LORENZO M. TAÑADA, ABRAHAM F.

SARMIENTO, and MOVEMENT OF ATTORNEYS FOR

BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), Petitioners, v. HON. JUAN C.
TUVERA. in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his
capacity as Deputy Executive Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET
AL., Respondents.

SYLLABUS

FERNAN, J., concurring: chanro b1es vi rt ual 1aw li bra ry

1. CIVIL LAW; EFFECT AND APPLICATION OF LAWS; ARTICLE 2, CIVIL CODE; PUBLICATION OF LAWS
MADE TO ENSURE CONSTITUTIONAL RIGHT TO DUE PROCESS AND TO INFORMATION. — The
categorical statement by this Court on the need for publication before any law be made effective seeks
to prevent abuses on the part if the lawmakers and, at the time, ensure to the people their
constitutional right to due process and to information on matter of public concern. chanro blesvi rtua llawli bra ry:re d

RESOLUTION

CRUZ, J.:

Due process was invoked by the petitioners in demanding the disclosure or a number of presidential
decrees which they claimed had not been published as required by law. The government argued that
while publication was necessary as a rule, it was not so when it was "otherwise provided," as when the
decrees themselves declared that they were to become effective immediately upon their approval. In the
decision of this case on April 24, 1985, the Court affirmed the necessity for the publication of some of
these decrees, declaring in the dispositive portion as follows: jgc:chan roble s.com.p h

"WHEREFORE, the Court hereby orders respondents to publish to the Official Gazette all unpublished
presidential issuances which are of general application, and unless so published, they shall have no
binding force and effect." cralaw virtua1aw l ibra ry

The petitioners are now before us again, this time to move for reconsideration/clarification of that
decision. 1 Specifically, they ask the following questions: chan rob1es v irt ual 1aw l ibra ry

1. What is meant by "law of public nature" or "general applicability" ?

2. Must a distinction be made between laws of general applicability and laws which are not?

3. What is meant by "publication" ?

4. Where is the publication to be made?

5. When is the publication to be made?

Resolving their own doubts, the petitioners suggest that there should be no distinction between laws of
general applicability and those which are not; that publication means complete publication; and that the
publication must be made forthwith in the Official Gazette. 2

In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a request
for an advisory opinion and should therefore be dismissed, and, on the merits, that the clause "unless it
is otherwise provided" in Article 2 of the Civil Code meant that the publication required therein was not
always imperative; that publication, when necessary, did not have to be made in the Official Gazette;
and that in any case the subject decision was concurred in only by three justices and consequently not
binding. This elicited a Reply 4 refuting these arguments. Came next the February Revolution and the
Court required the new Solicitor General to file a Rejoinder in view of the supervening events, under
Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances intended only for the
interval administration of a government agency or for particular persons did not have to be published;
that publication when necessary must be in full and in the Official Gazette; and that, however, the
decision under reconsideration was not binding because it was not supported by eight members of this
Court. 5
The subject of contention is Article 2 of the Civil Code providing as follows: jgc: chan robles. com.ph

"ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such
publication."cralaw vi rtua1aw lib rary

After a careful study of this provision and of the arguments of the parties, both on the original petition
and on the instant motion, we have come to the conclusion, and so hold, that the clause "unless it is
otherwise provided" refers to the date of effectivity and not to the requirement of publication itself,
which cannot in any event be omitted. This clause does not mean that the legislature may make the law
effective immediately upon approval, or on any other date, without its previous publication. chanroble s virtual law lib rary

Publication is indispensable in every case, but the legislature may in its discretion provide that the usual
fifteen-day period shall be shortened or extended. An example, as pointed out by the present Chief
Justice in his separate concurrence in the original decision, 6 is the Civil Code which did not become
effective after fifteen days from its publication in the Official Gazette but "one year after such
publication." The general rule did not apply because it was "otherwise provided." cralaw vi rtua 1aw lib rary

It is not correct to say that under the disputed clause publication may be dispensed with altogether. The
reason is that such omission would offend due process insofar as it would deny the public knowledge of
the laws that are supposed to govern it. Surely, if the legislature could validly provide that a law shall
become effective immediately upon its approval notwithstanding the lack of publication (or after an
unreasonably short period after publication), it is not unlikely that persons not aware of it would be
prejudiced as a result; and they would be so not because of a failure to comply with it but simply
because they did not know of its existence. Significantly, this is not true only of penal laws as is
commonly supposed. One can think of many non-penal measures, like a law on prescription, which must
also be communicated to the persons they may affect before they can begin to operate. cralawnad

We note at this point the conclusive presumption that every person knows the law, which of course
presupposes that the law has been published if the presumption is to have any legal justification at all. It
is no less important to remember that Section 6 of the Bill of Rights recognizes "the right of the people
to information on matters of public concern," and this certainly applies to, among others, and indeed
especially, the legislative enactments of the government.

The term "laws" should refer to all laws and not only to those of general application, for strictly speaking
all laws relate to the people in general albeit there are some that do not apply to them directly. An
example is a law granting citizenship to a particular individual, like a relative of President Marcos who
was decreed instant naturalization. It surely cannot be said that such a law does not affect the public
although it unquestionably does not apply directly to all the people. The subject of such law is a matter
of public interest which any member of the body politic may question in the political forums or, if he is a
proper party, even in the courts of justice. In fact, a law without any bearing on the public would be
invalid as an intrusion of privacy or as class legislation or as an ultra vires act of the legislature. To be
valid, the law must invariably affect the public interest even if it might be directly applicable only to one
individual, or some of the people only, and not to the public as a whole.

We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication unless a
different effectivity date is fixed by the legislature.
chanrobles. com:c ralaw:red

Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution. Administrative rules and regulations must also be published if
their purpose is to enforce or implement existing law pursuant also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of
the administrative agency and not the public, need not be published. Neither is publication required of
the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines
to be followed by their subordinates in the performance of their duties. chan roble svi rtual lawlib rary

Accordingly, even the charter of a city must be published notwithstanding that it applies to only a
portion of the national territory and directly affects only the inhabitants of that place. All presidential
decrees must be published, including even, say, those naming a public place after a favored individual or
exempting him from certain prohibitions or requirements. The circulars issued by the Monetary Board
must be published if they are meant not merely to interpret but to "fill in the details" of the Central Bank
Act which that body is supposed to enforce.
However, no publication is required of the instructions issued by, say, the Minister of Social Welfare on
the case studies to be made in petitions for adoption or the rules laid down by the head of a government
agency on the assignments or workload of his personnel or the wearing of office uniforms.
Parenthetically, municipal ordinances are not covered by this rule but by the Local Government Code.

We agree that the publication must be in full or it is no publication at all since its purpose is to inform
the public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of
the number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary
Tuvera"), the supposed date of effectivity, and in a mere supplement of the Official Gazette cannot
satisfy the publication requirement. This is not even substantial compliance. This was the manner,
incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of
general applicability and interest, was "published" by the Marcos administration. 7 The evident purpose
was to withhold rather than disclose information on this vital law.

Coming now to the original decision, it is true that only four justices were categorically for publication in
the Official Gazette 8 and that six others felt that publication could be made elsewhere as long as the
people were sufficiently informed. 9 One reserved his vote 10 and another merely acknowledged the
need for due publication without indicating where it should be made, 11 It is therefore necessary for the
present membership of this Court to arrive at a clear consensus on this matter and to lay down a
binding decision supported by the necessary vote.

There is much to be said of the view that the publication need not be made in the Official Gazette,
considering its erratic releases and limited readership. Undoubtedly, newspapers of general circulation
could better perform the function of communicating the laws to the people as such periodicals are more
easily available, have a wider readership, and come out regularly. The trouble, though, is that this kind
of publication is not the one required or authorized by existing law. As far as we know, no amendment
has been made of Article 2 of the Civil Code. The Solicitor General has not pointed to such a law, and we
have no information that it exists. If it does, it obviously has not yet been published.

At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if we
find it impractical. That is not our function. That function belongs to the legislature. Our task is merely to
interpret and apply the law as conceived and approved by the political departments of the government
in accordance with the prescribed procedure. Consequently, we have no choice but to pronounce that
under Article 2 of the Civil Code, the publication of laws must be made in the Official Gazette, and not
elsewhere, as a requirement for their effectivity after fifteen days from such publication or after a
different period provided by the legislature. c hanro bles law l ibra ry

We also hold that the publication must be made forthwith, or at least as soon as possible, to give effect
to the law pursuant to the said Article 2. There is that possibility, of course, although not suggested by
the parties that a law could be rendered unenforceable by a mere refusal of the executive, for whatever
reason, to cause its publication as required. This is a matter, however, that we do not need to examine
at this time.

Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory
opinion is untenable, to say the least, and deserves no further comment.

The days of the secret laws and the unpublished decrees are over. This is once again an open society,
with all the acts of the government subject to public scrutiny and available always to public cognizance.
This has to be so if our country is to remain democratic, with sovereignty residing in the people and all
government authority emanating from them.

Although they have delegated the power of legislation, they retain the authority to review the work of
their delegates and to ratify or reject it according to their lights, through their freedom of expression and
their right of suffrage. This they cannot do if the acts of the legislature are concealed.

Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with
their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as
binding unless their existence and contents are confirmed by a valid publication intended to make full
disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot
feint, parry or cut unless the naked blade is drawn.

WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their approval,
or as soon thereafter as possible, be published in full in the Official Gazette, to become effective only
after fifteen days from their publication, or on another date specified by the legislature, in accordance
with Article 2 of the Civil Code.
chan roblesv irt ual|awlib ra ry

SO ORDERED.
Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr ., and Paras, JJ., concur.

G.R. No. 187587 June 5, 2013

NAGKAKAISANG MARALITA NG SITIO MASIGASIG, INC., Petitioner,

vs.
MILITARY SHRINE SERVICES - PHILIPPINE VETERANS AFFAIRS OFFICE, DEPARTMENT
OF NATIONAL DEFENSE, Respondent.

x-----------------------x

G.R. No. 187654

WESTERN BICUTAN LOT OWNERS ASSOCIATION, INC., represented by its Board of

Directors, Petitioner,
vs.
MILITARY SHRINE SERVICES - PHILIPPINE VETERANS AFFAIRS OFFICE, DEPARTMENT
OF NATIONAL DEFENSE, Respondent.

DECISION

SERENO, CJ.:

Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court assailing the
Decision1promulgated on 29 April 2009 of the Court of Appeals in CA-G.R. SP No. 97925.

THE FACTS

The facts, as culled from the records, are as follows:

On 12 July 1957, by virtue of Proclamation No. 423, President Carlos P. Garcia reserved parcels
of land in the Municipalities of Pasig, Taguig, Parañaque, Province of Rizal and Pasay City for a
military reservation. The military reservation, then known as Fort William McKinley, was later on
renamed Fort Andres Bonifacio (Fort Bonifacio).

On 28 May 1967, President Ferdinand E. Marcos (President Marcos) issued Proclamation No.
208, amending Proclamation No. 423, which excluded a certain area of Fort Bonifacio and
reserved it for a national shrine. The excluded area is now known as Libingan ng mga Bayani,
which is under the administration of herein respondent Military Shrine Services – Philippine
Veterans Affairs Office (MSS-PVAO).

Again, on 7 January 1986, President Marcos issued Proclamation No. 2476, further amending
Proclamation No. 423, which excluded barangaysLower Bicutan, Upper Bicutan and Signal
Village from the operation of Proclamation No. 423 and declared it open for disposition under the
provisions of Republic Act Nos. (R.A.) 274 and 730.

At the bottom of Proclamation No. 2476, President Marcos made a handwritten addendum,
which reads:

"P.S. – This includes Western Bicutan

(SGD.) Ferdinand E. Marcos"2

The crux of the controversy started when Proclamation No. 2476 was published in the Official
Gazette3 on 3 February 1986, without the above-quoted addendum.

Years later, on 16 October 1987, President Corazon C. Aquino (President Aquino) issued
Proclamation No. 172 which substantially reiterated Proclamation No. 2476, as published, but
this time excluded Lots 1 and 2 of Western Bicutan from the operation of Proclamation No. 423
and declared the said lots open for disposition under the provisions of R.A. 274 and 730.

Memorandum Order No. 119, implementing Proclamation No. 172, was issued on the same day.

Through the years, informal settlers increased and occupied some areas of Fort Bonifacio
including portions of the Libingan ng mga Bayani. Thus, Brigadier General Fredelito Bautista
issued General Order No. 1323 creating Task Force Bantay (TFB), primarily to prevent further
unauthorized occupation and to cause the demolition of illegal structures at Fort Bonifacio.

On 27 August 1999, members of petitioner Nagkakaisang Maralita ng Sitio Masigasig, Inc.

(NMSMI) filed a Petition with the Commission on Settlement of Land Problems (COSLAP), where
it was docketed as COSLAP Case No. 99-434. The Petition prayed for the following: (1) the
reclassification of the areas they occupied, covering Lot 3 of SWO-13-000-298 of Western
Bicutan, from public land to alienable and disposable land pursuant to Proclamation No. 2476;
(2) the subdivision of the subject lot by the Director of Lands; and (3) the Land Management
Bureau’s facilitation of the distribution and sale of the subject lot to its bona fide occupants.4

On 1 September 2000, petitioner Western Bicutan Lot Owners Association, Inc. (WBLOAI) filed a
Petition-in-Intervention substantially praying for the same reliefs as those prayed for by NMSMI
with regard to the area the former then occupied covering Lot 7 of SWO-00-001302 in Western
Bicutan.5

Thus, on 1 September 2006, COSLAP issued a Resolution6 granting the Petition and declaring
the portions of land in question alienable and disposable, with Associate Commissioner Lina
Aguilar-General dissenting.7

The COSLAP ruled that the handwritten addendum of President Marcos was an integral part of
Proclamation No. 2476, and was therefore, controlling. The intention of the President could not
be defeated by the negligence or inadvertence of others. Further, considering that Proclamation

No. 2476 was done while the former President was exercising legislative powers, it could not be
amended, repealed or superseded, by a mere executive enactment. Thus, Proclamation No. 172
could not have superseded much less displaced Proclamation No. 2476, as the latter was issued
on October 16, 1987 when President Aquino’s legislative power had ceased.

In her Dissenting Opinion, Associate Commissioner Lina AguilarGeneral stressed that pursuant
to Article 2 of the Civil Code, publication is indispensable in every case. Likewise, she held that
when the provision of the law is clear and unambiguous so that there is no occasion for the court
to look into legislative intent, the law must be taken as it is, devoid of judicial addition or
subtraction.8 Finally, she maintained that the Commission had no authority to supply the
addendum originally omitted in the published version of Proclamation No. 2476, as to do so
would be tantamount to encroaching on the field of the legislature.

Herein respondent MSS-PVAO filed a Motion for Reconsideration,9 which was denied by the
COSLAP in a Resolution dated 24 January 2007.10

MSS-PVAO filed a Petition with the Court of Appeals seeking to reverse the COSLAP
Resolutions dated 1 September 2006 and 24 January 2007.
Thus, on 29 April 2009, the then Court of Appeals First Division rendered the assailed Decision
granting MSS-PVAO’s Petition, the dispositive portion of which reads:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED. The Resolutions
dated September 1, 2006 and January 24, 2007 issued by the Commission on the Settlement of
Land Problems in COSLAP Case No. 99-434 are hereby REVERSED and SET ASIDE. In lieu
thereof, the petitions of respondents in COSLAP Case No. 99-434 are DISMISSED, for lack of
merit, as discussed herein. Further, pending urgent motions filed by respondents are likewise

DENIED. SO ORDERED.11 (Emphasis in the original)

Both NMSMI12 and WBLOAI13 appealed the said Decision by filing their respective Petitions for
Review with this Court under Rule 45 of the Rules of Court.

THE ISSUES

Petitioner NMSMI raises the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

RULING THAT PROCLAMATION NO. 2476 DID NOT INCLUDE ANY PORTION OF WESTERN
BICUTAN AS THE HANDWRITTEN NOTATION BY PRESIDENT MARCOS ON THE SAID
PROCLAMATION WAS NOT PUBLISHED IN THE OFFICIAL GAZETTE.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

RULING THAT PROCLAMATION NO. 172 LIKEWISE EXCLUDED THE PORTION OF LAND
OCCUPIED BY MEMBER OF HEREIN PETITIONER.

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT

CONSIDERING THAT THE HON. COSLAP HAS BROAD POWERS TO RECOMMEND TO THE
PRESIDENT >INNOVATIVE MEASURES TO RESOLVE EXPEDITIOUSLY VARIOUS LAND
CASES.14

On the other hand, petitioner WBLOAI raises this sole issue:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT

THE SUBJECT PROPERTY WAS NOT DECLARED ALIENABLE AND DISPOSABLE BY
VIRTUE OF PROCLAMATION NO. 2476 BECAUSE THE HANDWRITTEN ADDENDUM OF
PRESIDENT FERDINAND E. MARCOS INCLUDING WESTERN BICUTAN IN
PROCLAMATION NO. 2476 WAS NOT INCLUDED IN THE PUBLICATION.15

Both Petitions boil down to the principal issue of whether the Court of Appeals erred in ruling that
the subject lots were not alienable and disposable by virtue of Proclamation No. 2476 on the
ground that the handwritten addendum of President Marcos was not included in the publication of
the said law.

THE COURT’S RULING

We deny the Petitions for lack of merit.

Considering that petitioners were occupying Lots 3 and 7 of Western Bicutan (subject lots), their
claims were anchored on the handwritten addendum of President Marcos to Proclamation No.
2476. They allege that the former President intended to include all Western Bicutan in the
reclassification of portions of Fort Bonifacio as disposable public land when he made a notation
just below the printed version of Proclamation No. 2476.

However, it is undisputed that the handwritten addendum was not included when Proclamation
No. 2476 was published in the Official Gazette.

The resolution of whether the subject lots were declared as reclassified and disposable lies in the
determination of whether the handwritten addendum of President Marcos has the force and
effect of law. In relation thereto, Article 2 of the Civil Code expressly provides:

ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such
publication.

Under the above provision, the requirement of publication is indispensable to give effect to the
law, unless the law itself has otherwise provided. The phrase "unless otherwise provided" refers
to a different effectivity date other than after fifteen days following the completion of the law’s
publication in the Official Gazette, but does not imply that the requirement of publication may be
dispensed with. The issue of the requirement of publication was already settled in the landmark
case Tañada v. Hon. Tuvera,16 in which we had the occasion to rule thus:

Publication is indispensable in every case, but the legislature may in its discretion provide that
the usual fifteen-day period shall be shortened or extended. An example, as pointed out by the
present Chief Justice in his separate concurrence in the original decision, is the Civil Code which
did not become effective after fifteen days from its publication in the Official Gazette but "one
year after such publication." The general rule did not apply because it was "otherwise provided."

It is not correct to say that under the disputed clause publication may be dispensed with
altogether. The reason is that such omission would offend due process insofar as it would deny
the public knowledge of the laws that are supposed to govern it. Surely, if the legislature could
validly provide that a law shall become effective immediately upon its approval notwithstanding
the lack of publication (or after an unreasonably short period after publication), it is not unlikely
that persons not aware of it would be prejudiced as a result; and they would be so not because of
a failure to comply with it but simply because they did not know of its existence. Significantly, this
is not true only of penal laws as is commonly supposed. One can think of many non-penal
measures, like a law on prescription, which must also be communicated to the persons they may
affect before they can begin to operate.

xxxx

The term "laws" should refer to all laws and not only to those of general application, for strictly
speaking all laws relate to the people in general albeit there are some that do not apply to them
directly. An example is a law granting citizenship to a particular individual, like a relative of
President Marcos who was decreed instant naturalization. It surely cannot be said that such a
law does not affect the public although it unquestionably does not apply directly to all the people.
The subject of such law is a matter of public interest which any member of the body politic may
question in the political forums or, if he is a proper party, even in the courts of justice. In fact, a
law without any bearing on the public would be invalid as an intrusion of privacy or as class
legislation or as an ultra vires act of the legislature. To be valid, the law must invariably affect the
public interest even if it might be directly applicable only to one individual, or some of the people
only, and not to the public as a whole.
We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication unless
a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President
in the exercise of legislative powers whenever the same are validly delegated by the legislature
or, at present, directly conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law pursuant also to a valid
delegation.

xxxx

Accordingly, even the charter of a city must be published notwithstanding that it applies to only a
portion of the national territory and directly affects only the inhabitants of that place. All
presidential decrees must be published, including even, say, those naming a public place after a
favored individual or exempting him from certain prohibitions or requirements. The circulars
issued by the Monetary Board must be published if they are meant not merely to interpret but to
"fill in the details" of the Central Bank Act which that body is supposed to enforce.

xxxx

We agree that the publication must be in full or it is no publication at all since its purpose is to
inform the public of the contents of the laws. As correctly pointed out by the petitioners, the mere
mention of the number of the presidential decree, the title of such decree, its whereabouts (e.g.,
"with Secretary Tuvera"), the supposed date of effectivity, and in a mere supplement of the
Official Gazette cannot satisfy the publication requirement. This is not even substantial
1âwphi 1

compliance. This was the manner, incidentally, in which the General Appropriations Act for FY
1975, a presidential decree undeniably of general applicability and interest, was "published" by
the Marcos administration. The evident purpose was to withhold rather than disclose information
on this vital law.

xxxx

Laws must come out in the open in the clear light of the sun instead of skulking in the shadows
with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be
recognized as binding unless their existence and contents are confirmed by a valid publication
intended to make full disclosure and give proper notice to the people. The furtive law is like a
scabbarded saber that cannot feint, parry or cut unless the naked blade is drawn. (Emphases
supplied)

Applying the foregoing ruling to the instant case, this Court cannot rely on a handwritten note that
was not part of Proclamation No. 2476 as published. Without publication, the note never had any
legal force and effect.

Furthermore, under Section 24, Chapter 6, Book I of the Administrative Code, "the publication of
any law, resolution or other official documents in the Official Gazette shall be prima facie
evidence of its authority." Thus, whether or not President Marcos intended to include Western
Bicutan is not only irrelevant but speculative. Simply put, the courts may not speculate as to the
probable intent of the legislature apart from the words appearing in the law.17 This Court cannot
rule that a word appears in the law when, evidently, there is none. In Pagpalain Haulers, Inc. v.
Hon. Trajano,18 we ruled that "under Article 8 of the Civil Code, 'judicial decisions applying or
interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.'
This does not mean, however, that courts can create law. The courts exist for interpreting the
law, not for enacting it. To allow otherwise would be violative of the principle of separation of
powers, inasmuch as the sole function of our courts is to apply or interpret the laws, particularly
where gaps or lacunae exist or where ambiguities becloud issues, but it will not arrogate unto
itself the task of legislating." The remedy sought in these Petitions is not judicial interpretation,
but another legislation that would amend the law ‘to include petitioners' lots in the reclassification.

WHEREFORE, in view of the foregoing, the instant petitions are hereby DENIED for lack of
merit. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 97925 dated 29 April
2009 is AFFIRMED in toto. Accordingly, this Court's status quo order dated 17 June 2009 is
hereby LIFTED. Likewise, all pending motions to cite respondent in contempt is DENIED, having
been rendered moot. No costs.

SO ORDERED.

G.R. Nos. L-27860 and L-27896 March 29, 1974

PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the Testate Estate

of Charles Newton Hodges (Sp. Proc. No. 1672 of the Court of First Instance of
Iloilo), petitioner,
vs.
THE HONORABLE VENICIO ESCOLIN, Presiding Judge of the Court of First Instance of
Iloilo, Branch II, and AVELINA A. MAGNO, respondents.

G.R. Nos. L-27936 & L-27937 March 29, 1974

TESTATE ESTATE OF THE LATE LINNIE JANE HODGES (Sp. Proc. No. 1307). TESTATE
ESTATE OF THE LATE CHARLES NEWTON HODGES (Sp. Proc. No. 1672). PHILIPPINE
COMMERCIAL AND INDUSTRIAL BANK, administrator-appellant,
vs.
LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR GUZMAN,
BELCESAR CAUSING, FLORENIA BARRIDO, PURIFICACION CORONADO, GRACIANO
LUCERO, ARITEO THOMAS JAMIR, MELQUIADES BATISANAN, PEPITO IYULORES,
ESPERIDION PARTISALA, WINIFREDO ESPADA, ROSARIO ALINGASA, ADELFA
PREMAYLON, SANTIAGO PACAONSIS, and AVELINA A. MAGNO, the last as
Administratrix in Sp. Proc. No. 1307, appellees, WESTERN INSTITUTE OF TECHNOLOGY,
INC., movant-appellee.

San Juan, Africa, Gonzales and San Agustin for Philippine Commercial and Industrial Bank.

Manglapus Law Office, Antonio Law Office and Rizal R. Quimpo for private respondents and
appellees Avelina A. Magno, etc., et al.

BARREDO, J.:p

Certiorari and prohibition with preliminary injunction; certiorari to "declare all acts of the
respondent court in the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307 of the Court of
First Instance of Iloilo) subsequent to the order of December 14, 1957 as null and void for having
been issued without jurisdiction"; prohibition to enjoin the respondent court from allowing,
tolerating, sanctioning, or abetting private respondent Avelina A. Magno to perform or do any
acts of administration, such as those enumerated in the petition, and from exercising any
authority or power as Regular Administratrix of above-named Testate Estate, by entertaining
manifestations, motion and pleadings filed by her and acting on them, and also to enjoin said
court from allowing said private respondent to interfere, meddle or take part in any manner in the
administration of the Testate Estate of Charles Newton Hodges (Sp. Proc. No. 1672 of the same
court and branch); with prayer for preliminary injunction, which was issued by this Court on
August 8, 1967 upon a bond of P5,000; the petition being particularly directed against the orders
of the respondent court of October 12, 1966 denying petitioner's motion of April 22, 1966 and its
order of July 18, 1967 denying the motion for reconsideration of said order.

Related to and involving basically the same main issue as the foregoing petition, thirty-three (33)
appeals from different orders of the same respondent court approving or otherwise sanctioning
the acts of administration of the respondent Magno on behalf of the testate Estate of Mrs.
Hodges.

THE FACTS

On May 23, 1957, Linnie Jane Hodges died in Iloilo City leaving a will executed on November 22,
1952 pertinently providing as follows:

FIRST: I direct that all my just debts and funeral expenses be first paid out of my
estate.

SECOND: I give, devise and bequeath all of the rest, residue and remainder of
my estate, both personal and real, wherever situated, or located, to my beloved
husband, Charles Newton Hodges, to have and to hold unto him, my said
husband, during his natural lifetime.

THIRD: I desire, direct and provide that my husband, Charles Newton Hodges,
shall have the right to manage, control, use and enjoy said estate during his
lifetime, and he is hereby given the right to make any changes in the physical
properties of said estate, by sale or any part thereof which he may think best, and
the purchase of any other or additional property as he may think best; to execute
conveyances with or without general or special warranty, conveying in fee simple
or for any other term or time, any property which he may deem proper to dispose
of; to lease any of the real property for oil, gas and/or other minerals, and all such
deeds or leases shall pass the absolute fee simple title to the interest so
conveyed in such property as he may elect to sell. All rents, emoluments and
income from said estate shall belong to him, and he is further authorized to use
any part of the principal of said estate as he may need or desire. It is provided
herein, however, that he shall not sell or otherwise dispose of any of the
improved property now owned by us located at, in or near the City of Lubbock,
Texas, but he shall have the full right to lease, manage and enjoy the same
during his lifetime, above provided. He shall have the right to subdivide any farm
land and sell lots therein. and may sell unimproved town lots.

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

devise and bequeath all of the rest, residue and remainder of my estate, both real
and personal, wherever situated or located, to be equally divided among my
brothers and sisters, share and share alike, namely:

Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Saddie Rascoe, Era
Roman and Nimroy Higdon.

FIFTH: In case of the death of any of my brothers and/or sisters named in item
Fourth, above, prior to the death of my husband, Charles Newton Hodges, then it
is my will and bequest that the heirs of such deceased brother or sister shall take
jointly the share which would have gone to such brother or sister had she or he
survived.

SIXTH: I nominate and appoint my said husband, Charles Newton Hodges, to be

executor of this, my last will and testament, and direct that no bond or other
security be required of him as such executor.
 SEVENTH: It is my will and bequest that no action be had in the probate court, in
the administration of my estate, other than that necessary to prove and record
this will and to return an inventory and appraisement of my estate and list of
claims. (Pp. 2-4, Petition.)

This will was subsequently probated in aforementioned Special Proceedings No. 1307 of
respondent court on June 28, 1957, with the widower Charles Newton Hodges being appointed
as Executor, pursuant to the provisions thereof.

Previously, on May 27, 1957, the said widower (hereafter to be referred to as Hodges) had been
appointed Special Administrator, in which capacity he filed a motion on the same date as follows:

URGENT EX-PARTE MOTION TO ALLOW OR AUTHORIZE PETITIONER TO

CONTINUE THE BUSINESS IN WHICH HE WAS ENGAGED AND TO
PERFORM ACTS WHICH HE HAD BEEN DOING WHILE DECEASED WAS
LIVING

Come petitioner in the above-entitled special proceedings, thru his undersigned attorneys, to the
Hon. Court, most respectfully states:

1. — That Linnie Jane Hodges died leaving her last will and testament, a copy of
which is attached to the petition for probate of the same.

2. — That in said last will and testament herein petitioner Charles Newton
Hodges is directed to have the right to manage, control use and enjoy the estate
of deceased Linnie Jane Hodges, in the same way, a provision was placed in
paragraph two, the following: "I give, devise and bequeath all of the rest, residue
and remainder of my estate, to my beloved husband, Charles Newton Hodges, to
have and (to) hold unto him, my said husband, during his natural lifetime."

3. — That during the lifetime of Linnie Jane Hodges, herein petitioner was
engaged in the business of buying and selling personal and real properties, and
do such acts which petitioner may think best.

4. — That deceased Linnie Jane Hodges died leaving no descendants or

ascendants, except brothers and sisters and herein petitioner as executor
surviving spouse, to inherit the properties of the decedent.

5. — That the present motion is submitted in order not to paralyze the business of
petitioner and the deceased, especially in the purchase and sale of properties.
That proper accounting will be had also in all these transactions.

WHEREFORE, it is most respectfully prayed that, petitioner C. N. Hodges

(Charles Newton Hodges) be allowed or authorized to continue the business in
which he was engaged and to perform acts which he had been doing while
deceased Linnie Jane Hodges was living.

City of Iloilo, May 27, 1957. (Annex "D", Petition.)

which the respondent court immediately granted in the following order:

It appearing in the urgent ex-parte motion filed by petitioner C. N. Hodges, that

the business in which said petitioner and the deceased were engaged will be
paralyzed, unless and until the Executor is named and appointed by the Court,
the said petitioner is allowed or authorized to continue the business in which he
 was engaged and to perform acts which he had been doing while the deceased
was living.

SO ORDERED.

City of Iloilo May 27, 1957. (Annex "E", Petition.)

Under date of December 11, 1957, Hodges filed as such Executor another motion thus:

MOTION TO APPROVE ALL SALES, CONVEYANCES, LEASES, MORTGAGES

THAT THE EXECUTOR HAD MADE FURTHER AND SUBSEQUENT
TRANSACTIONS WHICH THE EXECUTOR MAY DO IN ACCORDANCE WITH
THE LAST WISH OF THE DECEASED LINNIE JANE HODGES.

Comes the Executor in the above-entitled proceedings, thru his undersigned

attorney, to the Hon. Court, most respectfully states:

1. — That according to the last will and testament of the deceased Linnie Jane
Hodges, the executor as the surviving spouse and legatee named in the will of
the deceased; has the right to dispose of all the properties left by the deceased,
portion of which is quoted as follows:

Second: I give, devise and bequeath all of the rest, residue and remainder of my
estate, both personal and real, wherever situated, or located, to my beloved
husband, Charles Newton Hodges, to have and to hold unto him, my said
husband, during his natural lifetime.

Third: I desire, direct and provide that my husband, Charles Newton Hodges,
shall have the right to manage, control, use and enjoy said estate during his
lifetime, and he is hereby given the right to make any changes in the physical
properties of said estate, by sale or any part thereof which he may think best, and
the purchase of any other or additional property as he may think best; to execute
conveyances with or without general or special warranty, conveying in fee simple
or for any other term or time, any property which he may deem proper to dispose
of; to lease any of the real property for oil, gas and/or other minerals, and all such
deeds or leases shall pass the absolute fee simple title to the interest so
conveyed in such property as he may elect to sell. All rents, emoluments and
income from said estate shall belong to him, and he is further authorized to use
any part of the principal of said estate as he may need or desire. ...

2. — That herein Executor, is not only part owner of the properties left as
conjugal, but also, the successor to all the properties left by the deceased Linnie
Jane Hodges. That during the lifetime of herein Executor, as Legatee has the
right to sell, convey, lease or dispose of the properties in the Philippines. That
inasmuch as C.N. Hodges was and is engaged in the buy and sell of real and
personal properties, even before the death of Linnie Jane Hodges, a motion to
authorize said C.N. Hodges was filed in Court, to allow him to continue in the
business of buy and sell, which motion was favorably granted by the Honorable
Court.

3. — That since the death of Linnie Jane Hodges, Mr. C.N. Hodges had been
buying and selling real and personal properties, in accordance with the wishes of
the late Linnie Jane Hodges.
 4. — That the Register of Deeds for Iloilo, had required of late the herein
Executor to have all the sales, leases, conveyances or mortgages made by him,
approved by the Hon. Court.

5. — That it is respectfully requested, all the sales, conveyances leases and

mortgages executed by the Executor, be approved by the Hon. Court. and
subsequent sales conveyances, leases and mortgages in compliances with the
wishes of the late Linnie Jane Hodges, and within the scope of the terms of the
last will and testament, also be approved;

6. — That the Executor is under obligation to submit his yearly accounts, and the
properties conveyed can also be accounted for, especially the amounts received.

WHEREFORE, it is most respectfully prayed that, all the sales, conveyances,

leases, and mortgages executed by the Executor, be approved by the Hon.
Court, and also the subsequent sales, conveyances, leases, and mortgages in
consonance with the wishes of the deceased contained in her last will and
testament, be with authorization and approval of the Hon. Court.

City of Iloilo, December 11, 1967.

(Annex "G", Petition.)

which again was promptly granted by the respondent court on December 14, 1957 as follows:

ORDER

As prayed for by Attorney Gellada, counsel for the Executor for the reasons
stated in his motion dated December 11, 1957, which the Court considers well
taken all the sales, conveyances, leases and mortgages of all properties left by
the deceased Linnie Jane Hodges executed by the Executor Charles N. Hodges
are hereby APPROVED. The said Executor is further authorized to execute
subsequent sales, conveyances, leases and mortgages of the properties left by
the said deceased Linnie Jane Hodges in consonance with the wishes conveyed
in the last will and testament of the latter.

So ordered.

Iloilo City. December 14, 1957.

(Annex "H", Petition.)

On April 14, 1959, in submitting his first statement of account as Executor for approval, Hodges
alleged:

Pursuant to the provisions of the Rules of Court, herein executor of the

deceased, renders the following account of his administration covering the period
from January 1, 1958 to December 31, 1958, which account may be found in
detail in the individual income tax return filed for the estate of deceased Linnie
Jane Hodges, to wit:

That a certified public accountant has examined the statement of net worth of the
estate of Linnie Jane Hodges, the assets and liabilities, as well as the income
and expenses, copy of which is hereto attached and made integral part of this
statement of account as Annex "A".
 IN VIEW OF THE FOREGOING, it is most respectfully prayed that, the statement
of net worth of the estate of Linnie Jane Hodges, the assets and liabilities,
income and expenses as shown in the individual income tax return for the estate
of the deceased and marked as Annex "A", be approved by the Honorable Court,
as substantial compliance with the requirements of the Rules of Court.

That no person interested in the Philippines of the time and place of examining
the herein accounts be given notice, as herein executor is the only devisee or
legatee of the deceased, in accordance with the last will and testament already
probated by the Honorable court.

City of Iloilo April 14, 1959.

(Annex "I", Petition.)

The respondent court approved this statement of account on April 21, 1959 in its order worded
thus:

Upon petition of Atty. Gellada, in representation of the Executor, the statement of

net worth of the estate of Linnie Jane Hodges, assets and liabilities, income and
expenses as shown in the individual income tax return for the estate of the
deceased and marked as Annex "A" is approved.

SO ORDERED.

City of Iloilo April 21, 1959.

(Annex "J", Petition.)

His accounts for the periods January 1, 1959 to December 31, 1959 and January 1, 1960 to
December 31, 1960 were submitted likewise accompanied by allegations identical mutatis
mutandis to those of April 14, 1959, quoted above; and the respective orders approving the
same, dated July 30, 1960 and May 2, 1961, were substantially identical to the above-quoted
order of April 21, 1959. In connection with the statements of account just mentioned, the
following assertions related thereto made by respondent-appellee Magno in her brief do not
appear from all indications discernible in the record to be disputable:

Under date of April 14, 1959, C.N. Hodges filed his first "Account by the
Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of
Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of December 31,
1958 annexed thereto, C.N. Hodges reported that the combined conjugal estate
earned a net income of P328,402.62, divided evenly between him and the estate
of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return"
for calendar year 1958 on the estate of Linnie Jane Hodges reporting, under
oath, the said estate as having earned income of P164,201.31, exactly one-half
of the net income of his combined personal assets and that of the estate of Linnie
Jane Hodges. (p. 91, Appellee's Brief.)

xxx xxx xxx

Under date of July 21, 1960, C.N. Hodges filed his second "Annual Statement of
Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement
of Networth of Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of
December 31, 1959 annexed thereto, C.N. Hodges reported that the combined
conjugal estate earned a net income of P270,623.32, divided evenly between him
 and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual
income tax return" for calendar year 1959 on the estate of Linnie Jane Hodges
reporting, under oath, the said estate as having earned income of P135,311.66,
exactly one-half of the net income of his combined personal assets and that of
the estate of Linnie Jane Hodges. (pp. 91-92. Appellee's Brief.)

xxx xxx xxx

Under date of April 20, 1961, C.N. Hodges filed his third "Annual Statement of
Account by the Executor for the Year 1960" of the estate of Linnie Jane Hodges.
In the "Statement of Net Worth of Mr. C.N. Hodges and the Estate of Linnie Jane
Hodges" as of December 31, 1960 annexed thereto, C.N. Hodges reported that
the combined conjugal estate earned a net income of P314,857.94, divided
evenly between him and the estate of Linnie Jane Hodges. Pursuant to this, he
filed an "individual income tax return" for calendar year 1960 on the estate of
Linnie Jane Hodges reporting, under oath, the said estate as having earned
income of P157,428.97, exactly one-half of the net income of his combined
personal assets and that of the estate of Linnie Jane Hodges. (Pp. 92-93,
Appellee's Brief.)

Likewise the following:

In the petition for probate that he (Hodges) filed, he listed the seven brothers and
sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court
admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon
(see p. 14, Green ROA). Immediately, C.N. Hodges filed a verified motion to have
Roy Higdon's name included as an heir, stating that he wanted to straighten the
records "in order the heirs of deceased Roy Higdon may not think or believe they
were omitted, and that they were really and are interested in the estate of
deceased Linnie Jane Hodges. .

As an executor, he was bound to file tax returns for the estate he was
administering under American law. He did file such as estate tax return on August
8, 1958. In Schedule "M" of such return, he answered "Yes" to the question as to
whether he was contemplating "renouncing the will". On the question as to what
property interests passed to him as the surviving spouse, he answered:

"None, except for purposes of administering the Estate, paying

debts, taxes and other legal charges. It is the intention of the
surviving husband of deceased to distribute the remaining
property and interests of the deceased in their Community estate
to the devisees and legatees named in the will when the debts,
liabilities, taxes and expenses of administration are finally
determined and paid."

Again, on August 9, 1962, barely four months before his death, he executed an
"affidavit" wherein he ratified and confirmed all that he stated in Schedule "M" of
his estate tax returns as to his having renounced what was given him by his
wife's will.1

As appointed executor, C.N. Hodges filed an "Inventory" dated May 12, 1958. He
listed all the assets of his conjugal partnership with Linnie Jane Hodges on a
separate balance sheet and then stated expressly that her estate which has
come into his possession as executor was "one-half of all the items" listed in said
balance sheet. (Pp. 89-90, Appellee's Brief.)
Parenthetically, it may be stated, at this juncture, that We are taking pains to quote wholly or at
least, extensively from some of the pleadings and orders whenever We feel that it is necessary to
do so for a more comprehensive and clearer view of the important and decisive issues raised by
the parties and a more accurate appraisal of their respective positions in regard thereto.

The records of these cases do not show that anything else was done in the above-mentioned
Special Proceedings No. 1307 until December 26, 1962, when on account of the death of
Hodges the day before, the same lawyer, Atty. Leon P. Gellada, who had been previously acting
as counsel for Hodges in his capacity as Executor of his wife's estate, and as such had filed the
aforequoted motions and manifestations, filed the following:

URGENT EX-PARTE MOTION FOR THE APPOINTMENT OF A

SPECIAL ADMINISTRATRIX

COMES the undersigned attorney for the Executor in the above-entitled

proceedings, to the Honorable Court, most respectfully states:

1. That in accordance with the Last Will and Testament of Linnie Jane Hodges
(deceased), her husband, Charles Newton Hodges was to act as Executor, and
in fact, in an order issued by this Hon. Court dated June 28, 1957, the said
Charles Newton Hodges was appointed Executor and had performed the duties
as such.

2. That last December 22, 1962, the said Charles Newton Hodges was stricken
ill, and brought to the Iloilo Mission Hospital for treatment, but unfortunately, he
died on December 25, 1962, as shown by a copy of the death certificate hereto
attached and marked as Annex "A".

3. That in accordance with the provisions of the last will and testament of Linnie
Jane Hodges, whatever real and personal properties that may remain at the
death of her husband Charles Newton Hodges, the said properties shall be
equally divided among their heirs. That there are real and personal properties left
by Charles Newton Hodges, which need to be administered and taken care of.

4. That the estate of deceased Linnie Jane Hodges, as well as that of Charles
Newton Hodges, have not as yet been determined or ascertained, and there is
necessity for the appointment of a general administrator to liquidate and distribute
the residue of the estate to the heirs and legatees of both spouses. That in
accordance with the provisions of Section 2 of Rule 75 of the Rules of Court, the
conjugal partnership of Linnie Jane Hodges and Charles Newton Hodges shall be
liquidated in the testate proceedings of the wife.

5. That the undersigned counsel, has perfect personal knowledge of the

existence of the last will and testament of Charles Newton Hodges, with similar
provisions as that contained in the last will and testament of Linnie Jane Hodges.
However, said last will and testament of Charles Newton Hodges is kept inside
the vault or iron safe in his office, and will be presented in due time before this
honorable Court.

6. That in the meantime, it is imperative and indispensable that, an Administratrix

be appointed for the estate of Linnie Jane Hodges and a Special Administratrix
for the estate of Charles Newton Hodges, to perform the duties required by law,
to administer, collect, and take charge of the goods, chattels, rights, credits, and
estate of both spouses, Charles Newton Hodges and Linnie Jane Hodges, as
provided for in Section 1 and 2, Rule 81 of the Rules of Court.
 7. That there is delay in granting letters testamentary or of administration,
because the last will and testament of deceased, Charles Newton Hodges, is still
kept in his safe or vault, and in the meantime, unless an administratrix (and,) at
the same time, a Special Administratrix is appointed, the estate of both spouses
are in danger of being lost, damaged or go to waste.

8. That the most trusted employee of both spouses Linnie Jane Hodges and C.N.
Hodges, who had been employed for around thirty (30) years, in the person of
Miss Avelina Magno, (should) be appointed Administratrix of the estate of Linnie
Jane Hodges and at the same time Special Administratrix of the estate of Charles
Newton Hodges. That the said Miss Avelina Magno is of legal age, a resident of
the Philippines, the most fit, competent, trustworthy and well-qualified person to
serve the duties of Administratrix and Special Administratrix and is willing to act
as such.

9. That Miss Avelina Magno is also willing to file bond in such sum which the
Hon. Court believes reasonable.

WHEREFORE, in view of all the foregoing, it is most respectfully prayed that,

Miss AVELINA A. MAGNO be immediately appointed Administratrix of the estate
of Linnie Jane Hodges and as Special Administratrix of the estate of Charles
Newton Hodges, with powers and duties provided for by law. That the Honorable
Court fix the reasonable bond of P1,000.00 to be filed by Avelina A. Magno.

(Annex "O", Petition.)

which respondent court readily acted on in its order of even date thus: .

For the reasons alleged in the Urgent Ex-parte Motion filed by counsel for the
Executor dated December 25, 1962, which the Court finds meritorious, Miss
AVELINA A. MAGNO, is hereby appointed Administratrix of the estate of Linnie
Jane Hodges and as Special Administratrix of the estate of Charles Newton
Hodges, in the latter case, because the last will of said Charles Newton Hodges
is still kept in his vault or iron safe and that the real and personal properties of
both spouses may be lost, damaged or go to waste, unless a Special
Administratrix is appointed.

Miss Avelina A. Magno is required to file bond in the sum of FIVE THOUSAND
PESOS (P5,000.00), and after having done so, let letters of Administration be
issued to her." (Annex "P", Petition.)

On December 29, 1962, however, upon urgent ex-parte petition of respondent

Magno herself, thru Atty. Gellada, Harold, R. Davies, "a representative of the
heirs of deceased Charles Newton Hodges (who had) arrived from the United
States of America to help in the administration of the estate of said deceased"
was appointed as Co-Special Administrator of the estate of Hodges, (pp. 29-33,
Yellow - Record on Appeal) only to be replaced as such co-special administrator
on January 22, 1963 by Joe Hodges, who, according to the motion of the same
attorney, is "the nephew of the deceased (who had) arrived from the United
States with instructions from the other heirs of the deceased to administer the
properties or estate of Charles Newton Hodges in the Philippines, (Pp. 47-50, id.)

Meanwhile, under date of January 9, 1963, the same Atty. Gellada filed in Special Proceedings
1672 a petition for the probate of the will of Hodges,2 with a prayer for the issuance of letters of
administration to the same Joe Hodges, albeit the motion was followed on February 22, 1963 by
a separate one asking that Atty. Fernando Mirasol be appointed as his co-administrator. On the
same date this latter motion was filed, the court issued the corresponding order of probate and
letters of administration to Joe Hodges and Atty. Mirasol, as prayed for.

At this juncture, again, it may also be explained that just as, in her will, Mrs. Hodges bequeathed
her whole estate to her husband "to have and to hold unto him, my said husband, during his
natural lifetime", she, at the same time or in like manner, provided that "at the death of my said
husband — I give devise and bequeath all of the rest, residue and remainder of my estate, both
real and personal, wherever situated or located, to be equally divided among my brothers and
sisters, share and share alike —". Accordingly, it became incumbent upon Hodges, as executor
of his wife's will, to duly liquidate the conjugal partnership, half of which constituted her estate, in
order that upon the eventuality of his death, "the rest, residue and remainder" thereof could be
determined and correspondingly distributed or divided among her brothers and sisters. And it
was precisely because no such liquidation was done, furthermore, there is the issue of whether
the distribution of her estate should be governed by the laws of the Philippines or those of Texas,
of which State she was a national, and, what is more, as already stated, Hodges made official
and sworn statements or manifestations indicating that as far as he was concerned no "property
interests passed to him as surviving spouse — "except for purposes of administering the estate,
paying debts, taxes and other legal charges" and it was the intention of the surviving husband of
the deceased to distribute the remaining property and interests of the deceased in their
Community Estate to the devisees and legatees named in the will when the debts, liabilities,
taxes and expenses of administration are finally determined and paid", that the incidents and
controversies now before Us for resolution arose. As may be observed, the situation that ensued
upon the death of Hodges became rather unusual and so, quite understandably, the lower court's
actuations presently under review are apparently wanting in consistency and seemingly lack
proper orientation.

Thus, We cannot discern clearly from the record before Us the precise perspective from which
the trial court proceeded in issuing its questioned orders. And, regretably, none of the lengthy
briefs submitted by the parties is of valuable assistance in clearing up the matter.

To begin with, We gather from the two records on appeal filed by petitioner, as appellant in the
appealed cases, one with green cover and the other with a yellow cover, that at the outset, a sort
of modus operandi had been agreed upon by the parties under which the respective
administrators of the two estates were supposed to act conjointly, but since no copy of the said
agreement can be found in the record before Us, We have no way of knowing when exactly such
agreement was entered into and under what specific terms. And while reference is made to
said modus operandi in the order of September 11, 1964, on pages 205-206 of the Green
Record on Appeal, reading thus:

The present incident is to hear the side of administratrix, Miss Avelina A. Magno,
in answer to the charges contained in the motion filed by Atty. Cesar Tirol on
September 3, 1964. In answer to the said charges, Miss Avelina A. Magno,
through her counsel, Atty. Rizal Quimpo, filed a written manifestation.

After reading the manifestation here of Atty. Quimpo, for and in behalf of the
administratrix, Miss Avelina A. Magno, the Court finds that everything that
happened before September 3, 1964, which was resolved on September 8, 1964,
to the satisfaction of parties, was simply due to a misunderstanding between the
representative of the Philippine Commercial and Industrial Bank and Miss Magno
and in order to restore the harmonious relations between the parties, the Court
ordered the parties to remain in status quo as to their modus operandi before
September 1, 1964, until after the Court can have a meeting with all the parties
and their counsels on October 3, as formerly agreed upon between counsels,
Attys. Ozaeta, Gibbs and Ozaeta, Attys. Tirol and Tirol and Atty. Rizal Quimpo.
 In the meantime, the prayers of Atty. Quimpo as stated in his manifestation shall
not be resolved by this Court until October 3, 1964.

SO ORDERED.

there is nothing in the record indicating whatever happened to it afterwards, except that again,
reference thereto was made in the appealed order of October 27, 1965, on pages 292-295 of the
Green Record on Appeal, as follows:

On record is an urgent motion to allow PCIB to open all doors and locks in the
Hodges Office at 206-208 Guanco Street, Iloilo City, to take immediate and
exclusive possession thereof and to place its own locks and keys for security
purposes of the PCIB dated October 27, 1965 thru Atty. Cesar Tirol. It is alleged
in said urgent motion that Administratrix Magno of the testate estate of Linnie
Jane Hodges refused to open the Hodges Office at 206-208 Guanco Street, Iloilo
City where PCIB holds office and therefore PCIB is suffering great moral damage
and prejudice as a result of said act. It is prayed that an order be issued
authorizing it (PCIB) to open all doors and locks in the said office, to take
immediate and exclusive possession thereof and place thereon its own locks and
keys for security purposes; instructing the clerk of court or any available deputy to
witness and supervise the opening of all doors and locks and taking possession
of the PCIB.

A written opposition has been filed by Administratrix Magno of even date (Oct.
27) thru counsel Rizal Quimpo stating therein that she was compelled to close
the office for the reason that the PCIB failed to comply with the order of this Court
signed by Judge Anacleto I. Bellosillo dated September 11, 1964 to the effect that
both estates should remain in status quo to their modus operandi as of
September 1, 1964.

To arrive at a happy solution of the dispute and in order not to interrupt the
operation of the office of both estates, the Court aside from the reasons stated in
the urgent motion and opposition heard the verbal arguments of Atty. Cesar Tirol
for the PCIB and Atty. Rizal Quimpo for Administratix Magno.

After due consideration, the Court hereby orders Magno to open all doors and
locks in the Hodges Office at 206-208 Guanco Street, Iloilo City in the presence
of the PCIB or its duly authorized representative and deputy clerk of court Albis of
this branch not later than 7:30 tomorrow morning October 28, 1965 in order that
the office of said estates could operate for business.

Pursuant to the order of this Court thru Judge Bellosillo dated September 11,
1964, it is hereby ordered:

(a) That all cash collections should be deposited in the joint account of the
estates of Linnie Jane Hodges and estates of C.N. Hodges;

(b) That whatever cash collections that had been deposited in the account of
either of the estates should be withdrawn and since then deposited in the joint
account of the estate of Linnie Jane Hodges and the estate of C.N. Hodges;

(c) That the PCIB should countersign the check in the amount of P250 in favor of
Administratrix Avelina A. Magno as her compensation as administratrix of the
Linnie Jane Hodges estate chargeable to the testate estate of Linnie Jane
Hodges only;
 (d) That Administratrix Magno is hereby directed to allow the PCIB to inspect
whatever records, documents and papers she may have in her possession in the
same manner that Administrator PCIB is also directed to allow Administratrix
Magno to inspect whatever records, documents and papers it may have in its
possession;

(e) That the accountant of the estate of Linnie Jane Hodges shall have access to
all records of the transactions of both estates for the protection of the estate of
Linnie Jane Hodges; and in like manner the accountant or any authorized
representative of the estate of C.N. Hodges shall have access to the records of
transactions of the Linnie Jane Hodges estate for the protection of the estate of
C.N. Hodges.

Once the estates' office shall have been opened by Administratrix Magno in the
presence of the PCIB or its duly authorized representative and deputy clerk Albis
or his duly authorized representative, both estates or any of the estates should
not close it without previous consent and authority from this court.

SO ORDERED.

As may be noted, in this order, the respondent court required that all collections from the
properties in the name of Hodges should be deposited in a joint account of the two estates,
which indicates that seemingly the so-called modus operandi was no longer operative, but again
there is nothing to show when this situation started.

Likewise, in paragraph 3 of the petitioner's motion of September 14, 1964, on pages 188-201 of
the Green Record on Appeal, (also found on pp. 83-91 of the Yellow Record on Appeal) it is
alleged that:

3. On January 24, 1964 virtually all of the heirs of C.N. Hodges, Joe Hodges and
Fernando P. Mirasol acting as the two co-administrators of the estate of C.N.
Hodges, Avelina A. Magno acting as the administratrix of the estate of Linnie
Jane Hodges and Messrs. William Brown and Ardell Young acting for all of the
Higdon family who claim to be the sole beneficiaries of the estate of Linnie Jane
Hodges and various legal counsel representing the aforementioned parties
entered into an amicable agreement, which was approved by this Honorable
Court, wherein the parties thereto agreed that certain sums of money were to be
paid in settlement of different claims against the two estates and that the assets
(to the extent they existed) of both estates would be administered jointly by the
PCIB as administrator of the estate of C.N. Hodges and Avelina A. Magno as
administratrix of the estate of Linnie Jane Hodges, subject, however, to the
aforesaid October 5, 1963 Motion, namely, the PCIB's claim to exclusive
possession and ownership of one hundred percent (100%) (or, in the alternative,
seventy-five percent (75%) of all assets owned by C.N. Hodges or Linnie Jane
Hodges situated in the Philippines. On February 1, 1964 (pp. 934-935, CFI Rec.,
S.P. No. 1672) this Honorable Court amended its order of January 24, 1964 but
in no way changed its recognition of the afore-described basic demand by the
PCIB as administrator of the estate of C.N. Hodges to one hundred percent
(100%) of the assets claimed by both estates.

but no copy of the mentioned agreement of joint administration of the two estates exists in the
record, and so, We are not informed as to what exactly are the terms of the same which could be
relevant in the resolution of the issues herein.
On the other hand, the appealed order of November 3, 1965, on pages 313-320 of the Green
Record on Appeal, authorized payment by respondent Magno of, inter alia, her own fees as
administratrix, the attorney's fees of her lawyers, etc., as follows:

Administratrix Magno thru Attys. Raul S. Manglapus and Rizal. R. Quimpo filed a
Manifestation and Urgent Motion dated June 10, 1964 asking for the approval of
the Agreement dated June 6, 1964 which Agreement is for the purpose of
retaining their services to protect and defend the interest of the said
Administratrix in these proceedings and the same has been signed by and bears
the express conformity of the attorney-in-fact of the late Linnie Jane Hodges, Mr.
James L. Sullivan. It is further prayed that the Administratrix of the Testate Estate
of Linnie Jane Hodges be directed to pay the retailers fee of said lawyers, said
fees made chargeable as expenses for the administration of the estate of Linnie
Jane Hodges (pp. 1641-1642, Vol. V, Sp. 1307).

An opposition has been filed by the Administrator PCIB thru Atty. Herminio
Ozaeta dated July 11, 1964, on the ground that payment of the retainers fee of
Attys. Manglapus and Quimpo as prayed for in said Manifestation and Urgent
Motion is prejudicial to the 100% claim of the estate of C. N. Hodges;
employment of Attys. Manglapus and Quimpo is premature and/or unnecessary;
Attys. Quimpo and Manglapus are representing conflicting interests and the
estate of Linnie Jane Hodges should be closed and terminated (pp. 1679-1684,
Vol, V, Sp. 1307).

Atty. Leon P. Gellada filed a memorandum dated July 28, 1964 asking that the
Manifestation and Urgent Motion filed by Attys. Manglapus and Quimpo be
denied because no evidence has been presented in support thereof. Atty.
Manglapus filed a reply to the opposition of counsel for the Administrator of the C.
N. Hodges estate wherein it is claimed that expenses of administration include
reasonable counsel or attorney's fees for services to the executor or
administrator. As a matter of fact the fee agreement dated February 27, 1964
between the PCIB and the law firm of Ozaeta, Gibbs & Ozaeta as its counsel (Pp.
1280-1284, Vol. V, Sp. 1307) which stipulates the fees for said law firm has been
approved by the Court in its order dated March 31, 1964. If payment of the fees
of the lawyers for the administratrix of the estate of Linnie Jane Hodges will
cause prejudice to the estate of C. N. Hodges, in like manner the very agreement
which provides for the payment of attorney's fees to the counsel for the PCIB will
also be prejudicial to the estate of Linnie Jane Hodges (pp. 1801-1814, Vol. V,
Sp. 1307).

Atty. Herminio Ozaeta filed a rejoinder dated August 10, 1964 to the reply to the
opposition to the Manifestation and Urgent Motion alleging principally that the
estates of Linnie Jane Hodges and C. N. Hodges are not similarly situated for the
reason that C. N. Hodges is an heir of Linnie Jane Hodges whereas the latter is
not an heir of the former for the reason that Linnie Jane Hodges predeceased C.
N. Hodges (pp. 1839-1848, Vol. V, Sp. 1307); that Attys. Manglapus and Quimpo
formally entered their appearance in behalf of Administratrix of the estate of
Linnie Jane Hodges on June 10, 1964 (pp. 1639-1640, Vol. V, Sp. 1307).

Atty. Manglapus filed a manifestation dated December 18, 1964 stating therein
that Judge Bellosillo issued an order requiring the parties to submit memorandum
in support of their respective contentions. It is prayed in this manifestation that
the Manifestation and Urgent Motion dated June 10, 1964 be resolved (pp. 6435-
6439, Vol. VII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a counter- manifestation dated
January 5, 1965 asking that after the consideration by the court of all allegations
and arguments and pleadings of the PCIB in connection therewith (1) said
manifestation and urgent motion of Attys. Manglapus and Quimpo be denied (pp.
6442-6453, Vol. VII, Sp. 1307). Judge Querubin issued an order dated January 4,
1965 approving the motion dated June 10, 1964 of the attorneys for the
administratrix of the estate of Linnie Jane Hodges and agreement annexed to
said motion. The said order further states: "The Administratrix of the estate of
Linnie Jane Hodges is authorized to issue or sign whatever check or checks may
be necessary for the above purpose and the administrator of the estate of C. N.
Hodges is ordered to countersign the same. (pp. 6518-6523, Vol VII, Sp. 1307).

Atty. Roman Mabanta, Jr. for the PCIB filed a manifestation and motion dated
January 13, 1965 asking that the order of January 4, 1965 which was issued by
Judge Querubin be declared null and void and to enjoin the clerk of court and the
administratrix and administrator in these special proceedings from all
proceedings and action to enforce or comply with the provision of the aforesaid
order of January 4, 1965. In support of said manifestation and motion it is alleged
that the order of January 4, 1965 is null and void because the said order was
never delivered to the deputy clerk Albis of Branch V (the sala of Judge
Querubin) and the alleged order was found in the drawer of the late Judge
Querubin in his office when said drawer was opened on January 13, 1965 after
the death of Judge Querubin by Perfecto Querubin, Jr., the son of the judge and
in the presence of Executive Judge Rovira and deputy clerk Albis (Sec. 1, Rule
36, New Civil Code) (Pp. 6600-6606, Vol. VIII, Sp. 1307).

Atty. Roman Mabanta, Jr. for the PCIB filed a motion for reconsideration dated
February 23, 1965 asking that the order dated January 4, 1964 be reversed on
the ground that:

1. Attorneys retained must render services to the estate not to the personal heir;

2. If services are rendered to both, fees should be pro-rated between them;

3. Attorneys retained should not represent conflicting interests; to the prejudice of

the other heirs not represented by said attorneys;

4. Fees must be commensurate to the actual services rendered to the estate;

5. There must be assets in the estate to pay for said fees (Pp. 6625-6636, Vol.
VIII, Sp. 1307).

Atty. Quimpo for Administratrix Magno of the estate of Linnie Jane Hodges filed a
motion to submit dated July 15, 1965 asking that the manifestation and urgent
motion dated June 10, 1964 filed by Attys. Manglapus and Quimpo and other
incidents directly appertaining thereto be considered submitted for consideration
and approval (pp. 6759-6765, Vol. VIII, Sp. 1307).

Considering the arguments and reasons in support to the pleadings of both the
Administratrix and the PCIB, and of Atty. Gellada, hereinbefore mentioned, the
Court believes that the order of January 4, 1965 is null and void for the reason
that the said order has not been filed with deputy clerk Albis of this court (Branch
V) during the lifetime of Judge Querubin who signed the said order. However, the
said manifestation and urgent motion dated June 10, 1964 is being treated and
considered in this instant order. It is worthy to note that in the motion dated
January 24, 1964 (Pp. 1149- 1163, Vol. V, Sp. 1307) which has been filed by
 Atty. Gellada and his associates and Atty. Gibbs and other lawyers in addition to
the stipulated fees for actual services rendered. However, the fee agreement
dated February 27, 1964, between the Administrator of the estate of C. N.
Hodges and Atty. Gibbs which provides for retainer fee of P4,000 monthly in
addition to specific fees for actual appearances, reimbursement for expenditures
and contingent fees has also been approved by the Court and said lawyers have
already been paid. (pp. 1273-1279, Vol. V, Sp. Proc. 1307 pp. 1372-1373, Vol. V,
Sp. Proc. 1307).

WHEREFORE, the order dated January 4, 1965 is hereby declared null and void.

The manifestation and motion dated June 10, 1964 which was filed by the
attorneys for the administratrix of the testate estate of Linnie Jane Hodges is
granted and the agreement annexed thereto is hereby approved.

The administratrix of the estate of Linnie Jane Hodges is hereby directed to be

needed to implement the approval of the agreement annexed to the motion and
the administrator of the estate of C. N. Hodges is directed to countersign the said
check or checks as the case may be.

SO ORDERED.

thereby implying somehow that the court assumed the existence of independent but
simultaneous administrations.

Be that as it may, again, it appears that on August 6, 1965, the court, acting on a motion of
petitioner for the approval of deeds of sale executed by it as administrator of the estate of
Hodges, issued the following order, also on appeal herein:

Acting upon the motion for approval of deeds of sale for registered land of the
PCIB, Administrator of the Testate Estate of C. N. Hodges in Sp. Proc. 1672 (Vol.
VII, pp. 2244-2245), dated July 16, 1965, filed by Atty. Cesar T. Tirol in
representation of the law firms of Ozaeta, Gibbs and Ozaeta and Tirol and Tirol
and the opposition thereto of Atty. Rizal R. Quimpo (Vol. VIII, pp. 6811-6813)
dated July 22, 1965 and considering the allegations and reasons therein stated,
the court believes that the deeds of sale should be signed jointly by the PCIB,
Administrator of the Testate Estate of C. N. Hodges and Avelina A. Magno,
Administratrix of the Testate Estate of Linnie Jane Hodges and to this effect the
PCIB should take the necessary steps so that Administratrix Avelina A. Magno
could sign the deeds of sale.

SO ORDERED. (p. 248, Green Record on Appeal.)

Notably this order required that even the deeds executed by petitioner, as administrator of the
Estate of Hodges, involving properties registered in his name, should be co-signed by
respondent Magno.3 And this was not an isolated instance.

In her brief as appellee, respondent Magno states:

After the lower court had authorized appellee Avelina A. Magno to execute final
deeds of sale pursuant to contracts to sell executed by C. N. Hodges on February
20, 1963 (pp. 45-46, Green ROA), motions for the approval of final deeds of sale
(signed by appellee Avelina A. Magno and the administrator of the estate of C. N.
Hodges, first Joe Hodges, then Atty. Fernando Mirasol and later the appellant)
were approved by the lower court upon petition of appellee Magno's counsel,
Atty. Leon P. Gellada, on the basis of section 8 of Rule 89 of the Revised Rules
of Court. Subsequently, the appellant, after it had taken over the bulk of the
assets of the two estates, started presenting these motions itself. The first such
attempt was a "Motion for Approval of Deeds of Sale for Registered Land and
Cancellations of Mortgages" dated July 21, 1964 filed by Atty. Cesar T. Tirol,
counsel for the appellant, thereto annexing two (2) final deeds of sale and two (2)
cancellations of mortgages signed by appellee Avelina A. Magno and D. R.
Paulino, Assistant Vice-President and Manager of the appellant (CFI Record, Sp.
Proc. No. 1307, Vol. V, pp. 1694-1701). This motion was approved by the lower
court on July 27, 1964. It was followed by another motion dated August 4, 1964
for the approval of one final deed of sale again signed by appellee Avelina A.
Magno and D. R. Paulino (CFI Record, Sp. Proc. No. 1307. Vol. V, pp. 1825-
1828), which was again approved by the lower court on August 7, 1964. The
gates having been opened, a flood ensued: the appellant subsequently filed
similar motions for the approval of a multitude of deeds of sales and cancellations
of mortgages signed by both the appellee Avelina A. Magno and the appellant.

A random check of the records of Special Proceeding No. 1307 alone will show
Atty. Cesar T. Tirol as having presented for court approval deeds of sale of real
properties signed by both appellee Avelina A. Magno and D. R. Paulino in the
following numbers: (a) motion dated September 21, 1964 — 6 deeds of sale; (b)
motion dated November 4, 1964 — 1 deed of sale; (c) motion dated December 1,
1964 — 4 deeds of sale; (d) motion dated February 3, 1965 — 8 deeds of sale;
(f) motion dated May 7, 1965 — 9 deeds of sale. In view of the very extensive
landholdings of the Hodges spouses and the many motions filed concerning
deeds of sale of real properties executed by C. N. Hodges the lower court has
had to constitute special separate expedientes in Special Proceedings Nos. 1307
and 1672 to include mere motions for the approval of deeds of sale of the
conjugal properties of the Hodges spouses.

As an example, from among the very many, under date of February 3, 1965, Atty.
Cesar T. Tirol, as counsel for the appellant, filed "Motion for Approval of Deeds of
Sale for Registered Land and Cancellations of Mortgages" (CFI Record, Sp.
Proc. No. 1307, Vol. VIII, pp. 6570-6596) the allegations of which read:

"1. In his lifetime, the late C. N. Hodges executed "Contracts to Sell" real
property, and the prospective buyers under said contracts have already paid the
price and complied with the terms and conditions thereof;

"2. In the course of administration of both estates, mortgage debtors have already
paid their debts secured by chattel mortgages in favor of the late C. N. Hodges,
and are now entitled to release therefrom;

"3. There are attached hereto documents executed jointly by the Administratrix in
Sp. Proc. No. 1307 and the Administrator in Sp. Proc. No. 1672, consisting of
deeds of sale in favor —

Fernando Cano, Bacolod City, Occ. Negros

Fe Magbanua, Iloilo City
Policarpio M. Pareno, La Paz, Iloilo City
Rosario T. Libre, Jaro, Iloilo City
Federico B. Torres, Iloilo City
Reynaldo T. Lataquin, La Paz, Iloilo City
Anatolio T. Viray, Iloilo City
Benjamin Rolando, Jaro, Iloilo City

and cancellations of mortgages in favor of —

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

"4. That the approval of the aforesaid documents will not reduce
the assets of the estates so as to prevent any creditor from
receiving his full debt or diminish his dividend."

And the prayer of this motion is indeed very revealing:

"WHEREFORE, it is respectfully prayed that, under Rule 89, Section 8 of the

Rules of Court, this honorable court approve the aforesaid deeds of sale and
cancellations of mortgages." (Pp. 113-117, Appellee's Brief.)

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

Further indicating lack of concrete perspective or orientation on the part of the respondent court
and its hesitancy to clear up matters promptly, in its other appealed order of November 23, 1965,
on pages 334-335 of the Green Record on Appeal, said respondent court allowed the movant
Ricardo Salas, President of appellee Western Institute of Technology (successor of Panay
Educational Institutions, Inc.), one of the parties with whom Hodges had contracts that are in
question in the appeals herein, to pay petitioner, as Administrator of the estate of Hodges and/or
respondent Magno, as Administrator of the estate of Mrs. Hodges, thus:

Considering that in both cases there is as yet no judicial declaration of heirs nor
distribution of properties to whomsoever are entitled thereto, the Court believes
that payment to both the administrator of the testate estate of C. N. Hodges and
the administratrix of the testate estate of Linnie Jane Hodges or to either one of
the two estates is proper and legal.

WHEREFORE, movant Ricardo T. Salas can pay to both estates or either of

them.

SO ORDERED.

(Pp. 334-335, Green Record on Appeal.)

On the other hand, as stated earlier, there were instances when respondent Magno was given
authority to act alone. For instance, in the other appealed order of December 19, 1964, on page
221 of the Green Record on Appeal, the respondent court approved payments made by her of
overtime pay to some employees of the court who had helped in gathering and preparing copies
of parts of the records in both estates as follows:

Considering that the expenses subject of the motion to approve payment of

overtime pay dated December 10, 1964, are reasonable and are believed by this
Court to be a proper charge of administration chargeable to the testate estate of
the late Linnie Jane Hodges, the said expenses are hereby APPROVED and to
be charged against the testate estate of the late Linnie Jane Hodges. The
administrator of the testate estate of the late Charles Newton Hodges is hereby
ordered to countersign the check or checks necessary to pay the said overtime
pay as shown by the bills marked Annex "A", "B" and "C" of the motion.
 SO ORDERED.

(Pp. 221-222, Green Record on Appeal.)

Likewise, the respondent court approved deeds of sale executed by respondent Magno alone, as
Administratrix of the estate of Mrs. Hodges, covering properties in the name of Hodges, pursuant
to "contracts to sell" executed by Hodges, irrespective of whether they were executed by him
before or after the death of his wife. The orders of this nature which are also on appeal herein
are the following:

1. Order of March 30, 1966, on p. 137 of the Green Record on Appeal, approving the deed of
sale executed by respondent Magno in favor of appellee Lorenzo Carles on February 24, 1966,
pursuant to a "contract to sell" signed by Hodges on June 17, 1958, after the death of his wife,
which contract petitioner claims was cancelled by it for failure of Carles to pay the installments
due on January 7, 1965.

2. Order of April 5, 1966, on pp. 139-140, id., approving the deed of sale executed by respondent
Magno in favor of appellee Salvador Guzman on February 28, 1966 pursuant to a "contract to
sell" signed by Hodges on September 13, 1960, after the death of his wife, which contract
petitioner claims it cancelled on March 3, 1965 in view of failure of said appellee to pay the
installments on time.

3. Order of April 20, 1966, on pp. 167-168, id., approving the deed of sale executed by
respondent Magno in favor of appellee Purificacion Coronado on March 28, 1966 pursuant to a
"contract to sell" signed by Hodges on August 14, 1961, after the death of his wife.

4. Order of April 20, 1966, on pp. 168-169, id., approving the deed of sale executed by
respondent Magno in favor of appellee Florenia Barrido on March 28, 1966, pursuant to a
"contract to sell" signed by Hodges on February 21, 1958, after the death of his wife.

5. Order of June 7, 1966, on pp. 184-185, id., approving the deed of sale executed by
respondent Magno in favor of appellee Belcezar Causing on May 2, 1966, pursuant to a "contract
to sell" signed by Hodges on February 10, 1959, after the death of his wife.

6. Order of June 21, 1966, on pp. 211-212, id., approving the deed of sale executed by
respondent Magno in favor of appellee Artheo Thomas Jamir on June 3, 1966, pursuant to a
"contract to sell" signed by Hodges on May 26, 1961, after the death of his wife.

7. Order of June 21, 1966, on pp. 212-213, id., approving the deed of sale executed by
respondent Magno in favor of appellees Graciano Lucero and Melquiades Batisanan on June 6
and June 3, 1966, respectively, pursuant to "contracts to sell" signed by Hodges on June 9, 1959
and November 27, 1961, respectively, after the death of his wife.

8. Order of December 2, 1966, on pp. 303-304, id., approving the deed of sale executed by
respondent Magno in favor of appellees Espiridion Partisala, Winifredo Espada and Rosario
Alingasa on September 6, 1966, August 17, 1966 and August 3, 1966, respectively, pursuant to
"contracts to sell" signed by Hodges on April 20, 1960, April 18, 1960 and August 25, 1958,
respectively, that is, after the death of his wife.

9. Order of April 5, 1966, on pp. 137-138, id., approving the deed of sale executed by respondent
Magno in favor of appellee Alfredo Catedral on March 2, 1966, pursuant to a "contract to sell"
signed by Hodges on May 29, 1954, before the death of his wife, which contract petitioner claims
it had cancelled on February 16, 1966 for failure of appellee Catedral to pay the installments due
on time.
10. Order of April 5, 1966, on pp. 138-139, id., approving the deed of sale executed by
respondent Magno in favor of appellee Jose Pablico on March 7, 1966, pursuant to a "contract to
sell" signed by Hodges on March 7, 1950, after the death of his wife, which contract petitioner
claims it had cancelled on June 29, 1960, for failure of appellee Pablico to pay the installments
due on time.

11. Order of December 2, 1966, on pp. 303-304, id., insofar as it approved the deed of sale
executed by respondent Magno in favor of appellee Pepito Iyulores on September 6, 1966,
pursuant to a "contract to sell" signed by Hodges on February 5, 1951, before the death of his
wife.

12. Order of January 3, 1967, on pp. 335-336, id., approving three deeds of sale executed by
respondent Magno, one in favor of appellees Santiago Pacaonsis and two in favor of appellee
Adelfa Premaylon on December 5, 1966 and November 3, 1966, respectively, pursuant to
separate "promises to sell" signed respectively by Hodges on May 26, 1955 and January 30,
1954, before the death of his wife, and October 31, 1959, after her death.

In like manner, there were also instances when respondent court approved deeds of sale
executed by petitioner alone and without the concurrence of respondent Magno, and such
approvals have not been the subject of any appeal. No less than petitioner points this out on
pages 149-150 of its brief as appellant thus:

The points of fact and law pertaining to the two abovecited assignments of error
have already been discussed previously. In the first abovecited error, the order
alluded to was general, and as already explained before, it was, as admitted by
the lower court itself, superseded by the particular orders approving specific final
deeds of sale executed by the appellee, Avelina A. Magno, which are subject of
this appeal, as well as the particular orders approving specific final deeds of sale
executed by the appellant, Philippine Commercial and Industrial Bank, which
were never appealed by the appellee, Avelina A. Magno, nor by any party for that
matter, and which are now therefore final.

Now, simultaneously with the foregoing incidents, others of more fundamental and all embracing
significance developed. On October 5, 1963, over the signature of Atty. Allison J. Gibbs in
representation of the law firm of Ozaeta, Gibbs & Ozaeta, as counsel for the co-administrators
Joe Hodges and Fernando P. Mirasol, the following self-explanatory motion was filed:

URGENT MOTION FOR AN ACCOUNTING AND DELIVERY TO

ADMINISTRATION OF THE ESTATE OF C. N. HODGES OF ALL
OF THE ASSETS OF THE CONJUGAL PARTNERSHIP OF THE
DECEASED LINNIE JANE HODGES AND C N. HODGES
EXISTING AS OF MAY 23, 1957 PLUS ALL THE RENTS,
EMOLUMENTS AND INCOME THEREFROM.

COMES NOW the co-administrator of the estate of C. N. Hodges, Joe Hodges,

through his undersigned attorneys in the above-entitled proceedings, and to this
Honorable Court respectfully alleges:

(1) On May 23, 1957 Linnie Jane Hodges died in Iloilo City.

(2) On June 28, 1957 this Honorable Court admitted to probate the Last Will and
Testament of the deceased Linnie Jane Hodges executed November 22, 1952
and appointed C. N. Hodges as Executor of the estate of Linnie Jane Hodges
(pp. 24-25, Rec. Sp. Proc. 1307).
 (3) On July 1, 1957 this Honorable Court issued Letters Testamentary to C. N.
Hodges in the Estate of Linnie Jane Hodges (p. 30, Rec. Sp. Proc. 1307).

(4) On December 14, 1957 this Honorable Court, on the basis of the following
allegations in a Motion dated December 11, 1957 filed by Leon P. Gellada as
attorney for the executor C. N. Hodges:

"That herein Executor, (is) not only part owner of the properties
left as conjugal, but also, the successor to all the properties left by
the deceased Linnie Jane Hodges."

(p. 44, Rec. Sp. Proc. 1307; emphasis supplied.)

issued the following order:

"As prayed for by Attorney Gellada, counsel for the Executory, for
the reasons stated in his motion dated December 11, 1957 which
the court considers well taken, all the sales, conveyances, leases
and mortgages of all properties left by the deceased Linnie Jane
Hodges are hereby APPROVED. The said executor is further
authorized to execute subsequent sales, conveyances, leases
and mortgages of the properties left by the said deceased Linnie
Jane Hodges in consonance with the wishes contained in the last
will and testament of the latter."

(p. 46, Rec. Sp. Proc. 1307; emphasis supplied.)

(5) On April 21, 1959 this Honorable Court approved the inventory and
accounting submitted by C. N. Hodges through his counsel Leon P. Gellada on
April 14, 1959 wherein he alleged among other things

"That no person interested in the Philippines of the time and place

of examining the herein account, be given notice, as herein
executor is the only devisee or legatee of the deceased, in
accordance with the last will and testament already probated by
the Honorable Court."

(pp. 77-78, Rec. Sp. Proc. 1307; emphasis supplied.).

(6) On July 30, 1960 this Honorable Court approved the "Annual Statement of
Account" submitted by C. N. Hodges through his counsel Leon P. Gellada on July
21, 1960 wherein he alleged among other things:

"That no person interested in the Philippines of the time and place

of examining the herein account, be given notice as herein
executor is the only devisee or legatee of the deceased Linnie
Jane Hodges, in accordance with the last will and testament of
the deceased, already probated by this Honorable Court."

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

(7) On May 2, 1961 this Honorable court approved the "Annual Statement of
Account By The Executor for the Year 1960" submitted through Leon P. Gellada
on April 20, 1961 wherein he alleged:
 That no person interested in the Philippines be given notice, of
the time and place of examining the herein account, as herein
Executor is the only devisee or legatee of the deceased Linnie
Jane Hodges, in accordance with the last will and testament of
the deceased, already probated by this Honorable Court.

