MATERIAL DISTRIBUTORS (PHIL.), INC., AND HARRY LYONS, PETITIONERS, VS. FELIPE NATIVIDAD, JUDGE OF FIRST INSTANCE OF MANILA, AND LOPE SARREAL, RESPONDENTS.

On March 24, 1947, Lope Sarreal filed a complaint (amended on
April 10, 1947, to include Harry Lyons) seeking a money judgment against
petitioners on three causes of action in the total of P1,256,229.30.

On May 27, 1947, Sarreal filed a motion for the production and
inspection of the following documents:

“I. Books or Papers of Material Distributors (Phil.) Inc.:

“1. Cash Receipts Journal

“2. Cash Payments Journal

“3. All Individual Ledgers, specially of the following persons
or entities.

“(a) British-American Engineering Corporation

“(b) Philippine Refinery

“(c) Felipe Buencamino

“(d) Luzon Stevedoring

“(e) Standard Oil Company of New York

“(f) Philippine Exchange Co., Inc.

“(g) Manila Laundry Company

“(h) Filipino Businessmen’s Syndicate

“(i) Material Distributors, Inc., Witchita, Kansas

“(j) Harry Lyons

“4. All letters exchanged between Material Distributors (Phil.)
Inc., Material Distributors, Inc. of Witchita, Kansas, ond Harry Lyons, between
October 9, 1946 and March 31, 1947.

“5. All cablegrams exchanged between Material Distributors
(Phil.) Inc., and Material Distributors, Inc., Witchita, Kansas, between October
9, 1946 to March 31, 1947.

“II. Books and Papers of the defendant Harry Lyons.

“1. Letters exchanged between Harry Lyons and Material
Distributors, Inc., Witchita, Kansas, between September 14, 1946 and March 24,
1947.

“2. Cablegrams exchanged between Harry Lyons and Material
Distributors, Inc., Witchita, Kansas, between September 14, 1946 and March 24,
1947.

“3. Cash Receipts Journal.

“4. Cash Payments Journal.”

On June 4, 1947, Sarreal filed a supplemental motion for the
production and inspection of the originals of Annexes A and B of the
complaint.

On June 12, 1947, petitioners filed a memorandum and opposition
to Sarreal’s above mentioned original and supplemental motions on the ground
that he failed to show good cause and that the motions were evidently filed for
the purpose of fishing evidence.

In July 16, 1947, respondent judge, granting both motions,
required petitioners to produce the documents and annexes in question on July
24, 1947.

On account of the absence in the Philippines of Harry Lyons,
petitioners moved, reserving whatever rights they have under the Rules of Court,
to postpone the inspection of the documents and annexes in question and
accordingly respondent judge postponed it to August 15, 1947.

On August 13, 1947, petitioners moved for the reconsideration
of the order of July 16, on the following grounds:

“(a) Article 46 of the Code of Commerce which prohibits
the delivery, communication and general examination of the correspondence of
merchants, a substantial right, as well as the petitioners’ right to the
inviolability of their correspondence as guaranteed by the Constitution would be
violated by the order requiring the production of the following documents:

“BOOKS AND PAPERS OF DEFENDANT HARRY LYONS

“(1) Letters exchanged between Harry Lyons and Material
Distributors, Inc., of Witchita, Kansas, between September 14, 1946 and March
24, 1947;

“(2) Cablegrams exchanged between, Harry Lyons and Material
Distributors, Inc., of Witchita, Kansas, between September 14, 1946 and March
24, 1947.

“BOOKS AND PAPERS OF MATERIAL DISTRIBUTORS (PHIL.) INC.

“(4-5) All letters and cablegrams exchanged between Material
Distributors (Phil.), Inc., Material Distributors, Inc., of Witchita, Kansas,
and Harry Lyons between October 9, 1946 and March 31, 1947.

“(b)That the production for plaintiff’s inspection of all the
foregoing documents above enumerated, as well as of the following documents,
would constitute a “fishing expedition,” not allowed by Rule 21 of the Rules of
Court, since their materiality or probable materiality is not shown by the
pleadings of the parties except by movant’s bare allegations which are disputed
by your petitioners:

“BOOKS AND PAPERS OF MATERIAL DISTRIBUTORS (PHIL.) INC.

“1-2. Cash Receipts Journal and Cash Payments Journal.

“3. All Individual Ledgers, specially of the following persons
or entities.

“(b) Philippine Refinery.

“(c) Felipe Buencamino.

