G.R. Nos.

L-27860 and L-27896 March 29, 1974

PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the Testate Estate of Charles
Newton Hodges (Sp. Proc. No. 1672 of the Court of First Instance of Iloilo), petitioner,
vs.
THE HONORABLE VENICIO ESCOLIN, Presiding Judge of the Court of First Instance of Iloilo, Branch II,
and AVELINA A. MAGNO, respondents.
G.R. Nos. L-27936 & L-27937 March 29, 1974
TESTATE ESTATE OF THE LATE LINNIE JANE HODGES (Sp. Proc. No. 1307). TESTATE ESTATE OF THE LATE
CHARLES NEWTON HODGES (Sp. Proc. No. 1672). PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK,
administrator-appellant,
vs.
LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR GUZMAN, BELCESAR CAUSING,
FLORENIA BARRIDO, PURIFICACION CORONADO, GRACIANO LUCERO, ARITEO THOMAS JAMIR,
MELQUIADES BATISANAN, PEPITO IYULORES, ESPERIDION PARTISALA, WINIFREDO ESPADA, ROSARIO
ALINGASA, ADELFA PREMAYLON, SANTIAGO PACAONSIS, and AVELINA A. MAGNO, the last as
Administratrix in Sp. Proc. No. 1307, appellees, WESTERN INSTITUTE OF TECHNOLOGY, INC., movantappellee.
Certiorari and prohibition with preliminary injunction; certiorari to "declare all acts of the respondent
court in the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307 of the Court of First Instance of
Iloilo) subsequent to the order of December 14, 1957 as null and void for having been issued without
jurisdiction"; prohibition to enjoin the respondent court from allowing, tolerating, sanctioning, or
abetting private respondent Avelina A. Magno to perform or do any acts of administration, such as those
enumerated in the petition, and from exercising any authority or power as Regular Administratrix of
above-named Testate Estate, by entertaining manifestations, motion and pleadings filed by her and
acting on them, and also to enjoin said court from allowing said private respondent to interfere, meddle
or take part in any manner in the administration of the Testate Estate of Charles Newton Hodges (Sp.
Proc. No. 1672 of the same court and branch); with prayer for preliminary injunction, which was issued
by this Court on August 8, 1967 upon a bond of P5,000; the petition being particularly directed against
the orders of the respondent court of October 12, 1966 denying petitioner's motion of April 22, 1966
and its order of July 18, 1967 denying the motion for reconsideration of said order.
Related to and involving basically the same main issue as the foregoing petition, thirty-three (33)
appeals from different orders of the same respondent court approving or otherwise sanctioning the acts
of administration of the respondent Magno on behalf of the testate Estate of Mrs. Hodges.
THE FACTS
On May 23, 1957, Linnie Jane Hodges died in Iloilo City leaving a will executed on November 22, 1952
pertinently providing as follows:
FIRST: I direct that all my just debts and funeral expenses be first paid out of my estate.

SECOND: I give, devise and bequeath all of the rest, residue and remainder of my estate,
both personal and real, wherever situated, or located, to my beloved husband, Charles
Newton Hodges, to have and to hold unto him, my said husband, during his natural
lifetime.
THIRD: I desire, direct and provide that my husband, Charles Newton Hodges, shall have
the right to manage, control, use and enjoy said estate during his lifetime, and he is
hereby given the right to make any changes in the physical properties of said estate, by
sale or any part thereof which he may think best, and the purchase of any other or
additional property as he may think best; to execute conveyances with or without
general or special warranty, conveying in fee simple or for any other term or time, any
property which he may deem proper to dispose of; to lease any of the real property for
oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee
simple title to the interest so conveyed in such property as he may elect to sell. All rents,
emoluments and income from said estate shall belong to him, and he is further
authorized to use any part of the principal of said estate as he may need or desire. It is
provided herein, however, that he shall not sell or otherwise dispose of any of the
improved property now owned by us located at, in or near the City of Lubbock, Texas,
but he shall have the full right to lease, manage and enjoy the same during his lifetime,
above provided. He shall have the right to subdivide any farm land and sell lots therein.
and may sell unimproved town lots.
FOURTH: At the death of my said husband, Charles Newton Hodges, I give, devise and
bequeath all of the rest, residue and remainder of my estate, both real and personal,
wherever situated or located, to be equally divided among my brothers and sisters,
share and share alike, namely:
Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Saddie Rascoe, Era Roman and
Nimroy Higdon.
FIFTH: In case of the death of any of my brothers and/or sisters named in item Fourth,
above, prior to the death of my husband, Charles Newton Hodges, then it is my will and
bequest that the heirs of such deceased brother or sister shall take jointly the share
which would have gone to such brother or sister had she or he survived.
SIXTH: I nominate and appoint my said husband, Charles Newton Hodges, to be
executor of this, my last will and testament, and direct that no bond or other security be
required of him as such executor.
SEVENTH: It is my will and bequest that no action be had in the probate court, in the
administration of my estate, other than that necessary to prove and record this will and
to return an inventory and appraisement of my estate and list of claims. (Pp. 2-4,
Petition.)
This will was subsequently probated in aforementioned Special Proceedings No. 1307 of respondent
court on June 28, 1957, with the widower Charles Newton Hodges being appointed as Executor,
pursuant to the provisions thereof.
2

Previously, on May 27, 1957, the said widower (hereafter to be referred to as Hodges) had been
appointed Special Administrator, in which capacity he filed a motion on the same date as follows:
URGENT EX-PARTE MOTION TO ALLOW OR AUTHORIZE PETITIONER TO CONTINUE THE
BUSINESS IN WHICH HE WAS ENGAGED AND TO PERFORM ACTS WHICH HE HAD BEEN
DOING WHILE DECEASED WAS LIVING
Come petitioner in the above-entitled special proceedings, thru his undersigned attorneys, to the Hon.
Court, most respectfully states:
1. That Linnie Jane Hodges died leaving her last will and testament, a copy of which is
attached to the petition for probate of the same.
2. That in said last will and testament herein petitioner Charles Newton Hodges is
directed to have the right to manage, control use and enjoy the estate of deceased
Linnie Jane Hodges, in the same way, a provision was placed in paragraph two, the
following: "I give, devise and bequeath all of the rest, residue and remainder of my
estate, to my beloved husband, Charles Newton Hodges, to have and (to) hold unto him,
my said husband, during his natural lifetime."
3. That during the lifetime of Linnie Jane Hodges, herein petitioner was engaged in
the business of buying and selling personal and real properties, and do such acts which
petitioner may think best.
4. That deceased Linnie Jane Hodges died leaving no descendants or ascendants,
except brothers and sisters and herein petitioner as executor surviving spouse, to inherit
the properties of the decedent.
5. That the present motion is submitted in order not to paralyze the business of
petitioner and the deceased, especially in the purchase and sale of properties. That
proper accounting will be had also in all these transactions.
WHEREFORE, it is most respectfully prayed that, petitioner C. N. Hodges (Charles
Newton Hodges) be allowed or authorized to continue the business in which he was
engaged and to perform acts which he had been doing while deceased Linnie Jane
Hodges was living.
City of Iloilo, May 27, 1957. (Annex "D", Petition.)
which the respondent court immediately granted in the following order:
It appearing in the urgent ex-parte motion filed by petitioner C. N. Hodges, that the
business in which said petitioner and the deceased were engaged will be paralyzed,
unless and until the Executor is named and appointed by the Court, the said petitioner is
allowed or authorized to continue the business in which he was engaged and to perform
acts which he had been doing while the deceased was living.

SO ORDERED.
City of Iloilo May 27, 1957. (Annex "E", Petition.)
Under date of December 11, 1957, Hodges filed as such Executor another motion thus:
MOTION TO APPROVE ALL SALES, CONVEYANCES, LEASES, MORTGAGES THAT THE
EXECUTOR HAD MADE FURTHER AND SUBSEQUENT TRANSACTIONS WHICH THE
EXECUTOR MAY DO IN ACCORDANCE WITH THE LAST WISH OF THE DECEASED LINNIE
JANE HODGES.
Comes the Executor in the above-entitled proceedings, thru his undersigned attorney,
to the Hon. Court, most respectfully states:
1. That according to the last will and testament of the deceased Linnie Jane Hodges,
the executor as the surviving spouse and legatee named in the will of the deceased; has
the right to dispose of all the properties left by the deceased, portion of which is quoted
as follows:
Second: I give, devise and bequeath all of the rest, residue and remainder of my estate,
both personal and real, wherever situated, or located, to my beloved husband, Charles
Newton Hodges, to have and to hold unto him, my said husband, during his natural
lifetime.
Third: I desire, direct and provide that my husband, Charles Newton Hodges, shall have
the right to manage, control, use and enjoy said estate during his lifetime, and he is
hereby given the right to make any changes in the physical properties of said estate, by
sale or any part thereof which he may think best, and the purchase of any other or
additional property as he may think best; to execute conveyances with or without
general or special warranty, conveying in fee simple or for any other term or time, any
property which he may deem proper to dispose of; to lease any of the real property for
oil, gas and/or other minerals, and all such deeds or leases shall pass the absolute fee
simple title to the interest so conveyed in such property as he may elect to sell. All rents,
emoluments and income from said estate shall belong to him, and he is further
authorized to use any part of the principal of said estate as he may need or desire. ...
2. That herein Executor, is not only part owner of the properties left as conjugal, but
also, the successor to all the properties left by the deceased Linnie Jane Hodges. That
during the lifetime of herein Executor, as Legatee has the right to sell, convey, lease or
dispose of the properties in the Philippines. That inasmuch as C.N. Hodges was and is
engaged in the buy and sell of real and personal properties, even before the death of
Linnie Jane Hodges, a motion to authorize said C.N. Hodges was filed in Court, to allow
him to continue in the business of buy and sell, which motion was favorably granted by
the Honorable Court.

3. That since the death of Linnie Jane Hodges, Mr. C.N. Hodges had been buying and
selling real and personal properties, in accordance with the wishes of the late Linnie
Jane Hodges.
4. That the Register of Deeds for Iloilo, had required of late the herein Executor to
have all the sales, leases, conveyances or mortgages made by him, approved by the
Hon. Court.
5. That it is respectfully requested, all the sales, conveyances leases and mortgages
executed by the Executor, be approved by the Hon. Court. and subsequent sales
conveyances, leases and mortgages in compliances with the wishes of the late Linnie
Jane Hodges, and within the scope of the terms of the last will and testament, also be
approved;
6. That the Executor is under obligation to submit his yearly accounts, and the
properties conveyed can also be accounted for, especially the amounts received.
WHEREFORE, it is most respectfully prayed that, all the sales, conveyances, leases, and
mortgages executed by the Executor, be approved by the Hon. Court, and also the
subsequent sales, conveyances, leases, and mortgages in consonance with the wishes of
the deceased contained in her last will and testament, be with authorization and
approval of the Hon. Court.
City of Iloilo, December 11, 1967.
(Annex "G", Petition.)
which again was promptly granted by the respondent court on December 14, 1957 as follows:
ORDER
As prayed for by Attorney Gellada, counsel for the Executor for the reasons stated in his
motion dated December 11, 1957, which the Court considers well taken all the sales,
conveyances, leases and mortgages of all properties left by the deceased Linnie Jane
Hodges executed by the Executor Charles N. Hodges are hereby APPROVED. The said
Executor is further authorized to execute subsequent sales, conveyances, leases and
mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance
with the wishes conveyed in the last will and testament of the latter.
So ordered.
Iloilo City. December 14, 1957.
(Annex "H", Petition.)
On April 14, 1959, in submitting his first statement of account as Executor for approval, Hodges alleged:

Pursuant to the provisions of the Rules of Court, herein executor of the deceased,
renders the following account of his administration covering the period from January 1,
1958 to December 31, 1958, which account may be found in detail in the individual
income tax return filed for the estate of deceased Linnie Jane Hodges, to wit:
That a certified public accountant has examined the statement of net worth of the
estate of Linnie Jane Hodges, the assets and liabilities, as well as the income and
expenses, copy of which is hereto attached and made integral part of this statement of
account as Annex "A".
IN VIEW OF THE FOREGOING, it is most respectfully prayed that, the statement of net
worth of the estate of Linnie Jane Hodges, the assets and liabilities, income and
expenses as shown in the individual income tax return for the estate of the deceased
and marked as Annex "A", be approved by the Honorable Court, as substantial
compliance with the requirements of the Rules of Court.
That no person interested in the Philippines of the time and place of examining the
herein accounts be given notice, as herein executor is the only devisee or legatee of the
deceased, in accordance with the last will and testament already probated by the
Honorable court.
City of Iloilo April 14, 1959.
(Annex "I", Petition.)
The respondent court approved this statement of account on April 21, 1959 in its order worded thus:
Upon petition of Atty. Gellada, in representation of the Executor, the statement of net
worth of the estate of Linnie Jane Hodges, assets and liabilities, income and expenses as
shown in the individual income tax return for the estate of the deceased and marked as
Annex "A" is approved.
SO ORDERED.
City of Iloilo April 21, 1959.
(Annex "J", Petition.)
His accounts for the periods January 1, 1959 to December 31, 1959 and January 1, 1960 to December
31, 1960 were submitted likewise accompanied by allegations identical mutatis mutandis to those of
April 14, 1959, quoted above; and the respective orders approving the same, dated July 30, 1960 and
May 2, 1961, were substantially identical to the above-quoted order of April 21, 1959. In connection
with the statements of account just mentioned, the following assertions related thereto made by
respondent-appellee Magno in her brief do not appear from all indications discernible in the record to
be disputable:

Under date of April 14, 1959, C.N. Hodges filed his first "Account by the Executor" of the
estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C.N. Hodges and the
Estate of Linnie Jane Hodges" as of December 31, 1958 annexed thereto, C.N. Hodges
reported that the combined conjugal estate earned a net income of P328,402.62,
divided evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he
filed an "individual income tax return" for calendar year 1958 on the estate of Linnie
Jane Hodges reporting, under oath, the said estate as having earned income of
P164,201.31, exactly one-half of the net income of his combined personal assets and
that of the estate of Linnie Jane Hodges. (p. 91, Appellee's Brief.)
xxx xxx xxx
Under date of July 21, 1960, C.N. Hodges filed his second "Annual Statement of Account
by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of
Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1959
annexed thereto, C.N. Hodges reported that the combined conjugal estate earned a net
income of P270,623.32, divided evenly between him and the estate of Linnie Jane
Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year
1959 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as
having earned income of P135,311.66, exactly one-half of the net income of his
combined personal assets and that of the estate of Linnie Jane Hodges. (pp. 91-92.
Appellee's Brief.)
xxx xxx xxx
Under date of April 20, 1961, C.N. Hodges filed his third "Annual Statement of Account
by the Executor for the Year 1960" of the estate of Linnie Jane Hodges. In the
"Statement of Net Worth of Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of
December 31, 1960 annexed thereto, C.N. Hodges reported that the combined conjugal
estate earned a net income of P314,857.94, divided evenly between him and the estate
of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return" for
calendar year 1960 on the estate of Linnie Jane Hodges reporting, under oath, the said
estate as having earned income of P157,428.97, exactly one-half of the net income of
his combined personal assets and that of the estate of Linnie Jane Hodges. (Pp. 92-93,
Appellee's Brief.)
Likewise the following:
In the petition for probate that he (Hodges) filed, he listed the seven brothers and
sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court
admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon (see p.
14, Green ROA). Immediately, C.N. Hodges filed a verified motion to have Roy Higdon's
name included as an heir, stating that he wanted to straighten the records "in order the
heirs of deceased Roy Higdon may not think or believe they were omitted, and that they
were really and are interested in the estate of deceased Linnie Jane Hodges. .

As an executor, he was bound to file tax returns for the estate he was administering
under American law. He did file such as estate tax return on August 8, 1958. In Schedule
"M" of such return, he answered "Yes" to the question as to whether he was
contemplating "renouncing the will". On the question as to what property interests
passed to him as the surviving spouse, he answered:
"None, except for purposes of administering the Estate, paying debts,
taxes and other legal charges. It is the intention of the surviving
husband of deceased to distribute the remaining property and interests
of the deceased in their Community estate to the devisees and legatees
named in the will when the debts, liabilities, taxes and expenses of
administration are finally determined and paid."
Again, on August 9, 1962, barely four months before his death, he executed an
"affidavit" wherein he ratified and confirmed all that he stated in Schedule "M" of his
estate tax returns as to his having renounced what was given him by his wife's will. 1
As appointed executor, C.N. Hodges filed an "Inventory" dated May 12, 1958. He listed
all the assets of his conjugal partnership with Linnie Jane Hodges on a separate balance
sheet and then stated expressly that her estate which has come into his possession as
executor was "one-half of all the items" listed in said balance sheet. (Pp. 89-90,
Appellee's Brief.)
Parenthetically, it may be stated, at this juncture, that We are taking pains to quote wholly or at least,
extensively from some of the pleadings and orders whenever We feel that it is necessary to do so for a
more comprehensive and clearer view of the important and decisive issues raised by the parties and a
more accurate appraisal of their respective positions in regard thereto.
The records of these cases do not show that anything else was done in the above-mentioned Special
Proceedings No. 1307 until December 26, 1962, when on account of the death of Hodges the day
before, the same lawyer, Atty. Leon P. Gellada, who had been previously acting as counsel for Hodges in
his capacity as Executor of his wife's estate, and as such had filed the aforequoted motions and
manifestations, filed the following:
URGENT
EX-PARTE
MOTION
SPECIAL ADMINISTRATRIX

FOR

THE

APPOINTMENT

OF

COMES the undersigned attorney for the Executor in the above-entitled proceedings, to
the Honorable Court, most respectfully states:
1. That in accordance with the Last Will and Testament of Linnie Jane Hodges
(deceased), her husband, Charles Newton Hodges was to act as Executor, and in fact, in
an order issued by this Hon. Court dated June 28, 1957, the said Charles Newton Hodges
was appointed Executor and had performed the duties as such.
2. That last December 22, 1962, the said Charles Newton Hodges was stricken ill, and
brought to the Iloilo Mission Hospital for treatment, but unfortunately, he died on
8

December 25, 1962, as shown by a copy of the death certificate hereto attached and
marked as Annex "A".
3. That in accordance with the provisions of the last will and testament of Linnie Jane
Hodges, whatever real and personal properties that may remain at the death of her
husband Charles Newton Hodges, the said properties shall be equally divided among
their heirs. That there are real and personal properties left by Charles Newton Hodges,
which need to be administered and taken care of.
4. That the estate of deceased Linnie Jane Hodges, as well as that of Charles Newton
Hodges, have not as yet been determined or ascertained, and there is necessity for the
appointment of a general administrator to liquidate and distribute the residue of the
estate to the heirs and legatees of both spouses. That in accordance with the provisions
of Section 2 of Rule 75 of the Rules of Court, the conjugal partnership of Linnie Jane
Hodges and Charles Newton Hodges shall be liquidated in the testate proceedings of the
wife.
5. That the undersigned counsel, has perfect personal knowledge of the existence of the
last will and testament of Charles Newton Hodges, with similar provisions as that
contained in the last will and testament of Linnie Jane Hodges. However, said last will
and testament of Charles Newton Hodges is kept inside the vault or iron safe in his
office, and will be presented in due time before this honorable Court.
6. That in the meantime, it is imperative and indispensable that, an Administratrix be
appointed for the estate of Linnie Jane Hodges and a Special Administratrix for the
estate of Charles Newton Hodges, to perform the duties required by law, to administer,
collect, and take charge of the goods, chattels, rights, credits, and estate of both
spouses, Charles Newton Hodges and Linnie Jane Hodges, as provided for in Section 1
and 2, Rule 81 of the Rules of Court.
7. That there is delay in granting letters testamentary or of administration, because the
last will and testament of deceased, Charles Newton Hodges, is still kept in his safe or
vault, and in the meantime, unless an administratrix (and,) at the same time, a Special
Administratrix is appointed, the estate of both spouses are in danger of being lost,
damaged or go to waste.
8. That the most trusted employee of both spouses Linnie Jane Hodges and C.N. Hodges,
who had been employed for around thirty (30) years, in the person of Miss Avelina
Magno, (should) be appointed Administratrix of the estate of Linnie Jane Hodges and at
the same time Special Administratrix of the estate of Charles Newton Hodges. That the
said Miss Avelina Magno is of legal age, a resident of the Philippines, the most fit,
competent, trustworthy and well-qualified person to serve the duties of Administratrix
and Special Administratrix and is willing to act as such.
9. That Miss Avelina Magno is also willing to file bond in such sum which the Hon. Court
believes reasonable.

WHEREFORE, in view of all the foregoing, it is most respectfully prayed that, Miss
AVELINA A. MAGNO be immediately appointed Administratrix of the estate of Linnie
Jane Hodges and as Special Administratrix of the estate of Charles Newton Hodges, with
powers and duties provided for by law. That the Honorable Court fix the reasonable
bond of P1,000.00 to be filed by Avelina A. Magno.
(Annex "O", Petition.)
which respondent court readily acted on in its order of even date thus: .
For the reasons alleged in the Urgent Ex-parte Motion filed by counsel for the Executor
dated December 25, 1962, which the Court finds meritorious, Miss AVELINA A. MAGNO,
is hereby appointed Administratrix of the estate of Linnie Jane Hodges and as Special
Administratrix of the estate of Charles Newton Hodges, in the latter case, because the
last will of said Charles Newton Hodges is still kept in his vault or iron safe and that the
real and personal properties of both spouses may be lost, damaged or go to waste,
unless a Special Administratrix is appointed.
Miss Avelina A. Magno is required to file bond in the sum of FIVE THOUSAND PESOS
(P5,000.00), and after having done so, let letters of Administration be issued to her."
(Annex "P", Petition.)
On December 29, 1962, however, upon urgent ex-parte petition of respondent Magno
herself, thru Atty. Gellada, Harold, R. Davies, "a representative of the heirs of deceased
Charles Newton Hodges (who had) arrived from the United States of America to help in
the administration of the estate of said deceased" was appointed as Co-Special
Administrator of the estate of Hodges, (pp. 29-33, Yellow - Record on Appeal) only to be
replaced as such co-special administrator on January 22, 1963 by Joe Hodges, who,
according to the motion of the same attorney, is "the nephew of the deceased (who
had) arrived from the United States with instructions from the other heirs of the
deceased to administer the properties or estate of Charles Newton Hodges in the
Philippines, (Pp. 47-50, id.)
Meanwhile, under date of January 9, 1963, the same Atty. Gellada filed in Special Proceedings 1672 a
petition for the probate of the will of Hodges, 2 with a prayer for the issuance of letters of administration
to the same Joe Hodges, albeit the motion was followed on February 22, 1963 by a separate one asking
that Atty. Fernando Mirasol be appointed as his co-administrator. On the same date this latter motion
was filed, the court issued the corresponding order of probate and letters of administration to Joe
Hodges and Atty. Mirasol, as prayed for.
At this juncture, again, it may also be explained that just as, in her will, Mrs. Hodges bequeathed her
whole estate to her husband "to have and to hold unto him, my said husband, during his natural
lifetime", she, at the same time or in like manner, provided that "at the death of my said husband I
give devise and bequeath all of the rest, residue and remainder of my estate, both real and personal,
wherever situated or located, to be equally divided among my brothers and sisters, share and share
alike ". Accordingly, it became incumbent upon Hodges, as executor of his wife's will, to duly liquidate
the conjugal partnership, half of which constituted her estate, in order that upon the eventuality of his
10

death, "the rest, residue and remainder" thereof could be determined and correspondingly distributed
or divided among her brothers and sisters. And it was precisely because no such liquidation was done,
furthermore, there is the issue of whether the distribution of her estate should be governed by the laws
of the Philippines or those of Texas, of which State she was a national, and, what is more, as already
stated, Hodges made official and sworn statements or manifestations indicating that as far as he was
concerned no "property interests passed to him as surviving spouse "except for purposes of
administering the estate, paying debts, taxes and other legal charges" and it was the intention of the
surviving husband of the deceased to distribute the remaining property and interests of the deceased in
their Community Estate to the devisees and legatees named in the will when the debts, liabilities, taxes
and expenses of administration are finally determined and paid", that the incidents and controversies
now before Us for resolution arose. As may be observed, the situation that ensued upon the death of
Hodges became rather unusual and so, quite understandably, the lower court's actuations presently
under review are apparently wanting in consistency and seemingly lack proper orientation.
Thus, We cannot discern clearly from the record before Us the precise perspective from which the trial
court proceeded in issuing its questioned orders. And, regretably, none of the lengthy briefs submitted
by the parties is of valuable assistance in clearing up the matter.
To begin with, We gather from the two records on appeal filed by petitioner, as appellant in the
appealed cases, one with green cover and the other with a yellow cover, that at the outset, a sort of
modus operandi had been agreed upon by the parties under which the respective administrators of the
two estates were supposed to act conjointly, but since no copy of the said agreement can be found in
the record before Us, We have no way of knowing when exactly such agreement was entered into and
under what specific terms. And while reference is made to said modus operandi in the order of
September 11, 1964, on pages 205-206 of the Green Record on Appeal, reading thus:
The present incident is to hear the side of administratrix, Miss Avelina A. Magno, in
answer to the charges contained in the motion filed by Atty. Cesar Tirol on September 3,
1964. In answer to the said charges, Miss Avelina A. Magno, through her counsel, Atty.
Rizal Quimpo, filed a written manifestation.
After reading the manifestation here of Atty. Quimpo, for and in behalf of the
administratrix, Miss Avelina A. Magno, the Court finds that everything that happened
before September 3, 1964, which was resolved on September 8, 1964, to the
satisfaction of parties, was simply due to a misunderstanding between the
representative of the Philippine Commercial and Industrial Bank and Miss Magno and in
order to restore the harmonious relations between the parties, the Court ordered the
parties to remain in status quo as to their modus operandi before September 1, 1964,
until after the Court can have a meeting with all the parties and their counsels on
October 3, as formerly agreed upon between counsels, Attys. Ozaeta, Gibbs and Ozaeta,
Attys. Tirol and Tirol and Atty. Rizal Quimpo.
In the meantime, the prayers of Atty. Quimpo as stated in his manifestation shall not be
resolved by this Court until October 3, 1964.
SO ORDERED.

11

there is nothing in the record indicating whatever happened to it afterwards, except that again,
reference thereto was made in the appealed order of October 27, 1965, on pages 292-295 of the Green
Record on Appeal, as follows:
On record is an urgent motion to allow PCIB to open all doors and locks in the Hodges
Office at 206-208 Guanco Street, Iloilo City, to take immediate and exclusive possession
thereof and to place its own locks and keys for security purposes of the PCIB dated
October 27, 1965 thru Atty. Cesar Tirol. It is alleged in said urgent motion that
Administratrix Magno of the testate estate of Linnie Jane Hodges refused to open the
Hodges Office at 206-208 Guanco Street, Iloilo City where PCIB holds office and
therefore PCIB is suffering great moral damage and prejudice as a result of said act. It is
prayed that an order be issued authorizing it (PCIB) to open all doors and locks in the
said office, to take immediate and exclusive possession thereof and place thereon its
own locks and keys for security purposes; instructing the clerk of court or any available
deputy to witness and supervise the opening of all doors and locks and taking
possession of the PCIB.
A written opposition has been filed by Administratrix Magno of even date (Oct. 27) thru
counsel Rizal Quimpo stating therein that she was compelled to close the office for the
reason that the PCIB failed to comply with the order of this Court signed by Judge
Anacleto I. Bellosillo dated September 11, 1964 to the effect that both estates should
remain in status quo to their modus operandi as of September 1, 1964.
To arrive at a happy solution of the dispute and in order not to interrupt the operation
of the office of both estates, the Court aside from the reasons stated in the urgent
motion and opposition heard the verbal arguments of Atty. Cesar Tirol for the PCIB and
Atty. Rizal Quimpo for Administratix Magno.
After due consideration, the Court hereby orders Magno to open all doors and locks in
the Hodges Office at 206-208 Guanco Street, Iloilo City in the presence of the PCIB or its
duly authorized representative and deputy clerk of court Albis of this branch not later
than 7:30 tomorrow morning October 28, 1965 in order that the office of said estates
could operate for business.
Pursuant to the order of this Court thru Judge Bellosillo dated September 11, 1964, it is
hereby ordered:
(a) That all cash collections should be deposited in the joint account of the estates of
Linnie Jane Hodges and estates of C.N. Hodges;
(b) That whatever cash collections that had been deposited in the account of either of
the estates should be withdrawn and since then deposited in the joint account of the
estate of Linnie Jane Hodges and the estate of C.N. Hodges;
(c) That the PCIB should countersign the check in the amount of P250 in favor of
Administratrix Avelina A. Magno as her compensation as administratrix of the Linnie
Jane Hodges estate chargeable to the testate estate of Linnie Jane Hodges only;
12

(d) That Administratrix Magno is hereby directed to allow the PCIB to inspect whatever
records, documents and papers she may have in her possession in the same manner
that Administrator PCIB is also directed to allow Administratrix Magno to inspect
whatever records, documents and papers it may have in its possession;
(e) That the accountant of the estate of Linnie Jane Hodges shall have access to all
records of the transactions of both estates for the protection of the estate of Linnie Jane
Hodges; and in like manner the accountant or any authorized representative of the
estate of C.N. Hodges shall have access to the records of transactions of the Linnie Jane
Hodges estate for the protection of the estate of C.N. Hodges.
Once the estates' office shall have been opened by Administratrix Magno in the
presence of the PCIB or its duly authorized representative and deputy clerk Albis or his
duly authorized representative, both estates or any of the estates should not close it
without previous consent and authority from this court.
SO ORDERED.
As may be noted, in this order, the respondent court required that all collections from the properties in
the name of Hodges should be deposited in a joint account of the two estates, which indicates that
seemingly the so-called modus operandi was no longer operative, but again there is nothing to show
when this situation started.
Likewise, in paragraph 3 of the petitioner's motion of September 14, 1964, on pages 188-201 of the
Green Record on Appeal, (also found on pp. 83-91 of the Yellow Record on Appeal) it is alleged that:
3. On January 24, 1964 virtually all of the heirs of C.N. Hodges, Joe Hodges and Fernando
P. Mirasol acting as the two co-administrators of the estate of C.N. Hodges, Avelina A.
Magno acting as the administratrix of the estate of Linnie Jane Hodges and Messrs.
William Brown and Ardell Young acting for all of the Higdon family who claim to be the
sole beneficiaries of the estate of Linnie Jane Hodges and various legal counsel
representing the aforementioned parties entered into an amicable agreement, which
was approved by this Honorable Court, wherein the parties thereto agreed that certain
sums of money were to be paid in settlement of different claims against the two estates
and that the assets (to the extent they existed) of both estates would be administered
jointly by the PCIB as administrator of the estate of C.N. Hodges and Avelina A. Magno
as administratrix of the estate of Linnie Jane Hodges, subject, however, to the aforesaid
October 5, 1963 Motion, namely, the PCIB's claim to exclusive possession and
ownership of one hundred percent (100%) (or, in the alternative, seventy-five percent
(75%) of all assets owned by C.N. Hodges or Linnie Jane Hodges situated in the
Philippines. On February 1, 1964 (pp. 934-935, CFI Rec., S.P. No. 1672) this Honorable
Court amended its order of January 24, 1964 but in no way changed its recognition of
the afore-described basic demand by the PCIB as administrator of the estate of C.N.
Hodges to one hundred percent (100%) of the assets claimed by both estates.

13

but no copy of the mentioned agreement of joint administration of the two estates exists in the record,
and so, We are not informed as to what exactly are the terms of the same which could be relevant in the
resolution of the issues herein.
On the other hand, the appealed order of November 3, 1965, on pages 313-320 of the Green Record on
Appeal, authorized payment by respondent Magno of, inter alia, her own fees as administratrix, the
attorney's fees of her lawyers, etc., as follows:
Administratrix Magno thru Attys. Raul S. Manglapus and Rizal. R. Quimpo filed a
Manifestation and Urgent Motion dated June 10, 1964 asking for the approval of the
Agreement dated June 6, 1964 which Agreement is for the purpose of retaining their
services to protect and defend the interest of the said Administratrix in these
proceedings and the same has been signed by and bears the express conformity of the
attorney-in-fact of the late Linnie Jane Hodges, Mr. James L. Sullivan. It is further prayed
that the Administratrix of the Testate Estate of Linnie Jane Hodges be directed to pay
the retailers fee of said lawyers, said fees made chargeable as expenses for the
administration of the estate of Linnie Jane Hodges (pp. 1641-1642, Vol. V, Sp. 1307).
An opposition has been filed by the Administrator PCIB thru Atty. Herminio Ozaeta
dated July 11, 1964, on the ground that payment of the retainers fee of Attys.
Manglapus and Quimpo as prayed for in said Manifestation and Urgent Motion is
prejudicial to the 100% claim of the estate of C. N. Hodges; employment of Attys.
Manglapus and Quimpo is premature and/or unnecessary; Attys. Quimpo and
Manglapus are representing conflicting interests and the estate of Linnie Jane Hodges
should be closed and terminated (pp. 1679-1684, Vol, V, Sp. 1307).
Atty. Leon P. Gellada filed a memorandum dated July 28, 1964 asking that the
Manifestation and Urgent Motion filed by Attys. Manglapus and Quimpo be denied
because no evidence has been presented in support thereof. Atty. Manglapus filed a
reply to the opposition of counsel for the Administrator of the C. N. Hodges estate
wherein it is claimed that expenses of administration include reasonable counsel or
attorney's fees for services to the executor or administrator. As a matter of fact the fee
agreement dated February 27, 1964 between the PCIB and the law firm of Ozaeta, Gibbs
& Ozaeta as its counsel (Pp. 1280-1284, Vol. V, Sp. 1307) which stipulates the fees for
said law firm has been approved by the Court in its order dated March 31, 1964. If
payment of the fees of the lawyers for the administratrix of the estate of Linnie Jane
Hodges will cause prejudice to the estate of C. N. Hodges, in like manner the very
agreement which provides for the payment of attorney's fees to the counsel for the
PCIB will also be prejudicial to the estate of Linnie Jane Hodges (pp. 1801-1814, Vol. V,
Sp. 1307).
Atty. Herminio Ozaeta filed a rejoinder dated August 10, 1964 to the reply to the
opposition to the Manifestation and Urgent Motion alleging principally that the estates
of Linnie Jane Hodges and C. N. Hodges are not similarly situated for the reason that C.
N. Hodges is an heir of Linnie Jane Hodges whereas the latter is not an heir of the
former for the reason that Linnie Jane Hodges predeceased C. N. Hodges (pp. 18391848, Vol. V, Sp. 1307); that Attys. Manglapus and Quimpo formally entered their
14

appearance in behalf of Administratrix of the estate of Linnie Jane Hodges on June 10,
1964 (pp. 1639-1640, Vol. V, Sp. 1307).
Atty. Manglapus filed a manifestation dated December 18, 1964 stating therein that
Judge Bellosillo issued an order requiring the parties to submit memorandum in support
of their respective contentions. It is prayed in this manifestation that the Manifestation
and Urgent Motion dated June 10, 1964 be resolved (pp. 6435-6439, Vol. VII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a counter- manifestation dated January 5,
1965 asking that after the consideration by the court of all allegations and arguments
and pleadings of the PCIB in connection therewith (1) said manifestation and urgent
motion of Attys. Manglapus and Quimpo be denied (pp. 6442-6453, Vol. VII, Sp. 1307).
Judge Querubin issued an order dated January 4, 1965 approving the motion dated June
10, 1964 of the attorneys for the administratrix of the estate of Linnie Jane Hodges and
agreement annexed to said motion. The said order further states: "The Administratrix of
the estate of Linnie Jane Hodges is authorized to issue or sign whatever check or checks
may be necessary for the above purpose and the administrator of the estate of C. N.
Hodges is ordered to countersign the same. (pp. 6518-6523, Vol VII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a manifestation and motion dated January
13, 1965 asking that the order of January 4, 1965 which was issued by Judge Querubin
be declared null and void and to enjoin the clerk of court and the administratrix and
administrator in these special proceedings from all proceedings and action to enforce or
comply with the provision of the aforesaid order of January 4, 1965. In support of said
manifestation and motion it is alleged that the order of January 4, 1965 is null and void
because the said order was never delivered to the deputy clerk Albis of Branch V (the
sala of Judge Querubin) and the alleged order was found in the drawer of the late Judge
Querubin in his office when said drawer was opened on January 13, 1965 after the
death of Judge Querubin by Perfecto Querubin, Jr., the son of the judge and in the
presence of Executive Judge Rovira and deputy clerk Albis (Sec. 1, Rule 36, New Civil
Code) (Pp. 6600-6606, Vol. VIII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a motion for reconsideration dated February
23, 1965 asking that the order dated January 4, 1964 be reversed on the ground that:
1. Attorneys retained must render services to the estate not to the personal heir;
2. If services are rendered to both, fees should be pro-rated between them;
3. Attorneys retained should not represent conflicting interests; to the prejudice of the
other heirs not represented by said attorneys;
4. Fees must be commensurate to the actual services rendered to the estate;
5. There must be assets in the estate to pay for said fees (Pp. 6625-6636, Vol. VIII, Sp.
1307).

15

Atty. Quimpo for Administratrix Magno of the estate of Linnie Jane Hodges filed a
motion to submit dated July 15, 1965 asking that the manifestation and urgent motion
dated June 10, 1964 filed by Attys. Manglapus and Quimpo and other incidents directly
appertaining thereto be considered submitted for consideration and approval (pp. 67596765, Vol. VIII, Sp. 1307).
Considering the arguments and reasons in support to the pleadings of both the
Administratrix and the PCIB, and of Atty. Gellada, hereinbefore mentioned, the Court
believes that the order of January 4, 1965 is null and void for the reason that the said
order has not been filed with deputy clerk Albis of this court (Branch V) during the
lifetime of Judge Querubin who signed the said order. However, the said manifestation
and urgent motion dated June 10, 1964 is being treated and considered in this instant
order. It is worthy to note that in the motion dated January 24, 1964 (Pp. 1149- 1163,
Vol. V, Sp. 1307) which has been filed by Atty. Gellada and his associates and Atty. Gibbs
and other lawyers in addition to the stipulated fees for actual services rendered.
However, the fee agreement dated February 27, 1964, between the Administrator of
the estate of C. N. Hodges and Atty. Gibbs which provides for retainer fee of P4,000
monthly in addition to specific fees for actual appearances, reimbursement for
expenditures and contingent fees has also been approved by the Court and said lawyers
have already been paid. (pp. 1273-1279, Vol. V, Sp. Proc. 1307 pp. 1372-1373, Vol. V, Sp.
Proc. 1307).
WHEREFORE, the order dated January 4, 1965 is hereby declared null and void.
The manifestation and motion dated June 10, 1964 which was filed by the attorneys for
the administratrix of the testate estate of Linnie Jane Hodges is granted and the
agreement annexed thereto is hereby approved.
The administratrix of the estate of Linnie Jane Hodges is hereby directed to be needed
to implement the approval of the agreement annexed to the motion and the
administrator of the estate of C. N. Hodges is directed to countersign the said check or
checks as the case may be.
SO ORDERED.
thereby implying somehow that the court assumed the existence of independent but simultaneous
administrations.
Be that as it may, again, it appears that on August 6, 1965, the court, acting on a motion of petitioner for
the approval of deeds of sale executed by it as administrator of the estate of Hodges, issued the
following order, also on appeal herein:
Acting upon the motion for approval of deeds of sale for registered land of the PCIB,
Administrator of the Testate Estate of C. N. Hodges in Sp. Proc. 1672 (Vol. VII, pp. 22442245), dated July 16, 1965, filed by Atty. Cesar T. Tirol in representation of the law firms
of Ozaeta, Gibbs and Ozaeta and Tirol and Tirol and the opposition thereto of Atty. Rizal
R. Quimpo (Vol. VIII, pp. 6811-6813) dated July 22, 1965 and considering the allegations
16

and reasons therein stated, the court believes that the deeds of sale should be signed
jointly by the PCIB, Administrator of the Testate Estate of C. N. Hodges and Avelina A.
Magno, Administratrix of the Testate Estate of Linnie Jane Hodges and to this effect the
PCIB should take the necessary steps so that Administratrix Avelina A. Magno could sign
the deeds of sale.
SO ORDERED. (p. 248, Green Record on Appeal.)
Notably this order required that even the deeds executed by petitioner, as administrator of the Estate of
Hodges, involving properties registered in his name, should be co-signed by respondent Magno. 3 And
this was not an isolated instance.
In her brief as appellee, respondent Magno states:
After the lower court had authorized appellee Avelina A. Magno to execute final deeds
of sale pursuant to contracts to sell executed by C. N. Hodges on February 20, 1963 (pp.
45-46, Green ROA), motions for the approval of final deeds of sale (signed by appellee
Avelina A. Magno and the administrator of the estate of C. N. Hodges, first Joe Hodges,
then Atty. Fernando Mirasol and later the appellant) were approved by the lower court
upon petition of appellee Magno's counsel, Atty. Leon P. Gellada, on the basis of section
8 of Rule 89 of the Revised Rules of Court. Subsequently, the appellant, after it had
taken over the bulk of the assets of the two estates, started presenting these motions
itself. The first such attempt was a "Motion for Approval of Deeds of Sale for Registered
Land and Cancellations of Mortgages" dated July 21, 1964 filed by Atty. Cesar T. Tirol,
counsel for the appellant, thereto annexing two (2) final deeds of sale and two (2)
cancellations of mortgages signed by appellee Avelina A. Magno and D. R. Paulino,
Assistant Vice-President and Manager of the appellant (CFI Record, Sp. Proc. No. 1307,
Vol. V, pp. 1694-1701). This motion was approved by the lower court on July 27, 1964. It
was followed by another motion dated August 4, 1964 for the approval of one final deed
of sale again signed by appellee Avelina A. Magno and D. R. Paulino (CFI Record, Sp.
Proc. No. 1307. Vol. V, pp. 1825-1828), which was again approved by the lower court on
August 7, 1964. The gates having been opened, a flood ensued: the appellant
subsequently filed similar motions for the approval of a multitude of deeds of sales and
cancellations of mortgages signed by both the appellee Avelina A. Magno and the
appellant.
A random check of the records of Special Proceeding No. 1307 alone will show Atty.
Cesar T. Tirol as having presented for court approval deeds of sale of real properties
signed by both appellee Avelina A. Magno and D. R. Paulino in the following numbers:
(a) motion dated September 21, 1964 6 deeds of sale; (b) motion dated November 4,
1964 1 deed of sale; (c) motion dated December 1, 1964 4 deeds of sale; (d)
motion dated February 3, 1965 8 deeds of sale; (f) motion dated May 7, 1965 9
deeds of sale. In view of the very extensive landholdings of the Hodges spouses and the
many motions filed concerning deeds of sale of real properties executed by C. N. Hodges
the lower court has had to constitute special separate expedientes in Special
Proceedings Nos. 1307 and 1672 to include mere motions for the approval of deeds of
sale of the conjugal properties of the Hodges spouses.
17

As an example, from among the very many, under date of February 3, 1965, Atty. Cesar
T. Tirol, as counsel for the appellant, filed "Motion for Approval of Deeds of Sale for
Registered Land and Cancellations of Mortgages" (CFI Record, Sp. Proc. No. 1307, Vol.
VIII, pp. 6570-6596) the allegations of which read:
"1. In his lifetime, the late C. N. Hodges executed "Contracts to Sell" real property, and
the prospective buyers under said contracts have already paid the price and complied
with the terms and conditions thereof;
"2. In the course of administration of both estates, mortgage debtors have already paid
their debts secured by chattel mortgages in favor of the late C. N. Hodges, and are now
entitled to release therefrom;
"3. There are attached hereto documents executed jointly by the Administratrix in Sp.
Proc. No. 1307 and the Administrator in Sp. Proc. No. 1672, consisting of deeds of sale in
favor
Fernando
Cano,
Bacolod
City,
Occ.
Fe
Magbanua,
Iloilo
Policarpio
M.
Pareno,
La
Paz,
Iloilo
Rosario
T.
Libre,
Jaro,
Iloilo
Federico
B.
Torres,
Iloilo
Reynaldo
T.
Lataquin,
La
Paz,
Iloilo
Anatolio
T.
Viray,
Iloilo
Benjamin Rolando, Jaro, Iloilo City

Negros
City
City
City
City
City
City

and cancellations of mortgages in favor of

Pablo
Manzano,
Oton,
Ricardo
M.
Diana,
Dao,
San
Jose,
Simplicio
Tingson,
Iloilo
Amado
Magbanua,
Pototan,
Roselia
M.
Baes,
Bolo,
Roxas
William
Bayani,
Rizal
Estanzuela,
Iloilo
Elpidio
Villarete,
Molo,
Iloilo
Norma T. Ruiz, Jaro, Iloilo City

Iloilo
Antique
City
Iloilo
City
City
City

"4. That the approval of the aforesaid documents will not reduce the
assets of the estates so as to prevent any creditor from receiving his full
debt or diminish his dividend."
And the prayer of this motion is indeed very revealing:
"WHEREFORE, it is respectfully prayed that, under Rule 89, Section 8 of the Rules of
Court, this honorable court approve the aforesaid deeds of sale and cancellations of
mortgages." (Pp. 113-117, Appellee's Brief.)

18

None of these assertions is denied in Petitioner's reply brief.

Further indicating lack of concrete perspective or orientation on the part of the respondent court and its
hesitancy to clear up matters promptly, in its other appealed order of November 23, 1965, on pages
334-335 of the Green Record on Appeal, said respondent court allowed the movant Ricardo Salas,
President of appellee Western Institute of Technology (successor of Panay Educational Institutions, Inc.),
one of the parties with whom Hodges had contracts that are in question in the appeals herein, to pay
petitioner, as Administrator of the estate of Hodges and/or respondent Magno, as Administrator of the
estate of Mrs. Hodges, thus:
Considering that in both cases there is as yet no judicial declaration of heirs nor
distribution of properties to whomsoever are entitled thereto, the Court believes that
payment to both the administrator of the testate estate of C. N. Hodges and the
administratrix of the testate estate of Linnie Jane Hodges or to either one of the two
estates is proper and legal.
WHEREFORE, movant Ricardo T. Salas can pay to both estates or either of them.
SO ORDERED.
(Pp. 334-335, Green Record on Appeal.)
On the other hand, as stated earlier, there were instances when respondent Magno was given authority
to act alone. For instance, in the other appealed order of December 19, 1964, on page 221 of the Green
Record on Appeal, the respondent court approved payments made by her of overtime pay to some
employees of the court who had helped in gathering and preparing copies of parts of the records in both
estates as follows:
Considering that the expenses subject of the motion to approve payment of overtime
pay dated December 10, 1964, are reasonable and are believed by this Court to be a
proper charge of administration chargeable to the testate estate of the late Linnie Jane
Hodges, the said expenses are hereby APPROVED and to be charged against the testate
estate of the late Linnie Jane Hodges. The administrator of the testate estate of the late
Charles Newton Hodges is hereby ordered to countersign the check or checks necessary
to pay the said overtime pay as shown by the bills marked Annex "A", "B" and "C" of the
motion.
SO ORDERED.
(Pp. 221-222, Green Record on Appeal.)
Likewise, the respondent court approved deeds of sale executed by respondent Magno alone, as
Administratrix of the estate of Mrs. Hodges, covering properties in the name of Hodges, pursuant to
"contracts to sell" executed by Hodges, irrespective of whether they were executed by him before or
after the death of his wife. The orders of this nature which are also on appeal herein are the following:

19

1. Order of March 30, 1966, on p. 137 of the Green Record on Appeal, approving the deed of sale
executed by respondent Magno in favor of appellee Lorenzo Carles on February 24, 1966, pursuant to a
"contract to sell" signed by Hodges on June 17, 1958, after the death of his wife, which contract
petitioner claims was cancelled by it for failure of Carles to pay the installments due on January 7, 1965.
2. Order of April 5, 1966, on pp. 139-140, id., approving the deed of sale executed by respondent Magno
in favor of appellee Salvador Guzman on February 28, 1966 pursuant to a "contract to sell" signed by
Hodges on September 13, 1960, after the death of his wife, which contract petitioner claims it cancelled
on March 3, 1965 in view of failure of said appellee to pay the installments on time.
3. Order of April 20, 1966, on pp. 167-168, id., approving the deed of sale executed by respondent
Magno in favor of appellee Purificacion Coronado on March 28, 1966 pursuant to a "contract to sell"
signed by Hodges on August 14, 1961, after the death of his wife.
4. Order of April 20, 1966, on pp. 168-169, id., approving the deed of sale executed by respondent
Magno in favor of appellee Florenia Barrido on March 28, 1966, pursuant to a "contract to sell" signed
by Hodges on February 21, 1958, after the death of his wife.
5. Order of June 7, 1966, on pp. 184-185, id., approving the deed of sale executed by respondent Magno
in favor of appellee Belcezar Causing on May 2, 1966, pursuant to a "contract to sell" signed by Hodges
on February 10, 1959, after the death of his wife.
6. Order of June 21, 1966, on pp. 211-212, id., approving the deed of sale executed by respondent
Magno in favor of appellee Artheo Thomas Jamir on June 3, 1966, pursuant to a "contract to sell" signed
by Hodges on May 26, 1961, after the death of his wife.
7. Order of June 21, 1966, on pp. 212-213, id., approving the deed of sale executed by respondent
Magno in favor of appellees Graciano Lucero and Melquiades Batisanan on June 6 and June 3, 1966,
respectively, pursuant to "contracts to sell" signed by Hodges on June 9, 1959 and November 27, 1961,
respectively, after the death of his wife.
8. Order of December 2, 1966, on pp. 303-304, id., approving the deed of sale executed by respondent
Magno in favor of appellees Espiridion Partisala, Winifredo Espada and Rosario Alingasa on September
6, 1966, August 17, 1966 and August 3, 1966, respectively, pursuant to "contracts to sell" signed by
Hodges on April 20, 1960, April 18, 1960 and August 25, 1958, respectively, that is, after the death of his
wife.
9. Order of April 5, 1966, on pp. 137-138, id., approving the deed of sale executed by respondent Magno
in favor of appellee Alfredo Catedral on March 2, 1966, pursuant to a "contract to sell" signed by Hodges
on May 29, 1954, before the death of his wife, which contract petitioner claims it had cancelled on
February 16, 1966 for failure of appellee Catedral to pay the installments due on time.
10. Order of April 5, 1966, on pp. 138-139, id., approving the deed of sale executed by respondent
Magno in favor of appellee Jose Pablico on March 7, 1966, pursuant to a "contract to sell" signed by
Hodges on March 7, 1950, after the death of his wife, which contract petitioner claims it had cancelled
on June 29, 1960, for failure of appellee Pablico to pay the installments due on time.

20

11. Order of December 2, 1966, on pp. 303-304, id., insofar as it approved the deed of sale executed by
respondent Magno in favor of appellee Pepito Iyulores on September 6, 1966, pursuant to a "contract to
sell" signed by Hodges on February 5, 1951, before the death of his wife.
12. Order of January 3, 1967, on pp. 335-336, id., approving three deeds of sale executed by respondent
Magno, one in favor of appellees Santiago Pacaonsis and two in favor of appellee Adelfa Premaylon on
December 5, 1966 and November 3, 1966, respectively, pursuant to separate "promises to sell" signed
respectively by Hodges on May 26, 1955 and January 30, 1954, before the death of his wife, and October
31, 1959, after her death.
In like manner, there were also instances when respondent court approved deeds of sale executed by
petitioner alone and without the concurrence of respondent Magno, and such approvals have not been
the subject of any appeal. No less than petitioner points this out on pages 149-150 of its brief as
appellant thus:
The points of fact and law pertaining to the two abovecited assignments of error have
already been discussed previously. In the first abovecited error, the order alluded to was
general, and as already explained before, it was, as admitted by the lower court itself,
superseded by the particular orders approving specific final deeds of sale executed by
the appellee, Avelina A. Magno, which are subject of this appeal, as well as the
particular orders approving specific final deeds of sale executed by the appellant,
Philippine Commercial and Industrial Bank, which were never appealed by the appellee,
Avelina A. Magno, nor by any party for that matter, and which are now therefore final.
Now, simultaneously with the foregoing incidents, others of more fundamental and all embracing
significance developed. On October 5, 1963, over the signature of Atty. Allison J. Gibbs in representation
of the law firm of Ozaeta, Gibbs & Ozaeta, as counsel for the co-administrators Joe Hodges and
Fernando P. Mirasol, the following self-explanatory motion was filed:
URGENT MOTION FOR AN ACCOUNTING AND DELIVERY TO
ADMINISTRATION OF THE ESTATE OF C. N. HODGES OF ALL OF THE
ASSETS OF THE CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE JANE
HODGES AND C N. HODGES EXISTING AS OF MAY 23, 1957 PLUS ALL THE
RENTS, EMOLUMENTS AND INCOME THEREFROM.
COMES NOW the co-administrator of the estate of C. N. Hodges, Joe Hodges, through
his undersigned attorneys in the above-entitled proceedings, and to this Honorable
Court respectfully alleges:
(1) On May 23, 1957 Linnie Jane Hodges died in Iloilo City.
(2) On June 28, 1957 this Honorable Court admitted to probate the Last Will and
Testament of the deceased Linnie Jane Hodges executed November 22, 1952 and
appointed C. N. Hodges as Executor of the estate of Linnie Jane Hodges (pp. 24-25, Rec.
Sp. Proc. 1307).

21

(3) On July 1, 1957 this Honorable Court issued Letters Testamentary to C. N. Hodges in
the Estate of Linnie Jane Hodges (p. 30, Rec. Sp. Proc. 1307).
(4) On December 14, 1957 this Honorable Court, on the basis of the following
allegations in a Motion dated December 11, 1957 filed by Leon P. Gellada as attorney
for the executor C. N. Hodges:
"That herein Executor, (is) not only part owner of the properties left as
conjugal, but also, the successor to all the properties left by the
deceased Linnie Jane Hodges."
(p. 44, Rec. Sp. Proc. 1307; emphasis supplied.)
issued the following order:
"As prayed for by Attorney Gellada, counsel for the Executory, for the
reasons stated in his motion dated December 11, 1957 which the court
considers well taken, all the sales, conveyances, leases and mortgages of
all properties left by the deceased Linnie Jane Hodges are hereby
APPROVED. The said executor is further authorized to execute
subsequent sales, conveyances, leases and mortgages of the properties
left by the said deceased Linnie Jane Hodges in consonance with the
wishes contained in the last will and testament of the latter."
(p. 46, Rec. Sp. Proc. 1307; emphasis supplied.)
(5) On April 21, 1959 this Honorable Court approved the inventory and accounting
submitted by C. N. Hodges through his counsel Leon P. Gellada on April 14, 1959
wherein he alleged among other things
"That no person interested in the Philippines of the time and place of
examining the herein account, be given notice, as herein executor is the
only devisee or legatee of the deceased, in accordance with the last will
and testament already probated by the Honorable Court."
(pp. 77-78, Rec. Sp. Proc. 1307; emphasis supplied.).
(6) On July 30, 1960 this Honorable Court approved the "Annual Statement of Account"
submitted by C. N. Hodges through his counsel Leon P. Gellada on July 21, 1960 wherein
he alleged among other things:
"That no person interested in the Philippines of the time and place of
examining the herein account, be given notice as herein executor is the
only devisee or legatee of the deceased Linnie Jane Hodges, in
accordance with the last will and testament of the deceased, already
probated by this Honorable Court."

22

(pp. 81-82. Rec. Sp. Proc. 1307; emphasis supplied.)

(7) On May 2, 1961 this Honorable court approved the "Annual Statement of Account By
The Executor for the Year 1960" submitted through Leon P. Gellada on April 20, 1961
wherein he alleged:
That no person interested in the Philippines be given notice, of the time
and place of examining the herein account, as herein Executor is the
only devisee or legatee of the deceased Linnie Jane Hodges, in
accordance with the last will and testament of the deceased, already
probated by this Honorable Court.
(pp. 90-91. Rec. Sp. Proc. 1307; emphasis supplied.)
(8) On December 25, 1962, C.N. Hodges died.
(9) On December 25, 1962, on the Urgent Ex-parte Motion of Leon P. Gellada filed only
in Special Proceeding No. 1307, this Honorable Court appointed Avelina A. Magno
"Administratrix of the estate of Linnie Jane Hodges and as Special Administratrix of the
estate of Charles Newton Hodges, in the latter case, because the last will of said Charles
Newton Hodges is still kept in his vault or iron safe and that the real and personal
properties of both spouses may be lost, damaged or go to waste, unless a Special
Administratrix is appointed."
(p. 100. Rec. Sp. Proc. 1307)
(10) On December 26, 1962 Letters of Administration were issued to Avelina Magno
pursuant to this Honorable Court's aforesaid Order of December 25, 1962
"With full authority to take possession of all the property of said
deceased in any province or provinces in which it may be situated and
to perform all other acts necessary for the preservation of said
property, said Administratrix and/or Special Administratrix having filed a
bond satisfactory to the Court."
(p. 102, Rec. Sp. Proc. 1307)
(11) On January 22, 1963 this Honorable Court on petition of Leon P. Gellada of January
21, 1963 issued Letters of Administration to:
(a) Avelina A. Magno as Administratrix of the estate of Linnie Jane Hodges;
(b) Avelina A. Magno as Special Administratrix of the Estate of Charles Newton Hodges;
and
(c) Joe Hodges as Co-Special Administrator of the Estate of Charles Newton Hodges.
23

(p. 43, Rec. Sp. Proc. 1307)

(12) On February 20, 1963 this Honorable Court on the basis of a motion filed by Leon P.
Gellada as legal counsel on February 16, 1963 for Avelina A. Magno acting as
Administratrix of the Estate of Charles Newton Hodges (pp. 114-116, Sp. Proc. 1307)
issued the following order:
"... se autoriza a aquella (Avelina A. Magno) a firmar escrituras de venta
definitiva de propiedades cubiertas por contratos para vender,
firmados, en vida, por el finado Charles Newton Hodges, cada vez que el
precio estipulado en cada contrato este totalmente pagado. Se autoriza
igualmente a la misma a firmar escrituras de cancelacion de hipoteca
tanto de bienes reales como personales cada vez que la consideracion
de cada hipoteca este totalmente pagada.
"Cada una de dichas escrituras que se otorguen debe ser sometida para
la aprobacion de este Juzgado."
(p. 117, Sp. Proc. 1307).
[Par 1 (c), Reply to Motion For Removal of Joe Hodges]
(13) On September l6, 1963 Leon P. Gellada, acting as attorney for Avelina A. Magno as
Administratrix of the estate of Linnie Jane Hodges, alleges:
3. That since January, 1963, both estates of Linnie Jane Hodges and
Charles Newton Hodges have been receiving in full, payments for those
"contracts to sell" entered into by C. N. Hodges during his lifetime, and
the purchasers have been demanding the execution of definite deeds of
sale in their favor.
4. That hereto attached are thirteen (13) copies deeds of sale
executed by the Administratrix and by the co-administrator (Fernando
P. Mirasol) of the estate of Linnie Jane Hodges and Charles Newton
Hodges respectively, in compliance with the terms and conditions of the
respective "contracts to sell" executed by the parties thereto."
(14) The properties involved in the aforesaid motion of September 16, 1963 are all
registered in the name of the deceased C. N. Hodges.
(15) Avelina A. Magno, it is alleged on information and belief, has been advertising in
the newspaper in Iloilo thusly:
For Sale
Testate Estate of Linnie Jane Hodges and Charles Newton Hodges.

24

All Real Estate or Personal Property will be sold on First Come First Served Basis.
Avelina
A.
Magno
Admini
stratrix
(16) Avelina A. Magno, it is alleged on information and belief, has paid and still is paying
sums of money to sundry persons.
(17) Joe Hodges through the undersigned attorneys manifested during the hearings
before this Honorable Court on September 5 and 6, 1963 that the estate of C. N. Hodges
was claiming all of the assets belonging to the deceased spouses Linnie Jane Hodges and
C. N. Hodges situated in Philippines because of the aforesaid election by C. N. Hodges
wherein he claimed and took possession as sole owner of all of said assets during the
administration of the estate of Linnie Jane Hodges on the ground that he was the sole
devisee and legatee under her Last Will and Testament.
(18) Avelina A. Magno has submitted no inventory and accounting of her administration
as Administratrix of the estate of Linnie Jane Hodges and Special Administratrix of the
estate of C. N. Hodges. However, from manifestations made by Avelina A. Magno and
her legal counsel, Leon P. Gellada, there is no question she will claim that at least fifty
per cent (50%) of the conjugal assets of the deceased spouses and the rents,
emoluments and income therefrom belong to the Higdon family who are named in
paragraphs Fourth and Fifth of the Will of Linnie Jane Hodges (p. 5, Rec. Sp. Proc. 1307).
WHEREFORE, premises considered, movant respectfully prays that this Honorable Court,
after due hearing, order:
(1) Avelina A. Magno to submit an inventory and accounting of all of the funds,
properties and assets of any character belonging to the deceased Linnie Jane Hodges
and C. N. Hodges which have come into her possession, with full details of what she has
done with them;
(2) Avelina A. Magno to turn over and deliver to the Administrator of the estate of C. N.
Hodges all of the funds, properties and assets of any character remaining in her
possession;
(3) Pending this Honorable Court's adjudication of the aforesaid issues, Avelina A.
Magno to stop, unless she first secures the conformity of Joe Hodges (or his duly
authorized representative, such as the undersigned attorneys) as the Co-administrator
and attorney-in-fact of a majority of the beneficiaries of the estate of C. N. Hodges:
(a) Advertising the sale and the sale of the properties of the estates:
(b) Employing personnel and paying them any compensation.
25

(4) Such other relief as this Honorable Court may deem just and equitable in the
premises. (Annex "T", Petition.)
Almost a year thereafter, or on September 14, 1964, after the co-administrators Joe Hodges and
Fernando P. Mirasol were replaced by herein petitioner Philippine Commercial and Industrial Bank as
sole administrator, pursuant to an agreement of all the heirs of Hodges approved by the court, and
because the above motion of October 5, 1963 had not yet been heard due to the absence from the
country of Atty. Gibbs, petitioner filed the following:
MANIFESTATION AND MOTION, INCLUDING MOTION TO SET FOR
HEARING AND RESOLVE "URGENT MOTION FOR AN ACCOUNTING AND
DELIVERY TO ADMINISTRATORS OF THE ESTATE OF C. N. HODGES OF ALL
THE ASSETS OF THE CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE
JANE HODGES AND C. N. HODGES EXISTING AS OF MAY 23, 1957 PLUS
ALL OF THE RENTS, EMOLUMENTS AND INCOME THEREFROM OF
OCTOBER 5, 1963.
COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as
PCIB), the administrator of the estate of C. N. Hodges, deceased, in Special Proceedings
No. 1672, through its undersigned counsel, and to this Honorable Court respectfully
alleges that:
1. On October 5, 1963, Joe Hodges acting as the co-administrator of the estate of C. N.
Hodges filed, through the undersigned attorneys, an "Urgent Motion For An Accounting
and Delivery To Administrator of the Estate of C. N. Hodges of all Of The Assets Of The
Conjugal Partnership of The Deceased Linnie Jane Hodges and C. N. Hodges Existing as
Of May, 23, 1957 Plus All Of The Rents, Emoluments and Income Therefrom" (pp. 536542, CFI Rec. S. P. No. 1672).
2. On January 24, 1964 this Honorable Court, on the basis of an amicable agreement
entered into on January 23, 1964 by the two co-administrators of the estate of C. N.
Hodges and virtually all of the heirs of C. N. Hodges (p. 912, CFI Rec., S. P. No. 1672),
resolved the dispute over who should act as administrator of the estate of C. N. Hodges
by appointing the PCIB as administrator of the estate of C. N. Hodges (pp. 905-906, CFI
Rec. S. P. No. 1672) and issuing letters of administration to the PCIB.
3. On January 24, 1964 virtually all of the heirs of C. N. Hodges, Joe Hodges and
Fernando P. Mirasol acting as the two co-administrators of the estate of C. N. Hodges,
Avelina A. Magno acting as the administratrix of the estate of Linnie Jane Hodges, and
Messrs. William Brown and Ardel Young Acting for all of the Higdon family who claim to
be the sole beneficiaries of the estate of Linnie Jane Hodges and various legal counsel
representing the aforenamed parties entered into an amicable agreement, which was
approved by this Honorable Court, wherein the parties thereto agreed that certain sums
of money were to be paid in settlement of different claims against the two estates and
that the assets (to the extent they existed)of both estates would be administrated jointly
by the PCIB as administrator of the estate of C. N. Hodges and Avelina A. Magno as
administratrix of the estate of Linnie Jane Hodges, subject, however, to the aforesaid
October 5, 1963 Motion, namely, the PCIB's claim to exclusive possession and
26

ownership of one-hundred percent (10017,) (or, in the alternative, seventy-five percent

[75%] of all assets owned by C. N. Hodges or Linnie Jane Hodges situated in the
Philippines. On February 1, 1964 (pp. 934-935, CFI Rec., S. P. No. 1672) this Honorable
Court amended its order of January 24, 1964 but in no way changes its recognition of
the aforedescribed basic demand by the PCIB as administrator of the estate of C. N.
Hodges to one hundred percent (100%) of the assets claimed by both estates.
4. On February 15, 1964 the PCIB filed a "Motion to Resolve" the aforesaid Motion of
October 5, 1963. This Honorable Court set for hearing on June 11, 1964 the Motion of
October 5, 1963.
5. On June 11, 1964, because the undersigned Allison J. Gibbs was absent in the United
States, this Honorable Court ordered the indefinite postponement of the hearing of the
Motion of October 5, 1963.
6. Since its appointment as administrator of the estate of C. N. Hodges the PCIB has not
been able to properly carry out its duties and obligations as administrator of the estate
of C. N. Hodges because of the following acts, among others, of Avelina A. Magno and
those who claim to act for her as administratrix of the estate of Linnie Jane Hodges:
(a) Avelina A. Magno illegally acts as if she is in exclusive control of all of
the assets in the Philippines of both estates including those claimed by
the estate of C. N. Hodges as evidenced in part by her locking the
premises at 206-208 Guanco Street, Iloilo City on August 31, 1964 and
refusing to reopen same until ordered to do so by this Honorable Court
on September 7, 1964.
(b) Avelina A. Magno illegally acts as though she alone may decide how
the assets of the estate of C.N. Hodges should be administered, who the
PCIB shall employ and how much they may be paid as evidenced in
party by her refusal to sign checks issued by the PCIB payable to the
undersigned counsel pursuant to their fee agreement approved by this
Honorable Court in its order dated March 31, 1964.
(c) Avelina A. Magno illegally gives access to and turns over possession
of the records and assets of the estate of C.N. Hodges to the attorneyin-fact of the Higdon Family, Mr. James L. Sullivan, as evidenced in part
by the cashing of his personal checks.
(d) Avelina A. Magno illegally refuses to execute checks prepared by the
PCIB drawn to pay expenses of the estate of C. N. Hodges as evidenced
in part by the check drawn to reimburse the PCIB's advance of
P48,445.50 to pay the 1964 income taxes reported due and payable by
the estate of C.N. Hodges.

27

7. Under and pursuant to the orders of this Honorable Court, particularly those of
January 24 and February 1, 1964, and the mandate contained in its Letters of
Administration issued on January 24, 1964 to the PCIB, it has
"full authority to take possession of all the property of
the deceased C. N. Hodges
"and to perform all other acts necessary for the preservation of said
property." (p. 914, CFI Rec., S.P. No. 1672.)
8. As administrator of the estate of C. N. Hodges, the PCIB claims the right to the
immediate exclusive possession and control of all of the properties, accounts
receivables, court cases, bank accounts and other assets, including the documentary
records evidencing same, which existed in the Philippines on the date of C. N. Hodges'
death, December 25, 1962, and were in his possession and registered in his name alone.
The PCIB knows of no assets in the Philippines registered in the name of Linnie Jane
Hodges, the estate of Linnie Jane Hodges, or, C. N. Hodges, Executor of the Estate of
Linnie Jane Hodges on December 25, 1962. All of the assets of which the PCIB has
knowledge are either registered in the name of C. N. Hodges, alone or were derived
therefrom since his death on December 25, 1962.
9. The PCIB as the current administrator of the estate of C. N. Hodges, deceased,
succeeded to all of the rights of the previously duly appointed administrators of the
estate of C. N. Hodges, to wit:
(a) On December 25, 1962, date of C. N. Hodges' death, this Honorable
Court appointed Miss Avelina A. Magno simultaneously as:
(i) Administratrix of the estate of Linnie Jane Hodges (p. 102, CFI Rec.,
S.P. No. 1307) to replace the deceased C. N. Hodges who on May 28,
1957 was appointed Special Administrator (p. 13. CFI Rec. S.P. No. 1307)
and on July 1, 1957 Executor of the estate of Linnie Jane Hodges (p. 30,
CFI Rec., S. P. No. 1307).
(ii) Special Administratrix of the estate of C. N. Hodges (p. 102, CFI Rec.,
S.P. No. 1307).
(b) On December 29, 1962 this Honorable Court appointed Harold K.
Davies as co-special administrator of the estate of C.N. Hodges along
with Avelina A. Magno (pp. 108-111, CFI Rec., S. P. No. 1307).
(c) On January 22, 1963, with the conformity of Avelina A. Magno,
Harold K. Davies resigned in favor of Joe Hodges (pp. 35-36, CFI Rec.,
S.P. No. 1672) who thereupon was appointed on January 22, 1963 by
this Honorable Court as special co-administrator of the estate of C.N.
Hodges (pp. 38-40 & 43, CFI Rec. S.P. No. 1672) along with Miss Magno

28

who at that time was still acting as special co-administratrix of the

estate of C. N. Hodges.
(d) On February 22, 1963, without objection on the part of Avelina A.
Magno, this Honorable Court appointed Joe Hodges and Fernando P.
Mirasol as co-administrators of the estate of C.N. Hodges (pp. 76-78, 81
& 85, CFI Rec., S.P. No. 1672).
10. Miss Avelina A. Magno, pursuant to the orders of this Honorable Court of December
25, 1962, took possession of all Philippine Assets now claimed by the two estates.
Legally, Miss Magno could take possession of the assets registered in the name of C. N.
Hodges alone only in her capacity as Special Administratrix of the Estate of C.N. Hodges.
With the appointment by this Honorable Court on February 22, 1963 of Joe Hodges and
Fernando P. Mirasol as the co-administrators of the estate of C.N. Hodges, they legally
were entitled to take over from Miss Magno the full and exclusive possession of all of
the assets of the estate of C.N. Hodges. With the appointment on January 24, 1964 of
the PCIB as the sole administrator of the estate of C.N. Hodges in substitution of Joe
Hodges and Fernando P. Mirasol, the PCIB legally became the only party entitled to the
sole and exclusive possession of all of the assets of the estate of C. N. Hodges.
11. The PCIB's predecessors submitted their accounting and this Honorable Court
approved same, to wit:
(a) The accounting of Harold K. Davies dated January 18, 1963 (pp. 1633, CFI Rec. S.P. No. 1672); which shows or its face the:
(i) Conformity of Avelina A. Magno acting as "Administratrix of the
Estate of Linnie Jane Hodges and Special Administratrix of the Estate of
C. N. Hodges";
(ii) Conformity of Leslie Echols, a Texas lawyer acting for the heirs of
C.N. Hodges; and
(iii) Conformity of William Brown, a Texas lawyer acting for the Higdon
family who claim to be the only heirs of Linnie Jane Hodges (pp. 18, 2533, CFI Rec., S. P. No. 1672).
Note: This accounting was approved by this Honorable Court on January 22, 1963 (p. 34,
CFI Rec., S. P. No. 1672).
(b) The accounting of Joe Hodges and Fernando P. Mirasol as of January
23, 1964, filed February 24, 1964 (pp. 990-1000, CFI Rec. S.P. No. 1672
and pp. 1806-1848, CFI Rec. S.P. No. 1307).
Note: This accounting was approved by this Honorable Court on March 3, 1964.

29

(c) The PCIB and its undersigned lawyers are aware of no report or
accounting submitted by Avelina A. Magno of her acts as administratrix
of the estate of Linnie Jane Hodges or special administratrix of the
estate of C.N. Hodges, unless it is the accounting of Harold K. Davies as
special co-administrator of the estate of C.N. Hodges dated January 18,
1963 to which Miss Magno manifested her conformity (supra).
12. In the aforesaid agreement of January 24, 1964, Miss Avelina A. Magno agreed to receive P10,000.00
"for her services as administratrix of the estate of Linnie Jane Hodges"
and in addition she agreed to be employed, starting February 1, 1964, at
"a monthly salary of P500.00 for her services as an employee of both
estates."
24 ems.
13. Under the aforesaid agreement of January 24, 1964 and the orders of this Honorable
Court of same date, the PCIB as administrator of the estate of C. N. Hodges is entitled to
the exclusive possession of all records, properties and assets in the name of C. N.
Hodges as of the date of his death on December 25, 1962 which were in the possession
of the deceased C. N. Hodges on that date and which then passed to the possession of
Miss Magno in her capacity as Special Co-Administratrix of the estate of C. N. Hodges or
the possession of Joe Hodges or Fernando P. Mirasol as co-administrators of the estate
of C. N. Hodges.
14. Because of Miss Magno's refusal to comply with the reasonable request of PCIB
concerning the assets of the estate of C. N. Hodges, the PCIB dismissed Miss Magno as
an employee of the estate of C. N. Hodges effective August 31, 1964. On September 1,
1964 Miss Magno locked the premises at 206-208 Guanco Street and denied the PCIB
access thereto. Upon the Urgent Motion of the PCIB dated September 3, 1964, this
Honorable Court on September 7, 1964 ordered Miss Magno to reopen the aforesaid
premises at 206-208 Guanco Street and permit the PCIB access thereto no later than
September 8, 1964.
15. The PCIB pursuant to the aforesaid orders of this Honorable Court is again in physical
possession of all of the assets of the estate of C. N. Hodges. However, the PCIB is not in
exclusive control of the aforesaid records, properties and assets because Miss Magno
continues to assert the claims hereinabove outlined in paragraph 6, continues to use her
own locks to the doors of the aforesaid premises at 206-208 Guanco Street, Iloilo City
and continues to deny the PCIB its right to know the combinations to the doors of the
vault and safes situated within the premises at 206-208 Guanco Street despite the fact
that said combinations were known to only C. N. Hodges during his lifetime.
16. The Philippine estate and inheritance taxes assessed the estate of Linnie Jane
Hodges were assessed and paid on the basis that C. N. Hodges is the sole beneficiary of
30

the assets of the estate of Linnie Jane Hodges situated in the Philippines. Avelina A.
Magno and her legal counsel at no time have questioned the validity of the aforesaid
assessment and the payment of the corresponding Philippine death taxes.
17. Nothing further remains to be done in the estate of Linnie Jane Hodges except to
resolve the aforesaid Motion of October 5, 1963 and grant the PCIB the exclusive
possession and control of all of the records, properties and assets of the estate of C. N.
Hodges.
18. Such assets as may have existed of the estate of Linnie Jane Hodges were ordered by
this Honorable Court in special Proceedings No. 1307 to be turned over and delivered to
C. N. Hodges alone. He in fact took possession of them before his death and asserted
and exercised the right of exclusive ownership over the said assets as the sole
beneficiary of the estate of Linnie Jane Hodges.
WHEREFORE, premises considered, the PCIB respectfully petitions that this Honorable
court:
(1) Set the Motion of October 5, 1963 for hearing at the earliest possible date with
notice to all interested parties;
(2) Order Avelina A. Magno to submit an inventory and accounting as Administratrix of
the Estate of Linnie Jane Hodges and Co-Administratrix of the Estate of C. N. Hodges of
all of the funds, properties and assets of any character belonging to the deceased Linnie
Jane Hodges and C. N. Hodges which have come into her possession, with full details of
what she has done with them;
(3) Order Avelina A. Magno to turn over and deliver to the PCIB as administrator of the
estate of C. N. Hodges all of the funds, properties and assets of any character remaining
in her possession;
(4) Pending this Honorable Court's adjudication of the aforesaid issues, order Avelina A.
Magno and her representatives to stop interferring with the administration of the estate
of C. N. Hodges by the PCIB and its duly authorized representatives;
(5) Enjoin Avelina A. Magno from working in the premises at 206-208 Guanco Street,
Iloilo City as an employee of the estate of C. N. Hodges and approve her dismissal as
such by the PCIB effective August 31, 1964;
(6) Enjoin James L. Sullivan, Attorneys Manglapus and Quimpo and others allegedly
representing Miss Magno from entering the premises at 206-208 Guanco Street, Iloilo
City or any other properties of C. N. Hodges without the express permission of the PCIB;
(7) Order such other relief as this Honorable Court finds just and equitable in the
premises. (Annex "U" Petition.)