(pp. 90-91. Rec. Sp. Proc. 1307; emphasis supplied.)

(8) On December 25, 1962, C.N. Hodges died.

(9) On December 25, 1962, on the Urgent Ex-parte Motion of Leon P. Gellada
filed only in Special Proceeding No. 1307, this Honorable Court appointed
Avelina A. Magno

"Administratrix of the estate of Linnie Jane Hodges and as Special Administratrix

of the estate of Charles Newton Hodges, in the latter case, because the last will
of said Charles Newton Hodges is still kept in his vault or iron safe and that the
real and personal properties of both spouses may be lost, damaged or go to
waste, unless a Special Administratrix is appointed."

(p. 100. Rec. Sp. Proc. 1307)

(10) On December 26, 1962 Letters of Administration were issued to Avelina

Magno pursuant to this Honorable Court's aforesaid Order of December 25, 1962

"With full authority to take possession of all the property of said

deceased in any province or provinces in which it may be situated
and to perform all other acts necessary for the preservation of
said property, said Administratrix and/or Special Administratrix
having filed a bond satisfactory to the Court."

(p. 102, Rec. Sp. Proc. 1307)

(11) On January 22, 1963 this Honorable Court on petition of Leon P. Gellada of
January 21, 1963 issued Letters of Administration to:

(a) Avelina A. Magno as Administratrix of the estate of Linnie Jane Hodges;

(b) Avelina A. Magno as Special Administratrix of the Estate of Charles Newton

Hodges; and

(c) Joe Hodges as Co-Special Administrator of the Estate of Charles Newton

Hodges.

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

(12) On February 20, 1963 this Honorable Court on the basis of a motion filed by
Leon P. Gellada as legal counsel on February 16, 1963 for Avelina A. Magno
acting as Administratrix of the Estate of Charles Newton Hodges (pp. 114-116,
Sp. Proc. 1307) issued the following order:

"... se autoriza a aquella (Avelina A. Magno) a firmar escrituras de

venta definitiva de propiedades cubiertas por contratos para
vender, firmados, en vida, por el finado Charles Newton Hodges,
cada vez que el precio estipulado en cada contrato este
 totalmente pagado. Se autoriza igualmente a la misma a firmar
escrituras de cancelacion de hipoteca tanto de bienes reales
como personales cada vez que la consideracion de cada hipoteca
este totalmente pagada.

"Cada una de dichas escrituras que se otorguen debe ser

sometida para la aprobacion de este Juzgado."

(p. 117, Sp. Proc. 1307).

[Par 1 (c), Reply to Motion For Removal of Joe Hodges]

(13) On September l6, 1963 Leon P. Gellada, acting as attorney for Avelina A.
Magno as Administratrix of the estate of Linnie Jane Hodges, alleges:

3. — That since January, 1963, both estates of Linnie Jane

Hodges and Charles Newton Hodges have been receiving in full,
payments for those "contracts to sell" entered into by C. N.
Hodges during his lifetime, and the purchasers have been
demanding the execution of definite deeds of sale in their favor.

4. — That hereto attached are thirteen (13) copies deeds of sale

executed by the Administratrix and by the co-administrator
(Fernando P. Mirasol) of the estate of Linnie Jane Hodges and
Charles Newton Hodges respectively, in compliance with the
terms and conditions of the respective "contracts to sell" executed
by the parties thereto."

(14) The properties involved in the aforesaid motion of September 16, 1963 are
all registered in the name of the deceased C. N. Hodges.

(15) Avelina A. Magno, it is alleged on information and belief, has been

advertising in the newspaper in Iloilo thusly:

For Sale

Testate Estate of Linnie Jane Hodges and Charles Newton Hodges.

All Real Estate or Personal Property will be sold on First Come First Served
Basis.

Ave
lina
A.
Ma
gno
Ad
mini
stra
trix

(16) Avelina A. Magno, it is alleged on information and belief, has paid and still is
paying sums of money to sundry persons.
 (17) Joe Hodges through the undersigned attorneys manifested during the
hearings before this Honorable Court on September 5 and 6, 1963 that the estate
of C. N. Hodges was claiming all of the assets belonging to the deceased
spouses Linnie Jane Hodges and C. N. Hodges situated in Philippines because
of the aforesaid election by C. N. Hodges wherein he claimed and took
possession as sole owner of all of said assets during the administration of the
estate of Linnie Jane Hodges on the ground that he was the sole devisee and
legatee under her Last Will and Testament.

(18) Avelina A. Magno has submitted no inventory and accounting of her

administration as Administratrix of the estate of Linnie Jane Hodges and Special
Administratrix of the estate of C. N. Hodges. However, from manifestations made
by Avelina A. Magno and her legal counsel, Leon P. Gellada, there is no question
she will claim that at least fifty per cent (50%) of the conjugal assets of the
deceased spouses and the rents, emoluments and income therefrom belong to
the Higdon family who are named in paragraphs Fourth and Fifth of the Will of
Linnie Jane Hodges (p. 5, Rec. Sp. Proc. 1307).

WHEREFORE, premises considered, movant respectfully prays that this

Honorable Court, after due hearing, order:

(1) Avelina A. Magno to submit an inventory and accounting of all of the funds,
properties and assets of any character belonging to the deceased Linnie Jane
Hodges and C. N. Hodges which have come into her possession, with full details
of what she has done with them;

(2) Avelina A. Magno to turn over and deliver to the Administrator of the estate of
C. N. Hodges all of the funds, properties and assets of any character remaining in
her possession;

(3) Pending this Honorable Court's adjudication of the aforesaid issues, Avelina
A. Magno to stop, unless she first secures the conformity of Joe Hodges (or his
duly authorized representative, such as the undersigned attorneys) as the Co-
administrator and attorney-in-fact of a majority of the beneficiaries of the estate of
C. N. Hodges:

(a) Advertising the sale and the sale of the properties of the estates:

(b) Employing personnel and paying them any compensation.

(4) Such other relief as this Honorable Court may deem just and equitable in the
premises. (Annex "T", Petition.)

Almost a year thereafter, or on September 14, 1964, after the co-administrators Joe Hodges and
Fernando P. Mirasol were replaced by herein petitioner Philippine Commercial and Industrial
Bank as sole administrator, pursuant to an agreement of all the heirs of Hodges approved by the
court, and because the above motion of October 5, 1963 had not yet been heard due to the
absence from the country of Atty. Gibbs, petitioner filed the following:

MANIFESTATION AND MOTION, INCLUDING MOTION TO SET

FOR HEARING AND RESOLVE "URGENT MOTION FOR AN
ACCOUNTING AND DELIVERY TO ADMINISTRATORS OF THE
ESTATE OF C. N. HODGES OF ALL THE ASSETS OF THE
CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE JANE
HODGES AND C. N. HODGES EXISTING AS OF MAY 23, 1957
 PLUS ALL OF THE RENTS, EMOLUMENTS AND INCOME
THEREFROM OF OCTOBER 5, 1963.

COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to

as PCIB), the administrator of the estate of C. N. Hodges, deceased, in Special
Proceedings No. 1672, through its undersigned counsel, and to this Honorable
Court respectfully alleges that:

1. On October 5, 1963, Joe Hodges acting as the co-administrator of the estate of

C. N. Hodges filed, through the undersigned attorneys, an "Urgent Motion For An
Accounting and Delivery To Administrator of the Estate of C. N. Hodges of all Of
The Assets Of The Conjugal Partnership of The Deceased Linnie Jane Hodges
and C. N. Hodges Existing as Of May, 23, 1957 Plus All Of The Rents,
Emoluments and Income Therefrom" (pp. 536-542, CFI Rec. S. P. No. 1672).

2. On January 24, 1964 this Honorable Court, on the basis of an amicable

agreement entered into on January 23, 1964 by the two co-administrators of the
estate of C. N. Hodges and virtually all of the heirs of C. N. Hodges (p. 912, CFI
Rec., S. P. No. 1672), resolved the dispute over who should act as administrator
of the estate of C. N. Hodges by appointing the PCIB as administrator of the
estate of C. N. Hodges (pp. 905-906, CFI Rec. S. P. No. 1672) and issuing letters
of administration to the PCIB.

3. On January 24, 1964 virtually all of the heirs of C. N. Hodges, Joe Hodges and
Fernando P. Mirasol acting as the two co-administrators of the estate of C. N.
Hodges, Avelina A. Magno acting as the administratrix of the estate of Linnie
Jane Hodges, and Messrs. William Brown and Ardel Young Acting for all of the
Higdon family who claim to be the sole beneficiaries of the estate of Linnie Jane
Hodges and various legal counsel representing the aforenamed parties entered
into an amicable agreement, which was approved by this Honorable Court,
wherein the parties thereto agreed that certain sums of money were to be paid in
settlement of different claims against the two estates and that the assets (to the
extent they existed)of both estates would be administrated jointly by the PCIB as
administrator of the estate of C. N. Hodges and Avelina A. Magno as
administratrix of the estate of Linnie Jane Hodges, subject, however, to the
aforesaid October 5, 1963 Motion, namely, the PCIB's claim to exclusive
possession and ownership of one-hundred percent (10017,) (or, in the
alternative, seventy-five percent [75%] of all assets owned by C. N. Hodges or
Linnie Jane Hodges situated in the Philippines. On February 1, 1964 (pp. 934-
935, CFI Rec., S. P. No. 1672) this Honorable Court amended its order of
January 24, 1964 but in no way changes its recognition of the aforedescribed
basic demand by the PCIB as administrator of the estate of C. N. Hodges to one
hundred percent (100%) of the assets claimed by both estates.

4. On February 15, 1964 the PCIB filed a "Motion to Resolve" the aforesaid
Motion of October 5, 1963. This Honorable Court set for hearing on June 11,
1964 the Motion of October 5, 1963.

5. On June 11, 1964, because the undersigned Allison J. Gibbs was absent in the
United States, this Honorable Court ordered the indefinite postponement of the
hearing of the Motion of October 5, 1963.

6. Since its appointment as administrator of the estate of C. N. Hodges the PCIB

has not been able to properly carry out its duties and obligations as administrator
of the estate of C. N. Hodges because of the following acts, among others, of
Avelina A. Magno and those who claim to act for her as administratrix of the
estate of Linnie Jane Hodges:

(a) Avelina A. Magno illegally acts as if she is in exclusive control

of all of the assets in the Philippines of both estates including
those claimed by the estate of C. N. Hodges as evidenced in part
by her locking the premises at 206-208 Guanco Street, Iloilo City
on August 31, 1964 and refusing to reopen same until ordered to
do so by this Honorable Court on September 7, 1964.

(b) Avelina A. Magno illegally acts as though she alone may

decide how the assets of the estate of C.N. Hodges should be
administered, who the PCIB shall employ and how much they
may be paid as evidenced in party by her refusal to sign checks
issued by the PCIB payable to the undersigned counsel pursuant
to their fee agreement approved by this Honorable Court in its
order dated March 31, 1964.

(c) Avelina A. Magno illegally gives access to and turns over

possession of the records and assets of the estate of C.N.
Hodges to the attorney-in-fact of the Higdon Family, Mr. James L.
Sullivan, as evidenced in part by the cashing of his personal
checks.

(d) Avelina A. Magno illegally refuses to execute checks prepared

by the PCIB drawn to pay expenses of the estate of C. N. Hodges
as evidenced in part by the check drawn to reimburse the PCIB's
advance of P48,445.50 to pay the 1964 income taxes reported
due and payable by the estate of C.N. Hodges.

7. Under and pursuant to the orders of this Honorable Court, particularly those of
January 24 and February 1, 1964, and the mandate contained in its Letters of
Administration issued on January 24, 1964 to the PCIB, it has

"full authority to take possession of all the property

of the deceased C. N. Hodges

"and to perform all other acts necessary for the preservation of

said property." (p. 914, CFI Rec., S.P. No. 1672.)

8. As administrator of the estate of C. N. Hodges, the PCIB claims the right to the
immediate exclusive possession and control of all of the properties, accounts
receivables, court cases, bank accounts and other assets, including the
documentary records evidencing same, which existed in the Philippines on the
date of C. N. Hodges' death, December 25, 1962, and were in his possession
and registered in his name alone. The PCIB knows of no assets in the Philippines
registered in the name of Linnie Jane Hodges, the estate of Linnie Jane Hodges,
or, C. N. Hodges, Executor of the Estate of Linnie Jane Hodges on December 25,
1962. All of the assets of which the PCIB has knowledge are either registered in
the name of C. N. Hodges, alone or were derived therefrom since his death on
December 25, 1962.

9. The PCIB as the current administrator of the estate of C. N. Hodges,

deceased, succeeded to all of the rights of the previously duly appointed
administrators of the estate of C. N. Hodges, to wit:
 (a) On December 25, 1962, date of C. N. Hodges' death, this
Honorable Court appointed Miss Avelina A. Magno
simultaneously as:

(i) Administratrix of the estate of Linnie Jane Hodges (p. 102, CFI
Rec., S.P. No. 1307) to replace the deceased C. N. Hodges who
on May 28, 1957 was appointed Special Administrator (p. 13. CFI
Rec. S.P. No. 1307) and on July 1, 1957 Executor of the estate of
Linnie Jane Hodges (p. 30, CFI Rec., S. P. No. 1307).

(ii) Special Administratrix of the estate of C. N. Hodges (p. 102,

CFI Rec., S.P. No. 1307).

(b) On December 29, 1962 this Honorable Court appointed Harold

K. Davies as co-special administrator of the estate of C.N.
Hodges along with Avelina A. Magno (pp. 108-111, CFI Rec., S.
P. No. 1307).

(c) On January 22, 1963, with the conformity of Avelina A. Magno,

Harold K. Davies resigned in favor of Joe Hodges (pp. 35-36, CFI
Rec., S.P. No. 1672) who thereupon was appointed on January
22, 1963 by this Honorable Court as special co-administrator of
the estate of C.N. Hodges (pp. 38-40 & 43, CFI Rec. S.P. No.
1672) along with Miss Magno who at that time was still acting as
special co-administratrix of the estate of C. N. Hodges.

(d) On February 22, 1963, without objection on the part of Avelina

A. Magno, this Honorable Court appointed Joe Hodges and
Fernando P. Mirasol as co-administrators of the estate of C.N.
Hodges (pp. 76-78, 81 & 85, CFI Rec., S.P. No. 1672).

10. Miss Avelina A. Magno, pursuant to the orders of this Honorable Court of
December 25, 1962, took possession of all Philippine Assets now claimed by the
two estates. Legally, Miss Magno could take possession of the assets registered
in the name of C. N. Hodges alone only in her capacity as Special Administratrix
of the Estate of C.N. Hodges. With the appointment by this Honorable Court on
February 22, 1963 of Joe Hodges and Fernando P. Mirasol as the co-
administrators of the estate of C.N. Hodges, they legally were entitled to take
over from Miss Magno the full and exclusive possession of all of the assets of the
estate of C.N. Hodges. With the appointment on January 24, 1964 of the PCIB as
the sole administrator of the estate of C.N. Hodges in substitution of Joe Hodges
and Fernando P. Mirasol, the PCIB legally became the only party entitled to the
sole and exclusive possession of all of the assets of the estate of C. N. Hodges.

11. The PCIB's predecessors submitted their accounting and this Honorable
Court approved same, to wit:

(a) The accounting of Harold K. Davies dated January 18, 1963

(pp. 16-33, CFI Rec. S.P. No. 1672); which shows or its face the:

(i) Conformity of Avelina A. Magno acting as "Administratrix of the

Estate of Linnie Jane Hodges and Special Administratrix of the
Estate of C. N. Hodges";

(ii) Conformity of Leslie Echols, a Texas lawyer acting for the

heirs of C.N. Hodges; and
 (iii) Conformity of William Brown, a Texas lawyer acting for the
Higdon family who claim to be the only heirs of Linnie Jane
Hodges (pp. 18, 25-33, CFI Rec., S. P. No. 1672).

Note: This accounting was approved by this Honorable Court on January 22,
1963 (p. 34, CFI Rec., S. P. No. 1672).

(b) The accounting of Joe Hodges and Fernando P. Mirasol as of

January 23, 1964, filed February 24, 1964 (pp. 990-1000, CFI
Rec. S.P. No. 1672 and pp. 1806-1848, CFI Rec. S.P. No. 1307).

Note: This accounting was approved by this Honorable Court on March 3, 1964.

(c) The PCIB and its undersigned lawyers are aware of no report
or accounting submitted by Avelina A. Magno of her acts as
administratrix of the estate of Linnie Jane Hodges or special
administratrix of the estate of C.N. Hodges, unless it is the
accounting of Harold K. Davies as special co-administrator of the
estate of C.N. Hodges dated January 18, 1963 to which Miss
Magno manifested her conformity (supra).

12. In the aforesaid agreement of January 24, 1964, Miss Avelina A. Magno agreed to receive
P10,000.00

"for her services as administratrix of the estate of Linnie Jane

Hodges"

and in addition she agreed to be employed, starting February 1, 1964, at

"a monthly salary of P500.00 for her services as an employee of

both estates."

24 ems.

13. Under the aforesaid agreement of January 24, 1964 and the orders of this
Honorable Court of same date, the PCIB as administrator of the estate of C. N.
Hodges is entitled to the exclusive possession of all records, properties and
assets in the name of C. N. Hodges as of the date of his death on December 25,
1962 which were in the possession of the deceased C. N. Hodges on that date
and which then passed to the possession of Miss Magno in her capacity as
Special Co-Administratrix of the estate of C. N. Hodges or the possession of Joe
Hodges or Fernando P. Mirasol as co-administrators of the estate of C. N.
Hodges.

14. Because of Miss Magno's refusal to comply with the reasonable request of
PCIB concerning the assets of the estate of C. N. Hodges, the PCIB dismissed
Miss Magno as an employee of the estate of C. N. Hodges effective August 31,
1964. On September 1, 1964 Miss Magno locked the premises at 206-208
Guanco Street and denied the PCIB access thereto. Upon the Urgent Motion of
the PCIB dated September 3, 1964, this Honorable Court on September 7, 1964
ordered Miss Magno to reopen the aforesaid premises at 206-208 Guanco Street
and permit the PCIB access thereto no later than September 8, 1964.

15. The PCIB pursuant to the aforesaid orders of this Honorable Court is again in
physical possession of all of the assets of the estate of C. N. Hodges. However,
the PCIB is not in exclusive control of the aforesaid records, properties and
assets because Miss Magno continues to assert the claims hereinabove outlined
in paragraph 6, continues to use her own locks to the doors of the aforesaid
premises at 206-208 Guanco Street, Iloilo City and continues to deny the PCIB its
right to know the combinations to the doors of the vault and safes situated within
the premises at 206-208 Guanco Street despite the fact that said combinations
were known to only C. N. Hodges during his lifetime.

16. The Philippine estate and inheritance taxes assessed the estate of Linnie
Jane Hodges were assessed and paid on the basis that C. N. Hodges is the sole
beneficiary of the assets of the estate of Linnie Jane Hodges situated in the
Philippines. Avelina A. Magno and her legal counsel at no time have questioned
the validity of the aforesaid assessment and the payment of the corresponding
Philippine death taxes.

17. Nothing further remains to be done in the estate of Linnie Jane Hodges
except to resolve the aforesaid Motion of October 5, 1963 and grant the PCIB the
exclusive possession and control of all of the records, properties and assets of
the estate of C. N. Hodges.

18. Such assets as may have existed of the estate of Linnie Jane Hodges were
ordered by this Honorable Court in special Proceedings No. 1307 to be turned
over and delivered to C. N. Hodges alone. He in fact took possession of them
before his death and asserted and exercised the right of exclusive ownership
over the said assets as the sole beneficiary of the estate of Linnie Jane Hodges.

WHEREFORE, premises considered, the PCIB respectfully petitions that this

Honorable court:

(1) Set the Motion of October 5, 1963 for hearing at the earliest possible date with
notice to all interested parties;

(2) Order Avelina A. Magno to submit an inventory and accounting as

Administratrix of the Estate of Linnie Jane Hodges and Co-Administratrix of the
Estate of C. N. Hodges of all of the funds, properties and assets of any character
belonging to the deceased Linnie Jane Hodges and C. N. Hodges which have
come into her possession, with full details of what she has done with them;

(3) Order Avelina A. Magno to turn over and deliver to the PCIB as administrator
of the estate of C. N. Hodges all of the funds, properties and assets of any
character remaining in her possession;

(4) Pending this Honorable Court's adjudication of the aforesaid issues, order
Avelina A. Magno and her representatives to stop interferring with the
administration of the estate of C. N. Hodges by the PCIB and its duly authorized
representatives;

(5) Enjoin Avelina A. Magno from working in the premises at 206-208 Guanco
Street, Iloilo City as an employee of the estate of C. N. Hodges and approve her
dismissal as such by the PCIB effective August 31, 1964;

(6) Enjoin James L. Sullivan, Attorneys Manglapus and Quimpo and others
allegedly representing Miss Magno from entering the premises at 206-208
Guanco Street, Iloilo City or any other properties of C. N. Hodges without the
express permission of the PCIB;
 (7) Order such other relief as this Honorable Court finds just and equitable in the
premises. (Annex "U" Petition.)

On January 8, 1965, petitioner also filed a motion for "Official Declaration of Heirs of Linnie Jane
Hodges Estate" alleging:

COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB), as
administrator of the estate of the late C. N. Hodges, through the undersigned counsel, and to this
Honorable Court respectfully alleges that:

1. During their marriage, spouses Charles Newton Hodges and Linnie Jane
Hodges, American citizens originally from the State of Texas, U.S.A., acquired
and accumulated considerable assets and properties in the Philippines and in the
States of Texas and Oklahoma, United States of America. All said properties
constituted their conjugal estate.

2. Although Texas was the domicile of origin of the Hodges spouses, this
Honorable Court, in its orders dated March 31 and December 12, 1964 (CFI
Record, Sp. Proc. No. 1307, pp. ----; Sp. Proc. No. 1672, p. ----), conclusively
found and categorically ruled that said spouses had lived and worked for more
than 50 years in Iloilo City and had, therefore, acquired a domicile of choice in
said city, which they retained until the time of their respective deaths.

3. On November 22, 1952, Linnie Jane Hodges executed in the City of Iloilo her
Last Will and Testament, a copy of which is hereto attached as Annex "A". The
bequests in said will pertinent to the present issue are the second, third,
and fourth provisions, which we quote in full hereunder.

SECOND: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever
situated, or located, to my husband, Charles Newton Hodges, to
have and to hold unto him, my said husband during his natural
lifetime.

THIRD: I desire, direct and provide that my husband, Charles

Newton Hodges, shall have the right to manage, control, use and
enjoy said estate during his lifetime, and he is hereby given the
right to make any changes in the physical properties of said
estate by sale of any part thereof which he think best, and the
purchase of any other or additional property as he may think best;
to execute conveyances with or without general or special
warranty, conveying in fee simple or for any other term or time,
any property which he may deem proper to dispose of; to lease
any of the real property for oil, gas and/or other minerals, and all
such deeds or leases shall pass the absolute fee simple title to
the interest so conveyed in such property as he may elect to sell.
All rents, emoluments and income from said estate shall belong to
him, and he is further authorized to use any part of the principal of
said estate as he may need or desire. It is provided herein,
however, that he shall not sell or otherwise dispose of any of the
improved property now owned by us located at, in or near the City
of Lubbock, Texas, but he shall have the full right to lease,
manage and enjoy the same during his lifetime, as above
provided. He shall have the right to sub-divide any farmland and
sell lots therein, and may sell unimproved town lots.
 FOURTH: At the death of my said husband, Charles Newton
Hodges, I give, devise and bequeath all of the rest, residue and
remainder of my estate both real and personal, wherever situated
or located, to be equally divided among my brothers and sisters,
share and share alike, namely:

"Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie

Rascoe, Era Boman and Nimray Higdon."

4. On November 14, 1953, C. N. Hodges executed in the City of Iloilo his Last
Will and Testament, a copy of which is hereto attached as Annex "B ". In said
Will, C. N. Hodges designated his wife, Linnie Jane Hodges, as his beneficiary
using the identical language she used in the second and third provisos of her
Will, supra.

5. On May 23, 1957 Linnie Jane Hodges died in Iloilo City, predeceasing her
husband by more than five (5) years. At the time of her death, she had no forced
or compulsory heir, except her husband, C. N. Hodges. She was survived also by
various brothers and sisters mentioned in her Will (supra), which, for
convenience, we shall refer to as the HIGDONS.

6. On June 28, 1957, this Honorable Court admitted to probate the Last Will and
Testament of the deceased Linnie Jane Hodges (Annex "A"), and appointed C. N.
Hodges as executor of her estate without bond. (CFI Record, Sp. Proc. No. 1307,
pp. 24-25). On July 1, 1957, this Honorable Court issued letters testamentary to
C. N. Hodges in the estate of Linnie Jane Hodges. (CFI Record, Sp. Proc. No.
1307, p. 30.)

7. The Will of Linnie Jane Hodges, with respect to the order of succession, the
amount of successional rights, and the intrinsic of its testamentary provisions,
should be governed by Philippine laws because:

(a) The testatrix, Linnie Jane Hodges, intended Philippine laws to

govern her Will;

(b) Article 16 of the Civil Code provides that "the national law of
the person whose succession is under consideration, whatever
may be the nature of the property and regardless of the country
wherein said property may be found", shall prevail. However, the
Conflict of Law of Texas, which is the "national law" of the
testatrix, Linnie Jane Hodges, provide that the domiciliary law
(Philippine law — see paragraph 2, supra) should govern the
testamentary dispositions and successional rights over movables
(personal properties), and the law of the situs of the property (also
Philippine law as to properties located in the Philippines) with
regards immovable (real properties). Thus applying the "Renvoi
Doctrine", as approved and applied by our Supreme Court in the
case of "In The Matter Of The Testate Estate of Eduard E.
Christensen", G.R. No.
L-16749, promulgated January 31, 1963, Philippine law should
apply to the Will of Linnie Jane Hodges and to the successional
rights to her estate insofar as her movable and immovable assets
in the Philippines are concerned. We shall not, at this stage,
discuss what law should govern the assets of Linnie Jane Hodges
located in Oklahoma and Texas, because the only assets in issue
 in this motion are those within the jurisdiction of this motion Court
in the two above-captioned Special Proceedings.

8. Under Philippine and Texas law, the conjugal or community estate of spouses
shall, upon dissolution, be divided equally between them. Thus, upon the death of
Linnie Jane Hodges on May 23, 1957, one-half (1/2) of the entirety of the assets
of the Hodges spouses constituting their conjugal estate pertained automatically
to Charles Newton Hodges, not by way of inheritance, but in his own right as
partner in the conjugal partnership. The other one-half (1/2) portion of the
conjugal estate constituted the estate of Linnie Jane Hodges. This is the only
portion of the conjugal estate capable of inheritance by her heirs.

9. This one-half (1/2) portion of the conjugal assets pertaining to Linnie Jane
Hodges cannot, under a clear and specific provision of her Will, be enhanced or
increased by income, earnings, rents, or emoluments accruing after her death on
May 23, 1957. Linnie Jane Hodges' Will provides that "all rents, emoluments and
income from said estate shall belong to him (C. N. Hodges) and he is further
authorized to use any part of the principal of said estate as he may need or
desire." (Paragraph 3, Annex "A".) Thus, by specific provision of Linnie Jane
Hodges' Will, "all rents, emoluments and income" must be credited to the one-half
(1/2) portion of the conjugal estate pertaining to C. N. Hodges. Clearly, therefore,
the estate of Linnie Jane Hodges, capable of inheritance by her heirs, consisted
exclusively of no more than one-half (1/2) of the conjugal estate, computed as of
the time of her death on May 23, 1957.

10. Articles 900, 995 and 1001 of the New Civil Code provide that the surviving
spouse of a deceased leaving no ascendants or descendants is entitled, as a
matter of right and by way of irrevocable legitime, to at least one-half (1/2) of the
estate of the deceased, and no testamentary disposition by the deceased can
legally and validly affect this right of the surviving spouse. In fact, her husband is
entitled to said one-half (1/2) portion of her estate by way of legitime. (Article 886,
Civil Code.) Clearly, therefore, immediately upon the death of Linnie Jane
Hodges, C. N. Hodges was the owner of at least three-fourths (3/4) or seventy-
five (75%) percent of all of the conjugal assets of the spouses, (1/2 or 50% by
way of conjugal partnership share and 1/4 or 25% by way of inheritance and
legitime) plus all "rents, emoluments and income" accruing to said conjugal estate
from the moment of Linnie Jane Hodges' death (see paragraph 9, supra).

11. The late Linnie Jane Hodges designated her husband C.N. Hodges as her
sole and exclusive heir with full authority to do what he pleased, as exclusive heir
and owner of all the assets constituting her estate, except only with regards
certain properties "owned by us, located at, in or near the City of Lubbock,
Texas". Thus, even without relying on our laws of succession and legitime, which
we have cited above, C. N. Hodges, by specific testamentary designation of his
wife, was entitled to the entirely to his wife's estate in the Philippines.

12. Article 777 of the New Civil Code provides that "the rights of the successor
are transmitted from the death of the decedent". Thus, title to the estate of Linnie
Jane Hodges was transmitted to C. N. Hodges immediately upon her death on
May 23, 1957. For the convenience of this Honorable Court, we attached hereto
as Annex "C" a graph of how the conjugal estate of the spouses Hodges should
be divided in accordance with Philippine law and the Will of Linnie Jane Hodges.

13. In his capacity as sole heir and successor to the estate of Linnie Jane
Hodges as above-stated, C. N. Hodges, shortly after the death of Linnie Jane
Hodges, appropriated to himself the entirety of her estate. He operated all the
assets, engaged in business and performed all acts in connection with the
entirety of the conjugal estate, in his own name alone, just as he had been
operating, engaging and doing while the late Linnie Jane Hodges was still
alive. Upon his death on December 25, 1962, therefore, all said conjugal assets
were in his sole possession and control, and registered in his name alone, not as
executor, but as exclusive owner of all said assets.

14. All these acts of C. N. Hodges were authorized and sanctioned expressly and
impliedly by various orders of this Honorable Court, as follows:

(a) In an Order dated May 27, 1957, this Honorable Court ruled that C. N.
Hodges "is allowed or authorized to continue the business in which he was
engaged, and to perform acts which he had been doing while the deceased was
living." (CFI Record, Sp. Proc. No. 1307, p. 11.)

(b) On December 14, 1957, this Honorable Court, on the basis of the following
fact, alleged in the verified Motion dated December 11, 1957 filed by Leon P.
Gellada as attorney for the executor C. N. Hodges:

That herein Executor, (is) not only part owner of the properties left as conjugal,
but also, the successor to all the properties left by the deceased Linnie Jane
Hodges.' (CFI Record, Sp. Proc. No. 1307, p. 44; emphasis supplied.)

issued the following order:

"As prayed for by Attorney Gellada, counsel for the Executor, for the reasons
stated in his motion dated December 11, 1957, which the Court considers well
taken, all the sales, conveyances, leases and mortgages of all the properties left
by the deceased Linnie Jane Hodges executed by the Executor, Charles Newton
Hodges are hereby APPROVED. The said Executor is further authorized to
execute subsequent sales, conveyances, leases and mortgages of the properties
left by the said deceased Linnie Jane Hodges in consonance with the wishes
contained in the last will and testament of the latter." (CFI Record. Sp. Proc. No.
1307, p. 46; emphasis supplied.)

24 ems

(c) On April 21, 1959, this Honorable Court approved the verified inventory and
accounting submitted by C. N. Hodges through his counsel Leon P. Gellada on
April 14, 1959 wherein he alleged among other things,

"That no person interested in the Philippines of the time and place

of examining the herein account, be given notice, as herein
executor is the only devisee or legatee of the deceased, in
accordance with the last will and testament already probated by
the Honorable Court." (CFI Record, Sp. Proc. No. 1307, pp. 77-
78; emphasis supplied.)

(d) On July 20, 1960, this Honorable Court approved the verified "Annual
Statement of Account" submitted by C. N. Hodges through his counsel Leon P.
Gellada on July 21, 1960 wherein he alleged, among other things.

"That no person interested in the Philippines of the time and place

of examining the herein account, be given notice as herein
executor is the only devisee or legatee of the deceased Linnie
Jane Hodges, in accordance with the last will and testament ofthe
 deceased, already probated by this Honorable Court." (CFI
Record, Sp. Proc. No. 1307, pp. 81-82; emphasis supplied.)

(e) On May 2, 1961, this Honorable Court approved the verified "Annual
Statement of Account By The Executor For the Year 1960" submitted through
Leon P. Gellada on April 20, 1961 wherein he alleged:

"That no person interested in the Philippines be given notice, ofthe time and
place of examining the herein account, as herein executor is the only devisee or
legatee of the deceased Linnie Jane Hodges, in accordance with the last will and
testament ofthe deceased, already probated by this Honorable Court." (CFI
Record, Sp. Proc. No. 1307, pp. 90-91; emphasis supplied.)

15. Since C. N. Hodges was the sole and exclusive heir of Linnie Jane Hodges,
not only by law, but in accordance with the dispositions of her will, there was, in
fact, no need to liquidate the conjugal estate of the spouses. The entirely of said
conjugal estate pertained to him exclusively, therefore this Honorable Court
sanctioned and authorized, as above-stated, C. N. Hodges to manage, operate
and control all the conjugal assets as owner.

16. By expressly authorizing C. N. Hodges to act as he did in connection with the

estate of his wife, this Honorable Court has (1) declared C. N. Hodges as the sole
heir of the estate of Linnie Jane Hodges, and (2) delivered and distributed her
estate to C. N. Hodges as sole heir in accordance with the terms and conditions
of her Will. Thus, although the "estate of Linnie Jane Hodges" still exists as a
legal and juridical personality, it had no assets or properties located in the
Philippines registered in its name whatsoever at the time of the death of C. N.
Hodges on December 25, 1962.

17. The Will of Linnie Jane Hodges (Annex "A"), fourth paragraph, provides as
follows:

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

give, devise and bequeath all of the rest, residue and remainder
of my estate both real and personal, wherever situated or located,
to be equally divided among my brothers and sisters, share and
share alike, namely:

"Esta Higdon, Emma Howell, Leonard Higdon,

Roy Higdon, Sadie Rascoe, Era Boman and
Nimray Higdon."

Because of the facts hereinabove set out there is no "rest, residue and
remainder", at least to the extent of the Philippine assets, which remains to vest
in the HIGDONS, assuming this proviso in Linnie Jane Hodges' Will is valid and
binding against the estate of C. N. Hodges.

18. Any claims by the HIGDONS under the above-quoted provision of Linnie
Jane Hodges' Will is without merit because said provision is void and invalid at
least as to the Philippine assets. It should not, in anyway, affect the rights of the
estate of C. N. Hodges or his heirs to the properties, which C. N. Hodges
acquired by way of inheritance from his wife Linnie Jane Hodges upon her death.

(a) In spite of the above-mentioned provision in the Will of Linnie

Jane Hodges, C. N. Hodges acquired, not merely a usufructuary
right, but absolute title and ownership to her estate. In a recent
 case involving a very similar testamentary provision, the Supreme
Court held that the heir first designated acquired full ownership of
the property bequeathed by the will, not mere usufructuary rights.
(Consolacion Florentino de Crisologo, et al., vs. Manuel Singson,
G. R. No. L-13876, February 28, 1962.)

(b) Article 864, 872 and 886 of the New Civil Code clearly provide
that no charge, condition or substitution whatsoever upon the
legitime can be imposed by a testator. Thus, under the provisions
of Articles 900, 995 and 1001 of the New Civil Code, the legitime
of a surviving spouse is 1/2 of the estate of the deceased spouse.
Consequently, the above-mentioned provision in the Will of Linnie
Jane Hodges is clearly invalid insofar as the legitime of C. N.
Hodges was concerned, which consisted of 1/2 of the 1/2 portion
of the conjugal estate, or 1/4 of the entire conjugal estate of the
deceased.

(c) There are generally only two kinds of substitution provided for
and authorized by our Civil Code (Articles 857-870), namely,
(1) simple or common substitution, sometimes referred to
as vulgar substitution (Article 859), and (2) fideicommissary
substitution (Article 863). All other substitutions are merely
variations of these. The substitution provided for by paragraph
four of the Will of Linnie Jane Hodges is not fideicommissary
substitution, because there is clearly no obligation on the part of
C. N. Hodges as the first heir designated, to preserve the
properties for the substitute heirs. (Consolacion Florentino de
Crisologo et al. vs. Manuel Singson, G. R. No.
L-13876.) At most, it is a vulgar or simple substitution. However,
in order that a vulgar or simple substitution can be valid, three
alternative conditions must be present, namely, that the first
designated heir (1) should die before the testator; or (2) should
not wish to accept the inheritance; or (3) should be incapacitated
to do so. None of these conditions apply to C. N. Hodges, and,
therefore, the substitution provided for by the above-quoted
provision of the Will is not authorized by the Code, and, therefore,
it is void. Manresa, commenting on these kisses of substitution,
meaningfully stated that: "... cuando el testador instituyeun primer
heredero, y por fallecimiento de este nombra otro u otros, ha de
entenderse que estas segundas designaciones solo han de llegar
a tener efectividad en el caso de que el primer instituido muera
antes que el testador, fuera o no esta su verdadera intencion. ...".
(6 Manresa, 7 a ed., pag. 175.) In other words, when another heir
is designated to inherit upon the death of a first heir, the second
designation can have effect only in case the first instituted heir
dies before the testator, whether or not that was the true intention
of said testator. Since C. N. Hodges did not die before Linnie
Jane Hodges, the provision for substitution contained in Linnie
Jane Hodges' Willis void.

(d) In view of the invalidity of the provision for substitution in the

Will, C. N. Hodges' inheritance to the entirety of the Linnie Jane
Hodges estate is irrevocable and final.

19. Be that as it may, at the time of C. N. Hodges' death, the entirety of the
conjugal estate appeared and was registered in him exclusively as owner. Thus,
the presumption is that all said assets constituted his estate. Therefore —
 (a) If the HIGDONS wish to enforce their dubious rights as substituted heirs to 1/4
of the conjugal estate (the other 1/4 is covered by the legitime of C. N. Hodges
which can not be affected by any testamentary disposition), their remedy, if any,
is to file their claim against the estate of C. N. Hodges, which should be entitled
at the present time to full custody and control of all the conjugal estate of the
spouses.

(b) The present proceedings, in which two estates exist under separate
administration, where the administratrix of the Linnie Jane Hodges estate
exercises an officious right to object and intervene in matters affecting exclusively
the C. N. Hodges estate, is anomalous.

WHEREFORE, it is most respectfully prayed that after trial and reception of

evidence, this Honorable Court declare:

1. That the estate of Linnie Jane Hodges was and is composed exclusively of
one-half (1/2) share in the conjugal estate of the spouses Hodges, computed as
of the date of her death on May 23, 1957;

2. That the other half of the conjugal estate pertained exclusively to C. N. Hodges
as his share as partner in the conjugal partnership;

3. That all "rents, emoluments and income" of the conjugal estate accruing after
Linnie Jane Hodges' death pertains to C. N. Hodges;

4. That C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane
Hodges;

5. That, therefore, the entire conjugal estate of the spouses located in the
Philippines, plus all the "rents, emoluments and income" above-mentioned, now
constitutes the estate of C. N. Hodges, capable of distribution to his heirs upon
termination of Special Proceedings No. 1672;

6. That PCIB, as administrator of the estate of C. N. Hodges, is entitled to full and

exclusive custody, control and management of all said properties; and

7. That Avelina A. Magno, as administratrix of the estate of Linnie Jane Hodges,

as well as the HIGDONS, has no right to intervene or participate in the
administration of the C. N. Hodges estate.

PCIB further prays for such and other relief as may be deemed just and equitable
in the premises."

(Record, pp. 265-277)

Before all of these motions of petitioner could be resolved, however, on December 21, 1965,
private respondent Magno filed her own "Motion for the Official Declaration of Heirs of the Estate
of Linnie Jane Hodges" as follows:

COMES NOW the Administratrix of the Estate of Linnie Jane Hodges and,
through undersigned counsel, unto this Honorable Court most respectfully states
and manifests:
1. That the spouses Charles Newton Hodges and Linnie Jane Hodges were
American citizens who died at the City of Iloilo after having amassed and
accumulated extensive properties in the Philippines;

2. That on November 22, 1952, Linnie Jane Hodges executed a last will and
testament (the original of this will now forms part of the records of these
proceedings as Exhibit "C" and appears as Sp. Proc. No. 1307, Folio I, pp. 17-
18);

3. That on May 23, 1957, Linnie Jane Hodges died at the City of Iloilo at the time
survived by her husband, Charles Newton Hodges, and several relatives named
in her last will and testament;

4. That on June 28, 1957, a petition therefor having been priorly filed and duly
heard, this Honorable Court issued an order admitting to probate the last will and
testament of Linnie Jane Hodges (Sp. Proc. No. 1307, Folio I, pp. 24-25, 26-28);

5. That the required notice to creditors and to all others who may have any claims
against the decedent, Linnie Jane Hodges has already been printed, published
and posted (Sp. Proc. No. 1307, Folio I. pp. 34-40) and the reglamentary period
for filing such claims has long ago lapsed and expired without any claims having
been asserted against the estate of Linnie Jane Hodges, approved by the
Administrator/Administratrix of the said estate, nor ratified by this Honorable
Court;

6. That the last will and testament of Linnie Jane Hodges already admitted to
probate contains an institution of heirs in the following words:

"SECOND: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever situated
or located, to my beloved husband, Charles Newton Hodges to
have and to hold unto him, my said husband, during his natural
lifetime.

THIRD: I desire, direct and provide that my husband, Charles

Newton Hodges, shall have the right to manage, control, use and
enjoy said estate during his lifetime, and, he is hereby given the
right to make any changes in the physical properties of said
estate, by sale of any part thereof which he may think best, and
the purchase of any other or additional property as he may think
best; to execute conveyances with or without general or special
warranty, conveying in fee simple or for any other term or time,
any property which he may deem proper to dispose of; to lease
any of the real property for oil, gas and/or other minerals, and all
such deeds or leases shall pass the absolute fee simple title to
the interest so conveyed in such property as he elect to sell. All
rents, emoluments and income from said estate shall belong to
him, and he is further authorized to use any part of the principal of
said estate as he may need or desire. It is provided herein,
however, that he shall not sell or otherwise dispose of any of the
improved property now owned by us located at, in or near the City
of Lubbock Texas, but he shall have the full right to lease,
manage and enjoy the same during his lifetime, above provided.
He shall have the right to subdivide any farm land and sell lots
therein, and may sell unimproved town lots.
 FOURTH: At the death of my said husband, Charles Newton
Hodges, I give, devise and bequeath all of the rest, residue and
remainder of my estate, both real and personal, wherever situated
or located, to be equally divided among my brothers and sisters,
share and share alike, namely:

Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Sadie

Rascoe, Era Boman and Nimroy Higdon.

FIFTH: In case of the death of any of my brothers and/or sisters

named in item Fourth, above, prior to the death of my husband,
Charles Newton Hodges, then it is my will and bequest that the
heirs of such deceased brother or sister shall take jointly the
share which would have gone to such brother or sister had she or
he survived."

7. That under the provisions of the last will and testament already above-quoted,
Linnie Jane Hodges gave a life-estate or a usufruct over all her estate to her
husband, Charles Newton Hodges, and a vested remainder-estate or the naked
title over the same estate to her relatives named therein;

8. That after the death of Linnie Jane Hodges and after the admission to probate
of her last will and testament, but during the lifetime of Charles Newton Hodges,
the said Charles Newton Hodges with full and complete knowledge of the life-
estate or usufruct conferred upon him by the will since he was then acting as
Administrator of the estate and later as Executor of the will of Linnie Jane
Hodges, unequivocably and clearly through oral and written declarations and
sworn public statements, renounced, disclaimed and repudiated his life-estate
and usufruct over the estate of Linnie Jane Hodges;

9. That, accordingly, the only heirs left to receive the estate of Linnie Jane
Hodges pursuant to her last will and testament, are her named brothers and
sisters, or their heirs, to wit: Esta Higdon, Emma Howell, Leonard Higdon, Aline
Higdon and David Higdon, the latter two being the wife and son respectively of
the deceased Roy Higdon, Sadie Rascoe Era Boman and Nimroy Higdon, all of
legal ages, American citizens, with residence at the State of Texas, United States
of America;

10. That at the time of the death of Linnie Jane Hodges on May 23, 1957, she
was the co-owner (together with her husband Charles Newton Hodges) of an
undivided one-half interest in their conjugal properties existing as of that date,
May 23, 1957, which properties are now being administered sometimes jointly
and sometimes separately by the Administratrix of the estate of Linnie Jane
Hodges and/or the Administrator of the estate of C. N. Hodges but all of which
are under the control and supervision of this Honorable Court;

11. That because there was no separation or segregation of the interests of

husband and wife in the combined conjugal estate, as there has been no such
separation or segregation up to the present, both interests have continually
earned exactly the same amount of "rents, emoluments and income", the entire
estate having been continually devoted to the business of the spouses as if they
were alive;

12. That the one-half interest of Linnie Jane Hodges in the combined conjugal
estate was earning "rents, emoluments and income" until her death on May 23,
1957, when it ceased to be saddled with any more charges or expenditures which
are purely personal to her in nature, and her estate kept on earning such "rents,
emoluments and income" by virtue of their having been expressly renounced,
disclaimed and repudiated by Charles Newton Hodges to whom they were
bequeathed for life under the last will and testament of Linnie Jane Hodges;

13. That, on the other hand, the one-half interest of Charles Newton Hodges in
the combined conjugal estate existing as of May 23, 1957, while it may have
earned exactly the same amount of "rents, emoluments and income" as that of
the share pertaining to Linnie Jane Hodges, continued to be burdened by
charges, expenditures, and other dispositions which are purely personal to him in
nature, until the death of Charles Newton Hodges himself on December 25, 1962;

14. That of all the assets of the combined conjugal estate of Linnie Jane Hodges
and Charles Newton Hodges as they exist today, the estate of Linnie Jane
Hodges is clearly entitled to a portion more than fifty percent (50%) as compared
to the portion to which the estate of Charles Newton Hodges may be entitled,
which portions can be exactly determined by the following manner:

a. An inventory must be made of the assets of the combined

conjugal estate as they existed on the death of Linnie Jane
Hodges on May 23, 1957 — one-half of these assets belong to
the estate of Linnie Jane Hodges;

b. An accounting must be made of the "rents, emoluments and

income" of all these assets — again one-half of these belong to
the estate of Linnie Jane Hodges;

c. Adjustments must be made, after making a deduction of

charges, disbursements and other dispositions made by Charles
Newton Hodges personally and for his own personal account from
May 23, 1957 up to December 25, 1962, as well as other charges,
disbursements and other dispositions made for him and in his
behalf since December 25, 1962 up to the present;

15. That there remains no other matter for disposition now insofar as the estate of
Linnie Jane Hodges is concerned but to complete the liquidation of her estate,
segregate them from the conjugal estate, and distribute them to her heirs
pursuant to her last will and testament.

WHEREFORE, premises considered, it is most respectfully moved and prayed

that this Honorable Court, after a hearing on the factual matters raised by this
motion, issue an order:

a. Declaring the following persons, to wit: Esta Higdon, Emma Howell, Leonard
Higdon, Aline Higdon, David Higdon, Sadie Rascoe, Era Boman and Nimroy
Higdon, as the sole heirs under the last will and testament of Linnie Jane Hodges
and as the only persons entitled to her estate;

b. Determining the exact value of the estate of Linnie Jane Hodges in accordance
with the system enunciated in paragraph 14 of this motion;

c. After such determination ordering its segregation from the combined conjugal
estate and its delivery to the Administratrix of the estate of Linnie Jane Hodges
for distribution to the heirs to whom they properly belong and appertain.

(Green Record on Appeal, pp. 382-391)

whereupon, instead of further pressing on its motion of January 8, 1965 aforequoted, as it had
been doing before, petitioner withdrew the said motion and in addition to opposing the above
motion of respondent Magno, filed a motion on April 22, 1966 alleging in part that:

1. That it has received from the counsel for the administratrix of the supposed
estate of Linnie Jane Hodges a notice to set her "Motion for Official Declaration of
Heirs of the Estate of Linnie Jane Hodges";

2. That before the aforesaid motion could be heard, there are matters pending
before this Honorable Court, such as:

a. The examination already ordered by this Honorable Court of

documents relating to the allegation of Avelina Magno that
Charles Newton Hodges "through ... written declarations and
sworn public statements, renounced, disclaimed and repudiated
life-estate and usufruct over the estate of Linnie Jane Hodges';

b. That "Urgent Motion for An Accounting and Delivery to the

Estate of C. N. Hodges of All the Assets of the Conjugal
Partnership of the Deceased Linnie Jane Hodges and C. N.
Hodges Existing as of May 23, 1957 Plus All the Rents,
Emoluments and Income Therefrom";

c. Various motions to resolve the aforesaid motion;

d. Manifestation of September 14, 1964, detailing acts of

interference of Avelina Magno under color of title as administratrix
of the Estate of Linnie Jane Hodges;

which are all prejudicial, and which involve no issues of fact, all facts involved
therein being matters of record, and therefore require only the resolution of
questions of law;

3. That whatever claims any alleged heirs or other persons may have could be
very easily threshed out in the Testate Estate of Charles Newton Hodges;

4. That the maintenance of two separate estate proceedings and two

administrators only results in confusion and is unduly burdensome upon the
Testate Estate of Charles Newton Hodges, particularly because the bond filed by
Avelina Magno is grossly insufficient to answer for the funds and property which
she has inofficiously collected and held, as well as those which she continues to
inofficiously collect and hold;

5. That it is a matter of record that such state of affairs affects and

inconveniences not only the estate but also third-parties dealing with it;" (Annex
"V", Petition.)

and then, after further reminding the court, by quoting them, of the relevant allegations of its
earlier motion of September 14, 1964, Annex U, prayed that:

1. Immediately order Avelina Magno to account for and deliver to the

administrator of the Estate of C. N. Hodges all the assets of the conjugal
partnership of the deceased Linnie Jane Hodges and C. N. Hodges, plus all the
rents, emoluments and income therefrom;
 2. Pending the consideration of this motion, immediately order Avelina Magno to
turn over all her collections to the administrator Philippine Commercial &
Industrial Bank;

3. Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc. No. 1307) closed;

4. Defer the hearing and consideration of the motion for declaration of heirs in the
Testate Estate of Linnie Jane Hodges until the matters hereinabove set forth are
resolved.
(Prayer, Annex "V" of Petition.)

On October 12, 1966, as already indicated at the outset of this opinion, the respondent court
denied the foregoing motion, holding thus:

ORDER

On record is a motion (Vol. X, Sp. 1672, pp. 4379-4390) dated April 22, 1966 of
administrator PCIB praying that (1) Immediately order Avelina Magno to account
for and deliver to the administrator of the estate of C. N. Hodges all assets of the
conjugal partnership of the deceased Linnie Jane Hodges and C. N. Hodges,
plus all the rents, emoluments and income therefrom; (2) Pending the
consideration of this motion, immediately order Avelina Magno to turn over all her
collections to the administrator PCIB; (3) Declare the Testate Estate of Linnie
Jane Hodges (Sp. Proc. No. 1307) closed; and (4) Defer the hearing and
consideration of the motion for declaration of heirs in the Testate Estate of Linnie
Jane Hodges until the matters hereinabove set forth are resolved.

This motion is predicated on the fact that there are matters pending before this
court such as (a) the examination already ordered by this Honorable Court of
documents relating to the allegation of Avelina Magno that Charles Newton
Hodges thru written declaration and sworn public statements renounced,
disclaimed and repudiated his life-estate and usufruct over the estate of Linnie
Jane Hodges (b) the urgent motion for accounting and delivery to the estate of C.
N. Hodges of all the assets of the conjugal partnership of the deceased Linnie
Jane Hodges and C. N. Hodges existing as of May 23, 1957 plus all the rents,
emoluments and income therefrom; (c) various motions to resolve the aforesaid
motion; and (d) manifestation of September 14, 1964, detailing acts of
interference of Avelina Magno under color of title as administratrix of the estate of
Linnie Jane Hodges.

These matters, according to the instant motion, are all pre-judicial involving no
issues of facts and only require the resolution of question of law; that in the
motion of October 5, 1963 it is alleged that in a motion dated December 11, 1957
filed by Atty. Leon Gellada as attorney for the executor C. N. Hodges, the said
executor C. N. Hodges is not only part owner of the properties left as conjugal but
also the successor to all the properties left by the deceased Linnie Jane Hodges.

Said motion of December 11, 1957 was approved by the Court in consonance
with the wishes contained in the last will and testament of Linnie Jane Hodges.

That on April 21, 1959 this Court approved the inventory and accounting
submitted by C. N. Hodges thru counsel Atty. Leon Gellada in a motion filed on
April 14, 1959 stating therein that executor C. N. Hodges is the only devisee or
legatee of Linnie Jane Hodges in accordance with the last will and testament
already probated by the Court.
That on July 13, 1960 the Court approved the annual statement of accounts
submitted by the executor C. N. Hodges thru his counsel Atty. Gellada on July
21, 1960 wherein it is stated that the executor, C. N. Hodges is the only devisee
or legatee of the deceased Linnie Jane Hodges; that on May 2, 1961 the Court
approved the annual statement of accounts submitted by executor, C. N. Hodges
for the year 1960 which was submitted by Atty. Gellada on April 20, 1961 wherein
it is stated that executor Hodges is the only devisee or legatee of the deceased
Linnie Jane Hodges;

That during the hearing on September 5 and 6, 1963 the estate of C. N. Hodges
claimed all the assets belonging to the deceased spouses Linnie Jane Hodges
and C. N. Hodges situated in the Philippines; that administratrix Magno has
executed illegal acts to the prejudice of the testate estate of C. N. Hodges.

An opposition (Sp. 1672, Vol. X, pp. 4415-4421) dated April 27, 1966 of
administratrix Magno has been filed asking that the motion be denied for lack of
merit and that the motion for the official declaration of heirs of the estate of Linnie
Jane Hodges be set for presentation and reception of evidence.

It is alleged in the aforesaid opposition that the examination of documents which

are in the possession of administratrix Magno can be made prior to the hearing of
the motion for the official declaration of heirs of the estate of Linnie Jane Hodges,
during said hearing.

That the matters raised in the PCIB's motion of October 5, 1963 (as well as the
other motion) dated September 14, 1964 have been consolidated for the purpose
of presentation and reception of evidence with the hearing on the determination
of the heirs of the estate of Linnie Jane Hodges. It is further alleged in the
opposition that the motion for the official declaration of heirs of the estate of
Linnie Jane Hodges is the one that constitutes a prejudicial question to the
motions dated October 5 and September 14, 1964 because if said motion is
found meritorious and granted by the Court, the PCIB's motions of October 5,
1963 and September 14, 1964 will become moot and academic since they are
premised on the assumption and claim that the only heir of Linnie Jane Hodges
was C. N. Hodges.

That the PCIB and counsel are estopped from further questioning the
determination of heirs in the estate of Linnie Jane Hodges at this stage since it
was PCIB as early as January 8, 1965 which filed a motion for official declaration
of heirs of Linnie Jane Hodges that the claim of any heirs of Linnie Jane Hodges
can be determined only in the administration proceedings over the estate of
Linnie Jane Hodges and not that of C. N. Hodges, since the heirs of Linnie Jane
Hodges are claiming her estate and not the estate of C. N. Hodges.

A reply (Sp. 1672, Vol. X, pp. 4436-4444) dated May 11, 1966 of the PCIB has
been filed alleging that the motion dated April 22, 1966 of the PCIB is not to seek
deferment of the hearing and consideration of the motion for official declaration of
heirs of Linnie Jane Hodges but to declare the testate estate of Linnie Jane
Hodges closed and for administratrix Magno to account for and deliver to the
PCIB all assets of the conjugal partnership of the deceased spouses which has
come to her possession plus all rents and income.

A rejoinder (Sp. 1672, Vol. X, pp. 4458-4462) of administratrix Magno dated May
19, 1966 has been filed alleging that the motion dated December 11, 1957 only
sought the approval of all conveyances made by C. N. Hodges and requested the
Court authority for all subsequent conveyances that will be executed by C. N.
 Hodges; that the order dated December 14, 1957 only approved the
conveyances made by C. N. Hodges; that C. N. Hodges represented by counsel
never made any claim in the estate of Linnie Jane Hodges and never filed a
motion to declare himself as the heir of the said Linnie Jane Hodges despite the
lapse of more than five (5) years after the death of Linnie Jane Hodges; that it is
further alleged in the rejoinder that there can be no order of adjudication of the
estate unless there has been a prior express declaration of heirs and so far no
declaration of heirs in the estate of Linnie Jane Hodges (Sp. 1307) has been
made.

Considering the allegations and arguments in the motion and of the PCIB as well
as those in the opposition and rejoinder of administratrix Magno, the Court finds
the opposition and rejoinder to be well taken for the reason that so far there has
been no official declaration of heirs in the testate estate of Linnie Jane Hodges
and therefore no disposition of her estate.

WHEREFORE, the motion of the PCIB dated April 22, 1966 is hereby DENIED.
(Annex "W", Petition)

In its motion dated November 24, 1966 for the reconsideration of this order, petitioner
alleged inter alia that:

It cannot be over-stressed that the motion of December 11, 1957 was based on
the fact that:

a. Under the last will and testament of the deceased, Linnie Jane
Hodges, the late Charles Newton Hodges was the sole heir
instituted insofar as her properties in the Philippines are
concerned;

b. Said last will and testament vested upon the said late Charles
Newton Hodges rights over said properties which, in sum, spell
ownership, absolute and in fee simple;

c. Said late Charles Newton Hodges was, therefore, "not only part
owner of the properties left as conjugal, but also, the successor to
all the properties left by the deceased Linnie Jane Hodges.

Likewise, it cannot be over-stressed that the aforesaid motion was granted by this
Honorable Court "for the reasons stated" therein.

Again, the motion of December 11, 1957 prayed that not only "all the sales,
conveyances, leases, and mortgages executed by" the late Charles Newton
Hodges, but also all "the subsequent sales, conveyances, leases, and mortgages
..." be approved and authorized. This Honorable Court, in its order of December
14, 1957, "for the reasons stated" in the aforesaid motion, granted the same, and
not only approved all the sales, conveyances, leases and mortgages of all
properties left by the deceased Linnie Jane Hodges executed by the late Charles
Newton Hodges, but also authorized "all subsequent sales, conveyances, leases
and mortgages of the properties left by the said deceased Linnie Jane Hodges.
(Annex "X", Petition)

and reiterated its fundamental pose that the Testate Estate of Linnie Jane Hodges had already
been factually, although not legally, closed with the virtual declaration of Hodges and
adjudication to him, as sole universal heir of all the properties of the estate of his wife, in the
order of December 14, 1957, Annex G. Still unpersuaded, on July 18, 1967, respondent court
denied said motion for reconsideration and held that "the court believes that there is no
justification why the order of October 12, 1966 should be considered or modified", and, on July
19, 1967, the motion of respondent Magno "for official declaration of heirs of the estate of Linnie
Jane Hodges", already referred to above, was set for hearing.

In consequence of all these developments, the present petition was filed on August 1, 1967
(albeit petitioner had to pay another docketing fee on August 9, 1967, since the orders in
question were issued in two separate testate estate proceedings, Nos. 1307 and 1672, in the
court below).

Together with such petition, there are now pending before Us for resolution herein, appeals from
the following:

1. The order of December 19, 1964 authorizing payment by respondent Magno of

overtime pay, (pp. 221, Green Record on Appeal) together with the subsequent
orders of January 9, 1965, (pp. 231-232,id.) October 27, 1965, (pp. 227, id.) and
February 15, 1966 (pp. 455-456, id.) repeatedly denying motions for
reconsideration thereof.

2. The order of August 6, 1965 (pp. 248, id.) requiring that deeds executed by
petitioner to be co-signed by respondent Magno, as well as the order of October
27, 1965 (pp. 276-277) denying reconsideration.

3. The order of October 27, 1965 (pp. 292-295, id.) enjoining the deposit of all
collections in a joint account and the same order of February 15, 1966 mentioned
in No. 1 above which included the denial of the reconsideration of this order of
October 27, 1965.

4. The order of November 3, 1965 (pp. 313-320, id.) directing the payment of
attorney's fees, fees of the respondent administratrix, etc. and the order of
February 16, 1966 denying reconsideration thereof.

5. The order of November 23, 1965 (pp. 334-335, id.) allowing appellee Western
Institute of Technology to make payments to either one or both of the
administrators of the two estates as well as the order of March 7, 1966 (p.
462, id.) denying reconsideration.

6. The various orders hereinabove earlier enumerated approving deeds of sale

executed by respondent Magno in favor of appellees Carles, Catedral, Pablito,
Guzman, Coronado, Barrido, Causing, Javier, Lucero and Batisanan, (see pp. 35
to 37 of this opinion), together with the two separate orders both dated December
2, 1966 (pp. 306-308, and pp. 308-309, Yellow Record on Appeal) denying
reconsideration of said approval.

7. The order of January 3, 1967, on pp. 335-336, Yellow Record on Appeal,

approving similar deeds of sale executed by respondent Magno, as those in No.
6, in favor of appellees Pacaonsis and Premaylon, as to which no motion for
reconsideration was filed.

8. Lastly, the order of December 2, 1966, on pp. 305-306, Yellow Record on

Appeal, directing petitioner to surrender to appellees Lucero, Batisanan, Javier,
Pablito, Barrido, Catedral, Causing, Guzman, and Coronado, the certificates of
title covering the lands involved in the approved sales, as to which no motion for
reconsideration was filed either.
Strictly speaking, and considering that the above orders deal with different matters, just as they
affect distinctly different individuals or persons, as outlined by petitioner in its brief as appellant
on pp. 12-20 thereof, there are, therefore, thirty-three (33) appeals before Us, for which reason,
petitioner has to pay also thirty-one (31) more docket fees.

It is as well perhaps to state here as elsewhere in this opinion that in connection with these
appeals, petitioner has assigned a total of seventy-eight (LXXVIII) alleged errors, the respective
discussions and arguments under all of them covering also the fundamental issues raised in
respect to the petition for certiorari and prohibition, thus making it feasible and more practical for
the Court to dispose of all these cases together.4

The assignments of error read thus:

I to IV

THE ORDER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION
PARTISALA, WINIFREDO C. ESPADA AND ROSARIO ALINGASA, EXECUTED
BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND
OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM
DURING HIS LIFETIME.

V to VIII

THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN

FAVOR OF THE APPELLEES, PEPITO G. IYULORES, ESPIRIDION
PARTISALA, WINIFREDO C. ESPADA AND ROSARIO ALINGASA, COVERING
PARCELS OF LAND FOR WHICH THEY HAVE NEVER PAID IN FULL IN
ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL.

IX to XII

THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF

OWNERSHIP OVER REAL PROPERTY OF THE APPELLEES, PEPITO G.
IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND
ROSARIO ALINGASA, WHILE ACTING AS A PROBATE COURT.

XIII to XV

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102),
SANTIAGO PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104),
EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS
OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND
THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM
DURING HIS LIFETIME.

XVI to XVIII

THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN

FAVOR OF THE APPELLEES ADELFA PREMAYLON (LOT NO. 102),
SANTIAGO PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104)
COVERING PARCELS OF LAND FOR WHICH THEY HAVE NEVER PAID IN
FULL IN ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL.
XIX to XXI

THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF

OWNERSHIP OVER REAL PROPERTY OF THE APPELLEES ADELFA
PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA
PREMAYLON (LOT NO. 104) WHILE ACTING AS A PROBATE COURT.

XXII to XXV

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEES LORENZO CARLES, JOSE PABLICO, ALFREDO
CATEDRAL AND SALVADOR S. GUZMAN, EXECUTED BY THE APPELLEE,
AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE
DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL
COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.

XXVI to XXIX

THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE

EXECUTED IN FAVOR OF THE APPELLEES, LORENZO CARLES, JOSE
PABLICO, ALFREDO CATEDRAL AND SALVADOR S. GUZMAN PURSUANT
TO CONTRACTS TO SPELL WHICH WERE CANCELLED AND RESCINDED.

XXX to XXXIV

THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF

OWNERSHIP OVER REAL PROPERTY OF THE LORENZO CARLES, JOSE
PABLICO, ALFREDO CATEDRAL AND SALVADOR S. GUZMAN, WHILE
ACTING AS A PROBATE COURT.

XXXV to XXXVI

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEES, FLORENIA BARRIDO AND PURIFICACION
CORONADO, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO,
COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES
NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH
WERE EXECUTED BY HIM DURING HIS LIFETIME.

XXXVII to XXXVIII

THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN

FAVOR OF THE APPELLEES, FLORENIA BARRIDO AND PURIFICACION
CORONADO, ALTHOUGH THEY WERE IN ARREARS IN THE PAYMENTS
AGREED UPON IN THE ORIGINAL CONTRACT TO SELL WHICH THEY
EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE
AMOUNT OF P10,680.00 and P4,428.90, RESPECTIVELY.

XXXIX to XL

THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES

NEWTON HODGES, OF THE CONTRACTUAL RIGHT, EXERCISED THROUGH
HIS ADMINISTRATOR, THE INSTANT APPELLANT, TO CANCEL THE
CONTRACTS TO SELL OF THE APPELLEES, FLORENIA BARRIDO AND
PURIFICACION CORONADO.
XLI to XLIII

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR
AND MELQUIADES BATISANAN, EXECUTED BY THE APPELLEE, AVELINA
A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED,
CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING
WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME.

XLIV to XLVI

THE LOWER COURT ERRED IN APPROVING THE FINAL DEED OF SALE IN

FAVOR OF THE APPELLEES, GRACIANO LUCERO, ARITEO THOMAS JAMIR
AND MELQUIADES BATISANAN, PURSUANT TO CONTRACTS TO SELL
EXECUTED BY THEM WITH THE DECEASED, CHARLES NEWTON HODGES,
THE TERMS AND CONDITIONS OF WHICH THEY HAVE NEVER COMPLIED
WITH.

XLVII to XLIX

THE LOWER COURT ERRED IN DEPRIVING THE DECEASED, CHARLES

NEWTON HODGES, OF HIS RIGHT, EXERCISED THROUGH HIS
ADMINISTRATION, THE INSTANT APPELLANT, TO CANCEL THE
CONTRACTS TO SELL OF THE APPELLEES, GRACIANO LUCERO, ARITEO
THOMAS JAMIR AND MELQUIADES BATISANAN, AND IN DETERMINING
THE RIGHTS OF THE SAID APPELLEES OVER REAL PROPERTY WHILE
ACTING AS A PROBATE COURT.

THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN

FAVOR OF THE APPELLEE, BELCESAR CAUSING, EXECUTED BY THE
APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED
BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS
TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS
LIFETIME.

LI

THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN

FAVOR OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH HE WAS IN
ARREARS IN THE PAYMENTS AGREED UPON IN THE ORIGINAL
CONTRACT TO SELL WHICH HE EXECUTED WITH THE DECEASED,
CHARLES NEWTON HODGES, IN THE AMOUNT OF P2,337.50.

LII

THE LOWER COURT ERRED IN APPROVING THE DEED OF SALE IN FAVOR

OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH THE SAME WAS
NOT EXECUTED IN ACCORDANCE WITH THE RULES OF COURT.

LIII to LXI

THE LOWER COURT ERRED IN ORDERING THE APPELLANT, PHILIPPINE

COMMERCIAL AND INDUSTRIAL BANK TO SURRENDER THE OWNER'S
 DUPLICATE CERTIFICATES OF TITLE OVER THE RESPECTIVE LOTS
COVERED BY THE DEEDS OF SALE EXECUTED BY THE APPELLEE,
AVELINA A. MAGNO, IN FAVOR OF THE OTHER APPELLEES, JOSE
PABLICO, ALFREDO CATEDRAL, SALVADOR S. GUZMAN, FLRENIA
BARRIDO, PURIFICACION CORONADO, BELCESAR CAUSING, ARITEO
THOMAS JAMIR, MAXIMA BATISANAN AND GRACIANO L. LUCERO.

LXII

THE LOWER COURT ERRED IN RESOLVING THE MOTION OF THE

APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, DATED NOVEMBER 3,
1965, WITHOUT ANY COPY THEREOF HAVING BEEN SERVED UPON THE
APPELLANT, PHILIPPINE COMMERCIAL & INDUSTRIAL BANK.

LXIII

THE LOWER COURT ERRED IN HEARING AND CONSIDERING THE MOTION

OF THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, DATED
NOVEMBER 3rd, 1965, ON NOVEMBER 23, 1965, WHEN THE NOTICE FOR
THE HEARING THEREOF WAS FOR NOVEMBER 20, 1965.

LXIV

THE LOWER COURT ERRED IN GRANTING THE APPELLEE, WESTERN

INSTITUTE OF TECHNOLOGY A RELIEF OTHER THAN THAT PRAYED FOR
IN ITS MOTION, DATED NOVEMBER 3, 1965, IN THE ABSENCE OF A
PRAYER FOR GENERAL RELIEF CONTAINED THEREIN.

LXV

THE LOWER COURT ERRED IN ALLOWING THE APPELLEE, WESTERN

INSTITUTE OF TECHNOLOGY, TO CONTINUE PAYMENTS UPON A
CONTRACT TO SELL THE TERMS AND CONDITIONS OF WHICH IT HAS
FAILED TO FULFILL.

LXVI

THE LOWER COURT ERRED IN DETERMINING THE RIGHTS OF THE

APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY OVER THE REAL
PROPERTY SUBJECT MATTER OF THE CONTRACT TO SELL IT EXECUTED
WITH THE DECEASED, CHARLES NEWTON HODGES, WHILE ACTING AS A
PROBATE COURT.

LXVII

LOWER COURT ERRED IN ALLOWING THE CONTINUATION OF PAYMENTS

BY THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY, UPON A
CONTRACT TO SELL EXECUTED BY IT AND THE DECEASED, CHARLES
NEWTON HODGES, TO A PERSON OTHER THAN HIS LAWFULLY
APPOINTED ADMINISTRATOR.

LXVIII

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S

FEES FROM THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
 HODGES, WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS
THEREOF.

LXIX

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF RETAINER'S

FEES OF LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE OF
THE DECEASED, LINNIE JANE HODGES.

LXX

THE LOWER COURT ERRED IN IMPLEMENTING THE ALLEGED

AGREEMENT BETWEEN THE HEIRS OF THE SUPPOSED ESTATE OF THE
DECEASED, LINNIE JANE HODGES, AND THEIR LAWYERS.

LXXI

THE LOWER COURT ERRED IN ORDERING THE PREMATURE

DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR
BENEFICIARIES THEREOF, BY WAY OF RETAINER'S FEES.

LXXII

THE LOWER COURT ERRED IN ORDERING THAT ALL FINAL DEEDS OF

SALE EXECUTED PURSUANT TO CONTRACTS TO SELL ENTERED INTO BY
THE DECEASED, CHARLES NEWTON HODGES, DURING HIS LIFETIME, BE
SIGNED JOINTLY BY THE APPELLEE, AVELINA A. MAGNO, AND THE
APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, AND NOT
BY THE LATTER ONLY AS THE LAWFULLY APPOINTED ADMINISTRATOR
OF HIS ESTATE.

LXXIII

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL

EXPENSES FROM THE SUPPOSED ESTATE OF THE DECEASED, LINNIE
JANE HODGES, WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS
THEREOF.

LXXIV

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF LEGAL

EXPENSES OF LAWYERS OF ALLEGED HEIRS TO THE SUPPOSED ESTATE
OF THE DECEASED, LINNIE JANE HODGES.

LXXV

THE LOWER COURT ERRED IN ORDERING THE PREMATURE

DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR
BENEFICIARIES THEREOF, BY WAY OF LEGAL EXPENSES.

LXXVI

THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF

COMPENSATION TO THE PURPORTED ADMINISTRATRIX OF THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE HODGES, THE
 INSTANT APPELLEE, AVELINA A. MAGNO, WHEN THERE IS NEITHER SUCH
ESTATE NOR ASSETS THEREOF.

LXXVII

THE LOWER COURT ERRED IN ORDERING THAT THE FUNDS OF THE

TESTATE ESTATE OF THE DECEASED, CHARLES NEWTON HODGES, BE
PLACED IN A JOINT ACCOUNT OF THE APPELLANT, PHILIPPINE
COMMERCIAL AND INDUSTRIAL BANK, AND THE APPELLEE, AVELINA A.
MAGNO, WHO IS A COMPLETE STRANGER TO THE AFORESAID ESTATE.

LXXVIII

THE LOWER COURT ERRED IN ORDERING THAT THE APPELLEE, AVELINA

A. MAGNO, BE GIVEN EQUAL ACCESS TO THE RECORDS OF THE
TESTATE ESTATE OF THE DECEASED, CHARLES NEWTON HODGES,
WHEN SHE IS A COMPLETE STRANGER TO THE AFORESAID ESTATE. (Pp.
73-83, Appellant's Brief.)

To complete this rather elaborate, and unavoidably extended narration of the factual setting of
these cases, it may also be mentioned that an attempt was made by the heirs of Mrs. Hodges to
have respondent Magno removed as administratrix, with the proposed appointment of Benito J.
Lopez in her place, and that respondent court did actually order such proposed replacement, but
the Court declared the said order of respondent court violative of its injunction of August 8, 1967,
hence without force and effect (see Resolution of September 8, 1972 and February 1, 1973).
Subsequently, Atty. Efrain B. Trenas, one of the lawyers of said heirs, appeared no longer for the
proposed administrator Lopez but for the heirs themselves, and in a motion dated October 26,
1972 informed the Court that a motion had been filed with respondent court for the removal of
petitioner PCIB as administrator of the estate of C. N. Hodges in Special Proceedings 1672,
which removal motion alleged that 22.968149% of the share of C. N. Hodges had already been
acquired by the heirs of Mrs. Hodges from certain heirs of her husband. Further, in this
connection, in the answer of PCIB to the motion of respondent Magno to have it declared in
contempt for disregarding the Court's resolution of September 8, 1972 modifying the injunction of
August 8, 1967, said petitioner annexed thereto a joint manifestation and motion, appearing to
have been filed with respondent court, informing said court that in addition to the fact that 22% of
the share of C. N. Hodges had already been bought by the heirs of Mrs. Hodges, as already
stated, certain other heirs of Hodges representing 17.343750% of his estate were joining cause
with the heirs of Mrs. Hodges as against PCIB, thereby making somewhat precarious, if not
possibly untenable, petitioners' continuation as administrator of the Hodges estate.

RESOLUTION OF ISSUES IN THE CERTIORARI AND

PROHIBITION CASES

As to the Alleged Tardiness

of the Present Appeals

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

The Propriety Here of Certiorari and

Prohibition instead of Appeal

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

We come now to the errors assigned by petitioner-appellant, Philippine Commercial & Industrial
Bank, (PCIB, for short) in the petition as well as in its main brief as appellant.

III

On Whether or Not There is Still Any Part of the Testate

Estate Mrs. Hodges that may be Adjudicated to her brothers
and sisters as her estate, of which respondent Magno is the
unquestioned Administratrix in special Proceedings 1307.

In the petition, it is the position of PCIB that the respondent court exceeded its jurisdiction or
gravely abused its discretion in further recognizing after December 14, 1957 the existence of the
Testate Estate of Linnie Jane Hodges and in sanctioning purported acts of administration therein
of respondent Magno. Main ground for such posture is that by the aforequoted order of
respondent court of said date, Hodges was already allowed to assert and exercise all his rights
as universal heir of his wife pursuant to the provisions of her will, quoted earlier, hence, nothing
else remains to be done in Special Proceedings 1307 except to formally close it. In other words,
the contention of PCIB is that in view of said order, nothing more than a formal declaration of
Hodges as sole and exclusive heir of his wife and the consequent formal unqualified adjudication
to him of all her estate remain to be done to completely close Special Proceedings 1307, hence
respondent Magno should be considered as having ceased to be Administratrix of the Testate
Estate of Mrs. Hodges since then.

After carefully going over the record, We feel constrained to hold that such pose is patently
untenable from whatever angle it is examined.

To start with, We cannot find anywhere in respondent Order of December 14, 1957 the sense
being read into it by PCIB. The tenor of said order bears no suggestion at all to such effect. The
declaration of heirs and distribution by the probate court of the estate of a decedent is its most
important function, and this Court is not disposed to encourage judges of probate proceedings to
be less than definite, plain and specific in making orders in such regard, if for no other reason
than that all parties concerned, like the heirs, the creditors, and most of all the government, the
devisees and legatees, should know with certainty what are and when their respective rights and
obligations ensuing from the inheritance or in relation thereto would begin or cease, as the case
may be, thereby avoiding precisely the legal complications and consequent litigations similar to
those that have developed unnecessarily in the present cases. While it is true that in instances
wherein all the parties interested in the estate of a deceased person have already actually
distributed among themselves their respective shares therein to the satisfaction of everyone
concerned and no rights of creditors or third parties are adversely affected, it would naturally be
almost ministerial for the court to issue the final order of declaration and distribution, still it is
inconceivable that the special proceeding instituted for the purpose may be considered
terminated, the respective rights of all the parties concerned be deemed definitely settled, and
the executor or administrator thereof be regarded as automatically discharged and relieved
already of all functions and responsibilities without the corresponding definite orders of the
probate court to such effect.

Indeed, the law on the matter is specific, categorical and unequivocal. Section 1 of Rule 90
provides:

SECTION 1. When order for distribution of residue made. — When the debts,
funeral charges, and expenses of administration, the allowance to the widow and
inheritance tax, if any, chargeable to the estate in accordance with law have been
paid, the court, on the application of the executor or administrator, or of a person
interested in the estate, and after hearing upon notice, shall assign the residue of
the estate to the persons entitled to the same, naming them and the proportions,
or parts, to which each is entitled, and such persons may demand and recover
their respective shares from the executor or administrator, or any other person
having the same in his possession. If there is a controversy before the court as to
who are the lawful heirs of the deceased person or as to the distributive shares to
which each person is entitled under the law, the controversy shall be heard and
decided as in ordinary cases.

No distribution shall be allowed until the payment of the obligations above

mentioned has been made or provided for, unless the distributees, or any of them
give a bond, in a sum to be fixed by the court, conditioned for the payment of said
obligations within such time as the court directs.

These provisions cannot mean anything less than that in order that a proceeding for the
settlement of the estate of a deceased may be deemed ready for final closure, (1) there should
have been issued already an order of distribution or assignment of the estate of the decedent
among or to those entitled thereto by will or by law, but (2) such order shall not be issued until
after it is shown that the "debts, funeral expenses, expenses of administration, allowances,
taxes, etc. chargeable to the estate" have been paid, which is but logical and proper. (3) Besides,
such an order is usually issued upon proper and specific application for the purpose of the
interested party or parties, and not of the court.

