaresSantiago(ponente), Romeo J. Callejo, Sr. and Mariano M. Umali.

2 Entitled Manufacturers Hanover Trust Co. and/or Chemical Bank,Petitioners, versus Hon. Hermogenes R. Liwag, Presiding Judge, Regional



(a)

Trial Court of Manila, Branch 55, and Rafael Ma. Guerrero, Respondents.

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712 SUPREME COURT REPORTS ANNOTATEDManufacturers Hanover Trust Co. vs. Guerrero

New York law and that this law bars all of Guerrerosclaims except actual damages. The Philippine ConsularOffice in New York authenticated the Walden affidavit.

The RTC denied the Banks Motion for Partial SummaryJudgment and its motion for reconsideration on March 6,1996 and July 17, 1996, respectively. The Bank filed apetition for certiorari and prohibition with the Court ofAppeals assailing the RTC Orders. In its Decision datedAugust 24, 1998, the Court of Appeals dismissed thepetition. On December 14, 1998, the Court of Appealsdenied the Banks motion for reconsideration. Hence, theinstant petition.

The Ruling of the Court of Appeals

The Court of Appeals sustained the RTC orders denyingthe motion for partial summary judgment. The Court ofAppeals ruled that the Walden affidavit does not serve asproof of the New York law and jurisprudence relied on bythe Bank to support its motion. The Court of Appealsconsidered the New York law and jurisprudence as publicdocuments defined in Section 19, Rule 132 of the Rules onEvidence, as follows:

SEC. 19. Classes of Documents.For the purpose of theirpresentation in evidence, documents are either public or private.Public documents are:

The written official acts, or records of the official acts ofthe sovereign authority, official bodies and tribunals, andpublic officers, whether of the Philippines, or of a foreigncountry

x x x.

The Court of Appeals opined that the following procedureoutlined in Section 24, Rule 132 should be followed inproving foreign law:



SEC. 24. Proof of official record.The record of public documentsreferred to in paragraph (a) of Section 19, when admissible forany purpose, may be evidenced by an official publication thereofor by a copy attested by the officer having the legal custody of therecord, or by his deputy, and accompanied, if the record is notkept in the Philippines, with a certificate that such officer has thecustody. If the office in which the record is kept is in a foreigncountry, the certificate may be made by a secretary of theembassy or legation, consul general, consul, vice consul, or

713


consular agent or by any officer in the foreign service of thePhilippines stationed in the foreign country in which the record iskept, and authenticated by the seal of his office.

The Court of Appeals likewise rejected the Banksargument that Section 2, Rule 34 of the old Rules of Courtallows the Bank to move with the supporting Waldenaffidavit for partial summary judgment in its favor. TheCourt of Appeals clarified that the Walden affidavit is notthe supporting affidavit referred to in Section 2, Rule 34that would prove the lack of genuine issue between theparties. The Court of Appeals concluded that even if theWalden affidavit is used for purposes of summaryjudgment, the Bank must still comply with the procedureprescribed by the Rules to prove the foreign law.

The Issues

The Bank contends that the Court of Appeals committedreversible error in

x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TOSUPPORT ITS MOTION FOR SUMMARY JUDGMENT MAYNOT BE GIVEN BY AFFIDAVIT

x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICHPROVES FOREIGN LAW AS A FACT, IS HEARSAY ANDTHEREBY CANNOT SERVE AS PROOF OF THE NEW YORKLAW RELIED UPON BY PETITIONERS IN THEIR MOTIONFOR SUMMARY JUDGMENT x x x.

3



First, the Bank argues that in moving for partial summaryjudgment, it was entitled to use the Walden affidavit toprove that the stipulated foreign law bars the claims forconsequential, moral, temperate, nominal and exemplarydamages and attorneys fees. Consequently, outrightdismissal by summary judgment of these claims iswarranted.

Second, the Bank claims that the Court of Appealsmixed up the requirements of Rule 35 on summaryjudgments and those of a trial on the merits in consideringthe Walden affidavit as hearsay. The Bank points outthat the Walden affidavit is not hearsay since Rule 35expressly permits the use of affidavits.