31

On January 8, 1965, petitioner also filed a motion for "Official Declaration of Heirs of Linnie Jane Hodges
Estate" alleging:
COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB), as
administrator of the estate of the late C. N. Hodges, through the undersigned counsel, and to this
Honorable Court respectfully alleges that:
1. During their marriage, spouses Charles Newton Hodges and Linnie Jane Hodges,
American citizens originally from the State of Texas, U.S.A., acquired and accumulated
considerable assets and properties in the Philippines and in the States of Texas and
Oklahoma, United States of America. All said properties constituted their conjugal
estate.
2. Although Texas was the domicile of origin of the Hodges spouses, this Honorable
Court, in its orders dated March 31 and December 12, 1964 (CFI Record, Sp. Proc. No.
1307, pp. ----; Sp. Proc. No. 1672, p. ----), conclusively found and categorically ruled that
said spouses had lived and worked for more than 50 years in Iloilo City and had,
therefore, acquired a domicile of choice in said city, which they retained until the time
of their respective deaths.
3. On November 22, 1952, Linnie Jane Hodges executed in the City of Iloilo her Last Will
and Testament, a copy of which is hereto attached as Annex "A". The bequests in said
will pertinent to the present issue are the second, third, and fourth provisions, which we
quote in full hereunder.
SECOND: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever situated, or
located, to my husband, Charles Newton Hodges, to have and to hold
unto him, my said husband during his natural lifetime.
THIRD: I desire, direct and provide that my husband, Charles Newton
Hodges, shall have the right to manage, control, use and enjoy said
estate during his lifetime, and he is hereby given the right to make any
changes in the physical properties of said estate by sale of any part
thereof which he think best, and the purchase of any other or additional
property as he may think best; to execute conveyances with or without
general or special warranty, conveying in fee simple or for any other
term or time, any property which he may deem proper to dispose of; to
lease any of the real property for oil, gas and/or other minerals, and all
such deeds or leases shall pass the absolute fee simple title to the
interest so conveyed in such property as he may elect to sell. All rents,
emoluments and income from said estate shall belong to him, and he is
further authorized to use any part of the principal of said estate as he
may need or desire. It is provided herein, however, that he shall not sell
or otherwise dispose of any of the improved property now owned by us
located at, in or near the City of Lubbock, Texas, but he shall have the
full right to lease, manage and enjoy the same during his lifetime, as
32

above provided. He shall have the right to sub-divide any farmland and
sell lots therein, and may sell unimproved town lots.
FOURTH: At the death of my said husband, Charles Newton Hodges, I
give, devise and bequeath all of the rest, residue and remainder of my
estate both real and personal, wherever situated or located, to be
equally divided among my brothers and sisters, share and share alike,
namely:
"Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe,
Era Boman and Nimray Higdon."
4. On November 14, 1953, C. N. Hodges executed in the City of Iloilo his Last Will and
Testament, a copy of which is hereto attached as Annex "B ". In said Will, C. N. Hodges
designated his wife, Linnie Jane Hodges, as his beneficiary using the identical language
she used in the second and third provisos of her Will, supra.
5. On May 23, 1957 Linnie Jane Hodges died in Iloilo City, predeceasing her husband by
more than five (5) years. At the time of her death, she had no forced or compulsory heir,
except her husband, C. N. Hodges. She was survived also by various brothers and sisters
mentioned in her Will (supra), which, for convenience, we shall refer to as the HIGDONS.
6. On June 28, 1957, this Honorable Court admitted to probate the Last Will and
Testament of the deceased Linnie Jane Hodges (Annex "A"), and appointed C. N. Hodges
as executor of her estate without bond. (CFI Record, Sp. Proc. No. 1307, pp. 24-25). On
July 1, 1957, this Honorable Court issued letters testamentary to C. N. Hodges in the
estate of Linnie Jane Hodges. (CFI Record, Sp. Proc. No. 1307, p. 30.)
7. The Will of Linnie Jane Hodges, with respect to the order of succession, the amount of
successional rights, and the intrinsic of its testamentary provisions, should be governed
by Philippine laws because:
(a) The testatrix, Linnie Jane Hodges, intended Philippine laws to govern
her Will;
(b) Article 16 of the Civil Code provides that "the national law of the
person whose succession is under consideration, whatever may be the
nature of the property and regardless of the country wherein said
property may be found", shall prevail. However, the Conflict of Law of
Texas, which is the "national law" of the testatrix, Linnie Jane Hodges,
provide that the domiciliary law (Philippine law see paragraph 2,
supra) should govern the testamentary dispositions and successional
rights over movables (personal properties), and the law of the situs of
the property (also Philippine law as to properties located in the
Philippines) with regards immovable (real properties). Thus applying the
"Renvoi Doctrine", as approved and applied by our Supreme Court in
the case of "In The Matter Of The Testate Estate of Eduard E.
33

Christensen",
G.R.
No.
L-16749, promulgated January 31, 1963, Philippine law should apply to
the Will of Linnie Jane Hodges and to the successional rights to her
estate insofar as her movable and immovable assets in the Philippines
are concerned. We shall not, at this stage, discuss what law should
govern the assets of Linnie Jane Hodges located in Oklahoma and Texas,
because the only assets in issue in this motion are those within the
jurisdiction of this motion Court in the two above-captioned Special
Proceedings.
8. Under Philippine and Texas law, the conjugal or community estate of spouses shall,
upon dissolution, be divided equally between them. Thus, upon the death of Linnie Jane
Hodges on May 23, 1957, one-half (1/2) of the entirety of the assets of the Hodges
spouses constituting their conjugal estate pertained automatically to Charles Newton
Hodges, not by way of inheritance, but in his own right as partner in the conjugal
partnership. The other one-half (1/2) portion of the conjugal estate constituted the
estate of Linnie Jane Hodges. This is the only portion of the conjugal estate capable of
inheritance by her heirs.
9. This one-half (1/2) portion of the conjugal assets pertaining to Linnie Jane Hodges
cannot, under a clear and specific provision of her Will, be enhanced or increased by
income, earnings, rents, or emoluments accruing after her death on May 23, 1957.
Linnie Jane Hodges' Will provides that "all rents, emoluments and income from said
estate shall belong to him (C. N. Hodges) and he is further authorized to use any part of
the principal of said estate as he may need or desire." (Paragraph 3, Annex "A".) Thus, by
specific provision of Linnie Jane Hodges' Will, "all rents, emoluments and income" must
be credited to the one-half (1/2) portion of the conjugal estate pertaining to C. N.
Hodges. Clearly, therefore, the estate of Linnie Jane Hodges, capable of inheritance by
her heirs, consisted exclusively of no more than one-half (1/2) of the conjugal estate,
computed as of the time of her death on May 23, 1957.
10. Articles 900, 995 and 1001 of the New Civil Code provide that the surviving spouse
of a deceased leaving no ascendants or descendants is entitled, as a matter of right and
by way of irrevocable legitime, to at least one-half (1/2) of the estate of the deceased,
and no testamentary disposition by the deceased can legally and validly affect this right
of the surviving spouse. In fact, her husband is entitled to said one-half (1/2) portion of
her estate by way of legitime. (Article 886, Civil Code.) Clearly, therefore, immediately
upon the death of Linnie Jane Hodges, C. N. Hodges was the owner of at least threefourths (3/4) or seventy-five (75%) percent of all of the conjugal assets of the spouses,
(1/2 or 50% by way of conjugal partnership share and 1/4 or 25% by way of inheritance
and legitime) plus all "rents, emoluments and income" accruing to said conjugal estate
from the moment of Linnie Jane Hodges' death (see paragraph 9, supra).
11. The late Linnie Jane Hodges designated her husband C.N. Hodges as her sole and
exclusive heir with full authority to do what he pleased, as exclusive heir and owner of
all the assets constituting her estate, except only with regards certain properties
"owned by us, located at, in or near the City of Lubbock, Texas". Thus, even without
relying on our laws of succession and legitime, which we have cited above, C. N. Hodges,
34

by specific testamentary designation of his wife, was entitled to the entirely to his wife's
estate in the Philippines.
12. Article 777 of the New Civil Code provides that "the rights of the successor are
transmitted from the death of the decedent". Thus, title to the estate of Linnie Jane
Hodges was transmitted to C. N. Hodges immediately upon her death on May 23, 1957.
For the convenience of this Honorable Court, we attached hereto as Annex "C" a graph
of how the conjugal estate of the spouses Hodges should be divided in accordance with
Philippine law and the Will of Linnie Jane Hodges.
13. In his capacity as sole heir and successor to the estate of Linnie Jane Hodges as
above-stated, C. N. Hodges, shortly after the death of Linnie Jane Hodges, appropriated
to himself the entirety of her estate. He operated all the assets, engaged in business and
performed all acts in connection with the entirety of the conjugal estate, in his own
name alone, just as he had been operating, engaging and doing while the late Linnie
Jane Hodges was still alive. Upon his death on December 25, 1962, therefore, all said
conjugal assets were in his sole possession and control, and registered in his name alone,
not as executor, but as exclusive owner of all said assets.
14. All these acts of C. N. Hodges were authorized and sanctioned expressly and
impliedly by various orders of this Honorable Court, as follows:
(a) In an Order dated May 27, 1957, this Honorable Court ruled that C. N. Hodges "is
allowed or authorized to continue the business in which he was engaged, and to
perform acts which he had been doing while the deceased was living." (CFI Record, Sp.
Proc. No. 1307, p. 11.)
(b) On December 14, 1957, this Honorable Court, on the basis of the following fact,
alleged in the verified Motion dated December 11, 1957 filed by Leon P. Gellada as
attorney for the executor C. N. Hodges:
That herein Executor, (is) not only part owner of the properties left as conjugal, but also,
the successor to all the properties left by the deceased Linnie Jane Hodges.' (CFI Record,
Sp. Proc. No. 1307, p. 44; emphasis supplied.)
issued the following order:
"As prayed for by Attorney Gellada, counsel for the Executor, for the reasons stated in
his motion dated December 11, 1957, which the Court considers well taken, all the sales,
conveyances, leases and mortgages of all the properties left by the deceased Linnie Jane
Hodges executed by the Executor, Charles Newton Hodges are hereby APPROVED. The
said Executor is further authorized to execute subsequent sales, conveyances, leases
and mortgages of the properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes contained in the last will and testament of the latter." (CFI
Record. Sp. Proc. No. 1307, p. 46; emphasis supplied.)
24 ems
35

(c) On April 21, 1959, this Honorable Court approved the verified inventory and
accounting submitted by C. N. Hodges through his counsel Leon P. Gellada on April 14,
1959 wherein he alleged among other things,
"That no person interested in the Philippines of the time and place of
examining the herein account, be given notice, as herein executor is the
only devisee or legatee of the deceased, in accordance with the last will
and testament already probated by the Honorable Court." (CFI Record,
Sp. Proc. No. 1307, pp. 77-78; emphasis supplied.)
(d) On July 20, 1960, this Honorable Court approved the verified "Annual Statement of
Account" submitted by C. N. Hodges through his counsel Leon P. Gellada on July 21,
1960 wherein he alleged, among other things.
"That no person interested in the Philippines of the time and place of
examining the herein account, be given notice as herein executor is the
only devisee or legatee of the deceased Linnie Jane Hodges, in
accordance with the last will and testament ofthe deceased, already
probated by this Honorable Court." (CFI Record, Sp. Proc. No. 1307, pp.
81-82; emphasis supplied.)
(e) On May 2, 1961, this Honorable Court approved the verified "Annual Statement of
Account By The Executor For the Year 1960" submitted through Leon P. Gellada on April
20, 1961 wherein he alleged:
"That no person interested in the Philippines be given notice, ofthe time and place of
examining the herein account, as herein executor is the only devisee or legatee of the
deceased Linnie Jane Hodges, in accordance with the last will and testament ofthe
deceased, already probated by this Honorable Court." (CFI Record, Sp. Proc. No. 1307,
pp. 90-91; emphasis supplied.)
15. Since C. N. Hodges was the sole and exclusive heir of Linnie Jane Hodges, not only by
law, but in accordance with the dispositions of her will, there was, in fact, no need to
liquidate the conjugal estate of the spouses. The entirely of said conjugal estate
pertained to him exclusively, therefore this Honorable Court sanctioned and authorized,
as above-stated, C. N. Hodges to manage, operate and control all the conjugal assets as
owner.
16. By expressly authorizing C. N. Hodges to act as he did in connection with the estate
of his wife, this Honorable Court has (1) declared C. N. Hodges as the sole heir of the
estate of Linnie Jane Hodges, and (2) delivered and distributed her estate to C. N.
Hodges as sole heir in accordance with the terms and conditions of her Will. Thus,
although the "estate of Linnie Jane Hodges" still exists as a legal and juridical
personality, it had no assets or properties located in the Philippines registered in its
name whatsoever at the time of the death of C. N. Hodges on December 25, 1962.
17. The Will of Linnie Jane Hodges (Annex "A"), fourth paragraph, provides as follows:
36

"At the death of my said husband, Charles Newton Hodges, I give,

devise and bequeath all of the rest, residue and remainder of my estate
both real and personal, wherever situated or located, to be equally
divided among my brothers and sisters, share and share alike, namely:
"Esta Higdon, Emma Howell, Leonard Higdon, Roy
Higdon, Sadie Rascoe, Era Boman and Nimray Higdon."
Because of the facts hereinabove set out there is no "rest, residue and remainder", at
least to the extent of the Philippine assets, which remains to vest in the HIGDONS,
assuming this proviso in Linnie Jane Hodges' Will is valid and binding against the estate
of C. N. Hodges.
18. Any claims by the HIGDONS under the above-quoted provision of Linnie Jane
Hodges' Will is without merit because said provision is void and invalid at least as to the
Philippine assets. It should not, in anyway, affect the rights of the estate of C. N. Hodges
or his heirs to the properties, which C. N. Hodges acquired by way of inheritance from
his wife Linnie Jane Hodges upon her death.
(a) In spite of the above-mentioned provision in the Will of Linnie Jane
Hodges, C. N. Hodges acquired, not merely a usufructuary right, but
absolute title and ownership to her estate. In a recent case involving a
very similar testamentary provision, the Supreme Court held that the
heir first designated acquired full ownership of the property
bequeathed by the will, not mere usufructuary rights. (Consolacion
Florentino de Crisologo, et al., vs. Manuel Singson, G. R. No. L-13876,
February 28, 1962.)
(b) Article 864, 872 and 886 of the New Civil Code clearly provide that
no charge, condition or substitution whatsoever upon the legitime can
be imposed by a testator. Thus, under the provisions of Articles 900, 995
and 1001 of the New Civil Code, the legitime of a surviving spouse is 1/2
of the estate of the deceased spouse. Consequently, the abovementioned provision in the Will of Linnie Jane Hodges is clearly invalid
insofar as the legitime of C. N. Hodges was concerned, which consisted
of 1/2 of the 1/2 portion of the conjugal estate, or 1/4 of the entire
conjugal estate of the deceased.
(c) There are generally only two kinds of substitution provided for and
authorized by our Civil Code (Articles 857-870), namely, (1) simple or
common substitution, sometimes referred to as vulgar substitution
(Article 859), and (2) fideicommissary substitution (Article 863). All
other substitutions are merely variations of these. The substitution
provided for by paragraph four of the Will of Linnie Jane Hodges is not
fideicommissary substitution, because there is clearly no obligation on
the part of C. N. Hodges as the first heir designated, to preserve the
properties for the substitute heirs. (Consolacion Florentino de Crisologo
et
al.
vs.
Manuel
Singson,
G.
R.
No.
37

L-13876.) At most, it is a vulgar or simple substitution. However, in

order that a vulgar or simple substitution can be valid, three alternative
conditions must be present, namely, that the first designated heir (1)
should die before the testator; or (2) should not wish to accept the
inheritance; or (3) should be incapacitated to do so. None of these
conditions apply to C. N. Hodges, and, therefore, the substitution
provided for by the above-quoted provision of the Will is not authorized
by the Code, and, therefore, it is void. Manresa, commenting on these
kisses of substitution, meaningfully stated that: "... cuando el testador
instituyeun primer heredero, y por fallecimiento de este nombra otro u
otros, ha de entenderse que estas segundas designaciones solo han de
llegar a tener efectividad en el caso de que el primer instituido muera
antes que el testador, fuera o no esta su verdadera intencion. ...". (6
Manresa, 7 a ed., pag. 175.) In other words, when another heir is
designated to inherit upon the death of a first heir, the second
designation can have effect only in case the first instituted heir dies
before the testator, whether or not that was the true intention of said
testator. Since C. N. Hodges did not die before Linnie Jane Hodges, the
provision for substitution contained in Linnie Jane Hodges' Willis void.
(d) In view of the invalidity of the provision for substitution in the Will,
C. N. Hodges' inheritance to the entirety of the Linnie Jane Hodges
estate is irrevocable and final.
19. Be that as it may, at the time of C. N. Hodges' death, the entirety of the conjugal
estate appeared and was registered in him exclusively as owner. Thus, the presumption
is that all said assets constituted his estate. Therefore
(a) If the HIGDONS wish to enforce their dubious rights as substituted heirs to 1/4 of the
conjugal estate (the other 1/4 is covered by the legitime of C. N. Hodges which can not
be affected by any testamentary disposition), their remedy, if any, is to file their claim
against the estate of C. N. Hodges, which should be entitled at the present time to full
custody and control of all the conjugal estate of the spouses.
(b) The present proceedings, in which two estates exist under separate administration,
where the administratrix of the Linnie Jane Hodges estate exercises an officious right to
object and intervene in matters affecting exclusively the C. N. Hodges estate, is
anomalous.
WHEREFORE, it is most respectfully prayed that after trial and reception of evidence,
this Honorable Court declare:
1. That the estate of Linnie Jane Hodges was and is composed exclusively of one-half
(1/2) share in the conjugal estate of the spouses Hodges, computed as of the date of her
death on May 23, 1957;

38

2. That the other half of the conjugal estate pertained exclusively to C. N. Hodges as his
share as partner in the conjugal partnership;
3. That all "rents, emoluments and income" of the conjugal estate accruing after Linnie
Jane Hodges' death pertains to C. N. Hodges;
4. That C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane Hodges;
5. That, therefore, the entire conjugal estate of the spouses located in the Philippines,
plus all the "rents, emoluments and income" above-mentioned, now constitutes the
estate of C. N. Hodges, capable of distribution to his heirs upon termination of Special
Proceedings No. 1672;
6. That PCIB, as administrator of the estate of C. N. Hodges, is entitled to full and
exclusive custody, control and management of all said properties; and
7. That Avelina A. Magno, as administratrix of the estate of Linnie Jane Hodges, as well
as the HIGDONS, has no right to intervene or participate in the administration of the C.
N. Hodges estate.
PCIB further prays for such and other relief as may be deemed just and equitable in the
premises."
(Record, pp. 265-277)
Before all of these motions of petitioner could be resolved, however, on December 21, 1965, private
respondent Magno filed her own "Motion for the Official Declaration of Heirs of the Estate of Linnie Jane
Hodges" as follows:
COMES NOW the Administratrix of the Estate of Linnie Jane Hodges and, through
undersigned counsel, unto this Honorable Court most respectfully states and manifests:
1. That the spouses Charles Newton Hodges and Linnie Jane Hodges were American
citizens who died at the City of Iloilo after having amassed and accumulated extensive
properties in the Philippines;
2. That on November 22, 1952, Linnie Jane Hodges executed a last will and testament
(the original of this will now forms part of the records of these proceedings as Exhibit
"C" and appears as Sp. Proc. No. 1307, Folio I, pp. 17-18);
3. That on May 23, 1957, Linnie Jane Hodges died at the City of Iloilo at the time
survived by her husband, Charles Newton Hodges, and several relatives named in her
last will and testament;
4. That on June 28, 1957, a petition therefor having been priorly filed and duly heard,
this Honorable Court issued an order admitting to probate the last will and testament of
Linnie Jane Hodges (Sp. Proc. No. 1307, Folio I, pp. 24-25, 26-28);
39

5. That the required notice to creditors and to all others who may have any claims
against the decedent, Linnie Jane Hodges has already been printed, published and
posted (Sp. Proc. No. 1307, Folio I. pp. 34-40) and the reglamentary period for filing such
claims has long ago lapsed and expired without any claims having been asserted against
the estate of Linnie Jane Hodges, approved by the Administrator/Administratrix of the
said estate, nor ratified by this Honorable Court;
6. That the last will and testament of Linnie Jane Hodges already admitted to probate
contains an institution of heirs in the following words:
"SECOND: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever situated or
located, to my beloved husband, Charles Newton Hodges to have and to
hold unto him, my said husband, during his natural lifetime.
THIRD: I desire, direct and provide that my husband, Charles Newton
Hodges, shall have the right to manage, control, use and enjoy said
estate during his lifetime, and, he is hereby given the right to make any
changes in the physical properties of said estate, by sale of any part
thereof which he may think best, and the purchase of any other or
additional property as he may think best; to execute conveyances with
or without general or special warranty, conveying in fee simple or for
any other term or time, any property which he may deem proper to
dispose of; to lease any of the real property for oil, gas and/or other
minerals, and all such deeds or leases shall pass the absolute fee simple
title to the interest so conveyed in such property as he elect to sell. All
rents, emoluments and income from said estate shall belong to him,
and he is further authorized to use any part of the principal of said
estate as he may need or desire. It is provided herein, however, that he
shall not sell or otherwise dispose of any of the improved property now
owned by us located at, in or near the City of Lubbock Texas, but he
shall have the full right to lease, manage and enjoy the same during his
lifetime, above provided. He shall have the right to subdivide any farm
land and sell lots therein, and may sell unimproved town lots.
FOURTH: At the death of my said husband, Charles Newton Hodges, I
give, devise and bequeath all of the rest, residue and remainder of my
estate, both real and personal, wherever situated or located, to be
equally divided among my brothers and sisters, share and share alike,
namely:
Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie Rascoe,
Era Boman and Nimroy Higdon.
FIFTH: In case of the death of any of my brothers and/or sisters named
in item Fourth, above, prior to the death of my husband, Charles
Newton Hodges, then it is my will and bequest that the heirs of such
40

deceased brother or sister shall take jointly the share which would have
gone to such brother or sister had she or he survived."
7. That under the provisions of the last will and testament already above-quoted, Linnie
Jane Hodges gave a life-estate or a usufruct over all her estate to her husband, Charles
Newton Hodges, and a vested remainder-estate or the naked title over the same estate
to her relatives named therein;
8. That after the death of Linnie Jane Hodges and after the admission to probate of her
last will and testament, but during the lifetime of Charles Newton Hodges, the said
Charles Newton Hodges with full and complete knowledge of the life-estate or usufruct
conferred upon him by the will since he was then acting as Administrator of the estate
and later as Executor of the will of Linnie Jane Hodges, unequivocably and clearly
through oral and written declarations and sworn public statements, renounced,
disclaimed and repudiated his life-estate and usufruct over the estate of Linnie Jane
Hodges;
9. That, accordingly, the only heirs left to receive the estate of Linnie Jane Hodges
pursuant to her last will and testament, are her named brothers and sisters, or their
heirs, to wit: Esta Higdon, Emma Howell, Leonard Higdon, Aline Higdon and David
Higdon, the latter two being the wife and son respectively of the deceased Roy Higdon,
Sadie Rascoe Era Boman and Nimroy Higdon, all of legal ages, American citizens, with
residence at the State of Texas, United States of America;
10. That at the time of the death of Linnie Jane Hodges on May 23, 1957, she was the
co-owner (together with her husband Charles Newton Hodges) of an undivided one-half
interest in their conjugal properties existing as of that date, May 23, 1957, which
properties are now being administered sometimes jointly and sometimes separately by
the Administratrix of the estate of Linnie Jane Hodges and/or the Administrator of the
estate of C. N. Hodges but all of which are under the control and supervision of this
Honorable Court;
11. That because there was no separation or segregation of the interests of husband
and wife in the combined conjugal estate, as there has been no such separation or
segregation up to the present, both interests have continually earned exactly the same
amount of "rents, emoluments and income", the entire estate having been continually
devoted to the business of the spouses as if they were alive;
12. That the one-half interest of Linnie Jane Hodges in the combined conjugal estate was
earning "rents, emoluments and income" until her death on May 23, 1957, when it
ceased to be saddled with any more charges or expenditures which are purely personal
to her in nature, and her estate kept on earning such "rents, emoluments and income"
by virtue of their having been expressly renounced, disclaimed and repudiated by
Charles Newton Hodges to whom they were bequeathed for life under the last will and
testament of Linnie Jane Hodges;

41

13. That, on the other hand, the one-half interest of Charles Newton Hodges in the
combined conjugal estate existing as of May 23, 1957, while it may have earned exactly
the same amount of "rents, emoluments and income" as that of the share pertaining to
Linnie Jane Hodges, continued to be burdened by charges, expenditures, and other
dispositions which are purely personal to him in nature, until the death of Charles
Newton Hodges himself on December 25, 1962;
14. That of all the assets of the combined conjugal estate of Linnie Jane Hodges and
Charles Newton Hodges as they exist today, the estate of Linnie Jane Hodges is clearly
entitled to a portion more than fifty percent (50%) as compared to the portion to which
the estate of Charles Newton Hodges may be entitled, which portions can be exactly
determined by the following manner:
a. An inventory must be made of the assets of the combined conjugal
estate as they existed on the death of Linnie Jane Hodges on May 23,
1957 one-half of these assets belong to the estate of Linnie Jane
Hodges;
b. An accounting must be made of the "rents, emoluments and income"
of all these assets again one-half of these belong to the estate of
Linnie Jane Hodges;
c. Adjustments must be made, after making a deduction of charges,
disbursements and other dispositions made by Charles Newton Hodges
personally and for his own personal account from May 23, 1957 up to
December 25, 1962, as well as other charges, disbursements and other
dispositions made for him and in his behalf since December 25, 1962 up
to the present;
15. That there remains no other matter for disposition now insofar as the estate of
Linnie Jane Hodges is concerned but to complete the liquidation of her estate, segregate
them from the conjugal estate, and distribute them to her heirs pursuant to her last will
and testament.
WHEREFORE, premises considered, it is most respectfully moved and prayed that this
Honorable Court, after a hearing on the factual matters raised by this motion, issue an
order:
a. Declaring the following persons, to wit: Esta Higdon, Emma Howell, Leonard Higdon,
Aline Higdon, David Higdon, Sadie Rascoe, Era Boman and Nimroy Higdon, as the sole
heirs under the last will and testament of Linnie Jane Hodges and as the only persons
entitled to her estate;
b. Determining the exact value of the estate of Linnie Jane Hodges in accordance with
the system enunciated in paragraph 14 of this motion;

42

c. After such determination ordering its segregation from the combined conjugal estate
and its delivery to the Administratrix of the estate of Linnie Jane Hodges for distribution
to the heirs to whom they properly belong and appertain.
(Green Record on Appeal, pp. 382-391)
whereupon, instead of further pressing on its motion of January 8, 1965 aforequoted, as it had been
doing before, petitioner withdrew the said motion and in addition to opposing the above motion of
respondent Magno, filed a motion on April 22, 1966 alleging in part that:
1. That it has received from the counsel for the administratrix of the supposed estate of
Linnie Jane Hodges a notice to set her "Motion for Official Declaration of Heirs of the
Estate of Linnie Jane Hodges";
2. That before the aforesaid motion could be heard, there are matters pending before
this Honorable Court, such as:
a. The examination already ordered by this Honorable Court of
documents relating to the allegation of Avelina Magno that Charles
Newton Hodges "through ... written declarations and sworn public
statements, renounced, disclaimed and repudiated life-estate and
usufruct over the estate of Linnie Jane Hodges';
b. That "Urgent Motion for An Accounting and Delivery to the Estate of
C. N. Hodges of All the Assets of the Conjugal Partnership of the
Deceased Linnie Jane Hodges and C. N. Hodges Existing as of May 23,
1957 Plus All the Rents, Emoluments and Income Therefrom";
c. Various motions to resolve the aforesaid motion;
d. Manifestation of September 14, 1964, detailing acts of interference
of Avelina Magno under color of title as administratrix of the Estate of
Linnie Jane Hodges;
which are all prejudicial, and which involve no issues of fact, all facts involved therein
being matters of record, and therefore require only the resolution of questions of law;
3. That whatever claims any alleged heirs or other persons may have could be very
easily threshed out in the Testate Estate of Charles Newton Hodges;
4. That the maintenance of two separate estate proceedings and two administrators
only results in confusion and is unduly burdensome upon the Testate Estate of Charles
Newton Hodges, particularly because the bond filed by Avelina Magno is grossly
insufficient to answer for the funds and property which she has inofficiously collected
and held, as well as those which she continues to inofficiously collect and hold;

43

5. That it is a matter of record that such state of affairs affects and inconveniences not
only the estate but also third-parties dealing with it;" (Annex "V", Petition.)
and then, after further reminding the court, by quoting them, of the relevant allegations of its earlier
motion of September 14, 1964, Annex U, prayed that:
1. Immediately order Avelina Magno to account for and deliver to the administrator of
the Estate of C. N. Hodges all the assets of the conjugal partnership of the deceased
Linnie Jane Hodges and C. N. Hodges, plus all the rents, emoluments and income
therefrom;
2. Pending the consideration of this motion, immediately order Avelina Magno to turn
over all her collections to the administrator Philippine Commercial & Industrial Bank;
3. Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307) closed;
4. Defer the hearing and consideration of the motion for declaration of heirs in the
Testate Estate of Linnie Jane Hodges until the matters hereinabove set forth are
resolved.
(Prayer, Annex "V" of Petition.)
On October 12, 1966, as already indicated at the outset of this opinion, the respondent court denied the
foregoing motion, holding thus:
ORDER
On record is a motion (Vol. X, Sp. 1672, pp. 4379-4390) dated April 22, 1966 of
administrator PCIB praying that (1) Immediately order Avelina Magno to account for and
deliver to the administrator of the estate of C. N. Hodges all assets of the conjugal
partnership of the deceased Linnie Jane Hodges and C. N. Hodges, plus all the rents,
emoluments and income therefrom; (2) Pending the consideration of this motion,
immediately order Avelina Magno to turn over all her collections to the administrator
PCIB; (3) Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307) closed;
and (4) Defer the hearing and consideration of the motion for declaration of heirs in the
Testate Estate of Linnie Jane Hodges until the matters hereinabove set forth are
resolved.
This motion is predicated on the fact that there are matters pending before this court
such as (a) the examination already ordered by this Honorable Court of documents
relating to the allegation of Avelina Magno that Charles Newton Hodges thru written
declaration and sworn public statements renounced, disclaimed and repudiated his lifeestate and usufruct over the estate of Linnie Jane Hodges (b) the urgent motion for
accounting and delivery to the estate of C. N. Hodges of all the assets of the conjugal
partnership of the deceased Linnie Jane Hodges and C. N. Hodges existing as of May 23,
1957 plus all the rents, emoluments and income therefrom; (c) various motions to
resolve the aforesaid motion; and (d) manifestation of September 14, 1964, detailing

44

acts of interference of Avelina Magno under color of title as administratrix of the estate
of Linnie Jane Hodges.
These matters, according to the instant motion, are all pre-judicial involving no issues of
facts and only require the resolution of question of law; that in the motion of October 5,
1963 it is alleged that in a motion dated December 11, 1957 filed by Atty. Leon Gellada
as attorney for the executor C. N. Hodges, the said executor C. N. Hodges is not only
part owner of the properties left as conjugal but also the successor to all the properties
left by the deceased Linnie Jane Hodges.
Said motion of December 11, 1957 was approved by the Court in consonance with the
wishes contained in the last will and testament of Linnie Jane Hodges.
That on April 21, 1959 this Court approved the inventory and accounting submitted by
C. N. Hodges thru counsel Atty. Leon Gellada in a motion filed on April 14, 1959 stating
therein that executor C. N. Hodges is the only devisee or legatee of Linnie Jane Hodges
in accordance with the last will and testament already probated by the Court.
That on July 13, 1960 the Court approved the annual statement of accounts submitted
by the executor C. N. Hodges thru his counsel Atty. Gellada on July 21, 1960 wherein it is
stated that the executor, C. N. Hodges is the only devisee or legatee of the deceased
Linnie Jane Hodges; that on May 2, 1961 the Court approved the annual statement of
accounts submitted by executor, C. N. Hodges for the year 1960 which was submitted by
Atty. Gellada on April 20, 1961 wherein it is stated that executor Hodges is the only
devisee or legatee of the deceased Linnie Jane Hodges;
That during the hearing on September 5 and 6, 1963 the estate of C. N. Hodges claimed
all the assets belonging to the deceased spouses Linnie Jane Hodges and C. N. Hodges
situated in the Philippines; that administratrix Magno has executed illegal acts to the
prejudice of the testate estate of C. N. Hodges.
An opposition (Sp. 1672, Vol. X, pp. 4415-4421) dated April 27, 1966 of administratrix
Magno has been filed asking that the motion be denied for lack of merit and that the
motion for the official declaration of heirs of the estate of Linnie Jane Hodges be set for
presentation and reception of evidence.
It is alleged in the aforesaid opposition that the examination of documents which are in
the possession of administratrix Magno can be made prior to the hearing of the motion
for the official declaration of heirs of the estate of Linnie Jane Hodges, during said
hearing.
That the matters raised in the PCIB's motion of October 5, 1963 (as well as the other
motion) dated September 14, 1964 have been consolidated for the purpose of
presentation and reception of evidence with the hearing on the determination of the
heirs of the estate of Linnie Jane Hodges. It is further alleged in the opposition that the
motion for the official declaration of heirs of the estate of Linnie Jane Hodges is the one
that constitutes a prejudicial question to the motions dated October 5 and September
45

14, 1964 because if said motion is found meritorious and granted by the Court, the
PCIB's motions of October 5, 1963 and September 14, 1964 will become moot and
academic since they are premised on the assumption and claim that the only heir of
Linnie Jane Hodges was C. N. Hodges.
That the PCIB and counsel are estopped from further questioning the determination of
heirs in the estate of Linnie Jane Hodges at this stage since it was PCIB as early as
January 8, 1965 which filed a motion for official declaration of heirs of Linnie Jane
Hodges that the claim of any heirs of Linnie Jane Hodges can be determined only in the
administration proceedings over the estate of Linnie Jane Hodges and not that of C. N.
Hodges, since the heirs of Linnie Jane Hodges are claiming her estate and not the estate
of C. N. Hodges.
A reply (Sp. 1672, Vol. X, pp. 4436-4444) dated May 11, 1966 of the PCIB has been filed
alleging that the motion dated April 22, 1966 of the PCIB is not to seek deferment of the
hearing and consideration of the motion for official declaration of heirs of Linnie Jane
Hodges but to declare the testate estate of Linnie Jane Hodges closed and for
administratrix Magno to account for and deliver to the PCIB all assets of the conjugal
partnership of the deceased spouses which has come to her possession plus all rents
and income.
A rejoinder (Sp. 1672, Vol. X, pp. 4458-4462) of administratrix Magno dated May 19,
1966 has been filed alleging that the motion dated December 11, 1957 only sought the
approval of all conveyances made by C. N. Hodges and requested the Court authority for
all subsequent conveyances that will be executed by C. N. Hodges; that the order dated
December 14, 1957 only approved the conveyances made by C. N. Hodges; that C. N.
Hodges represented by counsel never made any claim in the estate of Linnie Jane
Hodges and never filed a motion to declare himself as the heir of the said Linnie Jane
Hodges despite the lapse of more than five (5) years after the death of Linnie Jane
Hodges; that it is further alleged in the rejoinder that there can be no order of
adjudication of the estate unless there has been a prior express declaration of heirs and
so far no declaration of heirs in the estate of Linnie Jane Hodges (Sp. 1307) has been
made.
Considering the allegations and arguments in the motion and of the PCIB as well as
those in the opposition and rejoinder of administratrix Magno, the Court finds the
opposition and rejoinder to be well taken for the reason that so far there has been no
official declaration of heirs in the testate estate of Linnie Jane Hodges and therefore no
disposition of her estate.
WHEREFORE, the motion of the PCIB dated April 22, 1966 is hereby DENIED.
(Annex "W", Petition)
In its motion dated November 24, 1966 for the reconsideration of this order, petitioner alleged inter alia
that:

46

It cannot be over-stressed that the motion of December 11, 1957 was based on the fact
that:
a. Under the last will and testament of the deceased, Linnie Jane
Hodges, the late Charles Newton Hodges was the sole heir instituted
insofar as her properties in the Philippines are concerned;
b. Said last will and testament vested upon the said late Charles Newton
Hodges rights over said properties which, in sum, spell ownership,
absolute and in fee simple;
c. Said late Charles Newton Hodges was, therefore, "not only part
owner of the properties left as conjugal, but also, the successor to all
the properties left by the deceased Linnie Jane Hodges.
Likewise, it cannot be over-stressed that the aforesaid motion was granted by this
Honorable Court "for the reasons stated" therein.
Again, the motion of December 11, 1957 prayed that not only "all the sales,
conveyances, leases, and mortgages executed by" the late Charles Newton Hodges, but
also all "the subsequent sales, conveyances, leases, and mortgages ..." be approved and
authorized. This Honorable Court, in its order of December 14, 1957, "for the reasons
stated" in the aforesaid motion, granted the same, and not only approved all the sales,
conveyances, leases and mortgages of all properties left by the deceased Linnie Jane
Hodges executed by the late Charles Newton Hodges, but also authorized "all
subsequent sales, conveyances, leases and mortgages of the properties left by the said
deceased Linnie Jane Hodges. (Annex "X", Petition)
and reiterated its fundamental pose that the Testate Estate of Linnie Jane Hodges had already been
factually, although not legally, closed with the virtual declaration of Hodges and adjudication to him, as
sole universal heir of all the properties of the estate of his wife, in the order of December 14, 1957,
Annex G. Still unpersuaded, on July 18, 1967, respondent court denied said motion for reconsideration
and held that "the court believes that there is no justification why the order of October 12, 1966 should
be considered or modified", and, on July 19, 1967, the motion of respondent Magno "for official
declaration of heirs of the estate of Linnie Jane Hodges", already referred to above, was set for hearing.
In consequence of all these developments, the present petition was filed on August 1, 1967 (albeit
petitioner had to pay another docketing fee on August 9, 1967, since the orders in question were issued
in two separate testate estate proceedings, Nos. 1307 and 1672, in the court below).
Together with such petition, there are now pending before Us for resolution herein, appeals from the
following:
1. The order of December 19, 1964 authorizing payment by respondent Magno of
overtime pay, (pp. 221, Green Record on Appeal) together with the subsequent orders
of January 9, 1965, (pp. 231-232, id.) October 27, 1965, (pp. 227, id.) and February 15,
1966 (pp. 455-456, id.) repeatedly denying motions for reconsideration thereof.
47

2. The order of August 6, 1965 (pp. 248, id.) requiring that deeds executed by petitioner
to be co-signed by respondent Magno, as well as the order of October 27, 1965 (pp.
276-277) denying reconsideration.
3. The order of October 27, 1965 (pp. 292-295, id.) enjoining the deposit of all
collections in a joint account and the same order of February 15, 1966 mentioned in No.
1 above which included the denial of the reconsideration of this order of October 27,
1965.
4. The order of November 3, 1965 (pp. 313-320, id.) directing the payment of attorney's
fees, fees of the respondent administratrix, etc. and the order of February 16, 1966
denying reconsideration thereof.
5. The order of November 23, 1965 (pp. 334-335, id.) allowing appellee Western
Institute of Technology to make payments to either one or both of the administrators of
the two estates as well as the order of March 7, 1966 (p. 462, id.) denying
reconsideration.
6. The various orders hereinabove earlier enumerated approving deeds of sale executed
by respondent Magno in favor of appellees Carles, Catedral, Pablito, Guzman, Coronado,
Barrido, Causing, Javier, Lucero and Batisanan, (see pp. 35 to 37 of this opinion),
together with the two separate orders both dated December 2, 1966 (pp. 306-308, and
pp. 308-309, Yellow Record on Appeal) denying reconsideration of said approval.
7. The order of January 3, 1967, on pp. 335-336, Yellow Record on Appeal, approving
similar deeds of sale executed by respondent Magno, as those in No. 6, in favor of
appellees Pacaonsis and Premaylon, as to which no motion for reconsideration was
filed.
8. Lastly, the order of December 2, 1966, on pp. 305-306, Yellow Record on Appeal,
directing petitioner to surrender to appellees Lucero, Batisanan, Javier, Pablito, Barrido,
Catedral, Causing, Guzman, and Coronado, the certificates of title covering the lands
involved in the approved sales, as to which no motion for reconsideration was filed
either.
Strictly speaking, and considering that the above orders deal with different matters, just as they affect
distinctly different individuals or persons, as outlined by petitioner in its brief as appellant on pp. 12-20
thereof, there are, therefore, thirty-three (33) appeals before Us, for which reason, petitioner has to pay
also thirty-one (31) more docket fees.
It is as well perhaps to state here as elsewhere in this opinion that in connection with these appeals,
petitioner has assigned a total of seventy-eight (LXXVIII) alleged errors, the respective discussions and
arguments under all of them covering also the fundamental issues raised in respect to the petition for
certiorari and prohibition, thus making it feasible and more practical for the Court to dispose of all these
cases together. 4
The assignments of error read thus:
48

I to IV
THE ORDER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND
ROSARIO ALINGASA, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING
PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.
V to VIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE
APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND
ROSARIO ALINGASA, COVERING PARCELS OF LAND FOR WHICH THEY HAVE NEVER PAID
IN FULL IN ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL.
IX to XII
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL
PROPERTY OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA, WINIFREDO
C. ESPADA AND ROSARIO ALINGASA, WHILE ACTING AS A PROBATE COURT.
XIII to XV
THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA
PREMAYLON (LOT NO. 104), EXECUTED BY THE APPELLEE, AVELINA A. MAGNO,
COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES,
AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS
LIFETIME.
XVI to XVIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE
APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA
PREMAYLON (LOT NO. 104) COVERING PARCELS OF LAND FOR WHICH THEY HAVE
NEVER PAID IN FULL IN ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL.
XIX to XXI
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL
PROPERTY OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO
PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104) WHILE ACTING AS A PROBATE
COURT.
XXII to XXV

49

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEES LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND SALVADOR S.
GUZMAN, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF
LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO
SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.
XXVI to XXIX
THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE EXECUTED IN
FAVOR OF THE APPELLEES, LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND
SALVADOR S. GUZMAN PURSUANT TO CONTRACTS TO SPELL WHICH WERE CANCELLED
AND RESCINDED.
XXX to XXXIV
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF OWNERSHIP OVER REAL
PROPERTY OF THE LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND
SALVADOR S. GUZMAN, WHILE ACTING AS A PROBATE COURT.
XXXV to XXXVI
THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEES, FLORENIA BARRIDO AND PURIFICACION CORONADO, EXECUTED BY THE
APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE
DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING
WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.
XXXVII to XXXVIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE
APPELLEES, FLORENIA BARRIDO AND PURIFICACION CORONADO, ALTHOUGH THEY
WERE IN ARREARS IN THE PAYMENTS AGREED UPON IN THE ORIGINAL CONTRACT TO
SELL WHICH THEY EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE
AMOUNT OF P10,680.00 and P4,428.90, RESPECTIVELY.
XXXIX to XL
THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES NEWTON HODGES,
OF THE CONTRACTUAL RIGHT, EXERCISED THROUGH HIS ADMINISTRATOR, THE INSTANT
APPELLANT, TO CANCEL THE CONTRACTS TO SELL OF THE APPELLEES, FLORENIA
BARRIDO AND PURIFICACION CORONADO.
XLI to XLIII
THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES BATISANAN,
EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND
50

OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL
COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.
XLIV to XLVI
THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE IN FAVOR OF THE
APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES BATISANAN,
PURSUANT TO CONTRACTS TO SELL EXECUTED BY THEM WITH THE DECEASED, CHARLES
NEWTON HODGES, THE TERMS AND CONDITIONS OF WHICH THEY HAVE NEVER
COMPLIED WITH.
XLVII to XLIX
THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES NEWTON HODGES,
OF HIS RIGHT, EXERCISED THROUGH HIS ADMINISTRATION, THE INSTANT APPELLANT,
TO CANCEL THE CONTRACTS TO SELL OF THE APPELLEES, GRACIANO LUCERO, ARITEO
THOMAS JAMIR AND MELQUIADES BATISANAN, AND IN DETERMINING THE RIGHTS OF
THE SAID APPELLEES OVER REAL PROPERTY WHILE ACTING AS A PROBATE COURT.
L
THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE
APPELLEE, BELCESAR CAUSING, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO,
COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES,
AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS
LIFETIME.
LI
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE
APPELLEE, BELCESAR CAUSING, ALTHOUGH HE WAS IN ARREARS IN THE PAYMENTS
AGREED UPON IN THE ORIGINAL CONTRACT TO SELL WHICH HE EXECUTED WITH THE
DECEASED, CHARLES NEWTON HODGES, IN THE AMOUNT OF P2,337.50.
LII
THE LOWER COURT ERRED IN APPROVING THE DEED OF SALE IN FAVOR OF THE
APPELLEE, BELCESAR CAUSING, ALTHOUGH THE SAME WAS NOT EXECUTED IN
ACCORDANCE WITH THE RULES OF COURT.
LIII to LXI
THE LOWER COURT ERRED IN ORDERING THE APPELLANT, PHILIPPINE COMMERCIAL
AND INDUSTRIAL BANK TO SURRENDER THE OWNER'S DUPLICATE CERTIFICATES OF
TITLE OVER THE RESPECTIVE LOTS COVERED BY THE DEEDS OF SALE EXECUTED BY THE
APPELLEE, AVELINA A. MAGNO, IN FAVOR OF THE OTHER APPELLEES, JOSE PABLICO,
ALFREDO CATEDRAL, SALVADOR S. GUZMAN, FLRENIA BARRIDO, PURIFICACION
51

CORONADO, BELCESAR CAUSING, ARITEO THOMAS JAMIR, MAXIMA BATISANAN AND

GRACIANO L. LUCERO.
LXII
THE LOWER COURT ERRED IN RESOLVING THE MOTION OF THE APPELLEE, WESTERN
INSTITUTE OF TECHNOLOGY, DATED NOVEMBER 3, 1965, WITHOUT ANY COPY THEREOF
HAVING BEEN SERVED UPON THE APPELLANT, PHILIPPINE COMMERCIAL & INDUSTRIAL
BANK.
LXIII
THE LOWER COURT ERRED IN HEARING AND CONSIDERING THE MOTION OF THE
APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, DATED NOVEMBER 3rd, 1965, ON
NOVEMBER 23, 1965, WHEN THE NOTICE FOR THE HEARING THEREOF WAS FOR
NOVEMBER 20, 1965.
LXIV
THE LOWER COURT ERRED IN GRANTING THE APPELLEE, WESTERN INSTITUTE OF
TECHNOLOGY A RELIEF OTHER THAN THAT PRAYED FOR IN ITS MOTION, DATED
NOVEMBER 3, 1965, IN THE ABSENCE OF A PRAYER FOR GENERAL RELIEF CONTAINED
THEREIN.
LXV
THE LOWER COURT ERRED IN ALLOWING THE APPELLEE, WESTERN INSTITUTE OF
TECHNOLOGY, TO CONTINUE PAYMENTS UPON A CONTRACT TO SELL THE TERMS AND
CONDITIONS OF WHICH IT HAS FAILED TO FULFILL.
LXVI
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF THE APPELLEE, WESTERN
INSTITUTE OF TECHNOLOGY OVER THE REAL PROPERTY SUBJECT MATTER OF THE
CONTRACT TO SELL IT EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES,
WHILE ACTING AS A PROBATE COURT.
LXVII
LOWER COURT ERRED IN ALLOWING THE CONTINUATION OF PAYMENTS BY THE
APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, UPON A CONTRACT TO SELL
EXECUTED BY IT AND THE DECEASED, CHARLES NEWTON HODGES, TO A PERSON OTHER
THAN HIS LAWFULLY APPOINTED ADMINISTRATOR.
LXVIII

52

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S FEES FROM THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, WHEN THERE IS NEITHER
SUCH ESTATE NOR ASSETS THEREOF.
LXIX
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S FEES OF
LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES.
LXX
THE LOWER COURT ERRED IN IMPLEMENTING THE ALLEGED AGREEMENT BETWEEN THE
HEIRS OF THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, AND THEIR
LAWYERS.
LXXI
THE LOWER COURT ERRED IN ORDERING THE PREMATURE DISTRIBUTION OF ESTATE
ASSETS TO ALLEGED HEIRS OR BENEFICIARIES THEREOF, BY WAY OF RETAINER'S FEES.
LXXII
THE LOWER COURT ERRED IN ORDERING THAT ALL FINAL DEEDS OF SALE EXECUTED
PURSUANT TO CONTRACTS TO SELL ENTERED INTO BY THE DECEASED, CHARLES
NEWTON HODGES, DURING HIS LIFETIME, BE SIGNED JOINTLY BY THE APPELLEE,
AVELINA A. MAGNO, AND THE APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL
BANK, AND NOT BY THE LATTER ONLY AS THE LAWFULLY APPOINTED ADMINISTRATOR
OF HIS ESTATE.
LXXIII
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL EXPENSES FROM THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, WHEN THERE IS NEITHER
SUCH ESTATE NOR ASSETS THEREOF.
LXXIV
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL EXPENSES OF
LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES.
LXXV
THE LOWER COURT ERRED IN ORDERING THE PREMATURE DISTRIBUTION OF ESTATE
ASSETS TO ALLEGED HEIRS OR BENEFICIARIES THEREOF, BY WAY OF LEGAL EXPENSES.

53

LXXVI
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF COMPENSATION TO THE
PURPORTED ADMINISTRATRIX OF THE SUPPOSED ESTATE OF THE DECEASED, LINNIE
JANE HODGES, THE INSTANT APPELLEE, AVELINA A. MAGNO, WHEN THERE IS NEITHER
SUCH ESTATE NOR ASSETS THEREOF.
LXXVII
THE LOWER COURT ERRED IN ORDERING THAT THE FUNDS OF THE TESTATE ESTATE OF
THE DECEASED, CHARLES NEWTON HODGES, BE PLACED IN A JOINT ACCOUNT OF THE
APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, AND THE APPELLEE,
AVELINA A. MAGNO, WHO IS A COMPLETE STRANGER TO THE AFORESAID ESTATE.
LXXVIII
THE LOWER COURT ERRED IN ORDERING THAT THE APPELLEE, AVELINA A. MAGNO, BE
GIVEN EQUAL ACCESS TO THE RECORDS OF THE TESTATE ESTATE OF THE DECEASED,
CHARLES NEWTON HODGES, WHEN SHE IS A COMPLETE STRANGER TO THE AFORESAID
ESTATE. (Pp. 73-83, Appellant's Brief.)
To complete this rather elaborate, and unavoidably extended narration of the factual setting of these
cases, it may also be mentioned that an attempt was made by the heirs of Mrs. Hodges to have
respondent Magno removed as administratrix, with the proposed appointment of Benito J. Lopez in her
place, and that respondent court did actually order such proposed replacement, but the Court declared
the said order of respondent court violative of its injunction of August 8, 1967, hence without force and
effect (see Resolution of September 8, 1972 and February 1, 1973). Subsequently, Atty. Efrain B. Trenas,
one of the lawyers of said heirs, appeared no longer for the proposed administrator Lopez but for the
heirs themselves, and in a motion dated October 26, 1972 informed the Court that a motion had been
filed with respondent court for the removal of petitioner PCIB as administrator of the estate of C. N.
Hodges in Special Proceedings 1672, which removal motion alleged that 22.968149% of the share of C.
N. Hodges had already been acquired by the heirs of Mrs. Hodges from certain heirs of her husband.
Further, in this connection, in the answer of PCIB to the motion of respondent Magno to have it
declared in contempt for disregarding the Court's resolution of September 8, 1972 modifying the
injunction of August 8, 1967, said petitioner annexed thereto a joint manifestation and motion,
appearing to have been filed with respondent court, informing said court that in addition to the fact that
22% of the share of C. N. Hodges had already been bought by the heirs of Mrs. Hodges, as already
stated, certain other heirs of Hodges representing 17.343750% of his estate were joining cause with the
heirs of Mrs. Hodges as against PCIB, thereby making somewhat precarious, if not possibly untenable,
petitioners' continuation as administrator of the Hodges estate.
RESOLUTION
PROHIBITION CASES

OF

ISSUES

IN

THE

CERTIORARI

AND

54

As
to
of the Present Appeals

the

Alleged

Tardiness

The priority question raised by respondent Magno relates to the alleged tardiness of all the
aforementioned thirty-three appeals of PCIB. Considering, however, that these appeals revolve around
practically the same main issues and that it is admitted that some of them have been timely taken, and,
moreover, their final results hereinbelow to be stated and explained make it of no consequence
whether or not the orders concerned have become final by the lapsing of the respective periods to
appeal them, We do not deem it necessary to pass upon the timeliness of any of said appeals.
II
The
Propriety
Prohibition instead of Appeal

Here

of

Certiorari

and

The other preliminary point of the same respondent is alleged impropriety of the special civil action of
certiorari and prohibition in view of the existence of the remedy of appeal which it claims is proven by
the very appeals now before Us. Such contention fails to take into account that there is a common
thread among the basic issues involved in all these thirty-three appeals which, unless resolved in one
single proceeding, will inevitably cause the proliferation of more or less similar or closely related
incidents and consequent eventual appeals. If for this consideration alone, and without taking account
anymore of the unnecessary additional effort, expense and time which would be involved in as many
individual appeals as the number of such incidents, it is logical and proper to hold, as We do hold, that
the remedy of appeal is not adequate in the present cases. In determining whether or not a special civil
action of certiorari or prohibition may be resorted to in lieu of appeal, in instances wherein lack or
excess of jurisdiction or grave abuse of discretion is alleged, it is not enough that the remedy of appeal
exists or is possible. It is indispensable that taking all the relevant circumstances of the given case,
appeal would better serve the interests of justice. Obviously, the longer delay, augmented expense and
trouble and unnecessary repetition of the same work attendant to the present multiple appeals, which,
after all, deal with practically the same basic issues that can be more expeditiously resolved or
determined in a single special civil action, make the remedies of certiorari and prohibition, pursued by
petitioner, preferable, for purposes of resolving the common basic issues raised in all of them, despite
the conceded availability of appeal. Besides, the settling of such common fundamental issues would
naturally minimize the areas of conflict between the parties and render more simple the determination
of the secondary issues in each of them. Accordingly, respondent Magno's objection to the present
remedy of certiorari and prohibition must be overruled.
We come now to the errors assigned by petitioner-appellant, Philippine Commercial & Industrial Bank,
(PCIB, for short) in the petition as well as in its main brief as appellant.
III
On
Whether
or
Not
There
is
Still
Any
Part
of
the
Estate
Mrs.
Hodges
that
may
be
Adjudicated
to
her
and
sisters
as
her
estate,
of
which
respondent
Magno
unquestioned Administratrix in special Proceedings 1307.

Testate
brothers
is
the

55

In the petition, it is the position of PCIB that the respondent court exceeded its jurisdiction or gravely
abused its discretion in further recognizing after December 14, 1957 the existence of the Testate Estate
of Linnie Jane Hodges and in sanctioning purported acts of administration therein of respondent Magno.
Main ground for such posture is that by the aforequoted order of respondent court of said date, Hodges
was already allowed to assert and exercise all his rights as universal heir of his wife pursuant to the
provisions of her will, quoted earlier, hence, nothing else remains to be done in Special Proceedings
1307 except to formally close it. In other words, the contention of PCIB is that in view of said order,
nothing more than a formal declaration of Hodges as sole and exclusive heir of his wife and the
consequent formal unqualified adjudication to him of all her estate remain to be done to completely
close Special Proceedings 1307, hence respondent Magno should be considered as having ceased to be
Administratrix of the Testate Estate of Mrs. Hodges since then.
After carefully going over the record, We feel constrained to hold that such pose is patently untenable
from whatever angle it is examined.
To start with, We cannot find anywhere in respondent Order of December 14, 1957 the sense being
read into it by PCIB. The tenor of said order bears no suggestion at all to such effect. The declaration of
heirs and distribution by the probate court of the estate of a decedent is its most important function,
and this Court is not disposed to encourage judges of probate proceedings to be less than definite, plain
and specific in making orders in such regard, if for no other reason than that all parties concerned, like
the heirs, the creditors, and most of all the government, the devisees and legatees, should know with
certainty what are and when their respective rights and obligations ensuing from the inheritance or in
relation thereto would begin or cease, as the case may be, thereby avoiding precisely the legal
complications and consequent litigations similar to those that have developed unnecessarily in the
present cases. While it is true that in instances wherein all the parties interested in the estate of a
deceased person have already actually distributed among themselves their respective shares therein to
the satisfaction of everyone concerned and no rights of creditors or third parties are adversely affected,
it would naturally be almost ministerial for the court to issue the final order of declaration and
distribution, still it is inconceivable that the special proceeding instituted for the purpose may be
considered terminated, the respective rights of all the parties concerned be deemed definitely settled,
and the executor or administrator thereof be regarded as automatically discharged and relieved already
of all functions and responsibilities without the corresponding definite orders of the probate court to
such effect.
Indeed, the law on the matter is specific, categorical and unequivocal. Section 1 of Rule 90 provides:
SECTION 1. When order for distribution of residue made. When the debts, funeral
charges, and expenses of administration, the allowance to the widow and inheritance
tax, if any, chargeable to the estate in accordance with law have been paid, the court,
on the application of the executor or administrator, or of a person interested in the
estate, and after hearing upon notice, shall assign the residue of the estate to the
persons entitled to the same, naming them and the proportions, or parts, to which each
is entitled, and such persons may demand and recover their respective shares from the
executor or administrator, or any other person having the same in his possession. If
there is a controversy before the court as to who are the lawful heirs of the deceased
person or as to the distributive shares to which each person is entitled under the law,
the controversy shall be heard and decided as in ordinary cases.
56

No distribution shall be allowed until the payment of the obligations above mentioned
has been made or provided for, unless the distributees, or any of them give a bond, in a
sum to be fixed by the court, conditioned for the payment of said obligations within
such time as the court directs.
These provisions cannot mean anything less than that in order that a proceeding for the settlement of
the estate of a deceased may be deemed ready for final closure, (1) there should have been issued
already an order of distribution or assignment of the estate of the decedent among or to those entitled
thereto by will or by law, but (2) such order shall not be issued until after it is shown that the "debts,
funeral expenses, expenses of administration, allowances, taxes, etc. chargeable to the estate" have
been paid, which is but logical and proper. (3) Besides, such an order is usually issued upon proper and
specific application for the purpose of the interested party or parties, and not of the court.
... it is only after, and not before, the payment of all debts, funeral charges, expenses of
administration, allowance to the widow, and inheritance tax shall have been effected
that the court should make a declaration of heirs or of such persons as are entitled by
law to the residue. (Moran, Comments on the Rules of Court, 2nd ed., Vol. II, p. 397,
citing Capistrano vs. Nadurata, 49 Phil., 726; Lopez vs. Lopez, 37 Off. Gaz., 3091.)
(JIMOGA-ON v. BELMONTE, 84 Phil. 545, 548) (p. 86, Appellee's Brief)
xxx xxx xxx
Under Section 753 of the Code of Civil Procedure, (corresponding to Section 1, Rule 90)
what brings an intestate (or testate) proceeding to a close is the order of distribution
directing delivery of the residue to the persons entitled thereto after paying the
indebtedness, if any, left by the deceased. (Santiesteban vs. Santiesteban, 68 Phil. 367,
370.)
In the cases at bar, We cannot discern from the voluminous and varied facts, pleadings and orders
before Us that the above indispensable prerequisites for the declaration of heirs and the adjudication of
the estate of Mrs. Hodges had already been complied with when the order of December 14, 1957 was
issued. As already stated, We are not persuaded that the proceedings leading to the issuance of said
order, constituting barely of the motion of May 27, 1957, Annex D of the petition, the order of even
date, Annex E, and the motion of December 11, 1957, Annex H, all aforequoted, are what the law
contemplates. We cannot see in the order of December 14, 1957, so much relied upon by the petitioner,
anything more than an explicit approval of "all the sales, conveyances, leases and mortgages of all the
properties left by the deceased Linnie Jane Hodges executed by the Executor Charles N. Hodges" (after
the death of his wife and prior to the date of the motion), plus a general advance authorization to
enable said "Executor to execute subsequent sales, conveyances, leases and mortgages of the
properties left the said deceased Linnie Jane Hodges in consonance with wishes conveyed in the last will
and testament of the latter", which, certainly, cannot amount to the order of adjudication of the estate
of the decedent to Hodges contemplated in the law. In fact, the motion of December 11, 1957 on which
the court predicated the order in question did not pray for any such adjudication at all. What is more,
although said motion did allege that "herein Executor (Hodges) is not only part owner of the properties
left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane Hodges", it
significantly added that "herein Executor, as Legatee (sic), has the right to sell, convey, lease or dispose
of the properties in the Philippines during his lifetime", thereby indicating that what said motion
contemplated was nothing more than either the enjoyment by Hodges of his rights under the particular
57

portion of the dispositions of his wife's will which were to be operative only during his lifetime or the
use of his own share of the conjugal estate, pending the termination of the proceedings. In other words,
the authority referred to in said motions and orders is in the nature of that contemplated either in
Section 2 of Rule 109 which permits, in appropriate cases, advance or partial implementation of the
terms of a duly probated will before final adjudication or distribution when the rights of third parties
would not be adversely affected thereby or in the established practice of allowing the surviving spouse
to dispose of his own share of he conjugal estate, pending its final liquidation, when it appears that no
creditors of the conjugal partnership would be prejudiced thereby, (see the Revised Rules of Court by
Francisco, Vol. V-B, 1970 ed. p. 887) albeit, from the tenor of said motions, We are more inclined to
believe that Hodges meant to refer to the former. In any event, We are fully persuaded that the quoted
allegations of said motions read together cannot be construed as a repudiation of the rights
unequivocally established in the will in favor of Mrs. Hodges' brothers and sisters to whatever have not
been disposed of by him up to his death.
Indeed, nowhere in the record does it appear that the trial court subsequently acted upon the premise
suggested by petitioner. On the contrary, on November 23, 1965, when the court resolved the motion of
appellee Western Institute of Technology by its order We have quoted earlier, it categorically held that
as of said date, November 23, 1965, "in both cases (Special Proceedings 1307 and 1672) there is as yet
no judicial declaration of heirs nor distribution of properties to whomsoever are entitled thereto." In
this connection, it may be stated further against petitioner, by way of some kind of estoppel, that in its
own motion of January 8, 1965, already quoted in full on pages 54-67 of this decision, it prayed inter alia
that the court declare that "C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane
Hodges", which it would not have done if it were really convinced that the order of December 14, 1957
was already the order of adjudication and distribution of her estate. That said motion was later
withdrawn when Magno filed her own motion for determination and adjudication of what should
correspond to the brothers and sisters of Mrs. Hodges does not alter the indubitable implication of the
prayer of the withdrawn motion.
It must be borne in mind that while it is true that Mrs. Hodges bequeathed her whole estate to her
husband and gave him what amounts to full powers of dominion over the same during his lifetime, she
imposed at the same time the condition that whatever should remain thereof upon his death should go
to her brothers and sisters. In effect, therefore, what was absolutely given to Hodges was only so much
of his wife's estate as he might possibly dispose of during his lifetime; hence, even assuming that by the
allegations in his motion, he did intend to adjudicate the whole estate to himself, as suggested by
petitioner, such unilateral act could not have affected or diminished in any degree or manner the right
of his brothers and sisters-in-law over what would remain thereof upon his death, for surely, no one can
rightly contend that the testamentary provision in question allowed him to so adjudicate any part of the
estate to himself as to prejudice them. In other words, irrespective of whatever might have been
Hodges' intention in his motions, as Executor, of May 27, 1957 and December 11, 1957, the trial court's
orders granting said motions, even in the terms in which they have been worded, could not have had
the effect of an absolute and unconditional adjudication unto Hodges of the whole estate of his wife.
None of them could have deprived his brothers and sisters-in-law of their rights under said will. And it
may be added here that the fact that no one appeared to oppose the motions in question may only be
attributed, firstly, to the failure of Hodges to send notices to any of them, as admitted in the motion
itself, and, secondly, to the fact that even if they had been notified, they could not have taken said
motions to be for the final distribution and adjudication of the estate, but merely for him to be able,
pending such final distribution and adjudication, to either exercise during his lifetime rights of dominion
over his wife's estate in accordance with the bequest in his favor, which, as already observed, may be
58

allowed under the broad terms of Section 2 of Rule 109, or make use of his own share of the conjugal
estate. In any event, We do not believe that the trial court could have acted in the sense pretended by
petitioner, not only because of the clear language of the will but also because none of the interested
parties had been duly notified of the motion and hearing thereof. Stated differently, if the orders of May
27, 1957 and December 4, 1957 were really intended to be read in the sense contended by petitioner,
We would have no hesitancy in declaring them null and void.
Petitioner cites the case of Austria vs. Ventenilla, G. R. No. L-10018, September 19, 1956, (unreported
but a partial digest thereof appears in 99 Phil. 1069) in support of its insistence that with the orders of
May 27 and December 14, 1957, the closure of Mrs. Hodges' estate has become a mere formality,
inasmuch as said orders amounted to the order of adjudication and distribution ordained by Section 1 of
Rule 90. But the parallel attempted to be drawn between that case and the present one does not hold.
There the trial court had in fact issued a clear, distinct and express order of adjudication and distribution
more than twenty years before the other heirs of the deceased filed their motion asking that the
administratrix be removed, etc. As quoted in that decision, the order of the lower court in that respect
read as follows:
En orden a la mocion de la administradora, el juzgado la encuentra procedente bajo la
condicion de que no se hara entrega ni adjudicacion de los bienes a los herederos antes
de que estos presten la fianza correspondiente y de acuerdo con lo prescrito en el Art.
754 del Codigo de Procedimientos: pues, en autos no aparece que hayan sido
nombrados comisionados de avaluo y reclamaciones. Dicha fianza podra ser por un
valor igual al de los bienes que correspondan a cada heredero segun el testamento.
Creo que no es obice para la terminacion del expediente el hecho de que la
administradora no ha presentado hasta ahora el inventario de los bienes; pues, segun la
ley, estan exentos de esta formalidad os administradores que son legatarios del residuo
o remanente de los bienes y hayan prestado fianza para responder de las gestiones de
su cargo, y aparece en el testamento que la administradora Alejandra Austria reune
dicha condicion.
POR TODO LO EXPUESTO, el juzgado declara, 1.o: no haber lugar a la mocion de Ramon
Ventenilla y otros; 2.o, declara asimismo que los unicos herederos del finado Antonio
Ventenilla son su esposa Alejandra Austria, Maria Ventenilla, hermana del testador, y
Ramon Ventenilla, Maria Ventenilla, Ramon Soriano, Eulalio Soriano, Jose Soriano,
Gabriela Ventenilla, Lorenzo Ventenilla, Felicitas Ventenilla, Eugenio Ventenilla y
Alejandra Ventenilla, en representacion de los difuntos Juan, Tomas, Catalino y Froilan,
hermanos del testador, declarando, ademas que la heredera Alejandra Austria tiene
derecho al remanente de todos los bienes dejados por el finado, despues de deducir de
ellos la porcion que corresponde a cada uno de sus coherederos, conforme esta
mandado en las clausulas 8.a, 9.a, 10.a, 11.a, 12.a y 13.a del testamento; 3.o, se
aprueba el pago hecho por la administradora de los gastos de la ultima enfermedad y
funerales del testador, de la donacion hecha por el testador a favor de la Escuela a
Publica del Municipio de Mangatarem, y de las misas en sufragio del alma del finado;
4.o, que una vez prestada la fianza mencionada al principio de este auto, se haga la
entrega y adjudicacion de los bienes, conforme se dispone en el testamento y se acaba
de declarar en este auto; 5.o, y, finalmente, que verificada la adjudicacion, se dara por
terminada la administracion, revelandole toda responsabilidad a la administradora, y
cancelando su fianza.
59

ASI SE ORDENA.
Undoubtedly, after the issuance of an order of such tenor, the closure of any proceedings for the
settlement of the estate of a deceased person cannot be but perfunctory.
In the case at bar, as already pointed out above, the two orders relied upon by petitioner do not appear
ex-facie to be of the same tenor and nature as the order just quoted, and, what is more, the
circumstances attendant to its issuance do not suggest that such was the intention of the court, for
nothing could have been more violative of the will of Mrs. Hodges.
Indeed, to infer from Hodges' said motions and from his statements of accounts for the years 1958,
1959 and 1960, A Annexes I, K and M, respectively, wherein he repeatedly claimed that "herein executor
(being) the only devisee or legatee of the deceased, in accordance with the last will and testament
already probated," there is "no (other) person interested in the Philippines of the time and place of
examining herein account to be given notice", an intent to adjudicate unto himself the whole of his
wife's estate in an absolute manner and without regard to the contingent interests of her brothers and
sisters, is to impute bad faith to him, an imputation which is not legally permissible, much less
warranted by the facts of record herein. Hodges knew or ought to have known that, legally speaking, the
terms of his wife's will did not give him such a right. Factually, there are enough circumstances extant in
the records of these cases indicating that he had no such intention to ignore the rights of his co-heirs. In
his very motions in question, Hodges alleged, thru counsel, that the "deceased Linnie Jane Hodges died
leaving no descendants and ascendants, except brothers and sisters and herein petitioner, as surviving
spouse, to inherit the properties of the decedent", and even promised that "proper accounting will be
had in all these transactions" which he had submitted for approval and authorization by the court,
thereby implying that he was aware of his responsibilities vis-a-vis his co-heirs. As alleged by respondent
Magno in her brief as appellee:
Under date of April 14, 1959, C. N. Hodges filed his first "Account by the Executor" of
the estate of Linnie Jane Hodges. In the "Statement of Networth of Mr. C. N. Hodges and
the Estate of Linnie Jane Hodges" as of December 31, 1958 annexed thereto, C. N.
Hodges reported that the combined conjugal estate earned a net income of
P328,402.62, divided evenly between him and the estate of Linnie Jane Hodges.
Pursuant to this, he filed an "individual income tax return" for calendar year 1958 on the
estate of Linnie Jane Hodges reporting, under oath, the said estate as having earned
income of P164,201.31, exactly one-half of the net income of his combined personal
assets and that of the estate of Linnie Jane Hodges. (p. 91, Appellee's Brief.)
Under date of July 21, 1960, C. N. Hodges filed his second "Annual Statement of Account
by the Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of
Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of December 31, 1959
annexed thereto, C. N. Hodges reported that the combined conjugal estate earned a net
income of P270,623.32, divided evenly between him and the estate of Linnie Jane
Hodges. Pursuant to this, he filed an "individual income tax return" for calendar year
1959 on the estate of Linnie Jane Hodges reporting, under oath, the said estate as
having earned income of P135,311.66, exactly one-half of the net income of his
combined personal assets and that of the estate of Linnie Jane Hodges. (pp. 91-92, id.)

60

Under date of April 20, 1961, C. N. Hodges filed his third "Annual Statement of Account
by the Executor for the year 1960" of the estate of Linnie Jane Hodges. In the
"Statement of Net Worth of Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as
of December 31, 1960 annexed thereto, C. N. Hodges reported that the combined
conjugal estate earned a net income of P314,857.94, divided of Linnie Jane Hodges.
Pursuant to this, he filed an "individual evenly between him and the estate income tax
return" for calendar year 1960 on the estate of Linnie Jane Hodges reporting, under
oath, the said estate as having earned income of P157,428.97, exactly one-half of the
net income of his combined personal assets and that of the estate of Linnie Jane
Hodges. (pp. 92-93, id.)
In the petition for probate that he (Hodges) filed, he listed the seven brothers and
sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court
admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon (see p.
14, Green ROA). Immediately, C. N. Hodges filed a verified motion to have Roy Higdon's
name included as an heir, stating that he wanted to straighten the records "in order
(that) the heirs of deceased Roy Higdon may not think or believe they were omitted,
and that they were really and are interested in the estate of deceased Linnie Jane
Hodges".
Thus, he recognized, if in his own way, the separate identity of his wife's estate from his own share of
the conjugal partnership up to the time of his death, more than five years after that of his wife. He never
considered the whole estate as a single one belonging exclusively to himself. The only conclusion one
can gather from this is that he could have been preparing the basis for the eventual transmission of his
wife's estate, or, at least, so much thereof as he would not have been able to dispose of during his
lifetime, to her brothers and sisters in accordance with her expressed desire, as intimated in his tax
return in the United States to be more extensively referred to anon. And assuming that he did pay the
corresponding estate and inheritance taxes in the Philippines on the basis of his being sole heir, such
payment is not necessarily inconsistent with his recognition of the rights of his co-heirs. Without
purporting to rule definitely on the matter in these proceedings, We might say here that We are inclined
to the view that under the peculiar provisions of his wife's will, and for purposes of the applicable
inheritance tax laws, Hodges had to be considered as her sole heir, pending the actual transmission of
the remaining portion of her estate to her other heirs, upon the eventuality of his death, and whatever
adjustment might be warranted should there be any such remainder then is a matter that could well be
taken care of by the internal revenue authorities in due time.
It is to be noted that the lawyer, Atty. Leon P. Gellada, who signed the motions of May 27, 1957 and
December 11, 1957 and the aforementioned statements of account was the very same one who also
subsequently signed and filed the motion of December 26, 1962 for the appointment of respondent
Magno as "Administratrix of the Estate of Mrs. Linnie Jane Hodges" wherein it was alleged that "in
accordance with the provisions of the last will and testament of Linnie Jane Hodges, whatever real
properties that may remain at the death of her husband, Charles Newton Hodges, the said properties
shall be equally divided among their heirs." And it appearing that said attorney was Hodges' lawyer as
Executor of the estate of his wife, it stands to reason that his understanding of the situation, implicit in
his allegations just quoted, could somehow be reflective of Hodges' own understanding thereof.
As a matter of fact, the allegations in the motion of the same Atty. Gellada dated July 1, 1957, a
"Request for Inclusion of the Name of Roy Higdon in the Order of the Court dated July 19, 1957, etc.",
61

reference to which is made in the above quotation from respondent Magno's brief, are over the oath of
Hodges himself, who verified the motion. Said allegations read:
1. That the Hon. Court issued orders dated June 29, 1957, ordering the probate of the
will.
2. That in said order of the Hon. Court, the relatives of the deceased Linnie Jane
Hodges were enumerated. However, in the petition as well as in the testimony of
Executor during the hearing, the name Roy Higdon was mentioned, but deceased. It was
unintentionally omitted the heirs of said Roy Higdon who are his wife Aline Higdon and
son David Higdon, all of age, and residents of Quinlan, Texas, U.S.A.
3. That to straighten the records, and in order the heirs of deceased Roy Higdon may
not think or believe they were omitted, and that they were really and are interested in
the estate of deceased Linnie Jane Hodges, it is requested of the Hon. Court to insert the
names of Aline Higdon and David Higdon, wife and son of deceased Roy Higdon in the
said order of the Hon. Court dated June 29, 1957. (pars. 1 to 3, Annex 2 of Magno's
Answer Record, p. 260)
As can be seen, these italicized allegations indicate, more or less, the real attitude of Hodges in regard to
the testamentary dispositions of his wife.
In connection with this point of Hodges' intent, We note that there are documents, copies of which are
annexed to respondent Magno's answer, which purportedly contain Hodges' own solemn declarations
recognizing the right of his co-heirs, such as the alleged tax return he filed with the United States
Taxation authorities, identified as Schedule M, (Annex 4 of her answer) and his supposed affidavit of
renunciation, Annex 5. In said Schedule M, Hodges appears to have answered the pertinent question
thus:
2a. Had the surviving spouse the right to declare an election between (1) the provisions
made in his or her favor by the will and (11) dower, curtesy or a statutory interest? (X)
Yes ( ) No
2d. Does the surviving spouse contemplate renouncing the will and electing to take
dower, curtesy, or a statutory interest? (X) Yes ( ) No
3. According to the information and belief of the person or persons filing the return, is
any action described under question 1 designed or contemplated? ( ) Yes (X) No (Annex
4, Answer Record, p. 263)
and to have further stated under the item, "Description of property interests passing to surviving
spouse" the following:
None, except for purposes of administering the Estate, paying debts, taxes and other
legal charges. It is the intention of the surviving husband of deceased to distribute the
remaining property and interests of the deceased in their Community Estate to the

62

devisees and legatees named in the will when the debts, liabilities, taxes and expenses of
administration are finally determined and paid. (Annex 4, Answer Record, p. 263)
In addition, in the supposed affidavit of Hodges, Annex 5, it is stated:
I, C. N. Hodges, being duly sworn, on oath affirm that at the time the United States
Estate Tax Return was filed in the Estate of Linnie Jane Hodges on August 8, 1958, I
renounced and disclaimed any and all right to receive the rents, emoluments and
income from said estate, as shown by the statement contained in Schedule M at page
29 of said return, a copy of which schedule is attached to this affidavit and made a part
hereof.
The purpose of this affidavit is to ratify and confirm, and I do hereby ratify and confirm,
the declaration made in Schedule M of said return and hereby formally disclaim and
renounce any right on my part to receive any of the said rents, emoluments and income
from the estate of my deceased wife, Linnie Jane Hodges. This affidavit is made to
absolve me or my estate from any liability for the payment of income taxes on income
which has accrued to the estate of Linnie Jane Hodges since the death of the said Linnie
Jane Hodges on May 23, 1957. (Annex 5, Answer Record, p. 264)
Although it appears that said documents were not duly presented as evidence in the court below, and
We cannot, therefore, rely on them for the purpose of the present proceedings, still, We cannot close
our eyes to their existence in the record nor fail to note that their tenor jibes with Our conclusion
discussed above from the circumstances related to the orders of May 27 and December 14, 1957. 5
Somehow, these documents, considering they are supposed to be copies of their originals found in the
official files of the governments of the United States and of the Philippines, serve to lessen any possible
apprehension that Our conclusion from the other evidence of Hodges' manifest intent vis-a-vis the rights
of his co-heirs is without basis in fact.
Verily, with such eloquent manifestations of his good intentions towards the other heirs of his wife, We
find it very hard to believe that Hodges did ask the court and that the latter agreed that he be declared
her sole heir and that her whole estate be adjudicated to him without so much as just annotating the
contingent interest of her brothers and sisters in what would remain thereof upon his demise. On the
contrary, it seems to us more factual and fairer to assume that Hodges was well aware of his position as
executor of the will of his wife and, as such, had in mind the following admonition made by the Court in
Pamittan vs. Lasam, et al., 60 Phil., 908, at pp. 913-914:
Upon the death of Bernarda in September, 1908, said lands continued to be conjugal
property in the hands of the defendant Lasam. It is provided in article 1418 of the Civil
Code that upon the dissolution of the conjugal partnership, an inventory shall
immediately be made and this court in construing this provision in connection with
section 685 of the Code of Civil Procedure (prior to its amendment by Act No. 3176 of
November 24, 1924) has repeatedly held that in the event of the death of the wife, the
law imposes upon the husband the duty of liquidating the affairs of the partnership
without delay (desde luego) (Alfonso vs. Natividad, 6 Phil., 240; Prado vs. Lagera, 7 Phil.,
395; De la Rama vs. De la Rama, 7 Phil., 745; Enriquez vs. Victoria, 10 Phil., 10; Amancio
vs. Pardo, 13 Phil., 297; Rojas vs. Singson Tongson, 17 Phil., 476; Sochayseng vs. Trujillo,
31 Phil., 153; Molera vs. Molera, 40 Phil., 566; Nable Jose vs. Nable Jose, 41 Phil., 713.)
63