... it is only after, and not before, the payment of all debts, funeral charges,
expenses of administration, allowance to the widow, and inheritance tax shall
have been effected that the court should make a declaration of heirs or of such
persons as are entitled by law to the residue. (Moran, Comments on the Rules of
Court, 2nd ed., Vol. II, p. 397, citing Capistrano vs. Nadurata, 49 Phil., 726;
Lopez vs. Lopez, 37 Off. Gaz., 3091.) (JIMOGA-ON v. BELMONTE, 84 Phil. 545,
548) (p. 86, Appellee's Brief)
 xxx xxx xxx

Under Section 753 of the Code of Civil Procedure, (corresponding to Section 1,

Rule 90) what brings an intestate (or testate) proceeding to a close is the order of
distribution directing delivery of the residue to the persons entitled thereto after
paying the indebtedness, if any, left by the deceased. (Santiesteban vs.
Santiesteban, 68 Phil. 367, 370.)

In the cases at bar, We cannot discern from the voluminous and varied facts, pleadings and
orders before Us that the above indispensable prerequisites for the declaration of heirs and the
adjudication of the estate of Mrs. Hodges had already been complied with when the order of
December 14, 1957 was issued. As already stated, We are not persuaded that the proceedings
leading to the issuance of said order, constituting barely of the motion of May 27, 1957, Annex D
of the petition, the order of even date, Annex E, and the motion of December 11, 1957, Annex H,
all aforequoted, are what the law contemplates. We cannot see in the order of December 14,
1957, so much relied upon by the petitioner, anything more than an explicit approval of "all the
sales, conveyances, leases and mortgages of all the properties left by the deceased Linnie Jane
Hodges executed by the Executor Charles N. Hodges" (after the death of his wife and prior to the
date of the motion), plus a general advance authorization to enable said "Executor — to execute
subsequent sales, conveyances, leases and mortgages of the properties left the said deceased
Linnie Jane Hodges in consonance with wishes conveyed in the last will and testament of the
latter", which, certainly, cannot amount to the order of adjudication of the estate of the decedent
to Hodges contemplated in the law. In fact, the motion of December 11, 1957 on which the court
predicated the order in question did not pray for any such adjudication at all. What is more,
although said motion did allege that "herein Executor (Hodges) is not only part owner of the
properties left as conjugal, but also, the successor to all the properties left by the deceased
Linnie Jane Hodges", it significantly added that "herein Executor, as Legatee (sic), has the right
to sell, convey, lease or dispose of the properties in the Philippines — during his lifetime",
thereby indicating that what said motion contemplated was nothing more than either the
enjoyment by Hodges of his rights under the particular portion of the dispositions of his wife's will
which were to be operative only during his lifetime or the use of his own share of the conjugal
estate, pending the termination of the proceedings. In other words, the authority referred to in
said motions and orders is in the nature of that contemplated either in Section 2 of Rule 109
which permits, in appropriate cases, advance or partial implementation of the terms of a duly
probated will before final adjudication or distribution when the rights of third parties would not be
adversely affected thereby or in the established practice of allowing the surviving spouse to
dispose of his own share of he conjugal estate, pending its final liquidation, when it appears that
no creditors of the conjugal partnership would be prejudiced thereby, (see the Revised Rules of
Court by Francisco, Vol. V-B, 1970 ed. p. 887) albeit, from the tenor of said motions, We are
more inclined to believe that Hodges meant to refer to the former. In any event, We are fully
persuaded that the quoted allegations of said motions read together cannot be construed as a
repudiation of the rights unequivocally established in the will in favor of Mrs. Hodges' brothers
and sisters to whatever have not been disposed of by him up to his death.

Indeed, nowhere in the record does it appear that the trial court subsequently acted upon the
premise suggested by petitioner. On the contrary, on November 23, 1965, when the court
resolved the motion of appellee Western Institute of Technology by its order We have quoted
earlier, it categorically held that as of said date, November 23, 1965, "in both cases (Special
Proceedings 1307 and 1672) there is as yet no judicial declaration of heirs nor distribution of
properties to whomsoever are entitled thereto." In this connection, it may be stated further
against petitioner, by way of some kind of estoppel, that in its own motion of January 8, 1965,
already quoted in full on pages 54-67 of this decision, it prayed inter alia that the court declare
that "C. N. Hodges was the sole and exclusive heir of the estate of Linnie Jane Hodges", which it
would not have done if it were really convinced that the order of December 14, 1957 was already
the order of adjudication and distribution of her estate. That said motion was later withdrawn
when Magno filed her own motion for determination and adjudication of what should correspond
to the brothers and sisters of Mrs. Hodges does not alter the indubitable implication of the prayer
of the withdrawn motion.

It must be borne in mind that while it is true that Mrs. Hodges bequeathed her whole estate to her
husband and gave him what amounts to full powers of dominion over the same during his
lifetime, she imposed at the same time the condition that whatever should remain thereof upon
his death should go to her brothers and sisters. In effect, therefore, what was absolutely given to
Hodges was only so much of his wife's estate as he might possibly dispose of during his lifetime;
hence, even assuming that by the allegations in his motion, he did intend to adjudicate the whole
estate to himself, as suggested by petitioner, such unilateral act could not have affected or
diminished in any degree or manner the right of his brothers and sisters-in-law over what would
remain thereof upon his death, for surely, no one can rightly contend that the testamentary
provision in question allowed him to so adjudicate any part of the estate to himself as to prejudice
them. In other words, irrespective of whatever might have been Hodges' intention in his motions,
as Executor, of May 27, 1957 and December 11, 1957, the trial court's orders granting said
motions, even in the terms in which they have been worded, could not have had the effect of an
absolute and unconditional adjudication unto Hodges of the whole estate of his wife. None of
them could have deprived his brothers and sisters-in-law of their rights under said will. And it may
be added here that the fact that no one appeared to oppose the motions in question may only be
attributed, firstly, to the failure of Hodges to send notices to any of them, as admitted in the
motion itself, and, secondly, to the fact that even if they had been notified, they could not have
taken said motions to be for the final distribution and adjudication of the estate, but merely for
him to be able, pending such final distribution and adjudication, to either exercise during his
lifetime rights of dominion over his wife's estate in accordance with the bequest in his favor,
which, as already observed, may be allowed under the broad terms of Section 2 of Rule 109, or
make use of his own share of the conjugal estate. In any event, We do not believe that the trial
court could have acted in the sense pretended by petitioner, not only because of the clear
language of the will but also because none of the interested parties had been duly notified of the
motion and hearing thereof. Stated differently, if the orders of May 27, 1957 and December 4,
1957 were really intended to be read in the sense contended by petitioner, We would have no
hesitancy in declaring them null and void.

Petitioner cites the case of Austria vs. Ventenilla, G. R. No. L-10018, September 19, 1956,
(unreported but a partial digest thereof appears in 99 Phil. 1069) in support of its insistence that
with the orders of May 27 and December 14, 1957, the closure of Mrs. Hodges' estate has
become a mere formality, inasmuch as said orders amounted to the order of adjudication and
distribution ordained by Section 1 of Rule 90. But the parallel attempted to be drawn between
that case and the present one does not hold. There the trial court had in fact issued a clear,
distinct and express order of adjudication and distribution more than twenty years before the
other heirs of the deceased filed their motion asking that the administratrix be removed, etc. As
quoted in that decision, the order of the lower court in that respect read as follows:

En orden a la mocion de la administradora, el juzgado la encuentra procedente

bajo la condicion de que no se hara entrega ni adjudicacion de los bienes a los
herederos antes de que estos presten la fianza correspondiente y de acuerdo
con lo prescrito en el Art. 754 del Codigo de Procedimientos: pues, en autos no
aparece que hayan sido nombrados comisionados de avaluo y reclamaciones.
Dicha fianza podra ser por un valor igual al de los bienes que correspondan a
cada heredero segun el testamento. Creo que no es obice para la terminacion
del expediente el hecho de que la administradora no ha presentado hasta ahora
el inventario de los bienes; pues, segun la ley, estan exentos de esta formalidad
os administradores que son legatarios del residuo o remanente de los bienes y
hayan prestado fianza para responder de las gestiones de su cargo, y aparece
en el testamento que la administradora Alejandra Austria reune dicha condicion.

POR TODO LO EXPUESTO, el juzgado declara, 1.o: no haber lugar a la mocion

de Ramon Ventenilla y otros; 2.o, declara asimismo que los unicos herederos del
 finado Antonio Ventenilla son su esposa Alejandra Austria, Maria Ventenilla,
hermana del testador, y Ramon Ventenilla, Maria Ventenilla, Ramon Soriano,
Eulalio Soriano, Jose Soriano, Gabriela Ventenilla, Lorenzo Ventenilla, Felicitas
Ventenilla, Eugenio Ventenilla y Alejandra Ventenilla, en representacion de los
difuntos Juan, Tomas, Catalino y Froilan, hermanos del testador, declarando,
ademas que la heredera Alejandra Austria tiene derecho al remanente de todos
los bienes dejados por el finado, despues de deducir de ellos la porcion que
corresponde a cada uno de sus coherederos, conforme esta mandado en las
clausulas 8.a, 9.a, 10.a, 11.a, 12.a y 13.a del testamento; 3.o, se aprueba el
pago hecho por la administradora de los gastos de la ultima enfermedad y
funerales del testador, de la donacion hecha por el testador a favor de la Escuela
a Publica del Municipio de Mangatarem, y de las misas en sufragio del alma del
finado; 4.o, que una vez prestada la fianza mencionada al principio de este auto,
se haga la entrega y adjudicacion de los bienes, conforme se dispone en el
testamento y se acaba de declarar en este auto; 5.o, y, finalmente, que verificada
la adjudicacion, se dara por terminada la administracion, revelandole toda
responsabilidad a la administradora, y cancelando su fianza.

ASI SE ORDENA.

Undoubtedly, after the issuance of an order of such tenor, the closure of any proceedings for the
settlement of the estate of a deceased person cannot be but perfunctory.

In the case at bar, as already pointed out above, the two orders relied upon by petitioner do not
appear ex-facie to be of the same tenor and nature as the order just quoted, and, what is more,
the circumstances attendant to its issuance do not suggest that such was the intention of the
court, for nothing could have been more violative of the will of Mrs. Hodges.

Indeed, to infer from Hodges' said motions and from his statements of accounts for the years
1958, 1959 and 1960, A Annexes I, K and M, respectively, wherein he repeatedly claimed that
"herein executor (being) the only devisee or legatee of the deceased, in accordance with the last
will and testament already probated," there is "no (other) person interested in the Philippines of
the time and place of examining herein account to be given notice", an intent to adjudicate unto
himself the whole of his wife's estate in an absolute manner and without regard to the contingent
interests of her brothers and sisters, is to impute bad faith to him, an imputation which is not
legally permissible, much less warranted by the facts of record herein. Hodges knew or ought to
have known that, legally speaking, the terms of his wife's will did not give him such a right.
Factually, there are enough circumstances extant in the records of these cases indicating that he
had no such intention to ignore the rights of his co-heirs. In his very motions in question, Hodges
alleged, thru counsel, that the "deceased Linnie Jane Hodges died leaving no descendants and
ascendants, except brothers and sisters and herein petitioner, as surviving spouse, to inherit the
properties of the decedent", and even promised that "proper accounting will be had — in all these
transactions" which he had submitted for approval and authorization by the court, thereby
implying that he was aware of his responsibilities vis-a-vis his co-heirs. As alleged by respondent
Magno in her brief as appellee:

Under date of April 14, 1959, C. N. Hodges filed his first "Account by the
Executor" of the estate of Linnie Jane Hodges. In the "Statement of Networth of
Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of December 31,
1958 annexed thereto, C. N. Hodges reported that the combined conjugal estate
earned a net income of P328,402.62, divided evenly between him and the estate
of Linnie Jane Hodges. Pursuant to this, he filed an "individual income tax return"
for calendar year 1958 on the estate of Linnie Jane Hodges reporting, under
oath, the said estate as having earned income of P164,201.31, exactly one-half
of the net income of his combined personal assets and that of the estate of Linnie
Jane Hodges. (p. 91, Appellee's Brief.)
 Under date of July 21, 1960, C. N. Hodges filed his second "Annual Statement of
Account by the Executor" of the estate of Linnie Jane Hodges. In the "Statement
of Networth of Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of
December 31, 1959 annexed thereto, C. N. Hodges reported that the combined
conjugal estate earned a net income of P270,623.32, divided evenly between him
and the estate of Linnie Jane Hodges. Pursuant to this, he filed an "individual
income tax return" for calendar year 1959 on the estate of Linnie Jane Hodges
reporting, under oath, the said estate as having earned income of P135,311.66,
exactly one-half of the net income of his combined personal assets and that of
the estate of Linnie Jane Hodges. (pp. 91-92, id.)

Under date of April 20, 1961, C. N. Hodges filed his third "Annual Statement of
Account by the Executor for the year 1960" of the estate of Linnie Jane Hodges.
In the "Statement of Net Worth of Mr. C. N. Hodges and the Estate of Linnie Jane
Hodges" as of December 31, 1960 annexed thereto, C. N. Hodges reported that
the combined conjugal estate earned a net income of P314,857.94, divided of
Linnie Jane Hodges. Pursuant to this, he filed an "individual evenly between him
and the estate income tax return" for calendar year 1960 on the estate of Linnie
Jane Hodges reporting, under oath, the said estate as having earned income of
P157,428.97, exactly one-half of the net income of his combined personal assets
and that of the estate of Linnie Jane Hodges. (pp. 92-93, id.)

In the petition for probate that he (Hodges) filed, he listed the seven brothers and
sisters of Linnie Jane as her "heirs" (see p. 2, Green ROA). The order of the court
admitting the will to probate unfortunately omitted one of the heirs, Roy Higdon
(see p. 14, Green ROA). Immediately, C. N. Hodges filed a verified motion to
have Roy Higdon's name included as an heir, stating that he wanted to straighten
the records "in order (that) the heirs of deceased Roy Higdon may not think or
believe they were omitted, and that they were really and are interested in the
estate of deceased Linnie Jane Hodges".

Thus, he recognized, if in his own way, the separate identity of his wife's estate from his own
share of the conjugal partnership up to the time of his death, more than five years after that of his
wife. He never considered the whole estate as a single one belonging exclusively to himself. The
only conclusion one can gather from this is that he could have been preparing the basis for the
eventual transmission of his wife's estate, or, at least, so much thereof as he would not have
been able to dispose of during his lifetime, to her brothers and sisters in accordance with her
expressed desire, as intimated in his tax return in the United States to be more extensively
referred to anon. And assuming that he did pay the corresponding estate and inheritance taxes in
the Philippines on the basis of his being sole heir, such payment is not necessarily inconsistent
with his recognition of the rights of his co-heirs. Without purporting to rule definitely on the matter
in these proceedings, We might say here that We are inclined to the view that under the peculiar
provisions of his wife's will, and for purposes of the applicable inheritance tax laws, Hodges had
to be considered as her sole heir, pending the actual transmission of the remaining portion of her
estate to her other heirs, upon the eventuality of his death, and whatever adjustment might be
warranted should there be any such remainder then is a matter that could well be taken care of
by the internal revenue authorities in due time.

It is to be noted that the lawyer, Atty. Leon P. Gellada, who signed the motions of May 27, 1957
and December 11, 1957 and the aforementioned statements of account was the very same one
who also subsequently signed and filed the motion of December 26, 1962 for the appointment of
respondent Magno as "Administratrix of the Estate of Mrs. Linnie Jane Hodges" wherein it was
alleged that "in accordance with the provisions of the last will and testament of Linnie Jane
Hodges, whatever real properties that may remain at the death of her husband, Charles Newton
Hodges, the said properties shall be equally divided among their heirs." And it appearing that
said attorney was Hodges' lawyer as Executor of the estate of his wife, it stands to reason that
his understanding of the situation, implicit in his allegations just quoted, could somehow be
reflective of Hodges' own understanding thereof.

As a matter of fact, the allegations in the motion of the same Atty. Gellada dated July 1, 1957, a
"Request for Inclusion of the Name of Roy Higdon in the Order of the Court dated July 19, 1957,
etc.", reference to which is made in the above quotation from respondent Magno's brief, are over
the oath of Hodges himself, who verified the motion. Said allegations read:

1. — That the Hon. Court issued orders dated June 29, 1957, ordering the
probate of the will.

2. — That in said order of the Hon. Court, the relatives of the deceased Linnie
Jane Hodges were enumerated. However, in the petition as well as in the
testimony of Executor during the hearing, the name Roy Higdon was mentioned,
but deceased. It was unintentionally omitted the heirs of said Roy Higdon who are
his wife Aline Higdon and son David Higdon, all of age, and residents of Quinlan,
Texas, U.S.A.

3. — That to straighten the records, and in order the heirs of deceased Roy
Higdon may not think or believe they were omitted, and that they were really and
are interested in the estate of deceased Linnie Jane Hodges, it is requested of
the Hon. Court to insert the names of Aline Higdon and David Higdon, wife and
son of deceased Roy Higdon in the said order of the Hon. Court dated June 29,
1957. (pars. 1 to 3, Annex 2 of Magno's Answer — Record, p. 260)

As can be seen, these italicized allegations indicate, more or less, the real attitude of Hodges in
regard to the testamentary dispositions of his wife.

In connection with this point of Hodges' intent, We note that there are documents, copies of
which are annexed to respondent Magno's answer, which purportedly contain Hodges' own
solemn declarations recognizing the right of his co-heirs, such as the alleged tax return he filed
with the United States Taxation authorities, identified as Schedule M, (Annex 4 of her answer)
and his supposed affidavit of renunciation, Annex 5. In said Schedule M, Hodges appears to
have answered the pertinent question thus:

2a. Had the surviving spouse the right to declare an election between (1) the
provisions made in his or her favor by the will and (11) dower, curtesy or a
statutory interest? (X) Yes ( ) No

2d. Does the surviving spouse contemplate renouncing the will and electing to
take dower, curtesy, or a statutory interest? (X) Yes ( ) No

3. According to the information and belief of the person or persons filing the
return, is any action described under question 1 designed or contemplated? ( )
Yes (X) No (Annex 4, Answer — Record, p. 263)

and to have further stated under the item, "Description of property interests passing to surviving
spouse" the following:

None, except for purposes of administering the Estate, paying debts, taxes and
other legal charges. It is the intention of the surviving husband of deceased to
distribute the remaining property and interests of the deceased in their
Community Estate to the devisees and legatees named in the will when the
debts, liabilities, taxes and expenses of administration are finally determined and
paid. (Annex 4, Answer — Record, p. 263)
In addition, in the supposed affidavit of Hodges, Annex 5, it is stated:

I, C. N. Hodges, being duly sworn, on oath affirm that at the time the United
States Estate Tax Return was filed in the Estate of Linnie Jane Hodges on
August 8, 1958, I renounced and disclaimed any and all right to receive the rents,
emoluments and income from said estate, as shown by the statement contained
in Schedule M at page 29 of said return, a copy of which schedule is attached to
this affidavit and made a part hereof.

The purpose of this affidavit is to ratify and confirm, and I do hereby ratify and
confirm, the declaration made in Schedule M of said return and hereby formally
disclaim and renounce any right on my part to receive any of the said rents,
emoluments and income from the estate of my deceased wife, Linnie Jane
Hodges. This affidavit is made to absolve me or my estate from any liability for
the payment of income taxes on income which has accrued to the estate of Linnie
Jane Hodges since the death of the said Linnie Jane Hodges on May 23, 1957.
(Annex 5, Answer — Record, p. 264)

Although it appears that said documents were not duly presented as evidence in the court below,
and We cannot, therefore, rely on them for the purpose of the present proceedings, still, We
cannot close our eyes to their existence in the record nor fail to note that their tenor jibes with
Our conclusion discussed above from the circumstances related to the orders of May 27 and
December 14, 1957. 5 Somehow, these documents, considering they are supposed to be copies
of their originals found in the official files of the governments of the United States and of the
Philippines, serve to lessen any possible apprehension that Our conclusion from the other
evidence of Hodges' manifest intent vis-a-vis the rights of his co-heirs is without basis in fact.

Verily, with such eloquent manifestations of his good intentions towards the other heirs of his
wife, We find it very hard to believe that Hodges did ask the court and that the latter agreed that
he be declared her sole heir and that her whole estate be adjudicated to him without so much as
just annotating the contingent interest of her brothers and sisters in what would remain thereof
upon his demise. On the contrary, it seems to us more factual and fairer to assume that Hodges
was well aware of his position as executor of the will of his wife and, as such, had in mind the
following admonition made by the Court in Pamittan vs. Lasam, et al., 60 Phil., 908, at pp. 913-
914:

Upon the death of Bernarda in September, 1908, said lands continued to be

conjugal property in the hands of the defendant Lasam. It is provided in article
1418 of the Civil Code that upon the dissolution of the conjugal partnership, an
inventory shall immediately be made and this court in construing this provision in
connection with section 685 of the Code of Civil Procedure (prior to its
amendment by Act No. 3176 of November 24, 1924) has repeatedly held that in
the event of the death of the wife, the law imposes upon the husband the duty of
liquidating the affairs of the partnership without delay (desde luego) (Alfonso vs.
Natividad, 6 Phil., 240; Prado vs. Lagera, 7 Phil., 395; De la Rama vs. De la
Rama, 7 Phil., 745; Enriquez vs. Victoria, 10 Phil., 10; Amancio vs. Pardo, 13
Phil., 297; Rojas vs. Singson Tongson, 17 Phil., 476; Sochayseng vs. Trujillo, 31
Phil., 153; Molera vs. Molera, 40 Phil., 566; Nable Jose vs. Nable Jose, 41 Phil.,
713.)

In the last mentioned case this court quoted with approval the case
of Leatherwood vs. Arnold (66 Texas, 414, 416, 417), in which that court
discussed the powers of the surviving spouse in the administration of the
community property. Attention was called to the fact that the surviving husband,
in the management of the conjugal property after the death of the wife, was a
trustee of unique character who is liable for any fraud committed by him with
 relation to the property while he is charged with its administration. In the
liquidation of the conjugal partnership, he had wide powers (as the law stood
prior to Act No. 3176) and the high degree of trust reposed in him stands out
more clearly in view of the fact that he was the owner of a half interest in his own
right of the conjugal estate which he was charged to administer. He could
therefore no more acquire a title by prescription against those for whom he was
administering the conjugal estate than could a guardian against his ward or a
judicial administrator against the heirs of estate. Section 38 of Chapter III of the
Code of Civil Procedure, with relation to prescription, provides that "this chapter
shall not apply ... in the case of a continuing and subsisting trust." The surviving
husband in the administration and liquidation of the conjugal estate occupies the
position of a trustee of the highest order and is not permitted by the law to hold
that estate or any portion thereof adversely to those for whose benefit the law
imposes upon him the duty of administration and liquidation. No liquidation was
ever made by Lasam — hence, the conjugal property which came into his
possession on the death of his wife in September, 1908, still remains conjugal
property, a continuing and subsisting trust. He should have made a liquidation
immediately (desde luego). He cannot now be permitted to take advantage of his
own wrong. One of the conditions of title by prescription (section 41, Code of Civil
Procedure) is possession "under a claim of title exclusive of any other right". For
a trustee to make such a claim would be a manifest fraud.

And knowing thus his responsibilities in the premises, We are not convinced that Hodges
arrogated everything unto himself leaving nothing at all to be inherited by his wife's brothers and
sisters.

PCIB insists, however, that to read the orders of May 27 and December 14, 1957, not as
adjudicatory, but merely as approving past and authorizing future dispositions made by Hodges
in a wholesale and general manner, would necessarily render the said orders void for being
violative of the provisions of Rule 89 governing the manner in which such dispositions may be
made and how the authority therefor and approval thereof by the probate court may be secured.
If We sustained such a view, the result would only be that the said orders should be declared
ineffective either way they are understood, considering We have already seen it is legally
impossible to consider them as adjudicatory. As a matter of fact, however, what surges
immediately to the surface, relative to PCIB's observations based on Rule 89, is that from such
point of view, the supposed irregularity would involve no more than some non-jurisdictional
technicalities of procedure, which have for their evident fundamental purpose the protection of
parties interested in the estate, such as the heirs, its creditors, particularly the government on
account of the taxes due it; and since it is apparent here that none of such parties are objecting
to said orders or would be prejudiced by the unobservance by the trial court of the procedure
pointed out by PCIB, We find no legal inconvenience in nor impediment to Our giving sanction to
the blanket approval and authority contained in said orders. This solution is definitely preferable
in law and in equity, for to view said orders in the sense suggested by PCIB would result in the
deprivation of substantive rights to the brothers and sisters of Mrs. Hodges, whereas reading
them the other way will not cause any prejudice to anyone, and, withal, will give peace of mind
and stability of rights to the innocent parties who relied on them in good faith, in the light of the
peculiar pertinent provisions of the will of said decedent.

Now, the inventory submitted by Hodges on May 12, 1958 referred to the estate of his wife as
consisting of "One-half of all the items designated in the balance sheet, copy of which is hereto
attached and marked as "Annex A"." Although, regrettably, no copy of said Annex A appears in
the records before Us, We take judicial notice, on the basis of the undisputed facts in these
cases, that the same consists of considerable real and other personal kinds of properties. And
since, according to her will, her husband was to be the sole owner thereof during his lifetime, with
full power and authority to dispose of any of them, provided that should there be any remainder
upon his death, such remainder would go to her brothers and sisters, and furthermore, there is
no pretension, much less any proof that Hodges had in fact disposed of all of them, and, on the
contrary, the indications are rather to the effect that he had kept them more or less intact, it
cannot truthfully be said that, upon the death of Hodges, there was no more estate of Mrs.
Hodges to speak of. It is Our conclusion, therefore, that properties do exist which constitute such
estate, hence Special Proceedings 1307 should not yet be closed.

Neither is there basis for holding that respondent Magno has ceased to be the Administratrix in
said proceeding. There is no showing that she has ever been legally removed as such, the
attempt to replace her with Mr. Benito Lopez without authority from the Court having been
expressly held ineffective by Our resolution of September 8, 1972. Parenthetically, on this last
point, PCIB itself is very emphatic in stressing that it is not questioning said respondent's status
as such administratrix. Indeed, it is not clear that PCIB has any standing to raise any objection
thereto, considering it is a complete stranger insofar as the estate of Mrs. Hodges is concerned.

It is the contention of PCIB, however, that as things actually stood at the time of Hodges' death,
their conjugal partnership had not yet been liquidated and, inasmuch as the properties
composing the same were thus commingled pro indiviso and, consequently, the properties
pertaining to the estate of each of the spouses are not yet identifiable, it is PCIB alone, as
administrator of the estate of Hodges, who should administer everything, and all that respondent
Magno can do for the time being is to wait until the properties constituting the remaining estate of
Mrs. Hodges have been duly segregated and delivered to her for her own administration.
Seemingly, PCIB would liken the Testate Estate of Linnie Jane Hodges to a party having a claim
of ownership to some properties included in the inventory of an administrator of the estate of a
decedent, (here that of Hodges) and who normally has no right to take part in the proceedings
pending the establishment of his right or title; for which as a rule it is required that an ordinary
action should be filed, since the probate court is without jurisdiction to pass with finality on
questions of title between the estate of the deceased, on the one hand, and a third party or even
an heir claiming adversely against the estate, on the other.

We do not find such contention sufficiently persuasive. As We see it, the situation obtaining
herein cannot be compared with the claim of a third party the basis of which is alien to the
pending probate proceedings. In the present cases what gave rise to the claim of PCIB of
exclusive ownership by the estate of Hodges over all the properties of the Hodges spouses,
including the share of Mrs. Hodges in the community properties, were the orders of the trial court
issued in the course of the very settlement proceedings themselves, more specifically, the orders
of May 27 and December 14, 1957 so often mentioned above. In other words, the root of the
issue of title between the parties is something that the court itself has done in the exercise of its
probate jurisdiction. And since in the ultimate analysis, the question of whether or not all the
properties herein involved pertain exclusively to the estate of Hodges depends on the legal
meaning and effect of said orders, the claim that respondent court has no jurisdiction to take
cognizance of and decide the said issue is incorrect. If it was within the competence of the court
to issue the root orders, why should it not be within its authority to declare their true significance
and intent, to the end that the parties may know whether or not the estate of Mrs. Hodges had
already been adjudicated by the court, upon the initiative of Hodges, in his favor, to the exclusion
of the other heirs of his wife instituted in her will?

At this point, it bears emphasis again that the main cause of all the present problems confronting
the courts and the parties in these cases was the failure of Hodges to secure, as executor of his
wife's estate, from May, 1957 up to the time of his death in December, 1962, a period of more
than five years, the final adjudication of her estate and the closure of the proceedings. The
record is bare of any showing that he ever exerted any effort towards the early settlement of said
estate. While, on the one hand, there are enough indications, as already discuss that he had
intentions of leaving intact her share of the conjugal properties so that it may pass wholly to his
co-heirs upon his death, pursuant to her will, on the other hand, by not terminating the
proceedings, his interests in his own half of the conjugal properties remained commingled pro-
indiviso with those of his co-heirs in the other half. Obviously, such a situation could not be
conducive to ready ascertainment of the portion of the inheritance that should appertain to his co-
heirs upon his death. Having these considerations in mind, it would be giving a premium for such
procrastination and rather unfair to his co-heirs, if the administrator of his estate were to be given
exclusive administration of all the properties in question, which would necessarily include the
function of promptly liquidating the conjugal partnership, thereby identifying and segregating
without unnecessary loss of time which properties should be considered as constituting the
estate of Mrs. Hodges, the remainder of which her brothers and sisters are supposed to inherit
equally among themselves.

To be sure, an administrator is not supposed to represent the interests of any particular party and
his acts are deemed to be objectively for the protection of the rights of everybody concerned with
the estate of the decedent, and from this point of view, it maybe said that even if PCIB were to
act alone, there should be no fear of undue disadvantage to anyone. On the other hand,
however, it is evidently implicit in section 6 of Rule 78 fixing the priority among those to whom
letters of administration should be granted that the criterion in the selection of the administrator is
not his impartiality alone but, more importantly, the extent of his interest in the estate, so much so
that the one assumed to have greater interest is preferred to another who has less. Taking both
of these considerations into account, inasmuch as, according to Hodges' own inventory
submitted by him as Executor of the estate of his wife, practically all their properties were
conjugal which means that the spouses have equal shares therein, it is but logical that both
estates should be administered jointly by representatives of both, pending their segregation from
each other. Particularly is such an arrangement warranted because the actuations so far of PCIB
evince a determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from
their inheritance. Besides, to allow PCIB, the administrator of his estate, to perform now what
Hodges was duty bound to do as executor is to violate the spirit, if not the letter, of Section 2 of
Rule 78 which expressly provides that "The executor of an executor shall not, as such,
administer the estate of the first testator." It goes without saying that this provision refers also to
the administrator of an executor like PCIB here.

We are not unmindful of the fact that under Section 2 of Rule 73, "When the marriage is
dissolved by the death of the husband or wife, the community property shall be inventoried,
administered, and liquidated, and the debts thereof paid, in the testate or intestate proceedings
of the deceased spouse. If both spouses have died, the conjugal partnership shall be liquidated
in the testate or intestate proceedings of either." Indeed, it is true that the last sentence of this
provision allows or permits the conjugal partnership of spouses who are both deceased to be
settled or liquidated in the testate or intestate proceedings of either, but precisely because said
sentence allows or permits that the liquidation be made in either proceeding, it is a matter of
sound judicial discretion in which one it should be made. After all, the former rule referring to the
administrator of the husband's estate in respect to such liquidation was done away with by Act
3176, the pertinent provisions of which are now embodied in the rule just cited.

Thus, it can be seen that at the time of the death of Hodges, there was already the pending
judicial settlement proceeding of the estate of Mrs. Hodges, and, more importantly, that the
former was the executor of the latter's will who had, as such, failed for more than five years to
see to it that the same was terminated earliest, which was not difficult to do, since from ought
that appears in the record, there were no serious obstacles on the way, the estate not being
indebted and there being no immediate heirs other than Hodges himself. Such dilatory or
indifferent attitude could only spell possible prejudice of his co-heirs, whose rights to inheritance
depend entirely on the existence of any remainder of Mrs. Hodges' share in the community
properties, and who are now faced with the pose of PCIB that there is no such remainder. Had
Hodges secured as early as possible the settlement of his wife's estate, this problem would not
arisen. All things considered, We are fully convinced that the interests of justice will be better
served by not permitting or allowing PCIB or any administrator of the estate of Hodges exclusive
administration of all the properties in question. We are of the considered opinion and so hold that
what would be just and proper is for both administrators of the two estates to act conjointly until
after said estates have been segregated from each other.

At this juncture, it may be stated that we are not overlooking the fact that it is PCIB's contention
that, viewed as a substitution, the testamentary disposition in favor of Mrs. Hodges' brothers and
sisters may not be given effect. To a certain extent, this contention is correct. Indeed, legally
speaking, Mrs. Hodges' will provides neither for a simple or vulgar substitution under Article 859
of the Civil Code nor for a fideicommissary substitution under Article 863 thereof. There is no
vulgar substitution therein because there is no provision for either (1) predecease of the testator
by the designated heir or (2) refusal or (3) incapacity of the latter to accept the inheritance, as
required by Article 859; and neither is there a fideicommissary substitution therein because no
obligation is imposed thereby upon Hodges to preserve the estate or any part thereof for anyone
else. But from these premises, it is not correct to jump to the conclusion, as PCIB does, that the
testamentary dispositions in question are therefore inoperative and invalid.

The error in PCIB's position lies simply in the fact that it views the said disposition exclusively in
the light of substitutions covered by the Civil Code section on that subject, (Section 3, Chapter 2,
Title IV, Book III) when it is obvious that substitution occurs only when another heir is appointed
in a will "so that he may enter into inheritance in default of the heir originally instituted," (Article
857, id.) and, in the present case, no such possible default is contemplated. The brothers and
sisters of Mrs. Hodges are not substitutes for Hodges because, under her will, they are not to
inherit what Hodges cannot, would not or may not inherit, but what he would not dispose of from
his inheritance; rather, therefore, they are also heirs instituted simultaneously with Hodges,
subject, however, to certain conditions, partially resolutory insofar as Hodges was concerned and
correspondingly suspensive with reference to his brothers and sisters-in-law. It is partially
resolutory, since it bequeaths unto Hodges the whole of her estate to be owned and enjoyed by
him as universal and sole heir with absolute dominion over them6 only during his lifetime, which
means that while he could completely and absolutely dispose of any portion thereof inter vivos to
anyone other than himself, he was not free to do so mortis causa, and all his rights to what might
remain upon his death would cease entirely upon the occurrence of that contingency, inasmuch
as the right of his brothers and sisters-in-law to the inheritance, although vested already upon the
death of Mrs. Hodges, would automatically become operative upon the occurrence of the death
of Hodges in the event of actual existence of any remainder of her estate then.

Contrary to the view of respondent Magno, however, it was not the usufruct alone of her estate,
as contemplated in Article 869 of the Civil Code, that she bequeathed to Hodges during his
lifetime, but the full ownership thereof, although the same was to last also during his lifetime only,
even as there was no restriction whatsoever against his disposing or conveying the whole or any
portion thereof to anybody other than himself. The Court sees no legal impediment to this kind of
institution, in this jurisdiction or under Philippine law, except that it cannot apply to the legitime of
Hodges as the surviving spouse, consisting of one-half of the estate, considering that Mrs.
Hodges had no surviving ascendants nor descendants. (Arts. 872, 900, and 904, New Civil
Code.)

But relative precisely to the question of how much of Mrs. Hodges' share of the conjugal
partnership properties may be considered as her estate, the parties are in disagreement as to
how Article 16 of the Civil Code7 should be applied. On the one hand, petitioner claims that
inasmuch as Mrs. Hodges was a resident of the Philippines at the time of her death, under said
Article 16, construed in relation to the pertinent laws of Texas and the principle of renvoi, what
should be applied here should be the rules of succession under the Civil Code of the Philippines,
and, therefore, her estate could consist of no more than one-fourth of the said conjugal
properties, the other fourth being, as already explained, the legitime of her husband (Art. 900,
Civil Code) which she could not have disposed of nor burdened with any condition (Art. 872, Civil
Code). On the other hand, respondent Magno denies that Mrs. Hodges died a resident of the
Philippines, since allegedly she never changed nor intended to change her original residence of
birth in Texas, United States of America, and contends that, anyway, regardless of the question
of her residence, she being indisputably a citizen of Texas, under said Article 16 of the Civil
Code, the distribution of her estate is subject to the laws of said State which, according to her, do
not provide for any legitime, hence, the brothers and sisters of Mrs. Hodges are entitled to the
remainder of the whole of her share of the conjugal partnership properties consisting of one-half
thereof. Respondent Magno further maintains that, in any event, Hodges had renounced his
rights under the will in favor of his co-heirs, as allegedly proven by the documents touching on
the point already mentioned earlier, the genuineness and legal significance of which petitioner
seemingly questions. Besides, the parties are disagreed as to what the pertinent laws of Texas
provide. In the interest of settling the estates herein involved soonest, it would be best, indeed, if
these conflicting claims of the parties were determined in these proceedings. The Court regrets,
however, that it cannot do so, for the simple reason that neither the evidence submitted by the
parties in the court below nor their discussion, in their respective briefs and memoranda before
Us, of their respective contentions on the pertinent legal issues, of grave importance as they are,
appear to Us to be adequate enough to enable Us to render an intelligent comprehensive and
just resolution. For one thing, there is no clear and reliable proof of what in fact the possibly
applicable laws of Texas are. 7* Then also, the genuineness of documents relied upon by
respondent Magno is disputed. And there are a number of still other conceivable related issues
which the parties may wish to raise but which it is not proper to mention here. In Justice,
therefore, to all the parties concerned, these and all other relevant matters should first be
threshed out fully in the trial court in the proceedings hereafter to be held therein for the purpose
of ascertaining and adjudicating and/or distributing the estate of Mrs. Hodges to her heirs in
accordance with her duly probated will.

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

It should be borne in mind that as above-indicated, the question of what are the laws of Texas
governing the matters herein issue is, in the first instance, one of fact, not of law. Elementary is
the rule that foreign laws may not be taken judicial notice of and have to be proven like any other
fact in dispute between the parties in any proceeding, with the rare exception in instances when
the said laws are already within the actual knowledge of the court, such as when they are well
and generally known or they have been actually ruled upon in other cases before it and none of
the parties concerned do not claim otherwise. (5 Moran, Comments on the Rules of Court, p. 41,
1970 ed.) In Fluemer vs. Hix, 54 Phil. 610, it was held:

It is the theory of the petitioner that the alleged will was executed in Elkins West Virginia, on
November 3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of West
Virginia govern. To this end, there was submitted a copy of section 3868 of Acts 1882, c. 84 as
found in West Virginia Code, Annotated, by Hogg Charles E., vol. 2, 1914, p. 1960, and as
certified to by the Director of the National Library. But this was far from a compliance with the
law. The laws of a foreign jurisdiction do not prove themselves in our courts. The courts of the
Philippine Islands are not authorized to take judicial notice of the laws of the various States of the
American Union. Such laws must be proved as facts. (In re Estate of Johnson [1918], 39 Phil.,
156.) Here the requirements of the law were not met. There was no showing that the book from
which an extract was taken was printed or published under the authority of the State of West
Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from the
law attested by the certificate of the officer having charge of the original, under the seal of the
State of West Virginia, as provided in section 301 of the Code of Civil Procedure. No evidence
was introduced to show that the extract from the laws of West Virginia was in force at the time
the alleged will was executed."

No evidence of the nature thus suggested by the Court may be found in the records of the cases
at bar. Quite to the contrary, the parties herein have presented opposing versions in their
respective pleadings and memoranda regarding the matter. And even if We took into account
that in Aznar vs. Garcia, the Court did make reference to certain provisions regarding succession
in the laws of Texas, the disparity in the material dates of that case and the present ones would
not permit Us to indulge in the hazardous conjecture that said provisions have not been
amended or changed in the meantime.

On the other hand, in In re Estate of Johnson, 39 Phil. 156, We held:

Upon the other point — as to whether the will was executed in conformity with the
statutes of the State of Illinois — we note that it does not affirmatively appear
from the transcription of the testimony adduced in the trial court that any witness
was examined with reference to the law of Illinois on the subject of the execution
of will. The trial judge no doubt was satisfied that the will was properly executed
by examining section 1874 of the Revised Statutes of Illinois, as exhibited in
 volume 3 of Starr & Curtis's Annotated Illinois Statutes, 2nd ed., p. 426; and he
may have assumed that he could take judicial notice of the laws of Illinois under
section 275 of the Code of Civil Procedure. If so, he was in our opinion mistaken.
That section authorizes the courts here to take judicial notice, among other
things, of the acts of the legislative department of the United States. These words
clearly have reference to Acts of the Congress of the United States; and we
would hesitate to hold that our courts can, under this provision, take judicial
notice of the multifarious laws of the various American States. Nor do we think
that any such authority can be derived from the broader language, used in the
same section, where it is said that our courts may take judicial notice of matters
of public knowledge "similar" to those therein enumerated. The proper rule we
think is to require proof of the statutes of the States of the American Union
whenever their provisions are determinative of the issues in any action litigated in
the Philippine courts.

Nevertheless, even supposing that the trial court may have erred in taking judicial
notice of the law of Illinois on the point in question, such error is not now available
to the petitioner, first, because the petition does not state any fact from which it
would appear that the law of Illinois is different from what the court found, and,
secondly, because the assignment of error and argument for the appellant in this
court raises no question based on such supposed error. Though the trial court
may have acted upon pure conjecture as to the law prevailing in the State of
Illinois, its judgment could not be set aside, even upon application made within
six months under section 113 of the Code of Civil Procedure, unless it should be
made to appear affirmatively that the conjecture was wrong. The petitioner, it is
true, states in general terms that the will in question is invalid and inadequate to
pass real and personal property in the State of Illinois, but this is merely a
conclusion of law. The affidavits by which the petition is accompanied contain no
reference to the subject, and we are cited to no authority in the appellant's brief
which might tend to raise a doubt as to the correctness of the conclusion of the
trial court. It is very clear, therefore, that this point cannot be urged as of serious
moment.

It is implicit in the above ruling that when, with respect to certain aspects of the foreign laws
concerned, the parties in a given case do not have any controversy or are more or less in
agreement, the Court may take it for granted for the purposes of the particular case before it that
the said laws are as such virtual agreement indicates, without the need of requiring the
presentation of what otherwise would be the competent evidence on the point. Thus, in the
instant cases wherein it results from the respective contentions of both parties that even if the
pertinent laws of Texas were known and to be applied, the amount of the inheritance pertaining
to the heirs of Mrs. Hodges is as We have fixed above, the absence of evidence to the effect
that, actually and in fact, under said laws, it could be otherwise is of no longer of any
consequence, unless the purpose is to show that it could be more. In other words, since PCIB,
the petitioner-appellant, concedes that upon application of Article 16 of the Civil Code and the
pertinent laws of Texas, the amount of the estate in controversy is just as We have determined it
to be, and respondent-appellee is only claiming, on her part, that it could be more, PCIB may not
now or later pretend differently.

To be more concrete, on pages 20-21 of its petition herein, dated July 31, 1967, PCIB states
categorically:

Inasmuch as Article 16 of the Civil Code provides that "intestate and

testamentary successions both with respect to the order of succession and to the
amount of successional rights and to the intrinsic validity of testamentary
provisions, shall be regulated by the national law of the person whose succession
is under consideration, whatever may be the nature of the property and
regardless of the country wherein said property may be found", while the law of
 Texas (the Hodges spouses being nationals of U.S.A., State of Texas), in its
conflicts of law rules, provides that the domiciliary law (in this case Philippine law)
governs the testamentary dispositions and successional rights over movables or
personal properties, while the law of the situs (in this case also Philippine law
with respect to all Hodges properties located in the Philippines), governs with
respect to immovable properties, and applying therefore the 'renvoi doctrine' as
enunciated and applied by this Honorable Court in the case of In re Estate of
Christensen (G.R. No. L-16749, Jan. 31, 1963), there can be no question that
Philippine law governs the testamentary dispositions contained in the Last Will
and Testament of the deceased Linnie Jane Hodges, as well as the successional
rights to her estate, both with respect to movables, as well as to immovables
situated in the Philippines.

In its main brief dated February 26, 1968, PCIB asserts:

The law governing successional rights.

As recited above, there is no question that the deceased, Linnie Jane Hodges,
was an American citizen. There is also no question that she was a national of the
State of Texas, U.S.A. Again, there is likewise no question that she had her
domicile of choice in the City of Iloilo, Philippines, as this has already been
pronounced by the above-cited orders of the lower court, pronouncements which
are by now res adjudicata (par. [a], See. 49, Rule 39, Rules of Court; In re Estate
of Johnson, 39 Phil. 156).

Article 16 of the Civil Code provides:

"Real property as well as personal property is subject to the law of the country
where it is situated.

However, intestate and testamentary successions, both with respect to the order
of succession and to the amount of successional rights and to the intrinsic validity
of testamentary provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may be the nature of the
property and regardless of the country wherein said property may be found."

Thus the aforecited provision of the Civil Code points towards the national law of
the deceased, Linnie Jane Hodges, which is the law of Texas, as governing
succession "both with respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary provisions ...". But
the law of Texas, in its conflicts of law rules, provides that the domiciliary law
governs the testamentary dispositions and successional rights over movables or
personal property, while the law of the situs governs with respect to immovable
property. Such that with respect to both movable property, as well as immovable
property situated in the Philippines, the law of Texas points to the law of the
Philippines.

Applying, therefore, the so-called "renvoi doctrine", as enunciated and applied by

this Honorable Court in the case of "In re Christensen" (G.R. No. L-16749, Jan.
31, 1963), there can be no question that Philippine law governs the testamentary
provisions in the Last Will and Testament of the deceased Linnie Jane Hodges,
as well as the successional rights to her estate, both with respect to movables, as
well as immovables situated in the Philippines.

The subject of successional rights.

 Under Philippine law, as it is under the law of Texas, the conjugal or community
property of the spouses, Charles Newton Hodges and Linnie Jane Hodges, upon
the death of the latter, is to be divided into two, one-half pertaining to each of the
spouses, as his or her own property. Thus, upon the death of Linnie Jane
Hodges, one-half of the conjugal partnership property immediately pertained to
Charles Newton Hodges as his own share, and not by virtue of any successional
rights. There can be no question about this.

Again, Philippine law, or more specifically, Article 900 of the Civil Code provides:

If the only survivor is the widow or widower, she or he shall be

entitled to one-half of the hereditary estate of the deceased
spouse, and the testator may freely dispose of the other half.

If the marriage between the surviving spouse and the testator was
solemnized in articulo mortis, and the testator died within three
months from the time of the marriage, the legitime of the surviving
spouse as the sole heir shall be one-third of the hereditary estate,
except when they have been living as husband and wife for more
than five years. In the latter case, the legitime of the surviving
spouse shall be that specified in the preceding paragraph.

This legitime of the surviving spouse cannot be burdened by a fideicommisary

substitution (Art. 864, Civil code), nor by any charge, condition, or substitution
(Art, 872, Civil code). It is clear, therefore, that in addition to one-half of the
conjugal partnership property as his own conjugal share, Charles Newton
Hodges was also immediately entitled to one-half of the half conjugal share of the
deceased, Linnie Jane Hodges, or one-fourth of the entire conjugal property, as
his legitime.

One-fourth of the conjugal property therefore remains at issue.

In the summary of its arguments in its memorandum dated April 30, 1968, the following appears:

Briefly, the position advanced by the petitioner is:

a. That the Hodges spouses were domiciled legally in the Philippines (pp. 19-20,
petition). This is now a matter of res adjudicata (p. 20, petition).

b. That under Philippine law, Texas law, and the renvoi doctrine, Philippine law
governs the successional rights over the properties left by the deceased, Linnie
Jane Hodges (pp. 20-21, petition).

c. That under Philippine as well as Texas law, one-half of the Hodges properties
pertains to the deceased, Charles Newton Hodges (p. 21, petition). This is not
questioned by the respondents.

d. That under Philippine law, the deceased, Charles Newton Hodges,

automatically inherited one-half of the remaining one-half of the Hodges
properties as his legitime (p. 21, petition).

e. That the remaining 25% of the Hodges properties was inherited by the
deceased, Charles Newton Hodges, under the will of his deceased spouse (pp.
22-23, petition). Upon the death of Charles Newton Hodges, the substitution
 'provision of the will of the deceased, Linnie Jane Hodges, did not operate
because the same is void (pp. 23-25, petition).

f. That the deceased, Charles Newton Hodges, asserted his sole ownership of
the Hodges properties and the probate court sanctioned such assertion (pp. 25-
29, petition). He in fact assumed such ownership and such was the status of the
properties as of the time of his death (pp. 29-34, petition).

Of similar tenor are the allegations of PCIB in some of its pleadings quoted in the earlier part of
this option.

On her part, it is respondent-appellee Magno's posture that under the laws of Texas, there is no
system of legitime, hence the estate of Mrs. Hodges should be one-half of all the conjugal
properties.

It is thus unquestionable that as far as PCIB is concerned, the application to these cases of
Article 16 of the Civil Code in relation to the corresponding laws of Texas would result in that the
Philippine laws on succession should control. On that basis, as We have already explained
above, the estate of Mrs. Hodges is the remainder of one-fourth of the conjugal partnership
properties, considering that We have found that there is no legal impediment to the kind of
disposition ordered by Mrs. Hodges in her will in favor of her brothers and sisters and, further,
that the contention of PCIB that the same constitutes an inoperative testamentary substitution is
untenable. As will be recalled, PCIB's position that there is no such estate of Mrs. Hodges is
predicated exclusively on two propositions, namely: (1) that the provision in question in Mrs.
Hodges' testament violates the rules on substitution of heirs under the Civil Code and (2) that, in
any event, by the orders of the trial court of May 27, and December 14, 1957, the trial court had
already finally and irrevocably adjudicated to her husband the whole free portion of her estate to
the exclusion of her brothers and sisters, both of which poses, We have overruled. Nowhere in its
pleadings, briefs and memoranda does PCIB maintain that the application of the laws of Texas
would result in the other heirs of Mrs. Hodges not inheriting anything under her will. And since
PCIB's representations in regard to the laws of Texas virtually constitute admissions of fact which
the other parties and the Court are being made to rely and act upon, PCIB is "not permitted to
contradict them or subsequently take a position contradictory to or inconsistent with them." (5
Moran, id, p. 65, citing Cunanan vs. Amparo, 80 Phil. 227; Sta. Ana vs. Maliwat, L-23023, Aug.
31, 1968, 24 SCRA 1018).

Accordingly, the only question that remains to be settled in the further proceedings hereby
ordered to be held in the court below is how much more than as fixed above is the estate of Mrs.
Hodges, and this would depend on (1) whether or not the applicable laws of Texas do provide in
effect for more, such as, when there is no legitime provided therein, and (2) whether or not
Hodges has validly waived his whole inheritance from Mrs. Hodges.

In the course of the deliberations, it was brought out by some members of the Court that to avoid
or, at least, minimize further protracted legal controversies between the respective heirs of the
Hodges spouses, it is imperative to elucidate on the possible consequences of dispositions made
by Hodges after the death of his wife from the mass of the unpartitioned estates without any
express indication in the pertinent documents as to whether his intention is to dispose of part of
his inheritance from his wife or part of his own share of the conjugal estate as well as of those
made by PCIB after the death of Hodges. After a long discussion, the consensus arrived at was
as follows: (1) any such dispositions made gratuitously in favor of third parties, whether these be
individuals, corporations or foundations, shall be considered as intended to be of properties
constituting part of Hodges' inheritance from his wife, it appearing from the tenor of his motions
of May 27 and December 11, 1957 that in asking for general authority to make sales or other
disposals of properties under the jurisdiction of the court, which include his own share of the
conjugal estate, he was not invoking particularly his right over his own share, but rather his right
to dispose of any part of his inheritance pursuant to the will of his wife; (2) as regards sales,
exchanges or other remunerative transfers, the proceeds of such sales or the properties taken in
by virtue of such exchanges, shall be considered as merely the products of "physical changes" of
the properties of her estate which the will expressly authorizes Hodges to make, provided that
whatever of said products should remain with the estate at the time of the death of Hodges
should go to her brothers and sisters; (3) the dispositions made by PCIB after the death of
Hodges must naturally be deemed as covering only the properties belonging to his estate
considering that being only the administrator of the estate of Hodges, PCIB could not have
disposed of properties belonging to the estate of his wife. Neither could such dispositions be
considered as involving conjugal properties, for the simple reason that the conjugal partnership
automatically ceased when Mrs. Hodges died, and by the peculiar provision of her will, under
discussion, the remainder of her share descended also automatically upon the death of Hodges
to her brothers and sisters, thus outside of the scope of PCIB's administration. Accordingly, these
construction of the will of Mrs. Hodges should be adhered to by the trial court in its final order of
adjudication and distribution and/or partition of the two estates in question.

THE APPEALS

A cursory examination of the seventy-eight assignments of error in appellant PCIB's brief would
readily reveal that all of them are predicated mainly on the contention that inasmuch as Hodges
had already adjudicated unto himself all the properties constituting his wife's share of the
conjugal partnership, allegedly with the sanction of the trial court per its order of December 14,
1957, there has been, since said date, no longer any estate of Mrs. Hodges of which appellee
Magno could be administratrix, hence the various assailed orders sanctioning her actuations as
such are not in accordance with law. Such being the case, with the foregoing resolution holding
such posture to be untenable in fact and in law and that it is in the best interest of justice that for
the time being the two estates should be administered conjointly by the respective administrators
of the two estates, it should follow that said assignments of error have lost their fundamental
reasons for being. There are certain matters, however, relating peculiarly to the respective orders
in question, if commonly among some of them, which need further clarification. For instance,
some of them authorized respondent Magno to act alone or without concurrence of PCIB. And
with respect to many of said orders, PCIB further claims that either the matters involved were not
properly within the probate jurisdiction of the trial court or that the procedure followed was not in
accordance with the rules. Hence, the necessity of dealing separately with the merits of each of
the appeals.

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

Going back to the appeals, it is perhaps best to begin first with what appears to Our mind to be
the simplest, and then proceed to the more complicated ones in that order, without regard to the
numerical sequence of the assignments of error in appellant's brief or to the order of the
discussion thereof by counsel.

Assignments of error numbers

LXXII, LXXVII and LXXVIII.

These assignments of error relate to (1) the order of the trial court of August 6, 1965 providing
that "the deeds of sale (therein referred to involving properties in the name of Hodges) should be
signed jointly by the PCIB, as Administrator of Testate Estate of C.N. Hodges, and Avelina A.
Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges, and to this effect, the
PCIB should take the necessary steps so that Administratrix Avelina A. Magno could sign the
deeds of sale," (p. 248, Green Rec. on Appeal) (2) the order of October 27, 1965 denying the
motion for reconsideration of the foregoing order, (pp. 276-277, id.) (3) the other order also dated
October 27, 1965 enjoining inter alia, that "(a) all cash collections should be deposited in the joint
account of the estate of Linnie Jane Hodges and estate of C. N. Hodges, (b) that whatever cash
collections (that) had been deposited in the account of either of the estates should be withdrawn
and since then (sic) deposited in the joint account of the estate of Linnie Jane Hodges and the
estate of C. N. Hodges; ... (d) (that) Administratrix Magno — allow the PCIB to inspect whatever
records, documents and papers she may have in her possession, in the same manner that
Administrator PCIB is also directed to allow Administratrix Magno to inspect whatever records,
documents and papers it may have in its possession" and "(e) that the accountant of the estate
of Linnie Jane Hodges shall have access to all records of the transactions of both estates for the
protection of the estate of Linnie Jane Hodges; and in like manner, the accountant or any
authorized representative of the estate of C. N. Hodges shall have access to the records of
transactions of the Linnie Jane Hodges estate for the protection of the estate of C. N. Hodges",
(pp. 292-295, id.) and (4) the order of February 15, 1966, denying, among others, the motion for
reconsideration of the order of October 27, 1965 last referred to. (pp. 455-456, id.)

As may be readily seen, the thrust of all these four impugned orders is in line with the Court's
above-mentioned resolution of September 8, 1972 modifying the injunction previously issued on
August 8, 1967, and, more importantly, with what We have said the trial court should have
always done pending the liquidation of the conjugal partnership of the Hodges spouses. In fact,
as already stated, that is the arrangement We are ordering, by this decision, to be followed.
Stated differently, since the questioned orders provide for joint action by the two administrators,
and that is precisely what We are holding out to have been done and should be done until the
two estates are separated from each other, the said orders must be affirmed. Accordingly the
foregoing assignments of error must be, as they are hereby overruled.

Assignments of error Numbers LXVIII

to LXXI and LXXIII to LXXVI.

The orders complained of under these assignments of error commonly deal with expenditures
made by appellee Magno, as Administratrix of the Estate of Mrs. Hodges, in connection with her
administration thereof, albeit additionally, assignments of error Numbers LXIX to LXXI put into
question the payment of attorneys fees provided for in the contract for the purpose, as
constituting, in effect, premature advances to the heirs of Mrs. Hodges.

More specifically, assignment Number LXXIII refers to reimbursement of overtime pay paid to six
employees of the court and three other persons for services in copying the court records to
enable the lawyers of the administration to be fully informed of all the incidents in the
proceedings. The reimbursement was approved as proper legal expenses of administration per
the order of December 19, 1964, (pp. 221-222, id.) and repeated motions for reconsideration
thereof were denied by the orders of January 9, 1965, (pp. 231-232, id.) October 27, 1965, (p.
277, id.) and February 15, 1966. (pp. 455-456, id.) On the other hand, Assignments Numbers
LXVIII to LXXI, LXXIV and LXXV question the trial court's order of November 3, 1965 approving
the agreement of June 6, 1964 between Administratrix Magno and James L. Sullivan, attorney-
in-fact of the heirs of Mrs. Hodges, as Parties of the First Part, and Attorneys Raul Manglapus
and Rizal R. Quimpo, as Parties of the Second Part, regarding attorneys fees for said counsel
who had agreed "to prosecute and defend their interests (of the Parties of the First Part) in
certain cases now pending litigation in the Court of First Instance of Iloilo —, more specifically in
Special Proceedings 1307 and 1672 —" (pp. 126-129, id.) and directing Administratrix Magno "to
issue and sign whatever check or checks maybe needed to implement the approval of the
agreement annexed to the motion" as well as the "administrator of the estate of C. N. Hodges —
to countersign the said check or checks as the case maybe." (pp. 313-320, id.), reconsideration
of which order of approval was denied in the order of February 16, 1966, (p. 456, id.) Assignment
Number LXXVI imputes error to the lower court's order of October 27, 1965, already referred to
above, insofar as it orders that "PCIB should counter sign the check in the amount of P250 in
favor of Administratrix Avelina A. Magno as her compensation as administratrix of Linnie Jane
Hodges estate chargeable to the Testate Estate of Linnie Jane Hodges only." (p. 294, id.)

Main contention again of appellant PCIB in regard to these eight assigned errors is that there is
no such estate as the estate of Mrs. Hodges for which the questioned expenditures were made,
hence what were authorized were in effect expenditures from the estate of Hodges. As We have
already demonstrated in Our resolution above of the petition for certiorari and prohibition, this
posture is incorrect. Indeed, in whichever way the remaining issues between the parties in these
cases are ultimately resolved, 10 the final result will surely be that there are properties constituting
the estate of Mrs. Hodges of which Magno is the current administratrix. It follows, therefore, that
said appellee had the right, as such administratrix, to hire the persons whom she paid overtime
pay and to be paid for her own services as administratrix. That she has not yet collected and is
not collecting amounts as substantial as that paid to or due appellant PCIB is to her credit.

Of course, she is also entitled to the services of counsel and to that end had the authority to
enter into contracts for attorney's fees in the manner she had done in the agreement of June 6,
1964. And as regards to the reasonableness of the amount therein stipulated, We see no reason
to disturb the discretion exercised by the probate court in determining the same. We have gone
over the agreement, and considering the obvious size of the estate in question and the nature of
the issues between the parties as well as the professional standing of counsel, We cannot say
that the fees agreed upon require the exercise by the Court of its inherent power to reduce it.

PCIB insists, however, that said agreement of June 6, 1964 is not for legal services to the estate
but to the heirs of Mrs. Hodges, or, at most, to both of them, and such being the case, any
payment under it, insofar as counsels' services would redound to the benefit of the heirs, would
be in the nature of advances to such heirs and a premature distribution of the estate. Again, We
hold that such posture cannot prevail.

Upon the premise We have found plausible that there is an existing estate of Mrs. Hodges, it
results that juridically and factually the interests involved in her estate are distinct and different
from those involved in her estate of Hodges and vice versa. Insofar as the matters related
exclusively to the estate of Mrs. Hodges, PCIB, as administrator of the estate of Hodges, is a
complete stranger and it is without personality to question the actuations of the administratrix
thereof regarding matters not affecting the estate of Hodges. Actually, considering the obviously
considerable size of the estate of Mrs. Hodges, We see no possible cause for apprehension that
when the two estates are segregated from each other, the amount of attorney's fees stipulated in
the agreement in question will prejudice any portion that would correspond to Hodges' estate.

And as regards the other heirs of Mrs. Hodges who ought to be the ones who should have a say
on the attorney's fees and other expenses of administration assailed by PCIB, suffice it to say
that they appear to have been duly represented in the agreement itself by their attorney-in-fact,
James L. Sullivan and have not otherwise interposed any objection to any of the expenses
incurred by Magno questioned by PCIB in these appeals. As a matter of fact, as ordered by the
trial court, all the expenses in question, including the attorney's fees, may be paid without
awaiting the determination and segregation of the estate of Mrs. Hodges.

Withal, the weightiest consideration in connection with the point under discussion is that at this
stage of the controversy among the parties herein, the vital issue refers to the existence or non-
existence of the estate of Mrs. Hodges. In this respect, the interest of respondent Magno, as the
appointed administratrix of the said estate, is to maintain that it exists, which is naturally common
and identical with and inseparable from the interest of the brothers and sisters of Mrs. Hodges.
Thus, it should not be wondered why both Magno and these heirs have seemingly agreed to
retain but one counsel. In fact, such an arrangement should be more convenient and economical
to both. The possibility of conflict of interest between Magno and the heirs of Mrs. Hodges would
be, at this stage, quite remote and, in any event, rather insubstantial. Besides, should any
substantial conflict of interest between them arise in the future, the same would be a matter that
the probate court can very well take care of in the course of the independent proceedings in
Case No. 1307 after the corresponding segregation of the two subject estates. We cannot
perceive any cogent reason why, at this stage, the estate and the heirs of Mrs. Hodges cannot
be represented by a common counsel.

Now, as to whether or not the portion of the fees in question that should correspond to the heirs
constitutes premature partial distribution of the estate of Mrs. Hodges is also a matter in which
neither PCIB nor the heirs of Hodges have any interest. In any event, since, as far as the records
show, the estate has no creditors and the corresponding estate and inheritance taxes, except
those of the brothers and sisters of Mrs. Hodges, have already been paid, 11 no prejudice can
caused to anyone by the comparatively small amount of attorney's fees in question. And in this
connection, it may be added that, although strictly speaking, the attorney's fees of the counsel of
an administrator is in the first instance his personal responsibility, reimbursable later on by the
estate, in the final analysis, when, as in the situation on hand, the attorney-in-fact of the heirs has
given his conformity thereto, it would be idle effort to inquire whether or not the sanction given to
said fees by the probate court is proper.

For the foregoing reasons, Assignments of Error LXVIII to LXXI and LXXIII to LXXVI should be
as they are hereby overruled.

Assignments of error I to IV,

XIII to XV, XXII to XXV, XXXV
to XXX VI, XLI to XLIII and L.
These assignments of error deal with the approval by the trial court of various deeds of sale of
real properties registered in the name of Hodges but executed by appellee Magno, as
Administratrix of the Estate of Mrs. Hodges, purportedly in implementation of corresponding
supposed written "Contracts to Sell" previously executed by Hodges during the interim between
May 23, 1957, when his wife died, and December 25, 1962, the day he died. As stated on pp.
118-120 of appellant's main brief, "These are: the, contract to sell between the deceased,
Charles Newton Hodges, and the appellee, Pepito G. Iyulores executed on February 5, 1961; the
contract to sell between the deceased, Charles Newton Hodges, and the appellant Esperidion
Partisala, executed on April 20, 1960; the contract to sell between the deceased, Charles
Newton Hodges, and the appellee, Winifredo C. Espada, executed on April 18, 1960; the
contract to sell between the deceased, Charles Newton Hodges, and the appellee, Rosario
Alingasa, executed on August 25, 1958; the contract to sell between the deceased, Charles
Newton Hodges, and the appellee, Lorenzo Carles, executed on June 17, 1958; the contract to
sell between the deceased, Charles Newton Hodges, and the appellee, Salvador S. Guzman,
executed on September 13, 1960; the contract to sell between the deceased, Charles Newton
Hodges, and the appellee, Florenia Barrido, executed on February 21, 1958; the contract to sell
between the deceased, Charles Newton Hodges, and the appellee, Purificacion Coronado,
executed on August 14, 1961; the contract to sell between the deceased, Charles Newton
Hodges, and the appellee, Graciano Lucero, executed on November 27, 1961; the contract to
sell between the deceased, Charles Newton Hodges, and the appellee, Ariteo Thomas Jamir,
executed on May 26, 1961; the contract to sell between the deceased, Charles Newton Hodges,
and the appellee, Melquiades Batisanan, executed on June 9, 1959; the contract to sell between
the deceased, Charles Newton Hodges, and the appellee, Belcezar Causing, executed on
February 10, 1959 and the contract to sell between the deceased, Charles Newton Hodges, and
the appellee, Adelfa Premaylon, executed on October 31, 1959, re Title No. 13815."

Relative to these sales, it is the position of appellant PCIB that, inasmuch as pursuant to the will
of Mrs. Hodges, her husband was to have dominion over all her estate during his lifetime, it was
as absolute owner of the properties respectively covered by said sales that he executed the
aforementioned contracts to sell, and consequently, upon his death, the implementation of said
contracts may be undertaken only by the administrator of his estate and not by the administratrix
of the estate of Mrs. Hodges. Basically, the same theory is invoked with particular reference to
five other sales, in which the respective "contracts to sell" in favor of these appellees were
executed by Hodges before the death of his wife, namely, those in favor of appellee Santiago
Pacaonsis, Alfredo Catedral, Jose Pablico, Western Institute of Technology and Adelfa
Premaylon.

Anent those deeds of sale based on promises or contracts to sell executed by Hodges after the
death of his wife, those enumerated in the quotation in the immediately preceding paragraph, it is
quite obvious that PCIB's contention cannot be sustained. As already explained earlier, 11* all
proceeds of remunerative transfers or dispositions made by Hodges after the death of his wife
should be deemed as continuing to be parts of her estate and, therefore, subject to the terms of
her will in favor of her brothers and sisters, in the sense that should there be no showing that
such proceeds, whether in cash or property have been subsequently conveyed or assigned
subsequently by Hodges to any third party by acts inter vivos with the result that they could not
thereby belong to him anymore at the time of his death, they automatically became part of the
inheritance of said brothers and sisters. The deeds here in question involve transactions which
are exactly of this nature. Consequently, the payments made by the appellees should be
considered as payments to the estate of Mrs. Hodges which is to be distributed and partitioned
among her heirs specified in the will.

The five deeds of sale predicated on contracts to sell executed Hodges during the lifetime of his
wife, present a different situation. At first blush, it would appear that as to them, PCIB's position
has some degree of plausibility. Considering, however, that the adoption of PCIB's theory would
necessarily have tremendous repercussions and would bring about considerable disturbance of
property rights that have somehow accrued already in favor of innocent third parties, the five
purchasers aforenamed, the Court is inclined to take a pragmatic and practical view of the legal
situation involving them by overlooking the possible technicalities in the way, the non-observance
of which would not, after all, detract materially from what should substantially correspond to each
and all of the parties concerned.

To start with, these contracts can hardly be ignored. Bona fide third parties are involved; as much
as possible, they should not be made to suffer any prejudice on account of judicial controversies
not of their own making. What is more, the transactions they rely on were submitted by them to
the probate court for approval, and from already known and recorded actuations of said court
then, they had reason to believe that it had authority to act on their motions, since appellee
Magno had, from time to time prior to their transactions with her, been allowed to act in her
capacity as administratrix of one of the subject estates either alone or conjointly with PCIB. All
the sales in question were executed by Magno in 1966 already, but before that, the court had
previously authorized or otherwise sanctioned expressly many of her act as administratrix
involving expenditures from the estate made by her either conjointly with or independently from
PCIB, as Administrator of the Estate of Hodges. Thus, it may be said that said buyers-appellees
merely followed precedents in previous orders of the court. Accordingly, unless the impugned
orders approving those sales indubitably suffer from some clearly fatal infirmity the Court would
rather affirm them.

It is quite apparent from the record that the properties covered by said sales are equivalent only
to a fraction of what should constitute the estate of Mrs. Hodges, even if it is assumed that the
same would finally be held to be only one-fourth of the conjugal properties of the spouses as of
the time of her death or, to be more exact, one-half of her estate as per the inventory submitted
by Hodges as executor, on May 12, 1958. In none of its numerous, varied and voluminous
pleadings, motions and manifestations has PCIB claimed any possibility otherwise. Such being
the case, to avoid any conflict with the heirs of Hodges, the said properties covered by the
questioned deeds of sale executed by appellee Magno may be treated as among those
corresponding to the estate of Mrs. Hodges, which would have been actually under her control
and administration had Hodges complied with his duty to liquidate the conjugal partnership.
Viewing the situation in that manner, the only ones who could stand to be prejudiced by the
appealed orders referred to in the assignment of errors under discussion and who could,
therefore, have the requisite interest to question them would be only the heirs of Mrs. Hodges,
definitely not PCIB.

It is of no moment in what capacity Hodges made the "contracts to sell' after the death of his
wife. Even if he had acted as executor of the will of his wife, he did not have to submit those
contracts to the court nor follow the provisions of the rules, (Sections 2, 4, 5, 6, 8 and 9 of Rule
89 quoted by appellant on pp. 125 to 127 of its brief) for the simple reason that by the very
orders, much relied upon by appellant for other purposes, of May 27, 1957 and December 14,
1957, Hodges was "allowed or authorized" by the trial court "to continue the business in which he
was engaged and to perform acts which he had been doing while the deceased was living",
(Order of May 27) which according to the motion on which the court acted was "of buying and
selling personal and real properties", and "to execute subsequent sales, conveyances, leases
and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance
with the wishes conveyed in the last will and testament of the latter." (Order of December 14) In
other words, if Hodges acted then as executor, it can be said that he had authority to do so by
virtue of these blanket orders, and PCIB does not question the legality of such grant of authority;
on the contrary, it is relying on the terms of the order itself for its main contention in these cases.
On the other hand, if, as PCIB contends, he acted as heir-adjudicatee, the authority given to him
by the aforementioned orders would still suffice.

As can be seen, therefore, it is of no moment whether the "contracts to sell" upon which the
deeds in question were based were executed by Hodges before or after the death of his wife. In
a word, We hold, for the reasons already stated, that the properties covered by the deeds being
assailed pertain or should be deemed as pertaining to the estate of Mrs. Hodges; hence, any
supposed irregularity attending the actuations of the trial court may be invoked only by her heirs,
not by PCIB, and since the said heirs are not objecting, and the defects pointed out not being
strictly jurisdictional in nature, all things considered, particularly the unnecessary disturbance of
rights already created in favor of innocent third parties, it is best that the impugned orders are not
disturbed.

In view of these considerations, We do not find sufficient merit in the assignments of error under
discussion.

Assignments of error V to VIII,

XVI to XVIII, XXVI to XXIX, XXXVII
to XXXVIII, XLIV to XLVI and LI.

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

Assignments of error IX to XII, XIX

to XXI, XXX to XXIV, XXXIX to XL,
XLVII to XLIX, LII and LIII to LXI.

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

Actually, contrary to the stand of PCIB, it is this last point regarding appellee Magno's having
agreed to ignore the cancellations made by PCIB and allowed the buyers-appellees to
consummate the sales in their favor that is decisive. Since We have already held that the
properties covered by the contracts in question should be deemed to be portions of the estate of
Mrs. Hodges and not that of Hodges, it is PCIB that is a complete stranger in these incidents.
Considering, therefore, that the estate of Mrs. Hodges and her heirs who are the real parties in
interest having the right to oppose the consummation of the impugned sales are not objecting,
and that they are the ones who are precisely urging that said sales be sanctioned, the
assignments of error under discussion have no basis and must accordingly be as they are
hereby overruled.

With particular reference to assignments LIII to LXI, assailing the orders of the trial court
requiring PCIB to surrender the respective owner's duplicate certificates of title over the
properties covered by the sales in question and otherwise directing the Register of Deeds of Iloilo
to cancel said certificates and to issue new transfer certificates of title in favor of the buyers-
appellees, suffice it to say that in the light of the above discussion, the trial court was within its
rights to so require and direct, PCIB having refused to give way, by withholding said owners'
duplicate certificates, of the corresponding registration of the transfers duly and legally approved
by the court.

Assignments of error LXII to LXVII

All these assignments of error commonly deal with the appeal against orders favoring appellee
Western Institute of Technology. As will be recalled, said institute is one of the buyers of real
property covered by a contract to sell executed by Hodges prior to the death of his wife. As of
October, 1965, it was in arrears in the total amount of P92,691.00 in the payment of its
installments on account of its purchase, hence it received under date of October 4, 1965 and
October 20, 1965, letters of collection, separately and respectively, from PCIB and appellee
Magno, in their respective capacities as administrators of the distinct estates of the Hodges
spouses, albeit, while in the case of PCIB it made known that "no other arrangement can be
accepted except by paying all your past due account", on the other hand, Magno merely said she
would "appreciate very much if you can make some remittance to bring this account up-to-date
and to reduce the amount of the obligation." (See pp. 295-311, Green R. on A.) On November 3,
1965, the Institute filed a motion which, after alleging that it was ready and willing to pay P20,000
on account of its overdue installments but uncertain whether it should pay PCIB or Magno, it
prayed that it be "allowed to deposit the aforesaid amount with the court pending resolution of the
conflicting claims of the administrators." Acting on this motion, on November 23, 1965, the trial
court issued an order, already quoted in the narration of facts in this opinion, holding that
payment to both or either of the two administrators is "proper and legal", and so "movant — can
pay to both estates or either of them", considering that "in both cases (Special Proceedings 1307
and 1672) there is as yet no judicial declaration of heirs nor distribution of properties to
whomsoever are entitled thereto."

The arguments under the instant assignments of error revolve around said order. From the
procedural standpoint, it is claimed that PCIB was not served with a copy of the Institute's
motion, that said motion was heard, considered and resolved on November 23, 1965, whereas
the date set for its hearing was November 20, 1965, and that what the order grants is different
from what is prayed for in the motion. As to the substantive aspect, it is contended that the matter
treated in the motion is beyond the jurisdiction of the probate court and that the order authorized
payment to a person other than the administrator of the estate of Hodges with whom the Institute
had contracted.

The procedural points urged by appellant deserve scant consideration. We must assume, absent
any clear proof to the contrary, that the lower court had acted regularly by seeing to it that
appellant was duly notified. On the other hand, there is nothing irregular in the court's having
resolved the motion three days after the date set for hearing the same. Moreover, the record
reveals that appellants' motion for reconsideration wherein it raised the same points was denied
by the trial court on March 7, 1966 (p. 462, Green R. on A.) Withal, We are not convinced that
the relief granted is not within the general intent of the Institute's motion.

Insofar as the substantive issues are concerned, all that need be said at this point is that they are
mere reiterations of contentions We have already resolved above adversely to appellants'
position. Incidentally, We may add, perhaps, to erase all doubts as to the propriety of not
disturbing the lower court's orders sanctioning the sales questioned in all these appeal s by
PCIB, that it is only when one of the parties to a contract to convey property executed by a
deceased person raises substantial objections to its being implemented by the executor or
administrator of the decedent's estate that Section 8 of Rule 89 may not apply and,
consequently, the matter has, to be taken up in a separate action outside of the probate court;
but where, as in the cases of the sales herein involved, the interested parties are in agreement
that the conveyance be made, it is properly within the jurisdiction of the probate court to give its
sanction thereto pursuant to the provisions of the rule just mentioned. And with respect to the
supposed automatic rescission clauses contained in the contracts to sell executed by Hodges in
favor of herein appellees, the effect of said clauses depend on the true nature of the said
contracts, despite the nomenclature appearing therein, which is not controlling, for if they amount
to actual contracts of sale instead of being mere unilateral accepted "promises to sell", (Art.
1479, Civil Code of the Philippines, 2nd paragraph) thepactum commissorium or the automatic
rescission provision would not operate, as a matter of public policy, unless there has been a
previous notarial or judicial demand by the seller (10 Manresa 263, 2nd ed.) neither of which
have been shown to have been made in connection with the transactions herein involved.

Consequently, We find no merit in the assignments of error

Number LXII to LXVII.

SUMMARY

Considering the fact that this decision is unusually extensive and that the issues herein taken up
and resolved are rather numerous and varied, what with appellant making seventy-eight
assignments of error affecting no less than thirty separate orders of the court a quo, if only to
facilitate proper understanding of the import and extent of our rulings herein contained, it is
perhaps desirable that a brief restatement of the whole situation be made together with our
conclusions in regard to its various factual and legal aspects. .

The instant cases refer to the estate left by the late Charles Newton Hodges as well as that of his
wife, Linnie Jane Hodges, who predeceased him by about five years and a half. In their
respective wills which were executed on different occasions, each one of them provided mutually
as follows: "I give, devise and bequeath all of the rest, residue and remainder (after funeral and
administration expenses, taxes and debts) of my estate, both real and personal, wherever
situated or located, to my beloved (spouse) to have and to hold unto (him/her) — during (his/her)
natural lifetime", subject to the condition that upon the death of whoever of them survived the
other, the remainder of what he or she would inherit from the other is "give(n), devise(d) and
bequeath(ed)" to the brothers and sisters of the latter.

Mrs. Hodges died first, on May 23, 1957. Four days later, on May 27, Hodges was appointed
special administrator of her estate, and in a separate order of the same date, he was "allowed or
authorized to continue the business in which he was engaged, (buying and selling personal and
real properties) and to perform acts which he had been doing while the deceased was living."
Subsequently, on December 14, 1957, after Mrs. Hodges' will had been probated and Hodges
had been appointed and had qualified as Executor thereof, upon his motion in which he asserted
that he was "not only part owner of the properties left as conjugal, but also, the successor to all
the properties left by the deceased Linnie Jane Hodges", the trial court ordered that "for the
reasons stated in his motion dated December 11, 1957, which the Court considers well taken, ...
all the sales, conveyances, leases and mortgages of all properties left by the deceased Linnie
Jane Hodges executed by the Executor, Charles Newton Hodges are hereby APPROVED. The
said Executor is further authorized to execute subsequent sales, conveyances, leases and
mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with
the wishes contained in the last will and testament of the latter."

Annually thereafter, Hodges submitted to the court the corresponding statements of account of
his administration, with the particularity that in all his motions, he always made it point to urge the
that "no person interested in the Philippines of the time and place of examining the herein
accounts be given notice as herein executor is the only devisee or legatee of the deceased in
accordance with the last will and testament already probated by the Honorable Court." All said
accounts approved as prayed for.