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3 Rollo, pp. 89.

714


Lastly, the Bank argues that since Guerrero did not submitany opposing affidavit to refute the facts contained in theWalden affidavit, he failed to show the need for a trial onhis claims for damages other than actual.

The Courts Ruling

The petition is devoid of merit.The Bank filed its motion for partial summary judgment

pursuant to Section 2, Rule 34 of the old Rules of Courtwhich reads:

Section 2. Summary judgment for defending party.A partyagainst whom a claim, counterclaim, or crossclaim is asserted ora declaratory relief is sought may, at any time, move withsupporting affidavits for a summary judgment in his favor as toall or any part thereof.

A court may grant a summary judgment to settleexpeditiously a case if, on motion of either party, thereappears from the pleadings, depositions, admissions, andaffidavits that no important issues of fact are involved,



except the amount of damages. In such event, the movingparty is entitled to a judgment as a matter of law.

4

In a motion for summary judgment, the crucial questionis: are the issues raised in the pleadings genuine, sham orfictitious, as shown by affidavits, depositions or admissionsaccompanying the motion?

5

A genuine issue means an issue of fact which calls forthe presentation of evidence as distinguished from an issuewhich is fictitious or contrived so as not to constitute agenuine issue for trial.

6

A perusal of the parties respective pleadings wouldshow that there are genuine issues of fact that necessitateformal trial. Guerreros complaint before the RTC containsa statement of the ultimate facts on which he relies for hisclaim for damages. He is seeking damages for what heasserts as illegally withheld taxes charged againstinterests on his checking account with the Bank, areturned check worth US$18,000.00 due to signatureverification problems, and unauthorized conversion of hisaccount. In its Answer, the Bank set up its defense thatthe agreed foreign law to

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4 Garcia v. Court of Appeals, 312 SCRA 180 (1999).5 Diman v. Alumbres, 299 SCRA 459 (1998).6 Paz v. Court of Appeals, 181 SCRA 26 (1990).

715


govern their contractual relation bars the recovery ofdamages other than actual. Apparently, facts are assertedin Guerreros complaint while specific denials andaffirmative defenses are set out in the Banks answer.

True, the court can determine whether there aregenuine issues in a case based merely on the affidavits orcounteraffidavits submitted by the parties to the court.However, as correctly ruled by the Court of Appeals, theBanks motion for partial summary judgment as supportedby the Walden affidavit does not demonstrate thatGuerreros claims are sham, fictitious or contrived. On thecontrary, the Walden affidavit shows that the facts and



material allegations as pleaded by the parties are disputedand there are substantial triable issues necessitating aformal trial.

There can be no summary judgment where questions offact are in issue or where material allegations of thepleadings are in dispute.

7 The resolution of whether a

foreign law allows only the recovery of actual damages is aquestion of fact as far as the trial court is concerned sinceforeign laws do not prove themselves in our courts.

8 Foreign

laws are not a matter of judicial notice.9 Like any other

fact, they must be alleged and proven. Certainly, theconflicting allegations as to whether New York law orPhilippine law applies to Guerreros claims present a cleardispute on material allegations which can be resolved onlyby a trial on the merits.

Under Section 24 of Rule 132, the record of publicdocuments of a sovereign authority or tribunal may beproved by (1) an official publication thereof or (2) a copyattested by the officer having the legal custody thereof. Suchofficial publication or copy must be accompanied, if therecord is not kept in the Philippines, with a certificate thatthe attesting officer has the legal custody thereof. Thecertificate may be issued by any of the authorizedPhilippine embassy or consular officials stationed in theforeign country in which the record is kept, andauthenticated by the seal of his office. The attestation muststate, in substance, that the copy is a correct copy of theoriginal, or a specific part thereof, as the case may be, andmust be under the official seal of the attesting officer.