In the last mentioned case this court quoted with approval the case of Leatherwood vs.
Arnold (66 Texas, 414, 416, 417), in which that court discussed the powers of the
surviving spouse in the administration of the community property. Attention was called
to the fact that the surviving husband, in the management of the conjugal property after
the death of the wife, was a trustee of unique character who is liable for any fraud
committed by him with relation to the property while he is charged with its
administration. In the liquidation of the conjugal partnership, he had wide powers (as
the law stood prior to Act No. 3176) and the high degree of trust reposed in him stands
out more clearly in view of the fact that he was the owner of a half interest in his own
right of the conjugal estate which he was charged to administer. He could therefore no
more acquire a title by prescription against those for whom he was administering the
conjugal estate than could a guardian against his ward or a judicial administrator against
the heirs of estate. Section 38 of Chapter III of the Code of Civil Procedure, with relation
to prescription, provides that "this chapter shall not apply ... in the case of a continuing
and subsisting trust." The surviving husband in the administration and liquidation of the
conjugal estate occupies the position of a trustee of the highest order and is not
permitted by the law to hold that estate or any portion thereof adversely to those for
whose benefit the law imposes upon him the duty of administration and liquidation. No
liquidation was ever made by Lasam hence, the conjugal property which came into
his possession on the death of his wife in September, 1908, still remains conjugal
property, a continuing and subsisting trust. He should have made a liquidation
immediately (desde luego). He cannot now be permitted to take advantage of his own
wrong. One of the conditions of title by prescription (section 41, Code of Civil
Procedure) is possession "under a claim of title exclusive of any other right". For a
trustee to make such a claim would be a manifest fraud.
And knowing thus his responsibilities in the premises, We are not convinced that Hodges arrogated
everything unto himself leaving nothing at all to be inherited by his wife's brothers and sisters.
PCIB insists, however, that to read the orders of May 27 and December 14, 1957, not as adjudicatory,
but merely as approving past and authorizing future dispositions made by Hodges in a wholesale and
general manner, would necessarily render the said orders void for being violative of the provisions of
Rule 89 governing the manner in which such dispositions may be made and how the authority therefor
and approval thereof by the probate court may be secured. If We sustained such a view, the result
would only be that the said orders should be declared ineffective either way they are understood,
considering We have already seen it is legally impossible to consider them as adjudicatory. As a matter
of fact, however, what surges immediately to the surface, relative to PCIB's observations based on Rule
89, is that from such point of view, the supposed irregularity would involve no more than some nonjurisdictional technicalities of procedure, which have for their evident fundamental purpose the
protection of parties interested in the estate, such as the heirs, its creditors, particularly the government
on account of the taxes due it; and since it is apparent here that none of such parties are objecting to
said orders or would be prejudiced by the unobservance by the trial court of the procedure pointed out
by PCIB, We find no legal inconvenience in nor impediment to Our giving sanction to the blanket
approval and authority contained in said orders. This solution is definitely preferable in law and in
equity, for to view said orders in the sense suggested by PCIB would result in the deprivation of
substantive rights to the brothers and sisters of Mrs. Hodges, whereas reading them the other way will
not cause any prejudice to anyone, and, withal, will give peace of mind and stability of rights to the
64

innocent parties who relied on them in good faith, in the light of the peculiar pertinent provisions of the
will of said decedent.
Now, the inventory submitted by Hodges on May 12, 1958 referred to the estate of his wife as consisting
of "One-half of all the items designated in the balance sheet, copy of which is hereto attached and
marked as "Annex A"." Although, regrettably, no copy of said Annex A appears in the records before Us,
We take judicial notice, on the basis of the undisputed facts in these cases, that the same consists of
considerable real and other personal kinds of properties. And since, according to her will, her husband
was to be the sole owner thereof during his lifetime, with full power and authority to dispose of any of
them, provided that should there be any remainder upon his death, such remainder would go to her
brothers and sisters, and furthermore, there is no pretension, much less any proof that Hodges had in
fact disposed of all of them, and, on the contrary, the indications are rather to the effect that he had
kept them more or less intact, it cannot truthfully be said that, upon the death of Hodges, there was no
more estate of Mrs. Hodges to speak of. It is Our conclusion, therefore, that properties do exist which
constitute such estate, hence Special Proceedings 1307 should not yet be closed.
Neither is there basis for holding that respondent Magno has ceased to be the Administratrix in said
proceeding. There is no showing that she has ever been legally removed as such, the attempt to replace
her with Mr. Benito Lopez without authority from the Court having been expressly held ineffective by
Our resolution of September 8, 1972. Parenthetically, on this last point, PCIB itself is very emphatic in
stressing that it is not questioning said respondent's status as such administratrix. Indeed, it is not clear
that PCIB has any standing to raise any objection thereto, considering it is a complete stranger insofar as
the estate of Mrs. Hodges is concerned.
It is the contention of PCIB, however, that as things actually stood at the time of Hodges' death, their
conjugal partnership had not yet been liquidated and, inasmuch as the properties composing the same
were thus commingled pro indiviso and, consequently, the properties pertaining to the estate of each of
the spouses are not yet identifiable, it is PCIB alone, as administrator of the estate of Hodges, who
should administer everything, and all that respondent Magno can do for the time being is to wait until
the properties constituting the remaining estate of Mrs. Hodges have been duly segregated and
delivered to her for her own administration. Seemingly, PCIB would liken the Testate Estate of Linnie
Jane Hodges to a party having a claim of ownership to some properties included in the inventory of an
administrator of the estate of a decedent, (here that of Hodges) and who normally has no right to take
part in the proceedings pending the establishment of his right or title; for which as a rule it is required
that an ordinary action should be filed, since the probate court is without jurisdiction to pass with
finality on questions of title between the estate of the deceased, on the one hand, and a third party or
even an heir claiming adversely against the estate, on the other.
We do not find such contention sufficiently persuasive. As We see it, the situation obtaining herein
cannot be compared with the claim of a third party the basis of which is alien to the pending probate
proceedings. In the present cases what gave rise to the claim of PCIB of exclusive ownership by the
estate of Hodges over all the properties of the Hodges spouses, including the share of Mrs. Hodges in
the community properties, were the orders of the trial court issued in the course of the very settlement
proceedings themselves, more specifically, the orders of May 27 and December 14, 1957 so often
mentioned above. In other words, the root of the issue of title between the parties is something that the
court itself has done in the exercise of its probate jurisdiction. And since in the ultimate analysis, the
question of whether or not all the properties herein involved pertain exclusively to the estate of Hodges
depends on the legal meaning and effect of said orders, the claim that respondent court has no
65

jurisdiction to take cognizance of and decide the said issue is incorrect. If it was within the competence
of the court to issue the root orders, why should it not be within its authority to declare their true
significance and intent, to the end that the parties may know whether or not the estate of Mrs. Hodges
had already been adjudicated by the court, upon the initiative of Hodges, in his favor, to the exclusion of
the other heirs of his wife instituted in her will?
At this point, it bears emphasis again that the main cause of all the present problems confronting the
courts and the parties in these cases was the failure of Hodges to secure, as executor of his wife's estate,
from May, 1957 up to the time of his death in December, 1962, a period of more than five years, the
final adjudication of her estate and the closure of the proceedings. The record is bare of any showing
that he ever exerted any effort towards the early settlement of said estate. While, on the one hand,
there are enough indications, as already discuss that he had intentions of leaving intact her share of the
conjugal properties so that it may pass wholly to his co-heirs upon his death, pursuant to her will, on the
other hand, by not terminating the proceedings, his interests in his own half of the conjugal properties
remained commingled pro-indiviso with those of his co-heirs in the other half. Obviously, such a
situation could not be conducive to ready ascertainment of the portion of the inheritance that should
appertain to his co-heirs upon his death. Having these considerations in mind, it would be giving a
premium for such procrastination and rather unfair to his co-heirs, if the administrator of his estate
were to be given exclusive administration of all the properties in question, which would necessarily
include the function of promptly liquidating the conjugal partnership, thereby identifying and
segregating without unnecessary loss of time which properties should be considered as constituting the
estate of Mrs. Hodges, the remainder of which her brothers and sisters are supposed to inherit equally
among themselves.
To be sure, an administrator is not supposed to represent the interests of any particular party and his
acts are deemed to be objectively for the protection of the rights of everybody concerned with the
estate of the decedent, and from this point of view, it maybe said that even if PCIB were to act alone,
there should be no fear of undue disadvantage to anyone. On the other hand, however, it is evidently
implicit in section 6 of Rule 78 fixing the priority among those to whom letters of administration should
be granted that the criterion in the selection of the administrator is not his impartiality alone but, more
importantly, the extent of his interest in the estate, so much so that the one assumed to have greater
interest is preferred to another who has less. Taking both of these considerations into account,
inasmuch as, according to Hodges' own inventory submitted by him as Executor of the estate of his wife,
practically all their properties were conjugal which means that the spouses have equal shares therein, it
is but logical that both estates should be administered jointly by representatives of both, pending their
segregation from each other. Particularly is such an arrangement warranted because the actuations so
far of PCIB evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from
their inheritance. Besides, to allow PCIB, the administrator of his estate, to perform now what Hodges
was duty bound to do as executor is to violate the spirit, if not the letter, of Section 2 of Rule 78 which
expressly provides that "The executor of an executor shall not, as such, administer the estate of the first
testator." It goes without saying that this provision refers also to the administrator of an executor like
PCIB here.
We are not unmindful of the fact that under Section 2 of Rule 73, "When the marriage is dissolved by
the death of the husband or wife, the community property shall be inventoried, administered, and
liquidated, and the debts thereof paid, in the testate or intestate proceedings of the deceased spouse. If
both spouses have died, the conjugal partnership shall be liquidated in the testate or intestate
proceedings of either." Indeed, it is true that the last sentence of this provision allows or permits the
66

conjugal partnership of spouses who are both deceased to be settled or liquidated in the testate or
intestate proceedings of either, but precisely because said sentence allows or permits that the
liquidation be made in either proceeding, it is a matter of sound judicial discretion in which one it should
be made. After all, the former rule referring to the administrator of the husband's estate in respect to
such liquidation was done away with by Act 3176, the pertinent provisions of which are now embodied
in the rule just cited.
Thus, it can be seen that at the time of the death of Hodges, there was already the pending judicial
settlement proceeding of the estate of Mrs. Hodges, and, more importantly, that the former was the
executor of the latter's will who had, as such, failed for more than five years to see to it that the same
was terminated earliest, which was not difficult to do, since from ought that appears in the record, there
were no serious obstacles on the way, the estate not being indebted and there being no immediate
heirs other than Hodges himself. Such dilatory or indifferent attitude could only spell possible prejudice
of his co-heirs, whose rights to inheritance depend entirely on the existence of any remainder of Mrs.
Hodges' share in the community properties, and who are now faced with the pose of PCIB that there is
no such remainder. Had Hodges secured as early as possible the settlement of his wife's estate, this
problem would not arisen. All things considered, We are fully convinced that the interests of justice will
be better served by not permitting or allowing PCIB or any administrator of the estate of Hodges
exclusive administration of all the properties in question. We are of the considered opinion and so hold
that what would be just and proper is for both administrators of the two estates to act conjointly until
after said estates have been segregated from each other.
At this juncture, it may be stated that we are not overlooking the fact that it is PCIB's contention that,
viewed as a substitution, the testamentary disposition in favor of Mrs. Hodges' brothers and sisters may
not be given effect. To a certain extent, this contention is correct. Indeed, legally speaking, Mrs. Hodges'
will provides neither for a simple or vulgar substitution under Article 859 of the Civil Code nor for a
fideicommissary substitution under Article 863 thereof. There is no vulgar substitution therein because
there is no provision for either (1) predecease of the testator by the designated heir or (2) refusal or (3)
incapacity of the latter to accept the inheritance, as required by Article 859; and neither is there a
fideicommissary substitution therein because no obligation is imposed thereby upon Hodges to preserve
the estate or any part thereof for anyone else. But from these premises, it is not correct to jump to the
conclusion, as PCIB does, that the testamentary dispositions in question are therefore inoperative and
invalid.
The error in PCIB's position lies simply in the fact that it views the said disposition exclusively in the light
of substitutions covered by the Civil Code section on that subject, (Section 3, Chapter 2, Title IV, Book III)
when it is obvious that substitution occurs only when another heir is appointed in a will "so that he may
enter into inheritance in default of the heir originally instituted," (Article 857, id.) and, in the present
case, no such possible default is contemplated. The brothers and sisters of Mrs. Hodges are not
substitutes for Hodges because, under her will, they are not to inherit what Hodges cannot, would not
or may not inherit, but what he would not dispose of from his inheritance; rather, therefore, they are
also heirs instituted simultaneously with Hodges, subject, however, to certain conditions, partially
resolutory insofar as Hodges was concerned and correspondingly suspensive with reference to his
brothers and sisters-in-law. It is partially resolutory, since it bequeaths unto Hodges the whole of her
estate to be owned and enjoyed by him as universal and sole heir with absolute dominion over them 6
only during his lifetime, which means that while he could completely and absolutely dispose of any
portion thereof inter vivos to anyone other than himself, he was not free to do so mortis causa, and all
his rights to what might remain upon his death would cease entirely upon the occurrence of that
67

contingency, inasmuch as the right of his brothers and sisters-in-law to the inheritance, although vested
already upon the death of Mrs. Hodges, would automatically become operative upon the occurrence of
the death of Hodges in the event of actual existence of any remainder of her estate then.
Contrary to the view of respondent Magno, however, it was not the usufruct alone of her estate, as
contemplated in Article 869 of the Civil Code, that she bequeathed to Hodges during his lifetime, but the
full ownership thereof, although the same was to last also during his lifetime only, even as there was no
restriction whatsoever against his disposing or conveying the whole or any portion thereof to anybody
other than himself. The Court sees no legal impediment to this kind of institution, in this jurisdiction or
under Philippine law, except that it cannot apply to the legitime of Hodges as the surviving spouse,
consisting of one-half of the estate, considering that Mrs. Hodges had no surviving ascendants nor
descendants. (Arts. 872, 900, and 904, New Civil Code.)
But relative precisely to the question of how much of Mrs. Hodges' share of the conjugal partnership
properties may be considered as her estate, the parties are in disagreement as to how Article 16 of the
Civil Code 7 should be applied. On the one hand, petitioner claims that inasmuch as Mrs. Hodges was a
resident of the Philippines at the time of her death, under said Article 16, construed in relation to the
pertinent laws of Texas and the principle of renvoi, what should be applied here should be the rules of
succession under the Civil Code of the Philippines, and, therefore, her estate could consist of no more
than one-fourth of the said conjugal properties, the other fourth being, as already explained, the
legitime of her husband (Art. 900, Civil Code) which she could not have disposed of nor burdened with
any condition (Art. 872, Civil Code). On the other hand, respondent Magno denies that Mrs. Hodges died
a resident of the Philippines, since allegedly she never changed nor intended to change her original
residence of birth in Texas, United States of America, and contends that, anyway, regardless of the
question of her residence, she being indisputably a citizen of Texas, under said Article 16 of the Civil
Code, the distribution of her estate is subject to the laws of said State which, according to her, do not
provide for any legitime, hence, the brothers and sisters of Mrs. Hodges are entitled to the remainder of
the whole of her share of the conjugal partnership properties consisting of one-half thereof. Respondent
Magno further maintains that, in any event, Hodges had renounced his rights under the will in favor of
his co-heirs, as allegedly proven by the documents touching on the point already mentioned earlier, the
genuineness and legal significance of which petitioner seemingly questions. Besides, the parties are
disagreed as to what the pertinent laws of Texas provide. In the interest of settling the estates herein
involved soonest, it would be best, indeed, if these conflicting claims of the parties were determined in
these proceedings. The Court regrets, however, that it cannot do so, for the simple reason that neither
the evidence submitted by the parties in the court below nor their discussion, in their respective briefs
and memoranda before Us, of their respective contentions on the pertinent legal issues, of grave
importance as they are, appear to Us to be adequate enough to enable Us to render an intelligent
comprehensive and just resolution. For one thing, there is no clear and reliable proof of what in fact the
possibly applicable laws of Texas are. 7* Then also, the genuineness of documents relied upon by
respondent Magno is disputed. And there are a number of still other conceivable related issues which
the parties may wish to raise but which it is not proper to mention here. In Justice, therefore, to all the
parties concerned, these and all other relevant matters should first be threshed out fully in the trial
court in the proceedings hereafter to be held therein for the purpose of ascertaining and adjudicating
and/or distributing the estate of Mrs. Hodges to her heirs in accordance with her duly probated will.
To be more explicit, all that We can and do decide in connection with the petition for certiorari and
prohibition are: (1) that regardless of which corresponding laws are applied, whether of the Philippines
or of Texas, and taking for granted either of the respective contentions of the parties as to provisions of
68

the latter, 8 and regardless also of whether or not it can be proven by competent evidence that Hodges
renounced his inheritance in any degree, it is easily and definitely discernible from the inventory
submitted by Hodges himself, as Executor of his wife's estate, that there are properties which should
constitute the estate of Mrs. Hodges and ought to be disposed of or distributed among her heirs
pursuant to her will in said Special Proceedings 1307; (2) that, more specifically, inasmuch as the
question of what are the pertinent laws of Texas applicable to the situation herein is basically one of
fact, and, considering that the sole difference in the positions of the parties as to the effect of said laws
has reference to the supposed legitime of Hodges it being the stand of PCIB that Hodges had such a
legitime whereas Magno claims the negative - it is now beyond controversy for all future purposes of
these proceedings that whatever be the provisions actually of the laws of Texas applicable hereto, the
estate of Mrs. Hodges is at least, one-fourth of the conjugal estate of the spouses; the existence and
effects of foreign laws being questions of fact, and it being the position now of PCIB that the estate of
Mrs. Hodges, pursuant to the laws of Texas, should only be one-fourth of the conjugal estate, such
contention constitutes an admission of fact, and consequently, it would be in estoppel in any further
proceedings in these cases to claim that said estate could be less, irrespective of what might be proven
later to be actually the provisions of the applicable laws of Texas; (3) that Special Proceedings 1307 for
the settlement of the testate estate of Mrs. Hodges cannot be closed at this stage and should proceed to
its logical conclusion, there having been no proper and legal adjudication or distribution yet of the
estate therein involved; and (4) that respondent Magno remains and continues to be the Administratrix
therein. Hence, nothing in the foregoing opinion is intended to resolve the issues which, as already
stated, are not properly before the Court now, namely, (1) whether or not Hodges had in fact and in law
waived or renounced his inheritance from Mrs. Hodges, in whole or in part, and (2) assuming there had
been no such waiver, whether or not, by the application of Article 16 of the Civil Code, and in the light of
what might be the applicable laws of Texas on the matter, the estate of Mrs. Hodges is more than the
one-fourth declared above. As a matter of fact, even our finding above about the existence of properties
constituting the estate of Mrs. Hodges rests largely on a general appraisal of the size and extent of the
conjugal partnership gathered from reference made thereto by both parties in their briefs as well as in
their pleadings included in the records on appeal, and it should accordingly yield, as to which exactly
those properties are, to the more concrete and specific evidence which the parties are supposed to
present in support of their respective positions in regard to the foregoing main legal and factual issues.
In the interest of justice, the parties should be allowed to present such further evidence in relation to all
these issues in a joint hearing of the two probate proceedings herein involved. After all, the court a quo
has not yet passed squarely on these issues, and it is best for all concerned that it should do so in the
first instance.
Relative to Our holding above that the estate of Mrs. Hodges cannot be less than the remainder of onefourth of the conjugal partnership properties, it may be mentioned here that during the deliberations,
the point was raised as to whether or not said holding might be inconsistent with Our other ruling here
also that, since there is no reliable evidence as to what are the applicable laws of Texas, U.S.A. "with
respect to the order of succession and to the amount of successional rights" that may be willed by a
testator which, under Article 16 of the Civil Code, are controlling in the instant cases, in view of the
undisputed Texan nationality of the deceased Mrs. Hodges, these cases should be returned to the court
a quo, so that the parties may prove what said law provides, it is premature for Us to make any specific
ruling now on either the validity of the testamentary dispositions herein involved or the amount of
inheritance to which the brothers and sisters of Mrs. Hodges are entitled. After nature reflection, We
are of the considered view that, at this stage and in the state of the records before Us, the feared
inconsistency is more apparent than real. Withal, it no longer lies in the lips of petitioner PCIB to make

69

any claim that under the laws of Texas, the estate of Mrs. Hodges could in any event be less than that
We have fixed above.
It should be borne in mind that as above-indicated, the question of what are the laws of Texas governing
the matters herein issue is, in the first instance, one of fact, not of law. Elementary is the rule that
foreign laws may not be taken judicial notice of and have to be proven like any other fact in dispute
between the parties in any proceeding, with the rare exception in instances when the said laws are
already within the actual knowledge of the court, such as when they are well and generally known or
they have been actually ruled upon in other cases before it and none of the parties concerned do not
claim otherwise. (5 Moran, Comments on the Rules of Court, p. 41, 1970 ed.) In Fluemer vs. Hix, 54 Phil.
610, it was held:
It is the theory of the petitioner that the alleged will was executed in Elkins West Virginia, on November
3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of West Virginia govern. To
this end, there was submitted a copy of section 3868 of Acts 1882, c. 84 as found in West Virginia Code,
Annotated, by Hogg Charles E., vol. 2, 1914, p. 1960, and as certified to by the Director of the National
Library. But this was far from a compliance with the law. The laws of a foreign jurisdiction do not prove
themselves in our courts. The courts of the Philippine Islands are not authorized to take judicial notice of
the laws of the various States of the American Union. Such laws must be proved as facts. (In re Estate of
Johnson [1918], 39 Phil., 156.) Here the requirements of the law were not met. There was no showing
that the book from which an extract was taken was printed or published under the authority of the State
of West Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from the
law attested by the certificate of the officer having charge of the original, under the seal of the State of
West Virginia, as provided in section 301 of the Code of Civil Procedure. No evidence was introduced to
show that the extract from the laws of West Virginia was in force at the time the alleged will was
executed."
No evidence of the nature thus suggested by the Court may be found in the records of the cases at bar.
Quite to the contrary, the parties herein have presented opposing versions in their respective pleadings
and memoranda regarding the matter. And even if We took into account that in Aznar vs. Garcia, the
Court did make reference to certain provisions regarding succession in the laws of Texas, the disparity in
the material dates of that case and the present ones would not permit Us to indulge in the hazardous
conjecture that said provisions have not been amended or changed in the meantime.
On the other hand, in In re Estate of Johnson, 39 Phil. 156, We held:
Upon the other point as to whether the will was executed in conformity with the
statutes of the State of Illinois we note that it does not affirmatively appear from the
transcription of the testimony adduced in the trial court that any witness was examined
with reference to the law of Illinois on the subject of the execution of will. The trial
judge no doubt was satisfied that the will was properly executed by examining section
1874 of the Revised Statutes of Illinois, as exhibited in volume 3 of Starr & Curtis's
Annotated Illinois Statutes, 2nd ed., p. 426; and he may have assumed that he could
take judicial notice of the laws of Illinois under section 275 of the Code of Civil
Procedure. If so, he was in our opinion mistaken. That section authorizes the courts here
to take judicial notice, among other things, of the acts of the legislative department of
the United States. These words clearly have reference to Acts of the Congress of the
United States; and we would hesitate to hold that our courts can, under this provision,
70

take judicial notice of the multifarious laws of the various American States. Nor do we
think that any such authority can be derived from the broader language, used in the
same section, where it is said that our courts may take judicial notice of matters of
public knowledge "similar" to those therein enumerated. The proper rule we think is to
require proof of the statutes of the States of the American Union whenever their
provisions are determinative of the issues in any action litigated in the Philippine courts.
Nevertheless, even supposing that the trial court may have erred in taking judicial notice
of the law of Illinois on the point in question, such error is not now available to the
petitioner, first, because the petition does not state any fact from which it would appear
that the law of Illinois is different from what the court found, and, secondly, because the
assignment of error and argument for the appellant in this court raises no question
based on such supposed error. Though the trial court may have acted upon pure
conjecture as to the law prevailing in the State of Illinois, its judgment could not be set
aside, even upon application made within six months under section 113 of the Code of
Civil Procedure, unless it should be made to appear affirmatively that the conjecture
was wrong. The petitioner, it is true, states in general terms that the will in question is
invalid and inadequate to pass real and personal property in the State of Illinois, but this
is merely a conclusion of law. The affidavits by which the petition is accompanied
contain no reference to the subject, and we are cited to no authority in the appellant's
brief which might tend to raise a doubt as to the correctness of the conclusion of the
trial court. It is very clear, therefore, that this point cannot be urged as of serious
moment.
It is implicit in the above ruling that when, with respect to certain aspects of the foreign laws concerned,
the parties in a given case do not have any controversy or are more or less in agreement, the Court may
take it for granted for the purposes of the particular case before it that the said laws are as such virtual
agreement indicates, without the need of requiring the presentation of what otherwise would be the
competent evidence on the point. Thus, in the instant cases wherein it results from the respective
contentions of both parties that even if the pertinent laws of Texas were known and to be applied, the
amount of the inheritance pertaining to the heirs of Mrs. Hodges is as We have fixed above, the absence
of evidence to the effect that, actually and in fact, under said laws, it could be otherwise is of no longer
of any consequence, unless the purpose is to show that it could be more. In other words, since PCIB, the
petitioner-appellant, concedes that upon application of Article 16 of the Civil Code and the pertinent
laws of Texas, the amount of the estate in controversy is just as We have determined it to be, and
respondent-appellee is only claiming, on her part, that it could be more, PCIB may not now or later
pretend differently.
To be more concrete, on pages 20-21 of its petition herein, dated July 31, 1967, PCIB states
categorically:
Inasmuch as Article 16 of the Civil Code provides that "intestate and testamentary
successions both with respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country wherein said
property may be found", while the law of Texas (the Hodges spouses being nationals of
U.S.A., State of Texas), in its conflicts of law rules, provides that the domiciliary law (in
71

this case Philippine law) governs the testamentary dispositions and successional rights
over movables or personal properties, while the law of the situs (in this case also
Philippine law with respect to all Hodges properties located in the Philippines), governs
with respect to immovable properties, and applying therefore the 'renvoi doctrine' as
enunciated and applied by this Honorable Court in the case of In re Estate of
Christensen (G.R. No. L-16749, Jan. 31, 1963), there can be no question that Philippine
law governs the testamentary dispositions contained in the Last Will and Testament of
the deceased Linnie Jane Hodges, as well as the successional rights to her estate, both
with respect to movables, as well as to immovables situated in the Philippines.
In its main brief dated February 26, 1968, PCIB asserts:
The law governing successional rights.
As recited above, there is no question that the deceased, Linnie Jane Hodges, was an
American citizen. There is also no question that she was a national of the State of Texas,
U.S.A. Again, there is likewise no question that she had her domicile of choice in the City
of Iloilo, Philippines, as this has already been pronounced by the above-cited orders of
the lower court, pronouncements which are by now res adjudicata (par. [a], See. 49,
Rule 39, Rules of Court; In re Estate of Johnson, 39 Phil. 156).
Article 16 of the Civil Code provides:
"Real property as well as personal property is subject to the law of the country where it
is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
regardless of the country wherein said property may be found."
Thus the aforecited provision of the Civil Code points towards the national law of the
deceased, Linnie Jane Hodges, which is the law of Texas, as governing succession "both
with respect to the order of succession and to the amount of successional rights and to
the intrinsic validity of testamentary provisions ...". But the law of Texas, in its conflicts
of law rules, provides that the domiciliary law governs the testamentary dispositions
and successional rights over movables or personal property, while the law of the situs
governs with respect to immovable property. Such that with respect to both movable
property, as well as immovable property situated in the Philippines, the law of Texas
points to the law of the Philippines.
Applying, therefore, the so-called "renvoi doctrine", as enunciated and applied by this
Honorable Court in the case of "In re Christensen" (G.R. No. L-16749, Jan. 31, 1963),
there can be no question that Philippine law governs the testamentary provisions in the
Last Will and Testament of the deceased Linnie Jane Hodges, as well as the successional

72

rights to her estate, both with respect to movables, as well as immovables situated in
the Philippines.
The subject of successional rights.
Under Philippine law, as it is under the law of Texas, the conjugal or community
property of the spouses, Charles Newton Hodges and Linnie Jane Hodges, upon the
death of the latter, is to be divided into two, one-half pertaining to each of the spouses,
as his or her own property. Thus, upon the death of Linnie Jane Hodges, one-half of the
conjugal partnership property immediately pertained to Charles Newton Hodges as his
own share, and not by virtue of any successional rights. There can be no question about
this.
Again, Philippine law, or more specifically, Article 900 of the Civil Code provides:
If the only survivor is the widow or widower, she or he shall be entitled
to one-half of the hereditary estate of the deceased spouse, and the
testator may freely dispose of the other half.
If the marriage between the surviving spouse and the testator was
solemnized in articulo mortis, and the testator died within three months
from the time of the marriage, the legitime of the surviving spouse as
the sole heir shall be one-third of the hereditary estate, except when
they have been living as husband and wife for more than five years. In
the latter case, the legitime of the surviving spouse shall be that
specified in the preceding paragraph.
This legitime of the surviving spouse cannot be burdened by a fideicommisary
substitution (Art. 864, Civil code), nor by any charge, condition, or substitution (Art, 872,
Civil code). It is clear, therefore, that in addition to one-half of the conjugal partnership
property as his own conjugal share, Charles Newton Hodges was also immediately
entitled to one-half of the half conjugal share of the deceased, Linnie Jane Hodges, or
one-fourth of the entire conjugal property, as his legitime.
One-fourth of the conjugal property therefore remains at issue.
In the summary of its arguments in its memorandum dated April 30, 1968, the following appears:
Briefly, the position advanced by the petitioner is:
a. That the Hodges spouses were domiciled legally in the Philippines (pp. 19-20,
petition). This is now a matter of res adjudicata (p. 20, petition).
b. That under Philippine law, Texas law, and the renvoi doctrine, Philippine law governs
the successional rights over the properties left by the deceased, Linnie Jane Hodges (pp.
20-21, petition).

73

c. That under Philippine as well as Texas law, one-half of the Hodges properties pertains
to the deceased, Charles Newton Hodges (p. 21, petition). This is not questioned by the
respondents.
d. That under Philippine law, the deceased, Charles Newton Hodges, automatically
inherited one-half of the remaining one-half of the Hodges properties as his legitime (p.
21, petition).
e. That the remaining 25% of the Hodges properties was inherited by the deceased,
Charles Newton Hodges, under the will of his deceased spouse (pp. 22-23, petition).
Upon the death of Charles Newton Hodges, the substitution 'provision of the will of the
deceased, Linnie Jane Hodges, did not operate because the same is void (pp. 23-25,
petition).
f. That the deceased, Charles Newton Hodges, asserted his sole ownership of the
Hodges properties and the probate court sanctioned such assertion (pp. 25-29,
petition). He in fact assumed such ownership and such was the status of the properties
as of the time of his death (pp. 29-34, petition).
Of similar tenor are the allegations of PCIB in some of its pleadings quoted in the earlier part of this
option.
On her part, it is respondent-appellee Magno's posture that under the laws of Texas, there is no system
of legitime, hence the estate of Mrs. Hodges should be one-half of all the conjugal properties.
It is thus unquestionable that as far as PCIB is concerned, the application to these cases of Article 16 of
the Civil Code in relation to the corresponding laws of Texas would result in that the Philippine laws on
succession should control. On that basis, as We have already explained above, the estate of Mrs. Hodges
is the remainder of one-fourth of the conjugal partnership properties, considering that We have found
that there is no legal impediment to the kind of disposition ordered by Mrs. Hodges in her will in favor of
her brothers and sisters and, further, that the contention of PCIB that the same constitutes an
inoperative testamentary substitution is untenable. As will be recalled, PCIB's position that there is no
such estate of Mrs. Hodges is predicated exclusively on two propositions, namely: (1) that the provision
in question in Mrs. Hodges' testament violates the rules on substitution of heirs under the Civil Code and
(2) that, in any event, by the orders of the trial court of May 27, and December 14, 1957, the trial court
had already finally and irrevocably adjudicated to her husband the whole free portion of her estate to
the exclusion of her brothers and sisters, both of which poses, We have overruled. Nowhere in its
pleadings, briefs and memoranda does PCIB maintain that the application of the laws of Texas would
result in the other heirs of Mrs. Hodges not inheriting anything under her will. And since PCIB's
representations in regard to the laws of Texas virtually constitute admissions of fact which the other
parties and the Court are being made to rely and act upon, PCIB is "not permitted to contradict them or
subsequently take a position contradictory to or inconsistent with them." (5 Moran, id, p. 65, citing
Cunanan vs. Amparo, 80 Phil. 227; Sta. Ana vs. Maliwat, L-23023, Aug. 31, 1968, 24 SCRA 1018).
Accordingly, the only question that remains to be settled in the further proceedings hereby ordered to
be held in the court below is how much more than as fixed above is the estate of Mrs. Hodges, and this
would depend on (1) whether or not the applicable laws of Texas do provide in effect for more, such as,
74

when there is no legitime provided therein, and (2) whether or not Hodges has validly waived his whole
inheritance from Mrs. Hodges.
In the course of the deliberations, it was brought out by some members of the Court that to avoid or, at
least, minimize further protracted legal controversies between the respective heirs of the Hodges
spouses, it is imperative to elucidate on the possible consequences of dispositions made by Hodges after
the death of his wife from the mass of the unpartitioned estates without any express indication in the
pertinent documents as to whether his intention is to dispose of part of his inheritance from his wife or
part of his own share of the conjugal estate as well as of those made by PCIB after the death of Hodges.
After a long discussion, the consensus arrived at was as follows: (1) any such dispositions made
gratuitously in favor of third parties, whether these be individuals, corporations or foundations, shall be
considered as intended to be of properties constituting part of Hodges' inheritance from his wife, it
appearing from the tenor of his motions of May 27 and December 11, 1957 that in asking for general
authority to make sales or other disposals of properties under the jurisdiction of the court, which
include his own share of the conjugal estate, he was not invoking particularly his right over his own
share, but rather his right to dispose of any part of his inheritance pursuant to the will of his wife; (2) as
regards sales, exchanges or other remunerative transfers, the proceeds of such sales or the properties
taken in by virtue of such exchanges, shall be considered as merely the products of "physical changes" of
the properties of her estate which the will expressly authorizes Hodges to make, provided that whatever
of said products should remain with the estate at the time of the death of Hodges should go to her
brothers and sisters; (3) the dispositions made by PCIB after the death of Hodges must naturally be
deemed as covering only the properties belonging to his estate considering that being only the
administrator of the estate of Hodges, PCIB could not have disposed of properties belonging to the
estate of his wife. Neither could such dispositions be considered as involving conjugal properties, for the
simple reason that the conjugal partnership automatically ceased when Mrs. Hodges died, and by the
peculiar provision of her will, under discussion, the remainder of her share descended also automatically
upon the death of Hodges to her brothers and sisters, thus outside of the scope of PCIB's administration.
Accordingly, these construction of the will of Mrs. Hodges should be adhered to by the trial court in its
final order of adjudication and distribution and/or partition of the two estates in question.
THE APPEALS
A cursory examination of the seventy-eight assignments of error in appellant PCIB's brief would readily
reveal that all of them are predicated mainly on the contention that inasmuch as Hodges had already
adjudicated unto himself all the properties constituting his wife's share of the conjugal partnership,
allegedly with the sanction of the trial court per its order of December 14, 1957, there has been, since
said date, no longer any estate of Mrs. Hodges of which appellee Magno could be administratrix, hence
the various assailed orders sanctioning her actuations as such are not in accordance with law. Such
being the case, with the foregoing resolution holding such posture to be untenable in fact and in law and
that it is in the best interest of justice that for the time being the two estates should be administered
conjointly by the respective administrators of the two estates, it should follow that said assignments of
error have lost their fundamental reasons for being. There are certain matters, however, relating
peculiarly to the respective orders in question, if commonly among some of them, which need further
clarification. For instance, some of them authorized respondent Magno to act alone or without
concurrence of PCIB. And with respect to many of said orders, PCIB further claims that either the
matters involved were not properly within the probate jurisdiction of the trial court or that the
procedure followed was not in accordance with the rules. Hence, the necessity of dealing separately
with the merits of each of the appeals.
75

Indeed, inasmuch as the said two estates have until now remained commingled pro-indiviso, due to the
failure of Hodges and the lower court to liquidate the conjugal partnership, to recognize appellee
Magno as Administratrix of the Testate Estate of Mrs. Hodges which is still unsegregated from that of
Hodges is not to say, without any qualification, that she was therefore authorized to do and perform all
her acts complained of in these appeals, sanctioned though they might have been by the trial court. As a
matter of fact, it is such commingling pro-indiviso of the two estates that should deprive appellee of
freedom to act independently from PCIB, as administrator of the estate of Hodges, just as, for the same
reason, the latter should not have authority to act independently from her. And considering that the
lower court failed to adhere consistently to this basic point of view, by allowing the two administrators
to act independently of each other, in the various instances already noted in the narration of facts
above, the Court has to look into the attendant circumstances of each of the appealed orders to be able
to determine whether any of them has to be set aside or they may all be legally maintained
notwithstanding the failure of the court a quo to observe the pertinent procedural technicalities, to the
end only that graver injury to the substantive rights of the parties concerned and unnecessary and
undesirable proliferation of incidents in the subject proceedings may be forestalled. In other words, We
have to determine, whether or not, in the light of the unusual circumstances extant in the record, there
is need to be more pragmatic and to adopt a rather unorthodox approach, so as to cause the least
disturbance in rights already being exercised by numerous innocent third parties, even if to do so may
not appear to be strictly in accordance with the letter of the applicable purely adjective rules.
Incidentally, it may be mentioned, at this point, that it was principally on account of the confusion that
might result later from PCIB's continuing to administer all the community properties, notwithstanding
the certainty of the existence of the separate estate of Mrs. Hodges, and to enable both estates to
function in the meantime with a relative degree of regularity, that the Court ordered in the resolution of
September 8, 1972 the modification of the injunction issued pursuant to the resolutions of August 8,
October 4 and December 6, 1967, by virtue of which respondent Magno was completely barred from
any participation in the administration of the properties herein involved. In the September 8 resolution,
We ordered that, pending this decision, Special Proceedings 1307 and 1672 should proceed jointly and
that the respective administrators therein "act conjointly none of them to act singly and
independently of each other for any purpose." Upon mature deliberation, We felt that to allow PCIB to
continue managing or administering all the said properties to the exclusion of the administratrix of Mrs.
Hodges' estate might place the heirs of Hodges at an unduly advantageous position which could result in
considerable, if not irreparable, damage or injury to the other parties concerned. It is indeed to be
regretted that apparently, up to this date, more than a year after said resolution, the same has not been
given due regard, as may be gleaned from the fact that recently, respondent Magno has filed in these
proceedings a motion to declare PCIB in contempt for alleged failure to abide therewith,
notwithstanding that its repeated motions for reconsideration thereof have all been denied soon after
they were filed. 9
Going back to the appeals, it is perhaps best to begin first with what appears to Our mind to be the
simplest, and then proceed to the more complicated ones in that order, without regard to the numerical
sequence of the assignments of error in appellant's brief or to the order of the discussion thereof by
counsel.
Assignments
LXXII, LXXVII and LXXVIII.

of

error

numbers

76

These assignments of error relate to (1) the order of the trial court of August 6, 1965 providing that "the
deeds of sale (therein referred to involving properties in the name of Hodges) should be signed jointly
by the PCIB, as Administrator of Testate Estate of C.N. Hodges, and Avelina A. Magno, as Administratrix
of the Testate Estate of Linnie Jane Hodges, and to this effect, the PCIB should take the necessary steps
so that Administratrix Avelina A. Magno could sign the deeds of sale," (p. 248, Green Rec. on Appeal) (2)
the order of October 27, 1965 denying the motion for reconsideration of the foregoing order, (pp. 276277, id.) (3) the other order also dated October 27, 1965 enjoining inter alia, that "(a) all cash collections
should be deposited in the joint account of the estate of Linnie Jane Hodges and estate of C. N. Hodges,
(b) that whatever cash collections (that) had been deposited in the account of either of the estates
should be withdrawn and since then (sic) deposited in the joint account of the estate of Linnie Jane
Hodges and the estate of C. N. Hodges; ... (d) (that) Administratrix Magno allow the PCIB to inspect
whatever records, documents and papers she may have in her possession, in the same manner that
Administrator PCIB is also directed to allow Administratrix Magno to inspect whatever records,
documents and papers it may have in its possession" and "(e) that the accountant of the estate of Linnie
Jane Hodges shall have access to all records of the transactions of both estates for the protection of the
estate of Linnie Jane Hodges; and in like manner, the accountant or any authorized representative of the
estate of C. N. Hodges shall have access to the records of transactions of the Linnie Jane Hodges estate
for the protection of the estate of C. N. Hodges", (pp. 292-295, id.) and (4) the order of February 15,
1966, denying, among others, the motion for reconsideration of the order of October 27, 1965 last
referred to. (pp. 455-456, id.)
As may be readily seen, the thrust of all these four impugned orders is in line with the Court's abovementioned resolution of September 8, 1972 modifying the injunction previously issued on August 8,
1967, and, more importantly, with what We have said the trial court should have always done pending
the liquidation of the conjugal partnership of the Hodges spouses. In fact, as already stated, that is the
arrangement We are ordering, by this decision, to be followed. Stated differently, since the questioned
orders provide for joint action by the two administrators, and that is precisely what We are holding out
to have been done and should be done until the two estates are separated from each other, the said
orders must be affirmed. Accordingly the foregoing assignments of error must be, as they are hereby
overruled.
Assignments
to LXXI and LXXIII to LXXVI.

of

error

Numbers

LXVIII

The orders complained of under these assignments of error commonly deal with expenditures made by
appellee Magno, as Administratrix of the Estate of Mrs. Hodges, in connection with her administration
thereof, albeit additionally, assignments of error Numbers LXIX to LXXI put into question the payment of
attorneys fees provided for in the contract for the purpose, as constituting, in effect, premature
advances to the heirs of Mrs. Hodges.
More specifically, assignment Number LXXIII refers to reimbursement of overtime pay paid to six
employees of the court and three other persons for services in copying the court records to enable the
lawyers of the administration to be fully informed of all the incidents in the proceedings. The
reimbursement was approved as proper legal expenses of administration per the order of December 19,
1964, (pp. 221-222, id.) and repeated motions for reconsideration thereof were denied by the orders of
January 9, 1965, (pp. 231-232, id.) October 27, 1965, (p. 277, id.) and February 15, 1966. (pp. 455-456,
id.) On the other hand, Assignments Numbers LXVIII to LXXI, LXXIV and LXXV question the trial court's
order of November 3, 1965 approving the agreement of June 6, 1964 between Administratrix Magno
77

and James L. Sullivan, attorney-in-fact of the heirs of Mrs. Hodges, as Parties of the First Part, and
Attorneys Raul Manglapus and Rizal R. Quimpo, as Parties of the Second Part, regarding attorneys fees
for said counsel who had agreed "to prosecute and defend their interests (of the Parties of the First
Part) in certain cases now pending litigation in the Court of First Instance of Iloilo , more specifically in
Special Proceedings 1307 and 1672 " (pp. 126-129, id.) and directing Administratrix Magno "to issue
and sign whatever check or checks maybe needed to implement the approval of the agreement annexed
to the motion" as well as the "administrator of the estate of C. N. Hodges to countersign the said
check or checks as the case maybe." (pp. 313-320, id.), reconsideration of which order of approval was
denied in the order of February 16, 1966, (p. 456, id.) Assignment Number LXXVI imputes error to the
lower court's order of October 27, 1965, already referred to above, insofar as it orders that "PCIB should
counter sign the check in the amount of P250 in favor of Administratrix Avelina A. Magno as her
compensation as administratrix of Linnie Jane Hodges estate chargeable to the Testate Estate of Linnie
Jane Hodges only." (p. 294, id.)
Main contention again of appellant PCIB in regard to these eight assigned errors is that there is no such
estate as the estate of Mrs. Hodges for which the questioned expenditures were made, hence what
were authorized were in effect expenditures from the estate of Hodges. As We have already
demonstrated in Our resolution above of the petition for certiorari and prohibition, this posture is
incorrect. Indeed, in whichever way the remaining issues between the parties in these cases are
ultimately resolved, 10 the final result will surely be that there are properties constituting the estate of
Mrs. Hodges of which Magno is the current administratrix. It follows, therefore, that said appellee had
the right, as such administratrix, to hire the persons whom she paid overtime pay and to be paid for her
own services as administratrix. That she has not yet collected and is not collecting amounts as
substantial as that paid to or due appellant PCIB is to her credit.
Of course, she is also entitled to the services of counsel and to that end had the authority to enter into
contracts for attorney's fees in the manner she had done in the agreement of June 6, 1964. And as
regards to the reasonableness of the amount therein stipulated, We see no reason to disturb the
discretion exercised by the probate court in determining the same. We have gone over the agreement,
and considering the obvious size of the estate in question and the nature of the issues between the
parties as well as the professional standing of counsel, We cannot say that the fees agreed upon require
the exercise by the Court of its inherent power to reduce it.
PCIB insists, however, that said agreement of June 6, 1964 is not for legal services to the estate but to
the heirs of Mrs. Hodges, or, at most, to both of them, and such being the case, any payment under it,
insofar as counsels' services would redound to the benefit of the heirs, would be in the nature of
advances to such heirs and a premature distribution of the estate. Again, We hold that such posture
cannot prevail.
Upon the premise We have found plausible that there is an existing estate of Mrs. Hodges, it results that
juridically and factually the interests involved in her estate are distinct and different from those involved
in her estate of Hodges and vice versa. Insofar as the matters related exclusively to the estate of Mrs.
Hodges, PCIB, as administrator of the estate of Hodges, is a complete stranger and it is without
personality to question the actuations of the administratrix thereof regarding matters not affecting the
estate of Hodges. Actually, considering the obviously considerable size of the estate of Mrs. Hodges, We
see no possible cause for apprehension that when the two estates are segregated from each other, the
amount of attorney's fees stipulated in the agreement in question will prejudice any portion that would
correspond to Hodges' estate.
78

And as regards the other heirs of Mrs. Hodges who ought to be the ones who should have a say on the
attorney's fees and other expenses of administration assailed by PCIB, suffice it to say that they appear
to have been duly represented in the agreement itself by their attorney-in-fact, James L. Sullivan and
have not otherwise interposed any objection to any of the expenses incurred by Magno questioned by
PCIB in these appeals. As a matter of fact, as ordered by the trial court, all the expenses in question,
including the attorney's fees, may be paid without awaiting the determination and segregation of the
estate of Mrs. Hodges.
Withal, the weightiest consideration in connection with the point under discussion is that at this stage of
the controversy among the parties herein, the vital issue refers to the existence or non-existence of the
estate of Mrs. Hodges. In this respect, the interest of respondent Magno, as the appointed
administratrix of the said estate, is to maintain that it exists, which is naturally common and identical
with and inseparable from the interest of the brothers and sisters of Mrs. Hodges. Thus, it should not be
wondered why both Magno and these heirs have seemingly agreed to retain but one counsel. In fact,
such an arrangement should be more convenient and economical to both. The possibility of conflict of
interest between Magno and the heirs of Mrs. Hodges would be, at this stage, quite remote and, in any
event, rather insubstantial. Besides, should any substantial conflict of interest between them arise in the
future, the same would be a matter that the probate court can very well take care of in the course of the
independent proceedings in Case No. 1307 after the corresponding segregation of the two subject
estates. We cannot perceive any cogent reason why, at this stage, the estate and the heirs of Mrs.
Hodges cannot be represented by a common counsel.
Now, as to whether or not the portion of the fees in question that should correspond to the heirs
constitutes premature partial distribution of the estate of Mrs. Hodges is also a matter in which neither
PCIB nor the heirs of Hodges have any interest. In any event, since, as far as the records show, the estate
has no creditors and the corresponding estate and inheritance taxes, except those of the brothers and
sisters of Mrs. Hodges, have already been paid, 11 no prejudice can caused to anyone by the
comparatively small amount of attorney's fees in question. And in this connection, it may be added that,
although strictly speaking, the attorney's fees of the counsel of an administrator is in the first instance
his personal responsibility, reimbursable later on by the estate, in the final analysis, when, as in the
situation on hand, the attorney-in-fact of the heirs has given his conformity thereto, it would be idle
effort to inquire whether or not the sanction given to said fees by the probate court is proper.
For the foregoing reasons, Assignments of Error LXVIII to LXXI and LXXIII to LXXVI should be as they are
hereby overruled.
Assignments
of
XIII
to
XV,
to XXX VI, XLI to XLIII and L.

error
XXII

I
to

to
XXV,

IV,
XXXV

These assignments of error deal with the approval by the trial court of various deeds of sale of real
properties registered in the name of Hodges but executed by appellee Magno, as Administratrix of the
Estate of Mrs. Hodges, purportedly in implementation of corresponding supposed written "Contracts to
Sell" previously executed by Hodges during the interim between May 23, 1957, when his wife died, and
December 25, 1962, the day he died. As stated on pp. 118-120 of appellant's main brief, "These are: the,
contract to sell between the deceased, Charles Newton Hodges, and the appellee, Pepito G. Iyulores
executed on February 5, 1961; the contract to sell between the deceased, Charles Newton Hodges, and
the appellant Esperidion Partisala, executed on April 20, 1960; the contract to sell between the
79

deceased, Charles Newton Hodges, and the appellee, Winifredo C. Espada, executed on April 18, 1960;
the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Rosario Alingasa,
executed on August 25, 1958; the contract to sell between the deceased, Charles Newton Hodges, and
the appellee, Lorenzo Carles, executed on June 17, 1958; the contract to sell between the deceased,
Charles Newton Hodges, and the appellee, Salvador S. Guzman, executed on September 13, 1960; the
contract to sell between the deceased, Charles Newton Hodges, and the appellee, Florenia Barrido,
executed on February 21, 1958; the contract to sell between the deceased, Charles Newton Hodges, and
the appellee, Purificacion Coronado, executed on August 14, 1961; the contract to sell between the
deceased, Charles Newton Hodges, and the appellee, Graciano Lucero, executed on November 27, 1961;
the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Ariteo Thomas
Jamir, executed on May 26, 1961; the contract to sell between the deceased, Charles Newton Hodges,
and the appellee, Melquiades Batisanan, executed on June 9, 1959; the contract to sell between the
deceased, Charles Newton Hodges, and the appellee, Belcezar Causing, executed on February 10, 1959
and the contract to sell between the deceased, Charles Newton Hodges, and the appellee, Adelfa
Premaylon, executed on October 31, 1959, re Title No. 13815."
Relative to these sales, it is the position of appellant PCIB that, inasmuch as pursuant to the will of Mrs.
Hodges, her husband was to have dominion over all her estate during his lifetime, it was as absolute
owner of the properties respectively covered by said sales that he executed the aforementioned
contracts to sell, and consequently, upon his death, the implementation of said contracts may be
undertaken only by the administrator of his estate and not by the administratrix of the estate of Mrs.
Hodges. Basically, the same theory is invoked with particular reference to five other sales, in which the
respective "contracts to sell" in favor of these appellees were executed by Hodges before the death of
his wife, namely, those in favor of appellee Santiago Pacaonsis, Alfredo Catedral, Jose Pablico, Western
Institute of Technology and Adelfa Premaylon.
Anent those deeds of sale based on promises or contracts to sell executed by Hodges after the death of
his wife, those enumerated in the quotation in the immediately preceding paragraph, it is quite obvious
that PCIB's contention cannot be sustained. As already explained earlier, 1 1* all proceeds of
remunerative transfers or dispositions made by Hodges after the death of his wife should be deemed as
continuing to be parts of her estate and, therefore, subject to the terms of her will in favor of her
brothers and sisters, in the sense that should there be no showing that such proceeds, whether in cash
or property have been subsequently conveyed or assigned subsequently by Hodges to any third party by
acts inter vivos with the result that they could not thereby belong to him anymore at the time of his
death, they automatically became part of the inheritance of said brothers and sisters. The deeds here in
question involve transactions which are exactly of this nature. Consequently, the payments made by the
appellees should be considered as payments to the estate of Mrs. Hodges which is to be distributed and
partitioned among her heirs specified in the will.
The five deeds of sale predicated on contracts to sell executed Hodges during the lifetime of his wife,
present a different situation. At first blush, it would appear that as to them, PCIB's position has some
degree of plausibility. Considering, however, that the adoption of PCIB's theory would necessarily have
tremendous repercussions and would bring about considerable disturbance of property rights that have
somehow accrued already in favor of innocent third parties, the five purchasers aforenamed, the Court
is inclined to take a pragmatic and practical view of the legal situation involving them by overlooking the
possible technicalities in the way, the non-observance of which would not, after all, detract materially
from what should substantially correspond to each and all of the parties concerned.
80

To start with, these contracts can hardly be ignored. Bona fide third parties are involved; as much as
possible, they should not be made to suffer any prejudice on account of judicial controversies not of
their own making. What is more, the transactions they rely on were submitted by them to the probate
court for approval, and from already known and recorded actuations of said court then, they had reason
to believe that it had authority to act on their motions, since appellee Magno had, from time to time
prior to their transactions with her, been allowed to act in her capacity as administratrix of one of the
subject estates either alone or conjointly with PCIB. All the sales in question were executed by Magno in
1966 already, but before that, the court had previously authorized or otherwise sanctioned expressly
many of her act as administratrix involving expenditures from the estate made by her either conjointly
with or independently from PCIB, as Administrator of the Estate of Hodges. Thus, it may be said that said
buyers-appellees merely followed precedents in previous orders of the court. Accordingly, unless the
impugned orders approving those sales indubitably suffer from some clearly fatal infirmity the Court
would rather affirm them.
It is quite apparent from the record that the properties covered by said sales are equivalent only to a
fraction of what should constitute the estate of Mrs. Hodges, even if it is assumed that the same would
finally be held to be only one-fourth of the conjugal properties of the spouses as of the time of her
death or, to be more exact, one-half of her estate as per the inventory submitted by Hodges as executor,
on May 12, 1958. In none of its numerous, varied and voluminous pleadings, motions and
manifestations has PCIB claimed any possibility otherwise. Such being the case, to avoid any conflict
with the heirs of Hodges, the said properties covered by the questioned deeds of sale executed by
appellee Magno may be treated as among those corresponding to the estate of Mrs. Hodges, which
would have been actually under her control and administration had Hodges complied with his duty to
liquidate the conjugal partnership. Viewing the situation in that manner, the only ones who could stand
to be prejudiced by the appealed orders referred to in the assignment of errors under discussion and
who could, therefore, have the requisite interest to question them would be only the heirs of Mrs.
Hodges, definitely not PCIB.
It is of no moment in what capacity Hodges made the "contracts to sell' after the death of his wife. Even
if he had acted as executor of the will of his wife, he did not have to submit those contracts to the court
nor follow the provisions of the rules, (Sections 2, 4, 5, 6, 8 and 9 of Rule 89 quoted by appellant on pp.
125 to 127 of its brief) for the simple reason that by the very orders, much relied upon by appellant for
other purposes, of May 27, 1957 and December 14, 1957, Hodges was "allowed or authorized" by the
trial court "to continue the business in which he was engaged and to perform acts which he had been
doing while the deceased was living", (Order of May 27) which according to the motion on which the
court acted was "of buying and selling personal and real properties", and "to execute subsequent sales,
conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes conveyed in the last will and testament of the latter." (Order of December
14) In other words, if Hodges acted then as executor, it can be said that he had authority to do so by
virtue of these blanket orders, and PCIB does not question the legality of such grant of authority; on the
contrary, it is relying on the terms of the order itself for its main contention in these cases. On the other
hand, if, as PCIB contends, he acted as heir-adjudicatee, the authority given to him by the
aforementioned orders would still suffice.
As can be seen, therefore, it is of no moment whether the "contracts to sell" upon which the deeds in
question were based were executed by Hodges before or after the death of his wife. In a word, We hold,
for the reasons already stated, that the properties covered by the deeds being assailed pertain or should
be deemed as pertaining to the estate of Mrs. Hodges; hence, any supposed irregularity attending the
81

actuations of the trial court may be invoked only by her heirs, not by PCIB, and since the said heirs are
not objecting, and the defects pointed out not being strictly jurisdictional in nature, all things
considered, particularly the unnecessary disturbance of rights already created in favor of innocent third
parties, it is best that the impugned orders are not disturbed.
In view of these considerations, We do not find sufficient merit in the assignments of error under
discussion.
Assignments
of
XVI
to
XVIII,
to XXXVIII, XLIV to XLVI and LI.

error
XXVI

V
to

to
XXIX,

VIII,
XXXVII

All these assignments of error commonly deal with alleged non-fulfillment by the respective vendees,
appellees herein, of the terms and conditions embodied in the deeds of sale referred to in the
assignments of error just discussed. It is claimed that some of them never made full payments in
accordance with the respective contracts to sell, while in the cases of the others, like Lorenzo Carles,
Jose Pablico, Alfredo Catedral and Salvador S. Guzman, the contracts with them had already been
unilaterally cancelled by PCIB pursuant to automatic rescission clauses contained in them, in view of the
failure of said buyers to pay arrearages long overdue. But PCIB's posture is again premised on its
assumption that the properties covered by the deeds in question could not pertain to the estate of Mrs.
Hodges. We have already held above that, it being evident that a considerable portion of the conjugal
properties, much more than the properties covered by said deeds, would inevitably constitute the
estate of Mrs. Hodges, to avoid unnecessary legal complications, it can be assumed that said properties
form part of such estate. From this point of view, it is apparent again that the questions, whether or not
it was proper for appellee Magno to have disregarded the cancellations made by PCIB, thereby reviving
the rights of the respective buyers-appellees, and, whether or not the rules governing new dispositions
of properties of the estate were strictly followed, may not be raised by PCIB but only by the heirs of Mrs.
Hodges as the persons designated to inherit the same, or perhaps the government because of the still
unpaid inheritance taxes. But, again, since there is no pretense that any objections were raised by said
parties or that they would necessarily be prejudiced, the contentions of PCIB under the instant
assignments of error hardly merit any consideration.
Assignments
of
to
XXI,
XXX
XLVII to XLIX, LII and LIII to LXI.

error
to

IX
XXIV,

to
XXXIX

XII,
to

XIX
XL,

PCIB raises under these assignments of error two issues which according to it are fundamental, namely:
(1) that in approving the deeds executed by Magno pursuant to contracts to sell already cancelled by it
in the performance of its functions as administrator of the estate of Hodges, the trial court deprived the
said estate of the right to invoke such cancellations it (PCIB) had made and (2) that in so acting, the
court "arrogated unto itself, while acting as a probate court, the power to determine the contending
claims of third parties against the estate of Hodges over real property," since it has in effect determined
whether or not all the terms and conditions of the respective contracts to sell executed by Hodges in
favor of the buyers-appellees concerned were complied with by the latter. What is worse, in the view of
PCIB, is that the court has taken the word of the appellee Magno, "a total stranger to his estate as
determinative of the issue".

82

Actually, contrary to the stand of PCIB, it is this last point regarding appellee Magno's having agreed to
ignore the cancellations made by PCIB and allowed the buyers-appellees to consummate the sales in
their favor that is decisive. Since We have already held that the properties covered by the contracts in
question should be deemed to be portions of the estate of Mrs. Hodges and not that of Hodges, it is
PCIB that is a complete stranger in these incidents. Considering, therefore, that the estate of Mrs.
Hodges and her heirs who are the real parties in interest having the right to oppose the consummation
of the impugned sales are not objecting, and that they are the ones who are precisely urging that said
sales be sanctioned, the assignments of error under discussion have no basis and must accordingly be as
they are hereby overruled.
With particular reference to assignments LIII to LXI, assailing the orders of the trial court requiring PCIB
to surrender the respective owner's duplicate certificates of title over the properties covered by the
sales in question and otherwise directing the Register of Deeds of Iloilo to cancel said certificates and to
issue new transfer certificates of title in favor of the buyers-appellees, suffice it to say that in the light of
the above discussion, the trial court was within its rights to so require and direct, PCIB having refused to
give way, by withholding said owners' duplicate certificates, of the corresponding registration of the
transfers duly and legally approved by the court.
Assignments of error LXII to LXVII
All these assignments of error commonly deal with the appeal against orders favoring appellee Western
Institute of Technology. As will be recalled, said institute is one of the buyers of real property covered by
a contract to sell executed by Hodges prior to the death of his wife. As of October, 1965, it was in
arrears in the total amount of P92,691.00 in the payment of its installments on account of its purchase,
hence it received under date of October 4, 1965 and October 20, 1965, letters of collection, separately
and respectively, from PCIB and appellee Magno, in their respective capacities as administrators of the
distinct estates of the Hodges spouses, albeit, while in the case of PCIB it made known that "no other
arrangement can be accepted except by paying all your past due account", on the other hand, Magno
merely said she would "appreciate very much if you can make some remittance to bring this account upto-date and to reduce the amount of the obligation." (See pp. 295-311, Green R. on A.) On November 3,
1965, the Institute filed a motion which, after alleging that it was ready and willing to pay P20,000 on
account of its overdue installments but uncertain whether it should pay PCIB or Magno, it prayed that it
be "allowed to deposit the aforesaid amount with the court pending resolution of the conflicting claims
of the administrators." Acting on this motion, on November 23, 1965, the trial court issued an order,
already quoted in the narration of facts in this opinion, holding that payment to both or either of the
two administrators is "proper and legal", and so "movant can pay to both estates or either of them",
considering that "in both cases (Special Proceedings 1307 and 1672) there is as yet no judicial
declaration of heirs nor distribution of properties to whomsoever are entitled thereto."
The arguments under the instant assignments of error revolve around said order. From the procedural
standpoint, it is claimed that PCIB was not served with a copy of the Institute's motion, that said motion
was heard, considered and resolved on November 23, 1965, whereas the date set for its hearing was
November 20, 1965, and that what the order grants is different from what is prayed for in the motion.
As to the substantive aspect, it is contended that the matter treated in the motion is beyond the
jurisdiction of the probate court and that the order authorized payment to a person other than the
administrator of the estate of Hodges with whom the Institute had contracted.

83

The procedural points urged by appellant deserve scant consideration. We must assume, absent any
clear proof to the contrary, that the lower court had acted regularly by seeing to it that appellant was
duly notified. On the other hand, there is nothing irregular in the court's having resolved the motion
three days after the date set for hearing the same. Moreover, the record reveals that appellants' motion
for reconsideration wherein it raised the same points was denied by the trial court on March 7, 1966 (p.
462, Green R. on A.) Withal, We are not convinced that the relief granted is not within the general intent
of the Institute's motion.
Insofar as the substantive issues are concerned, all that need be said at this point is that they are mere
reiterations of contentions We have already resolved above adversely to appellants' position.
Incidentally, We may add, perhaps, to erase all doubts as to the propriety of not disturbing the lower
court's orders sanctioning the sales questioned in all these appeal s by PCIB, that it is only when one of
the parties to a contract to convey property executed by a deceased person raises substantial objections
to its being implemented by the executor or administrator of the decedent's estate that Section 8 of
Rule 89 may not apply and, consequently, the matter has, to be taken up in a separate action outside of
the probate court; but where, as in the cases of the sales herein involved, the interested parties are in
agreement that the conveyance be made, it is properly within the jurisdiction of the probate court to
give its sanction thereto pursuant to the provisions of the rule just mentioned. And with respect to the
supposed automatic rescission clauses contained in the contracts to sell executed by Hodges in favor of
herein appellees, the effect of said clauses depend on the true nature of the said contracts, despite the
nomenclature appearing therein, which is not controlling, for if they amount to actual contracts of sale
instead of being mere unilateral accepted "promises to sell", (Art. 1479, Civil Code of the Philippines,
2nd paragraph) the pactum commissorium or the automatic rescission provision would not operate, as a
matter of public policy, unless there has been a previous notarial or judicial demand by the seller (10
Manresa 263, 2nd ed.) neither of which have been shown to have been made in connection with the
transactions herein involved.
Consequently,
We
Number LXII to LXVII.

find

no

merit

in

the

assignments

of

error

SUMMARY
Considering the fact that this decision is unusually extensive and that the issues herein taken up and
resolved are rather numerous and varied, what with appellant making seventy-eight assignments of
error affecting no less than thirty separate orders of the court a quo, if only to facilitate proper
understanding of the import and extent of our rulings herein contained, it is perhaps desirable that a
brief restatement of the whole situation be made together with our conclusions in regard to its various
factual and legal aspects. .
The instant cases refer to the estate left by the late Charles Newton Hodges as well as that of his wife,
Linnie Jane Hodges, who predeceased him by about five years and a half. In their respective wills which
were executed on different occasions, each one of them provided mutually as follows: "I give, devise
and bequeath all of the rest, residue and remainder (after funeral and administration expenses, taxes
and debts) of my estate, both real and personal, wherever situated or located, to my beloved (spouse)
to have and to hold unto (him/her) during (his/her) natural lifetime", subject to the condition that
upon the death of whoever of them survived the other, the remainder of what he or she would inherit
from the other is "give(n), devise(d) and bequeath(ed)" to the brothers and sisters of the latter.
84

Mrs. Hodges died first, on May 23, 1957. Four days later, on May 27, Hodges was appointed special
administrator of her estate, and in a separate order of the same date, he was "allowed or authorized to
continue the business in which he was engaged, (buying and selling personal and real properties) and to
perform acts which he had been doing while the deceased was living." Subsequently, on December 14,
1957, after Mrs. Hodges' will had been probated and Hodges had been appointed and had qualified as
Executor thereof, upon his motion in which he asserted that he was "not only part owner of the
properties left as conjugal, but also, the successor to all the properties left by the deceased Linnie Jane
Hodges", the trial court ordered that "for the reasons stated in his motion dated December 11, 1957,
which the Court considers well taken, ... all the sales, conveyances, leases and mortgages of all
properties left by the deceased Linnie Jane Hodges executed by the Executor, Charles Newton Hodges
are hereby APPROVED. The said Executor is further authorized to execute subsequent sales,
conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes contained in the last will and testament of the latter."
Annually thereafter, Hodges submitted to the court the corresponding statements of account of his
administration, with the particularity that in all his motions, he always made it point to urge the that "no
person interested in the Philippines of the time and place of examining the herein accounts be given
notice as herein executor is the only devisee or legatee of the deceased in accordance with the last will
and testament already probated by the Honorable Court." All said accounts approved as prayed for.
Nothing else appears to have been done either by the court a quo or Hodges until December 25, 1962.
Importantly to be the provision in the will of Mrs. Hodges that her share of the conjugal partnership was
to be inherited by her husband "to have and to hold unto him, my said husband, during his natural
lifetime" and that "at the death of my said husband, I give, devise and bequeath all the rest, residue and
remainder of my estate, both real and personal, wherever situated or located, to be equally divided
among my brothers and sisters, share and share alike", which provision naturally made it imperative
that the conjugal partnership be promptly liquidated, in order that the "rest, residue and remainder" of
his wife's share thereof, as of the time of Hodges' own death, may be readily known and identified, no
such liquidation was ever undertaken. The record gives no indication of the reason for such omission,
although relatedly, it appears therein:
1. That in his annual statement submitted to the court of the net worth of C. N. Hodges
and the Estate of Linnie Jane Hodges, Hodges repeatedly and consistently reported the
combined income of the conjugal partnership and then merely divided the same equally
between himself and the estate of the deceased wife, and, more importantly, he also, as
consistently, filed corresponding separate income tax returns for each calendar year for
each resulting half of such combined income, thus reporting that the estate of Mrs.
Hodges had its own income distinct from his own.
2. That when the court a quo happened to inadvertently omit in its order probating the
will of Mrs. Hodges, the name of one of her brothers, Roy Higdon then already
deceased, Hodges lost no time in asking for the proper correction "in order that the
heirs of deceased Roy Higdon may not think or believe they were omitted, and that they
were really interested in the estate of the deceased Linnie Jane Hodges".
3. That in his aforementioned motion of December 11, 1957, he expressly stated that
"deceased Linnie Jane Hodges died leaving no descendants or ascendants except
brothers and sisters and herein petitioner as the surviving spouse, to inherit the
85

properties of the decedent", thereby indicating that he was not excluding his wife's
brothers and sisters from the inheritance.
4. That Hodges allegedly made statements and manifestations to the United States
inheritance tax authorities indicating that he had renounced his inheritance from his
wife in favor of her other heirs, which attitude he is supposed to have reiterated or
ratified in an alleged affidavit subscribed and sworn to here in the Philippines and in
which he even purportedly stated that his reason for so disclaiming and renouncing his
rights under his wife's will was to "absolve (him) or (his) estate from any liability for the
payment of income taxes on income which has accrued to the estate of Linnie Jane
Hodges", his wife, since her death.
On said date, December 25, 1962, Hodges died. The very next day, upon motion of herein respondent
and appellee, Avelina A. Magno, she was appointed by the trial court as Administratrix of the Testate
Estate of Linnie Jane Hodges, in Special Proceedings No. 1307 and as Special Administratrix of the estate
of Charles Newton Hodges, "in the latter case, because the last will of said Charles Newton Hodges is still
kept in his vault or iron safe and that the real and personal properties of both spouses may be lost,
damaged or go to waste, unless Special Administratrix is appointed," (Order of December 26, 1962, p.
27, Yellow R. on A.) although, soon enough, on December 29, 1962, a certain Harold K. Davies was
appointed as her Co-Special Administrator, and when Special Proceedings No. 1672, Testate Estate of
Charles Newton Hodges, was opened, Joe Hodges, as next of kin of the deceased, was in due time
appointed as Co-Administrator of said estate together with Atty. Fernando P. Mirasol, to replace Magno
and Davies, only to be in turn replaced eventually by petitioner PCIB alone.
At the outset, the two probate proceedings appear to have been proceeding jointly, with each
administrator acting together with the other, under a sort of modus operandi. PCIB used to secure at
the beginning the conformity to and signature of Magno in transactions it wanted to enter into and
submitted the same to the court for approval as their joint acts. So did Magno do likewise. Somehow,
however, differences seem to have arisen, for which reason, each of them began acting later on
separately and independently of each other, with apparent sanction of the trial court. Thus, PCIB had its
own lawyers whom it contracted and paid handsomely, conducted the business of the estate
independently of Magno and otherwise acted as if all the properties appearing in the name of Charles
Newton Hodges belonged solely and only to his estate, to the exclusion of the brothers and sisters of
Mrs. Hodges, without considering whether or not in fact any of said properties corresponded to the
portion of the conjugal partnership pertaining to the estate of Mrs. Hodges. On the other hand, Magno
made her own expenditures, hired her own lawyers, on the premise that there is such an estate of Mrs.
Hodges, and dealth with some of the properties, appearing in the name of Hodges, on the assumption
that they actually correspond to the estate of Mrs. Hodges. All of these independent and separate
actuations of the two administrators were invariably approved by the trial court upon submission.
Eventually, the differences reached a point wherein Magno, who was more cognizant than anyone else
about the ins and outs of the businesses and properties of the deceased spouses because of her long
and intimate association with them, made it difficult for PCIB to perform normally its functions as
administrator separately from her. Thus, legal complications arose and the present judicial controversies
came about.
Predicating its position on the tenor of the orders of May 27 and December 14, 1957 as well as the
approval by the court a quo of the annual statements of account of Hodges, PCIB holds to the view that
the estate of Mrs. Hodges has already been in effect closed with the virtual adjudication in the
86

mentioned orders of her whole estate to Hodges, and that, therefore, Magno had already ceased since
then to have any estate to administer and the brothers and sisters of Mrs. Hodges have no interests
whatsoever in the estate left by Hodges. Mainly upon such theory, PCIB has come to this Court with a
petition for certiorari and prohibition praying that the lower court's orders allowing respondent Magno
to continue acting as administratrix of the estate of Mrs. Hodges in Special Proceedings 1307 in the
manner she has been doing, as detailed earlier above, be set aside. Additionally, PCIB maintains that the
provision in Mrs. Hodges' will instituting her brothers and sisters in the manner therein specified is in
the nature of a testamentary substitution, but inasmuch as the purported substitution is not, in its view,
in accordance with the pertinent provisions of the Civil Code, it is ineffective and may not be enforced. It
is further contended that, in any event, inasmuch as the Hodges spouses were both residents of the
Philippines, following the decision of this Court in Aznar vs. Garcia, or the case of Christensen, 7 SCRA
95, the estate left by Mrs. Hodges could not be more than one-half of her share of the conjugal
partnership, notwithstanding the fact that she was citizen of Texas, U.S.A., in accordance with Article 16
in relation to Articles 900 and 872 of the Civil Code. Initially, We issued a preliminary injunction against
Magno and allowed PCIB to act alone.
At the same time PCIB has appealed several separate orders of the trial court approving individual acts
of appellee Magno in her capacity as administratrix of the estate of Mrs. Hodges, such as, hiring of
lawyers for specified fees and incurring expenses of administration for different purposes and executing
deeds of sale in favor of her co-appellees covering properties which are still registered in the name of
Hodges, purportedly pursuant to corresponding "contracts to sell" executed by Hodges. The said orders
are being questioned on jurisdictional and procedural grounds directly or indirectly predicated on the
principal theory of appellant that all the properties of the two estates belong already to the estate of
Hodges exclusively.
On the other hand, respondent-appellee Magno denies that the trial court's orders of May 27 and
December 14, 1957 were meant to be finally adjudicatory of the hereditary rights of Hodges and
contends that they were no more than the court's general sanction of past and future acts of Hodges as
executor of the will of his wife in due course of administration. As to the point regarding substitution,
her position is that what was given by Mrs. Hodges to her husband under the provision in question was
a lifetime usufruct of her share of the conjugal partnership, with the naked ownership passing directly to
her brothers and sisters. Anent the application of Article 16 of the Civil Code, she claims that the
applicable law to the will of Mrs. Hodges is that of Texas under which, she alleges, there is no system of
legitime, hence, the estate of Mrs. Hodges cannot be less than her share or one-half of the conjugal
partnership properties. She further maintains that, in any event, Hodges had as a matter of fact and of
law renounced his inheritance from his wife and, therefore, her whole estate passed directly to her
brothers and sisters effective at the latest upon the death of Hodges.
In this decision, for the reasons discussed above, and upon the issues just summarized, We overrule
PCIB's contention that the orders of May 27, 1957 and December 14, 1957 amount to an adjudication to
Hodges of the estate of his wife, and We recognize the present existence of the estate of Mrs. Hodges,
as consisting of properties, which, while registered in that name of Hodges, do actually correspond to
the remainder of the share of Mrs. Hodges in the conjugal partnership, it appearing that pursuant to the
pertinent provisions of her will, any portion of said share still existing and undisposed of by her husband
at the time of his death should go to her brothers and sisters share and share alike. Factually, We find
that the proven circumstances relevant to the said orders do not warrant the conclusion that the court
intended to make thereby such alleged final adjudication. Legally, We hold that the tenor of said orders
furnish no basis for such a conclusion, and what is more, at the time said orders were issued, the
87

proceedings had not yet reached the point when a final distribution and adjudication could be made.
Moreover, the interested parties were not duly notified that such disposition of the estate would be
done. At best, therefore, said orders merely allowed Hodges to dispose of portions of his inheritance in
advance of final adjudication, which is implicitly permitted under Section 2 of Rule 109, there being no
possible prejudice to third parties, inasmuch as Mrs. Hodges had no creditors and all pertinent taxes
have been paid.
More specifically, We hold that, on the basis of circumstances presently extant in the record, and on the
assumption that Hodges' purported renunciation should not be upheld, the estate of Mrs. Hodges
inherited by her brothers and sisters consists of one-fourth of the community estate of the spouses at
the time of her death, minus whatever Hodges had gratuitously disposed of therefrom during the period
from, May 23, 1957, when she died, to December 25, 1962, when he died provided, that with regard to
remunerative dispositions made by him during the same period, the proceeds thereof, whether in cash
or property, should be deemed as continuing to be part of his wife's estate, unless it can be shown that
he had subsequently disposed of them gratuitously.
At this juncture, it may be reiterated that the question of what are the pertinent laws of Texas and what
would be the estate of Mrs. Hodges under them is basically one of fact, and considering the respective
positions of the parties in regard to said factual issue, it can already be deemed as settled for the
purposes of these cases that, indeed, the free portion of said estate that could possibly descend to her
brothers and sisters by virtue of her will may not be less than one-fourth of the conjugal estate, it
appearing that the difference in the stands of the parties has reference solely to the legitime of Hodges,
PCIB being of the view that under the laws of Texas, there is such a legitime of one-fourth of said
conjugal estate and Magno contending, on the other hand, that there is none. In other words, hereafter,
whatever might ultimately appear, at the subsequent proceedings, to be actually the laws of Texas on
the matter would no longer be of any consequence, since PCIB would anyway be in estoppel already to
claim that the estate of Mrs. Hodges should be less than as contended by it now, for admissions by a
party related to the effects of foreign laws, which have to be proven in our courts like any other
controverted fact, create estoppel.
In the process, We overrule PCIB's contention that the provision in Mrs. Hodges' will in favor of her
brothers and sisters constitutes ineffective hereditary substitutions. But neither are We sustaining, on
the other hand, Magno's pose that it gave Hodges only a lifetime usufruct. We hold that by said
provision, Mrs. Hodges simultaneously instituted her brothers and sisters as co-heirs with her husband,
with the condition, however, that the latter would have complete rights of dominion over the whole
estate during his lifetime and what would go to the former would be only the remainder thereof at the
time of Hodges' death. In other words, whereas they are not to inherit only in case of default of Hodges,
on the other hand, Hodges was not obliged to preserve anything for them. Clearly then, the essential
elements of testamentary substitution are absent; the provision in question is a simple case of
conditional simultaneous institution of heirs, whereby the institution of Hodges is subject to a partial
resolutory condition the operative contingency of which is coincidental with that of the suspensive
condition of the institution of his brothers and sisters-in-law, which manner of institution is not
prohibited by law.
We also hold, however, that the estate of Mrs. Hodges inherited by her brothers and sisters could be
more than just stated, but this would depend on (1) whether upon the proper application of the
principle of renvoi in relation to Article 16 of the Civil Code and the pertinent laws of Texas, it will appear
that Hodges had no legitime as contended by Magno, and (2) whether or not it can be held that Hodges
88

had legally and effectively renounced his inheritance from his wife. Under the circumstances presently
obtaining and in the state of the record of these cases, as of now, the Court is not in a position to make
a final ruling, whether of fact or of law, on any of these two issues, and We, therefore, reserve said
issues for further proceedings and resolution in the first instance by the court a quo, as hereinabove
indicated. We reiterate, however, that pending such further proceedings, as matters stand at this stage,
Our considered opinion is that it is beyond cavil that since, under the terms of the will of Mrs. Hodges,
her husband could not have anyway legally adjudicated or caused to be adjudicated to himself her
whole share of their conjugal partnership, albeit he could have disposed any part thereof during his
lifetime, the resulting estate of Mrs. Hodges, of which Magno is the uncontested administratrix, cannot
be less than one-fourth of the conjugal partnership properties, as of the time of her death, minus what,
as explained earlier, have been gratuitously disposed of therefrom, by Hodges in favor of third persons
since then, for even if it were assumed that, as contended by PCIB, under Article 16 of the Civil Code and
applying renvoi the laws of the Philippines are the ones ultimately applicable, such one-fourth share
would be her free disposable portion, taking into account already the legitime of her husband under
Article 900 of the Civil Code.
The foregoing considerations leave the Court with no alternative than to conclude that in predicating its
orders on the assumption, albeit unexpressed therein, that there is an estate of Mrs. Hodges to be
distributed among her brothers and sisters and that respondent Magno is the legal administratrix
thereof, the trial court acted correctly and within its jurisdiction. Accordingly, the petition for certiorari
and prohibition has to be denied. The Court feels however, that pending the liquidation of the conjugal
partnership and the determination of the specific properties constituting her estate, the two
administrators should act conjointly as ordered in the Court's resolution of September 8, 1972 and as
further clarified in the dispositive portion of its decision.
Anent the appeals from the orders of the lower court sanctioning payment by appellee Magno, as administratrix,
of expenses of administration and attorney's fees, it is obvious that, with Our holding that there is such an estate
of Mrs. Hodges, and for the reasons stated in the body of this opinion, the said orders should be affirmed. This We
do on the assumption We find justified by the evidence of record, and seemingly agreed to by appellant PCIB, that
the size and value of the properties that should correspond to the estate of Mrs. Hodges far exceed the total of the
attorney's fees and administration expenses in question.

With respect to the appeals from the orders approving transactions made by appellee Magno, as
administratrix, covering properties registered in the name of Hodges, the details of which are related
earlier above, a distinction must be made between those predicated on contracts to sell executed by
Hodges before the death of his wife, on the one hand, and those premised on contracts to sell entered
into by him after her death. As regards the latter, We hold that inasmuch as the payments made by
appellees constitute proceeds of sales of properties belonging to the estate of Mrs. Hodges, as may be
implied from the tenor of the motions of May 27 and December 14, 1957, said payments continue to
pertain to said estate, pursuant to her intent obviously reflected in the relevant provisions of her will, on
the assumption that the size and value of the properties to correspond to the estate of Mrs. Hodges
would exceed the total value of all the properties covered by the impugned deeds of sale, for which
reason, said properties may be deemed as pertaining to the estate of Mrs. Hodges. And there being no
showing that thus viewing the situation, there would be prejudice to anyone, including the government,
the Court also holds that, disregarding procedural technicalities in favor of a pragmatic and practical
approach as discussed above, the assailed orders should be affirmed. Being a stranger to the estate of
Mrs. Hodges, PCIB has no personality to raise the procedural and jurisdictional issues raised by it. And
inasmuch as it does not appear that any of the other heirs of Mrs. Hodges or the government has
89

objected to any of the orders under appeal, even as to these parties, there exists no reason for said
orders to be set aside.
DISPOSITIVE PART
IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered DISMISSING the petition in G.
R. Nos. L-27860 and L-27896, and AFFIRMING, in G. R. Nos. L-27936-37 and the other thirty-one
numbers hereunder ordered to be added after payment of the corresponding docket fees, all the orders
of the trial court under appeal enumerated in detail on pages 35 to 37 and 80 to 82 of this decision; the
existence of the Testate Estate of Linnie Jane Hodges, with respondent-appellee Avelina A. Magno, as
administratrix thereof is recognized, and it is declared that, until final judgment is ultimately rendered
regarding (1) the manner of applying Article 16 of the Civil Code of the Philippines to the situation
obtaining in these cases and (2) the factual and legal issue of whether or not Charles Newton Hodges
had effectively and legally renounced his inheritance under the will of Linnie Jane Hodges, the said
estate consists of one-fourth of the community properties of the said spouses, as of the time of the
death of the wife on May 23, 1957, minus whatever the husband had already gratuitously disposed of in
favor of third persons from said date until his death, provided, first, that with respect to remunerative
dispositions, the proceeds thereof shall continue to be part of the wife's estate, unless subsequently
disposed of gratuitously to third parties by the husband, and second, that should the purported
renunciation be declared legally effective, no deductions whatsoever are to be made from said estate; in
consequence, the preliminary injunction of August 8, 1967, as amended on October 4 and December 6,
1967, is lifted, and the resolution of September 8, 1972, directing that petitioner-appellant PCIB, as
Administrator of the Testate Estate of Charles Newton Hodges, in Special Proceedings 1672, and
respondent-appellee Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges, in
Special Proceedings 1307, should act thenceforth always conjointly, never independently from each
other, as such administrators, is reiterated, and the same is made part of this judgment and shall
continue in force, pending the liquidation of the conjugal partnership of the deceased spouses and the
determination and segregation from each other of their respective estates, provided, that upon the
finality of this judgment, the trial court should immediately proceed to the partition of the presently
combined estates of the spouses, to the end that the one-half share thereof of Mrs. Hodges may be
properly and clearly identified; thereafter, the trial court should forthwith segregate the remainder of
the one-fourth herein adjudged to be her estate and cause the same to be turned over or delivered to
respondent for her exclusive administration in Special Proceedings 1307, while the other one-fourth
shall remain under the joint administration of said respondent and petitioner under a joint proceedings
in Special Proceedings 1307 and 1672, whereas the half unquestionably pertaining to Hodges shall be
administered by petitioner exclusively in Special Proceedings 1672, without prejudice to the resolution
by the trial court of the pending motions for its removal as administrator 12; and this arrangement shall
be maintained until the final resolution of the two issues of renvoi and renunciation hereby reserved for
further hearing and determination, and the corresponding complete segregation and partition of the
two estates in the proportions that may result from the said resolution.
Generally and in all other respects, the parties and the court a quo are directed to adhere henceforth, in all their
actuations in Special Proceedings 1307 and 1672, to the views passed and ruled upon by the Court in the foregoing
opinion.
Appellant PCIB is ordered to pay, within five (5) days from notice hereof, thirty-one additional appeal docket fees,
but this decision shall nevertheless become final as to each of the parties herein after fifteen (15) days from the
respective notices to them hereof in accordance with the rules. Costs against petitioner-appellant PCIB.

90

G.R. No. 120077

October 13, 2000

THE
MANILA
HOTEL
CORP.
AND
MANILA
HOTEL
INTL.
LTD.,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G.
SANTOS, respondents.
The case before the Court is a petition for certiorari1 to annul the following orders of the National Labor
Relations Commission (hereinafter referred to as "NLRC") for having been issued without or with excess
jurisdiction and with grave abuse of discretion:2
(1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution of August 28, 1992.4
The questioned order declared that the NLRC, not the Philippine Overseas Employment
Administration (hereinafter referred to as "POEA"), had jurisdiction over private respondent's
complaint;
(2) Decision of December 15, 1994.5 Directing petitioners to jointly and severally pay private
respondent twelve thousand and six hundred dollars (US$ 12,600.00) representing salaries for
the unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00) as extra
four months salary for the two (2) year period of his contract, three thousand six hundred
dollars (US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight hundred
dollars (US$19,800.00) or its peso equivalent and attorney's fees amounting to ten percent
(10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration of the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an overseas
worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman. Subsequently, in June
1988, he was directly hired by the Palace Hotel, Beijing, People's Republic of China and later terminated
due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila Hotel
International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled corporation duly
organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong Kong.7 MHC is an
"incorporator" of MHICL, owning 50% of its capital stock.8
By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company Limited), MHICL10
trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos
received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel,
91

Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor
Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary
and increased benefits. The position was slated to open on October 1, 1988.11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment
contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was acceptable,
to return the same to Mr. Henk in Manila, together with his passport and two additional pictures for his
visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30, 1988,
under the pretext that he was needed at home to help with the family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4, 1988)
and notified them that he was going to arrive in Manila during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment would commence September 1,
1988 for a period of two years.12 It provided for a monthly salary of nine hundred dollars (US$900.00)
net of taxes, payable fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace
Hotel.14
Subsequently, respondent Santos signed an amended "employment agreement" with the Palace Hotel,
effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The Vice
President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the
employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned to
China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten note
that respondent Santos be given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that
his employment at the Palace Hotel print shop would be terminated due to business reverses brought
about by the political upheaval in China.15 We quote the letter:16

92

"After the unfortunate happenings in China and especially Beijing (referring to Tiannamen
Square incidents), our business has been severely affected. To reduce expenses, we will not
open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this does in no
way reflect your past performance which we found up to our expectations."
"Should a turnaround in the business happen, we will contact you directly and give you priority
on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and paid all
benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt,
demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:17
His service with the Palace Hotel, Beijing was not abruptly terminated but we followed the onemonth notice clause and Mr. Santos received all benefits due him.
"For your information the Print Shop at the Palace Hotel is still not operational and with a low
business outlook, retrenchment in various departments of the hotel is going on which is a
normal management practice to control costs.
"When going through the latest performance ratings, please also be advised that his
performance was below average and a Chinese National who is doing his job now shows a
better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed up for work but still
enjoyed free accommodation/laundry/meals up to the day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration
Branch, National Capital Region, National Labor Relations Commission (NLRC). He prayed for an award of
nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and attorney's fees equivalent to 20% of the
damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as
respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus:19
"WHEREFORE, judgment is hereby rendered:
93

"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction
over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for want of
jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted resolution.
He argued that the case was not cognizable by the POEA as he was not an "overseas contract worker."21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor Arbiter
Emerson Tumanon to hear the case on the question of whether private respondent was retrenched or
dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the testimonial and
documentary evidence presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital Region,
Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that respondent Santos
was illegally dismissed from employment and recommended that he be paid actual damages equivalent
to his salaries for the unexpired portion of his contract.26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:27
"WHEREFORE, finding that the report and recommendations of Arbiter de Vera are supported
by substantial evidence, judgment is hereby rendered, directing the respondents to jointly and
severally pay complainant the following computed contractual benefits: (1) US$12,600.00 as
salaries for the unexpired portion of the parties' contract; (2) US$3,600.00 as extra four (4)
months salary for the two (2) years period (sic) of the parties' contract; (3) US$3,600.00 as "14th
month pay" for the aforesaid two (2) years contract stipulated by the parties or a total of
94

US$19,800.00 or its peso equivalent, plus (4) attorney's fees of 10% of complainant's total
award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de Vera's
recommendation had no basis in law and in fact.28
On March 30, 1995, the NLRC denied the motion for reconsideration.29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a temporary
restraining order and/or writ of preliminary injunction and a motion for the annulment of the entry of
judgment of the NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required respondents to
file their respective comments, without giving due course to the petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the petition
and its annexes, they can not defend and sustain the position taken by the NLRC in its assailed decision
and orders. The Solicitor General prayed that he be excused from filing a comment on behalf of the
NLRC33
On April 30,1996, private respondent Santos filed his comment.34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the NLRC to
file its own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the case involves
purely foreign elements. The only link that the Philippines has with the case is that respondent Santos is
a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or any authorized recruitment agency of
the government.36

95

Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the
case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may
conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its
decision.37 The conditions are unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents of the
case from the time of recruitment, to employment to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are
not nationals of the Philippines. Neither .are they "doing business in the Philippines." Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as to the law
governing the employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the place where the contract was made).38
The employment contract was not perfected in the Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace
Hotel in the People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts surrounding the alleged
illegal dismissal as all acts complained of took place in Beijing, People's Republic of China. The NLRC was
not in a position to determine whether the Tiannamen Square incident truly adversely affected
operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper decision could
be reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel.
The Palace Hotel is a corporation incorporated under the laws of China and was not even served with
summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies involving
foreign employers. Neither are we saying that we do not have power over an employment contract
executed in a foreign country. If Santos were an "overseas contract worker", a Philippine forum,
specifically the POEA, not the NLRC, would protect him.39 He is not an "overseas contract worker" a fact
which he admits with conviction.40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's decision cannot be
sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was
liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot be held
liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is
not enough to pierce the veil of corporate fiction between MHICL and MHC.
96

Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is
used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is done only
when a corporation is a mere alter ego or business conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a single stockholder or
by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient
reason for disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the defendant must have
control or complete domination of the other corporation's finances, policy and business practices with
regard to the transaction attacked. There must be proof that the other corporation had no separate
mind, will or existence with respect the act complained of. Second, control must be used by the
defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty must be the
proximate cause of the injury or loss complained of. The absence of any of the elements prevents the
piercing of the corporate veil.43
It is basic that a corporation has a personality separate and distinct from those composing it as well as
from that of any other legal entity to which it may be related.44 Clear and convincing evidence is needed
to pierce the veil of corporate fiction.45 In this case, we find no evidence to show that MHICL and MHC
are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract
with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda
signed the employment contract as a mere witness. He merely signed under the word "noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party would.46 In
Sichangco v. Board of Commissioners of Immigration,47 the Court recognized that the term "noted"
means that the person so noting has merely taken cognizance of the existence of an act or declaration,
without exercising a judicious deliberation or rendering a decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the
document is that which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no recitals, after the parties (emphasis ours)."48 As opposed to a party to a
contract, a witness is simply one who, "being present, personally sees or perceives a thing; a beholder, a
spectator, or eyewitness."49 One who "notes" something just makes a "brief written statement"50 a
memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship between Santos
and MHICL. In determining the existence of an employer-employee relationship, the following elements
are considered:51
"(1) the selection and engagement of the employee;

97

"(2) the payment of wages;

"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It did not select respondent
Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did not engage respondent Santos to work. The terms of employment were negotiated
and finalized through correspondence between respondent Santos, Mr. Schmidt and Mr. Henk, who
were officers and representatives of the Palace Hotel and not MHICL. Neither did respondent Santos
adduce any proof that MHICL had the power to control his conduct. Finally, it was the Palace Hotel,
through Mr. Schmidt and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is no proof that
MHICL "supplied" respondent Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity.
The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to pierce the
corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no employeremployee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J.
Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following:53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising from employeremployee relations;
"5. Cases arising from any violation of Article 264 of this Code, including questions involving
legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of persons
in domestic or household service, involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for reinstatement."

