Felipe vs. MGM Motor Trading Corporation

A complaint is properly dismissed on demurrer to evidence when the plaintiff's admitted evidence, taken as true, is insufficient in point of law to establish the material allegations and the right to the relief sought. The burden of proof rests on the party making the allegations, and a receipt for partial payment, standing alone, does not prove the existence of an installment sale.

Frederick F. Felipe filed a complaint for specific performance and damages against MGM Motor Trading Corporation (MGM Motors) and Ayala General Insurance Corporation (Ayala Insurance). He alleged that he purchased a Nissan Terrano Wagon on installment through MGM Motors' authorized representative, Jane Sarmiento, paying a downpayment of P200,000.00 and a reservation fee of P5,000.00. He further issued seven Allied Bank checks for P24,165.00 each payable to MGM Motors. The vehicle was delivered on 14 May 1997. Felipe insured the vehicle with Ayala Insurance and paid a premium of P40,220.67. On 15 November 1997, the vehicle was reportedly lost while parked along Adriatico Street in Manila. Ayala Insurance refused to pay his claim. MGM Motors refused to produce the document of sale by installment despite repeated demands, and instead insisted the transaction was on a cash basis.

MGM Motors denied receiving the downpayment and asserted the transaction was a cash sale with a P220,000.00 discount. The vehicle was delivered but Felipe failed to pay in cash, so MGM Motors withheld the registration papers. MGM Motors claimed Felipe fraudulently registered the vehicle and insured it. During negotiations, the parties agreed Felipe's obligation amounted to P1,020,000.00, and his mother issued a postdated check for that amount which bounced, leading to a Batas Pambansa Bilang 22 case against her. Felipe paid P200,000.00 to settle the civil aspect of that case. Ayala Insurance denied liability, asserting Felipe had no insurable interest because he was not the vehicle's owner.

The Alleged Installment Purchase: - Felipe claimed he purchased a Nissan Terrano Wagon on installment from MGM Motors through its authorized representative, Jane Sarmiento. - He allegedly gave a P200,000.00 downpayment and a P5,000.00 reservation fee to Sarmiento. - He issued seven Allied Bank checks for P24,165.00 each, payable to MGM Motors. - On 14 May 1997, MGM Motors delivered the vehicle to Felipe.

The Insurance and Alleged Loss: - Felipe insured the vehicle with Ayala Insurance under Policy No. PC970000440001-00-000, paying a premium of P40,220.67. - On 15 November 1997, the vehicle was reportedly lost while parked along Adriatico Street in Manila. - Ayala Insurance refused to pay his claim.

MGM Motors' Version: - MGM Motors denied the installment sale and asserted the transaction was a cash sale with a P220,000.00 discount. - The vehicle was delivered on 14 May 1997 but Felipe failed to pay in cash; consequently, MGM Motors retained the registration papers. - Felipe fraudulently registered the vehicle with the Land Transportation Office in his name and insured it with Ayala Insurance. - During negotiations, the parties agreed Felipe's obligation amounted to P1,020,000.00. - Felipe's mother, Purificacion, issued a postdated check for P1,020,000.00 as full payment; the check bounced upon maturity. - MGM Motors filed a BP 22 case against Felipe's mother. To settle the civil aspect, Felipe paid P200,000.00 to MGM Motors. - MGM Motors produced a sales invoice indicating the mode of payment was "COD" or cash on delivery.

Ayala Insurance's Defense: - Ayala Insurance contended Felipe had no insurable interest because he was not the vehicle's owner. - It asserted Felipe failed to establish: (1) premium payment; (2) insurable interest at the time of loss; (3) a deed of sale; (4) that the proximate cause of loss was a peril insured against; and (5) the existence of the original insurance policy.

Evidence Admitted at Trial: - Felipe's own testimony was stricken off the record because he failed to return for cross-examination despite numerous opportunities. - Only two pieces of evidence were admitted: (1) an Official Receipt dated 7 May 1998 showing MGM Motors acknowledged receipt of P200,000.00 from Felipe; and (2) the testimony of his father, Alberto Felipe, that he witnessed Felipe pay P200,000.00 to MGM Motors.

• Sufficiency of Evidence: Felipe insisted that the two admitted pieces of evidence sufficiently substantiated the material allegations of the complaint. Alberto Felipe's testimony established that the purchase was on installment basis from MGM Motors, that petitioner paid an additional P200,000.00, and that MGM Motors failed to deliver the promised installment sale documents despite payments. The receipt issued by MGM Motors further proved the installment sale.

• Transfer of Ownership by Delivery: Felipe argued that the vehicle was actually delivered to him, and ownership was consequently transferred to him upon delivery. With respect to Ayala Insurance, he was already the owner when the insurance was taken and when the vehicle was lost.

• Insurable Interest: Assuming arguendo that title remained with MGM Motors, Felipe maintained that his insurable interest consisted of the substantial amount he had paid toward the purchase price of the vehicle.

• MGM Motors — Nature of the Sale: MGM Motors cited the Municipal Trial Court's finding in the BP 22 criminal case against Felipe's mother, which determined that the purchase agreement was on a cash basis, not installment. MGM Motors echoed the trial court's ruling that Felipe failed to substantiate the material allegations in his complaint.

• Ayala Insurance — Insufficiency of Evidence: Ayala Insurance argued that the only evidence submitted against it—the receipt for P200,000.00 paid to MGM Motors—did not constitute proof of insurable interest. It emphasized that Felipe failed to establish by preponderance of evidence the following: premium payment, insurable interest at the time of loss, existence of a deed of sale, that the proximate cause of loss was a peril insured against, and the existence of the original insurance policy.

• Propriety of Demurrer to Evidence: Whether the trial court correctly granted the demurrer to evidence and dismissed the complaint.

