ISABELA SUGAR CO., INC. AND ENRIQUE J.C. MONTILLA, PETITIONERS, VS. JUDGE HIGINIO B. MACADAEG, ELIAS JEREOS, AND HEIRS OF JOSE YULO, NAMELY, ALICIA YULO DE LAUREL, HERMINIA YULO…

This
is a proceeding instituted by petitioners to annul an order of the
Court of First Instance of Manila, Hon. Higinio B. Macadaeg, presiding,
compelling petitioner Enrique J. C, Montilla to answer certain
questions propounded to him by counsel for the respondents herein, in
the course of the taking of Montilla’s deposition in civil case No.
15273 of the Court of First Instance of Manila, in which the
respondents herein are plaintiffs and the petitioners, defendants. In
order to understand the issue involved in this proceeding, it is
necessary that a brief resume of the circumstances constituting the
background of the questions propounded be given.

Petitioner
Enrique J. C. Montilla and his relatives own more than 95 per cent of
the outstanding shares of stock of the petitioner Isabela Sugar Co.,
Inc., and respondents Elias Jereos and the heirs of Jose Yulo only
about 1/20 of 1 per cent thereof. At the outbreak of the last war the
Isabela Sugar Co., Inc. was indebted to the Philippine National Bank in
the sum of P591,902.69. During the occupation this amount was increased
to P1,097,038.14. Late in the year 1944, Montilla paid this obligation
to the bank in Japanese military notes in a private capacity. After the
liberation, the bank agreed to recognize as valid the payment made by
Montilla to the extent of 60 per cent or P658,222.88. Thereupon, the
stockholders resolved in a meeting to recognize this sum as an
obligation of the company in Montilla’s favor. When the Supreme Court
subsequently ruled that payments made during the occupation with
military notes were valid, the stockholders approved another resolution
recognizing the company’s obligation to the full extent of the military
notes paid, namely P1,097,038.14.

On December 4, 1951
respondents herein filed the complaint in civil case No. 15273,
alleging that Montilla should be allowed to recover from the company
only the actual value of the depreciated currency with which he had
paid the company’s obligation to the bank, i.e., only P18,283.97, and
at the same time asked for the taking of his deposition. In the course
of the taking of the deposition, two questions were propounded to him,
thus:

1. Q.—Referring to this property in
   Pennsylvania, is it not a fact that you bought that property on
   December 7, 1943 from Alicia Ortiz de Arcega for the price of
   P65,278.50 in Japanese notes and you sold it on October 11, 1944 to
   Severo Capiral for P20,000 Japanese money? In other words, you earned
   and made a profit?

2. Q.—Did you pay any war profit tax for the sale of those three properties mentioned by you?

Upon
the propounding of the above questions, counsel for Montilla objected.
At first the objection seemed to have been only on the ground that they
are immaterial, irrelevant and impertinent, but in the discussion that
ensued between counsel for one and the other side, it became apparent
that it was objected to also on the ground that “there is nothing
therein (complaint) that justifies or permits opposing counsel to ask
questions relating to profits that the witness may have made during the
war.” Upon the submission of the questions for the consideration of the
judge before whom the case was pending, under the provisions of section
17, Rule 18 of the Rules of Court, respondent Judge Macadaeg ruled that
the first question could be asked because it was not immaterial or
irrelevant, but that the second one was incriminatory. Thereupon,
counsel for Montilla moved to reconsider the ruling, alleging that the
principal objection to the question was that it had a tendency to
incriminate the deponent. Judge Macadaeg, however, ruled that it is not
incriminatory, and that even if it were so, it was too late for the
witness to invoke the constitutional privilege. It is against the two
orders of Judge Macadaeg that this proceeding by certiorari is being
prosecuted.

When the deposition of a witness is being taken
under the provisions of Rule 18 of the Rules of Court, the party
objecting to a question claimed to be immaterial or irrelevant may
object thereto, but such party can not prevent the witness from
answering the question (section 17, Rule 18) because the relevancy or
materiality will only be decided upon the trial when the deposition is
introduced as evidence (section 29, Rule 18). An exception to this
general rule obtains when the questions propounded are annoying,
embarrassing, or oppressive to the deponent (section 18, Rule 18, Rules
of Court), in which case the matter may be submitted to the trial judge
for a ruling, or when the constitutional privilege against self-
incrimination is invoked by the deponent or by counsel on his behalf,
to enforce the constitutional privilege defined in section 79, Rule
123, Rules of Court, in which latter case also the staying hand of the
trial judge may also be demanded. It was under this latter circumstance
that the trial judge’s orders were issued.