98

In all these cases, an employer-employee relationship is an indispensable jurisdictional requirement.

The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can be resolved by reference to the Labor Code,
or other labor statutes, or their collective bargaining agreements.54
"To determine which body has jurisdiction over the present controversy, we rely on the sound judicial
principle that jurisdiction over the subject matter is conferred by law and is determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His failure
to dismiss the case amounts to grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and
resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994 and
March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.

99

G.R. No. 103493 June 19, 1997

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA
HOLDINGS,
N.V.,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R.
PERLAS, and WILLIAM H. CRAIG, respondents.
This case presents for determination the conclusiveness of a foreign judgment upon the rights of the
parties under the same cause of action asserted in a case in our local court. Petitioners brought this case
in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the
foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non
conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners
Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec Investment Corporation
(hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat
with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private
respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducat's obligation
under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with
Vendor's Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of
land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to
ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488,
Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA
released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their
possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by
the note became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of
US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by
petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the
Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District,
where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United
States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint,
reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim,
impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly appraised the
property, was later dropped as counterdefendant. ATHONA sought the recovery of damages and excess
payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For
their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their
person, but, as their motion was denied, they later filed a joint answer with counterclaim against private
respondents and Edgardo V. Guevarra, PHILSEC's own former president, for the rescission of the sale on
the ground that the property had been overvalued. On March 13, 1990, the United States District Court
for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the
100

ground that it was "frivolous and [was] brought against him simply to humiliate and embarrass him." For
this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them
to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a
complaint "For Sum of Money with Damages and Writ of Preliminary Attachment" against private
respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The
complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H86-440 of the United States District Court of Southern Texas that private respondents committed fraud
by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners
claimed that, as a result of private respondents' fraudulent misrepresentations, ATHONA, PHILSEC, and
AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners
prayed that private respondents be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia,
vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and
(3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged
overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL
which were not parties to the sale and whose only participation was to extend financial accommodation
to ATHONA under a separate loan agreement. On the other hand, private respondents 1488, Inc. and its
president Daic filed a joint "Special Appearance and Qualified Motion to Dismiss," contending that the
action being in personam, extraterritorial service of summons by publication was ineffectual and did not
vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic,
who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the evidentiary
requirements of the controversy may be more suitably tried before the forum of the litis pendentia in
the U.S., under the principle in private international law of forum non conveniens," even as it noted that
Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9, 1988,
the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis
pendentia considering that
the "main factual element" of the cause of action in this case which is the validity of the
sale of real property in the United States between defendant 1488 and plaintiff ATHONA
is the subject matter of the pending case in the United States District Court which,
under the doctrine of forum non conveniens, is the better (if not exclusive) forum to
litigate matters needed to determine the assessment and/or fluctuations of the fair
market value of real estate situated in Houston, Texas, U.S.A. from the date of the
transaction in 1983 up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were
non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial
service of summons was ineffective. The trial court subsequently lifted the writ of attachment it
had earlier issued against the shares of stocks of 1488, Inc. and Daic.
101

Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle
of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants,
despite the previous attachment of shares of stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 against Ducat,
1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are
Philsec, the Ayala International Finance Ltd. (BPI-IFL's former name) and the Athona
Holdings, NV. The case at bar involves the same parties. The transaction sued upon by
the parties, in both cases is the Warranty Deed executed by and between Athona
Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are
sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on
the marketability of Ducat's securities given in exchange for the Texas property. The
recovery of a sum of money and damages, for fraud purportedly committed by
appellees, in overpricing the Texas land, constitute the action before the Philippine
court, which likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the
recovery of a sum of money for alleged tortious acts, so that service of summons by publication
did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil
Case No. 16563 on the ground of forum non conveniens was likewise affirmed by the Court of
Appeals on the ground that the case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve
foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas,
U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the
buyer, Athona Holdings, a foreign corporation which does not claim to be doing
business in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona
Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was
executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES
FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN
AFFIRMING THE TRIAL COURT'S DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF
APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS
LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN
NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL
ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS'
RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS
102

(WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was pending in
the Court of Appeals, the United States District Court for the Southern District of Texas rendered
judgment 5 in the case before it. The judgment, which was in favor of private respondents, was affirmed
on appeal by the Circuit Court of Appeals. 6 Thus, the principal issue to be resolved in this case is
whether Civil Case No. 16536 is barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment
admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign
judgment cannot be given the effect of res judicata without giving them an opportunity to impeach it on
grounds stated in Rule 39, 50 of the Rules of Court, to wit: "want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this Court has given the effect of res judicata to foreign
judgments in several cases, 7 it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law. 8 It is not necessary for this purpose to
initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is
that there is opportunity to challenge the foreign judgment, in order for the court to properly determine
its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from
actions in rem, a foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary. 9 Rule 39, 50
provides:
Sec. 50. Effect of foreign judgments. The effect of a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title
to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a
right as between the parties and their successors in interest by a subsequent title; but
the judgment may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd., 10
which private respondents invoke for claiming conclusive effect for the foreign judgment in their favor,
the foreign judgment was considered res judicata because this Court found "from the evidence as well
as from appellant's own pleadings" 11 that the foreign court did not make a "clear mistake of law or fact"
or that its judgment was void for want of jurisdiction or because of fraud or collusion by the defendants.
Trial had been previously held in the lower court and only afterward was a decision rendered, declaring
the judgment of the Supreme Court of the State of Washington to have the effect of res judicata in the
case before the lower court. In the same vein, in Philippines International Shipping Corp. v. Court of
Appeals, 12 this Court held that the foreign judgment was valid and enforceable in the Philippines there
103

being no showing that it was vitiated by want of notice to the party, collusion, fraud or clear mistake of
law or fact. The prima facie presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the
judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate
court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented
thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court
were exactly the issues raised in this case such that the judgment that might be rendered would
constitute res judicata. As the trial court stated in its disputed order dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of this case and the
pending case in the United States are not identical, precisely the Order of January 26,
1988 never found that the causes of action of this case and the case pending before the
USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners' action is
barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S.
court over their persons, but their claim was brushed aside by both the trial court and the Court
of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No.
92-1070 and assigned to Branch 134, although the proceedings were suspended because of the
pendency of this case. To sustain the appellate court's ruling that the foreign judgment constitutes res
judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the
judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject
to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case,
but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in
a separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where
affirmative relief is being sought. Hence, in the interest of justice, the complaint should
be considered as a petition for the recognition of the Hongkong judgment under Section
50 (b), Rule 39 of the Rules of Court in order that the defendant, private respondent
herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or clear
mistake of fact and law, if applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should
be consolidated. 15 After all, the two have been filed in the Regional Trial Court of Makati, albeit in
different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No.
92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should
have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may
they proceed with their action against private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the principle of
forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does
104

not include forum non conveniens. 16 The propriety of dismissing a case based on this principle requires a
factual determination, hence, it is more properly considered a matter of defense. Second, while it is
within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do
so only after "vital facts are established, to determine whether special circumstances" require the
court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by
private respondents in connection with the motion to dismiss. It failed to consider that one of the
plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino,
and that it was the extinguishment of the latter's debt which was the object of the transaction under
litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in
the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over
1488, Inc. and Daic could not be obtained because this is an action in personam and summons were
served by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of
summons on a non-resident defendant may be effected out of the Philippines by leave of Court where,
among others, "the property of the defendant has been attached within the Philippines." 18 It is not
disputed that the properties, real and personal, of the private respondents had been attached prior to
service of summons under the Order of the trial court dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the
proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11
sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be
enforced is severable from the main judgment under consideration in Civil Case No. 16563. The
separability of Guevara's claim is not only admitted by petitioners, 20 it appears from the pleadings that
petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO
should be lifted and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED
to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further
proceedings in accordance with this decision. The temporary restraining order issued on June 29, 1994 is
hereby LIFTED.
SO ORDERED.

105

G.R. No. 128803 September 25, 1998

ASIAVEST
LIMITED,
vs.
THE COURT OF APPEALS and ANTONIO HERAS, respondents.

petitioner,

In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are summarized
in the 24 August 1990 Decision of Branch 107 of the Regional Trial Court of Quezon City in Civil Case No.
Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the
defendant Antonio Heras praying that said defendant be ordered to pay to the plaintiff
the amounts awarded by the Hong Kong Court Judgment dated December 28, 1984 and
amended on April 13, 1987, to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong
currency at the time of payment with legal interest from
December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per
annum from October 31, 1984 to December 28, 1984;
and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees,
litigation expenses and cost, with interest thereon from
the date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court
could resolve the said motion, a fire which partially razed the Quezon City Hall Building
on June 11, 1988 totally destroyed the office of this Court, together with all its records,
equipment and properties. On July 26, 1988, the plaintiff, through counsel filed a
Motion for Reconstitution of Case Records. The Court, after allowing the defendant to
react thereto, granted the said Motion and admitted the annexes attached thereto as
the reconstituted records of this case per Order dated September 6, 1988. Thereafter,
the Motion to Dismiss, the resolution of which had been deferred; was denied by the
Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial
conference. At the conference, the parties could not arrive at any settlement. However,
they agreed on the following stipulations of facts:
1. The defendant admits the existence of the judgment
dated December 28, 1984 as well as its amendment
dated April 13, 1987, but not necessarily the
authenticity or validity thereof;
106

2. The plaintiff is not doing business and is not licensed

to do business in the Philippines;
3. The residence of defendant, Antonio Heras, is New
Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong
Kong Court has been repelled by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud or clear mistake of law or fact, such as to overcome the
presumption established in Section 50, Rule 39 of the Rules of Court in favor of foreign
judgments.
In view of the admission by the defendant of the existence of the aforementioned
judgment (Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended
by the Order of January 18, 1989), as well as the legal presumption in favor of the
plaintiff as provided for in paragraph (b); Sec. 50, (Ibid.), the plaintiff presented only
documentary evidence to show rendition, existence, and authentication of such
judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B", with their
submarkings). In addition, the plaintiff presented testimonial and documentary evidence
to show its entitlement to attorney's fees and other expenses of litigation. . . . .
On the other hand, the defendant presented two witnesses, namely. Fortunata dela
Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of
a statement of claim of Asiavest Limited was ever served in the office of the Navegante
Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of
summons was either served on the defendant at his residence in New Manila, Quezon
City. Her knowledge is based on the fact that she was the personal secretary of Mr.
Heras during his JD Transit days up to the latter part of 1972 when he shifted or
diversified to shipping business in Hong Kong; that she was in-charge of all his letters
and correspondence, business commitments, undertakings, conferences and
appointments, until October 1984 when Mr. Heras left Hong Kong for good; that she
was also the Officer-in-Charge or Office Manager of Navegante Shipping Agency LTD, a
Hong Kong registered and based company acting as ships agent, up to and until the
company closed shop sometime in the first quarter of 1985, when shipping business
collapsed worldwide; that the said company held office at 34-35 Connaught Road,
Central Hong Kong and later transferred to Carton House at Duddel Street, Hong Kong,
until the company closed shop in 1985; and that she was certain of such facts because
she held office at Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a
representative of the law office of the defendant's counsel who made a verification of
the record of the case filed by the plaintiff in Hong Kong against the defendant, as well
as the procedure in serving Court processes in Hong Kong.

107

In his affidavit (Exh. "2") which constitutes his direct testimony, the said witness stated
that:
The defendant was sued on the basis of his personal guarantee of the
obligations of Compania Hermanos de Navegacion S.A. There is no
record that a writ of summons was served on the person of the
defendant in Hong Kong, or that any such attempt at service was made.
Likewise, there is no record that a copy of the judgment of the High
Court was furnished or served on the defendant; anyway, it is not a
legal requirement to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the
solicitor (lawyer) of the claimant or plaintiff. In Hong
Kong there are no Court personnel who serve writs of
summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not
contested, the claimant or the plaintiff is not required
to present proof of his claim or complaint nor present
evidence under oath of the claim in order to obtain a
Judgment.
c) There is no legal requirement that such a Judgment
or decision rendered by the Court in Hong Kong [to]
make a recitation of the facts or the law upon which the
claim is based.
d) There is no necessity to furnish the defendant with a
copy of the Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no
established legal requirement or obligation under Hong
Kong laws that the creditor must first bring proceedings
against the principal debtor. The creditor can
immediately go against the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned by the law
firm of the defendant's counsel as an expert witness and to verify the records of the
Hong Kong case, he had been acting as counsel for the defendant in a number of
commercial matters; that there was an application for service of summons upon the
defendant outside the jurisdiction of Hong Kong; that there was an order of the Court
authorizing service upon Heras outside of Hong Kong, particularly in Manila or any other
place in the Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of
service of summons, otherwise the Hong Kong Court will refuse to render judgment (p.
10, ibid); that the mere fact that the Hong Kong Court rendered judgment, it can be
presumed that there was service of summons; that in this case, it is not just a
presumption because there was an affidavit stating that service was effected in [sic] a
108

particular man here in Manila; that such affidavit was filed by one Jose R. Fernandez of
the firm Sycip Salazar on the 21st of December 1984, and stated in essence that "on
Friday, the 23rd of November 1984 he served the 4th defendant at No. 6 First Street,
Quezon City by leaving it at that address with Mr. Dionisio Lopez, the son-in-law of the
4th defendant the copy of the writ and Mr. Lopez informed me and I barely believed
that he would bring the said writ to the attention of the 4th defendant" (pp. 11-12,
ibid.); that upon filing of that affidavit, the Court was asked and granted judgment
against the 4th defendant; and that if the summons or claim is not contested, the
claimant of the plaintiff is not required to present proof of his claim or complaint or
present evidence under oath of the claim in order to obtain judgment; and that such
judgment can be enforced in the same manner as a judgment rendered after full
hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive
evidence of a right as between the parties; hence, the party impugning it had the burden to prove want
of jurisdiction over his person. HERAS failed to discharge that burden. He did not testify to state
categorically and under oath that he never received summons. Even his own witness Lousich admitted
that HERAS was served with summons in his Quezon City residence. As to De la Vega's testimony
regarding non-service of summons, the same was hearsay and had no probative value.
As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the
procedural laws of the Philippines because it contained no statements of the facts and the law on which
it was based, the trial court ruled that since the issue relate to procedural matters, the law of the forum,
i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such legalities were not
required under Hong Kong laws. The trial Court also debunked HERAS' contention that the principle of
excussion under Article 2058 of the Civil Code of the Philippines was violated. It declared that matters of
substance are subject to the law of the place where the transaction occurred; in this case, Hong Kong
laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given effect in
this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the foreign judgment.
It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff
the following sums or their equivalents in Philippine currency at the time of payment:
US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum
from October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal
interests on the aggregate amount from December 28, 1984, and to pay attorney's fees
in the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and an
increase in attorney's fees in the amount of US$19,346.45 with interest until full payment of the said
obligations. On the other hand, HERAS no longer opposed the motion and instead appealed the decision
to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 29513.
In its order 2 of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration by
increasing the award of attorney's fees to "US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY,
AND TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST would pay the corresponding filing fees
109

for the increase. ASIAVEST appealed the order requiring prior payment of filing fees. However, it later
withdrew its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial court and
dismissing ASIAVEST's complaint without prejudice. It underscored the fact that a foreign judgment does
not of itself have any extraterritorial application. For it to be given effect, the foreign tribunal should
have acquired jurisdiction over the person and the subject matter. If such tribunal has not acquired
jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure, such as those
relating to service of summons upon the defendant are governed by the lex fori, which was, in this case,
the law of Hong Kong. Relative thereto, it gave weight to Lousich's testimony that under the Hong Kong
law, the substituted service of summons upon HERAS effected in the Philippines by the clerk of Sycip
Salazar Hernandez & Gatmaitan firm would be valid provided that it was done in accordance with
Philippine laws. It then stressed that where the action is in personam and the defendant is in the
Philippines, the summons should be personally served on the defendant pursuant to Section 7, Rule 14
of the Rules of Court. 4 Substituted service may only be availed of where the defendant cannot be
promptly served in person, the fact of impossibility of personal service should be explained in the proof
of service. It also found as persuasive HERAS' argument that instead of directly using the clerk of the
Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the court
issuing the summons, ASIAVEST should have asked for leave of the local courts to have the foreign
summons served by the sheriff or other court officer of the place where service was to be made, or for
special reasons by any person authorized by the judge.
The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is
unavailing to give jurisdiction in an action against him personally for money recovery." Summons should
have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically
present in Hong Kong for nearly 14 years. Since there was not even an attempt to serve summons on
HERAS in Hong Kong, the Hong Kong Supreme Court did not acquire jurisdiction over HERAS.
Nonetheless it did not totally foreclose the claim of ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a meritorious defense against
[ASIAVEST's] claims or that [HERAS] ought to be absolved of any liability, nevertheless,
in view of the foregoing discussion, there is a need to deviate front the findings of the
lower court in the interest of justice and fair play. This, however, is without prejudice to
whatever action [ASIAVEST] might deem proper in order to enforce its claims against
[HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence supporting the
validity of the foreign judgment be submitted, and that our courts are not bound to give effect to
foreign judgments which contravene our laws and the principle of sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling that
I.

110

. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE "SUPPORTING THE

VALIDITY OF THE JUDGMENT";
II.
. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINES LAW;
III.
. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;
IV.
. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF
PHILIPPINE COURTS;
V.
. . . THE FOREIGN JUDGMENT "CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF
SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing law at the
time this case was decided by the trial court and respondent Court of Appeals, a foreign judgment
against a person rendered by a court having jurisdiction to pronounce the judgment is presumptive
evidence of a right as between the parties and their successors in interest by the subsequent title.
However, the judgment may be repelled by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the
contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have
acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds
provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party challenging the
foreign judgment HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the other
hand, ASIAVEST presented evidence to prove rendition, existence, and authentication of the judgment
by the proper officials. The judgment is thus presumed to be valid and binding in the country from which
it comes, until the contrary is shown. 6 Consequently, the first ground relied upon by ASIAVEST has
merit. The presumption of validity accorded foreign judgment would be rendered meaningless were the
party seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court did
not acquire jurisdiction over the person of HERAS. This involves the issue of whether summons was
111

properly and validly served on HERAS. It is settled that matters of remedy and procedure such as those
relating to the service of process upon the defendant are governed by the lex fori or the law of the
forum, 7 i.e., the law of Hong Kong in this case. HERAS insisted that according to his witness Mr. Lousich,
who was presented as an expert on Hong Kong laws, there was no valid service of summons on him.
In his counter-affidavit, 8 which served as his direct testimony per agreement of the parties, 9 Lousich
declared that the record of the Hong Kong case failed to show that a writ of summons was served upon
HERAS in Hong Kong or that any such attempt was made. Neither did the record show that a copy of the
judgment of the court was served on HERAS. He stated further that under Hong Kong laws (a) a writ of
summons could be served by the solicitor of the claimant or plaintiff; and (b) where the said writ or
claim was not contested, the claimant or plaintiff was not required to present proof under oath in order
to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich' testified that the Hong Kong court authorized
service of summons on HERAS outside of its jurisdiction, particularly in the Philippines. He admitted also
the existence of an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan law
firm stating that he (Fernandez) served summons on HERAS on 13 November 1984 at No. 6, 1st St.,
Quezon City, by leaving a copy with HERAS's son-in-law Dionisio Lopez. 10 On redirect examination,
Lousich declared that such service of summons would be valid under Hong Kong laws provided that it
was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich as an
expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the
record of public documents of a sovereign authority, tribunal, official body, or public officer may be
proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody
thereof, which must be accompanied, if the record is not kept in the Philippines, with a certificate that
such officer has the custody. The certificate may be issued by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent, or any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of
his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An authority 12
on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v.
Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court)
does not exclude the presentation of other competent evidence to prove the existence
of a foreign law. In that case, the Supreme Court considered the testimony under oath
of an attorney-at-law of San Francisco, California, who quoted verbatim a section of
California Civil Code and who stated that the same was in force at the time the
obligations were contracted, as sufficient evidence to establish the existence of said law.
Accordingly, in line with this view, the Supreme Court in the Collector of Internal
Revenue v. Fisher et al., 14 upheld the Tax Court in considering the pertinent law of
California as proved by the respondents' witness. In that case, the counsel for
respondent "testified that as an active member of the California Bar since 1951, he is
familiar with the revenue and taxation laws of the State of California. When asked by
112

the lower court to state the pertinent California law as regards exemption of intangible
personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California
Internal and Revenue Code as published in Derring's California Code, a publication of
Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited
section was offered in evidence by respondents." Likewise, in several naturalization
cases, it was held by the Court that evidence of the law of a foreign country on
reciprocity regarding the acquisition of citizenship, although not meeting the prescribed
rule of practice, may be allowed and used as basis for favorable action, if, in the light of
all the circumstances, the Court is "satisfied of the authenticity of the written proof
offered." 15 Thus, in, a number of decisions, mere authentication of the Chinese
Naturalization Law by the Chinese Consulate General of Manila was held to be
competent proof of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong
Kong in respect of service of summons either in actions in rem or in personam, and where the defendant
is either a resident or nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law
on this particular issue, the presumption of identity or similarity or the so-called processual presumption
shall come into play. It will thus be presumed that the Hong Kong law on the matter is similar to the
Philippine law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine first whether the action is in
personam, in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules
of Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem
is an action against the thing itself instead of against the person. 19 An action quasi in rem is one wherein
an individual is named as defendant and the purpose of the proceeding is to subject his interest therein
to the obligation or lien burdening the property. 20
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case. Jurisdiction over the person of a resident defendant who does not
voluntarily appear in court can be acquired by personal service of summons as provided under Section 7,
Rule 14 of the Rules of Court. If he cannot be personally served with summons within a reasonable time,
substituted service may be made in accordance with Section 8 of said Rule. If he is temporarily out of
the country, any of the following modes of service may be resorted to: (1) substituted service set forth
in Section 8; 21 (2) personal service outside the country, with leave of court; (3) service by publication,
also with leave of court; 22 or (4) any other manner the court may deem sufficient. 23
However, in an action in personam wherein the defendant is a non-resident who does not voluntarily
submit himself to the authority of the court, personal service of summons within the state is essential to
the acquisition of jurisdiction over her person. 24 This method of service is possible if such defendant is
physically present in the country. If he is not found therein, the court cannot acquire jurisdiction over his
person and therefore cannot validly try and decide the case against him. 25 An exception was laid down
in Gemperle v. Schenker 26 wherein a non-resident was served with summons through his wife, who was
a resident of the Philippines and who was his representatives and attorney-in-fact in a prior civil case
filed by him; moreover, the second case was a mere offshoot of the first case.

113

On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant
is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over
the res. Nonetheless summons must be served upon the defendant not for the purpose of vesting the
court with jurisdiction but merely for satisfying the due process requirements. 27 Thus, where the
defendant is a non-resident who is not found in the Philippines and (1) the action affects the personal
status of the plaintiff; (2) the action relates to, or the subject matter of which is property in the
Philippines in which the defendant has or claims a lien or interest; (3) the action seeks the exclusion of
the defendant from any interest in the property located in the Philippines; or (4) the property of the
defendant has been attached in the Philippines service of summons may be effected by (a) personal
service out of the country, with leave of court; (b) publication, also with leave of court, or (c) any other
manner the court may deem sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was based on
his personal guarantee of the obligation of the principal debtor. Before we can apply the foregoing rules,
we must determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until 1985, 29 testified that
HERAS was the President and part owner of a shipping company in Hong Kong during all those times
that she served as his secretary. He had in his employ a staff of twelve. 30 He had "business
commitments, undertakings, conferences, and appointments until October 1984 when [he] left Hong
Kong for good," 31 HERAS's other witness, Russel Warren Lousich, testified that he had acted as counsel
for HERAS "for a number of commercial matters." 32 ASIAVEST then infers that HERAS was a resident of
Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his
Answer 34 to ASIAVEST's complaint for the enforcement of the Hong Kong court judgment, HERAS
maintained that the Hong Kong court did not have jurisdiction over him because the fundamental rule is
that jurisdiction in personam over non-resident defendants, so as to sustain a money judgment, must be
based upon personal service of summons within the state which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: "The question of Hong
Kong court's 'want of jurisdiction' is therefore a triable issue if it is to be pleaded by the defendant to
'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong Kong suit was in
personam, that defendant was not a resident of Hong Kong when the suit was filed or that he did not
voluntarily submit to the Hong Kong court's jurisdiction) should be alleged and proved by the
defendant." 37
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of jurisdiction over
his person was corroborated by ASIAVEST's allegation in the complaint that he "has his residence at No.
6, 1st St., New Manila, Quezon City, Philippines." He then concluded that such judicial admission
amounted to evidence that he was and is not a resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among which was
that "the residence of defendant, Antonio Heras, is New Manila, Quezon City." 39
We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court
judgment is concerned, was never in issue. He never challenged the service of summons on him through
114

a security guard in his Quezon City residence and through a lawyer in his office in that city. In his Motion
to Dismiss, he did not question the jurisdiction of the Philippine court over his person on the ground of
invalid service of summons. What was in issue was his residence as far as the Hong Kong suit was
concerned. We therefore conclude that the stipulated fact that HERAS "is a resident of New Manila,
Quezon City, Philippines" refers to his residence at the time jurisdiction over his person was being
sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS
was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably,
one in personam, summons should have been personally served on him in Hong Kong. The
extraterritorial service in the Philippines was therefore invalid and did not confer on the Hong Kong
court jurisdiction over his person. It follows that the Hong Kong court judgment cannot be given force
and effect here in the Philippines for having been rendered without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in November
1984 when the extraterritorial service of summons was attempted to be made on him. As declared by
his secretary, which statement was not disputed by ASIAVEST, HERAS left Hong Kong in October 1984
"for good." 40 His absence in Hong Kong must have been the reason why summons was not served on
him therein; thus, ASIAVEST was constrained to apply for leave to effect service in the Philippines, and
upon obtaining a favorable action on the matter, it commissioned the Sycip Salazar Hernandez &
Gatmaitan law firm to serve the summons here in the Philippines.
In Brown v. Brown, 41 the defendant was previously a resident of the Philippines. Several days after a
criminal action for concubinage was filed against him, he abandoned the Philippines. Later, a proceeding
quasi in rem was instituted against him. Summons in the latter case was served on the defendant's
attorney-in-fact at the latter's address. The Court held that under the facts of the case, it could not be
said that the defendant was "still a resident of the Philippines because he ha[d] escaped to his country
and [was] therefore an absentee in the Philippines." As such, he should have been "summoned in the
same manner as one who does not reside and is not found in the Philippines."
Similarly, HERAS, who was also an absentee, should have been served with summons in the same
manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of Court providing
for extraterritorial service will not apply because the suit against him was in personam. Neither can we
apply Section 18, which allows extraterritorial service on a resident defendant who is temporarily absent
from the country, because even if HERAS be considered as a resident of Hong Kong, the undisputed fact
remains that he left Hong Kong not only "temporarily" but "for good."
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this case and
AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.

115

G.R. No. 136804

February 19, 2003

MANUFACTURERS
HANOVER
TRUST
vs.
RAFAEL MA. GUERRERO, respondent.

CO.

and/or

CHEMICAL

BANK,

petitioners,

The Case
This is a petition for review under Rule 45 of the Rules of Court to set aside the Court of Appeals1
Decision of August 24, 1998 and Resolution of December 14, 1998 in CA-G.R. SP No. 423102 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
damages against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank ("the Bank" for
brevity) with the Regional Trial Court of Manila ("RTC" for brevity). Guerrero sought payment of
damages allegedly for (1) illegally withheld taxes charged against interests on his checking account with
the Bank; (2) a returned check worth US$18,000.00 due to signature verification problems; and (3)
unauthorized conversion of his account. Guerrero amended his complaint on April 18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by stipulation Guerreros
account is governed by New York law and this law does not permit any of Guerreros claims except
actual damages. Subsequently, the Bank filed a Motion for Partial Summary Judgment seeking the
dismissal of Guerreros claims for consequential, nominal, temperate, moral and exemplary damages as
well as attorneys fees on the same ground alleged in its Answer. The Bank contended that the trial
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 Summary
Judgment. Alyssa Waldens affidavit ("Walden affidavit" for brevity) stated that Guerreros New York
bank account stipulated that the governing law is New York law and that this law bars all of Guerreros
claims except actual damages. The Philippine Consular Office in New York authenticated the Walden
affidavit.
The RTC denied the Banks Motion for Partial Summary Judgment and its motion for reconsideration on
March 6, 1996 and July 17, 1996, respectively. The Bank filed a petition for certiorari and prohibition
with the Court of Appeals assailing the RTC Orders. In its Decision dated August 24, 1998, the Court of
Appeals dismissed the petition. On December 14, 1998, the Court of Appeals denied the Banks motion
for reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for partial summary judgment. The
Court of Appeals ruled that the Walden affidavit does not serve as proof of the New York law and
jurisprudence relied on by the Bank to support its motion. The Court of Appeals considered the New
116

York law and jurisprudence as public documents defined in Section 19, Rule 132 of the Rules on
Evidence, as follows:
"SEC. 19. Classes of Documents. For the purpose of their presentation in evidence, documents are
either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or of a foreign country;
x x x."
The Court of Appeals opined that the following procedure outlined in Section 24, Rule 132 should be
followed in proving foreign law:
"SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office
in which the record is kept is in a foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office."
The Court of Appeals likewise rejected the Banks argument that Section 2, Rule 34 of the old Rules of
Court allows the Bank to move with the supporting Walden affidavit for partial summary judgment in its
favor. The Court of Appeals clarified that the Walden affidavit is not the supporting affidavit referred to
in Section 2, Rule 34 that would prove the lack of genuine issue between the parties. The Court of
Appeals concluded that even if the Walden affidavit is used for purposes of summary judgment, the
Bank must still comply with the procedure prescribed by the Rules to prove the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error in "x x x HOLDING THAT *THE BANKS+ PROOF OF FACTS TO SUPPORT ITS MOTION FOR SUMMARY
JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;
x x x HOLDING THAT *THE BANKS+ AFFIDAVIT, WHICH PROVES FOREIGN LAW AS A FACT, IS "HEARSAY"
AND THEREBY CANNOT SERVE AS PROOF OF THE NEW YORK LAW RELIED UPON BY PETITIONERS IN
THEIR MOTION FOR SUMMARY JUDGMENT x x x."3
First, the Bank argues that in moving for partial summary judgment, it was entitled to use the
Walden affidavit to prove that the stipulated foreign law bars the claims for consequential,
moral, temperate, nominal and exemplary damages and attorneys fees. Consequently, outright
dismissal by summary judgment of these claims is warranted.
117

Second, the Bank claims that the Court of Appeals mixed up the requirements of Rule 35 on
summary judgments and those of a trial on the merits in considering the Walden affidavit as
"hearsay." The Bank points out that the Walden affidavit is not hearsay since Rule 35 expressly
permits the use of affidavits.
Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit to refute the
facts contained in the Walden affidavit, he failed to show the need for a trial on his 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 Court which reads:
"Section 2. Summary judgment for defending party. A party against whom a claim, counterclaim, or
cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits
for a summary judgment in his favor as to all or any part thereof."
A court may grant a summary judgment to settle expeditiously a case if, on motion of either party, there
appears from the pleadings, depositions, admissions, and affidavits that no important issues of fact are
involved, except the amount of damages. In such event, the moving party is entitled to a judgment as a
matter of law.4
In a motion for summary judgment, the crucial question is: are the issues raised in the pleadings
genuine, sham or fictitious, as shown by affidavits, depositions or admissions accompanying the
motion?5
A genuine issue means an issue of fact which calls for the presentation of evidence as distinguished from
an issue which is fictitious or contrived so as not to constitute a genuine issue for trial.6
A perusal of the parties respective pleadings would show that there are genuine issues of fact that
necessitate formal trial. Guerreros complaint before the RTC contains a statement of the ultimate facts
on which he relies for his claim for damages. He is seeking damages for what he asserts as "illegally
withheld taxes charged against interests on his checking account with the Bank, a returned check worth
US$18,000.00 due to signature verification problems, and unauthorized conversion of his account." In its
Answer, the Bank set up its defense that the agreed foreign law to govern their contractual relation bars
the recovery of damages other than actual. Apparently, facts are asserted in Guerreros complaint while
specific denials and affirmative defenses are set out in the Banks answer.
True, the court can determine whether there are genuine issues in a case based merely on the affidavits
or counter-affidavits submitted by the parties to the court. However, as correctly ruled by the Court of
Appeals, the Banks motion for partial summary judgment as supported by the Walden affidavit does
not demonstrate that Guerreros claims are sham, fictitious or contrived. On the contrary, the Walden
affidavit shows that the facts and material allegations as pleaded by the parties are disputed and there
are substantial triable issues necessitating a formal trial.
118

There can be no summary judgment where questions of fact are in issue or where material allegations of
the pleadings are in dispute.7 The resolution of whether a foreign law allows only the recovery of actual
damages is a question of fact as far as the trial court is concerned since foreign 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, the conflicting allegations as to whether New York law or
Philippine law applies to Guerreros claims present a clear dispute on material allegations which can be
resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may
be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal
custody thereof. Such official publication or copy must be accompanied, if the record is not kept in the
Philippines, with a certificate that the attesting officer has the legal custody thereof. The certificate may
be issued by any of the authorized Philippine embassy or consular officials stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office. The attestation must
state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case
may be, and must be under the official seal of the attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v. Court of Appeals10 which held
that:
"x x x:
Although it is desirable that foreign law be proved in accordance with the above rule, however, the
Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal, that Section 41, Rule 123
(Section 25, Rule 132 of the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the Supreme Court considered
the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a
section of California Civil Code and who stated that the same was in force at the time the obligations
were contracted, as sufficient evidence to establish the existence of said law. Accordingly, in line with
this view, the Supreme Court in the Collector of Internal Revenue v. Fisher et al., upheld the Tax Court in
considering the pertinent law of California as proved by the respondents witness. In that case, the
counsel for respondent "testified that as an active member of the California Bar since 1951, he is
familiar with the revenue and taxation laws of the State of California. When asked by the lower court to
state the pertinent California law as regards exemption of intangible personal properties, the witness
cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derrings
California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation
of the cited section was offered in evidence by respondents." Likewise, in several naturalization cases, it
was held by the Court that evidence of the law of a foreign country on reciprocity regarding the
acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and
used as basis for favorable action, if, in the light of all the circumstances, the Court is "satisfied of the
authenticity of the written proof offered." Thus, in a number of decisions, mere authentication of the
Chinese Naturalization Law by the Chinese Consulate General of Manila was held to be competent proof
of that law." (Emphasis supplied)
The Bank, however, cannot rely on Willamette Iron and Steel Works v. Muzzal or Collector of Internal
Revenue v. Fisher to support its cause. These cases involved attorneys testifying in open court during
the trial in the Philippines and quoting the particular foreign laws sought to be established. On the other
hand, the Walden affidavit was taken abroad ex parte and the affiant never testified in open
119

court.1a\^/phi1.net The Walden affidavit cannot be considered as proof of New York law on damages
not only because it is self-serving but also because it does not state the specific New York law on
damages. We reproduce portions of the Walden affidavit as follows:
"3. In New York, "[n]ominal damages are damages in name only, trivial sums such as six cents or
$1. Such damages are awarded both in tort and contract cases when the plaintiff establishes a
cause of action against the defendant, but is unable to prove" actual damages. Dobbs, Law of
Remedies, 3.32 at 294 (1993). Since Guerrero is claiming for actual damages, he cannot ask for
nominal damages.
4. There is no concept of temperate damages in New York law. I have reviewed Dobbs, a wellrespected treatise, which does not use the phrase "temperate damages" in its index. I have also
done a computerized search for the phrase in all published New York cases, and have found no
cases that use it. I have never heard the phrase used in American law.
5. The Uniform Commercial Code ("UCC") governs many aspects of a Banks relationship with its
depositors. In this case, it governs Guerreros claim arising out of the non-payment of the
$18,000 check. Guerrero claims that this was a wrongful dishonor. However, the UCC states that
"justifiable refusal to pay or accept" as opposed to dishonor, occurs when a bank refuses to pay
a check for reasons such as a missing indorsement, a missing or illegible signature or a forgery,
3-510, Official Comment 2. .. to the Complaint, MHT returned the check because it had no
signature card on . and could not verify Guerreros signature. In my opinion, consistent with
the UCC, that is a legitimate and justifiable reason not to pay.
6. Consequential damages are not available in the ordinary case of a justifiable refusal to pay.
UCC 1-106 provides that "neither consequential or special or punitive damages may be had
except as specifically provided in the Act or by other rule of law". UCC 4-103 further provides
that consequential damages can be recovered only where there is bad faith. This is more
restrictive than the New York common law, which may allow consequential damages in a breach
of contract case (as does the UCC where there is a wrongful dishonor).
7. Under New York law, requests for lost profits, damage to reputation and mental distress are
considered consequential damages. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540
N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction Corp. v. Buffalo Savings Bank, 50 A.D.2d
718, 374 N.Y.S..2d 868, 869-70 (4th Dept 1975) damage to reputation); Dobbs, Law of Remedies
12.4(1) at 63 (emotional distress).
8. As a matter of New York law, a claim for emotional distress cannot be recovered for a breach
of contract. Geler v. National Westminster Bank U.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) Martin
v. Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dept 1976). Damage to
reputation is also not recoverable for a contract. Motif Construction Corp. v. Buffalo Savings
Bank, 374 N.Y.S.2d at 869-70.1a\^/phi1.net
9. In cases where the issue is the breach of a contract to purchase stock, New York courts will
not take into consideration the performance of the stock after the breach. Rather, damages will
be based on the value of the stock at the time of the breach, Aroneck v. Atkin, 90 A.D.2d 966,
120

456 N.Y.S.2d 558, 559 (4th Dept 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d
1023 (1983).
10. Under New York law, a party can only get consequential damages if they were the type that
would naturally arise from the breach and if they were "brought within the contemplation of
parties as the probable result of the breach at the time of or prior to contracting." Kenford Co.,
Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo,
223 N.Y. 32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys fees unless they are provided by
contract or statute. E.g., Geler v. National Westminster Bank, 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 Dept 1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st
Dept 1991). There is no statute that permits attorneys fees in a case of this type.
12. Exemplary, or punitive damages are not allowed for a breach of contract, even where the
plaintiff claims the defendant acted with malice. Geler v. National Westminster Bank, 770
F.Supp. 210, 215 (S.D.N.Y. 1991); Catalogue Service of chester11_v. Insurance Co. of North
America, 74 A.D.2d 837, 838, 425 N.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).
13. Exemplary or punitive damages may be recovered only where it is alleged and proven that
the wrong supposedly committed by defendant amounts to a fraud aimed at the public
generally and involves a high moral culpability. Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d
497, 223 N.Y.S.2d 488 (1961).
14. Furthermore, it has been consistently held under New York law that exemplary damages are
not available for a mere breach of contract for in such a case, as a matter of law, only a private
wrong and not a public right is involved. Thaler v. The North Insurance Company, 63 A.D.2d 921,
406 N.Y.S.2d 66 (1st Dept 1978)."12
The Walden affidavit states conclusions from the affiants personal interpretation and opinion of the
facts of the case vis a vis the alleged laws and jurisprudence without citing any law in particular. The
citations in the Walden affidavit of various U.S. court decisions do not constitute proof of the official
records or decisions of the U.S. courts. While the Bank attached copies of some of the U.S. court
decisions cited in the Walden affidavit, these copies do not comply with Section 24 of Rule 132 on proof
of official records or decisions of foreign courts.
The Banks intention in presenting the Walden affidavit is to prove New York law and jurisprudence.
However, because of the failure to comply with Section 24 of Rule 132 on how to prove a foreign law
and decisions of foreign courts, the Walden affidavit did not prove the current state of New York law
and jurisprudence. Thus, the Bank has only alleged, but has not proved, what New York law and
jurisprudence are on the matters at issue.
Next, the Bank makes much of Guerreros failure to submit an opposing affidavit to the Walden affidavit.
However, the pertinent provision of Section 3, Rule 35 of the old Rules of Court did not make the
submission of an opposing affidavit mandatory, thus:
121

"SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days before the
time specified for the hearing. The adverse party prior to the day of hearing may serve opposing
affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleadings,
depositions and admissions on file, together with the affidavits, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law." (Emphasis supplied)
It is axiomatic that the term "may" as used in remedial law, is only permissive and not mandatory.13
Guerrero cannot be said to have admitted the averments in the Banks motion for partial summary
judgment and the Walden affidavit just because he failed to file an opposing affidavit. Guerrero opposed
the motion for partial summary judgment, although he did not present an opposing affidavit. Guerrero
may not have presented an opposing affidavit, as there was no need for one, because the Walden
affidavit did not establish what the Bank intended to prove. Certainly, Guerrero did not admit, expressly
or impliedly, the veracity of the statements in the Walden affidavit. The Bank still had the burden of
proving New York law and jurisprudence even if Guerrero did not present an opposing affidavit. As the
party moving for summary judgment, the Bank has the burden of clearly demonstrating the absence of
any genuine issue of fact and that any doubt as to the existence of such issue is resolved against the
movant.14
Moreover, it would have been redundant and pointless for Guerrero to submit an opposing affidavit
considering that what the Bank seeks to be opposed is the very subject matter of the complaint.
Guerrero need not file an opposing affidavit to the Walden affidavit because his complaint itself
controverts the matters set forth in the Banks motion and the Walden affidavit. A party should not be
made to deny matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a quo correctly denied the Banks
motion for partial summary judgment. There is a need to determine by presentation of evidence in a
regular trial if the Bank is guilty of any wrongdoing and if it is liable for damages under the applicable
laws.
This case has been delayed long enough by the Banks resort to a motion for partial summary judgment.
Ironically, the Bank has successfully defeated the very purpose for which summary judgments were
devised in our rules, which is, to aid parties in avoiding the expense and loss of time involved in a trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 24, 1998 and the
Resolution dated December 14, 1998 of the Court of Appeals in CA-G.R. SP No. 42310 is AFFIRMED.
SO ORDERED.

122

G.R. No. 119602

October 6, 2000

WILDVALLEY
SHIPPING
CO.,
LTD.
vs.
COURT OF APPEALS and PHILIPPINE PRESIDENT LINES INC., respondents.

petitioner,

This is a petition for review on certiorari seeking to set aside the decision of the Court of Appeals which
reversed the decision of the lower court in CA-G.R. CV No. 36821, entitled "Wildvalley Shipping Co., Ltd.,
plaintiff-appellant, versus Philippine President Lines, Inc., defendant-appellant."
The antecedent facts of the case are as follows:
Sometime in February 1988, the Philippine Roxas, a vessel owned by Philippine President Lines, Inc.,
private respondent herein, arrived in Puerto Ordaz, Venezuela, to load iron ore. Upon the completion of
the loading and when the vessel was ready to leave port, Mr. Ezzar del Valle Solarzano Vasquez, an
official pilot of Venezuela, was designated by the harbour authorities in Puerto Ordaz to navigate the
Philippine Roxas through the Orinoco River.1 He was asked to pilot the said vessel on February 11, 19882
boarding it that night at 11:00 p.m.3
The master (captain) of the Philippine Roxas, Captain Nicandro Colon, was at the bridge together with
the pilot (Vasquez), the vessel's third mate (then the officer on watch), and a helmsman when the vessel
left the port4 at 1:40 a.m. on February 12, 1988.5 Captain Colon left the bridge when the vessel was
under way.6
The Philippine Roxas experienced some vibrations when it entered the San Roque Channel at mile 172.7
The vessel proceeded on its way, with the pilot assuring the watch officer that the vibration was a result
of the shallowness of the channel.8
Between mile 158 and 157, the vessel again experienced some vibrations.9 These occurred at 4:12 a.m.10
It was then that the watch officer called the master to the bridge.11
The master (captain) checked the position of the vessel12 and verified that it was in the centre of the
channel.13 He then went to confirm, or set down, the position of the vessel on the chart.14 He ordered
Simplicio A. Monis, Chief Officer of the President Roxas, to check all the double bottom tanks.15
At around 4:35 a.m., the Philippine Roxas ran aground in the Orinoco River,16 thus obstructing the
ingress and egress of vessels.
As a result of the blockage, the Malandrinon, a vessel owned by herein petitioner Wildvalley Shipping
Company, Ltd., was unable to sail out of Puerto Ordaz on that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a suit with the Regional Trial Court of Manila,
Branch III against Philippine President Lines, Inc. and Pioneer Insurance Company (the
underwriter/insurer of Philippine Roxas) for damages in the form of unearned profits, and interest
thereon amounting to US $400,000.00 plus attorney's fees, costs, and expenses of litigation. The
complaint against Pioneer Insurance Company was dismissed in an Order dated November 7, 1988.17

123

At the pre-trial conference, the parties agreed on the following facts:

"1. The jurisdictional facts, as specified in their respective pleadings;
"2. That defendant PPL was the owner of the vessel Philippine Roxas at the time of the incident;
"3. That defendant Pioneer Insurance was the insurance underwriter for defendant PPL;
"4. That plaintiff Wildvalley Shipping Co., Inc. is the owner of the vessel Malandrinon, whose
passage was obstructed by the vessel Philippine Roxas at Puerto Ordaz, Venezuela, as specified
in par. 4, page 2 of the complaint;
"5. That on February 12, 1988, while the Philippine Roxas was navigating the channel at Puerto
Ordaz, the said vessel grounded and as a result, obstructed navigation at the channel;
"6. That the Orinoco River in Puerto Ordaz is a compulsory pilotage channel;
"7. That at the time of the incident, the vessel, Philippine Roxas, was under the command of the
pilot Ezzar Solarzano, assigned by the government thereat, but plaintiff claims that it is under
the command of the master;
"8. The plaintiff filed a case in Middleburg, Holland which is related to the present case;
"9. The plaintiff caused the arrest of the Philippine Collier, a vessel owned by the defendant PPL;
"10. The Orinoco River is 150 miles long and it takes approximately 12 hours to navigate out of
the said river;
"11. That no security for the plaintiff's claim was given until after the Philippine Collier was
arrested; and
"12. That a letter of guarantee, dated 12-May-88 was issued by the Steamship Mutual
Underwriters Ltd."18
The trial court rendered its decision on October 16, 1991 in favor of the petitioner, Wildvalley Shipping
Co., Ltd. The dispositive portion thereof reads as follows:
"WHEREFORE, judgment is rendered for the plaintiff, ordering defendant Philippine President Lines, Inc.
to pay to the plaintiff the sum of U.S. $259,243.43, as actual and compensatory damages, and U.S.
$162,031.53, as expenses incurred abroad for its foreign lawyers, plus additional sum of U.S. $22,000.00,
as and for attorney's fees of plaintiff's local lawyer, and to pay the cost of this suit.
"Defendant's counterclaim is dismissed for lack of merit.
"SO ORDERED."19

124

Both parties appealed: the petitioner appealing the non-award of interest with the private respondent
questioning the decision on the merits of the case.
After the requisite pleadings had been filed, the Court of Appeals came out with its questioned decision
dated June 14, 1994,20 the dispositive portion of which reads as follows:
"WHEREFORE, finding defendant-appellant's appeal to be meritorious, judgment is hereby rendered
reversing the Decision of the lower court. Plaintiff-appellant's Complaint is dismissed and it is ordered to
pay defendant-appellant the amount of Three Hundred Twenty-three Thousand, Forty-two Pesos and
Fifty-three Centavos (P323,042.53) as and for attorney's fees plus cost of suit. Plaintiff-appellant's
appeal is DISMISSED.
"SO ORDERED."21
Petitioner filed a motion for reconsideration22 but the same was denied for lack of merit in the
resolution dated March 29, 1995.23
Hence, this petition.
The petitioner assigns the following errors to the court a quo:
1. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT UNDER PHILIPPINE
LAW NO FAULT OR NEGLIGENCE CAN BE ATTRIBUTED TO THE MASTER NOR THE OWNER OF THE
"PHILIPPINE ROXAS" FOR THE GROUNDING OF SAID VESSEL RESULTING IN THE BLOCKAGE OF
THE RIO ORINOCO;
2. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE FINDINGS OF FACTS
OF THE TRIAL COURT CONTRARY TO EVIDENCE;
3. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE "PHILIPPINE
ROXAS" IS SEAWORTHY;
4. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING VENEZUELAN LAW
DESPITE THE FACT THAT THE SAME HAS BEEN SUBSTANTIALLY PROVED IN THE TRIAL COURT
WITHOUT ANY OBJECTION FROM PRIVATE RESPONDENT, AND WHOSE OBJECTION WAS
INTERPOSED BELATEDLY ON APPEAL;
5. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN AWARDING ATTORNEY'S FEES AND
COSTS TO PRIVATE RESPONDENT WITHOUT ANY FAIR OR REASONABLE BASIS WHATSOEVER;
6. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT PETITIONER'S
CAUSE IS MERITORIOUS HENCE, PETITIONER SHOULD BE ENTITLED TO ATTORNEY'S FEES, COSTS
AND INTEREST.
The petition is without merit.
The primary issue to be determined is whether or not Venezuelan law is applicable to the case at bar.
125

It is well-settled that foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other fact, they must be alleged and proved.24
A distinction is to be made as to the manner of proving a written and an unwritten law. The former falls
under Section 24, Rule 132 of the Rules of Court, as amended, the entire provision of which is quoted
hereunder. Where the foreign law sought to be proved is "unwritten," the oral testimony of expert
witnesses is admissible, as are printed and published books of reports of decisions of the courts of the
country concerned if proved to be commonly admitted in such courts.25
Section 24 of Rule 132 of the Rules of Court, as amended, provides:
"Sec. 24. Proof of official record. -- The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office
in which the record is kept is in a foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office." (Underscoring supplied)
The court has interpreted Section 25 (now Section 24) to include competent evidence like the testimony
of a witness to prove the existence of a written foreign law.26
In the noted case of Willamette Iron & Steel Works vs. Muzzal,27 it was held that:
" Mr. Arthur W. Bolton, an attorney-at-law of San Francisco, California, since the year 1918 under oath,
quoted verbatim section 322 of the California Civil Code and stated that said section was in force at the
time the obligations of defendant to the plaintiff were incurred, i.e. on November 5, 1928 and
December 22, 1928. This evidence sufficiently established the fact that the section in question was the
law of the State of California on the above dates. A reading of sections 300 and 301 of our Code of Civil
Procedure will convince one that these sections do not exclude the presentation of other competent
evidence to prove the existence of a foreign law.
"`The foreign law is a matter of fact You ask the witness what the law is; he may, from his recollection,
or on producing and referring to books, say what it is.' (Lord Campbell concurring in an opinion of Lord
Chief Justice Denman in a well-known English case where a witness was called upon to prove the Roman
laws of marriage and was permitted to testify, though he referred to a book containing the decrees of
the Council of Trent as controlling, Jones on Evidence, Second Edition, Volume 4, pages 3148-3152.) x x
x."
We do not dispute the competency of Capt. Oscar Leon Monzon, the Assistant Harbor Master and Chief
of Pilots at Puerto Ordaz, Venezuela,28 to testify on the existence of the Reglamento General de la Ley de
Pilotaje (pilotage law of Venezuela)29 and the Reglamento Para la Zona de Pilotaje No 1 del Orinoco (rules
governing the navigation of the Orinoco River). Captain Monzon has held the aforementioned posts for
eight years.30 As such he is in charge of designating the pilots for maneuvering and navigating the
Orinoco River. He is also in charge of the documents that come into the office of the harbour masters.31

126

Nevertheless, we take note that these written laws were not proven in the manner provided by Section
24 of Rule 132 of the Rules of Court.
The Reglamento General de la Ley de Pilotaje was published in the Gaceta Oficial32 of the Republic of
Venezuela. A photocopy of the Gaceta Oficial was presented in evidence as an official publication of the
Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje No 1 del Orinoco is published in a book issued by the Ministerio
de Comunicaciones of Venezuela.33 Only a photocopy of the said rules was likewise presented as
evidence.
Both of these documents are considered in Philippine jurisprudence to be public documents for they are
the written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers of Venezuela.34
For a copy of a foreign public document to be admissible, the following requisites are mandatory: (1) It
must be attested by the officer having legal custody of the records or by his deputy; and (2) It must be
accompanied by a certificate by a secretary of the embassy or legation, consul general, consul, vice
consular or consular agent or foreign service officer, and with the seal of his office.35 The latter
requirement is not a mere technicality but is intended to justify the giving of full faith and credit to the
genuineness of a document in a foreign country.36
It is not enough that the Gaceta Oficial, or a book published by the Ministerio de Comunicaciones of
Venezuela, was presented as evidence with Captain Monzon attesting it. It is also required by Section 24
of Rule 132 of the Rules of Court that a certificate that Captain Monzon, who attested the documents, is
the officer who had legal custody of those records made by a secretary of the embassy or legation,
consul general, consul, vice consul or consular agent or by any officer in the foreign service of the
Philippines stationed in Venezuela, and authenticated by the seal of his office accompanying the copy of
the public document. No such certificate could be found in the records of the case.
With respect to proof of written laws, parol proof is objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a foreign statute is involved, the best evidence
rule requires that it be proved by a duly authenticated copy of the statute.37
At this juncture, we have to point out that the Venezuelan law was not pleaded before the lower court.
A foreign law is considered to be pleaded if there is an allegation in the pleading about the existence of
the foreign law, its import and legal consequence on the event or transaction in issue.38
A review of the Complaint39 revealed that it was never alleged or invoked despite the fact that the
grounding of the M/V Philippine Roxas occurred within the territorial jurisdiction of Venezuela.
We reiterate that under the rules of private international law, a foreign law must be properly pleaded
and proved as a fact. In the absence of pleading and proof, the laws of a foreign country, or state, will be
presumed to be the same as our own local or domestic law and this is known as processual
presumption.40

127

Having cleared this point, we now proceed to a thorough study of the errors assigned by the petitioner.
Petitioner alleges that there was negligence on the part of the private respondent that would warrant
the award of damages.
There being no contractual obligation, the private respondent is obliged to give only the diligence
required of a good father of a family in accordance with the provisions of Article 1173 of the New Civil
Code, thus:
"Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201,
paragraph 2, shall apply.
"If the law or contract does not state the diligence which is to be observed in the performance, that
which is expected of a good father of a family shall be required."
The diligence of a good father of a family requires only that diligence which an ordinary prudent man
would exercise with regard to his own property. This we have found private respondent to have
exercised when the vessel sailed only after the "main engine, machineries, and other auxiliaries" were
checked and found to be in good running condition;41 when the master left a competent officer, the
officer on watch on the bridge with a pilot who is experienced in navigating the Orinoco River; when the
master ordered the inspection of the vessel's double bottom tanks when the vibrations occurred
anew.42
The Philippine rules on pilotage, embodied in Philippine Ports Authority Administrative Order No. 03-85,
otherwise known as the Rules and Regulations Governing Pilotage Services, the Conduct of Pilots and
Pilotage Fees in Philippine Ports enunciate the duties and responsibilities of a master of a vessel and its
pilot, among other things.
The pertinent provisions of the said administrative order governing these persons are quoted
hereunder:
"Sec. 11. Control of Vessels and Liability for Damage. -- On compulsory pilotage grounds, the Harbor
Pilot providing the service to a vessel shall be responsible for the damage caused to a vessel or to life
and property at ports due to his negligence or fault. He can be absolved from liability if the accident is
caused by force majeure or natural calamities provided he has exercised prudence and extra diligence to
prevent or minimize the damage.
"The Master shall retain overall command of the vessel even on pilotage grounds whereby he can
countermand or overrule the order or command of the Harbor Pilot on board. In such event, any
damage caused to a vessel or to life and property at ports by reason of the fault or negligence of the
Master shall be the responsibility and liability of the registered owner of the vessel concerned without
prejudice to recourse against said Master.
"Such liability of the owner or Master of the vessel or its pilots shall be determined by competent
authority in appropriate proceedings in the light of the facts and circumstances of each particular case.
128

"x x x
"Sec. 32. Duties and Responsibilities of the Pilots or Pilots Association. -- The duties and responsibilities
of the Harbor Pilot shall be as follows:
"x x x
"f) A pilot shall be held responsible for the direction of a vessel from the time he assumes his work as a
pilot thereof until he leaves it anchored or berthed safely; Provided, however, that his responsibility
shall cease at the moment the Master neglects or refuses to carry out his order."
The Code of Commerce likewise provides for the obligations expected of a captain of a vessel, to wit:
"Art. 612. The following obligations shall be inherent in the office of captain:
"x x x
"7. To be on deck on reaching land and to take command on entering and leaving ports, canals,
roadsteads, and rivers, unless there is a pilot on board discharging his duties. x x x."
The law is very explicit. The master remains the overall commander of the vessel even when there is a
pilot on board. He remains in control of the ship as he can still perform the duties conferred upon him
by law43 despite the presence of a pilot who is temporarily in charge of the vessel. It is not required of
him to be on the bridge while the vessel is being navigated by a pilot.
However, Section 8 of PPA Administrative Order No. 03-85, provides:
"Sec. 8. Compulsory Pilotage Service - For entering a harbor and anchoring thereat, or passing through
rivers or straits within a pilotage district, as well as docking and undocking at any pier/wharf, or shifting
from one berth or another, every vessel engaged in coastwise and foreign trade shall be under
compulsory pilotage.
"xxx."
The Orinoco River being a compulsory pilotage channel necessitated the engaging of a pilot who was
presumed to be knowledgeable of every shoal, bank, deep and shallow ends of the river. In his
deposition, pilot Ezzar Solarzano Vasquez testified that he is an official pilot in the Harbour at Port
Ordaz, Venezuela,44 and that he had been a pilot for twelve (12) years.45 He also had experience in
navigating the waters of the Orinoco River.46
The law does provide that the master can countermand or overrule the order or command of the harbor
pilot on board. The master of the Philippine Roxas deemed it best not to order him (the pilot) to stop
the vessel,47 mayhap, because the latter had assured him that they were navigating normally before the
grounding of the vessel.48 Moreover, the pilot had admitted that on account of his experience he was
very familiar with the configuration of the river as well as the course headings, and that he does not
even refer to river charts when navigating the Orinoco River.49

129

Based on these declarations, it comes as no surprise to us that the master chose not to regain control of
the ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the knowledge
and experience of pilot Vasquez to guide the vessel safely.
"Licensed pilots, enjoying the emoluments of compulsory pilotage, are in a different class from ordinary
employees, for they assume to have a skill and a knowledge of navigation in the particular waters over
which their licenses extend superior to that of the master; pilots are bound to use due diligence and
reasonable care and skill. A pilot's ordinary skill is in proportion to the pilot's responsibilities, and implies
a knowledge and observance of the usual rules of navigation, acquaintance with the waters piloted in
their ordinary condition, and nautical skill in avoiding all known obstructions. The character of the skill
and knowledge required of a pilot in charge of a vessel on the rivers of a country is very different from
that which enables a navigator to carry a vessel safely in the ocean. On the ocean, a knowledge of the
rules of navigation, with charts that disclose the places of hidden rocks, dangerous shores, or other
dangers of the way, are the main elements of a pilot's knowledge and skill. But the pilot of a river vessel,
like the harbor pilot, is selected for the individual's personal knowledge of the topography through
which the vessel is steered."50
We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt
the watch officer asked him what was going on, and pilot Vasquez replied that "(they) were in the
middle of the channel and that the vibration was as (sic) a result of the shallowness of the channel."51
Pilot Ezzar Solarzano Vasquez was assigned to pilot the vessel Philippine Roxas as well as other vessels
on the Orinoco River due to his knowledge of the same. In his experience as a pilot, he should have been
aware of the portions which are shallow and which are not. His failure to determine the depth of the
said river and his decision to plod on his set course, in all probability, caused damage to the vessel. Thus,
we hold him as negligent and liable for its grounding.
In the case of Homer Ramsdell Transportation Company vs. La Compagnie Generale Transatlantique,
182 U.S. 406, it was held that:
"x x x The master of a ship, and the owner also, is liable for any injury done by the negligence of the
crew employed in the ship. The same doctrine will apply to the case of a pilot employed by the master
or owner, by whose negligence any injury happens to a third person or his property: as, for example, by
a collision with another ship, occasioned by his negligence. And it will make no difference in the case
that the pilot, if any is employed, is required to be a licensed pilot; provided the master is at liberty to
take a pilot, or not, at his pleasure, for in such a case the master acts voluntarily, although he is
necessarily required to select from a particular class. On the other hand, if it is compulsive upon the
master to take a pilot, and, a fortiori, if he is bound to do so under penalty, then, and in such case,
neither he nor the owner will be liable for injuries occasioned by the negligence of the pilot; for in
such a case the pilot cannot be deemed properly the servant of the master or the owner, but is forced
upon them, and the maxim Qui facit per alium facit per se does not apply." (Underscoring supplied)
Anent the river passage plan, we find that, while there was none,52 the voyage has been sufficiently
planned and monitored as shown by the following actions undertaken by the pilot, Ezzar Solarzano
Vasquez, to wit: contacting the radio marina via VHF for information regarding the channel, river
traffic,53 soundings of the river, depth of the river, bulletin on the buoys.54 The officer on watch also
monitored the voyage.55
130

We, therefore, do not find the absence of a river passage plan to be the cause for the grounding of the
vessel.
The doctrine of res ipsa loquitur does not apply to the case at bar because the circumstances
surrounding the injury do not clearly indicate negligence on the part of the private respondent. For the
said doctrine to apply, the following conditions must be met: (1) the accident was of such character as to
warrant an inference that it would not have happened except for defendant's negligence; (2) the
accident must have been caused by an agency or instrumentality within the exclusive management or
control of the person charged with the negligence complained of; and (3) the accident must not have
been due to any voluntary action or contribution on the part of the person injured.56
As has already been held above, there was a temporary shift of control over the ship from the master of
the vessel to the pilot on a compulsory pilotage channel. Thus, two of the requisites necessary for the
doctrine to apply, i.e., negligence and control, to render the respondent liable, are absent.
As to the claim that the ship was unseaworthy, we hold that it is not.
The Lloyds Register of Shipping confirmed the vessels seaworthiness in a Confirmation of Class issued
on February 16, 1988 by finding that "the above named ship (Philippine Roxas) maintained the class
"+100A1 Strengthened for Ore Cargoes, Nos. 2 and 8 Holds may be empty (CC) and +LMC" from
31/12/87 up until the time of casualty on or about 12/2/88."57 The same would not have been issued
had not the vessel been built according to the standards set by Lloyd's.
Samuel Lim, a marine surveyor, at Lloyd's Register of Shipping testified thus:
"Q Now, in your opinion, as a surveyor, did top side tank have any bearing at all to the seaworthiness of
the vessel?
"A Well, judging on this particular vessel, and also basing on the class record of the vessel, wherein
recommendations were made on the top side tank, and it was given sufficient time to be repaired, it
means that the vessel is fit to travel even with those defects on the ship.
"COURT
What do you mean by that? You explain. The vessel is fit to travel even with defects? Is that what you
mean? Explain.
"WITNESS
"A Yes, your Honor. Because the class society which register (sic) is the third party looking into the
condition of the vessel and as far as their record states, the vessel was class or maintained, and she is fit
to travel during that voyage."
"x x x
"ATTY. MISA

131

Before we proceed to other matter, will you kindly tell us what is (sic) the 'class +100A1 Strengthened
for Ore Cargoes', mean?
"WITNESS
"A Plus 100A1 means that the vessel was built according to Lloyd's rules and she is capable of carrying
ore bulk cargoes, but she is particularly capable of carrying Ore Cargoes with No. 2 and No. 8 holds
empty.
"x x x
"COURT
The vessel is classed, meaning?
"A Meaning she is fit to travel, your Honor, or seaworthy."58
It is not required that the vessel must be perfect. To be seaworthy, a ship must be reasonably fit to
perform the services, and to encounter the ordinary perils of the voyage, contemplated by the parties to
the policy.59
As further evidence that the vessel was seaworthy, we quote the deposition of pilot Vasquez:
"Q Was there any instance when your orders or directions were not complied with because of the
inability of the vessel to do so?
"A No.
"Q. Was the vessel able to respond to all your commands and orders?
"A. The vessel was navigating normally."60
Eduardo P. Mata, Second Engineer of the Philippine Roxas submitted an accident report wherein he
stated that on February 11, 1988, he checked and prepared the main engine, machineries and all other
auxiliaries and found them all to be in good running condition and ready for maneuvering. That same
day the main engine, bridge and engine telegraph and steering gear motor were also tested.61 Engineer
Mata also prepared the fuel for consumption for maneuvering and checked the engine generators.62
Finally, we find the award of attorneys fee justified.1wphi1
Article 2208 of the New Civil Code provides that:
"Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
"x x x

132

"(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.
"x x x"
Due to the unfounded filing of this case, the private respondent was unjustifiably forced to litigate, thus
the award of attorneys fees was proper.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is DENIED and the decision of the Court of
Appeals in CA G.R. CV No. 36821 is AFFIRMED.
SO ORDERED.

133

G.R. No. 142840

May 7, 2001

ANTONIO
BENGSON
III,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and TEODORO C. CRUZ, respondents.

petitioner,

CONCURRING OPINION
DISSENTING OPINION
The citizenship of respondent Teodoro C. Cruz is at issue in this case, in view of the constitutional
requirement that "no person shall be a Member of the House of Representative unless he is a naturalborn citizen."1
Respondent Cruz was a natural-born citizen of the Philippines. He was born in San Clemente, Tarlac, on
April 27, 1960, of Filipino parents. The fundamental law then applicable was the 1935 Constitution.2
On November 5, 1985, however, respondent Cruz enlisted in the United States Marine Corps and
without the consent of the Republic of the Philippines, took an oath of allegiance to the United States.
As a Consequence, he lost his Filipino citizenship for under Commonwealth Act No. 63, section 1(4), a
Filipino citizen may lose his citizenship by, among other, "rendering service to or accepting commission
in the armed forces of a foreign country." Said provision of law reads:
SECTION 1. How citizenship may be lost. A Filipino citizen may lose his citizenship in any of the
following ways and/or events:
xxx
(4) By rendering services to, or accepting commission in, the armed of a foreign country:
Provided, That the rendering of service to, or the acceptance of such commission in, the armed
forces of a foreign country, and the taking of an oath of allegiance incident thereto, with the
consent of the Republic of the Philippines, shall not divest a Filipino of his Philippine citizenship
if either of the following circumstances is present:
(a) The Republic of the Philippines has a defensive and/or offensive pact of alliance with said
foreign country; or
(b) The said foreign country maintains armed forces on Philippine territory with the consent of
the Republic of the Philippines: Provided, That the Filipino citizen concerned, at the time of
rendering said service, or acceptance of said commission, and taking the oath of allegiance
incident thereto, states that he does so only in connection with his service to said foreign
country; And provided, finally, That any Filipino citizen who is rendering service to, or is
commissioned in, the armed forces of a foreign country under any of the circumstances
mentioned in paragraph (a) or (b), shall not be Republic of the Philippines during the period of
his service to, or commission in, the armed forces of said country. Upon his discharge from the
service of the said foreign country, he shall be automatically entitled to the full enjoyment of his

134

civil and politically entitled to the full enjoyment of his civil political rights as a Filipino citizen x x
x.
Whatever doubt that remained regarding his loss of Philippine citizenship was erased by his
naturalization as a U.S. citizen on June 5, 1990, in connection with his service in the U.S. Marine Corps.
On March 17, 1994, respondent Cruz reacquired his Philippine citizenship through repatriation under
Republic Act No. 2630.3 He ran for and was elected as the Representative of the Second District of
Pangasinan in the May 11, 1998 elections. He won by a convincing margin of 26,671 votes over
petitioner Antonio Bengson III, who was then running for reelection.1wphi1.nt
Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent House of
Representatives Electoral Tribunal (HRET) claiming that respondent Cruz was not qualified to become a
member of the House of Representatives since he is not a natural-born citizen as required under Article
VI, section 6 of the Constitution.4
On March 2, 2000, the HRET rendered its decision5 dismissing the petition for quo warranto and
declaring Cruz the duly elected Representative of the Second District of Pangasinan in the May 1998
elections. The HRET likewise denied petitioner's motion for reconsideration of the decision in its
resolution dated April 27, 2000.6
Petitioner thus filed the present petition for certiorari assailing the HRET's decision on the following
grounds:
1. The HRET committed serious errors and grave abuse of discretion, amounting to excess of
jurisdiction, when it ruled that private respondent is a natural-born citizen of the Philippines
despite the fact that he had ceased being such in view of the loss and renunciation of such
citizenship on his part.
2. The HRET committed serious errors and grave abuse of discretion, amounting to excess of
jurisdiction, when it considered private respondent as a citizen of the Philippines despite the
fact he did not validly acquire his Philippine citizenship.
3. Assuming that private respondent's acquisition of Philippine citizenship was invalid, the HRET
committed serious errors and grave abuse of discretion, amounting to excess of jurisdiction,
when it dismissed the petition despite the fact that such reacquisition could not legally and
constitutionally restore his natural-born status.7
The issue now before us is whether respondent Cruz, a natural-born Filipino who became an American
citizen, can still be considered a natural-born Filipino upon his reacquisition of Philippine citizenship.
Petitioner asserts that respondent Cruz may no longer be considered a natural-born Filipino since he lost
h is Philippine citizenship when he swore allegiance to the United States in 1995, and had to reacquire
the same by repatriation. He insists that Article citizens are those who are from birth with out having to
perform any act to acquire or perfect such citizenship.

135

Respondent on the other hand contends that he reacquired his status as natural-born citizen when he
was repatriated since the phrase "from birth" in Article IV, Section 2 refers to the innate, inherent and
inborn characteristic of being a natural-born citizen.
The petition is without merit.
The 1987 Constitution enumerates who are Filipino citizens as follow:
(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution;
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973 of Filipino mother, who elect Philippine citizenship upon
reaching the age of majority, and
(4) Those who are naturalized in accordance with law.8
There are two ways of acquiring citizenship: (1) by birth, and (2) by naturalization. These ways of
acquiring citizenship correspond to the two kinds of citizens: the natural-born citizen, and the
naturalized citizen. A person who at the time of his birth is a citizen of a particular country, is a naturalborn citizen thereof.9
As defined in the same Constitution, natural-born citizens "are those citizens of the Philippines from
birth without having to perform any act to acquire or perfect his Philippine citezenship."10
On the other hand, naturalized citizens are those who have become Filipino citizens through
naturalization, generally under Commonwealth Act No. 473, otherwise known as the Revised
Naturalization Law, which repealed the former Naturalization Law (Act No. 2927), and by Republic Act
No. 530.11 To be naturalized, an applicant has to prove that he possesses all the qualifications12 and
none of the disqualification13 provided by law to become a Filipino citizen. The decision granting
Philippine citizenship becomes executory only after two (2) years from its promulgation when the court
is satisfied that during the intervening period, the applicant has (1) not left the Philippines; (2) has
dedicated himself to a lawful calling or profession; (3) has not been convicted of any offense or violation
of Government promulgated rules; or (4) committed any act prejudicial to the interest of the nation or
contrary to any Government announced policies.14
Filipino citizens who have lost their citizenship may however reacquire the same in the manner provided
by law. Commonwealth Act. No. (C.A. No. 63), enumerates the three modes by which Philippine
citizenship may be reacquired by a former citizen: (1) by naturalization, (2) by repatriation, and (3) by
direct act of Congress.15
Naturalization is mode for both acquisition and reacquisition of Philippine citizenship. As a mode of
initially acquiring Philippine citizenship, naturalization is governed by Commonwealth Act No. 473, as
amended. On the other hand, naturalization as a mode for reacquiring Philippine citizenship is governed
by Commonwealth Act No. 63.16 Under this law, a former Filipino citizen who wishes to reacquire
Philippine citizenship must possess certain qualifications17 and none of the disqualification mentioned in
Section 4 of C.A. 473.18
136

Repatriation, on the other hand, may be had under various statutes by those who lost their citizenship
due to: (1) desertion of the armed forces;19 services in the armed forces of the allied forces in World
War II;20 (3) service in the Armed Forces of the United States at any other time, 21 (4) marriage of a
Filipino woman to an alien;22 and (5) political economic necessity.23
As distinguished from the lengthy process of naturalization, repatriation simply consists of the taking of
an oath of allegiance to the Republic of the Philippine and registering said oath in the Local Civil Registry
of the place where the person concerned resides or last resided.
In Angat v. Republic,24 we held:
xxx. Parenthetically, under these statutes [referring to RA Nos. 965 and 2630], the person
desiring to reacquire Philippine citizenship would not even be required to file a petition in court,
and all that he had to do was to take an oath of allegiance to the Republic of the Philippines and
to register that fact with the civil registry in the place of his residence or where he had last
resided in the Philippines. [Italics in the original.25
Moreover, repatriation results in the recovery of the original nationality.26 This means that a naturalized
Filipino who lost his citizenship will be restored to his prior status as a naturalized Filipino citizen. On the
other hand, if he was originally a natural-born citizen before he lost his Philippine citizenship, he will be
restored to his former status as a natural-born Filipino.
In respondent Cruz's case, he lost his Filipino citizenship when he rendered service in the Armed Forces
of the United States. However, he subsequently reacquired Philippine citizenship under R.A. No. 2630,
which provides:
Section 1. Any person who had lost his Philippine citizenship by rendering service to, or
accepting commission in, the Armed Forces of the United States, or after separation from the
Armed Forces of the United States, acquired United States citizenship, may reacquire Philippine
citizenship by taking an oath of allegiance to the Republic of the Philippines and registering the
same with Local Civil Registry in the place where he resides or last resided in the Philippines. The
said oath of allegiance shall contain a renunciation of any other citizenship.
Having thus taken the required oath of allegiance to the Republic and having registered the same in the
Civil Registry of Magantarem, Pangasinan in accordance with the aforecited provision, respondent Cruz
is deemed to have recovered his original status as a natural-born citizen, a status which he acquired at
birth as the son of a Filipino father.27 It bears stressing that the act of repatriation allows him to recover,
or return to, his original status before he lost his Philippine citizenship.
Petitioner's contention that respondent Cruz is no longer a natural-born citizen since he had to perform
an act to regain his citizenship is untenable. As correctly explained by the HRET in its decision, the term
"natural-born citizen" was first defined in Article III, Section 4 of the 1973 Constitution as follows:
Sec. 4. A natural-born citizen is one who is a citizen of the Philippines from birth without having
to perform any act to acquire or perfect his Philippine citizenship.

137

Two requisites must concur for a person to be considered as such: (1) a person must be a Filipino citizen
birth and (2) he does not have to perform any act to obtain or perfect his Philippine citizenship.
Under the 1973 Constitution definition, there were two categories of Filipino citizens which were not
considered natural-born: (1) those who were naturalized and (2) those born before January 17, 1973,38
of Filipino mothers who, upon reaching the age of majority, elected Philippine citizenship. Those
"naturalized citizens" were not considered natural-born obviously because they were not Filipino at
birth and had to perform an act to acquire Philippine citizenship. Those born of Filipino mothers before
the effectively of the 1973 Constitution were likewise not considered natural-born because they also
had to perform an act to perfect their Philippines citizenship.
The present Constitution, however, now consider those born of Filipino mothers before the effectivity of
the 1973 Constitution and who elected Philippine citizenship upon reaching the majority age as naturalborn. After defining who re natural-born citizens, Section 2 of Article IV adds a sentence: "Those who
elect Philippine citizenship in accordance with paragraph (3), Section 1 hereof shall be deemed naturalborn citizens." Consequently, only naturalized Filipinos are considered not natural-born citizens. It is
apparent from the enumeration of who are citizens under the present Constitution that there are only
two classes of citizens: (1) those who are natural-born and (2) those who are naturalized in accordance
with law. A citizen who is not a naturalized Filipino, i.e., did not have to undergo the process of
naturalization to obtain Philippine citizenship, necessarily is natural-born Filipino. Noteworthy is the
absence in said enumeration of a separate category for persons who, after losing Philippine citizenship,
subsequently reacquire it. The reason therefor is clear: as to such persons, they would either be naturalborn or naturalized depending on the reasons for the loss of their citizenship and the mode prescribed
by the applicable law for the reacquisition thereof. As respondent Cruz was not required by law to go
through naturalization proceeding in order to reacquire his citizenship, he is perforce a natural-born
Filipino. As such, he possessed all the necessary qualifications to be elected as member of the House of
Representatives.
A final point. The HRET has been empowered by the Constitution to be the "sole judge" of all contests
relating to the election, returns, and qualifications of the members of the House.29 The Court's
jurisdiction over the HRET is merely to check "whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the latter.30 In the absence thereof, there is no
occasion for the Court to exercise its corrective power and annul the decision of the HRET nor to
substitute the Court's judgement for that of the latter for the simple reason that it is not the office of a
petition for certiorari to inquire into the correctness of the assailed decision.31 There is no such showing
of grave abuse of discretion in this case.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.

138

G.R. No. 161434

March 3, 2004

MARIA
JEANETTE
C.
TECSON
and
FELIX
B.
DESIDERIO,
JR.,
petitioners,
vs.
The COMMISSION ON ELECTIONS, RONALD ALLAN KELLY POE (a.k.a. FERNANDO POE, JR.) and
VICTORINO X. FORNIER, respondents.
x-----------------------------x
G.R. No. 161634

March 3, 2004

ZOILO
ANTONIO
VELEZ,
vs.
RONALD ALLAN KELLEY POE, a.k.a. FERNANDO POE, JR., respondent.

petitioner,

x-----------------------------x
G. R. No. 161824

March 3, 2004

VICTORINO
X.
FORNIER,
petitioner,
vs.
HON. COMMISSION ON ELECTIONS and RONALD ALLAN KELLEY POE, ALSO KNOWN AS FERNANDO
POE JR., respondents.
Citizenship is a treasured right conferred on those whom the state believes are deserving of the
privilege. It is a "precious heritage, as well as an inestimable acquisition,"1 that cannot be taken lightly
by anyone - either by those who enjoy it or by those who dispute it.
Before the Court are three consolidated cases, all of which raise a single question of profound
importance to the nation. The issue of citizenship is brought up to challenge the qualifications of a
presidential candidate to hold the highest office of the land. Our people are waiting for the judgment of
the Court with bated breath. Is Fernando Poe, Jr., the hero of silver screen, and now one of the main
contenders for the presidency, a natural-born Filipino or is he not?
The moment of introspection takes us face to face with Spanish and American colonial roots and
reminds us of the rich heritage of civil law and common law traditions, the fusion resulting in a hybrid of
laws and jurisprudence that could be no less than distinctly Filipino.
Antecedent Case Settings
On 31 December 2003, respondent Ronald Allan Kelly Poe, also known as Fernando Poe, Jr. (hereinafter
"FPJ"), filed his certificate of candidacy for the position of President of the Republic of the Philippines
under the Koalisyon ng Nagkakaisang Pilipino (KNP) Party, in the forthcoming national elections. In his
certificate of candidacy, FPJ, representing himself to be a natural-born citizen of the Philippines, stated
his name to be "Fernando Jr.," or "Ronald Allan" Poe, his date of birth to be 20 August 1939 and his
place of birth to be Manila.

