Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 98376 August 16, 1991

PEOPLE OF THE PHILIPPINES, petitioners,

vs.
HON. BAYANI S. RIVERA, Judge, Branch 129 , Regional Trial Court of Kalookan City, and
WILFREDO L. EMBRANO, respondent.

The Solicitor General for petitioner.

Eduardo S. Rodriguez for private respondent.

NARVASA, J.:p

The special civil action of certiorari at bar instituted in this Court to annul an order rendered by
the Regional Trial Court at Kalookan City, Branch 129, in a prosecution for arson docketed in
that Court as Criminal Case No. 28820 (87).

Accused in that case of arson is Wilfredo L. Sembrano. It is the prosecution's theory that he
wilfully caused the fire in the early morning of May 21, 1987 which totally burned and
destroyed the second and third floors of the "I Love You Restaurant and Sauna Bath" owned by
Juanita L. Tan, located at No. 2 L. Bustamante St. Kalookan City. 1

Among the witnesses presented by the Government to demonstrate Sembrano's culpability

was Benjamin Lee, a room boy of the restaurant and bath. Lee testified on direct examination
at the hearing of December 8, 1987. His testimony was essentially that Sembrano had run out
of the VIP room where the fire had started and refused to heed his (Lee's) call to stop. Lee took
the witness stand again on April 26, 1987 during which he was cross-examined by defense
counsel, gave additional evidence on redirect examination, was again questioned on recross-
examination by the same defense counsel, and thereafter allowed to step down. 2

The prosecution completed presentation of its evidence-in-chief in due course. But before it
could rest its case, and two (2) months or so after Benjamin Lee had completed his testimony,
the defendant's original counsel, Benjamin Formoso, withdrew his appearance and was
substituted by another attorney, Eduardo S. Rodriguez. 3 The latter then filed a motion on June
8, 1988 to recall Benjamin Lee for further examination. 4 The ground relied upon by Atty.
Rodriguez was simply that after he had reviewed the record of Benjamin Lee's testimony, he
came to the conclusion that " there seems to be many points and questions that should have
been asked but were not profounded (sic) by the other defense counsel who conducted.. (the
cross-examination). It was on this averment, and counsel's reference to "the gravity of the
offense charge (sic)" and the need "to afford the accused full opportunity to defend himself,"
that Lee's recall for further cross examination was sought to be justified. Over objections of the
prosecution, the Court 5 granted the motion.

Efforts were thereafter exerted to cause witness Benjamin Lee to again appear before the Court
for further cross-examination. These efforts met with no success; and the trial had to be
postponed several times. It appears that Lee had terminated his employment and moved
elsewhere without indicating his new address.

So, on October 1, 1990 the private prosecutor filed a "Manifestation and Motion" drawing
attention to the inability to procure the re-appearance of witness Lee for which "the
prosecution could not be held liable," and to the fact that "Lee has already been thoroughly
examined by the former defense counsel," and praying upon these premises "that the farther
examination of Benjamin Lee be dispensed with and ... the prosecution ... allowed to terminate
the presentation of its evidence."

By Order dated October 2, 1990, 6 the Trial Court denied the motion to dispense with the recall
of Benjamin Lee. In fact, it ordered the testimony of Benjamin Lee for the prosecution xx
stricken off the record for lack of complete cross-examination" because the witness could no
longer be found, and "the failure of counsel for the accused to further cross-examine the
witness is not the fault of the defense. 7

In the same order, the Court also set the "reception of further evidence for the prosecution, if
any, ... on October 23, 1990 xx as earlier scheduled." Subsequently, it denied the private
prosecutor's motion for reconsideration of the order. 8 Hence, the action at bar, instituted by
the Office of the Solicitor General.

The writ of certiorari prayed for will issue. The Trial Court acted with grave abuse of discretion
in authorizing the recall of witness Benjamin Lee over the objections of the prosecution, and in
later striking out said witness' testimony for want of further cross-examination.

There is no doubt that a Trial Court has discretion to grant leave for the recall of a witness. This
is clear from a reading of Section 9, Rule 132 of the Rules of Court, as amended, 9 viz.:

SEC. 9. Recalling witness. After the examination of a witness by both sides has
been concluded, the witness cannot be recalled without leave of the court. The
court will grant or withhold leave in its discretion, as the interests of justice may
require.
But obviously that discretion may not be exercised in a vacuum, as it were, entirely, isolated
from a particular set of attendant circumstances. The discretion to recall a witness is not
properly invoked or exercisable by an applicant's mere general statement that there is a need
to recall a witness "in the interest of justice," or "in order to afford a party full opportunity to
present his case," or that, as here, "there seems to be many points and questions that should
have been asked" in the earlier interrogation. To regard expressed generalities such as these as
sufficient ground for recall of witnesses would make the recall of witness no longer
discretionary but ministerial. Something more than the bare assertion of the need to propound
additional questions is essential before the Court's discretion may rightfully be exercised to
grant or deny recall. There must be a satisfactory showing of some concrete, substantial ground
for the recall. There must be a satisfactory showing on the movant's part, for instance, that
particularly identified material points were not covered in the cross-examination, or that
particularly described vital documents were not presented to the witness whose recall is prayed
for, or that the cross-examination was conducted in so inept a manner as to result in a virtual
absence thereof. Absent such particulars, to repeat, there would be no foundation for a trial
court to authorize the recall of any witness.

In the case at bar, the respondent Trial Court granted the defendant's motion for recall on
nothing more than said movant's general claim that certain questions unspecified, it must be
stressed had to be asked. In doing so, it acted without basis, exercised power whimsically or
capriciously, and gravely abused its discretion.

So, too, the respondent Court acted whimsically, capriciously, and oppressively, in other words,
gravely abused its discretion, in ordering the striking out of the entire testimony of Benjamin
Lee after it appeared that he could no longer be found and produced for further examination.
In the first place, the Court acted unilaterally, without any motion to this effect by the defense
and thus without according the prosecution a prior opportunity to show why the striking out
should not be decreed. More importantly, the striking out was directed without any showing
whatever by the defense of the indispensability of further cross-examination, what it was that
would have been elicited by further cross-examination rendering valueless all that the witness
had previously stated. It should be stressed that Lee was subjected both to cross-examination
and recross-examination by former counsel of the accused Sembrano. Obviously the latter was
satisfied that there had been sufficient cross-examination of the witness. Absence of cross-
examination may not therefore be invoked as ground to strike out Lee's testimony (as being
hearsay). And there is no showing whatever in this case that it was the prosecution that placed
the witness beyond the reach of the Court, much less of the expected nature or tenor of his
additional testimony which, because not presented, would necessarily cause the evidence
earlier given by Lee to become hearsay or otherwise incompetent, and therefore, amenable to
being stricken from the record.

WHEREFORE, the petition is GRANTED and the respondent Court's challenged Order dated
October 2, 1990 is NULLIFIED AND SET ASIDE, with costs against private respondent.
THIRD DIVISION

[G.R. No. L-39013. February 29, 1988.]

FRANCISCO BUNAG, Petitioner, v. COURT OF APPEALS, ESTRUDES BAUTISTA Vda. de BITUIN

and BRUNO BAUTISTA, Respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; DEED OF SALE NOT NOTARIZED; CONSIDERED PRIVATE WRITING;
DUE EXECUTION AND AUTHENTICITY THEREOF MUST BE PROVED. The deed of sale is not
notarized and is, therefore, a private writing, whose due execution and authenticity must be
proved before it can be received in evidence. Proof of the due execution and authenticity of
private writings is required under Section 21, Rule 132 of the Revised Rules of Court.

2. ID.; ID.; ID.; EXCLUDED AS EVIDENCE FOR FAILURE OF PARTY TO PROVE ITS DUE EXECUTION
AND AUTHENTICITY. The due execution and authenticity of the deed of sale not having been
satisfactorily proven, such private document should be excluded.

3. ID.; CIVIL ACTIONS; STIPULATION OF FACTS SUBMITTED BY BOTH PARTIES; GENERALLY

CONCLUSIVE UPON THEM AND THE COURT. Stipulation of fact was stipulated by the parties,
it need not be proven, it cannot be contradicted by evidence to the contrary, and it is
conclusive upon the parties, unless it is shown that the admission was made through a palpable
mistake. The Court of Appeals cannot arbitrarily disregard the statement of facts agreed upon
by the parties. It is duty bound to render judgment strictly in accordance with the stipulation of
facts.

4. ID.; EVIDENCE; FINDINGS OF FACT OF THE COURT OF APPEALS, GENERALLY BINDING; CASE AT
BAR, AN EXCEPTION. The questions raised in petitioners petition for review are questions of
fact and not of law and, therefore, this Court should not disturb the findings of fact of the Court
of Appeals. While the Court agrees with private respondents that, ordinarily, the Supreme
Court should not review questions of fact in appeals of this nature, the Court finds, however,
that an exception obtains in the instant case, for clearly evident is a misapprehension of facts.

DECISION

CORTES, J.:
The core of the controversy in this case is a thumbmarked, non-notarized and non-witnessed
deed of sale of a parcel of unregistered land, which on its face cannot but cause a prudent man
to doubt its due execution and authenticity.

The facts are briefly summarized in the decision of the Court of Appeals:chanrob1es virtual 1aw
library

The evidence of the plaintiff consisting of the sole testimony of said plaintiff is to the effect that
the property in question was originally owned by his father Apolonio Bunag Aguas as shown by
Tax Declaration Nos. 546 for 1941 and 320 for 1960 (Exhs. B & E), located at San Nicolas, Betis,
Pampanga; that he had been living in their house thereon with his father until 1920 when they
transferred their residence to Tarlac; that in 1925 their house thereon was demolished as it was
old; that they planted bamboos on the land; that Jose Bautista Santiago, a nephew-in-law,
erected a house on said lot and lived therein for sometime until he became a widower when he
transferred to another house; that said Jose Bautista Santiago one day accompanied his sister
Estrudes Bautista to stay in that house; and that Santiago was allowed by his father to build a
house on said lot on condition that he would pay for the land taxes as compensation for the use
of the land. He admitted, however, that he only learned about this agreement from his father.
On September 15, 1962, and September 24, 1962 he sent written demands to defendant Bruno
Bautista, thru his lawyer, to vacate the lot and remove the houses thereon, (Exhs. A & B). The
testimony of the other witness Juan Bunag was stricken from the records as he failed to return
to court for cross-examination.

On the other hand, the evidence for the defendant consist of the testimony of defendant Bruno
Bautista who testified that he is the owner of the land in question by virtue of a deed of sale of
January 3, 1941, signed by Apolonio Bunag with his thumbmark; that Bunag first offered it for
sale to his brother Jose Bautista, but as the latter had no money, he referred the matter to his
father; that after he was contacted in Baguio by his father, he sent the P100.00 as consideration
of the sale and so the sale was consummated between his father and Bunag; that he came
down from Baguio and had the house repaired and he stayed there with his family until
liberation when they left the house and allowed his sister Estrudes Bautista to live therein; that
he planted bananas, chicos, trees, calamansi, eggplants, thereon; that he had been paying the
land taxes thereon (Exhs. 5 to 5-M); that the property is declared in his name (Exh. 6); and he
denies that her sister Estrudes requested Apolonio Bunag to allow her to stay on the property
as her sister had a house of her own then.

Brigida Bautista testified that her brother bought the said property from Apolonio Bunag and
that she was present when Bunag affixed his thumbmark on the document (Exh. 1); that aside
from this deed, there were other documents supporting the sale as the note (Exh. 2) containing
the consideration and the parties. Assessors Field Sheet of the property (Exh. 3) and the letter
of the assessor to Bunag in 1941 informing him of the revision of the assessment. (Rollo, pp. 15-
18).

The trial court decided in favor of petitioner, the dispositive portion of the decision reading as
follows:chanrob1es virtual 1aw library

IN VlEW OF THE FOREGOlNG, judgment is rendered in favor of the plaintiff. The defendants,
Bruno Bautista and Estrudes Bautista vda. de Bituin, are hereby ordered to vacate the property
herein described and to deliver possession thereof to the plaintiff, Francisco Bunag; ordering
the said defendants, jointly and severally, to pay the land taxes of the property up to and
including the year 1968; and to pay the plaintiff the sum of P15.00 per month as reasonable
rentals thereof from the date of this judgment until the property is delivered to the plaintiff; to
pay the plaintiff the sum of P200.00 as expenses of litigation and costs. For lack of merit, the
counterclaim of the defendants are dismissed. (Rollo, pp. 14-15)

The Court of Appeals, finding the deed of sale (Exhibit 1) to have been validly executed and,
thus, concluding that "the preponderance of evidence leans heavily in favor of the claim of the
ownership of defendant Bruno Bautista" [Rollo, p. 18], set aside the decision of the trial court
and dismissed the complaint. The motion for reconsideration was subsequently denied by the
Court of Appeals in a minute resolution for lack of merit.

Consequently, resolution of the instant petition primarily revolves around the issue of the due
execution authenticity of the deed of sale (Exhibit 1). The petitioner assigned the following
errors:chanrob1es virtual 1aw library

THE COURT OF APPEALS ERRED IN HOLDING THAT THE DEED OF SALE (EXHIBIT "1") WAS DULY
EXECUTED AND AUTHENTICATED.

II

THE COURT OF APPEALS ERRED IN MAKING CONCLUSION (SIC) NOT IN ACCORDANCE WITH THE
EVIDENCE ON RECORD.

At the outset, it must be emphasized that the deed of sale (Exhibit 1) was not acknowledged
before a notary public and neither are there any signatures in the blank spaces for the
signatures of attesting witnesses. The document is typewritten in English and over the similarly
typewritten words "APOLONIO BUNIAG" is a thumbprint.

The deed of sale (Exhibit 1) is not notarized and is, therefore, a private writing (U.S. v. Orera, 11
Phil. 596 (1908)], whose due execution and authenticity must be proved before it can be
received in evidence [Nolan v. Sales, 7 Phil. 1 (1906); U.S. v. Evangelista, 29 Phil. 215 (1915);
Antillon v. Barcelon, 37 Phil. 148 (1917)].

Proof of the due execution and authenticity of private writings is required under Section 21,
Rule 132 of the Revised Rules of Court, to wit:chanrob1es virtual 1aw library

Sec. 21. Private writing, its execution and authenticity, how proved. Before any private
writing may be received in evidence, its due execution and authenticity must be proved
either:chanrob1es virtual 1aw library

(a) By anyone who saw the writing executed;

(b) By evidence of the genuineness of the handwriting of the maker; or

(c) By a subscribing witness.

To support its conclusion as to the due execution and authenticity of the deed of sale (Exhibit
1), the Court of Appeals relied on the testimony of Brigida Bautista, a sister of private
respondents. She testified as follows:chanrob1es virtual 1aw library

Q. Who is the owner of the property?

A. My brother Bruno Bautista.

Q. Do you know how your brother, Bruno Bautista, came to own the same property?

A. Yes, sir. He bought it from Apolonio Bunag.

Q. Do you know if there is any document evidencing the purchase of the said property from
Apolonio Bunag?

A. Yes, sir.

Q. Showing to you this document already marked as Exhibit 1, do you recognize this?

A. Yes, sir, this is the document showing the purchase and sale of the lot in litigation.

Q. At the bottom portion thereof, appears a thumbmark above the typewritten name Apolonio
Bunag, do you know whose thumbmark this is?

A. That is the thumbmark of Apolonio Bunag, sir, and I know that is his because I saw him
affixed (sic) his thumbmark. (TSN, March 25, 1967, pp. 1-2).

However, the trial court found proof of the due execution and authenticity of the deed of sale
(Exhibit l) wanting, reasoning that:chanrob1es virtual 1aw library

The testimony of this witness (Brigida Bautista) has to be received with caution, coming as it
does from a sister of the defendants. The circumstances of her alleged presence during the
"execution" of the deed of sale was not related. Neither does she give any light as to whether
Apolonio Bunag understood the document. It should be noted that Exhibit "1" was written in
English. Since it appears that said document was merely thumb-marked, it could reasonably be
inferred that Apolonio Bunag, the supposed vendor, was illiterate. Under the circumstances,
the minimum proof necessary to establish due authenticity should, in the least, include
evidence that the document (Exhibit "1") was duly read, explained and translated to Apolonio
Bunag. Unfortunately, no such evidence was presented. Another fact which compels this Court
to proceed with caution is the fact that there are no instrumental witnesses in the document.
The mischief that lurks behind accepting at face value a document that is merely thumb-
marked, without any witnesses to it, and not acknowledged before a notary public could be one
of the reasons behind the requirement of the rules on evidence that a private writing must be
shown to be duly executed and authenticated. The probative value of the testimony of Brigida
Bautista, who did not furnish us with any details surrounding the execution of Exhibit "1,"
coming as it does from a person whose partisanship can not, and should not, be overlook (sic),
falls short from (sic) the minimum requirements of credibility. Indeed it has been said that the
testimony of an eye-witness as to the execution of a private document must be positive. He
must state that the document was actually executed by the person whose name is subscribed
thereto. It is not sufficient if he states in a general manner that such person made the writing
(Nolan v. Salas, 7 Phil. 1). More so if the document was merely thumb-marked.

Regretably, this Court can not accept, for failure of proof as to its due execution and
authenticity, the probative value of Exhibit "1." (Record on Appeal, pp. 38-39).

The Court sustains and adopts the trial courts findings and its conclusion that private
respondents have failed to prove the due execution and authenticity of the deed of sale (Exhibit
1).

The due execution and authenticity of the deed of sale (Exhibit 1) not having been satisfactorily
proven, such private document should be excluded [Paz v. Santiago, 47 Phil. 334 (1925);
Alejandrino v. Reyes, 53 Phil. 973 (1929); Chapman v. Garcia, 64 Phil. 618 (1937); General
Enterprises v. Lianga Bay Logging Co., G.R. No. L-18487, August 31, 1964, 11 SCRA 733].

2. Petitioner contends that the Court of Appeals erred in arriving at a conclusion not supported
by the record, when it said:chanrob1es virtual 1aw library

The pretension of the plaintiff that the defendant bound himself to pay the taxes for the use of
the land is belied by the fact that the defendant paid the taxes in his own name and not in the
name of Bunag, and the defendant kept the receipts of payment and did not deliver even one
of those receipts to Bunag. (Rollo, p. 19.).