Nothing else appears to have been done either by the court a quo or Hodges until December 25,
1962. Importantly to be the provision in the will of Mrs. Hodges that her share of the conjugal
partnership was to be inherited by her husband "to have and to hold unto him, my said husband,
during his natural lifetime" and that "at the death of my said husband, I give, devise and
bequeath all the rest, residue and remainder of my estate, both real and personal, wherever
situated or located, to be equally divided among my brothers and sisters, share and share alike",
which provision naturally made it imperative that the conjugal partnership be promptly liquidated,
in order that the "rest, residue and remainder" of his wife's share thereof, as of the time of
Hodges' own death, may be readily known and identified, no such liquidation was ever
undertaken. The record gives no indication of the reason for such omission, although relatedly, it
appears therein:

1. That in his annual statement submitted to the court of the net worth of C. N.
Hodges and the Estate of Linnie Jane Hodges, Hodges repeatedly and
consistently reported the combined income of the conjugal partnership and then
merely divided the same equally between himself and the estate of the deceased
wife, and, more importantly, he also, as consistently, filed corresponding separate
income tax returns for each calendar year for each resulting half of such
combined income, thus reporting that the estate of Mrs. Hodges had its own
income distinct from his own.

2. That when the court a quo happened to inadvertently omit in its order probating
the will of Mrs. Hodges, the name of one of her brothers, Roy Higdon then
already deceased, Hodges lost no time in asking for the proper correction "in
order that the heirs of deceased Roy Higdon may not think or believe they were
omitted, and that they were really interested in the estate of the deceased Linnie
Jane Hodges".

3. That in his aforementioned motion of December 11, 1957, he expressly stated

that "deceased Linnie Jane Hodges died leaving no descendants or ascendants
except brothers and sisters and herein petitioner as the surviving spouse, to
inherit the properties of the decedent", thereby indicating that he was not
excluding his wife's brothers and sisters from the inheritance.

4. That Hodges allegedly made statements and manifestations to the United

States inheritance tax authorities indicating that he had renounced his inheritance
from his wife in favor of her other heirs, which attitude he is supposed to have
reiterated or ratified in an alleged affidavit subscribed and sworn to here in the
Philippines and in which he even purportedly stated that his reason for so
disclaiming and renouncing his rights under his wife's will was to "absolve (him)
or (his) estate from any liability for the payment of income taxes on income which
has accrued to the estate of Linnie Jane Hodges", his wife, since her death.

On said date, December 25, 1962, Hodges died. The very next day, upon motion of herein
respondent and appellee, Avelina A. Magno, she was appointed by the trial court as
Administratrix of the Testate Estate of Linnie Jane Hodges, in Special Proceedings No. 1307 and
as Special Administratrix of the estate of Charles Newton Hodges, "in the latter case, because
the last will of said Charles Newton Hodges is still kept in his vault or iron safe and that the real
and personal properties of both spouses may be lost, damaged or go to waste, unless Special
Administratrix is appointed," (Order of December 26, 1962, p. 27, Yellow R. on A.) although,
soon enough, on December 29, 1962, a certain Harold K. Davies was appointed as her Co-
Special Administrator, and when Special Proceedings No. 1672, Testate Estate of Charles
Newton Hodges, was opened, Joe Hodges, as next of kin of the deceased, was in due time
appointed as Co-Administrator of said estate together with Atty. Fernando P. Mirasol, to replace
Magno and Davies, only to be in turn replaced eventually by petitioner PCIB alone.

At the outset, the two probate proceedings appear to have been proceeding jointly, with each
administrator acting together with the other, under a sort of modus operandi. PCIB used to
secure at the beginning the conformity to and signature of Magno in transactions it wanted to
enter into and submitted the same to the court for approval as their joint acts. So did Magno do
likewise. Somehow, however, differences seem to have arisen, for which reason, each of them
began acting later on separately and independently of each other, with apparent sanction of the
trial court. Thus, PCIB had its own lawyers whom it contracted and paid handsomely, conducted
the business of the estate independently of Magno and otherwise acted as if all the properties
appearing in the name of Charles Newton Hodges belonged solely and only to his estate, to the
exclusion of the brothers and sisters of Mrs. Hodges, without considering whether or not in fact
any of said properties corresponded to the portion of the conjugal partnership pertaining to the
estate of Mrs. Hodges. On the other hand, Magno made her own expenditures, hired her own
lawyers, on the premise that there is such an estate of Mrs. Hodges, and dealth with some of the
properties, appearing in the name of Hodges, on the assumption that they actually correspond to
the estate of Mrs. Hodges. All of these independent and separate actuations of the two
administrators were invariably approved by the trial court upon submission. Eventually, the
differences reached a point wherein Magno, who was more cognizant than anyone else about
the ins and outs of the businesses and properties of the deceased spouses because of her long
and intimate association with them, made it difficult for PCIB to perform normally its functions as
administrator separately from her. Thus, legal complications arose and the present judicial
controversies came about.

Predicating its position on the tenor of the orders of May 27 and December 14, 1957 as well as
the approval by the court a quo of the annual statements of account of Hodges, PCIB holds to
the view that the estate of Mrs. Hodges has already been in effect closed with the virtual
adjudication in the mentioned orders of her whole estate to Hodges, and that, therefore, Magno
had already ceased since then to have any estate to administer and the brothers and sisters of
Mrs. Hodges have no interests whatsoever in the estate left by Hodges. Mainly upon such
theory, PCIB has come to this Court with a petition for certiorari and prohibition praying that the
lower court's orders allowing respondent Magno to continue acting as administratrix of the estate
of Mrs. Hodges in Special Proceedings 1307 in the manner she has been doing, as detailed
earlier above, be set aside. Additionally, PCIB maintains that the provision in Mrs. Hodges' will
instituting her brothers and sisters in the manner therein specified is in the nature of a
testamentary substitution, but inasmuch as the purported substitution is not, in its view, in
accordance with the pertinent provisions of the Civil Code, it is ineffective and may not be
enforced. It is further contended that, in any event, inasmuch as the Hodges spouses were both
residents of the Philippines, following the decision of this Court in Aznar vs. Garcia, or the case
of Christensen, 7 SCRA 95, the estate left by Mrs. Hodges could not be more than one-half of
her share of the conjugal partnership, notwithstanding the fact that she was citizen of Texas,
U.S.A., in accordance with Article 16 in relation to Articles 900 and 872 of the Civil Code. Initially,
We issued a preliminary injunction against Magno and allowed PCIB to act alone.

At the same time PCIB has appealed several separate orders of the trial court approving
individual acts of appellee Magno in her capacity as administratrix of the estate of Mrs. Hodges,
such as, hiring of lawyers for specified fees and incurring expenses of administration for different
purposes and executing deeds of sale in favor of her co-appellees covering properties which are
still registered in the name of Hodges, purportedly pursuant to corresponding "contracts to sell"
executed by Hodges. The said orders are being questioned on jurisdictional and procedural
grounds directly or indirectly predicated on the principal theory of appellant that all the properties
of the two estates belong already to the estate of Hodges exclusively.

On the other hand, respondent-appellee Magno denies that the trial court's orders of May 27 and
December 14, 1957 were meant to be finally adjudicatory of the hereditary rights of Hodges and
contends that they were no more than the court's general sanction of past and future acts of
Hodges as executor of the will of his wife in due course of administration. As to the point
regarding substitution, her position is that what was given by Mrs. Hodges to her husband under
the provision in question was a lifetime usufruct of her share of the conjugal partnership, with the
naked ownership passing directly to her brothers and sisters. Anent the application of Article 16
of the Civil Code, she claims that the applicable law to the will of Mrs. Hodges is that of Texas
under which, she alleges, there is no system of legitime, hence, the estate of Mrs. Hodges
cannot be less than her share or one-half of the conjugal partnership properties. She further
maintains that, in any event, Hodges had as a matter of fact and of law renounced his inheritance
from his wife and, therefore, her whole estate passed directly to her brothers and sisters effective
at the latest upon the death of Hodges.

In this decision, for the reasons discussed above, and upon the issues just summarized, We
overrule PCIB's contention that the orders of May 27, 1957 and December 14, 1957 amount to
an adjudication to Hodges of the estate of his wife, and We recognize the present existence of
the estate of Mrs. Hodges, as consisting of properties, which, while registered in that name of
Hodges, do actually correspond to the remainder of the share of Mrs. Hodges in the conjugal
partnership, it appearing that pursuant to the pertinent provisions of her will, any portion of said
share still existing and undisposed of by her husband at the time of his death should go to her
brothers and sisters share and share alike. Factually, We find that the proven circumstances
relevant to the said orders do not warrant the conclusion that the court intended to make thereby
such alleged final adjudication. Legally, We hold that the tenor of said orders furnish no basis for
such a conclusion, and what is more, at the time said orders were issued, the proceedings had
not yet reached the point when a final distribution and adjudication could be made. Moreover, the
interested parties were not duly notified that such disposition of the estate would be done. At
best, therefore, said orders merely allowed Hodges to dispose of portions of his inheritance in
advance of final adjudication, which is implicitly permitted under Section 2 of Rule 109, there
being no possible prejudice to third parties, inasmuch as Mrs. Hodges had no creditors and all
pertinent taxes have been paid.

More specifically, We hold that, on the basis of circumstances presently extant in the record, and
on the assumption that Hodges' purported renunciation should not be upheld, the estate of Mrs.
Hodges inherited by her brothers and sisters consists of one-fourth of the community estate of
the spouses at the time of her death, minus whatever Hodges had gratuitously disposed of
therefrom during the period from, May 23, 1957, when she died, to December 25, 1962, when he
died provided, that with regard to remunerative dispositions made by him during the same period,
the proceeds thereof, whether in cash or property, should be deemed as continuing to be part of
his wife's estate, unless it can be shown that he had subsequently disposed of them gratuitously.

At this juncture, it may be reiterated that the question of what are the pertinent laws of Texas and
what would be the estate of Mrs. Hodges under them is basically one of fact, and considering the
respective positions of the parties in regard to said factual issue, it can already be deemed as
settled for the purposes of these cases that, indeed, the free portion of said estate that could
possibly descend to her brothers and sisters by virtue of her will may not be less than one-fourth
of the conjugal estate, it appearing that the difference in the stands of the parties has reference
solely to the legitime of Hodges, PCIB being of the view that under the laws of Texas, there is
such a legitime of one-fourth of said conjugal estate and Magno contending, on the other hand,
that there is none. In other words, hereafter, whatever might ultimately appear, at the subsequent
proceedings, to be actually the laws of Texas on the matter would no longer be of any
consequence, since PCIB would anyway be in estoppel already to claim that the estate of Mrs.
Hodges should be less than as contended by it now, for admissions by a party related to the
effects of foreign laws, which have to be proven in our courts like any other controverted fact,
create estoppel.

In the process, We overrule PCIB's contention that the provision in Mrs. Hodges' will in favor of
her brothers and sisters constitutes ineffective hereditary substitutions. But neither are We
sustaining, on the other hand, Magno's pose that it gave Hodges only a lifetime usufruct. We
hold that by said provision, Mrs. Hodges simultaneously instituted her brothers and sisters as co-
heirs with her husband, with the condition, however, that the latter would have complete rights of
dominion over the whole estate during his lifetime and what would go to the former would be only
the remainder thereof at the time of Hodges' death. In other words, whereas they are not to
inherit only in case of default of Hodges, on the other hand, Hodges was not obliged to preserve
anything for them. Clearly then, the essential elements of testamentary substitution are absent;
the provision in question is a simple case of conditional simultaneous institution of heirs, whereby
the institution of Hodges is subject to a partial resolutory condition the operative contingency of
which is coincidental with that of the suspensive condition of the institution of his brothers and
sisters-in-law, which manner of institution is not prohibited by law.

We also hold, however, that the estate of Mrs. Hodges inherited by her brothers and sisters could
be more than just stated, but this would depend on (1) whether upon the proper application of the
principle of renvoi in relation to Article 16 of the Civil Code and the pertinent laws of Texas, it will
appear that Hodges had no legitime as contended by Magno, and (2) whether or not it can be
held that Hodges had legally and effectively renounced his inheritance from his wife. Under the
circumstances presently obtaining and in the state of the record of these cases, as of now, the
Court is not in a position to make a final ruling, whether of fact or of law, on any of these two
issues, and We, therefore, reserve said issues for further proceedings and resolution in the first
instance by the court a quo, as hereinabove indicated. We reiterate, however, that pending such
further proceedings, as matters stand at this stage, Our considered opinion is that it is beyond
cavil that since, under the terms of the will of Mrs. Hodges, her husband could not have anyway
legally adjudicated or caused to be adjudicated to himself her whole share of their conjugal
partnership, albeit he could have disposed any part thereof during his lifetime, the resulting
estate of Mrs. Hodges, of which Magno is the uncontested administratrix, cannot be less than
one-fourth of the conjugal partnership properties, as of the time of her death, minus what, as
explained earlier, have been gratuitously disposed of therefrom, by Hodges in favor of third
persons since then, for even if it were assumed that, as contended by PCIB, under Article 16 of
the Civil Code and applying renvoi the laws of the Philippines are the ones ultimately applicable,
such one-fourth share would be her free disposable portion, taking into account already the
legitime of her husband under Article 900 of the Civil Code.

The foregoing considerations leave the Court with no alternative than to conclude that in
predicating its orders on the assumption, albeit unexpressed therein, that there is an estate of
Mrs. Hodges to be distributed among her brothers and sisters and that respondent Magno is the
legal administratrix thereof, the trial court acted correctly and within its jurisdiction. Accordingly,
the petition for certiorari and prohibition has to be denied. The Court feels however, that pending
the liquidation of the conjugal partnership and the determination of the specific properties
constituting her estate, the two administrators should act conjointly as ordered in the Court's
resolution of September 8, 1972 and as further clarified in the dispositive portion of its decision.

Anent the appeals from the orders of the lower court sanctioning payment by appellee Magno, as
administratrix, of expenses of administration and attorney's fees, it is obvious that, with Our
holding that there is such an estate of Mrs. Hodges, and for the reasons stated in the body of this
opinion, the said orders should be affirmed. This We do on the assumption We find justified by
the evidence of record, and seemingly agreed to by appellant PCIB, that the size and value of
the properties that should correspond to the estate of Mrs. Hodges far exceed the total of the
attorney's fees and administration expenses in question.

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

DISPOSITIVE PART

IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered DISMISSING the
petition in G. R. Nos. L-27860 and L-27896, and AFFIRMING, in G. R. Nos. L-27936-37 and the
other thirty-one numbers hereunder ordered to be added after payment of the corresponding
docket fees, all the orders of the trial court under appeal enumerated in detail on pages 35 to 37
and 80 to 82 of this decision; the existence of the Testate Estate of Linnie Jane Hodges, with
respondent-appellee Avelina A. Magno, as administratrix thereof is recognized, and it is declared
that, until final judgment is ultimately rendered regarding (1) the manner of applying Article 16 of
the Civil Code of the Philippines to the situation obtaining in these cases and (2) the factual and
legal issue of whether or not Charles Newton Hodges had effectively and legally renounced his
inheritance under the will of Linnie Jane Hodges, the said estate consists of one-fourth of the
community properties of the said spouses, as of the time of the death of the wife on May 23,
1957, minus whatever the husband had already gratuitously disposed of in favor of third persons
from said date until his death, provided, first, that with respect to remunerative dispositions, the
proceeds thereof shall continue to be part of the wife's estate, unless subsequently disposed of
gratuitously to third parties by the husband, and second, that should the purported renunciation
be declared legally effective, no deductions whatsoever are to be made from said estate; in
consequence, the preliminary injunction of August 8, 1967, as amended on October 4 and
December 6, 1967, is lifted, and the resolution of September 8, 1972, directing that petitioner-
appellant PCIB, as Administrator of the Testate Estate of Charles Newton Hodges, in Special
Proceedings 1672, and respondent-appellee Avelina A. Magno, as Administratrix of the Testate
Estate of Linnie Jane Hodges, in Special Proceedings 1307, should act thenceforth always
conjointly, never independently from each other, as such administrators, is reiterated, and the
same is made part of this judgment and shall continue in force, pending the liquidation of the
conjugal partnership of the deceased spouses and the determination and segregation from each
other of their respective estates, provided, that upon the finality of this judgment, the trial court
should immediately proceed to the partition of the presently combined estates of the spouses, to
the end that the one-half share thereof of Mrs. Hodges may be properly and clearly identified;
thereafter, the trial court should forthwith segregate the remainder of the one-fourth herein
adjudged to be her estate and cause the same to be turned over or delivered to respondent for
her exclusive administration in Special Proceedings 1307, while the other one-fourth shall remain
under the joint administration of said respondent and petitioner under a joint proceedings in
Special Proceedings 1307 and 1672, whereas the half unquestionably pertaining to Hodges shall
be administered by petitioner exclusively in Special Proceedings 1672, without prejudice to the
resolution by the trial court of the pending motions for its removal as administrator12; and this
arrangement shall be maintained until the final resolution of the two issues of renvoi and
renunciation hereby reserved for further hearing and determination, and the corresponding
complete segregation and partition of the two estates in the proportions that may result from the
said resolution.

Generally and in all other respects, the parties and the court a quo are directed to adhere
henceforth, in all their actuations in Special Proceedings 1307 and 1672, to the views passed
and ruled upon by the Court in the foregoing opinion.
Appellant PCIB is ordered to pay, within five (5) days from notice hereof, thirty-one additional
appeal docket fees, but this decision shall nevertheless become final as to each of the parties
herein after fifteen (15) days from the respective notices to them hereof in accordance with the
rules.

Costs against petitioner-appellant PCIB.

Zaldivar, Castro, Esguerra and Fernandez, JJ., concur.

Makasiar, Antonio, Muñoz Palma and Aquino, JJ., concur in the result.

G.R. No. 169364 September 18, 2009

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
EVANGELINE SITON y SACIL and KRYSTEL KATE SAGARANO y MEFANIA, Respondents.

DECISION

YNARES-SANTIAGO, J.:

If a man is called to be a street sweeper, he should sweep streets even as Michelangelo painted,
or Beethoven composed music, or Shakespeare wrote poetry. He should sweep streets so well
that all the hosts of Heaven and Earth will pause to say, here lived a great street sweeper who
did his job well.

– Martin Luther King, Jr.

Assailed in this petition for review on certiorari is the July 29, 2005 Order1 of Branch 11, Davao
City Regional Trial Court in Special Civil Case No. 30-500-2004 granting respondents’ Petition
for Certiorari and declaring paragraph 2 of Article 202 of the Revised Penal Code
unconstitutional.

Respondents Evangeline Siton and Krystel Kate Sagarano were charged with vagrancy pursuant
to Article 202 (2) of the Revised Penal Code in two separate Informations dated November 18,
2003, docketed as Criminal Case Nos. 115,716-C-2003 and 115,717-C-2003 and raffled to
Branch 3 of the Municipal Trial Court in Cities, Davao City. The Informations, read:

That on or about November 14, 2003, in the City of Davao, Philippines, and within the jurisdiction
of this Honorable Court, the above-mentioned accused, willfully, unlawfully and feloniously
wandered and loitered around San Pedro and Legaspi Streets, this City, without any visible
means to support herself nor lawful and justifiable purpose.2

Article 202 of the Revised Penal Code provides:

Art. 202. Vagrants and prostitutes; penalty. — The following are vagrants:

1. Any person having no apparent means of subsistence, who has the physical ability to
work and who neglects to apply himself or herself to some lawful calling;

2. Any person found loitering about public or semi-public buildings or places or tramping
or wandering about the country or the streets without visible means of support;

3. Any idle or dissolute person who lodges in houses of ill fame; ruffians or pimps and
those who habitually associate with prostitutes;
 4. Any person who, not being included in the provisions of other articles of this Code,
shall be found loitering in any inhabited or uninhabited place belonging to another without
any lawful or justifiable purpose;

5. Prostitutes.

For the purposes of this article, women who, for money or profit, habitually indulge in sexual
intercourse or lascivious conduct, are deemed to be prostitutes.

Any person found guilty of any of the offenses covered by this articles shall be punished
by arresto menor or a fine not exceeding 200 pesos, and in case of recidivism, by arresto
mayor in its medium period to prision correccional in its minimum period or a fine ranging from
200 to 2,000 pesos, or both, in the discretion of the court.

Instead of submitting their counter-affidavits as directed, respondents filed separate Motions to

Quash3 on the ground that Article 202 (2) is unconstitutional for being vague and overbroad.

In an Order4 dated April 28, 2004, the municipal trial court denied the motions and directed
respondents anew to file their respective counter-affidavits. The municipal trial court also
declared that the law on vagrancy was enacted pursuant to the State’s police power and justified
by the Latin maxim "salus populi est suprem(a) lex," which calls for the subordination of
individual benefit to the interest of the greater number, thus:

Our law on vagrancy was enacted pursuant to the police power of the State. An authority on
police power, Professor Freund describes laconically police power "as the power of promoting
public welfare by restraining and regulating the use of liberty and property." (Citations omitted). In
fact the person’s acts and acquisitions are hemmed in by the police power of the state. The
justification found in the Latin maxim, salus populi est supreme (sic) lex" (the god of the people is
the Supreme Law). This calls for the subordination of individual benefit to the interests of the
greater number.In the case at bar the affidavit of the arresting police officer, SPO1 JAY PLAZA
with Annex "A" lucidly shows that there was a prior surveillance conducted in view of the reports
that vagrants and prostitutes proliferate in the place where the two accused (among other
women) were wandering and in the wee hours of night and soliciting male customer. Thus, on
that basis the prosecution should be given a leeway to prove its case. Thus, in the interest of
substantial justice, both prosecution and defense must be given their day in Court: the
prosecution proof of the crime, and the author thereof; the defense, to show that the acts of the
accused in the indictment can’t be categorized as a crime.5

The municipal trial court also noted that in the affidavit of the arresting police officer, SPO1 Jay
Plaza, it was stated that there was a prior surveillance conducted on the two accused in an area
reported to be frequented by vagrants and prostitutes who solicited sexual favors. Hence, the
prosecution should be given the opportunity to prove the crime, and the defense to rebut the
evidence. 1avv phi 1

Respondents thus filed an original petition for certiorari and prohibition with the Regional Trial
Court of Davao City,6directly challenging the constitutionality of the anti-vagrancy law, claiming
that the definition of the crime of vagrancy under Article 202 (2), apart from being vague, results
as well in an arbitrary identification of violators, since the definition of the crime includes in its
coverage persons who are otherwise performing ordinary peaceful acts. They likewise claimed
that Article 202 (2) violated the equal protection clause under the Constitution because it
discriminates against the poor and unemployed, thus permitting an arbitrary and unreasonable
classification.

The State, through the Office of the Solicitor General, argued that pursuant to the Court’s ruling
in Estrada v. Sandiganbayan,7 the overbreadth and vagueness doctrines apply only to free
speech cases and not to penal statutes. It also asserted that Article 202 (2) must be presumed
valid and constitutional, since the respondents failed to overcome this presumption.

On July 29, 2005, the Regional Trial Court issued the assailed Order granting the petition, the
dispositive portion of which reads:

WHEREFORE, PRESCINDING FROM THE FOREGOING, the instant Petition is hereby

GRANTED. Paragraph 2 of Article 202 of the Revised Penal Code is hereby declared
unconstitutional and the Order of the court a quo, dated April 28, 2004, denying the petitioners’
Motion to Quash is set aside and the said court is ordered to dismiss the subject criminal cases
against the petitioners pending before it.

SO ORDERED.8

In declaring Article 202 (2) unconstitutional, the trial court opined that the law is vague and it
violated the equal protection clause. It held that the "void for vagueness" doctrine is equally
applicable in testing the validity of penal statutes. Citing Papachristou v. City of
Jacksonville,9 where an anti vagrancy ordinance was struck down as unconstitutional by the
Supreme Court of the United States, the trial court ruled:

The U.S. Supreme Court’s justifications for striking down the Jacksonville Vagrancy Ordinance
are equally applicable to paragraph 2 of Article 202 of the Revised Penal Code.

Indeed, to authorize a police officer to arrest a person for being "found loitering about public or
semi-public buildings or places or tramping or wandering about the country or the streets without
visible means of support" offers too wide a latitude for arbitrary determinations as to who should
be arrested and who should not.

Loitering about and wandering have become national pastimes particularly in these times of
recession when there are many who are "without visible means of support" not by reason of
choice but by force of circumstance as borne out by the high unemployment rate in the entire
country.

To authorize law enforcement authorities to arrest someone for nearly no other reason than the
fact that he cannot find gainful employment would indeed be adding insult to injury.10

On its pronouncement that Article 202 (2) violated the equal protection clause of the Constitution,
the trial court declared:

The application of the Anti-Vagrancy Law, crafted in the 1930s, to our situation at present runs
afoul of the equal protection clause of the constitution as it offers no reasonable classification
between those covered by the law and those who are not.

Class legislation is such legislation which denies rights to one which are accorded to others, or
inflicts upon one individual a more severe penalty than is imposed upon another in like case
offending.

Applying this to the case at bar, since the definition of Vagrancy under Article 202 of the Revised
Penal Code offers no guidelines or any other reasonable indicators to differentiate those who
have no visible means of support by force of circumstance and those who choose to loiter about
and bum around, who are the proper subjects of vagrancy legislation, it cannot pass a judicial
scrutiny of its constitutionality.11

Hence, this petition for review on certiorari raising the sole issue of:
WHETHER THE REGIONAL TRIAL COURT COMMITTED A REVERSIBLE ERROR IN
DECLARING UNCONSTITUTIONAL ARTICLE 202 (2) OF THE REVISED PENAL CODE12

Petitioner argues that every statute is presumed valid and all reasonable doubts should be
resolved in favor of its constitutionality; that, citing Romualdez v. Sandiganbayan,13 the
overbreadth and vagueness doctrines have special application to free-speech cases only and are
not appropriate for testing the validity of penal statutes; that respondents failed to overcome the
presumed validity of the statute, failing to prove that it was vague under the standards set out by
the Courts; and that the State may regulate individual conduct for the promotion of public welfare
in the exercise of its police power.

On the other hand, respondents argue against the limited application of the overbreadth and
vagueness doctrines. They insist that Article 202 (2) on its face violates the constitutionally-
guaranteed rights to due process and the equal protection of the laws; that the due process
vagueness standard, as distinguished from the free speech vagueness doctrine, is adequate to
declare Article 202 (2) unconstitutional and void on its face; and that the presumption of
constitutionality was adequately overthrown.

The Court finds for petitioner.

The power to define crimes and prescribe their corresponding penalties is legislative in nature
and inherent in the sovereign power of the state to maintain social order as an aspect of police
power. The legislature may even forbid and penalize acts formerly considered innocent and
lawful provided that no constitutional rights have been abridged.14 However, in exercising its
power to declare what acts constitute a crime, the legislature must inform the citizen with
reasonable precision what acts it intends to prohibit so that he may have a certain
understandable rule of conduct and know what acts it is his duty to avoid.15 This requirement has
come to be known as the void-for-vagueness doctrine which states that "a statute which either
forbids or requires the doing of an act in terms so vague that men of common intelligence must
necessarily guess at its meaning and differ as to its application, violates the first essential of due
process of law."16

In Spouses Romualdez v. COMELEC,17 the Court recognized the application of the void-for-
vagueness doctrine to criminal statutes in appropriate cases. The Court therein held:

At the outset, we declare that under these terms, the opinions of the dissent which seek to bring
to the fore the purported ambiguities of a long list of provisions in Republic Act No. 8189 can be
deemed as a facial challenge. An appropriate "as applied" challenge in the instant Petition should
be limited only to Section 45 (j) in relation to Sections 10 (g) and (j) of Republic Act No. 8189 –
the provisions upon which petitioners are charged. An expanded examination of the law covering
provisions which are alien to petitioners’ case would be antagonistic to the rudiment that for
judicial review to be exercised, there must be an existing case or controversy that is appropriate
or ripe for determination, and not conjectural or anticipatory.18

The first statute punishing vagrancy – Act No. 519 – was modeled after American vagrancy
statutes and passed by the Philippine Commission in 1902. The Penal Code of Spain of 1870
which was in force in this country up to December 31, 1931 did not contain a provision on
vagrancy.19 While historically an Anglo-American concept of crime prevention, the law on
vagrancy was included by the Philippine legislature as a permanent feature of the Revised Penal
Code in Article 202 thereof which, to repeat, provides:

ART. 202. Vagrants and prostitutes; penalty. – The following are vagrants:

1. Any person having no apparent means of subsistence, who has the physical ability to
work and who neglects to apply himself or herself to some lawful calling;
 2. Any person found loitering about public or semi-public buildings or places, or tramping
or wandering about the country or the streets without visible means of support;

3. Any idle or dissolute person who lodges in houses of ill-fame; ruffians or pimps and
those who habitually associate with prostitutes;

4. Any person who, not being included in the provisions of other articles of this Code,
shall be found loitering in any inhabited or uninhabited place belonging to another without
any lawful or justifiable purpose;

5. Prostitutes.

For the purposes of this article, women who, for money or profit, habitually indulge in sexual
intercourse or lascivious conduct, are deemed to be prostitutes.

Any person found guilty of any of the offenses covered by this article shall be punished
by arresto menor or a fine not exceeding 200 pesos, and in case of recidivism, by arresto
mayor in its medium period to prision correccional in its minimum period or a fine ranging from
200 to 2,000 pesos, or both, in the discretion of the court.

In the instant case, the assailed provision is paragraph (2), which defines a vagrant as any
person found loitering about public or semi-public buildings or places, or tramping or wandering
about the country or the streets without visible means of support. This provision was based on
the second clause of Section 1 of Act No. 519 which defined "vagrant" as "every person found
loitering about saloons or dramshops or gambling houses, or tramping or straying through the
country without visible means of support." The second clause was essentially retained with the
modification that the places under which the offense might be committed is now expressed in
general terms – public or semi-public places.

The Regional Trial Court, in asserting the unconstitutionality of Article 202 (2), take support
mainly from the U.S. Supreme Court’s opinion in the Papachristou v. City of Jacksonville20 case,
which in essence declares:

Living under a rule of law entails various suppositions, one of which is that "[all persons] are
entitled to be informed as to what the State commands or forbids." Lanzetta v. New Jersey, 306
U. S. 451, 306 U. S. 453.

Lanzetta is one of a well recognized group of cases insisting that the law give fair notice of the
offending conduct. See Connally v. General Construction Co., 269 U. S. 385, 269 U. S. 391;
Cline v. Frink Dairy Co., 274 U. S. 445; United States v. Cohen Grocery Co., 255 U. S. 81. In the
field of regulatory statutes governing business activities, where the acts limited are in a narrow
category, greater leeway is allowed. Boyce Motor Lines, Inc. v. United States, 342 U. S. 337;
United States v. National Dairy Products Corp., 372 U. S. 29; United States v. Petrillo, 332 U. S.
1.

The poor among us, the minorities, the average householder, are not in business and not alerted
to the regulatory schemes of vagrancy laws; and we assume they would have no understanding
of their meaning and impact if they read them. Nor are they protected from being caught in the
vagrancy net by the necessity of having a specific intent to commit an unlawful act. See Screws
v. United States, 325 U. S. 91; Boyce Motor Lines, Inc. v. United States, supra.

The Jacksonville ordinance makes criminal activities which, by modern standards, are normally
innocent. "Nightwalking" is one. Florida construes the ordinance not to make criminal one night's
wandering, Johnson v. State, 202 So.2d at 855, only the "habitual" wanderer or, as the ordinance
describes it, "common night walkers." We know, however, from experience that sleepless people
often walk at night, perhaps hopeful that sleep-inducing relaxation will result.
Luis Munoz-Marin, former Governor of Puerto Rico, commented once that "loafing" was a
national virtue in his Commonwealth, and that it should be encouraged. It is, however, a crime in
Jacksonville.

xxxx

Persons "wandering or strolling" from place to place have been extolled by Walt Whitman and
Vachel Lindsay. The qualification "without any lawful purpose or object" may be a trap for
innocent acts. Persons "neglecting all lawful business and habitually spending their time by
frequenting . . . places where alcoholic beverages are sold or served" would literally embrace
many members of golf clubs and city clubs.

Walkers and strollers and wanderers may be going to or coming from a burglary. Loafers or
loiterers may be "casing" a place for a holdup. Letting one's wife support him is an intra-family
matter, and normally of no concern to the police. Yet it may, of course, be the setting for
numerous crimes.

The difficulty is that these activities are historically part of the amenities of life as we have known
them. They are not mentioned in the Constitution or in the Bill of Rights. These unwritten
amenities have been, in part, responsible for giving our people the feeling of independence and
self-confidence, the feeling of creativity. These amenities have dignified the right of dissent, and
have honored the right to be nonconformists and the right to defy submissiveness. They have
encouraged lives of high spirits, rather than hushed, suffocating silence.

xxxx

Where the list of crimes is so all-inclusive and generalized as the one in this ordinance, those
convicted may be punished for no more than vindicating affronts to police authority:

"The common ground which brings such a motley assortment of human troubles before the
magistrates in vagrancy-type proceedings is the procedural laxity which permits 'conviction' for
almost any kind of conduct and the existence of the House of Correction as an easy and
convenient dumping-ground for problems that appear to have no other immediate solution."
Foote, Vagrancy-Type Law and Its Administration, 104 U.Pa.L.Rev. 603, 631.

xxxx

Another aspect of the ordinance's vagueness appears when we focus not on the lack of notice
given a potential offender, but on the effect of the unfettered discretion it places in the hands of
the Jacksonville police. Caleb Foote, an early student of this subject, has called the vagrancy-
type law as offering "punishment by analogy." Such crimes, though long common in Russia, are
not compatible with our constitutional system.

xxxx

A presumption that people who might walk or loaf or loiter or stroll or frequent houses where
liquor is sold, or who are supported by their wives or who look suspicious to the police are to
become future criminals is too precarious for a rule of law. The implicit presumption in these
generalized vagrancy standards -- that crime is being nipped in the bud -- is too extravagant to
deserve extended treatment. Of course, vagrancy statutes are useful to the police. Of course,
they are nets making easy the roundup of so-called undesirables. But the rule of law implies
equality and justice in its application. Vagrancy laws of the Jacksonville type teach that the
scales of justice are so tipped that even-handed administration of the law is not possible. The
rule of law, evenly applied to minorities as well as majorities, to the poor as well as the rich, is the
great mucilage that holds society together.21
The underlying principles in Papachristou are that: 1) the assailed Jacksonville ordinance "fails to
give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden by the
statute;" and 2) it encourages or promotes opportunities for the application of discriminatory law
enforcement.

The said underlying principle in Papachristou that the Jacksonville ordinance, or Article 202 (2) in
this case, fails to give fair notice of what constitutes forbidden conduct, finds no application here
because under our legal system, ignorance of the law excuses no one from compliance
therewith.22 This principle is of Spanish origin, and we adopted it to govern and limit legal conduct
in this jurisdiction. Under American law, ignorance of the law is merely a traditional rule that
admits of exceptions.23

Moreover, the Jacksonville ordinance was declared unconstitutional on account of specific

provisions thereof, which are not found in Article 202 (2). The ordinance (Jacksonville Ordinance
Code § 257) provided, as follows:

Rogues and vagabonds, or dissolute persons who go about begging; common gamblers,
persons who use juggling or unlawful games or plays, common drunkards, common night
walkers, thieves, pilferers or pickpockets, traders in stolen property, lewd, wanton and lascivious
persons, keepers of gambling places, common railers and brawlers, persons wandering or
strolling around from place to place without any lawful purpose or object, habitual loafers,
disorderly persons, persons neglecting all lawful business and habitually spending their time by
frequenting houses of ill fame, gaming houses, or places where alcoholic beverages are sold or
served, persons able to work but habitually living upon the earnings of their wives or minor
children shall be deemed vagrants and, upon conviction in the Municipal Court shall be punished
as provided for Class D offenses.

Thus, the U.S. Supreme Court in Jacksonville declared the ordinance unconstitutional, because
such activities or habits as nightwalking, wandering or strolling around without any lawful purpose
or object, habitual loafing, habitual spending of time at places where alcoholic beverages are
sold or served, and living upon the earnings of wives or minor children, which are otherwise
common and normal, were declared illegal. But these are specific acts or activities not found
in Article 202 (2). The closest to Article 202 (2) – "any person found loitering about public or
semi-public buildings or places, or tramping or wandering about the country or the streets without
visible means of support" – from the Jacksonville ordinance, would be "persons wandering or
strolling around from place to place without any lawful purpose or object." But these two acts are
still not the same: Article 202 (2) is qualified by "without visible means of support" while the
Jacksonville ordinance prohibits wandering or strolling "without any lawful purpose or object,"
which was held by the U.S. Supreme Court to constitute a "trap for innocent acts."

Under the Constitution, the people are guaranteed the right to be secure in their persons,
houses, papers and effects against unreasonable searches and seizures of whatever nature and
for any purpose, and no search warrant or warrant of arrest shall issue except upon probable
cause to be determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be
searched and the persons or things to be seized.24 Thus, as with any other act or offense, the
requirement of probable cause provides an acceptable limit on police or executive authority that
may otherwise be abused in relation to the search or arrest of persons found to be violating
Article 202 (2). The fear exhibited by the respondents, echoing Jacksonville, that unfettered
discretion is placed in the hands of the police to make an arrest or search, is therefore assuaged
by the constitutional requirement of probable cause, which is one less than certainty or proof, but
more than suspicion or possibility.25

Evidently, the requirement of probable cause cannot be done away with arbitrarily without pain of
punishment, for, absent this requirement, the authorities are necessarily guilty of abuse. The
grounds of suspicion are reasonable when, in the absence of actual belief of the arresting
officers, the suspicion that the person to be arrested is probably guilty of committing the offense,
is based on actual facts, i.e., supported by circumstances sufficiently strong in themselves to
create the probable cause of guilt of the person to be arrested. A reasonable suspicion therefore
must be founded on probable cause, coupled with good faith of the peace officers making the
arrest.26

The State cannot in a cavalier fashion intrude into the persons of its citizens as well as into their
houses, papers and effects. The constitutional provision sheathes the private individual with an
impenetrable armor against unreasonable searches and seizures. It protects the privacy and
sanctity of the person himself against unlawful arrests and other forms of restraint, and prevents
him from being irreversibly cut off from that domestic security which renders the lives of the most
unhappy in some measure agreeable.27

As applied to the instant case, it appears that the police authorities have been conducting
previous surveillance operations on respondents prior to their arrest. On the surface, this
satisfies the probable cause requirement under our Constitution. For this reason, we are not
moved by respondents’ trepidation that Article 202 (2) could have been a source of police abuse
in their case.

Since the Revised Penal Code took effect in 1932, no challenge has ever been made upon the
constitutionality of Article 202 except now. Instead, throughout the years, we have witnessed the
streets and parks become dangerous and unsafe, a haven for beggars, harassing "watch-your-
car" boys, petty thieves and robbers, pickpockets, swindlers, gangs, prostitutes, and individuals
performing acts that go beyond decency and morality, if not basic humanity. The streets and
parks have become the training ground for petty offenders who graduate into hardened and
battle-scarred criminals. Everyday, the news is rife with reports of innocent and hardworking
people being robbed, swindled, harassed or mauled – if not killed – by the scourge of the streets.
Blue collar workers are robbed straight from withdrawing hard-earned money from the ATMs
(automated teller machines); students are held up for having to use and thus exhibit publicly their
mobile phones; frail and helpless men are mauled by thrill-seeking gangs; innocent passers-by
are stabbed to death by rowdy drunken men walking the streets; fair-looking or pretty women are
stalked and harassed, if not abducted, raped and then killed; robbers, thieves, pickpockets and
snatchers case streets and parks for possible victims; the old are swindled of their life savings by
conniving streetsmart bilkers and con artists on the prowl; beggars endlessly pester and
panhandle pedestrians and commuters, posing a health threat and putting law-abiding drivers
and citizens at risk of running them over. All these happen on the streets and in public places,
day or night.

The streets must be protected. Our people should never dread having to ply them each day, or
else we can never say that we have performed our task to our brothers and sisters. We must rid
the streets of the scourge of humanity, and restore order, peace, civility, decency and morality in
them.

This is exactly why we have public order laws, to which Article 202 (2) belongs. These laws
were crafted to maintain minimum standards of decency, morality and civility in human
society. These laws may be traced all the way back to ancient times, and today, they have also
come to be associated with the struggle to improve the citizens’ quality of life, which is
guaranteed by our Constitution.28 Civilly, they are covered by the "abuse of rights" doctrine
embodied in the preliminary articles of the Civil Code concerning Human Relations, to the end, in
part, that any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.29 This
provision is, together with the succeeding articles on human relations, intended to embody
certain basic principles "that are to be observed for the rightful relationship between human
beings and for the stability of the social order."30
In civil law, for example, the summary remedy of ejectment is intended to prevent criminal
disorder and breaches of the peace and to discourage those who, believing themselves entitled
to the possession of the property, resort to force rather than to some appropriate action in court
to assert their claims.31 Any private person may abate a public nuisance which is specially
injurious to him by removing, or if necessary, by destroying the thing which constitutes the same,
without committing a breach of the peace, or doing unnecessary injury.32

Criminally, public order laws encompass a whole range of acts – from public indecencies and
immoralities, to public nuisances, to disorderly conduct. The acts punished are made illegal by
their offensiveness to society’s basic sensibilities and their adverse effect on the quality of life of
the people of society. For example, the issuance or making of a bouncing check is deemed a
public nuisance, a crime against public order that must be abated.33 As a matter of public policy,
the failure to turn over the proceeds of the sale of the goods covered by a trust receipt or to
return said goods, if not sold, is a public nuisance to be abated by the imposition of penal
sanctions.34 Thus, public nuisances must be abated because they have the effect of interfering
with the comfortable enjoyment of life or property by members of a community.

Article 202 (2) does not violate the equal protection clause; neither does it discriminate against
the poor and the unemployed. Offenders of public order laws are punished not for their status, as
for being poor or unemployed, but for conducting themselves under such circumstances as to
endanger the public peace or cause alarm and apprehension in the community. Being poor or
unemployed is not a license or a justification to act indecently or to engage in immoral conduct.

Vagrancy must not be so lightly treated as to be considered constitutionally offensive. It is a

public order crime which punishes persons for conducting themselves, at a certain place and
time which orderly society finds unusual, under such conditions that are repugnant and
outrageous to the common standards and norms of decency and morality in a just, civilized and
ordered society, as would engender a justifiable concern for the safety and well-being of
members of the community.

Instead of taking an active position declaring public order laws unconstitutional, the State should
train its eye on their effective implementation, because it is in this area that the Court perceives
difficulties. Red light districts abound, gangs work the streets in the wee hours of the morning,
dangerous robbers and thieves ply their trade in the trains stations, drunken men terrorize law-
abiding citizens late at night and urinate on otherwise decent corners of our streets. Rugby-
sniffing individuals crowd our national parks and busy intersections. Prostitutes wait for
customers by the roadside all around the metropolis, some even venture in bars and restaurants.
Drug-crazed men loiter around dark avenues waiting to pounce on helpless citizens. Dangerous
groups wander around, casing homes and establishments for their next hit. The streets must be
made safe once more. Though a man’s house is his castle,35 outside on the streets, the king is
fair game.

The dangerous streets must surrender to orderly society.

Finally, we agree with the position of the State that first and foremost, Article 202 (2) should be
presumed valid and constitutional. When confronted with a constitutional question, it is
elementary that every court must approach it with grave care and considerable caution bearing in
mind that every statute is presumed valid and every reasonable doubt should be resolved in
favor of its constitutionality.36 The policy of our courts is to avoid ruling on constitutional questions
and to presume that the acts of the political departments are valid in the absence of a clear and
unmistakable showing to the contrary. To doubt is to sustain, this presumption is based on the
doctrine of separation of powers which enjoins upon each department a becoming respect for the
acts of the other departments. The theory is that as the joint act of Congress and the President of
the Philippines, a law has been carefully studied, crafted and determined to be in accordance
with the fundamental law before it was finally enacted.37
It must not be forgotten that police power is an inherent attribute of sovereignty. It has been
defined as the power vested by the Constitution in the legislature to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of
the commonwealth, and for the subjects of the same. The power is plenary and its scope is vast
and pervasive, reaching and justifying measures for public health, public safety, public morals,
and the general welfare.38 As an obvious police power measure, Article 202 (2) must therefore be
viewed in a constitutional light.

WHEREFORE, the petition is GRANTED. The Decision of Branch 11 of the Regional Trial Court
of Davao City in Special Civil Case No. 30-500-2004 declaring Article 202, paragraph 2 of the
Revised Penal Code UNCONSTITUTIONAL is REVERSED and SET ASIDE.

Let the proceedings in Criminal Cases Nos. 115,716-C-2003 and 115,717-C-2003 thus continue.

No costs.

SO ORDERED.

[G.R. NO. 173615 : October 16, 2009]

PHILIPPINE NATIONAL BANK, Petitioner, v. CAYETANO A. TEJANO, JR., Respondent.

DECISION

PERALTA, J.:

In this Petition for Review, 1 the Philippine National Bank assails the January 3, 2006 Decision2 of the
Court of Appeals in CA-G.R. SP No. 50084, which reversed Resolution Nos. 980716 and 983099 issued
by the Civil Service Commission, respectively dated April 14, 1998 and December 7, 1998, and referred
the case back to said office for further proceedings. The assailed Resolutions, in turn, dismissed
respondent Cayetano A. Tejano's appeal from the resolution of the Board of Directors of the Philippine
National Bank which found him guilty of grave misconduct in connection with a number of transactions
with certain corporate entities.

The case stems from a number of alleged irregular and fraudulent transactions made by respondent
Cayetano A. Tejano, Jr. supposedly with the participation of eight (8) other employees of petitioner
Philippine National Bank (PNB) in its branch in Cebu City - namely Ma. Teresa Chan, Marcelino
Magdadaro, Douglasia Canuel, Novel Fortich, Jacinto Ouano, Quirubin Blanco, Manuel Manzanares and
Pedrito Ranile. Respondent, together with the other employees, allegedly committed grave misconduct,
gross neglect of duty, conduct grossly prejudicial to the best interest of the service and acts violative of
Republic Act No. 3019, relative to the corporate accounts of and transactions with Pat International
Trading Corporation (PITC), Khun Tong International Trading Corporation (KITC), Pat Garments
International Corporation (PGIC), Aqua Solar Trading Corporation, Dacebu Traders and Exporters,
Mancao Mercantile Co., Inc. and V&G Better Homes Subdivision. All of these transactions transpired at
the time that PNB was still a government-owned and controlled corporation.

Respondent, who was then the Vice-President and Manager of the bank, and the eight other employees
were administratively charged before the PNB Management Hearing Committee on February 24 and
March 17, 1994.3 At the close of the hearing on the merits, the Committee found that with respect to
respondent, he was guilty of gross misconduct in misappropriating the funds of V&G and of gross neglect
in extending unwarranted credit accommodations to PITC, PGIC and KITC which must serve as an
aggravating circumstance. The Committee then recommended that respondent be meted the penalty of
forced resignation without forfeiture of benefits.4

The PNB Board of Directors differed. In its Resolution No. 885 dated June 21, 1995, it found that
respondent's gross neglect in giving unwarranted credit to PITC, PGIC and KITC must serve as an
aggravating circumstance in relation to the offense of grave misconduct consisting of misappropriation of
V&G funds and must serve the penalty of forced resignation with forfeiture of benefits.6
It appears that only herein respondent sought reconsideration but the Board of Directors, in its
Resolution No. 107,7 denied the same. Thereafter, on September 21, 1995, respondent appealed to the
Civil Service Commission (CSC)8 and, on October 19, 1995, he submitted his Memorandum on Appeal.9

In the meantime, on May 27, 1996, the PNB had ceased to be a government-owned and controlled
corporation, and in view of its conversion into a private banking institution by virtue of Executive Order
(E.O.) No. 80.10 Despite this development, the CSC, on April 14 1998, issued Resolution No.
98071611dismissing respondent's appeal for being filed out of time.

Respondent filed a motion for reconsideration12 on which the CSC required petitioner to comment. In its
Comment, petitioner theorized that even granting respondent's appeal was filed on time, the same
must, nevertheless, be dismissed on account of the privatization of PNB which thereby removed the case
from the jurisdiction of the CSC. The CSC found this argument meritorious and, subsequently, in its
Resolution No. 98309913 dated December 7, 1998, it denied respondent's reconsideration on that
ground.

Respondent elevated the matter to the Court of Appeals on Petition for Review, 14
docketed as CA-G.R.
SP No. 50084.

Before the appellate court, respondent, on the one hand, ascribed error to the CSC in denying due
course to his appeal on the basis of the privatization of PNB inasmuch as the incident subject of the case
had transpired way back in 1992, when the bank was still a government-owned and controlled
corporation. He particularly noted that the CSC, before the privatization of the bank, had already
acquired jurisdiction over the appeal upon the filing thereof and subsequent submission of the
memorandum on appeal. This, according to respondent, negated petitioner's theory that the CSC could
no longer assume jurisdiction and dispose of the appeal on the merits, especially considering that
jurisdiction once acquired generally continues until the final disposition of the case.15 On the other hand,
petitioner argued in essence that although the jurisdiction to act on the appeal must continue until the
final disposition of the case, this rule admits of exceptions as where, in the present case, the law must
be construed in a way as to operate on actions pending before its enactment.16

The Court of Appeals found merit in respondent's appeal. On January 3, 2006, it issued the assailed
Decision reversing the twin resolutions of the CSC. The appellate court pointed out that respondent's
appeal before the CSC had been filed on time and that the said commission had not lost jurisdiction over
it despite the supervening privatization of PNB. But inasmuch as the assailed Resolutions did not
permeate the merits of respondent's appeal, the appellate court found it wise to remand the case to the
CSC for further proceedings. It disposed of the appeal as follows:

WHEREFORE, premises considered, the instant Petition for Review under Rule 43 of the Rules of Court is
hereby GRANTED. ACCORDINGLY, Resolution No. 980716 dated April 14, 1998 and Resolution No.
983099 dated December 7, 1998 of the Civil Service Commission are hereby REVERSED and the case is
remanded to the Civil Service Commission for further proceedings.

so ordered.17

Petitioner's motion for reconsideration was denied.18 Hence, it filed the instant Petition for Review
bearing the same issue as that raised previously.

At the core of the controversy is the question of whether E.O. No. 80 has the effect of removing from
the jurisdiction of the CSC the appeal of respondent which was already pending before the CSC at the
time the said law converted PNB into a private banking institution. Petitioner is insistent that, indeed,
the law does have that effect, and this argument is perched on Section 6 of E.O. No. 80, which
materially provides that the bank would cease to be a government-owned and controlled corporation
upon the issuance of its articles of incorporation by the Securities and Exchange Commission and would
no longer be subject to the coverage of both the CSC and the Commission on Audit.19 Petitioner believes
that while indeed jurisdiction ordinarily continues until the termination of the case, it advances the
opinion that the rule does not apply where the law provides otherwise or where the said law intends to
operate on cases pending at the time of its enactment.20

For his part, respondent submits that Section 6 of E.O. No. 80 does not provide for the transfer of
jurisdiction over his pending appeal from the CSC to another administrative authority, and that neither
does the provision authorize its retroactive application in a way that would deprive the CSC of
jurisdiction over cases already pending before it prior to its effectivity.21 Additionally, he invokes
estoppel against petitioner inasmuch as the latter has actively participated in the proceedings before the
CSC and, hence, was already barred from raising the issue of jurisdiction, and alleges that petitioner's
present recourse was taken merely to cause delay in the final resolution of the controversy.22

We draw no merit in the petition.

In essence, Section 6 of E.O. No. 80, also known as the Revised Charter of PNB, treats of the effects of
converting the bank into a private financial and banking institution. It states:

Section 6. Change in Ownership of the Majority of the Voting Equity of the Bank. - When the ownership
of the majority of the issued common voting shares passes to private investors, the stockholders shall
cause the adoption and registration with the Securities and Exchange Commission of the appropriate
Articles of Incorporation and revised by-laws within three (3) months from such transfer of ownership.
Upon the issuance of the certificate of incorporation under the provisions of the Corporation Code, this
Charter shall cease to have force and effect, and shall be deemed repealed. Any special privileges
granted to the Bank such as the authority to act as official government depositary, or restrictions
imposed upon the Bank, shall be withdrawn, and the Bank shall thereafter be considered a privately
organized bank subject to the laws and regulations generally applicable to private banks. The Bank shall
likewise cease to be a government-owned or controlled corporation subject to the coverage of service-
wide agencies such as the Commission on Audit and the Civil Service Commission.

The fact of the change of the nature of the Bank from a government-owned and controlled financial
institution to a privately-owned entity shall be given publicity.23

In a language too plain to be mistaken, the quoted portion of the law only states no more than the
natural, logical and legal consequences of opening to private ownership the majority of the bank's voting
equity. This is very evident in the title of the section called Change in Ownership of the Majority of the
Voting Equity of the Bank. Certainly, the transfer of the majority of the bank's voting equity from public
to private hands is an inevitable effect of privatization or, conversely, the privatization of the bank would
necessitate the opening of the voting equity thereof to private ownership. And as the bank ceases to be
government depository, it would, accordingly be coming under the operation of the definite set of laws
and rules applicable to all other private corporations incorporated under the general incorporation law.
Perhaps the aspect of more importance in the present case is that the bank, upon its privatization,
would no longer be subject to the coverage of government service-wide agencies such as the CSC and
the Commission on Audit (COA).

By no stretch of intelligent and reasonable construction can the provisions in Section 6 of E.O. No. 80 be
interpreted in such a way as to divest the CSC of jurisdiction over pending disciplinary cases involving
acts committed by an employee of the PNB at the time that the bank was still a government-owned and
controlled corporation. Stated otherwise, no amount of reasonable inference may be derived from the
terms of the said Section to the effect that it intends to modify the jurisdiction of the CSC in disciplinary
cases involving employees of the government.

Sound indeed is the rule that where the law is clear, plain and free from ambiguity, it must be given its
literal meaning and applied without any interpretation or even
construction.24http://sc.judiciary.gov.ph/jurisprudence/2002/may2002/133706.htm - _edn13 This is
based on the presumption that the words employed therein correctly express its intent and preclude
even the courts from giving it a different construction.25 Section 6 of E.O. No. 80 is explicit in terms. It
speaks for itself. It does not invite an interpretation that reads into its clear and plain language
petitioner's adamant assertion that it divested the CSC of jurisdiction to finally dispose of respondent's
pending appeal despite the privatization of PNB.

In the alternative, petitioner likewise posits that the portion of Section 6 of the E.O. No. 80, which states
that the PNB would no longer be subject to the coverage of both the COA and the CSC, must be
understood to be applicable to cases already pending with the CSC at the time of the bank's conversion
into a private entity. We are not swayed.

While there is no denying that upon its privatization, the bank would consequently be subject to laws,
rules and regulations applicable to private corporations - which is to say that disciplinary cases involving
its employees would then be placed under the operation of the Labor Code of the Philippines - still, we
cannot validate petitioner's own interpretation of Section 6 of E.O. No. 80 that the same must be applied
to respondent's pending appeal with the CSC and that, resultantly, the CSC must abdicate its appellate
jurisdiction without having to resolve the case to finality.
It is binding rule, conformably with Article 4 of the Civil Code, that, generally, laws shall have only a
prospective effect and must not be applied retroactively in such a way as to apply to pending disputes
and cases. This is expressed in the familiar legal maxim lex prospicit, non respicit (the law looks forward
and not backward.)26 The rationale against retroactivity is easy to perceive: the retroactive application of
a law usually divests rights that have already become vested or impairs the obligations of contract and,
hence, is unconstitutional.27 Although the rule admits of certain well-defined exceptions28 such as, for
instance, where the law itself expressly provides for retroactivity,29 we find that not one of such
exceptions that would otherwise lend credence to petitioner's argument obtains in this case. Hence, in
other words, the fact that Section 6 of E.O. No. 80 states that PNB would be removed from the coverage
of the CSC must be taken to govern acts committed by the bank's employees after privatization. ???ñ r?b l?š

G.R. No. 120295 June 28, 1996

JUAN G. FRIVALDO, petitioner,

vs.
COMMISSION ON ELECTIONS, and RAUL R. LEE, respondents.

G.R. No. 123755 June 28, 1996

RAUL R. LEE, petitioner,

vs.
COMMISSION ON ELECTIONS and JUAN G. FRIVALDO, respondents.

PANGANIBAN, J.:p

The ultimate question posed before this Court in these twin cases is: Who should be declared the rightful governor of Sorsogon -

(i) Juan G. Frivaldo, who unquestionably obtained the highest number of votes in three
successive elections but who was twice declared by this Court to be disqualified to hold such
office due to his alien citizenship, and who now claims to have re-assumed his lost Philippine
citizenship thru repatriation;

(ii) Raul R. Lee, who was the second placer in the canvass, but who claims that the votes cast in
favor of Frivaldo should be considered void; that the electorate should be deemed to have
intentionally thrown away their ballots; and that legally, he secured the most number
of valid votes; or

(iii) The incumbent Vice-Governor, Oscar G. Deri, who obviously was not voted directly to the
position of governor, but who according to prevailing jurisprudence should take over the said post
inasmuch as, by the ineligibility of Frivaldo, a "permanent vacancy in the contested office has
occurred"?

In ruling for Frivaldo, the Court lays down new doctrines on repatriation,
clarifies/reiterates/amplifies existing jurisprudence on citizenship and elections, and upholds the
superiority of substantial justice over pure legalisms.

G.R. No. 123755

This is a special civil action under Rules 65 and 58 of the Rules of Court for certiorari and
preliminary injunction to review and annul a Resolution of the respondent Commission on
Elections (Comelec), First Division,1 promulgated on December 19, 19952 and another Resolution
of the Comelec en banc promulgated February 23, 19963 denying petitioner's motion for
reconsideration.

The Facts
On March 20, 1995, private respondent Juan G. Frivaldo filed his Certificate of Candidacy for the
office of Governor of Sorsogon in the May 8, 1995 elections. On March 23, 1995, petitioner Raul
R. Lee, another candidate, filed a petition4 with the Comelec docketed as SPA No. 95-028
praying that Frivaldo "be disqualified from seeking or holding any public office or position by
reason of not yet being a citizen of the Philippines", and that his Certificate of Candidacy be
canceled. On May 1, 1995, the Second Division of the Comelec promulgated a
Resolution5 granting the petition with the following disposition6:

WHEREFORE, this Division resolves to GRANT the petition and declares that
respondent is DISQUALIFIED to run for the Office of Governor of Sorsogon on
the ground that he is NOT a citizen of the Philippines. Accordingly, respondent's
certificate of candidacy is canceled.

The Motion for Reconsideration filed by Frivaldo remained unacted upon until after the May 8,
1995 elections. So, his candidacy continued and he was voted for during the elections held on
said date. On May 11, 1995, the Comelec en banc7 affirmed the aforementioned Resolution of
the Second Division.

The Provincial Board of Canvassers completed the canvass of the election returns and a
Certificate of Votes8 dated May 27, 1995 was issued showing the following votes obtained by the
candidates for the position of Governor of Sorsogon:

Antonio H. Escudero, Jr. 51,060

Juan G. Frivaldo 73,440

Raul R. Lee 53,304

Isagani P. Ocampo 1,925

On June 9, 1995, Lee filed in said SPA No. 95-028, a (supplemental) petition9 praying for his
proclamation as the duly-elected Governor of Sorsogon.

In an order10 dated June 21, 1995, but promulgated according to the petition "only on June 29,
1995," the Comelec en banc directed "the Provincial Board of Canvassers of Sorsogon to
reconvene for the purpose of proclaiming candidate Raul Lee as the winning gubernatorial
candidate in the province of Sorsogon on June 29, 1995 . . ." Accordingly, at 8:30 in the evening
of June 30, 1995, Lee was proclaimed governor of Sorsogon.

On July 6, 1995, Frivaldo filed with the Comelec a new petition,11 docketed as SPC No. 95-317,
praying for the annulment of the June 30, 1995 proclamation of Lee and for his own
proclamation. He alleged that on June 30, 1995, at 2:00 in the afternoon, he took his oath of
allegiance as a citizen of the Philippines after "his petition for repatriation under P.D. 725 which
he filed with the Special Committee on Naturalization in September 1994 had been granted". As
such, when "the said order (dated June 21, 1995) (of the Comelec) . . . was released and
received by Frivaldo on June 30, 1995 at 5:30 o'clock in the evening, there was no more legal
impediment to the proclamation (of Frivaldo) as governor . . ." In the alternative, he averred that
pursuant to the two cases of Labo vs. Comelec,12 the Vice-Governor - not Lee - should occupy
said position of governor.

On December 19, 1995, the Comelec First Division promulgated the herein assailed
Resolution13 holding that Lee, "not having garnered the highest number of votes," was not legally
entitled to be proclaimed as duly-elected governor; and that Frivaldo, "having garnered the
highest number of votes,
and . . . having reacquired his Filipino citizenship by repatriation on June 30, 1995 under the
provisions of Presidential Decree No. 725 . . . (is) qualified to hold the office of governor of
Sorsogon"; thus:

PREMISES CONSIDERED, the Commission (First Division), therefore

RESOLVES to GRANT the Petition.

Consistent with the decisions of the Supreme Court, the proclamation of Raul R.
Lee as Governor of Sorsogon is hereby ordered annulled, being contrary to law,
he not having garnered the highest number of votes to warrant his proclamation.

Upon the finality of the annulment of the proclamation of Raul R. Lee, the
Provincial Board of Canvassers is directed to immediately reconvene and, on the
basis of the completed canvass, proclaim petitioner Juan G. Frivaldo as the duly
elected Governor of Sorsogon having garnered the highest number of votes, and
he having reacquired his Filipino citizenship by repatriation on June 30, 1995
under the provisions of Presidential Decree No. 725 and, thus, qualified to hold
the office of Governor of Sorsogon.

Conformably with Section 260 of the Omnibus Election Code (B.P. Blg. 881), the
Clerk of the Commission is directed to notify His Excellency the President of the
Philippines, and the Secretary of the Sangguniang Panlalawigan of the Province
of Sorsogon of this resolution immediately upon the due implementation thereof.

On December 26, 1995, Lee filed a motion for reconsideration which was denied by the
Comelec en banc in its Resolution 14 promulgated on February 23, 1996. On February 26, 1996,
the present petition was filed. Acting on the prayer for a temporary restraining order, this Court
issued on February 27, 1996 a Resolution which inter alia directed the parties "to maintain
the status quo prevailing prior to the filing of this petition."

The Issues in G.R. No. 123755

Petitioner Lee's "position on the matter at hand may briefly be capsulized in the following
propositions"15:

First -- The initiatory petition below was so far insufficient in form and substance
to warrant the exercise by the COMELEC of its jurisdiction with the result that, in
effect, the COMELEC acted without jurisdiction in taking cognizance of and
deciding said petition;

Second -- The judicially declared disqualification of respondent was a continuing

condition and rendered him ineligible to run for, to be elected to and to hold the
Office of Governor;

Third -- The alleged repatriation of respondent was neither valid nor is the effect
thereof retroactive as to cure his ineligibility and qualify him to hold the Office of
Governor; and

Fourth -- Correctly read and applied, the Labo Doctrine fully supports the validity
of petitioner's proclamation as duly elected Governor of Sorsogon.

G.R. No. 120295

This is a petition to annul three Resolutions of the respondent Comelec, the first two of which are
also at issue in G.R. No. 123755, as follows:
 1. Resolution16 of the Second Division, promulgated on May 1, 1995, disqualifying
Frivaldo from running for governor of Sorsogon in the May 8, 1995 elections "on
the ground that he is not a citizen of the Philippines";

2. Resolution17 of the Comelec en banc, promulgated on May 11, 1995; and

3. Resolution18 of the Comelec en banc, promulgated also on May 11, 1995

suspending the proclamation of, among others, Frivaldo.

The Facts and the Issue

The facts of this case are essentially the same as those in G.R. No. 123755. However, Frivaldo
assails the above-mentioned resolutions on a different ground: that under Section 78 of the
Omnibus Election Code, which is reproduced hereinunder:

Sec. 78. Petition to deny due course or to cancel a certificate of candidacy. -- A

verified petition seeking to deny due course or to cancel a certificate of candidacy
may be filed by any person exclusively on the ground that any material
representation contained therein as required under Section 74 hereof is false.
The petition may be filed at any time not later than twenty-five days from the time
of the filing of the certificate of candidacy and shall be decided, after notice and
hearing, not later than fifteen days before the election. (Emphasis supplied.)

the Comelec had no jurisdiction to issue said Resolutions because they were not
rendered "within the period allowed by law" i.e., "not later than fifteen days before the
election."

Otherwise stated, Frivaldo contends that the failure of the Comelec to act on the petition for
disqualification within the period of fifteen days prior to the election as provided by law is a
jurisdictional defect which renders the said Resolutions null and void.

By Resolution on March 12, 1996, the Court consolidated G.R. Nos. 120295 and 123755 since
they are intimately related in their factual environment and are identical in the ultimate question
raised, viz., who should occupy the position of governor of the province of Sorsogon.

On March 19, 1995, the Court heard oral argument from the parties and required them thereafter
to file simultaneously their respective memoranda.

The Consolidated Issues

From the foregoing submissions, the consolidated issues may be restated as follows:

1. Was the repatriation of Frivaldo valid and legal? If so, did it seasonably cure his lack of
citizenship as to qualify him to be proclaimed and to hold the Office of Governor? If not, may it be
given retroactive effect? If so, from when?

2. Is Frivaldo's "judicially declared" disqualification for lack of Filipino citizenship a continuing bar
to his eligibility to run for, be elected to or hold the governorship of Sorsogon?

3. Did the respondent Comelec have jurisdiction over the initiatory petition in SPC No. 95-317
considering that said petition is not "a pre-proclamation case, an election protest or a quo
warranto case"?

4. Was the proclamation of Lee, a runner-up in the election, valid and legal in light of existing
jurisprudence?
5. Did the respondent Commission on Elections exceed its jurisdiction in promulgating the
assailed Resolutions, all of which prevented Frivaldo from assuming the governorship of
Sorsogon, considering that they were not rendered within the period referred to in Section 78 of
the Omnibus Election Code, viz., "not later than fifteen days before the elections"?

The First Issue: Frivaldo's Repatriation

The validity and effectivity of Frivaldo's repatriation is the lis mota, the threshold legal issue in
this case. All the other matters raised are secondary to this.

The Local Government Code of 199119 expressly requires Philippine citizenship as a qualification
for elective local officials, including that of provincial governor, thus:

Sec. 39. Qualifications. -- (a) An elective local official must be a citizen of the
Philippines; a registered voter in the barangay, municipality, city, or province or,
in the case of a member of the sangguniang panlalawigan, sangguniang
panlungsod, or sangguniang bayan, the district where he intends to be elected; a
resident therein for at least one (1) year immediately preceding the day of the
election; and able to read and write Filipino or any other local language or dialect.

(b) Candidates for the position of governor, vice governor or

member of the sangguniang panlalawigan, or mayor, vice mayor
or member of the sangguniang panlungsod of highly urbanized
cities must be at least twenty-three (23) years of age on election
day.

xxx xxx xxx

Inasmuch as Frivaldo had been declared by this Court20 as a non-citizen, it is therefore incumbent
upon him to show that he has reacquired citizenship; in fine, that he possesses the qualifications
prescribed under the said statute (R.A. 7160).

Under Philippine law,21 citizenship may be reacquired by direct act of Congress, by naturalization
or by repatriation. Frivaldo told this Court in G.R. No. 10465422 and during the oral argument in
this case that he tried to resume his citizenship by direct act of Congress, but that the bill
allowing him to do so "failed to materialize, notwithstanding the endorsement of several members
of the House of Representatives" due, according to him, to the "maneuvers of his political rivals."
In the same case, his attempt at naturalization was rejected by this Court because of
jurisdictional, substantial and procedural defects.

Despite his lack of Philippine citizenship, Frivaldo was overwhelmingly elected governor by the
electorate of Sorsogon, with a margin of 27,000 votes in the 1988 elections, 57,000 in 1992, and
20,000 in 1995 over the same opponent Raul Lee. Twice, he was judicially declared a non-
Filipino and thus twice disqualified from holding and discharging his popular mandate. Now, he
comes to us a third time, with a fresh vote from the people of Sorsogon and a favorable decision
from the Commission on Elections to boot. Moreover, he now boasts of having successfully
passed through the third and last mode of reacquiring citizenship: by repatriation under P.D. No.
725, with no less than the Solicitor General himself, who was the prime opposing counsel in the
previous cases he lost, this time, as counsel for co-respondent Comelec, arguing the validity of
his cause (in addition to his able private counsel Sixto S. Brillantes, Jr.). That he took his oath of
allegiance under the provisions of said Decree at 2:00 p.m. on June 30, 1995 is not disputed.
Hence, he insists that he -- not Lee -- should have been proclaimed as the duly-elected governor
of Sorsogon when the Provincial Board of Canvassers met at 8:30 p.m. on the said date since,
clearly and unquestionably, he garnered the highest number of votes in the elections and since
at that time, he already reacquired his citizenship.
En contrario, Lee argues that Frivaldo's repatriation is tainted with serious defects, which we
shall now discuss in seriatim.

First, Lee tells us that P.D. No. 725 had "been effectively repealed", asserting that "then
President Corazon Aquino exercising legislative powers under the Transitory Provisions of the
1987 Constitution, forbade the grant of citizenship by Presidential Decree or Executive Issuances
as the same poses a serious and contentious issue of policy which the present government, in
the exercise of prudence and sound discretion, should best leave to the judgment of the first
Congress under the 1987 Constitution", adding that in her memorandum dated March 27, 1987
to the members of the Special Committee on Naturalization constituted for purposes of
Presidential Decree No. 725, President Aquino directed them "to cease and desist from
undertaking any and all proceedings within your functional area of responsibility as defined under
Letter of Instructions (LOI) No. 270 dated April 11, 1975, as amended."23

This memorandum dated March 27, 198724 cannot by any stretch of legal hermeneutics be
construed as a law sanctioning or authorizing a repeal of P.D. No. 725. Laws are repealed only
by subsequent ones 25 and a repeal may be express or implied. It is obvious that no express
repeal was made because then President Aquino in her memorandum -- based on the copy
furnished us by Lee -- did not categorically and/or impliedly state that P.D. 725 was being
repealed or was being rendered without any legal effect. In fact, she did not even mention it
specifically by its number or text. On the other hand, it is a basic rule of statutory construction
that repeals by implication are not favored. An implied repeal will not be allowed "unless it is
convincingly and unambiguously demonstrated that the two laws are clearly repugnant and
patently inconsistent that they cannot co-exist".26

The memorandum of then President Aquino cannot even be regarded as a legislative enactment,
for not every pronouncement of the Chief Executive even under the Transitory Provisions of the
1987 Constitution can nor should be regarded as an exercise of her law-making powers. At best,
it could be treated as an executive policy addressed to the Special Committee to halt the
acceptance and processing of applications for repatriation pending whatever "judgment the first
Congress under the 1987 Constitution" might make. In other words, the former President did not
repeal P.D. 725 but left it to the first Congress -- once created -- to deal with the matter. If she
had intended to repeal such law, she should have unequivocally said so instead of referring the
matter to Congress. The fact is she carefully couched her presidential issuance in terms that
clearly indicated the intention of "the present government, in the exercise of prudence and sound
discretion" to leave the matter of repeal to the new Congress. Any other interpretation of the said
Presidential Memorandum, such as is now being proffered to the Court by Lee, would visit
unmitigated violence not only upon statutory construction but on common sense as well.

Second, Lee also argues that "serious congenital irregularities flawed the repatriation
proceedings," asserting that Frivaldo's application therefor was "filed on June 29, 1995 . . . (and)
was approved in just one day or on June 30, 1995 . . .", which "prevented a judicious review and
evaluation of the merits thereof." Frivaldo counters that he filed his application for repatriation
with the Office of the President in Malacañang Palace on August 17, 1994. This is confirmed by
the Solicitor General. However, the Special Committee was reactivated only on June 8, 1995,
when presumably the said Committee started processing his application. On June 29, 1995, he
filled up and re-submitted the FORM that the Committee required. Under these circumstances, it
could not be said that there was "indecent haste" in the processing of his application.

Anent Lee's charge that the "sudden reconstitution of the Special Committee on Naturalization
was intended solely for the personal interest of respondent,"27 the Solicitor General explained
during the oral argument on March 19, 1996 that such allegation is simply baseless as there
were many others who applied and were considered for repatriation, a list of whom was
submitted by him to this Court, through a Manifestation28 filed on April 3, 1996.
On the basis of the parties' submissions, we are convinced that the presumption of regularity in
the performance of official duty and the presumption of legality in the repatriation of Frivaldo have
not been successfully rebutted by Lee. The mere fact that the proceedings were speeded up is
by itself not a ground to conclude that such proceedings were necessarily tainted. After all, the
requirements of repatriation under P.D. No. 725 are not difficult to comply with, nor are they
tedious and cumbersome. In fact, P.D.
72529 itself requires very little of an applicant, and even the rules and regulations to implement the
said decree were left to the Special Committee to promulgate. This is not unusual since, unlike in
naturalization where an alien covets a first-time entry into Philippine political life, in repatriation
the applicant is a former natural-born Filipino who is merely seeking to reacquire his previous
citizenship. In the case of Frivaldo, he was undoubtedly a natural-born citizen who openly and
faithfully served his country and his province prior to his naturalization in the United States -- a
naturalization he insists was made necessary only to escape the iron clutches of a dictatorship
he abhorred and could not in conscience embrace -- and who, after the fall of the dictator and the
re-establishment of democratic space, wasted no time in returning to his country of birth to offer
once more his talent and services to his people.

So too, the fact that ten other persons, as certified to by the Solicitor General, were granted
repatriation argues convincingly and conclusively against the existence of favoritism vehemently
posited by Raul Lee. At any rate, any contest on the legality of Frivaldo's repatriation should have
been pursued before the Committee itself, and, failing there, in the Office of the President,
pursuant to the doctrine of exhaustion of administrative remedies.

Third, Lee further contends that assuming the assailed repatriation to be valid, nevertheless it
could only be effective as at 2:00 p.m. of June 30, 1995 whereas the citizenship qualification
prescribed by the Local Government Code "must exist on the date of his election, if not when the
certificate of candidacy is filed," citing our decision in G.R. 10465430 which held that "both the
Local Government Code and the Constitution require that only Philippine citizens can run and be
elected to public office." Obviously, however, this was a mere obiter as the only issue in said
case was whether Frivaldo's naturalization was valid or not -- and NOT the effective date thereof.
Since the Court held his naturalization to be invalid, then the issue of when an aspirant for public
office should be a citizen was NOT resolved at all by the Court. Which question we shall now
directly rule on.

Under Sec. 39 of the Local Government Code, "(a)n elective local official must be:

* a citizen of the Philippines;

* a registered voter in the barangay, municipality, city, or province . . . where he

intends to be elected;

* a resident therein for at least one (1) year immediately preceding the day of the
election;

* able to read and write Filipino or any other local language or dialect.

* In addition, "candidates for the position of governor . . . must be at least twenty-

three (23) years of age on election day.

From the above, it will be noted that the law does not specify any particular date or time when the
candidate must possess citizenship, unlike that for residence (which must consist of at least one
year's residency immediately preceding the day of election) and age (at least twenty three years
of age on election day).

Philippine citizenship is an indispensable requirement for holding an elective public office,31 and
the purpose of the citizenship qualification is none other than to ensure that no alien, i.e., no
person owing allegiance to another nation, shall govern our people and our country or a unit of
territory thereof. Now, an official begins to govern or to discharge his functions only upon his
proclamation and on the day the law mandates his term of office to begin. Since Frivaldo re-
assumed his citizenship on June 30, 1995 -- the very day32 the term of office of governor (and
other elective officials) began -- he was therefore already qualified to be proclaimed, to hold such
office and to discharge the functions and responsibilities thereof as of said date. In short, at that
time, he was already qualified to govern his native Sorsogon. This is the liberal interpretation that
should give spirit, life and meaning to our law on qualifications consistent with the purpose for
which such law was enacted. So too, even from a literal (as distinguished from liberal)
construction, it should be noted that Section 39 of the Local Government Code speaks of
"Qualifications" of "ELECTIVE OFFICIALS", not of candidates. Why then should such
qualification be required at the time of election or at the time of the filing of the certificates of
candidacies, as Lee insists? Literally, such qualifications -- unless otherwise expressly
conditioned, as in the case of age and residence -- should thus be possessed when the "elective
[or elected] official" begins to govern, i.e., at the time he is proclaimed and at the start of his term
-- in this case, on June 30, 1995. Paraphrasing this Court's ruling in Vasquez vs. Giap and Li
Seng Giap & Sons, 33 if the purpose of the citizenship requirement is to ensure that our people
and country do not end up being governed by aliens, i.e., persons owing allegiance to another
nation, that aim or purpose would not be thwarted but instead achieved by construing the
citizenship qualification as applying to the time of proclamation of the elected official and at the
start of his term.

But perhaps the more difficult objection was the one raised during the oral argument34 to the
effect that the citizenship qualification should be possessed at the time the candidate (or for that
matter the elected official) registered as a voter. After all, Section 39, apart from requiring the
official to be a citizen, also specifies as another item of qualification, that he be a "registered
voter". And, under the law35 a "voter" must be a citizen of the Philippines. So therefore, Frivaldo
could not have been a voter -- much less a validly registered one -- if he was not a citizen at the
time of such registration.

The answer to this problem again lies in discerning the purpose of the requirement. If the law
intended the citizenship qualification to be possessed prior to election consistent with the
requirement of being a registered voter, then it would not have made citizenship a SEPARATE
qualification. The law abhors a redundancy. It therefore stands to reason that the law intended
CITIZENSHIP to be a qualification distinct from being a VOTER, even if being a voter presumes
being a citizen first. It also stands to reason that the voter requirement was included as another
qualification (aside from "citizenship"), not to reiterate the need for nationality but to require that
the official be registered as a voter IN THE AREA OR TERRITORY he seeks to govern, i.e., the
law states: "a registered voter in the barangay, municipality, city, or province . . . where he
intends to be elected." It should be emphasized that the Local Government Code requires an
elective official to be a registered voter. It does not require him to vote actually. Hence,
registration -- not the actual voting -- is the core of this "qualification". In other words, the law's
purpose in this second requirement is to ensure that the prospective official is actually registered
in the area he seeks to govern -- and not anywhere else.