139

Victorino X. Fornier, petitioner in G.R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon.
Commission on Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr., Respondents,"
initiated, on 09 January 2004, a petition docketed SPA No. 04-003 before the Commission on Elections
("COMELEC") to disqualify FPJ and to deny due course or to cancel his certificate of candidacy upon the
thesis that FPJ made a material misrepresentation in his certificate of candidacy by claiming to be a
natural-born Filipino citizen when in truth, according to Fornier, his parents were foreigners; his mother,
Bessie Kelley Poe, was an American, and his father, Allan Poe, was a Spanish national, being the son of
Lorenzo Pou, a Spanish subject. Granting, petitioner asseverated, that Allan F. Poe was a Filipino citizen,
he could not have transmitted his Filipino citizenship to FPJ, the latter being an illegitimate child of an
alien mother. Petitioner based the allegation of the illegitimate birth of respondent on two assertions first, Allan F. Poe contracted a prior marriage to a certain Paulita Gomez before his marriage to Bessie
Kelley and, second, even if no such prior marriage had existed, Allan F. Poe, married Bessie Kelly only a
year after the birth of respondent.
In the hearing before the Third Division of the COMELEC on 19 January 2004, petitioner, in support of his
claim, presented several documentary exhibits - 1) a copy of the certificate of birth of FPJ, 2) a certified
photocopy of an affidavit executed in Spanish by Paulita Poe y Gomez attesting to her having filed a case
for bigamy and concubinage against the father of respondent, Allan F. Poe, after discovering his
bigamous relationship with Bessie Kelley, 3) an English translation of the affidavit aforesaid, 4) a certified
photocopy of the certificate of birth of Allan F. Poe, 5) a certification issued by the Director of the
Records Management and Archives Office, attesting to the fact that there was no record in the National
Archives that a Lorenzo Poe or Lorenzo Pou resided or entered the Philippines before 1907, and 6) a
certification from the Officer-In-Charge of the Archives Division of the National Archives to the effect
that no available information could be found in the files of the National Archives regarding the birth of
Allan F. Poe.
On his part, respondent, presented twenty-two documentary pieces of evidence, the more significant
ones being - a) a certification issued by Estrella M. Domingo of the Archives Division of the National
Archives that there appeared to be no available information regarding the birth of Allan F. Poe in the
registry of births for San Carlos, Pangasinan, b) a certification issued by the Officer-In-Charge of the
Archives Division of the National Archives that no available information about the marriage of Allan F.
Poe and Paulita Gomez could be found, c) a certificate of birth of Ronald Allan Poe, d) Original Certificate
of Title No. P-2247 of the Registry of Deeds for the Province of Pangasinan, in the name of Lorenzo Pou,
e) copies of Tax Declaration No. 20844, No. 20643, No. 23477 and No. 23478 in the name of Lorenzo
Pou, f) a copy of the certificate of death of Lorenzo Pou, g) a copy of the purported marriage contract
between Fernando Pou and Bessie Kelley, and h) a certification issued by the City Civil Registrar of San
Carlos City, Pangasinan, stating that the records of birth in the said office during the period of from 1900
until May 1946 were totally destroyed during World War II.
On 23 January 2004, the COMELEC dismissed SPA No. 04-003 for lack of merit. Three days later, or on 26
January 2004, Fornier filed his motion for reconsideration. The motion was denied on 06 February 2004
by the COMELEC en banc. On 10 February 2004, petitioner assailed the decision of the COMELEC before
this Court conformably with Rule 64, in relation to Rule 65, of the Revised Rules of Civil Procedure. The
petition, docketed G. R. No. 161824, likewise prayed for a temporary restraining order, a writ of
preliminary injunction or any other resolution that would stay the finality and/or execution of the
COMELEC resolutions.

140

The other petitions, later consolidated with G. R. No. 161824, would include G. R. No. 161434, entitled
"Maria Jeanette C. Tecson, and Felix B. Desiderio, Jr., vs. The Commission on Elections, Ronald Allan
Kelley Poe (a.k.a. Fernando Poe, Jr.), and Victorino X. Fornier," and the other, docketed G. R. No.
161634, entitled "Zoilo Antonio G. Velez, vs. Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr.," both
challenging the jurisdiction of the COMELEC and asserting that, under Article VII, Section 4, paragraph 7,
of the 1987 Constitution, only the Supreme Court had original and exclusive jurisdiction to resolve the
basic issue on the case.
Jurisdiction of the Court
In G. R. No. 161824
In seeking the disqualification of the candidacy of FPJ and to have the COMELEC deny due course to or
cancel FPJs certificate of candidacy for alleged misrepresentation of a material fact (i.e., that FPJ was a
natural-born citizen) before the COMELEC, petitioner Fornier invoked Section 78 of the Omnibus
Election Code
"Section 78. Petition to deny due course to or cancel a certificate of candidacy. --- A verified
petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any
person exclusively on the ground that any material representation contained therein as required
under Section 74 hereof is false"
in consonance with the general powers of COMELEC expressed in Section 52 of the Omnibus Election
Code "Section 52. Powers and functions of the Commission on Elections. In addition to the powers
and functions conferred upon it by the Constitution, the Commission shall have exclusive charge
of the enforcement and administration of all laws relative to the conduct of elections for the
purpose of ensuring free, orderly and honest elections" and in relation to Article 69 of the Omnibus Election Code which would authorize "any
interested party" to file a verified petition to deny or cancel the certificate of candidacy of any
nuisance candidate.
Decisions of the COMELEC on disqualification cases may be reviewed by the Supreme Court per Rule 642
in an action for certiorari under Rule 653 of the Revised Rules of Civil Procedure. Section 7, Article IX, of
the 1987 Constitution also reads
"Each Commission shall decide by a majority vote of all its Members any case or matter brought
before it within sixty days from the date of its submission for decision or resolution. A case or
matter is deemed submitted for decision or resolution upon the filing of the last pleading, brief,
or memorandum, required by the rules of the Commission or by the Commission itself. Unless
otherwise provided by this Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari by the aggrieved party within
thirty days from receipt of a copy thereof."

141

Additionally, Section 1, Article VIII, of the same Constitution provides that judicial power is vested in one
Supreme Court and in such lower courts as may be established by law which power "includes the duty of
the courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the Government."
It is sufficiently clear that the petition brought up in G. R. No. 161824 was aptly elevated to, and could
well be taken cognizance of by, this Court. A contrary view could be a gross denial to our people of their
fundamental right to be fully informed, and to make a proper choice, on who could or should be elected
to occupy the highest government post in the land.
In G. R. No. 161434 and G. R. No. 161634
Petitioners Tecson, et al., in G. R. No. 161434, and Velez, in G. R. No. 161634, invoke the provisions of
Article VII, Section 4, paragraph 7, of the 1987 Constitution in assailing the jurisdiction of the COMELEC
when it took cognizance of SPA No. 04-003 and in urging the Supreme Court to instead take on the
petitions they directly instituted before it. The Constitutional provision cited reads:
"The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the
election, returns, and qualifications of the President or Vice-President, and may promulgate its
rules for the purpose."
The provision is an innovation of the 1987 Constitution. The omission in the 1935 and the 1973
Constitution to designate any tribunal to be the sole judge of presidential and vice-presidential contests,
has constrained this Court to declare, in Lopez vs. Roxas,4 as "not (being) justiciable" controversies or
disputes involving contests on the elections, returns and qualifications of the President or VicePresident. The constitutional lapse prompted Congress, on 21 June 1957, to enact Republic Act No.
1793, "An Act Constituting an Independent Presidential Electoral Tribunal to Try, Hear and Decide
Protests Contesting the Election of the President-Elect and the Vice-President-Elect of the Philippines
and Providing for the Manner of Hearing the Same." Republic Act 1793 designated the Chief Justice and
the Associate Justices of the Supreme Court to be the members of the tribunal. Although the
subsequent adoption of the parliamentary form of government under the 1973 Constitution might have
implicitly affected Republic Act No. 1793, the statutory set-up, nonetheless, would now be deemed
revived under the present Section 4, paragraph 7, of the 1987 Constitution.
Ordinary usage would characterize a "contest" in reference to a post-election scenario. Election contests
consist of either an election protest or a quo warranto which, although two distinct remedies, would
have one objective in view, i.e., to dislodge the winning candidate from office. A perusal of the
phraseology in Rule 12, Rule 13, and Rule 14 of the "Rules of the Presidential Electoral Tribunal,"
promulgated by the Supreme Court en banc on 18 April 1992, would support this premise "Rule 12. Jurisdiction. - The Tribunal shall be the sole judge of all contests relating to the
election, returns, and qualifications of the President or Vice-President of the Philippines.
"Rule 13. How Initiated. - An election contest is initiated by the filing of an election protest or a
petition for quo warranto against the President or Vice-President. An election protest shall not

142

include a petition for quo warranto. A petition for quo warranto shall not include an election
protest.
"Rule 14. Election Protest. - Only the registered candidate for President or for Vice-President of
the Philippines who received the second or third highest number of votes may contest the
election of the President or the Vice-President, as the case may be, by filing a verified petition
with the Clerk of the Presidential Electoral Tribunal within thirty (30) days after the
proclamation of the winner."
The rules categorically speak of the jurisdiction of the tribunal over contests relating to the election,
returns and qualifications of the "President" or "Vice-President", of the Philippines, and not of
"candidates" for President or Vice-President. A quo warranto proceeding is generally defined as being an
action against a person who usurps, intrudes into, or unlawfully holds or exercises a public office.5 In
such context, the election contest can only contemplate a post-election scenario. In Rule 14, only a
registered candidate who would have received either the second or third highest number of votes could
file an election protest. This rule again presupposes a post-election scenario.
It is fair to conclude that the jurisdiction of the Supreme Court, defined by Section 4, paragraph 7, of the
1987 Constitution, would not include cases directly brought before it, questioning the qualifications of a
candidate for the presidency or vice-presidency before the elections are held.
Accordingly, G. R. No. 161434, entitled "Maria Jeanette C. Tecson, et al., vs. Commission on Elections et
al.," and G. R. No. 161634, entitled "Zoilo Antonio Velez vs. Ronald Allan Kelley Poe a.k.a. Fernando Poe,
Jr." would have to be dismissed for want of jurisdiction.
The Citizenship Issue
Now, to the basic issue; it should be helpful to first give a brief historical background on the concept of
citizenship.
Perhaps, the earliest understanding of citizenship was that given by Aristotle, who, sometime in 384 to
322 B.C., described the "citizen" to refer to a man who shared in the administration of justice and in the
holding of an office.6 Aristotle saw its significance if only to determine the constituency of the "State,"
which he described as being composed of such persons who would be adequate in number to achieve a
self-sufficient existence.7 The concept grew to include one who would both govern and be governed, for
which qualifications like autonomy, judgment and loyalty could be expected. Citizenship was seen to
deal with rights and entitlements, on the one hand, and with concomitant obligations, on the other.8 In
its ideal setting, a citizen was active in public life and fundamentally willing to submit his private
interests to the general interest of society.
The concept of citizenship had undergone changes over the centuries. In the 18th century, the concept
was limited, by and large, to civil citizenship, which established the rights necessary for individual
freedom, such as rights to property, personal liberty and justice.9 Its meaning expanded during the 19th
century to include political citizenship, which encompassed the right to participate in the exercise of
political power.10 The 20th century saw the next stage of the development of social citizenship, which
laid emphasis on the right of the citizen to economic well-being and social security.11 The idea of
citizenship has gained expression in the modern welfare state as it so developed in Western Europe. An
143

ongoing and final stage of development, in keeping with the rapidly shrinking global village, might well
be the internationalization of citizenship.12
The Local Setting - from Spanish Times to the Present
There was no such term as "Philippine citizens" during the Spanish regime but "subjects of Spain" or
"Spanish subjects."13 In church records, the natives were called 'indios', denoting a low regard for the
inhabitants of the archipelago. Spanish laws on citizenship became highly codified during the 19th
century but their sheer number made it difficult to point to one comprehensive law. Not all of these
citizenship laws of Spain however, were made to apply to the Philippine Islands except for those
explicitly extended by Royal Decrees.14
Spanish laws on citizenship were traced back to the Novisima Recopilacion, promulgated in Spain on 16
July 1805 but as to whether the law was extended to the Philippines remained to be the subject of
differing views among experts;15 however, three royal decrees were undisputably made applicable to
Spaniards in the Philippines - the Order de la Regencia of 14 August 1841,16 the Royal Decree of 23
August 1868 specifically defining the political status of children born in the Philippine Islands,17 and
finally, the Ley Extranjera de Ultramar of 04 July 1870, which was expressly made applicable to the
Philippines by the Royal Decree of 13 July 1870.18
The Spanish Constitution of 1876 was never extended to the Philippine Islands because of the express
mandate of its Article 89, according to which the provisions of the Ultramar among which this country
was included, would be governed by special laws.19
It was only the Civil Code of Spain, made effective in this jurisdiction on 18 December 1889, which came
out with the first categorical enumeration of who were Spanish citizens. "(a) Persons born in Spanish territory,
"(b) Children of a Spanish father or mother, even if they were born outside of Spain,
"(c) Foreigners who have obtained naturalization papers,
"(d) Those who, without such papers, may have become domiciled inhabitants of any town of
the Monarchy."20
The year 1898 was another turning point in Philippine history. Already in the state of decline as a
superpower, Spain was forced to so cede her sole colony in the East to an upcoming world power, the
United States. An accepted principle of international law dictated that a change in sovereignty, while
resulting in an abrogation of all political laws then in force, would have no effect on civil laws, which
would remain virtually intact.
The Treaty of Paris was entered into on 10 December 1898 between Spain and the United States.21
Under Article IX of the treaty, the civil rights and political status of the native inhabitants of the
territories ceded to the United States would be determined by its Congress -

144

"Spanish subjects, natives of the Peninsula, residing in the territory over which Spain by the
present treaty relinquishes or cedes her sovereignty may remain in such territory or may
remove therefrom, retaining in either event all their rights of property, including the right to sell
or dispose of such property or of its proceeds; and they shall also have the right to carry on their
industry, commerce, and professions, being subject in respect thereof to such laws as are
applicable to foreigners. In case they remain in the territory they may preserve their allegiance
to the Crown of Spain by making, before a court of record, within a year from the date of the
exchange of ratifications of this treaty, a declaration of their decision to preserve such
allegiance; in default of which declaration they shall be held to have renounced it and to have
adopted the nationality of the territory in which they reside.
Thus
"The civil rights and political status of the native inhabitants of the territories hereby ceded to
the United States shall be determined by the Congress."22
Upon the ratification of the treaty, and pending legislation by the United States Congress on the subject,
the native inhabitants of the Philippines ceased to be Spanish subjects. Although they did not become
American citizens, they, however, also ceased to be "aliens" under American laws and were thus issued
passports describing them to be citizens of the Philippines entitled to the protection of the United
States.
The term "citizens of the Philippine Islands" appeared for the first time in the Philippine Bill of 1902, also
commonly referred to as the Philippine Organic Act of 1902, the first comprehensive legislation of the
Congress of the United States on the Philippines ".... that all inhabitants of the Philippine Islands continuing to reside therein, who were Spanish
subjects on the 11th day of April, 1891, and then resided in said Islands, and their children born
subsequent thereto, shall be deemed and held to be citizens of the Philippine Islands and as
such entitled to the protection of the United States, except such as shall have elected to
preserve their allegiance to the Crown of Spain in accordance with the provisions of the treaty
of peace between the United States and Spain, signed at Paris, December tenth eighteen
hundred and ninety eight."23
Under the organic act, a "citizen of the Philippines" was one who was an inhabitant of the Philippines,
and a Spanish subject on the 11th day of April 1899. The term "inhabitant" was taken to include 1) a
native-born inhabitant, 2) an inhabitant who was a native of Peninsular Spain, and 3) an inhabitant who
obtained Spanish papers on or before 11 April 1899.24
Controversy arose on to the status of children born in the Philippines from 11 April 1899 to 01 July 1902,
during which period no citizenship law was extant in the Philippines. Weight was given to the view,
articulated in jurisprudential writing at the time, that the common law principle of jus soli, otherwise
also known as the principle of territoriality, operative in the United States and England, governed those
born in the Philippine Archipelago within that period.25 More about this later.
In 23 March 1912, the Congress of the United States made the following amendment to the Philippine
Bill of 1902 145

"Provided, That the Philippine Legislature is hereby authorized to provide by law for the
acquisition of Philippine citizenship by those natives of the Philippine Islands who do not come
within the foregoing provisions, the natives of other insular possession of the United States, and
such other persons residing in the Philippine Islands who would become citizens of the United
States, under the laws of the United States, if residing therein."26
With the adoption of the Philippine Bill of 1902, the concept of "Philippine citizens" had for the first time
crystallized. The word "Filipino" was used by William H. Taft, the first Civil Governor General in the
Philippines when he initially made mention of it in his slogan, "The Philippines for the Filipinos." In 1916,
the Philippine Autonomy Act, also known as the Jones Law restated virtually the provisions of the
Philippine Bill of 1902, as so amended by the Act of Congress in 1912 "That all inhabitants of the Philippine Islands who were Spanish subjects on the eleventh day of
April, eighteen hundred and ninety-nine, and then resided in said Islands, and their children
born subsequently thereto, shall be deemed and held to be citizens of the Philippine Islands,
except such as shall have elected to preserve their allegiance to the Crown of Spain in
accordance with the provisions of the treaty of peace between the United States and Spain,
signed at Paris December tenth, eighteen hundred and ninety-eight and except such others as
have since become citizens of some other country; Provided, That the Philippine Legislature,
herein provided for, is hereby authorized to provide for the acquisition of Philippine citizenship
by those natives of the Philippine Islands who do not come within the foregoing provisions, the
natives of the insular possessions of the United States, and such other persons residing in the
Philippine Islands who are citizens of the United States, or who could become citizens of the
United States under the laws of the United States, if residing therein."
Under the Jones Law, a native-born inhabitant of the Philippines was deemed to be a citizen of the
Philippines as of 11 April 1899 if he was 1) a subject of Spain on 11 April 1899, 2) residing in the
Philippines on said date, and, 3) since that date, not a citizen of some other country.
While there was, at one brief time, divergent views on whether or not jus soli was a mode of acquiring
citizenship, the 1935 Constitution brought to an end to any such link with common law, by adopting,
once and for all, jus sanguinis or blood relationship as being the basis of Filipino citizenship "Section 1, Article III, 1935 Constitution. The following are citizens of the Philippines "(1) Those who are citizens of the Philippine Islands at the time of the adoption of this
Constitution
"(2) Those born in the Philippines Islands of foreign parents who, before the adoption of this
Constitution, had been elected to public office in the Philippine Islands.
"(3) Those whose fathers are citizens of the Philippines.
"(4) Those whose mothers are citizens of the Philippines and upon reaching the age of majority,
elect Philippine citizenship.
"(5) Those who are naturalized in accordance with law."
146

Subsection (4), Article III, of the 1935 Constitution, taken together with existing civil law provisions at
the time, which provided that women would automatically lose their Filipino citizenship and acquire that
of their foreign husbands, resulted in discriminatory situations that effectively incapacitated the women
from transmitting their Filipino citizenship to their legitimate children and required illegitimate children
of Filipino mothers to still elect Filipino citizenship upon reaching the age of majority. Seeking to correct
this anomaly, as well as fully cognizant of the newly found status of Filipino women as equals to men,
the framers of the 1973 Constitution crafted the provisions of the new Constitution on citizenship to
reflect such concerns "Section 1, Article III, 1973 Constitution - The following are citizens of the Philippines:
"(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution.
"(2) Those whose fathers or mothers are citizens of the Philippines.
"(3) Those who elect Philippine citizenship pursuant to the provisions of the Constitution of
nineteen hundred and thirty-five.
"(4) Those who are naturalized in accordance with law."
For good measure, Section 2 of the same article also further provided that
"A female citizen of the Philippines who marries an alien retains her Philippine citizenship,
unless by her act or omission she is deemed, under the law to have renounced her citizenship."
The 1987 Constitution generally adopted the provisions of the 1973 Constitution, except for subsection
(3) thereof that aimed to correct the irregular situation generated by the questionable proviso in the
1935 Constitution.
Section I, Article IV, 1987 Constitution now provides:
"The following are citizens of the Philippines:
"(1) Those who are citizens of the Philippines at the time of the adoption of this
Constitution.
"(2) Those whose fathers or mothers are citizens of the Philippines.
"(3) Those born before January 17, 1973 of Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority; and
"(4) Those who are naturalized in accordance with law."
The Case Of FPJ
Section 2, Article VII, of the 1987 Constitution expresses:

147

"No person may be elected President unless he is a natural-born citizen of the Philippines, a
registered voter, able to read and write, at least forty years of age on the day of the election,
and a resident of the Philippines for at least ten years immediately preceding such election."
The term "natural-born citizens," is defined to include "those who are citizens of the Philippines from
birth without having to perform any act to acquire or perfect their Philippine citizenship."27
The date, month and year of birth of FPJ appeared to be 20 August 1939 during the regime of the 1935
Constitution. Through its history, four modes of acquiring citizenship - naturalization, jus soli, res
judicata and jus sanguinis28 had been in vogue. Only two, i.e., jus soli and jus sanguinis, could qualify a
person to being a "natural-born" citizen of the Philippines. Jus soli, per Roa vs. Collector of Customs29
(1912), did not last long. With the adoption of the 1935 Constitution and the reversal of Roa in Tan
Chong vs. Secretary of Labor30 (1947), jus sanguinis or blood relationship would now become the
primary basis of citizenship by birth.
Documentary evidence adduced by petitioner would tend to indicate that the earliest established direct
ascendant of FPJ was his paternal grandfather Lorenzo Pou, married to Marta Reyes, the father of Allan
F. Poe. While the record of birth of Lorenzo Pou had not been presented in evidence, his death
certificate, however, identified him to be a Filipino, a resident of San Carlos, Pangasinan, and 84 years
old at the time of his death on 11 September 1954. The certificate of birth of the father of FPJ, Allan F.
Poe, showed that he was born on 17 May 1915 to an Espaol father, Lorenzo Pou, and a mestiza Espaol
mother, Marta Reyes. Introduced by petitioner was an "uncertified" copy of a supposed certificate of
the alleged marriage of Allan F. Poe and Paulita Gomez on 05 July 1936. The marriage certificate of Allan
F. Poe and Bessie Kelley reflected the date of their marriage to be on 16 September 1940. In the same
certificate, Allan F. Poe was stated to be twenty-five years old, unmarried, and a Filipino citizen, and
Bessie Kelley to be twenty-two years old, unmarried, and an American citizen. The birth certificate of
FPJ, would disclose that he was born on 20 August 1939 to Allan F. Poe, a Filipino, twenty-four years old,
married to Bessie Kelly, an American citizen, twenty-one years old and married.
Considering the reservations made by the parties on the veracity of some of the entries on the birth
certificate of respondent and the marriage certificate of his parents, the only conclusions that could be
drawn with some degree of certainty from the documents would be that 1. The parents of FPJ were Allan F. Poe and Bessie Kelley;
2. FPJ was born to them on 20 August 1939;
3. Allan F. Poe and Bessie Kelley were married to each other on 16 September, 1940;
4. The father of Allan F. Poe was Lorenzo Poe; and
5. At the time of his death on 11 September 1954, Lorenzo Poe was 84 years old.
Would the above facts be sufficient or insufficient to establish the fact that FPJ is a natural-born Filipino
citizen? The marriage certificate of Allan F. Poe and Bessie Kelley, the birth certificate of FPJ, and the
death certificate of Lorenzo Pou are documents of public record in the custody of a public officer. The

148

documents have been submitted in evidence by both contending parties during the proceedings before
the COMELEC.
The birth certificate of FPJ was marked Exhibit "A" for petitioner and Exhibit "3" for respondent. The
marriage certificate of Allan F. Poe to Bessie Kelley was submitted as Exhibit "21" for respondent. The
death certificate of Lorenzo Pou was submitted by respondent as his Exhibit "5." While the last two
documents were submitted in evidence for respondent, the admissibility thereof, particularly in
reference to the facts which they purported to show, i.e., the marriage certificate in relation to the date
of marriage of Allan F. Poe to Bessie Kelley and the death certificate relative to the death of Lorenzo Pou
on 11 September 1954 in San Carlos, Pangasinan, were all admitted by petitioner, who had utilized
those material statements in his argument. All three documents were certified true copies of the
originals.
Section 3, Rule 130, Rules of Court states that "Original document must be produced; exceptions. - When the subject of inquiry is the contents
of a document, no evidence shall be admissible other than the original document itself, except
in the following cases:
"x x x

xxx

xxx

"(d) When the original is a public record in the custody of a public office or is recorded in a
public office."
Being public documents, the death certificate of Lorenzo Pou, the marriage certificate of Allan F. Poe
and Bessie Kelly, and the birth certificate of FPJ, constitute prima facie proof of their contents. Section
44, Rule 130, of the Rules of Court provides:
"Entries in official records. Entries in official records made in the performance of his duty by a
public officer of the Philippines, or by a person in the performance of a duty specially enjoined
by law, are prima facie evidence of the facts therein stated."
The trustworthiness of public documents and the value given to the entries made therein could be
grounded on 1) the sense of official duty in the preparation of the statement made, 2) the penalty which
is usually affixed to a breach of that duty, 3) the routine and disinterested origin of most such
statements, and 4) the publicity of record which makes more likely the prior exposure of such errors as
might have occurred.31
The death certificate of Lorenzo Pou would indicate that he died on 11 September 1954, at the age of 84
years, in San Carlos, Pangasinan. It could thus be assumed that Lorenzo Pou was born sometime in the
year 1870 when the Philippines was still a colony of Spain. Petitioner would argue that Lorenzo Pou was
not in the Philippines during the crucial period of from 1898 to 1902 considering that there was no
existing record about such fact in the Records Management and Archives Office. Petitioner, however,
likewise failed to show that Lorenzo Pou was at any other place during the same period. In his death
certificate, the residence of Lorenzo Pou was stated to be San Carlos, Pangasinan. In the absence of any
evidence to the contrary, it should be sound to conclude, or at least to presume, that the place of
residence of a person at the time of his death was also his residence before death. It would be
149

extremely doubtful if the Records Management and Archives Office would have had complete records of
all residents of the Philippines from 1898 to 1902.
Proof of Paternity and Filiation
Under Civil Law.
Petitioner submits, in any case, that in establishing filiation (relationship or civil status of the child to the
father [or mother]) or paternity (relationship or civil status of the father to the child) of an illegitimate
child, FPJ evidently being an illegitimate son according to petitioner, the mandatory rules under civil law
must be used.
Under the Civil Code of Spain, which was in force in the Philippines from 08 December 1889 up until the
day prior to 30 August 1950 when the Civil Code of the Philippines took effect, acknowledgment was
required to establish filiation or paternity. Acknowledgment was either judicial (compulsory) or
voluntary. Judicial or compulsory acknowledgment was possible only if done during the lifetime of the
putative parent; voluntary acknowledgment could only be had in a record of birth, a will, or a public
document.32 Complementary to the new code was Act No. 3753 or the Civil Registry Law expressing in
Section 5 thereof, that "In case of an illegitimate child, the birth certificate shall be signed and sworn to jointly by the
parents of the infant or only by the mother if the father refuses. In the latter case, it shall not be
permissible to state or reveal in the document the name of the father who refuses to
acknowledge the child, or to give therein any information by which such father could be
identified."
In order that the birth certificate could then be utilized to prove voluntary acknowledgment of filiation
or paternity, the certificate was required to be signed or sworn to by the father. The failure of such
requirement rendered the same useless as being an authoritative document of recognition.33 In
Mendoza vs. Mella,34 the Court ruled "Since Rodolfo was born in 1935, after the registry law was enacted, the question here really is
whether or not his birth certificate (Exhibit 1), which is merely a certified copy of the registry
record, may be relied upon as sufficient proof of his having been voluntarily recognized. No such
reliance, in our judgment, may be placed upon it. While it contains the names of both parents,
there is no showing that they signed the original, let alone swore to its contents as required in
Section 5 of Act No. 3753. For all that might have happened, it was not even they or either of
them who furnished the data to be entered in the civil register. Petitioners say that in any event
the birth certificate is in the nature of a public document wherein voluntary recognition of a
natural child may also be made, according to the same Article 131. True enough, but in such a
case, there must be a clear statement in the document that the parent recognizes the child as
his or her own."
In the birth certificate of respondent FPJ, presented by both parties, nowhere in the document was the
signature of Allan F. Poe found. There being no will apparently executed, or at least shown to have been
executed, by decedent Allan F. Poe, the only other proof of voluntary recognition remained to be "some

150

other public document." In Pareja vs. Pareja,35 this Court defined what could constitute such a
document as proof of voluntary acknowledgment:
"Under the Spanish Civil Code there are two classes of public documents, those executed by
private individuals which must be authenticated by notaries, and those issued by competent
public officials by reason of their office. The public document pointed out in Article 131 as one
of the means by which recognition may be made belongs to the first class."
Let us leave it at that for the moment.
The 1950 Civil Code categorized the acknowledgment or recognition of illegitimate children into
voluntary, legal or compulsory. Voluntary recognition was required to be expressedly made in a record
of birth, a will, a statement before a court of record or in any authentic writing. Legal acknowledgment
took place in favor of full blood brothers and sisters of an illegitimate child who was recognized or
judicially declared as natural. Compulsory acknowledgment could be demanded generally in cases when
the child had in his favor any evidence to prove filiation. Unlike an action to claim legitimacy which
would last during the lifetime of the child, and might pass exceptionally to the heirs of the child, an
action to claim acknowledgment, however, could only be brought during the lifetime of the presumed
parent.
Amicus Curiae Ruben F. Balane defined, during the oral argument, "authentic writing," so as to be an
authentic writing for purposes of voluntary recognition, simply as being a genuine or indubitable writing
of the father. The term would include a public instrument (one duly acknowledged before a notary
public or other competent official) or a private writing admitted by the father to be his.
The Family Code has further liberalized the rules; Article 172, Article 173, and Article 175 provide:
"Art. 172. The filiation of legitimate children is established by any of the following:
"(1) The record of birth appearing in the civil register or a final judgment; or
"(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
"In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
"(1) The open and continuous possession of the status of a legitimate child; or
"(2) Any other means allowed by the Rules of Court and special laws.
"Art. 173. The action to claim legitimacy may be brought by the child during his or her lifetime
and shall be transmitted to the heirs should the child die during minority or in a state of insanity.
In these cases, the heirs shall have a period of five years within which to institute the action.
"The action already commenced by the child shall survive notwithstanding the death of either or
both of the parties.

151

"x x x

xxx

x x x.

"Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on
the same, evidence as legitimate children.
"The action must be brought within the same period specified in Article 173, except when the
action is based on the second paragraph of Article 172, in which case the action may be brought
during the lifetime of the alleged parent."
The provisions of the Family Code are retroactively applied; Article 256 of the code reads:
"Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested
or acquired rights in accordance with the Civil Code or other laws."
Thus, in Vda. de Sy-Quia vs. Court of Appeals,36 the Court has ruled:
"We hold that whether Jose was a voluntarily recognized natural child should be decided under
Article 278 of the Civil Code of the Philippines. Article 2260 of that Code provides that 'the
voluntary recognition of a natural child shall take place according to this Code, even if the child
was born before the effectivity of this body of laws' or before August 30, 1950. Hence, Article
278 may be given retroactive effect."
It should be apparent that the growing trend to liberalize the acknowledgment or recognition of
illegitimate children is an attempt to break away from the traditional idea of keeping well apart
legitimate and non-legitimate relationships within the family in favor of the greater interest and welfare
of the child. The provisions are intended to merely govern the private and personal affairs of the family.
There is little, if any, to indicate that the legitimate or illegitimate civil status of the individual would also
affect his political rights or, in general, his relationship to the State. While, indeed, provisions on
"citizenship" could be found in the Civil Code, such provisions must be taken in the context of private
relations, the domain of civil law; particularly "Civil Law is that branch of law which has for its double purpose the organization of the family
and the regulation of property. It has thus [been] defined as the mass of precepts which
determine and regulate the relations of assistance, authority and obedience among members of
a family, and those which exist among members of a society for the protection of private
interests."37
In Yaez de Barnuevo vs. Fuster,38 the Court has held:
"In accordance with Article 9 of the Civil Code of Spain, x x x the laws relating to family rights
and duties, or to the status, condition and legal capacity of persons, govern Spaniards although
they reside in a foreign country; that, in consequence, 'all questions of a civil nature, such as
those dealing with the validity or nullity of the matrimonial bond, the domicile of the husband
and wife, their support, as between them, the separation of their properties, the rules governing
property, marital authority, division of conjugal property, the classification of their property,
legal causes for divorce, the extent of the latter, the authority to decree it, and, in general, the

152

civil effects of marriage and divorce upon the persons and properties of the spouses, are
questions that are governed exclusively by the national law of the husband and wife."
The relevance of "citizenship" or "nationality" to Civil Law is best exemplified in Article 15 of the Civil
Code, stating that "Laws relating to family rights and duties, or to the status, condition and legal capacity of
persons are binding upon citizens of the Philippines, even though living abroad" that explains the need to incorporate in the code a reiteration of the Constitutional provisions on
citizenship. Similarly, citizenship is significant in civil relationships found in different parts of the Civil
Code,39 such as on successional rights and family relations.40 In adoption, for instance, an adopted child
would be considered the child of his adoptive parents and accorded the same rights as their legitimate
child but such legal fiction extended only to define his rights under civil law41 and not his political status.
Civil law provisions point to an obvious bias against illegitimacy. This discriminatory attitude may be
traced to the Spanish family and property laws, which, while defining proprietary and successional rights
of members of the family, provided distinctions in the rights of legitimate and illegitimate children. In
the monarchial set-up of old Spain, the distribution and inheritance of titles and wealth were strictly
according to bloodlines and the concern to keep these bloodlines uncontaminated by foreign blood was
paramount.
These distinctions between legitimacy and illegitimacy were codified in the Spanish Civil Code, and the
invidious discrimination survived when the Spanish Civil Code became the primary source of our own
Civil Code. Such distinction, however, remains and should remain only in the sphere of civil law and not
unduly impede or impinge on the domain of political law.
The proof of filiation or paternity for purposes of determining his citizenship status should thus be
deemed independent from and not inextricably tied up with that prescribed for civil law purposes. The
Civil Code or Family Code provisions on proof of filiation or paternity, although good law, do not have
preclusive effects on matters alien to personal and family relations. The ordinary rules on evidence
could well and should govern. For instance, the matter about pedigree is not necessarily precluded from
being applicable by the Civil Code or Family Code provisions.
Section 39, Rule 130, of the Rules of Court provides "Act or Declaration about pedigree. The act or declaration of a person deceased, or unable to
testify, in respect to the pedigree of another person related to him by birth or marriage, may be
received in evidence where it occurred before the controversy, and the relationship between
the two persons is shown by evidence other than such act or declaration. The word `pedigree
includes relationship, family genealogy, birth, marriage, death, the dates when and the places
where these facts occurred, and the names of the relatives. It embraces also facts of family
history intimately connected with pedigree."
For the above rule to apply, it would be necessary that (a) the declarant is already dead or unable to
testify, (b) the pedigree of a person must be at issue, (c) the declarant must be a relative of the person
whose pedigree is in question, (d) declaration must be made before the controversy has occurred, and
153

(e) the relationship between the declarant and the person whose pedigree is in question must be shown
by evidence other than such act or declaration.
Thus, the duly notarized declaration made by Ruby Kelley Mangahas, sister of Bessie Kelley Poe
submitted as Exhibit 20 before the COMELEC, might be accepted to prove the acts of Allan F. Poe,
recognizing his own paternal relationship with FPJ, i.e, living together with Bessie Kelley and his children
(including respondent FPJ) in one house, and as one family "I, Ruby Kelley Mangahas, of legal age and sound mind, presently residing in Stockton,
California, U.S.A., after being sworn in accordance with law do hereby declare that:
"1. I am the sister of the late Bessie Kelley Poe.
"2. Bessie Kelley Poe was the wife of Fernando Poe, Sr.
"3. Fernando and Bessie Poe had a son by the name of Ronald Allan Poe, more popularly known
in the Philippines as `Fernando Poe, Jr., or `FPJ.
"4. Ronald Allan Poe `FPJ was born on August 20, 1939 at St. Luke's Hospital, Magdalena Street,
Manila.
"x x x

xxx

xxx

"7. Fernando Poe Sr., and my sister Bessie, met and became engaged while they were students
at the University of the Philippines in 1936. I was also introduced to Fernando Poe, Sr., by my
sister that same year.
"8. Fernando Poe, Sr., and my sister Bessie had their first child in 1938.
"9. Fernando Poe, Sr., my sister Bessie and their first three children, Elizabeth, Ronald, Allan and
Fernando II, and myself lived together with our mother at our family's house on Dakota St. (now
Jorge Bocobo St.), Malate until the liberation of Manila in 1945, except for some months
between 1943-1944.
"10. Fernando Poe, Sr., and my sister, Bessie, were blessed with four (4) more children after
Ronald Allan Poe.
"x x x

xxx

xxx

"18. I am executing this Declaration to attest to the fact that my nephew, Ronald Allan Poe is a
natural born Filipino, and that he is the legitimate child of Fernando Poe, Sr.
"Done in City of Stockton, California, U.S.A., this 12th day of January 2004.
Ruby Kelley Mangahas Declarant DNA Testing

154

In case proof of filiation or paternity would be unlikely to satisfactorily establish or would be difficult to
obtain, DNA testing, which examines genetic codes obtained from body cells of the illegitimate child and
any physical residue of the long dead parent could be resorted to. A positive match would clear up
filiation or paternity. In Tijing vs. Court of Appeals,42 this Court has acknowledged the strong weight of
DNA testing "Parentage will still be resolved using conventional methods unless we adopt the modern and scientific
ways available. Fortunately, we have now the facility and expertise in using DNA test for identification
and parentage testing. The University of the Philippines Natural Science Research Institute (UP-NSRI)
DNA Analysis Laboratory has now the capability to conduct DNA typing using short tandem repeat (STR)
analysis. The analysis is based on the fact that the DNA of a child/person has two (2) copies, one copy
from the mother and the other from the father. The DNA from the mother, the alleged father and the
child are analyzed to establish parentage. Of course, being a novel scientific technique, the use of DNA
test as evidence is still open to challenge. Eventually, as the appropriate case comes, courts should not
hesitate to rule on the admissibility of DNA evidence. For it was said, that courts should apply the results
of science when competently obtained in aid of situations presented, since to reject said result is to
deny progress."
Petitioners Argument For Jurisprudential Conclusiveness
Petitioner would have it that even if Allan F. Poe were a Filipino citizen, he could not have transmitted
his citizenship to respondent FPJ, the latter being an illegitimate child. According to petitioner, prior to
his marriage to Bessie Kelley, Allan F. Poe, on July 5, 1936, contracted marriage with a certain Paulita
Gomez, making his subsequent marriage to Bessie Kelley bigamous and respondent FPJ an illegitimate
child. The veracity of the supposed certificate of marriage between Allan F. Poe and Paulita Gomez could
be most doubtful at best. But the documentary evidence introduced by no less than respondent himself,
consisting of a birth certificate of respondent and a marriage certificate of his parents showed that FPJ
was born on 20 August 1939 to a Filipino father and an American mother who were married to each
other a year later, or on 16 September 1940. Birth to unmarried parents would make FPJ an illegitimate
child. Petitioner contended that as an illegitimate child, FPJ so followed the citizenship of his mother,
Bessie Kelley, an American citizen, basing his stand on the ruling of this Court in Morano vs. Vivo,43 citing
Chiongbian vs. de Leo44 and Serra vs. Republic.45
On the above score, the disquisition made by amicus curiae Joaquin G. Bernas, SJ, is most convincing; he
states "We must analyze these cases and ask what the lis mota was in each of them. If the
pronouncement of the Court on jus sanguinis was on the lis mota, the pronouncement would be
a decision constituting doctrine under the rule of stare decisis. But if the pronouncement was
irrelevant to the lis mota, the pronouncement would not be a decision but a mere obiter dictum
which did not establish doctrine. I therefore invite the Court to look closely into these cases.
"First, Morano vs. Vivo. The case was not about an illegitimate child of a Filipino father. It was
about a stepson of a Filipino, a stepson who was the child of a Chinese mother and a Chinese
father. The issue was whether the stepson followed the naturalization of the stepfather.
Nothing about jus sanguinis there. The stepson did not have the blood of the naturalized
stepfather.
155

"Second, Chiongbian vs. de Leon. This case was not about the illegitimate son of a Filipino
father. It was about a legitimate son of a father who had become Filipino by election to public
office before the 1935 Constitution pursuant to Article IV, Section 1(2) of the 1935 Constitution.
No one was illegitimate here.
"Third, Serra vs. Republic. The case was not about the illegitimate son of a Filipino father. Serra
was an illegitimate child of a Chinese father and a Filipino mother. The issue was whether one
who was already a Filipino because of his mother who still needed to be naturalized. There is
nothing there about invidious jus sanguinis.
"Finally, Paa vs. Chan.46 This is a more complicated case. The case was about the citizenship of
Quintin Chan who was the son of Leoncio Chan. Quintin Chan claimed that his father, Leoncio,
was the illegitimate son of a Chinese father and a Filipino mother. Quintin therefore argued that
he got his citizenship from Leoncio, his father. But the Supreme Court said that there was no
valid proof that Leoncio was in fact the son of a Filipina mother. The Court therefore concluded
that Leoncio was not Filipino. If Leoncio was not Filipino, neither was his son Quintin. Quintin
therefore was not only not a natural-born Filipino but was not even a Filipino.
"The Court should have stopped there. But instead it followed with an obiter dictum. The Court
said obiter that even if Leoncio, Quintin's father, were Filipino, Quintin would not be Filipino
because Quintin was illegitimate. This statement about Quintin, based on a contrary to fact
assumption, was absolutely unnecessary for the case. x x x It was obiter dictum, pure and
simple, simply repeating the obiter dictum in Morano vs. Vivo.
"x x x

xxx

xxx

"Aside from the fact that such a pronouncement would have no textual foundation in the
Constitution, it would also violate the equal protection clause of the Constitution not once but
twice. First, it would make an illegitimate distinction between a legitimate child and an
illegitimate child, and second, it would make an illegitimate distinction between the illegitimate
child of a Filipino father and the illegitimate child of a Filipino mother.
"The doctrine on constitutionally allowable distinctions was established long ago by People vs.
Cayat.47 I would grant that the distinction between legitimate children and illegitimate children
rests on real differences. x x x But real differences alone do not justify invidious distinction. Real
differences may justify distinction for one purpose but not for another purpose.
"x x x What is the relevance of legitimacy or illegitimacy to elective public service? What possible
state interest can there be for disqualifying an illegitimate child from becoming a public officer.
It was not the fault of the child that his parents had illicit liaison. Why deprive the child of the
fullness of political rights for no fault of his own? To disqualify an illegitimate child from holding
an important public office is to punish him for the indiscretion of his parents. There is neither
justice nor rationality in that. And if there is neither justice nor rationality in the distinction, then
the distinction transgresses the equal protection clause and must be reprobated."

156

The other amici curiae, Mr. Justice Vicente Mendoza (a former member of this Court), Professor Ruben
Balane and Dean Martin Magallona, at bottom, have expressed similar views. The thesis of petitioner,
unfortunately hinging solely on pure obiter dicta, should indeed fail.
Where jurisprudence regarded an illegitimate child as taking after the citizenship of its mother, it did so
for the benefit the child. It was to ensure a Filipino nationality for the illegitimate child of an alien father
in line with the assumption that the mother had custody, would exercise parental authority and had the
duty to support her illegitimate child. It was to help the child, not to prejudice or discriminate against
him.
The fact of the matter perhaps the most significant consideration is that the 1935 Constitution, the
fundamental law prevailing on the day, month and year of birth of respondent FPJ, can never be more
explicit than it is. Providing neither conditions nor distinctions, the Constitution states that among the
citizens of the Philippines are "those whose fathers are citizens of the Philippines." There utterly is no
cogent justification to prescribe conditions or distinctions where there clearly are none provided.
In Sum
(1) The Court, in the exercise of its power of judicial review, possesses jurisdiction over the
petition in G. R. No. 161824, filed under Rule 64, in relation to Rule 65, of the Revised Rules of
Civil Procedure. G.R. No. 161824 assails the resolution of the COMELEC for alleged grave abuse
of discretion in dismissing, for lack of merit, the petition in SPA No. 04-003 which has prayed for
the disqualification of respondent FPJ from running for the position of President in the 10th May
2004 national elections on the contention that FPJ has committed material representation in his
certificate of candidacy by representing himself to be a natural-born citizen of the Philippines.
(2) The Court must dismiss, for lack of jurisdiction and prematurity, the petitions in G. R. No.
161434 and No. 161634 both having been directly elevated to this Court in the latters capacity
as the only tribunal to resolve a presidential and vice-presidential election contest under the
Constitution. Evidently, the primary jurisdiction of the Court can directly be invoked only after,
not before, the elections are held.
(3) In ascertaining, in G.R. No. 161824, whether grave abuse of discretion has been committed
by the COMELEC, it is necessary to take on the matter of whether or not respondent FPJ is a
natural-born citizen, which, in turn, depended on whether or not the father of respondent, Allan
F. Poe, would have himself been a Filipino citizen and, in the affirmative, whether or not the
alleged illegitimacy of respondent prevents him from taking after the Filipino citizenship of his
putative father. Any conclusion on the Filipino citizenship of Lorenzo Pou could only be drawn
from the presumption that having died in 1954 at 84 years old, Lorenzo would have been born
sometime in the year 1870, when the Philippines was under Spanish rule, and that San Carlos,
Pangasinan, his place of residence upon his death in 1954, in the absence of any other evidence,
could have well been his place of residence before death, such that Lorenzo Pou would have
benefited from the "en masse Filipinization" that the Philippine Bill had effected in 1902. That
citizenship (of Lorenzo Pou), if acquired, would thereby extend to his son, Allan F. Poe, father of
respondent FPJ. The 1935 Constitution, during which regime respondent FPJ has seen first light,
confers citizenship to all persons whose fathers are Filipino citizens regardless of whether such
children are legitimate or illegitimate.
157

(4) But while the totality of the evidence may not establish conclusively that respondent FPJ is a
natural-born citizen of the Philippines, the evidence on hand still would preponderate in his
favor enough to hold that he cannot be held guilty of having made a material misrepresentation
in his certificate of candidacy in violation of Section 78, in relation to Section 74, of the Omnibus
Election Code. Petitioner has utterly failed to substantiate his case before the Court,
notwithstanding the ample opportunity given to the parties to present their position and
evidence, and to prove whether or not there has been material misrepresentation, which, as so
ruled in Romualdez-Marcos vs. COMELEC,48 must not only be material, but also deliberate and
willful.
WHEREFORE, the Court RESOLVES to DISMISS
1. G. R. No. 161434, entitled "Maria Jeanette C. Tecson and Felix B. Desiderio, Jr., Petitioners,
versus Commission on Elections, Ronald Allan Kelley Poe (a.k.a. "Fernando Poe, Jr.,) and
Victorino X. Fornier, Respondents," and G. R. No. 161634, entitled "Zoilo Antonio Velez,
Petitioner, versus Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr., Respondent," for want of
jurisdiction.
2. G. R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon. Commission on
Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr.," for failure to show
grave abuse of discretion on the part of respondent Commission on Elections in dismissing the
petition in SPA No. 04-003.
No Costs.
SO ORDERED.

158

G.R. No. 86564 August 1, 1989

RAMON
L.
LABO,
JR.,
petitioner,
vs.
THE COMMISSION ON ELECTIONS (COMELEC) EN BANC AND LUIS L. LARDIZABAL, respondents
The petitioner asks this Court to restrain the Commission on Elections from looking into the question of
his citizenship as a qualification for his office as Mayor of Baguio City. The allegation that he is a
foreigner, he says, is not the issue. The issue is whether or not the public respondent has jurisdiction to
conduct any inquiry into this matter, considering that the petition for quo warranto against him was not
filed on time.
It is noteworthy that this argument is based on the alleged tardiness not of the petition itself but of the
payment of the filing fee, which the petitioner contends was an indispensable requirement. The fee is,
curiously enough, all of P300.00 only. This brings to mind the popular verse that for want of a horse the
kingdom was lost. Still, if it is shown that the petition was indeed filed beyond the reglementary period,
there is no question that this petition must be granted and the challenge abated.
The petitioner's position is simple. He was proclaimed mayor-elect of Baguio City, on January 20, 1988.
The petition for quo warranto was filed by the private respondent on January 26, 1988, but no filing fee
was paid on that date. This fee was finally paid on February 10, 1988, or twenty-one days after his
proclamation. As the petition by itself alone was ineffectual without the filing fee, it should be deemed
filed only when the fee was paid. This was done beyond the reglementary period provided for under
Section 253 of the Omnibus Election Code reading as follows:
SEC. 253. Petition for quo warranto. Any voter contesting the election of a Member
of the Batasang Pambansa, regional, provincial, or city officer on the ground of
ineligibility or of disloyalty to the Republic of the Philippines shall file a sworn petition
for quo warranto with the Commission within ten days after the proclamation of the
result of the election.
The petitioner adds that the payment of the filing fee is required under Rule 36, Section 5, of the
Procedural Rules of the COMELEC providing that
Sec. 5. No petition for quo warranto shall be given due course without the payment of a
filing fee in the amount of Three Hundred Pesos (P300.00) and the legal research fee as
required by law.
and stresses that there is abundant jurisprudence holding that the payment of the filing fee is essential
to the timeliness of the filling of the petition itself. He cites many rulings of the Court to this effect,
specifically Manchester v. Court of Appeals. 1
For his part, the private respondent denies that the filing fee was paid out of time. In fact he says, it was
flied ahead of time. His point is that when he filed his "Petition for Quo Warranto with Prayer for
Immediate Annulment of Proclamation and Restraining Order or Injunction" on January 26, 1988, the
COMELEC treated it as a pre-proclamation controversy and docketed it as SPC Case No. 88-288. No
docket fee was collected although it was offered. It was only on February 8, 1988, that the COMELEC
159

decided to treat his petition as solely for quo warranto and re-docketed it as EPC Case No. 88-19, serving
him notice on February 10, 1988. He immediately paid the filing fee on that date.
The private respondent argues further that during the period when the COMELEC regarded his petition
as a pre-proclamation controversy, the time for filing an election protest or quo warranto proceeding
was deemed suspended under Section 248 of the Omnibus Election Code. 2 At any rate, he says, Rule 36,
Section 5, of the COMELEC Rules of Procedure cited by the petitioner, became effective only on
November 15, 1988, seven days after publication of the said Rules in the Official Gazette pursuant to
Section 4, Rule 44 thereof. 3 These rules could not retroact to January 26,1988, when he filed his petition
with the COMELEC.
In his Reply, the petitioner argues that even if the Omnibus Election Code did not require it, the
payment of filing fees was still necessary under Res. No. 1996 and, before that, Res. No. 1450 of the
respondent COMELEC, promulgated on January 12, 1988, and February 26, 1980, respectively. To this,
the private respondent counters that the latter resolution was intended for the local elections held on
January 30, 1980, and did not apply to the 1988 local elections, which were supposed to be governed by
the first-mentioned resolution. However, Res. No. 1996 took effect only on March 3, 1988, following the
lapse of seven days after its publication as required by RA No. 6646, otherwise known as the Electoral
Reform Law of 1987, which became effective on January 5, 1988. Its Section 30 provides in part:
Sec. 30. Effectivity of Regulations and Orders of the Commission. The rules and
regulations promulgated by the Commission shall take effect on the seventh day after
their publication in the Official Gazette or in at least (2) daily newspapers of general
circulation in the Philippines.
The Court has considered the arguments of the parties and holds that the petition for quo warranto was
filed on time. We agree with the respondents that the fee was paid during the ten-day period as
extended by the pendency of the petition when it was treated by the COMELEC as a pre-proclamation
proceeding which did not require the payment of a filing fee. At that, we reach this conclusion only on
the assumption that the requirement for the payment of the fees in quo warranto proceedings was
already effective. There is no record that Res. No. 1450 was even published; and as for Res. No. 1996,
this took effect only on March 3, 1988, seven days after its publication in the February 25, 1988 issues of
the Manila Chronicle and the Philippine Daily Inquirer, or after the petition was filed.
The petitioner forgets Ta;ada v. Tuvera 4 when he argues that the resolutions became effective
"immediately upon approval" simply because it was so provided therein. We held in that case that
publication was still necessary under the due process clause despite such effectivity clause.
In any event, what is important is that the filing fee was paid, and whatever delay there may have been
is not imputable to the private respondent's fault or neglect. It is true that in the Manchester Case, we
required the timely payment of the filing fee as a precondition for the timeliness of the filing of the case
itself. In Sun Insurance Office, Ltd. v. Asuncion, 5 however this Court, taking into account the special
circumstances of that case, declared:
This Court reiterates the rule that the trial court acquires jurisdiction over a case only
upon the payment of the prescribed filing fee. However, the court may allow the

160

payment of the said fee within a reasonable time. In the event of non-compliance
therewith, the case shall be dismissed.
The same idea is expressed in Rule 42, Section 18, of the COMELEC Rules of Procedure adopted on June
20, 1988, thus:
Sec. 18. Non-payment of prescribed fees. If the fees above prescribed are not paid,
the Commission may refuse to take action thereon until they are paid and may dismiss
the action or the proceeding. (Emphasis supplied.)
The Court notes that while arguing the technical point that the petition for quo warranto should be
dismissed for failure to pay the filing fee on time, the petitioner would at the same time minimize his
alleged lack of citizenship as "a futile technicality," It is regrettable, to say the least, that the
requirement of citizenship as a qualification for public office can be so demeaned. What is worse is that
it is regarded as an even less important consideration than the reglementary period the petitioner
insists upon.
This matter should normally end here as the sole issue originally raised by the petitioner is the
timeliness of the quo warranto proceedings against him. However, as his citizenship is the subject of
that proceeding, and considering the necessity for an early resolution of that more important question
clearly and urgently affecting the public interest, we shall directly address it now in this same action.
The Court has similarly acted in a notable number of cases, thus:
From the foregoing brief statement of the nature of the instant case, it would appear
that our sole function in this proceeding should be to resolve the single issue of whether
or not the Court of Appeals erred in ruling that the motion for new trial of the GSIS in
question should indeed be deemed pro forma. But going over the extended pleadings of
both parties, the Court is immediately impressed that substantial justice may not be
timely achieved, if we should decide this case upon such a technical ground alone. We
have carefully read all the allegations and arguments of the parties, very ably and
comprehensively expounded by evidently knowledgeable and unusually competent
counsel, and we feel we can better serve the interests of justice by broadening the
scope of our inquiry, for as the record before us stands, we see that there is enough
basis for us to end the basic controversy between the parties here and now, dispensing,
however, with procedural steps which would not anyway affect substantially the merits
of their respective claims. 6
xxx
While it is the fault of the petitioner for appealing to the wrong court and thereby
allowing the period for appeal to lapse, the more correct procedure was for the
respondent court to forward the case to the proper court which was the Court of
Appeals for appropriate action. Considering, however, the length of time that this case
has been pending, we apply the rule in the case of Del Castillo v. Jaymalin, (112 SCRA
629) and follow the principle enunciated in Alger Electric, Inc. v. Court of Appeals, (135
SCRA 37) which states:
161

... it is a cherished rule of procedure for this Court to always strive to

settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation. No useful purpose will be
served if this case is remanded to the trial court only to have its decision
raised again to the Intermediate Appellate Court and from there to this
Court. (p. 43)
Only recently in the case of Beautifont, Inc., et al. v. Court of Appeals, et al. (G.R. No.
50141, January 29, 1988), we stated that:
... But all those relevant facts are now before this Court. And those facts dictate the
rendition of a verdict in the petitioner's favor. There is therefore no point in referring
the case back to the Court of Appeals. The facts and the legal propositions involved will
not change, nor should the ultimate judgment. Considerable time has already elapsed
and, to serve the ends of justice, it is time that the controversy is finally laid to rest. (See
Sotto v. Samson, 5 SCRA 733; Republic v. Paredes, 108 Phil. 57; Lianga Lumber Co. v.
Lianga Timber Co., Inc., 76 SCRA 197; Erico v. Heirs of Chigas, 98 SCRA 575; Francisco v.
City of Davao, 12 SCRA 628; Valencia v. Mabilangan, 105 Phil. 162).lwph1.t Sound
practice seeks to accommodate the theory which avoids waste of time, effort and
expense, both to the parties and the government, not to speak of delay in the disposal
of the case (cf. Fernandez v. Garcia, 92 Phil. 592, 597). A marked characteristic of our
judicial set-up is that where the dictates of justice so demand ... the Supreme Court
should act, and act with finality.' (Li Siu Liat v. Republic, 21 SCRA 1039, 1046, citing
Samal v. CA, 99 Phil. 230 and U.S. v. Gimenez, 34 Phil. 74). In this case, the dictates of
justice do demand that this Court act, and act with finality. 7
xxx
Remand of the case to the lower court for further reception of evidence is not necessary
where the court is in a position to resolve the dispute based on the records before it. On
many occasions, the Court, in the public interest and the expeditious administration of
justice, has resolved actions on the merits instead of remanding them to the trial court
for further proceedings, such as where the ends of justice would not be subserved by
the remand of the case or when public interest demands an early disposition of the case
or where the trial court had already received all the evidence of the parties. 8
This course of action becomes all the more justified in the present case where, to repeat for stress, it is
claimed that a foreigner is holding a public office.
We also note in his Reply, the petitioner says:
In adopting private respondent's comment, respondent COMELEC implicitly adopted as
"its own" private respondent's repeated assertion that petitioner is no longer a Filipino
citizen. In so doing, has not respondent COMELEC effectively disqualified itself, by
reason of prejudgment, from resolving the petition for quo warranto filed by private
respondent still pending before it? 9

162

This is still another reason why the Court has seen fit to rule directly on the merits of this case.
Going over the record, we find that there are two administrative decisions on the question of the
petitioner's citizenship. The first was rendered by the Commission on Elections on May 12, 1982, and
found the petitioner to be a citizen of the Philippines. 10 The second was rendered by the Commission on
Immigration and Deportation on September 13, 1988, and held that the petitioner was not a citizen of
the Philippines. 11
The first decision was penned by then COMELEC Chigas, Vicente Santiago, Jr., with Commissioners
Pabalate Savellano and Opinion concurring in full and Commissioner Bacungan concurring in the
dismissal of the petition "without prejudice to the issue of the respondent's citizenship being raised
anew in a proper case." Commissioner Sagadraca reserved his vote, while Commissioner Felipe was for
deferring decision until representations shall have been made with the Australian Embassy for official
verification of the petitioner's alleged naturalization as an Australian.
The second decision was unanimously rendered by Chairman Miriam Defensor-Santiago and
Commissioners Alano and Geraldez of the Commission on Immigration and Deportation. It is important
to observe that in the proceeding before the COMELEC, there was no direct proof that the herein
petitioner had been formally naturalized as a citizen of Australia. This conjecture, which was eventually
rejected, was merely inferred from the fact that he had married an Australian citizen, obtained an
Australian passport, and registered as an alien with the CID upon his return to this country in 1980.
On the other hand, the decision of the CID took into account the official statement of the Australian
Government dated August 12, 1984, through its Consul in the Philippines, that the petitioner was still an
Australian citizen as of that date by reason of his naturalization in 1976. That statement 12 is reproduced
in full as follows:
I, GRAHAM COLIN WEST, Consul of Australia in the Philippines, by virtue of a certificate of appointment
signed and sealed by the Australian Minister of State for Foreign Affairs on 19 October 1983, and
recognized as such by Letter of Patent signed and sealed by the Philippines Acting Minister of Foreign
Affairs on 23 November 1983, do hereby provide the following statement in response to the subpoena
Testificandum dated 9 April 1984 in regard to the Petition for disqualification against RAMON LABO, JR.
Y LOZANO (SPC No. 84-73), and do hereby certify that the statement is true and correct.
STATEMENT
A) RAMON LABO, JR. Y LOZANO, date of birth 23 December 1934, was married in the
Philippines to an Australian citizen. As the spouse of an Australian citizen, he was not
required to meet normal requirements for the grant of citizenship and was granted
Australian citizenship by Sydney on 28 July 1976.
B) Any person over the age of 16 years who is granted Australian citizenship must take
an oath of allegiance or make an affirmation of allegiance. The wording of the oath of
affirmation is: "I ..., renouncing all other allegiance ..." etc. This need not necessarily
have any effect on his former nationality as this would depend on the citizenship laws of
his former country.

163

C) The marriage was declared void in the Australian Federal Court in Sydney on 27 June
1980 on the ground that the marriage had been bigamous.
D) According to our records LABO is still an Australian citizen.
E) Should he return to Australia, LABO may face court action in respect of Section 50 of
Australian Citizenship Act 1948 which relates to the giving of false or misleading
information of a material nature in respect of an application for Australian citizenship. If
such a prosecution was successful, he could be deprived of Australian citizenship under
Section 21 of the Act.
F) There are two further ways in which LABO could divest himself of Australian
citizenship:
(i) He could make a declaration of Renunciation of Australian citizenship under Section
18 of the Australian Citizenship Act, or
(ii) If he acquired another nationality, (for example, Filipino) by a formal and voluntary
act other than marriage, then he would automatically lose as Australian citizenship
under Section 17 of the Act.
IN WITNESS WHEREOF, I HAVE HEREUNTO SET MAY HAND AND SEAL OF THE
AUSTRALIAN EMBASSY, MANILA, THIS 12th DAY OF APRIL 1984. DONE AT MANILA IN
THE PHILIPPINES.
(Signed) GRAHAM C. WEST Consul
This was affirmed later by the letter of February 1, 1988, addressed to the private
respondent by the Department of Foreign Affairs reading as follows: 13
Sir:
With reference to your letter dated 1 February 1988, I wish to inform you that inquiry
made with the Australian Government through the Embassy of the Philippines in
Canberra has elicited the following information:
1) That Mr. Ramon L. Labo, Jr. acquired Australian citizenship on 28 July 1976.
2) That prior to 17 July 1986, a candidate for Australian citizenship had to either swear
an oath of allegiance or make an affirmation of allegiance which carries a renunciation
of "all other allegiance.
Very truly yours, For the Secretary of Foreign Affairs: (SGD) RODOLFO SEVERINO, JR.
Assistant Secretary
The decision also noted the oath of allegiance taken by every naturalized Australian reading as follows:

164

OATH OF ALLEGIANCE
I, A.B., renouncing all other allegiance, swear by Almighty God that I will be faithful and
bear true allegiance to Her Majesty Elizabeth the Second, Queen of Australia, Her heirs
and successors according to law, and that I will faithfully observe the laws of Australia
and fulfill my duties as an Australian citizen. 14
and the Affirmation of Allegiance, which declares:
AFFIRMATION OF ALLEGIANCE
I, A.B., renouncing all other allegiance, solemnly and sincerely promise and declare that I
will be faithful and bear true allegiance to Her Majesty Elizabeth the Second, Queen of
Australia, Her heirs and successors according to law, and that I will faithfully observe the
Laws of Australia and fulfill my duties as an Australian citizen. 15
The petitioner does not question the authenticity of the above evidence. Neither does he deny that he
obtained Australian Passport No. 754705, which he used in coming back to the Philippines in 1980, when
he declared before the immigration authorities that he was an alien and registered as such under Alien
Certificate of Registration No. B-323985. 16 He later asked for the change of his status from immigrant to
a returning former Philippine citizen and was granted Immigrant Certificate of Residence No. 223809. 17
He also categorically declared that he was a citizen of Australia in a number of sworn statements
voluntarily made by him and. even sought to avoid the jurisdiction of the barangay court on the ground
that he was a foreigner. 18
The decision of the COMELEC in 1982 quaintly dismisses all these acts as "mistakes" that did not divest
the petitioner of his citizenship, although, as earlier noted, not all the members joined in this finding.
We reject this ruling as totally baseless. The petitioner is not an unlettered person who was not aware of
the consequences of his acts, let alone the fact that he was assisted by counsel when he performed
these acts.
The private respondent questions the motives of the COMELEC at that time and stresses Labo's political
affiliation with the party in power then, but we need not go into that now.
There is also the claim that the decision can no longer be reversed because of the doctrine of res
judicata, but this too must be dismissed. This doctrine does not apply to questions of citizenship, as the
Court has ruled in several cases. 19 Moreover, it does not appear that it was properly and seasonably
pleaded, in a motion to dismiss or in the answer, having been invoked only when the petitioner filed his
reply 20 to the private respondent's comment. Besides, one of the requisites of res judicata, to wit,
identity of parties, is not present in this case.
The petitioner's contention that his marriage to an Australian national in 1976 did not automatically
divest him of Philippine citizenship is irrelevant. There is no claim or finding that he automatically ceased
to be a Filipino because of that marriage. He became a citizen of Australia because he was naturalized as
such through a formal and positive process, simplified in his case because he was married to an
Australian citizen. As a condition for such naturalization, he formally took the Oath of Allegiance and/or
made the Affirmation of Allegiance, both quoted above. Renouncing all other allegiance, he swore "to
165

be faithful and bear true allegiance to Her Majesty Elizabeth the Second, Queen of Australia ..." and to
fulfill his duties "as an Australian citizen."
The petitioner now claims that his naturalization in Australia made him at worst only a dual national and
did not divest him of his Philippine citizenship. Such a specious argument cannot stand against the clear
provisions of CA No. 63, which enumerates the modes by which Philippine citizenship may be lost.
Among these are: (1) naturalization in a foreign country; (2) express renunciation of citizenship; and (3)
subscribing to an oath of allegiance to support the Constitution or laws of a foreign country, all of which
are applicable to the petitioner. It is also worth mentioning in this connection that under Article IV,
Section 5, of the present Constitution, "Dual allegiance of citizens is inimical to the national interest and
shall be dealt with by law."
Even if it be assumed that, as the petitioner asserts, his naturalization in Australia was annulled after it
was found that his marriage to the Australian citizen was bigamous, that circumstance alone did not
automatically restore his Philippine citizenship. His divestiture of Australian citizenship does not concern
us here. That is a matter between him and his adopted country. What we must consider is the fact that
he voluntarily and freely rejected Philippine citizenship and willingly and knowingly embraced the
citizenship of a foreign country. The possibility that he may have been subsequently rejected by
Australia, as he claims, does not mean that he has been automatically reinstated as a citizen of the
Philippines.
Under CA No. 63 as amended by PD No. 725, Philippine citizenship may be reacquired by direct act of
Congress, by naturalization, or by repatriation. It does not appear in the record, nor does the petitioner
claim, that he has reacquired Philippine citizenship by any of these methods. He does not point to any
judicial decree of naturalization as to any statute directly conferring Philippine citizenship upon him.
Neither has he shown that he has complied with PD No. 725, providing that:
... (2) natural-born Filipinos who have lost their Philippine citizenship may reacquire
Philippine citizenship through repatriation by applying with the Special Committee on
Naturalization created by Letter of Instruction No. 270, and, if their applications are
approved, taking the necessary oath of allegiance to the Republic of the Philippines,
after which they shall be deemed to have reacquired Philippine citizenship. The
Commission on Immigration and Deportation shall thereupon cancel their certificate of
registration. (Emphasis supplied.)
That is why the Commission on Immigration and Deportation rejected his application for the
cancellation of his alien certificate of registration. And that is also the reason we must deny his present
claim for recognition as a citizen of the Philippines.
The petitioner is not now, nor was he on the day of the local elections on January 18, 1988, a citizen of
the Philippines. In fact, he was not even a qualified voter under the Constitution itself because of his
alienage. 21 He was therefore ineligible as a candidate for mayor of Baguio City, under Section 42 of the
Local Government Code providing in material part as follows:
Sec. 42. Qualifications. An elective local official must be a citizen of the Philippines, at
least twenty-three years of age on election day, a qualified voter registered as such in
the barangay, municipality, city or province where he proposes to be elected, a resident
166

therein for at least one year at the time of the filing of his certificate of candidacy, and
able to read and write English, Filipino, or any other local language or dialect.
The petitioner argues that his alleged lack of citizenship is a "futile technicality" that should not frustrate
the will of the electorate of Baguio City, who elected him by a "resonant and thunderous majority." To
be accurate, it was not as loud as all that, for his lead over the second-placer was only about 2,100
votes. In any event, the people of that locality could not have, even unanimously, changed the
requirements of the Local Government Code and the Constitution. The electorate had no power to
permit a foreigner owing his total allegiance to the Queen of Australia, or at least a stateless individual
owing no allegiance to the Republic of the Philippines, to preside over them as mayor of their city. Only
citizens of the Philippines have that privilege over their countrymen.
The probability that many of those who voted for the petitioner may have done so in the belief that he
was qualified only strengthens the conclusion that the results of the election cannot nullify the
qualifications for the office now held by him. These qualifications are continuing requirements; once any
of them is lost during incumbency, title to the office itself is deemed forfeited. In the case at bar, the
citizenship and voting requirements were not subsequently lost but were not possessed at all in the first
place on the day of the election. The petitioner was disqualified from running as mayor and, although
elected, is not now qualified to serve as such.
Finally, there is the question of whether or not the private respondent, who filed the quo warranto
petition, can replace the petitioner as mayor. He cannot. The simple reason is that as he obtained only
the second highest number of votes in the election, he was obviously not the choice of the people of
Baguio city.
The latest ruling of the Court on this issue is Santos v. Commission on Elections 22 decided in 1985. In
that case, the candidate who placed second was proclaimed elected after the votes for his winning rival,
who was disqualified as a turncoat and considered a non-candidate, were all disregarded as stray. In
effect, the second placer won by default. That decision was supported by eight members of the Court
then 23 with three dissenting 24 and another two reserving their vote. 25 One was on official leave. 26
Re-examining that decision, the Court finds, and so holds, that it should be reversed in favor of the
earlier case of Geronimo v. Ramos, 27 Which represents the more logical and democratic rule. That case,
which reiterated the doctrine first announced in 1912 in Topacio vs. Paredes 28 was supported by ten
members of the Court 29 without any dissent, although one reserved his vote, 30 another took no part 31
and two others were on leave. 32 There the Court held:
... it would be extremely repugnant to the basic concept of the constitutionally
guaranteed right to suffrage if a candidate who has not acquired the majority or
plurality of votes is proclaimed a winner and imposed as the representative of a
constituency, the majority of which have positively declared through their ballots that
they do not choose him.
Sound policy dictates that public elective offices are filled by those who have received
the highest number of votes cast in the election for that office, and it is a fundamental
Idea in all republican forms of government that no one can be declared elected and no

167

measure can be declared carried unless he or it receives a majority or plurality of the

legal votes cast in the election. (20 Corpus Juris 2nd, S 243, p. 676.)
The fact that the candidate who obtained the highest number of votes is later declared
to be disqualified or not eligible for the office to which he was elected does not
necessarily entitle the candidate who obtained the second highest number of votes to
be declared the winner of the elective office. The votes cast for a dead, disqualified, or
non-eligible person may not be valid to vote the winner into office or maintain him
there. However, in the absence of a statute which clearly asserts a contrary political and
legislative policy on the matter, if the votes were cast in the sincere belief that the
candidate was alive, qualified, or eligible, they should not be treated as stray, void or
meaningless.
It remains to stress that the citizen of the Philippines must take pride in his status as such and cherish
this priceless gift that, out of more than a hundred other nationalities, God has seen fit to grant him.
Having been so endowed, he must not lightly yield this precious advantage, rejecting it for another land
that may offer him material and other attractions that he may not find in his own country. To be sure,
he has the right to renounce the Philippines if he sees fit and transfer his allegiance to a state with more
allurements for him. 33 But having done so, he cannot expect to be welcomed back with open arms once
his taste for his adopted country turns sour or he is himself disowned by it as an undesirable alien.
Philippine citizenship is not a cheap commodity that can be easily recovered after its renunciation. It
may be restored only after the returning renegade makes a formal act of re-dedication to the country he
has abjured and he solemnly affirms once again his total and exclusive loyalty to the Republic of the
Philippines. This may not be accomplished by election to public office.
WHEREFORE, petitioner Ramon J. Labo, Jr. is hereby declared NOT a citizen of the Philippines and
therefore DISQUALIFIED from continuing to serve as Mayor of Baguio City. He is ordered to VACATE his
office and surrender the same to the Vice-Mayor of Baguio City, once this decision becomes final and
executory. The temporary restraining order dated January 31, 1989, is LIFTED.

168

G.R. No. 99358 January 30, 1995

DJUMANTAN,
petitioner,
vs.
HON. ANDREA D. DOMINGO, COMMISSIONER OF THE BOARD OF IMMIGRATION, HON. REGINO R.
SANTIAGO and HON. JORGE V. SARMIENTO, COMMISSIONERS BUREAU OF IMMIGRATION AND
DEPORTATION, respondents.
This is a petition for certiorari under Rule 65 of the Revised Rules of Court with preliminary injunction, to
reverse and set aside the Decision dated September 27, 1990 of the Commission on Immigration and
Deportation (CID), ordering the deportation of petitioner and its Resolution dated January 29, 1991,
denying the motion for reconsideration.
I
Bernard Banez, the husband of Marina Cabael, went to Indonesia as a contract worker.
On April 3, 1974, he embraced and was converted to Islam. On May 17, 1974, he married petitioner in
accordance with Islamic rites. He returned to the Philippines in January 1979.
On January 13, 1979, petitioner and her two children with Banez, (two-year old Marina and nine-month
old Nikulas) arrived in Manila as the "guests" of Banez. The latter made it appear that he was just a
friend of the family of petitioner and was merely repaying the hospitability extended to him during his
stay in Indonesia.
When petitioner and her two children arrived at the Ninoy Aquino International Airport on January 13,
1979, Banez, together with Marina Cabael, met them.
Banez executed an "Affidavit of Guaranty and Support," for his "guests," stating inter alia, that:
That I am the guarantor for the entry into the Philippines of Mrs. Djumantan, 42 years
old, and her two minor children, MARINA, 2 years old, and NIKULAS, 9 months old, all
Indonesian citizens, who are coming as temporary visitors.
That I am willing to guaranty them out of gratitude to their family for the hospitality
they have accorded me during the few years that I have stayed in Indonesia in
connection with my employment thereat.
That I guaranty they are law abiding citizens and I guaranty their behavior while they are
in the Philippines; I also guaranty their support and that they will not become a public
charge.
That I guaranty their voluntary departure upon the termination of the authorized stay
granted them by the Government (Rollo, p. 41).
As "guests," petitioner and her two children lived in the house of Banez.

169

Petitioner and her children were admitted to the Philippines as temporary visitors under Section 9(a) of
the Immigration Act of 1940.
In 1981, Marina Cabael discovered the true relationship of her husband and petitioner. She filed a
complaint for "concubinage" with the Municipal Trial Court of Urdaneta, Pangasinan against the two.
This case was, however, dismissed for lack of merit.
On March 25, 1982, the immigration status of petitioner was changed from temporary visitor to that of
permanent resident under Section 13(a) of the same law. On April 14, 1982, petitioner was issued an
alien certificate of registration.
Not accepting the set-back, Banez' eldest son, Leonardo, filed a letter complaint with the Ombudsman,
who subsequently referred the letter to the CID. On the basis of the said letter, petitioner was detained
at the CID detention cell. She later released pending the deportation proceedings (DEP Case No. 90-400)
after posting a cash bond (Rollo, pp. 15-16). Thereafter, she manifested to the CID that she be allowed
to depart voluntarily from the Philippines and asked for time to purchase her airline ticket (Rollo, p. 10).
However, she a change of heart and moved for the dismissal of the deportation case on the ground that
she was validly married to a Filipino citizen (Rollo, pp. 11-12).
In the Decision dated September 27, 1990, the CID, through public respondents, disposed as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the Board of Commissioners finds the
second marriage of Bernardo Banes to respondent Djumantan irregular and not in
accordance with the laws of the Philippines. We revoke the Section 13(a) visa previously
granted to her (Rollo, p. 23).
Public respondents denied petitioner's motion for reconsideration in their Resolution dated January 29,
1991 (Rollo, pp. 31-33).
Hence, this petition.
We issued a temporary restraining order, directing public respondents to cease and desist from
executing or implementing the Decision dated September 27, 1990 and the Resolution dated January
29, 1991 (Rollo, pp. 34-36).
On September 20, 1994, Leonardo C. Banez manifested that his father died on August 14, 1994 and that
he and his mother were withdrawing their objection to the granting of a permanent resident visa to
petitioner (Rollo, pp. 173-175).
II
Petitioner claims that her marriage to Banez was valid under Article 27 of P.D. No. 1085, the Muslim
Code, which recognizes the practice of polyandry by Muslim males. From that premise, she argues that
under Articles 109 of the Civil Code of the Philippines, Article 68 of the Family Code and Article 34 of the
Muslim Code, the husband and wife are obliged to live together and under Article 110 of the Civil Code
of the Philippines, the husband is given the right to fix the conjugal residence. She claims that public
respondents have no right to order the couple to live separately (Rollo, pp. 5-7).
170

When asked to comment on the petition, the Solicitor General took the position that the CID could not
order petitioner's deportation because its power to do so had prescribed under Section 37 (b) of the
Immigration Act of 1940 (Rollo, pp. 57-74).
III
We need not resolve the validity of petitioner's marriage to Banez, if under the law the CID can validly
deport petitioner as an "undesirable alien" regardless of her marriage to a Filipino citizen. Therefore, to
be first resolved is the question on petitioner's immigration status, particularly the legality of her
admission into the country and the change of her status from temporary visitor to permanent resident.
Upon a finding that she was not lawfully admitted into the country and she did not lawfully acquire
permanent residency, the next question is whether the power to deport her has prescribed.
There was a blatant abuse of our immigration laws in effecting petitioner's entry into the country and
the change of her immigration status from temporary visitor to permanent resident. All such privileges
were obtained through misinterpretation.
Never was the marriage of petitioner to Banez disclosed to the immigration authorities in her
applications for temporary visitor's visa and for permanent residency.
The civil status of an alien applicant for admission as a temporary visitor is a matter that could influence
the exercise of discretion on the part of the immigration authorities. The immigration authorities would
be less inclined to allow the entry of a woman who claims to have entered into a marriage with a Filipino
citizen, who is married to another woman (Cf. Shiu Shin Man v. Galang, 3 SCRA 871 [1961]).
Generally, the right of the President to expel or deport aliens whose presence is deemed inimical to the
public interest is as absolute and unqualified as the right to prohibit and prevent their entry into the
country (Annotations, 8 ALR 1286). this right is based on the fact that since the aliens are not part of the
nation, their admission into the territory is a matter of pure permission and simple tolerance which
creates no obligation on the part of the government to permit them to stay (3 Am. Jur. 2d. 72).
The interest, which an alien has in being admitted into or allowed to continue to reside in the country, is
protected only so far as Congress may choose to protect it (United States ex rel. Kaloudis v. Shauhnessy
180 F. 2d. 489).
There is no law guaranteeing aliens married to Filipino citizens the right to be admitted, much less to be
given permanent residency, in the Philippines.
The fact of marriage by an alien to a citizen does not withdraw her from the operation of the
immigration laws governing the admission and exclusion of aliens (United States ex rel. Knauff v.
Shauhnessy, 338 US 537 94 L. Ed. 317, 70 S. Ct. 309 [1950]; Low Wah Suey v. Backus, 225 US 460 56 L.
Ed. 1165, 32 S. Ct. 734 [1912]; Annotations, 71 ALR 1213). Marriage of an alien woman to a Filipino
husband does not ipso facto make her a Filipino citizen and does not excuse her from her failure to
depart from the country upon the expiration of her extended stay here as an alien (Joaquin v. Galang, 33
SCRA 362 [1970]).

171

Under Section 9 of the Immigration Act of 1940, it is not mandatory for the CID to admit any alien who
applies for a visitor's visa. Once admitted into the country, the alien has no right to an indefinite stay.
Under Section 13 of the law, an alien allowed to stay temporarily may apply for a change of status and
"may be admitted" as a permanent resident. Among those considered qualified to apply for permanent
residency if the wife or husband of a Philippine citizen (Immigration Act of 1940, Sec. 13[a]). The entry of
aliens into the country and their admission as immigrants is not a matter of right, even if they are legally
married to Filipino citizens.
IV
We now address the issue raised by the Solicitor General that the right of public respondents to deport
petitioner has prescribed, citing Section 37(b) of the Immigration Act of 1940.
Said Section 37(b) provides:
Deportation may be effected under clauses 2, 7, 8, 11 and 12 of paragraph (a) of this
section at any time after entry, but shall not be effected under any clause unless the
arrest in the deportation proceedings is made within five years after the cause for
deportation arises. Deportation under clauses 3 and 4 shall not be effected if the court,
or judge thereof, when sentencing the alien, shall recommend to the Commissioner of
Immigration that the alien be not deported (As amended by Rep. Act No. 503).
Section 37(a) of the said law mentioned in Section 37(b) thereof provides:
The following aliens shall be arrested upon the warrant of the Commissioner of
Immigration or of any other officer designated by him for the purpose and deported
upon the warrant of the Commissioner of Immigration after a determination by the
Board of Commissioners of the existence of the ground for deportation as charged
against the alien:
1) Any alien who enters the Philippines after the effective date of this Act by means of
false and misleading statements or without inspection and admission by the
immigration authorities at a designating port of entry or at any place other than at a
designated port of entry.
2) Any alien who enters the Philippines after the effective date of this Act, who was not
lawfully admissible at the time of entry;
3) Any alien who, after the effective date of this Act, is convicted in the Philippines and
sentenced for a term of one year or more for a crime involving moral turpitude
committed within five years after his entry, is so convicted and sentenced more than
once;
4) Any alien who is convicted and sentenced for a violation of the law governing
prohibited drugs;

172

5) Any alien who practices prostitution or is an inmate of a house of prostitution or is

connected with the management of a house of prostitution, or is a procurer;
6) Any alien who becomes a public charge within five years after entry from causes not
affirmatively shown to have arisen subsequent to entry;
7) Any alien who remains in the Philippines in violation of any limitation or condition
under which he was admitted a non-immigrant;
8) Any alien who believes in, advises, advocates or teaches the overthrow by force and
violence of the Government of the Philippines, or of constituted law and authority, or
who disbelieves in or is opposed to organized government, or who advises, advocates,
or teaches the assault or assassination of public officials because of their office, or who
advises, advocates, or teaches the unlawful destruction of property, or who is a member
of or affiliated with any organization entertaining, advocating or teaching such
doctrines, or who on any manner whatsoever lends assistance, financial or otherwise, to
the dissemination of such doctrines;
9) Any alien who commits any of the acts described in Sections forty-five and forty-six of
this Act, independent of criminal action which may be brought against him: Provided,
That in the case of an alien who, for any reason, is convicted and sentenced to suffer
both imprisonment and deportation, said alien shall first serve the entire period of his
imprisonment before he is actually deported: Provided, however, That the imprisonment
may be waived by the Commissioner of Immigration with the consent of the
Department Head, and upon payment by the alien concerned of such amount as the
Commissioner may fix and approved by the Department Head, and upon payment by
the alien concerned of such amount as the Commissioner may fix and approved by the
Department Head (as amended by R.A. No. 144);
10) Any alien who, at any time within five years after entry, shall have been convicted of
violating the provisions of the Philippine Commonwealth Act Numbered Six hundred
and fifty-three, otherwise known as the Philippine Alien Registration Act of 1941 (now
Republic Act No. 562), or who, at any time after entry, shall have been convicted more
than once of violating the provisions of the same Act;
11) Any alien who engages in profiteering, hoarding, or black-marketing, independent of
any criminal action which may be brought against him;
12) Any alien who is convicted of any offense penalized under Commonwealth Act
Numbered Four hundred and seventy-three, otherwise known as the Revised
Naturalization Laws of the Philippines, or any law relating to acquisition of Philippine
citizenship;
13) Any alien who defrauds his creditor by absconding or alienating properties, to
prevent them from being attached or executed.