Petitioner argues that this finding is grossly erroneous, considering that in the stipulation of
facts submitted by both parties before the trial court, it is expressly provided:chanrob1es
virtual 1aw library
3. That the parties hereto hereby stipulate and agree that the defendant, Bruno Bautista, has
been paying the land taxes due on the aforesaid property, personally or thru his wife,
Consolacion Capati, for the period from 1940 to 1964, as shown by the corresponding official
land tax receipts duly issued by the Municipal Treasurer of Guagua, Pampanga; however, under
the column NAME OF DECLARED OWNER thereof, the name Bunag Aguas Apolonio is written.

As this fact was stipulated by the parties, it need not be proven, it cannot be contradicted by
evidence to the contrary, and it is conclusive upon the parties, unless it is shown that the
admission was made through a palpable mistake [Irlanda v. Pitargue, 22 Phil. 383 (1912); Board
of Administrators, Philippine Veterans Administration v. Agcaoili, G.R. No. L-38129, July 23,
1974, 58 SCRA 72].

There being no allegation of a palpable mistake that would relieve private respondents from
the stipulation of facts, the stipulated fact above-quoted is conclusive upon the parties.

The Court of Appeals cannot arbitrarily disregard the statement of facts agreed upon by the
parties [Siping v. Cacob, 10 Phil. 717 (1908)]. It is duty bound to render judgment strictly in
accordance with the stipulation of facts [Cabrera v. Lacson, 71 Phil. 182 (1940)].

It may also be added that, indeed, in the Real Estate Tax Receipts (Exhibits 5 5-M) covering
the years 1947 to 1964 presented by private respondents as their evidence, under the column
entitled "NAME OF DECLARED OWNER," the name "Bunag Aguas Apolonio" is written. This
assumes greater significance considering that the payers in these receipts were either private
respondent Bruno Bautista, his wife Consolacion Capati or Ambrosio Bautista.

Thus, this Court finds merit in petitioners contention that the Court of Appeals conclusion is
not supported by the record, for said conclusion is contrary to the stipulated fact and the
evidence offered by private respondents, which support petitioners contention that his father
did not sell the disputed property to private respondents father, but merely allowed their
brother to build a house on the land on the condition that the latter would pay for the realty
taxes due.

With the exclusion of the deed of sale (Exhibit 1), the conclusiveness of the stipulation
regarding the payment of realty taxes and the declaration of Apolonio Bunag Aguas as the
owner in the Real Estate Tax Receipts (Exhibits 5 5-M), it becomes apparent that petitioners
father never ceased to own the disputed property.

At this juncture, it would be opportune to address private respondents submission that the
questions raised in petitioners petition for review are questions of fact and not of law and,
therefore, this Court should not disturb the findings of fact of the Court of Appeals. While the
Court agrees with private respondents that, ordinarily, the Supreme Court should not review
questions of fact in appeals of this nature, the Court finds, however, that an exception obtains
in the instant case, for clearly evident is a misapprehension of facts [De la Cruz v. Sosing, 94
Phil. 26 (1953); Castillo v. Court of Appeals, G.R. No. L-48290, September 29, 1983, 124 SCRA
808]. As summarized by the Court in a recent decision:chanrob1es virtual 1aw library

The jurisdiction of this Court in cases brought to us from the Court of Appeals (now
Intermediate Appellate Court) is limited to the review of errors of law, said appellate courts
findings of fact being conclusive upon us except (1) when the conclusion is a finding grounded
entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly
absurd, mistaken or impossible; (3) when there is grave abuse of discretion in the appreciation
of facts; (4) when the judgment is premised on a misapprehension of facts; (5) when the
findings of fact are conflicting; and (6) when the Court of Appeals, in making its findings went
beyond the issues of the case and the same is contrary to the admissions of both appellant and
appellee . . . [Rizal Cement Co., Inc. v. Villareal, G.R. No. L-30272, February 28, 1985, 135 SCRA
15].

WHEREFORE, the petition is hereby GRANTED, the decision of the Court of Appeals is set aside
and the decision of the trial court is affirmed in toto. This Decision is immediately executory.

SO ORDERED.

Fernan (Chairman), Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

THIRD DIVISION

[G.R. No. 76792. March 12, 1990.]

RESURRECCION BARTOLOME, Et Al., *, Petitioners, v. THE INTERMEDIATE APPELLATE COURT

(now Court of Appeals) and HEIRS OF SPOUSES BERNABE BARTOLOME and URSULA
CID, Respondents.

Rafael B. Ruiz, for Petitioners.

E.L. Peralta for Private Respondents.

SYLLABUS

1. RESIDUAL LAW; EVIDENCE; REQUISITES WHEN PRIVATE WRITING NEED NOT BE PROVEN BY
OTHER EVIDENCE OF ITS EXECUTION AND AUTHENTICITY. Rule 132 of the Rules of Court
provides: "SEC. 22. Evidence of execution not necessary. Where a private writing is more
than thirty years old, is produced from a custody in which it would naturally be found if
genuine, and is unblemished by any alterations or circumstances of suspicion, no other
evidence of its execution and authenticity need be given." We agree with the appellate court
that the first two requirements ordained by Section 22 are met by Exhibit 4. It appearing that it
was executed in 1917, Exhibit 4 was more than thirty years old when it was offered in evidence
in 1983. It was presented in court by the proper custodian thereof who is an heir of the person
who would naturally keep it.

2. ID.; ID.; PROOFS OF DUE EXECUTION AND AUTHENTICITY OF ANCIENT WRITING. Under
Section 21 of Rule 132, the due execution and authenticity of a private writing must be proved
either by anyone who saw the writing executed, by evidence of the genuineness of the
handwriting of the maker, or by a subscribing witness. The testimony of Dominador Bartolome
on Exhibit 4 and Ursula Cids sworn statement in 1937 do not fall within the purview of Section
21. The signature of Maria Gonzales on the missing fourth page of Exhibit 4 would have helped
authenticate the document if it is proven to be genuine. But as there can be no such proof
arising from the signature of Maria Gonzales in the deed of sale, the same must be excluded.

3. CIVIL LAW; CODE OF CIVIL PROCEDURE; WILLS AND SUCCESSION; SURVIVING SPOUSE
ENTITLED ONLY TO THE PROPERTY IN USUFRUCT. Even if Exhibit 4 were complete and
authentic, still, it would substantially be infirm. Under Article 834 of the old Civil Code, Maria
Gonzales, as a surviving spouse, "shall be entitled to a portion in usufruct equal to that
corresponding by way of legitime to each of the legitimate children or descendants who has not
received any betterment." And, until it had been ascertained by means of the liquidation of the
deceased spouses estate that a portion of the conjugal property remained after all the
partnership obligations and debts had been paid, the surviving spouse or her heirs could not
assert any claim of right or title in or to the community property which was placed in the
exclusive possession and control of the husband as administrator thereof. Hence, in the
absence of proof that the estate of Epitacio Batara had been duly settled, Maria Gonzales had
no right to sell not even a portion of the property subject of Exhibit 4.

4. ID.; LAND TITLE AND DEEDS; ACQUISITIVE PRESCRIPTION; PERIOD SUSPENDED UPON THE
INSTITUTION OF CADASTRAL PROCEDURES. On the issue of whether acquisitive prescription
runs during the pendency of a cadastral case, we hold, as this Court held in Cano v. De
Camacho, that the institution of cadastral proceedings, or at least the publication of the notice
therein issued, has the effect of suspending the running of the prescriptive period. Hence, the
appellate court erred in ascribing acquisitive prescription in favor of Ursula Cid "up to the
present."cralaw virtua1aw library

5. REMEDIAL LAW; EVIDENCE; WEIGHT AND SUFFICIENCY; TAX DECLARATIONS; DOES NOT
CONCLUSIVELY PROVE OWNERSHIP. While it is true that the property had been declared for
tax purposes by Bernabe Bartolome and that, subsequent to his death, taxes thereon were paid
in the name of his son, Dominador, ownership thereof had not been acquired by Ursula Cid or
her heirs. Aside from the fact that said declarations and payments were made during the
pendency of the cadastral case, a tax declaration in the name of the alleged property owner or
of his predecessor-in-interest, does not prove ownership. It is merely an indicium of a claim of
ownership. In the same manner, neither does the payment of taxes conclusively prove
ownership of the land paid for.

DECISION

FERNAN, C.J.:

This is a petition for review on certiorari of the decision 1 of the then Intermediate Appellate
Court "adjudicating the whole Lot No. 11165 in favor of" Bernabe Bartolome and Ursula Cid,
thereby reversing the decision 2 of the Regional Trial Court of Ilocos Norte, Branch XII at Laoag
City. The dispositive portion of the latter decision states:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered adjudicating the eastern portion to the heirs of the
late Epitacio Batara measuring 27 meters from south to north by 32 meters from east to west,
with an area of 864 square meters, bounded on the east by the Provincial Road; on the north by
the heirs of Rufo Manuel; on the west by a portion of the same Lot No. 11165; and on the south
by Lot No. 11164; the remaining portion to the heirs of Doroteo Bartolome, bounded on the
east by the portion of Lot No. 11165 adjudicated to the heirs of Epitacio Batara and heirs of
Rufo Manuel; on the north by Eugenio Andrada; on the west by Nieves Caday or Lot No. 11166;
and on the south by Lot No. 11164.
"Likewise, the heirs of Epitacio Bartolome Batara are hereby ordered to reserved (sic) the road
right of way for the necessary expansion of the road adjacent to the eastern side of said lot,
subject, however, to just compensation.chanrobles virtual lawlibrary

"Once this Decision becomes final, let the corresponding Decree be issued accordingly.

"IT IS SO ORDERED."cralaw virtua1aw library

The record shows that a 725-square meter portion of said Lot No. 11165 located in Barrio 11,
Laoag, Ilocos Norte, was first declared as his property by Epitacio Batara under tax declaration
No. 5708 dated May 23, 1906. 3 The property was described therein as bounded on the north
by the property of Pedro Manuel, on the east by the road, on the south by the property of
Doroteo Bartolome and on the west by the property of one named Esteban, and as having "una
casa de tabla de dimension 5 x 4 metros" as improvement. Tax declaration No. 5708 was
superseded by tax declaration No. 37576 labelled as a "revision of declaration of real property
(urban)" dated April 23, 1914. 4 The residential lot described in the latter tax declaration
contained an area of 772 square meters with a "casa" and a "granero" as improvements
thereon.

Epitacio Batara and his wife, Maria Gonzales, had two children: Catalina and Pedro. The latter
died a bachelor and without issue. Catalina, who married someone surnamed Bartolome, bore
five children named Isabela, Tarcila, Calixto, Resurreccion and Ruperta. In 1912, before he left
Laoag to settle in Culalabo, Gamo (Burgos), Isabela, Epitacio entrusted the lot to his cousin,
Doroteo Bartolome, who owned the lot bounding Epitacios property on the south. 5 Maria
Gonzales remained in the lot for sometime. When she later followed Epitacio to Isabela, she
allowed Doroteo Bartolome to continue taking charge of the property. 6

In 1916, Epitacio Batara died in Isabela. Five years later or in 1921, Maria Gonzales and her
grandchildren, Calixto and Resurreccion Bartolome, returned to Laoag. As they found that the
house on their lot was destroyed by fire, they boarded in someone elses house. Calixto
constructed a bamboo fence around his grandfathers lot and he and Resurreccion, who was
studying in Laoag, cleaned it. Resurreccion went back to Isabela after Maria Gonzales death in
1926. 7 It was also in that year when Doroteo Bartolome, to whom Epitacio had entrusted his
land, migrated to Davao City. Doroteo died there two years later. 8

Thereafter, the Director of Lands instituted cadastral proceedings over the land involved herein
(Cadastral Case No. 53). On October 23, 1933, Ursula Cid, the widow of the son of Doroteo
Bartolome, Bernabe, who died in 1928, 9 filed an answer in Cadastral Case No. 53, claiming
ownership over Lot No. 11165 with an area of 1660 square meters, described as bounded on
the north by the property of Rufo Manuel and Eugenia Andrada, on the east by the provincial
road, on the south by the property of Doroteo Bartolome, and on the west by the property of
Nieves Caday and Eugenia Andrada, and with a house as improvement thereon. The land was
allegedly acquired by Ursula Cid through inheritance from Doroteo Bartolome, the father of
Ursulas deceased husband, Bernabe. 10
More than three months later or on January 30, 1934, Resurreccion Bartolome also filed an
answer in the same cadastral case claiming ownership over a portion of Lot No. 11165 with an
area of 864 square meters described as bounded on the north by the property of the heirs of
Rufo Manuel, on the east by Blumentritt Street, on the south by the property of Doroteo
Bartolome, and on the west by the property of Bernabe Bartolome. No improvements on the
lot were indicated in the answer which also stated that said portion of Lot No. 11165 was
acquired by claimant Resurreccion Bartolome "by inheritance from my grandfather and
grandmother . . . Epitacio Batara and Maria Gonzales." 11

From then on, no further proceedings were held in the cadastral case. Meanwhile, in 1934,
Resurreccion Bartolome verbally entrusted the portion she had claimed to Maria Bartolome,
whom she later described as the daughter of Doroteo Bartolome. 12

In 1939, Ursula Cid and her children also migrated to Davao City leaving their house on Lot No.
11165 to a lessee, Severino Ramos. Ursula and her son, Dominador Bartolome, instructed Maria
Bartolome, the sister of Bernabe, to receive the rentals for the house from Severino Ramos. 13
Maria Bartolome also paid the taxes on the property until 1948, when Dominador took over the
task. 14 But on September 22, 1950, Maria Bartolome, as "administrator of the parcel of land
situated at Bo. 11, Laoag, Ilocos Norte," leased Lot No. 11165 to the Philippine United Trading
Co., Inc. 15 The rentals for the property were paid by the lessee to Dominador Bartolome until
the edifice housing the company was burned down in 1968. 16 Resurreccion Bartolome, who
had been residing in Isabela, was given by Maria Bartolome a small amount, which could have
been about P50, in consideration of the lease contract. 17

In June, 1968, the Court of First Instance of Ilocos Norte sent out notices for the "continuation
of the hearing" on June 13, 1968 in Cadastral Case No. 53. 18 It should be remembered,
however, that from the time Ursula Cid and Resurreccion Bartolome filed their answers to the
petition in the cadastral case, there had been no progress in the proceedings.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

A year later or in 1969, Maria J. Bartolome filed in Cadastral Case No. 53 a "motion to admit
answer in intervention," alleging that she is one of the children of Doroteo Bartolome and that
she and her co-heirs had been excluded in Ursula Cids answer to the petition. She therefore
prayed that the answer of Ursula Cid be amended so as to include the rightful heirs of Doroteo
Bartolome. 19 At the same time, she filed an answer claiming co-ownership over Lot No. 11165
with Clemente, Julia and Rosario Bartolome and Ursula Cid, the widow of Bernabe. She likewise
alleged therein that she and her siblings inherited the 1660-square meter lot from Doroteo

Bartolome. 20

Three months later, Ursula Cid filed a motion to amend her answer to reflect the complete
"ground or basis of acquisition" of Lot No. 11165. 21 In her amended answer, Ursula Cid stated
that she was the absolute owner of Lot No. 11165; that she had been the possessor of Lot No.
11165 for over fifty years; that she "acquired by inheritance from Bernabe Bartolome, who
together with her, purchased the . . . lot which used to be three adjoining lots from their
respective owners;" and that Lot No. 11165 had been declared for tax purposes in the name of
her late husband Bernabe Bartolome. 22

No hearing was conducted in the case until 1974. To buttress her claim that she and her
husband purchased Lot No. 11165, Ursula Cid presented at the trial three deeds of sale: [a] one
dated March 1, 1917 showing that Bernabe Bartolome and Ursula Cid bought a 374-square
meter lot for fifteen pesos from the spouses Domingo Agustin and Josefa Manrique; 23 [b]
another document dated February 18, 1913 executed by Ignacia Manrique in favor of Bernabe
Bartolome evidencing the sale of another lot also for fifteen pesos; 24 and [c] still another deed
executed by Maria Gonzales y Paguyo on February 9, 1917 in favor of Bernabe Bartolome and
Ursula Cid ceding to the latter 772 square meters of land for P103.75. 25 The last-mentioned
piece of land is the one being claimed by Resurreccion Bartolome.

On May 10, 1984, the Regional Trial Court of Ilocos Norte rendered a decision the dispositive
portion of which is quoted above. The court entertained only the answers of Ursula Cid and
Resurreccion Bartolome. It found that the lots described in Exhibits 2 and 3 presented by Ursula
Cid "are not within Lot 11165" and that said exhibits "are defective as the vendors are not the
real owner(s)" of the lots described therein. As to Exhibit 4, the court ruled that it has "no
probative value as the same is incomplete and unsigned." The court also held that Ursula Cids
possession of the land "after the claimants had filed their respective answer(s) or after the
declaration of a general default," did not confer ownership on her because said possession was
interrupted and merely tolerated by all the parties during the pendency of the case. 26

Ursula Cid appealed to the then Intermediate Appellate Court. In its decision reversing the
lower court, the appellate court held that the deeds of sale presented by Ursula Cid are ancient
documents under Section 22, Rule 132 of the Rules of Court. It also ruled that Ursula Cids
continuous possession of the lot from its acquisition and her exercise of rights of ownership
over it vested her with the legal presumption that she possessed it under a just title.chanrobles
lawlibrary : rednad

Her motion for the reconsideration of said decision having been denied, Resurreccion
Bartolome filed the instant petition for review on certiorari based on two principal issues: [a]
whether the provisions of Rule 132 on ancient documents are applicable with respect to Exhibit
4, and [b] whether acquisitive prescription runs during the pendency of a cadastral case.