“(d) Luzon Stevedoring.

“(e) Standard Oil Company of New York.

“(f) Philippine Exchange Co., Inc.

“(g) Manila Laundry Company.

“(c) That plaintiff is not entitled to the production
and inspection of the originals of Annexes A and B because his only purpose, as
stated in his supplemental motion, Exhibit D, was to find out if a case of
falsification has been made, that the, issue between the parties in this regard
is material only to your petitioners’ affirmative defense, and that if
plaintiff’s purpose was as stated in said supplemental motion, then your
petitioners claimed their privilege against self-incrimination. That this latter
privilege was also claimed insofar as the production and inspection of the other
documents were concerned by your petitioners in view of cousel for respondent
Lope Sarreal’s charge to the Honorable City Fiscal for the City of Manila that
your petitioners were violating our Corporation Law.”

On September 27, 1947, respondent judge denied the motion for
reconsideration.

Petitioners impugn the validity of the orders of July 16 and
September 27, 1947, as were issued by the respondent judge in excess of his
jurisdiction or with grave abuse of his discretion, and prayed for the annulment
or modification of the order of July 16, 1947.

Respondent Sarreal advance the following reasons to show that
the orders complained of were not issued in excess of the trial court’s
jurisdiction or with grave abuse of discretion:

“(a) The motions of the respondent Lope Sarreal of May
27, 1947 and June 4, 1947 contain allegations of the ultimate fact that the
“books and papers mentioned in said motions constitute or contain evidence
material to the matters involved in the case and are in the possession, custody
or control of the petitioners herein, and allegation to this effect is adequate
showing of good cause for the production and inspection of the documents
mentioned therein, being an allegation in the very words used in Form 11 of the
Appendix Forms of our Rules of Court, and therefore a sufficient complaince with
said Rule (Go Tianco vs. Judge Diaz, et al., G. R. L-7, January 22, 1946,
reported in the June 1946 issue of the Official Gazette).

“(b) Article 46 of the Code of Commerce invoked by the
petitioners does not apply to cases of production and inspection of books and
papers belonging to a party to the action in which such production and
inspection are sought (Decision of Supreme Court of Spain of March 30, 1894). At
any rate, said Article of the Code of Commerce lias been impliedly repealed by
Act No. 190, pertinent portions of which are now embodied in our Rules of Court
(3 Op. of Atty. Gen. 380).

“(c) Neither would, the inspection of books and papers
of the petitioners amount to a violation of the inviolability of correspondence
under Sec. 1, No. 5, Article III of the Constitution of the Philippines,
considering that the inspection of said books and papers are sought through
proper order of the trial court, and the Constitutional provision invoked by the
petitioners precisely allows inspection of communication and correspondence
upon lawful order of the court. Moreover, this provision of our
Constitution creates no new right, being merely a re-enforcement of the
Constitutional prohibition against unreasonable searches and seizures
(Sinco, Philippine Government and Political Law, 4th Edition, p. 632), and when
the inspection of such books and papers was allowed ‘upon lawful order of the
court’ made through the respondent Judge, such inspection cannot be considered
as unreasonable altho such books and papers are private in character
(First National Bank vs. Hughes, 6 Fed., C 737, 741, appeal dismissed for want
of jurisdiction in 106 U. S., 523, 27 Law ed., 268, 1 Sup. Ct. Rep., 489;
Johnson Steel Street-Rail Co. vs. North Branch Steel Co., 48 Fed., 191; Victor
G. Beede Co. vs. Joseph Bancroft & Sons Co., 98 Fed., 175, affirmed in 52
L.R.A., 734, 45 C.C.A., 354, 106 Fed., 396, where this question was not
involved; Burnham vs. Morrissey, 14 Gray, 226, 74 Am. Dec., 676; United States
vs. Terminal R. Assoc., 148 Fed., 486; Re Dunn, 9 Mo. App., 255; Elder vs.
Bogardus, 1 Edm. Sel. Cas., 110; Boston & M.R. Co. vs. State [N. H.], 77
Atl. 996; Hopkinson vs. Burghley, L. R. 2ch., 447; Groker-Wheeler Co. vs.
Bullock [C. C.], 134 Fed., 241; Re Bolster, 110 Pac., 547).

