LAW ON EVIDENCE | SAN MIGUEL VS. KALALO, G.R. No. 185522, June 13, 2012
SAN MIGUEL VS. KALALO,
G.R. No. 185522, June 13, 2012
FACTS Kalalo had been a dealer of beer products since 1998. She had a credit overdraft arrangement with petitioner SMC whereby, prior to the delivery of beer products.In time, respondent’s business grew and the number of beer products delivered to her by SMC increased from 200 to 4,000 cases a week. Because of the increased volume of deliveries, it became very difficult for her to follow and keep track of the transactions. Thus, she requested regular statements of account from petitioner, but it failed to comply. In 2000, SMC’s agent required Kalalo to issue several postdated checks to cope with the probable increase in orders during the busy Christmas season, without informing her of the breakdown of the balance. She complied with the request; but after making several cash payments and returning a number of empty beer bottles and cases, she noticed that she still owed petitioner a substantial amount. She then insisted that it provide her with a detailed statement of account, but it failed to do so. In order to protect her rights and to compel SMC to update her account, she ordered her bank to stop payment on the last seven checks she had issued to petitioner. On 19 October 2000, instead of updating the account of respondent Kalalo, petitioner SMC sent her a demand letter for the value of the seven dishonored checks. On 5 December 2000, and in the face of constant threats made by the agents of SMC, respondent’s counsel wrote a letter (the "Offer of Compromise") wherein Kalalo "acknowledge[d] the receipt of the statement of account demanding the payment of the sum of ₱ 816,689.00" and "submitt[ed] a proposal by way of ‘Compromise Agreement’ to settle the said obligation. However, SMC refused to the proposal. Thereafter, it filed a complaint against Kalalo. MeTC acquitted Kalalo and affirmed by the RTC. Whether the Offer of Compromise may not be considered as evidence against respondent Kalalo.
HELD. Yes.
The Offer of Compromise may not be considered as evidence against respondent Kalalo. The fact that respondent made a compromise offer to petitioner SMC cannot be considered as an admission of liability. In Pentagon Steel Corporation v. Court of Appeals. we examined the reasons why compromise offers must not be considered as evidence against the offeror: First, since the law favors the settlement of controversies out of court, a person is entitled to "buy his or her peace" without danger of being prejudiced in case his or her efforts fail; hence, any communication made toward that end will be regarded as privileged. Indeed, if every offer to buy peace could be used as evidence against a person who presents it, many settlements would be prevented and unnecessary litigation would result, since no prudent person would dare offer or entertain a compromise if his or her compromise position could be exploited as a confession of weakness. Second, offers for compromise are irrelevant because they are not intended as admissions by the parties making them. A true offer of compromise does not, in legal contemplation, involve an admission on the part of a defendant that he or she is legally liable, or on the part of a plaintiff, that his or her claim is groundless or even doubtful, since it is made with a view to avoid controversy and save the expense of litigation. It is the distinguishing mark of an offer of compromise that it is made tentatively, hypothetically, and in contemplation of mutual concessions. Petitioner further argues that respondent’s Offer of Compromise may be received in evidence as an implied admission of guilt. It quotes Rule 130, Section 27 of the Revised Rules on Evidence, which states:
Sec. 27. Offer of compromise not admissible. – In civil cases, an offer of compromise is not an admission of any liability, and is not admissible in evidence against the offeror.
The Offer of Compromise was clearly not made in the context of a criminal proceeding and, therefore, cannot be considered as an implied admission of guilt.