Exhibit 4 consists of three pieces of paper. The first piece is a blank sheet which apparently
serves as a cover page. The two other pages contain the handwritten document in Ilocano
stating that in consideration of the amount of P103.75, Maria Gonzales y Paguyo sold to the
spouses Bernabe Bartolome and Ursula Cid 772 square meters of land bounded on the north by
the property of Pedro Manuel, on the east by the Bacarra road, on the south by the property of
Doroteo Bartolome and on the west by the property of Bernabe Bartolome. The third sheet or
page 2 thereof contains a warranty against eviction and other disturbances with the last three
lines indicating the date of the execution of the instrument.

According to Dominador Bartolome, he first saw Exhibit 4 in the possession of his mother,
Ursula Cid, when he was just eleven years old. He noticed that the document had a fourth page
containing the signature of Maria Gonzales and that all four pages were sewn together. 27
However, when the document was entrusted to him by his mother in 1947 as he was then
representing the family in litigation concerning the land, the documents fourth page was
already missing. 28 He stated that his mother told him that the fourth page was lost during the
Japanese occupation while they were evacuating from Davao City. 29

Dominador Bartolome also presented in court a sworn statement in Ilocano executed by Ursula
Cid on February 19, 1937. 30 In her statement, Ursula Cid declared that the sale of the lot to her
and her husband by Maria Gonzales was evidenced by a written instrument; that the land had
been transferred in the name of her husband; that she had been paying taxes therefor, and that
they had been in continuous possession of the land for more than twenty years. 31

Rule 132 of the Rules of Court provides:jgc:chanrobles.com.ph

"SEC. 22. Evidence of execution not necessary. Where a private writing is more than thirty
years old, is produced from a custody in which it would naturally be found if genuine, and is
unblemished by any alterations or circumstances of suspicion, no other evidence of its
execution and authenticity need be given."cralaw virtua1aw library

We agree with the appellate court that the first two requirements ordained by Section 22 are
met by Exhibit 4. It appearing that it was executed in 1917, Exhibit 4 was more than thirty years
old when it was offered in evidence in 1983. 32 It was presented in court by the proper
custodian thereof who is an heir of the person who would naturally keep it. 33 We notice,
however, that the Court of Appeals failed to consider and discuss the third requirement; that
no alterations or circumstances of suspicion are present.

Admittedly, on its face, the deed of sale appears unmarred by alteration. We hold, however,
that the missing page has nonetheless affected its authenticity. Indeed, its importance cannot
be overemphasized. It allegedly bears the signature of the vendor of the portion of Lot No.
11165 in question and therefore, it contains vital proof of the voluntary transmission of rights
over the subject of the sale. Without that signature, the document is incomplete. Verily, an
incomplete document is akin to if not worse than a document with altered
contents.chanrobles.com:cralaw:red

Moreover, there is a circumstance which bothers the Court and makes the genuineness of the
document suspect. If it is really true that the document was executed in 1917, Ursula Cid would
have had it in her possession when she filed her answer in Cadastral Case No. 53 in 1933.
Accordingly, she could have stated therein that she acquired the portion in question by
purchase from Maria Gonzales. But as it turned out, she only claimed purchase as a mode of
acquisition of Lot No. 11165 after her sister-in-law, Maria J. Bartolome and the other
descendants of Doroteo Bartolome sought intervention in the case and demanded their rightful
shares over the property.

All these negate the appellate courts conclusion that Exhibit 4 is an ancient document.
Necessarily, proofs of its due execution and authenticity are vital. Under Section 21 of Rule 132,
the due execution and authenticity of a private writing must be proved either by anyone who
saw the writing executed, by evidence of the genuineness of the handwriting of the maker, or
by a subscribing witness. The testimony of Dominador Bartolome on Exhibit 4 and Ursula Cids
sworn statement in 1937 34 do not fall within the purview of Section 21. The signature of Maria
Gonzales on the missing fourth page of Exhibit 4 would have helped authenticate the document
if it is proven to be genuine. But as there can be no such proof arising from the signature of
Maria Gonzales in the deed of sale, the same must be excluded. 35

Even if Exhibit 4 were complete and authentic, still, it would substantially be infirm. Under
Article 834 of the old Civil Code, Maria Gonzales, as a surviving spouse, "shall be entitled to a
portion in usufruct equal to that corresponding by way of legitime to each of the legitimate
children or descendants who has not received any betterment." And, until it had been
ascertained by means of the liquidation of the deceased spouses estate that a portion of the
conjugal property remained after all the partnership obligations and debts had been paid, the
surviving spouse or her heirs could not assert any claim of right or title in or to the community
property which was placed in the exclusive possession and control of the husband as
administrator thereof. 36 Hence, in the absence of proof that the estate of Epitacio Batara had
been duly settled, Maria Gonzales had no right to sell not even a portion of the property subject
of Exhibit 4.chanrobles.com : virtual law library

On the issue of whether acquisitive prescription runs during the pendency of a cadastral case,
we hold, as this Court held in Cano v. De Camacho, 37 that the institution of cadastral
proceedings, or at least the publication of the notice therein issued, has the effect of
suspending the running of the prescriptive period. Hence, the appellate court erred in ascribing
acquisitive prescription in favor of Ursula Cid "up to the

present." 38

Neither can Ursula Cid successfully assert that prior to the institution of the cadastral
proceedings, she and her husband had gained acquisitive prescription over the property. Until
Doroteo Bartolome migrated to Davao City in 1926, he was in possession of the whole lot
including the portion entrusted to him by Epitacio Batara. Granting that the 1520-square meter
lot Bernabe Bartolome had declared as his own in 1925 39 is within Lot No. 11165, still, the
period from 1925 until the filing of the cadastral case in 1933 failed to give him an advantage. It
is short of the 10-year actual, adverse and uninterrupted period of possession mandated by
Section 41 of the Code of Civil Procedure in order that a full and complete title could be vested
on the person claiming to be the owner of a piece of land.

Furthermore, while it is true that the property had been declared for tax purposes by Bernabe
Bartolome and that, subsequent to his death, taxes thereon were paid in the name of his son,
Dominador, 40 ownership thereof had not been acquired by Ursula Cid or her heirs. Aside from
the fact that said declarations and payments were made during the pendency of the cadastral
case, a tax declaration in the name of the alleged property owner or of his predecessor-in-
interest, does not prove ownership. It is merely an indicium of a claim of ownership. 41 In the
same manner, neither does the payment of taxes conclusively prove ownership of the land paid
for.

The foregoing discussion notwithstanding, the Court is unprepared to decree 824 square
meters of Lot No. 11165 in favor of Resurreccion Bartolome and her co-heirs to the of Epitacio
Batara. The revised declaration of real property in the name of Epitacio, which petitioners
presented as Exhibit B, reveals that Epitacio Batara owned only 772 square meters of the lot
involved. Certainly, petitioner and her co-heirs may not be entitled to an area greater than
what their grandfather claimed as his own.chanrobles virtual lawlibrary

Similarly, what remains of Lot No. 11165 after the portion herein adjudicated to Resurreccion
Bartolome and her co-heirs has been determined, may not be granted to the heirs of Bernabe
Bartolome and Ursula Cid exclusively. The two other deeds of sale presented as Exhibits 2 and 3
having been found worthless by the trial court as they involve parcels of land not within Lot No.
11165 and the vendors of which were not the real owners of the property, which findings of
facts are binding on this Court, the law mandates that the property, having been inherited from
Doroteo Bartolome, must be shared in equal portions by his children or their heirs.

WHEREFORE, the appealed decision of the then Intermediate Appellate Court is hereby
reversed and set aside.

The eastern portion of Lot No. 11165 with an area of 772 square meters is hereby adjudicated
in favor of the heirs of Epitacio Batara who are herein represented by Resurreccion Bartolome
while the remaining area of Lot No. 11165 is hereby adjudicated in favor of the heirs of Doroteo
Bartolome.

Petitioners shall pay the cost of the survey and subdivision of Lot No. 11165. No costs. SO
ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 71391 January 29, 1987

CELSA PUNCIA ANCHUELO, ET AL., petitioners,

vs.
INTERMEDIATE APPELLATE COURT and BENITO GAVINO, ET AL., respondents.

Bernabe C. Cabico for petitioners.

Augusto A. Pardalis for private respondents.

GUTIERREZ, JR., J.:

This is a petition to review the decision of the Intermediate Appellate Court, now Court of
Appeals, which affirmed the decision of the then Court of First Instance in Civil Case No. R-642
(7289) entitled "Celsa Puncia Anchuelo, et al v. Benito Gavino, et al." for reformation of
contract and accounting with damages.

In their complaint filed on April 27,1972, Antonio Anchuelo and petitioner Celsa Puncia alleged
that they are the owners of seven (7) parcels of land covered by Original Certificate of Title
(Free Patent) No. 586; that on May 19, 1961, they secured a loan from Benito Gavino and Juana
Euste in the amount of P3,000.00 but, instead of executing a deed of mortgage over the said
parcels of land, the Gavinos induced the Anchuelos to execute a supposed deed of sale with the
understanding that the Gavino would execute another document on the same day to make the
transaction appear as an agreement to resell but its essence is one of repurchase of the same
properties after the lapse of nineteen (19) years from the date of execution; that the
consideration on both documents in the amount of P28,000.00 is fictitious, the truth, being that
the actual amount of the loan obtained was only P3,000.00; that the Anchuelos offered to
repurchase the properties for the actual amount of the loan obtained but the Gavinos refused;
that Benito Gavino had transferred the properties to his sister and co-defendant Martha Gavino
and thereafter re-transferred the same properties to his other co- defendants Jaime and Juan
both surnamed Gavino; that these transfers resulted in the issuance of certificate of title to
those other defendants which were fictitious for want of consideration; hence, the petitioners
prayed among others, that the deed of sale be annulled; that they be allowed to repurchase the
subject properties; and that the certificate of title of the various defendants covering the
subject properties be annulled.
In their Answer, the Gavinos denied the allegations of the complaint and alleged that the deed
of sale correctly reflects the true intention of the actual transaction between them and the
plaintiffs, and that the amount of P28,000.00 stated in the document as consideration thereof
is the purchase price of the subject properties; and that the transfer of the properties from the
defendants Benito Gavino and Juana Euste to Martha Gavino and thereafter to Jaime and Juan
Gavino were true and legitimate transactions and that there were considerations in such sales.
They admitted the execution of the document "Promise to Resell" but alleged it was void for
want of consideration.

In the course of the proceedings in the lower court, Antonio Anchuelo died and he was
substituted by his children with Celsa Puncia Anchuelo.

The trial court found the facts of the case, as follows:

xxx xxx xxx

[S]ometime in the year 1954 the Anchuelos were in great financial stress which
prompted them to encumber or alienate seven (7) parcels of their conjugal land.

The seven (7) parcels were mortgaged to the Rehabilitation Finance Corporation
(RFC) for P3,000.00 which loan was increased by P2,000.00 on October 9, 1956
(Exhibits 2 & 3).

A loan of P2,000 was also obtained from the Philippine National Bank (PNB)
which was secured by a second mortgage on the same property. Three years
later, that was on October 16, 1958 the Anchuelos obtained once more a loan
for P7,000.00 from Leonor Cayetano. As security they constituted a second
mortgage in which the mortgagee was to assume the indebtedness of the
Anchuelos to the DBP.

As the finances of the Anchuelos did not improve, interests from banking
institution accumulated they finally conveyed the property to defendants Benito
Gavino and Juana Euste-Gavino for P18,000.00 (Exh. 13) which included the
P7,000.00 loaned from Leonor Cayetano and, with a interest, becomes P7,850.00
(Exh. 9); the amount of P1,500.00 stated in the Pacto de Retro of Lot I of Original
Certificate of Title No. 568; and also the amount of P4,541.39 which was paid by
Benito Gavino to the RFC and the amount of P2,104.55 paid to the PNB. The
balance of P2,105.06 was paid in cash to the Anchuelo

On May 19, 1961, the Anchuelo spouses transformed the Pacto de Retro to an
absolute sale (Exhs. A, A-1 & Exh. 16) with the increase in price to P28,000.00.

It should be noted that from the alleged P18,000.00 amount of the supposed
consideration there was a total payment made by the defendant Benito Gavino
 in the sum of P15,995.94 which is short of P2,105.06 to complete the fun
amount of P18,000.00 The defendants alleged that the amount was paid in cash
(p. 26, TSN, Sept. 12, 1975, Annexes 2, Reconstituted Transcript).lwphl@it

Out of the P28,000.00 of which the sum of P18,000.00 was considered paid,
there exist an existing balance of P10,000.00. How was this amount of P
10,000.00 paid by the Gavinos? The amount of P5,500.00 was allegedly paid by
the Gavinos when Exhibit A and Exhibit 16 was executed as explained by the
defendant, and the sum of P4,500.00 was covered by a Promissory Note dated
May 19, 1961 (Exh. 10).

From the promissory note abovementioned, it gives December 31, 1962 as the
date of maturity. Nevertheless, on November 20, 1961, the amount of P1,600.00
plus one (1) sack of rice worth P24.00 was received by the late Antonio Anchuelo
and signed by plaintiff Celsa Puncia-Anchuelo (Exh. 10-A). On August 26, 1962,
the remaining P2,876.00 was paid (Exh. 10-B).

It is the observation of the Court that Exhibit 10-B leave no signature or detailed
explanation how the P2,876.00 was paid There was just a statement which
reads:

Paid auxillary total

August 26, 1962

OK

which to the unbiased mind, does not seem to convey that a specific amount
was paid The original of the promissory note was said to have been returned to
the plaintiffs upon redeeming the promissory note before the date of maturity.
Why should such promissory note be re to the plaintiffs since the Gavino spouses
were the makers of the Promissory Note?

The Gavino spouses Benito and Juana, sold the land to Martha Gavino for
P30,000.00 thereafter, Martha Gavino sold the property to Juan and Jaime both
surnamed Gavino. All the sales made duly registered as the sellers and buyers
were dealing with titled pro- parties.

xxx xxx xxx

Based on these findings, the trial court promulgated a decision, the dispositive portion of which
reads:
 WHEREFORE, the Court finds that the sale between Antonio Anchuelo and Celsa
Puncia-Anchuelo on one hand to Benito Gavino and Juana Euste-Gavino on the
other hand, is true and valid deed of sale sufficient to transfer ownership. The
subsequent sale to Martha Gavino and the sale thereafter to Jaime and Juan
both surnamed Gavino are likewise declared valid.

The preponderance of evidence which strongly favors the defendants, the said
defendants are jointly and severally ordered to pay unto the plaintiffs, for the
interest of justice, the sum of THREE THOUSAND EIGHT HUNDRED SEVENTY SIX
(P3,876.00) PESOS, the amount which was not received by the plaintiffs nor paid
to them by reason of the promissory note executed by Benito Gavino. After the
payment of said amount, the case should be dismissed. No pronouncement as to
damages and costs.

The afore-quoted decision was appealed by the petitioners to the Intermediate Appellate
Court.

Except for making the second paragraph of the appealed decision's dispositive portion clearer
by correcting it to read as follows.

The preponderance of evidence strongly favors the defendants but said

defendants are jointly. . . .

the trial court's decision was affirmed by the appellate court.

A motion for reconsideration filed by the petitioners was denied. Hence, this petition

The main issue in this petition is whether or not the petitioners have established their right to
repurchase the subject parcels of land.

The petitioners invoke two grounds upon which they base their right to repurchase the subject
parcels of land. First, they maintain that the deed of absolute sale (Exhs. A, A-1 and Exh. 16) was
fictitious and without any consideration and that the true and real transaction between the
Anchuelo spouses on one hand and the Gavino spouses on the other hand was a sale with right
of repurchase or venta con pacto de retro. Second, they contend that they have the legal right
under Section 119 of Commonwealth Act 141 (Public Land Law) to repurchase the parcels of
land within five (5) years from May 19, 1961 the date when the deed of absolute sale and
agreement to resell was executed.

We find no reason to disturb the findings of the trial court and the appellate court that the
disputed deed of sale reflects the true transaction between the Anchuelo spouses on one hand
and the Gavino spouses on the other. This is clearly seen in the execution of public documents
evidencing the parties' various transactions involving the land and leading to the execution of
the questioned deed of sale.
The records show that after the Gavinos had redeemed the Anchuelo properties by paying
P4,541.39, P2,104.55, and P7,850.00 to the Development Bank of the Philippines, Philippine
National Bank and Leonor Cayetano, respectively, and had given the Anchuelos P2,105.06 in
cask the Anchuelos executed on March 15, 1960 a deed of sale with right to repurchase the
seven (7) parcels in favor of the Gavinos.

On May 19, 1961, the Gavino spouses executed a "deed of repurchase" in favor of the
Anchuelos where the land was transferred to the latter for P18,000.00. However, on this same
day, May 19, 1961, the spouses Anchuelo converted the deed of sale with right to repurchase
dated March 15, 1960 into a Deed of Absolute Sale for the increased amount of P28,000.00 in
favor of the Gavinos. For the difference of P10,000.00, the Gavinos paid P5,500.00 in cash and
P4,500.00 in a promissory note. Three separate payments on the note were eventually
effected. On this same date also, May 19, 1961, the Gavinos executed in turn, an agreement to
resell the properties to the Anchuelos for P28,000.00 but giving the latter not earlier than
nineteen (19) years to redeem the properties.

These public documents are entitled to full faith and credit on their face in the absence of any
competent evidence that their execution was tainted by defects or irregularities that would
warrant a declaration of nullity. (Roman v. Court of Appeals, 112 SCRA 542). The records show
that the petitioners have failed to prove their allegations of a fictitious sale or fraud in the
execution of the questioned deed. The findings of facts of the trial court and the appellate court
are supported by the evidence and appear both credible and logical.

As earlier stated, on the same day that the absolute deed of sale was executed, the Gavino
spouses executed an Agreement to Resell the same parcels of land, for the same price in favor
of the Anchuelo spouses (Exhibit B). Embodied in the document is the following stipulation:

That it is a condition of this agreement that the PARTY OF THE SECOND PART, his
heirs, assigns and successors in interests, shall not exercise their right to
repurchase said parcels of land subject matter of this agreement within the
period of nineteen (19) years from the date of execution of this instrument but
may only exercise their right after the lapse of said nineteen years from date of
the execution of this agreement.