Before this Court, Frivaldo has repeatedly emphasized -- and Lee has not disputed -- that he
"was and is a registered voter of Sorsogon, and his registration as a voter has been sustained as
valid by judicial declaration . . . In fact, he cast his vote in his precinct on May 8, 1995."36

So too, during the oral argument, his counsel steadfastly maintained that "Mr. Frivaldo has
always been a registered voter of Sorsogon. He has voted in 1987, 1988, 1992, then he voted
again in 1995. In fact, his eligibility as a voter was questioned, but the court dismissed (sic) his
eligibility as a voter and he was allowed to vote as in fact, he voted in all the previous elections
including on May 8, 1995."3 7

It is thus clear that Frivaldo is a registered voter in the province where he intended to be elected.
There is yet another reason why the prime issue of citizenship should be reckoned from the date
of proclamation, not necessarily the date of election or date of filing of the certificate of
candidacy. Section 253 of the Omnibus Election Code 38 gives any voter, presumably including
the defeated candidate, the opportunity to question the ELIGIBILITY (or the disloyalty) of a
candidate. This is the only provision of the Code that authorizes a remedy on how to contest
before the Comelec an incumbent's ineligibility arising from failure to meet the qualifications
enumerated under Sec. 39 of the Local Government Code. Such remedy of Quo Warranto can
be availed of "within ten days after proclamation" of the winning candidate. Hence, it is only at
such time that the issue of ineligibility may be taken cognizance of by the Commission. And
since, at the very moment of Lee's proclamation (8:30 p.m., June 30, 1995), Juan G. Frivaldo
was already and indubitably a citizen, having taken his oath of allegiance earlier in the afternoon
of the same day, then he should have been the candidate proclaimed as he unquestionably
garnered the highest number of votes in the immediately preceding elections and such oath had
already cured his previous "judicially-declared" alienage. Hence, at such time, he was no longer
ineligible.

But to remove all doubts on this important issue, we also hold that the repatriation of Frivaldo
RETROACTED to the date of the filing of his application on August 17, 1994.

It is true that under the Civil Code of the Philippines, 39 "(l)aws shall have no retroactive effect,
unless the contrary is provided." But there are settled exceptions40 to this general rule, such as
when the statute is CURATIVE or REMEDIAL in nature or when it CREATES NEW RIGHTS.

According to Tolentino,41 curative statutes are those which undertake to cure errors and
irregularities, thereby validating judicial or administrative proceedings, acts of public officers, or
private deeds and contracts which otherwise would not produce their intended consequences by
reason of some statutory disability or failure to comply with some technical requirement. They
operate on conditions already existing, and are necessarily retroactive in operation. Agpalo,42 on
the other hand, says that curative statutes are
"healing acts . . . curing defects and adding to the means of enforcing existing obligations . . .
(and) are intended to supply defects, abridge superfluities in existing laws, and curb certain evils.
. . . By their very nature, curative statutes are retroactive . . . (and) reach back to past events to
correct errors or irregularities and to render valid and effective attempted acts which would be
otherwise ineffective for the purpose the parties intended."

On the other hand, remedial or procedural laws, i.e., those statutes relating to remedies or
modes of procedure, which do not create new or take away vested rights, but only operate in
furtherance of the remedy or confirmation of such rights, ordinarily do not come within the legal
meaning of a retrospective law, nor within the general rule against the retrospective operation of
statutes.43

A reading of P.D. 725 immediately shows that it creates a new right, and also provides for a new
remedy, thereby filling certain voids in our laws. Thus, in its preamble, P.D. 725 expressly
recognizes the plight of "many Filipino women (who) had lost their Philippine citizenship by
marriage to aliens" and who could not, under the existing law (C.A. No. 63, as amended) avail of
repatriation until "after the death of their husbands or the termination of their marital status" and
who could neither be benefitted by the 1973 Constitution's new provision allowing "a Filipino
woman who marries an alien to retain her Philippine citizenship . . ." because "such provision of
the new Constitution does not apply to Filipino women who had married aliens before said
constitution took effect." Thus, P.D. 725 granted a new right to these women -- the right to re-
acquire Filipino citizenship even during their marital coverture, which right did not exist prior to
P.D. 725. On the other hand, said statute also provided a new remedy and a new right in favor of
other "natural born Filipinos who (had) lost their Philippine citizenship but now desire to re-
acquire Philippine citizenship", because prior to the promulgation of P.D. 725 such former
Filipinos would have had to undergo the tedious and cumbersome process of naturalization, but
with the advent of P.D. 725 they could now re-acquire their Philippine citizenship under the
simplified procedure of repatriation.
The Solicitor General44 argues:

By their very nature, curative statutes are retroactive, (DBP vs. CA, 96 SCRA
342), since they are intended to supply defects, abridge superfluities in existing
laws (Del Castillo vs. Securities and Exchange Commission, 96 Phil. 119) and
curb certain evils (Santos vs. Duata, 14 SCRA 1041).

In this case, P.D. No. 725 was enacted to cure the defect in the existing
naturalization law, specifically C.A. No. 63 wherein married Filipino women are
allowed to repatriate only upon the death of their husbands, and natural-born
Filipinos who lost their citizenship by naturalization and other causes faced the
difficulty of undergoing the rigid procedures of C.A. 63 for reacquisition of Filipino
citizenship by naturalization.

Presidential Decree No. 725 provided a remedy for the aforementioned legal
aberrations and thus its provisions are considered essentially remedial and
curative.

In light of the foregoing, and prescinding from the wording of the preamble, it is unarguable that
the legislative intent was precisely to give the statute retroactive operation. "(A) retrospective
operation is given to a statute or amendment where the intent that it should so operate clearly
appears from a consideration of the act as a whole, or from the terms thereof."45 It is obvious to
the Court that the statute was meant to "reach back" to those persons, events and transactions
not otherwise covered by prevailing law and jurisprudence. And inasmuch as it has been held
that citizenship is a political and civil right equally as important as the freedom of speech, liberty
of abode, the right against unreasonable searches and seizures and other guarantees enshrined
in the Bill of Rights, therefore the legislative intent to give retrospective operation to P.D. 725
must be given the fullest effect possible. "(I)t has been said that a remedial statute must be so
construed as to make it effect the evident purpose for which it was enacted, so that if the reason
of the statute extends to past transactions, as well as to those in the future, then it will be so
applied although the statute does not in terms so direct, unless to do so would impair some
vested right or violate some constitutional guaranty."46 This is all the more true of P.D. 725, which
did not specify any restrictions on or delimit or qualify the right of repatriation granted therein.

At this point, a valid question may be raised: How can the retroactivity of P.D. 725 benefit
Frivaldo considering that said law was enacted on June 5, 1975, while Frivaldo lost his Filipino
citizenship much later, on January 20, 1983, and applied for repatriation even later, on August
17, 1994?

While it is true that the law was already in effect at the time that Frivaldo became an American
citizen, nevertheless, it is not only the law itself (P.D. 725) which is to be given retroactive effect,
but even the repatriation granted under said law to Frivaldo on June 30, 1995 is to be deemed to
have retroacted to the date of his application therefor, August 17, 1994. The reason for this is
simply that if, as in this case, it was the intent of the legislative authority that the law should apply
to past events -- i.e., situations and transactions existing even before the law came into being --
in order to benefit the greatest number of former Filipinos possible thereby enabling them to
enjoy and exercise the constitutionally guaranteed right of citizenship, and such legislative
intention is to be given the fullest effect and expression, then there is all the more reason to have
the law apply in a retroactive or retrospective manner to situations, events and transactions
subsequent to the passage of such law. That is, the repatriation granted to Frivaldo on June 30,
1995 can and should be made to take effect as of date of his application. As earlier mentioned,
there is nothing in the law that would bar this or would show a contrary intention on the part of
the legislative authority; and there is no showing that damage or prejudice to anyone, or anything
unjust or injurious would result from giving retroactivity to his repatriation. Neither has Lee shown
that there will result the impairment of any contractual obligation, disturbance of any vested right
or breach of some constitutional guaranty.
Being a former Filipino who has served the people repeatedly, Frivaldo deserves a liberal
interpretation of Philippine laws and whatever defects there were in his nationality should now be
deemed mooted by his repatriation.

Another argument for retroactivity to the date of filing is that it would prevent prejudice to
applicants. If P.D. 725 were not to be given retroactive effect, and the Special Committee
decides not to act, i.e., to delay the processing of applications for any substantial length of time,
then the former Filipinos who may be stateless, as Frivaldo -- having already renounced his
American citizenship -- was, may be prejudiced for causes outside their control. This should not
be. In case of doubt in the interpretation or application of laws, it is to be presumed that the law-
making body intended right and justice to prevail.4 7

And as experience will show, the Special Committee was able to process, act upon and grant
applications for repatriation within relatively short spans of time after the same were filed.48 The
fact that such interregna were relatively insignificant minimizes the likelihood of prejudice to the
government as a result of giving retroactivity to repatriation. Besides, to the mind of the Court,
direct prejudice to the government is possible only where a person's repatriation has the effect of
wiping out a liability of his to the government arising in connection with or as a result of his being
an alien, and accruing only during the interregnum between application and approval, a situation
that is not present in the instant case.

And it is but right and just that the mandate of the people, already twice frustrated, should now
prevail. Under the circumstances, there is nothing unjust or iniquitous in treating Frivaldo's
repatriation as having become effective as of the date of his application, i.e., on August 17, 1994.
This being so, all questions about his possession of the nationality qualification -- whether at the
date of proclamation (June 30, 1995) or the date of election (May 8, 1995) or date of filing his
certificate of candidacy (March 20, 1995) would become moot.

Based on the foregoing, any question regarding Frivaldo's status as a registered voter would also
be deemed settled. Inasmuch as he is considered as having been repatriated -- i.e., his Filipino
citizenship restored -- as of August 17, 1994, his previous registration as a voter is likewise
deemed validated as of said date.

It is not disputed that on January 20, 1983 Frivaldo became an American. Would the retroactivity
of his repatriation not effectively give him dual citizenship, which under Sec. 40 of the Local
Government Code would disqualify him "from running for any elective local position?"49 We
answer this question in the negative, as there is cogent reason to hold that Frivaldo was really
STATELESS at the time he took said oath of allegiance and even before that, when he ran for
governor in 1988. In his Comment, Frivaldo wrote that he "had long renounced and had long
abandoned his American citizenship -- long before May 8, 1995. At best, Frivaldo was stateless
in the interim -- when he abandoned and renounced his US citizenship but before he was
repatriated to his Filipino citizenship."50

On this point, we quote from the assailed Resolution dated December 19, 1995:51

By the laws of the United States, petitioner Frivaldo lost his American citizenship
when he took his oath of allegiance to the Philippine Government when he ran for
Governor in 1988, in 1992, and in 1995. Every certificate of candidacy contains
an oath of allegiance to the Philippine Government."

These factual findings that Frivaldo has lost his foreign nationality long before the elections of
1995 have not been effectively rebutted by Lee. Furthermore, it is basic that such findings of the
Commission are conclusive upon this Court, absent any showing of capriciousness or
arbitrariness or
abuse.52
 The Second Issue: Is Lack of Citizenship
a Continuing Disqualification?

Lee contends that the May 1, 1995 Resolution 53 of the Comelec Second Division in SPA No. 95-
028 as affirmed in toto by Comelec En Banc in its Resolution of May 11, 1995 "became final and
executory after five (5) days or on May 17, 1995, no restraining order having been issued by this
Honorable Court.54 Hence, before Lee "was proclaimed as the elected governor on June 30,
1995, there was already a final and executory judgment disqualifying" Frivaldo. Lee adds that
this Court's two rulings (which Frivaldo now concedes were legally "correct") declaring Frivaldo
an alien have also become final and executory way before the 1995 elections, and these "judicial
pronouncements of his political status as an American citizen absolutely and for all time
disqualified (him) from running for, and holding any public office in the Philippines."

We do not agree.

It should be noted that our first ruling in G.R. No. 87193 disqualifying Frivaldo was rendered in
connection with the 1988 elections while that in G.R. No. 104654 was in connection with the
1992 elections. That he was disqualified for such elections is final and can no longer be changed.
In the words of the respondent Commission (Second Division) in its assailed Resolution:55

The records show that the Honorable Supreme Court had decided that Frivaldo
was not a Filipino citizen and thus disqualified for the purpose of the 1988 and
1992 elections. However, there is no record of any "final judgment" of the
disqualification of Frivaldo as a candidate for the May 8, 1995 elections. What the
Commission said in its Order of June 21, 1995 (implemented on June 30, 1995),
directing the proclamation of Raul R. Lee, was that Frivaldo was not a Filipino
citizen "having been declared by the Supreme Court in its Order dated March 25,
1995, not a citizen of the Philippines." This declaration of the Supreme Court,
however, was in connection with the 1992 elections.

Indeed, decisions declaring the acquisition or denial of citizenship cannot govern a person's
future status with finality. This is because a person may subsequently reacquire, or for that
matter lose, his citizenship under any of the modes recognized by law for the purpose. Hence,
in Lee vs. Commissioner of Immigration,56 we held:

Everytime the citizenship of a person is material or indispensable in a judicial or

administrative case, whatever the corresponding court or administrative authority
decides therein as to such citizenship is generally not considered res judicata,
hence it has to be threshed out again and again, as the occasion demands.

The Third Issue: Comelec's Jurisdiction

Over The Petition in SPC No. 95-317

Lee also avers that respondent Comelec had no jurisdiction to entertain the petition in SPC No.
95-317 because the only "possible types of proceedings that may be entertained by the Comelec
are a pre-proclamation case, an election protest or a quo warranto case". Again, Lee reminds us
that he was proclaimed on June 30, 1995 but that Frivaldo filed SPC No. 95-317 questioning his
(Lee's) proclamation only on July 6, 1995 -- "beyond the 5-day reglementary period." Hence,
according to him, Frivaldo's "recourse was to file either an election protest or a quo
warranto action."

This argument is not meritorious. The Constitution57 has given the Comelec ample power to
"exercise exclusive original jurisdiction over all contests relating to the elections, returns and
qualifications of all elective . . . provincial . . . officials." Instead of dwelling at length on the
various petitions that Comelec, in the exercise of its constitutional prerogatives, may entertain,
suffice it to say that this Court has invariably recognized the Commission's authority to hear and
decide petitions for annulment of proclamations -- of which SPC No. 95-317 obviously is
one.58 Thus, in Mentang vs. COMELEC,59 we ruled:

The petitioner argues that after proclamation and assumption of office, a pre-
proclamation controversy is no longer viable. Indeed, we are aware of cases
holding that pre-proclamation controversies may no longer be entertained by the
COMELEC after the winning candidate has been proclaimed. (citing Gallardo vs.
Rimando, 187 SCRA 463; Salvacion vs. COMELEC, 170 SCRA 513; Casimiro
vs. COMELEC, 171 SCRA 468.) This rule, however, is premised on an
assumption that the proclamation is no proclamation at all and the proclaimed
candidate's assumption of office cannot deprive the COMELEC of the power to
make such declaration of nullity. (citing Aguam vs. COMELEC, 23 SCRA 883;
Agbayani vs. COMELEC, 186 SCRA 484.)

The Court however cautioned that such power to annul a proclamation must "be done within ten
(10) days following the proclamation." Inasmuch as Frivaldo's petition was filed only six (6) days
after Lee's proclamation, there is no question that the Comelec correctly acquired jurisdiction
over the same.

The Fourth Issue: Was Lee's Proclamation Valid?

Frivaldo assails the validity of the Lee proclamation. We uphold him for the following reasons:

First. To paraphrase this Court in Labo vs. COMELEC,60 "the fact remains that he (Lee) was not
the choice of the sovereign will," and in Aquino vs. COMELEC,61 Lee is "a second placer, . . . just
that, a second placer."

In spite of this, Lee anchors his claim to the governorship on the pronouncement of this Court in
the aforesaid Labo62 case, as follows:

The rule would have been different if the electorate fully aware in fact and in law
of a candidate's disqualification so as to bring such awareness within the realm of
notoriety, would nonetheless cast their votes in favor of the ineligible candidate.
In such case, the electorate may be said to have waived the validity and efficacy
of their votes by notoriously misapplying their franchise or throwing away their
votes, in which case, the eligible candidate obtaining the next higher number of
votes may be deemed elected.

But such holding is qualified by the next paragraph, thus:

But this is not the situation obtaining in the instant dispute. It has not been shown,
and none was alleged, that petitioner Labo was notoriously known as an ineligible
candidate, much less the electorate as having known of such fact. On the
contrary, petitioner Labo was even allowed by no less than the Comelec itself in
its resolution dated May 10, 1992 to be voted for the office of the city Payor as its
resolution dated May 9, 1992 denying due course to petitioner Labo's certificate
of candidacy had not yet become final and subject to the final outcome of this
case.

The last-quoted paragraph in Labo, unfortunately for Lee, is the ruling appropriate in this case
because Frivaldo was in 1995 in an identical situation as Labo was in 1992 when the Comelec's
cancellation of his certificate of candidacy was not yet final on election day as there was in both
cases a pending motion for reconsideration, for which reason Comelec issued an (omnibus)
resolution declaring that Frivaldo (like Labo in 1992) and several others can still be voted for in
the May 8, 1995 election, as in fact, he was.
Furthermore, there has been no sufficient evidence presented to show that the electorate of
Sorsogon was "fully aware in fact and in law" of Frivaldo's alleged disqualification as to "bring
such awareness within the realm of notoriety;" in other words, that the voters intentionally wasted
their ballots knowing that, in spite of their voting for him, he was ineligible. If Labo has any
relevance at all, it is that the vice-governor -- and not Lee -- should be pro- claimed, since in
losing the election, Lee was, to paraphrase Labo again, "obviously not the choice of the people"
of Sorsogon. This is the emphatic teaching of Labo:

The rule, therefore, is: the ineligibility of a candidate receiving majority votes does
not entitle the eligible candidate receiving the next highest number of votes to be
declared elected. A minority or defeated candidate cannot be deemed elected to
the office.

Second. As we have earlier declared Frivaldo to have seasonably reacquired his citizenship and
inasmuch as he obtained the highest number of votes in the 1995 elections, he -- not Lee --
should be proclaimed. Hence, Lee's proclamation was patently erroneous and should now be
corrected.

The Fifth Issue: Is Section 78 of the

Election Code Mandatory?

In G.R. No. 120295, Frivaldo claims that the assailed Resolution of the Comelec (Second
Division) dated May 1, 1995 and the confirmatory en banc Resolution of May 11, 1995
disqualifying him for want of citizenship should be annulled because they were rendered beyond
the fifteen (15) day period prescribed by Section 78, of the Omnibus Election Code which reads
as follows:

Sec. 78. Petition to deny due course or to cancel a certificate of candidacy. -- A

verified petition seeking to deny due course or to cancel a certificate of candidacy
may be filed by any person exclusively on the ground that any material
representation contained therein as required under Section 74 hereof is false.
The petition may be filed at any time not later than twenty-five days from the time
of the filing of the certificate of candidacy and shall be decided after notice and
hearing, not later than fifteen days before the election. (Emphasis supplied.)

This claim is now moot and academic inasmuch as these resolutions are deemed superseded by
the subsequent ones issued by the Commission (First Division) on December 19, 1995,
affirmed en banc63 on February 23, 1996; which both upheld his election. At any rate, it is obvious
that Section 78 is merely directory as Section 6 of R.A. No. 6646 authorizes the Commission to
try and decide petitions for disqualifications even after the elections, thus:

Sec. 6. Effect of Disqualification Case. -- Any candidate who has been declared
by final judgment to be disqualified shall not be voted for, and the votes cast for
him shall not be counted. If for any reason a candidate is not declared by final
judgment before an election to be disqualified and he is voted for and receives
the winning number of votes in such election, the Court or Commission shall
continue with the trial and hearing of the action, inquiry or protest and upon
motion of the complainant or any intervenor, may during the pendency thereof
order the suspension of the proclamation of such candidate whenever the
evidence of his guilt is strong. (emphasis supplied)

Refutation of
Mr. Justice Davide's Dissent

In his dissenting opinion, the esteemed Mr. Justice Hilario G. Davide, Jr. argues that President
Aquino's memorandum dated March 27, 1987 should be viewed as a suspension (not a repeal,
as urged by Lee) of P.D. 725. But whether it decrees a suspension or a repeal is a purely
academic distinction because the said issuance is not a statute that can amend or abrogate an
existing law.
The existence and subsistence of P.D. 725 were recognized in the first Frivaldo case;64 viz.,
"(u)nder CA No. 63 as amended by CA No. 473 and P.D. No. 725, Philippine citizenship maybe
reacquired by . . . repatriation". He also contends that by allowing Frivaldo to register and to
remain as a registered voter, the Comelec and in effect this Court abetted a "mockery" of our two
previous judgments declaring him a non-citizen. We do not see such abetting or mockery. The
retroactivity of his repatriation, as discussed earlier, legally cured whatever defects there may
have been in his registration as a voter for the purpose of the 1995 elections. Such retroactivity
did not change his disqualifications in 1988 and 1992, which were the subjects of such previous
rulings.

Mr. Justice Davide also believes that Quo Warranto is not the sole remedy to question the
ineligibility of a candidate, citing the Comelec's authority under Section 78 of the Omnibus
Election Code allowing the denial of a certificate of candidacy on the ground of a false material
representation therein as required by Section 74. Citing Loong, he then states his disagreement
with our holding that Section 78 is merely directory. We really have no quarrel. Our point is that
Frivaldo was in error in his claim in G.R. No. 120295 that the Comelec Resolutions promulgated
on May 1, 1995 and May 11, 1995 were invalid because they were issued "not later than fifteen
days before the election" as prescribed by Section 78. In dismissing the petition in G.R. No.
120295, we hold that the Comelec did not commit grave abuse of discretion because "Section 6
of R.A. 6646 authorizes the Comelec to try and decide disqualifications even after the elections."
In spite of his disagreement with us on this point, i.e., that Section 78 "is merely directory", we
note that just like us, Mr. Justice Davide nonetheless votes to "DISMISS G.R. No. 120295". One
other point. Loong, as quoted in the dissent, teaches that a petition to deny due course under
Section 78 must be filed within the 25-day period prescribed therein. The present case however
deals with the period during which the Comelec may decide such petition. And we hold that it
may be decided even after the fifteen day period mentioned in Section 78. Here, we rule that a
decision promulgated by the Comelec even after the elections is valid but Loong held that a
petition filed beyond the 25-day period is out of time. There is no inconsistency nor conflict.

Mr. Justice Davide also disagrees with the Court's holding that, given the unique factual
circumstances of Frivaldo, repatriation may be given retroactive effect. He argues that such
retroactivity "dilutes" our holding in the first Frivaldo case. But the first (and even the second
Frivaldo) decision did not directly involve repatriation as a mode of acquiring citizenship. If we
may repeat, there is no question that Frivaldo was not a Filipino for purposes of determining his
qualifications in the 1988 and 1992 elections. That is settled. But his supervening repatriation has
changed his political status -- not in 1988 or 1992, but only in the 1995 elections.

Our learned colleague also disputes our holding that Frivaldo was stateless prior to his
repatriation, saying that "informal renunciation or abandonment is not a ground to lose American
citizenship". Since our courts are charged only with the duty of determining who are Philippine
nationals, we cannot rule on the legal question of who are or who are not Americans. It is basic in
international law that a State determines ONLY those who are its own citizens -- not who are the
citizens of other countries.65 The issue here is: the Comelec made a finding of fact that Frivaldo
was stateless and such finding has not been shown by Lee to be arbitrary or whimsical. Thus,
following settled case law, such finding is binding and final.

The dissenting opinion also submits that Lee who lost by chasmic margins to Frivaldo in all three
previous elections, should be declared winner because "Frivaldo's ineligibility for being an
American was publicly known". First, there is absolutely no empirical evidence for such "public"
knowledge. Second, even if there is, such knowledge can be truepost facto only of the last two
previous elections. Third, even the Comelec and now this Court were/are still deliberating on his
nationality before, during and after the 1995 elections. How then can there be such "public"
knowledge?
Mr. Justice Davide submits that Section 39 of the Local Government Code refers to the
qualifications of electivelocal officials, i.e., candidates, and not elected officials, and that the
citizenship qualification [under par. (a) of that section] must be possessed by candidates, not
merely at the commencement of the term, but by election day at the latest. We see it differently.
Section 39, par. (a) thereof speaks of "elective local official" while par. (b) to (f) refer to
"candidates". If the qualifications under par. (a) were intended to apply to "candidates" and not
elected officials, the legislature would have said so, instead of differentiating par. (a) from the rest
of the paragraphs. Secondly, if Congress had meant that the citizenship qualification should be
possessed at election day or prior thereto, it would have specifically stated such detail, the same
way it did in pars. (b) to (f) far other qualifications of candidates for governor, mayor, etc.

Mr. Justice Davide also questions the giving of retroactive effect to Frivaldo's repatriation on the
ground, among others, that the law specifically provides that it is only after taking the oath of
allegiance that applicants shall be deemed to have reacquired Philippine citizenship. We do not
question what the provision states. We hold however that the provision should be understood
thus: that after taking the oath of allegiance the applicant is deemed to have reacquired
Philippine citizenship, which reacquisition (or repatriation) is deemed for all purposes and intents
to have retroacted to the date of his application therefor.

In any event, our "so too" argument regarding the literal meaning of the word "elective" in
reference to Section 39 of the Local Authority Code, as well as regarding Mr. Justice Davide's
thesis that the very wordings of P.D. 725 suggest non-retroactivity, were already taken up rather
extensively earlier in this Decision.

Mr. Justice Davide caps his paper with a clarion call: "This Court must be the first to uphold the
Rule of Law." We agree -- we must all follow the rule of law. But that is NOT the issue here. The
issue is how should the law be interpreted and applied in this case so it can be followed, so it can
rule!

At balance, the question really boils down to a choice of philosophy and perception of how to
interpret and apply laws relating to elections: literal or liberal; the letter or the spirit, the naked
provision or its ultimate purpose; legal syllogism or substantial justice; in isolation or in the
context of social conditions; harshly against or gently in favor of the voters' obvious choice. In
applying election laws, it would be far better to err in favor of popular sovereignty than to be right
in complex but little understood legalisms. Indeed, to inflict a thrice rejected candidate upon the
electorate of Sorsogon would constitute unmitigated judicial tyranny and an unacceptable assault
upon this Court's conscience.

EPILOGUE

In sum, we rule that the citizenship requirement in the Local Government Code is to be
possessed by an elective official at the latest as of the time he is proclaimed and at the start of
the term of office to which he has been elected. We further hold P.D. No. 725 to be in full force
and effect up to the present, not having been suspended or repealed expressly nor impliedly at
any time, and Frivaldo's repatriation by virtue thereof to have been properly granted and thus
valid and effective. Moreover, by reason of the remedial or curative nature of the law granting
him a new right to resume his political status and the legislative intent behind it, as well as his
unique situation of having been forced to give up his citizenship and political aspiration as his
means of escaping a regime he abhorred, his repatriation is to be given retroactive effect as of
the date of his application therefor, during the pendency of which he was stateless, he having
given up his U.S. nationality. Thus, in contemplation of law, he possessed the vital requirement
of Filipino citizenship as of the start of the term of office of governor, and should have been
proclaimed instead of Lee. Furthermore, since his reacquisition of citizenship retroacted to
August 17, 1994, his registration as a voter of Sorsogon is deemed to have been validated as of
said date as well. The foregoing, of course, are precisely consistent with our holding that lack of
the citizenship requirement is not a continuing disability or disqualification to run for and hold
public office. And once again, we emphasize herein our previous rulings recognizing the
Comelec's authority and jurisdiction to hear and decide petitions for annulment of proclamations.

This Court has time and again liberally and equitably construed the electoral laws of our country
to give fullest effect to the manifest will of our people,66 for in case of doubt, political laws must be
interpreted to give life and spirit to the popular mandate freely expressed through the ballot.
Otherwise stated, legal niceties and technicalities cannot stand in the way of the sovereign will.
Consistently, we have held:

. . . (L)aws governing election contests must be liberally construed to the end that
the will of the people in the choice of public officials may not be defeated by mere
technical objections (citations omitted).67

The law and the courts must accord Frivaldo every possible protection, defense and refuge, in
deference to the popular will. Indeed, this Court has repeatedly stressed the importance of giving
effect to the sovereign will in order to ensure the survival of our democracy. In any action
involving the possibility of a reversal of the popular electoral choice, this Court must exert utmost
effort to resolve the issues in a manner that would give effect to the will of the majority, for it is
merely sound public policy to cause elective offices to be filled by those who are the choice of the
majority. To successfully challenge a winning candidate's qualifications, the petitioner must
clearly demonstrate that the ineligibility is so patently antagonistic68 to constitutional and legal
principles that overriding such ineligibility and thereby giving effect to the apparent will of the
people, would ultimately create greater prejudice to the very democratic institutions and juristic
traditions that our Constitution and laws so zealously protect and promote. In this undertaking,
Lee has miserably failed.

In Frivaldo's case. it would have been technically easy to find fault with his cause. The Court
could have refused to grant retroactivity to the effects of his repatriation and hold him still
ineligible due to his failure to show his citizenship at the time he registered as a voter before the
1995 elections. Or, it could have disputed the factual findings of the Comelec that he was
stateless at the time of repatriation and thus hold his consequent dual citizenship as a
disqualification "from running for any elective local position." But the real essence of justice does
not emanate from quibblings over patchwork legal technicality. It proceeds from the spirit's gut
consciousness of the dynamic role of law as a brick in the ultimate development of the social
edifice. Thus, the Court struggled against and eschewed the easy, legalistic, technical and
sometimes harsh anachronisms of the law in order to evoke substantial justice in the larger social
context consistent with Frivaldo's unique situation approximating venerability in Philippine
political life. Concededly, he sought American citizenship only to escape the clutches of the
dictatorship. At this stage, we cannot seriously entertain any doubt about his loyalty and
dedication to this country. At the first opportunity, he returned to this land, and sought to serve
his people once more. The people of Sorsogon overwhelmingly voted for him three times. He
took an oath of allegiance to this Republic every time he filed his certificate of candidacy and
during his failed naturalization bid. And let it not be overlooked, his demonstrated tenacity and
sheer determination to re-assume his nationality of birth despite several legal set-backs speak
more loudly, in spirit, in fact and in truth than any legal technicality, of his consuming intention
and burning desire to re-embrace his native Philippines even now at the ripe old age of 81 years.
Such loyalty to and love of country as well as nobility of purpose cannot be lost on this Court of
justice and equity. Mortals of lesser mettle would have given up. After all, Frivaldo was assured
of a life of ease and plenty as a citizen of the most powerful country in the world. But he opted,
nay, single-mindedly insisted on returning to and serving once more his struggling but beloved
land of birth. He therefore deserves every liberal interpretation of the law which can be applied in
his favor. And in the final analysis, over and above Frivaldo himself, the indomitable people of
Sorsogon most certainly deserve to be governed by a leader of their overwhelming choice.

WHEREFORE, in consideration of the foregoing:

(1) The petition in G.R. No. 123755 is hereby DISMISSED. The assailed Resolutions of the
respondent Commission are AFFIRMED.

(2) The petition in G.R. No. 120295 is also DISMISSED for being moot and academic. In any
event, it has no merit.

No costs.

SO ORDERED.

G.R. No. 164527 August 15, 2007

FRANCISCO I. CHAVEZ, Petitioner,

vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC., HARBOUR
CENTRE PORT TERMINAL, INC., and MR. REGHIS ROMERO II, Respondents.

DECISION

VELASCO, JR., J.:

In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order
and/or Writ of Preliminary Injunction under Rule 65, petitioner, in his capacity as taxpayer, seeks:

to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993 between
the National Housing Authority and R-II Builders, Inc. and the Smokey Mountain Development
and Reclamation Project embodied therein; the subsequent amendments to the said JVA; and all
other agreements signed and executed in relation thereto – including, but not limited to the
Smokey Mountain Asset Pool Agreement dated 26 September 1994 and the separate
agreements for Phase I and Phase II of the Project––as well as all other transactions which
emanated therefrom, for being UNCONSTITUTIONAL and INVALID;

to enjoin respondents—particularly respondent NHA—from further implementing and/or enforcing

the said project and other agreements related thereto, and from further deriving and/or enjoying
any rights, privileges and interest therefrom x x x; and

to compel respondents to disclose all documents and information relating to the project––
including, but not limited to, any subsequent agreements with respect to the different phases of
the project, the revisions over the original plan, the additional works incurred thereon, the current
financial condition of respondent R-II Builders, Inc., and the transactions made respecting the
project.1

The Facts

On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO)
1612 approving and directing the implementation of the Comprehensive and Integrated
Metropolitan Manila Waste Management Plan (the Plan). The Metro Manila Commission, in
coordination with various government agencies, was tasked as the lead agency to implement the
Plan as formulated by the Presidential Task Force on Waste Management created by
Memorandum Circular No. 39. A day after, on March 2, 1988, MO 161-A3 was issued, containing
the guidelines which prescribed the functions and responsibilities of fifteen (15) various
government departments and offices tasked to implement the Plan, namely: Department of
Public Works and Highway (DPWH), Department of Health (DOH), Department of Environment
and Natural Resources (DENR), Department of Transportation and Communication, Department
of Budget and Management, National Economic and Development Authority (NEDA), Philippine
Constabulary Integrated National Police, Philippine Information Agency and the Local
Government Unit (referring to the City of Manila), Department of Social Welfare and
Development, Presidential Commission for Urban Poor, National Housing Authority (NHA),
Department of Labor and Employment, Department of Education, Culture and Sports (now
Department of Education), and Presidential Management Staff.

Specifically, respondent NHA was ordered to "conduct feasibility studies and develop low-cost
housing projects at the dumpsite and absorb scavengers in NHA resettlement/low-cost housing
projects."4 On the other hand, the DENR was tasked to "review and evaluate proposed projects
under the Plan with regard to their environmental impact, conduct regular monitoring of activities
of the Plan to ensure compliance with environmental standards and assist DOH in the conduct of
the study on hospital waste management."5

At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in
Balut, Tondo, Manila, where numerous Filipinos resided in subhuman conditions, collecting items
that may have some monetary value from the garbage. The Smokey Mountain dumpsite is
bounded on the north by the Estero Marala, on the south by the property of the National
Government, on the east by the property of B and I Realty Co., and on the west by Radial Road
10 (R-10).

Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost
housing project which resulted in the formulation of the "Smokey Mountain Development Plan
and Reclamation of the Area Across R-10" or the Smokey Mountain Development and
Reclamation Project (SMDRP; the Project). The Project aimed to convert the Smokey Mountain
dumpsite into a habitable housing project, inclusive of the reclamation of the area across R-10,
adjacent to the Smokey Mountain as the enabling component of the project.6 Once finalized, the
Plan was submitted to President Aquino for her approval.

On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was
enacted.7 Its declared policy under Section 1 is "[t]o recognize the indispensable role of the
private sector as the main engine for national growth and development and provide the most
appropriate favorable incentives to mobilize private resources for the purpose." Sec. 3 authorized
and empowered "[a]ll government infrastructure agencies, including government-owned and
controlled corporations and local government units x x x to enter into contract with any duly pre-
qualified private contractor for the financing, construction, operation and maintenance of any
financially viable infrastructure facilities through the build-operate-transfer or build and transfer
scheme."

RA 6957 defined "build-and-transfer" scheme as "[a] contractual arrangement whereby the

contractor undertakes the construction, including financing, of a given infrastructure facility, and
its turnover after the completion to the government agency or local government unit concerned
which shall pay the contractor its total investment expended on the project, plus reasonable rate
of return thereon." The last paragraph of Sec. 6 of the BOT Law provides that the repayment
scheme in the case of "land reclamation or the building of industrial estates" may consist of "[t]he
grant of a portion or percentage of the reclaimed land or industrial estate built, subject to the
constitutional requirements with respect to the ownership of lands."

On February 10, 1992, Joint Resolution No. 038 was passed by both houses of Congress. Sec. 1
of this resolution provided, among other things, that:

Section 1. There is hereby approved the following national infrastructure projects for
implementation under the provisions of Republic Act No. 6957 and its implementing rules and
regulations:

xxxx
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service and related
facilities;

xxxx

(k) Land reclamation, dredging and other related development facilities;

(l) Industrial estates, regional industrial centers and export processing zones including steel mills,
iron-making and petrochemical complexes and related infrastructure and utilities;

xxxx

(p) Environmental and solid waste management-related facilities such as collection equipment,
composting plants, incinerators, landfill and tidal barriers, among others; and

(q) Development of new townsites and communities and related facilities.

This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of
all national infrastructure projects by the Congress.

On January 17, 1992, President Aquino proclaimed MO 4159 approving and directing the
implementation of the SMDRP. Secs. 3 and 4 of the Memorandum Order stated:

Section 3. The National Housing Authority is hereby directed to implement the Smokey Mountain
Development Plan and Reclamation of the Area Across R-10 through a private sector joint
venture scheme at the least cost to the government.

Section 4. The land area covered by the Smokey Mountain dumpsite is hereby conveyed to the
National Housing Authority as well as the area to be reclaimed across R-10. (Emphasis
supplied.)

In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of
proposals regarding the technical feasibility of reclamation, while the DENR was directed to (1)
facilitate titling of Smokey Mountain and of the area to be reclaimed and (2) assist in the
technical evaluation of proposals regarding environmental impact statements.10

In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee
the implementation of the Plan, chaired by the National Capital Region-Cabinet Officer for
Regional Development (NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA,
Philippine Ports Authority (PPA), DENR, and Development Bank of the Philippines (DBP) as
members.11 The NEDA subsequently became a member of the EXECOM. Notably, in a
September 2, 1994 Letter,12 PEA General Manager Amado Lagdameo approved the plans for the
reclamation project prepared by the NHA.

In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was

created composed of the technical representatives of the EXECOM "[t]o assist the NHA in the
evaluation of the project proposals, assist in the resolution of all issues and problems in the
project to ensure that all aspects of the development from squatter relocation, waste
management, reclamation, environmental protection, land and house construction meet
governing regulation of the region and to facilitate the completion of the project."13

Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the
right to become NHA’s joint venture partner in the implementation of the SMDRP. The notices
were published in newspapers of general circulation on January 23 and 26 and February 1, 14,
16, and 23, 1992, respectively. Out of the thirteen (13) contractors who responded, only five (5)
contractors fully complied with the required pre-qualification documents. Based on the evaluation
of the pre-qualification documents, the EXECOM declared the New San Jose Builders, Inc. and
R-II Builders, Inc. (RBI) as the top two contractors.14

Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and
Financing Plan) of the top two (2) contractors in this manner:

(1) The DBP, as financial advisor to the Project, evaluated their Financial Proposals;

(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing
Construction and Reclamation;

(3) The DENR evaluated Technical Proposals on Waste Management and Disposal by
conducting the Environmental Impact Analysis; and

(4) The NHA and the City of Manila evaluated the socio-economic benefits presented by
the proposals.

On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.

On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve
the R-II Builders, Inc. (RBI) proposal which garnered the highest score of 88.475%.

Subsequently, the EXECOM made a Project briefing to President Ramos. As a result, President
Ramos issued Proclamation No. 3915 on September 9, 1992, which reads:

WHEREAS, the National Housing Authority has presented a viable conceptual plan to convert
the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of
the area across Road Radial 10 (R-10) adjacent to the Smokey Mountain as the enabling
component of the project;

xxxx

These parcels of land of public domain are hereby placed under the administration and
disposition of the National Housing Authority to develop, subdivide and dispose to qualified
beneficiaries, as well as its development for mix land use (commercial/industrial) to provide
employment opportunities to on-site families and additional areas for port-related activities.

In order to facilitate the early development of the area for disposition, the Department of
Environment and Natural Resources, through the Lands and Management Bureau, is hereby
directed to approve the boundary and subdivision survey and to issue a special patent and title in
the name of the National Housing Authority, subject to final survey and private rights, if any there
be. (Emphasis supplied.)

On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement
with RBI "[s]ubject to final review and approval of the Joint Venture Agreement by the Office of
the President."16

On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement17 (JVA) for the
development of the Smokey Mountain dumpsite and the reclamation of the area across R-10
based on Presidential Decree No. (PD) 75718 which mandated NHA "[t]o undertake the physical
and socio-economic upgrading and development of lands of the public domain identified for
housing," MO 161-A which required NHA to conduct the feasibility studies and develop a low-
cost housing project at the Smokey Mountain, and MO 415 as amended by MO 415-A which
approved the Conceptual Plan for Smokey Mountain and creation of the EXECOM and
TECHCOM. Under the JVA, the Project "involves the clearing of Smokey Mountain for eventual
development into a low cost medium rise housing complex and industrial/commercial site with
the reclamation of the area directly across [R-10] to act as the enabling component of the
Project."19 The JVA covered a lot in Tondo, Manila with an area of two hundred twelve thousand
two hundred thirty-four (212,234) square meters and another lot to be reclaimed also in Tondo
with an area of four hundred thousand (400,000) square meters.

The Scope of Work of RBI under Article II of the JVA is as follows:

a) To fully finance all aspects of development of Smokey Mountain and reclamation of no

more than 40 hectares of Manila Bay area across Radial Road 10.

b) To immediately commence on the preparation of feasibility report and detailed

engineering with emphasis to the expedient acquisition of the Environmental Clearance
Certificate (ECC) from the DENR.

c) The construction activities will only commence after the acquisition of the ECC, and

d) Final details of the contract, including construction, duration and delivery timetables,
shall be based on the approved feasibility report and detailed engineering.

Other obligations of RBI are as follows:

2.02 The [RBI] shall develop the PROJECT based on the Final Report and Detailed
Engineering as approved by the Office of the President. All costs and expenses for hiring
technical personnel, date gathering, permits, licenses, appraisals, clearances, testing and
similar undertaking shall be for the account of the [RBI].

2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units
complete with basic amenities such as plumbing, electrical and sewerage facilities within
the temporary housing project as staging area to temporarily house the squatter families
from the Smokey Mountain while development is being undertaken. These temporary
housing units shall be turned over to the [NHA] for disposition.

2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing units on
the leveled Smokey Mountain complete with basic utilities and amenities, in accordance
with the plans and specifications set forth in the Final Report approved by the [NHA].
Completed units ready for mortgage take out shall be turned over by the [RBI] to NHA on
agreed schedule.

2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-10]
as contained in Proclamation No. 39 as the enabling component of the project and
payment to the [RBI] as its asset share.

2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary to
complete all herein development works to be undertaken on a phase to phase basis in
accordance with the work program stipulated therein.

The profit sharing shall be based on the approved pre-feasibility report submitted to the
EXECOM, viz:

For the developer (RBI):

1. To own the forty (40) hectares of reclaimed land.

 2. To own the commercial area at the Smokey Mountain area composed of 1.3 hectares,
and

3. To own all the constructed units of medium rise low cost permanent housing units
beyond the 3,500 units share of the [NHA].

For the NHA:

1. To own the temporary housing consisting of 3,500 units.

2. To own the cleared and fenced incinerator site consisting of 5 hectares situated at the
Smokey Mountain area.

3. To own the 3,500 units of permanent housing to be constructed by [RBI] at the

Smokey Mountain area to be awarded to qualified on site residents.

4. To own the Industrial Area site consisting of 3.2 hectares, and

5. To own the open spaces, roads and facilities within the Smokey Mountain area.

In the event of "extraordinary increase in labor, materials, fuel and non-recoverability of total
project expenses,"20the OP, upon recommendation of the NHA, may approve a corresponding
adjustment in the enabling component.

The functions and responsibilities of RBI and NHA are as follows:

For RBI:

4.01 Immediately commence on the preparation of the FINAL REPORT with emphasis to the
expedient acquisition, with the assistance of the [NHA] of Environmental Compliance Certificate
(ECC) from the Environmental Management Bureau (EMB) of the [DENR]. Construction shall
only commence after the acquisition of the ECC. The Environment Compliance Certificate (ECC)
shall form part of the FINAL REPORT.

The FINAL REPORT shall provide the necessary subdivision and housing plans, detailed
engineering and architectural drawings, technical specifications and other related and required
documents relative to the Smokey Mountain area.

With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion to develop
the same in a manner that it deems necessary to recover the [RBI’s] investment, subject to
environmental and zoning rules.

4.02 Finance the total project cost for land development, housing construction and reclamation of
the PROJECT.

4.03 Warrant that all developments shall be in compliance with the requirements of the FINAL
REPORT.

4.04 Provide all administrative resources for the submission of project accomplishment reports to
the [NHA] for proper evaluation and supervision on the actual implementation.

4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of way to the
PROJECT, from the owners of the adjacent lots for access road, water, electrical power
connections and drainage facilities.
4.06 Provide temporary field office and transportation vehicles (2 units), one (1) complete set of
computer and one (1) unit electric typewriter for the [NHA’s] field personnel to be charged to the
PROJECT.

For the NHA:

4.07 The [NHA] shall be responsible for the removal and relocation of all squatters within
Smokey Mountain to the Temporary Housing Complex or to other areas prepared as relocation
areas with the assistance of the [RBI]. The [RBI] shall be responsible in releasing the funds
allocated and committed for relocation as detailed in the FINAL REPORT.

4.08 Assist the [RBI] and shall endorse granting of exemption fees in the acquisition of all
necessary permits, licenses, appraisals, clearances and accreditations for the PROJECT subject
to existing laws, rules and regulations.

4.09 The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and
Reclamation Area while the land development and construction of housing units are in progress
to determine whether the development and construction works are undertaken in accordance
with the FINAL REPORT. If in its judgment, the PROJECT is not pursued in accordance with the
FINAL REPORT, the [NHA] shall require the [RBI] to undertake necessary remedial works. All
expenses, charges and penalties incurred for such remedial, if any, shall be for the account of
the [RBI].

4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x x x

4.11 Handle the processing and documentation of all sales transactions related to its assets
shares from the venture such as the 3,500 units of permanent housing and the allotted industrial
area of 3.2 hectares.

4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted from
the proceeds due to the [NHA].

4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for the Smokey
Mountain and Reclamation Area within 90 days upon submission of Survey returns to the Land
Management Sector. The land titles to the 40-hectare reclaimed land, the 1.3 hectare
commercial area at the Smokey Mountain area and the constructed units of medium-rise
permanent housing units beyond the 3,500 units share of the [NHA] shall be issued in the name
of the [RBI] upon completion of the project. However, the [RBI] shall have the authority to pre-sell
its share as indicated in this agreement.

The final details of the JVA, which will include the construction duration, costs, extent of
reclamation, and delivery timetables, shall be based on the FINAL REPORT which will be
contained in a Supplemental Agreement to be executed later by the parties.

The JVA may be modified or revised by written agreement between the NHA and RBI specifying
the clauses to be revised or modified and the corresponding amendments.

If the Project is revoked or terminated by the Government through no fault of RBI or by mutual
agreement, the Government shall compensate RBI for its actual expenses incurred in the Project
plus a reasonable rate of return not exceeding that stated in the feasibility study and in the
contract as of the date of such revocation, cancellation, or termination on a schedule to be
agreed upon by both parties.

As a preliminary step in the project implementation, consultations and dialogues were conducted
with the settlers of the Smokey Mountain Dumpsite Area. At the same time, DENR started
processing the application for the Environmental Clearance Certificate (ECC) of the SMDRP. As
a result however of the consultative dialogues, public hearings, the report on the on-site field
conditions, the Environmental Impact Statement (EIS) published on April 29 and May 12, 1993
as required by the Environmental Management Bureau of DENR, the evaluation of the DENR,
and the recommendations from other government agencies, it was discovered that design
changes and additional work have to be undertaken to successfully implement the Project.21

Thus, on February 21, 1994, the parties entered into another agreement denominated as the
Amended and Restated Joint Venture Agreement22 (ARJVA) which delineated the different
phases of the Project. Phase I of the Project involves the construction of temporary housing units
for the current residents of the Smokey Mountain dumpsite, the clearing and leveling-off of the
dumpsite, and the construction of medium-rise low-cost housing units at the cleared and leveled
dumpsite.23 Phase II of the Project involves the construction of an incineration area for the on-site
disposal of the garbage at the dumpsite.24 The enabling component or consideration for Phase I
of the Project was increased from 40 hectares of reclaimed lands across R-10 to 79
hectares.25 The revision also provided for the enabling component for Phase II of 119 hectares of
reclaimed lands contiguous to the 79 hectares of reclaimed lands for Phase I.26 Furthermore, the
amended contract delineated the scope of works and the terms and conditions of Phases I and II,
thus:

The PROJECT shall consist of Phase I and Phase II.

Phase I shall involve the following:

a. the construction of 2,992 units of temporary housing for the affected residents while
clearing and development of Smokey Mountain [are] being undertaken

b. the clearing of Smokey Mountain and the subsequent construction of 3,520 units of
medium rise housing and the development of the industrial/commercial site within the
Smokey Mountain area

c. the reclamation and development of a 79 hectare area directly across Radial Road 10
to serve as the enabling component of Phase I

Phase II shall involve the following:

a. the construction and operation of an incinerator plant that will conform to the emission
standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be

reclaimed under Phase I to serve as the enabling component of Phase II.

Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500
units under the JVA.27However, it was required to construct 3,520 medium-rise low-cost
permanent housing units instead of 3,500 units under the JVA. There was a substantial change
in the design of the permanent housing units such that a "loft shall be incorporated in each unit
so as to increase the living space from 20 to 32 square meters. The additions and changes in the
Original Project Component are as follows:

ORIGINAL CHANGES/REVISIONS

1. TEMPORARY HOUSING
 Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life of 3
years, gauge 26 G.I. roofing sheets future 12 SM floor area. use as permanent
structures for factory and warehouses mixed 17 sm & 12 sm floor area.

2. MEDIUM RISE MASS

HOUSING

Box type precast Shelter Conventional and precast component 20 square meter
concrete structures, 32 square floor area with 2.4 meter meter floor area with loft
floor height; bare type, 160 units/ (sleeping quarter) 3.6 m. floor building. height,
painted and improved

architectural façade, 80 units/building.

3. MITIGATING MEASURES

3.1 For reclamation work Use of clean dredgefill material below the MLLW and
SM material mixed with dredgefill above MLLW.

a. 100% use of Smokey Mountain material as dredgefill Use of Steel

Sheet Piles needed for longer depth of embedment.

b. Concrete Sheet Piles short depth of embedment

c. Silt removal approximately Need to remove more than 3.0

1.0 meter only meters of silt after sub-soil investigation.28

These material and substantial modifications served as justifications for the increase in
the share of RBI from 40 hectares to 79 hectares of reclaimed land.

Under the JVA, the specific costs of the Project were not stipulated but under the ARJVA,
the stipulated cost for Phase I was pegged at six billion six hundred ninety-three million
three hundred eighty-seven thousand three hundred sixty-four pesos (PhP
6,693,387,364).

In his February 10, 1994 Memorandum, the Chairperson of the SMDRP EXECOM
submitted the ARJVA for approval by the OP. After review of said agreement, the OP
directed that certain terms and conditions of the ARJVA be further clarified or amended
preparatory to its approval. Pursuant to the President’s directive, the parties reached an
agreement on the clarifications and amendments required to be made on the ARJVA.

On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and
Restated Joint Venture Agreement (AARJVA)29 clarifying certain terms and condition of
the ARJVA, which was submitted to President Ramos for approval, to wit:

Phase II shall involve the following:

a. the construction and operation of an incinerator plant that will conform to the
emission standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be

reclaimed under Phase I to serve as the enabling component of Phase II, the
 exact size and configuration of which shall be approved by the SMDRP
Committee30

Other substantial amendments are the following:

4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:

2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the Manila Bay area
directly across Radial Road 10 (R-10) to serve as payment to the DEVELOPER as its
asset share for Phase I and to develop such land into commercial area with port facilities;
provided, that the port plan shall be integrated with the Philippine Port Authority’s North
Harbor plan for the Manila Bay area and provided further, that the final reclamation and
port plan for said reclaimed area shall be submitted for approval by the Public Estates
Authority and the Philippine Ports Authority, respectively: provided finally, that subject to
par. 2.02 above, actual reclamation work may commence upon approval of the final
reclamation plan by the Public Estates Authority.

xxxx

9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA, and
shall read as follows:

5.05. In the event this Agreement is revoked, cancelled or terminated by the AUTHORITY
through no fault of the DEVELOPER, the AUTHORITY shall compensate the DEVELOPER for
the value of the completed portions of, and actual expenditures on the PROJECT plus a
reasonable rate of return thereon, not exceeding that stated in the Cost Estimates of Items of
Work previously approved by the SMDRP Executive Committee and the AUTHORITY and stated
in this Agreement, as of the date of such revocation, cancellation, or termination, on a schedule
to be agreed upon by the parties, provided that said completed portions of Phase I are in
accordance with the approved FINAL REPORT.

Afterwards, President Ramos issued Proclamation No. 465 dated August 31, 199431 increasing
the proposed area for reclamation across R-10 from 40 hectares to 79 hectares,32 to wit:

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue
of the powers vested in me by the law, and as recommended by the SMDRP Executive
Committee, do hereby authorize the increase of the area of foreshore or submerged lands of
Manila Bay to be reclaimed, as previously authorized under Proclamation No. 39 (s. 1992) and
Memorandum Order No. 415 (s. 1992), from Four Hundred Thousand (400,000) square meters,
more or less, to Seven Hundred Ninety Thousand (790,000) square meters, more or less.

On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No.
3591 conveying in favor of NHA an area of 211,975 square meters covering the Smokey
Mountain Dumpsite.

In its September 7, 1994 letter to the EXECOM, the OP through then Executive Secretary
Teofisto T. Guingona, Jr., approved the ARJVA as amended by the AARJVA.

On September 8, 1994, the DENR issued Special Patent 3592 pursuant to Proclamation No. 39,
conveying in favor of NHA a 401,485-square meter area.

On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Corporation (HIGC), now
known as the Home Guaranty Corporation, and the Philippine National Bank (PNB)33 executed
the Smokey Mountain Asset Pool Formation Trust Agreement (Asset Pool
Agreement).34 Thereafter, a Guaranty Contract was entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act.35 The Act made the establishment
of an incinerator illegal and effectively barred the implementation of the planned incinerator
project under Phase II. Thus, the off-site disposal of the garbage at the Smokey Mountain
became necessary.36

The land reclamation was completed in August 1996.37

Sometime later in 1996, pursuant likewise to Proclamation No. 39, the DENR issued Special
Patent No. 3598 conveying in favor of NHA an additional 390,000 square meter area.

During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency
Technical Committee found and recommended to the EXECOM on December 17, 1997 that
additional works were necessary for the completion and viability of the Project. The EXECOM
approved the recommendation and so, NHA instructed RBI to implement the change orders or
necessary works.38

Such necessary works comprised more than 25% of the original contract price and as a result,
the Asset Pool incurred direct and indirect costs. Based on C1 12 A of the Implementing Rules
and Regulations of PD 1594, a supplemental agreement is required for "all change orders and
extra work orders, the total aggregate cost of which being more than twenty-five (25%) of the
escalated original contract price."

The EXECOM requested an opinion from the Department of Justice (DOJ) to determine whether
a bidding was required for the change orders and/or necessary works. The DOJ, through DOJ
Opinion Nos. 119 and 155 dated August 26, 1993 and November 12, 1993, opined that "a
rebidding, pursuant to the aforequoted provisions of the implementing rules (referring to PD
1594) would not be necessary where the change orders inseparable from the original scope of
the project, in which case, a negotiation with the incumbent contractor may be allowed."

Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA to enter into a
supplemental agreement covering said necessary works.

On March 20, 1998, the NHA and RBI entered into a Supplemental Agreement covering the
aforementioned necessary works and submitted it to the President on March 24, 1998 for
approval.

Outgoing President Ramos decided to endorse the consideration of the Supplemental

Agreement to incoming President Joseph E. Estrada. On June 30, 1998, Estrada became the
13th Philippine President.

However, the approval of the Supplemental Agreement was unacted upon for five months. As a
result, the utilities and the road networks were constructed to cover only the 79-hectare original
enabling component granted under the ARJVA. The 220-hectare extension of the 79-hectare
area was no longer technically feasible. Moreover, the financial crises and unreliable real estate
situation made it difficult to sell the remaining reclaimed lots. The devaluation of the peso and the
increase in interest cost led to the substantial increase in the cost of reclamation.

On August 1, 1998, the NHA granted RBI’s request to suspend work on the SMDRP due to "the
delay in the approval of the Supplemental Agreement, the consequent absence of an enabling
component to cover the cost of the necessary works for the project, and the resulting inability to
replenish the Asset Pool funds partially used for the completion of the necessary works."39

As of August 1, 1998 when the project was suspended, RBI had "already accomplished a portion
of the necessary works and change orders which resulted in [RBI] and the Asset Pool incurring
advances for direct and indirect cost which amount can no longer be covered by the 79-hectare
enabling component under the ARJVA."40
Repeated demands were made by RBI in its own capacity and on behalf of the asset pool on
NHA for payment for the advances for direct and indirect costs subject to NHA validation.

In November 1998, President Estrada issued Memorandum Order No. 33 reconstituting the
SMDRP EXECOM and further directed it to review the Supplemental Agreement and submit its
recommendation on the completion of the SMDRP.

The reconstituted EXECOM conducted a review of the project and recommended the
amendment of the March 20, 1998 Supplemental Agreement "to make it more feasible and to
identify and provide new sources of funds for the project and provide for a new enabling
component to cover the payment for the necessary works that cannot be covered by the 79-
hectare enabling component under the ARJVA."41

The EXECOM passed Resolution Nos. 99-16-01 and 99-16-0242 which approved the modification
of the Supplemental Agreement, to wit:

a) Approval of 150 hectares additional reclamation in order to make the reclamation

feasible as part of the enabling component.

b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares based on
surveys) to the SMDRP Asset Pool.

c) The inclusion in the total development cost of other additional, necessary and
indispensable infrastructure works and the revision of the original cost stated in the
Supplemental Agreement dated March 20, 1998 from PhP 2,953,984,941.40 to PhP
2,969,134,053.13.

d) Revision in the sharing agreement between the parties.

In the March 23, 2000 OP Memorandum, the EXECOM was authorized to proceed and complete
the SMDRP subject to certain guidelines and directives.

After the parties in the case at bar had complied with the March 23, 2000 Memorandum, the NHA
November 9, 2000 Resolution No. 4323 approved "the conveyance of the 17-hectare Vitas
property in favor of the existing or a newly created Asset Pool of the project to be developed into
a mixed commercial-industrial area, subject to certain conditions."

On January 20, 2001, then President Estrada was considered resigned. On the same day,
President Gloria M. Arroyo took her oath as the 14th President of the Philippines.

As of February 28, 2001, "the estimated total project cost of the SMDRP has reached P8.65
billion comprising of P4.78 billion in direct cost and P3.87 billion in indirect cost,"43 subject to
validation by the NHA.

On August 28, 2001, NHA issued Resolution No. 4436 to pay for "the various necessary
works/change orders to SMDRP, to effect the corresponding enabling component consisting of
the conveyance of the NHA’s Vitas Property and an additional 150-hectare reclamation area"
and to authorize the release by NHA of PhP 480 million "as advance to the project to make the
Permanent Housing habitable, subject to reimbursement from the proceeds of the expanded
enabling component."44

On November 19, 2001, the Amended Supplemental Agreement (ASA) was signed by the
parties, and on February 28, 2002, the Housing and Urban Development Coordinating Council
(HUDCC) submitted the agreement to the OP for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to submit the works covered by the
PhP 480 million [advance to the Project] and the ASA to public bidding."45 On August 28, 2002,
the HUDCC informed RBI of the decision of the Cabinet.

In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the decision of the
government "to bid out the remaining works under the ASA thereby unilaterally terminating the
Project with RBI and all the agreements related thereto." RBI demanded the payment of just
compensation "for all accomplishments and costs incurred in developing the SMDRP plus a
reasonable rate of return thereon pursuant to Section 5.05 of the ARJVA and Section 6.2 of the
ASA."46

Consequently, the parties negotiated the terms of the termination of the JVA and other
subsequent agreements.

On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby
both parties agreed to terminate the JVA and other subsequent agreements, thus:

1. TERMINATION

1.1 In compliance with the Cabinet directive dated 30 July 2002 to submit the
works covered by the P480 Million and the ASA to public bidding, the following
agreements executed by and between the NHA and the DEVELOPER are hereby
terminated, to wit:

a. Joint Venture Agreement (JVA) dated 19 March 1993

b. Amended and Restated Joint Venture Agreement (ARJVA) dated 21

February 1994

c. Amendment and Restated Joint Venture Agreement dated 11 August

1994

d. Supplemental Agreement dated 24 March 1998

e. Amended Supplemental Agreement (ASA) dated 19 November 2001.

xxxx

5. SETTLEMENT OF CLAIMS

5.1 Subject to the validation of the DEVELOPER’s claims, the NHA hereby agrees to
initially compensate the Developer for the abovementioned costs as follows:

a. Direct payment to DEVELOPER of the amounts herein listed in the following

manner:

a.1 P250 Million in cash from the escrow account in accordance with
Section 2 herewith;

a.2 Conveyance of a 3 hectare portion of the Vitas Industrial area

immediately after joint determination of the appraised value of the said
property in accordance with the procedure herein set forth in the last
paragraph of Section 5.3. For purposes of all payments to be made
through conveyance of real properties, the parties shall secure from the
NHA Board of Directors all documents necessary and sufficient to effect
 the transfer of title over the properties to be conveyed to RBI, which
documents shall be issued within a reasonable period.

5.2 Any unpaid balance of the DEVELOPERS claims determined after the validation
process referred to in Section 4 hereof, may be paid in cash, bonds or through the
conveyance of properties or any combination thereof. The manner, terms and conditions
of payment of the balance shall be specified and agreed upon later within a period of
three months from the time a substantial amount representing the unpaid balance has
been validated pursuant hereto including, but not limited to the programming of quarterly
cash payments to be sourced by the NHA from its budget for debt servicing, from its
income or from any other sources.

5.3 In any case the unpaid balance is agreed to be paid, either partially or totally through
conveyance of properties, the parties shall agree on which properties shall be subject to
conveyance. The NHA and DEVELOPER hereby agree to determine the valuation of the
properties to be conveyed by getting the average of the appraisals to be made by two (2)
mutually acceptable independent appraisers.

Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement
with the asset pool for the development and operations of a port in the Smokey Mountain Area
which is a major component of SMDRP to provide a source of livelihood and employment for
Smokey Mountain residents and spur economic growth. A Subscription Agreement was executed
between the Asset Pool and HCPTI whereby the asset pool subscribed to 607 million common
shares and 1,143 million preferred shares of HCPTI. The HCPTI preferred shares had a premium
and penalty interest of 7.5% per annum and a mandatory redemption feature. The asset pool
paid the subscription by conveying to HCPTI a 10-hectare land which it acquired from the NHA
being a portion of the reclaimed land of the SMDRP. Corresponding certificates of titles were
issued to HCPTI, namely: TCT Nos. 251355, 251356, 251357, and 251358.

Due to HCPTI’s failure to obtain a license to handle foreign containerized cargo from PPA, it
suffered a net income loss of PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in
2003. The Project Governing Board of the Asset Pool later conveyed by way of dacion en pago a
number of HCPTI shares to RBI in lieu of cash payment for the latter’s work in SMDRP.

On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which
impleaded as respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and Mr. Reghis
Romero II, raising constitutional issues.

The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21)
permanent housing structures had been turned over by respondent RBI. It claimed that 2,510
beneficiary-families belonging to the poorest of the poor had been transferred to their permanent
homes and benefited from the Project.

The Issues

The grounds presented in the instant petition are:

Neither respondent NHA nor respondent R-II builders may validly reclaim foreshore and
submerged land because:

1. Respondent NHA and R-II builders were never granted any power and authority to
reclaim lands of the public domain as this power is vested exclusively with the PEA.
 2. Even assuming that respondents NHA and R-II builders were given the power and
authority to reclaim foreshore and submerged land, they were never given the authority
by the denr to do so.

II

Respondent R-II builders cannot acquire the reclaimed foreshore and submerged land areas
because:

1. The reclaimed foreshore and submerged parcels of land are inalienable public lands
which are beyond the commerce of man.

2. Assuming arguendo that the subject reclaimed foreshore and submerged parcels of
land were already declared alienable lands of the public domain, respondent R-II builders
still could not acquire the same because there was never any declaration that the said
lands were no longer needed for public use.

3. Even assuming that the subject reclaimed lands are alienable and no longer needed
for public use, respondent R-II builders still cannot acquire the same because there was
never any law authorizing the sale thereof.

4. There was never any public bidding awarding ownership of the subject land to
respondent R-II builders.

5. Assuming that all the requirements for a valid transfer of alienable public had been
performed, respondent R-II Builders, being private corporation is nonetheless
expresslyprohibited by the Philippine Constitution to acquire lands of the public domain.

III

Respondent harbour, being a private corporation whose majority stocks are owned and
controlled by respondent Romero’s Corporations – R-II builders and R-II Holdings – is
disqualified from being a transferee of public land.

IV

Respondents must be compelled to disclose all information related to the smokey mountain
development and reclamation project.

The Court’s Ruling

Before we delve into the substantive issues raised in this petition, we will first deal with several
procedural matters raised by respondents.

Whether petitioner has the requisite locus standi to file this case

Respondents argue that petitioner Chavez has no legal standing to file the petition.

Only a person who stands to be benefited or injured by the judgment in the suit or entitled to the
avails of the suit can file a complaint or petition.47 Respondents claim that petitioner is not a
proper party-in-interest as he was unable to show that "he has sustained or is in immediate or
imminent danger of sustaining some direct and personal injury as a result of the execution and
enforcement of the assailed contracts or agreements."48 Moreover, they assert that not all
government contracts can justify a taxpayer’s suit especially when no public funds were utilized
in contravention of the Constitution or a law.
We explicated in Chavez v. PCGG49 that in cases where issues of transcendental public
importance are presented, there is no necessity to show that petitioner has experienced or is in
actual danger of suffering direct and personal injury as the requisite injury is assumed. We find
our ruling in Chavez v. PEA50 as conclusive authority on locus standi in the case at bar since the
issues raised in this petition are averred to be in breach of the fair diffusion of the country’s
natural resources and the constitutional right of a citizen to information which have been declared
to be matters of transcendental public importance. Moreover, the pleadings especially those of
respondents readily reveal that public funds have been indirectly utilized in the Project by means
of Smokey Mountain Project Participation Certificates (SMPPCs) bought by some government
agencies.

Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court.

Whether petitioner’s direct recourse to this Court was proper

Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts
in his petition. Judicial hierarchy was made clear in the case of People v. Cuaresma, thus:

There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals,
and should also serve as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands
upon the Court’s time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court’s docket.51 x x x

The OSG claims that the jurisdiction over petitions for prohibition and mandamus is concurrent
with other lower courts like the Regional Trial Courts and the Court of Appeals. Respondent NHA
argues that the instant petition is misfiled because it does not introduce special and important
reasons or exceptional and compelling circumstances to warrant direct recourse to this Court and
that the lower courts are more equipped for factual issues since this Court is not a trier of facts.
Respondents RBI and RHI question the filing of the petition as this Court should not be unduly
burdened with "repetitions, invocation of jurisdiction over constitutional questions it had
previously resolved and settled."

In the light of existing jurisprudence, we find paucity of merit in respondents’ postulation.

While direct recourse to this Court is generally frowned upon and discouraged, we have however
ruled in Santiago v. Vasquez that such resort to us may be allowed in certain situations, wherein
this Court ruled that petitions for certiorari, prohibition, or mandamus, though cognizable by other
courts, may directly be filed with us if "the redress desired cannot be obtained in the appropriate
courts or where exceptional compelling circumstances justify availment of a remedy within and
calling for the exercise of [this Court’s] primary jurisdiction."52
1avv phi 1

The instant petition challenges the constitutionality and legality of the SMDRP involving several
hectares of government land and hundreds of millions of funds of several government agencies.
Moreover, serious constitutional challenges are made on the different aspects of the Project
which allegedly affect the right of Filipinos to the distribution of natural resources in the country
and the right to information of a citizen—matters which have been considered to be of
extraordinary significance and grave consequence to the public in general. These concerns in
the instant action compel us to turn a blind eye to the judicial structure meant to provide an
orderly dispensation of justice and consider the instant petition as a justified deviation from an
established precept.
Core factual matters undisputed

Respondents next challenge the projected review by this Court of the alleged factual issues
intertwined in the issues propounded by petitioner. They listed a copious number of questions
seemingly factual in nature which would make this Court a trier of facts.53

We find the position of respondents bereft of merit.

For one, we already gave due course to the instant petition in our January 18, 2005
Resolution.54 In said issuance, the parties were required to make clear and concise statements of
established facts upon which our decision will be based.

Secondly, we agree with petitioner that there is no necessity for us to make any factual findings
since the facts needed to decide the instant petition are well established from the admissions of
the parties in their pleadings55 and those derived from the documents appended to said
submissions. Indeed, the core facts which are the subject matter of the numerous issues raised
in this petition are undisputed.

Now we will tackle the issues that prop up the instant petition.

Since petitioner has cited our decision in PEA as basis for his postulations in a number of issues,
we first resolve the query—is PEA applicable to the case at bar?

A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.

The Court finds that PEA is not a binding precedent to the instant petition because the facts in
said case are substantially different from the facts and circumstances in the case at bar, thus:

(1) The reclamation project in PEA was undertaken through a JVA entered into between
PEA and AMARI. The reclamation project in the instant NHA case was undertaken by the
NHA, a national government agency in consultation with PEA and with the approval of
two Philippine Presidents;

(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and
reclaim submerged areas without public bidding on April 25, 1995. In the instant NHA
case, the NHA and RBI executed a JVA after RBI was declared the winning bidder on
August 31, 1992 as the JVA partner of the NHA in the SMDRP after compliance with the
requisite public bidding.

(3) In PEA, there was no law or presidential proclamation classifying the lands to be
reclaimed as alienable and disposal lands of public domain. In this RBI case, MO 415 of
former President Aquino and Proclamation No. 39 of then President Ramos, coupled with
Special Patents Nos. 3591, 3592, and 3598, classified the reclaimed lands as alienable
and disposable;

(4) In PEA, the Chavez petition was filed before the amended JVA was executed by PEA
and AMARI. In this NHA case, the JVA and subsequent amendments were already
1avv phi1

substantially implemented. Subsequently, the Project was terminated through a MOA

signed on August 27, 2003. Almost one year later on August 5, 2004, the Chavez petition
was filed;

(5) In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after
the Chavez petition was filed with the Court and after Senate Committee Report No. 560
was issued finding that the subject lands are inalienable lands of public domain. In the
instant petition, RBI and other respondents are considered to have signed the
 agreements in good faith as the Project was terminated even before the Chavez petition
was filed;

(6) The PEA-AMARI JVA was executed as a result of direct negotiation between the
parties and not in accordance with the BOT Law. The NHA-RBI JVA and subsequent
amendments constitute a BOT contract governed by the BOT Law; and

(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a
government entity tasked to dispose of public lands under Executive Order No. (EO)
525.56 In the NHA case, the reclaimed lands were transferred to NHA, a government
entity NOT tasked to dispose of public land and therefore said alienable lands were
converted to patrimonial lands upon their transfer to NHA.57

Thus the PEA Decision58 cannot be considered an authority or precedent to the instant case. The
principle of stare decisis59 has no application to the different factual setting of the instant case.

We will now dwell on the substantive issues raised by petitioner. After a perusal of the grounds
raised in this petition, we find that most of these issues are moored on our PEA Decision which,
as earlier discussed, has no application to the instant petition. For this reason alone, the petition
can already be rejected. Nevertheless, on the premise of the applicability of said decision to the
case at bar, we will proceed to resolve said issues.

First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner

Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim
foreshore and submerged land because they were not given any power and authority to reclaim
lands of the public domain as this power was delegated by law to PEA.

Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain,
the Public Estates Authority (PEA), petitioner claims, is "the primary authority for the reclamation
of all foreshore and submerged lands of public domain," and relies on PEA where this Court
held:

Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government." The same section also states that "[A]ll reclamation projects shall
be approved by the President upon recommendation of the PEA, and shall be undertaken by the
PEA or through a proper contract executed by it with any person or entity; x x x." Thus, under EO
No. 525, in relation to PD No. 3-A and PD No. 1084, PEA became the primary implementing
agency of the National Government to reclaim foreshore and submerged lands of the public
domain. EO No. 525 recognized PEA as the government entity "to undertake the reclamation of
lands and ensure their maximum utilization in promoting public welfare and interests." Since
large portions of these reclaimed lands would obviously be needed for public service, there must
be a formal declaration segregating reclaimed lands no longer needed for public service from
those still needed for public service.60

In the Smokey Mountain Project, petitioner clarifies that the reclamation was not done by PEA or
through a contract executed by PEA with another person or entity but by the NHA through an
agreement with respondent RBI. Therefore, he concludes that the reclamation is null and void.

Petitioner’s contention has no merit.

EO 525 reads:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National Government.
All reclamation projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by it with any person
or entity; Provided, that, reclamation projects of any national government agency or entity
authorized under its charter shall be undertaken in consultation with the PEA upon approval of
the President. (Emphasis supplied.)

The aforequoted provision points to three (3) requisites for a legal and valid reclamation project,
viz:

(1) approval by the President;

(2) favorable recommendation of PEA; and

(3) undertaken by any of the following:

a. by PEA

b. by any person or entity pursuant to a contract it executed with PEA

c. by the National Government agency or entity authorized under its charter to

reclaim lands subject to consultation with PEA

Without doubt, PEA under EO 525 was designated as the agency primarily responsible for
integrating, directing, and coordinating all reclamation projects. Primarily means "mainly,
principally, mostly, generally." Thus, not all reclamation projects fall under PEA’s authority of
supervision, integration, and coordination. The very charter of PEA, PD 1084,61 does not mention
that PEA has the exclusive and sole power and authority to reclaim lands of public domain. EO
525 even reveals the exception—reclamation projects by a national government agency or entity
authorized by its charter to reclaim land. One example is EO 405 which authorized the Philippine
Ports Authority (PPA) to reclaim and develop submerged areas for port related purposes. Under
its charter, PD 857, PPA has the power "to reclaim, excavate, enclose or raise any of the lands"
vested in it.

Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily
responsible for integrating, directing and coordinating reclamation projects, such authority is NOT
exclusive and such power to reclaim may be granted or delegated to another government agency
or entity or may even be undertaken by the National Government itself, PEA being only an
agency and a part of the National Government.

Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP. After a
scrutiny of the facts culled from the records, we find that the project met all the three (3)
requirements, thus:

1. There was ample approval by the President of the Philippines; as a matter of fact, two
Philippine Presidents approved the same, namely: Presidents Aquino and Ramos. President
Aquino sanctioned the reclamation of both the SMDRP housing and commercial-industrial sites
through MO 415 (s. 1992) which approved the SMDRP under Sec. 1 and directed NHA "x x x to
implement the Smokey Mountain Development Plan and Reclamation of the Area across R-10
through a private sector joint venture scheme at the least cost to government" under Section 3.

For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly
reserved the Smokey Mountain Area and the Reclamation Area for a housing project and related
commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the
increase of the Reclamation Area from 40 hectares of foreshore and submerged land of the
Manila Bay to 79 hectares. It speaks of the reclamation of 400,000 square meters, more or less,
of the foreshore and submerged lands of Manila Bay adjoining R-10 as an enabling component
of the SMDRP.

As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square
meters of Smokey Mountain, Special Patent No. 3592 covering 401,485 square meters of
reclaimed land, and Special Patent No. 3598 covering another 390,000 square meters of
reclaimed land were issued by the DENR.

Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.

2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA.
President Aquino saw to it that there was coordination of the project with PEA by designating its
general manager as member of the EXECOM tasked to supervise the project implementation.
The assignment was made in Sec. 2 of MO 415 which provides:

Section 2. An Executive Committee is hereby created to oversee the implementation of the Plan,
chaired by the NCR-CORD, with the heads of the following agencies as members: The National
Housing Authority, the City of Manila, the Department of Public Works and Highways, the Public
Estates Authority, the Philippine Ports Authority, the Department of Environment and Natural
Resources and the Development Bank of the Philippines. (Emphasis supplied.)

The favorable recommendation by PEA of the JVA and subsequent amendments were
incorporated as part of the recommendations of the EXECOM created under MO 415. While
there was no specific recommendation on the SMDRP emanating solely from PEA, we find that
the approbation of the Project and the land reclamation as an essential component by the
EXECOM of which PEA is a member, and its submission of the SMDRP and the agreements on
the Project to the President for approval amply met the second requirement of EO 525.

3. The third element was also present—the reclamation was undertaken either by PEA or any
person or entity under contract with PEA or by the National Government agency or entity
authorized under its charter to reclaim lands subject to consultation with PEA. It cannot be
disputed that the reclamation phase was not done by PEA or any person or entity under contract
with PEA. However, the reclamation was implemented by the NHA, a national government
agency whose authority to reclaim lands under consultation with PEA is derived from its
charter—PD 727 and other pertinent laws—RA 727962 and RA 6957 as amended by RA 7718.

While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had
more than enough authority to do so under existing laws. While PD 757, the charter of NHA,
does not explicitly mention "reclamation" in any of the listed powers of the agency, we rule that
the NHA has an implied power to reclaim land as this is vital or incidental to effectively, logically,
and successfully implement an urban land reform and housing program enunciated in Sec. 9 of
Article XIII of the 1987 Constitution.

Basic in administrative law is the doctrine that a government agency or office has express and
implied powers based on its charter and other pertinent statutes. Express powers are those
powers granted, allocated, and delegated to a government agency or office by express
provisions of law. On the other hand, implied powers are those that can be inferred or are implicit
in the wordings of the law63 or conferred by necessary or fair implication in the enabling act.64 In
Angara v. Electoral Commission, the Court clarified and stressed that when a general grant of
power is conferred or duty enjoined, every particular power necessary for the exercise of the one
or the performance of the other is also conferred by necessary implication.65 It was also
explicated that when the statute does not specify the particular method to be followed or used by
a government agency in the exercise of the power vested in it by law, said agency has the
authority to adopt any reasonable method to carry out its functions.66

The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA
6957, and PD 3-A,67viz:

1. NHA’s power to reclaim derived from PD 757 provisions:

a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of
NHA:

Section 3. Progress and Objectives. The Authority shall have the following purposes and
objectives:

xxxx

b) To undertake housing, development, resettlement or other activities as would enhance

the provision of housing to every Filipino;

c) To harness and promote private participation in housing ventures in terms of capital

expenditures, land, expertise, financing and other facilities for the sustained growth of the
housing industry. (Emphasis supplied.)

Land reclamation is an integral part of the development of resources for some of the housing
requirements of the NHA. Private participation in housing projects may also take the form of land
reclamation.

b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore
Development Authority (TFDA), has the power to reclaim, thus:

Section 5. Dissolution of Existing Housing Agencies. The People's Homesite and Housing
Corporation (PHHC), the Presidential Assistant on Housing Resettlement Agency (PAHRA), the
Tondo Foreshore Development Authority (TFDA), the Central Institute for the Training and
Relocation of Urban Squatters (CITRUS), the Presidential Committee for Housing and Urban
Resettlement (PRECHUR), Sapang Palay Development Committee, Inter-Agency Task Force to
Undertake the Relocation of Families in Barrio Nabacaan, Villanueva, Misamis Oriental and all
other existing government housing and resettlement agencies, task forces and ad-hoc
committees, are hereby dissolved. Their powers and functions, balance of appropriations,
records, assets, rights, and choses in action, are transferred to, vested in, and assumed by the
Authority. x x x (Emphasis supplied.)