“(d) The inspection of said documents is not for the
purpose of “fishing evidence” but with a view to enabling the respondent Lope
Sarreal to designate with particularity in the subpoena duces tecum to be
obtained in connection with the trial of the case on its merits the specific
books and papers containing the entry of receipts and payments made by the
petitioners, such books and papers, being material to the case in view, among
others, of the allegations in the amended complaint that the defendants, the
petitioners herein, had been remitting all or the greater volume of the proceeds
from the sales of equipments and materials of the defendants in Civil Case No.
2059 outside the jurisdiction of the trial court and had been disposing of their
properties with the intention of defrauding their creditors. At any rate,
“fishing expedition” is allowed and is precisely contemplated in Rule 21 of our
Rules of Court as a weapon of discovery (XXVI Am. Bar. Ass. Jur. No. 1, Jan.
1940, 48; Golden vs. Arcadia Mutual Casualty Company, D. C. I11., 1942, 2 F. R.
D. 26; Leach vs. Griff Bros. Coop. Corp., D. C. Miss., 1942, 3 F. R. D. 444;
Civil Aeronautics Board of Aeronautic Authority vs. Canadian Colonial Airways,
D. C., 1941, 41 F. S. 1006; Quemus Theatre Co. vs. Warner Bros. Pictures, D. C.
N. J., 1940, 35 F. S., 949; United Mercantile Agency v. Silver Fleet Motor
Express, D.C. Ky., 1941, 1 F. R. D., 709; Walling vs. Richmon Screw Anchor
Company, D. C. N. Y., 1943, 4 F. R. D., 265; Monarch Liquor Corp. vs. Schenley
Distillers Corp., D. C. N. Y., 1941, 2 F. R. D., 51; Walsh vs. Comm. Mutual Life
insurance Company of Hartford, Conn. [1939], 26 F. Supp., 556; Olson
Transportation Company vs. Socony Vacuum Oil Company, 7 F. R. D., 234).

“(e) The originals of Annexes A and B are relevant not
only to the case of the defendants but also to that of the plaintiff in Civil
Case No. 2059 here involved, in view of the issue of fact raised by the
pleadings of the parties as to whether the originals of Annexes A and B have
been falsified by the insertion therein of the names of Gil J. Puyat and Raymond
Lehmann after said Annexes were signed by respondent Lope Sarreal and
delivered to the petitioner Harry Lyons, in view of which respondent Lope
Sarreal is entitled to the production and inspection thereof under the
provisions of Rule 21 of our Rules of Court.

“(f) Even if ocular inspection of said Annexes A and B
may reveal falsification thereof by the petitioners amounting to a violation of
the applicable provisions of our Revised Penal Code, the petitioners cannot
exempt themselves from the production of said exhibits for mere
inspection and copying, inasmuch as the Constitutional prohibition against
self-incrimination has been extended in specific cases only to the
production of documents as evidence, and only when the person
producing them is made to take the witness stand and identify them under oath,
and not to the production of such documents for mere inspection (Comm.
vs. Southern Express Co., 1914, 160 Ky., 1, 169 SW., 517, annotated cases 1916A,
373, L. R. A., 1915B, 913; U. S. vs. Hughes, 12 Blatchff, 553); the reason being
that the Constitutional prohibition is one against compelling a person to be a
‘witness against himself’, and this has been held to mean testimonial
compulsion or extraction of admission from the person’s own lips (4
Wigmore, 865, 2263; Wilson vs. U. S., 55 Law. ed., 776, citing cases).

“(g) Moreover, the corporate records sought to be
inspected are not covered by the Constitutional prohibition against
self-incrimination, even though such documents may contain evidence tending to
subject any or all of the officers of a corporation to a criminal indictment
(Wilson vs. U. S. 221 U. S., 36I, 51 Law ed., 771; Oklahoma Press Pub. Co. vs.
Walling, 327 U. S., 186, 90 Law. ed., 614, 627-629; U. S. vs. Bauch & Lamp
Optical Co., 321 U. S., 707, 88 Law ed., 1024, 1037 [1944]; U.S. vs. White, 88
Law. ed., 1547).

“(h) Production and inspection of documents have been
allowed and sustained in decided cases, under Orders which were broader than
those here assailed, for the production and inspection of all books of accounts,
all memoranda and and records, stock book, ledger, journal, cash book, bank
book, bank deposit slip, check book, voucher, contract, income tax return,
booking record and correspondence (U.S. v. Duodera, 1 F. R. S., 466, U. S. D. C.
June 16, 1939; Orange Country Theater Corp. vs. League, 1 F. R. S., 448).