173

Under clause 1 of Section 37(a), an "alien who enters the Philippines after the effective date of this Act
by means of false and misleading statements or without inspection and admission by the immigration
authorities at a designated port of entry or at any place other than at a designated port of entry" is
subject to deportation.
The deportation of an alien under said clause of Section 37(a) has a prescriptive period and "shall not be
effected ... unless the arrest in the deportation proceedings is made within five years after the cause for
deportation arises" (Immigration Act of 1940, Sec. 37[b]).
Congress may impose a limitation of time for the deportation of alien from the country (Costanzo v.
Tillinghast, 287 US 341 77 L. Ed. 350, 53 S. Ct. 152 [1932]; Guiney v. Bonham [CA 9] 261 F. 582, 8 ALR
1282).
In Board of Commissioners (CID) v. Dela Rosa, 197 SCRA 853 (1991), we held that under Section 37(b) of
the Immigration Act of 1940, the deportation of an alien may be barred after the lapse of five years after
the cause of deportation arises. Justice Feliciano, in his dissenting opinion, qualified the broad
statement of the law as follows:
Examination of the above quoted Section 37 (b) shows that the five (5) year limitation is
applicable only where deportation is sought to be effected under clauses of Section 37
(a) other than clauses 2, 7, 8, 11 and 12; that where deportation or exclusion is sought
to be effected under clauses of Section 37(a), no period of limitation is applicable; and
that to the contrary, deportation or exclusion may be effected "at any time after entry."
Justice Davide, in his dissenting opinion, clarified:
Note that the five-year period applies only to clauses other than 2, 7, 8, 11 and 12 of
paragraph (a) of the Section. In respect to clauses 2, 7, 8, 11, and 12, the limitation does
not apply.
In Lam Shee v. Bengzon, 93 Phil. 1065 (1953), the alien admitted that she had gained entrance into the
Philippines fraudulently by making use of the name of a Chinese resident-merchant other than that of
her lawful husband. The Court, however, held that she could no longer be deported "for the simple
reason that more than 5 years had elapsed from the date of her admission."
The right of public respondents to deport petitioner has prescribed.
Petitioner was admitted and allowed entry into the Philippines on January 13, 1979 on the basis of false
and misleading statements in her application and in the other supporting documents submitted to the
immigration authorities. Leonardo C. Banez first complained with the CID on November 19, 1980 about
the manner petitioner was admitted into the country and asked for her deportation (Rollo, pp. 77-78).
After the EDSA Revolution, he sent a follow-up letter to the CID requesting action on his 1980 lettercomplaint (Rollo, p. 78).
Tolling the prescriptive period from November 19, 1980, when Leonardo C. Banez informed the CID of
the illegal entry of petitioner into the country, more than five years had elapsed before the issuance of
the order of her deportation on September 27, 1990.
174

In their Comment, public respondents urged that what is barred under Section 37(b) is the deportation
of an alien and claimed that what they ordered was not the deportation of petitioner but merely the
revocation of Section 13(a) which refers to the visa previously granted her (Rollo, p. 102).
The "arrest" contemplated by Section 37(b) refers to the arrest for the purpose of carrying out an order
for deportation and not the arrest prior to proceedings to determine the right of the alien to stay in the
country. When public respondents revoked the permanent residence visa issued to petitioner, they, in
effect, ordered her arrest and deportation as an overstaying alien.
WHEREFORE, the petition is GRANTED and the temporary restraining order issued on June 4, 1991 is
MADE PERMANENT.
The Decision of the Board of Commissioners dated September 27, 1990 revoking the issuance of the
permanent resident visa to petitioner and the Resolution dated January 29, 1991 are REVERSED.
SO ORDERED.

175

G.R. No. 119976 September 18, 1995

IMELDA
ROMUALDEZ-MARCOS,
vs.
COMMISSION ON ELECTIONS and CIRILO ROY MONTEJO, respondents.

petitioner,

A constitutional provision should be construed as to give it effective operation and suppress the
mischief at which it is aimed. 1 The 1987 Constitution mandates that an aspirant for election to the
House of Representatives be "a registered voter in the district in which he shall be elected, and a
resident thereof for a period of not less than one year immediately preceding the election." 2 The
mischief which this provision reproduced verbatim from the 1973 Constitution seeks to prevent is
the possibility of a "stranger or newcomer unacquainted with the conditions and needs of a community
and not identified with the latter, from an elective office to serve that community." 3
Petitioner Imelda Romualdez-Marcos filed her Certificate of Candidacy for the position of
Representative of the First District of Leyte with the Provincial Election Supervisor on March 8, 1995,
providing the following information in item no. 8: 4
RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO BE ELECTED IMMEDIATELY
PRECEDING THE ELECTION: __________ Years and seven Months.
On March 23, 1995, private respondent Cirilo Roy Montejo, the incumbent Representative of the First
District of Leyte and a candidate for the same position, filed a "Petition for Cancellation and
Disqualification" 5 with the Commission on Elections alleging that petitioner did not meet the
constitutional requirement for residency. In his petition, private respondent contended that Mrs.
Marcos lacked the Constitution's one year residency requirement for candidates for the House of
Representatives on the evidence of declarations made by her in Voter Registration Record 94-No.
3349772 6 and in her Certificate of Candidacy. He prayed that "an order be issued declaring (petitioner)
disqualified and canceling the certificate of candidacy." 7
On March 29, 1995, petitioner filed an Amended/Corrected Certificate of Candidacy, changing the entry
"seven" months to "since childhood" in item no. 8 of the amended certificate. 8 On the same day, the
Provincial Election Supervisor of Leyte informed petitioner that:
[T]his office cannot receive or accept the aforementioned Certificate of Candidacy on
the ground that it is filed out of time, the deadline for the filing of the same having
already lapsed on March 20, 1995. The Corrected/Amended Certificate of Candidacy
should have been filed on or before the March 20, 1995 deadline. 9
Consequently, petitioner filed the Amended/Corrected Certificate of Candidacy with the COMELEC's
Head
Office
in
Intramuros,
Manila
on
March 31, 1995. Her Answer to private respondent's petition in SPA No. 95-009 was likewise filed with
the head office on the same day. In said Answer, petitioner averred that the entry of the word "seven"
in her original Certificate of Candidacy was the result of an "honest misinterpretation" 10 which she
sought to rectify by adding the words "since childhood" in her Amended/Corrected Certificate of
Candidacy and that "she has always maintained Tacloban City as her domicile or residence. 11 Impugning
respondent's motive in filing the petition seeking her disqualification, she noted that:
176

When respondent (petitioner herein) announced that she was intending to register as a
voter in Tacloban City and run for Congress in the First District of Leyte, petitioner
immediately opposed her intended registration by writing a letter stating that "she is
not a resident of said city but of Barangay Olot, Tolosa, Leyte. After respondent had
registered as a voter in Tolosa following completion of her six month actual residence
therein, petitioner filed a petition with the COMELEC to transfer the town of Tolosa
from the First District to the Second District and pursued such a move up to the
Supreme Court, his purpose being to remove respondent as petitioner's opponent in the
congressional election in the First District. He also filed a bill, along with other Leyte
Congressmen, seeking the creation of another legislative district to remove the town of
Tolosa out of the First District, to achieve his purpose. However, such bill did not pass
the Senate. Having failed on such moves, petitioner now filed the instant petition for the
same objective, as it is obvious that he is afraid to submit along with respondent for the
judgment and verdict of the electorate of the First District of Leyte in an honest, orderly,
peaceful, free and clean elections on May 8, 1995. 12
On April 24, 1995, the Second Division of the Commission on Elections (COMELEC), by a vote of 2 to 1, 13
came up with a Resolution 1) finding private respondent's Petition for Disqualification in SPA 95-009
meritorious; 2) striking off petitioner's Corrected/Amended Certificate of Candidacy of March 31, 1995;
and 3) canceling her original Certificate of Candidacy. 14 Dealing with two primary issues, namely, the
validity of amending the original Certificate of Candidacy after the lapse of the deadline for filing
certificates of candidacy, and petitioner's compliance with the one year residency requirement, the
Second Division held:
Respondent raised the affirmative defense in her Answer that the printed word "Seven"
(months) was a result of an "honest misinterpretation or honest mistake" on her part
and, therefore, an amendment should subsequently be allowed. She averred that she
thought that what was asked was her "actual and physical" presence in Tolosa and not
residence of origin or domicile in the First Legislative District, to which she could have
responded "since childhood." In an accompanying affidavit, she stated that her domicile
is Tacloban City, a component of the First District, to which she always intended to
return whenever absent and which she has never abandoned. Furthermore, in her
memorandum, she tried to discredit petitioner's theory of disqualification by alleging
that she has been a resident of the First Legislative District of Leyte since childhood,
although she only became a resident of the Municipality of Tolosa for seven months.
She asserts that she has always been a resident of Tacloban City, a component of the
First District, before coming to the Municipality of Tolosa.
Along this point, it is interesting to note that prior to her registration in Tolosa,
respondent announced that she would be registering in Tacloban City so that she can be
a candidate for the District. However, this intention was rebuffed when petitioner wrote
the Election Officer of Tacloban not to allow respondent since she is a resident of Tolosa
and not Tacloban. She never disputed this claim and instead implicitly acceded to it by
registering in Tolosa.
This incident belies respondent's claim of "honest misinterpretation or honest mistake."
Besides, the Certificate of Candidacy only asks for RESIDENCE. Since on the basis of her
Answer, she was quite aware of "residence of origin" which she interprets to be
177

Tacloban City, it is curious why she did not cite Tacloban City in her Certificate of
Candidacy. Her explanation that she thought what was asked was her actual and
physical presence in Tolosa is not easy to believe because there is none in the question
that insinuates about Tolosa. In fact, item no. 8 in the Certificate of Candidacy speaks
clearly of "Residency in the CONSTITUENCY where I seek to be elected immediately
preceding the election." Thus, the explanation of respondent fails to be persuasive.
From the foregoing, respondent's defense of an honest mistake or misinterpretation,
therefore, is devoid of merit.
To further buttress respondent's contention that an amendment may be made, she
cited the case of Alialy v. COMELEC (2 SCRA 957). The reliance of respondent on the case
of Alialy is misplaced. The case only applies to the "inconsequential deviations which
cannot affect the result of the election, or deviations from provisions intended primarily
to secure timely and orderly conduct of elections." The Supreme Court in that case
considered the amendment only as a matter of form. But in the instant case, the
amendment cannot be considered as a matter of form or an inconsequential deviation.
The change in the number of years of residence in the place where respondent seeks to
be elected is a substantial matter which determines her qualification as a candidacy,
specially those intended to suppress, accurate material representation in the original
certificate which adversely affects the filer. To admit the amended certificate is to
condone the evils brought by the shifting minds of manipulating candidate, of the
detriment of the integrity of the election.
Moreover, to allow respondent to change the seven (7) month period of her residency
in order to prolong it by claiming it was "since childhood" is to allow an untruthfulness
to be committed before this Commission. The arithmetical accuracy of the 7 months
residency the respondent indicated in her certificate of candidacy can be gleaned from
her entry in her Voter's Registration Record accomplished on January 28, 1995 which
reflects that she is a resident of Brgy. Olot, Tolosa, Leyte for 6 months at the time of the
said registration (Annex A, Petition). Said accuracy is further buttressed by her letter to
the election officer of San Juan, Metro Manila, dated August 24, 1994, requesting for
the cancellation of her registration in the Permanent List of Voters thereat so that she
can be re-registered or transferred to Brgy. Olot, Tolosa, Leyte. The dates of these three
(3) different documents show the respondent's consistent conviction that she has
transferred her residence to Olot, Tolosa, Leyte from Metro Manila only for such limited
period of time, starting in the last week of August 1994 which on March 8, 1995 will only
sum up to 7 months. The Commission, therefore, cannot be persuaded to believe in the
respondent's contention that it was an error.
xxx xxx xxx
Based on these reasons the Amended/Corrected Certificate of Candidacy cannot be
admitted by this Commission.
xxx xxx xxx

178

Anent the second issue, and based on the foregoing discussion, it is clear that
respondent has not complied with the one year residency requirement of the
Constitution.
In election cases, the term "residence" has always been considered as synonymous with
"domicile" which imports not only the intention to reside in a fixed place but also
personal presence in-that place, coupled with conduct indicative of such intention.
Domicile denotes a fixed permanent residence to which when absent for business or
pleasure, or for like reasons, one intends to return. (Perfecto Faypon vs. Eliseo Quirino,
96 Phil 294; Romualdez vs. RTC-Tacloban, 226 SCRA 408). In respondent's case, when
she returned to the Philippines in 1991, the residence she chose was not Tacloban but
San Juan, Metro Manila. Thus, her animus revertendi is pointed to Metro Manila and not
Tacloban.
This Division is aware that her claim that she has been a resident of the First District
since childhood is nothing more than to give her a color of qualification where she is
otherwise constitutionally disqualified. It cannot hold ground in the face of the facts
admitted by the respondent in her affidavit. Except for the time that she studied and
worked for some years after graduation in Tacloban City, she continuously lived in
Manila. In 1959, after her husband was elected Senator, she lived and resided in San
Juan, Metro Manila where she was a registered voter. In 1965, she lived in San Miguel,
Manila where she was again a registered voter. In 1978, she served as member of the
Batasang Pambansa as the representative of the City of Manila and later on served as
the Governor of Metro Manila. She could not have served these positions if she had not
been a resident of the City of Manila. Furthermore, when she filed her certificate of
candidacy for the office of the President in 1992, she claimed to be a resident of San
Juan, Metro Manila. As a matter of fact on August 24, 1994, respondent wrote a letter
with the election officer of San Juan, Metro Manila requesting for the cancellation of her
registration in the permanent list of voters that she may be re-registered or transferred
to Barangay Olot, Tolosa, Leyte. These facts manifest that she could not have been a
resident of Tacloban City since childhood up to the time she filed her certificate of
candidacy because she became a resident of many places, including Metro Manila. This
debunks her claim that prior to her residence in Tolosa, Leyte, she was a resident of the
First Legislative District of Leyte since childhood.
In this case, respondent's conduct reveals her lack of intention to make Tacloban her
domicile. She registered as a voter in different places and on several occasions declared
that she was a resident of Manila. Although she spent her school days in Tacloban, she is
considered to have abandoned such place when she chose to stay and reside in other
different places. In the case of Romualdez vs. RTC (226 SCRA 408) the Court explained
how one acquires a new domicile by choice. There must concur: (1) residence or bodily
presence in the new locality; (2) intention to remain there; and (3) intention to abandon
the old domicile. In other words there must basically be animus manendi with animus
non revertendi. When respondent chose to stay in Ilocos and later on in Manila, coupled
with her intention to stay there by registering as a voter there and expressly declaring
that she is a resident of that place, she is deemed to have abandoned Tacloban City,
where she spent her childhood and school days, as her place of domicile.
179

Pure intention to reside in that place is not sufficient, there must likewise be conduct
indicative of such intention. Respondent's statements to the effect that she has always
intended to return to Tacloban, without the accompanying conduct to prove that
intention, is not conclusive of her choice of residence. Respondent has not presented
any evidence to show that her conduct, one year prior the election, showed intention to
reside in Tacloban. Worse, what was evident was that prior to her residence in Tolosa,
she had been a resident of Manila.
It is evident from these circumstances that she was not a resident of the First District of
Leyte "since childhood."
To further support the assertion that she could have not been a resident of the First
District of Leyte for more than one year, petitioner correctly pointed out that on January
28, 1995 respondent registered as a voter at precinct No. 18-A of Olot, Tolosa, Leyte. In
doing so, she placed in her Voter Registration Record that she resided in the
municipality of Tolosa for a period of six months. This may be inconsequential as argued
by the respondent since it refers only to her residence in Tolosa, Leyte. But her failure to
prove that she was a resident of the First District of Leyte prior to her residence in
Tolosa leaves nothing but a convincing proof that she had been a resident of the district
for six months only. 15
In a Resolution promulgated a day before the May 8, 1995 elections, the COMELEC en banc denied
petitioner's Motion for Reconsideration 16 of the April 24, 1995 Resolution declaring her not qualified to
run for the position of Member of the House of Representatives for the First Legislative District of Leyte.
17
The Resolution tersely stated:
After deliberating on the Motion for Reconsideration, the Commission RESOLVED to
DENY it, no new substantial matters having been raised therein to warrant reexamination of the resolution granting the petition for disqualification. 18
On May 11, 1995, the COMELEC issued a Resolution allowing petitioner's proclamation should the
results of the canvass show that she obtained the highest number of votes in the congressional elections
in the First District of Leyte. On the same day, however, the COMELEC reversed itself and issued a
second Resolution directing that the proclamation of petitioner be suspended in the event that she
obtains the highest number of votes. 19
In a Supplemental Petition dated 25 May 1995, petitioner averred that she was the overwhelming
winner of the elections for the congressional seat in the First District of Leyte held May 8, 1995 based on
the canvass completed by the Provincial Board of Canvassers on May 14, 1995. Petitioner alleged that
the canvass showed that she obtained a total of 70,471 votes compared to the 36,833 votes received by
Respondent Montejo. A copy of said Certificate of Canvass was annexed to the Supplemental Petition.
On account of the Resolutions disqualifying petitioner from running for the congressional seat of the
First District of Leyte and the public respondent's Resolution suspending her proclamation, petitioner
comes to this court for relief.

180

Petitioner raises several issues in her Original and Supplemental Petitions. The principal issues may be
classified into two general areas:
I. The issue of Petitioner's qualifications
Whether or not petitioner was a resident, for election purposes, of the First District of
Leyte for a period of one year at the time of the May 9, 1995 elections.
II. The Jurisdictional Issue
a) Prior to the elections
Whether or not the COMELEC properly exercised its jurisdiction in disqualifying
petitioner outside the period mandated by the Omnibus Election Code for
disqualification cases under Article 78 of the said Code.
b) After the Elections
Whether or not the House of Representatives Electoral Tribunal assumed exclusive
jurisdiction over the question of petitioner's qualifications after the May 8, 1995
elections.
I. Petitioner's qualification
A perusal of the Resolution of the COMELEC's Second Division reveals a startling confusion in the
application of settled concepts of "Domicile" and "Residence" in election law. While the COMELEC
seems to be in agreement with the general proposition that for the purposes of election law, residence
is synonymous with domicile, the Resolution reveals a tendency to substitute or mistake the concept of
domicile for actual residence, a conception not intended for the purpose of determining a candidate's
qualifications for election to the House of Representatives as required by the 1987 Constitution. As it
were, residence, for the purpose of meeting the qualification for an elective position, has a settled
meaning in our jurisdiction.
Article 50 of the Civil Code decrees that "[f]or the exercise of civil rights and the fulfillment of civil
obligations, the domicile of natural persons is their place of habitual residence." In Ong vs. Republic 20
this court took the concept of domicile to mean an individual's "permanent home", "a place to which,
whenever absent for business or for pleasure, one intends to return, and depends on facts and
circumstances in the sense that they disclose intent." 21 Based on the foregoing, domicile includes the
twin elements of "the fact of residing or physical presence in a fixed place" and animus manendi, or the
intention of returning there permanently.
Residence, in its ordinary conception, implies the factual relationship of an individual to a certain place.
It is the physical presence of a person in a given area, community or country. The essential distinction
between residence and domicile in law is that residence involves the intent to leave when the purpose
for which the resident has taken up his abode ends. One may seek a place for purposes such as pleasure,
business, or health. If a person's intent be to remain, it becomes his domicile; if his intent is to leave as
soon as his purpose is established it is residence. 22 It is thus, quite perfectly normal for an individual to
181

have different residences in various places. However, a person can only have a single domicile, unless,
for various reasons, he successfully abandons his domicile in favor of another domicile of choice. In
Uytengsu vs. Republic, 23 we laid this distinction quite clearly:
There is a difference between domicile and residence. "Residence" is used to indicate a
place of abode, whether permanent or temporary; "domicile" denotes a fixed
permanent residence to which, when absent, one has the intention of returning. A man
may have a residence in one place and a domicile in another. Residence is not domicile,
but domicile is residence coupled with the intention to remain for an unlimited time. A
man can have but one domicile for the same purpose at any time, but he may have
numerous places of residence. His place of residence is generally his place of domicile,
but it is not by any means necessarily so since no length of residence without intention
of remaining will constitute domicile.
For political purposes the concepts of residence and domicile are dictated by the peculiar criteria of
political laws. As these concepts have evolved in our election law, what has clearly and unequivocally
emerged is the fact that residence for election purposes is used synonymously with domicile.
In Nuval vs. Guray, 24 the Court held that "the term residence. . . is synonymous with domicile which
imports not only intention to reside in a fixed place, but also personal presence in that place, coupled
with conduct indicative of such intention." 25 Larena vs. Teves 26 reiterated the same doctrine in a case
involving the qualifications of the respondent therein to the post of Municipal President of Dumaguete,
Negros Oriental. Faypon vs. Quirino, 27 held that the absence from residence to pursue studies or
practice a profession or registration as a voter other than in the place where one is elected does not
constitute loss of residence. 28 So settled is the concept (of domicile) in our election law that in these
and other election law cases, this Court has stated that the mere absence of an individual from his
permanent residence without the intention to abandon it does not result in a loss or change of domicile.
The deliberations of the 1987 Constitution on the residence qualification for certain elective positions
have placed beyond doubt the principle that when the Constitution speaks of "residence" in election
law, it actually means only "domicile" to wit:
Mr. Nolledo: With respect to Section 5, I remember that in the 1971 Constitutional
Convention, there was an attempt to require residence in the place not less than one
year immediately preceding the day of the elections. So my question is: What is the
Committee's concept of residence of a candidate for the legislature? Is it actual
residence or is it the concept of domicile or constructive residence?
Mr. Davide: Madame President, insofar as the regular members of the National
Assembly are concerned, the proposed section merely provides, among others, "and a
resident thereof", that is, in the district for a period of not less than one year preceding
the day of the election. This was in effect lifted from the 1973 Constitution, the
interpretation given to it was domicile. 29
xxx xxx xxx

182

Mrs. Rosario Braid: The next question is on Section 7, page 2. I think Commissioner
Nolledo has raised the same point that "resident" has been interpreted at times as a
matter of intention rather than actual residence.
Mr. De los Reyes: Domicile.
Ms. Rosario Braid: Yes, So, would the gentleman consider at the proper time to go back
to actual residence rather than mere intention to reside?
Mr. De los Reyes: But we might encounter some difficulty especially considering that a
provision in the Constitution in the Article on Suffrage says that Filipinos living abroad
may vote as enacted by law. So, we have to stick to the original concept that it should
be by domicile and not physical residence. 30
In Co vs. Electoral Tribunal of the House of Representatives, 31 this Court concluded that the framers of
the 1987 Constitution obviously adhered to the definition given to the term residence in election law,
regarding it as having the same meaning as domicile. 32
In the light of the principles just discussed, has petitioner Imelda Romualdez Marcos satisfied the
residency requirement mandated by Article VI, Sec. 6 of the 1987 Constitution? Of what significance is
the questioned entry in petitioner's Certificate of Candidacy stating her residence in the First Legislative
District of Leyte as seven (7) months?
It is the fact of residence, not a statement in a certificate of candidacy which ought to be decisive in
determining whether or not and individual has satisfied the constitution's residency qualification
requirement. The said statement becomes material only when there is or appears to be a deliberate
attempt to mislead, misinform, or hide a fact which would otherwise render a candidate ineligible. It
would be plainly ridiculous for a candidate to deliberately and knowingly make a statement in a
certificate of candidacy which would lead to his or her disqualification.
It stands to reason therefore, that petitioner merely committed an honest mistake in jotting the word
"seven" in the space provided for the residency qualification requirement. The circumstances leading to
her filing the questioned entry obviously resulted in the subsequent confusion which prompted
petitioner to write down the period of her actual stay in Tolosa, Leyte instead of her period of residence
in the First district, which was "since childhood" in the space provided. These circumstances and events
are amply detailed in the COMELEC's Second Division's questioned resolution, albeit with a different
interpretation. For instance, when herein petitioner announced that she would be registering in
Tacloban City to make her eligible to run in the First District, private respondent Montejo opposed the
same, claiming that petitioner was a resident of Tolosa, not Tacloban City. Petitioner then registered in
her place of actual residence in the First District, which is Tolosa, Leyte, a fact which she subsequently
noted down in her Certificate of Candidacy. A close look at said certificate would reveal the possible
source of the confusion: the entry for residence (Item No. 7) is followed immediately by the entry for
residence in the constituency where a candidate seeks election thus:
7. RESIDENCE (complete Address): Brgy. Olot, Tolosa, Leyte
POST OFFICE ADDRESS FOR ELECTION PURPOSES: Brgy. Olot, Tolosa, Leyte
183

8.
RESIDENCE
IN
THE
CONSTITUENCY
WHERE
I
SEEK
TO
BE ELECTED IMMEDIATELY PRECEDING THE ELECTION:_________ Years and Seven
Months.
Having been forced by private respondent to register in her place of actual residence in Leyte instead of
petitioner's claimed domicile, it appears that petitioner had jotted down her period of stay in her legal
residence or domicile. The juxtaposition of entries in Item 7 and Item 8 the first requiring actual
residence and the second requiring domicile coupled with the circumstances surrounding petitioner's
registration as a voter in Tolosa obviously led to her writing down an unintended entry for which she
could be disqualified. This honest mistake should not, however, be allowed to negate the fact of
residence in the First District if such fact were established by means more convincing than a mere entry
on a piece of paper.
We now proceed to the matter of petitioner's domicile.
In support of its asseveration that petitioner's domicile could not possibly be in the First District of Leyte,
the Second Division of the COMELEC, in its assailed Resolution of April 24,1995 maintains that "except
for the time when (petitioner) studied and worked for some years after graduation in Tacloban City, she
continuously lived in Manila." The Resolution additionally cites certain facts as indicative of the fact that
petitioner's domicile ought to be any place where she lived in the last few decades except Tacloban,
Leyte. First, according to the Resolution, petitioner, in 1959, resided in San Juan, Metro Manila where
she was also registered voter. Then, in 1965, following the election of her husband to the Philippine
presidency, she lived in San Miguel, Manila where she as a voter. In 1978 and thereafter, she served as a
member of the Batasang Pambansa and Governor of Metro Manila. "She could not, have served these
positions if she had not been a resident of Metro Manila," the COMELEC stressed. Here is where the
confusion lies.
We have stated, many times in the past, that an individual does not lose his domicile even if he has lived
and maintained residences in different places. Residence, it bears repeating, implies a factual
relationship to a given place for various purposes. The absence from legal residence or domicile to
pursue a profession, to study or to do other things of a temporary or semi-permanent nature does not
constitute loss of residence. Thus, the assertion by the COMELEC that "she could not have been a
resident of Tacloban City since childhood up to the time she filed her certificate of candidacy because
she became a resident of many places" flies in the face of settled jurisprudence in which this Court
carefully made distinctions between (actual) residence and domicile for election law purposes. In Larena
vs. Teves, 33 supra, we stressed:
[T]his court is of the opinion and so holds that a person who has his own house wherein
he lives with his family in a municipality without having ever had the intention of
abandoning it, and without having lived either alone or with his family in another
municipality, has his residence in the former municipality, notwithstanding his having
registered as an elector in the other municipality in question and having been a
candidate for various insular and provincial positions, stating every time that he is a
resident of the latter municipality.
More significantly, in Faypon vs. Quirino, 34 We explained that:

184

A citizen may leave the place of his birth to look for "greener pastures," as the saying
goes, to improve his lot, and that, of course includes study in other places, practice of
his avocation, or engaging in business. When an election is to be held, the citizen who
left his birthplace to improve his lot may desire to return to his native town to cast his
ballot but for professional or business reasons, or for any other reason, he may not
absent himself from his professional or business activities; so there he registers himself
as voter as he has the qualifications to be one and is not willing to give up or lose the
opportunity to choose the officials who are to run the government especially in national
elections. Despite such registration, the animus revertendi to his home, to his domicile
or residence of origin has not forsaken him. This may be the explanation why the
registration of a voter in a place other than his residence of origin has not been deemed
sufficient to constitute abandonment or loss of such residence. It finds justification in
the natural desire and longing of every person to return to his place of birth. This strong
feeling of attachment to the place of one's birth must be overcome by positive proof of
abandonment for another.
From the foregoing, it can be concluded that in its above-cited statements supporting its proposition
that petitioner was ineligible to run for the position of Representative of the First District of Leyte, the
COMELEC was obviously referring to petitioner's various places of (actual) residence, not her domicile. In
doing so, it not only ignored settled jurisprudence on residence in election law and the deliberations of
the constitutional commission but also the provisions of the Omnibus Election Code (B.P. 881). 35
What is undeniable, however, are the following set of facts which establish the fact of petitioner's
domicile, which we lift verbatim from the COMELEC's Second Division's assailed Resolution: 36
In or about 1938 when respondent was a little over 8 years old, she established her
domicile in Tacloban, Leyte (Tacloban City). She studied in the Holy Infant Academy in
Tacloban from 1938 to 1949 when she graduated from high school. She pursued her
college studies in St. Paul's College, now Divine Word University in Tacloban, where she
earned her degree in Education. Thereafter, she taught in the Leyte Chinese School, still
in Tacloban City. In 1952 she went to Manila to work with her cousin, the late speaker
Daniel Z. Romualdez in his office in the House of Representatives. In 1954, she married
ex-President Ferdinand E. Marcos when he was still a congressman of Ilocos Norte and
registered there as a voter. When her husband was elected Senator of the Republic in
1959, she and her husband lived together in San Juan, Rizal where she registered as a
voter. In 1965, when her husband was elected President of the Republic of the
Philippines, she lived with him in Malacanang Palace and registered as a voter in San
Miguel, Manila.
[I]n February 1986 (she claimed that) she and her family were abducted and kidnapped
to Honolulu, Hawaii. In November 1991, she came home to Manila. In 1992, respondent
ran for election as President of the Philippines and filed her Certificate of Candidacy
wherein she indicated that she is a resident and registered voter of San Juan, Metro
Manila.
Applying the principles discussed to the facts found by COMELEC, what is inescapable is that petitioner
held various residences for different purposes during the last four decades. None of these purposes
unequivocally point to an intention to abandon her domicile of origin in Tacloban, Leyte. Moreover,
185

while petitioner was born in Manila, as a minor she naturally followed the domicile of her parents. She
grew up in Tacloban, reached her adulthood there and eventually established residence in different
parts of the country for various reasons. Even during her husband's presidency, at the height of the
Marcos Regime's powers, petitioner kept her close ties to her domicile of origin by establishing
residences in Tacloban, celebrating her birthdays and other important personal milestones in her home
province, instituting well-publicized projects for the benefit of her province and hometown, and
establishing a political power base where her siblings and close relatives held positions of power either
through the ballot or by appointment, always with either her influence or consent. These well-publicized
ties to her domicile of origin are part of the history and lore of the quarter century of Marcos power in
our country. Either they were entirely ignored in the COMELEC'S Resolutions, or the majority of the
COMELEC did not know what the rest of the country always knew: the fact of petitioner's domicile in
Tacloban, Leyte.
Private respondent in his Comment, contends that Tacloban was not petitioner's domicile of origin
because she did not live there until she was eight years old. He avers that after leaving the place in 1952,
she "abandoned her residency (sic) therein for many years and . . . (could not) re-establish her domicile
in said place by merely expressing her intention to live there again." We do not agree.
First, minor follows the domicile of his parents. As domicile, once acquired is retained until a new one is
gained, it follows that in spite of the fact of petitioner's being born in Manila, Tacloban, Leyte was her
domicile of origin by operation of law. This domicile was not established only when her father brought
his family back to Leyte contrary to private respondent's averments.
Second, domicile of origin is not easily lost. To successfully effect a change of domicile, one must
demonstrate: 37
1. An actual removal or an actual change of domicile;
2. A bona fide intention of abandoning the former place of residence and establishing a
new one; and
3. Acts which correspond with the purpose.
In the absence of clear and positive proof based on these criteria, the residence of origin should be
deemed to continue. Only with evidence showing concurrence of all three requirements can the
presumption of continuity or residence be rebutted, for a change of residence requires an actual and
deliberate abandonment, and one cannot have two legal residences at the same time. 38 In the case at
bench, the evidence adduced by private respondent plainly lacks the degree of persuasiveness required
to convince this court that an abandonment of domicile of origin in favor of a domicile of choice indeed
occurred. To effect an abandonment requires the voluntary act of relinquishing petitioner's former
domicile with an intent to supplant the former domicile with one of her own choosing (domicilium
voluntarium).
In this connection, it cannot be correctly argued that petitioner lost her domicile of origin by operation
of law as a result of her marriage to the late President Ferdinand E. Marcos in 1952. For there is a clearly
established distinction between the Civil Code concepts of "domicile" and "residence." 39 The
presumption that the wife automatically gains the husband's domicile by operation of law upon
186

marriage cannot be inferred from the use of the term "residence" in Article 110 of the Civil Code
because the Civil Code is one area where the two concepts are well delineated. Dr. Arturo Tolentino,
writing on this specific area explains:
In the Civil Code, there is an obvious difference between domicile and residence. Both
terms imply relations between a person and a place; but in residence, the relation is one
of fact while in domicile it is legal or juridical, independent of the necessity of physical
presence. 40
Article 110 of the Civil Code provides:
Art. 110. The husband shall fix the residence of the family. But the court may exempt
the wife from living with the husband if he should live abroad unless in the service of
the Republic.
A survey of jurisprudence relating to Article 110 or to the concepts of domicile or residence as they
affect the female spouse upon marriage yields nothing which would suggest that the female spouse
automatically loses her domicile of origin in favor of the husband's choice of residence upon marriage.
Article 110 is a virtual restatement of Article 58 of the Spanish Civil Code of 1889 which states:
La mujer esta obligada a seguir a su marido donde quiera que fije su residencia. Los
Tribunales, sin embargo, podran con justa causa eximirla de esta obligacion cuando el
marido transende su residencia a ultramar o' a pais extranjero.
Note the use of the phrase "donde quiera su fije de residencia" in the aforequoted article, which means
wherever (the husband) wishes to establish residence. This part of the article clearly contemplates only
actual residence because it refers to a positive act of fixing a family home or residence. Moreover, this
interpretation is further strengthened by the phrase "cuando el marido translade su residencia" in the
same provision which means, "when the husband shall transfer his residence," referring to another
positive act of relocating the family to another home or place of actual residence. The article obviously
cannot
be
understood
to
refer
to
domicile
which
is
a
fixed,
fairly-permanent concept when it plainly connotes the possibility of transferring from one place to
another not only once, but as often as the husband may deem fit to move his family, a circumstance
more consistent with the concept of actual residence.
The right of the husband to fix the actual residence is in harmony with the intention of the law to
strengthen and unify the family, recognizing the fact that the husband and the wife bring into the
marriage different domiciles (of origin). This difference could, for the sake of family unity, be reconciled
only by allowing the husband to fix a single place of actual residence.
Very significantly, Article 110 of the Civil Code is found under Title V under the heading: RIGHTS AND
OBLIGATIONS BETWEEN HUSBAND AND WIFE. Immediately preceding Article 110 is Article 109 which
obliges the husband and wife to live together, thus:
Art. 109. The husband and wife are obligated to live together, observe mutual respect
and fidelity and render mutual help and support.
187

The duty to live together can only be fulfilled if the husband and wife are physically together. This takes
into account the situations where the couple has many residences (as in the case of the petitioner). If
the husband has to stay in or transfer to any one of their residences, the wife should necessarily be with
him in order that they may "live together." Hence, it is illogical to conclude that Art. 110 refers to
"domicile" and not to "residence." Otherwise, we shall be faced with a situation where the wife is left in
the domicile while the husband, for professional or other reasons, stays in one of their (various)
residences. As Dr. Tolentino further explains:
Residence and Domicile Whether the word "residence" as used with reference to
particular matters is synonymous with "domicile" is a question of some difficulty, and
the ultimate decision must be made from a consideration of the purpose and intent
with which the word is used. Sometimes they are used synonymously, at other times
they are distinguished from one another.
xxx xxx xxx
Residence in the civil law is a material fact, referring to the physical presence of a
person in a place. A person can have two or more residences, such as a country
residence and a city residence. Residence is acquired by living in place; on the other
hand, domicile can exist without actually living in the place. The important thing for
domicile is that, once residence has been established in one place, there be an intention
to stay there permanently, even if residence is also established in some other
place. 41
In fact, even the matter of a common residence between the husband and the wife during the marriage
is not an iron-clad principle; In cases applying the Civil Code on the question of a common matrimonial
residence, our jurisprudence has recognized certain situations 42 where the spouses could not be
compelled to live with each other such that the wife is either allowed to maintain a residence different
from that of her husband or, for obviously practical reasons, revert to her original domicile (apart from
being allowed to opt for a new one). In De la Vina vs. Villareal 43 this Court held that "[a] married woman
may acquire a residence or domicile separate from that of her husband during the existence of the
marriage where the husband has given cause for divorce." 44 Note that the Court allowed the wife either
to obtain new residence or to choose a new domicile in such an event. In instances where the wife
actually opts, .under the Civil Code, to live separately from her husband either by taking new residence
or reverting to her domicile of origin, the Court has held that the wife could not be compelled to live
with her husband on pain of contempt. In Arroyo vs. Vasques de Arroyo 45 the Court held that:
Upon examination of the authorities, we are convinced that it is not within the province
of the courts of this country to attempt to compel one of the spouses to cohabit with,
and render conjugal rights to, the other. Of course where the property rights of one of
the pair are invaded, an action for restitution of such rights can be maintained. But we
are disinclined to sanction the doctrine that an order, enforcible (sic) by process of
contempt, may be entered to compel the restitution of the purely personal right of
consortium. At best such an order can be effective for no other purpose than to compel
the spouses to live under the same roof; and he experience of those countries where
the courts of justice have assumed to compel the cohabitation of married people shows
that the policy of the practice is extremely questionable. Thus in England, formerly the
Ecclesiastical Court entertained suits for the restitution of conjugal rights at the instance
188

of either husband or wife; and if the facts were found to warrant it, that court would
make a mandatory decree, enforceable by process of contempt in case of disobedience,
requiring the delinquent party to live with the other and render conjugal rights. Yet this
practice was sometimes criticized even by the judges who felt bound to enforce such
orders, and in Weldon v. Weldon (9 P.D. 52), decided in 1883, Sir James Hannen,
President in the Probate, Divorce and Admiralty Division of the High Court of Justice,
expressed his regret that the English law on the subject was not the same as that which
prevailed in Scotland, where a decree of adherence, equivalent to the decree for the
restitution of conjugal rights in England, could be obtained by the injured spouse, but
could not be enforced by imprisonment. Accordingly, in obedience to the growing
sentiment against the practice, the Matrimonial Causes Act (1884) abolished the remedy
of imprisonment; though a decree for the restitution of conjugal rights can still be
procured, and in case of disobedience may serve in appropriate cases as the basis of an
order for the periodical payment of a stipend in the character of alimony.
In the voluminous jurisprudence of the United States, only one court, so far as we can
discover, has ever attempted to make a preemptory order requiring one of the spouses
to live with the other; and that was in a case where a wife was ordered to follow and
live with her husband, who had changed his domicile to the City of New Orleans. The
decision referred to (Bahn v. Darby, 36 La. Ann., 70) was based on a provision of the Civil
Code of Louisiana similar to article 56 of the Spanish Civil Code. It was decided many
years ago, and the doctrine evidently has not been fruitful even in the State of
Louisiana. In other states of the American Union the idea of enforcing cohabitation by
process of contempt is rejected. (21 Cyc., 1148).
In a decision of January 2, 1909, the Supreme Court of Spain appears to have affirmed
an order of the Audiencia Territorial de Valladolid requiring a wife to return to the
marital domicile, and in the alternative, upon her failure to do so, to make a particular
disposition of certain money and effects then in her possession and to deliver to her
husband, as administrator of the ganancial property, all income, rents, and interest
which might accrue to her from the property which she had brought to the marriage.
(113 Jur. Civ., pp. 1, 11) But it does not appear that this order for the return of the wife
to the marital domicile was sanctioned by any other penalty than the consequences that
would be visited upon her in respect to the use and control of her property; and it does
not appear that her disobedience to that order would necessarily have been followed by
imprisonment for contempt.
Parenthetically when Petitioner was married to then Congressman Marcos, in 1954, petitioner was
obliged by virtue of Article 110 of the Civil Code to follow her husband's actual place of residence
fixed by him. The problem here is that at that time, Mr. Marcos had several places of residence, among
which were San Juan, Rizal and Batac, Ilocos Norte. There is no showing which of these places Mr.
Marcos did fix as his family's residence. But assuming that Mr. Marcos had fixed any of these places as
the conjugal residence, what petitioner gained upon marriage was actual residence. She did not lose her
domicile of origin.
On the other hand, the common law concept of "matrimonial domicile" appears to have been
incorporated, as a result of our jurisprudential experiences after the drafting of the Civil Code of 1950,
into the New Family Code. To underscore the difference between the intentions of the Civil Code and
189

the Family Code drafters, the term residence has been supplanted by the term domicile in an entirely
new provision (Art. 69) distinctly different in meaning and spirit from that found in Article 110. The
provision recognizes revolutionary changes in the concept of women's rights in the intervening years by
making the choice of domicile a product of mutual agreement between the spouses. 46
Without as much belaboring the point, the term residence may mean one thing in civil law (or under the
Civil Code) and quite another thing in political law. What stands clear is that insofar as the Civil Code is
concerned-affecting the rights and obligations of husband and wife the term residence should only be
interpreted to mean "actual residence." The inescapable conclusion derived from this unambiguous civil
law delineation therefore, is that when petitioner married the former President in 1954, she kept her
domicile of origin and merely gained a new home, not a domicilium necessarium.
Even assuming for the sake of argument that petitioner gained a new "domicile" after her marriage and
only acquired a right to choose a new one after her husband died, petitioner's acts following her return
to the country clearly indicate that she not only impliedly but expressly chose her domicile of origin
(assuming this was lost by operation of law) as her domicile. This "choice" was unequivocally expressed
in her letters to the Chairman of the PCGG when petitioner sought the PCGG's permission to
"rehabilitate (our) ancestral house in Tacloban and Farm in Olot, Leyte. . . to make them livable for the
Marcos family to have a home in our homeland." 47 Furthermore, petitioner obtained her residence
certificate in 1992 in Tacloban, Leyte, while living in her brother's house, an act which supports the
domiciliary intention clearly manifested in her letters to the PCGG Chairman. She could not have gone
straight to her home in San Juan, as it was in a state of disrepair, having been previously looted by
vandals. Her "homes" and "residences" following her arrival in various parts of Metro Manila merely
qualified as temporary or "actual residences," not domicile. Moreover, and proceeding from our
discussion pointing out specific situations where the female spouse either reverts to her domicile of
origin or chooses a new one during the subsistence of the marriage, it would be highly illogical for us to
assume that she cannot regain her original domicile upon the death of her husband absent a positive act
of selecting a new one where situations exist within the subsistence of the marriage itself where the
wife gains a domicile different from her husband.
In the light of all the principles relating to residence and domicile enunciated by this court up to this
point, we are persuaded that the facts established by the parties weigh heavily in favor of a conclusion
supporting petitioner's claim of legal residence or domicile in the First District of Leyte.
II. The jurisdictional issue
Petitioner alleges that the jurisdiction of the COMELEC had already lapsed considering that the assailed
resolutions were rendered on April 24, 1995, fourteen (14) days before the election in violation of
Section 78 of the Omnibus Election Code. 48 Moreover, petitioner contends that it is the House of
Representatives Electoral Tribunal and not the COMELEC which has jurisdiction over the election of
members of the House of Representatives in accordance with Article VI Sec. 17 of the Constitution. This
is untenable.
It is a settled doctrine that a statute requiring rendition of judgment within a specified time is generally
construed to be merely directory, 49 "so that non-compliance with them does not invalidate the
judgment on the theory that if the statute had intended such result it would have clearly indicated it." 50
The difference between a mandatory and a directory provision is often made on grounds of necessity.
190

Adopting the same view held by several American authorities, this court in Marcelino vs. Cruz held that:
51

The difference between a mandatory and directory provision is often determined on

grounds of expediency, the reason being that less injury results to the general public by
disregarding than enforcing the letter of the law.
In Trapp v. Mc Cormick, a case calling for the interpretation of a statute containing a
limitation of thirty (30) days within which a decree may be entered without the consent
of counsel, it was held that "the statutory provisions which may be thus departed from
with impunity, without affecting the validity of statutory proceedings, are usually those
which relate to the mode or time of doing that which is essential to effect the aim and
purpose of the Legislature or some incident of the essential act." Thus, in said case, the
statute under examination was construed merely to be directory.
The mischief in petitioner's contending that the COMELEC should have abstained from rendering a
decision after the period stated in the Omnibus Election Code because it lacked jurisdiction, lies in the
fact that our courts and other quasi-judicial bodies would then refuse to render judgments merely on
the ground of having failed to reach a decision within a given or prescribed period.
In any event, with the enactment of Sections 6 and 7 of R.A. 6646 in relation to Section 78 of B.P. 881, 52
it is evident that the respondent Commission does not lose jurisdiction to hear and decide a pending
disqualification case under Section 78 of B.P. 881 even after the elections.
As to the House of Representatives Electoral Tribunal's supposed assumption of jurisdiction over the
issue of petitioner's qualifications after the May 8, 1995 elections, suffice it to say that HRET's
jurisdiction as the sole judge of all contests relating to the elections, returns and qualifications of
members of Congress begins only after a candidate has become a member of the House of
Representatives. 53 Petitioner not being a member of the House of Representatives, it is obvious that the
HRET at this point has no jurisdiction over the question.
It would be an abdication of many of the ideals enshrined in the 1987 Constitution for us to either to
ignore or deliberately make distinctions in law solely on the basis of the personality of a petitioner in a
case. Obviously a distinction was made on such a ground here. Surely, many established principles of
law, even of election laws were flouted for the sake perpetuating power during the pre-EDSA regime.
We renege on these sacred ideals, including the meaning and spirit of EDSA ourselves bending
established principles of principles of law to deny an individual what he or she justly deserves in law.
Moreover, in doing so, we condemn ourselves to repeat the mistakes of the past.
WHEREFORE, having determined that petitioner possesses the necessary residence qualifications to run
for a seat in the House of Representatives in the First District of Leyte, the COMELEC's questioned
Resolutions dated April 24, May 7, May 11, and May 25, 1995 are hereby SET ASIDE. Respondent
COMELEC is hereby directed to order the Provincial Board of Canvassers to proclaim petitioner as the
duly elected Representative of the First District of Leyte.
SO ORDERED.

191

G.R. No. 134015 July 19, 1999

JUAN
DOMINO,
petitioner,
vs.
COMMISSION ON ELECTIONS, NARCISO Ra. GRAFILO, JR., EDDY B. JAVA, JUAN P. BAYONITO, JR.,
ROSARIO SAMSON and DIONISIO P. LIM, SR., respondent, LUCILLE CHIONGBIAN-SOLON, intervenor.
Challenged in this case for certiorari with a prayer for preliminary injunction are the Resolution of 6 May
1998 1 of the Second Division of the Commission on Elections (hereafter COMELEC), declaring petitioner
Juan Domino (hereafter DOMINO) disqualified as candidate for representative of the Lone Legislative
District of the Province of Sarangani in the 11 May 1998 elections, and the Decision of 29 May 1998 2 of
the COMELEC en banc denying DOMINO's motion for reconsideration.
The antecedents are not disputed.
On 25 March 1998, DOMINO filed his certificate of candidacy for the position of Representative of the
Lone Legislative District of the Province of Sarangani indicating in item nine (9) of his certificate that he
had resided in the constituency where he seeks to be elected for one (1) year and two (2) months
immediately preceding the election. 3
On 30 March 1998, private respondents Narciso Ra. Grafilo, Jr., Eddy B. Java, Juan P. Bayonito, Jr.,
Rosario Samson and Dionisio P. Lim, Sr., fied with the COMELEC a Petition to Deny Due Course to or
Cancel Certificate of Candidacy, which was docketed as SPA No. 98-022 and assigned to the Second
Division of the COMELEC. Private respondents alleged that DOMINO, contrary to his declaration in the
certificate of candidacy, is not a resident, much less a registered voter, of the province of Sarangani
where he seeks election. To substantiate their allegations, private respondents presented the following
evidence:
1. Annex "A" the Certificate of Candidacy of respondent for the
position of Congressman of the Lone District of the Province of
Sarangani filed with the Office of the Provincial Election Supervisor of
Sarangani on March 25, 1998, where in item 4 thereof he wrote his date
of birth as December 5, 1953; in item 9, he claims he have resided in the
constituency where he seeks election for one (1) year and two (2)
months; and, in item 10, that he is registered voter of Precinct No. 14A1, Barangay Poblacion, Alabel, Sarangani;
2. Annex "B" Voter's Registration Record with SN 31326504 dated
June 22, 1997 indicating respondent's registration at Precinct No. 4400A, Old Balara, Quezon City;
3. Annex "C" Respondent's Community Tax Certificate No. 11132214C
dated January 15, 1997;
4. Annex "D" Certified true copy of the letter of Herson D. Dema-ala,
Deputy Provincial & Municipal Treasurer of Alabel, Sarangani, dated
February 26, 1998, addressed to Mr. Conrado G. Butil, which reads:
192

In connection with your letter of even date, we are furnishing you

herewith certified xerox copy of the triplicate copy of COMMUNITY TAX
CERTIFICATE NO. 11132214C in the name of Juan Domino.
Furthermore, Community Tax Certificate No. 11132212C of the same
stub was issued to Carlito Engcong on September 5, 1997, while
Certificate No. 11132213C was also issued to Mr. Juan Domino but was
cancelled and serial no. 11132215C was issued in the name of Marianita
Letigio on September 8, 1997.
5. Annex "E" The triplicate copy of the Community Tax Certificate No.
11132214C in the name of Juan Domino dated September 5, 1997;
6. Annex "F" Copy of the letter of Provincial Treasurer Lourdes P.
Riego dated March 2, 1998 addressed to Mr. Herson D. Dema-ala,
Deputy Provincial Treasurer and Municipal Treasurer of Alabel,
Sarangani, which states:
For easy reference, kindly turn-over to the undersigned for safekeeping,
the stub of Community Tax Certificate containing Nos. 11132201C11132250C issued to you on June 13, 1997 and paid under Official
Receipt No. 7854744.
Upon request of Congressman James L. Chiongbian.
7. Annex "G" Certificate of Candidacy of respondent for the position
of Congressman in the 3rd District of Quezon City for the 1995 elections
filed with the Office of the Regional Election Director, National Capital
Region, on March 17, 1995, where, in item 4 thereof, he wrote his birth
date as December 22, 1953; in item 8 thereof his "residence in the
constituency where I seek to be elected immediately preceding the
election" as 3 years and 5 months; and, in item 9, that he is a registered
voter of Precinct No. 182, Barangay Balara, Quezon City;
8. Annex "H" a copy of the APPLICATION FOR TRANSFER OF
REGISTRATION RECORDS DUE TO CHANGE OF RESIDENCE of respondent
dated August 30, 1997 addressed to and received by Election Officer
Mantil Alim, Alabel, Sarangani, on September 22, 1997, stating among
others, that "[T]he undersigned's previous residence is at 24 Bonifacio
Street, Ayala Heights, Quezon City, III District, Quezon City; wherein he
is a registered voter" and "that for business and residence purposes, the
undersigned has transferred and conducts his business and reside at
Barangay Poblacion, Alabel, Province of Sarangani prior to this
application;"
9. Annex "I" Copy of the SWORN APPLICATION FOR OF
CANCELLATION OF THE VOTER'S [TRANSFER OF] PREVIOUS
193

REGISTRATION of respondent subscribed and sworn to on 22 October

1997 before Election Officer Mantil Allim at Alabel, Sarangani. 4
For his defense, DOMINO maintains that he had complied with the one-year residence requirement and
that he has been residing in Sarangani since January 1997. In support of the said contention, DOMINO
presented before the COMELEC the following exhibits, to wit:
1. Annex "1" Copy of the Contract of Lease between Nora Dacaldacal
as Lessor and Administrator of the properties of deceased spouses
Maximo and Remedios Dacaldacal and respondent as Lessee executed
on January 15, 1997, subscribed and sworn to before Notary Public
Johnny P. Landero;
2. Annex "2" Copy of the Extra-Judicial Settlement of Estate with
Absolute Deed of sale executed by and between the heirs of deceased
spouses Maximo and Remedios Dacaldacal, namely: Maria Lourdes,
Jupiter and Beberlie and the respondent on November 4, 1997,
subscribed and sworn to before Notary Public Jose A. Alegario;
3. Annex "3" True Carbon Xerox copy of the Decision dated January
19, 1998, of the Metropolitan Trial Court of Metro Manila, Branch 35,
Quezon City, in Election Case NO. 725 captioned as "In the Matter of the
Petition for the Exclusion from the List of voters of Precinct No. 4400-A
Brgy. Old Balara, Quezon City, Spouses Juan and Zorayda Domino,
Petitioners, -versus- Elmer M. Kayanan, Election Officer, Quezon City,
District III, and the Board of Election Inspectors of Precinct No. 4400-A,
Old Balara, Quezon City, Respondents." The dispositive portion of which
reads:
1. Declaring the registration of petitioners as voters of
Precinct No. 4400-A, Barangay Old Balara, in District III
Quezon City as completely erroneous as petitioners
were no longer residents of Quezon City but of Alabel,
Sarangani where they have been residing since
December 1996;
2. Declaring this erroneous registration of petitioners in
Quezon City as done in good faith due to an honest
mistake caused by circumstances beyond their control
and without any fault of petitioners;
3. Approving the transfer of registration of voters of
petitioners from Precint No. 4400-A of Barangay Old
Balara, Quezon City to Precinct No. 14A1 of Barangay
Poblacion of Alabel, Sarangani; and

194

4. Ordering the respondents to immediately transfer

and forward all the election/voter's registration records
of the petitioners in Quezon City to the Election Officer,
the Election Registration Board and other Comelec
Offices of Alabel, Sarangani where the petitioners are
obviously qualified to excercise their respective rights of
suffrage.
4. Annex "4" Copy of the Application for Transfer of Registration
Records due to Change of Residence addressed to Mantil Alim,
COMELEC Registrar, Alabel, Sarangani, dated August 30, 1997.
5. Annex "5" Certified True Copy of the Notice of Approval of
Application, the roster of applications for registration approved by the
Election Registration Board on October 20, 1997, showing the spouses
Juan and Zorayda Bailon Domino listed as numbers 111 and 112 both
under Precinct No. 14A1, the last two names in the slate indicated as
transferees without VRR numbers and their application dated August
30, 1997 and September 30, 1997, respectively.
6. Annex "6" same as Annex "5"
7. Annex "6-a" Copy of the Sworn Application for Cancellation of
Voter's Previous Registration (Annex "I", Petition);
8. Annex "7" Copy of claim card in the name of respondent showing
his VRR No. 31326504 dated October 20, 1997 as a registered voter of
Precinct No. 14A1, Barangay Poblacion, Alabel, Sarangani;
9. Annex "7-a" Certification dated April 16, 1998, issued by Atty.
Elmer M. Kayanan, Election Officer IV, District III, Quezon City, which
reads:
This is to certify that the spouses JUAN and ZORAYDA DOMINO are no
longer registered voters of District III, Quezon City. Their registration
records (VRR) were transferred and are now in the possession of the
Election Officer of Alabel, Sarangani.
This certification is being issued upon the request of Mr. JUAN DOMINO.
10. Annex "8" Affidavit of Nora Dacaldacal and Maria Lourdes
Dacaldacal stating the circumstances and incidents detailing their
alleged acquaintance with respondent.
11. Annexes "8-a", "8-b", "8-c" and "8-d" Copies of the uniform
affidavits of witness Myrna Dalaguit, Hilario Fuentes, Coraminda
Lomibao and Elena V. Piodos subscribed and sworn to before Notary
195

Public Bonifacio F. Doria, Jr., on April 18, 1998, embodying their alleged
personal knowledge of respondent's residency in Alabel, Sarangani;
12. Annex "8-e" A certification dated April 20, 1998, subscribed and
sworn to before Notary Public Bonifacio, containing a listing of the
names of fifty-five (55) residents of Alabel, Sarangani, declaring and
certifying under oath that they personally know the respondent as a
permanent resident of Alabel, Sarangani since January 1997 up to
present;
13. Annexes "9", "9-a" and "9-b" Copies of Individual Income Tax
Return for the year 1997, BIR form 2316 and W-2, respectively, of
respondent; and,
14. Annex "10" The affidavit of respondent reciting the chronology of
events and circumstances leading to his relocation to the Municipality
of Alabel, Sarangani, appending Annexes "A", "B", "C", "D", "D-1", "E",
"F", "G" with sub-markings "G-1" and "G-2" and "H" his CTC No.
111`32214C dated September 5, 1997, which are the same as Annexes
"1", "2", "4", "5", "6-a", "3", "7", "9" with sub-markings "9-a" and "9-b"
except Annex "H". 5
On 6 May 1998, the COMELEC 2nd Division promulgated a resolution declaring DOMINO disqualified as
candidate for the position of representative of the lone district of Sarangani for lack of the one-year
residence requirement and likewise ordered the cancellation of his certificate of candidacy, on the basis
of the following findings:
What militates against respondent's claim that he has met the residency requirement
for the position sought is his own Voter's Registration Record No. 31326504 dated June
22, 1997 [Annex "B", Petition] and his address indicated as 24 Bonifacio St., Ayala
Heights, Old Balara, Quezon City. This evidence, standing alone, negates all his
protestations that he established residence at Barangay Poblacion, Alabel, Sarangani, as
early as January 1997. It is highly improbable, nay incredible, for respondent who
previously ran for the same position in the 3rd Legislative District of Quezon City during
the elections of 1995 to unwittingly forget the residency requirement for the office
sought.
Counting, therefore, from the day after June 22, 1997 when respondent registered at
Precinct No. 4400-A, up to and until the day of the elections on May 11, 1998,
respondent clearly lacks the one (1) year residency requirement provided for candidates
for Member of the House of Representatives under Section 6, Article VI of the
Constitution.
All told, petitioner's evidence conspire to attest to respondent's lack of residence in the
constituency where he seeks election and while it may be conceded that he is a
registered voter as contemplated under Section 12 of R.A. 8189, he lacks the

196

qualification to run for the position of Congressman for the Lone District of the Province
of Sarangani. 6
On 11 May 1998, the day of the election, the COMELEC issued Supplemental Omnibus Resolution No.
3046, ordering that the votes cast for DOMINO be counted but to suspend the proclamation if winning,
considering that the Resolution disqualifying him as candidate had not yet become final and executory. 7
The result of the election, per Statement of Votes certified by the Chairman of the Provincial Board of
Canvassers, 8 shows that DOMINO garnered the highest number of votes over his opponents for the
position of Congressman of the Province of Sarangani.
On 15 May 1998, DOMINO filed a motion for reconsideration of the Resolution dated 6 May 1998, which
was denied by the COMELEC en banc in its decision dated 29 May 1998. Hence, the present Petition for
Certiorari with prayer for Preliminary Mandatory Injunction alleging, in the main, that the COMELEC
committed grave abuse of discretion amounting to excess or lack of jurisdiction when it ruled that he did
not meet the one-year residence requirement.
On 14 July 1998, acting on DOMINO's Motion for Issuance of Temporary Restraining Order, the Court
directed the parties to maintain the status quo prevailing at the time of the filing of the instant petition.
9

On 15 September 1998, Lucille L. Chiongbian-Solon, (hereafter INTERVENOR), the candidate receiving

the second highest number of votes, was allowed by the Court to Intervene. 10 INTERVENOR in her
Motion for Leave to Intervene and in her Comment in Intervention 11 is asking the Court to uphold the
disqualification of petitioner Juan Domino and to proclaim her as the duly elected representative of
Sarangani in the 11 May 1998 elections.
Before us DOMINO raised the following issues for resolution, to wit:
a. Whether or not the judgment of the Metropolitan Trial Court of
Quezon City declaring petitioner as resident of Sarangani and not of
Quezon City is final, conclusive and binding upon the whole world,
including the Commission on Elections.
b. Whether or not petitioner herein has resided in the subject
congressional district for at least one (1) year immediately preceding
the May 11, 1998 elections; and
c. Whether or not respondent COMELEC has jurisdiction over the
petition a quo for the disqualification of petitioner. 12
The first issue.
The contention of DOMINO that the decision of the Metropolitan Trial Court of Quezon City in the
exclusion proceedings declaring him a resident of the Province of Sarangani and not of Quezon City is
final and conclusive upon the COMELEC cannot be sustained.

197

The COMELEC has jurisdiction as provided in Sec. 78, Art. IX of the Omnibus Election Code, over a
petition to deny due course to or cancel certificate of candidacy. In the exercise of the said jurisdiction,
it is within the competence of the COMELEC to determine whether false representation as to material
facts was made in the certificate of candidacy, that will include, among others, the residence of the
candidate.
The determination of the Metropolitan Trial Court of Quezon City in the exclusion proceedings as to the
right of DOMINO to be included or excluded from the list of voters in the precinct within its territorial
jurisdicton, does not preclude the COMELEC, in the determination of DOMINO's qualification as a
candidate, to pass upon the issue of compliance with the residency requirement.
The proceedings for the exclusion or inclusion of voters in the list of voters are summary in character.
Thus, the factual findings of the trial court and its resultant conclusions in the exclusion proceedings on
matters other than the right to vote in the precinct within its territorial jurisdiction are not conclusive
upon the COMELEC. Although the court in inclusion or exclusion proceedings may pass upon any
question necessary to decide the issue raised including the questions of citizenship and residence of the
challenged voter, the authority to order the inclusion in or exclusion from the list of voters necessarily
caries with it the power to inquire into and settle all matters essential to the exercise of said authority.
However, except for the right to remain in the list of voters or for being excluded therefrom for the
particular election in relation to which the proceedings had been held, a decision in an exclusion or
inclusion proceeding, even if final and unappealable, does not acquire the nature of res judicata. 13 In
this sense, it does not operate as a bar to any future action that a party may take concerning the subject
passed upon in the proceeding. 14 Thus, a decision in an exclusion proceeding would neither be
conclusive on the voter's political status, nor bar subsequent proceedings on his right to be registered as
a voter in any other election. 15
Thus, in Tan Cohon v. Election Registrar 16 we ruled that:
. . . It is made clear that even as it is here held that the order of the City Court in
question has become final, the same does not constitute res adjudicata as to any of the
matters therein contained. It is ridiculous to suppose that such an important and
intricate matter of citizenship may be passed upon and determined with finality in such
a summary and peremptory proceeding as that of inclusion and exclusion of persons in
the registry list of voters. Even if the City Court had granted appellant's petition for
inclusion in the permanent list of voters on the allegation that she is a Filipino citizen
qualified to vote, her alleged Filipino citizenship would still have been left open to
question.
Moreover, the Metropolitan Trial Court of Quezon City in its 18 January decision exceeded its
jurisdiction when it declared DOMINO a resident of the Province of Sarangani, approved and ordered
the transfer of his voter's registration from Precinct No. 4400-A of Barangay Old Balara, Quezon City to
precinct 14A1 of Barangay Poblacion, Alabel, Sarangani. It is not within the competence of the trial
court, in an exclusion proceedings, to declare the challenged voter a resident of another municipality.
The jurisdiction of the lower court over exclusion cases is limited only to determining the right of voter
to remain in the list of voters or to declare that the challenged voter is not qualified to vote in the
precint in which he is registered, specifying the ground of the voter's disqualification. The trial court has
no power to order the change or transfer of registration from one place of residence to another for it is
the function of the election Registration Board as provided under Section 12 of R.A. No. 8189. 17 The
198

only effect of the decision of the lower court excluding the challenged voter from the list of voters, is for
the Election Registration Board, upon receipt of the final decision, to remove the voter's registration
record from the corresponding book of voters, enter the order of exclusion therein, and thereafter place
the record in the inactive file. 18
Finally, the application of the rule on res judicata is unavailing. Identity of parties, subject matter and
cause of action are indispensable requirements for the application of said doctrine. Neither herein
Private Respondents nor INTERVENOR, is a party in the exclusion proceedings. The Petition for Exclusion
was filed by DOMINDO himself and his wife, praying that he and his wife be excluded from the Voter's
List on the ground of erroneous registration while the Petition to Deny Due Course to or Cancel
Certificate of Candidacy was filed by private respondents against DOMINO for alleged false
representation in his certificate of candidacy. For the decision to be a basis for the dismissal by reason of
res judicata, it is essential that there must be between the first and the second action identity of parties,
identity of subject matter and identity of causes of action. 19 In the present case, the aforesaid essential
requisites are not present. In the case of Nuval v. Guray, et al., 20 the Supreme Court in resolving a
similar issue ruled that:
The question to be solved under the first assignment of error is whether or not the
judgment rendered in the case of the petition for the exclusion of Norberto Guray's
name from the election list of Luna, is res judicata, so as to prevent the institution and
prosecution of an action in quo warranto, which is now before us.
The procedure prescribed by section 437 of the Administrative Code, as amended by Act
No. 3387, is of a summary character and the judgment rendered therein is not
appealable except when the petition is tried before the justice of the peace of the
capital or the circuit judge, in which case it may be appealed to the judge of first
instance, with whom said two lower judges have concurrent jurisdiction.
The petition for exclusion was presented by Gregorio Nuval in his dual capacity as
qualified voter of the municipality of Luna, and as a duly registered candidate for the
office of president of said municipality, against Norberto Guray as a registered voter in
the election list of said municipality. The present proceeding of quo warranto was
interposed by Gregorio Nuval in his capacity as a registered candidate voted for the
office of municipal president of Luna, against Norberto Guray, as an elected candidate
for the same office. Therefore, there is no identity of parties in the two cases, since it is
not enough that there be an identity of persons, but there must be an identity of
capacities in which said persons litigate. (Art. 1259 of the Civil Code; Bowler vs. Estate of
Alvarez, 23 Phil., 561; 34 Corpus Juris, p. 756, par. 1165)
In said case of the petition for the exclusion, the object of the litigation, or the litigious
matter was the exclusion of Norberto Guray as a voter from the election list of the
municipality of Luna, while in the present que warranto proceeding, the object of the
litigation, or the litigious matter is his exclusion or expulsion from the office to which he
has been elected. Neither does there exist, then, any identity in the object of the
litigation, or the litigious matter.
In said case of the petition for exclusion, the cause of action was that Norberto Guray
had not the six months' legal residence in the municipality of Luna to be a qualified
199

voter thereof, while in the present proceeding of quo warranto, the cause of action is
that Norberto Guray has not the one year's legal residence required for eligibility to the
office of municipal president of Luna. Neither does there exist therefore, identity of
causes of action.
In order that res judicata may exist the following are necessary: (a) identity of parties;
(b) identity of things; and (c) identity of issues (Aquino v. Director of Lands, 39 Phil. 850).
And as in the case of the petition for excluision and in the present quo warranto
proceeding, as there is no identity of parties, or of things or litigious matter, or of issues
or causes of action, there is no res judicata.
The Second Issue.
Was DOMINO a resident of the Province of Sarangani for at least one year immediately preceding the 11
May 1998 election as stated in his certificate of candidacy?
We hold in the negative.
It is doctrinally settled that the term "residence," as used in the law prescribing the qualifications for
suffrage and for elective office, means the same thing as "domicile," which imports not only an intention
to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of
such intention. 21 "Domicile" denotes a fixed permanent residence to which, whenever absent for
business, pleasure, or some other reasons, one intends to return. 22 "Domicile" is a question of intention
and circumstances. In the consideration of circumstances, three rules must be borne in mind, namely:
(1) that a man must have a residence or domicile somewhere; (2) when once established it remains until
a new one is acquired; and (3) a man can have but one residence or domicile at a time. 23
Records
show
that
petitioner's
domicile
of
origin
was
Candon,
Ilocos
Sur 24 and that sometime in 1991, he acquired a new domicile of choice at 24 Bonifacio St. Ayala Heights,
Old Balara, Quezon City, as shown by his certificate of candidacy for the position of representative of the
3rd District of Quezon City in the May 1995 election. Petitioner is now claiming that he had effectively
abandoned his "residence" in Quezon City and has established a new "domicile" of choice at the
Province of Sarangani.
A person's "domicile" once established is considered to continue and will not be deemed lost until a new
one is established. 25 To successfully effect a change of domicile one must demonstrate an actual
removal or an actual change of domicile; a bona fide intention of abandoning the former place of
residence and establishing a new one and definite acts which correspond with the
purpose. 26 In other words, there must basically be animus manendi coupled with animus non
revertendi. The purpose to remain in or at the domicile of choice must be for an indefinite period of
time; the change of residence must be voluntary; and the residence at the place chosen for the new
domicile must be actual. 27
It is the contention of petitioner that his actual physical presence in Alabel, Sarangani since December
1996 was sufficiently established by the lease of a house and lot located therein in January 1997 and by
the affidavits and certifications under oath of the residents of that place that they have seen petitioner
and his family residing in their locality.
200

While this may be so, actual and physical is not in itself sufficient to show that from said date he had
transferred his residence in that place. To establish a new domicile of choice, personal presence in the
place must be coupled with conduct indicative of that intention. While "residence" simply requires
bodily presence in a given place, "domicile" requires not only such bodily presence in that place but also
a declared and probable intent to make it one's fixed and permanent place of abode, one's home. 28
As a general rule, the principal elements of domicile, physical presence in the locality involved and
intention to adopt it as a domicile, must concur in order to establish a new domicile. No change of
domicile will result if either of these elements is absent. Intention to acquire a domicile without actual
residence in the locality does not result in acquisition of domicile, nor does the fact of physical presence
without intention. 29
The lease contract entered into sometime in January 1997, does not adequately support a change of
domicile. The lease contract may be indicative of DOMINO's intention to reside in Sarangani but it does
not engender the kind of permanency required to prove abandonment of one's original domicile. The
mere absence of individual from his permanent residence, no matter how long, without the intention to
abandon
it
does
not
result
in
loss
or
change
of
domicile. 30 Thus the date of the contract of lease of a house and lot located in the province of
Sarangani, i.e., 15 January 1997, cannot be used, in the absence of other circumstances, as the
reckoning period of the one-year residence requirement.
Further, Domino's lack of intention to abandon his residence in Quezon City is further strengthened by
his act of registering as voter in one of the precincts in Quezon City. While voting is not conclusive of
residence, it does give rise to a strong presumption of residence especially in this case where DOMINO
registered in his former barangay. Exercising the right of election franchise is a deliberate public
assertion of the fact of residence, and is said to have decided preponderance in a doubtful case upon
the place the elector claims as, or believes to be, his residence. 31 The fact that a party continously voted
in a particular locality is a strong factor in assisting to determine the status of his domicile. 32
His claim that his registration in Quezon City was erroneous and was caused by events over which he
had no control cannot be sustained. The general registration of voters for purposes of the May 1998
elections was scheduled for two (2) consecutive weekends, viz.: June 14, 15, 21, and 22. 33
While, Domino's intention to establish residence in Sarangani can be gleaned from the fact that be
bought the house he was renting on November 4, 1997, that he sought cancellation of his previous
registration in Qezon City on 22 October 1997, 34 and that he applied for transfer of registration from
Quezon City to Sarangani by reason of change of residence on 30 August 1997, 35 DOMINO still falls short
of the one year residency requirement under the Constitution.
In showing compliance with the residency requirement, both intent and actual presence in the district
one intends to represent must satisfy the length of time prescribed by the fundamental law. 36 Domino's
failure to do so rendered him ineligible and his election to office null and void. 37
The Third Issue.
DOMINO's contention that the COMELEC has no jurisdiction in the present petition is bereft of merit.

201

As previously mentioned, the COMELEC, under Sec. 78, Art. IX of the Omnibus Election Code, has
jurisdiction over a petition to deny due course to or cancel certificate of candidacy. Such jurisdiction
continues even after election, if for any reason no final judgment of disqualification is rendered before
the election, and the candidate facing disqualification is voted for and receives the highest number of
votes 38 and provided further that the winning candidate has not been proclaimed or has taken his oath
of office. 39
It has been repeatedly held in a number of cases, that the House of Representatives Electoral Tribunal's
sole and exclusive jurisdiction over all contests relating to the election, returns and qualifications of
members of Congress as provided under Section 17 of Article VI of the Constitution begins only after a
candidate has become a member of the House of Representatives. 40
The fact of obtaining the highest number of votes in an election does not automatically vest the position
in the winning candidate. 41 A candidate must be proclaimed and must have taken his oath of office
before he can be considered a member of the House of Representatives.
In the instant case, DOMINO was not proclaimed as Congressman-elect of the Lone Congressional
District of the Province of Sarangani by reason of a Supplemental Omnibus Resolution issued by the
COMELEC on the day of the election ordering the suspension of DOMINO's proclamation should he
obtain the winning number of votes. This resolution was issued by the COMELEC in view of the nonfinality of its 6 May 1998 resolution disqualifying DOMINO as candidate for the position.
Cosidering that DOMINO has not been proclaimed as Congressman-elect in the Lone Congressional
District of the Province of Sarangani he cannot be deemed a member of the House of Representatives.
Hence, it is the COMELEC and not the Electoral Tribunal which has jurisdiction over the issue of his
ineligibility as a candidate. 42
Issue raised by INTERVENOR.
After finding that DOMINO is disqualified as candidate for the position of representative of the province
of Sarangani, may INTERVENOR, as the candidate who received the next highest number of votes, be
proclaimed as the winning candidate?
It is now settled doctrine that the candidate who obtains the second highest number of votes may not
be proclaimed winner in case the winning candidate is disqualified. 43 In every election, the people's
choice is the paramount consideration and their expressed will must, at all times, be given effect. When
the majority speaks and elects into office a candidate by giving the highest number of votes cast in the
election for that office, no one can be declared elected in his place. 44
It would be extremely repugnant to the basic concept of the constitutionally guaranteed right to
suffrage if a candidate who has not acquired the majority or plurality of votes is proclaimed a winner
and imposed as the representative of a constituency, the majority of which have positively declared
through their ballots that they do not choose him. 45 To simplistically assume that the second placer
would have received the other votes would be to substitute our judgment for the mind of the voters. He
could not be considered the first among qualified candidates because in a field which excludes the
qualified candidate, the conditions would have substantially changed. 46

202

Sound policy dictates that public elective offices are filled by those who have received the highest
number of votes cast in the election for that office, and it is fundamental idea in all republican forms of
government that no one can be declared elected and no measure can be declared carried unless he or it
receives a majority or plurality of the legal votes cast in the election. 47
The effect of a decision declaring a person ineligible to hold an office is only that the election fails
entirely, that the wreath of victory cannot be transferred 48 from the disqualified winner to the
repudiated loser because the law then as now only authorizes a declaration of election in favor of the
person who has obtained a plurality of votes 49 and does not entitle the candidate receiving the next
highest number of votes to be declared elected. In such case, the electors have failed to make a choice
and the election is a nullity. 50 To allow the defeated and repudiated candidate to take over the elective
position despite his rejection by the electorate is to disenfranchise the electorate without any fault on
their part and to undermine the importance and meaning of democracy and the people's right to elect
officials of their choice. 51
INTERVENOR's plea that the votes cast in favor of DOMINO be considered stray votes cannot be
sustained. INTERVENOR's reliance on the opinion made in the Labo, Jr. case 52 to wit: if the electorate,
fully aware in fact and in law of a candidate's disqualification so as to bring such awareness within the
realm of notoriety, would nevertheless cast their votes in favor of the ineligible candidate, the
electorate may be said to have waived the validity and efficacy of their votes by notoriously misapplying
their franchise or throwing away their votes, in which case, the eligible candidate obtaining the next
higher number of votes may be deemed elected, is misplaced.
Contrary to the claim of INTERVENOR, petitioner was not notoriously known by the public as an
ineligible candidate. Although the resolution declaring him ineligible as candidate was rendered before
the election, however, the same is not yet final and executory. In fact, it was no less than the COMELEC
in its Supplemental Omnibus Resolution No. 3046 that allowed DOMINO to be voted for the office and
ordered that the votes cast for him be counted as the Resolution declaring him ineligible has not yet
attained finality. Thus the votes cast for DOMINO are presumed to have been cast in the sincere belief
that he was a qualified candidate, without any intention to misapply their franchise. Thus, said votes can
not be treated as stray, void, or meaningless. 53
WHEREFORE, the instant petition is DISMISSED. The resolution dated 6 May 1998 of the COMELEC 2nd
Division and the decision dated 29 May 1998 of the COMELEC En Banc, are hereby AFFIRMED.
SO ORDERED.

203

G.R. No. 128314

May 29, 2002

RODOLFO
V.
vs.
COURT OF APPEALS and PERICO V. JAO, respondents.