This stipulation clearly violates Article 1601 of the Civil Code, which limits the period for
conventional redemption should there be an agreement to the maximum of ten years from the
date of the contract. (Baluyot v. Venegas, 22 SCRA 412) Where the agreement for repurchase
exceeds ten years, we have ruled that the vendor a retro has ten years from the execution of
the contract to exercise his right of redemption (Baluyot V. Venegas, supra citing Santos v. Heirs
of Crisostomo and Tiongson, 41 Phil. 342).

The Agreement to Resell was executed on May 19, 1961. The petitioners, therefore had until
May 19, 1971 to exercise their right to redeem the subject parcels of land. The records clearly
show that the petitioners failed to exercise their right to redeem the parcels of land within this
ten-year period.

The petitioners also invoke their right to redeem the subject parcels of land within five (5) years
from May 19, 1961. This claim is premised on the fact that the seven (7) parcels of land were
originally covered by Original Certificate of Title No. 586 issued by the Register of Deeds,
Camarines Sur on February 11, 1953 to Antonio Anchuelo pursuant to Free Patent No. U-2776
issued six days earlier.

The appellate court dismissed this theory in this wise.

In the first place, this issue was never raised in the trial court Well settled is the
rule that questions not raised in the lower court cannot be raised for the first
time on appeal (Garcia v. Court of Appeals, 102 SCRA 597; Matienzo v. Sevilla,
107 SCRA 276). It would indeed be unfair to the adverse party if an entirely new
issue is raised on appeal as it had no opportunity to introduce evidence to
counteract this new issue. Moreover, there is a different evidence required in
order to invoke the right of repurchase under Section 119 of C.A. No. 141.

Moreover, the Court finds merit in the contention of the appellees that even
granting arguendo that plaintiffs can still repurchase the land under the Public
Land Law, said right had already expired. The instant complaint was filed eleven
years after the date of sale was executed on May 19, 1961. Even the filing of Civil
Cases Nos. 5694 and 6184 cannot suspend the period of redemption. It appears
that the complaint (Exhibit 20) referred to annulment of loan.

We agree.

Section 119 of Commonwealth Act 141 states:

Every reconveyance of land acquired under the free patent homestead

provisions, when proper, shall be subject to repurchase by the applicant, his
widow, or legal heirs, within a period of five years from the date of the
conveyance.

We interpreted this provision in Lee v. Court of Appeals (68 SCRA 198, 204) as follows:

xxx xxx xxx

... Article 1616 of the Civil Code of the Philippines, in the absence of an
applicable provision in Commonwealth Act No. 141, furnishes the guide, to wit:
"The vendor cannot avail himself of the right of repurchase without returning to
the vendee the price of the sale. ... "
 Thus, in the case of Angao v. Clavano, 17 Phil 152, it was held that "it is not
sufficient for the vendor to intimate or to state to the vendee that the former
desires to redeem the thing sold, but he must immediately thereupon offer to
repay the price. ... "Likewise, in several other cases decided by the Supreme
Court (Fructo v. Fuentes, 15 Phil 362; Retes v. Suelto, 20 Phil 394; Rosales v.
Reyes, et al 25 Phil. 495; Canuto v. Mariano, 37 Phil. 840; De la Cruz, et al v.
Resurreccion, et al., 98 Phil. 975; and other cases) where the right to repurchase
was held to have been properly exercised, there was a definite finding of tender
of payment having been made by the vendor.

xxx xxx xxx

xxx xxx xxx

It is clear that the mere sending of letters by vendor Simeon expressing his desire
to repurchase the property without an accompanying tender of redemption
price fell short of the requirements of law. Having failed to properly exercise his
right of redemption within the statutory five-year period, the right is lost and the
same can no longer be revived by the filing of an action to compel redemption
after the lapse of the period. ...

There is nothing in the records nor in the factual findings of the trial court and the Intermediate
Appellate Court to indicate that there was a valid tender of payment of the repurchase price
during the five-year period under Section 119 of Commonwealth Act 141 or the ten-year period
under Article 1601 of the Civil Code. This is a factual issue which can no longer be threshed out
in a petition for review. The findings of the lower courts are supported by the evidence.

The petitioners contend that two civil cases flied ahead of Civil Case No. R-642 (7289) should be
deemed to have suspended the running of the ten-year period to repurchase.

The contention is without merit.

The first case, CC No. 5694 filed on November 5, 1963 was for annulment of loan. There is
nothing in the complaint to indicate that it was filed to exercise the right of repurchase. We
cannot read into the complaint something which is not there.

The second case, CC No. 6184 was entitled annulment of sale and repurchase of property. It
was filed on June 24, 1966 but was dismissed because of the petitioners' failure to prosecute
their case.

The complaint which gave rise to the present petition was filed on April 21, 1972. The Anchuelo
spouses averred in this complaint in Civil Case No. R-642 (7289) that "this case is the same as
the one filed in Branch III of this Honorable Court in Civil Case No. 6184 which was dismissed
without prejudice, however, upon suggestion by the Presiding Judge, this case is instituted in
order to avail further delays in the proceedings for relief under Section 38 of the Rules of
Court."

The petitioners' averments indicate that not one of the cases earlier filed could suspend the
running of the ten-year period or constitute a valid tender in an effort to repurchase. The
petitioners question the deed of sale dated May 19, 1961 as fraudulent because the agreement
was intended to be a mortgage but they were "induced ... to execute a supposed deed of sale."
The petitioners question the P28,000.00 consideration as fictitious because the loan they
obtained was only P3,000.00. They question the transactions as illegal and the result of the
Gavinos taking advantage of their financial necessity and "mental strains." The complaint
alleges post offers to repurchase for the actual amount of the loan, meaning P3,000.00, which
the respondents allegedly rejected. While the prayer includes a clause "that the plaintiffs be
allowed to repurchase the properties in question," the Anchuelos asked that they be paid
P10,000.00 annually by the Gavinos from 1961 instead of offering any amount to indicate a
willingness to buy back the properties. The theory of the petitioners is that the deed of sale is
fraudulent and fictitious. If there was no valid sale, there is nothing to repurchase.

The inevitable conclusion is that the petitioners did not exercise their right to redeem the
subject parcels of land within the ten-year prescriptive period. It was only after the ten-year
period had already lapsed that the present case was filed. It was only then that the petitioners
pursued their right to repurchase the subject parcels of land but without any tender of payment
and in terms contradictory of a desire to repurchase.

It is to be noted that the lower courts ordered the private respondents to pay the petitioners
the amount of P3,876.00 as the remaining balance of the former in the P28,000.00 price of the
subject parcels of land. This amount was arrived at after deducting P1,600.00 and P24.00 paid
by the private respondents to cover their P4,500.00 promissory note which was part of the
P28,000.00 total price for the parcels of land. The discrepancy is not explained by the evidence.
The respondents claim to have paid it as shown by an August 26, 1962 statement which reads
"Paid all total August 26, 1962. OK." The trial court ruled that since no specific amount was
mentioned and the note was in the hands of the Anchuelos, it is not proof of payment. The
computation is incorrect as the remainder after deducting P1,624.00 from P4,500.00 is
P2,876.00 and not P3,876.00.

WHEREFORE, the instant petition is hereby DENIED. Except for the MODIFICATION that the
private respondents are ordered to pay the petitioners P2,876.00, the decision of the
respondent court is AFFIRMED.

Republic of the Philippines

SUPREME COURT
Manila
 FIRST DIVISION

G.R. No. L-49542 September 12, 1980

ANTONIO MACADANGDANG, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and ELIZABETH MEJIAS, respondents.

MAKASIAR, J.:

This petition for review seeks to set aside the decision of the Court of Appeals in CA-G.R. No.
54618-R which reversed the decision of the Court of First Instance of Davao, Branch IX
dismissing the action for recognition and support filed by respondent Elizabeth Mejias against
petitioner Antonio Macadangdang, and which found minor Rolando to be the illegitimate son of
petitioner who was ordered to give a monthly support of P350.00 until his alleged son reaches
the age of majority (p. 47, rec.; p. 10, ROA).

The records show that respondent Elizabeth Mejias is a married woman, her husband being
Crispin Anahaw (pp. 61-62, t.s.n., Sept. 21, 1972; pp. 10-11, Brief for Respondent [P. 198, rec.])
She allegedly had intercourse with petitioner Antonio Macadangdang sometime in March, 1967
(p. 38, t.s.n., June 7, 1972 in CC No. 109). She also alleges that due to the affair, she and her
husband separated in 1967 (p. 63, t.s.n., Sept. 21, 1972). On October 30, 1967 (7 months or 210
days following the illicit encounter), she gave birth to a baby boy who was named Rolando
Macadangdang in baptismal rites held on December 24,1967 (Annex "A", List of Exhibits).

The records also disclose that on April 25, 1972, respondent (then plaintiff) filed a complaint for
recognition and support against petitioner (then defendant) with the Court of First Instance of
Davao, Branch IX. This case was docketed as Civil Case No. 263 (p. 1, ROA).

Defendant (now petitioner) Macadangdang filed his answer on June 30, 1972, opposing
plaintiff's claim and praying for its dismissal (p. 3, ROA).

On August 9, 1972, the lower court in a pre-trial conference, issued a Pre-trial Order formalizing
certain stipulations, admissions and factual issues on which both parties agreed (pp. 4, 5, and 6,
ROA). Correspondingly, upon agreement of the parties, an amended complaint was filed by
plaintiff on October 17, 1972 (pp. 7,8 and 9, ROA).

In its decision rendered on February 27, 1973, the lower court dismissed the complaint,. The
decision invoked positive provisions of the Civil Code and Rules of Court and authorities (pp. 10-
18, ROA).
On April 18, 1973, plaintiff appealed the CFI decision to the Court of Appeals (p. 59, In her
appeal, appellant assigned these errors:

1. The Honorable Trial Court erred in applying in the instant case the provisions
of Arts. 255 and 256 of the Civil Code and Secs. 4[a], 4[b] and 4[c], Rule 131, of
the Revised Rules of Court (p. 18, rec.);

2. The Honorable Trial Court erred in holding that plaintiff-appellant cannot

validly question the legitimacy of her son, Rolando Macadangdang, by a
collateral attack without joining her legal husband as a party in the instant case
(p. 18, rec.).

In its decision handed down on June 2, 1978, the Court of Appeals reversed the lower court's
decision (p. 47, and thus declared minor Rolando to be an illegitimate son of Antonio
Macadangdang (p. 52, rec.).

On November 6, 1978, the Court of Appeals denied appellant's motions for reconsideration for
lack of merit. (p. 56, rec.).

Hence, petitioner filed this petition on January 12, 1979.

The issues boil down to:

1. Whether or not the child Rolando is conclusively presumed the legitimate

issue of the spouses Elizabeth Mejias and Crispin Anahaw; and

2. Whether or not the wife may institute an action that would bastardize her
child without giving her husband, the legally presumed father, an opportunity to
be heard.

The crucial point that should be emphasized and should be straightened out from the very
beginning is the fact that respondent's initial illicit affair with petitioner occurred sometime in
March, 1967 and that by reason thereof, she and her husband separated. This fact surfaced
from the testimony of respondent herself in the hearing of September 21, 1972 when this case
was still in the lower court. The pertinent portions of her testimony are thus quoted:

By Atty. Fernandez:

Q What did you feel as a result of the incident where Antonio

Macadangdang used pill and took advantage of your womanhood?

A I felt worried, mentally shocked and humiliated.

 Q If these feelings: worries, mental shock and humiliation, if estimated
in monetary figures, how much win be the amount?

A Ten thousand pesos, sir.

Q And because of the incidental what happened to your with

Crispin Anahaw.

xxx xxx xxx

WITNESS:

A We separate, sir. (pp. 61-63, T.s.n., Civil Case No. 263, Sept. 21,
1972; emphasis supplied).

From the foregoing line of questions and answers, it can be gleaned that respondent's answers
were given with spontaneity and with a clear understanding of the questions posed. There
cannot be any other meaning or interpretation of the word "incident" other than that of the
initial contact between petitioner and respondent. Even a layman would understand the clear
sense of the question posed before respondent and her categorical and spontaneous answer
which does not leave any room for interpretation. It must be noted that the very question of
her counsel conveys the assumption of an existing between respondent and her husband.

The finding of the Court of Appeals that respondent and her husband were separated in 1965
cannot therefore be considered conclusive and binding on this Court. It is based solely on the
testimony of respondent which is self-serving. Nothing in the records shows that her statement
was confirmed or corroborated by another witness and the same cannot be treated as borne
out by the record or that which is based on substantial evidence. It is not even confirmed by her
own husband, who was not impleaded.

In the case of Tolentino vs. De Jesus (L-32797, 56 SCRA 167 [1974], this Court restated that the
findings of facts of the Court of Appeals are conclusive on the parties and on the Supreme
Court, unless (1) the conclusion is a finding grounded entirely on speculation, surmise, and
conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of
discretion; (4) the judgment is based on misapprehension of facts; (5) the Court of Appeals went
beyond the issues of the case and its findings are contrary to the admission of both appellant
and appellee; (6) the findings of facts of the Court of Appeals are contrary to those of the trial
court; (7) said findings of facts are conclusions without citation of specific evidence on which
they are based; (8) the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; and (9) when the finding of facts of the Court of
Appeals is premised on the absence of evidence and is contradicted by evidence on
record [Pioneer Insurance and Surety Corporation vs. Yap, L-36232, December 19, 1974; Roque
vs. Buan, L-22459, 21 SCRA 642 (1967); Ramos vs. Pepsi-cola Bottling Company of the
Philippines, L-225533, 19 SCRA 289 (1967); emphasis supplied].
Again, in Roque vs. Buan, supra, this Court reiterated the aforestated doctrine adding four more
exceptions to the general rule. This case invoked the same ruling in the previous case of Ramos
vs. Pepsi-Cola Bottling Company, etc., supra.

In the recent case of Francisca Alsua-Betts, et al. vs. Court of Appeals, et al. (L-46430-31, July
30, 1979), which petitioner aptly invokes, this Court thus emphasized:

... But what should not be ignored by lawyers and litigants alike is the more basic
principle that the "findings of fact" described as "final" or "conclusive" are those
borne out by the record or those which are based upon substantial evidence. The
general rule laid down by the Supreme Court does not declare the absolute
correctness of all the findings of fact made by the Court of Appeals. There are
exceptions to the general rule, where we have reviewed the findings of fact of
the Court of Appeals ... (emphasis supplied).

The following provisions of the Civil Code and the Rules of Court should be borne in mind:

Art. 255. Children born after one hundred and eighty days following the
celebration of the marriage, and before three hundred days following its
dissolution or the separation of the spouses shall be presumed to be legitimate.

Against this presumption, no evidence shall be admitted other than that of the
physical impossibility of the husband's having access to his wife within the first
one hundred and twenty days of the three hundred which preceded the birth of
the child.

This physical impossibility may be caused:

(1) By the impotence of the husband;

(2) By the fact that the husband and wife were separately, in such a way that
access was not possible;

(3) By the serious illness of the husband.

Art. 256. The child shall be presumed legitimate, although the mother may have
declared against its legitimacy or may have been sentenced as an adulteress.

Art. 257. Should the wife commit adultery at or about the time of the conception
of the child, but there was no physical impossibility of access between her and
her husband as set forth in article 255, the child is prima facie presumed to be
illegitimate if it appears highly improbable, for ethnic reasons, that the child is
that of the husband. For the purposes of this article, the wife's adultery need not
be proved in a criminal case.
 xxx xxx xxx

Sec. 4. Quasi-conclusive presumptions of legitimacy

(a) Children born after one hundred eighty days following the celebration of the
marriage, and before three hundred days following its dissolution or the
separation of the spouses shall be presumed legitimate.

Against presumption no evidence be admitted other than that of the physical

impossibility of the husband's having access to his wife within the first one
hundred and twenty days of the three hundred which preceded the birth of the
child.

This physical impossibility may be caused:

[1] By the impotence of the husband

[2] By the fact that the husband and the wife were living separately, in such a
way that access was not possible;

[3] By the serious illness of the husband;

(b) The child shall be presumed legitimate although the mother may have
declared against its legitimacy or may have been sentenced as an adulteress.

(c) Should the wife commit adultery at or about the time of the conception of
the child, but there was no physical impossibility of access between her and her
husband as set forth above, the child is presumed legitimate, unless it appears
highly improbable, for ethnic reasons, that the child is that of the husband. For
the purpose of the rule, the wife's adultery need not be proved in a criminal
case. ... (Rule 131, Rules of Court).

Whether or not respondent and her husband were separated would be immaterial to the
resolution of the status of the child Rolando. What should really matter is the fact that during
the initial one hundred twenty days of the three hundred which preceded the birth of the
renamed child, no concrete or even substantial proof was presented to establish physical
impossibility of access between respondent and her spouse. From her very revealing testimony,
respondent declared that she was bringing two sacks of rice to Samal for her children; that her
four children by her husband in her mother's house in the said town; that her alleged estranged
husband also lived in her mother's place (p. 73, pp. 21 & 22, 64 & 65, t.s.n., Sept. 21, 1972). It
should also be noted that even during her affair with petitioner and right after her delivery,
respondent went to her mother's house in Samal for treatment. Thus, in the direct examination
of Patrocinia Avila (the boy's yaya), the following came out:
 Q Why were you taking care of the child Rolando, where was
Elizabeth Mejias?

A Because Elizabeth went to her parents in Same Davao del Norte for
treatment because she had a relapse (p. 13, t.s.n., of Sept. 21, 1972).

From the foregoing and since respondent and her husband continued to live in the same
province, the fact remains that there was always the possibility of access to each other. As has
already been pointed out, respondent's self-serving statements were never corroborated nor
confirmed by any other evidence, more particularly that of her husband.

The baby boy subject of this controversy was born on October 30, 1967, only seven (7) months
after March, 1967 when the "incident" or first illicit intercourse between respondent and
petitioner took place, and also, seven months from their separation (if there really was a
separation). It must be noted that as of March, 1967, respondent and Crispin Anahaw had
already four children; hence, they had been married years before such date (t.s.n., pp. 21-22,
Sept. 21, 1972). The birth of Rolando came more than one hundred eighty 180 days following
the celebration of the said marriage and before 300 days following the alleged separation
between aforenamed spouses.