PD 570 dated October 30, 1974 created the TFDA, which defined its objectives, powers, and
functions. Sec. 2 provides:

Section 2. Objectives and Purposes. The Authority shall have the following purposes and
objectives:

a) To undertake all manner of activity, business or development projects for the

establishment of harmonious, comprehensive, integrated and healthy living community in
the Tondo Foreshoreland and its resettlement site;

b) To undertake and promote the physical and socio-economic amelioration of the Tondo
Foreshore residents in particular and the nation in general (Emphasis supplied.)

The powers and functions are contained in Sec. 3, to wit:

 a) To develop and implement comprehensive and integrated urban renewal programs for
the Tondo Foreshore and Dagat-dagatan lagoon and/or any other additional/alternative
resettlement site and to formulate and enforce general and specific policies for its
development which shall ensure reasonable degree of compliance with environmental
standards.

b) To prescribe guidelines and standards for the reservation, conservation and utilization
of public lands covering the Tondo Foreshore land and its resettlement sites;

c) To construct, acquire, own, lease, operate and maintain infrastructure facilities,

housing complex, sites and services;

d) To determine, regulate and supervise the establishment and operation of housing,

sites, services and commercial and industrial complexes and any other enterprises to be
constructed or established within the Tondo Foreshore and its resettlement sites;

e) To undertake and develop, by itself or through joint ventures with other public or
private entities, all or any of the different phases of development of the Tondo Foreshore
land and its resettlement sites;

f) To acquire and own property, property-rights and interests, and encumber or otherwise
dispose of the same as it may deem appropriate (Emphasis supplied.)

From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to
develop public lands covering the Tondo foreshore land and any other additional and alternative
resettlement sites under letter b, Sec. 3 of PD 570. Since the additional and/or alternative sites
adjacent to Tondo foreshore land cover foreshore and submerged areas, the reclamation of said
areas is necessary in order to convert them into a comprehensive and integrated resettlement
housing project for the slum dwellers and squatters of Tondo. Since the powers of TFDA were
assumed by the NHA, then the NHA has the power to reclaim lands in the Tondo foreshore area
which covers the 79-hectare land subject of Proclamations Nos. 39 and 465 and Special Patents
Nos. 3592 and 3598.

c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority
to reclaim land, thus:

Sec. 6. Powers and functions of the Authority.—The Authority shall have the following powers
and functions to be exercised by the Board in accordance with its established national human
settlements plan prepared by the Human Settlements Commission:

(a) Develop and implement the comprehensive and integrated housing program provided for in
Section hereof;

xxxx

(c) Prescribe guidelines and standards for the reservation, conservation and utilization of public
lands identified for housing and resettlement;

xxxx

(e) Develop and undertake housing development and/or resettlement projects through joint
ventures or other arrangements with public and private entities;

xxxx
(k) Enter into contracts whenever necessary under such terms and conditions as it may deem
proper and reasonable;

(l) Acquire property rights and interests and encumber or otherwise dispose the same as it may
deem appropriate;

xxxx

(s) Perform such other acts not inconsistent with this Decree, as may be necessary to effect the
policies and objectives herein declared. (Emphasis supplied.)

The NHA’s authority to reclaim land can be inferred from the aforequoted provisions. It can make
use of public lands under letter (c) of Sec. 6 which includes reclaimed land as site for its
comprehensive and integrated housing projects under letter (a) which can be undertaken through
joint ventures with private entities under letter (e). Taken together with letter (s) which authorizes
NHA to perform such other activities "necessary to effect the policies and objectives" of PD 757,
it is safe to conclude that the NHA’s power to reclaim lands is a power that is implied from the
exercise of its explicit powers under Sec. 6 in order to effectively accomplish its policies and
objectives under Sec. 3 of its charter. Thus, the reclamation of land is an indispensable
component for the development and construction of the SMDRP housing facilities.

2. NHA’s implied power to reclaim land is enhanced by RA 7279.

PD 757 identifies NHA’s mandate to "[d]evelop and undertake housing development and/or
resettlement projects through joint ventures or other arrangements with public and private
entities."

The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of
RA 7279, which provide:

Section 12. Disposition of Lands for Socialized Housing.—The National Housing Authority, with
respect to lands belonging to the National Government, and the local government units with
respect to other lands within their respective localities, shall coordinate with each other to
formulate and make available various alternative schemes for the disposition of lands to the
beneficiaries of the Program. These schemes shall not be limited to those involving transfer of
ownership in fee simple but shall include lease, with option to purchase, usufruct or such other
variations as the local government units or the National Housing Authority may deem most
expedient in carrying out the purposes of this Act.

xxxx

Section 29. Resettlement.—With two (2) years from the effectivity of this Act, the local
government units, in coordination with the National Housing Authority, shall implement the
relocation and resettlement of persons living in danger areas such as esteros, railroad tracks,
garbage dumps, riverbanks, shorelines, waterways, and in other public places as sidewalks,
roads, parks, and playgrounds. The local government unit, in coordination with the National
Housing Authority, shall provide relocation or resettlement sites with basic services and facilities
and access to employment and livelihood opportunities sufficient to meet the basic needs of the
affected families. (Emphasis supplied.)

Lands belonging to the National Government include foreshore and submerged lands which can
be reclaimed to undertake housing development and resettlement projects.

3. MO 415 explains the undertaking of the NHA in SMDRP:

WHEREAS, Memorandum Order No. 161-A mandated the National Housing Authority to conduct
feasibility studies and develop low-cost housing projects at the dumpsites of Metro Manila;

WHEREAS, the National Housing Authority has presented a viable Conceptual Plan to convert
the Smokey Mountain dumpsite into a habitable housing project inclusive of the reclamation area
across R-10 as enabling component of the Project;

WHEREAS, the said Plan requires the coordinated and synchronized efforts of the City of Manila
and other government agencies and instrumentalities to ensure effective and efficient
implementation;

WHEREAS, the government encourages private sector initiative in the implementation of its
projects. (Emphasis supplied.)

Proceeding from these "whereas" clauses, it is unequivocal that reclamation of land in the
Smokey Mountain area is an essential and vital power of the NHA to effectively implement its
avowed goal of developing low-cost housing units at the Smokey Mountain dumpsites. The
interpretation made by no less than the President of the Philippines as Chief of the Executive
Branch, of which the NHA is a part, must necessarily command respect and much weight and
credit.

4. RA 6957 as amended by RA 7718—the BOT Law—serves as an exception to PD 1084 and

EO 525.

Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is
unequivocal that all government infrastructure agencies like the NHA can undertake
infrastructure or development projects using the contractual arrangements prescribed by the law,
and land reclamation is one of the projects that can be resorted to in the BOT project
implementation under the February 10, 1992 Joint Resolution No. 3 of the 8th Congress.

From the foregoing considerations, we find that the NHA has ample implied authority to
undertake reclamation projects.

Even without an implied power to reclaim lands under NHA’s charter, we rule that the authority
granted to NHA, a national government agency, by the President under PD 3-A reinforced by EO
525 is more than sufficient statutory basis for the reclamation of lands under the SMDRP.

PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on
September 23, 1972. It provided that "[t]he provisions of any law to the contrary notwithstanding,
the reclamation of areas, underwater, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under the proper contract." It repealed, in effect, RA
1899 which previously delegated the right to reclaim lands to municipalities and chartered cities
and revested it to the National Government.68 Under PD 3-A, "national government" can only
mean the Executive Branch headed by the President. It cannot refer to Congress as it was
dissolved and abolished at the time of the issuance of PD 3-A on September 23, 1972.
Moreover, the Executive Branch is the only implementing arm in the government with the
equipment, manpower, expertise, and capability by the very nature of its assigned powers and
functions to undertake reclamation projects. Thus, under PD 3-A, the Executive Branch through
the President can implement reclamation of lands through any of its departments, agencies, or
offices.

Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which
was granted, among others, the power "to reclaim land, including foreshore and submerged
areas by dredging, filling or other means or to acquire reclaimed lands." The PEA’s power to
reclaim is not however exclusive as can be gleaned from its charter, as the President retained his
power under PD 3-A to designate another agency to reclaim lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility for integrating,
directing, and coordinating reclamation projects for and on behalf of the National Government
although other national government agencies can be designated by the President to reclaim
lands in coordination with the PEA. Despite the issuance of EO 525, PD 3-A remained valid and
subsisting. Thus, the National Government through the President still retained the power and
control over all reclamation projects in the country.

The power of the National Government through the President over reclamation of areas, that is,
underwater whether foreshore or inland, was made clear in EO 54369 which took effect on June
24, 2006. Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and
was granted the authority to approve reclamation projects, a power previously reposed in the
President under EO 525. EO 543 reads:

Section 1. The power of the President to approve reclamation projects is hereby delegated to the
Philippine Reclamation Authority [formerly PEA], through its governing board, subject to
compliance with existing laws and rules and subject to the condition that reclamation contracts to
be executed with any person or entity go through public bidding.

Section 2. Nothing in the Order shall be construed as diminishing the President’s authority to
modify, amend or nullify PRA’s action.

Section 3. All executive issuances inconsistent with this Executive Order are hereby repealed or
amended accordingly. (Emphasis supplied.)

Sec. 2 of EO 543 strengthened the power of control and supervision of the President over
reclamation of lands as s/he can modify, amend, or nullify the action of PEA (now PRA).

From the foregoing issuances, we conclude that the President’s delegation to NHA, a national
government agency, to reclaim lands under the SMDRP, is legal and valid, firmly anchored on
PD 3-A buttressed by EO 525 notwithstanding the absence of any specific grant of power under
its charter, PD 757.

Second Issue: Whether respondents NHA and RBI were given the

power and authority by DENR to reclaim foreshore and submerged

lands

Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to
reclaim, they were not authorized to do so by the DENR.

Again, reliance is made on our ruling in PEA where it was held that the DENR’s authority is
necessary in order for the government to validly reclaim foreshore and submerged lands. In PEA,
we expounded in this manner:

As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all lands of the public domain."
Thus, DENR decides whether areas under water, like foreshore or submerged areas of Manila
Bay, should be reclaimed or not. This means that PEA needs authorization from DENR before
PEA can undertake reclamation projects in Manila Bay, or in any part of the country.

DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under
Sections 6 and 7 of CA No. 141. Once DENR decides that the reclaimed lands should be so
classified, it then recommends to the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open to disposition. We note that
then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.

In short, DENR is vested with the power to authorize the reclamation of areas under water, while
PEA is vested with the power to undertake the physical reclamation of areas under water,
whether directly or through private contractors. DENR is also empowered to classify lands of the
public domain into alienable or disposable lands subject to the approval of the President. On the
other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public
domain.70

Despite our finding that PEA is not a precedent to the case at bar, we find after all that under
existing laws, the NHA is still required to procure DENR’s authorization before a reclamation
project in Manila Bay or in any part of the Philippines can be undertaken. The requirement
applies to PEA, NHA, or any other government agency or office granted with such power under
the law.

Notwithstanding the need for DENR permission, we nevertheless find petitioner’s position bereft
of merit.

The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project
for the following reasons:

1. Sec. 17, Art. VII of the Constitution provides that "the President shall have control of all
executive departments, bureaus and offices." The President is assigned the task of seeing to it
that all laws are faithfully executed. "Control," in administrative law, means "the power of an
officer to alter, modify, nullify or set aside what a subordinate officer has done in the performance
of his duties and to substitute the judgment of the former for that of the latter."71

As such, the President can exercise executive power motu proprio and can supplant the act or
decision of a subordinate with the President’s own. The DENR is a department in the executive
branch under the President, and it is only an alter ego of the latter. Ordinarily the proposed action
and the staff work are initially done by a department like the DENR and then submitted to the
President for approval. However, there is nothing infirm or unconstitutional if the President
decides on the implementation of a certain project or activity and requires said department to
implement it. Such is a presidential prerogative as long as it involves the department or office
authorized by law to supervise or execute the Project. Thus, as in this case, when the President
approved and ordered the development of a housing project with the corresponding reclamation
work, making DENR a member of the committee tasked to implement the project, the required
authorization from the DENR to reclaim land can be deemed satisfied. It cannot be disputed that
the ultimate power over alienable and disposable public lands is reposed in the President of the
Philippines and not the DENR Secretary. To still require a DENR authorization on the Smokey
Mountain when the President has already authorized and ordered the implementation of the
Project would be a derogation of the powers of the President as the head of the executive
branch. Otherwise, any department head can defy or oppose the implementation of a project
approved by the head of the executive branch, which is patently illegal and unconstitutional.

In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive
department, the President may act directly or order the said department to undertake an activity,
thus:

[A]t the apex of the entire executive officialdom is the President. Section 17, Article VII of the
Constitution specifies [her] power as Chief executive departments, bureaus and offices. [She]
shall ensure that the laws be faithfully executed. As Chief Executive, President Arroyo holds the
steering wheel that controls the course of her government. She lays down policies in the
execution of her plans and programs. Whatever policy she chooses, she has her subordinates to
implement them. In short, she has the power of control. Whenever a specific function is entrusted
by law or regulation to her subordinate, she may act directly or merely direct the performance of
a duty x x x. Such act is well within the prerogative of her office (emphasis supplied).72

Moreover, the power to order the reclamation of lands of public domain is reposed first in the
Philippine President. The Revised Administrative Code of 1987 grants authority to the President
to reserve lands of public domain for settlement for any specific purpose, thus:

Section 14. Power to Reserve Lands of the Public and Private Domain of the Government.—(1)
The President shall have the power to reserve for settlement or public use, and for specific public
purposes, any of the lands of the public domain, the use of which is not otherwise directed by
law. The reserved land shall thereafter remain subject to the specific public purpose indicated
until otherwise provided by law or proclamation. (Emphasis supplied.)

President Aquino reserved the area of the Smokey Mountain dumpsite for settlement and issued
MO 415 authorizing the implementation of the Smokey Mountain Development Project plus the
reclamation of the area across R-10. Then President Ramos issued Proclamation No. 39
covering the 21-hectare dumpsite and the 40-hectare commercial/industrial area, and
Proclamation No. 465 and MO 415 increasing the area of foreshore and submerged lands of
Manila Bay to be reclaimed from 40 to 79 hectares. Having supervision and control over the
DENR, both Presidents directly assumed and exercised the power granted by the Revised
Administrative Code to the DENR Secretary to authorize the NHA to reclaim said lands. What
can be done indirectly by the DENR can be done directly by the President. It would be absurd if
the power of the President cannot be exercised simply because the head of a department in the
executive branch has not acted favorably on a project already approved by the President. If such
arrangement is allowed then the department head will become more powerful than the President.

2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the
NCR-CORD to oversee the implementation of the Project. The EXECOM was the one which
recommended approval of the project plan and the joint venture agreements. Clearly, the DENR
retained its power of supervision and control over the laws affected by the Project since it was
tasked to "facilitate the titling of the Smokey Mountain and of the area to be reclaimed," which
shows that it had tacitly given its authority to the NHA to undertake the reclamation.

3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while
then Secretary Victor O. Ramos issued Special Patent No. 3598 that embraced the areas
covered by the reclamation. These patents conveyed the lands to be reclaimed to the NHA and
granted to said agency the administration and disposition of said lands for subdivision and
disposition to qualified beneficiaries and for development for mix land use (commercial/industrial)
"to provide employment opportunities to on-site families and additional areas for port related
activities." Such grant of authority to administer and dispose of lands of public domain under the
SMDRP is of course subject to the powers of the EXECOM of SMDRP, of which the DENR is a
member.

4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision
and control over the lands of public domain covered by the Project.

Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified
and confirmed the reclamation of the subject lands for the purposes laid down in Proclamations
Nos. 39 and 465.

Third Issue: Whether respondent RBI can acquire reclaimed

foreshore and submerged lands considered as inalienable and

outside the commerce of man

Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and
submerged areas as these are inalienable public lands beyond the commerce of man based on
Art. 1409 of the Civil Code which provides:

Article 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order
or public policy;

xxxx

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.

Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the
State and they cannot be alienated except for alienable agricultural lands of the public domain.
One of the State’s natural resources are lands of public domain which include reclaimed lands.

Petitioner contends that for these reclaimed lands to be alienable, there must be a law or
presidential proclamation officially classifying these reclaimed lands as alienable and disposable
and open to disposition or concession. Absent such law or proclamation, the reclaimed lands
cannot be the enabling component or consideration to be paid to RBI as these are beyond the
commerce of man.

We are not convinced of petitioner’s postulation.

The reclaimed lands across R-10 were classified alienable and disposable lands of public
domain of the State for the following reasons, viz:

First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10
as alienable or disposable hence open to disposition or concession, to wit:

(1) MO 415 issued by President Aquino, of which Sec. 4 states that "[t]he land covered
by the Smokey Mountain Dumpsite is hereby conveyed to the National Housing Authority
as well as the area to be reclaimed across R-10."

The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the
declaration that said lands are alienable and disposable. Otherwise, the NHA cannot
effectively use them in its housing and resettlement project.

(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed lands
were conveyed to NHA for subdivision and disposition to qualified beneficiaries and for
development into a mixed land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port-related activities. Said
directive carries with it the pronouncement that said lands have been transformed to
alienable and disposable lands. Otherwise, there is no legal way to convey it to the
beneficiaries.

(3) Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed
area to 79 hectares to be developed and disposed of in the implementation of the
 SMDRP. The authority put into the hands of the NHA to dispose of the reclaimed lands
tacitly sustains the conversion to alienable and disposable lands.

Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on
Proclamations Nos. 39 and 465 issued by President Ramos, without doubt, classified the
reclaimed areas as alienable and disposable.

Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit
declarations that the lands to be reclaimed are classified as alienable and disposable. We find
however that such conclusion is derived and implicit from the authority given to the NHA to
transfer the reclaimed lands to qualified beneficiaries.

The query is, when did the declaration take effect? It did so only after the special patents
covering the reclaimed areas were issued. It is only on such date that the reclaimed lands
became alienable and disposable lands of the public domain. This is in line with the ruling in PEA
where said issue was clarified and stressed:

PD No. 1085, coupled with President Aquino’s actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085 and President Aquino’s
issuance of a land patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. The Freedom Islands are thus alienable or disposable lands of the
public domain, open to disposition or concession to qualified parties.73 (Emphasis supplied.)

Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with
Special Patent Nos. 3591, 3592, and 3598 more than satisfy the requirement in PEA that "[t]here
must be a law or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession (emphasis supplied)."74

Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA
6957 as amended by RA 7718 provides ample authority for the classification of reclaimed land in
the SMDRP for the repayment scheme of the BOT project as alienable and disposable lands of
public domain. Sec. 6 of RA 6957 as amended by RA 7718 provides:

For the financing, construction, operation and maintenance of any infrastructure projects
undertaken through the build-operate-and transfer arrangement or any of its variations pursuant
to the provisions of this Act, the project proponent x x x may likewise be repaid in the form of a
share in the revenue of the project or other non-monetary payments, such as, but not limited to,
the grant of a portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land. (Emphasis supplied.)

While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that
shall serve as payment to the project proponent have become alienable and disposable lands
and opened for disposition; nonetheless, this conclusion is necessarily implied, for how else can
the land be used as the enabling component for the Project if such classification is not deemed
made?

It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not
convert alienable lands of public domain into private or patrimonial lands. We ruled in PEA that
"alienable lands of public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these lands can become private
or patrimonial lands (emphasis supplied)."75 To lands reclaimed by PEA or through a contract
with a private person or entity, such reclaimed lands still remain alienable lands of public domain
which can be transferred only to Filipino citizens but not to a private corporation. This is because
PEA under PD 1084 and EO 525 is tasked to hold and dispose of alienable lands of public
domain and it is only when it is transferred to Filipino citizens that it becomes patrimonial
property. On the other hand, the NHA is a government agency not tasked to dispose of public
lands under its charter—The Revised Administrative Code of 1987. The NHA is an "end-user
agency" authorized by law to administer and dispose of reclaimed lands. The moment titles over
reclaimed lands based on the special patents are transferred to the NHA by the Register of
Deeds, they are automatically converted to patrimonial properties of the State which can be sold
to Filipino citizens and private corporations, 60% of which are owned by Filipinos. The reason is
obvious: if the reclaimed land is not converted to patrimonial land once transferred to NHA, then
it would be useless to transfer it to the NHA since it cannot legally transfer or alienate lands of
public domain. More importantly, it cannot attain its avowed purposes and goals since it can only
transfer patrimonial lands to qualified beneficiaries and prospective buyers to raise funds for the
SMDRP.

From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared
alienable and disposable land of the public domain; and in the hands of NHA, it has been
reclassified as patrimonial property.

Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3)
Presidential Acts (MO 415 and Proclamations Nos. 39 and 465) and hence, the declaration that
such areas are alienable and disposable land of the public domain, citing PEA, has no legal
basis.

Petitioner’s contention is not well-taken.

Petitioner’s sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the
special patents issued by the DENR demonstrates the inherent weakness of his proposition. As
was ruled in PEA cited by petitioner himself, "PD No. 1085, coupled with President Aquino’s
actual issuance of a special patent covering the Freedom Islands is equivalent to an official
proclamation classifying the Freedom islands as alienable or disposable lands of public domain."
In a similar vein, the combined and collective effect of Proclamations Nos. 39 and 465 with
Special Patents Nos. 3592 and 3598 is tantamount to and can be considered to be an official
declaration that the reclaimed lots are alienable or disposable lands of the public domain.

The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence
transfer of ownership of reclaimed lands to the NHA, are official acts of the DENR Secretary in
the exercise of his power of supervision and control over alienable and disposable public lands
and his exclusive jurisdiction over the management and disposition of all lands of public domain
under the Revised Administrative Code of 1987. Special Patent No. 3592 speaks of the transfer
of Lots 1 and 2, and RI-003901-000012-D with an area of 401,485 square meters based on the
survey and technical description approved by the Bureau of Lands. Lastly, Special Patent No.
3598 was issued in favor of the NHA transferring to said agency a tract of land described in Plan
RL-00-000013 with an area of 390,000 square meters based on the survey and technical
descriptions approved by the Bureau of Lands.

The conduct of the survey, the preparation of the survey plan, the computation of the technical
description, and the processing and preparation of the special patent are matters within the
technical area of expertise of administrative agencies like the DENR and the Land Management
Bureau and are generally accorded not only respect but at times even finality.76 Preparation of
special patents calls for technical examination and a specialized review of calculations and
specific details which the courts are ill-equipped to undertake; hence, the latter defer to the
administrative agency which is trained and knowledgeable on such matters.77

Subsequently, the special patents in the name of the NHA were submitted to the Register of
Deeds of the City of Manila for registration, and corresponding certificates of titles over the
reclaimed lots were issued based on said special patents. The issuance of certificates of titles in
NHA’s name automatically converts the reclaimed lands to patrimonial properties of the NHA.
Otherwise, the lots would not be of use to the NHA’s housing projects or as payment to the BOT
contractor as the enabling component of the BOT contract. The laws of the land have to be
applied and interpreted depending on the changing conditions and times. Tempora mutantur et
legis mutantur in illis (time changes and laws change with it). One such law that should be
treated differently is the BOT Law (RA 6957) which brought about a novel way of implementing
government contracts by allowing reclaimed land as part or full payment to the contractor of a
government project to satisfy the huge financial requirements of the undertaking. The NHA holds
the lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP
undertaken by authority of the BOT Law and for disposition in accordance with said special law.
The lands become alienable and disposable lands of public domain upon issuance of the special
patents and become patrimonial properties of the Government from the time the titles are issued
to the NHA.

As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that:

It is true that, once a patent is registered and the corresponding certificate of title is issued, the
land covered by them ceases to be part of the public domain and becomes private property, and
the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one
year from the date of issuance of such patent.78

The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,79 Heirs of Carlos Alcaraz v.
Republic,80 and the more recent case of Doris Chiongbian-Oliva v. Republic of the
Philippines.81 Thus, the 79-hectare reclaimed land became patrimonial property after the
issuance of certificates of titles to the NHA based on Special Patents Nos. 3592 and 3598.

One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by
Special Patents Nos. 3592 (40 hectare reclaimed land) and 3598 (39-hectare reclaimed land).
The reclamation of the land under SMDRP was completed in August 1996 while the PEA
decision was rendered on July 9, 2002. In the meantime, subdivided lots forming parts of the
reclaimed land were already sold to private corporations for value and separate titles issued to
the buyers. The Project was terminated through a Memorandum of Agreement signed on August
27, 2003. The PEA decision became final through the November 11, 2003 Resolution. It is a
settled precept that decisions of the Supreme Court can only be applied prospectively as they
may prejudice vested rights if applied retroactively.

In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of
its decisions based on considerations of equity and fair play, thus:

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was
that enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe
and the DBP are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial
decisions applying or interpreting the laws of the Constitution shall form a part of the legal system
of the Philippines." But while our decisions form part of the law of the land, they are also subject
to Article 4 of the Civil Code which provides that "laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the
law looks forward not backward. The rationale against retroactivity is easy to perceive. The
retroactive application of a law usually divests rights that have already become vested or impairs
the obligations of contract and hence, is unconstitutional.

The same consideration underlies our rulings giving only prospective effect to decisions
enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] "x x
x when a doctrine of this Court is overruled and a different view is adopted, the new doctrine
should be applied prospectively and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof.82

Fourth Issue: Whether respondent RBI can acquire reclaimed

lands when there was no declaration that said lands are no

longer needed for public use

Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands
of the public domain, still, the reclamation is flawed for there was never any declaration that said
lands are no longer needed for public use.

We are not moved by petitioner’s submission.

Even if it is conceded that there was no explicit declaration that the lands are no longer needed
for public use or public service, there was however an implicit executive declaration that the
reclaimed areas R-10 are not necessary anymore for public use or public service when President
Aquino through MO 415 conveyed the same to the NHA partly for housing project and related
commercial/industrial development intended for disposition to and enjoyment of certain
beneficiaries and not the public in general and partly as enabling component to finance the
project.

President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the reclaimed
lands of the Smokey Mountain project are no longer required for public use or service, thus:

These parcels of land of public domain are hereby placed under the administration and
disposition of the National Housing Authority to develop, subdivide and dispose to qualified
beneficiaries, as well as its development for mix land use (commercial/industrial) to provide
employment opportunities to on-site families and additional areas for port related activities.
(Emphasis supplied.)

While numerical count of the persons to be benefited is not the determinant whether the property
is to be devoted to public use, the declaration in Proclamation No. 39 undeniably identifies only
particular individuals as beneficiaries to whom the reclaimed lands can be sold, namely—the
Smokey Mountain dwellers. The rest of the Filipinos are not qualified; hence, said lands are no
longer essential for the use of the public in general.

In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the
area to be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that said
lands are undoubtedly set aside for the beneficiaries of SMDRP and not the public—declaring
the power of NHA to dispose of land to be reclaimed, thus: "The authority to administer, develop,
or dispose lands identified and reserved by this Proclamation and Proclamation No. 39 (s.1992),
in accordance with the SMDRP, as enhance, is vested with the NHA, subject to the provisions of
existing laws." (Emphasis supplied.)

MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the
reclaimed areas for public use or service as the Project cannot be successfully implemented
without the withdrawal of said lands from public use or service. Certainly, the devotion of the
reclaimed land to public use or service conflicts with the intended use of the Smokey Mountain
areas for housing and employment of the Smokey Mountain scavengers and for financing the
Project because the latter cannot be accomplished without abandoning the public use of the
subject land. Without doubt, the presidential proclamations on SMDRP together with the
issuance of the special patents had effectively removed the reclaimed lands from public use.

More decisive and not in so many words is the ruling in PEA which we earlier cited, that "PD No.
1085 and President Aquino’s issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service." Consequently, we ruled in that case
that the reclaimed lands are "open to disposition or concession to qualified parties."83
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have
classified the reclaimed lands as alienable and disposable and open to disposition or concession
as they would be devoted to units for Smokey Mountain beneficiaries. Hence, said lands are no
longer intended for public use or service and shall form part of the patrimonial properties of the
State under Art. 422 of the Civil Code.84 As discussed a priori, the lands were classified as
patrimonial properties of the NHA ready for disposition when the titles were registered in its name
by the Register of Deeds.

Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure
project are necessarily reclassified as alienable and disposable lands under the BOT Law;
otherwise, absurd and illogical consequences would naturally result. Undoubtedly, the BOT
contract will not be accepted by the BOT contractor since there will be no consideration for its
contractual obligations. Since reclaimed land will be conveyed to the contractor pursuant to the
BOT Law, then there is an implied declaration that such land is no longer intended for public use
or public service and, hence, considered patrimonial property of the State.

Fifth Issue: Whether there is a law authorizing sale of

reclaimed lands

Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law
authorizing their sale. He argues that unlike PEA, no legislative authority was granted to the NHA
to sell reclaimed land.

This position is misplaced.

Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is
not empowered by any law to sell reclaimed land, thus:

Section 60. Any tract of land comprised under this title may be leased or sold, as the case may
be, to any person, corporation or association authorized to purchase or lease public lands for
agricultural purposes. The area of the land so leased or sold shall be such as shall, in the
judgment of the Secretary of Agriculture and Natural Resources, be reasonably necessary for the
purposes for which such sale or lease if requested and shall in no case exceed one hundred and
forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations,
transfers, made to a province, municipality or branch or subdivision of the Government for the
purposes deemed by said entities conducive to the public interest; but the land so granted
donated or transferred to a province, municipality, or branch or subdivision of the Government
shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title,
except when authorized by Congress; Provided, further, That any person, corporation,
association or partnership disqualified from purchasing public land for agricultural purposes
under the provisions of this Act, may lease land included under this title suitable for industrial or
residential purposes, but the lease granted shall only be valid while such land is used for the
purposes referred to. (Emphasis supplied.)

Reliance on said provision is incorrect as the same applies only to "a province, municipality or
branch or subdivision of the Government." The NHA is not a government unit but a government
corporation performing governmental and proprietary functions.

In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by
it under the law to other parties, thus:

Section 6. Powers and functions of the Authority. The Authority shall have the following powers
and functions to be exercised by the Boards in accordance with the established national human
settlements plan prepared by the Human Settlements Commission:
xxxx

(k) Enter into contracts whenever necessary under such terms and conditions as it may deem
proper and reasonable;

(l) Acquire property rights and interests, and encumber or otherwise dispose the same as it may
deem appropriate (Emphasis supplied.)

Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or
otherwise dispose of them as it may deem appropriate. The transfer of the reclaimed lands by
the National Government to the NHA for housing, commercial, and industrial purposes
transformed them into patrimonial lands which are of course owned by the State in its private or
proprietary capacity. Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or
qualified corporation.

Sixth Issue: Whether the transfer of reclaimed lands to RBI

was done by public bidding

Petitioner also contends that there was no public bidding but an awarding of ownership of said
reclaimed lands to RBI. Public bidding, he says, is required under Secs. 63 and 67 of CA 141
which read:

Section 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce for
authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall give
notice by public advertisement in the same manner as in the case of leases or sales of
agricultural public land, that the Government will lease or sell, as the case may be, the lots or
blocks specified in the advertisement, for the purpose stated in the notice and subject to the
conditions specified in this chapter.

xxxx

Section 67. The lease or sale shall be made through oral bidding; and adjudication shall be made
to the highest bidder. However, where an applicant has made improvements on the land by
virtue of a permit issued to him by competent authority, the sale or lease shall be made by sealed
bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied
whenever applicable. If all or part of the lots remain unleased or unsold, the Director of Lands
shall from time to time announce in the Official Gazette or in any other newspapers of general
circulation, the lease of sale of those lots, if necessary.

He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were
conveyed to RBI by negotiated contract and not by public bidding as required by law.

This stand is devoid of merit.

There is no doubt that respondent NHA conducted a public bidding of the right to become its joint
venture partner in the Smokey Mountain Project. Notices or Invitations to Bid were published in
the national dailies on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The
bidding proper was done by the Bids and Awards Committee (BAC) on May 18, 1992. On August
31, 1992, the Inter-Agency Techcom made up of the NHA, PEA, DPWH, PPA, DBP, and DENR
opened the bids and evaluated them, resulting in the award of the contract to respondent RBI on
October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23, 1994, said JVA
was amended and restated into the ARJVA. On August 11, 1994, the ARJVA was again
amended. On September 7, 1994, the OP approved the ARJVA and the amendments to the
ARJVA. From these factual settings, it cannot be gainsaid that there was full compliance with the
laws and regulations governing public biddings involving a right, concession, or property of the
government.

Petitioner concedes that he does not question the public bidding on the right to be a joint venture
partner of the NHA, but the absence of bidding in the sale of alienable and disposable lands of
public domain pursuant to CA 141 as amended.

Petitioner’s theory is incorrect.

Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the
Director of Lands of alienable and disposable lands of public domain. This is not present in the
case at bar. The lands reclaimed by and conveyed to the NHA are no longer lands of public
domain. These lands became proprietary lands or patrimonial properties of the State upon
transfer of the titles over the reclaimed lands to the NHA and hence outside the ambit of CA 141.
The NHA can therefore legally transfer patrimonial land to RBI or to any other interested qualified
buyer without any bidding conducted by the Director of Lands because the NHA, unlike PEA, is a
government agency not tasked to sell lands of public domain. Hence, it can only hold patrimonial
lands and can dispose of such lands by sale without need of public bidding.

Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding "when government
property has become unserviceable for any cause or is no longer needed." It appears from the
Handbook on Property and Supply Management System, Chapter 6, that reclaimed lands which
have become patrimonial properties of the State, whose titles are conveyed to government
agencies like the NHA, which it will use for its projects or programs, are not within the ambit of
Sec. 79. We quote the determining factors in the Disposal of Unserviceable Property, thus:

Determining Factors in the Disposal of Unserviceable Property

 Property, which can no longer be repaired or reconditioned;

 Property whose maintenance costs of repair more than outweigh the benefits and
services that will be derived from its continued use;
 Property that has become obsolete or outmoded because of changes in technology;
 Serviceable property that has been rendered unnecessary due to change in the agency’s
function or mandate;
 Unused supplies, materials and spare parts that were procured in excess of
requirements; and
 Unused supplies and materials that [have] become dangerous to use because of long
storage or use of which is determined to be hazardous.85

Reclaimed lands cannot be considered unserviceable properties. The reclaimed lands in

question are very much needed by the NHA for the Smokey Mountain Project because without it,
then the projects will not be successfully implemented. Since the reclaimed lands are not
unserviceable properties and are very much needed by NHA, then Sec. 79 of PD 1445 does not
apply.

More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed
lands transferred to a government agency like the NHA which has entered into a BOT contract
with a private firm. The reason is obvious. If the patrimonial property will be subject to public
bidding as the only way of disposing of said property, then Sec. 6 of RA 6957 on the repayment
scheme is almost impossible or extremely difficult to implement considering the uncertainty of a
winning bid during public auction. Moreover, the repayment scheme of a BOT contract may be in
the form of non-monetary payment like the grant of a portion or percentage of reclaimed land.
Even if the BOT partner participates in the public bidding, there is no assurance that he will win
the bid and therefore the payment in kind as agreed to by the parties cannot be performed or the
winning bid prize might be below the estimated valuation of the land. The only way to harmonize
Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to consider Sec. 79 of PD 1445 as inapplicable to
BOT contracts involving patrimonial lands. The law does not intend anything impossible (lex non
intendit aliquid impossibile).

Seventh Issue: Whether RBI, being a private corporation,

is barred by the Constitution to acquire lands of public domain

Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987
Constitution from acquiring lands of public domain.

Petitioner’s proposition has no legal mooring for the following reasons:

1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid "a
portion as percentage of the reclaimed land" subject to the constitutional requirement that
only Filipino citizens or corporations with at least 60% Filipino equity can acquire the
same. It cannot be denied that RBI is a private corporation, where Filipino citizens own at
least 60% of the stocks. Thus, the transfer to RBI is valid and constitutional.

2. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said
proclamations were converted to alienable and disposable lands of public domain. When
the titles to the reclaimed lands were transferred to the NHA, said alienable and
disposable lands of public domain were automatically classified as lands of the private
domain or patrimonial properties of the State because the NHA is an agency NOT tasked
to dispose of alienable or disposable lands of public domain. The only way it can transfer
the reclaimed land in conjunction with its projects and to attain its goals is when it is
automatically converted to patrimonial properties of the State. Being patrimonial or
private properties of the State, then it has the power to sell the same to any qualified
person—under the Constitution, Filipino citizens as private corporations, 60% of which is
owned by Filipino citizens like RBI.

3. The NHA is an end-user entity such that when alienable lands of public domain are
transferred to said agency, they are automatically classified as patrimonial properties.
The NHA is similarly situated as BCDA which was granted the authority to dispose of
patrimonial lands of the government under RA 7227. The nature of the property holdings
conveyed to BCDA is elucidated and stressed in the May 6, 2003 Resolution in Chavez
v. PEA, thus:

BCDA is an entirely different government entity. BCDA is authorized by law to sell specific
government lands that have long been declared by presidential proclamations as military
reservations for use by the different services of the armed forces under the Department of
National Defense. BCDA’s mandate is specific and limited in area, while PEA’s mandate is
general and national. BCDA holds government lands that have been granted to end-user
government entities––the military services of the armed forces. In contrast, under Executive
Order No. 525, PEA holds the reclaimed public lands, not as an end-user entity, but as the
government agency "primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government."

x x x Well-settled is the doctrine that public land granted to an end-user government agency for a
specific public use may subsequently be withdrawn by Congress from public use and declared
patrimonial property to be sold to private parties. R.A. No. 7227 creating the BCDA is a law that
declares specific military reservations no longer needed for defense or military purposes and
reclassifies such lands as patrimonial property for sale to private parties.
Government owned lands, as long as they are patrimonial property, can be sold to private
parties, whether Filipino citizens or qualified private corporations. Thus, the so-called Friar Lands
acquired by the government under Act No. 1120 are patrimonial property which even private
corporations can acquire by purchase. Likewise, reclaimed alienable lands of the public domain if
sold or transferred to a public or municipal corporation for a monetary consideration become
patrimonial property in the hands of the public or municipal corporation. Once converted to
patrimonial property, the land may be sold by the public or municipal corporation to private
parties, whether Filipino citizens or qualified private corporations.86 (Emphasis supplied.)

The foregoing Resolution makes it clear that the SMDRP was a program adopted by the
Government under Republic Act No. 6957 (An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure Projects by the Private Sector, and For Other
Purposes), as amended by RA 7718, which is a special law similar to RA 7227. Moreover, since
the implementation was assigned to the NHA, an end-user agency under PD 757 and RA 7279,
the reclaimed lands registered under the NHA are automatically classified as patrimonial lands
ready for disposition to qualified beneficiaries.

The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private
corporation, is disqualified from being a transferee of public land. What was transferred to HCPTI
is a 10-hectare lot which is already classified as patrimonial property in the hands of the NHA.
HCPTI, being a qualified corporation under the 1987 Constitution, the transfer of the subject lot to
it is valid and constitutional.

Eighth Issue: Whether respondents can be compelled to disclose

all information related to the SMDRP

Petitioner asserts his right to information on all documents such as contracts, reports,
memoranda, and the like relative to SMDRP.

Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like
the current stage of the Project, the present financial capacity of RBI, the complete list of
investors in the asset pool, the exact amount of investments in the asset pool and other similar
important information regarding the Project.

He prays that respondents be compelled to disclose all information regarding the SMDRP and
furnish him with originals or at least certified true copies of all relevant documents relating to the
said project including, but not limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool
Agreement.

This relief must be granted.

The right of the Filipino people to information on matters of public concern is enshrined in the
1987 Constitution, thus:

ARTICLE II

xxxx

SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions involving public interest.

ARTICLE III
SEC. 7. The right of the people to information on matters of public concern shall be recognized.
Access to official records, and to documents, and papers pertaining to official acts, transactions,
or decisions, as well as to government research data used as basis for policy development, shall
be afforded the citizen, subject to such limitations as may be provided by law.

In Valmonte v. Belmonte, Jr., this Court explicated this way:

[A]n essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive
and be responsive to the people’s will. Yet, this open dialogue can be effective only to the extent
that the citizenry is informed and thus able to formulate its will intelligently. Only when the
participants in the discussion are aware of the issues and have access to information relating
thereto can such bear fruit.87

In PEA, this Court elucidated the rationale behind the right to information:

These twin provisions of the Constitution seek to promote transparency in policy-making and in
the operations of the government, as well as provide the people sufficient information to exercise
effectively other constitutional rights. These twin provisions are essential to the exercise of
freedom of expression. If the government does not disclose its official acts, transactions and
decisions to citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to hold public
officials "at all times x x x accountable to the people," for unless citizens have the proper
information, they cannot hold public officials accountable for anything. Armed with the right
information, citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed citizenry is essential to the
existence and proper functioning of any democracy.88

Sec. 28, Art. II compels the State and its agencies to fully disclose "all of its transactions
involving public interest." Thus, the government agencies, without need of demand from anyone,
must bring into public view all the steps and negotiations leading to the consummation of the
transaction and the contents of the perfected contract.89 Such information must pertain to
"definite propositions of the government," meaning official recommendations or final positions
reached on the different matters subject of negotiation. The government agency, however, need
not disclose "intra-agency or inter-agency recommendations or communications during the stage
when common assertions are still in the process of being formulated or are in the exploratory
stage." The limitation also covers privileged communication like information on military and
diplomatic secrets; information affecting national security; information on investigations of crimes
by law enforcement agencies before the prosecution of the accused; information on foreign
relations, intelligence, and other classified information.

It is unfortunate, however, that after almost twenty (20) years from birth of the 1987 Constitution,
there is still no enabling law that provides the mechanics for the compulsory duty of government
agencies to disclose information on government transactions. Hopefully, the desired enabling law
will finally see the light of day if and when Congress decides to approve the proposed "Freedom
of Access to Information Act." In the meantime, it would suffice that government agencies post
on their bulletin boards the documents incorporating the information on the steps and
negotiations that produced the agreements and the agreements themselves, and if finances
permit, to upload said information on their respective websites for easy access by interested
parties. Without any law or regulation governing the right to disclose information, the NHA or any
of the respondents cannot be faulted if they were not able to disclose information relative to the
SMDRP to the public in general.

The other aspect of the people’s right to know apart from the duty to disclose is the duty to allow
access to information on matters of public concern under Sec. 7, Art. III of the Constitution. The
gateway to information opens to the public the following: (1) official records; (2) documents and
papers pertaining to official acts, transactions, or decisions; and (3) government research data
used as a basis for policy development.

Thus, the duty to disclose information should be differentiated from the duty to permit access to
information. There is no need to demand from the government agency disclosure of information
as this is mandatory under the Constitution; failing that, legal remedies are available. On the
other hand, the interested party must first request or even demand that he be allowed access to
documents and papers in the particular agency. A request or demand is required; otherwise, the
government office or agency will not know of the desire of the interested party to gain access to
such papers and what papers are needed. The duty to disclose covers only transactions
involving public interest, while the duty to allow access has a broader scope of information which
embraces not only transactions involving public interest, but any matter contained in official
communications and public documents of the government agency.

We find that although petitioner did not make any demand on the NHA to allow access to
information, we treat the petition as a written request or demand. We order the NHA to allow
petitioner access to its official records, documents, and papers relating to official acts,
transactions, and decisions that are relevant to the said JVA and subsequent agreements
relative to the SMDRP.

Ninth Issue: Whether the operative fact doctrine applies to the instant petition

Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because
it is an equitable doctrine which could not be used to countenance an inequitable result that is
contrary to its proper office.

On the other hand, the petitioner Solicitor General argues that the existence of the various
agreements implementing the SMDRP is an operative fact that can no longer be disturbed or
simply ignored, citing Rieta v. People of the Philippines.90

The argument of the Solicitor General is meritorious.

The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated
that a legislative or executive act, prior to its being declared as unconstitutional by the courts, is
valid and must be complied with, thus:

As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern. Administrative or executive acts,
orders and regulations shall be valid only when they are not contrary to the laws of the
Constitution." It is understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be complied with. This
is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their positions.
What could be more fitting than that in a subsequent litigation regard be had to what has been
done while such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact
must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is
the governmental organ which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior
to such a determination [of unconstitutionality], is an operative fact and may have consequences
which cannot justly be ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be considered in various aspects,
with respect to particular relations, individual and corporate, and particular conduct, private and
official." This language has been quoted with approval in a resolution in Araneta v. Hill and the
decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of
Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co.91 (Emphasis supplied.)

This doctrine was reiterated in the more recent case of City of Makati v. Civil Service
Commission, wherein we ruled that:

Moreover, we certainly cannot nullify the City Government’s order of suspension, as we have no
reason to do so, much less retroactively apply such nullification to deprive private respondent of
a compelling and valid reason for not filing the leave application. For as we have held, a void act
though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions
done in reliance thereof. Consequently, the existence of a statute or executive order prior to its
being adjudged void is an operative fact to which legal consequences are attached. It would
indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension
in lieu of a formal leave application.92 (Emphasis supplied.)

The principle was further explicated in the case of Rieta v. People of the Philippines, thus:

In similar situations in the past this Court had taken the pragmatic and realistic course set forth in
Chicot County Drainage District vs. Baxter Bank to wit:

The courts below have proceeded on the theory that the Act of Congress, having been found to
be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no
duties, and hence affording no basis for the challenged decree. x x x It is quite clear, however,
that such broad statements as to the effect of a determination of unconstitutionality must be
taken with qualifications. The actual existence of a statute, prior to [the determination of its
invalidity], is an operative fact and may have consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various aspects –with respect to particular conduct,
private and official. Questions of rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon accordingly, of public policy in the light of
the nature both of the statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the attention of courts, state
and federal, and it is manifest from numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.

In the May 6, 2003 Resolution in Chavez v. PEA,93 we ruled that De Agbayani94 is not applicable
to the case considering that the prevailing law did not authorize private corporations from owning
land. The prevailing law at the time was the 1935 Constitution as no statute dealt with the same
issue.

In the instant case, RA 6957 was the prevailing law at the time that the joint venture agreement
was signed. RA 6957, entitled "An Act Authorizing The Financing, Construction, Operation And
Maintenance Of Infrastructure Projects By The Private Sector And For Other Purposes," which
was passed by Congress on July 24, 1989, allows repayment to the private contractor of
reclaimed lands.95 Such law was relied upon by respondents, along with the above-mentioned
executive issuances in pushing through with the Project. The existence of such law and
issuances is an "operative fact" to which legal consequences have attached. This Court is
constrained to give legal effect to the acts done in consonance with such executive and
legislative acts; to do otherwise would work patent injustice on respondents.

Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the
transfer of land, although illegal or unconstitutional, will not be invalidated on considerations of
equity and social justice. However, in that case, we did not apply the same considering that PEA,
respondent in said case, was not entitled to equity principles there being bad faith on its part,
thus:

There are, moreover, special circumstances that disqualify Amari from invoking equity principles.
Amari cannot claim good faith because even before Amari signed the Amended JVA on March
30, 1999, petitioner had already filed the instant case on April 27, 1998 questioning precisely the
qualification of Amari to acquire the Freedom Islands. Even before the filing of this petition, two
Senate Committees had already approved on September 16, 1997 Senate Committee Report
No. 560. This Report concluded, after a well-publicized investigation into PEA’s sale of the
Freedom Islands to Amari, that the Freedom Islands are inalienable lands of the public domain.
Thus, Amari signed the Amended JVA knowing and assuming all the attendant risks, including
the annulment of the Amended JVA.96

Such indicia of bad faith are not present in the instant case. When the ruling in PEA was
rendered by this Court on July 9, 2002, the JVAs were all executed. Furthermore, when petitioner
filed the instant case against respondents on August 5, 2004, the JVAs were already terminated
by virtue of the MOA between the NHA and RBI. The respondents had no reason to think that
their agreements were unconstitutional or even questionable, as in fact, the concurrent acts of
the executive department lent validity to the implementation of the Project. The SMDRP
agreements have produced vested rights in favor of the slum dwellers, the buyers of reclaimed
land who were issued titles over said land, and the agencies and investors who made
investments in the project or who bought SMPPCs. These properties and rights cannot be
disturbed or questioned after the passage of around ten (10) years from the start of the SMDRP
implementation. Evidently, the "operative fact" principle has set in. The titles to the lands in the
hands of the buyers can no longer be invalidated.

The Court’s Dispositions

Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA
and RBI and the SMDRP embodied in the JVA, the subsequent amendments to the JVA and all
other agreements signed and executed in relation to it, including, but not limited to, the
September 26, 1994 Smokey Mountain Asset Pool Agreement and the agreement on Phase I of
the Project as well as all other transactions which emanated from the Project, have been shown
to be valid, legal, and constitutional. Phase II has been struck down by the Clean Air Act.

With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from
further implementing and/or enforcing the said Project and other agreements related to it, and
from further deriving and/or enjoying any rights, privileges and interest from the Project, we find
the same prayer meritless.

Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:

Sec. 2. Petition for prohibition.—When the proceedings of any tribunal, corporation, board, officer
or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter specified therein, or
otherwise granting such incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-judicial functions in relation to the
SMDRP and the agreements relative to it. Likewise, it has not been shown what ministerial
functions the NHA has with regard to the SMDRP.

A ministerial duty is one which is so clear and specific as to leave no room for the exercise of
discretion in its performance. It is a duty which an officer performs in a given state of facts in a
prescribed manner in obedience to the mandate of legal authority, without regard to the exercise
of his/her own judgment upon the propriety of the act done.97

Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and
other related agreements, certainly does not involve ministerial functions of the NHA but instead
requires exercise of judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides for
validation of the developer’s (RBI’s) claims arising from the termination of the SMDRP through
the various government agencies.98 Such validation requires the exercise of discretion.

In addition, prohibition does not lie against the NHA in view of petitioner’s failure to avail and
exhaust all administrative remedies. Clear is the rule that prohibition is only available when there
is no adequate remedy in the ordinary course of law.

More importantly, prohibition does not lie to restrain an act which is already a fait accompli. The
"operative fact" doctrine protecting vested rights bars the grant of the writ of prohibition to the
case at bar. It should be remembered that petitioner was the Solicitor General at the time
SMDRP was formulated and implemented. He had the opportunity to question the SMDRP and
the agreements on it, but he did not. The moment to challenge the Project had passed.

On the prayer for a writ of mandamus, petitioner asks the Court to compel respondents to
disclose all documents and information relating to the project, including, but not limited to, any
subsequent agreements with respect to the different phases of the Project, the revisions of the
original plan, the additional works incurred on the Project, the current financial condition of
respondent RBI, and the transactions made with respect to the project. We earlier ruled that
petitioner will be allowed access to official records relative to the SMDRP. That would be
adequate relief to satisfy petitioner’s right to the information gateway.

WHEREFORE, the petition is partially granted.

The prayer for a writ of prohibition is DENIED for lack of merit.

The prayer for a writ of mandamus is GRANTED. Respondent NHA is ordered to allow access to
petitioner to all public documents and official records relative to the SMDRP—including, but not
limited to, the March 19, 1993 JVA between the NHA and RBI and subsequent agreements
related to the JVA, the revisions over the original plan, and the additional works incurred on and
the transactions made with respect to the Project.

No costs.

SO ORDERED.

G.R. No. 162333 December 23, 2008

BIENVENIDO C. TEOCO and JUAN C. TEOCO, JR., petitioners,

vs.
METROPOLITAN BANK AND TRUST COMPANY, respondent.

DECISION
REYES, R.T., J.:

REAL creditors are rarely unwilling to receive their debts from any hand which will pay
them.1 Ang tunay na may pautang ay bihirang tumanggi sa kabayaran mula kaninuman.

This is a petition for review on certiorari seeking the reversal of the Decision2 of the Court of
Appeals (CA) in CA-G.R. CV No. 58891 dated February 20, 2004 which annulled and set aside
the decision of the Regional Trial Court (RTC) of Catbalogan, Samar on July 22, 1997 in
Cadastral Record No. 1378. The RTC originally dismissed the petition for writ of possession filed
by respondent Metropolitan Bank and Trust Company (Metrobank) on the ground that
intervenors and present petitioners, the brothers Bienvenido Teoco and Juan Teoco, Jr. (the
brothers Teoco), have redeemed the subject property. The CA reversed this dismissal and
ordered the issuance of a writ of possession in favor of respondent Metrobank.

Culled from the records, the facts are as follows:

Lydia T. Co, married to Ramon Co, was the registered owner of two parcels of land situated in
Poblacion, Municipality of Catbalogan, Province of Samar under Transfer Certificate of Title
(TCT) Nos. T-6220 and T-6910.3Ramon Co mortgaged the said parcels of land to Metrobank for
a sum of P200,000.00.

On February 14, 1991, the properties were sold to Metrobank in an extrajudicial foreclosure sale
under Act No. 3135. One year after the registration of the Certificates of Sale, the titles to the
properties were consolidated in the name of Metrobank for failure of Ramon Co to redeem the
same within the one year period provided for by law. TCT Nos. T-6220 and T-6910 were
cancelled and TCT Nos. T-8482 and T-8493 were issued in the name of Metrobank.

On November 29, 1993, Metrobank filed a petition for the issuance of a writ of possession
against Ramon Co and Lydia Co (the spouses Co). However, since the spouses Co were no
longer residing in the Philippines at the time the petition was filed, the trial court ordered
Metrobank, on January 12, 1994 and again on January 26, 1994 to effect summons by
publication against the spouses Co.

On May 17, 1994, the brothers Teoco filed an answer-in-intervention alleging that they are the
successors-in-interest of the spouses Co, and that they had duly and validly redeemed the
subject properties within the reglementary period provided by law. The brothers Teoco thus
prayed for the dismissal of Metrobank’s petition for a writ of possession, and for the nullification
of the TCTs issued in the name of Metrobank. The brothers Teoco further prayed for the
issuance in their name of new certificates of title.

Metrobank, in its reply, alleged that the amount deposited by the brothers Teoco as redemption
price was not sufficient, not being in accordance with Section 78 of the General Banking Act.
Metrobank also said the assignment of the right of redemption by the spouses Co in favor of the
brothers Teoco was not properly executed, as it lacks the necessary authentication from the
Philippine Embassy.

On February 24, 1995, the trial court was informed that the brothers Teoco had deposited the
amount of P356,297.57 to the clerk of court of the RTC in Catbalogan, Samar. The trial court
ordered Metrobank to disclose whether it is allowing the brothers Teoco to redeem the subject
properties. Metrobank refused to accept the amount deposited by the brothers Teoco, alleging
that they are obligated to pay the spouses Co’s subsequent obligations to Metrobank as well.
The brothers Teoco claimed that they are not bound to pay all the obligations of the spouses Co,
but only the value of the property sold during the public auction.

On February 26, 1997, the trial court reiterated its earlier order directing Metrobank to effect
summons by publication to the spouses Co. Metrobank complied with said order by submitting
documents showing that it caused the publication of summons against the spouses Co. The
brothers Teoco challenged this summons by publication, arguing that the newspaper where the
summons by publication was published, the Samar Reporter, was not a newspaper of general
circulation in the Philippines. The brothers Teoco furthermore argued that Metrobank did not
present witnesses to identify the documents to prove summons by publication.

RTC Disposition

On July 22, 1997, the RTC rendered its decision in favor of the brothers Teoco, to wit:

WHEREFORE, judgment is hereby rendered dismissing the petition for a writ of

possession under Section 7 of Act 3135 it appearing that intervenor Atty. Juan C. Teoco,
Jr. and his brother Atty. Bienvenido C. Teoco have legally and effectively redeemed Lot
61 and 67 of Psd-66654, Catbalogan, Cadastre, from the petitioner Metropolitan Bank
and Trust Company.

Accordingly, Metrobank may now withdraw the aforesaid redemption money

of P356,297.57 deposited by Juan C. Teoco, Jr., on February 10, 1992 with the clerk of
court and it is ordered that the Transfer Certificate of Title Nos. T-8492 and T-8493 of
Metropolitan Bank and Trust Company be and are cancelled and in their place new
transfer certificates of title be issued in favor of Intervenors Attys. Bienvenido C. Teoco
and Juan C. Teoco, Jr., of legal age, married, and residents of Calbiga, Samar,
Philippines, upon payment of the prescribed fees therefore. No pronouncement as to
costs.4

According to the RTC, the case filed by Metrobank should be dismissed since intervenor Juan C.
Teoco, Jr., by his tender of P356,297.57 to Metrobank on February 10, 1992, within the
reglementary period of redemption of the foreclosed property, had legally and effectively
redeemed the subject properties from Metrobank. This redemption amount is a fair and
reasonable price and is in keeping with the letter and spirit of Section 78 of the General Banking
Act because Metrobank purchased the mortgaged properties from the sheriff of the same court
for only P316,916.29. In debunking the argument that the amount tendered was insufficient, the
RTC held:

It is contended for Metrobank that the redemption money deposited by Juan C. Teoco,
Jr., is insufficient and ineffective because the spouses Ramon Co and Lydia T. Co owe it
the total amount of P6,856,125 excluding interest and other charges and the mortgage
contract executed by them in favor of Metrobank in 1985 and 1986 (Exh. A and B) are
not only security for payment of their obligation in the amount of P200,000 but also for
those obligations that may have been previously and later extended to the Co couple
including interest and other charges as appears in the accounts, books and records of
the bank.

Metrobank cites the case of Mojica v. Court of Appeals, 201 SCRA 517 (1991) where the
Supreme Court held that mortgages given to secure future advancements are valid and
legal contracts; that the amounts named as consideration in said contract do not limit the
amount for which the mortgage may stand as security; that a mortgage given to secure
the advancements is a continuing security and is not discharged by repayment of the
amount named in the mortgage until the full amount of the advancements are paid. In the
opinion of this court, it is not fair and just to apply this rule to the case at bar. There is no
evidence offered by Metrobank that these other obligations of Ramon Co and his wife
were not secured by real estate mortgages of other lands. If the other indebtedness of
the Co couple to Metrobank are secured by a mortgage on their other lands or properties
the obligation can be enforced by foreclosure which the court assumes Metrobank has
already done. There is no proof that Metrobank asked for a deficiency judgment for these
unpaid loans.
 The Supreme Court in the Mojica case was dealing with the rights of the mortgagee
under a mortgage from an owner of the land. It determined the security covered by the
mortgage the intention of the parties and the equities of the case. What was held in that
case was hedged about so as to limit the decision to the particular facts. It must be
apparent that the Mojica ruling cannot be construed to give countenance or approval to
the theory that in all cases without exception mortgages given to secure past and future
advancements are valid and legal contracts.

In construing a contract between the bank and a borrower such a construction as would
be more favorable to the borrower should be adopted since the alleged past and future
indebtedness of Ramon Co to the bank was not described and specified therein and that
the addendum was made because the mortgage given therefore were not sufficient or
that these past and future advancements were unsecured. That being the case the
mortgage contracts, Exh. A and B should be interpreted against Metrobank which drew
said contracts. A written contract should, in case of doubt, be interpreted against the
party who has drawn the contract (6 R.C.L. 854; H.E. Heackock Co. vs. Macondray &
Co., 42 Phil. 205). Here, the mortgage contracts are in printed form prepared by
Metrobank and therefore ambiguities therein should be construed against the party
causing it (Yatco vs. El Hogar Filipino, 67 Phil. 610; Hodges vs. Tazaro, CA, 57 O.G.
6970).5

The RTC added that there is another reason for dismissing Metrobank’s petition: the RTC failed
to acquire jurisdiction over the spouses Co. The RTC noted that Metrobank published its petition
for writ of possession, but did not publish the writ of summons issued by said court on February
16, 1994. According to the RTC:

A petition for a writ of possession of foreclosed property is in reality a possession suit.

That Metrobank prayed for a writ of possession in an independent special proceeding
does not alter the nature of the case as a possessory suit (Cabrera v. Sinoy, L.-12648,
23 November 1959).

The defendant or owner of the property foreclosed by the petitioner should be summoned
to answer the petition. Accordingly, the publication made by the petitioner is fatally flawed
and defective and on that basis alone this court acquired no jurisdiction over the person
of respondents Ramon Co and his wife (Mapa vs. Court of Appeals, G.R. No. 79394,
October 2, 1992; Lopez vs. Philippine National Bank, L-34223, December 10, 1982).6

Metrobank appealed to the CA. In its appeal, Metrobank claimed that the RTC erred in finding
that the publication made by it is fatally flawed, and that the brothers Teoco had effectively
redeemed the properties in question.

CA Disposition

On February 20, 2004, the CA decided the appeal in favor of Metrobank, with the following
disposition:

WHEREFORE, the appeal is hereby GRANTED. The assailed Decision dated July 22,
1997 rendered by the Regional Trial Court of Catbalogan, Samar Branch 29 in Cadastral
Record No. 1378 is hereby ANNULLED and SET ASIDE. Accordingly, let a writ of
possession in favor of petitioner-appellant METROPOLITAN BANK AND TRUST
COMPANY be issued over the properties and improvements covered by Transfer
Certificates of Title Nos. T-8492 and T-8493 of the Registry of Deeds of Western Samar.

SO ORDERED.7
As regards the question of jurisdiction, the CA ruled that since the parcels of land in question
were already registered in the name of Metrobank at the time the petition was filed, and since the
certificates of title of the spouses Co were already cancelled, there is no more need to issue
summons to the spouses Co. The CA noted that the best proof of ownership of the parcel of land
is a certificate of title.8

The CA also held that the issue of the validity of summons to the spouses Co is unimportant
considering that the properties in question were mortgaged to Metrobank and were subsequently
sold to the same bank after the spouses Co failed to satisfy the principal obligation. Hence, the
applicable law is Act No. 3135,9 as amended by Act No. 4118. Section 7 of said Act No. 3135
states that a petition for the issuance of a writ of possession filed by the purchaser of a property
in an extrajudicial foreclosure sale may be done ex parte. It is the ministerial duty of the trial court
to grant such writ of possession. No discretion is left to the trial court. Any question regarding the
cancellation of the writ, or with respect to the validity and regularity of the public sale should be
determined in a subsequent proceeding as outlined in Section 9 of Act No. 3135.10

Further, the CA held that the brothers Teoco were not able to effectively redeem the subject
properties, because the amount tendered was insufficient, and the brothers Teoco have not
sufficiently shown that the spouses Co’s right of redemption was properly transferred to them.

Issues

In this Rule 45 petition, the brothers Teoco impute to the CA the following errors:

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF

JUDGMENT IN HOLDING THAT PETITIONERS FAILED TO REDEEM THE SUBJECT
PROPERTIES WITHIN THE REGLEMENTARY PERIOD OF ONE YEAR AND THAT
THE REDEMPTION PRICE TENDERED IS INSUFFICIENT.

II

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF

JUDGMENT IN HOLDING PETITIONERS TO PAY NOT ONLY THE P200,000
PRINCIPAL OBLIGATION BUT ALSO THAT PREVIOUSLY EXTENDED, WHETHER
DIRECT OR INDIRECT, PRINCIPAL OR SECONDARY AS APPEARS IN THE
ACCOUNTS, BOOKS AND RECORDS.

III

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE

PETITIONERS HAVE NOT SUFFICIENTLY SHOW(N) THAT THE RIGHT OF
REDEMPTION WAS PROPERLY TRANSFERRED TO THEM.

IV

THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF

THE REGIONAL TRIAL COURT, BRANCH 29, AND GRANTING THE WRIT OF
POSSESSION TO THE RESPONDENT.11(Underscoring supplied)

Our Ruling

Sufficiency of Amount Tendered

We find that neither petitioners, the brothers Teoco, nor respondent, Metrobank, were able to
present sufficient evidence to prove whether the additional loans granted to the spouses Co by
Metrobank were covered by the mortgage agreement between them. The brothers Teoco failed
to present any evidence of the supposed trust receipt agreement between Metrobank and the
spouses Co, or an evidence of the supposed payment by the spouses Co of the other loans
extended by Metrobank. Metrobank, on the other hand, merely relied on the stipulation on the
mortgage deed that the mortgage was intended to secure "the payment of the same
(P200,000.00 loan) and those that may hereafter be obtained."12 However, there was no mention
whatsoever of the mortgage agreement in the succeeding loans entered into by the spouses Co.

While we agree with Metrobank that mortgages intended to secure future advancements are
valid and legal contracts,13 entering into such mortgage contracts does not necessarily put within
its coverage all loan agreements that may be subsequently entered into by the parties. If
Metrobank wishes to apply the mortgage contract in order to satisfy loan obligations not stated
on the face of such contract, Metrobank should prove by a preponderance of evidence that such
subsequent obligations are secured by said mortgage contract and not by any other form of
security.

In order to prevent any injustice to, or unjust enrichment of, any of the parties, this Court holds
that the fairest resolution is to allow the brothers Teoco to redeem the foreclosed properties
based on the amount for which it was foreclosed (P255,441.14 plus interest). This is subject,
however, to the right of Metrobank to foreclose the same property anew in order to satisfy the
succeeding loans entered into by the spouses Co, if they were, indeed, covered by the mortgage
contract. The right of Metrobank to foreclose the mortgage would not be hampered by the
transfer of the properties to the brothers Teoco as a result of this decision, since Article 2127 of
the Civil Code provides:

Art. 2127. The mortgage extends to the natural accessions, to the improvements,
growing fruits, and the rents or income not yet received when the obligation becomes
due, and to the amount of the indemnity granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate
remains in the possession of the mortgagor, or it passes into the hands of a third person.
(Emphasis supplied)

Further, Article 2129 of the Civil Code provides:

Art. 2129. The creditor may claim from a third person in possession of the mortgaged
property, the payment of the part of the credit secured by the property which said third
person possesses, in the terms and with the formalities which the law establishes.

The mortgage directly and immediately subjects the property upon which it is imposed, whoever
the possessor may be to the fulfillment of the obligation for whose security it was constituted.
Otherwise stated, a mortgage creates a real right which is enforceable against the whole world.
Hence, even if the mortgage property is sold or its possession transferred to another, the
property remains subject to the fulfillment of the obligation for whose security it was constituted.14

Thus, the redemption by the brothers Teoco shall be without prejudice to the subsequent
foreclosure of same properties by Metrobank in order to satisfy other obligations covered by the
Real Estate Mortgage.

Transfer of Right of Redemption

The CA held that the brothers Teoco have not sufficiently shown that the spouses Co’s right of
redemption was properly transferred to them. The assignment of the right of redemption only
stated that the spouses Co are transferring the right of redemption to their parents, brothers, and
sisters, but did not specifically include the brothers Teoco, who are just brothers-in-law of Ramon
Co. Furthermore, the spouses Co no longer reside in the Philippines, and the assignment of the
right of redemption was not properly executed and/or authenticated.

The alleged transfer of the right of redemption is couched in the following language:

KNOW ALL MEN BY THESE PRESENTS:

That we, RAMON CO and LYDIA CO, of legal ages, for and in consideration of
preserving the continuous ownership and possession of family owned properties,
by these presents, hereby cede, transfer and convey in favor of my parents,
brothers and sisters, the right to redeem the properties under TCT Nos. T-6910
and T-6220, located in Patag district, Catbalogan, Samar, sold by public auction
sale on February 14, 1991 to the Metropolitan Bank and Trust Company.

Furthermore, we waived whatever rights we may have over the properties in

favor of the successor-in-interest including that of transferring the title to whoever
may redeem the aforesaid properties.

IN WITNESS WHEREOF, we have hereunto affixed our signatures this 10th day of
January, 1992 at Vancouver, Canada.15

The brothers Teoco may be brothers-in-law only of Ramon Co, but they are also the brothers of
Lydia Teoco Co, who is actually the registered owner of the properties covered by TCT Nos. T-
6910 and T-6220. Clearly, the brothers Teoco are two of the persons referred to in the above
transfer of the right of redemption executed by the spouses Co.

Anent the CA observation that the assignment of the right of redemption was not properly
executed and/or authenticated, Lopez v. Court of Appeals16 is instructive. In Lopez, this Court
ruled that a special power of attorney executed in a foreign country is generally not admissible in
evidence as a public document in our courts. The Court there held:

Is the special power of attorney relied upon by Mrs. Ty a public document? We find that it
is. It has been notarized by a notary public or by a competent public official with all the
solemnities required by law of a public document. When executed and acknowledged in
the Philippines, such a public document or a certified true copy thereof is admissible in
evidence. Its due execution and authentication need not be proven unlike a private
writing.

Section 25, Rule 132 of the Rules of Court provides –

Sec. 25. Proof of public or official record. – An official record or an entry therein,
when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record,
or by his deputy, and accompanied, if the record is not kept in the Philippines,
with a certificate that such officer has the custody. If the office in which the record
is kept is in a foreign country, the certificate may be made by a secretary of
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.

From the foregoing provision, when the special power of attorney is executed and
acknowledged before a notary public or other competent official in a foreign country, it
cannot be admitted in evidence unless it is certified as such in accordance with the
foregoing provision of the rules by a secretary of 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 of said public
document and authenticated by the seal of his office. A city judge-notary who notarized
the document, as in this case, cannot issue such certification.17

Verily, the assignment of right of redemption is not admissible in evidence as a public document
in our courts. However, this does not necessarily mean that such document has no probative
value.

There are generally three reasons for the necessity of the presentation of public
documents. First, public documents are prima facie evidence of the facts stated in them, as
provided for in Section 23, Rule 132 of the Rules of Court:

SEC. 23. Public documents as evidence. – Documents consisting of entries in public

records made in the performance of a duty by a public officer are prima facie evidence of
the facts therein stated. All other public documents are evidence, even against a third
person, of the fact which gave rise to their execution and of the date of the latter.
(Underscoring supplied)

Second, the presentation of a public document dispenses with the need to prove a document’s
due execution and authenticity, which is required under Section 20, Rule 132 of the Rules of
Court for the admissibility of private documents offered as authentic:

SEC. 20. Proof of private document. – Before any private document offered as authentic
is received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.
(Underscoring supplied)

In the presentation of public documents as evidence, on the other hand, due execution and
authenticity are already presumed:

SEC. 23. Public documents are evidence. – Documents consisting of entries in public
records made in the performance of a duty by a public officer are prima facie evidence of
the facts therein stated. All other public documents are evidence, even against a third
person, of the fact which gave rise to their execution and of the date of the latter.
(Underscoring supplied)

SEC. 30. Proof of notarial documents. – Every instrument duly acknowledged or proved
and certified as provided by law, may be presented in evidence without further proof, the
certificate of acknowledgment being prima facie evidence of the execution of the
instrument or document involved. (Underscoring supplied)

Third, the law may require that certain transactions appear in public instruments, such as Articles
1358 and 1625 of the Civil Code, which respectively provide:

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification
or extinguishment of real rights over immovable property; sales of real property or of an
interest therein governed by Articles 1403, No. 2, and 1405;
 (2) The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third
person;

(4) The cession of actions or rights proceeding from an act appearing in a public
document.

All other contracts where the amount involved exceeds five hundred pesos must appear
in writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles 1403, No. 2, and 1405.

Art. 1625. An assignment of a credit, right or action shall produce no effect as against
third person, unless it appears in a public instrument, or the instrument is recorded in the
Registry of Property in case the assignment involves real property. (Underscoring
supplied)

Would the exercise by the brothers Teoco of the right to redeem the properties in question be
precluded by the fact that the assignment of right of redemption was not contained in a public
document? We rule in the negative.

Metrobank never challenged either the content, the due execution, or the genuineness of the
assignment of the right of redemption. Consequently, Metrobank is deemed to have admitted the
same. Having impliedly admitted the content of the assignment of the right of redemption, there
is no necessity for a prima facie evidence of the facts there stated. In the same manner, since
Metrobank has impliedly admitted the due execution and genuineness of the assignment of the
right of redemption, a private document evidencing the same is admissible in evidence.18

True it is that the Civil Code requires certain transactions to appear in public documents.
However, the necessity of a public document for contracts which transmit or extinguish real rights
over immovable property, as mandated by Article 1358 of the Civil Code, is only
for convenience; it is not essential for validity or enforceability.19 Thus, in Cenido v.
Apacionado,20 this Court ruled that the only effect of noncompliance with the provisions of Article
1358 of the Civil Code is that a party to such a contract embodied in a private document may be
compelled to execute a public document:

Article 1358 does not require the accomplishment of the acts or contracts in a public
instrument in order to validate the act or contract but only to insure its efficacy, so that
after the existence of said contract has been admitted, the party bound may be
compelled to execute the proper document. This is clear from Article 1357, viz.:

"Art. 1357. If the law requires a document or other special form, as in the acts
and contracts enumerated in the following article (Article 1358), the contracting
parties may compel each other to observe that form, once the contract has been
perfected. This right may be exercised simultaneously with the action upon the
contract."21

On the other hand, Article 1625 of the Civil Code provides that "[a]n assignment of a credit, right
or action shall produce no effect as against third person, unless it appears in a public
instrument, or the instrument is recorded in the Registry of Property in case the assignment
involves real property."

In Co v. Philippine National Bank,22 the Court interpreted the phrase "effect as against a third
person" to be damage or prejudice to such third person, thus:
 x x x In Lichauco vs. Olegario, et al., 43 Phil. 540, this Court held that "whether or not x x
x an execution debtor was legally authorized to sell his right of redemption, is a question
already decided by this Court in the affirmative in numerous decisions on the precepts of
Sections 463 and 464 and other sections related thereto, of the Code of Civil Procedure."
(The mentioned provisions are carried over in Rule 39 of the Revised Rules of
Court.) That the transfers or conveyances in question were not registered is of miniscule
significance, there being no showing that PNB was damaged or could be damaged by
such omission. When CITADEL made its tender on May 5, 1976, PNB did not question
the personality of CITADEL at all. It is now too late and purely technical to raise such
innocuous failure to comply with Article 1625 of the Civil Code.23

In Ansaldo v. Court of Appeals,24 the Court held:

In its Decision, the First Division of the Appellate Tribunal, speaking through the
Presiding Justice at the time, Hon. Magno S. Gatmaitan, held as regards Arnaldo’s
contentions, that –

xxxx

2) there was no need that the assignment be in a public document this being
required only "to produce x x x effect as against third persons" (Article 1625, Civil
Code), i.e., "to adversely affect 3rd persons," i.e., "a 3rd person with a right
against original creditor, for example, an original creditor of creditor, – against
whom surely such an assignment by his debtor (creditor in the credit assigned)
would be prejudicial, because he, creditor of assigning creditor, would thus be
deprived of an attachable asset of his debtor x x x;

xxxx

Except for the question of the claimed lack of authority on the part of TFC’s president to
execute the assignment of credit in favor of PCIB improperly raised for the first time on
appeal, as observed by the Court of Appeals – the issues raised by Ansaldo were set up
by him in, and after analysis and assessment rejected by, both the Trial Court and the
Appellate Tribunal. This court sees no error whatever in the appreciation of the facts by
either Court or their application of the relevant law and jurisprudence to those facts,
inclusive of the question posed anew by Ansaldo relative to the alleged absence of
authority on the part of TFC’s president to assign the corporation’s credit to PCIB.25

In the case at bar, Metrobank would not be prejudiced by the assignment by the spouses Co of
their right of redemption in favor of the brothers Teoco. As conceded by Metrobank, the
assignees, the brothers Teoco, would merely step into the shoes of the assignors, the spouses
Co. The brothers Teoco would have to comply with all the requirements imposed by law on the
spouses Co. Metrobank would not lose any security for the satisfaction of any loan obtained from
it by the spouses Co. In fact, the assignment would even prove to be beneficial to Metrobank, as
it can foreclose on the subject properties anew, provided it proves that the subsequent loans
entered into by the spouses Co are covered by the mortgage contract.

WHEREFORE, the decision of the Court of Appeals is SET ASIDE. The decision of the Regional
Trial Court in Catbalogan, Samar is REINSTATED with the following MODIFICATION: the
redemption by Bienvenido C. Teoco and Juan C. Teoco, Jr. of the properties covered by TCT
Nos. T-6910 and T-6220 shall be without prejudice to the subsequent foreclosure of same
properties by Metropolitan Bank and Trust Company to satisfy other loans covered by the Real
Estate Mortgage.

SO ORDERED.
G.R. No. 174269 May 8, 2009

POLO S. PANTALEON, Petitioner,

vs.
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent.

DECISION

TINGA, J.:

The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and son Adrian
Roberto, joined an escorted tour of Western Europe organized by Trafalgar Tours of Europe,
Ltd., in October of 1991. The tour group arrived in Amsterdam in the afternoon of 25 October
1991, the second to the last day of the tour. As the group had arrived late in the city, they failed
to engage in any sight-seeing. Instead, it was agreed upon that they would start early the next
day to see the entire city before ending the tour.

The following day, the last day of the tour, the group arrived at the Coster Diamond House in
Amsterdam around 10 minutes before 9:00 a.m. The group had agreed that the visit to Coster
should end by 9:30 a.m. to allow enough time to take in a guided city tour of Amsterdam. The
group was ushered into Coster shortly before 9:00 a.m., and listened to a lecture on the art of
diamond polishing that lasted for around ten minutes.1 Afterwards, the group was led to the
store’s showroom to allow them to select items for purchase. Mrs. Pantaleon had already
planned to purchase even before the tour began a 2.5 karat diamond brilliant cut, and she found
a diamond close enough in approximation that she decided to buy.2 Mrs. Pantaleon also selected
for purchase a pendant and a chain,3 all of which totaled U.S. $13,826.00.

To pay for these purchases, Pantaleon presented his American Express credit card together with
his passport to the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before
the tour group was slated to depart from the store. The sales clerk took the card’s imprint, and
asked Pantaleon to sign the charge slip. The charge purchase was then referred electronically to
respondent’s Amsterdam office at 9:20 a.m.

Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet been
approved. His son, who had already boarded the tour bus, soon returned to Coster and informed
the other members of the Pantaleon family that the entire tour group was waiting for them. As it
was already 9:40 a.m., and he was already worried about further inconveniencing the tour group,
Pantaleon asked the store clerk to cancel the sale. The store manager though asked plaintiff to
wait a few more minutes. After 15 minutes, the store manager informed Pantaleon that
respondent had demanded bank references. Pantaleon supplied the names of his depositary
banks, then instructed his daughter to return to the bus and apologize to the tour group for the
delay.

At around 10:00 a.m, or around 45 minutes after Pantaleon had presented his AmexCard, and 30
minutes after the tour group was supposed to have left the store, Coster decided to release the
items even without respondent’s approval of the purchase. The spouses Pantaleon returned to
the bus. It is alleged that their offers of apology were met by their tourmates with stony
silence.4 The tour group’s visible irritation was aggravated when the tour guide announced that
the city tour of Amsterdam was to be canceled due to lack of remaining time, as they had to
catch a 3:00 p.m. ferry at Calais, Belgium to London.5 Mrs. Pantaleon ended up weeping, while
her husband had to take a tranquilizer to calm his nerves.

It later emerged that Pantaleon’s purchase was first transmitted for approval to respondent’s
Amsterdam office at 9:20 a.m., Amsterdam time, then referred to respondent’s Manila office at
9:33 a.m, then finally approved at 10:19 a.m., Amsterdam time.6 The Approval Code was
transmitted to respondent’s Amsterdam office at 10:38 a.m., several minutes after petitioner had
already left Coster, and 78 minutes from the time the purchases were electronically transmitted
by the jewelry store to respondent’s Amsterdam office.