“(i) The respondent Judge, before issuing the Orders
complained of, gave the parties full opportunity, not only to discuss the
question involved by repeated oral arguments but also by written memoranda, and
in the exercise of his discretion issued the Orders complained of only after
full consideration of all the questions of fact and law
involved.”

The production and inspection of documents and books here in
question call for the interpretation and application of section 1 of Rule 21,
which reads as follows:

“SECTION 1. Motion for production or inspection;
order.—Upon motion of any party showing good cause therefor and upon notice
to all other parties, the court in which an action is pending may (a)
order any party to produce and permit the inspection and copying or
photographing, by or on behalf of the moving party, of any designated documents,
papers, books, accounts, letters, photographs, objects or tangible things, not
privileged, which constitute or contain evidence material to any matter involved
in the action and which are in his possession, custody or control; or (b)
order any party to permit entry upon designated land or other property in his
possession or control for the purpose of inspecting, measuring, surveying, or
photographing the property or any designated relevant object or operation
thereon. The order shall specify the time, place and manner of making the
inspection and taking copies and photographs, and may prescribe such terms and
conditions as are just.”

Petitioners contend that in filing his original and
supplemental motions, Sarreal has failed to show good cause for the issuance of
the requested order. It appears, however, in the original motion of May 27,
1947, that the books and papers therein mentioned “constitute or contain the
evidence material to the matters involved in the above entitled case.”

In the supplemental motion of June 4, 1947, it is alleged that
there is direct conflict between the allegations of the complaint and amended
complaint and those of the answer and amended answer as to whether or not the
names of Gil J. Puyat and Raymond W. Lehmann appear in any part of the originals
of Annexes A and B of the complaint, and plaintiff Sarreal wanted the production
and inspection of said originals to show that they did not contain the names of
Gil J. Puyat and Raymond W. Lehmann, and that if said names should appear now
typed in said Annexes A and B, said additional names must have been typed by
direction of Harry Lyons without the knowledge or consent of Sarreal and after
said originals were delivered by Harry Lyons and filed by the latter and that
the changes so introduced are a forgery.

With these allegations in the original and supplemental motions
Sarreal has fulfilled the requirement of showing good cause for the production
and inspection of the books and documents in question under Rule 21.

Petitioners contend that the order of the trial judge violated
petitioners’ constitutional right against self-incrimination.

We have considered carefully the reasons advanced by
petitioners in their pleadings and memoranda in support of this allegation and
we found nothing in them to show how, without the inspection of Annexes A and B
of the complaint, petitioners may incriminate themselves. We have, therefore, to
dismiss such contention.

Petitioners contend that the orders complained of trampled upon
petitioners’ right to the inviolability of the correspondence and communication
as guaranteed by the following provisions of the Constitution:

“(3) The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable searches and seizures shall not
be violated, and no warrants shall issue but upon probable cause, to be
determined by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the
place to be searched, and the persons or things to be seized. (Sec. 1, Art. III,
Constitution of the Philippines.)

“(5) The privacy of communication and correspondence shall be
inviolable except upon lawful order of the court or when public safety and order
require otherwise.” (Sec. 1, Art. III, Constitution of the
Philippines.)

The orders in question, issued in virtue of the provisions of
Rule 21, pertain to a civil procedure that cannot be identified or confused with
the unreasonable searches prohibited by the Constitution. But in the erroneous
hypothesies that the production and inspection of books and documents in
question is tantamount to a search warrant, the procedure outlined by Rule 21
and followed by respondent judge place them outside the realm of the prohibited
unreasonable searches. There is no question that, upon the pleadings in the
case, Sarreal has an interest in the books and documents in question, that they
are material and important to the issues between him and petitioners, that
justice will be better served if all the facts pertinent to the controversy are
placed before the trial court.

The constitutional guarantee of privacy of communication and
correspondence will not be violated, because the trial court has power and
jurisdiction to issue the order for the production and inspection of the books
and documents in question in virtue of the constitutional guarantee making an
express exception in favor of the disclosure of communication and correspondence
upon lawful order of a court of justice.

After a careful consideration of the legal questions raised by
petitioners, this Court has arrived at the conclusion that the trial judge, in
issuing the order of July 16, 1947, has not exceeded his jurisdiction or acted
with grave abuse of discretion.

Petition denied with costs against petitioners.

Moran, C.J., Paras, Feria, Tuason, Montemayor, and
Reyes, JJ., concur.

MORAN, C. J.:

Mr. Justice Pablo voted for this decision.