• Factual Nature of Questions Presented: Whether the questions of whether the sale was on cash or installment basis, and whether Felipe had an insurable interest, are questions of fact beyond the scope of a petition for review on certiorari under Rule 45.

• Sufficiency of Evidence on Installment Sale: Whether the Official Receipt for P200,000.00 and Alberto Felipe's testimony sufficiently proved that the vehicle purchase was on an installment basis.

• Sufficiency of Evidence on Insurance Claim: Whether Felipe presented sufficient evidence to prove a valid claim against Ayala Insurance for the alleged loss of the insured vehicle.

• Propriety of Demurrer to Evidence: The dismissal on demurrer to evidence was correct. A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence, presented after the plaintiff rests his case. The essential question is whether the plaintiff has shown entitlement to the claim based on the facts and the law. The trial court judge is duty-bound to make this determination. The only admitted evidence—the receipt and Alberto Felipe's testimony—did not prove the material allegations of the complaint or the alleged liability of Ayala Insurance.

• Factual Nature of Questions Presented: The questions of whether the sale was on cash or installment basis and whether Felipe had an insurable interest are questions of fact, which are beyond the purview of a Rule 45 petition. A question of fact exists when doubt arises as to the truth or falsity of statements of fact, involving calibration of evidence, credibility of witnesses, and the probability of specific situations. The Supreme Court defers to the factual findings of the trial judge, who had the distinct advantage of directly observing the witnesses.

• Sufficiency of Evidence on Installment Sale: The evidence was insufficient to prove an installment sale. The burden of proof lies on the party who makes the allegations. A receipt for partial payment does not suffice to prove that the purchase was on installment basis. Felipe presented no document to prove the alleged installment arrangement, while MGM Motors produced a sales invoice stating the mode of payment was "COD" or cash on delivery.

• Sufficiency of Evidence on Insurance Claim: Felipe failed to substantiate his allegations against Ayala Insurance. He bore the burden of proving that a loss occurred and that the loss was covered by the insurance policy. None of the two admitted pieces of evidence tended to prove loss of the subject vehicle or coverage under the insurance policy. Consequently, Felipe was not entitled to the reliefs prayed for.

• Demurrer to Evidence (Rule 33, Section 1, 1997 Rules of Civil Procedure): After the plaintiff has completed the presentation of evidence, the defendant may move for dismissal on the ground that upon the facts and the law, the plaintiff has shown no right to relief. The essential question is whether the plaintiff has been able to show entitlement to the claim. If the motion is granted and reversed on appeal, the movant is deemed to have waived the right to present evidence.

• Scope of Rule 45 Petition for Review on Certiorari: A petition for review on certiorari under Rule 45 contemplates only questions of law, not of fact. The Supreme Court defers to the factual findings of the trial judge, who directly observed the witnesses and determined their credibility from demeanor.

• Question of Law vs. Question of Fact: A question of law exists when there is doubt or controversy as to what the law is on a certain state of facts. A question of fact exists when doubt arises as to the truth or falsity of statements of fact, involving the calibration of evidence, credibility of witnesses, existence and relevance of surrounding circumstances, and probability of specific situations.

• Burden of Proof: The burden of proof lies on the party who makes the allegations (ei incumbit probatio qui dicit, non qui negat). A plaintiff must establish the material allegations of the complaint by preponderance of evidence to be entitled to the relief sought.

• "A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and is presented after the plaintiff rests his case. It is an objection by one of the parties in an action, to the effect that the evidence which his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the issue."

• "The essential question to be resolved in a demurrer to evidence is whether the plaintiff has been able to show that he is entitled to his claim, and it is incumbent upon the trial court judge to make such a determination."

• "A question of law exists when there is doubt or controversy as to what the law is on a certain state of facts. There is a question of fact when doubt arises as to the truth or falsity of the statement of facts. The resolution of a question of fact necessarily involves a calibration of the evidence, the credibility of the witnesses, the existence and the relevance of surrounding circumstances, and the probability of specific situations."

• "Well-established is the rule that the burden of proof lies on the party who makes the allegations."

• Celina v. Heirs of Alejo Santiago, 479 Phil. 617 (2004): Cited for the definition and nature of a demurrer to evidence as an objection that the adversary's evidence is insufficient in point of law to make out a case or sustain the issue.

• Uy v. Chua, 616 Phil. 768 (2009): Cited for the proposition that the essential question in a demurrer to evidence is whether the plaintiff has shown entitlement to the claim, and that the trial court judge must make this determination.

• Abad v. Guimba, 503 Phil. 321 (2005): Cited for the distinction between questions of law and questions of fact, and the principle that the Supreme Court defers to the factual findings of the trial judge who directly observed the witnesses.

• Heirs of Pedro Pasag v. Spouses Parocha, 550 Phil. 571 (2007): Cited for the rule that the burden of proof lies on the party making the allegations.

• Rule 33, Section 1, 1997 Rules of Civil Procedure: Governs demurrer to evidence. After the plaintiff completes presentation of evidence, the defendant may move for dismissal on the ground that the plaintiff has shown no right to relief based on the facts and the law. If the motion is denied, the defendant may present evidence; if granted and reversed on appeal, the movant waives the right to present evidence. Applied to sustain the trial court's dismissal of Felipe's complaint after he failed to present sufficient evidence to prove his material allegations.

• Rule 45, Rules of Court: Governs appeals by certiorari to the Supreme Court, limiting review to questions of law. Applied to bar consideration of the factual issues Felipe raised, as the questions of whether the sale was on cash or installment basis and whether he had insurable interest were questions of fact.

Chief Justice Maria Lourdes P. A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Lucas P. Bersamin, and Associate Justice Francis H. Jardeleza (Acting Member per Special Order No. 2188 dated 16 September 2015).