Under the aforequoted Article 255 of the Civil Code, the child Rolando is conclusively presumed
to be the legitimate son of respondent and her husband.

The fact that the child was born a mere seven (7) months after the initial sexual contact
between petitioner and respondent is another proof that the said child was not of petitioner
since, from indications, he came out as a normal full-term baby.

It must be stressed that the child under question has no birth certificate of Baptism (attached in
the List of Exhibits) which was prepared in the absence of the alleged father [petitioner]. Note
again that he was born on October 30, 1967. Between March, 1967 and October 30, 1967, the
time difference is clearly 7 months. The baby Rolando could have been born prematurely. But
such is not the case. Respondent underwent a normal nine-month pregnancy. Respondent
herself and the yaya, Patrocinia Avila, declared that the baby was born in the rented house at
Carpenter Street, which birth was obvisouly normal; that he was such a healthy baby that
barely 5 days after his birth, he was already cared for by said yaya when respondent became
sick (pp. 28, 29 & 43, t.s.n., Sept. 21, 1972); and that when he was between 15 days and 2
months of age, respondent left him to the care of the yaya when the former left for Samal for
treatment and returned only in February, 1968 (pp. 30-32, t.s.n., Sept. 21, 1972). From the
aforestated facts, it can be indubitably said that the child was a full-term baby at birth, normally
delivered, and raised normally by the yaya. If it were otherwise or if he were born prematurely,
he would have needed special care like being placed in an incubator in a clinic or hospital and
attended to by a physician, not just a mere yaya. These all point to the fact that the baby who
was born on October 30, 1967 or 7 months from the first sexual encounter between petitioner
and respondent was conceived as early as January, 1967. How then could he be the child of
petitioner?

In Our jurisprudence, this Court has been more definite in its pronouncements on the value of
baptismal certificates. It thus ruled that while baptismal and marriage certificates may be
considered public documents, they are evidence only to prove the administration of the
sacraments on the dates therein specified but not the veracity of the states or declarations
made therein with respect to his kinsfolk and/or citizenship (Paa vs. Chan, L-25945, Oct. 31,
1967). Again, in the case of Fortus vs. Novero (L-22378, 23 SCRA 1331 [1968]), this Court held
that a baptismal administered, in conformity with the rites of the Catholic Church by the priest
who baptized the child, but it does not prove the veracity of the declarations and statements
contained in the certificate that concern the relationship of the person baptized. Such
declarations and statements, in order that their truth may be admitted, must indispensably be
shown by proof recognized by law.

The child Rolando is presumed to be the legitimate son of respondent and her spouse. This
presumption becomes conclusive in the absence of proof that there was physical impossibility
of access between the spouses in the first 120 days of the 300 which preceded the birth of the
child. This presumption is actually quasi-conclusive and may be rebutted or refuted by only one
evidence the physical impossibility of access between husband and wife within the first 120
days of the 300 which preceded the birth of the child. This physical impossibility of access may
be caused by any of these:

1. Impotence of the husband;

2. Living separately in such a way that access was impossible and

3. Serious illness of the husband.

This presumption of legitimacy is based on the assumption that there is sexual union in
marriage, particularly during the period of conception. Hence, proof of the physical
impossibility of such sexual union prevents the application of the presumption (Tolentino,
Commentaries & Jurisprudence on the Civil Code, Vol. 1, p. 513 citing Bevilaqua, Familia p. 311).

The modern rule is that, in order to overthrow the presumption of legitimacy, it must be
shown beyond reasonable doubt that there was no access as could have enabled the husband
to be the father of the child. Sexual intercourse is to be presumed where personal access is not
disproved, unless such presumption is rebutted by evidence to the contrary; where sexual
intercourse is presumed or proved, the husband must be taken to be the father of the child
(Tolentino, citing Madden, Persons and Domestic Relations, pp. 340-341).

To defeat the presumption of legitimacy, therefore, there must be physical impossibility of

access by the husband to the wife during the period of conception. The law expressly refers to
physical impossibility. Hence, a circumstance which makes sexual relations improbable, cannot
defeat the presumption of legitimacy; but it may be proved as a circumstance to corroborate
proof of physical impossibility of access (Tolentino, citing Bonet 352; 4 Valverde 408).

Impotence refers to the inability of the male organ to copulation, to perform its proper function
(Bouvier's Law Dictionary 514). As defined in the celebrated case of Menciano vs. San Jose (89
Phil. 63), impotency is the physical inability to have sexual intercourse. It is not synonymous
with sterility. Sterility refers to the inability to procreate, whereas, impotence refers to the
physical inability to perform the act of sexual intercourse. In respect of the impotency of the
husband of the mother of a child, to overcome the presumption of legitimacy on conception or
birth in wedlock or to show illegitimacy, it has been held or recognized that the evidence or
proof must be clear or satisfactory: clear, satisfactory and convincing, irresistible or positive
(S.C. Tarleton vs. Thompson, 118 S.E. 421, 125 SC 182, cited in 10 C.J.S. 50).

The separation between the spouses must be such as to make sexual access impossible. This
may take place when they reside in different countries or provinces, and they have never been
together during the period of conception (Estate of Benito Marcelo, 60 Phil. 442). Or, the
husband may be in prison during the period of conception, unless it appears that sexual union
took place through corrupt violation of or allowed by prison regulations (1 Manresa 492-500).

The illness of the husband must be of such a nature as to exclude the possibility of his having
sexual intercourse with his wife; such as, when because of a injury, he was placed in a plaster
cast, and it was inconceivable to have sexual intercourse without the most severe pain
(Tolentino, citing Commissioner vs. Hotel 256 App. Div. 352, 9 N.Y. Supp. p. 515); or the illness
produced temporary or permanent impotence, making copulation impossible (Tolentino, citing
Q. Bonet 352).

Thus, in the case of Andal vs. Macaraig (89 Phil. 165), this Court ruled that just because
tuberculosis is advanced in a man does not necessarily mean that he is incapable of sexual
intercourse. There are cases where persons suffering from tuberculosis can do the carnal act
even in the most crucial stage of health because then they seemed to be more inclined to
sexual intercourse. The fact that the wife had illicit intercourse with a man other than her
husband during the initial period, does not preclude cohabitation between said husband and
wife.

Significantly American courts have made definite pronouncements or rulings on the issues
under consideration. The policy of the law is to confer legitimacy upon children born in wedlock
when access of the husband at the time of conception was not impossible (N.Y. Milone vs.
Milone, 290 N.Y. S. 863, 160 Misc. 830) and there is the presumption that a child so born is the
child of the husband and is legitimate even though the wife was guilty of infidelity during the
possible period of conception (N.Y. Dieterich vs. Dieterich, 278 N.Y. S. 645, Misc. 714; both cited
in 10 C.J.S., pp. 18,19 & 20).
So firm was this presumption originally that it cannot be rebutted unless the husband was
incapable of procreation or was absent beyond the four seas, that is, absent from the realm,
during the whole period of the wife's pregnancy (10 C.J.S. p. 20).

The presumption of legitimacy of children born during wedlock obtains, notwithstanding the
husband and wife voluntarily separate and live apart, unless the contrary is shown (Ala. Franks
vs. State, 161 So. 549, 26 . App. 430) and this includes children born after the separation [10
C.J.S. pp. 23 & 24; emphasis supplied].

It must be stressed that Article 256 of the Civil Code which provides that the child is presumed
legitimate although the mother may have declared against its legitimacy or may have been
sentenced as an adulteress has been adopted for two solid reasons. First, in a fit of anger, or to
arouse jealousy in the husband, the wife may have made this declaration (Power vs. State, 95
N.E., 660). Second, the article is established as a guaranty in favor of the children whose
condition should not be under the mercy of the passions of their parents. The husband whose
honor if offended, that is, being aware of his wife's adultery, may obtain from the guilty spouse
by means of coercion, a confession against the legitimacy of the child which may really be only
a confession of her guilt. Or the wife, out of vengeance and spite, may declare the as not her
husband's although the statement be false. But there is another reason which is more powerful,
demanding the exclusion of proof of confession or adultery, and it is, that at the moment of
conception, it cannot be determined when a woman cohabits during the same period with two
men, by whom the child was begotten, it being possible that it be the husband himself
(Manresa, Vol. I, pp. 503-504).

Hence, in general, good morals and public policy require that a mother should not be permitted
to assert the illegitimacy of a child born in wedlock in order to obtain some benefit for herself
(N.Y. Flint vs. Pierce, 136 N.Y. S. 1056, cited in 10 C.J.S. 77).

The law is not willing that the child be declared illegitimate to suit the whims and purposes of
either parent, nor Merely upon evidence that no actual act of sexual intercourse occurred
between husband and wife at or about the time the wife became pregnant. Thus, where the
husband denies having any intercourse with his wife, the child was still presumed legitimate
(Lynn vs. State, 47 Ohio App. 158,191 N.E. 100).

With respect to Article 257 aforequoted, it must be emphasized that adultery on the part of the
wife, in itself, cannot destroy the presumption of legitimacy of her child, because it is still
possible that the child is that of the husband (Tolentino, citing 1 Vera 170; 4 Borja 23-24).

It has, therefore, been held that the admission of the wife's testimony on the point would be
unseemly and scandalous, not only because it reveals immoral conduct on her part, but also
because of the effect it may have on the child, who is in no fault, but who nevertheless must be
the chief sufferer thereby (7 Am. Jur. Sec. 21, pp. 641-642).
In the case of a child born or conceived in wedlock, evidence of the infidelity or adultery of the
wife and mother is not admissible to show illegitimacy, if there is no proof of the husband's
impotency or non-access to his wife (Iowa Craven vs. Selway, 246 N.W. 821, cited in 10 C.J.S.
36).

At this juncture, it must be pointed out that only the husband can contest the legitimacy of a
child born to his wife. He is the one directly confronted with the scandal and ridicule which the
infidelity of his wife produces; and he should decide whether to conceal that infidelity or
expose it, in view of the moral or economic interest involved (Tolentino, citing Bevilaqua,
Familia, p. 314).

The right to repudiate or contest the legitimacy of a child born in wedlock belongs only to the
alleged father, who is the husband of the mother and can be exercised only by him or his heirs,
within a fixed time, and in certain cases, and only in a direct suit brought for the purpose (La
Ducasse vs. Ducasse, 45 So. 565, 120 La. 731; Saloy's Succ. 10 So. 872, 44 La. Ann., cited in 10
C.J.S. 77; emphasis supplied).

Thus the mother has no right to disavow a child because maternity is never uncertain; she can
only contest the Identity of the child (La Eloi vs. Mader, 1 Rollo. 581, 38 Am. D. 192).

Formerly, declarations of a wife that her husband was not the father of a child in wedlock were
held to be admissible in evidence; but the general rule now is that they are inadmissible to
bastardize the child, regardless of statutory provisions obviating incompetency on the ground
of interest, or the fact that the conception was antenuptial. The rule is said to be founded in
decency, morality and public policy (Wallace vs. Wallace 137 Iowa 37,114 N.W. 527,14 L.R.A.
[N.S.] 544,126 Am. St. Rep. 253,15 Ann. Cas. 761, Am. Jur. 26).

From the foregoing, particularly the testimony of respondent and her witnesses, this Court has
every reason to believe that Crispin Anahaw was not actually separated from Elizabeth Mejias;
that he was a very potent man, having had four children with his wife; that even if he and were
even separately (which the latter failed to prove anyway) and assuming, for argument's sake,
that they were really separated, there was the possibility of physical access to each other
considering their proximity to each other and considering further that respondent still visited
and recuperated in her mother's house in Samal where her spouse resided with her children.
Moreover, Crispin Anahaw did not have any serious illness or any illness whatsoever which
would have rendered him incapable of having sexual act with his wife. No substantial evidence
whatsoever was brought out to negate the aforestated facts.

Crispin Anahaw served as a refuge after respondent's reckless and immoral pursuits or a
"buffer" after her flings. And she deliberately did not include nor present her husband in this
case because she could not risk her scheme. She had to be certain that such scheme to
bastardize her own son for her selfish motives would not be thwarted.
This Court finds no other recourse except to deny respondent's claim to declare her son
Rolando the illegitimate child of petitioner. From all indications, respondent has paraded
herself as a woman of highly questionable character. A married woman who, on first meeting,
rides with a total stranger who is married towards nightfall, sleeps in his house in the presence
of his children, then lives with him after their initial sexual contact the atmosphere for which
she herself provided is patently immoral and hedonistic. Although her husband was a very
potent man, she readily indulged in an instant illicit relationship with a married man she had
never known before.

Respondent had shown total lack of or genuine concern for her child (Rolando) for, even after
birth, she left him in the care of a yaya for several months. This is not the normal instinct and
behavior of a mother who has the safety and welfare of her child foremost in her mind. The
filing of this case itself shows how she is capable of sacrificing the psycho-social future
(reputation) of the child in exchange for some monetary consideration. This is blatant
shamelessness.

It also appears that her claim against petitioner is a disguised attempt to evade the
responsibility and consequence of her reckless behavior at the expense of her husband, her
illicit lover and above all her own son. For this Court to allow, much less consent to, the
bastardization of respondent's son would give rise to serious and far-reaching consequences on
society. This Court will not tolerate scheming married women who would indulge in illicit affairs
with married men and then exploit the children born during such immoral relations by using
them to collect from such moneyed paramours. This would be the form of wrecking the stability
of two families. This would be a severe assault on morality.

And as between the paternity by the husband and the paternity by the paramour, all the
circumstances being equal, the law is inclined to follow the former; hence, the child is thus
given the benefit of legitimacy.

Finally, Article 220 of the Civil Code reinforces the aforesaid principle when it provides thus:

Art. 220. In case of doubt, an presumptions favor the solidarity of the family.
Thus, every of law or facts leans toward the validity of marriage, the
indissolubility of the marriage bonds, the legitimacy of childrenthe community of
property during marriage, the authority of parents over their children, and the
validity of defense for any member of the family in case of unlawful aggression.

WHEREFORE, THE DECISION OF THE COURT OF APPEALS DATED JUNE 2, 1978, AND ITS
RESOLUTION DATED NOVEMBER 6, 1978 ARE HEREBY REVERSED AND SET ASIDE. COSTS
AGAINST PRIVATE RESPONDENT.

SO ORDERED.

Teehankee (Chairman), Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.

 SECOND DIVISION

[G.R. No. 104235. November 18, 1993.]

SPOUSES CESAR & SUTHIRA ZALAMEA AND LIANA ZALAMEA, Petitioners, v. HONORABLE
COURT OF APPEALS AND TRANSWORLD AIRLINES, INC., Respondents.

Sycip, Salazar, Hernandez, Gatmaitan, for Petitioners.

Quisumbing, Torres & Evangelista for private-respondent.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; FOREIGN LAWS, HOW PROVED. 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. 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.

2. ID.; ID.; ID.; U.S. LAW OR REGULATION AUTHORIZING OVERBOOKING, NOT PROVED BY MERE
TESTIMONY OF RESPONDENTS AIRLINE CUSTOMER SERVICE AGENT. 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 courts finding that overbooking is specifically allowed
by the US Code of Federal Regulations has no basis in fact.

3. CIVIL LAW; APPLICATION OF LAWS; CONTRACT GOVERNED BY LAWS OF PLACE WHERE

EXECUTED; CASE AT BAR. 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 requires 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. Since the tickets were sold and issued in the
Philippines, the applicable law in this case would be Philippine law.

4. ID.; DAMAGES; OVERBOOKING AMOUNTS TO BAD FAITH ENTITLING PASSENGERS TO AWARD

OF MORAL DAMAGES. Existing jurisprudence explicitly states that overbooking amounts to
bad faith, entitling the passengers concerned to an award of moral damages. (Alitalia Airways v.
Court of Appeals, G.R. No. 77011, 187 SCRA 763 [1990]; Korean Airlines Co., Ltd. v. Court of
Appeals, G.R. No. 61418, 154 SCRA 211 [1987])

5. ID.; ID.; BREACH OF CONTRACT OF CARRIAGE AMOUNTS TO BAD FAITH. In fact, existing
jurisprudence abounds with rulings where the breach of contract of carriage amounts to bad
faith. (Pan American World Airways, Inc. v. Intermediate Appellate Court, G.R. No. 74442, 153
SCRA 521 [1987]) A contract to transport passengers is quite different in kind and degree from
any other contractual relation. (Zulueta v. Pan American World Airways, Inc., G.R. No. L-28589,
43 SCRA 397 [1972]

6. ID.; ID.; NON-INCORPORATION OF STIPULATIONS ON OVERBOOKING AND IN NOT

INFORMING PASSENGERS OF ITS POLICY GIVING LESS PRIORITY TO DISCOUNTED TICKET,
CONSTITUTE BAD FAITH; PASSENGERS ENTITLED TO BOTH MORAL AND EXEMPLARY DAMAGES;
CASE AT BAR. 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. Moreover, respondent TWA
was also guilty of not informing its passengers of its alleged policy of giving less priority to
discounted tickets. It is respondent TWAs 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. However, the award for moral and exemplary damages by the trial court is
excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped
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.

7. ID.; ID.; PASSENGER ENTITLED TO REIMBURSEMENT FOR COST OF TICKETS BOUGHT FOR
ANOTHER FLIGHT ON ANOTHER AIRLINE; CASE AT BAR. The respondent court erred,
however, in not ordering the refund of the cost 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. The purchase of
the American Airlines tickets by petitioners Suthira and Liana was the consequence of
respondent TWAs 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, 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 on 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.

8. ID.; ID.; ATTORNEYS FEES; RECOVERABLE WHERE A PARTY WAS COMPELLED TO LITIGATE TO
PROTECT HIS RIGHTS. The award to petitioners of attorneys fees is also justified under
Article 2208(2) of the Civil Code which allows recovery when the defendants act or omission
has compelled plaintiff to litigate or to incur expenses to protect his interest.