JAO,

petitioner,

YNARES-SANTIAGO, J.:
Rodolfo and Perico Jao were the only sons of the spouses Ignacio Jao Tayag and Andrea V. Jao, who died
intestate in 1988 and 1989, respectively. The decedents left real estate, cash, shares of stock and other
personal properties.
On April 17, 1991, Perico instituted a petition for issuance of letters of administration before the
Regional Trial Court of Quezon City, Branch 99, over the estate of his parents, docketed as Special
Proceedings No. Q-91-8507.1 Pending the appointment of a regular administrator, Perico moved that he
be appointed as special administrator. He alleged that his brother, Rodolfo, was gradually dissipating the
assets of the estate. More particularly, Rodolfo was receiving rentals from real properties without
rendering any accounting, and forcibly opening vaults belonging to their deceased parents and disposing
of the cash and valuables therein.
Rodolfo moved for the dismissal of the petition on the ground of improper venue.2 He argued that the
deceased spouses did not reside in Quezon City either during their lifetime or at the time of their
deaths. The decedents actual residence was in Angeles City, Pampanga, where his late mother used to
run and operate a bakery. As the health of his parents deteriorated due to old age, they stayed in
Rodolfos residence at 61 Scout Gandia Street, Quezon City, solely for the purpose of obtaining medical
treatment and hospitalization. Rodolfo submitted documentary evidence previously executed by the
decedents, consisting of income tax returns, voters affidavits, statements of assets and liabilities, real
estate tax payments, motor vehicle registration and passports, all indicating that their permanent
residence was in Angeles City, Pampanga.1wphi1.nt
In his opposition,3 Perico countered that their deceased parents actually resided in Rodolfos house in
Quezon City at the time of their deaths. As a matter of fact, it was conclusively declared in their death
certificates that their last residence before they died was at 61 Scout Gandia Street, Quezon City.4
Rodolfo himself even supplied the entry appearing on the death certificate of their mother, Andrea, and
affixed his own signature on the said document.
Rodolfo filed a rejoinder, stating that he gave the information regarding the decedents residence on the
death certificates in good faith and through honest mistake. He gave his residence only as reference,
considering that their parents were treated in their late years at the Medical City General Hospital in
Mandaluyong, Metro Manila. Their stay in his house was merely transitory, in the same way that they
were taken at different times for the same purpose to Pericos residence at Legaspi Towers in Roxas
Boulevard. The death certificates could not, therefore, be deemed conclusive evidence of the
decedents residence in light of the other documents showing otherwise.5

204

The court required the parties to submit their respective nominees for the position.6 Both failed to
comply, whereupon the trial court ordered that the petition be archived.7
Subsequently, Perico moved that the intestate proceedings be revived.8 After the parties submitted the
names of their respective nominees, the trial court designated Justice Carlos L. Sundiam as special
administrator of the estate of Ignacio Jao Tayag and Andrea Jao.9
On April 6, 1994, the motion to dismiss filed by petitioner Rodolfo was denied, to wit:
A mere perusal of the death certificates of the spouses issued separately in 1988 and 1989,
respectively, confirm the fact that Quezon City was the last place of residence of the decedents.
Surprisingly, the entries appearing on the death certificate of Andrea V. Jao were supplied by
movant, Rodolfo V. Jao, whose signature appears in said document. Movant, therefore, cannot
disown his own representation by taking an inconsistent position other than his own admission.
xxx xxx xxx.
WHEREFORE, in view of the foregoing consideration, this court DENIES for lack of merit
movants motion to dismiss.
SO ORDERED.10
Rodolfo filed a petition for certiorari with the Court of Appeals, which was docketed as CA-G.R. SP No.
35908. On December 11, 1996, the Court of Appeals rendered the assailed decision, the dispositive
portion of which reads:
WHEREFORE, no error, much less any grave abuse of discretion of the court a quo having been
shown, the petition for certiorari is hereby DISMISSED. The questioned order of the respondent
Judge is affirmed in toto.
SO ORDERED.11
Rodolfos motion for reconsideration was denied by the Court of Appeals in the assailed resolution
dated February 17, 1997.12 Hence, this petition for review, anchored on the following grounds:
I
RESPONDENT COURT HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD
WITH THE LAW AND IS DIRECTLY CONTRADICTORY TO THE APPLICABLE DECISION ALREADY
RENDERED BY THIS HONORABLE COURT.
II
RESPONDENT COURT ERRED IN DISREGARDING THE RULING OF THIS HONORABLE COURT IN THE
CASE OF EUSEBIO VS. EUSEBIO, 100 PHILS. 593, WHICH CLEARLY INTERPRETED WHAT IS MEANT
BY RESIDENCE IN SEC. 1 OF RULE 73 OF THE RULES OF COURT.
III
205

RESPONDENT COURT ERRED IN HOLDING THAT PHYSICAL PRESENCE IN A PLACE AT THE TIME OF
DEATH IS DETERMINATIVE OF DECEDENTS RESIDENCE RATHER THAN THE INTENTION OF THE
DECEDENTS TO ESTABLISH THEIR PERMANENT RESIDENCE IN ANOTHER PLACE.
IV
RESPONDENT COURT ERRED IN APPLYING BY ANALOGY THE RESIDENCE CONTEMPLATED IN SEC.
2 OF RULE 4 FOR THE PURPOSE OF SERVING SUMMONS TO A DEFENDANT IN A PERSONAL
ACTION TO THE RESIDENCE CONTEMPLATED IN SEC. 1 OF RULE 73 FOR THE PURPOSE OF
DETERMINING VENUE IN THE SETTLEMENT OF THE ESTATE OF A DECEASED.
V
RESPONDENT COURT ERRED IN GIVING MORE WEIGHT TO THE ENTRY OF PETITIONER AND
PRIVATE RESPONDENT IN THE RESPECTIVE DEATH CERTIFICATES OF THE DECEDENTS RATHER
THAN THE OVERWHELMING EVIDENCE SHOWING THE CLEAR INTENTION OF THE DECEDENTS TO
ESTABLISH THEIR PERMANENT RESIDENCE IN ANGELES CITY.
VI
RESPONDENT COURT ERRED IN APPLYING THE PRINCIPLE OF ESTOPPEL AS AGAINST PETITIONER
WHICH CAN NOT BE MORE PERSUASIVE THAN THE CLEAR INTENTION OF THE DECEDENTS
THEMSELVES TO ESTABLISH PERMANENT RESIDENCE IN ANGELES CITY.
VII
RESPONDENT COURT ERRED IN DISMISSING THE PETITION FOR CERTIORARI DESPITE THE CLEAR
ABUSE OF DISCRETION ON THE PART OF THE TRIAL COURT IN INSISTING TO TAKE COGNIZANCE
OF SP. PROCEEDING NO. Q-91-8507.13
The main issue before us is: where should the settlement proceedings be had --- in Pampanga, where
the decedents had their permanent residence, or in Quezon City, where they actually stayed before
their demise?
Rule 73, Section 1 of the Rules of Court states:
Where estate of deceased persons be settled. If the decedent is an inhabitant of the Philippines
at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of
administration granted, and his estate settled, in the Court of First Instance in the province in
which he resides at the time of his death, and if he is an inhabitant of a foreign country, the
Court of First Instance of any province in which he had estate. The court first taking cognizance
of the settlement of the estate of a decedent shall exercise jurisdiction to the exclusion of all
other courts. The jurisdiction assumed by a court, so far as it depends on the place of residence
of the decedent, or of the location of his estate, shall not be contested in a suit or proceeding,
except in an appeal from that court, in the original case, or when the want of jurisdiction
appears on the record. (underscoring ours)

206

Clearly, the estate of an inhabitant of the Philippines shall be settled or letters of administration granted
in the proper court located in the province where the decedent resides at the time of his death.
Petitioner Rodolfo invokes our ruling in the case of Eusebio v. Eusebio, et al.,14 where we held that the
situs of settlement proceedings shall be the place where the decedent had his permanent residence or
domicile at the time of death. In determining residence at the time of death, the following factors must
be considered, namely, the decedent had: (a) capacity to choose and freedom of choice; (b) physical
presence at the place chosen; and (c) intention to stay therein permanently.15 While it appears that the
decedents in this case chose to be physically present in Quezon City for medical convenience, petitioner
avers that they never adopted Quezon City as their permanent residence.1wphi1.nt
The contention lacks merit.
The facts in Eusebio were different from those in the case at bar. The decedent therein, Andres Eusebio,
passed away while in the process of transferring his personal belongings to a house in Quezon City. He
was then suffering from a heart ailment and was advised by his doctor/son to purchase a Quezon City
residence, which was nearer to his doctor. While he was able to acquire a house in Quezon City, Eusebio
died even before he could move therein. In said case, we ruled that Eusebio retained his domicile --- and
hence, residence --- in San Fernando, Pampanga. It cannot be said that Eusebio changed his residence
because, strictly speaking, his physical presence in Quezon City was just temporary.
In the case at bar, there is substantial proof that the decedents have transferred to petitioners Quezon
City residence. Petitioner failed to sufficiently refute respondents assertion that their elderly parents
stayed in his house for some three to four years before they died in the late 1980s.
Furthermore, the decedents respective death certificates state that they were both residents of Quezon
City at the time of their demise. Significantly, it was petitioner himself who filled up his late mothers
death certificate. To our mind, this unqualifiedly shows that at that time, at least, petitioner recognized
his deceased mothers residence to be Quezon City. Moreover, petitioner failed to contest the entry in
Ignacios death certificate, accomplished a year earlier by respondent.
The recitals in the death certificates, which are admissible in evidence, were thus properly considered
and presumed to be correct by the court a quo. We agree with the appellate courts observation that
since the death certificates were accomplished even before petitioner and respondent quarreled over
their inheritance, they may be relied upon to reflect the true situation at the time of their parents
death.
The death certificates thus prevailed as proofs of the decedents residence at the time of death, over
the numerous documentary evidence presented by petitioner. To be sure, the documents presented by
petitioner pertained not to residence at the time of death, as required by the Rules of Court, but to
permanent residence or domicile. In Garcia-Fule v. Court of Appeals,16 we held:
xxx xxx xxx the term "resides" connotes ex vi termini "actual residence" as distinguished from
"legal residence or domicile." This term "resides", like the terms "residing" and "residence", is
elastic and should be interpreted in the light of the object or purpose of the statute or rule in
which it is employed. In the application of venue statutes and rules Section 1, Rule 73 of the
Revised Rules of Court is of such nature residence rather than domicile is the significant factor.
207

Even where the statute uses the word "domicile" still it is construed as meaning residence and
not domicile in the technical sense. Some cases make a distinction between the terms
"residence" and "domicile" but as generally used in statutes fixing venue, the terms are
synonymous, and convey the same meaning as the term "inhabitant." In other words, "resides"
should be viewed or understood in its popular sense, meaning, the personal, actual or physical
habitation of a person, actual residence or place of abode. It signifies physical presence in a
place and actual stay thereat. In this popular sense, the term means merely residence, that is,
personal residence, not legal residence or domicile. Residence simply requires bodily presence
as an inhabitant in a given place, while domicile requires bodily presence in that place and also
an intention to make it ones domicile. No particular length of time of residence is required
though; however, the residence must be more than temporary.17
Both the settlement court and the Court of Appeals found that the decedents have been living with
petitioner at the time of their deaths and for some time prior thereto. We find this conclusion to be
substantiated by the evidence on record. A close perusal of the challenged decision shows that, contrary
to petitioners assertion, the court below considered not only the decedents physical presence in
Quezon City, but also other factors indicating that the decedents stay therein was more than
temporary. In the absence of any substantial showing that the lower courts factual findings stemmed
from an erroneous apprehension of the evidence presented, the same must be held to be conclusive
and binding upon this Court.
Petitioner strains to differentiate between the venue provisions found in Rule 4, Section 2, 18 on ordinary
civil actions, and Rule 73, Section 1, which applies specifically to settlement proceedings. He argues that
while venue in the former understandably refers to actual physical residence for the purpose of serving
summons, it is the permanent residence of the decedent which is significant in Rule 73, Section 1.
Petitioner insists that venue for the settlement of estates can only refer to permanent residence or
domicile because it is the place where the records of the properties are kept and where most of the
decedents properties are located.
Petitioners argument fails to persuade.
It does not necessarily follow that the records of a persons properties are kept in the place where he
permanently resides. Neither can it be presumed that a persons properties can be found mostly in the
place where he establishes his domicile. It may be that he has his domicile in a place different from that
where he keeps his records, or where he maintains extensive personal and business interests. No
generalizations can thus be formulated on the matter, as the question of where to keep records or
retain properties is entirely dependent upon an individuals choice and peculiarities.
At any rate, petitioner is obviously splitting straws when he differentiates between venue in ordinary
civil actions and venue in special proceedings. In Raymond v. Court of Appeals19 and Bejer v. Court of
Appeals,20 we ruled that venue for ordinary civil actions and that for special proceedings have one and
the same meaning. As thus defined, "residence", in the context of venue provisions, means nothing
more than a persons actual residence or place of abode, provided he resides therein with continuity
and consistency.21 All told, the lower court and the Court of Appeals correctly held that venue for the
settlement of the decedents intestate estate was properly laid in the Quezon City court.
WHEREFORE, in view of the foregoing, the petition is DENIED, and the decision of the Court of Appeals
in CA-G.R. SP No. 35908 is AFFIRMED. SO ORDERED.
208

G.R. No. 127768 November 19, 1999

UNITED
vs.
WILLIE J. UY, respondent.

AIRLINES,

petitioner,

UNITED AIRLINES assails in this petition for review on certiorari under Rule 45 the 29 August 1995
Decision of the Court of Appeals in CA-G.R. CV No. 39761 which reversed the 7 August 1992 order issued
by the trial court in Civil Case No. Q-92-12410 1 granting petitioner's motion to dismiss based on
prescription of cause of action. The issues sought to be resolved are whether the notice of appeal to the
appellate court was timely filed, and whether Art. 29 of the Warsaw Convention 2 should apply to the
case at bar.
On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United Airlines Flight No. 819 for
the San Francisco Manila route, checked in together with his luggage one piece of which was found to
be overweight at the airline counter. To his utter humiliation, an employee of petitioner rebuked him
saying that he should have known the maximum weight allowance to be 70 kgs. per bag and that he
should have packed his things accordingly. Then, in a loud voice in front of the milling crowd, she told
respondent to repack his things and transfer some of them from the overweight luggage to the lighter
ones. Not wishing to create further scene, respondent acceded only to find his luggage still overweight.
The airline then billed him overweight charges which he offered to pay with a miscellaneous charge
order (MCO) or an airline pre-paid credit. However, the airline's employee, and later its airport
supervisor, adamantly refused to honor the MCO pointing out that there were conflicting figures listed
on it. Despite the explanation from respondent that the last figure written on the MCO represented his
balance, petitioner's employees did not accommodate him. Faced with the prospect of leaving without
his luggage, respondent paid the overweight charges with his American Express credit card.
Respondent's troubles did not end there. Upon arrival in Manila, he discovered that one of his bags had
been slashed and its contents stolen. He particularized his losses to be around US $5,310.00. In a letter
dated 16 October 1989 respondent bewailed the insult, embarrassment and humiliating treatment he
suffered in the hands of United Airlines employees, notified petitioner of his loss and requested
reimbursement thereof. Petitioner United Airlines, through Central Baggage Specialist Joan Kroll, did not
refute any of respondent's allegations and mailed a check representing the payment of his loss based on
the maximum liability of US $9.70 per pound. Respondent, thinking the amount to be grossly inadequate
to compensate him for his losses, as well as for the indignities he was subjected to, sent two (2) more
letters to petitioner airline, one dated 4 January 1990 through a certain Atty. Pesigan, and another
dated 28 October 1991 through Atty. Ramon U. Ampil demanding an out-of-court settlement of
P1,000,000.00. Petitioner United Airlines did not accede to his demands.
Consequently, on 9 June 1992 respondent filed a complaint for damages against United Airlines alleging
that he was a person of good station, sitting in the board of directors of several top 500 corporations
and holding senior executive positions for such similar firms; 3 that petitioner airline accorded him ill and
shabby treatment to his extreme embarrassment and humiliation; and, as such he should be paid moral
damages of at least P1,000,000.00, exemplary damages of at least P500,000.00, plus attorney's fees of
at least P50,000.00. Similarly, he alleged that the damage to his luggage and its stolen contents
amounted to around $5,310.00, and requested reimbursement therefor.
209

United Airlines moved to dismiss the complaint on the ground that respondent's cause of action had
prescribed, invoking Art. 29 of the Warsaw Convention which provides
Art. 29 (1) The right to damages shall be extinguished if an action is not brought within
two (2) years, reckoned from the date of arrival at the destination, or from the date on
which the aircraft ought to have arrived, or from the date on which the transportation
stopped.
(2) The method of calculating the period of limitation shall be determined by the law of
the court to which the case is submitted.
Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be reconciled with par.
(2) thereof which states that "the method of calculating the period of limitation shall be determined by
the law of the court to which the case is submitted." Interpreting thus, respondent noted that according
to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when
there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment
of the debt by the debtor." 4 Since he made several demands upon United Airlines: first, through his
personal letter dated 16 October 1989; second, through a letter dated 4 January 1990 from Atty.
Pesigan; and, finally, through a letter dated 28 October 1991 written for him by Atty. Ampil, the two (2)year period of limitation had not yet been exhausted.
On 2 August 1992 the trial court ordered the dismissal of the action holding that the language of Art. 29
is clear that the action must be brought within two (2) years from the date of arrival at the destination.
It held that although the second paragraph of Art. 29 speaks of deference to the law of the local court in
"calculating the period of limitation," the same does not refer to the local forum's rules in interrupting
the prescriptive period but only to the rules of determining the time in which the action may be deemed
commenced, and within our jurisdiction the action shall be deemed "brought" or commenced by the
filing of a complaint. Hence, the trial court concluded that Art. 29 excludes the application of our
interruption rules.
Respondent received a copy of the dismissal order on 17 August 1992. On 31 August 1992, or fourteen
(14) days later, he moved for the reconsideration of the trial court's order. The trial court denied the
motion and respondent received copy of the denial order on 28 September 1992. Two (2) days later, on
1 October 1992 respondent filed his notice of appeal.
United Airlines once again moved for the dismissal of the case this time pointing out that respondent's
fifteen (15)-day period to appeal had already elapsed. Petitioner argued that having used fourteen (14)
days of the reglementary period for appeal, respondent Uy had only one (1) day remaining to perfect his
appeal, and since he filed his notice of appeal two (2) days later, he failed to meet the deadline.
In its questioned Decision dated 29 August 1995 5 the appellate court gave due course to the appeal
holding that respondent's delay of two (2) days in filing his notice of appeal did not hinder it from
reviewing the appealed order of dismissal since jurisprudence dictates that an appeal may be
entertained despite procedural lapses anchored on equity and justice.
On the applicability of the Warsaw Convention, the appellate court ruled that the Warsaw Convention
did not preclude the operation of the Civil Code and other pertinent laws. Respondent's failure to file his
210

complaint within the two (2)-year limitation provided in the Warsaw Convention did not bar his action
since he could still hold petitioner liable for breach of other provisions of the Civil Code which prescribe
a different period or procedure for instituting an action. Further, under Philippine laws, prescription of
actions is interrupted where, among others, there is a written extrajudicial demand by the creditors, and
since respondent Uy sent several demand letters to petitioner United Airlines, the running of the two
(2)-year prescriptive period was in effect suspended. Hence, the appellate court ruled that respondent's
cause of action had not yet prescribed and ordered the records remanded to the Quezon City trial court
for further proceedings.
Petitioner now contends that the appellate court erred in assuming jurisdiction over respondent's
appeal since it is clear that the notice of appeal was filed out of time. It argues that the courts relax the
stringent rule on perfection of appeals only when there are extraordinary circumstances, e.g., when the
Republic stands to lose hundreds of hectares of land already titled and used for educational purposes;
when the counsel of record was already dead; and wherein appellant was the owner of the trademark
for more than thirty (30) years, and the circumstances of the present case do not compare to the above
exceptional cases. 6
Sec. 1 of Rule 45 of the 1997 Rules of Civil Procedure provides that "a party may appeal by certiorari,
from a judgment of the Court of Appeals, by filing with the Supreme Court a petition for certiorari,
within fifteen (15) days from notice of judgment or of the denial of his motion for reconsideration filed
in due time . . . ." This Rule however should not be interpreted as "to sacrifice the substantial right of the
appellant in the sophisticated altar of technicalities with impairment of the sacred principles of justice."
7
It should be borne in mind that the real purpose behind the limitation of the period of appeal is to
forestall or avoid an unreasonable delay in the administration of justice. Thus, we have ruled that delay
in the filing of a notice of appeal does not justify the dismissal of the appeal where the circumstances of
the case show that there is no intent to delay the administration of justice on the part of appellant's
counsel, 8 or when there are no substantial rights affected, 9 or when appellant's counsel committed a
mistake in the computation of the period of appeal, an error not attributable to negligence or bad faith.
10

In the instant case, respondent filed his notice of appeal two (2) days later than the prescribed period.
Although his counsel failed to give the reason for the delay, we are inclined to give due course to his
appeal due to the unique and peculiar facts of the case and the serious question of law it poses. In the
now almost trite but still good principle, technicality, when it deserts its proper office as an aid to justice
and becomes its great hindrance and chief enemy, deserves scant consideration. 11
Petitioner likewise contends that the appellate court erred in ruling that respondent's cause of action
has not prescribed since delegates to the Warsaw Convention clearly intended the two (2)-year
limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various
tolling provisions of the laws of the forum. Petitioner argues that in construing the second paragraph of
Art. 29 private respondent cannot read into it Philippine rules on interruption of prescriptive periods
and state that his extrajudicial demand has interrupted the period of prescription. 12 American
jurisprudence has declared that "Art. 29 (2) was not intended to permit forums to consider local
limitation tolling provisions but only to let local law determine whether an action had been commenced
within the two-year period, since the method of commencing a suit varies from country to country." 13
Within our jurisdiction we have held that the Warsaw Convention can be applied, or ignored, depending
on the peculiar facts presented by each case. 14 Thus, we have ruled that the Convention's provisions do
211

not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers
and employees, or for some particular or exceptional type of damage. 15 Neither may the Convention be
invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and
preclude recovery therefor beyond the limits set by said Convention. 16 Likewise, we have held that the
Convention does not preclude the operation of the Civil Code and other pertinent laws. 17 It does not
regulate, much less exempt, the carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's
employees is found or established. 18
Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby and
humiliating treatment he received from petitioner's employees at the San Francisco Airport which
caused him extreme embarrassment and social humiliation; and, (b) the slashing of his luggage and the
loss of his personal effects amounting to US $5,310.00.
While his second cause of action an action for damages arising from theft or damage to property or
goods is well within the bounds of the Warsaw Convention, his first cause of action an action for
damages arising from the misconduct of the airline employees and the violation of respondent's rights
as passenger clearly is not.
Consequently, insofar as the first cause of action is concerned, respondent's failure to file his complaint
within the two (2)-year limitation of the Warsaw Convention does not bar his action since petitioner
airline may still be held liable for breach of other provisions of the Civil Code which prescribe a different
period or procedure for instituting the action, specifically, Art. 1146 thereof which prescribes four (4)
years for filing an action based on torts.
As for respondent's second cause of action, indeed the travaux preparatories of the Warsaw Convention
reveal that the delegates thereto intended the two (2)-year limitation incorporated in Art. 29 as an
absolute bar to suit and not to be made subject to the various tolling provisions of the laws of the
forum. This therefore forecloses the application of our own rules on interruption of prescriptive periods.
Article 29, par. (2), was intended only to let local laws determine whether an action had been
commenced within the two (2)-year period, and within our jurisdiction an action shall be deemed
commenced upon the filing of a complaint. Since it is indisputable that respondent filed the present
action beyond the two (2)-year time frame his second cause of action must be barred. Nonetheless, it
cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even
employed the services of two (2) lawyers to follow up his claims, and that the filing of the action itself
was delayed because of petitioner's evasion.
In this regard, Philippine Airlines, Inc. v. Court of Appeals 19 is instructive. In this case of PAL, private
respondent filed an action for damages against petitioner airline for the breakage of the front glass of
the microwave oven which she shipped under PAL Air Waybill No. 0-79-1013008-3. Petitioner averred
that, the action having been filed seven (7) months after her arrival at her port of destination, she failed
to comply with par. 12, subpar. (a) (1), of the Air Waybill which expressly provided that the person
entitled to delivery must make a complaint to the carrier in writing in case of visible damage to the
goods, immediately after discovery of the damage and at the latest within 14 days from receipt of the
goods. Despite non-compliance therewith the Court held that by private respondent's immediate
submission of a formal claim to petitioner, which however was not immediately entertained as it was
referred from one employee to another, she was deemed to have substantially complied with the
requirement. The Court noted that with private respondent's own zealous efforts in pursuing her claim it
212

was clearly not her fault that the letter of demand for damages could only be filed, after months of
exasperating follow-up of the claim, on 13 August 1990, and that if there was any failure at all to file the
formal claim within the prescriptive period contemplated in the Air Waybill, this was largely because of
the carrier's own doing, the consequences of which could not in all fairness be attributed to private
respondent.
In the same vein must we rule upon the circumstances brought before us. Verily, respondent filed his
complaint more than two (2) years later, beyond the period of limitation prescribed by the Warsaw
Convention for filing a claim for damages. However, it is obvious that respondent was forestalled from
immediately filing an action because petitioner airline gave him the runaround, answering his letters but
not giving in to his demands. True, respondent should have already filed an action at the first instance
when his claims were denied by petitioner but the same could only be due to his desire to make an outof-court settlement for which he cannot be faulted. Hence, despite the express mandate of Art. 29 of
the Warsaw Convention that an action for damages should be filed within two (2) years from the arrival
at the place of destination, such rule shall not be applied in the instant case because of the delaying
tactics employed by petitioner airline itself. Thus, private respondent's second cause of action cannot be
considered as time-barred under Art. 29 of the Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of Appeals reversing and setting aside the appealed
order of the trial court granting the motion to dismiss the complaint, as well as its Resolution denying
reconsideration, is AFFIRMED. Let the records of the case be remanded to the court of origin for further
proceedings taking its bearings from this disquisition.
SO ORDERED.

213

G.R. No. 104235 November 18, 1993

SPOUSES
CESAR
&
SUTHIRA
ZALAMEA
and
LIANA
ZALAMEA,
vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.

petitioners,

Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007 departing
from New York to Los Angeles on June 6, 1984 despite possession of confirmed tickets, petitioners filed
an action for damages before the Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating
petitioner's position, the trial court categorically ruled that respondent TransWorld Airlines (TWA)
breached its contract of carriage with petitioners and that said breach was "characterized by bad faith."
On appeal, however, the appellate court found that while there was a breach of contract on respondent
TWA's part, there was neither fraud nor bad faith because under the Code of Federal Regulations by the
Civil Aeronautics Board of the United States of America it is allowed to overbook flights.
The factual backdrop of the case is as follows:
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea,
purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a
flight to New York to Los Angeles on June 6, 1984. The tickets of petitioners-spouses were purchased at
a discount of 75% while that of their daughter was a full fare ticket. All three tickets represented
confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their
reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an
hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the number
of passengers who had checked in before them had already taken all the seats available on the flight.
Liana Zalamea appeared as the No. 13 on the wait-list while the two other Zalameas were listed as "No.
34, showing a party of two." Out of the 42 names on the wait list, the first 22 names were eventually
allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the
other hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding fullfare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who was holding
the full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who
presented the discounted tickets were denied boarding. According to Mr. Zalamea, it was only later
when he discovered the he was holding his daughter's full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated
because it was also fully booked. Thus, they were constrained to book in another flight and purchased
two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of contract
of air carriage before the Regional Trial Court of Makati, Metro Manila, Branch 145. As aforesaid, the
lower court ruled in favor of petitioners in its decision 1 dated January 9, 1989 the dispositive portion of
which states as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the
following amounts:
214

(1) US $918.00, or its peso equivalent at the time of payment representing the price of
the tickets bought by Suthira and Liana Zalamea from American Airlines, to enable them
to fly to Los Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment, representing the price of
Suthira Zalamea's ticket for TWA Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50,
Philippine Currency, representing the price of Liana Zalamea's ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as moral
damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for
attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit
predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it is a
matter of record that overbooking of flights is a common and accepted practice of airlines in the United
States and is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board,
no fraud nor bad faith could be imputed on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight was
overbooked and that even a person with a confirmed reservation may be denied accommodation on an
overbooked flight, nevertheless it ruled that such omission or negligence cannot under the
circumstances be considered to be so gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with fortyeight (48) other passengers where full-fare first class tickets were given priority over discounted tickets.
The dispositive portion of the decision of respondent Court of Appeals 3 dated October 25, 1991 states
as follows:
WHEREFORE, in view of all the foregoing, the decision under review is hereby MODIFIED
in that the award of moral and exemplary damages to the plaintiffs is eliminated, and
the defendant-appellant is hereby ordered to pay the plaintiff the following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment, representing the price
of Suthira Zalamea's ticket for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time of the payment, representing the price
of Cesar Zalamea's ticket for TWA Flight 007;

215

(3) P50,000.00 as and for attorney's fees.

(4) The costs of suit.
SO ORDERED. 4
Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and
alleged the following errors committed by the respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF
RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND PAYMENT
FOR
THE
AMERICAN
AIRLINES
TICKETS. 5
That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to
board their flight for Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law or
regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove
themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and
proved. 6 Written law may be evidenced by an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his deputy, and accompanied with a certificate that
such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul
general, consul, vice-consul, or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. 7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in
her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics
Board allows overbooking. Aside from said statement, no official publication of said code was presented
as evidence. Thus, respondent court's finding that overbooking is specifically allowed by the US Code of
Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at
bar in accordance with the principle of lex loci contractus which require that the law of the place where
the airline ticket was issued should be applied by the court where the passengers are residents and
nationals of the forum and the ticket is issued in such State by the defendant airline. 8 Since the tickets
were sold and issued in the Philippines, the applicable law in this case would be Philippine law.

216

Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers
concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, 9 where passengers
with confirmed bookings were refused carriage on the last minute, this Court held that when an airline
issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage
arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he
does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had
deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all
of them would show up for the check in. For the indignity and inconvenience of being refused a
confirmed seat on the last minute, said passenger is entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private respondent was not allowed to
board the plane because her seat had already been given to another passenger even before the
allowable period for passengers to check in had lapsed despite the fact that she had a confirmed ticket
and she had arrived on time, this Court held that petitioner airline acted in bad faith in violating private
respondent's rights under their contract of carriage and is therefore liable for the injuries she has
sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage amounts to
bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate Court, 11 where a would-be
passenger had the necessary ticket, baggage claim and clearance from immigration all clearly and
unmistakably showing that she was, in fact, included in the passenger manifest of said flight, and yet
was denied accommodation in said flight, this Court did not hesitate to affirm the lower court's finding
awarding her damages.
A contract to transport passengers is quite different in kind and degree from any other contractual
relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc. 12 This is so, for a contract of
carriage generates a relation attended with public duty a duty to provide public service and
convenience to its passengers which must be paramount to self-interest or enrichment. Thus, it was also
held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there were only 138
confirmed economy class passengers who could very well be accommodated in the smaller planes,
thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad
faith. Such inattention and lack of care for the interest of its passengers who are entitled to its utmost
consideration entitles the passenger to an award of moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not
informing its passengers beforehand that it could breach the contract of carriage even if they have
confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on
overbooking on the tickets issued or to properly inform its passengers about these policies so that the
latter would be prepared for such eventuality or would have the choice to ride with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the name
of the passenger and the points of origin and destination, contained such a notice. An examination of
Exhibit I does not bear this out. At any rate, said exhibit was not offered for the purpose of showing the
existence of a notice of overbooking but to show that Exhibit I was used for flight 007 in first class of
June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving
less priority to discounted tickets. While the petitioners had checked in at the same time, and held
217

confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure
time because the full-fare ticket he was holding was given priority over discounted tickets. The other
two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline system of boarding
priorities are reasonable policies, which when implemented do not amount to bad faith. But the issue
raised in this case is not the reasonableness of said policies but whether or not said policies were
incorporated or deemed written on petitioners' contracts of carriage. Respondent TWA failed to show
that there are provisions to that effect. Neither did it present any argument of substance to show that
petitioners were duly apprised of the overbooked condition of the flight or that there is a hierarchy of
boarding priorities in booking passengers. It is evident that petitioners had the right to rely upon the
assurance of respondent TWA, thru its agent in Manila, then in New York, that their tickets represented
confirmed seats without any qualification. The failure of respondent TWA to so inform them when it
could easily have done so thereby enabling respondent to hold on to them as passengers up to the last
minute amounts to bad faith. Evidently, respondent TWA placed its self-interest over the rights of
petitioners under their contracts of carriage. Such conscious disregard of petitioners' rights makes
respondent TWA liable for moral damages. To deter breach of contracts by respondent TWA in similar
fashion in the future, we adjudge respondent TWA liable for exemplary damages, as well.
Petitioners also assail the respondent court's decision not to require the refund of Liana Zalamea's ticket
because the ticket was used by her father. On this score, we uphold the respondent court. Petitioners
had not shown with certainty that the act of respondent TWA in allowing Mr. Zalamea to use the ticket
of her daughter was due to inadvertence or deliberate act. Petitioners had also failed to establish that
they did not accede to said agreement. The logical conclusion, therefore, is that both petitioners and
respondent TWA agreed, albeit impliedly, to the course of action taken.
The respondent court erred, however, in not ordering the refund of the American Airlines tickets
purchased and used by petitioners Suthira and Liana. The evidence shows that petitioners Suthira and
Liana were constrained to take the American Airlines flight to Los Angeles not because they "opted not
to use their TWA tickets on another TWA flight" but because respondent TWA could not accommodate
them either on the next TWA flight which was also fully booked. 14 The purchase of the American
Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's unjustifiable
breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code,
respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed
to the non-performance of its obligation. In the previously cited case of Alitalia Airways v. Court of
Appeals, 15 this Court explicitly held that a passenger is entitled to be reimbursed for the cost of the
tickets he had to buy for a flight to another airline. Thus, instead of simply being refunded for the cost of
the unused TWA tickets, petitioners should be awarded the actual cost of their flight from New York to
Los Angeles. On this score, we differ from the trial court's ruling which ordered not only the
reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To
require both prestations would have enabled petitioners to fly from New York to Los Angeles without
any fare being paid.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which
allows recovery when the defendant's act or omission has compelled plaintiff to litigate or to incur
expenses to protect his interest. However, the award for moral damages and exemplary damages by the
trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped
218

off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice
under the circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is
hereby MODIFIED to the extent of adjudging respondent TransWorld Airlines to pay damages to
petitioners in the following amounts, to wit:
(1) US$918.00 or its peso equivalent at the time of payment representing the price of the tickets bought
by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New
York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.
SO ORDERED.

219

G.R. No. 116044-45

March 9, 2000

AMERICAN
AIRLINES
petitioner,
vs.
COURT OF APPEALS, HON. BERNARDO LL. SALAS and DEMOCRITO MENDOZA, respondents.
Before us is a petition for review of the decision dated December 24, 1993 rendered by the Court of
Appeals in the consolidated cases docketed as CA-G.R. SP nos. 30946 and 31452 entitled American
Airlines vs. The Presiding Judge Branch 8 of the Regional Trial Court of Cebu and Democrito Mendoza,
petitions for certiorari and prohibition. In SP no. 30946, the petitioner assails the trial court's order
denying the petitioner's motion to dismiss the action for damages filed by the private respondent for
lack of jurisdiction under section 28 (1) of the Warsaw Convention; and in SP No. 31452 the petitioner
challenges the validity of the trial court's order striking off the record the deposition of the petitioner's
security officer taken in Geneva, Switzerland for failure of the said security officer to answer the cross
interrogatories propounded by the private respondent.
The sole issue raised in SP No. 30946 is the questioned jurisdiction of the Regional Trial Court of Cebu to
take cognizance of the action for damages filed by the private respondent against herein petitioner in
view of Art 28 (1) of the Warsaw Convention. 1 It is undisputed that the private respondent purchased
from Singapore Airlines in Manila conjunction tickets for Manila-Singapore-Athens-Larnaca-Rome-TurinZurich-Geneva-Copenhagen-New York. The petitioner was not a participating airline in any of the
segments in the itinerary under the said conjunction tickets. In Geneva the petitioner decided to forego
his trip to Copenhagen and to go straight to New York and in the absence of a direct flight under his
conjunction tickets from Geneva to New York, the private respondent on June 7, 1989 exchanged the
unused portion of the conjunction ticket for a one-way ticket from Geneva to New York from the
petitioner airline. Petitioner issued its own ticket to the private respondent in Geneva and claimed the
value of the unused portion of the conjunction ticket from the IATA 2 clearing house in Geneva.
In September 1989, private respondent filed an action for damages before the regional trial court of
Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the
petitioner's security officers prevented him from boarding the plane, detained him for about an hour
and allowed him to board the plane only after all the other passengers have boarded. The petitioner
filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain the said proceedings
under Art. 28(1) of the Warsaw Convention. The trial court denied the motion. The order of denial was
elevated to the Court of Appeals which affirmed the ruling of the trial court. Both the trial and the
appellate courts held that the suit may be brought in the Philippines under the pool partnership
agreement among the IATA members, which include Singapore Airlines and American Airlines, wherein
the members act as agents of each other in the issuance of tickets to those who may need their services.
The contract of carriage perfected in Manila between the private respondent and Singapore Airlines
binds the petitioner as an agent of Singapore Airlines and considering that the petitioner has a place of
business in Manila, the third option of the plaintiff under the Warsaw Convention i.e. the action may be
brought in the place where the contract was perfected and where the airline has a place of business, is
applicable. Hence this petition assailing the order upholding the jurisdiction of Philippine courts over the
instant action.
Both parties filed simultaneous memoranda pursuant to the resolution of this Court giving due course to
the petition.
220

The petitioner's theory is as follows: Under Art 28 (1) of the Warsaw convention an action for damages
must be brought at the option of the plaintiff either before the court of the 1) domicile of the carrier; 2)
the carrier's principal place of business; 3) the place where the carrier has a place of business through
which the contract was made; 4) the place of destination. The petitioner asserts that the Philippines is
neither the domicile nor the principal place of business of the defendant airline; nor is it the place of
destination. As regards the third option of the plaintiff, the petitioner contends that since the
Philippines is not the place where the contract of carriage was made between the parties herein,
Philippine courts do not have jurisdiction over this action for damages. The issuance of petitioner's own
ticket in Geneva in exchange for the conjunction ticket issued by Singapore Airlines for the final leg of
the private respondent's trip gave rise to a separate and distinct contract of carriage from that entered
into by the private respondent with Singapore Airlines in Manila. Petitioner lays stress on the fact that
the plane ticket for a direct flight from Geneva to New York was purchased by the private respondent
from the petitioner by "exchange and cash" which signifies that the contract of carriage with Singapore
Airlines was terminated and a second contract was perfected. Moreover, the second contract of carriage
cannot be deemed to have been an extension of the first as the petitioner airline is not a participating
airline in any of the destinations under the first contract. The petitioner claims that the private
respondent's argument that the petitioner is bound under the IATA Rules as agent of the principal airline
is irrelevant and the alleged bad faith of the airline does not remove the case from the applicability of
the Warsaw Convention. Further the IATA Rule cited by the private respondent which is admittedly
printed on the ticket issued by the petitioner to him which states, "An air carrier issuing a ticket for
carriage over the lines of another carrier does so only as its agent" does not apply herein, as neither
Singapore Airlines nor the petitioner issued a ticket to the private respondent covering the route of the
other. Since the conjunction tickets issued by Singapore Airlines do not include the route covered by the
ticket issued by the petitioner, the petitioner airline submits that it did not act as an agent of Singapore
Airlines.
Private respondent controverts the applicability of the Warsaw Convention in this case. He posits that
under Article 17 of the Warsaw Convention 3 a carrier may be held liable for damages if the "accident"
occurred on board the airline or in the course of "embarking or disembarking" from the carrier and that
under Article 25 (1) 4 thereof the provisions of the convention will not apply if the damage is caused by
the "willful misconduct" of the carrier. He argues that his cause of action is based on the incident at the
pre-departure area of the Geneva airport and not during the process of embarking nor disembarking
from the carrier and that security officers of the petitioner airline acted in bad faith. Accordingly, this
case is released from the terms of the Convention. Private respondent argues that assuming that the
Convention applies, his trip to nine cities in different countries performed by different carriers under the
conjunction tickets issued in Manila by Singapore Airlines is regarded as a single transaction; as such the
final leg of his trip from Geneva to New York with the petitioner airline is part and parcel of the original
contract of carriage perfected in Manila. Thus, the third option of the plaintiff under Art. 28 (1) e.g.,
where the carrier has a place of business through which the contract of carriage was made, applies
herein and the case was properly filed in the Philippines. The private respondent seeks affirmance of the
ruling of the lower courts that the petitioner acted as an agent of Singapore Airlines under the IATA
Rules and as an agent of the principal carrier the petitioner may be held liable under the contract of
carriage perfected in Manila, citing the judicial admission made by the petitioner that it claimed the
value of the unused portion of the private respondent's conjunction tickets from the IATA Clearing
House in Geneva where the accounts of both airlines are respectively credited and debited. Accordingly,
the petitioner cannot now deny the contract of agency with Singapore Airlines after it honored the
conjunction tickets issued by the latter.

221

The petition is without merit.

The Warsaw Convention to which the Republic of the Philippines is a party and which has the force and
effect of law in this country applies to all international transportation of persons, baggage or goods
performed by an aircraft gratuitously or for hire. 5 As enumerated in the Preamble of the Convention,
one of the objectives is "to regulate in a uniform manner the conditions of international transportation
by air". 6 The contract of carriage entered into by the private respondent with Singapore Airlines, and
subsequently with the petitioner, to transport him to nine cities in different countries with New York as
the final destination is a contract of international transportation and the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of the airline and its passengers. 7
This includes section 28 (1) which enumerates the four places where an action for damages may be
brought.
The threshold issue of jurisdiction of Philippine courts under Art 28 (1) must first be resolved before any
pronouncements may be made on the liability of the carrier thereunder. 8 The objections raised by the
private respondent that this case is released from the terms of the Convention because the incident on
which this action is predicated did not occur in the process of embarking and disembarking from the
carrier under Art 17 9 and that the employees of the petitioner airline acted with malice and bad faith
under Art 25 (1) 10 pertain to the merits of the case which may be examined only if the action has first
been properly commenced under the rules on jurisdiction set forth in Art. 28 (1).
Art 28 (1) of the Warsaw Convention states:
Art 28 (1) An action for damages must be brought at the option of the plaintiff, in the territory
of one of the High Contracting Parties, either before the court of the domicile of the carrier or of
his principal place of business or where he has a place of business through which the contract
has been made, or before the court at the place of destination.
There is no dispute that petitioner issued the ticket in Geneva which was neither the domicile nor the
principal place of business of petitioner nor the respondent's place of destination.
The question is whether the contract of transportation between the petitioner and the private
respondent would be considered as a single operation and part of the contract of transportation
entered into by the latter with Singapore Airlines in Manila.
Petitioner disputes the ruling of the lower court that it is. Petitioner's main argument is that the
issuance of a new ticket in Geneva created a contract of carriage separate and distinct from that entered
by the private respondent in Manila.
We find the petitioner's argument without merit.
Art 1(3) of the Warsaw Convention which states:
Transportation to be performed by several successive carriers shall be deemed, for the purposes
of this convention, to be one undivided transportation, if it has been regarded by the parties as
a single operation, whether it has been agreed upon under the form of a single contract or a
series of contracts, and it shall not lose its international character merely because one contract
222

or series of contracts is to be performed entirely within the territory subject of the sovereignty,
suzerainty, mandate or authority of the same High Contracting Party.
The contract of carriage between the private respondent and Singapore Airlines although performed by
different carriers under a series of airline tickets, including that issued by the petitioner, constitutes a
single operation. Members of the IATA are under a general pool partnership agreement wherein they
act as agent of each other in the issuance of tickets 11 to contracted passengers to boost ticket sales
worldwide and at the same time provide passengers easy access to airlines which are otherwise
inaccessible in some parts of the world. Booking and reservation among airline members are allowed
even by telephone and it has become an accepted practice among them. 12 A member airline which
enters into a contract of carriage consisting of a series of trips to be performed by different carriers is
authorized to receive the fare for the whole trip and through the required process of interline
settlement of accounts by way of the IATA clearing house an airline is duly compensated for the
segment of the trip serviced. 13 Thus, when the petitioner accepted the unused portion of the
conjunction tickets, entered it in the IATA clearing house and undertook to transport the private
respondent over the route covered by the unused portion of the conjunction tickets, i.e., Geneva to New
York, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent
of the principal contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed
to undertake. As such, the petitioner thereby assumed the obligation to take the place of the carrier
originally designated in the original conjunction ticket. The petitioner's argument that it is not a
designated carrier in the original conjunction tickets and that it issued its own ticket is not decisive of its
liability. The new ticket was simply a replacement for the unused portion of the conjunction ticket, both
tickets being for the same amount of US$2,760 and having the same points of departure and
destination. 14 By constituting itself as an agent of the principal carrier the petitioner's undertaking
should be taken as part of a single operation under the contract of carriage executed by the private
respondent and Singapore Airlines in Manila.
The quoted provision of the Warsaw Convention Art. 1(3) clearly states that a contract of air
transportation is taken as a single operation whether it is founded on a single contract or a series of
contracts. The number of tickets issued does not detract from the oneness of the contract of carriage as
long as the parties regard the contract as a single operation. The evident purpose underlying this Article
is to promote international air travel by facilitating the procurement of a series of contracts for air
transportation through a single principal and obligating different airlines to be bound by one contract of
transportation. Petitioner's acquiescence to take the place of the original designated carrier binds it
under the contract of carriage entered into by the private respondent and Singapore Airlines in Manila.
The third option of the plaintiff under Art 28 (1) of the Warsaw Convention e.g., to sue in the place of
business of the carrier wherein the contract was made, is therefore, Manila, and Philippine courts are
clothed with jurisdiction over this case. We note that while this case was filed in Cebu and not in Manila
the issue of venue is no longer an issue as the petitioner is deemed to have waived it when it presented
evidence before the trial court.
The issue raised in SP No. 31452 which is whether or not the trial court committed grave abuse of
discretion in ordering the deposition of the petitioner's security officer taken in Geneva to be stricken
off the record for failure of the said security officer to appear before the Philippine consul in Geneva to
answer the cross-interrogatories filed by the private respondent does not have to be resolved. The
subsequent appearance of the said security officer before the Philippine consul in Geneva on September
19, 1994 and the answer to the cross-interrogatories propounded by the private respondent was
223

transmitted to the trial court by the Philippine consul in Geneva on September 23, 1994 15 should be
deemed as full compliance with the requisites of the right of the private respondent to cross-examine
the petitioner's witness. The deposition filed by the petitioner should be reinstated as part of the
evidence and considered together with the answer to the cross-interrogatories.
WHEREFORE, the judgment of the appellate court in CA-G.R. SP No. 30946 is affirmed. The case is
ordered remanded to the court of origin for further proceedings. The decision of the appellate court in
CA-G.R. SP. No. 31452 is set aside. The deposition of the petitioner's security officer is reinstated as part
of the evidence.
SO ORDERED.

224

G.R. No. 61594 September 28, 1990

PAKISTAN
INTERNATIONAL
AIRLINES
CORPORATION,
petitioner,
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his capacity
as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG, respondents.
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign
corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of
employment, one with private respondent Ethelynne B. Farrales and the other with private respondent
Ma. M.C. Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent
portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by the mutual
consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the right to
terminate this agreement at any time by giving the EMPLOYEE notice in writing in
advance one month before the intended termination or in lieu thereof, by paying the
EMPLOYEE wages equivalent to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of Pakistan, and
only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter
arising out of or under this agreement.
Respondents then commenced training in Pakistan. After their training period, they began discharging
their job functions as flight attendants, with base station in Manila and flying assignments to different
parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of
employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent
separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both
that their services as flight stewardesses would be terminated "effective 1 September 1980,
conformably to clause 6 (b) of the employment agreement [they had) executed with [PIA]." 2

225

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint,
docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits and bonuses,
against PIA with the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts
at conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their
position papers and evidence supporting their respective positions. The PIA submitted its position paper,
3
but no evidence, and there claimed that both private respondents were habitual absentees; that both
were in the habit of bringing in from abroad sizeable quantities of "personal effects"; and that PIA
personnel at the Manila International Airport had been discreetly warned by customs officials to advise
private respondents to discontinue that practice. PIA further claimed that the services of both private
respondents were terminated pursuant to the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of
private respondents with full backwages or, in the alternative, the payment to them of the amounts
equivalent to their salaries for the remainder of the fixed three-year period of their employment
contracts; the payment to private respondent Mamasig of an amount equivalent to the value of a round
trip ticket Manila-USA Manila; and payment of a bonus to each of the private respondents equivalent to
their one-month salary. 4 The Order stated that private respondents had attained the status of regular
employees after they had rendered more than a year of continued service; that the stipulation limiting
the period of the employment contract to three (3) years was null and void as violative of the provisions
of the Labor Code and its implementing rules and regulations on regular and casual employment; and
that the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal
and entitled private respondents to reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE,
adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award
save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the
complainants [private respondents] their salaries corresponding to the unexpired portion of the
contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the
Order of the Deputy Minister as having been rendered without jurisdiction; for having been rendered
without support in the evidence of record since, allegedly, no hearing was conducted by the hearing
officer, Atty. Jose M. Pascual; and for having been issued in disregard and in violation of petitioner's
rights under the employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the subject
matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same
being lodged in the Arbitration Branch of the National Labor Relations Commission ("NLRC") It appears
to us beyond dispute, however, that both at the time the complaint was initiated in September 1980
and at the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L.
Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had
jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with
at least one (1) year of service without prior clearance from the Department of Labor and Employment:
Art. 278. Miscellaneous Provisions . . .
226

(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with at least one
year of service during the last two (2) years, whether such service is continuous or
broken, without prior written authority issued in accordance with such rules and
regulations as the Secretary may promulgate . . . (emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear
that in case of a termination without the necessary clearance, the Regional Director was
authorized to order the reinstatement of the employee concerned and the payment of
backwages; necessarily, therefore, the Regional Director must have been given jurisdiction over
such termination cases:
Sec. 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without
prior clearance shall be conclusively presumed to be termination of employment
without a just cause. The Regional Director shall, in such case order the immediate
reinstatement of the employee and the payment of his wages from the time of the
shutdown or dismissal until the time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was similarly very
explicit about the jurisdiction of the Regional Director over termination of employment cases:
Under PD 850, termination cases with or without CBA are now placed under the
original jurisdiction of the Regional Director. Preventive suspension cases, now made
cognizable for the first time, are also placed under the Regional Director. Before PD 850,
termination cases where there was a CBA were under the jurisdiction of the grievance
machinery and voluntary arbitration, while termination cases where there was no CBA
were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its implementing rules
and regulations with respect to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every application for clearance,
whether there is opposition or not, within ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his
order was null and void because it had been issued in violation of petitioner's right to procedural due
process . 6 This claim, however, cannot be given serious consideration. Petitioner was ordered by the
Regional Director to submit not only its position paper but also such evidence in its favor as it might
have. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to
sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample
opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of
Labor and Employment. 7

227

There is another reason why petitioner's claim of denial of due process must be rejected. At the time
the complaint was filed by private respondents on 21 September 1980 and at the time the Regional
Director issued his questioned order on 22 January 1981, applicable regulation, as noted above,
specified that a "dismissal without prior clearance shall be conclusively presumed to be termination of
employment without a cause", and the Regional Director was required in such case to" order the
immediate reinstatement of the employee and the payment of his wages from the time of the shutdown
or dismiss until . . . reinstatement." In other words, under the then applicable rule, the Regional Director
did not even have to require submission of position papers by the parties in view of the conclusive (juris
et de jure) character of the presumption created by such applicable law and regulation. In Cebu Institute
of Technology v. Minister of Labor and Employment, 8 the Court pointed out that "under Rule 14, Section
2, of the Implementing Rules and Regulations, the termination of [an employee] which was without
previous clearance from the Ministry of Labor is conclusively presumed to be without [just] cause . . . [a
presumption which] cannot be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with
private respondents Farrales and Mamasig, arguing that its relationship with them was governed by the
provisions of its contract rather than by the general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement
between the parties; while paragraph 6 provided that, notwithstanding any other provision in the
Contract, PIA had the right to terminate the employment agreement at any time by giving one-month's
notice to the employee or, in lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law
between the parties. 10 The principle of party autonomy in contracts is not, however, an absolute
principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such
stipulations as they may deem convenient, "provided they are not contrary to law, morals, good
customs, public order or public policy." Thus, counter-balancing the principle of autonomy of
contracting parties is the equally general rule that provisions of applicable law, especially provisions
relating to matters affected with public policy, are deemed written into the contract. 11 Put a little
differently, the governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public interest. The law
relating to labor and employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and regulations by simply contracting
with each other. It is thus necessary to appraise the contractual provisions invoked by petitioner PIA in
terms of their consistency with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that paragraph 5
of that employment contract was inconsistent with Articles 280 and 281 of the Labor Code as they
existed at the time the contract of employment was entered into, and hence refused to give effect to
said paragraph 5. These Articles read as follows:
Art. 280. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by
this Title An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his backwages computed from the
time his compensation was withheld from him up to the time his reinstatement.
228

Art. 281. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: provided, that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered as regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to examine in detail
the question of whether employment for a fixed term has been outlawed under the above quoted
provisions of the Labor Code. After an extensive examination of the history and development of Articles
280 and 281, the Court reached the conclusion that a contract providing for employment with a fixed
period was not necessarily unlawful:
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregarded as contrary
to public policy, morals, etc. But where no such intent to circumvent the law is shown, or
stated otherwise, where the reason for the law does not exist e.g. where it is indeed the
employee himself who insists upon a period or where the nature of the engagement is
such that, without being seasonal or for a specific project, a definite date of termination
is a sine qua non would an agreement fixing a period be essentially evil or illicit,
therefore anathema Would such an agreement come within the scope of Article 280
which admittedly was enacted "to prevent the circumvention of the right of the
employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the
Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate with his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to boot the principle
of freedom of contract to remedy the evil of employers" using it as a means to prevent
their employees from obtaining security of tenure is like cutting off the nose to spite the
face or, more relevantly, curing a headache by lopping off the head.
xxx xxx xxx

229

Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the employee's right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was agreed
upon knowingly and voluntarily by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those explicitly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or absence of a
substantial indication that the period specified in an employment agreement was designed to
circumvent the security of tenure of regular employees which is provided for in Articles 280 and
281 of the Labor Code. This indication must ordinarily rest upon some aspect of the agreement
other than the mere specification of a fixed term of the ernployment agreement, or upon
evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between petitioner PIA
and private respondents, we consider that those provisions must be read together and when so read,
the fixed period of three (3) years specified in paragraph 5 will be seen to have been effectively
neutralized by the provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the
employee the fixed three (3)-year period ostensibly granted by paragraph 5 by rendering such period in
effect a facultative one at the option of the employer PIA. For petitioner PIA claims to be authorized to
shorten that term, at any time and for any cause satisfactory to itself, to a one-month period, or even
less by simply paying the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the
agreement here involved is to render the employment of private respondents Farrales and Mamasig
basically employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6
were intended to prevent any security of tenure from accruing in favor of private respondents even
during the limited period of three (3) years, 13 and thus to escape completely the thrust of Articles 280
and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement
of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi Pakistan".
The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws
and regulations to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the relationship is much
affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to govern their relationship. Neither may
petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for
the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant
230

circumstances of this case will show the multiple and substantive contacts between Philippine law and
Philippine courts, on the one hand, and the relationship between the parties, upon the other: the
contract was not only executed in the Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private
respondents were based in the Philippines in between their assigned flights to the Middle East and
Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper
forum for the resolution of contractual disputes between the parties. Under these circumstances,
paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner
PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore
be presumed that the applicable provisions of the law of Pakistan are the same as the applicable
provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally dismissed and that public
respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor any act
without or in excess of jurisdiction in ordering their reinstatement with backwages. Private respondents
are entitled to three (3) years backwages without qualification or deduction. Should their reinstatement
to their former or other substantially equivalent positions not be feasible in view of the length of time
which has gone by since their services were unlawfully terminated, petitioner should be required to pay
separation pay to private respondents amounting to one (1) month's salary for every year of service
rendered by them, including the three (3) years service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order dated 12
August 1982 of public respondent is hereby AFFIRMED, except that (1) private respondents are entitled
to three (3) years backwages, without deduction or qualification; and (2) should reinstatement of
private respondents to their former positions or to substantially equivalent positions not be feasible,
then petitioner shall, in lieu thereof, pay to private respondents separation pay amounting to one (1)month's salary for every year of service actually rendered by them and for the three (3) years putative
service by private respondents. The Temporary Restraining Order issued on 13 September 1982 is
hereby LIFTED. Costs against petitioner.
SO ORDERED.

231

G.R. No. 129584 December 3, 1998

TRIPLE
EIGHT
INTEGRATED
SERVICES,
INC.,
petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER POTENCIANO S. CANIZARES, JR.
and ERLINDA OSDANA, respondents.
In this petition for certiorari now before us, petitioner Triple Eight Integrated Services Inc. seeks to
annul the decision 1 of public respondent National Labor Relations Commission (First Division, Quezon
City) dated March 11, 1997 affirming the August 20, 1996 decision 2 of Labor Arbiter Potenciano
Canizares. Petitioner was ordered to pay private respondent Erlinda Osdana her salaries for the
unexpired portion of her employment contract, unpaid salaries, salary differential, moral and exemplary
damages, as well as attorney's fees. On April 28, 1997, the NLRC denied petitioner's motion for
reconsideration. 3
The antecedent facts follow.
Sometime in August 1992, private respondent Osdana was recruited by petitioner for employment with
the latter's principal, Gulf Catering Company (GCC), a firm based in the Kingdom of Saudi Arabia. Under
the original employment contract, Osdana was engaged to work as "Food Server" for a period of thirtysix (36) months with a salary of five hundred fifty Saudi rials (SR550).
Osdana claims she was required by petitioner to pay a total of eleven thousand nine hundred fifty pesos
(P11,950.00) in placement fees and other charges, for which no receipt was issued. She was likewise
asked to undergo a medical examination conducted by the Philippine Medical Tests System, a duly
accredited clinic for overseas workers, which found her to be "Fit of Employment."
Subsequently,
petitioner
asked
Osdana
to
sign
another
"Contractor
Employee Agreement" 4 which provided that she would be employed as a waitress for twelve (12)
months with a salary of two hundred eighty US dollars ($280). It was this employment agreement which
was approved by the Philippine Overseas Employment Administration (POEA).
On September 16, 1992, Osdana left for Riyadh, Saudi Arabia, and commenced working for GCC. She
was assigned to the College of Public Administration of the Oleysha University and, contrary to the
terms and conditions of the employment contract, was made to wash dishes, cooking pots, and utensils,
perform janitorial work and other tasks which were unrelated to her job designation as waitress. Making
matters worse was the fact that she was made to work a gruelling twelve-hour shift, from six o'clock in
the morning to six o'clock in the evening, without overtime pay.
Because of the long hours and the strenuous nature of her work, Osdana suffered from numbness and
pain in her arms. The pain was such that she had to be confined at the Ladies Villa, a housing facility of
GCC, from June 18 to August 22, 1993, during which period, she was not paid her salaries.
After said confinement, Osdana was allowed to resume work, this time as Food Server and Cook at the
Hota Bani Tameem Hospital, where she worked seven days a week from August 22 to October 5, 1993.
Again, she was not compensated.

232

Then, from October 6 to October 23, 1993, Osdana was again confined at the Ladies Villa for no
apparent reason. During this period, she was still not paid her salary.
On October 24, 1993, she was re-assigned to the Oleysha University to wash dishes and do other menial
tasks. As with her previous assignment at the said University, Osdana worked long hours and under
harsh conditions. Because of this, she was diagnosed as having Bilateral Carpal Tunnel Syndrome, a
condition precipitated by activities requiring "repeated flexion, pronation, and supination of the wrist
and characterized by excruciating pain and numbness in the arms." 5
As the pain became unbearable, Osdana had to be hospitalized. She underwent two surgical operations,
one in January 1994, another on April 23, 1994. Between these operations, she was not given any work
assignments even if she was willing and able to do light work in accordance with her doctor's advice.
Again, Osdana was not paid any compensation for the period between February to April 22, 1994.
After her second operation, Osdana was discharged From the hospital on April 25, 1994. The medical
report stated that "she had very good improvement of the symptoms and she was discharged on the
second
day
of
the
6
operation.
Four days later, however, she was dismissed from work, allegedly or, the ground of illness. She was not
given any separation pay nor was she paid her salaries for the periods when she was not allowed to
work.
Upon her return to the Philippines, Osdana sought the help of petitioner, but to no avail. She was thus
constrained to file a complaint before the POEA against petitioner, praying for unpaid and underpaid
salaries, salaries for the unexpired portion of the employment contract, moral and exemplary damages
and attorney's fees, as well as the revocation, cancellation, suspension and/or imposition of
administrative sanctions against petitioner.
Pursuant to Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act
of 1995, the case was transferred to the arbitration branch of the NLRC and assigned to Labor Arbiter
Canizares.
In a decision dated August 20, 1996, the labor arbiter ruled in favor of Osdana. The dispositive portion of
the decision follows:
Wherefore, the respondent is hereby ordered to pay the complainant US$2,499.00 as
salaries for the unexpired portion of the contract, and US$1,076.00 as unpaid salary and
salary differential, or its equivalent in Philippine Peso.
The respondent is likewise ordered to pay the complainant P50,000 moral damages, and
P20,000 exemplary damages.
The respondent is further ordered to pay the complainant 10% of the monetary award
as attorney's fee.
Other claims are hereby dismissed for lack of sufficient evidence.
233

SO ORDERED.
Aggrieved by the labor arbiter's decision, petitioner appealed to the NLRC, which affirmed the decision
in question on March 11, 1997. Petitioner's motion for reconsideration was likewise denied by the NLRC
in its order dated April 28, 1997.
Hence, this petition for certiorari.
Petitioner alleges grave abuse of discretion on the part of the public respondents for the following
reasons: (a) ruling in favor of Osdana even if there was no factual or legal basis for the award and, (b)
holding petitioner solely liable for her claims despite the fact that its liability is joint and several with its
principal, GCC.
At the outset, petitioner argues that "public respondent Labor Arbiter gravely abused his discretion
when he rendered the questioned decision dated August 20, 1996 without stating the facts and the law
where he derived his conclusions." 7 In support of this argument, petitioner cites the first paragraph of
Article VIII, Section 14 of the Constitution: "No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based."
On this point, it is enough to note that the decisions of both the labor arbiter and the NLRC were based
mainly on the facts and allegations in Osdana's position paper and supporting documents. We find these
sufficient to constitute substantial evidence to support the questioned decisions. Generally, findings of
facts of quasi-judicial agencies like the NLRC are accorded great respect and, at times, even finality if
supported by substantial evidence. "Substantial evidence" is such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusions. 8
Moreover, well-settled is the rule that if doubts exist between the evidence presented by the employer
and the employee, the scales of justice must be tilted in favor of the latter. Thus, in controversies
between a worker and her employer, doubts reasonably arising from the evidence or in the
interpretation of agreements should be resolved in favor of the former.
Petitioner, for its part, was given the same opportunity to file its own position paper but instead, it
opted to file a two-page Answer With Special And Affirmative Defenses, denying generally the
allegations of the complaint. 9
As observed by the labor arbiter, "The record shows the complainant fled complaint (sic), position
paper, and supporting documents, and prosecuted her case diligently; while the respondent merely
tried to settle the case amicably, failing even to file its position paper." 10 The present case being one for
illegal dismissal, it was incumbent upon petitioner employer to show by substantial evidence that the
termination was validly made. In termination cases, the burden of proof rests on the employer to show
that the dismissal is for a just cause. 11 Having failed to file its position paper and to support its denials
and affirmative defenses in its answer, petitioner cannot now fault the labor arbiter and the NLRC for
relying on the facts as laid down by Osdana in her position paper and supported by other documents.
The essence of due process is that a party be afforded reasonable opportunity to be heard and to
submit any evidence he may have in support of his defense, 12 and this is exactly what petitioner was
accorded, although it chose not to fully avail thereof.

234

This Court, therefore, upholds the finding of herein public respondents that the facts and the evidence
on record adduced by Osdana and taken in relation to the answer of petitioner show that indeed there
was breach of the employment contract and illegal dismissal committed by petitioner's principal.
Petitioner claims that public respondents committed grave abuse of discretion when they ruled that
Osdana had been illegally dismissed by GCC. It maintains that the award for salaries for the unexpired
portion of the contract was improper because Osdana was validly dismissed on the ground of illness.
The argument must fail.
In its Answer, Memorandum of Appeal, 13 Petition for Certiorari, 14 and Consolidated Reply, 15 petitioner
consistently asserted that Osdana was validly repatriated for medical reasons, but it failed to
substantiate its claim that such repatriation was justified and done in accordance with law.
Art. 284 of the Labor Code is clear on the matter of termination by reason of disease or illness, viz:
Art. 284. Disease as a ground for termination An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or prejudicial to his health as well as
the health of his co-employees: . . . .
Specifically, Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides:
Sec. 8. Disease as a ground for dismissal Where the employee suffers from a disease
and his continued employment is prohibited by law or prejudicial to his health or to the
health of his co-employees, the employer shall not terminate his employment unless
there is a certification by competent public authority that the disease is of such nature or
at such a stage that it cannot be cured within a period of six 6 months with proper
medical treatment. If the disease or ailment can be cured within the period, the
employer shall not terminate the employee but shall ask the employee to take a leave.
The employer shall reinstate such employee to his former position immediately upon the
restoration of his normal health. (Emphasis supplied).
Viewed in the light of the foregoing provisions, the manner by which Osdana was terminated was clearly
in violation of the Labor Code and its implementing rules and regulations.
In the first place, Osdana's continued employment despite her illness was not prohibited by law nor was
it prejudicial to her health, as well as that of her co-employees. In fact, the medical report issued after
her second operation stated that "she had very good improvement of the symptoms." Besides, "Carpal
Tunnel Syndrome" is not a contagious disease.
Petitioner attributes good faith on the part of its principal, claiming that "It was the concern for the
welfare and physical well being (sic) of private respondent that drove her employer to take the painful
decision of terminating her from the service and having her repatriated to the Philippines at its expense.
The employer did not want to risk the aggravation of the illness of private respondent which could have
been the logical consequence were private respondent allowed to continue with her job." 16

235

The Court notes, however, that aside from these bare allegations, petitioner has not presented any
medical certificate or similar document from a competent public health authority in support of its
claims.
On the medical certificate requirement, petitioner erroneously argues that "private respondent was
employed in Saudi Arabia and not here in the Philippines. Hence, there was a physical impossibility to
secure from a Philippine public health authority the alluded medical certificate that public respondent's
illness will not be cured within a period of six months." 17
Petitioner entirely misses the point, as counsel for private respondent states in the Comment. 18 The rule
simply prescribes a "certification by a competent public health authority" and not a "Philippine public
health authority."
If, indeed, Osdana was physically unfit to continue her employment, her employer could have easily
obtained a certification to that effect from a competent public health authority in Saudi Arabia, thereby
heading off any complaint for illegal dismissal.
The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with;
otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or
extent of the employee's illness and thus defeat the public policy on the protection of labor. As the
Court observed in Prieto v. NLRC, 19 "The Court is not unaware of the many abuses suffered by our
overseas workers in the foreign land where they have ventured, usually with heavy hearts, in pursuit of
a more fulfilling future. Breach of contract, maltreatment, rape, insufficient nourishment, sub-human
lodgings, insults and other forms of debasement, are only a few of the inhumane acts to which they are
subjected by their foreign employers, who probably feel they can do as they please in their country.
While these workers may indeed have relatively little defense against exploitation while they are
abroad, that disadvantage must not continue to burden them when they return to their own territory to
voice their muted complaint. There is no reason why, in their own land, the protection of our own laws
cannot be extended to them in full measure for the redress of their grievances."
Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since
Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country.
Apparently, petitioner hopes to make it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of employees due to illness.
Again, petitioner's argument is without merit.
First, established is the rule that lex loci contactus (the law of the place where the contract is made)
governs in this jurisdiction. There is no question that the contract of employment in this case was
perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and
other laws affecting labor apply in this case. Furthermore, settled is the rule that the courts of the forum
will not enforce any foreign claim obnoxious to the forum's public policy. 20 Here in the Philippines,
employment agreements are more than contractual in nature. The Constitution itself, in Article XIII
Section 3, guarantees the special protection of workers, to wit:

236

The State shall afford fill protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities
for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
xxx xxx xxx
This public policy should be borne in mind in this case because to allow foreign employers to determine
for and by themselves whether an overseas contract worker may be dismissed on the ground of illness
would encourage illegal or arbitrary pre-termination of employment contracts.
As regards the monetary award of salaries for the unexpired portion of the employment contract,
unpaid salaries and salary differential granted by public respondents to Osdana, petitioner assails the
same for being contrary to law, evidence and existing jurisprudence, all of which therefore constitutes
grave abuse of discretion.
Although this contention is without merit, the award for salaries for the unexpired portion of the
contract must, however, be reduced. Paragraph 5, Section 10 of R.A. No. 8042, applies in this case, thus:
In case of termination of overseas employment without just, valid or authorized cause
as defined by law or contract, the worker shall be entitled to the full reimbursement of
his placement fee with interest at twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.
In the case at bar, while it would appear that the employment contract approved by the POEA was only
for a period of twelve months, Osdana's actual stint with the foreign principal lasted for one year and
seven-and-a-half months. It may be inferred, therefore, that the employer renewed her employment
contract for another year. Thus, the award for the unexpired portion of the contract should have been
US$1,260 (US$280 x 4 1/2 months) or its equivalent in Philippine pesos, not US$2,499 as adjudged by
the labor arbiter and affirmed by the NLRC.
As for the award for unpaid salaries and differential amounting to US$ 1,076 representing seven
months' unpaid salaries and one month underpaid salary, the same is proper because, as correctly
pointed out by Osdana, the "no work, no pay" rule relied upon by petitioner does not apply in this case.
In the first place, the fact that she had not worked from June 18 to August 22, 1993 and then from
January 24 to April 29, 1994, was due to her illness which was clearly work-related. Second, from August
23 to October 5, 1993, Osdana actually worked as food server and cook for seven days a week at the
Hota Bani Tameem Hospital, but was not paid any salary for the said period. Finally, from October 6 to
October 23, 1993, she was confined to quarters and was not given any work for no reason at all.

237

Now, with respect to the award of moral and exemplary damages, the same is likewise proper but
should be reduced. Worth reiterating is the rule that moral damages are recoverable where the
dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor,
or was done in a manner contrary to morals, good customs, or public policy. 21 Likewise, exemplary
damages may be awarded if the dismissal was effected in a wanton, oppressive or malevolent manner.
22

According to the facts of the case as stated by public respondent, Osdana was made to perform such
menial chores, as dishwashing and janitorial work, among others, contrary to her job designation as
waitress. She was also made to work long hours without overtime pay. Because of such arduous working
conditions, she developed Carpal Tunnel Syndrome. Her illness was such that she had to undergo
surgery twice. Since her employer determined for itself that she was no longer fit to continue working,
they sent her home posthaste without as much as separation pay or compensation for the months when
she was unable to work because of her illness. Since the employer is deemed to have acted in bad faith,
the award for attorney's fees is likewise upheld.
Finally, petitioner alleges save abuse of discretion on the part of public respondents for holding it solely
liable for the claims of Osdana despite the fact that its liability with the principal is joint and several.
Petitioner misunderstands the decision in question. It should be noted that contrary to petitioner's
interpretation, the decision of the labor arbiter which was affirmed by the NLRC did not really absolve
the foreign principal.
Petitioner was the only one held liable for Osdana's monetary claims because it was the only respondent
named in the complaint and it does not appear that petitioner took steps to have its principal included
as co-respondent. Thus, the POEA, and later the labor arbiter, did not acquire jurisdiction over the
foreign principal.
This is not to say, however, that GCC may not be field liable at all. Petitioner can still claim
reimbursement or contribution from it for the amounts awarded to the illegally-dismissed employee.
WHEREFORE, in view of the foregoing, the instant petition is DISMISSED. Accordingly, the decisions of
the labor arbiter dated August 20, 1996, and of the NLRC dated March 11, 1997, are AFFIRMED with the
MODIFICATION that the award to private respondent Osdana should be one thousand two hundred sixty
US dollars (US$1,260), or its equivalent in Philippine pesos, as salaries for the unexpired portion of the
employment contract, and one thousand seventy six US dollars (US$1,076), or its equivalent in
Philippine pesos, representing unpaid salaries for seven (7) months and underpaid salary for one (1)
month, plus interest.
Petitioner is likewise ordered to pay private respondent P30,000.00 in moral damages, P10,000.00 in
exemplary damages and 10% attorney's fees.
This decision is without prejudice to any remedy or claim for reimbursement or contribution petitioner
may institute against its foreign principal, Gulf Catering Company. No pronouncement as to costs.
SO ORDERED.

238

G.R. No. 138104

April 11, 2002

MR
HOLDINGS,
LTD.,
petitioner,
vs.
SHERIFF CARLOS P. BAJAR, SHERIFF FERDINAND M. JANDUSAY, SOLIDBANK CORPORATION, AND
MARCOPPER MINING CORPORATION, respondents.
In the present Petition for Review on Certiorari, petitioner MR Holdings, Ltd. assails the a) Decision1
dated January 8, 1999 of the Court of Appeals in CA-G.R. SP No. 49226 finding no grave abuse of
discretion on the part of Judge Leonardo P. Ansaldo of the Regional Trial Court (RTC), Branch 94, Boac,
Marinduque, in denying petitioners application for a writ of preliminary injunction;2 and b) Resolution3
dated March 29, 1999 denying petitioners motion for reconsideration.
The facts of the case are as follows:
Under a "Principal Loan Agreement"4 and "Complementary Loan Agreement,"5 both dated November 4,
1992, Asian Development Bank (ADB), a multilateral development finance institution, agreed to extend
to Marcopper Mining Corporation (Marcopper) a loan in the aggregate amount of US$40,000,000.00 to
finance the latters mining project at Sta. Cruz, Marinduque. The principal loan of US$ 15,000,000.00
was sourced from ADBs ordinary capital resources, while the complementary loan of US$ 25,000,000.00
was funded by the Bank of Nova Scotia, a participating finance institution.
On even date, ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation which owns 40% of
Marcopper, executed a "Support and Standby Credit Agreement" whereby the latter agreed to provide
Marcopper with cash flow support for the payment of its obligations to ADB.
To secure the loan, Marcopper executed in favor of ADB a "Deed of Real Estate and Chattel Mortgage" 6
dated November 11, 1992, covering substantially all of its (Marcoppers) properties and assets in
Marinduque. It was registered with the Register of Deeds on November 12, 1992.
When Marcopper defaulted in the payment of its loan obligation, Placer Dome, in fulfillment of its
undertaking under the "Support and Standby Credit Agreement," and presumably to preserve its
international credit standing, agreed to have its subsidiary corporation, petitioner MR Holding, Ltd.,
assumed Marcoppers obligation to ADB in the amount of US$ 18,453,450.02. Consequently, in an
"Assignment Agreement"7 dated March 20, 1997, ADB assigned to petitioner all its rights, interests and
obligations under the principal and complementary loan agreements, ("Deed of Real Estate and Chattel
Mortgage," and "Support and Standby Credit Agreement"). On December 8, 1997, Marcopper likewise
executed a "Deed of Assignment"8 in favor of petitioner. Under its provisions, Marcopper assigns,
transfers, cedes and conveys to petitioner, its assigns and/or successors-in-interest all of its
(Marcoppers) properties, mining equipment and facilities, to wit:
Land and Mining Rights
Building and Other Structures
Other Land Improvements

239

Machineries & Equipment, and Warehouse Inventory

Mine/Mobile Equipment
Transportation Equipment and Furniture & Fixtures
Meanwhile, it appeared that on May 7, 1997, Solidbank Corporation (Solidbank) obtained a Partial
Judgment9against Marcopper from the RTC, Branch 26, Manila, in Civil Case No. 96-80083 entitled
"Solidbank Corporation vs. Marcopper Mining Corporation, John E. Loney, Jose E. Reyes and Teodulo C.
Gabor, Jr.," the decretal portion of which reads:
"WHEREFORE, PREMISES CONSIDERED, partial judgment is hereby rendered ordering defendant
Marcopper Mining Corporation, as follows:
1. To pay plaintiff Solidbank the sum of Fifty Two Million Nine Hundred Seventy
Thousand Pesos Seven Hundred Fifty Six and 89/100 only (PHP 52,970,756.89), plus
interest and charges until fully paid;
2. To pay an amount equivalent to Ten Percent (10%) of above-stated amount as
attorneys fees; and
3. To pay the costs of suit.
"SO ORDERED."
Upon Solidbanks motion, the RTC of Manila issued a writ of execution pending appeal directing Carlos
P. Bajar, respondent sheriff, to require Marcopper "to pay the sums of money to satisfy the Partial
Judgment."10 Thereafter, respondent Bajar issued two notices of levy on Marcoppers personal and real
properties, and over all its stocks of scrap iron and unserviceable mining equipment.11 Together with
sheriff Ferdinand M. Jandusay (also a respondent) of the RTC, Branch 94, Boac, Marinduque, respondent
Bajar issued two notices setting the public auction sale of the levied properties on August 27, 1998 at
the Marcopper mine site.12
Having learned of the scheduled auction sale, petitioner served an "Affidavit of Third-Party Claim"13
upon respondent sheriffs on August 26, 1998, asserting its ownership over all Marcoppers mining
properties, equipment and facilities by virtue of the "Deed of Assignment."
Upon the denial of its "Affidavit of ThirdParty Claim" by the RTC of Manila,14 petitioner commenced
with the RTC of Boac, Marinduque, presided by Judge Leonardo P. Ansaldo, a complaint for
reivindication of properties, etc., with prayer for preliminary injunction and temporary restraining order
against respondents Solidbank, Marcopper, and sheriffs Bajar and Jandusay.15 The case was docketed as
Civil Case No. 98-13.
In an Order16 dated October 6, 1998, Judge Ansaldo denied petitioners application for a writ of
preliminary injunction on the ground that a) petitioner has no legal capacity to sue, it being a foreign
corporation doing business in the Philippines without license; b) an injunction will amount "to staying
the execution of a final judgment by a court of co-equal and concurrent jurisdiction;" and c) the validity
240

of the "Assignment Agreement" and the "Deed of Assignment" has been "put into serious question by
the timing of their execution and registration."
Unsatisfied, petitioner elevated the matter to the Court of Appeals on a Petition for Certiorari,
Prohibition and Mandamus, docketed therein as CA-G.R. SP No. 49226. On January 8, 1999, the Court of
Appeals rendered a Decision holding that Judge Ansaldo did not commit grave abuse of discretion in
denying petitioners prayer for a writ of preliminary injunction, ratiocinating as follows:
"Petitioner contends that it has the legal capacity to sue and seek redress from Philippine courts
as it is a non-resident foreign corporation not doing business in the Philippines and suing on
isolated transactions.
xxx

xxx

"We agree with the finding of the respondent court that petitioner is not suing on an isolated
transaction as it claims to be, as it is very obvious from the deed of assignment and its
relationships with Marcopper and Placer Dome, Inc. that its unmistakable intention is to
continue the operations of Marcopper and shield its properties/assets from the reach of
legitimate creditors, even those holding valid and executory court judgments against it. There is
no other way for petitioner to recover its huge financial investments which it poured into
Marcoppers rehabilitation and the local situs where the Deeds of Assignment were executed,
without petitioner continuing to do business in the country.
xxx

xxx
"While petitioner may just be an assignee to the Deeds of Assignment, it may still fall
within the meaning of "doing business" in light of the Supreme Court ruling in the case
of Far East International Import and Export Corporation vs. Nankai Kogyo Co., 6 SCRA
725, that:

Where a single act or transaction however is not merely incidental or casual but indicates the
foreign corporations intention to do other business in the Philippines, said single act or
transaction constitutes doing or engaging in or transacting business in the Philippines.
"Furthermore, the court went further by declaring that even a single act may constitute doing
business if it is intended to be the beginning of a series of transactions. (Far East International
Import and Export Corporation vs. Nankai Kogyo Co. supra).
"On the issue of whether petitioner is the bona fide owner of all the mining facilities and
equipment of Marcopper, petitioner relies heavily on the Assignment Agreement allegedly
executed on March 20, 1997 wherein all the rights and interest of Asian Development Bank
(ADB) in a purported Loan Agreement were ceded and transferred in favor of the petitioner as
assignee, in addition to a subsequent Deed of Assignment dated December 28, 1997 conveying
absolutely all the properties, mining equipment and facilities of Marcopper in favor of
petitioner.