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7 National Irrigation Administration v. Gamit, 215 SCRA 436 (1992).8 Llorente v. Court of Appeals, 345 SCRA 592 (2000).9 Ibid.

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Certain exceptions to this rule were recognized in AsiavestLimited v. Court of Appeals

10 which held that:

x x x:



Although it is desirable that foreign law be proved inaccordance with the above rule, however, the Supreme Court heldin the case of Willamette Iron and Steel Works v. Muzzal, thatSection 41, Rule 123 (Section 25, Rule 132 of the Revised Rules ofCourt) does not exclude the presentation of other competentevidence to prove the existence of a foreign law. In that case, theSupreme Court considered the testimony under oath of anattorneyatlaw of San Francisco. California, who quoted verbatima section of California Civil Code and who stated that the samewas in force at the time the obligations were contracted, assufficient evidence to establish the existence of said law.Accordingly, in line with this view, the Supreme Court in theCollector of Internal Revenue v. Fisher et al., upheld the Tax Courtin considering the pertinent law of California as proved by therespondents witness. In that case, the counsel for respondenttestified that as an active member of the California Bar since1951, he is familiar with the revenue and taxation laws of theState of California. When asked by the lower court to state thepertinent California law as regards exemption of intangiblepersonal properties, the witness cited Article 4, Sec. 13851 (a) & (b)of the California Internal and Revenue Code as published inDerrings California Code, a publication of BancroftWhitney Co.,Inc. And as part of his testimony, a full quotation of the citedsection was offered in evidence by respondents. Likewise, inseveral naturalization cases, it was held by the Court thatevidence of the law of a foreign country on reciprocity regardingthe acquisition of citizenship, although not meeting the prescribedrule of practice, may be allowed and used as basis for favorableaction, if, in the light of all the circumstances, the Court issatisfied of the authenticity of the written proof offered. Thus, ina number of decisions, mere authentication of the ChineseNaturalization Law by the Chinese Consulate General of Manilawas held to be competent proof of that law. (Italics supplied)

The Bank, however, cannot rely on Willamete Iron andSteel Works v. Muzzal or Collector of Internal Revenue v.Fisher to support its cause. These cases involved attorneystestifying in open court during the trial in the Philippinesand quoting the particular foreign laws sought to beestablished. On the other hand, the Walden affidavit wastaken abroad ex parte and the affiant never testified inopen court. The Walden affidavit cannot be considered asproof of New York law on damages not only because it isself



3.

4.

5.

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10296 SCRA 539 (1998).

717


serving but also because it does not state the specific NewYork law on damages. We reproduce portions of the Waldenaffidavit as follows:

In New York, [n]ominal damages are damages inname only, trivial sums such as six cents or $1.Such damages are awarded both in tort andcontract cases when the plaintiff establishes acause of action against the defendant, but is unableto prove actual damages. Dobbs, Law of Remedies, 3.32 at 294 (1993). Since Guerrero is claiming foractual damages, he cannot ask for nominaldamages.There is no concept of temperate damages in NewYork law. I have reviewed Dobbs, a wellrespectedtreatise, which does not use the phrase temperatedamages in its index. I have also done acomputerized search for the phrase in all publishedNew York cases, and have found no cases that useit. I have never heard the phrase used in Americanlaw.The Uniform Commercial Code (UCC) governsmany aspects of a Banks relationship with itsdepositors. In this case, it governs Guerreros claimarising out of the nonpayment of the $18,000check. Guerrero claims that this was a wrongfuldishonor. However, the UCC states that justifiablerefusal to pay or accept as opposed to dishonor,occurs when a bank refuses to pay a check forreasons such as a missing indorsement, a missingor illegible signature or a forgery, 3510, OfficialComment 2. . . . . to the Complaint, MHT returnedthe check because it had no signature card on . . . .and could not verify Guerreros signature. In myopinion, consistent with the UCC, that is alegitimate and justifiable reason not to pay.



6.

7.

8.

9.