After the star-crossed tour had ended, the Pantaleon family proceeded to the United States
before returning to Manila on 12 November 1992. While in the United States, Pantaleon
continued to use his AmEx card, several times without hassle or delay, but with two other
incidents similar to the Amsterdam brouhaha. On 30 October 1991, Pantaleon purchased golf
equipment amounting to US $1,475.00 using his AmEx card, but he cancelled his credit card
purchase and borrowed money instead from a friend, after more than 30 minutes had transpired
without the purchase having been approved. On 3 November 1991, Pantaleon used the card to
purchase children’s shoes worth $87.00 at a store in Boston, and it took 20 minutes before this
transaction was approved by respondent.

On 4 March 1992, after coming back to Manila, Pantaleon sent a letter7 through counsel to the
respondent, demanding an apology for the "inconvenience, humiliation and embarrassment he
and his family thereby suffered" for respondent’s refusal to provide credit authorization for the
aforementioned purchases.8 In response, respondent sent a letter dated 24 March 1992,9 stating
among others that the delay in authorizing the purchase from Coster was attributable to the
circumstance that the charged purchase of US $13,826.00 "was out of the usual charge
purchase pattern established."10 Since respondent refused to accede to Pantaleon’s demand for
an apology, the aggrieved cardholder instituted an action for damages with the Regional Trial
Court (RTC) of Makati City, Branch 145.11 Pantaleon prayed that he be awarded ₱2,000,000.00,
as moral damages; ₱500,000.00, as exemplary damages; ₱100,000.00, as attorney’s fees; and
₱50,000.00 as litigation expenses.12

On 5 August 1996, the Makati City RTC rendered a decision13 in favor of Pantaleon, awarding
him ₱500,000.00 as moral damages, ₱300,000.00 as exemplary damages, ₱100,000.00 as
attorney’s fees, and ₱85,233.01 as expenses of litigation. Respondent filed a Notice of Appeal,
while Pantaleon moved for partial reconsideration, praying that the trial court award the
increased amount of moral and exemplary damages he had prayed for.14 The RTC denied
Pantaleon’s motion for partial reconsideration, and thereafter gave due course to respondent’s
Notice of Appeal.15

On 18 August 2006, the Court of Appeals rendered a decision16 reversing the award of damages
in favor of Pantaleon, holding that respondent had not breached its obligations to petitioner.
Hence, this petition.

The key question is whether respondent, in connection with the aforementioned transactions,
had committed a breach of its obligations to Pantaleon. In addition, Pantaleon submits that even
assuming that respondent had not been in breach of its obligations, it still remained liable for
damages under Article 21 of the Civil Code.

The RTC had concluded, based on the testimonial representations of Pantaleon and
respondent’s credit authorizer, Edgardo Jaurigue, that the normal approval time for purchases
was "a matter of seconds." Based on that standard, respondent had been in clear delay with
respect to the three subject transactions. As it appears, the Court of Appeals conceded that there
had been delay on the part of respondent in approving the purchases. However, it made two
critical conclusions in favor of respondent. First, the appellate court ruled that the delay was not
attended by bad faith, malice, or gross negligence. Second, it ruled that respondent "had
exercised diligent efforts to effect the approval" of the purchases, which were "not in accordance
with the charge pattern" petitioner had established for himself, as exemplified by the fact that at
Coster, he was "making his very first single charge purchase of US$13,826," and "the record of
[petitioner]’s past spending with [respondent] at the time does not favorably support his ability to
pay for such purchase."17
On the premise that there was an obligation on the part of respondent "to approve or disapprove
with dispatch the charge purchase," petitioner argues that the failure to timely approve or
disapprove the purchase constituted mora solvendi on the part of respondent in the performance
of its obligation. For its part, respondent characterizes the depiction by petitioner of its obligation
to him as "to approve purchases instantaneously or in a matter of seconds."

Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default are
that the obligation is demandable and liquidated; the debtor delays performance; and the creditor
judicially or extrajudicially requires the debtor’s performance.18 Petitioner asserts that the Court of
Appeals had wrongly applied the principle of mora accipiendi, which relates to delay on the part
of the obligee in accepting the performance of the obligation by the obligor. The requisites of
mora accipiendi are: an offer of performance by the debtor who has the required capacity; the
offer must be to comply with the prestation as it should be performed; and the creditor refuses
the performance without just cause.19 The error of the appellate court, argues petitioner, is in
relying on the invocation by respondent of "just cause" for the delay, since while just cause is
determinative of mora accipiendi, it is not so with the case of mora solvendi.

We can see the possible source of confusion as to which type of mora to appreciate. Generally,
the relationship between a credit card provider and its card holders is that of creditor-
debtor,20 with the card company as the creditor extending loans and credit to the card holder,
who as debtor is obliged to repay the creditor. This relationship already takes exception to the
general rule that as between a bank and its depositors, the bank is deemed as the debtor while
the depositor is considered as the creditor.21 Petitioner is asking us, not baselessly, to again shift
perspectives and again see the credit card company as the debtor/obligor, insofar as it has the
obligation to the customer as creditor/obligee to act promptly on its purchases on credit.

Ultimately, petitioner’s perspective appears more sensible than if we were to still regard
respondent as the creditor in the context of this cause of action. If there was delay on the part of
respondent in its normal role as creditor to the cardholder, such delay would not have been in the
acceptance of the performance of the debtor’s obligation (i.e., the repayment of the debt), but it
would be delay in the extension of the credit in the first place. Such delay would not fall under
mora accipiendi, which contemplates that the obligation of the debtor, such as the actual
purchases on credit, has already been constituted. Herein, the establishment of the debt itself
(purchases on credit of the jewelry) had not yet been perfected, as it remained pending the
approval or consent of the respondent credit card company.

Still, in order for us to appreciate that respondent was in mora solvendi, we will have to first
recognize that there was indeed an obligation on the part of respondent to act on petitioner’s
purchases with "timely dispatch," or for the purposes of this case, within a period significantly
less than the one hour it apparently took before the purchase at Coster was finally approved.

The findings of the trial court, to our mind, amply established that the tardiness on the part of
respondent in acting on petitioner’s purchase at Coster did constitute culpable delay on its part in
complying with its obligation to act promptly on its customer’s purchase request, whether such
action be favorable or unfavorable. We quote the trial court, thus:

As to the first issue, both parties have testified that normal approval time for purchases was a
matter of seconds.

Plaintiff testified that his personal experience with the use of the card was that except for the
three charge purchases subject of this case, approvals of his charge purchases were always
obtained in a matter of seconds.

Defendant’s credit authorizer Edgardo Jaurique likewise testified:

 Q. – You also testified that on normal occasions, the normal approval time for charges
would be 3 to 4 seconds?

A. – Yes, Ma’am.

Both parties likewise presented evidence that the processing and approval of plaintiff’s charge
purchase at the Coster Diamond House was way beyond the normal approval time of a "matter
of seconds".

Plaintiff testified that he presented his AmexCard to the sales clerk at Coster, at 9:15 a.m. and by
the time he had to leave the store at 10:05 a.m., no approval had yet been received. In fact, the
Credit Authorization System (CAS) record of defendant at Phoenix Amex shows that defendant’s
Amsterdam office received the request to approve plaintiff’s charge purchase at 9:20 a.m.,
Amsterdam time or 01:20, Phoenix time, and that the defendant relayed its approval to Coster at
10:38 a.m., Amsterdam time, or 2:38, Phoenix time, or a total time lapse of one hour and [18]
minutes. And even then, the approval was conditional as it directed in computerese [sic] "Positive
Identification of Card holder necessary further charges require bank information due to high
exposure. By Jack Manila."

The delay in the processing is apparent to be undue as shown from the frantic successive
queries of Amexco Amsterdam which reads: "US$13,826. Cardmember buying jewels. ID seen.
Advise how long will this take?" They were sent at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08,
all times Phoenix. Manila Amexco could be unaware of the need for speed in resolving the
charge purchase referred to it, yet it sat on its hand, unconcerned.

xxx

To repeat, the Credit Authorization System (CAS) record on the Amsterdam transaction shows
how Amexco Netherlands viewed the delay as unusually frustrating. In sequence expressed in
Phoenix time from 01:20 when the charge purchased was referred for authorization, defendants
own record shows:

01:22 – the authorization is referred to Manila Amexco

01:32 – Netherlands gives information that the identification of the cardmember has been
presented and he is buying jewelries worth US $13,826.

01:33 – Netherlands asks "How long will this take?"

02:08 – Netherlands is still asking "How long will this take?"

The Court is convinced that defendants delay constitute[s] breach of its contractual obligation to
act on his use of the card abroad "with special handling."22 (Citations omitted)

xxx

Notwithstanding the popular notion that credit card purchases are approved "within seconds,"
there really is no strict, legally determinative point of demarcation on how long must it take for a
credit card company to approve or disapprove a customer’s purchase, much less one specifically
contracted upon by the parties. Yet this is one of those instances when "you’d know it when
you’d see it," and one hour appears to be an awfully long, patently unreasonable length of time to
approve or disapprove a credit card purchase. It is long enough time for the customer to walk to
a bank a kilometer away, withdraw money over the counter, and return to the store.
Notably, petitioner frames the obligation of respondent as "to approve or disapprove" the
purchase "in timely dispatch," and not "to approve the purchase instantaneously or within
seconds." Certainly, had respondent disapproved petitioner’s purchase "within seconds" or within
a timely manner, this particular action would have never seen the light of day. Petitioner and his
family would have returned to the bus without delay – internally humiliated perhaps over the
rejection of his card – yet spared the shame of being held accountable by newly-made friends for
making them miss the chance to tour the city of Amsterdam.

We do not wish do dispute that respondent has the right, if not the obligation, to verify whether
the credit it is extending upon on a particular purchase was indeed contracted by the cardholder,
and that the cardholder is within his means to make such transaction. The culpable failure of
respondent herein is not the failure to timely approve petitioner’s purchase, but the more
elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming
that respondent’s credit authorizers did not have sufficient basis on hand to make a judgment, we
see no reason why respondent could not have promptly informed petitioner the reason for the
delay, and duly advised him that resolving the same could take some time. In that way, petitioner
would have had informed basis on whether or not to pursue the transaction at Coster, given the
attending circumstances. Instead, petitioner was left uncomfortably dangling in the chilly autumn
winds in a foreign land and soon forced to confront the wrath of foreign folk.

Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in
bad faith, and the court should find that under the circumstances, such damages are due. The
findings of the trial court are ample in establishing the bad faith and unjustified neglect of
respondent, attributable in particular to the "dilly-dallying" of respondent’s Manila credit
authorizer, Edgardo Jaurique.23 Wrote the trial court:

While it is true that the Cardmembership Agreement, which defendant prepared, is silent as to
the amount of time it should take defendant to grant authorization for a charge purchase,
defendant acknowledged that the normal time for approval should only be three to four seconds.
Specially so with cards used abroad which requires "special handling", meaning with priority.
Otherwise, the object of credit or charge cards would be lost; it would be so inconvenient to use
that buyers and consumers would be better off carrying bundles of currency or traveller’s checks,
which can be delivered and accepted quickly. Such right was not accorded to plaintiff in the
instances complained off for reasons known only to defendant at that time. This, to the Court’s
mind, amounts to a wanton and deliberate refusal to comply with its contractual obligations, or at
least abuse of its rights, under the contract.24

xxx

The delay committed by defendant was clearly attended by unjustified neglect and bad faith,
since it alleges to have consumed more than one hour to simply go over plaintiff’s past credit
history with defendant, his payment record and his credit and bank references, when all such
data are already stored and readily available from its computer. This Court also takes note of the
fact that there is nothing in plaintiff’s billing history that would warrant the imprudent suspension
of action by defendant in processing the purchase. Defendant’s witness Jaurique admits:

Q. – But did you discover that he did not have any outstanding account?

A. – Nothing in arrears at that time.

Q. – You were well aware of this fact on this very date?

A. – Yes, sir.

Mr. Jaurique further testified that there were no "delinquencies" in plaintiff’s account.25
It should be emphasized that the reason why petitioner is entitled to damages is not simply
because respondent incurred delay, but because the delay, for which culpability lies under Article
1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages
are remunerative.26 Moral damages do not avail to soothe the plaints of the simply impatient, so
this decision should not be cause for relief for those who time the length of their credit card
transactions with a stopwatch. The somewhat unusual attending circumstances to the purchase
at Coster – that there was a deadline for the completion of that purchase by petitioner before any
delay would redound to the injury of his several traveling companions – gave rise to the moral
shock, mental anguish, serious anxiety, wounded feelings and social humiliation sustained by the
petitioner, as concluded by the RTC.27 Those circumstances are fairly unusual, and should not
give rise to a general entitlement for damages under a more mundane set of facts.

We sustain the amount of moral damages awarded to petitioner by the RTC. There is no hard-
and-fast rule in determining what would be a fair and reasonable amount of moral damages,
since each case must be governed by its own peculiar facts, however, it must be commensurate
to the loss or injury suffered.28 Petitioner’s original prayer for ₱5,000,000.00 for moral damages is
excessive under the circumstances, and the amount awarded by the trial court of ₱500,000.00 in
moral damages more seemly. 1avv phi 1

Likewise, we deem exemplary damages available under the circumstances, and the amount of
₱300,000.00 appropriate. There is similarly no cause though to disturb the determined award of
₱100,000.00 as attorney’s fees, and ₱85,233.01 as expenses of litigation.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is
REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati, Branch 145 in
Civil Case No. 92-1665 is hereby REINSTATED. Costs against respondent.

SO ORDERED.

G.R. No. 171365 October 6, 2010

ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J.

CATALAN, ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR.
and JOEL JONGCO, Petitioners,
vs.
ISMAEL VELOSO III, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review on Certiorari of the Decision1 dated January 31, 2006 of the
Court Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution2 dated
September 2, 2003 of Branch 227 of the Regional Trial Court (RTC-Branch 227) of Quezon City
in Civil Case No. Q-02-48341.

We partly reproduce below the facts of the case as culled by the Court of Appeals from the
records:

This case is an off-shoot of an unlawful detainer case filed by [herein petitioners] Ermelinda C.
Manaloto, Aurora J. Cifra, Flordeliza J. Arcilla, Lourdes J. Catalan, Ethelinda J. Holt, Bienvenido
R. Jongco, Artemio R. Jongco, Jr. and Joel Jongco against [herein respondent]. In said complaint
for unlawful detainer, it was alleged that they are the lessors of a residential house located at No.
42 Big Horseshoe Drive, Horseshoe Village, Quezon City [subject property] which was leased to
[respondent] at a monthly rental of ₱17,000.00. The action was instituted on the ground of
[respondent's] failure to pay rentals from May 23, 1997 to December 22, 1998 despite repeated
demands. [Respondent] denied the non-payment of rentals and alleged that he made an
advance payment of ₱825,000.00 when he paid for the repairs done on the leased property.

After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering
[respondent] to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village,
Quezon City; (b) pay [petitioners] the sum of ₱306,000.00 corresponding to the rentals due from
May 23, 1997 to November 22, 1998, and the sum of ₱17,000.00 a month thereafter until
[respondent] vacates the premises; and (c) pay [petitioners] the sum of ₱5,000.00 as attorney's
fees.

On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was
reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the
decision but he was also given an option to choose between staying in the leased property or
vacating the same, subject to the reimbursement by [petitioners] of one-half of the value of the
improvements which it found to be in the amount of ₱120,000.00. [Respondent] was also given
the right to remove said improvements pursuant to Article 1678 of the Civil Code, should
[petitioners] refuse to pay ₱60,000.00.

When both parties moved for the reconsideration of the RTC decision, the RTC issued an Order
dated February 23, 2001 modifying its previous ruling by increasing the value of the
improvements from ₱120,000.00 to ₱800,000.00.

After successive appeals to the Court of Appeals and the Supreme Court, the decision of the
RTC dated November 29, 2000 which reversed the decision of the MeTC, became final and
executory.3

Whilst respondent's appeal of the Metropolitan Trial Court (MeTC) judgment in the unlawful
detainer case was pending before the RTC-Branch 88, respondent filed before the RTC-Branch
227 on November 26, 2002 a Complaint for Breach of Contract and Damages4 against the
petitioners, docketed as Civil Case No. Q-02-48341. The said complaint alleged two causes of
action. The first cause of action was for damages because the respondent supposedly suffered
embarrassment and humiliation when petitioners distributed copies of the above-mentioned
MeTC decision in the unlawful detainer case to the homeowners of Horseshoe Village while
respondent's appeal was still pending before the Quezon City RTC-Branch 88. The second
cause of action was for breach of contract since petitioners, as lessors, failed to make continuing
repairs on the subject property to preserve and keep it tenantable. Thus, respondent sought the
following from the court a quo:

PRAYER

WHEREFORE, premises considered, it is respectfully prayed that after hearing the court render
a decision against the [herein petitioners] and in favor of the [herein respondent] by -

1. Ordering [petitioners] to pay [respondent] the following amounts:

a) ₱1,500,000.00 as moral damages and consequential damages;

b) ₱500,000.00 as exemplary damages;

c) ₱425,000.00 representing the difference of the expenses of the improvements of

₱825,000.00 and ₱400,000.00 pursuant to Art. 1678 of the Civil Code;

d) ₱594,000.00 representing interest for three (3) years from 1998 to 2000 on the
₱825,000.00 advanced by the [respondent] at the rate of 24% per annum;
 e) ₱250,000.00 as compensation for the [respondent's] labor and efforts in overseeing
and attending the needs of contractors the repair/renovation of the leased premises;

f) ₱250,000.00, plus 20% of all recoveries from [petitioners] and ₱2,500.00 per hearing
as attorney's fees;

g) Cost of suit.

[Respondent] further prays for such other reliefs and remedies which are just and equitable
under the premises.5

The petitioners filed an Omnibus Motion6 on February 18, 2003 praying for, among other reliefs,
the dismissal of respondent's complaint in Civil Case No. Q-02-48341. Petitioners argued that
respondent had no cause of action against them because the MeTC decision in the unlawful
detainer case was a matter of public record and its disclosure to the public violated no law or any
legal right of the respondent. Moreover, petitioners averred that the respondent's present
Complaint for Breach of Contract and Damages was barred by prior judgment since it was a
mere replication of respondent's Answer with Compulsory Counterclaim in the unlawful detainer
case before the MeTC. The said unlawful detainer case was already judicially decided with
finality.

On September 2, 2003, the RTC-Branch 227 issued a Resolution dismissing respondent's

complaint in Civil Case No. Q-02-48341 for violating the rule against splitting of cause of action,
lack of jurisdiction, and failure to disclose the pendency of a related case. The RTC-Branch 227
adjudged that Civil Case No. Q-02-48341 involved the same facts, parties, and causes of action
as those in the unlawful detainer case, and the MeTC had already properly taken cognizance of
the latter case.

Respondent received a copy of the RTC-Branch 227 decision in Civil Case No. Q-02-48341 on
September 26, 2003. He filed a Motion for Reconsideration7 of said judgment on October 10,
2003, which RTC-Branch 227 denied in an Order8 dated December 30, 2003.

Respondent received a copy of the RTC-Branch 227 order denying his Motion for
Reconsideration on February 20, 2004, and he filed his Notice of Appeal9 on March 1, 2004.
However, the RTC-Branch 227, in an Order10 dated March 23, 2004, dismissed respondent's
appeal for being filed out of time.

Respondent received a copy of the RTC-Branch 27 order dismissing his appeal on April 30, 2004
and he filed a Motion for Reconsideration11 of the same on May 3, 2004. The RTC-Branch 227, in
another Order12 dated May 31, 2004, granted respondent's latest motion because it was
"convinced that it is but appropriate and fair to both parties that this matter of whether or not the
Appeal was filed on time, be resolved by the appellate court rather than by this Court." The RTC-
Branch 227 then ordered that the records of the case be forwarded as soon as possible to the
Court of Appeals for further proceedings.

The Court of Appeals, in a Resolution13 dated February 8, 2005, resolved to give due course to
respondent's appeal. Said appeal was docketed as CA-G.R. CV No. 82610.

On January 31, 2006, the Court of Appeals rendered its Decision in CA-G.R. CV No. 82610. The
Court of Appeals fully agreed with the RTC-Branch 227 in dismissing respondent's second cause
of action (i.e., breach of contract) in Civil Case No. Q-02-48341. The appellate court, however,
held that RTC-Branch 227 should have proceeded with the trial on the merits of the first cause of
action (i.e., damages) in Civil Case No. Q-02-48341, because "[a]lthough [herein respondent]
may have stated the same factual antecedents that transpired in the unlawful detainer case, such
allegations were necessary to give an overview of the facts leading to the institution of another
case between the parties before the RTC acting in its original jurisdiction."14
The Court of Appeals then went on to find that petitioners were indeed liable to respondent for
damages:

No doubt, distributing the copies was primarily intended to embarrass [herein respondent] in the
community he mingled in. We are not unmindful of the fact that court decisions are public
documents and the general public is allowed access thereto to make inquiries thereon or to
secure a copy thereof. Nevertheless, under the circumstances of this case, although court
decisions are public documents, distribution of the same during the pendency of an appeal was
clearly intended to cause [respondent] some form of harassment and/or humiliation so that
[respondent] would be ostracized by his neighbors. The appeal may have delayed the attainment
of finality of the determination of the rights of the parties and the execution in the unlawful
detainer case but it did not justify [herein petitioners'] pre-emption of the outcome of the appeal.
By distributing copies of the MeTC decision, [petitioners] appeared to have assumed that the
MeTC decision would simply be affirmed and therefore they tried to cause the early ouster of
[respondent] thinking that a humiliated [respondent] would scurry out of the leased premises.
Clearly, there was evident bad faith intended to mock [respondent's] right to appeal which is a
statutory remedy to correct errors which might have been committed by the lower court.

Thus, moral damages may be awarded since [petitioners] acted in bad faith. Bad faith does not
simply connote bad judgment or negligence, it imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of known duty through some motive or
interest or ill will that partakes of the nature of fraud. However, an award of moral damages
would require certain conditions to be met, to wit: (1) first, there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be
culpable act or omission factually established; (3) third, the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the
award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

But it must again be stressed that moral damages are emphatically not intended to enrich a
plaintiff at the expense of the defendant. When awarded, moral damages must not be palpably
and scandalously excessive as to indicate that it was the result of passion, prejudice or
corruption on the part of the trial court judge. For this reason, this Court finds an award of
₱30,000.00 moral damages sufficient under the circumstances.

On the other hand, to warrant the award of exemplary damages, the wrongful act must be
accompanied by bad faith, and an award of damages would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless or malevolent manner. Accordingly, exemplary damages
in the amount of ₱10,000.00 is appropriate.15

In the end, the Court of Appeals decreed:

WHEREFORE, the decision of the Regional Trial Court is AFFIRMED with the MODIFICATION
that the case is dismissed only as to the second cause of action. As to the first cause of action,
[herein petitioners] are ordered to pay [herein respondent] moral damages of ₱30,000.00 and
exemplary damages of ₱10,000.00.16

Hence, the instant Petition for Review.

Petitioners assert that respondent's appeal of the RTC-Branch 227 Resolution dated September
2, 2003, which dismissed the latter's complaint in Civil Case No. Q-02-48341, was filed out of
time. Respondent received a copy of the said resolution on September 26, 2003, and he only
had 15 days from such date to file his appeal, or until October 11, 2003. Respondent, instead,
filed a Motion for Reconsideration of the resolution on October 10, 2003, which left him with only
one more day to file his appeal. The RTC-Branch 227 subsequently denied respondent's Motion
for Reconsideration in an Order dated December 30, 2003, which the respondent received on
February 20, 2004. Respondent only had until the following day, February 21, 2004, to file the
appeal. However, respondent filed his Notice of Appeal only on March 1, 2004. Hence,
petitioners conclude that the dismissal of respondent's complaint in Civil Case No. Q-02-48341
already attained finality.

Petitioners argue in the alternative that the award of damages in respondent's favor has no
factual and legal bases. They contend that the Court of Appeals erred in awarding moral and
exemplary damages to respondent based on the bare and unproven allegations in the latter's
complaint and without the benefit of any hearing or trial. While the appellate court declared that
RTC-Branch 227 should have proceeded with the trial on the merits involving the action for
damages, it surprisingly went ahead and ruled on petitioners' liability for said damages even
without trial. Even assuming for the sake of argument that respondent's allegations in his
complaint are true, he still has no cause of action for damages against petitioners, for the
disclosure of a court decision, which is part of public record, did not cause any legal and
compensable injury to respondent.

Respondent, on the other hand, maintains that his appeal of the September 2, 2003 Resolution
of the RTC-Branch 227 to the Court of Appeals was timely filed and that the same was aptly
given due course. In addition, respondent asserts that the appellate court was correct in holding
petitioners liable for damages even without any hearing or trial since petitioners, in filing their
omnibus motion praying for the dismissal of respondent's complaint on the ground of "no cause
of action," were deemed to have hypothetically admitted as true the allegations in said complaint.

The petition is partly meritorious.

We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondent's
second cause of action against petitioners (e.g., for breach of contract) was no longer disputed
by the parties. Thus, the present appeal pertains only to respondent's first cause of action (e.g.,
for damages), and in connection therewith, we are called upon to resolve the following issues: (1)
whether respondent timely filed his appeal of the Resolution dated September 2, 2003 of the
RTC-Branch 227 before the Court of Appeals; and (2) whether respondent is entitled to the
award of moral and exemplary damages.

We answer the first issue on the timeliness of respondent's appeal affirmatively.

Jurisprudence has settled the "fresh period rule," according to which, an ordinary appeal from the
RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken
within fifteen (15) days either from receipt of the original judgment of the trial court or from receipt
of the final order of the trial court dismissing or denying the motion for new trial or motion for
reconsideration. In Sumiran v. Damaso,17 we presented a survey of the cases applying the fresh
period rule:

As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of
the power of the Supreme Court to amend, repeal and create new procedural rules in all courts,
the Court is allowing a fresh period of 15 days within which to file a notice of appeal in the RTC,
counted from receipt of the order dismissing or denying a motion for new trial or motion for
reconsideration. This would standardize the appeal periods provided in the Rules and do away
with the confusion as to when the 15-day appeal period should be counted. Thus, the Court
stated:

To recapitulate, a party-litigant may either file his notice of appeal within 15 days from receipt of
the Regional Trial Court's decision or file it within 15 days from receipt of the order (the "final
order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day
period may be availed of only if either motion is filed; otherwise, the decision becomes final and
executory after the lapse of the original appeal period provided in Rule 41, Section 3.

The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit:
Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while
the present Petition was already pending before us. x x x.

xxxx

With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion
for reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of
that motion.

The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court
which states that the appeal shall be taken "within fifteen (15) days from notice of judgment or
final order appealed from." The use of the disjunctive word "or" signifies disassociation and
independence of one thing from another. It should, as a rule, be construed in the sense which it
ordinarily implies. Hence, the use of "or" in the above provision supposes that the notice of
appeal may be filed within 15 days from the notice of judgment or within 15 days from notice of
the "final order," x x x.

xxxx

The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period
should be counted - from receipt of notice of judgment or from receipt of notice of "final order"
appealed from.

Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc., we set aside the denial of a
notice of appeal which was purportedly filed five days late. With the fresh period rule, the 15-day
period within which to file the notice of appeal was counted from notice of the denial of the
therein petitioner's motion for reconsideration.

We followed suit in Elbiña v. Ceniza, wherein we applied the principle granting a fresh period of
15 days within which to file the notice of appeal, counted from receipt of the order dismissing a
motion for new trial or motion for reconsideration or any final order or resolution.

Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a
party-litigant may now file his notice of appeal either within fifteen days from receipt of the
original decision or within fifteen days from the receipt of the order denying the motion for
reconsideration.

In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule,"
expostulating that procedural law refers to the adjective law which prescribes rules and forms of
procedure in order that courts may be able to administer justice. Procedural laws do not come
within the legal conception of a retroactive law, or the general rule against the retroactive
operation of statutes. The "fresh period rule" is irrefragably procedural, prescribing the manner in
which the appropriate period for appeal is to be computed or determined and, therefore, can be
made applicable to actions pending upon its effectivity, such as the present case, without danger
of violating anyone else's rights.18 (Emphases supplied.)

Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases
pending and undetermined upon its effectivity:

The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the
date of promulgation of Neypes on September 14, 2005, was clearly explained by the Court in
Fil-Estate Properties, Inc. v. Homena-Valencia, stating thus:

The determinative issue is whether the "fresh period" rule announced in Neypes could
retroactively apply in cases where the period for appeal had lapsed prior to 14 September 2005
when Neypes was promulgated. That question may be answered with the guidance of the
general rule that procedural laws may be given retroactive effect to actions pending and
undetermined at the time of their passage, there being no vested rights in the rules of procedure.
Amendments to procedural rules are procedural or remedial in character as they do not create
new or remove vested rights, but only operate in furtherance of the remedy or confirmation of
rights already existing.19(Emphases supplied.)

In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of
the RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26,
2003. Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for
Reconsideration of said resolution. The RTC-Branch 227 denied respondent's Motion for
Reconsideration in an Order dated December 30, 2003, which the respondent received on
February 20, 2004. On March 1, 2004, just after nine days from receipt of the order denying his
Motion for Reconsideration, respondent already filed his Notice of Appeal. Clearly, under the
fresh period rule, respondent was able to file his appeal well-within the prescriptive period of 15
days, and the Court of Appeals did not err in giving due course to said appeal in CA-G.R. CV No.
82610.

We likewise agree with the Court of Appeals that the RTC-Branch 227 should not have
dismissed respondent's complaint for damages on the ground of failure to state a cause of
action.

According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by
which a party violates a right of another.

When the ground for dismissal is that the complaint states no cause of action, such fact can be
determined only from the facts alleged in the complaint and from no other, and the court cannot
consider other matters aliunde. The test, therefore, is whether, assuming the allegations of fact in
the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated
therein.20

Respondent made the following allegations in support of his claim for damages against
petitioners:

FIRST CAUSE OF ACTION

28. After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999,
ordering the [herein respondent] and all person claiming rights under him to -

(a) Vacate the leased premises;

(b) pay the [herein petitioners] the sum of ₱306,000.00 as unpaid rentals from May 23,
1997 to November 22, 1998; and

(c) pay the sum of ₱5,000.00 as attorneys fees;

But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners],
through [petitioner] Manaloto, already distributed copies of said Decision to some of the
homeowners of Horseshoe Village, who personally know the [respondent]. This act is a direct
assault or character assassination on the part of the [respondent] because as stated in the said
decision, [respondent] has been staying in the premises but did not or refused to pay his monthly
rentals for a long period of time when in truth and in fact was untrue.

29. That from the time the said decision was distributed to said members homeowners, the
[respondent] became the subject of conversation or talk of the town and by virtue of which
[respondent's] good name within the community or society where he belongs was greatly
damaged; his reputation was besmirched; [respondent] suffered sleepless night and serious
anxiety. [Respondent], who is the grandson of the late Senator Jose Veloso and Congressman
Ismael Veloso, was deprived of political career and to start with was to run as candidate for
Barangay Chairman within their area which was being offered to him by the homeowners but this
offer has started to fade and ultimately totally vanished after the distribution of said Decision.
Damages to his good names and reputations and other damages which he suffered as a
consequence thereof, may be reasonably compensated for at least ₱1,500,000.00 as moral and
consequential damages.

30. In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should
likewise be assessed exemplary damages in the amount of ₱500,000.00.21

A cause of action (for damages) exists if the following elements are present: (1) a right in favor of
the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation
on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.22 We find that all three elements exist in the case at bar. Respondent may
not have specifically identified each element, but it may be sufficiently determined from the
allegations in his complaint.

First, respondent filed the complaint to protect his good character, name, and reputation. Every
man has a right to build, keep, and be favored with a good name. This right is protected by law
with the recognition of slander and libel as actionable wrongs, whether as criminal offenses or
tortuous conduct.23

Second, petitioners are obliged to respect respondent's good name even though they are
opposing parties in the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very
person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith." A violation of such principle
constitutes an abuse of rights, a tortuous conduct. We expounded in Sea Commercial Company,
Inc. v. Court of Appeals24 that:

The principle of abuse of rights stated in the above article, departs from the classical theory that
"he who uses a right injures no one." The modern tendency is to depart from the classical and
traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights,
even when the act is not illicit.

Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to provide specifically in
statutory law. If mere fault or negligence in one's acts can make him liable for damages for injury
caused thereby, with more reason should abuse or bad faith make him liable. The absence of
good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking
any unconscientious advantage of another, even through the forms or technicalities of the law,
together with an absence of all information or belief of fact which would render the transaction
unconscientious. In business relations, it means good faith as understood by men of affairs.

While Article 19 may have been intended as a mere declaration of principle, the "cardinal law on
human conduct" expressed in said article has given rise to certain rules, e.g. that where a person
exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is
not in keeping with honesty and good faith, he opens himself to liability. The elements of an
abuse of rights under Article 19 are: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another.25
Petitioners are also expected to respect respondent's "dignity, personality, privacy and peace of
mind" under Article 26 of the Civil Code, which provides:

ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages, prevention and other relief:

(1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relations of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life,
place of birth, physical defect, or other personal condition.

Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and
actions referred to in Article 26, among other provisions, of the Civil Code.

In Concepcion v. Court of Appeals,26 we explained that:

The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The
Code Commission stressed in no uncertain terms that the human personality must be exalted.
The sacredness of human personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and civilization of every
country, is how far it dignifies man. If the statutes insufficiently protect a person from being
unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed
defective. Thus, under this article, the rights of persons are amply protected, and damages are
provided for violations of a person's dignity, personality, privacy and peace of mind.

It is petitioner's position that the act imputed to him does not constitute any of those enumerated
in Arts. 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal
provisions are not exclusive but are merely examples and do not preclude other similar or
analogous acts. Damages therefore are allowable for actions against a person's dignity, such as
profane, insulting, humiliating, scandalous or abusive language. Under Art. 2217 of the Civil
Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury,
although incapable of pecuniary computation, may be recovered if they are the proximate result
of the defendant's wrongful act or omission.27

And third, respondent alleged that the distribution by petitioners to Horseshoe Village
homeowners of copies of the MeTC decision in the unlawful detainer case, which was adverse to
respondent and still on appeal before the RTC-Branch 88, had no apparent lawful or just purpose
except to humiliate respondent or assault his character. As a result, respondent suffered
damages - becoming the talk of the town and being deprived of his political career. 1av vphi1

Petitioners reason that respondent has no cause of action against them since the MeTC decision
in the unlawful detainer case was part of public records.

It is already settled that the public has a right to see and copy judicial records and
documents.28 However, this is not a case of the public seeking and being denied access to
judicial records and documents. The controversy is rooted in the dissemination by petitioners of
the MeTC judgment against respondent to Horseshoe Village homeowners, who were not
involved at all in the unlawful detainer case, thus, purportedly affecting negatively respondent's
good name and reputation among said homeowners. The unlawful detainer case was a private
dispute between petitioners and respondent, and the MeTC decision against respondent was
then still pending appeal before the RTC-Branch 88, rendering suspect petitioners' intentions for
distributing copies of said MeTC decision to non-parties in the case. While petitioners were free
to copy and distribute such copies of the MeTC judgment to the public, the question is whether
they did so with the intent of humiliating respondent and destroying the latter's good name and
reputation in the community.

Nevertheless, we further declare that the Court of Appeals erred in already awarding moral and
exemplary damages in respondent's favor when the parties have not yet had the chance to
present any evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the
burden of proving it by a preponderance of evidence. It is incumbent upon the party claiming
affirmative relief from the court to convincingly prove its claim. Bare allegations, unsubstantiated
by evidence are not equivalent to proof under our Rules. In short, mere allegations are not
evidence.29

At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners
has no factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove
the same. Good faith refers to the state of the mind which is manifested by the acts of the
individual concerned. It consists of the intention to abstain from taking an unconscionable and
unscrupulous advantage of another. Bad faith, on the other hand, does not simply connote bad
judgment to simple negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty due to some motive or interest or ill will that
partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in response to
duty. It implies an intention to do ulterior and unjustifiable harm.30

We cannot subscribe to respondent's argument that there is no more need for the presentation of
evidence by the parties since petitioners, in moving for the dismissal of respondent's complaint
for damages, hypothetically admitted respondent's allegations. The hypothetical admission of
respondent's allegations in the complaint only goes so far as determining whether said complaint
should be dismissed on the ground of failure to state a cause of action. A finding that the
complaint sufficiently states a cause of action does not necessarily mean that the complaint is
meritorious; it shall only result in the reinstatement of the complaint and the hearing of the case
for presentation of evidence by the parties.

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision
dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH
MODIFICATIONS. The award of moral and exemplary damages made by the Court of Appeals in
favor of respondent Ismael Veloso III is DELETED. The complaint of respondent Ismael Veloso
III in Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of the Regional Trial
Court of Quezon City only in so far as the first cause of action is concerned. The said court is
DIRECTED to hear and dispose of the case with dispatch.

SO ORDERED.

[G.R. No. 150092. September 27, 2002.]

GLOBE TELECOM, INC., DELFIN LAZARO, JR., and ROBERTO GALANG, Petitioners, v. JOAN
FLORENDO-FLORES, Respondent.

DECISION

BELLOSILLO, J.:

This is a petition for review under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision 1 of the Court of Appeals of 25 May 2001 in CA-G.R. SP No. 60284 which affirmed the Decision
of the National Labor Relations Commission of 28 January 2000 in NLRC RAB-CAR 05-0170-98, NLRC
NCR CA No. 020270-99. 2

Petitioner GLOBE TELECOM, INC. (GLOBE) is a corporation duly organized and existing under the laws of
the Philippines. Petitioners Delfin Lazaro Jr. was its President and Roberto Galang its former Director-
Regional Sales. Respondent Joan Florendo-Flores was the Senior Account Manager for Northern Luzon.
1aw 1ibra ry
chanrob1e s virtua1

On 1 July 1998 Joan Florendo-Flores filed with the Regional Arbitration Branch of the National Labor
Relations Commission (NLRC) an amended complaint for constructive dismissal against GLOBE, Lazaro,
Galang, and Cacholo M. Santos, her immediate superior, Luzon Head-Regional Sales. In her affidavit
submitted as evidence during the arbitration proceedings, Florendo-Flores bared that Cacholo M. Santos
never accomplished and submitted her performance evaluation report thereby depriving her of salary
increases, bonuses and other incentives which other employees of the same rank had been receiving;
reduced her to a house-to-house selling agent (person-to-person sales agent or direct sales agent) of
company products ("handyphone") despite her rank as supervisor of company dealers and agents; never
supported her in the sales programs and recommendations she presented; and, withheld all her other
benefits, i.e., gasoline allowance, per diems, representation allowance, and car maintenance, to her
extreme pain and humiliation. 3

GLOBE and its co-petitioners claimed that after receiving her salary in the second week of May 1998
Florendo-Flores went AWOL (Absent Without Leave) without signifying through letter or any other means
that she was resigning from her position; that notwithstanding her absence and the filing of her case,
respondent Florendo-Flores’ employment was not terminated as shown by the fact that salary was still
provided her until July 1998 to be released upon her presentation of the attendance-record sheet
indicating that she already returned and reported for work; that she continued to have the use a of
company car and company "handyphone" unit; that she was replaced only when her absence became
indefinite and intolerable as the marketing operations in Northern Luzon began to suffer; that during the
pre-trial conference it was learned that Florendo-Flores’ complaint rested on her alleged personal and
private disagreement with her immediate superior Cacholo M. Santos; that there was no official act from
GLOBE or from other officers of the company, including respondents Lazaro and Galang, which called for
Florendo-Flores’ termination, diminution in rank, seniority and benefits, or would imply, even remotely,
any of the same; and, that Florendo-Flores filed the complaint without going through the grievance
process of GLOBE’s Human Resources Department and without informing its officers of her problems
with Cacholo M. Santos.

Labor Arbiter Monroe C. Tabingan declared Florendo-Flores to have been illegally dismissed and ordered
petitioners to reinstate her without loss of seniority rights and full benefits; and to pay full back wages,
inclusive of basic pay, allowances and bonuses as prayed for in the complaint amounting to
P307,625.00, exemplary damages in the sum of P200,000.00, and ten percent (10%) of the total
monetary award as attorney’s fees. However, the Labor Arbiter set aside the claim of abandonment as
the company failed to send the requisite notice to Florendo-Flores, 4 hence, there was no adherence to
procedural due process. Although he recognized that the problem brewed and eventually boiled over due
to the acts of Cacholo M. Santos, GLOBE’s former Head of Regional Sales, Luzon Area, the Labor Arbiter
found the company negligent in monitoring all its key personnel, and thus assessed against it exemplary
damages at the same time deleting actual and moral damages. 5

Petitioners appealed the decision to the NLRC which modified the judgment of the Labor Arbiter. The
NLRC ruled that petitioners did not dismiss Florendo-Flores but that the latter actually abandoned her
employment because of a disagreement with her immediate superior which she failed to bring to the
attention of GLOBE and its officers, particularly petitioners Lazaro and Galang. 6 However, the NLRC
declared that if only as an act of grace for the latter’s past services with the company, GLOBE, Lazaro
and Galang should be held accountable for the back wages of Florendo-Flores amounting to P307,625.00
minus the amount of P63,000.00 for the value of the company car in Florendo-Flores’ possession, or the
net amount of P244,625.00. 7

Both parties elevated the NLRC decision to the Court of Appeals, each side through a petition
for certiorari. In its Resolution of 2 September 2000 the appellate court dismissed the petition of
Florendo-Flores for failure to append the required verification and certification of non-forum shopping, 8
while it gave due course to the petition of GLOBE, Lazaro and Galang.

In their petition before the appellate court, GLOBE, Lazaro and Galang averred that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered them to pay
Florendo-Flores full back wages and damages despite its express finding that they did not cause the
dismissal of Florendo-Flores as the latter had actually abandoned her employment on account of her
personal differences with her superior.

In its Decision of 25 May 2001 the Court of Appeals found that Florendo-Flores was constructively
dismissed and that payment of back wages and damages was in order. On 21 June 2001 GLOBE, Lazaro
and Galang filed a motion for reconsideration but the motion was denied in the appellate court’s
Resolution of 19 September 2001.

Petitioners pose the following questions in this petition: In a special civil action for certiorari where
factual findings are deemed to be final and conclusive, can the Court of Appeals alter or substitute the
findings of fact of the lower court/tribunal? In the face of the finding of the NLRC that respondent
abandoned her employment because of a personal squabble with her immediate superior, and that
petitioners had nothing to do with the severance of Flores’ employment, can petitioners be held legally
liable for back wages while the guilty party Cacholo M. Santos is legally absolved of liability?

Petitioners submit that the answers to both questions must be in the negative. They argue that the
appellate court can neither alter nor substitute the factual findings of the NLRC as they are legally
deemed to be final and conclusive in a certiorari proceeding. They contend that a special civil action
for certiorari is an extraordinary remedy created not to correct mistakes in the factual findings or
conclusions of the lower court or tribunal, but a remedy intended to rectify jurisdictional errors and
grave abuse of discretion. Thus, the Court of Appeals cannot make its own factual findings and
substitute them for the factual findings of the NLRC, and on such basis render a decision.

Petitioners further note that the appellate court failed to address the issues raised in their petition. They
reiterate their position that they cannot be held liable for payment of back wages as an act of grace in
view of the express finding by the NLRC that respondent abandoned her employment because of a
personal rift with her immediate superior and not due to any act attributable to them. They stress that
there can be no liability in the absence of any wrongful act.

Invoking the principle of res inter alios acta declaring that the rights of a party cannot be prejudiced by
the act, declaration or omission of another, petitioners insist that since the NLRC found that
respondent’s problems arose from the acts and deeds of Santos, he alone should be held liable.
Petitioners find special exception to the NLRC’s application of the concept of "act of grace" to justify the
award since an "act of grace" is not a source of demandable obligation. They argue that it is not within
the power of any judicial or administrative agency to compel an employer to be liberal.

In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only
to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. 9 Hence, the
Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.

In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case
and re-examine the questioned findings. 10 As a corollary, this Court is clothed with ample authority to
review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration
is necessary to arrive at a just decision of the case. 11 The same principles are now necessarily adhered
to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through
a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of
the matters and on that basis reversed the ruling of the NLRC.

Glaring however is the discrepancy between the text of the decision of the appellate court which
declares that respondent Florendo-Flores "was unlawfully constructively dismissed" from employment,
12 and its dispositive portion which declares that "the assailed judgment is affirmed." 13 It should be
noted that the "assailed judgment" referred to the NLRC Decision which declared that respondent was
not illegally dismissed but that she abandoned her employment. Even in the award of back wages and
exemplary damages the two (2) decisions are at odds: The award of back wages made by the NLRC was
a gratuity or an act of grace from petitioners while the award made by the Court of Appeals could be
assumed to be anchored on its finding of illegal dismissal. How should the inconsistency be reconciled?

Where there is conflict between the dispositive portion of the decision and the body thereof, the
dispositive portion controls irrespective of what appears in the body. 14 While the body of the decision,
order or resolution might create some ambiguity in the manner the court’s reasoning preponderates, it is
the dispositive portion thereof that finally invests rights upon the parties, sets conditions for the exercise
of those rights, and imposes the corresponding duties or obligations. 15 Hence, for the Court of Appeals
to have affirmed the assailed judgment is to adopt and uphold the NLRC finding of abandonment and its
award of full back wages to respondent as an "act of grace" from petitioners.

However, we believe this is not the proper view as the records reveal that respondent was constructively
dismissed from service.

Constructive dismissal exists where there is cessation of work because "continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution
in pay." 16 All these are discernible in respondent’s situation. She was singularly edged out of
employment by the unbearable or undesirable treatment she received from her immediate superior
Cacholo M. Santos who discriminated against her without reason — not preparing and submitting her
performance evaluation report that would have been the basis for her increased salary; not forwarding
her project proposals to management that would have been the source of commendation; diminishing
her supervisor stature by assigning her to house-to-house sales or direct sales;. and withholding from
her the enjoyment of bonuses, allowances and other similar benefits that were necessary for her
efficient sales performance. Although respondent continued to have the rank of a supervisor, her
functions were reduced to a mere house-to-house sales agent or direct sales agent. This was
tantamount to a demotion. She might not have suffered any diminution in her basic salary but
petitioners did not dispute her allegation that she was deprived of all benefits due to another of her rank
and position, benefits which she apparently used to receive.

Far from pointing to Santos alone as the source of her woes, respondent attributes her degraded state
to petitioners as well. Florendo-Flores cited petitioners’ apathy or indifference to her plight as she was
twice left out in a salary increase in August 1987 and May 1998, without petitioners giving her any
reason. 17 It eludes belief that petitioners were entirely in the dark as the salary increases were granted
to all employees across-the-board but respondent was the only one left receiving a P19,100.00 per
month basic salary while the rest received a basic salary of almost P35,000.00 per month. 18 It is highly
improbable that the exclusion of respondent had escaped petitioners’ notice. The absence of an
evaluation report from Santos should have been noted by petitioners and looked into for proper action to
have been made. If a salary increase was unwarranted, then it should have been sufficiently explained
by petitioners to Respondent.

Petitioners argue that respondent Florendo-Flores could have brought to their attention the deplorable
treatment she received from Santos by resorting to the company’s grievance machinery so that the
problems in her relationship with Santos could then have been easily ironed out, but she did not. It
remains uncontroverted that respondent had inquired from petitioners the reason why her other benefits
had been withheld and sought clarification for her undeserved treatment but petitioner company and
Santos remained mum. 19

Thus, contrary to the observation of the NLRC, the dispute was not a mere private spat between
respondent Florendo-Flores and her immediate superior Santos. Granting that this was the case, it had
exceeded the periphery of simple personal affairs that overflowed into the realm of respondent’s
employment.

Respondent narrates that sometime in June 1997 Santos wrote her a baseless accusatory letter, and he
together with GLOBE Sales Director Roberto Galang, one of petitioners herein, verbally told her that she
should resign from her job, but she refused. 20 Thereafter, in July 1997 and the months subsequent
thereto all of respondent’s other benefits were withheld without any reason nor explanation from the
company. 21 Even as petitioners endeavored to lay the blame on Santos alone, he would not have been
able to single-handedly mastermind the entire affair as to influence Sales Director Galang and
manipulate the payroll. It only stands to reason that Santos was acting pursuant to a management
directive, or if not, then petitioners had condoned it, or at the very least, were negligent in supervising
all of their employees. As aptly observed by the Labor Arbiter —

. . . it would appear however that the respondent company was negligent in monitoring all its key
personnel. For it is the bounden duty of the corporate officialdom to constantly monitor their managerial
staff if only to ascertain the smooth flow of work and operations, which includes the inter-personal
relations of each and every key segment of the corporate machinery. For such, it must be assessed with
just and reasonable exemplary damages. 22

The unauthorized absence of respondent should not lead to the drastic conclusion that she had chosen
to abandon her work. To constitute abandonment, there must be: (a) failure to report for work or
absence without valid or justifiable reason; and, (b) a clear intention, as manifested by some overt act,
to sever the employer-employee relationship, 23 requisites that are negated by the immediate filing by
respondent Florendo-Flores of a complaint for constructive dismissal against petitioners. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal; more
so, when it includes a prayer for reinstatement. 24

The reduction of respondent’s functions which were originally supervisory in nature to a mere house-to-
house sales agent or direct sales agent constitutes a demotion in rank. For this act of illegal dismissal,
she deserves no less than full back wages starting from the time she had been illegally dismissed until
her actual reinstatement to her former position without loss of seniority rights and other benefits —
earned, accrued and demandable. She shall continue to enjoy her benefits, privileges and incentives
including the use of the company car and "handyphone." cralaw virtua1aw l ibra ry
The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion. It
must always bear in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner that right is exercised. Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker.25 c ralaw:red

In constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds such as genuine business necessity. 26 The employer must be
able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee. It must
not involve a demotion in rank or a diminution of salary and other benefits. If the employer cannot
overcome this burden of proof, the employee’s demotion shall be tantamount to unlawful constructive
dismissal.

It should be noted that the award of back wages in the instant case is justified upon the finding of illegal
dismissal, and not under the principle of "act of grace" for past services rendered. There are occasions
when the Court exercises liberality in granting financial awards to employees, but even then they
contemplate only the award of separation pay and/or financial assistance, and only as a measure of
social justice when the circumstances of the case so warrant, such as instances of valid dismissal for
causes other than serious misconduct or those reflecting on the employees’ moral character. 27 Proper
regard for the welfare of the labor sector should not dissuade us from protecting the rights of
management such that an award of back wages should be forthcoming only when valid grounds exist to
support it.

An award of actual and moral damages is not proper as the dismissal is not shown to be attended by
bad faith, or was oppressive to labor, or done in a manner contrary to morals, good customs or public
policy. 28 Exemplary damages are likewise not proper as these are imposed only if moral, temperate,
liquidated or compensatory damages are awarded. 29

WHEREFORE, the judgment appealed from is MODIFIED. The Decision of the Court of Appeals of 25 May
2001 in CA-G.R. SP No. 60284 affirming the Decision of the National Labor Relations Commission of 28
January 2000 declaring that respondent Joan Florendo-Flores had abandoned her work is SET ASIDE.
Petitioners Globe Telecom, Inc., Delfin Lazaro, Jr., and Roberto Galang are ordered to pay respondent
Joan Florendo-Flores full back wages from the time she was constructively dismissed on 15 May 1998
until the date of her effective reinstatement, without qualification or deduction. Accordingly, petitioners
are ordered to cause the immediate reinstatement of respondent to her former position, without loss of
seniority rights and other benefits. No pronouncement as to costs. chanrob1es vi rt ua1 1aw 1i bra ry

SO ORDERED.

G.R. No. 151866 September 9, 2004

SOLEDAD CARPIO, petitioner,

vs.
LEONORA A. VALMONTE, respondent.

DECISION

TINGA, J.:

Assailed in the instant petition for review is the Decision of the Court of Appeals in C.A.-G.R. CV
No. 69537,1promulgated on 17 January 2002.2 The appellate court reversed the trial court’s
decision denying respondent’s claim for damages against petitioner and ordered the latter to pay
moral damages to the former in the amount ofP100,000.00.

Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario and Jon Sierra
engaged her services for their church wedding on 10 October 1996. At about 4:30 p.m. on that
day, Valmonte went to the Manila Hotel where the bride and her family were billeted. When she
arrived at Suite 326-A, several persons were already there including the bride, the bride’s
parents and relatives, the make-up artist and his assistant, the official photographers, and the
fashion designer. Among those present was petitioner Soledad Carpio, an aunt of the bride who
was preparing to dress up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items needed for the
wedding rites and the gifts from the principal sponsors. She proceeded to the Maynila Restaurant
where the reception was to be held. She paid the suppliers, gave the meal allowance to the
band, and went back to the suite. Upon entering the suite, Valmonte noticed the people staring at
her. It was at this juncture that petitioner allegedly uttered the following words to Valmonte: "Ikaw
lang ang lumabas ng kwarto, nasaan ang dala mong bag? Saan ka pumunta? Ikaw lang and
lumabas ng kwarto, ikaw ang kumuha." Petitioner then ordered one of the ladies to search
Valmonte’s bag. It turned out that after Valmonte left the room to attend to her duties, petitioner
discovered that the pieces of jewelry which she placed inside the comfort room in a paper bag
were lost. The jewelry pieces consist of two (2) diamond rings, one (1) set of diamond earrings,
bracelet and necklace with a total value of about one million pesos. The hotel security was called
in to help in the search. The bags and personal belongings of all the people inside the room were
searched. Valmonte was allegedly bodily searched, interrogated and trailed by a security guard
throughout the evening. Later, police officers arrived and interviewed all persons who had access
to the suite and fingerprinted them including Valmonte. During all the time Valmonte was being
interrogated by the police officers, petitioner kept on saying the words "Siya lang ang lumabas ng
kwarto." Valmonte’s car which was parked at the hotel premises was also searched but the
search yielded nothing.

A few days after the incident, petitioner received a letter from Valmonte demanding a formal
letter of apology which she wanted to be circulated to the newlyweds’ relatives and guests to
redeem her smeared reputation as a result of petitioner’s imputations against her. Petitioner did
not respond to the letter. Thus, on 20 February 1997, Valmonte filed a suit for damages against
her before the Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte
prayed that petitioner be ordered to pay actual, moral and exemplary damages, as well as
attorney’s fees.

Responding to the complaint, petitioner denied having uttered words or done any act to confront
or single out Valmonte during the investigation and claimed that everything that transpired after
the theft incident was purely a police matter in which she had no participation. Petitioner prayed
for the dismissal of the complaint and for the court to adjudge Valmonte liable on her
counterclaim.

The trial court rendered its Decision on 21 August 2000, dismissing Valmonte’s complaint for
damages. It ruled that when petitioner sought investigation for the loss of her jewelry, she was
merely exercising her right and if damage results from a person exercising his legal right, it
is damnum absque injuria. It added that no proof was presented by Valmonte to show that
petitioner acted maliciously and in bad faith in pointing to her as the culprit. The court said that
Valmonte failed to show that she suffered serious anxiety, moral shock, social humiliation, or that
her reputation was besmirched due to petitioner’s wrongful act.

Respondent appealed to the Court of Appeals alleging that the trial court erred in finding that
petitioner did not slander her good name and reputation and in disregarding the evidence she
presented.

The Court of Appeals ruled differently. It opined that Valmonte has clearly established that she
was singled out by petitioner as the one responsible for the loss of her jewelry. It cited the
testimony of Serena Manding, corroborating Valmonte’s claim that petitioner confronted her and
uttered words to the effect that she was the only one who went out of the room and that she was
the one who took the jewelry. The appellate court held that Valmonte’s claim for damages is not
predicated on the fact that she was subjected to body search and interrogation by the police but
rather petitioner’s act of publicly accusing her of taking the missing jewelry. It categorized
petitioner’s utterance defamatory considering that it imputed upon Valmonte the crime of theft.
The court concluded that petitioner’s verbal assault upon Valmonte was done with malice and in
bad faith since it was made in the presence of many people without any solid proof except
petitioner’s suspicion. Such unfounded accusation entitles Valmonte to an award of moral
damages in the amount of ₱100,000.00 for she was publicly humiliated, deeply insulted, and
embarrassed. However, the court found no sufficient evidence to justify the award of actual
damages.

Hence, this petition.

Petitioner contends that the appellate court’s conclusion that she publicly humiliated respondent
does not conform to the evidence presented. She adds that even on the assumption that she
uttered the words complained of, it was not shown that she did so with malice and in bad faith.

In essence, petitioner would want this Court to review the factual conclusions reached by the
appellate court. The cardinal rule adhered to in this jurisdiction is that a petition for review must
raise only questions of law,3 and judicial review under Rule 45 does not extend to an evaluation
of the sufficiency of evidence unless there is a showing that the findings complained of are totally
devoid of support in the record or that they are so glaringly erroneous as to constitute serious
abuse of discretion.4 This Court, while not a trier of facts, may review the evidence in order to
arrive at the correct factual conclusion based on the record especially so when the findings of
fact of the Court of Appeals are at variance with those of the trial court, or when the inference
drawn by the Court of Appeals from the facts is manifestly mistaken.5

Contrary to the trial court’s finding, we find sufficient evidence on record tending to prove that
petitioner’s imputations against respondent was made with malice and in bad faith.

Petitioner’s testimony was shorn of substance and consists mainly of denials. She claimed not to
have uttered the words imputing the crime of theft to respondent or to have mentioned the latter’s
name to the authorities as the one responsible for the loss of her jewelry. Well-settled is the rule
that denials, if unsubstantiated by clear and convincing evidence, are negative and self-serving
which merit no weight in law and cannot be given greater evidentiary value over the testimony of
credible witnesses who testify on affirmative matters.6

Respondent, however, has successfully refuted petitioner’s testimony. Quite credibly, she has
narrated in great detail her distressing experience on that fateful day. She testified as to how
rudely she was treated by petitioner right after she returned to the room. Petitioner immediately
confronted her and uttered the words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong
bag? Saan ka pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her
bag and her car. Worse, during the reception, she was once more asked by the hotel security to
go to the ladies room and she was again bodily searched.7

Sereña Manding, a make-up artist, corroborated respondent’s testimony. She testified that
petitioner confronted respondent in the presence of all the people inside the suite accusing her of
being the only one who went out of the comfort room before the loss of the jewelry. Manding
added that respondent was embarrassed because everybody else in the room thought she was a
thief.8 If only to debunk petitioner’s assertion that she did not utter the accusatory remarks in
question publicly and with malice, Manding’s testimony on the point deserves to be reproduced.
Thus,

Q After that what did she do?

A Then Leo came out from the other room she said, she is (sic) the one I only saw from
the comfort room.

Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?

A She said "siya lang yung nakita kong galing sa C.R."

Q And who was Mrs. Carpio or the defendant referring to?

A Leo Valmonte.

Q Did she say anything else, the defendant?

A Her jewelry were lost and Leo was the only one she saw in the C.R. After that she get
(sic) the paper bag then the jewelry were already gone.

Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?

A Yes.

Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?

A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."

Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte were there other
people inside the room?

A Yes, sir.

Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?

A Yes, sir.

Q What was your thinking at that time that Mrs. Carpio said that to Mrs. Valmonte?

A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya. Kasi marami na
kaming nandodoon, dumating na yung couturier pati yung video man and we sir.

Q Who was the person you [were] alleging "na nakakahiya" whose (sic) being accused or
being somebody who stole those item of jewelry?

A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin doon siya yung
napagbintangan."

Q And who is Leo, what is her full name?

A Leo Valmonte.

Q Did the defendant tell this matter to other people inside the room?

A Yes, the mother of the bride.

Q And who else did she talk to?

A The father of the bride also.

Q And what did the defendant tell the mother regarding this matter?

A "Nawawala yung alahas ko." Sabi naman nung mother baka naman hindi mo dala
tignan mo munang mabuti.

Q Who was that other person that she talked to?

 A Father of the bride.9

Significantly, petitioner’s counsel elected not to pursue her cross-examination of the witness on
this point following her terse and firm declaration that she remembered petitioner’s exact
defamatory words in answer to the counsel’s question.10

Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted petitioner’s allegation
that she did not suspect or mention the name of respondent as her suspect in the loss of the
jewelry.11

To warrant recovery of damages, there must be both a right of action, for a wrong inflicted by the
defendant, and the damage resulting therefrom to the plaintiff. Wrong without damage, or
damage without wrong, does not constitute a cause of action.12

In the sphere of our law on human relations, the victim of a wrongful act or omission, whether
done willfully or negligently, is not left without any remedy or recourse to obtain relief for the
damage or injury he sustained. Incorporated into our civil law are not only principles of equity but
also universal moral precepts which are designed to indicate certain norms that spring from the
fountain of good conscience and which are meant to serve as guides for human conduct.13 First
of these fundamental precepts is the principle commonly known as "abuse of rights" under Article
19 of the Civil Code. It provides that "Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due and observe honesty and good
faith." To find the existence of an abuse of right, the following elements must be present: (1)
there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent or
prejudicing or injuring another.14 When a right is exercised in a manner which discards these
norms resulting in damage to another, a legal wrong is committed for which the actor can be held
accountable.15 One is not allowed to exercise his right in a manner which would cause
unnecessary prejudice to another or if he would thereby offend morals or good customs. Thus, a
person should be protected only when he acts in the legitimate exercise of his right, that is when
he acts with prudence and good faith; but not when he acts with negligence or abuse.16

Complementing the principle of abuse of rights are the provisions of Articles 20 and 21 of the
Civil Code which read, thus:

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals or good customs or public policy shall compensate the latter for the
damage.

The foregoing rules provide the legal bedrock for the award of damages to a party who
suffers damage whenever one commits an act in violation of some legal provision, or an
act which though not constituting a transgression of positive law, nevertheless violates
certain rudimentary rights of the party aggrieved.

In the case at bar, petitioner’s verbal reproach against respondent was certainly uncalled for
considering that by her own account nobody knew that she brought such kind and amount of
jewelry inside the paper bag.17 This being the case, she had no right to attack respondent with
her innuendos which were not merely inquisitive but outrightly accusatory. By openly accusing
respondent as the only person who went out of the room before the loss of the jewelry in the
presence of all the guests therein, and ordering that she be immediately bodily searched,
petitioner virtually branded respondent as the thief. True, petitioner had the right to ascertain the
identity of the malefactor, but to malign respondent without an iota of proof that she was the one
who actually stole the jewelry is an act which, by any standard or principle of law is
impermissible. Petitioner had willfully caused injury to respondent in a manner which is contrary
to morals and good customs. Her firmness and resolve to find her missing jewelry cannot justify
her acts toward respondent. She did not act with justice and good faith for apparently, she had
no other purpose in mind but to prejudice respondent. Certainly, petitioner transgressed the
provisions of Article 19 in relation to Article 21 for which she should be held accountable.

Owing to the rule that great weight and even finality is given to factual conclusions of the Court of
Appeals which affirm those of the trial court,18 we sustain the findings of the trial court and the
appellate court that respondent’s claim for actual damages has not been substantiated with
satisfactory evidence during the trial and must therefore be denied. To be recoverable, actual
damages must be duly proved with reasonable degree of certainty and the courts cannot rely on
speculation, conjecture or guesswork.19

Respondent, however, is clearly entitled to an award of moral damages. Moral damages may be
awarded whenever the defendant’s wrongful act or omission is the proximate cause of the
plaintiff’s physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury20in the cases specified or
analogous to those provided in Article 2219 of the Civil Code.21 Though no proof of pecuniary
loss is necessary in order that moral damages may be adjudicated, courts are mandated to take
into account all the circumstances obtaining in the case and assess damages according to their
discretion.22 Worthy of note is that moral damages are not awarded to penalize the
defendant,23 or to enrich a complainant, but to enable the latter to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of
defendant’s culpable action. In any case, award of moral damages must be proportionate to the
sufferings inflicted.24

Based on the foregoing jurisprudential pronouncements, we rule that the appellate court did not
err in awarding moral damages. Considering respondent’s social standing, and the fact that her
profession is based primarily on trust reposed in her by her clients, the seriousness of the
imputations made by petitioner has greatly tarnished her reputation and will in one way or the
other, affect her future dealings with her clients, the award of ₱100,000.00 as moral damages
appears to be a fair and reasonable assessment of respondent’s damages.

WHEREFORE, the instant Petition is DENIED. Costs against petitioner.

SO ORDERED.

G.R. No. 156109 November 18, 2004

KHRISTINE REA M. REGINO, Assisted and Represented by ARMANDO REGINO, petitioner,

vs.
PANGASINAN COLLEGES OF SCIENCE AND TECHNOLOGY, RACHELLE A. GAMUROT
and ELISSA BALADAD, respondents.

DECISION

PANGANIBAN, J.:

Upon enrolment, students and their school enter upon a reciprocal contract. The students agree
to abide by the standards of academic performance and codes of conduct, issued usually in the
form of manuals that are distributed to the enrollees at the start of the school term. Further, the
school informs them of the itemized fees they are expected to pay. Consequently, it cannot, after
the enrolment of a student, vary the terms of the contract. It cannot require fees other than those
it specified upon enrolment.

The Case

Before the Court is a Petition for Review under Rule 45,1 seeking to nullify the July 12, 20022 and
the November 22, 20023 Orders of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan
(Branch 48) in Civil Case No. U-7541. The decretal portion of the first assailed Order reads:

"WHEREFORE, the Court GRANTS the instant motion to dismiss for lack of cause of
action."4

The second challenged Order denied petitioner's Motion for Reconsideration.

The Facts

Petitioner Khristine Rea M. Regino was a first year computer science student at Respondent
Pangasinan Colleges of Science and Technology (PCST). Reared in a poor family, Regino went
to college mainly through the financial support of her relatives. During the second semester of
school year 2001-2002, she enrolled in logic and statistics subjects under Respondents Rachelle
A. Gamurot and Elissa Baladad, respectively, as teachers.

In February 2002, PCST held a fund raising campaign dubbed the "Rave Party and Dance
Revolution," the proceeds of which were to go to the construction of the school's tennis and
volleyball courts. Each student was required to pay for two tickets at the price of P100 each. The
project was allegedly implemented by recompensing students who purchased tickets with
additional points in their test scores; those who refused to pay were denied the opportunity to
take the final examinations.

Financially strapped and prohibited by her religion from attending dance parties and celebrations,
Regino refused to pay for the tickets. On March 14 and March 15, 2002, the scheduled dates of
the final examinations in logic and statistics, her teachers -- Respondents Rachelle A. Gamurot
and Elissa Baladad -- allegedly disallowed her from taking the tests. According to petitioner,
Gamurot made her sit out her logic class while her classmates were taking their examinations.
The next day, Baladad, after announcing to the entire class that she was not permitting petitioner
and another student to take their statistics examinations for failing to pay for their tickets,
allegedly ejected them from the classroom. Petitioner's pleas ostensibly went unheeded by
Gamurot and Baladad, who unrelentingly defended their positions as compliance with PCST's
policy.

On April 25, 2002, petitioner filed, as a pauper litigant, a Complaint5 for damages against PCST,
Gamurot and Baladad. In her Complaint, she prayed for P500,000 as nominal damages;
P500,000 as moral damages; at least P1,000,000 as exemplary damages; P250,000 as actual
damages; plus the costs of litigation and attorney's fees.

On May 30, 2002, respondents filed a Motion to Dismiss6 on the ground of petitioner's failure to
exhaust administrative remedies. According to respondents, the question raised involved the
determination of the wisdom of an administrative policy of the PCST; hence, the case should
have been initiated before the proper administrative body, the Commission of Higher Education
(CHED).

In her Comment to respondents' Motion, petitioner argued that prior exhaustion of administrative
remedies was unnecessary, because her action was not administrative in nature, but one purely
for damages arising from respondents' breach of the laws on human relations. As such,
jurisdiction lay with the courts.

On July 12, 2002, the RTC dismissed the Complaint for lack of cause of action.

Ruling of the Regional Trial Court

In granting respondents' Motion to Dismiss, the trial court noted that the instant controversy
involved a higher institution of learning, two of its faculty members and one of its students. It
added that Section 54 of the Education Act of 1982 vested in the Commission on Higher
Education (CHED) the supervision and regulation of tertiary schools. Thus, it ruled that the
CHED, not the courts, had jurisdiction over the controversy.7

In its dispositive portion, the assailed Order dismissed the Complaint for "lack of cause of action"
without, however, explaining this ground.

Aggrieved, petitioner filed the present Petition on pure questions of law.8

Issues

In her Memorandum, petitioner raises the following issues for our consideration:

"Whether or not the principle of exhaustion of administrative remedies applies in a civil

action exclusively for damages based on violation of the human relation provisions of the
Civil Code, filed by a student against her former school.

"Whether or not there is a need for prior declaration of invalidity of a certain school
administrative policy by the Commission on Higher Education (CHED) before a former
student can successfully maintain an action exclusively for damages in regular courts.

"Whether or not the Commission on Higher Education (CHED) has exclusive original
jurisdiction over actions for damages based upon violation of the Civil Code provisions on
human relations filed by a student against the school."9

All of the foregoing point to one issue -- whether the doctrine of exhaustion of administrative
remedies is applicable. The Court, however, sees a second issue which, though not expressly
raised by petitioner, was impliedly contained in her Petition: whether the Complaint stated
sufficient cause(s) of action.

The Court's Ruling

The Petition is meritorious.

First Issue:

Exhaustion of Administrative Remedies

Respondents anchored their Motion to Dismiss on petitioner's alleged failure to exhaust

administrative remedies before resorting to the RTC. According to them, the determination of the
controversy hinge on the validity, the wisdom and the propriety of PCST's academic policy. Thus,
the Complaint should have been lodged in the CHED, the administrative body tasked under
Republic Act No. 7722 to implement the state policy to "protect, foster and promote the right of all
citizens to affordable quality education at all levels and to take appropriate steps to ensure that
education is accessible to all."10
Petitioner counters that the doctrine finds no relevance to the present case since she is praying
for damages, a remedy beyond the domain of the CHED and well within the jurisdiction of the
courts.11

Petitioner is correct. First, the doctrine of exhaustion of administrative remedies has no bearing
on the present case. In Factoran Jr. v. CA,12 the Court had occasion to elucidate on the rationale
behind this doctrine:

"The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of

law, comity, and convenience, should not entertain suits unless the available
administrative remedies have first been resorted to and the proper authorities have been
given the appropriate opportunity to act and correct their alleged errors, if any, committed
in the administrative forum. x x x.13 "

Petitioner is not asking for the reversal of the policies of PCST. Neither is she demanding it to
allow her to take her final examinations; she was already enrolled in another educational
institution. A reversal of the acts complained of would not adequately redress her grievances;
under the circumstances, the consequences of respondents' acts could no longer be undone or
rectified.

Second, exhaustion of administrative remedies is applicable when there is competence on the

part of the administrative body to act upon the matter complained of.14 Administrative agencies
are not courts; they are neither part of the judicial system, nor are they deemed judicial
tribunals.15 Specifically, the CHED does not have the power to award damages.16 Hence, petitioner
could not have commenced her case before the Commission.

Third, the exhaustion doctrine admits of exceptions, one of which arises when the issue is purely
legal and well within the jurisdiction of the trial court.17 Petitioner's action for damages inevitably
calls for the application and the interpretation of the Civil Code, a function that falls within the
jurisdiction of the courts.18

Second Issue:

Cause of Action

Sufficient Causes of Action Stated in the Allegations in the Complaint

As a rule, every complaint must sufficiently allege a cause of action; failure to do so warrants its
dismissal.19 A complaint is said to assert a sufficient cause of action if, admitting what appears
solely on its face to be correct, the plaintiff would be entitled to the relief prayed for. Assuming
the facts that are alleged to be true, the court should be able to render a valid judgment in
accordance with the prayer in the complaint.20

A motion to dismiss based on lack of cause of action hypothetically admits the truth of the
alleged facts. In their Motion to Dismiss, respondents did not dispute any of petitioner's
allegations, and they admitted that "x x x the crux of plaintiff's cause of action is the
determination of whether or not the assessment of P100 per ticket is excessive or
oppressive."21 They thereby premised their prayer for dismissal on the Complaint's alleged failure
to state a cause of action. Thus, a reexamination of the Complaint is in order.

The Complaint contains the following factual allegations:

"10. In the second week of February 2002, defendant Rachelle A. Gamurot, in

connivance with PCST, forced plaintiff and her classmates to buy or take two tickets
each, x x x;
 "11. Plaintiff and many of her classmates objected to the forced distribution and selling of
tickets to them but the said defendant warned them that if they refused [to] take or pay
the price of the two tickets they would not be allowed at all to take the final examinations;

"12. As if to add insult to injury, defendant Rachelle A. Gamurot bribed students with
additional fifty points or so in their test score in her subject just to unjustly influence and
compel them into taking the tickets;

"13. Despite the students' refusal, they were forced to take the tickets because [of]
defendant Rachelle A. Gamurot's coercion and act of intimidation, but still many of them
including the plaintiff did not attend the dance party imposed upon them by defendants
PCST and Rachelle A. Gamurot;

"14. Plaintiff was not able to pay the price of her own two tickets because aside form the
fact that she could not afford to pay them it is also against her religious practice as a
member of a certain religious congregation to be attending dance parties and
celebrations;

"15. On March 14, 2002, before defendant Rachelle A. Gamurot gave her class its final
examination in the subject 'Logic' she warned that students who had not paid the tickets
would not be allowed to participate in the examination, for which threat and intimidation
many students were eventually forced to make payments:

"16. Because plaintiff could not afford to pay, defendant Rachelle A. Gamurot inhumanly
made plaintiff sit out the class but the defendant did not allow her to take her final
examination in 'Logic;'

"17. On March 15, 2002 just before the giving of the final examination in the subject
'Statistics,' defendant Elissa Baladad, in connivance with defendants Rachelle A.
Gamurot and PCST, announced in the classroom that she was not allowing plaintiff and
another student to take the examination for their failure and refusal to pay the price of the
tickets, and thenceforth she ejected plaintiff and the other student from the classroom;

"18. Plaintiff pleaded for a chance to take the examination but all defendants could say
was that the prohibition to give the examinations to non-paying students was an
administrative decision;

"19. Plaintiff has already paid her tuition fees and other obligations in the school;

"20. That the above-cited incident was not a first since PCST also did another forced
distribution of tickets to its students in the first semester of school year 2001-2002; x x x
" 22

The foregoing allegations show two causes of action; first, breach of contract; and second,
liability for tort.

Reciprocity of the
School-Student Contract

In Alcuaz v. PSBA,23 the Court characterized the relationship between the school and the student
as a contract, in which "a student, once admitted by the school is considered enrolled for one
semester."24 Two years later, in Non v. Dames II,25 the Court modified the "termination of contract
theory" in Alcuaz by holding that the contractual relationship between the school and the student
is not only semestral in duration, but for the entire period the latter are expected to complete
it."26 Except for the variance in the period during which the contractual relationship is considered
to subsist, both Alcuaz and Non were unanimous in characterizing the school-student
relationship as contractual in nature.

The school-student relationship is also reciprocal. Thus, it has consequences appurtenant to and
inherent in all contracts of such kind -- it gives rise to bilateral or reciprocal rights and obligations.
The school undertakes to provide students with education sufficient to enable them to pursue
higher education or a profession. On the other hand, the students agree to abide by the
academic requirements of the school and to observe its rules and regulations.27

The terms of the school-student contract are defined at the moment of its inception -- upon
enrolment of the student. Standards of academic performance and the code of behavior and
discipline are usually set forth in manuals distributed to new students at the start of every school
year. Further, schools inform prospective enrollees the amount of fees and the terms of payment.

In practice, students are normally required to make a down payment upon enrollment, with the
balance to be paid before every preliminary, midterm and final examination. Their failure to pay
their financial obligation is regarded as a valid ground for the school to deny them the opportunity
to take these examinations.

The foregoing practice does not merely ensure compliance with financial obligations; it also
underlines the importance of major examinations. Failure to take a major examination is usually
fatal to the students' promotion to the next grade or to graduation. Examination results form a
significant basis for their final grades. These tests are usually a primary and an indispensable
requisite to their elevation to the next educational level and, ultimately, to their completion of a
course.

Education is not a measurable commodity. It is not possible to determine who is "better

educated" than another. Nevertheless, a student's grades are an accepted approximation of what
would otherwise be an intangible product of countless hours of study. The importance of grades
cannot be discounted in a setting where education is generally the gate pass to employment
opportunities and better life; such grades are often the means by which a prospective employer
measures whether a job applicant has acquired the necessary tools or skills for a particular
profession or trade.

Thus, students expect that upon their payment of tuition fees, satisfaction of the set academic
standards, completion of academic requirements and observance of school rules and
regulations, the school would reward them by recognizing their "completion" of the course
enrolled in.

The obligation on the part of the school has been established in Magtibay v. Garcia,28 Licup v.
University of San Carlos29 and Ateneo de Manila University v. Garcia,30 in which the Court held
that, barring any violation of the rules on the part of the students, an institution of higher learning
has a contractual obligation to afford its students a fair opportunity to complete the course they
seek to pursue.

We recognize the need of a school to fund its facilities and to meet astronomical operating costs;
this is a reality in running it. Crystal v. Cebu International School31 upheld the imposition by
respondent school of a "land purchase deposit" in the amount of P50,000 per student to be used
for the "purchase of a piece of land and for the construction of new buildings and other facilities x
x x which the school would transfer [to] and occupy after the expiration of its lease contract over
its present site."

The amount was refundable after the student graduated or left the school. After noting that the
imposition of the fee was made only after prior consultation and approval by the parents of the
students, the Court held that the school committed no actionable wrong in refusing to admit the
children of the petitioners therein for their failure to pay the "land purchase deposit" and the 2.5
percent monthly surcharge thereon.

In the present case, PCST imposed the assailed revenue-raising measure belatedly, in the
middle of the semester. It exacted the dance party fee as a condition for the students' taking the
final examinations, and ultimately for its recognition of their ability to finish a course. The fee,
however, was not part of the school-student contract entered into at the start of the school year.
Hence, it could not be unilaterally imposed to the prejudice of the enrollees.

Such contract is by no means an ordinary one. In Non, we stressed that the school-student
contract "is imbued with public interest, considering the high priority given by the Constitution to
education and the grant to the State of supervisory and regulatory powers over all educational
institutions."32 Sections 5 (1) and (3) of Article XIV of the 1987 Constitution provide:

"The State shall protect and promote the right of all citizens to quality education at all
levels and shall take appropriate steps to make such declaration accessible to all.

"Every student has a right to select a profession or course of study, subject to fair,
reasonable and equitable admission and academic requirements."

The same state policy resonates in Section 9(2) of BP 232, otherwise known as the Education
Act of 1982:

"Section 9. Rights of Students in School. – In addition to other rights, and subject to the
limitations prescribed by law and regulations, students and pupils in all schools shall
enjoy the following rights:

xxx xxx xxx

(2) The right to freely choose their field of study subject to existing curricula and
to continue their course therein up to graduation, except in cases of academic
deficiency, or violation of disciplinary regulations."