DECISION

NOCON, J.:

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 petitioners 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 TWAs 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.chanrobles law library :
red

The factual backdrop of the case is as follows:chanrob1es virtual 1aw library

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 from 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 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 full-fare 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 that he was holding his daughters full-fare ticket.chanrobles law library

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:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the
following amounts:jgc:chanrobles.com.ph

"(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
Zalameas ticket for TWA Flight 007;chanrobles virtual lawlibrary

"(3) Eight Thousand Nine Hundred Thirty-four Pesos and Fifty Centavos (P8,934.50), Philippine
Currency, representing the price of Liana Zalameas ticket for TWA Flight 007;

"(4) Two Hundred Fifty Thousand Pesos (250,000.00), Philippine Currency, as moral damages
for all the plaintiffs;

"(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for attorneys
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
forty-eight (48) other passengers where full-fare first class tickets were given priority over
discounted tickets.chanrobles virtual lawlibrary

The dispositive portion of the decision of respondent Court of Appeals 3 dated October 25,
1991 states as follows:red:chanrobles.com.ph

"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 plaintiffs the following
amounts:jgc:chanrobles.com.ph

"(1) US$159.49, or its peso equivalent at the time of payment, representing the price of Suthira
Zalameas ticket for TWA Flight 007;

"(2) US$159.49, or its peso equivalent at the time of payment, representing the price of Cesar
Zalameas ticket for TWA Flight 007;

"(3) P50,000.00 as and for attorneys 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:chanrobles virtual lawlibrary
 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 ZALAMEAS 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 courts finding that overbooking is
specifically allowed by the US Code of Federal Regulations has no basis in fact.chanrobles
virtual lawlibrary

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 requires 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.

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 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 respondents rights under their contract of carriage and is
therefore liable for the injuries she has sustained as a result.chanroblesvirtualawlibrary

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 indeed a confirmed passenger
and 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 courts 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 plane, 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.chanrobles.com:cralaw:red

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 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 TWAs 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.cralawnad

Petitioners also assail the respondent courts decision not to require the refund of Liana
Zalameas 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 arrangement. 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 cost 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 TWAs 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 on 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 courts 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.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

The award to petitioners of attorneys fees is also justified under Article 2208(2) of the Civil
Code which allows recovery when the defendants act or omission has compelled plaintiff to
litigate or to incur expenses to protect his interest. However, the award for moral and
exemplary damages by the trial court is excessive in the light of the fact that only Suthira and
Liana Zalamea were actually "bumped 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:chanrob1es virtual 1aw library

(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 attorneys fees; and

(5) Costs of suit.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:

This petition for review on certiorari seeks to set aside the decision of the Court of Appeals
affirming the dismissal of the petitioner's complaint to enforce the judgment of a Japanese
court. The principal issue here is whether a Japanese court can acquire jurisdiction over a
Philippine corporation doing business in Japan by serving summons through diplomatic
channels on the Philippine corporation at its principal office in Manila after prior attempts to
serve summons in Japan had failed.

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized

under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637
of the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a
Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a
corporation incorporated under Philippine laws.

As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the
following are the factual and procedural antecedents of this controversy:

On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp &
Company, through its Japan branch, entered into an International Passenger
Sales Agency Agreement, whereby the former authorized the latter to sell its air
transportation tickets. Unable to remit the proceeds of the ticket sales made by
defendant on behalf of the plaintiff under the said agreement, plaintiff on March
25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted
proceeds of the ticket sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil Department,
Tokyo District Court of Japan against defendant at its office at the Taiheiyo
Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa
Prefecture. The attempt to serve the summons was unsuccessful because the
bailiff was advised by a person in the office that Mr. Dinozo, the person believed
to be authorized to receive court processes was in Manila and would be back on
April 24, 1980.

On April 24, 1980, bailiff returned to the defendant's office to serve the
summons. Mr. Dinozo refused to accept the same claiming that he was no longer
an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of the Tokyo
District Court decided to have the complaint and the writs of summons served at
the head office of the defendant in Manila. On July 11, 1980, the Director of the
Tokyo District Court requested the Supreme Court of Japan to serve the
summons through diplomatic channels upon the defendant's head office in
Manila.

On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit
the writ of summons (p. 276, Records). Despite receipt of the same, defendant
failed to appear at the scheduled hearing. Thus, the Tokyo Court proceeded to
hear the plaintiff's complaint and on [January 29, 1981], rendered judgment
ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and
damages for delay at the rate of 6% per annum from August 28, 1980 up to and
until payment is completed (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the
judgment. Defendant not having appealed the judgment, the same became final
and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a
suit for enforcement of the judgment was filed by plaintiff before the Regional
Trial Court of Manila Branch 54. 2

On July 16, 1983, defendant filed its answer averring that the judgment of the
Japanese Court sought to be enforced is null and void and unenforceable in this
jurisdiction having been rendered without due and proper notice to the
defendant and/or with collusion or fraud and/or upon a clear mistake of law and
fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the
plaintiff rested its case, defendant on April 21, 1989, filed a Motion for Judgment
on a Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of
jurisdiction and (2) the said judgment is contrary to Philippine law and public
 policy and rendered without due process of law. Plaintiff filed its opposition after
which the court a quo rendered the now assailed decision dated June 21, 1989
granting the demurrer motion and dismissing the complaint (Decision, pp. 376-
378, Records). In granting the demurrer motion, the trial court held that:

The foreign judgment in the Japanese Court sought in this action

is null and void for want of jurisdiction over the person of the
defendant considering that this is an action in personam; the
Japanese Court did not acquire jurisdiction over the person of the
defendant because jurisprudence requires that the defendant be
served with summons in Japan in order for the Japanese Court to
acquire jurisdiction over it, the process of the Court in Japan sent
to the Philippines which is outside Japanese jurisdiction cannot
confer jurisdiction over the defendant in the case before the
Japanese Court of the case at bar. Boudard versus Tait 67 Phil.
170. The plaintiff contends that the Japanese Court acquired
jurisdiction because the defendant is a resident of Japan, having
four (4) branches doing business therein and in fact had a permit
from the Japanese government to conduct business in Japan
(citing the exhibits presented by the plaintiff); if this is so then
service of summons should have been made upon the defendant
in Japan in any of these alleged four branches; as admitted by the
plaintiff the service of the summons issued by the Japanese Court
was made in the Philippines thru a Philippine Sheriff. This Court
agrees that if the defendant in a foreign court is a resident in the
court of that foreign court such court could acquire jurisdiction
over the person of the defendant but it must be served upon the
defendant in the territorial jurisdiction of the foreign court. Such
is not the case here because the defendant was served with
summons in the Philippines and not in Japan.

Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of
Appeal, asking the court to treat the said notice of appeal "as in effect after and
upon issuance of the court's denial of the motion for reconsideration."

Defendant opposed the motion for reconsideration to which a Reply dated

August 28, 1989 was filed by the plaintiff.

On October 16, 1989, the lower court disregarded the Motion for
Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its
reliance upon Boudard vs.Tait 4 wherein it was held that "the process of the court has no
extraterritorial effect and no jurisdiction is acquired over the person of the defendant by
serving him beyond the boundaries of the state." To support its position, the Court of Appeals
further stated:

In an action strictly in personam, such as the instant case, personal service of

summons within the forum is required for the court to acquire jurisdiction over
the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer
jurisdiction on the court, personal or substituted service of summons on the
defendant not extraterritorial service is necessary (Dial Corp vs. Soriano, 161
SCRA 739).

But while plaintiff-appellant concedes that the collection suit filed is an action in
personam, it is its theory that a distinction must be made between an action in
personam against a resident defendant and an action in personam against a non-
resident defendant. Jurisdiction is acquired over a non-resident defendant only if
he is served personally within the jurisdiction of the court and over a resident
defendant if by personal, substituted or constructive service conformably to
statutory authorization. Plaintiff-appellant argues that since the defendant-
appellee maintains branches in Japan it is considered a resident defendant.
Corollarily, personal, substituted or constructive service of summons when made
in compliance with the procedural rules is sufficient to give the court jurisdiction
to render judgment in personam.

Such an argument does not persuade.

It is a general rule that processes of the court cannot lawfully be served outside
the territorial limits of the jurisdiction of the court from which it issues (Carter
vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the residence or
citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa
511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service within
the proper territorial limits on defendant or someone authorized to accept
service for him. Thus, a defendant, whether a resident or not in the forum where
the action is filed, must be served with summons within that forum.

But even assuming a distinction between a resident defendant and non-resident

defendant were to be adopted, such distinction applies only to natural persons
and not in the corporations. This finds support in the concept that "a corporation
has no home or residence in the sense in which those terms are applied to
natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607).
Thus, as cited by the defendant-appellee in its brief:

Residence is said to be an attribute of a natural person, and can be predicated on

an artificial being only by more or less imperfect analogy. Strictly speaking,
therefore, a corporation can have no local residence or habitation. It has been
 said that a corporation is a mere ideal existence, subsisting only in
contemplation of law an invisible being which can have, in fact, no locality and
can occupy no space, and therefore cannot have a dwelling place. (18 Am. Jur.
2d, p. 693 citing Kimmerle v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins.
Co., 13 Conn 202)

Jurisprudence so holds that the foreign or domestic character of a corporation is

to be determined by the place of its origin where its charter was granted and not
by the location of its business activities (Jennings v. Idaho Rail Light & P. Co., 26
Idaho 703, 146 p. 101), A corporation is a "resident" and an inhabitant of the
state in which it is incorporated and no other (36 Am. Jur. 2d, p. 49).

Defendant-appellee is a Philippine Corporation duly organized under the

Philippine laws. Clearly, its residence is the Philippines, the place of its
incorporation, and not Japan. While defendant-appellee maintains branches in
Japan, this will not make it a resident of Japan. A corporation does not become a
resident of another by engaging in business there even though licensed by that
state and in terms given all the rights and privileges of a domestic corporation
(Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).

On this premise, defendant appellee is a non-resident corporation. As such,

court processes must be served upon it at a place within the state in which the
action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1
S. Ct. 354). 5

It then concluded that the service of summons effected in Manila or beyond the territorial
boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court over
the person of SHARP; hence, its decision was void.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court
contending that the respondent court erred in holding that SHARP was not a resident of Japan
and that summons on SHARP could only be validly served within that country.

A foreign judgment is presumed to be valid and binding in the country from which it comes,
until the contrary is shown. It is also proper to presume the regularity of the proceedings and
the giving of due notice therein. 6

Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a
tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence
of a right as between the parties and their successors-in-interest by a subsequent title. The
judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court,
whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity. 7Being the party challenging the judgment rendered by the Japanese
court, SHARP had the duty to demonstrate the invalidity of such judgment. In an attempt to
discharge that burden, it contends that the extraterritorial service of summons effected at its
home office in the Philippines was not only ineffectual but also void, and the Japanese Court did
not, therefore acquire jurisdiction over it.

It is settled that matters of remedy and procedure such as those relating to the service of
process upon a defendant are governed by the lex fori or the internal law of the forum. 8 In this
case, it is the procedural law of Japan where the judgment was rendered that determines the
validity of the extraterritorial service of process on SHARP. As to what this law is is a question of
fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any
other fact. 9Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced
by an official publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon SHARP to present evidence as to what that Japanese procedural law is and to
show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly, the
presumption of validity and regularity of the service of summons and the decision thereafter
rendered by the Japanese court must stand.

Alternatively in the light of the absence of proof regarding Japanese

law, the presumption of identity or similarity or the so-called processual presumption 10 may be
invoked. Applying it, the Japanese law on the matter is presumed to be similar with the
Philippine law on service of summons on a private foreign corporation doing business in the
Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign
corporation doing business in the Philippines, service may be made: (1) on its resident agent
designated in accordance with law for that purpose, or, (2) if there is no such resident agent, on
the government official designated by law to that effect; or (3) on any of its officers or agents
within the Philippines.

If the foreign corporation has designated an agent to receive summons, the designation is
exclusive, and service of summons is without force and gives the court no jurisdiction unless
made upon him. 11

Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c)
the Securities and Exchange Commission, in the case of other foreign corporations duly licensed
to do business in the Philippines. Whenever service of process is so made, the government
office or official served shall transmit by mail a copy of the summons or other legal proccess to
the corporation at its home or principal office. The sending of such copy is a necessary part of
the service. 12

SHARP contends that the laws authorizing service of process upon the Securities and Exchange
Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may
be, presuppose a situation wherein the foreign corporation doing business in the country no
longer has any branches or offices within the Philippines. Such contention is belied by the
pertinent provisions of the said laws. Thus, Section 128 of the Corporation Code 13 and Section
190 of the Insurance Code 14 clearly contemplate two situations: (1) if the corporation had left
the Philippines or had ceased to transact business therein, and (2) if the corporation has no
designated agent. Section 17 of the General Banking Act 15 does not even speak a corporation
which had ceased to transact business in the Philippines.

Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to
receive court processes in Japan. This silence could only mean, or least create an impression,
that it had none. Hence, service on the designated government official or on any of SHARP's
officers or agents in Japan could be availed of. The respondent, however, insists that only
service of any of its officers or employees in its branches in Japan could be resorted to. We do
not agree. As found by the respondent court, two attempts at service were made at SHARP's
Yokohama branch. Both were unsuccessful. On the first attempt, Mr. Dinozo, who was believed
to be the person authorized to accept court process, was in Manila. On the second, Mr. Dinozo
was present, but to accept the summons because, according to him, he was no longer an
employee of SHARP. While it may be true that service could have been made upon any of the
officers or agents of SHARP at its three other branches in Japan, the availability of such a
recourse would not preclude service upon the proper government official, as stated above.

As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons
for SHARP be served at its head office in the Philippine's after the two attempts of service had
failed. 16 The Tokyo District Court requested the Supreme Court of Japan to cause the delivery
of the summons and other legal documents to the Philippines. Acting on that request, the
Supreme Court of Japan sent the summons together with the other legal documents to the
Ministry of Foreign Affairs of Japan which, in turn, forwarded the same to the Japanese
Embassy in Manila . Thereafter, the court processes were delivered to the Ministry (now
Department) of Foreign Affairs of the Philippines, then to the Executive Judge of the Court of
First Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy Sheriff
Rolando Balingit to serve the same on SHARP at its principal office in Manila. This service is
equivalent to service on the proper government official under Section 14, Rule 14 of the Rules
of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP's contention that
such manner of service is not valid under Philippine laws holds no water. 17

In deciding against the petitioner, the respondent court sustained the trial court's reliance
on Boudard vs. Tait 18where this Court held:

The fundamental rule is that jurisdiction in personam over nonresidents, so as to

sustain a money judgment, must be based upon personal service within the state
which renders the judgment.

xxx xxx xxx

 The process of a court, has no extraterritorial effect, and no jurisdiction is
acquired over the person of the defendant by serving him beyond the
boundaries of the state. Nor has a judgment of a court of a foreign country
against a resident of this country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here.

Process issuing from the courts of one state or country cannot run into another,
and although a nonresident defendant may have been personally served with
such process in the state or country of his domicile, it will not give such
jurisdiction as to authorize a personal judgment against him.

It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial
Corp. vs. Soriano, 20 as well as the principle laid down by the Iowa Supreme Court in the 1911
case of Raher vs. Raher. 21

The first three cases are, however, inapplicable. Boudard involved the enforcement of a
judgment of the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial
court dismissed the case because the Hanoi court never acquired jurisdiction over the person of
the defendant considering that "[t]he, evidence adduced at the trial conclusively proves that
neither the appellee [the defendant] nor his agent or employees were ever in Hanoi, French
Indo-China; and that the deceased Marie Theodore Jerome Boudard had never, at any time,
been his employee." In Magdalena Estate, what was declared invalid resulting in the failure of
the court to acquire jurisdiction over the person of the defendants in an action in
personam was the service of summons through publication against non-appearing resident
defendants. It was claimed that the latter concealed themselves to avoid personal service of
summons upon them. In Dial, the defendants were foreign corporations which were not,
domiciled and licensed to engage in business in the Philippines and which did not have officers
or agents, places of business, or properties here. On the other hand, in the instant case, SHARP
was doing business in Japan and was maintaining four branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court of
a territory to render a personal judgment against anyone upon service made outside its limits
was applicable alike to cases of residents and non-residents. The principle was put at rest by the
United States Supreme Court when it ruled in the 1940 case of Milliken vs. Meyer 22 that
domicile in the state is alone sufficient to bring an absent defendant within the reach of the
state's jurisdiction for purposes of a personal judgment by means of appropriate substituted
service or personal service without the state. This principle is embodied in section 18, Rule 14
of the Rules of Court which allows service of summons on residents temporarily out of the
Philippines to be made out of the country. The rationale for this rule was explained
in Milliken as follows:
 [T]he authority of a state over one of its citizens is not terminated by the mere
fact of his absence from the state. The state which accords him privileges and
affords protection to him and his property by virtue of his domicile may also
exact reciprocal duties. "Enjoyment of the privileges of residence within the
state, and the attendant right to invoke the protection of its laws, are
inseparable" from the various incidences of state citizenship. The responsibilities
of that citizenship arise out of the relationship to the state which domicile
creates. That relationship is not dissolved by mere absence from the state. The
attendant duties, like the rights and privileges incident to domicile, are not
dependent on continuous presence in the state. One such incident of domicile is
amenability to suit within the state even during sojourns without the state,
where the state has provided and employed a reasonable method for apprising
such an absent party of the proceedings against him. 23

The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict
technical sense, such domicile as a corporation may have is single in its essence and a
corporation can have only one domicile which is the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a

resident in another state in which it has offices and transacts business. This is the rule in our
jurisdiction and apropos thereto, it may be necessery to quote what we stated in State
Investment House, Inc, vs. Citibank, N.A., 26 to wit:

The issue is whether these Philippine branches or units may be considered

"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they were
respectively incorporated. The answer cannot be found in the Insolvency Law
itself, which contains no definition of the term, resident, or any clear indication
of its meaning. There are however other statutes, albeit of subsequent
enactment and effectivity, from which enlightening notions of the term may be
derived.