Under the
allegation in respondents’ answer that Montilla’s payment to the bank
should be recognized by the company only to the extent of the value of
the money paid, respondents’ claim that they had the right to ascertain
the source of the money with which the payment was made might appear to
justify the asking of the first question. The real value of the payment
may be gauged by the actual value of the property from the proceeds of
whose sale the payment was made. Respondents’ theory would therefore
seem to be that if the real value of the property that Montilla sold
was only P60,000, for instance, even if the payment was actually
P200,000, such payment should be credited to him only to the extent of
said actual value of P60,000. Under the above theory, the price which
Montilla paid for the Pennsylvania property might have some relevancy
sufficient to justify its admission as evidence. But as the relevancy
of a subject is no ground for its exclusion in a deposition, it is not
here necessary to make a ruling thereon.

It is evident,
however, that the question as to the price that Montilla paid for the
property would have a tendency to incriminate him, within the meaning
of section 79 of Rule 123, Rules of Court, even if the question did not
contain how much it was sold for and was limited to how much he had
bought it for. In analyzing the import and application of the
constitutional privilege now subject of the action, Chief Justice
Marshall explained that usually a crime or a criminal act may contain
two or more elements and that a question would have a tendency to
incriminate, even if it tends to elicit only one of said elements:

“Many
links frequently compose that chain of testimony which is necessary to
convict any individual of a crime. It appears to the Court to be the
true sense of the rule that no witness is compellable to furnish any
one of them against himself. It is certainly not only a possible but a
probable case that a witness, by disclosing a single fact, may complete
the testimony against himself, and to every effectual purpose accuse
himself as entirely as he would by stating every circumstance which
would be required for his conviction. The fact of itself might be
unavailing; but all other facts without it would be insufficient. While
that remains concealed within his bosom, he is safe; but draw it from
thence, and he is exposed to a prosecution. The rule which declares
that no man is compellable to accuse himself would most obviously be
infringed by compelling a witness to disclose a fact of this
description. * * * It would seem, then, that the Court ought never to
compel a witness to give an answer which discloses a fact that would
form a necessary and essential part of a crime which is punishable by
the laws.” (Marshall in Aaron Burr’s Trial, Robertsons Rep. I, 208,
244, quoted in VIII Wigmore, p. 355).

In the case
at bar, when the disputed question (No. 1) was propounded to the
petitioner Montilla, he had already declared that the had sold the
property for P200,000, so that if he would answer that he purchased it
for P65,278.50, he would be directly admitting having made a profit,
which is one of the elements of the offense defined in the War Profit
Tax Law (Republic Act No. 55). It is claimed by respondents that the
witness is not incriminated because the War Profit Tax Law taxes the
increase in the net worth of an individual from December 8, 1941 to
February 26, 1945 (section 1, Republic Act No. 55). It is sufficient to
state in answer to this contention that if an individual is shown to
have paid only P68,000 for property which he had sold for P200,000 and
is credited to the full extent of the P200,000 (which in this case
witness paid to the bank for his company), he must certainly have been
enriched to the extent of the difference or, in the words of the law,
his net worth in 1945 resulted in an excess over his net worth in 1941.

It is also contended that even if the question as to the price paid for
the Pennsylvania property were incriminating, the privilege was waived
when Montilla answered all the questions about the purchase of the
property, the date thereof, the price paid, etc. with the answer “I do
not remember”. We cannot agree to this contention. Witness’ invariable
answer of “I do not remember” is clearly a refusal to answer, and the
privilege is not deemed waived thereby.

It is evident,
therefore, that the respondent judge violated the constitutional
privilege claimed in this proceeding when he ordered the petitioner
Enrique J.C. Montilla to answer the questions propounded to him by
counsel for the respondents. The writ must be granted and the orders
complained of annulled, and the writ of preliminary injunction issued
made permanent. With costs against respondents Elias Jereos and heirs
of Jose Yulo. So ordered.

Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, Jugo, and Bautista Angelo, JJ., concur.