Consequential damages are not available in theordinary case of a justifiable refusal to pay. UCC 1106 provides that neither consequential or specialor punitive damages may be had except asspecifically provided in the Act or by other rule oflaw. UCC 4103 further provides thatconsequential damages can be recovered only wherethere is bad faith. This is more restrictive than theNew York common law, which may allowconsequential damages in a breach of contract case(as does the UCC where there is a wrongfuldishonor).Under New York law, requests for lost profits,damage to reputation and mental distress areconsidered consequential damages. Kenford Co.,Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540N.Y.S.2d 1, 45 (1989) (lost profits) MotifConstruction Corp. v. Buffalo Savings Bank, 50A.D.2d 718, 374 N.Y.S..2d 868, 86970 (4th Dept1975) damage to reputation) Dobbs, Law ofRemedies 12.4(1) at 63 (emotional distress).As a matter of New York law, a claim for emotionaldistress cannot be recovered for a breach ofcontract. Geler v. National Westminster BankU.S.A., 770 F. Supp. 210, 215 (S.D.N.Y. 1991)Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540 N.Y.S.2d 387, 390 (3d Dept 1989) Mar

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tin v. Donald Park Acres, 54 A.D.2d 975, 389N.Y.S..2d 31, 32 (2nd Dept 1976). Damage toreputation is also not recoverable for a contract.Motif Construction Corp. v. Buffalo Savings Bank,374 N.Y.S.2d at 86970.In cases where the issue is the breach of a contractto purchase stock, New York courts will not takeinto consideration the performance of the stockafter the breach. Rather, damages will be based onthe value of the stock at the time of the breach,Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558,



10.

11.

12.

13.

14.

559 (4th Dept 1982), app. den. 59 N.Y.2d 601, 449N.E.2d 1276, 463 N.Y.S.2d 1023 (1983).Under New York law, a party can only getconsequential damages if they were the type thatwould naturally arise from the breach and if theywere brought within the contemplation of partiesas the probable result of the breach at the time of orprior to contracting. Kenford Co., Inc. v. Country ofErie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989),(quoting Chapman v. Fargo, 223 N.Y. 32, 36 (1918).Under New York law, a plaintiff is not entitled toattorneys fees unless they are provided by contractor statute. E.g., Geler v. National WestminsterBank, 770 F. Supp. 210, 213 (S.D.N.Y. 1991)Camatron Sewing Mach, Inc. v. F.M. Ring Assocs.,Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept1992) Stanisic v. Soho Landmark Assocs., 73A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dept 1991).There is no statute that permits attorneys fees in acase of this type.Exemplary, or punitive damages are not allowed fora breach of contract, even where the plaintiff claimsthe defendant acted with malice. Geler v. NationalWestminster Bank, 770 F.Supp. 210, 215 (S.D.N.Y.1991) Catalogue Service of . . .chester

11 v. Insurance

Co. of North America, 74 A.D.2d 837, 838, 425N.Y.S.2d 635, 637 (2d Dept 1980) Senior v.Manufacturers Hanover Trust Co., 110 A.D.2d 833,488 N.Y.S.2d 241, 242 (2d Dept 1985).Exemplary or punitive damages may be recoveredonly where it is alleged and proven that the wrongsupposedly committed by defendant amounts to afraud aimed at the public generally and involves ahigh moral culpability. Walker v. Sheldon, 10N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488(1961).Furthermore, it has been consistently held underNew York law that exemplary damages are notavailable for a mere breach of contract for in such acase, as a matter of law, only a private wrong andnot a public right is involved. Thaler v. The NorthInsurance Company, 63 A.D.2d 921, 406 N.Y.S.2d66 (1st Dept 1978).

12



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11 Illegible.12 Rollo, pp. 2630.

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The Walden affidavit states conclusions from the affiantspersonal interpretation and opinion of the facts of the casevisvis the alleged laws and jurisprudence without citingany law in particular. The citations in the Walden affidavitof various U.S. court decisions do not constitute proof of theofficial records or decisions of the U.S. courts. While theBank attached copies of some of the U.S. court decisionscited in the Walden affidavit, these copies do not complywith Section 24 of Rule 132 on proof of official records ordecisions of foreign courts.