241

"The Deeds of Assignment executed in favor of petitioner cannot be binding on the judgment
creditor, private respondent Solidbank, under the general legal principle that contracts can only
bind the parties who had entered into it, and it cannot favor or prejudice a third person (Quano
vs. Court of Appeals, 211 SCRA 40). Moreover, by express stipulation, the said deeds shall be
governed, interpreted and construed in accordance with laws of New York.1wphi1.nt
"The Deeds of Assignment executed by Marcopper, through its President, Atty. Teodulo C.
Gabor, Jr., were clearly made in bad faith and in fraud of creditors, particularly private
respondent Solidbank. The first Assignment Agreement purportedly executed on March 20,
1997 was entered into after Solidbank had filed on September 19, 1996 a case against
Marcopper for collection of sum of money before Branch 26 of the Regional Trial Court
docketed as Civil Case No. 96-80083. The second Deed of Assignment purportedly executed on
December 28, 1997 was entered into by President Gabor after Solidbank had filed its Motion
for Partial Summary Judgment, after the rendition by Branch 26 of the Regional Trial Court of
Manila of a Partial Summary Judgment and after the said trial court had issued a writ of
execution, and which judgment was later affirmed by the Court of Appeals. While the
assignments (which were not registered with the Registry of Property as required by Article
1625 of the new Civil Code) may be valid between the parties thereof, it produces no effect as
against third parties. The purported execution of the Deeds of Assignment in favor of petitioner
was in violation of Article 1387 of the New Civil Code x x x." (Emphasis Supplied)
Hence, the present Petition for Review on Certiorari by MR Holdings, Ltd. moored on the following
grounds:
"A. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN COMPLETELY
DISREGARDING AS A MATERIAL FACT OF THE CASE THE EXISTENCE OF THE PRIOR, REGISTERED
1992 DEED OF REAL ESTATE AND CHATTEL MORTGAGE CREATING A LIEN OVER THE LEVIED
PROPERTIES, SUBJECT OF THE ASSIGNMENT AGREEMENT DATED MARCH 20, 1997, THUS,
MATERIALLY CONTRIBUTING TO THE SAID COURTS MISPERCEPTION AND MISAPPRECIATION
OF THE MERITS OF PETITIONERS CASE.
B. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN MAKING A
FACTUAL FINDING THAT THE SAID ASSIGNMENT AGREEMENT IS NOT REGISTERED, THE SAME
BEING CONTRARY TO THE FACTS ON RECORD, THUS, MATERIALLY CONTRIBUTING TO THE
SAID COURTS MISPERCEPTION AND MISAPPRECIATION OF THE MERITS OF PETITIONERS
CASE.
C. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN MAKING A
FACTUAL FINDING ON THE EXISTENCE OF AN ATTACHMENT ON THE PROPERTIES SUBJECT OF
INSTANT CASE, THE SAME BEING CONTRARY TO THE FACTS ON RECORD, THUS, MATERIALLY
CONTRIBUTING TO THE SAID COURTS MISPERCEPTION AND MISAPPRECIATION OF THE
MERITS OF PETITIONERS CASE.
D. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT
THE SAID ASSIGNMENT AGREEMENT AND THE DEED OF ASSIGNMENT ARE NOT BINDING ON
RESPONDENT SOLIDBANK WHO IS NOT A PARTY THERETO, THE SAME BEING CONTRARY TO
LAW AND ESTABLISHED JURISPRUDENCE ON PRIOR REGISTERED MORTGAGE LIENS AND ON
PREFERENCE OF CREDITS.
242

E. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN FINDING THAT THE
AFOREMENTIONED ASSIGNMENT AGREEMENT AND DEED OF ASSIGNMENT ARE SHAM,
SIMULATED, OF DUBIOUS CHARACTER, AND WERE MADE IN BAD FAITH AND IN FRAUD OF
CREDITORS, PARTICULARLY RESPONDENT SOLIDBANK, THE SAME BEING IN COMPLETE
DISREGARD OF, VIZ: (1) THE LAW AND ESTABLISHED JURISPRUDENCE ON PRIOR, REGISTERED
MORTGAGE LIENS AND ON PREFERENCE OF CREDITS, BY REASON OF WHICH THERE EXISTS NO
CAUSAL CONNECTION BETWEEN THE SAID CONTRACTS AND THE PROCEEDINGS IN CIVIL CASE
NO. 96-80083; (2) THAT THE ASIAN DEVELOPMENT BANK WILL NOT OR COULD NOT HAVE
AGREED TO A SHAM; SIMULATED, DUBIOUS AND FRAUDULENT TRANSACTION; AND (3) THAT
RESPONDENT SOLIDBANKS BIGGEST STOCKHOLDER, THE BANK OF NOVA SCOTIA, WAS A
MAJOR BENEFICIARY OF THE ASSIGNMENT AGREEMENT IN QUESTION.
F. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT
PETITIONER IS WITHOUT LEGAL CAPACITY TO SUE AND SEEK REDRESS FROM PHILIPPINE
COURTS, IT BEING THE CASE THAT SECTION 133 OF THE CORPORATION CODE IS WITHOUT
APPLICATION TO PETITIONER, AND IT BEING THE CASE THAT THE SAID COURT MERELY RELIED
ON SURMISES AND CONJECTURES IN OPINING THAT PETITIONER INTENDS TO DO BUSINESS IN
THE PHILIPPINES.
G. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT
RESPONDENT MARCOPPER, PLACER DOME, INC., AND PETITIONER ARE ONE AND THE SAME
ENTITY, THE SAME BEING WITHOUT FACTUAL OR LEGAL BASIS.
H. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING
PETITIONER GUILTY OF FORUM SHOPPING, IT BEING CLEAR THAT NEITHER LITIS PENDENTIA
NOR RES JUDICATA MAY BAR THE INSTANT REIVINDICATORY ACTION, AND IT BEING CLEAR
THAT AS THIRD-PARTY CLAIMANT, THE LAW AFFORDS PETITIONER THE RIGHT TO FILE SUCH
REIVINDICATORY ACTION.
I. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN RENDERING A
DECISION WHICH IN EFFECT SERVES AS JUDGMENT ON THE MERITS OF THE CASE.
J. THE SHERIFFS LEVY AND SALE, THE SHERIFFS CERTIFICATE OF SALE DATED OCTOBER 12,
1998, THE RTC-MANILA ORDER DATED FEBRUARY 12, 1999, AND THE RTC-BOAC ORDER DATED
NOVEMBER 25, 1998 ARE NULL AND VOID.
K. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN AFFIRMING THE
DENIAL BY THE RTC-BOAC OF PETITIONERS APPLICATION FOR PRELIMINARY INJUNCTION, THE
SAME BEING IN TOTAL DISREGARD OF PETITIONERS RIGHT AS ASSIGNEE OF A PRIOR,
REGISTERED MORTGAGE LIEN, AND IN DISREGARD OF THE LAW AND JURISPRUDENCE ON
PREFERENCE OF CREDIT."
In its petition, petitioner alleges that it is not "doing business" in the Philippines and characterizes its
participation in the assignment contracts (whereby Marcoppers assets where transferred to it) as mere
isolated acts that cannot foreclose its right to sue in local courts. Petitioner likewise maintains that the
two assignment contracts, although executed during the pendency of Civil Case No. 96-80083 in the RTC
of Manila, are not fraudulent conveyances as they were supported by valuable considerations.
243

Moreover, they were executed in connection with prior transactions that took place as early as 1992
which involved ADB, a reputable financial institution. Petitioner further claims that when it paid
Marcoppers obligation to ADB, it stepped into the latters shoes and acquired its (ADBS) rights, titles,
and interests under the "Deed of Real Estate and Chattel Mortgage." Lastly, petitioner asserts its
existence as a corporation, separate and distinct from Placer Dome and Marcopper.
In its comment, Solidbank avers that: a) petitioner is "doing business" in the Philippines and this is
evidenced by the "huge investment" it poured into the assignment contracts; b) granting that petitioner
is not doing business in the Philippines, the nature of its transaction reveals an "intention to do
business" or "to begin a series of transaction" in the country; c) petitioner, Marcopper and Placer Dome
are one and the same entity, petitioner being then a wholly-owned subsidiary of Placer Dome, which, in
turn, owns 40% of Marcopper; d) the timing under which the assignments contracts were executed
shows that petitioners purpose was to defeat any judgment favorable to it (Solidbank); and e)
petitioner violated the rule on forum shopping since the object of Civil Case No. 98-13 (at RTC, Boac,
Marinduque) is similar to the other cases filed by Marcopper in order to forestall the sale of the levied
properties.
Marcopper, in a separate comment, states that it is merely a nominal party to the present case and that
its principal concerns are being ventilated in another case.
The petition is impressed with merit.
Crucial to the outcome of this case is our resolution of the following issues: 1) Does petitioner have the
legal capacity to sue? 2) Was the Deed of Assignment between Marcopper and petitioner executed in
fraud of creditors? 3) Are petitioner MR Holdings, Ltd., Placer Dome, and Marcopper one and the same
entity? and 4) Is petitioner guilty of forum shopping?
We shall resolve the issues in seriatim.
I
The Court of Appeals ruled that petitioner has no legal capacity to sue in the Philippine courts because it
is a foreign corporation doing business here without license. A review of this ruling does not pose much
complexity as the principles governing a foreign corporations right to sue in local courts have long been
settled by our Corporation Law.17 These principles may be condensed in three statements, to wit: a) if a
foreign corporation does business in the Philippines without a license, it cannot sue before the
Philippine courts;18 b) if a foreign corporation is not doing business in the Philippines, it needs no
license to sue before Philippine courts on an isolated transaction19 or on a cause of action entirely
independent of any business transaction;20 and c) if a foreign corporation does business in the
Philippines with the required license, it can sue before Philippine courts on any transaction. Apparently,
it is not the absence of the prescribed license but the "doing (of) business" in the Philippines without
such license which debars the foreign corporation from access to our courts.21
The task at hand requires us to weigh the facts vis--vis the established principles. The question whether
or not a foreign corporation is doing business is dependent principally upon the facts and circumstances
of each particular case, considered in the light of the purposes and language of the pertinent statute or

244

statutes involved and of the general principles governing the jurisdictional authority of the state over
such corporations.22
Batas Pambansa Blg. 68, otherwise known as "The Corporation Code of the Philippines," is silent as to
what constitutes doing" or "transacting" business in the Philippines. Fortunately, jurisprudence has
supplied the deficiency and has held that the term "implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of
some of the functions normally incident to, and in progressive prosecution of, the purpose and object
for which the corporation was organized."23 In Mentholatum Co. Inc., vs. Mangaliman,24 this Court laid
down the test to determine whether a foreign company is "doing business," thus:
" x x x The true test, however, seems to be whether the foreign corporation is continuing the
body or substance of the business or enterprise for which it was organized or whether it has
substantially retired from it and turned it over to another. (Traction Cos. vs. Collectors of Int.
Revenue [C.C.A., Ohio], 223 F. 984,987.) x x x."
The traditional case law definition has metamorphosed into a statutory definition, having been adopted
with some qualifications in various pieces of legislation in our jurisdiction. For instance, Republic Act No.
7042, otherwise known as the "Foreign Investment Act of 1991," defines "doing business" as follows:
"d) The phrase doing business shall include soliciting orders, service contracts, opening offices,
whether called liaison offices or branches; appointing representatives or distributors domiciled
in the Philippines or who in any calendar year stay in the country for a period or periods totalling
one hundred eight(y) (180) days or more; participating in the management, supervision or
control of any domestic business, firm, entity, or corporation in the Philippines; and any other
act or acts that imply a continuity of commercial dealings or arrangements, and contemplate
to that extent the performance of acts or works; or the exercise of some of the functions
normally incident to, and in progressive prosecution of, commercial gain or of the purpose
and object of the business organization; Provided, however, That the phrase doing business
shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights as such investor, nor
having a nominee director or officer to represent its interests in such corporation, nor
appointing a representative or distributor domiciled in the Philippines which transacts business
in its own name and for its own account." (Emphasis supplied)25
Likewise, Section 1 of Republic Act No. 5455,26 provides that:
"SECTION. 1. Definition and scope of this Act. - (1) x x x the phrase doing business shall include
soliciting orders, purchases, service contracts, opening offices, whether called liaison offices or
branches; appointing representatives or distributors who are domiciled in the Philippines or who
in any calendar year stay in the Philippines for a period or periods totaling one hundred eighty
days or more; participating in the management, supervision or control of any domestic business
firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity
of commercial dealings or arrangements, and contemplate to that extent the performance of
acts or works, or the exercise of some of the functions normally incident to, and in progressive
prosecution of, commercial gain or of the purpose and object of the business organization."

245

There are other statutes27 defining the term "doing business" in the same tenor as those above-quoted,
and as may be observed, one common denominator among them all is the concept of "continuity."
In the case at bar, the Court of Appeals categorized as "doing business" petitioners participation under
the "Assignment Agreement" and the "Deed of Assignment." This is simply untenable. The expression
"doing business" should not be given such a strict and literal construction as to make it apply to any
corporate dealing whatever.28 At this early stage and with petitioners acts or transactions limited to the
assignment contracts, it cannot be said that it had performed acts intended to continue the business for
which it was organized. It may not be amiss to point out that the purpose or business for which
petitioner was organized is not discernible in the records. No effort was exerted by the Court of
Appeals to establish the nexus between petitioners business and the acts supposed to constitute
"doing business." Thus, whether the assignment contracts were incidental to petitioners business or
were continuation thereof is beyond determination. We cannot apply the case cited by the Court of
Appeals, Far East Intl Import and Export Corp. vs. Nankai Kogyo Co., Ltd.,29 which held that a single act
may still constitute "doing business" if "it is not merely incidental or casual, but is of such character as
distinctly to indicate a purpose on the part of the foreign corporation to do other business in the state."
In said case, there was an express admission from an official of the foreign corporation that he was sent
to the Philippines to look into the operation of mines, thereby revealing the foreign corporations desire
to continue engaging in business here. But in the case at bar, there is no evidence of similar desire or
intent. Unarguably, petitioner may, as the Court of Appeals suggested, decide to operate Marcoppers
mining business, but, of course, at this stage, that is a mere speculation. Or it may decide to sell the
credit secured by the mining properties to an offshore investor, in which case the acts will still be
isolated transactions. To see through the present facts an intention on the part of petitioner to start a
series of business transaction is to rest on assumptions or probabilities falling short of actual proof.
Courts should never base its judgments on a state of facts so inadequately developed that it cannot be
determined where inference ends and conjecture begins.
Indeed, the Court of Appeals holding that petitioner was determined to be "doing business" in the
Philippines is based mainly on conjectures and speculation. In concluding that the "unmistakable
intention" of petitioner is to continue Marcoppers business, the Court of Appeals hangs on the wobbly
premise that "there is no other way for petitioner to recover its huge financial investments which it
poured into Marcoppers rehabilitation without it (petitioner) continuing Marcoppers business in the
country."30 This is a mere presumption. Absent overt acts of petitioner from which we may directly infer
its intention to continue Marcoppers business, we cannot give our concurrence. Significantly, a view
subscribed upon by many authorities is that the mere ownership by a foreign corporation of a property
in a certain state, unaccompanied by its active use in furtherance of the business for which it was
formed, is insufficient in itself to constitute doing business.31 In Chittim vs. Belle Fourche Bentonite
Products Co.,32 it was held that even if a foreign corporation purchased and took conveyances of a
mining claim, did some assessment work thereon, and endeavored to sell it, its acts will not constitute
the doing of business so as to subject the corporation to the statutory requirements for the
transacting of business. On the same vein, petitioner, a foreign corporation, which becomes the
assignee of mining properties, facilities and equipment cannot be automatically considered as doing
business, nor presumed to have the intention of engaging in mining business.
One important point. Long before petitioner assumed Marcoppers debt to ADB and became their
assignee under the two assignment contracts, there already existed a "Support and Standby Credit
Agreement" between ADB and Placer Dome whereby the latter bound itself to provide cash flow
support for Marcoppers payment of its obligations to ADB. Plainly, petitioners payment of US$
246

18,453,450.12 to ADB was more of a fulfillment of an obligation under the "Support and Standby Credit
Agreement" rather than an investment. That petitioner had to step into the shoes of ADB as
Marcoppers creditor was just a necessary legal consequence of the transactions that transpired. Also,
we must hasten to add that the "Support and Standby Credit Agreement" was executed four (4) years
prior to Marcoppers insovency, hence, the alleged "intention of petitioner to continue Marcoppers
business" could have no basis for at that time, Marcoppers fate cannot yet be determined.
In the final analysis, we are convinced that petitioner was engaged only in isolated acts or transactions.
Single or isolated acts, contracts, or transactions of foreign corporations are not regarded as a doing or
carrying on of business. Typical examples of these are the making of a single contract, sale, sale with the
taking of a note and mortgage in the state to secure payment therefor, purchase, or note, or the mere
commission of a tort.33 In these instances, there is no purpose to do any other business within the
country.
II
Solidbank contends that from the chronology and timing of events, it is evident that there existed a preset pattern of response on the part of Marcopper to defeat whatever court ruling that may be rendered
in favor of Solidbank.
We are not convinced.
While it may appear, at initial glance, that the assignment contracts are in the nature of fraudulent
conveyances, however, a closer look at the events that transpired prior to the execution of those
contracts gives rise to a different conclusion. The obvious flaw in the Court of Appeals Decision lies in its
constricted view of the facts obtaining in the case. In its factual narration, the Court of Appeals definitely
left out some events. We shall see later the significance of those events.
Article 1387 of the Civil Code of the Philippines provides:
"Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of creditors, when the donor did not reserve
sufficient property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against
whom some judgment has been rendered in any instance or some writ of attachment has
been issued. The decision or attachment need not refer to the property alienated, and need
not have been obtained by the party seeking rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other
manner recognized by law and of evidence.
This article presumes the existence of fraud made by a debtor. Thus, in the absence of satisfactory
evidence to the contrary, an alienation of a property will be held fraudulent if it is made after a
judgment has been rendered against the debtor making the alienation.34 This presumption of fraud is
not conclusive and may be rebutted by satisfactory and convincing evidence. All that is necessary is to

247

establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable
consideration.35
The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations.
Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of US$
18,453,450.12 to ADB in satisfaction of Marcoppers remaining debt as of March 20, 1997.36 Solidbank
cannot deny this fact considering that a substantial portion of the said payment, in the sum of US$
13,886,791.06, was remitted in favor of the Bank of Nova Scotia, its major stockholder.37
The facts of the case so far show that the assignment contracts were executed in good faith. The
execution of the "Assignment Agreement" on March 20, 1997 and the "Deed of Assignment" on
December 8,1997 is not the alpha of this case. While the execution of these assignment contracts
almost coincided with the rendition on May 7, 1997 of the Partial Judgment in Civil Case No. 96-80083
by the Manila RTC, however, there was no intention on the part of petitioner to defeat Solidbanks
claim. It bears reiterating that as early as November 4, 1992, Placer Dome had already bound itself
under a "Support and Standby Credit Agreement" to provide Marcopper with cash flow support for the
payment to ADB of its obligations. When Marcopper ceased operations on account of disastrous mine
tailings spill into the Boac River and ADB pressed for payment of the loan, Placer Dome agreed to have
its subsidiary, herein petitioner, paid ADB the amount of US $18,453,450.12. Thereupon, ADB and
Marcopper executed, respectively, in favor of petitioner an "Assignment Agreement" and a "Deed of
Assignment." Obviously, the assignment contracts were connected with transactions that happened
long before the rendition in 1997 of the Partial Judgment in Civil Case No. 96-80083 by the Manila RTC.
Those contracts cannot be viewed in isolation. If we may add, it is highly inconceivable that ADB, a
reputable international financial organization, will connive with Marcopper to feign or simulate a
contract in 1992 just to defraud Solidbank for its claim four years thereafter. And it is equally incredible
for petitioner to be paying the huge sum of US $ 18,453,450.12 to ADB only for the purpose of
defrauding Solidbank of the sum of P52,970,756.89.
It is said that the test as to whether or not a conveyance is fraudulent is -- does it prejudice the rights of
creditors?38 We cannot see how Solidbanks right was prejudiced by the assignment contracts
considering that substantially all of Marcoppers properties were already covered by the registered
"Deed of Real Estate and Chattel Mortgage" executed by Marcopper in favor of ADB as early as
November 11, 1992. As such, Solidbank cannot assert a better right than ADB, the latter being a
preferred creditor. It is basic that mortgaged properties answer primarily for the mortgaged credit, not
for the judgment credit of the mortgagors unsecured creditor. Considering that petitioner assumed
Marcoppers debt to ADB, it follows that Solidbanks right as judgment creditor over the subject
properties must give way to that of the former.1wphi1.nt
III
The record is lacking in circumstances that would suggest that petitioner corporation, Placer Dome and
Marcopper are one and the same entity. While admittedly, petitioner is a wholly-owned subsidiary of
Placer Dome, which in turn, which, in turn, was then a minority stockholder of Marcopper, however, the
mere fact that a corporation owns all of the stocks of another corporation, taken alone is not
sufficient to justify their being treated as one entity. If used to perform legitimate functions, a
subsidiarys separate existence shall be respected, and the liability of the parent corporation as well as
the subsidiary will be confined to those arising in their respective business.39
248

The recent case of Philippine National Bank vs. Ritratto Group Inc.,40 outlines the circumstances which
are useful in the determination of whether a subsidiary is but a mere instrumentality of the parentcorporation, to wit:
(a) The parent corporation owns all or most of the capital stock of the subsidiary.
(b) The parent and subsidiary corporations have common directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of the subsidiary or otherwise
causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses or losses of the subsidiary.
(g) The subsidiary has substantially no business except with the parent corporation or no assets
except those conveyed to or by the parent corporation.
(h) In the papers of the parent corporation or in the statements of its officers, the subsidiary is
described as a department or division of the parent corporation, or its business or financial
responsibility is referred to as the parent corporations own.
(i) The parent corporation uses the property of the subsidiary as its own.
(j) The directors or executives of the subsidiary do not act independently in the interest of the
subsidiary, but take their orders from the parent corporation.
(k) The formal legal requirements of the subsidiary are not observed.
In this catena of circumstances, what is only extant in the records is the matter of stock ownership.
There are no other factors indicative that petitioner is a mere instrumentality of Marcopper or Placer
Dome. The mere fact that Placer Dome agreed, under the terms of the "Support and Standby Credit
Agreement" to provide Marcopper with cash flow support in paying its obligations to ADB, does not
mean that its personality has merged with that of Marcopper. This singular undertaking, performed by
Placer Dome with its own stockholders in Canada and elsewhere, is not a sufficient ground to merge its
corporate personality with Marcopper which has its own set of shareholders, dominated mostly by
Filipino citizens. The same view applies to petitioners payment of Marcoppers remaining debt to ADB.
With the foregoing considerations and the absence of fraud in the transaction of the three foreign
corporations, we find it improper to pierce the veil of corporate fiction that equitable doctrine
developed to address situations where the corporate personality of a corporation is abused or used for
wrongful purposes.
IV

249

On the issue of forum shopping, there could have been a violation of the rules thereon if petitioner and
Marcopper were indeed one and the same entity. But since petitioner has a separate personality, it has
the right to pursue its third-party claim by filing the independent reivindicatory action with the RTC of
Boac, Marinduque, pursuant to Rule 39, Section 16 of the 1997 Rules of Civil Procedures. This remedy
has been recognized in a long line of cases decided by this Court.41 In Rodriguez vs. Court of Appeals,42
we held:
". . . It has long been settled in this jurisdiction that the claim of ownership of a third party over
properties levied for execution of a judgment presents no issue for determination by the court
issuing the writ of execution.
. . .Thus, when a property levied upon by the sheriff pursuant to a writ of execution is claimed by
third person in a sworn statement of ownership thereof, as prescribed by the rules, an entirely
different matter calling for a new adjudication arises. And dealing as it does with the all
important question of title, it is reasonable to require the filing of proper pleadings and the
holding of a trial on the matter in view of the requirements of due process.
. . . In other words, construing Section 17 of Rule 39 of the Revised Rules of Court (now Section
16 of the 1997 Rules of Civil Procedure), the rights of third-party claimants over certain
properties levied upon by the sheriff to satisfy the judgment may not be taken up in the case
where such claims are presented but in a separate and independent action instituted by the
claimants." (Emphasis supplied)
This "reivindicatory action" has for its object the recovery of ownership or possession of the property
seized by the sheriff, despite the third party claim, as well as damages resulting therefrom, and it may
be brought against the sheriff and such other parties as may be alleged to have connived with him in the
supposedly wrongful execution proceedings, such as the judgment creditor himself. Such action is an
entirely separate and distinct action from that in which execution has been issued. Thus, there being
no identity of parties and cause of action between Civil Case No. 98-13 (RTC, Boac) and those cases filed
by Marcopper, including Civil Case No. 96-80083 (RTC, Manila) as to give rise to res judicata or litis
pendentia, Solidbanks allegation of forum-shopping cannot prosper.43
All considered, we find petitioner to be entitled to the issuance of a writ of preliminary injunction.
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides:
"SEC. 3 Grounds for issuance of preliminary injunction. A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the acts or acts complained of
during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
250

applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual."
Petitioners right to stop the further execution of the properties covered by the assignment contracts is
clear under the facts so far established. An execution can be issued only against a party and not against
one who did not have his day in court.44 The duty of the sheriff is to levy the property of the judgment
debtor not that of a third person. For, as the saying goes, one mans goods shall not be sold for another
man's debts.45 To allow the execution of petitioners properties would surely work injustice to it and
render the judgment on the reivindicatory action, should it be favorable, ineffectual. In Arabay, Inc., vs.
Salvador,46 this Court held that an injunction is a proper remedy to prevent a sheriff from selling the
property of one person for the purpose of paying the debts of another; and that while the general rule is
that no court has authority to interfere by injunction with the judgments or decrees of another court of
equal or concurrent or coordinate jurisdiction, however, it is not so when a third-party claimant is
involved. We quote the instructive words of Justice Querube C. Makalintal in Abiera vs. Court of
Appeals,47 thus:
"The rationale of the decision in the Herald Publishing Company case48 is peculiarly applicable to
the one before Us, and removes it from the general doctrine enunciated in the decisions cited
by the respondents and quoted earlier herein.
1. Under Section 17 of Rule 39 a third person who claims property levied upon on execution may
vindicate such claim by action. Obviously a judgment rendered in his favor, that is, declaring him
to be the owner of the property, would not constitute interference with the powers or
processes of the court which rendered the judgment to enforce which the execution was levied.
If that be so and it is so because the property, being that of a stranger, is not subject to levy
then an interlocutory order such as injunction, upon a claim and prima facie showing of
ownership by the claimant, cannot be considered as such interference either."
WHEREFORE, the petition is GRANTED. The assailed Decision dated January 8, 1999 and the Resolution
dated March 29, 1999 of the Court of Appeals in CA G.R. No. 49226 are set aside. Upon filing of a bond
of P1,000,000.00, respondent sheriffs are restrained from further implementing the writ of execution
issued in Civil Case No. 96-80083 by the RTC, Branch 26, Manila, until further orders from this Court. The
RTC, Branch 94, Boac, Marinduque, is directed to dispose of Civil Case No. 98-13 with dispatch.
SO ORDERED.

251

G.R. No. 113074 January 22, 1997

ALFRED
HAHN,
petitioner,
vs.
COURT OF APPEALS and BAYERSCHE MOTOREN WERKE AKTIENGSELLSCHAFT (BMW), respondents.

This is a petition for review of the decision 1 of the Court of Appeals dismissing a complaint for specific
performance which petitioner had filed against private respondent on the ground that the Regional Trial
Court of Quezon City did not acquire jurisdiction over private respondent, a nonresident foreign
corporation, and of the appellate court's order denying petitioner's motion for reconsideration.
The following are the facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila." On
the other hand, private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
nonresident foreign corporation existing under the laws of the former Federal Republic of Germany,
with principal office at Munich, Germany.
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of Assignment with
Special Power of Attorney," which reads in full as follows:
WHEREAS, the ASSIGNOR is the present owner and holder of the BMW trademark and device in
the Philippines which ASSIGNOR uses and has been using on the products manufactured by
ASSIGNEE, and for which ASSIGNOR is the authorized exclusive Dealer of the ASSIGNEE in the
Philippines, the same being evidenced by certificate of registration issued by the Director of
Patents on 12 December 1963 and is referred to as Trademark No. 10625;
WHEREAS, the ASSIGNOR has agreed to transfer and consequently record said transfer of the
said BMW trademark and device in favor of the ASSIGNEE herein with the Philippines Patent
Office;
NOW THEREFORE, in view of the foregoing and in consideration of the stipulations hereunder
stated, the ASSIGNOR hereby affirms the said assignment and transfer in favor of the ASSIGNEE
under the following terms and conditions:
1. The ASSIGNEE shall take appropriate steps against any user other than ASSIGNOR or infringer
of the BMW trademark in the Philippines; for such purpose, the ASSIGNOR shall inform the
ASSIGNEE immediately of any such use or infringement of the said trademark which comes to
his knowledge and upon such information the ASSIGNOR shall automatically act as Attorney-InFact of the ASSIGNEE for such case, with full power, authority and responsibility to prosecute
unilaterally or in concert with ASSIGNEE, any such infringer of the subject mark and for purposes
hereof the ASSIGNOR is hereby named and constituted as ASSIGNEE's Attorney-In-Fact, but any
such suit without ASSIGNEE's consent will exclusively be the responsibility and for the account of
the ASSIGNOR,

252

2. That the ASSIGNOR and the ASSIGNEE shall continue business relations as has been usual in
the past without a formal contract, and for that purpose, the dealership of ASSIGNOR shall cover
the ASSIGNEE's complete production program with the only limitation that, for the present, in
view of ASSIGNEE's limited production, the latter shall not be able to supply automobiles to
ASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual in the past without a
formal contract." But on February 16, 1993, in a meeting with a BMW representative and the president
of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW was arranging
to grant the exclusive dealership of BMW cars and products to CMC, which had expressed interest in
acquiring the same. On February 24, 1993, petitioner received confirmation of the information from
BMW which, in a letter, expressed dissatisfaction with various aspects of petitioner's business,
mentioning among other things, decline in sales, deteriorating services, and inadequate showroom and
warehouse facilities, and petitioner's alleged failure to comply with the standards for an exclusive BMW
dealer. 2 Nonetheless, BMW expressed willingness to continue business relations with the petitioner on
the basis of a "standard BMW importer" contract, otherwise, it said, if this was not acceptable to
petitioner, BMW would have no alternative but to terminate petitioner's exclusive dealership effective
June 30, 1993.
Petitioner protested, claiming that the termination of his exclusive dealership would be a breach of the
Deed of Assignment. 3 Hahn insisted that as long as the assignment of its trademark and device
subsisted, he remained BMW's exclusive dealer in the Philippines because the assignment was made in
consideration of the exclusive dealership. In the same letter petitioner explained that the decline in
sales was due to lower prices offered for BMW cars in the United States and the fact that few customers
returned for repairs and servicing because of the durability of BMW parts and the efficiency of
petitioner's service.
Because of Hahn's insistence on the former business relation, BMW withdrew on March 26, 1993 its
offer of a "standard importer contract" and terminated the exclusive dealer relationship effective June
30, 1993. 4 At a conference of BMW Regional Importers held on April 26, 1993 in Singapore, Hahn was
surprised to find Alvarez among those invited from the Asian region. On April 29, 1993, BMW proposed
that Hahn and CMC jointly import and distribute BMW cars and parts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for specific performance
and damages against BMW to compel it to continue the exclusive dealership. Later he filed an amended
complaint to include an application for temporary restraining order and for writs of preliminary,
mandatory and prohibitory injunction to enjoin BMW from terminating his exclusive dealership. Hahn's
amended complaint alleged in pertinent parts:
2. Defendant [BMW] is a foreign corporation doing business in the Philippines with principal
offices at Munich, Germany. It may be served with summons and other court processes through
the Secretary of the Department of Trade and Industry of the Philippines. . . .
xxx xxx xxx
5. On March 7, 1967, Plaintiff executed in favor of defendant BMW a Deed of Assignment with
Special Power of Attorney covering the trademark and in consideration thereof, under its first
253

whereas clause, Plaintiff was duly acknowledged as the "exclusive Dealer of the Assignee in the
Philippines. . . .
xxx xxx xxx
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the
Philippines up to the present, Plaintiff, through its firm name "HAHN MANILA" and without any
monetary contribution from defendant BMW, established BMW's goodwill and market presence
in the Philippines. Pursuant thereto, Plaintiff has invested a lot of money and resources in order
to single-handedly compete against other motorcycle and car companies. . . . Moreover, Plaintiff
has built buildings and other infrastructures such as service centers and showrooms to maintain
and promote the car and products of defendant BMW.
xxx xxx xxx
10. In a letter dated February 24, 1993, defendant BMW advised Plaintiff that it was willing to
maintain with Plaintiff a relationship but only "on the basis of a standard BMW importer
contract as adjusted to reflect the particular situation in the Philippines" subject to certain
conditions, otherwise, defendant BMW would terminate Plaintiffs exclusive dealership and any
relationship for cause effective June 30, 1993. . . .
xxx xxx xxx
15. The actuations of defendant BMW are in breach of the assignment agreement between itself
and plaintiff since the consideration for the assignment of the BMW trademark is the
continuance of the exclusive dealership agreement. It thus, follows that the exclusive dealership
should continue for so long as defendant BMW enjoys the use and ownership of the trademark
assigned to it by Plaintiff.
The case was docketed as Civil Case No. Q-93-15933 and raffled to Branch 104 of the Quezon City
Regional Trial Court, which on June 14, 1993 issued a temporary restraining order. Summons and copies
of the complaint and amended complaint were thereafter served on the private respondent through the
Department of Trade and Industry, pursuant to Rule 14, 14 of the Rules of Court. The order, summons
and copies of the complaint and amended complaint were later sent by the DTI to BMW via registered
mail on June 15, 1993 5 and received by the latter on June 24, 1993.
On June 17, 1993, without proof of service on BMW, the hearing on the application for the writ of
preliminary injunction proceeded ex parte, with petitioner Hahn testifying. On June 30, 1993, the trial
court issued an order granting the writ of preliminary injunction upon the filing of a bond of
P100,000.00. On July 13, 1993, following the posting of the required bond, a writ of preliminary
injunction was issued.
On July 1, 1993, BMW moved to dismiss the case, contending that the trial court did not acquire
jurisdiction over it through the service of summons on the Department of Trade and Industry, because it
(BMW) was a foreign corporation and it was not doing business in the Philippines. It contended that the
execution of the Deed of Assignment was an isolated transaction; that Hahn was not its agent because
the latter undertook to assemble and sell BMW cars and products without the participation of BMW and
254

sold other products; and that Hahn was an indentor or middleman transacting business in his own name
and for his own account.
Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing business in the Philippines
through him as its agent, as shown by the fact that BMW invoices and order forms were used to
document his transactions; that he gave warranties as exclusive BMW dealer; that BMW officials
periodically inspected standards of service rendered by him; and that he was described in service
booklets and international publications of BMW as a "BMW Importer" or "BMW Trading Company" in
the Philippines.
The trial court 6 deferred resolution of the motion to dismiss until after trial on the merits for the reason
that the grounds advanced by BMW in its motion did not seem to be indubitable.
Without seeking reconsideration of the aforementioned order, BMW filed a petition for certiorari with
the Court of Appeals alleging that:
I. THE RESPONDENT JUDGE ACTED WITH UNDUE HASTE OR OTHERWISE INJUDICIOUSLY IN
PROCEEDINGS LEADING TOWARD THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION,
AND IN PRESCRIBING THE TERMS FOR THE ISSUANCE THEREOF.
II. THE RESPONDENT JUDGE PATENTLY ERRED IN DEFERRING RESOLUTION OF THE MOTION TO
DISMISS ON THE GROUND OF LACK OF JURISDICTION, AND THEREBY FAILING TO IMMEDIATELY
DISMISS THE CASE A QUO.
BMW asked for the immediate issuance of a temporary restraining order and, after hearing, for a writ of
preliminary injunction, to enjoin the trial court from proceeding further in Civil Case No. Q-93-15933.
Private respondent pointed out that, unless the trial court's order was set aside, it would be forced to
submit to the jurisdiction of the court by filing its answer or to accept judgment in default, when the
very question was whether the court had jurisdiction over it.
The Court of Appeals enjoined the trial court from hearing petitioner's complaint. On December 20,
1993, it rendered judgment finding the trial court guilty of grave abuse of discretion in deferring
resolution of the motion to dismiss. It stated:
Going by the pleadings already filed with the respondent court before it came out with its
questioned order of July 26, 1993, we rule and so hold that petitioner's (BMW) motion to
dismiss could be resolved then and there, and that the respondent judge's deferment of his
action thereon until after trial on the merit constitutes, to our mind, grave abuse of discretion.
xxx xxx xxx
. . . [T]here is not much appreciable disagreement as regards the factual matters relating to the
motion to dismiss. What truly divide (sic) the parties and to which they greatly differ is the legal
conclusions they respectively draw from such facts, (sic) with Hahn maintaining that on the basis
thereof, BMW is doing business in the Philippines while the latter asserts that it is not.

255

Then, after stating that any ruling which the trial court might make on the motion to dismiss would
anyway be elevated to it on appeal, the Court of Appeals itself resolved the motion. It ruled that BMW
was not doing business in the country and, therefore, jurisdiction over it could not be acquired through
service of summons on the DTI pursuant to Rule 14, 14. 'The court upheld private respondent's
contention that Hahn acted in his own name and for his own account and independently of BMW, based
on Alfred Hahn's allegations that he had invested his own money and resources in establishing BMW's
goodwill in the Philippines and on BMW's claim that Hahn sold products other than those of BMW. It
held that petitioner was a mere indentor or broker and not an agent through whom private respondent
BMW transacted business in the Philippines. Consequently, the Court of Appeals dismissed petitioner's
complaint against BMW.
Hence, this appeal. Petitioner contends that the Court of Appeals erred (1) in finding that the trial court
gravely abused its discretion in deferring action on the motion to dismiss and (2) in finding that private
respondent BMW is not doing business in the Philippines and, for this reason, dismissing petitioner's
case.
Petitioner's appeal is well taken. Rule 14, 14 provides:
14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a
nonresident joint stock company or association, doing business in the Philippines, service may
be made on its resident agent designated in accordance with law for that purpose, or, if there
be no such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines. (Emphasis added).
What acts are considered "doing business in the Philippines" are enumerated in 3(d) of the Foreign
Investments Act of 1991 (R.A. No. 7042) as follows: 7
d) the phrase "doing business" shall include soliciting orders, service contracts, opening offices,
whether called "liaison" offices or branches; appointing representatives or distributors domiciled
in the Philippines or who in any calendar year stay in the country for a period or periods totalling
one hundred eighty (180) days or more; participating in the management, supervision or control
of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts
that imply a continuity of commercial dealings or arrangements, and contemplate to that extent
the performance of acts or works, or the exercise of some of the functions normally incident to,
and in progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase "doing business" shall not be deemed to
include mere investment as a shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such investor; nor having a nominee
director or officer to represent its interests in such corporation; nor appointing a representative
or distributor domiciled in the Philippines which transacts business in its own name and for its
own account. (Emphasis supplied)
Thus, the phrase includes "appointing representatives or distributors in the Philippines" but not when
the representative or distributor "transacts business in its name and for its own account." In addition,
1(f)(1) of the Rules and Regulations implementing (IRR) the Omnibus Investment Code of 1987 (E.O.
No. 226) provided:

256

(f) "Doing business" shall be any act or combination of acts, enumerated in Article 44 of the
Code. In particular, "doing business" includes:
(1) . . . A foreign firm which does business through middlemen acting in their own names, such
as indentors, commercial brokers or commission merchants, shall not be deemed doing business
in the Philippines. But such indentors, commercial brokers or commission merchants shall be
the ones deemed to be doing business in the Philippines.
The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private
respondent BMW. If he is, BMW may be considered doing business in the Philippines and the trial court
acquired jurisdiction over it (BMW) by virtue of the service of summons on the Department of Trade and
Industry. Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of BMW cars
and products, BMW, a foreign corporation, is not considered doing business in the Philippines within the
meaning of the Foreign Investments Act of 1991 and the IRR, and the trial court did not acquire
jurisdiction over it (BMW).
The Court of Appeals held that petitioner Alfred Hahn acted in his own name and for his own account
and not as agent or distributor in the Philippines of BMW on the ground that "he alone had contacts
with individuals or entities interested in acquiring BMW vehicles. Independence characterizes Hahn's
undertakings, for which reason he is to be considered, under governing statutes, as doing business." (p.
13) In support of this conclusion, the appellate court cited the following allegations in Hahn's amended
complaint:
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the
Philippines up to the present, Plaintiff, through its firm name "HAHN MANILA" and without any
monetary contributions from defendant BMW, established BMW's goodwill and market
presence in the Philippines. Pursuant thereto, Plaintiff invested a lot of money and resources in
order to single-handedly compete against other motorcycle and car companies. . . . Moreover,
Plaintiff has built buildings and other infrastructures such as service centers and showrooms to
maintain and promote the car and products of defendant BMW.
As the above quoted allegations of the amended complaint show, however, there is nothing to support
the appellate court's finding that Hahn solicited orders alone and for his own account and without
"interference from, let alone direction of, BMW." (p. 13) To the contrary, Hahn claimed he took orders
for BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the downpayment
and pricing charges, notified Hahn of the scheduled production month for the orders, and reconfirmed
the orders by signing and returning to Hahn the acceptance sheets. Payment was made by the buyer
directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never paid for the
purchase price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14%
of the purchase price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing that
the vehicles had been registered in the Philippines and serviced by him, Hahn received an additional 3%
of the full purchase price. Hahn performed after-sale services, including warranty services, for which he
received reimbursement from BMW. All orders were on invoices and forms of BMW. 8
These allegations were substantially admitted by BMW which, in its petition for certiorari before the
Court of Appeals, stated: 9

257

9.4. As soon as the vehicles are fully manufactured and full payment of the purchase prices are
made, the vehicles are shipped to the Philippines. (The payments may be made by the
purchasers or third-persons or even by Hahn.) The bills of lading are made up in the name of the
purchasers, but Hahn-Manila is therein indicated as the person to be notified.
9.5. It is Hahn who picks up the vehicles from the Philippine ports, for purposes of conducting
pre-delivery inspections. Thereafter, he delivers the vehicles to the purchasers.
9.6. As soon as BMW invoices the vehicle ordered, Hahn is credited with a commission of
fourteen percent (14%) of the full purchase price thereof, and as soon as he confirms in writing
that the vehicles have been registered in the Philippines and have been serviced by him, he will
receive an additional three percent (3%) of the full purchase prices as commission.
Contrary to the appellate court's conclusion, this arrangement shows an agency. An agent receives a
commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely
by bringing the buyer and the seller together, even if no sale is eventually made.
As to the service centers and showrooms which he said he had put up at his own expense, Hahn said
that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. According to
Hahn, BMW periodically inspected the service centers to see to it that BMW standards were maintained.
Indeed, it would seem from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain
BMW standards that BMW was terminating Hahn's dealership.
The fact that Hahn invested his own money to put up these service centers and showrooms does not
necessarily prove that he is not an agent of BMW. For as already noted, there are facts in the record
which suggest that BMW exercised control over Hahn's activities as a dealer and made regular
inspections of Hahn's premises to enforce compliance with BMW standards and specifications. 10 For
example, in its letter to Hahn dated February 23, 1996, BMW stated:
In the last years we have pointed out to you in several discussions and letters that we have to
tackle the Philippine market more professionally and that we are through your present activities
not adequately prepared to cope with the forthcoming challenges. 11
In effect, BMW was holding Hahn accountable to it under the 1967 Agreement.
This case fits into the mould of Communications Materials, Inc. v. Court of Appeals, 12 in which the
foreign corporation entered into a "Representative Agreement" and a "Licensing Agreement" with a
domestic corporation, by virtue of which the latter was appointed "exclusive representative" in the
Philippines for a stipulated commission. Pursuant to these contracts, the domestic corporation sold
products exported by the foreign corporation and put up a service center for the products sold locally.
This Court held that these acts constituted doing business in the Philippines. The arrangement showed
that the foreign corporation's purpose was to penetrate the Philippine market and establish its presence
in the Philippines.
In addition, BMW held out private respondent Hahn as its exclusive distributor in the Philippines, even
as it announced in the Asian region that Hahn was the "official BMW agent" in the Philippines. 13

258

The Court of Appeals also found that petitioner Alfred Hahn dealt in other products, and not exclusively
in BMW products, and, on this basis, ruled that Hahn was not an agent of BMW. (p. 14) This finding is
based entirely on allegations of BMW in its motion to dismiss filed in the trial court and in its petition for
certiorari before the Court of Appeals. 14 But this allegation was denied by Hahn 15 and therefore the
Court of Appeals should not have cited it as if it were the fact.
Indeed this is not the only factual issue raised, which should have indicated to the Court of Appeals the
necessity of affirming the trial court's order deferring resolution of BMW's motion to dismiss. Petitioner
alleged that whether or not he is considered an agent of BMW, the fact is that BMW did business in the
Philippines because it sold cars directly to Philippine buyers. 16 This was denied by BMW, which claimed
that Hahn was not its agent and that, while it was true that it had sold cars to Philippine buyers, this was
done without solicitation on its part. 17
It is not true then that the question whether BMW is doing business could have been resolved simply by
considering the parties' pleadings. There are genuine issues of facts which can only be determined on
the basis of evidence duly presented. BMW cannot short circuit the process on the plea that to compel it
to go to trial would be to deny its right not to submit to the jurisdiction of the trial court which precisely
it denies. Rule 16, 3 authorizes courts to defer the resolution of a motion to dismiss until after the trial
if the ground on which the motion is based does not appear to be indubitable. Here the record of the
case bristles with factual issues and it is not at all clear whether some allegations correspond to the
proof.
Anyway, private respondent need not apprehend that by responding to the summons it would be
waiving its objection to the trial court's jurisdiction. It is now settled that, for purposes of having
summons served on a foreign corporation in accordance with Rule 14, 14, it is sufficient that it be
alleged in the complaint that the foreign corporation is doing business in the Philippines. The court need
not go beyond the allegations of the complaint in order to determine whether it has Jurisdiction. 18 A
determination that the foreign corporation is doing business is only tentative and is made only for the
purpose of enabling the local court to acquire jurisdiction over the foreign corporation through service
of summons pursuant to Rule 14, 14. Such determination does not foreclose a contrary finding should
evidence later show that it is not transacting business in the country. As this Court has explained:
This is not to say, however, that the petitioner's right to question the jurisdiction of the court
over its person is now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its
only involvement in the Philippines was through a passive investment in Sigfil, which it even
later disposed of, and that TEAM Pacific is not its agent, then it cannot really be said to be doing
business in the Philippines. It is a defense, however, that requires the contravention of the
allegations of the complaint, as well as a full ventilation, in effect, of the main merits of the case,
which should not thus be within the province of a mere motion to dismiss. So, also, the issue
posed by the petitioner as to whether a foreign corporation which has done business in the
country, but which has ceased to do business at the time of the filing of a complaint, can still be
made to answer for a cause of action which accrued while it was doing business, is another
matter that would yet have to await the reception and admission of evidence. Since these points
have seasonably been raised by the petitioner, there should be no real cause for what may
understandably be its apprehension, i.e., that by its participation during the trial on the merits, it
may, absent an invocation of separate or independent reliefs of its own, be considered to have
voluntarily submitted itself to the court's jurisdiction. 19
259

Far from committing an abuse of discretion, the trial court properly deferred resolution of the motion to
dismiss and thus avoided prematurely deciding a question which requires a factual basis, with the same
result if it had denied the motion and conditionally assumed jurisdiction. It is the Court of Appeals
which, by ruling that BMW is not doing business on the basis merely of uncertain allegations in the
pleadings, disposed of the whole case with finality and thereby deprived petitioner of his right to be
heard on his cause of action. Nor was there justification for nullifying the writ of preliminary injunction
issued by the trial court. Although the injunction was issued ex parte, the fact is that BMW was
subsequently heard on its defense by filing a motion to dismiss.
WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is REMANDED to the trial
court for further proceedings.
SO ORDERED.

260

G.R. No. 154618

April 14, 2004

AGILENT
TECHNOLOGIES
SINGAPORE
(PTE)
LTD.,
petitioner,
vs.
INTEGRATED SILICON TECHNOLOGY PHILIPPINES CORPORATION, TEOH KIANG HONG, TEOH KIANG
SENG, ANTHONY CHOO, JOANNE KATE M. DELA CRUZ, JEAN KAY M. DELA CRUZ and ROLANDO T.
NACILLA, respondents.
This petition for review assails the Decision dated August 12, 2002 of the Court of Appeals in CA-G.R. SP
No. 66574, which dismissed Civil Case No. 3123-2001-C and annulled and set aside the Order dated
September 4, 2001 issued by the Regional Trial Court of Calamba, Laguna, Branch 92.
Petitioner Agilent Technologies Singapore (Pte.), Ltd. ("Agilent") is a foreign corporation, which, by its
own admission, is not licensed to do business in the Philippines.1 Respondent Integrated Silicon
Technology Philippines Corporation ("Integrated Silicon") is a private domestic corporation, 100%
foreign owned, which is engaged in the business of manufacturing and assembling electronics
components.2 Respondents Teoh Kiang Hong, Teoh Kiang Seng and Anthony Choo, Malaysian nationals,
are current members of Integrated Silicons board of directors, while Joanne Kate M. dela Cruz, Jean Kay
M. dela Cruz, and Rolando T. Nacilla are its former members.3
The juridical relation among the various parties in this case can be traced to a 5-year Value Added
Assembly Services Agreement ("VAASA"), entered into on April 2, 1996 between Integrated Silicon and
the Hewlett-Packard Singapore (Pte.) Ltd., Singapore Components Operation ("HP-Singapore").4 Under
the terms of the VAASA, Integrated Silicon was to locally manufacture and assemble fiber optics for
export to HP-Singapore. HP-Singapore, for its part, was to consign raw materials to Integrated Silicon;
transport machinery to the plant of Integrated Silicon; and pay Integrated Silicon the purchase price of
the finished products.5 The VAASA had a five-year term, beginning on April 2, 1996, with a provision for
annual renewal by mutual written consent.6 On September 19, 1999, with the consent of Integrated
Silicon,7 HP-Singapore assigned all its rights and obligations in the VAASA to Agilent.8
On May 25, 2001, Integrated Silicon filed a complaint for "Specific Performance and Damages" against
Agilent and its officers Tan Bian Ee, Lim Chin Hong, Tey Boon Teck and Francis Khor, docketed as Civil
Case No. 3110-01-C. It alleged that Agilent breached the parties oral agreement to extend the VAASA.
Integrated Silicon thus prayed that defendant be ordered to execute a written extension of the VAASA
for a period of five years as earlier assured and promised; to comply with the extended VAASA; and to
pay actual, moral, exemplary damages and attorneys fees.9
On June 1, 2001, summons and a copy of the complaint were served on Atty. Ramon Quisumbing, who
returned these processes on the claim that he was not the registered agent of Agilent. Later, he entered
a special appearance to assail the courts jurisdiction over the person of Agilent.
On July 2, 2001, Agilent filed a separate complaint against Integrated Silicon, Teoh Kang Seng, Teoh
Kiang Gong, Anthony Choo, Joanne Kate M. dela Cruz, Jean Kay M. dela Cruz and Rolando T. Nacilla,10 for
"Specific Performance, Recovery of Possession, and Sum of Money with Replevin, Preliminary
Mandatory Injunction, and Damages", before the Regional Trial Court, Calamba, Laguna, Branch 92,
docketed as Civil Case No. 3123-2001-C. Agilent prayed that a writ of replevin or, in the alternative, a
writ of preliminary mandatory injunction, be issued ordering defendants to immediately return and
261

deliver to plaintiff its equipment, machineries and the materials to be used for fiber-optic components
which were left in the plant of Integrated Silicon. It further prayed that defendants be ordered to pay
actual and exemplary damages and attorneys fees.11
Respondents filed a Motion to Dismiss in Civil Case No. 3123-2001-C,12 on the grounds of lack of
Agilents legal capacity to sue;13 litis pendentia;14 forum shopping;15 and failure to state a cause of
action.16
On September 4, 2001, the trial court denied the Motion to Dismiss and granted petitioner Agilents
application for a writ of replevin.17
Without filing a motion for reconsideration, respondents filed a petition for certiorari with the Court of
Appeals.18
In the meantime, upon motion filed by respondents, Judge Antonio S. Pozas of Branch 92 voluntarily
inhibited himself in Civil Case No. 3123-2001-C. The case was re-raffled and assigned to Branch 35, the
same branch where Civil Case No. 3110-2001-C is pending.
On August 12, 2002, the Court of Appeals granted respondents petition for certiorari, set aside the
assailed Order of the trial court dated September 4, 2001, and ordered the dismissal of Civil Case No.
3123-2001-C.
Hence, the instant petition raising the following errors:
I.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT DISMISSING RESPONDENTS PETITION
FOR CERTIORARI FOR RESPONDENTS FAILURE TO FILE A MOTION FOR RECONSIDERATION BEFORE
RESORTING TO THE REMEDY OF CERTIORARI.
II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ANNULLING AND SETTING ASIDE THE TRIAL
COURTS ORDER DATED 4 SEPTEMBER 2001 AND ORDERING THE DISMISSAL OF CIVIL CASE NO. 31232001-C BELOW ON THE GROUND OF LITIS PENDENTIA, ON ACCOUNT OF THE PENDENCY OF CIVIL CASE
NO. 3110-2001-C.
III.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ANNULLING AND SETTING ASIDE THE TRIAL
COURTS ORDER DATED 4 SEPTEMBER 2001 AND ORDERING THE DISMISSAL OF CIVIL CASE NO. 31232001-C BELOW ON THE GROUND OF FORUM SHOPPING, ON ACCOUNT OF THE PENDENCY OF CIVIL CASE
NO. 3110-2001-C.
IV.

262

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN ORDERING THE DISMISSAL OF CIVIL CASE
NO. 323-2001-C BELOW INSTEAD OF ORDERING IT CONSOLIDATED WITH CIVIL CASE NO. 3110-2001-C.19
The two primary issues raised in this petition: (1) whether or not the Court of Appeals committed
reversible error in giving due course to respondents petition, notwithstanding the failure to file a
Motion for Reconsideration of the September 4, 2001 Order; and (2) whether or not the Court of
Appeals committed reversible error in dismissing Civil Case No. 3123-2001-C.
We find merit in the petition.
The Court of Appeals, citing the case of Malayang Manggagawa sa ESSO v. ESSO Standard Eastern,
Inc.,20 held that the lower court had no jurisdiction over Civil Case No. 3123-2001-C because of the
pendency of Civil Case No. 3110-2001-C and, therefore, a motion for reconsideration was not necessary
before resort to a petition for certiorari. This was error.
Jurisdiction is fixed by law. Batas Pambansa Blg. 129 vests jurisdiction over the subject matter of Civil
Case No. 3123-2001-C in the RTC.21
The Court of Appeals ruling that the assailed Order issued by the RTC of Calamba, Branch 92, was a
nullity for lack of jurisdiction due to litis pendentia and forum shopping, has no legal basis. The pendency
of another action does not strip a court of the jurisdiction granted by law.
The Court of Appeals further ruled that a Motion for Reconsideration was not necessary in view of the
urgent necessity in this case. We are not convinced. In the case of Bache and Co. (Phils.), Inc. v. Ruiz,22
relied on by the Court of Appeals, it was held that "time is of the essence in view of the tax assessments
sought to be enforced by respondent officers of the Bureau of Internal Revenue against petitioner
corporation, on account of which immediate and more direct action becomes necessary." Tax
assessments in that case were based on documents seized by virtue of an illegal search, and the
deprivation of the right to due process tainted the entire proceedings with illegality. Hence, the urgent
necessity of preventing the enforcement of the tax assessments was patent. Respondents, on the other
hand, cite the case of Geronimo v. Commission on Elections,23 where the urgent necessity of resolving a
disqualification case for a position in local government warranted the expeditious resort to certiorari. In
the case at bar, there is no analogously urgent circumstance which would necessitate the relaxation of
the rule on a Motion for Reconsideration.
Indeed, none of the exceptions for dispensing with a Motion for Reconsideration is present here. None
of the following cases cited by respondents serves as adequate basis for their procedural lapse.
In Vigan Electric Light Co., Inc. v. Public Service Commission,24 the questioned order was null and void for
failure of respondent tribunal to comply with due process requirements; in Matanguihan v. Tengco,25
the questioned order was a patent nullity for failure to acquire jurisdiction over the defendants, which
fact the records plainly disclosed; and in National Electrification Administration v. Court of Appeals,26 the
questioned orders were void for vagueness. No such patent nullity is evident in the Order issued by the
trial court in this case. Finally, while urgency may be a ground for dispensing with a Motion for
Reconsideration, in the case of Vivo v. Cloribel,27 cited by respondents, the slow progress of the case
would have rendered the issues moot had a motion for reconsideration been availed of. We find no such
urgent circumstance in the case at bar.
263

Respondents, therefore, availed of a premature remedy when they immediately raised the matter to the
Court of Appeals on certiorari; and the appellate court committed reversible error when it took
cognizance of respondents petition instead of dismissing the same outright.
We come now to the substantive issues of the petition.
Litis pendentia is a Latin term which literally means "a pending suit." It is variously referred to in some
decisions as lis pendens and auter action pendant. While it is normally connected with the control which
the court has on a property involved in a suit during the continuance proceedings, it is more interposed
as a ground for the dismissal of a civil action pending in court.
Litis pendentia as a ground for the dismissal of a civil action refers to that situation wherein another
action is pending between the same parties for the same cause of action, such that the second action
becomes unnecessary and vexatious. For litis pendentia to be invoked, the concurrence of the following
requisites is necessary:
(a) identity of parties or at least such as represent the same interest in both actions;
(b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts;
and
(c) the identity in the two cases should be such that the judgment that may be rendered in one
would, regardless of which party is successful, amount to res judicata in the other.28
The Court of Appeals correctly appreciated the identity of parties in Civil Cases No. 3123-2001-C and
3110-2001-C. Well-settled is the rule that lis pendens requires only substantial, and not absolute,
identity of parties.29 There is substantial identity of parties when there is a community of interest
between a party in the first case and a party in the second case, even if the latter was not impleaded in
the first case.30 The parties in these cases are vying over the interests of the two opposing corporations;
the individuals are only incidentally impleaded, being the natural persons purportedly accused of
violating these corporations rights.
Likewise, the fact that the positions of the parties are reversed, i.e., the plaintiffs in the first case are the
defendants in the second case or vice versa, does not negate the identity of parties for purposes of
determining whether the case is dismissible on the ground of litis pendentia.31
The identity of parties notwithstanding, litis pendentia does not obtain in this case because of the
absence of the second and third requisites. The rights asserted in each of the cases involved are
separate and distinct; there are two subjects of controversy presented for adjudication; and two causes
of action are clearly involved. The fact that respondents instituted a prior action for "Specific
Performance and Damages" is not a ground for defeating the petitioners action for "Specific
Performance, Recovery of Possession, and Sum of Money with Replevin, Preliminary Mandatory
Injunction, and Damages."
In Civil Case No. 3110-2001-C filed by respondents, the issue is whether or not there was a breach of an
oral promise to renew of the VAASA. The issue in Civil Case No. 3123-2001-C, filed by petitioner, is
whether petitioner has the right to take possession of the subject properties. Petitioners right of
264

possession is founded on the ownership of the subject goods, which ownership is not disputed and is
not contingent on the extension or non-extension of the VAASA. Hence, the replevin suit can validly be
tried even while the prior suit is being litigated in the Regional Trial Court.
Possession of the subject properties is not an issue in Civil Case No. 3110-2001-C. The reliefs sought by
respondent Integrated Silicon therein are as follows: (1) execution of a written extension or renewal of
the VAASA; (2) compliance with the extended VAASA; and (3) payment of overdue accounts, damages,
and attorneys fees. The reliefs sought by petitioner Agilent in Civil Case No. 3123-2001-C, on the other
hand, are as follows: (1) issuance of a Writ of Replevin or Writ of Preliminary Mandatory Injunction; (2)
recovery of possession of the subject properties; (3) damages and attorneys fees.
Concededly, some items or pieces of evidence may be admissible in both actions. It cannot be said,
however, that exactly the same evidence will support the decisions in both, since the legally significant
and controlling facts in each case are entirely different. Although the VAASA figures prominently in both
suits, Civil Case No. 3110-2001-C is premised on a purported breach of an oral obligation to extend the
VAASA, and damages arising out of Agilents alleged failure to comply with such purported extension.
Civil Case No. 3123-2001-C, on the other hand, is premised on a breach of the VAASA itself, and
damages arising to Agilent out of that purported breach.
It necessarily follows that the third requisite for litis pendentia is also absent. The following are the
elements of res judicata:
(a) The former judgment must be final;
(b) The court which rendered judgment must have jurisdiction over the parties and the subject
matter;
(c) It must be a judgment on the merits; and
(d) There must be between the first and second actions identity of parties, subject matter, and
cause of action.32
In this case, any judgment rendered in one of the actions will not amount to res judicata in the other
action. There being different causes of action, the decision in one case will not constitute res judicata as
to the other.
Of course, a decision in one case may, to a certain extent, affect the other case. This, however, is not the
test to determine the identity of the causes of action. Whatever difficulties or inconvenience may be
entailed if both causes of action are pursued on separate remedies, the proper solution is not the
dismissal order of the Court of Appeals. The possible consolidation of said cases, as well as stipulations
and appropriate modes of discovery, may well be considered by the court below to subserve not only
procedural expedience but, more important, the ends of justice.33
We now proceed to the issue of forum shopping.
The test for determining whether a party violated the rule against forum-shopping was laid down in the
case of Buan v. Lopez.34 Forum shopping exists where the elements of litis pendentia are present, or
265

where a final judgment in one case will amount to res judicata in the final other. There being no litis
pendentia in this case, a judgment in the said case will not amount to res judicata in Civil Case No. 31102001-C, and respondents contention on forum shopping must likewise fail.
We are not unmindful of the afflictive consequences that may be suffered by both petitioner and
respondents if replevin is granted by the trial court in Civil Case No. 3123-2001-C. If respondent
Integrated Silicon eventually wins Civil Case No. 3110-2001-C, and the VAASAs terms are extended,
petitioner corporation will have to comply with its obligations thereunder, which would include the
consignment of properties similar to those it may recover by way of replevin in Civil Case No. 31232001-C. However, petitioner will also suffer an injustice if denied the remedy of replevin, resort to which
is not only allowed but encouraged by law.
Respondents argue that since Agilent is an unlicensed foreign corporation doing business in the
Philippines, it lacks the legal capacity to file suit.35 The assailed acts of petitioner Agilent, purportedly in
the nature of "doing business" in the Philippines, are the following: (1) mere entering into the VAASA,
which is a "service contract";36 (2) appointment of a full-time representative in Integrated Silicon, to
"oversee and supervise the production" of Agilents products;37 (3) the appointment by Agilent of six
full-time staff members, who were permanently stationed at Integrated Silicons facilities in order to
inspect the finished goods for Agilent;38 and (4) Agilents participation in the management, supervision
and control of Integrated Silicon,39 including instructing Integrated Silicon to hire more employees to
meet Agilents increasing production needs,40 regularly performing quality audit, evaluation and
supervision of Integrated Silicons employees,41 regularly performing inventory audit of raw materials to
be used by Integrated Silicon, which was also required to provide weekly inventory updates to Agilent,42
and providing and dictating Integrated Silicon on the daily production schedule, volume and models of
the products to manufacture and ship for Agilent.43
A foreign corporation without a license is not ipso facto incapacitated from bringing an action in
Philippine courts. A license is necessary only if a foreign corporation is "transacting" or "doing business"
in the country. The Corporation Code provides:
Sec. 133. Doing business without a license. No foreign corporation transacting business in the
Philippines without a license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine laws.
The aforementioned provision prevents an unlicensed foreign corporation "doing business" in the
Philippines from accessing our courts.
In a number of cases, however, we have held that an unlicensed foreign corporation doing business in
the Philippines may bring suit in Philippine courts against a Philippine citizen or entity who had
contracted with and benefited from said corporation.44 Such a suit is premised on the doctrine of
estoppel. A party is estopped from challenging the personality of a corporation after having
acknowledged the same by entering into a contract with it. This doctrine of estoppel to deny corporate
existence and capacity applies to foreign as well as domestic corporations.45 The application of this
principle prevents a person contracting with a foreign corporation from later taking advantage of its
noncompliance with the statutes chiefly in cases where such person has received the benefits of the
contract.46
266

The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be
condensed in four statements: (1) if a foreign corporation does business in the Philippines without a
license, it cannot sue before the Philippine courts;47 (2) if a foreign corporation is not doing business in
the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a
cause of action entirely independent of any business transaction48; (3) if a foreign corporation does
business in the Philippines without a license, a Philippine citizen or entity which has contracted with said
corporation may be estopped from challenging the foreign corporations corporate personality in a suit
brought before Philippine courts;49 and (4) if a foreign corporation does business in the Philippines with
the required license, it can sue before Philippine courts on any transaction.
The challenge to Agilents legal capacity to file suit hinges on whether or not it is doing business in the
Philippines. However, there is no definitive rule on what constitutes "doing", "engaging in", or
"transacting" business in the Philippines, as this Court observed in the case of Mentholatum v.
Mangaliman.50 The Corporation Code itself is silent as to what acts constitute doing or transacting
business in the Philippines.
Jurisprudence has it, however, that the term "implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of
some of the functions normally incident to or in progressive prosecution of the purpose and subject of
its organization."51
In Mentholatum,52 this Court discoursed on the two general tests to determine whether or not a foreign
corporation can be considered as "doing business" in the Philippines. The first of these is the substance
test, thus:53
The true test [for doing business], however, seems to be whether the foreign corporation is
continuing the body of the business or enterprise for which it was organized or whether it has
substantially retired from it and turned it over to another.
The second test is the continuity test, expressed thus:54
The term [doing business] implies a continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the exercise of some of the
functions normally incident to, and in the progressive prosecution of, the purpose and object of
its organization.
Although each case must be judged in light of its attendant circumstances, jurisprudence has evolved
several guiding principles for the application of these tests. For instance, considering that it transacted
with its Philippine counterpart for seven years, engaging in futures contracts, this Court concluded that
the foreign corporation in Merrill Lynch Futures, Inc. v. Court of Appeals and Spouses Lara,55 was doing
business in the Philippines. In Commissioner of Internal Revenue v. Japan Airlines ("JAL"),56 the Court
held that JAL was doing business in the Philippines, i.e., its commercial dealings in the country were
continuous despite the fact that no JAL aircraft landed in the country as it sold tickets in the
Philippines through a general sales agent, and opened a promotions office here as well.
In General Corp. of the Phils. v. Union Insurance Society of Canton and Firemans Fund Insurance,57 a
foreign insurance corporation was held to be doing business in the Philippines, as it appointed a settling
267

agent here, and issued 12 marine insurance policies. We held that these transactions were not isolated
or casual, but manifested the continuity of the foreign corporations conduct and its intent to establish a
continuous business in the country. In Eriks PTE Ltd. v. Court of Appeals and Enriquez,58 the foreign
corporation sold its products to a Filipino buyer who ordered the goods 16 times within an eight-month
period. Accordingly, this Court ruled that the corporation was doing business in the Philippines, as there
was a clear intention on its part to continue the body of its business here, despite the relatively short
span of time involved. Communication Materials and Design, Inc., et al. v. Court of Appeals, ITEC, et al.59
and Top-Weld Manufacturing v. ECED, IRTI, et al.60 both involved the License and Technical Agreement
and Distributor Agreement of foreign corporations with their respective local counterparts that were the
primary bases for the Courts ruling that the foreign corporations were doing business in the
Philippines.61 In particular, the Court cited the highly restrictive nature of certain provisions in the
agreements involved, such that, as stated in Communication Materials, the Philippine entity is reduced
to a mere extension or instrument of the foreign corporation. For example, in Communication Materials,
the Court deemed the "No Competing Product" provision of the Representative Agreement therein
restrictive.62
The case law definition has evolved into a statutory definition, having been adopted with some
qualifications in various pieces of legislation. The Foreign Investments Act of 1991 (the "FIA"; Republic
Act No. 7042, as amended), defines "doing business" as follows:
Sec. 3, par. (d). The phrase "doing business" shall include soliciting orders, service contracts,
opening offices, whether called "liaison" offices or branches; appointing representatives or
distributors domiciled in the Philippines or who in any calendar year stay in the country for a
period or periods totaling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business, firm, entity, or corporation in the
Philippines; and any other act or acts that imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or works, or the exercise
of some of the functions normally incident to, and in the progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
An analysis of the relevant case law, in conjunction with Section 1 of the Implementing Rules
and Regulations of the FIA (as amended by Republic Act No. 8179), would demonstrate that the
acts enumerated in the VAASA do not constitute "doing business" in the Philippines.
Section 1 of the Implementing Rules and Regulations of the FIA (as amended by Republic Act No.
8179) provides that the following shall not be deemed "doing business":
(1) Mere investment as a shareholder by a foreign entity in domestic corporations duly
registered to do business, and/or the exercise of rights as such investor;
(2) Having a nominee director or officer to represent its interest in such corporation;
(3) Appointing a representative or distributor domiciled in the Philippines which
transacts business in the representatives or distributors own name and account;
(4) The publication of a general advertisement through any print or broadcast media;

268

(5) Maintaining a stock of goods in the Philippines solely for the purpose of having the
same processed by another entity in the Philippines;
(6) Consignment by a foreign entity of equipment with a local company to be used in the
processing of products for export;
(7) Collecting information in the Philippines; and
(8) Performing services auxiliary to an existing isolated contract of sale which are not on
a continuing basis, such as installing in the Philippines machinery it has manufactured or
exported to the Philippines, servicing the same, training domestic workers to operate it,
and similar incidental services.
By and large, to constitute "doing business", the activity to be undertaken in the Philippines is
one that is for profit-making.63
By the clear terms of the VAASA, Agilents activities in the Philippines were confined to (1) maintaining a
stock of goods in the Philippines solely for the purpose of having the same processed by Integrated
Silicon; and (2) consignment of equipment with Integrated Silicon to be used in the processing of
products for export. As such, we hold that, based on the evidence presented thus far, Agilent cannot be
deemed to be "doing business" in the Philippines. Respondents contention that Agilent lacks the legal
capacity to file suit is therefore devoid of merit. As a foreign corporation not doing business in the
Philippines, it needed no license before it can sue before our courts.
Finally, as to Agilents purported failure to state a cause of action against the individual respondents, we
likewise rule in favor of petitioner. A Motion to Dismiss hypothetically admits all the allegations in the
Complaint, which plainly alleges that these individual respondents had committed or permitted the
commission of acts prejudicial to Agilent. Whether or not these individuals had divested themselves of
their interests in Integrated Silicon, or are no longer members of Integrated Silicons Board of Directors,
is a matter of defense best threshed out during trial.
WHEREFORE, PREMISES CONSIDERED, the petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. SP No. 66574 dated August 12, 2002, which dismissed Civil Case No. 3123-2001-C,
is REVERSED and SET ASIDE. The Order dated September 4, 2001 issued by the Regional Trial Court of
Calamba, Laguna, Branch 92, in Civil Case No. 3123-2001-C, is REINSTATED. Agilents application for a
Writ of Replevin is GRANTED.
No pronouncement as to costs.
SO ORDERED.

269

G.R. No. 159586

July 26, 2004

EUROPEAN RESOURCES AND TECHNOLOGIES, INC. and DELFIN J. WENCESLAO, petitioners,

vs.
INGENIEUBURO BIRKHAHN + NOLTE, Ingeniurgesellschaft mbh and HEERS & BROCKSTEDT GMBH &
CO., respondents.

Assailed in this Petition for Review under Rule 45 of the Rules of Court is the Decision1 of the Court of
Appeals dated May 15, 2003, which sustained the Order of the Regional Trial Court of Angeles City,
Branch 61, dated June 28, 2001, and its subsequent Resolution dated August 3, 2003 denying
petitioners motion for reconsideration.
European Resources and Technologies Inc. (hereinafter "ERTI"), a corporation organized and existing
under the laws of the Republic of the Philippines, is joined by Delfin J. Wenceslao as petitioner in this
case. Ingenieuburo Birkhan + Nolte Ingiurgesellschaft mbh and Heers & Brockstedt Gmbh & Co. are
German corporations who are respondents in this case and shall be collectively referred to as the
"German Consortium".
The German Consortium tendered and submitted its bid to the Clark Development Corporation ("CDC")
to construct, operate and manage the Integrated Waste Management Center at the Clark Special
270

Economic Zone ("CSEZ"). CDC accepted the German Consortiums bid and awarded the contract to it. On
October 6, 1999, CDC and the German Consortium executed the Contract for Services2 which embodies
the terms and conditions of their agreement.
The Contract for Services provides that the German Consortium shall be empowered to enter into a
contract or agreement for the use of the integrated waste management center by corporations, local
government units, entities, and persons not only within the CSEZ but also outside. For waste collected
within the CSEZ, the German Consortium may impose a "tipping fee" per ton of waste collected from
locators and residents of the CSEZ, which fees shall be subject to the schedule agreed upon by the
parties and specified in the Contract for Services. For its operations outside of the CSEZ, the German
Consortium shall pay CDC US$1.50 per ton of non-hazardous solid waste collected.3 The CDC shall
guarantee that nineteen thousand eighteen hundred (19,800) tons per year of solid waste volume shall
be collected from inside and outside the CSEZ.4 The contract has a term of twenty-five (25) years,5
during which time the German Consortium shall operate the waste management center on a day-to-day
basis.6
Article VIII, Section 7 of the Contract for Services provides that the German Consortium shall undertake
to organize a local corporation as its representative for this project. On April 18, 2000, the German
Consortium entered into a Joint Venture with D.M. Wenceslao and Associates, Inc. ("DMWAI") and Ma.
Elena B. Villarama (doing business as LBV and Associates), embodied in a Memorandum of
Understanding7 ("MOU") signed by the parties. Under the MOU, the parties agreed to jointly form a
local corporation to which the German Consortium shall assign its rights under the Contract for Services.
Pursuant to this agreement, petitioner European Resources and Technologies, Inc. was incorporated.
The parties likewise agreed to prepare and finalize a Shareholders Agreement within one (1) month
from the execution of the MOU, which shall provide that the German Consortium shall own fifteen
percent (15%) of the equity in the joint venture corporation, DMWAI shall own seventy percent (70%)
and LBV&A shall own fifteen percent (15%). In the event that the parties fail to execute the
Shareholders Agreement, the MOU shall be considered null and void.8
On August 1, 2000, without the Shareholders Agreement having been executed, the German
Consortium and petitioner ERTI entered into a Memorandum of Agreement (MOA)9 whereby the
German Consortium ceded its rights and obligations under the Contract for Services in favor of ERTI and
assigned unto ERTI, among others, "its license from CDC to engage in the business of providing
environmental services needed in the CSEZ in connection with the waste management within the CSEZ
and other areas."10 Likewise, the parties agreed that should there be a disagreement between or among
them relative to the interpretation or implementation of the MOA and the collateral documents
including but not limited to the Contract for Services between the German Consortium and CDC, the
dispute shall be referred to a panel of arbitrators.11
On December 11, 2000, ERTI received a letter from BN Consultants Philippines, Inc., signed by Mr.
Holger Holst for and on behalf of the German Consortium,12 stating that the German Consortiums
contract with DMWAI, LBV&A and ERTI has been terminated or extinguished on the following grounds:
(a) the CDC did not give its approval to the Consortiums request for the approval of the assignment or
transfer by the German Consortium in favor of ERTI of its rights and interests under the Contract for
Services; (b) the parties failed to prepare and finalize the Shareholders Agreement pursuant to the
provision of the MOU; (c) there is no more factual or legal basis for the joint venture to continue; and (d)
with the termination of the MOU, the MOA is also deemed terminated or extinguished.
271

Attached to the letter was a copy of the letter of the CDC,13 stating that the German Consortiums
assignment of an eighty-five percent (85%) majority interest to another party violated its representation
to undertake both the financial and technical aspects of the project. The dilution of the Consortiums
interest in ERTI is a substantial modification of the Consortiums representations which were used as
bases for the award of the project to it.
On February 20, 2001, petitioner ERTI, through counsel, sent a letter to CDC requesting for the
reconsideration of its disapproval of the agreement between ERTI and the German Consortium.
Before CDC could act upon petitioner ERTIs letter, the German Consortium filed a complaint for
injunction against herein petitioners before the Regional Trial Court of Angeles City, Branch 61,
docketed as Civil Case No. 10049. The German Consortium claimed that petitioner ERTIs continued
misrepresentation as to their right to accept solid wastes from third parties for processing at the waste
management center will cause irreparable damage to the Consortium and its exclusive right to operate
the waste management center at the CSEZ. Moreover, petitioner ERTIs acts destroy the Consortiums
credibility and undermine customer confidence in it. Hence, the German Consortium prayed that a writ
of temporary restraining order be issued against petitioner ERTI and, after hearing, a writ of preliminary
injunction be likewise issued ordering petitioner ERTI to cease and desist from misrepresenting to third
parties or the public that it has any right or interest in the waste management center at CSEZ.14
Petitioners filed their Opposition to the application for preliminary injunction on February 7, 2001. The
following day, February 8, 2001, petitioners sent respondents, through Mr. Holger Holst, a letter
demanding that the parties proceed to arbitration in accordance with Section 17 of the MOA. At the
hearings on the application for injunction, petitioners objected to the presentation of evidence on the
ground that the trial court had no jurisdiction over the case since the German Consortium was
composed of foreign corporations doing business in the country without a license. Moreover, the MOA
between the parties provides that the dispute should be referred to arbitration.
The trial court overruled the objection and proceeded with the hearing. On June 28, 2001, the trial court
issued an Order granting the writ of preliminary injunction.15 Petitioners filed a motion for
reconsideration, which was denied in a Resolution dated November 21, 2001.
On January 17, 2002, petitioners filed a petition for certiorari and prohibition under Rule 65 of the Rules
of Court before the Court of Appeals, assailing the trial courts Orders dated June 28, 2001 and
November 21, 2001.
Meanwhile, on February 11, 2002, the temporary restraining order issued was lifted in view of
respondents failure to file sufficient bond.16 On September 6, 2002, all proceedings in Civil Case No.
10049 were suspended until the petition for certiorari pending before the Court of Appeals shall have
been resolved.17
On May 15, 2003, the Court of Appeals dismissed the petition for certiorari. Petitioners Motion for
Reconsideration was denied in a Resolution dated August 25, 2003.
Hence, this petition arguing that the Court of Appeals committed reversible error in:

272

(a) Ruling that petitioners are estopped from assailing the capacity of the respondents to
institute the suit for injunction
(b) Ruling that respondents are entitled to an injunctive writ.
(c) Not holding that the dispute is covered by the arbitration clause in the memorandum of
agreement.
(d) Issuing the writ of preliminary injunction that is tantamount to a decision of the case on the
merits.18
The petition is partly meritorious.
There is no general rule or governing principle laid down as to what constitutes "doing" or "engaging in"
or "transacting" business in the Philippines. Thus, it has often been held that a single act or transaction
may be considered as "doing business" when a corporation performs acts for which it was created or
exercises some of the functions for which it was organized.19 We have held that the act of participating
in a bidding process constitutes "doing business" because it shows the foreign corporations intention to
engage in business in the Philippines. In this regard, it is the performance by a foreign corporation of the
acts for which it was created, regardless of volume of business, that determines whether a foreign
corporation needs a license or not.20
Consequently, the German Consortium is doing business in the Philippines without the appropriate
license as required by our laws. By participating in the bidding conducted by the CDC for the operation
of the waste management center, the German Consortium exhibited its intent to transact business in
the Philippines. Although the Contract for Services provided for the establishment of a local corporation
to serve as respondents representative, it is clear from the other provisions of the Contract for Services
as well as the letter by the CDC containing the disapproval that it will be the German Consortium which
shall manage and conduct the operations of the waste management center for at least twenty-five
years. Moreover, the German Consortium was allowed to transact with other entities outside the CSEZ
for solid waste collection. Thus, it is clear that the local corporation to be established will merely act as a
conduit or extension of the German Consortium.
As a general rule, unlicensed foreign non-resident corporations cannot file suits in the Philippines.
Section 133 of the Corporation Code specifically provides:
SECTION 133. No foreign corporation transacting business in the Philippines without a license, or
its successors or assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines, but such corporation may
be sued or proceeded against before Philippine courts or administrative tribunals on any valid
cause of action recognized under Philippine laws.
A corporation has legal status only within the state or territory in which it was organized. For this
reason, a corporation organized in another country has no personality to file suits in the Philippines. In
order to subject a foreign corporation doing business in the country to the jurisdiction of our courts, it
must acquire a license from the Securities and Exchange Commission (SEC) and appoint an agent for
service of process. Without such license, it cannot institute a suit in the Philippines.21
273

However, there are exceptions to this rule. In a number of cases,22 we have declared a party estopped
from challenging or questioning the capacity of an unlicensed foreign corporation from initiating a suit in
our courts. In the case of Communication Materials and Design, Inc. v. Court of Appeals,23 a foreign
corporation instituted an action before our courts seeking to enjoin a local corporation, with whom it
had a "Representative Agreement", from using its corporate name, letter heads, envelopes, sign boards
and business dealings as well as the foreign corporations trademark. The case arose when the foreign
corporation discovered that the local corporation has violated certain contractual commitments as
stipulated in their agreement. In said case, we held that a foreign corporation doing business in the
Philippines without license may sue in Philippine Courts a Philippine citizen or entity that had contracted
with and benefited from it.
Hence, the party is estopped from questioning the capacity of a foreign corporation to institute an
action in our courts where it had obtained benefits from its dealings with such foreign corporation and
thereafter committed a breach of or sought to renege on its obligations. The rule relating to estoppel is
deeply rooted in the axiom of commodum ex injuria sua non habere debetno person ought to derive
any advantage from his own wrong.
In the case at bar, petitioners have clearly not received any benefit from its transactions with the
German Consortium. In fact, there is no question that petitioners were the ones who have expended a
considerable amount of money and effort preparatory to the implementation of the MOA. Neither do
petitioners seek to back out from their obligations under both the MOU and the MOA by challenging
respondents capacity to sue. The reverse could not be any more accurate. Petitioners are insisting on
the full validity and implementation of their agreements with the German Consortium.
To rule that the German Consortium has the capacity to institute an action against petitioners even
when the latter have not committed any breach of its obligation would be tantamount to an unlicensed
foreign corporation gaining access to our courts for protection and redress. We cannot allow this
without violating the very rationale for the law prohibiting a foreign corporation not licensed to do
business in the Philippines from suing or maintaining an action in Philippine courts. The object of
requiring a license is not to prevent the foreign corporation from performing single acts, but to prevent
it from acquiring domicile for the purpose of business without taking the steps necessary to render it
amenable to suits in the local courts.24 In other words, the foreign corporation is merely prevented from
being in a position where it takes the good without accepting the bad.
On the issue of whether the respondents were entitled to the injunctive writ, the petitioners claim that
respondents right is not in esse but is rather a future right which is contingent upon a judicial
declaration that the MOA has been validly rescinded. The Court of Appeals, in its decision, held that the
MOA should be deemed subject to a suspensive condition, that is, that CDCs prior written consent must
be obtained for the validity of the assignment.
This issue must be resolved in a separate proceeding. It must be noted that the hearing conducted in the
trial court was merely a preliminary hearing relating to the issuance of the injunctive writ. In order to
fully appreciate the facts of this case and the surrounding circumstances relating to the agreements and
contract involved, further proof should be presented for consideration of the court. Likewise, corollary
matters, such as whether either of the parties is liable for damages and to what extent, cannot be
resolved with absolute certainty, thus rendering any decision we might make incomplete as to fully
dispose of this case.
274

More importantly, it is evident that CDC must be made a proper party in any case which seeks to resolve
the effectivity or ineffectivity of its disapproval of the assignment made between petitioners and
respondent German Consortium. Where, as in the instant case, CDC is not impleaded as a party, any
decision of the court which will inevitably affect or involve CDC cannot be deemed binding on it.
For the same reason, petitioners assertion that the instant case should be referred to arbitration
pursuant to the provision of the MOA is untenable.
We have ruled in several cases that arbitration agreements are valid, binding, enforceable and not
contrary to public policy such that when there obtains a written provision for arbitration which is not
complied with, the trial court should suspend the proceedings and order the parties to proceed to
arbitration in accordance with the terms of their agreement.25 In the case at bar, the MOA between
petitioner ERTI and respondent German Consortium provided:
17. Should there be a disagreement between or among the Parties relative to the interpretation
or implementation of this Agreement and the collateral documents including but not limited to
the Contract for Services between GERMAN CONSORTIUM and CDC and the Parties cannot
resolve the same by themselves, the same shall be endorsed to a panel of arbitrators which shall
be convened in accordance with the process ordained under the Arbitration Law of the Republic
of the Philippines.26
Indeed, to brush aside a contractual agreement calling for arbitration in case of disagreement between
parties would be a step backward.27 But there are exceptions to this rule. Even if there is an arbitration
clause, there are instances when referral to arbitration does not appear to be the most prudent action.
The object of arbitration is to allow the expeditious determination of a dispute. Clearly, the issue before
us could not be speedily and efficiently resolved in its entirety if we allow simultaneous arbitration
proceedings and trial, or suspension of trial pending arbitration.28
As discussed earlier, the dispute between respondent German Consortium and petitioners involves the
disapproval by the CDC of the assignment by the German Consortium of its rights under the Contract for
Services to petitioner ERTI. Admittedly, the arbitration clause is contained in the MOA to which only the
German Consortium and petitioner ERTI were parties. Even if the case is brought before an arbitration
panel, the decision will not be binding upon CDC who is a non-party to the arbitration agreement. What
is more, the arbitration panel will not be able to completely dispose of all the issues of this case without
including CDC in its proceedings. Accordingly, the interest of justice would only be served if the trial
court hears and adjudicates the case in a single and complete proceeding.
Lastly, petitioners question the propriety of the issuance of writ of preliminary injunction claiming that
such is already tantamount to granting the main prayer of respondents complaint without the benefit
of a trial. Petitioners point out that the purpose of a preliminary injunction is to prevent threatened or
continuous irremediable injury to some of the parties before their claims can be thoroughly studied and
decided. It cannot be used to railroad the main case and seek a judgment without a full-blown trial as in
the instant case.
The Court of Appeals ruled that since petitioners did not raise this issue during the hearing on the
application for preliminary injunction before the trial court, the same cannot be raised for the first time
on appeal and even in special civil actions for certiorari as in this case.
275

At the outset, it must be noted that with the finding that the German Consortium is without any
personality to file the petition with the trial court, the propriety of the injunction writ issued is already
moot and academic. Even assuming for the sake of argument that respondents have the capacity to file
the petition, we find merit in the issue raised by petitioners against the injunction writ issued.
Before an injunctive writ can be issued, it is essential that the following requisites are present: (1) there
must be a right in esse or the existence of a right to be protected; and (2) the act against which
injunction to be directed is a violation of such right.29 The onus probandi is on movant to show that
there exists a right to be protected, which is directly threatened by the act sought to be enjoined.
Further, there must be a showing that the invasion of the right is material and substantial and that there
is an urgent and paramount necessity for the writ to prevent a serious damage.30
Thus, it is clear that for the issuance of the writ of preliminary injunction to be proper, it must be shown
that the invasion of the right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable and that there is an urgent and paramount necessity for the writ
to prevent serious damage.31 At the time of its application for an injunctive writ, respondents right to
operate and manage the waste management center, to the exclusion of or without any participation by
petitioner ERTI, cannot be said to be clear and unmistakable. The MOA executed between respondents
and petitioner ERTI has not yet been judicially declared as rescinded when the complaint was lodged in
court.32 Hence, a cloud of doubt exists over respondent German Consortiums exclusive right relating to
the waste management center.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 68923 dated May 15, 2003 is
REVERSED and SET ASIDE. The Orders of the trial court dated June 28, 2001 and November 21, 2001 are
ANNULLED and SET ASIDE and Civil Case No. 10049 is DISMISSED for lack of legal capacity of
respondents to institute the action. Costs against respondents.
SO ORDERED.

276