The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business within
the Philippines," as distinguished from a "'non-resident foreign corporation' . . .
(which is one) not engaged in trade or bussiness within the Philippines." [Sec. 20,
pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that branches,
subsidiaries, affiliation, extension offices or any other units of corporation or
juridical person organized under the laws of any foreign country operating in the
Philippines shall be considered residents of the Philippines. [Sec. 1(e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in
the Philippines of foreign banks . . . (which are) called Philippine branches," in
the same category as "commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan associations" (which
have been formed and organized under Philippine laws), making no distinction
between the former and the latter in so far as the terms "banking institutions"
and "bank" are used in the Act [Sec. 2], declaring on the contrary that in "all
matters not specifically covered by special provisions applicable only to foreign
banks, or their branches and agencies in the Philippines, said foreign banks or
their branches and agencies lawfully doing business in the Philippines "shall be
bound by all laws, rules, and regulations applicable to domestic banking
corporations of the same class, except such laws, rules and regulations as
provided for the creation, formation, organization, or dissolution of corporations
or as fix the relation, liabilities, responsibilities, or duties of members,
stockholders or officers of corporation. [Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc.
vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation licitly
doing business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident within the scope of the legal provision authorizing
attachment against a defendant not residing in the Philippine Islands; [Sec. 424,
in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule
59 of the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a
preliminary attachment may not be applied for and granted solely on the
asserted fact that the defendant is a foreign corporation authorized to do
business in the Philippines and is consequently and necessarily, "a party who
resides out of the Philippines." Parenthetically, if it may not be considered as a
party not residing in the Philippines, or as a party who resides out of the country,
then, logically, it must be considered a party who does reside in the Philippines,
who is a resident of the country. Be this as it may, this Court pointed out that:

. . . Our laws and jurisprudence indicate a purpose to assimilate

foreign corporations, duly licensed to do business here, to the
status of domestic corporations. (Cf. Section 73, Act No. 1459, and
Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu
Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be
entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner,
and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every
requirement of law made specially of foreign corporations, but in
addition with every requirement of law made of domestic
corporations. . . .
 Obviously, the assimilation of foreign corporations authorized to do business in
the Philippines "to the status of domestic corporations, subsumes their being
found and operating as corporations, hence, residing, in the country.

The same principle is recognized in American law: that the residence of a

corporation, if it can be said to have a residence, is necessarily where it exercises
corporate functions . . .;" that it is considered as dwelling "in the place where its
business is done . . .," as being "located where its franchises are exercised . . .,"
and as being "present where it is engaged in the prosecution of the corporate
enterprise;" that a "foreign corporation licensed to do business in a state is a
resident of any country where it maintains an office or agent for transaction of
its usual and customary business for venue purposes;" and that the "necessary
element in its signification is locality of existence." [Words and Phrases,
Permanent Ed., vol. 37, pp. 394, 412, 493].

In as much as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts'
lawful methods of serving process. 27

Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not
only under the processual presumption but also because of the presumption of regularity of
performance of official duty.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to
be without merit. We find no evidence that would justify an award for attorney's fees and
litigation expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for
exemplary damages warranted. Under Article 2234 of the Civil Code, before the court may
consider the question of whether or not exemplary damages should be awarded, the plaintiff
must show that he is entitled to moral, temperate, or compensatory damaged. There being no
such proof presented by NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in sustained the trial court's dismissal of NORTHWEST's
complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and
another in its stead is hereby rendered ORDERING private respondent C.F. SHARP L COMPANY,
INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case,
with interest thereon at the legal rate from the filing of the complaint therein until the said
foreign judgment is fully satisfied.

Costs against the private respondent.

SO ORDERED.

Padilla, Bellosillo, Quaison and Kapunan, JJ., concur.

 FIRST DIVISION

[G.R. No. 71381. November 24, 1986.]

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. CONSTANTINO PECARDAL, Accused-

Appellant.

Renato U. Galimba for Accused-Appellant.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; EXTRA-JUDICIAL CONFESSION; DISREGARDED; NOT FORMALLY

OFFERED BY BOTH PROSECUTION AND DEFENSE; CASE AT BAR. In the decision convicting the
accused-appellant, the trial judge relied strongly, if not almost mainly, on the formers
confession. This is strange because, to repeat, that piece of evidence was never formally
offered by the prosecution or, for that matter, even the defense. This document should never
have been considered at all because of Rule 132, Section 35, of the Rules of Court providing as
follows: "Sec. 35. Offer of evidence. The court shall consider no evidence which has not been
formally offered. The purpose for which the evidence is offered must be specified." According
to Moran, "the offer is necessary because it is the duty of a judge to rest his findings of facts
and his judgment only and strictly upon the evidence offered by the parties at the trial." In his
demurrer to the evidence, the accused-appellant stressed the failure of the prosecution to
present this confession, but the prosecutor simply said it was part of its strategy and left it at
that. Despite all this, the trial judge referred in his decision to Exhibit "H" as the confession and
considered it sufficient basis for the conviction of the accused. As a matter of fact, Exhibit "H"
was not the confession but the Police Referral of the case to the City Fiscal of Quezon City
dated July 22, 1982.

2. CONSTITUTIONAL LAW; RIGHT OF ACCUSED TO COUNSEL DURING CUSTODIAL

INVESTIGATION; VIOLATED IN CASE AT BAR. Even assuming that the supposed confession
had been formally offered in evidence, we would have to reject it just the same because it
violates Section 20, Article IV, of the 1973 Constitution. The undisputed evidence is that the
confession was obtained without according to the accused-appellant the right to counsel and
after he had been subjected to physical compulsion and maltreatment. If there was really an
interrogation of the accused, the notification of his constitutional rights by the investigating
officer was perfunctory and pro forma, intended obviously merely to satisfy the prescribed
norms through a recitation by rote of the sacramental advise. Although he was supposedly
informed of his right to counsel, he was not told he could get one if he so desired or that one
could be provided him at his request. It is a matter of record that the interrogation was made in
the absence of counsel, de parte or de oficio, and that the waiver of counsel, if made at all, was
not made with assistance of counsel as required.
3. REMEDIAL LAW; EVIDENCE; EXTRA-JUDICIAL CONFESSION; LACKS VOLUNTARINESS; CASE AT
BAR. Besides the lack of counsel, there was the violence the accused claimed was inflicted
upon him by the police. According to him, he was undressed, boxed, kicked, hit in the back with
the rattan chair, and electric shocked. Finally, unable to bear the punishment any longer, he
agreed to sign the prepared confession which he was not allowed to read. The prosecution did
not introduce any witness to refute these allegations. We note that at the time the accused-
appellant was apprehended and interrogated, he was only seventeen years old. That is a
susceptible age. One can accept how easily a teenager can succumb to the pressure exerted
upon him by hardened investigators experienced in extracting confessions through the use of
methods less than legal. That pressure was in this case irresistible.

4. CONSTITUTIONAL LAW; BILL OF RIGHTS; PRESUMPTION OF INNOCENCE SHOULD PREVAIL IN

CASE OF DOUBT. When the evidence for the prosecution and the evidence for the accused
are weighed, the scales must be tipped in favor of the latter. This is because of the
constitutional presumption of innocence the accused enjoys as a counterfoil to the awesome
authority of the State that is prosecuting him. The element of doubt, if reasonable as in this
case, must operate against the inference of guilt the prosecution would draw from its evidence.
That evidence, as it happens, consist only of the uncorroborated statement of the two
policemen which, as previously observed, is flawed and therefore suspect. The Solicitor General
strongly argues that the supposed confession could not have been made by any one except the
perpetrator of the offense because its commission was described in minute detail. Perhaps so.
On the other hand, it could have been the work of a creative imagination that concocted all the
said details to make a plausible tale against the Accused-Appellant. The doubt, which we cannot
brush aside, is there.

DECISION

CRUZ, J.:

The accused-appellant stands convicted of the crime of robbery with homicide and has been
sentenced to life imprisonment. 1 He asks us to reverse the decision of the trial court because
his constitutional rights have been violated.

The victim of the offense was a taxi driver whose body was found in the luggage compartment
of his vehicle in the morning of May 27, 1982. He had been stabbed twenty three times with a
balisong that had later been left on the dashboard of the car. Apparently, Rogelio Florendo had
also been robbed for no money was found on his person or in the taxicab.

It was two months later when the accused-appellant was picked up by the police and
questioned in connection with the crime, As a result, an information for the said offense was
filed against him and his unidentified co-accused, who was then at large and so was not tried
with him. 2

According to the prosecution, Pecardal and his companion boarded the victims taxicab at
about 1 oclock in the morning of May 27, 1982, and thereafter held him up. When he resisted,
they stabbed him in different parts of the body and killed him. They then divested him of his
money in the amount of P200.00, placed his body in the luggage compartment of the car, which
they drove to and abandoned in Yakal Street, Project 3, Amihan, Quezon City. There it was
discovered with its grisly occupant that same morning by a barangay tanod. 3

Presented as prosecution witnesses were the victims wife, Concepcion Florendo, who testified
on the civil damages; 4 Dr. Gregorio Blanco, who performed the autopsy on the victims body; 5
Pat. Teodoro Ybuan, and one of the two policemen who "invited" the accused-appellant for
investigation. 6

This last witness and Pat. Ernesto Daria declared in a joint affidavit that Pecardal "when
questioned readily admitted his participation in the fatal stabbing of victim ROGELIO FLORENDO
after robbing him of his daily earnings amounting to P200.00; and named EDUARDO AZARCON
as his partner in the commission of the said offense." 7

They said they thereafter turned over the accused-appellant to the Quezon City Police
Headquarters, where he signed a statement confessing his guilt. The statement described in
detail how the offense was committed and was marked as Exhibit "H" at the trial. 8
Significantly, however, it was never specifically offered in evidence by the prosecution.

The prosecution made much of this confession and argued it could not have been made except
by the actual perpetrator of the crime because of its detailed narration. Moreover, it had been
given by the accused-appellant voluntarily, after he had been apprised of his constitutional
rights. 9

The accused-appellant took the stand in his defense mainly to denounce this confession He
testified on the physical punishment inflicted on him by the police investigators that ultimately
forced him to sign the statement which he said had been prepared unilaterally by them. 10 This
testimony was not rebutted.

In the decision convicting the accused-appellant, 11 the trial judge relied strongly, if not almost
mainly, on this confession. This is strange because, to repeat, that piece of evidence was never
formally offered by the prosecution or, for that matter, even the defense.

This document should never have been considered at all because of Rule 132, Section 35, of the
Rules of Court providing as follows:jgc:chanrobles.com.ph

"Sec. 35. Offer of evidence. The court shall consider no evidence which has not been formally
offered. The purpose for which the evidence is offered must be specified."cralaw virtua1aw
library
According to Moran, "the offer is necessary because it is the duty of a judge to rest his findings
of facts and his judgment only and strictly upon the evidence offered by the parties at the trial."
12

In his demurrer to the evidence, the accused-appellant stressed the failure of the prosecution
to present this confession, 13 but the prosecutor simply said it was part of its strategy and left it
at that. 14

Despite all this, the trial judge referred in his decision to Exhibit "H" as the confession and
considered it sufficient basis for the conviction of the accused. As a matter of fact, Exhibit "H"
was not the confession but the Police Referral of the case to the City Fiscal of Quezon City
dated July 22, 1982. 15

But even assuming that the supposed confession had been formally offered in evidence, we
would have to reject it just the same because it violates Section 20, Article IV, of the 1973
Constitution.

The undisputed evidence is that the confession was obtained without according to the accused-
appellant the right to counsel and after he had been subjected to physical compulsion and
maltreatment.chanrobles.com.ph : virtual law library

If there was really an interrogation of the accused, the notification of his constitutional rights by
the investigating officer was perfunctory and pro forma, intended obviously merely to satisfy
the prescribed norms through a recitation by rote of the sacramental advise. 16

Although he was supposedly informed of his right to counsel, he was not told he could get one
if he so desired or that one could be provided him at his request. It is a matter of record that
the interrogation was made in the absence of counsel, de parte or de oficio, and that the
waiver of counsel, if made at all, was not made with the assistance of counsel as required. 17

It is true that the original requirement laid down in Morales v. Enrile 18 was not supported by
the majority of eight required by the Constitution. Nonetheless, the doctrine announced
therein was later affirmed in People v. Galit, 19 with fourteen members of the Court voting in
favor and only one not taking part. The same rule was only recently reiterated in the case of
People v. Sison, 20 decided last May.

Besides the lack of counsel, there was the violence the accused claimed was inflicted upon him
by the police. According to him, he was undressed, boxed, kicked, hit in the back with a rattan
chair, and electric-shocked. 21 Finally, unable to bear the punishment any longer, he agreed to
sign the prepared confession which he was not allowed to read. 22 The prosecution did not
introduce any witness to refute these allegations.

Surely, a confession obtained under these circumstances cannot stand if we are to obey the
mandate of the Constitution, as we must.

It is argued, however, that the accused-appellant orally admitted to Pat. Ybuan and Pat Daria
that he had killed and robbed Florendo. This admission was made, according to the two
policemen in their joint affidavit, after they apprehended the accused-appellant and started
questioning him.

While Pat. Ybuan testified that he informed the suspect of his constitutional rights at the time
of his arrest, there is no record that the admission was made by him in the presence of counsel,
or that he had previously waived counsel.

Additionally, even assuming that the accused-appellant was not yet under custodial
investigation at the time and that the requirements of Section 20 were not yet applicable, there
is still the question of the credibility of these two policemen.

One may suppose that in an excess of zeal the peace officers might have colored their
statement to insure the accused-appellants conviction. In any event, it is their word against
that of the accused-appellant, who disavowed the admission. 23

When the evidence for the prosecution and the evidence for the accused are weighed, the
scales must be tipped in favor of the latter. This is because of the constitutional presumption of
innocence the accused enjoys as a counterfoil to the awesome authority of the State that is
prosecuting him. 24

The element of doubt, if reasonable as in this case, must operate against the inference of guilt
the prosecution would draw from its evidence. That evidence, as it happens, consists only of
the uncorroborated statement of the two policemen which, as previously observed, is flawed
and therefore suspect.

The confession which could have corroborated them was not formally offered by the
prosecution. In any case, it is void because it was obtained without the advice or even the
presence of counsel, besides having been vitiated by force and threats.chanrobles law library :
red

The Solicitor General strongly argues that the supposed confession could not have been made
by any one except the perpetrator of the offense because its commission was described in
minute detail. Perhaps so. On the other hand, it could have been the work of a creative
imagination that concocted all the said details to make a plausible tale against the Accused-
Appellant. The doubt, which we cannot brush aside, is there.

We note that at the time the accused-appellant was apprehended and interrogated, he was
only seventeen years old. That is a susceptible age. One can accept how easily a teenager can
succumb to the pressure exerted upon him by hardened investigators experienced in extracting
confessions through the use of methods less than legal. That pressure was in this case
irresistible.

A life has been taken and justice demands that the wrong be redressed. But the same justice
that calls for retribution cannot convict the prisoner at bar whose guilt has not been proved.
Justitia est duplex, viz., severe puniens et vere praeveniens. Even as this Court must punish, so
too must it protect. Conceivably, the conviction of the accused-appellant could add another
victim in this case.

WHEREFORE, the appealed decision is REVERSED and the accused-appellant ACQUITTED, with
costs de oficio. It is so ordered.

Yap, Narvasa, Melencio-Herrera and Feliciano, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 92067 March 22, 1991

PHILIPPINE BANK OF COMMUNICATIONS, petitioner,

vs.
COURT OF APPEALS, JOSEPH L.G. CHUA and JALECO DEVELOPMENT, INC., respondents.

Sepidoza and Laogan Law Offices for petitioner.

Sotto & Sotto Law Offices for respondent Joseph L.G. Chua
Elias L. De los Reyes for Jaleco Development Inc.

GUTIERREZ, JR., J.:

This petition seeks the reversal of the Court of Appeals' decision affirming the earlier decision
of the Regional Trial Court of Makati, Branch 150 in Civil Case No. 7889 dismissing petitioner
Philippine Bank of Communications' (PBCOM) complaint for annulment of a Deed of Exchange
executed by respondent Joseph L.G. Chua in favor of Jaleco Development, Inc. (JALECO). The
deed of exchange was alleged to be in fraud of PBCOM as creditor of Chua who previously
signed as one of the sureties in three (3) Surety Agreements executed in favor of PBCOM. It
involved a transfer by Chua of his real property in exchange for shares of stocks of JALECO.

The facts of the case as summarized by the appellate court are not in dispute, to wit:

On April 14, 1976, Fortune Motors (Phils.), Inc. executed a Surety Agreement in favor of
Philippine Bank of Communications (PBCOM for short) with defendant-appellee Joseph
L.G. Chua, as one of the sureties (Exh. "A"). Again, on October 1, 1981, Fortune Motors
(Phils.), Inc. executed another Surety Agreement in favor of PBCOM with Chua likewise
acting as one of the sureties (Exh. "A-1").

From March 7, 1983 to May 3, 1983 Fortune Motors, (Phils.) thru its authorized officers
and/or representatives executed several trust receipts (Exhibits "B", "B-1", "B-2", "B-3",
"B-4", "B-5" and "B-6") in favor of PBCOM, the total principal amount of which was
P2,492,543.00.

On March 6, 1981, Forte Merchant Finance, Inc., executed a Surety Agreement in favor
of PBCOM with Joseph L.G. Chua as one of the sureties (Exh. "A-2").
 On May 13, 1983 to March 16, 1984, Forte Merchant Finance, Inc. obtained credit
accommodations from PBCOM in the form of trust receipt (Exh. "B-7") and loans
represented by promissory notes (Exhibits "C", "C-1", "C-2", and "C-3") in the total
amount of P2,609,862.00.

On October 24, 1983 Chua executed a Deed of Exchange (Exh. "F") transferring a parcel
of land with improvements thereon covered by TCT No. S-52808 (343721) to JALECO
Development, Inc., in exchange for 12,000 shares of said Corporation with a par value of
P1,200,000.00. As a result, TCT No. 126573 of the Register of Deeds of Rizal covering the
aforementioned parcel of land was issued in the name of JALECO Development, Inc., on
November 24, 1983.