The Banks intention in presenting the Walden affidavitis to prove New York law and jurisprudence. However,because of the failure to comply with Section 24 of Rule 132on how to prove a foreign law and decisions of foreigncourts, the Walden affidavit did not prove the current stateof New York law and jurisprudence. Thus, the Bank hasonly alleged, but has not proved, what New York law andjurisprudence are on the matters at issue.

Next, the Bank makes much of Guerreros failure tosubmit an opposing affidavit to the Walden affidavit.However, the pertinent provision of Section 3, Rule 35 ofthe old Rules of Court did not make the submission of anopposing affidavit mandatory, thus:

SEC. 3. Motion and proceedings thereon.The motion shall beserved at least ten (10) days before the time specified for thehearing. The adverse party prior to the day of hearing may serveopposing affidavits. After the hearing, the judgment sought shallbe rendered forthwith if the pleadings, depositions andadmissions on file, together with the affidavits, show that, exceptas to the amount of damages, there is no genuine issue as to anymaterial fact and that the moving party is entitled to a judgmentas a matter of law. (Italics supplied)

It is axiomatic that the term may as used in remediallaw, is only permissive and not mandatory.

13



Guerrero cannot be said to have admitted the avermentsin the Banks motion for partial summary judgment andthe Walden affidavit just because he failed to file anopposing affidavit. Guerrero opposed the motion for partialsummary judgment, although he did not present anopposing affidavit. Guerrero may not have presented anopposing affidavit, as there was no need for one, becausethe Walden affidavit did not establish what the Bank in

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13 Shauf v. Court of Appeals, 191 SCRA 713 (1990).

720


tended to prove. Certainly, Guerrero did not admit,expressly or impliedly, the veracity of the statements in theWalden affidavit. The Bank still had the burden of provingNew York law and jurisprudence even if Guerrero did notpresent an opposing affidavit. As the party moving forsummary judgment, the Bank has the burden of clearlydemonstrating the absence of any genuine issue of fact andthat any doubt as to the existence of such issue is resolvedagainst the movant.

14

Moreover, it would have been redundant and pointlessfor Guerrero to submit an opposing affidavit consideringthat what the Bank seeks to be opposed is the very subjectmatter of the complaint. Guerrero need not file an opposingaffidavit to the Walden affidavit because his complaintitself controverts the matters set forth in the Banks motionand the Walden affidavit. A party should not be made todeny matters already averred in his complaint.

There being substantial triable issues between theparties, the courts aquo correctly denied the Banks motionfor partial summary judgment. There is a need todetermine by presentation of evidence in a regular trial ifthe Bank is guilty of any wrongdoing and if it is liable fordamages under the applicable laws. This case has beendelayed long enough by the Banks resort to a motion forpartial summary judgment. Ironically, the Bank hassuccessfully defeated the very purpose for which summaryjudgments were devised in our rules, which is, to aid



parties in avoiding the expense and loss of time involved ina trial.

WHEREFORE, the petition is DENIED for lack of merit.The Decision dated August 24, 1998 and the Resolutiondated December 14, 1998 of the Court of Appeals in CAG.R. SP No. 42310 is AFFIRMED.

SO ORDERED.

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

YnaresSantiago, J., No part.

Petition denied, judgment and resolution affirmed.

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14 Natalia Realty Corporation v. Vallez, 173 SCRA 534 (1989).

721

VOL. 397, FEBRUARY 19, 2003 721People vs. Velez

Note.A summary judgment is one granted by thecourt upon motion by a party for an expeditious settlementof a case, there appearing from the pleadings, depositions,admissions, and affidavits that there are not importantquestions or issues of fact involved, and that therefore themoving party is entitled to a judgment as a matter of law.(Army and Navy Club of Manila, Inc. vs. Court of Appeals,271 SCRA 36 [1997])

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