On November 2, 1983, Chua sold 6,000 shares of JALECO Development, Inc., to Mr. Chua
Tiong King for P600,000.00 (Exh. "10"-Chua; Exh. "3"-JALECO) and another 6,000 shares
of JALECO Development, Inc. to Guillermo Jose, Jr. also for P600,000.00 (Exh. "5"-
JALECO) and Caw Le Ja Chua, wife of Chua sold the 6,000 share of JALECO Development,
Inc., to Chua Tiong King for P200,000.00 (Exh. "11"-Chua).

In the meanwhile, for failure of both Fortune Motors (Phils.), Inc. and Forte Merchant
Finance, Inc. to meet their respective financial obligations with PBCOM, the latter filed
Civil Case No. 84-25159 against Fortune Motors (Phils.), Inc., Joseph L. G. Chua, George
D. Tan, Edgar L. Rodriguez and Jose C. Alcantara and Civil Case No. 84-25160 against
Forte Merchant Finance, Inc., Joseph L. G. Chua, George O. Tan and Edgar L. Rodriguez
with the Regional Trial Court of Manila, both for Sum of Money with Writ of Preliminary
Attachment where PBCOM was able to obtain a notice of levy on the properties of
Fortune Motors (Phils.) covered by TCT No. S-41915 (Makati, MM IV) and S-54185 to 86
(Province of Rizal). When plaintiff was able to locate Chua's former property situated in
Dasmarias, Makati, Metro Manila, covered by TCT No. S-52808 containing an area of
1,541 square meters which was already transferred to JALECO Development, Inc., under
TCT No. 126573 by virtue of the Deed of Exchange dated October 24, 1983, PBCOM filed
Civil Case No. 7889 for annulment of Deed of Exchange with the Regional Trial Court of
Makati, Metro Manila.

In due course, a decision was rendered on September 18, 1986 dismissing said case.
(Rollo, pp. 37-39)

In affirming the dismissal of the complaint, the appellate court stated: The Deed of Exchange
was neither submitted nor offered as evidence rendering the petitioner's cause of action
untenable. Furthermore, the appellate court stated that the case for annulment of the deed of
exchange was filed at a time when two (2) other cases for sums of money were filed against the
respondent as one of the sureties of Fortune Motors (Phils.), Inc. (Civil Case No. 84-25159) and
of Forte Merchant Finance, Inc. (Civil Case No. 84-25160) which are both pending. Hence, the
annulment case which was filed in the hope of receiving favorable judgments in the two (2)
other cases in the future is premature. Finally, the appellate court stated that the petitioner's
interests in the meantime are sufficiently protected by a writ of preliminary attachment on
several properties of one of the principal debtors.

The petition is impressed with merit.

The records reveal the following:

In its petition filed with the lower court, the petitioner alleged among others:

xxx xxx xxx

12. That plaintiff was able to locate a parcel of land with buildings and improvements
thereon situated in Dasmarias Village, Makati, Metro Manila, with T.C.T. No. S-52808,
containing an area of 1,514 square meters, but the said property was transferred to the
name of a corporation named Jaleco Development Inc., pursuant to the Deed of
Exchange executed between Defendant Joseph L. G. Chua and Jaleco Development, Inc.,
dated October 24, 1983, photocopy of T.C.T. No. S-52808, the Deed of Exchange, and
T.C.T. No. 126573 are hereto attached as Annexes E, F, and G; and made integral part
hereof; (Rollo, pp. 95-96)

xxx xxx xxx

In his answer, respondent Chua stated:

xxx xxx xxx

That paragraph 12, is admitted; the said Deed of Exchange (Annex "F") was done in good
faith, was done in accordance with law and same is valid; (Rollo, p. 44)

xxx xxx xxx

Chua's admission of the existence of the Deed of Exchange, attached to the "Petition as Annex
"F" falls squarely within the scope of Judicial Admissions under Section 4, Rule 129 of the Rules
of Court. The rule provides:

Judicial Admissions. An admission, verbal or written, made by a party in the course of

the proceeding in the same case, does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no such
admission was made.

As early as 1925 in the case of Asia Banking Corporation v. Walter E. Olsen & Co. (48 Phil. 529),
we have ruled that documents attached to the complaint are considered a part thereof and
may be considered as evidence although they were not introduced as such. We said:
 Another error assigned by the appellant is the fact that the lower court took into
consideration the documents attached to the complaint as a part thereof, without
having been expressly introduced in evidence, This was no error. In the answer of the
defendants, there was no denial under oath of the authenticity of these documents.
Under section 103 of the Code of Civil Procedure, the authenticity and due execution of
these documents must, in that case, be deemed admitted. The effect of this is to relieve
the plaintiff from the duty of expressly presenting such documents as evidence. The
court, for the proper decision of the case, may and should consider, without the
introduction of evidence, the facts admitted by the parties. (at p. 532)

We reiterated this principle in the later case of Bravo Jr. v. Borja (134 SCRA 466 [1985]). In that
case we said:

But respondent judge claims that petitioner has not proved his minority. This is
inaccurate. In the motion for bail, petitioner alleged that he was a minor of 16 and this
averment was never challenged by the prosecution. Subsequently, in his memorandum
in support of the motion for bail, petitioner attached a copy of his birth certificate. And
finally, after respondent Judge had denied the motion for bail, petitioner filed a motion
for reconsideration, attaching thereto a certified true copy of his birth certificate.
Respondent Judge however refused to take cognizance of petitioner's unchallenged
minority allegedly because the certificate of birth was not offered in evidence. This was
error because evidence of petitioner's minority was already a part of the record of the
case. It was properly filed in support of a motion. It would be a needless formality to
offer it in evidence. Respondent Judge therefore acted with grave abuse of discretion in
disregarding it.

For its part, JALECO stated in its Answer:

xxx xxx xxx

2. That it has no knowledge or information sufficient to form a belief as to the truth of

the allegation contained in pars. 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 of the Petitioner;
(Emphasis supplied)

Paragraph 12 refers to the deed of exchange in the petition.

The Deed of Exchange was attached to the petition. Necessarily, JALECO's contention that it has
no knowledge or information sufficient to form a belief as to the truth of the deed of exchange
becomes an invalid or ineffective denial pursuant to the Rules of Court. Under the
circumstances, the petitioner could have easily asserted whether or not it executed the deed of
exchange. The ruling in Capitol Motors Corporations vs. Yabut (32 SCRA 1 [1970]) applies:

We agree with defendant-appellant that one of the modes of specific denial

contemplated in Section 10, Rule 8, is a denial by stating that the defendant is without
 knowledge or information sufficient to form a belief as to the truth of a material
averment in the complaint. The question, however, is whether paragraph 2 of the
defendant-appellant's answer constitutes a specific denial under the said rule. We do
not think so. In Warner Barnes & Co., Ltd. vs. Reyes, et al. G.R. No. L-9531, May 14, 1958
(103 Phil. 662), this Court said that the rule authorizing an answer to the effect that the
defendant has no knowledge or information sufficient to form a belief as to the truth of
an averment and giving such answer the effect of a denial, does not apply where the
fact as to which want of knowledge is asserted, is so plainly and necessarily within the
defendant's knowledge that his averment of ignorance must be palpably untrue. In said
case, the suit was one for foreclosure of mortgage, and a copy of the deed of mortgage
was attached to the complaint thus; according to this Court, it would have been easy for
the defendants to specifically allege in their answer whether or not they had executed
the alleged mortgage. The same thing can be said in the present case, where a copy of
the promissory note sued upon was attached to the complaint. . . .

Considering the admission by Chua and the non-denial by JALECO of the document forming part
of the petition, the appellate court committed reversible error in not admitting the deed of
exchange as evidence.

Furthermore, we find as not well-taken the appellate court's ruling that the pendency of two (2)
other cases for collection of money against respondent Chua, among others as surety of
Fortune Motors (Phils.), Inc. and Forte Merchant Finance, Inc., renders the petition for
annulment of deed of exchange premature.

For failure of both Fortune Motors (Phils), Inc. and Forte Merchant Finance, Inc. to pay their
obligations with the petitioner, the latter filed the two civil cases against Fortune Motors
(Phils.), Inc. and Forte Merchant Finance, Inc. and respondent Chua, among others with the
Regional Trial Court of Manila. The petitioner was granted a writ of attachment as a result of
which properties belonging to Fortune Motors (Phils.) were attached. It turned out, however,
that the attached properties of Fortune Motors (Phils.), Inc. were already previously
attached/mortgaged to prior lien holders in the amount of about P70,000,000.00. As regards
Forte Merchant Finance, Inc., it appears that it has no property to satisfy the debts it incurred
with PBCOM. The record further shows that as regards Chua, the property subject of the Deed
of Exchange between him and JALECO was his only property.

Under these circumstances, the petitioner's petition for annulment of the deed of exchange on
the ground that the deed was executed in fraud of creditors, despite the pendency of the two
(2) other civil cases is well-taken.

As surety for the financial obligations of Fortune Motors (Phils.), Inc. and the Forte Merchant
Finance, Inc., with the petitioner, respondent Chua bound himself solidarily liable with the two
(2) principal debtors. (Article 2047, Civil Code) The petitioner may therefore demand payment
of the whole financial obligations of Fortune Motors (Phils.), Inc. and Forte Finance, Inc., from
Chua, if the petitioner chooses to go directly after him. Hence, since the only property of Chua
was sold to JALECO after the debts became due, the petitioner has the right to file an
annulment of the deed of exchange between Chua and JALECO wherein Chua sold his only
property to JALECO to protect his interests and so as not to make the judgments in the two (2)
cases illusory:

Rescission requires the existence of creditors at the time of the fraudulent alienation,
and this must be proved as one of the bases of the judicial pronouncement setting aside
the contract; without prior existing debts, there can be neither injury nor fraud. The
credit must be existing at the time of the fraudulent alienation, even if it is not yet due.
But at the time the accion pauliana is brought, the credit must already be due.
Therefore, credits with suspensive term or condition are excluded, because the accion
pauliana presupposes a judgment and unsatisfied execution, which cannot exist when
the debt is not demandable at the time the rescissory action is brought. Rescission is a
subsidiary action, which presupposes that the creditor has exhausted the property of
the debtor, which is impossible in credits which cannot be enforced because of the term
or condition.

While it is necessary that the credit of the plaintiff in the accion pauliana must be prior
to the fraudulent alienation, the date of the judgment enforcing it is immaterial. Even if
the judgment be subsequent to the alienation, it is merely declaratory, with retroactive
effect to the date when the credit was constituted. . . . (Emphasis Supplied) (Tolentino,
Civil Code of the Philippines, Vol. IV Ed. pp. 578-579)

Parenthetically, the appellate court's observation that the petitioner's interests are sufficiently
protected by a writ of attachment on the properties of Fortune Finance (Phils.), Inc. has neither
legal nor factual basis.

One other point.

The trial court disregarded the ex-parte evidence adduced by the petitioner against JALECO
when the latter was declared in default on the ground that the ex-parte proceedings were
conducted by the Deputy Clerk of Court which is not allowed in accordance with the ruling in
the case of Lim Tanhu vs. Ramolete (66 SCRA 425 [1975]). That ruling has already been
overruled in the later case of Gochangco vs. CFI of Negros Occidental (157 SCRA 40 [1988]),
wherein we said:

The respondent Court also declared null and void "the reception of evidence ex
parte before . . (the) deputy clerk of court." It invoked what it termed the doctrinal rule
laid down in the recent case of Lim Tan Hu vs.Ramolete, 66 SCRA 430, promulgated on
August 29, 1975 (inter alia declaring that) a Clerk of Court is not legally authorized to
receive evidence ex-parte.

Now, that declaration does not reflect long observed and established judicial practice
with respect to default cases. It is not quite consistent, too, with the several explicitly
 authorized instances under the Rules where the function of receiving evidence and even
of making recommendatory findings of facts on the basis thereof may be delegated to
commissioners, inclusive of the Clerk of Court. These instances are set out in Rule 33,
treating of presentation of evidence before commissioners, etc., in particular situations,
such as when the trial of an issue of fact requires the examination of a long account, or
when the taking of an account is necessary for the information of the court, or when
issues of fact arise otherwise than upon the pleadings or while carrying a judgment or
order into effect; Rules 67 and 69, dealing with submission of evidence also before
commissioners in special civil actions of eminent domain and partition, respectively;
Rule 86 regarding trials of contested claims in judicial proceedings for the settlement of
a decedent's estate; Rule 136 empowering the clerk of court, directed by the judge inter
alia to receive evidence relating to the accounts of executors, administrators, guardians,
trustees and receivers, or relative to the settlement of the estates of deceased persons,
or to guardianships, trusteeships, or receiverships. In all these instances, the
competence of the clerk of court is assumed. Indeed, there would seem, to be sure,
nothing intrinsically wrong in allowing presentation of evidence ex parte before a Clerk
of Court. Such a procedure certainly does not foreclose relief to the party adversely
affected who, for valid cause and upon appropriate and seasonable application, may
bring about the undoing thereof or the elimination of prejudice thereby caused to him;
and it is, after all, the Court itself which is duty bound and has the ultimate
responsibility to pass upon the evidence received in this manner, discarding in the
process such proofs as are incompetent and then declare what facts have thereby been
established. In considering and analyzing the evidence preparatory to rendition of
judgment on the merits, it may not unreasonably be assumed that any serious error in
the ex parte presentation of evidence, prejudicial to any absent party, will be detected
and duly remedied by the Court, and/or may always, in any event be drawn to its
attention by any interested party. . . .

Consequently, there is no legal impediment to the admissibility of the evidence presented by

the petitioner against JALECO.

These findings pave the way to the resolution of the case on its merits.

Respondent Chua admitted his liability under the various Surety Agreements executed on
several dates by Fortune Motors (Phils.), Inc. and Forte Merchants Finance, Inc. as principal
debtors, respondent Chua, among others, as surety and the petitioner as creditor. He also
admitted in the Pre-Trial Order that he has no other properties sufficient to cover the claims of
the petitioner except for the Dasmarias property, subject matter of the Deed of Exchange.

During the above-mentioned proceedings, the petitioner established the following:

After the petitioner attached the properties of Fortune Motors (Phils.), Inc. by virtue of the writ
of attachment filed in the two (2) civil cases, it found out the same properties were previously
mortgaged and/or attached in the amount of about P70,000,000.00. Thereafter, the petitioner
was able to locate a property in the name of respondent Chua. This property was, however
already sold to JALECO on November 24, 1983 pursuant to a Deed of Exchange and the Register
of Deeds of Makati had already issued T.C.T. No. 126573 covering the property in the name of
JALECO.

Upon investigation with the Securities and Exchange Commission (SEC), the petitioner gathered
the following facts based on the SEC records: a) JALECO was organized on November 2, 1982
with a capital stock of P5,000,000.00; b) the stockholders of said corporation were mostly
members of the immediate family of Joseph L. G. Chua; c) on April 4, 1983, a Board Resolution
was passed authorizing the issuance of 12,000 shares of stocks worth Pl,200,000.00 to a new
subscriber and non-stockholder Joseph L. G. Chua; and d) prior to the acquisition by the
corporation of the property located at Dasmarias Village, Makati, the percentage of the
shareholding of the members of the family of Joseph L. G. Chua was 88% while after the
acquisition of the property and the issuance of the shares to Chua, they owned 94% of the
corporation.

The evidence on record also shows that despite the "sale" of the Dasmarias property,
respondent Chua continued to stay in the said property.

The well-settled principle is that a corporation "is invested by law with a separate personality,
separate and distinct from that of the person composing it as well as from any other legal entity
to which it may be related." (Tan Boon Been & Co., Inc. vs. Jarencio, 163 SCRA 205
[1988] citing Yutivo and Sons Hardware Company vs. Court of Tax Appeals, 1 SCRA 160 [1961];
Emilio Cano Enterprises, Inc. vs. Court of Industrial Relations, 13 SCRA 290 [1965]; and Western
Agro Industrial Corporation and Antonio Rodriguez vs. Court of Appeals, and Sia's Automotive
and Diesel Parts, Inc., G.R. No. 82558, August 20, 1990) However, the separate personality of
the corporation may be disregarded, or the veil of corporate fiction pierced when the
corporation is used "as a cloak or cover for fraud or illegality, or to work an injustice, or where
necessary to achieve equity or when necessary for the protection of creditors." (Sulo ng Bayan,
Inc. vs. Araneta, Inc., 72 SCRA 347 [1976] cited in Tan Boon Bee & Co., Inc. vs. Jarencio, supra;
Western Agro Industrial Corporation, et al. vs. Court of Appeals, supra.)

In the instant case, the evidence clearly shows that Chua and his immediate family control
JALECO. The Deed of Exchange executed by Chua and JALECO had for its subject matter the sale
of the only property of Chua at the time when Chua's financial obligations became due and
demandable. The records also show that despite the "sale", respondent Chua continued to stay
in the property, subject matter of the Deed of Exchange.

These circumstances tend to show that the Deed of Exchange was not what it purports to
be.1wphi1 Instead, they tend to show that the Deed of Exchange was executed with the sole
intention to defraud Chua's creditorthe petitioner. It was not a bona fide
transaction between JALECO and Chua. Chua entered a sham or simulated transaction with
JALECO for the sole purpose of transferring the title of the property to JALECO without really
divesting himself of the title and control of the said property.
Hence, JALECO's separate personality should be disregarded and the corporation veil pierced. In
this regard, the transaction leading to the execution of the Deed of Exchange between Chua
and JALECO must be considered a transaction between Chua and himself and not between
Chua and JALECO. Indeed, Chua took advantage of his control over JALECO to execute the Deed
of Exchange to defraud his creditor, the petitioner herein. JALECO was but a mere alter ego of
Chua. (See Tan Boon Bee & Co., Inc. vs. Jarencio, supra)

WHEREFORE, the instant petition is GRANTED, The questioned decision dated February 8, 1990
of the Court of Appeals is REVERSED and SET ASIDE. The Deed of Exchange executed by and
between Joseph L. G. Chua and JALECO Development, Inc., and the title issued in the name of
JALECO on the basis thereof are declared NULL and VOID. Costs against the private
respondents.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Davide, Jr., JJ., concur.