Liability for Tort

In her Complaint, petitioner also charged that private respondents "inhumanly punish students x
x x by reason only of their poverty, religious practice or lowly station in life, which inculcated upon
[petitioner] the feelings of guilt, disgrace and unworthiness;"33 as a result of such punishment, she
was allegedly unable to finish any of her subjects for the second semester of that school year
and had to lag behind in her studies by a full year. The acts of respondents supposedly caused
her extreme humiliation, mental agony and "demoralization of unimaginable proportions" in
violation of Articles 19, 21 and 26 of the Civil Code. These provisions of the law state thus:

"Article 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith."

"Article 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage."

"Article 26. Every person shall respect the dignity, personality, privacy and peace of mind
of his neighbors and other persons. The following and similar acts, though they may not
constitute a criminal offense, shall produce a cause of action for damages, prevention
and other relief:
 (1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relations of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his beliefs, lowly station in life,
place of birth, physical defect, or other personal condition."

Generally, liability for tort arises only between parties not otherwise bound by a contract. An
academic institution, however, may be held liable for tort even if it has an existing contract with
its students, since the act that violated the contract may also be a tort. We ruled thus in PSBA vs.
CA,34 from which we quote:

"x x x A perusal of Article 2176 [of the Civil Code] shows that obligations arising from
quasi-delicts or tort, also known as extra-contractual obligations, arise only between
parties not otherwise bound by contract, whether express or implied. However, this
impression has not prevented this Court from determining the existence of a tort even
when there obtains a contract. In Air France v. Carrascoso (124 Phil. 722), the private
respondent was awarded damages for his unwarranted expulsion from a first-class seat
aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-
airline's liability as one arising from tort, not one arising form a contract of carriage. In
effect, Air France is authority for the view that liability from tort may exist even if there is a
contract, for the act that breaks the contract may be also a tort. x x x This view was not
all that revolutionary, for even as early as 1918, this Court was already of a similar mind.
In Cangco v. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: 'x x x.
When such a contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes a breach of the contract would have
constituted the source of an extra-contractual obligation had no contract existed between
the parties.'

"Immediately what comes to mind is the chapter of the Civil Code on Human Relations,
particularly Article 21 x x x."35

Academic Freedom

In their Memorandum, respondents harp on their right to "academic freedom." We are not
impressed. According to present jurisprudence, academic freedom encompasses the
independence of an academic institution to determine for itself (1) who may teach, (2) what may
be taught, (3) how it shall teach, and (4) who may be admitted to study.36In Garcia v. the Faculty
Admission Committee, Loyola School of Theology,37 the Court upheld the respondent therein
when it denied a female student's admission to theological studies in a seminary for prospective
priests. The Court defined the freedom of an academic institution thus: "to decide for itself aims
and objectives and how best to attain them x x x free from outside coercion or interference save
possibly when overriding public welfare calls for some restraint."38

In Tangonan v. Paño,39 the Court upheld, in the name of academic freedom, the right of the
school to refuse readmission of a nursing student who had been enrolled on probation, and who
had failed her nursing subjects. These instances notwithstanding, the Court has emphasized that
once a school has, in the name of academic freedom, set its standards, these should be
meticulously observed and should not be used to discriminate against certain students.40 After
accepting them upon enrollment, the school cannot renege on its contractual obligation on
grounds other than those made known to, and accepted by, students at the start of the school
year.
In sum, the Court holds that the Complaint alleges sufficient causes of action against
respondents, and that it should not have been summarily dismissed. Needless to say, the Court
is not holding respondents liable for the acts complained of. That will have to be ruled upon in
due course by the court a quo.

WHEREFORE, the Petition is hereby GRANTED, and the assailed Orders REVERSED. The trial
court is DIRECTED to reinstate the Complaint and, with all deliberate speed, to continue the
proceedings in Civil Case No. U-7541. No costs.

SO ORDERED.

G.R. No. 156168 December 14, 2004

EQUITABLE BANKING CORPORATION, petitioner,

vs.
JOSE T. CALDERON, respondent.

DECISION

GARCIA, J.:

Thru this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Equitable Banking Corporation (EBC), seeks the reversal and setting aside of the
decision dated November 25, 20021 of the Court of Appeals in CA-G.R. CV No. 60016, which
partially affirmed an earlier decision of the Regional Trial Court at Makati City, Branch 61, insofar
as it grants moral damages and costs of suit to herein respondent, Jose T. Calderon.

The decision under review recites the factual background of the case, as follows:

Plaintiff-appellee [now respondent] Jose T. Calderon (Calderon for brevity), is a

businessman engaged in several business activities here and abroad, either in his
capacity as President or Chairman of the Board thereon. In addition thereto, he is a
stockholder of PLDT and a member of the Manila Polo Club, among others. He is a
seasoned traveler, who travels at least seven times a year in the U.S., Europe and Asia.
On the other hand, the defendant-appellant [now petitioner] Equitable Banking
Corporation (EBC for brevity), is one of the leading commercial banking institutions in the
Philippines, engaged in commercial banking, such as acceptance of deposits, extension
of loans and credit card facilities, among others.

xxx xxx xxx

Sometime in September 1984, Calderon applied and was issued an Equitable

International Visa card (Visa card for brevity). The said Visa card can be used for both
peso and dollar transactions within and outside the Philippines. The credit limit for the
peso transaction is TWENTY THOUSAND (P20,000.00) PESOS; while in the dollar
transactions, Calderon is required to maintain a dollar account with a minimum deposit of
$3,000.00, the balance of dollar account shall serve as the credit limit.
 In April 1986, Calderon together with some reputable business friends and associates,
went to Hongkong for business and pleasure trips. Specifically on 30 April 1986,
Calderon accompanied by his friend, Ed De Leon went to Gucci Department Store
located at the basement of the Peninsula Hotel (Hongkong). There and then, Calderon
purchased several Gucci items (t-shirts, jackets, a pair of shoes, etc.). The cost of his
total purchase amounted to HK$4,030.00 or equivalent to US$523.00. Instead of paying
the said items in cash, he used his Visa card (No. 4921 6400 0001 9373) to effect
payment thereof on credit. He then presented and gave his credit card to the saleslady
who promptly referred it to the store cashier for verification. Shortly thereafter, the
saleslady, in the presence of his friend, Ed De Leon and other shoppers of different
nationalities, informed him that his Visa card was blacklisted. Calderon sought the
reconfirmation of the status of his Visa card from the saleslady, but the latter simply did
not honor it and even threatened to cut it into pieces with the use of a pair of scissors.

Deeply embarrassed and humiliated, and in order to avoid further indignities, Calderon
paid cash for the Gucci goods and items that he bought.

Upon his return to the Philippines, and claiming that he suffered much torment and
embarrassment on account of EBC’s wrongful act of blacklisting/suspending his VISA credit card
while at the Gucci store in Hongkong, Calderon filed with the Regional Trial Court at Makati City
a complaint for damages2 against EBC.

In its Answer,3 EBC denied any liability to Calderon, alleging that the latter’s credit card privileges
for dollar transactions were earlier placed under suspension on account of Calderon’s prior use
of the same card in excess of his credit limit, adding that Calderon failed to settle said prior credit
purchase on due date, thereby causing his obligation to become past due. Corollarily, EBC
asserts that Calderon also failed to maintain the required minimum deposit of $3,000.00.

To expedite the direct examination of witnesses, the trial court required the parties to submit
affidavits, in question-and-answer form, of their respective witnesses, to be sworn to in court,
with cross examination to be made in open court.

Eventually, in a decision dated October 10, 1997,4 the trial court, concluding that "defendant bank
was negligent if not in bad faith, in suspending, or ‘blacklisting’ plaintiff’s credit card without
notice or basis", rendered judgment in favor of Calderon, thus:

WHEREFORE PREMISES ABOVE CONSIDERED, judgment is hereby rendered in favor

of plaintiff as against defendant EQUITABLE BANKING CORPORATION, which is
hereby ORDERED to pay plaintiff as follows:

1. the sum of US$150.00 as actual damages;

2. the sum of P200,000.00 as and by way of moral damages;

3. the amount of P100,000.00 as exemplary damages;

4. the sum of P100,000.00 as attorney’s fees plus P500.00 per court hearing and

5. costs of suit.

SO ORDERED.

Therefrom, EBC went to the Court of Appeals (CA), whereat its recourse was docketed as CA
G.R. CV No. 60016.
After due proceedings, the CA, in a decision dated November 25, 2002,5 affirmed that of the
trial court but only insofar as the awards of moral damages, the amount of which was even
reduced, and the costs of suits are concerned. More specifically, the CA decision dispositively
reads:6

WHEREFORE, in consideration of the foregoing disquisitions, the decision of the court a

quo dated 10 October 1997 is AFFIRMED insofar as the awards of moral damages and
costs of suit are concerned. However, anent the award of moral damages, the same is
reduced to One Hundred Thousand (P100,000.00) Pesos.

The rest of the awards are deleted.

SO ORDERED.

Evidently unwilling to accept a judgment short of complete exemption from any liability to
Calderon, EBC is now with us via the instant petition on its lone submission that "THE COURT
OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IS ENTITLED TO MORAL
DAMAGES NOTWITHSTANDING ITS FINDING THAT PETITIONER’S ACTIONS HAVE NOT
BEEN ATTENDED WITH ANY MALICE OR BAD FAITH."7

The petition is impressed with merit.

In law, moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury.8 However, to be entitled to the award thereof, it is not enough that one merely suffered
sleepless nights, mental anguish or serious anxiety as a result of the actuations of the other
party.9 In Philippine Telegraph & Telephone Corporation vs. Court of Appeals,10 we have had the
occasion to reiterate the conditions to be met in order that moral damages may be recovered,
viz:

An award of moral damages would require, firstly, evidence of besmirched reputation, or

physical, mental or psychological suffering sustained by the claimant; secondly, a
culpable act or omission factually established; thirdly, proof that the wrongful act or
omission of the defendant is the proximate cause of the damages sustained by the
claimant; and fourthly, that the case is predicated on any of the instances expressed or
envisioned by Articles 2219 and 2220 of the Civil Code.

Particularly, in culpa contractual or breach of contract, as here, moral damages are recoverable
only if the defendant has acted fraudulently or in bad faith,11 or is found guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligations.12 Verily, the breach
must be wanton, reckless, malicious or in bad faith, oppressive or abusive.13

Here, the CA ruled, and rightly so, that no malice or bad faith attended petitioner’s dishonor of
respondent’s credit card. For, as found no less by the same court, petitioner was justified in doing
so under the provisions of its Credit Card Agreement14 with respondent, paragraph 3 of which
states:

xxx the CARDHOLDER agrees not to exceed his/her approved credit limit, otherwise, all
charges incurred including charges incurred through the use of the extension CARD/S, if
any in excess of credit limit shall become due and demandable and the credit privileges
shall be automatically suspended without notice to the CARDHOLDER in accordance
with Section 11 hereof.

We are thus at a loss to understand why, despite its very own finding of absence of bad faith or
malice on the part of the petitioner, the CA nonetheless adjudged it liable for moral damages to
respondent.
Quite evidently, in holding petitioner liable for moral damages, the CA justified the award on its
assessment that EBC was negligent in not informing Calderon that his credit card was already
suspended even before he left for Hongkong, ratiocinating that petitioner’s right to automatically
suspend a cardholder’s privileges without notice should not have been indiscriminately used in
the case of respondent because the latter has already paid his past obligations and has an
existing dollar deposit in an amount more than the required minimum for credit card at the time
he made his purchases in Hongkong. But, as explained by the petitioner in the memorandum it
filed with this Court,15 which explanations were never controverted by respondent:

"xxx prior to the incident in question (i.e., April 30, 1986 when the purchases at the Gucci
store in Hongkong were made), respondent made credit purchases in Japan and
Hongkong from August to September 1985 amounting to US$14,226.12, while only
having a deposit of US$3,639.00 in his dollar account as evidenced by the pertinent
monthly statement of respondent’s credit card transactions and his bank passbook, thus
exceeding his credit limit; these purchases were accommodated by the petitioner on the
condition that the amount needed to cover the same will be deposited in a few days as
represented by respondent’s secretary and his company’s general manager – a certain
Mrs. Zamora and Mr. F.R. Oliquiano; respondent however failed to make good on his
commitment; later, respondent likewise failed to make the required deposit on the due
date of the purchases as stated in the pertinent monthly statement of account; as a
consequence thereof, his card privileges for dollar transactions were suspended; it was
only four months later – on 31 January 1986, that respondent deposited the sum
of P14,501.89 in his dollar account to cover his purchases; the said amount however was
not sufficient to maintain the required minimum dollar deposit of $3,000.00 as the
respondent’s dollar deposit stood at only US$2,704.94 after satisfaction of his
outstanding accounts; a day before he left for Hongkong, respondent made another
deposit of US$14,000.00 in his dollar account but did not bother to request the petitioner
for the reinstatement of his credit card privileges for dollar transactions, thus the same
remained under suspension."16

The foregoing are based on the sworn affidavit of petitioner’s Collection Manager, a certain
Lourdes Canlas, who was never cross examined by the respondent nor did the latter present any
evidence to refute its veracity.

Given the above, and with the express provision on automatic suspension without notice under
paragraph 3, supra, of the parties’ Credit Card Agreement, there is simply no basis for holding
petitioner negligent for not notifying respondent of the suspended status of his credit card
privileges.

It may be so that respondent, a day before he left for Hongkong, made a deposit of
US$14,000.00 to his dollar account with petitioner. The sad reality, however, is that he never
verified the status of his card before departing for Hongkong, much less requested petitioner to
reinstate the same.17

And, certainly, respondent could not have justifiably assumed that petitioner must have
reinstated his card by reason alone of his having deposited US$14,000.00 a day before he left
for Hongkong. As issuer of the card, petitioner has the option to decide whether to reinstate or
altogether terminate a credit card previously suspended on considerations which the petitioner
deemed proper, not the least of which are the cardholder’s payment record, capacity to pay and
compliance with any additional requirements imposed by it. That option, after all, is expressly
embodied in the same Credit Card Agreement, paragraph 12 of which unmistakably states:

The issuer shall likewise have the option of reinstating the card holder’s privileges which
have been terminated for any reason whatsoever upon submission of a new
accomplished application form if required by the issuer and upon payment of an
additional processing fee equivalent to annual fee.18
Even on the aspect of negligence, therefore, petitioner could not have been properly adjudged
liable for moral damages.

Unquestionably, respondent suffered damages as a result of the dishonor of his card. There is,
however, a material distinction between damages and injury. To quote from our decision in BPI
Express Card Corporation vs. Court of Appeals:19

Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results
from the injury; and damages are the recompense or compensation awarded for the
damage suffered. Thus, there can be damage without injury in those instances in
which the loss or harm was not the result of a violation of a legal duty. In such
cases the consequences must be borne by the injured person alone, the law affords no
remedy for damages resulting from an act which does not amount to a legal injury or
wrong. These situations are often called damnum absque injuria.

In other words, in order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff- a concurrence of injury to the plaintiff and legal
responsibility by the person causing it. The underlying basis for the award of tort
damages is the premise that an individual was injured in contemplation of law. Thus,
there must first be a breach of some duty and the imposition of liability for that breach
before damages may be awarded; and the breach of such duty should be the proximate
cause of the injury. (Emphasis supplied).

In the situation in which respondent finds himself, his is a case of damnum absque injuria.

We do not take issue with the appellate court in its observation that the Credit Card Agreement
herein involved is a contract of adhesion, with the stipulations therein contained unilaterally
prepared and imposed by the petitioner to prospective credit card holders on a take-it-or-leave-it
basis. As said by us in Polotan, Sr. vs. Court of Appeals:20

A contract of adhesion is one in which one of the contracting parties imposes a ready-
made form of contract which the other party may accept or reject, but cannot modify. One
party prepares the stipulation in the contract, while the other party merely affixes his
signature or his ‘adhesion’ thereto giving no room for negotiation and depriving the latter
of the opportunity to bargain on equal footing.

On the same breath, however, we have equally ruled that such a contract is "as binding as
ordinary contracts, the reason being that the party who adheres to the contract is free to reject it
entirely."21

Moreover, the provision on automatic suspension without notice embodied in the same Credit
Card Agreement is couched in clear and unambiguous term, not to say that the agreement itself
was entered into by respondent who, by his own account, is a reputable businessman engaged
in business activities here and abroad.

On a final note, we emphasize that "moral damages are in the category of an award designed to
compensate the claim for actual injury suffered and not to impose a penalty on the wrongdoer."22

WHEREFORE, the instant petition is hereby GRANTED and the decision under review
REVERSED and SET ASIDE.

SO ORDERED.

G.R. No. 154259 February 28, 2005

NIKKO HOTEL MANILA GARDEN and RUBY LIM, petitioners,
vs.
ROBERTO REYES, a.k.a. "AMAY BISAYA," respondent.

DECISION

CHICO-NAZARIO, J.:

In this petition for review on certiorari, petitioners Nikko Hotel Manila Garden (Hotel Nikko)1 and
Ruby Lim assail the Decision2 of the Court of Appeals dated 26 November 2001 reversing the
Decision3 of the Regional Trial Court (RTC) of Quezon City, Branch 104, as well as the
Resolution4 of the Court of Appeals dated 09 July 2002 which denied petitioners’ motion for
reconsideration.

The cause of action before the trial court was one for damages brought under the human
relations provisions of the New Civil Code. Plaintiff thereat (respondent herein) Roberto Reyes,
more popularly known by the screen name "Amay Bisaya," alleged that at around 6:00 o’clock in
the evening of 13 October 1994, while he was having coffee at the lobby of Hotel Nikko,5 he was
spotted by his friend of several years, Dr. Violeta Filart, who then approached him.6 Mrs. Filart
invited him to join her in a party at the hotel’s penthouse in celebration of the natal day of the
hotel’s manager, Mr. Masakazu Tsuruoka.7 Mr. Reyes asked if she could vouch for him for which
she replied: "of course."8Mr. Reyes then went up with the party of Dr. Filart carrying the basket of
fruits which was the latter’s present for the celebrant.9 At the penthouse, they first had their
picture taken with the celebrant after which Mr. Reyes sat with the party of Dr. Filart.10 After a
couple of hours, when the buffet dinner was ready, Mr. Reyes lined-up at the buffet table but, to
his great shock, shame and embarrassment, he was stopped by petitioner herein, Ruby Lim, who
claimed to speak for Hotel Nikko as Executive Secretary thereof.11 In a loud voice and within the
presence and hearing of the other guests who were making a queue at the buffet table, Ruby Lim
told him to leave the party ("huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang").12 Mr.
Reyes tried to explain that he was invited by Dr. Filart.13 Dr. Filart, who was within hearing
distance, however, completely ignored him thus adding to his shame and humiliation.14 Not long
after, while he was still recovering from the traumatic experience, a Makati policeman
approached and asked him to step out of the hotel.15 Like a common criminal, he was escorted
out of the party by the policeman.16 Claiming damages, Mr. Reyes asked for One Million Pesos
actual damages, One Million Pesos moral and/or exemplary damages and Two Hundred
Thousand Pesos attorney’s fees.17

Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the
ignominious circumstance painted by the latter. Ms. Lim narrated that she was the Hotel’s
Executive Secretary for the past twenty (20) years.18 One of her functions included organizing the
birthday party of the hotel’s former General Manager, Mr. Tsuruoka.19 The year 1994 was no
different. For Mr. Tsuruoka’s party, Ms. Lim generated an exclusive guest list and extended
invitations accordingly.20 The guest list was limited to approximately sixty (60) of Mr. Tsuruoka’s
closest friends and some hotel employees and that Mr. Reyes was not one of those invited.21 At
the party, Ms. Lim first noticed Mr. Reyes at the bar counter ordering a drink.22 Mindful of Mr.
Tsuruoka’s wishes to keep the party intimate, Ms. Lim approached Mr. Boy Miller, the "captain
waiter," to inquire as to the presence of Mr. Reyes who was not invited.23 Mr. Miller replied that he
saw Mr. Reyes with the group of Dr. Filart.24 As Dr. Filart was engaged in conversation with
another guest and as Ms. Lim did not want to interrupt, she inquired instead from the sister of Dr.
Filart, Ms. Zenaida Fruto, who told her that Dr. Filart did not invite Mr. Reyes.25 Ms. Lim then
requested Ms. Fruto to tell Mr. Reyes to leave the party as he was not invited.26 Mr. Reyes,
however, lingered prompting Ms. Lim to inquire from Ms. Fruto who said that Mr. Reyes did not
want to leave.27 When Ms. Lim turned around, she saw Mr. Reyes conversing with a Captain
Batung whom she later approached.28 Believing that Captain Batung and Mr. Reyes knew each
other, Ms. Lim requested from him the same favor from Ms. Fruto, i.e., for Captain Batung to tell
Mr. Reyes to leave the party as he was not invited.29 Still, Mr. Reyes lingered. When Ms. Lim
spotted Mr. Reyes by the buffet table, she decided to speak to him herself as there were no other
guests in the immediate vicinity.30However, as Mr. Reyes was already helping himself to the food,
she decided to wait.31 When Mr. Reyes went to a corner and started to eat, Ms. Lim approached
him and said: "alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na ho kayo ng
pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo."32 She then
turned around trusting that Mr. Reyes would show enough decency to leave, but to her surprise,
he began screaming and making a big scene, and even threatened to dump food on her.33 1awphi1.nét

Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her
version of the story to the effect that she never invited Mr. Reyes to the party.34 According to her,
it was Mr. Reyes who volunteered to carry the basket of fruits intended for the celebrant as he
was likewise going to take the elevator, not to the penthouse but to Altitude 49.35 When they
reached the penthouse, she reminded Mr. Reyes to go down as he was not properly dressed and
was not invited.36 All the while, she thought that Mr. Reyes already left the place, but she later
saw him at the bar talking to Col. Batung.37 Then there was a commotion and she saw Mr. Reyes
shouting.38 She ignored Mr. Reyes.39 She was embarrassed and did not want the celebrant to think
that she invited him.40

After trial on the merits, the court a quo dismissed the complaint,41 giving more credence to the
testimony of Ms. Lim that she was discreet in asking Mr. Reyes to leave the party. The trial court
likewise ratiocinated that Mr. Reyes assumed the risk of being thrown out of the party as he was
uninvited:

Plaintiff had no business being at the party because he was not a guest of Mr. Tsuruoka, the
birthday celebrant. He assumed the risk of being asked to leave for attending a party to which he
was not invited by the host. Damages are pecuniary consequences which the law imposes for
the breach of some duty or the violation of some right. Thus, no recovery can be had against
defendants Nikko Hotel and Ruby Lim because he himself was at fault (Garciano v. Court of
Appeals, 212 SCRA 436). He knew that it was not the party of defendant Violeta Filart even if
she allowed him to join her and took responsibility for his attendance at the party. His action
against defendants Nikko Hotel and Ruby Lim must therefore fail.42

On appeal, the Court of Appeals reversed the ruling of the trial court as it found more
commanding of belief the testimony of Mr. Reyes that Ms. Lim ordered him to leave in a loud
voice within hearing distance of several guests:

In putting appellant in a very embarrassing situation, telling him that he should not finish his food
and to leave the place within the hearing distance of other guests is an act which is contrary to
morals, good customs . . ., for which appellees should compensate the appellant for the damage
suffered by the latter as a consequence therefore (Art. 21, New Civil Code). The liability arises
from the acts which are in themselves legal or not prohibited, but contrary to morals or good
customs. Conversely, even in the exercise of a formal right, [one] cannot with impunity
intentionally cause damage to another in a manner contrary to morals or good customs.43

The Court of Appeals likewise ruled that the actuation of Ms. Lim in approaching several people
to inquire into the presence of Mr. Reyes exposed the latter to ridicule and was uncalled for as
she should have approached Dr. Filart first and both of them should have talked to Mr. Reyes in
private:

Said acts of appellee Lim are uncalled for. What should have been done by appellee Lim was to
approach appellee Mrs. Filart and together they should have told appellant Reyes in private that
the latter should leave the party as the celebrant only wanted close friends around. It is
necessary that Mrs. Filart be the one to approach appellant because it was she who invited
appellant in that occasion. Were it not for Mrs. Filart’s invitation, appellant could not have
suffered such humiliation. For that, appellee Filart is equally liable.

...
The acts of [appellee] Lim are causes of action which are predicated upon mere rudeness or lack
of consideration of one person, which calls not only protection of human dignity but respect of
such dignity. Under Article 20 of the Civil Code, every person who violates this duty becomes
liable for damages, especially if said acts were attended by malice or bad faith. Bad faith does
not simply connote bad judgment or simple negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a known duty to some motive or
interest or ill-will that partakes of the nature of fraud (Cojuangco, Jr. v. CA, et al., 309 SCRA
603).44

Consequently, the Court of Appeals imposed upon Hotel Nikko, Ruby Lim and Dr. Violeta Filart
the solidary obligation to pay Mr. Reyes (1) exemplary damages in the amount of Two Hundred
Thousand Pesos (P200,000); (2) moral damages in the amount of Two Hundred Thousand
Pesos (P200,000); and (3) attorney’s fees in the amount of Ten Thousand Pesos (P10,000).45 On
motion for reconsideration, the Court of Appeals affirmed its earlier decision as the argument
raised in the motion had "been amply discussed and passed upon in the decision sought to be
reconsidered."46

Thus, the instant petition for review. Hotel Nikko and Ruby Lim contend that the Court of Appeals
seriously erred in –

I.

… NOT APPLYING THE DOCTRINE OF VOLENTI NON FIT INJURIA CONSIDERING THAT BY
ITS OWN FINDINGS, AMAY BISAYA WAS A GATE-CRASHER

II.

… HOLDING HOTEL NIKKO AND RUBY LIM JOINTLY AND SEVERALLY LIABLE WITH DR.
FILART FOR DAMAGES SINCE BY ITS OWN RULING, AMAY BISAYA "COULD NOT HAVE
SUFFERED SUCH HUMILIATION," "WERE IT NOT FOR DR. FILART’S INVITATION"

III.

… DEPARTING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AS REGARDS THE
CIRCUMSTANCES THAT ALLEGEDLY CAUSED THE HUMILIATION OF AMAY BISAYA

IV.

… IN CONCLUDING THAT AMAY BISAYA WAS TREATED UNJUSTLY BECAUSE OF HIS

POVERTY, CONSIDERING THAT THIS WAS NEVER AN ISSUE AND NO EVIDENCE WAS
PRESENTED IN THIS REGARD

V.

… IN FAILING TO PASS UPON THE ISSUE ON THE DEFECTS OF THE APPELLANT’S

BRIEF, THEREBY DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS

Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit injuria,
they cannot be made liable for damages as respondent Reyes assumed the risk of being asked
to leave (and being embarrassed and humiliated in the process) as he was a "gate-crasher."

The doctrine of volenti non fit injuria ("to which a person assents is not esteemed in law as
injury"47 ) refers to self-inflicted injury48 or to the consent to injury49 which precludes the recovery of
damages by one who has knowingly and voluntarily exposed himself to danger, even if he is not
negligent in doing so.50 As formulated by petitioners, however, this doctrine does not find
application to the case at bar because even if respondent Reyes assumed the risk of being
asked to leave the party, petitioners, under Articles 19 and 21 of the New Civil Code, were still
under obligation to treat him fairly in order not to expose him to unnecessary ridicule and shame.

Thus, the threshold issue is whether or not Ruby Lim acted abusively in asking Roberto Reyes,
a.k.a. "Amay Bisaya," to leave the party where he was not invited by the celebrant thereof
thereby becoming liable under Articles 19 and 21 of the Civil Code. Parenthetically, and if Ruby
Lim were so liable, whether or not Hotel Nikko, as her employer, is solidarily liable with her.

As the trial court and the appellate court reached divergent and irreconcilable conclusions
concerning the same facts and evidence of the case, this Court is left without choice but to use
its latent power to review such findings of facts. Indeed, the general rule is that we are not a trier
of facts as our jurisdiction is limited to reviewing and revising errors of law.51 One of the
exceptions to this general rule, however, obtains herein as the findings of the Court of Appeals
are contrary to those of the trial court.52 The lower court ruled that Ms. Lim did not abuse her right
to ask Mr. Reyes to leave the party as she talked to him politely and discreetly. The appellate
court, on the other hand, held that Ms. Lim is liable for damages as she needlessly embarrassed
Mr. Reyes by telling him not to finish his food and to leave the place within hearing distance of
the other guests. Both courts, however, were in agreement that it was Dr. Filart’s invitation that
brought Mr. Reyes to the party.

The consequential question then is: Which version is credible?

From an in depth review of the evidence, we find more credible the lower court’s findings of fact.

First, let us put things in the proper perspective.

We are dealing with a formal party in a posh, five-star hotel,53 for-invitation-only, thrown for the
hotel’s former Manager, a Japanese national. Then came a person who was clearly uninvited (by
the celebrant)54 and who could not just disappear into the crowd as his face is known by many,
being an actor. While he was already spotted by the organizer of the party, Ms. Lim, the very
person who generated the guest list, it did not yet appear that the celebrant was aware of his
presence. Ms. Lim, mindful of the celebrant’s instruction to keep the party intimate, would
naturally want to get rid of the "gate-crasher" in the most hush-hush manner in order not to call
attention to a glitch in an otherwise seamless affair and, in the process, risk the displeasure of
the celebrant, her former boss. To unnecessarily call attention to the presence of Mr. Reyes
would certainly reflect badly on Ms. Lim’s ability to follow the instructions of the celebrant to invite
only his close friends and some of the hotel’s personnel. Mr. Reyes, upon whom the burden rests
to prove that indeed Ms. Lim loudly and rudely ordered him to leave, could not offer any
satisfactory explanation why Ms. Lim would do that and risk ruining a formal and intimate affair.
On the contrary, Mr. Reyes, on cross-examination, had unwittingly sealed his fate by admitting
that when Ms. Lim talked to him, she was very close. Close enough for him to kiss:

Q: And, Mr. Reyes, you testified that Miss Lim approached you while you were at the
buffet table? How close was she when she approached you?

A: Very close because we nearly kissed each other.

Q: And yet, she shouted for you to go down? She was that close and she shouted?

A: Yes. She said, "wag kang kumain, hindi ka imbitado dito, bumaba ka na lang."

Q: So, you are testifying that she did this in a loud voice?
 ...

A: Yes. If it is not loud, it will not be heard by many.55

In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose
him to ridicule and shame, it is highly unlikely that she would shout at him from a very close
distance. Ms. Lim having been in the hotel business for twenty years wherein being polite and
discreet are virtues to be emulated, the testimony of Mr. Reyes that she acted to the contrary
does not inspire belief and is indeed incredible. Thus, the lower court was correct in observing
that –

Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave
the party was made such that they nearly kissed each other, the request was meant to be heard
by him only and there could have been no intention on her part to cause embarrassment to him.
It was plaintiff’s reaction to the request that must have made the other guests aware of what
transpired between them. . .

Had plaintiff simply left the party as requested, there was no need for the police to take him out.56

Moreover, another problem with Mr. Reyes’s version of the story is that it is unsupported. It is a
basic rule in civil cases that he who alleges proves. Mr. Reyes, however, had not presented any
witness to back his story up. All his witnesses – Danny Rodinas, Pepito Guerrero and Alexander
Silva - proved only that it was Dr. Filart who invited him to the party.57

Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable to pay for damages under Articles 19 and 21 of the Civil Code.
Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that
of its employee.58

Article 19, known to contain what is commonly referred to as the principle of abuse of rights,59 is
not a panacea for all human hurts and social grievances. Article 19 states:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith. 1aw phi 1.nét

Elsewhere, we explained that when "a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be responsible."60 The object of this article, therefore, is
to set certain standards which must be observed not only in the exercise of one’s rights but also
in the performance of one’s duties.61 These standards are the following: act with justice, give
everyone his due and observe honesty and good faith.62 Its antithesis, necessarily, is any act
evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal right or
duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring
another.63 When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of
the Civil Code. Article 20 pertains to damages arising from a violation of law64 which does not
obtain herein as Ms. Lim was perfectly within her right to ask Mr. Reyes to leave. Article 21, on
the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage.

Article 2165 refers to acts contra bonus mores and has the following elements: (1) There is an act
which is legal; (2) but which is contrary to morals, good custom, public order, or public policy; and
(3) it is done with intent to injure.66
A common theme runs through Articles 19 and 21,67 and that is, the act complained of must be
intentional.68

As applied to herein case and as earlier discussed, Mr. Reyes has not shown that Ms. Lim was
driven by animosity against him. These two people did not know each other personally before the
evening of 13 October 1994, thus, Mr. Reyes had nothing to offer for an explanation for Ms. Lim’s
alleged abusive conduct except the statement that Ms. Lim, being "single at 44 years old," had a
"very strong bias and prejudice against (Mr. Reyes) possibly influenced by her associates in her
work at the hotel with foreign businessmen."69 The lameness of this argument need not be
belabored. Suffice it to say that a complaint based on Articles 19 and 21 of the Civil Code must
necessarily fail if it has nothing to recommend it but innuendos and conjectures.

Parenthetically, the manner by which Ms. Lim asked Mr. Reyes to leave was likewise acceptable
and humane under the circumstances. In this regard, we cannot put our imprimatur on the
appellate court’s declaration that Ms. Lim’s act of personally approaching Mr. Reyes (without first
verifying from Mrs. Filart if indeed she invited Mr. Reyes) gave rise to a cause of action
"predicated upon mere rudeness or lack of consideration of one person, which calls not only
protection of human dignity but respect of such dignity."70 Without proof of any ill-motive on her
part, Ms. Lim’s act of by-passing Mrs. Filart cannot amount to abusive conduct especially
because she did inquire from Mrs. Filart’s companion who told her that Mrs. Filart did not invite
Mr. Reyes.71 If at all, Ms. Lim is guilty only of bad judgment which, if done with good intentions,
cannot amount to bad faith.

Not being liable for both actual and moral damages, neither can petitioners Lim and Hotel Nikko
be made answerable for exemplary damages72 especially for the reason stated by the Court of
Appeals. The Court of Appeals held –

Not a few of the rich people treat the poor with contempt because of the latter’s lowly station in
life. This has to be limited somewhere. In a democracy, such a limit must be established. Social
l^vvphi1.net

equality is not sought by the legal provisions under consideration, but due regard for decency
and propriety (Code Commission, pp. 33-34). And by way of example or correction for public
good and to avert further commission of such acts, exemplary damages should be imposed upon
appellees.73

The fundamental fallacy in the above-quoted findings is that it runs counter with the very facts of
the case and the evidence on hand. It is not disputed that at the time of the incident in question,
l^vvphi1.net

Mr. Reyes was "an actor of long standing; a co-host of a radio program over DZRH; a Board
Member of the Music Singer Composer (MUSICO) chaired by popular singer Imelda Papin; a
showbiz Coordinator of Citizen Crime Watch; and 1992 official candidate of the KBL Party for
Governor of Bohol; and an awardee of a number of humanitarian organizations of the
Philippines."74 During his direct examination on rebuttal, Mr. Reyes stressed that he had
income75 and nowhere did he say otherwise. On the other hand, the records are bereft of any
information as to the social and economic standing of petitioner Ruby Lim. Consequently, the
conclusion reached by the appellate court cannot withstand scrutiny as it is without basis.

All told, and as far as Ms. Lim and Hotel Nikko are concerned, any damage which Mr. Reyes
might have suffered through Ms. Lim’s exercise of a legitimate right done within the bounds of
propriety and good faith, must be his to bear alone.

WHEREFORE, premises considered, the petition filed by Ruby Lim and Nikko Hotel Manila
Garden is GRANTED. The Decision of the Court of Appeals dated 26 November 2001 and its
Resolution dated 09 July 2002 are hereby REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 104, dated 26 April 1999 is hereby AFFIRMED. No
costs.

SO ORDERED.
G.R. No. 157314 July 29, 2005

FAR EAST BANK AND TRUST COMPANY, NOW BANK OF THE PHILIPPINE
ISLANDS, Petitioners,
vs.
THEMISTOCLES PACILAN, JR., Respondent.

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by Far East Bank and Trust Company
(now Bank of the Philippines Islands) seeking the reversal of the Decision1 dated August 30,
2002 of the Court of Appeals (CA) in CA-G.R. CV No. 36627 which ordered it, together with its
branch accountant, Roger Villadelgado, to pay respondent Themistocles Pacilan, Jr.2 the total
sum of ₱100,000.00 as moral and exemplary damages. The assailed decision affirmed with
modification that of the Regional Trial Court (RTC) of Negros Occidental, Bacolod City, Branch
54, in Civil Case No. 4908. Likewise sought to be reversed and set aside is the Resolution dated
January 17, 2003 of the appellate court, denying petitioner bank’s motion for reconsideration.

The case stemmed from the following undisputed facts:

Respondent Pacilan opened a current account with petitioner bank’s Bacolod Branch on May 23,
1980. His account was denominated as Current Account No. 53208 (0052-00407-4). The
respondent had since then issued several postdated checks to different payees drawn against
the said account. Sometime in March 1988, the respondent issued Check No. 2434886 in the
amount of ₱680.00 and the same was presented for payment to petitioner bank on April 4, 1988.

Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner bank.
The next day, or on April 5, 1988, the respondent deposited to his current account the amount of
₱800.00. The said amount was accepted by petitioner bank; hence, increasing the balance of the
respondent’s deposit to ₱1,051.43.

Subsequently, when the respondent verified with petitioner bank about the dishonor of Check No.
2434866, he discovered that his current account was closed on the ground that it was
"improperly handled." The records of petitioner bank disclosed that between the period of March
30,
1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416 for
₱6,000.00; Check No. 2480419 for ₱50.00; Check No. 2434880 for ₱680.00 and; Check No.
2434886 for ₱680.00, or a total amount of ₱7,410.00. At the time, however, the respondent’s
current account with petitioner bank only had a deposit of ₱6,981.43. Thus, the total amount of
the checks presented for payment on April 4, 1988 exceeded the balance of the respondent’s
deposit in his account. For this reason, petitioner bank, through its branch accountant,
Villadelgado, closed the respondent’s current account effective the evening of April 4, 1988 as it
then had an overdraft of ₱428.57. As a consequence of the overdraft, Check No. 2434886 was
dishonored.

On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of his
account was unjustified. When he did not receive a reply from petitioner bank, the respondent
filed with the RTC of Negros Occidental, Bacolod City, Branch 54, a complaint for damages
against petitioner bank and Villadelgado. The case was docketed as Civil Case No. 4908. The
respondent, as complainant therein, alleged that the closure of his current account by petitioner
bank was unjustified because on the first banking hour of April 5, 1988, he already deposited an
amount sufficient to fund his checks. The respondent pointed out that Check No. 2434886, in
particular, was delivered to petitioner bank at the close of banking hours on April 4, 1988 and,
following normal banking procedure, it
(petitioner bank) had until the last clearing hour of the following day, or on April 5, 1988, to honor
the check or return it, if not funded. In disregard of this banking procedure and practice, however,
petitioner bank hastily closed the respondent’s current account and dishonored his Check No.
2434886.

The respondent further alleged that prior to the closure of his current account, he had issued
several other postdated checks. The petitioner bank’s act of closing his current account allegedly
preempted the deposits that he intended to make to fund those checks. Further, the petitioner
bank’s act exposed him to criminal prosecution for violation of Batas Pambansa Blg. 22.

According to the respondent, the indecent haste that attended the closure of his account was
patently malicious and intended to embarrass him. He claimed that he is a Cashier of Prudential
Bank and Trust Company, whose branch office is located just across that of petitioner bank, and
a prominent and respected leader both in the civic and banking communities. The alleged
malicious acts of petitioner bank besmirched the respondent’s reputation and caused him "social
humiliation, wounded feelings, insurmountable worries and sleepless nights" entitling him to an
award of damages.

In their answer, petitioner bank and Villadelgado maintained that the respondent’s current
account was subject to petitioner bank’s Rules and Regulations Governing the Establishment
and Operation of Regular Demand
Deposits which provide that "the Bank reserves the right to close an account if the depositor
frequently draws checks against insufficient funds and/or uncollected deposits" and that "the
Bank reserves the right at any time to return checks of the depositor which are drawn against
insufficient funds or for any reason."3

They showed that the respondent had improperly and irregularly handled his current account. For
example, in 1986, the respondent’s account was overdrawn 156 times, in 1987, 117 times and in
1988, 26 times. In all these instances, the account was overdrawn due to the issuance of checks
against insufficient funds. The respondent had also signed several checks with a different
signature from the specimen on file for dubious reasons.

When the respondent made the deposit on April 5, 1988, it was obviously to cover for issuances
made the previous day against an insufficiently funded account. When his Check No. 2434886
was presented for payment on April 4, 1988, he had already incurred an overdraft; hence,
petitioner bank rightfully dishonored the same for insufficiency of funds.

After due proceedings, the court a quo rendered judgment in favor of the respondent as it
ordered the petitioner bank and Villadelgado, jointly and severally, to pay the respondent the
amounts of ₱100,000.00 as moral damages and ₱50,000.00 as exemplary damages and costs
of suit. In so ruling, the court a quo also cited petitioner bank’s rules and regulations which state
that "a charge of ₱10.00 shall be levied against the depositor for any check that is taken up as a
returned item due to ‘insufficiency of funds’ on the date of receipt from the clearing office even if
said check is honored and/or covered by sufficient deposit the following banking day." The same
rules and regulations also provide that "a check returned for insufficiency of funds for any reason
of similar import may be subsequently recleared for one more time only, subject to the same
charges."

According to the court a quo, following these rules and regulations, the respondent, as depositor,
had the right to put up sufficient funds for a check that was taken as a returned item for
insufficient funds the day following the receipt of said check from the clearing office. In fact, the
said check could still be recleared for one more time. In previous instances, petitioner bank
notified the respondent when he incurred an overdraft and he would then deposit sufficient funds
the following day to cover the overdraft. Petitioner bank thus acted unjustifiably when it
immediately closed the respondent’s account on April 4, 1988 and deprived him of the
opportunity to reclear his check or deposit sufficient funds therefor the following day.
As a result of the closure of his current account, several of the respondent’s checks were
subsequently dishonored and because of this, the respondent was humiliated, embarrassed and
lost his credit standing in the business community. The court a quo further ratiocinated that even
granting arguendo that petitioner bank had the right to close the respondent’s account, the
manner which attended the closure constituted an abuse of the
said right. Citing Article 19 of the Civil Code of the Philippines which states that "[e]very person
must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith" and Article 20 thereof which states that
"[e]very person who, contrary to law, wilfully or negligently causes damage to another, shall
indemnify the latter for the same," the court a quo adjudged petitioner bank of acting in bad faith.
It held that, under the foregoing circumstances, the respondent is entitled to an award of moral
and exemplary damages.

The decretal portion of the court a quo’s decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

1. Ordering the defendants [petitioner bank and Villadelgado], jointly and severally, to pay plaintiff
[the respondent] the sum of ₱100,000.00 as moral damages;

2. Ordering the defendants, jointly and severally, to pay plaintiff the sum of ₱50,000.00 as
exemplary damages plus costs and expenses of the suit; and

3. Dismissing [the] defendants’ counterclaim for lack of merit.

SO ORDERED.4

On appeal, the CA rendered the Decision dated August 30, 2002, affirming with modification the
decision of the court a quo.

The appellate court substantially affirmed the factual findings of the court a quo as it held that
petitioner bank unjustifiably closed the respondent’s account notwithstanding that its own rules
and regulations

allow that a check returned for insufficiency of funds or any reason of similar import, may be
subsequently recleared for one more time, subject to standard charges. Like the court a quo, the
appellate court observed that in several instances in previous years, petitioner bank would inform
the respondent when he incurred an overdraft and allowed him to make a timely deposit to fund
the checks that were initially dishonored for insufficiency of funds. However, on April 4, 1988,
petitioner bank immediately closed the respondent’s account without even notifying him that he
had incurred an overdraft. Even when they had already closed his account on April 4, 1988,
petitioner bank still accepted the deposit that the respondent made on April 5, 1988, supposedly
to cover his checks.

Echoing the reasoning of the court a quo, the CA declared that even as it may be conceded that
petitioner bank had reserved the right to close an account for repeated overdrafts by the
respondent, the exercise of that right must never be despotic or arbitrary. That petitioner bank
chose to close the account outright and return the check, even after accepting a deposit sufficient
to cover the said check, is contrary to its duty to handle the respondent’s account with utmost
fidelity. The exercise of the right is not absolute and good faith, at least, is required. The manner
by which petitioner bank closed the account of the respondent runs afoul of Article 19 of the Civil
Code which enjoins every person, in the exercise of his rights, "to give every one his due, and
observe honesty and good faith."
The CA concluded that petitioner bank’s precipitate and imprudent closure of the respondent’s
account had caused him, a respected officer of several civic and banking associations, serious
anxiety and humiliation. It had, likewise, tainted his credit standing. Consequently, the award of
damages is warranted. The CA, however, reduced the amount of damages awarded by the
court a quo as it found the same to be excessive:

We, however, find excessive the amount of damages awarded by the RTC. In our view the
reduced amount of ₱75,000.00 as moral damages and ₱25,000.00 as exemplary damages are in
order. Awards for damages are not meant to enrich the plaintiff-appellee [the respondent] at the
expense of defendants-appellants [the petitioners], but to obviate the moral suffering he has
undergone. The award is aimed at the restoration, within limits possible, of the status quo ante,
and should be proportionate to the suffering inflicted.5

The dispositive portion of the assailed CA decision reads:

WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the MODIFICATION
that the award of moral damages is reduced to ₱75,000.00 and the award of exemplary
damages reduced to ₱25,000.00.

SO ORDERED.6

Petitioner bank sought the reconsideration of the said decision but in the assailed Resolution
dated January 17, 2003, the appellate court denied its motion. Hence, the recourse to this Court.

Petitioner bank maintains that, in closing the account of the respondent in the evening of April 4,
1988, it acted in good faith and in accordance with the rules and regulations governing the
operation of a

regular demand deposit which reserves to the bank "the right to close an account if the depositor
frequently draws checks against insufficient funds and/or uncollected deposits." The same rules
and regulations also provide that "the depositor is not entitled, as a matter of right, to overdraw
on this deposit and the bank reserves the right at any time to return checks of the depositor
which are drawn against insufficient funds or for any reason."

It cites the numerous instances that the respondent had overdrawn his account and those
instances where he deliberately signed checks using a signature different from the specimen on
file. Based on these facts, petitioner bank was constrained to close the respondent’s account for
improper and irregular handling and returned his Check No. 2434886 which was presented to the
bank for payment on April 4, 1988.

Petitioner bank further posits that there is no law or rule which gives the respondent a legal right
to make good his check or to deposit the corresponding amount to cover said check within 24
hours after the same is dishonored or returned by the bank for having been drawn against
insufficient funds. It vigorously denies having violated Article 19 of the Civil Code as it insists that
it acted in good faith and in accordance with the pertinent banking rules and regulations.

The petition is impressed with merit.

A perusal of the respective decisions of the court a quo and the appellate court show that the
award of damages in the respondent’s favor was anchored mainly on Article 19 of the Civil Code
which, quoted anew below, reads:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.
The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b)
which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring
another.7 Malice or bad faith is at the core of the said provision.8 The law always presumes good
faith and any person who seeks to be awarded damages due to acts of another has the burden
of proving that the latter acted in bad faith or with ill-motive.9 Good faith refers to the state of the
mind which is manifested by the acts of the individual concerned. It consists of the intention to
abstain from taking an unconscionable and unscrupulous advantage of another.10 Bad faith does
not simply connote bad judgment or simple negligence, dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of known duty due to some motives or
interest or ill-will that partakes of the nature of fraud.11 Malice connotes ill-will or spite and speaks
not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad
faith or bad motive.12

Undoubtedly, petitioner bank has the right to close the account of the respondent based on the
following provisions of its Rules and Regulations Governing the Establishment and Operation of
Regular Demand Deposits:

10) The Bank reserves the right to close an account if the depositor frequently draws checks
against insufficient funds and/or uncollected deposits.

12) …

However, it is clearly understood that the depositor is not entitled, as a matter of right, to
overdraw on this deposit and the bank reserves the right at any time to return checks of the
depositor which are drawn against insufficient funds or for any other reason.

The facts, as found by the court a quo and the appellate court, do not establish that, in the
exercise of this right, petitioner bank committed an abuse thereof. Specifically, the second and
third elements for abuse of rights are not attendant in the present case. The evidence presented
by petitioner bank negates the existence of bad faith or malice on its part in closing the
respondent’s account on April 4, 1988 because on the said date the same was already
overdrawn. The respondent issued four checks, all due on April 4, 1988, amounting to ₱7,410.00
when the balance of his current account deposit was only ₱6,981.43. Thus, he incurred an
overdraft of ₱428.57 which resulted in the dishonor of his Check No. 2434886. Further, petitioner
bank showed that in 1986, the current account of the respondent was overdrawn 156 times due
to his issuance of checks against insufficient funds.13 In 1987, the said account was overdrawn
117 times for the same

reason.14 Again, in 1988, 26 times.15 There were also several instances when the respondent
issued checks deliberately using a signature different from his specimen signature on file with
petitioner bank.16 All these circumstances taken together justified the petitioner bank’s closure of
the respondent’s account on April 4, 1988 for "improper handling."

It is observed that nowhere under its rules and regulations is petitioner bank required to notify the
respondent, or any depositor for that matter, of the closure of the account for frequently drawing
checks against insufficient funds. No malice or bad faith could be imputed on petitioner bank for
so acting since the records bear out that the respondent had indeed been improperly and
irregularly handling his account not just a few times but hundreds of times. Under the
circumstances, petitioner bank could not be faulted for exercising its right in accordance with the
express rules and regulations governing the current accounts of its depositors. Upon the opening
of his account, the respondent had agreed to be bound by these terms and conditions.

Neither the fact that petitioner bank accepted the deposit made by the respondent the day
following the closure of his account constitutes bad faith or malice on the part of petitioner bank.
The same could be characterized as simple negligence by its personnel. Said act, by itself, is not
constitutive of bad faith.

The respondent had thus failed to discharge his burden of proving bad faith on the part of
petitioner bank or that it was motivated by ill-will or spite in closing his account on April 4, 1988
and in inadvertently accepting his deposit on April 5, 1988.

Further, it has not been shown that these acts were done by petitioner bank with the sole
intention of prejudicing and injuring the respondent. It is conceded that the respondent may have
suffered damages as a result of the closure of his current account. However, there is a material
distinction between damages and injury. The Court had the occasion to explain the distinction
between damages and injury in this wise:

… Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from
the injury; and damages are the recompense or compensation awarded for the damage suffered.
Thus, there can be damage without injury in those instances in which the loss or harm was not
the result of a violation of a legal duty. In such cases, the consequences must be borne by the
injured person alone, the law affords no remedy for damages resulting from an act which does
not amount to a legal injury or wrong. These situations are often called damnum absque injuria.

In other words, in order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff – a concurrence of injury to the plaintiff and legal responsibility by
the person causing it. The underlying basis for the award of tort damages is the premise that the
individual was injured in contemplation of law. Thus, there must first be a breach of some duty
and the imposition of liability for that breach before damages may be awarded; and the breach of
such duty should be the proximate cause of the injury.17

Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of his
other insufficiently funded checks, would have to be borne by him alone. It was the respondent’s
repeated improper

and irregular handling of his account which constrained petitioner bank to close the same in
accordance with the rules and regulations governing its depositors’ current accounts. The
respondent’s case is clearly one of damnum absque injuria.

WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and Resolution
dated January 17, 2003 of the Court of Appeals in CA-G.R. CV No. 36627 are REVERSED AND
SET ASIDE.

SO ORDERED.

[ G.R. No. 167238, March 25, 2009 ]

DEVELOPMENT BANK OF THE PHILIPPINES, PETITIONER, VS. SPOUSES
JESUS AND ANACORITA DOYON, RESPONDENTS.

DECISION
CORONA, J.:
This petition[1] seeks to the set aside the November 23, 2004 decision [2] and February 18, 2005 resolution[3] of the
Court of Appeals (CA) in CA-G.R. CV No. 74660.

In the early 1990s, respondent spouses Jesus and Anacorita Doyon obtained several loans amounting to P10
million[4] from petitioner Development Bank of the Philippines (DBP). As security for the loans, respondents
mortgaged their real estate properties as well as the motor vehicles of JD Bus Lines.

Due to their inability to fully pay their obligations upon maturity, [5] respondents requested petitioner to restructure
their past due loans.[6] Petitioner agreed. Hence, respondents signed three promissory notes on June 29, 1994. [7]

Nonetheless, respondents still failed to pay the quarterly installments on the promissory notes. Thus, petitioner
demanded the payment of the total value of their loans from respondents.[8] Respondents, however, ignored
petitioner and adamantly refused to pay their loans.

Consequently, petitioner filed an application for extrajudicial foreclosure of real estate mortgages in the Regional
Trial Court (RTC) of Ormoc City in 1995. To forestall the foreclosure proceedings, respondents immediately filed
an action for their nullification in the RTC of Ormoc City, Branch 35 claiming that they had already paid the
principal amount of their loans (or P10 million) to petitioner. This was docketed as Civil Case No. 3314-O.

For three years, Civil Case No. 3314-O was not acted upon by the RTC.

In 1998, petitioner withdrew the application for extrajudicial foreclosure and thereafter moved for the dismissal of
Civil Case No. 3314-O. The RTC granted the motion in an order dated March 2, 1998. [9] It held:
In today's hearing, which is for the reception of evidence for [petitioner], [it] informed the Court about its
withdrawal of the [application] for extrajudicial foreclosure of real estate made subject of the present case. In view
of the withdrawal, [petitioner] moved for the dismissal of the case considering that the action would be rendered
moot and academic.

When [respondents were] made to comment, they interposed no objection to the motion to dismiss.

By agreement therefore between the parties, this case is considered DISMISSED with prejudice.
Weeks later, petitioner demanded from respondents the payment of their outstanding obligations which had by
then ballooned to more than P20 million. Again, respondents ignored petitioner.

Petitioner filed an application for extrajudicial foreclosure of respondents' real and chattel mortgages with the
DBP special sheriff in Makati[10] and subsequently took constructive possession of the foreclosed properties.[11] It
posted guards at the perimeter of respondents' property in Barangay Cabulihan, Ormoc City (Cabulihan property)
where the foreclosed motor vehicles of JD Bus Lines were parked. [12] Subsequently, the DBP special sheriff
issued notices of sale at public auction of the foreclosed properties. [13]

Meanwhile, respondents filed a complaint for damages [14] against petitioner and the DBP special sheriff in the
RTC of Ormoc City, Branch 35. According to respondents, by withdrawing the application for extrajudicial
foreclosure and moving for the dismissal of Civil Case No. 3314-O, petitioner led them to believe that it would no
longer seek the satisfaction of its claims. Petitioner therefore acted contrary to Article 19 of the Civil
Code[15] when it foreclosed on the real and chattel mortgages anew.

Furthermore, respondents claimed that the provision in the mortgage contracts [16] allowing petitioner as
mortgagee to take constructive possession of the mortgaged properties upon respondents' default was void. The
provision allegedly constituted a pactum commissorium[17] since it permitted petitioner to appropriate the
mortgaged properties.

Lastly, respondents assailed the validity of the public auctions conducted by the DBP special sheriff. The
September 9, 1998 notices of sale stated that the foreclosed real properties would be sold at public auction on
"September 16, 1998 at 10:00 a.m. or soon thereafter" [18] while the foreclosed motor vehicles would be sold on
"September 16, 1998 at 2:00 p.m. or soon thereafter."[19] Section 4 of Act 3135,[20] however, requires that public
auctions must take place from 9 a.m. until 4 p.m. or, allegedly, for seven continuous hours.

Petitioner, in its answer, pointed out that despite the restructuring, respondents refused to pay the amortizations
on the June 29, 2004 promissory notes. Moreover, the filing of Civil Case No. 3314-O and the delay in its
resolution prevented petitioner from collecting on the said notes from respondents. It withdrew the application in
the RTC and moved for the dismissal of Civil Case No. 3314-O only for the purpose of availing of a more efficient
legal remedy, that is, foreclosure through a special sheriff, as authorized by its charter. [21]

In a decision dated January 25, 2002,[22] the RTC found that, by withdrawing its application for extrajudicial
foreclosure and moving for the dismissal of Civil Case No. 3314-O, petitioner led respondents to believe that their
loans had been extinguished. Thus, petitioner acted in bad faith when it foreclosed on the real and chattel
mortgages anew. The dispositive portion of the decision read:
Wherefore, after due consideration of all the foregoing, judgment is hereby rendered in favor of [respondents] and
against [petitioner], ordering as follows:
1. [petitioner] to immediately stop the presence of its security guards in the compound or premises of the
plaintiffs at Barangay Cabulihan, Ormoc City, and to vacate them from said premises;

2. [petitioner] to pay actual damages to [respondents] in the total amount of P16,000 per day for the four buses,
or a total of P480,000 per month for these buses starting from April 27, 1998 until the time the buses shall
 have been allowed to leave the compound of [respondents] or until [petitioner] shall vacate the said premises,
and P200,000 as compensatory damages for the injury to [respondents'] business standing;

3. [petitioner] to pay P1,000,000 as exemplary damages;

4. [petitioner and the DBP special sheriff] jointly and severally to pay the plaintiffs the sum of P2,000,000 as
moral damages, the sum of P50,000 as attorney's fees, the sum of P10,000 as litigation expenses and costs
of the suit.
Aggrieved, petitioner appealed to the CA. [23]

In a decision dated November 23, 2004, the CA affirmed the RTC decision with modification of the liability for
damages. Because the DBP special sheriff merely performed his ministerial duty (when he foreclosed on the real
and chattel mortgages and issued notices of sale in public auction of the foreclosed properties), petitioner alone
was liable.

Petitioner moved for reconsideration but it was denied. Hence, this petition.

Petitioner basically asserts that it did not act in bad faith when it foreclosed on respondents' real and chattel
mortgages anew. Because respondents' loans were past due, it had the right to satisfy its credit by foreclosing on
the mortgages.

We grant the petition.

This Court is not a trier of facts and, as a rule, it only entertains questions of law in a petition for review on
certiorari. This rule, however, admits of exceptions such as when the assailed decision is based on a
misapprehension of facts.[24]

In this instance, the RTC and the CA both found that petitioner acted with bad faith when it foreclosed on the real
and chattel mortgages. We disagree.

What is due to a person is determined by the circumstances of each particular case. [25] Article 19 of the Civil
Code provides:
Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due and observe honesty and good faith.
For an action for damages under this provision to prosper, the complainant must prove that:

(a) defendant has a legal right or duty;

(b) he exercised his right or performed his duty with bad faith and

(c) complainant was prejudiced or injured as a result of the said exercise or performance by defendant.

On the first requisite, we find that petitioner had the legal right to foreclose on the real and chattel mortgages.

Since respondents neither assailed the due execution of the June 29, 1994 promissory notes nor presented proof
of payment thereof, their obligation remained outstanding. Upon default, by prior mutual agreement, petitioner
had the right to foreclose on the real and chattel mortgages securing their loans.

The June 29, 1994 promissory notes uniformly stated that failure to pay an installment (or interest) on the due
date was an event of default.[26] Respondents were therefore in default when they failed to pay the quarterly
amortizations on the designated due dates.

When the principal obligation becomes due and the debtor fails to perform his obligation, the creditor may
foreclose on the mortgage[27] for the purpose of alienating the (mortgaged) property to satisfy his credit. [28]

Regarding the second requisite, bad faith imports a dishonest purpose or some moral obliquity or conscious
doing of a wrong that partakes of the nature of fraud.[29]

We note that the RTC of Ormoc City (Judge Fortunito L. Madrona) "sat" on Civil Case No. 3314-O for three long
years. This inordinate delay prejudiced petitioner. Inasmuch as petitioner was in the business of lending out
money it borrowed from the public, sound banking practice called for the exercise of a more efficient legal remedy
against a defaulting debtor like respondent.[30] Thus, petitioner could not be faulted for resorting to foreclosure
through a special sheriff. Such procedure was, after all, the more efficient method of enforcing petitioner's rights
as mortgagee under its charter.[31]

Moreover, the March 2, 1998 order of the RTC (quoted above) merely stated that the withdrawal of the
application for extrajudicial foreclosure in the RTC rendered Civil Case No. 3314-O moot and academic. Nothing
in the said order stated, or even hinted, that respondents' obligation to petitioner had in fact been extinguished.
Thus, there was nothing on the part of petitioner even remotely showing that it led respondents to believe that it
had waived its claims.

Lastly, inasmuch as petitioner demanded payment from them right after the dismissal of Civil Case No. 3314-O,
respondents could not have reasonably presumed that the bank had waived its claims against them.
Furthermore, the fact that a demand for payment was made negated bad faith on the part of petitioner. Despite
giving respondents the opportunity to pay their long overdue obligations and avoid foreclosure, respondents still
refused to pay. Since respondents did not have a cause of action against petitioner, the RTC and CA erred in
granting damages to them.

A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged property upon
foreclosure is valid. In Agricultural and Industrial Bank v. Tambunting,[32] we explained:
A stipulation ... authorizing the mortgagee, for the purpose stated therein specified, to take possession of the
mortgaged premises upon the foreclosure of a mortgage is not repugnant [to either Article 2088 or Article 2137].
On the contrary, such a stipulation is in consonance or analogous to the provisions of Article [2132], et seq. of the
Civil Code regarding antichresis and the provision of the Rules of Court regarding the appointment of a receiver
as a convenient and feasible means of preserving and administering the property in litigation. [33]
The real estate and chattel mortgage contracts [34] uniformly provided that petitioner could take possession of the
foreclosed properties upon the failure of respondents to pay even one amortization. Thus, respondents' refusal to
pay their obligations gave rise to petitioner's right to take constructive possession of the foreclosed motor
vehicles.

In Philippine National Bank v. Cabatingan,[35] we held that a sale at public auction held at any time between 9:00
a.m. and 4:00 p.m. of a particular day, regardless of duration, was valid. Since the sale at public auction of the
foreclosed real properties and chattels was conducted between 10:00 a.m. and 11:00 a.m. and between 2:00
p.m. and 3:30 p.m., respectively, the auctions were valid.

WHEREFORE, the petition is hereby GRANTED. The November 23, 2004 decision and February 18, 2005
resolution of the Court of Appeals in CA-G.R. CV 74660 affirming the January 25, 2002 decision of the Regional
Trial Court of Ormoc City, Branch 35 in Civil Case No. 3592-0 are SET ASIDE. New judgment is hereby entered
dismissing Civil Case No. 3592-0 for lack of cause of action.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 158805 April 16, 2009

VALLEY GOLF & COUNTRY CLUB, INC., Petitioner,

vs.
ROSA O. VDA. DE CARAM, Respondent.

DECISION

TINGA, J.:

May a non-stock corporation seize and dispose of the membership share of a fully-paid member
on account of its unpaid debts to the corporation when it is authorized to do so under the
corporate by-laws but not by the Articles of Incorporation? Such is the central issue raised in this
petition, which arose after petitioner Valley Golf & Country Club (Valley Golf) sold the
membership share of a member who had been delinquent in the payment of his monthly dues.

I.

The facts that preceded this petition are simple. Valley Golf & Country Club (Valley Golf) is a duly
constituted non-stock, non-profit corporation which operates a golf course. The members and
their guests are entitled to play golf on the said course and otherwise avail of the facilities and
privileges provided by Valley Golf.1 The shareholders are likewise assessed monthly
membership dues.
In 1961, the late Congressman Fermin Z. Caram, Jr. (Caram),2 the husband of the present
respondent, subscribed to purchased and paid for in full one share (Golf Share) in the capital
stock of Valley Golf. He was issued Stock Certificate No. 389 dated 26 January 1961 for the Golf
Share.3 The Stock Certificate likewise indicates a par value of ₱9,000.00.

Valley Golf would subsequently allege that beginning 25 January 1980, Caram stopped paying
his monthly dues, which were continually assessed until 31 June 1987. Valley Golf claims to
have sent five (5) letters to Caram concerning his delinquent account within the period from 27
January 1986 until 3 May 1987, all forwarded to

P.O. Box No. 1566, Makati Commercial Center Post Office, the mailing address which Caram
allegedly furnished Valley Golf.4 The first letter informed Caram that his account as of 31
December 1985 was delinquent and that his club privileges were suspended pursuant to Section
3, Article VII of the by-laws of Valley Golf.5 Despite such notice of delinquency, the second letter,
dated 26 August 1986, stated that should Caram’s account remain unpaid for 45 days, his name
would be "included in the delinquent list to be posted on the club’s bulletin board."6 The third
letter, dated 25 January 1987, again informed Caram of his delinquent account and the
suspension of his club privileges.7The fourth letter, dated 7 March 1987, informed Caram that
should he fail to settle his delinquencies, then totaling ₱7,525.45, within ten (10) days from
receipt thereof Valley Golf would exercise its right to sell the Golf Share to satisfy the outstanding
amount, again pursuant to the provisions of the by-laws.8 The final letter, dated 3 May 1987,
issued a final deadline until 31 May 1987 for Caram to settle his account, or otherwise face the
sale of the Golf Share to satisfy the claims of Valley Golf.9

The Golf Share was sold at public auction on 11 June 1987 for ₱25,000.00 after the Board of
Directors had authorized the sale in a meeting on 11 April 1987, and the Notice of Auction Sale
was published in the 6 June 1987 edition of the Philippine Daily Inquirer.10

As it turned out, Caram had died on 6 October 1986. Respondent initiated intestate proceedings
before the Regional Trial Court (RTC) of Iloilo City, Branch 35, to settle her husband’s
estate.11 Unaware of the pending controversy over the Golf Share, the Caram family and the
RTC included the same as part of Caram’s estate. The RTC approved a project of partition of
Caram’s estate on 29 August 1989. The Golf Share was adjudicated to respondent, who paid the
corresponding estate tax due, including that on the Golf Share.

It was only through a letter dated 15 May 1990 that the heirs of Caram learned of the sale of the
Golf Share following their inquiry with Valley Golf about the share. After a series of
correspondence, the Caram heirs were subsequently informed, in a letter dated 15 October
1990, that they were entitled to the refund of ₱11,066.52 out of the proceeds of the sale of the
Golf Share, which amount had been in the custody of Valley Golf since 11 June 1987.12

Respondent filed an action for reconveyance of the share with damages before the Securities
and Exchange Commission (SEC) against Valley Golf.13 On 15 November 1996, SEC Hearing
Officer Elpidio S. Salgado rendered a decision in favor of respondent, ordering Valley Golf to
convey ownership of the Golf Share or in the alternative to issue one fully paid share of stock of
Valley Golf the same class as the Golf Share to respondent. Damages totaling ₱90,000.00 were
also awarded to respondent.14

The SEC hearing officer noted that under Section 67, paragraph 2 of the Corporation Code, a
share stock could only be deemed delinquent and sold in an extrajudicial sale at public auction
only upon the failure of the stockholder to pay the unpaid subscription or balance for the share.
The section could not have applied in Caram’s case since he had fully paid for the Golf Share
and he had been assessed not for the share itself but for his delinquent club dues. Proceeding
from the foregoing premises, the SEC hearing officer concluded that the auction sale had no
basis in law and was thus a nullity.
The SEC hearing officer did entertain Valley Golf’s argument that the sale of the Golf Share was
authorized under the by-laws. However, it was ruled that pursuant to Section 6 of the Corporation
Code, "a provision creating a lien upon shares of stock for unpaid debts, liabilities, or
assessments of stockholders to the corporation, should be embodied in the Articles of
Incorporation, and not merely in the by-laws, because Section 6 (par.1) prescribes that the
shares of stock of a corporation may have such rights, privileges and restrictions as may be
stated in the articles of incorporation."15 It was observed that the Articles of Incorporation of
Valley Golf did not impose any lien, liability or restriction on the Golf Share or, for that matter,
even any conditionality that the Golf Share would be subject to assessment of monthly dues or a
lien on the share for non-payment of such dues.16 In the same vein, it was opined that since
Section 98 of the Corporation Code provides that restrictions on transfer of shares should appear
in the articles of incorporation, by-laws and the certificate of stock to be valid and binding on any
purchaser in good faith, there was more reason to apply the said rule to club delinquencies to
constitute a lien on golf shares.17

The SEC hearing officer further held that the delinquency in monthly club dues was merely an
ordinary debt enforceable by judicial action in a civil case. The decision generally affirmed
respondent’s assertion that Caram was not properly notified of the delinquencies, citing Caram’s
letter dated 7 July 1978 to Valley Golf about the change in his mailing address. He also noted
that Valley Golf had sent most of the letters after Caram’s death. In all, the decision concluded
that the sale of the Golf Share was effectively a deprivation of property without due process of
law.

On appeal to the SEC en banc,18 said body promulgated a decision19 on 9 May 2000, affirming
the hearing officer’s decision in toto. Again, the SEC found that Section 67 of the Corporation
Code could not justify the sale of the Golf Share since it applies only to unpaid subscriptions and
not to delinquent membership dues. The SEC also cited a general rule, formulated in American
jurisprudence, that a corporation has no right to dispose of shares of stock for delinquent
assessments, dues, service fees and other unliquidated charges unless there is an express grant
to do so, either by the statute itself or by the charter of a corporation.20 Said rule, taken in
conjunction with Section 6 of the Corporation Code, militated against the validity of the sale of the
Golf Share, the SEC stressed. In view of these premises, which according to the SEC entailed
the nullity of the sale, the body found it unnecessary to rule on whether there was valid notice of
the sale at public auction.

Valley Golf elevated the SEC’s decision to the Court of Appeals by way of a petition for
review.21 On 4 April 2003, the appellate court rendered a decision22 affirming the decisions of the
SEC and the hearing officer, with modification consisting of the deletion of the award of
attorney’s fees. This time, Valley Golf’s central argument was that its by-laws, rather than Section
67 of the Corporation Code, authorized the auction sale of the Golf Share. Nonetheless, the
Court of Appeals found that the by-law provisions cited by Valley Golf are "of doubtful validity," as
they purportedly conflict with Section 6 of the Code, which mandates that "rights privileges or
restrictions attached to a share of stock should be stated in the articles of incorporation.23 It noted
that what or who had become delinquent was "was Mr. Caram himself and not his golf share,"
and such being the case, the unpaid account "should have been filed as a money claim in the
proceedings for the settlement of his estate, instead of the petitioner selling his golf share to
satisfy the account."24

The Court of Appeals also adopted the findings of the hearing officer that the notices had not
been properly served on Caram or his heirs, thus effectively depriving respondent of property
without due process of law. While it upheld the award of damages, the appellate court struck
down the award of attorney’s fees since there was no discussion on the basis of such award in
the body of the decisions of both the hearing officer and the SEC.25

There is one other fact of note, mentioned in passing by the SEC hearing officer26 but ignored by
the SEC en banc and the Court of Appeals. Valley Golf’s third and fourth demand letters dated
25 January 1987 and 7 March 1987, respectively, were both addressed to "Est. of Fermin Z.
Caram, Jr." The abbreviation "Est." can only be taken to refer to "Estate." Unlike the first two
demand letters, the third and fourth letters were sent after Caram had died on 6 October 1986.
However, the fifth and final demand letter, dated 3 May 1987 or twenty-eight (28) days before the
sale, was again addressed to Fermin Caram himself and not to his estate, as if he were still alive.
The foregoing particular facts are especially significant to our disposition of this case.

II.

In its petition before this Court, Valley Golf concedes that Section 67 of the Corporation Code,
which authorizes the auction sale of shares with delinquent subscriptions, is not applicable in this
case. Nonetheless, it argues that the by-laws of Valley Golf authorizes the sale of delinquent
shares and that the by-laws constitute a valid law or contractual agreement between the
corporation and its stockholders or their respective successors. Caram, by becoming a member
of Valley Golf, bound himself to observe its by-laws which constitutes "the rules and regulations
or private laws enacted by the corporation to regulate, govern and control its own actions, affairs
and concerns and its stockholders or members and directors and officers with relation thereto
and among themselves in their relation to it."27 It also points out that the by-laws itself had duly
passed the SEC’s scrutiny and approval.

Valley Golf further argues that it was error on the part of the Court of Appeals to rely, as it did,
upon Section 6 of the Corporation Code "to nullify the subject provisions of the By-
Laws."28 Section 6 referrs to "restrictions" on the shares of stock which should be stated in the
articles of incorporation, as differentiated from "liens" which under the by-laws would serve as
basis for the auction sale of the share. Since Section 6 refers to restrictions and not to liens,
Valley Golf submits that "liens" are excluded from the ambit of the provision. It further proffers
that assuming that liens and restrictions are synonymous, Section 6 itself utilizes the permissive
word "may," thus evincing the non-mandatory character of the requirement that restrictions or
liens be stated in the articles of incorporation.

Valley Golf also argues that the Court of Appeals erred in relying on the factual findings of the
hearing officer, which are allegedly replete with errors and contradictions. Finally, it assails the
award of moral and exemplary damages.

III.

As found by the SEC and the Court of Appeals, the Articles of Incorporation of Valley Golf does
not contain any provision authorizing the corporation to create any lien on a member’s Golf
Share as a consequence of the member’s unpaid assessments or dues to Valley Golf. Before
this Court, Valley Golf asserts that such a provision is contained in its by-laws. We required the
parties to submit a certified copy of the by-laws of Valley Golf in effect as of 11 June 1987.29 In
compliance, Valley Golf submitted a copy of its by-laws, originally adopted on 6 June 195830 and
amended on 26 November 1986.31 The amendments bear no relevance to the issue of
delinquent membership dues. The relevant provisions, found in Article VIII entitled "Club
Accounts," are reproduced below:

Section 1. Lien.—The Club has the first lien on the share of the stockholder who has, in
his/her/its name, or in the name of an assignee, outstanding accounts and liabilities in favor of
the Club to secure the payment thereof.

xxx

Section 3. The account of any member shall be presented to such member every month. If any
statement of accounts remains unpaid for a period forty-five (45) days after cut-off date, said
member maybe (sic) posted as deliqnuent (sic). No delinquent member shall be entitled to enjoy
the privileges of such membership for the duration of the deliquency (sic). After the member shall
have been posted as delinquent, the Board may order his/her/its share sold to satisfy the claims
of the club; after which the member loses his/her/its rights and privileges permanently. No
member can be indebted to the Club at any time any amount in excess of the credit limit set by
the Board of Directors from time to time. The unpaid account referred to here includes non-
payment of dues, charges and other assessments and non-payment for subscriptions.32

To bolster its cause, Valley Golf proffers the proposition that by virtue of the by-law provisions a
lien is created on the shares of its members to ensure payment of dues, charges and other
assessments on the members. Both the SEC and the Court of Appeals debunked the tenability
or applicability of the proposition through two common thrusts.

Firstly, they correctly noted that the procedure under Section 67 of the Corporation Code for the
stock corporation’s recourse on unpaid subscriptions is inapt to a non-stock corporation vis-à-vis
a member’s outstanding dues. The basic factual backdrops in the two situations are disperate. In
the latter, the member has fully paid for his membership share, while in the former, the
stockholder has not yet fully paid for the share or shares of stock he subscribed to, thereby
authorizing the stock corporation to call on the unpaid subscription, declare the shares delinquent
and subject the delinquent shares to a sale at public auction.33

Secondly, the two bodies below concluded that following Section 6 of the Corporation Code,
which provides:

The shares of stock of stock corporation may be divided into classes or series of shares, or both,
any of which classes or series of shares may have such rights, privileges or restrictions as may
be stated in the articles of incorporation x x x 34

the lien on the Golf Share in favor of Valley Golf is not valid, as the power to constitute such a
lien should be provided in the articles of incorporation, and not merely in the by-laws.

However, there is a specific provision under the Title XI, on Non-Stock Corporations of the
Corporation Code dealing with termination of membership. Section 91 of the Corporation Code
provides:

SEC. 91. Termination of membership.—Membership shall be terminated in the manner and for
the causes provided in the articles of incorporation or the by-laws. Termination of membership
shall have the effect of extinguishing all rights of a member in the corporation or in its property,
unless otherwise provided in the articles of incorporation or the by-laws. (Emphasis supplied)

Clearly, the right of a non-stock corporation such as Valley Golf to expel a member through the
forfeiture of the Golf Share may be established in the by-laws alone, as is the situation in this
case. Thus, both the SEC and the appellate court are wrong in holding that the establishment of
a lien and the loss of the Golf Share consequent to the enforcement of the lien should have been
provided for in the articles of incorporation.

IV.

Given that the cause for termination of membership in a non-stock corporation may be
established through the by-laws alone and need not be set forth in the articles of incorporation, is
there any cause to invalidate the lien and the subsequent sale of the Golf Share by Valley Golf?

Former SEC Chairperson, Rosario Lopez, in her commentaries on the Corporation Code,
explains the import of Section 91 in a manner relevant to this case:

The prevailing rule is that the provisions of the articles of incorporation or by-laws of termination
of membership must be strictly complied with and applied to the letter. Thus, an association
whose member fails to pay his membership due and annual due as required in the by-laws, and
which provides for the termination or suspension of erring members as well as prohibits the latter
from intervening in any manner in the operational activities of the association, must be observed
because by-laws are self-imposed private laws binding on all members, directors and officers of
the corporation.35

Examining closely the relevant by-law provisions of Valley Golf,36 it appears that termination of
membership may occur when the following successive conditions are met: (1) presentation of the
account of the member; (2) failure of the member to settle the account within forty-five days after
the cut-off date; (3) posting of the member as delinquent; and (4) issuance of an order by the
board of directors that the share of the delinquent member be sold to satisfy the claims of Valley
Golf. These conditions found in by-laws duly approved by the SEC warrant due respect and we
are disinclined to rule against the validity of the by-law provisions.

At the same time, two points warrant special attention.

A.

Valley Golf has sought to accomplish the termination of Caram’s membership through the sale of
the Golf Share, justifying the sale through the constitution of a lien on the Golf Share under
Section 1, Article VIII of its by-laws. Generally in theory, a non-stock corporation has the power to
effect the termination of a member without having to constitute a lien on the membership share
or to undertake the elaborate process of selling the same at public auction. The articles of
incorporation or the by-laws can very well simply provide that the failure of a member to pay the
dues on time is cause for the board of directors to terminate membership. Yet Valley Golf was
organized in such a way that membership is adjunct to ownership of a share in the club; hence
the necessity to dispose of the share to terminate membership.

Share ownership introduces another dimension to the case—the reality that termination of
membership may also lead to the infringement of property rights. Even though Valley Golf is a
non-stock corporation, as evinced by the fact that it is not authorized to distribute to the holder of
its shares dividends or allotments of the surplus profits on the basis of shares held,37 the Golf
Share has an assigned value reflected on the certificate of membership itself.38 Termination of
membership in Valley Golf does not merely lead to the withdrawal of the rights and privileges of
the member to club properties and facilities but also to the loss of the Golf Share itself for which
the member had fully paid.

The claim of Valley Golf is limited to the amount of unpaid dues plus incremental costs. On the
other hand, Caram’s loss may encompass not only the amount he had paid for the share but also
the price it would have fetched in the market at the time his membership was terminated.

There is an easy way to remedy what is obviously an unfair situation. Taking the same example,
Valley Golf seizes the share, sells it to itself or a third person for ₱100.000.00, then refunds
₱99,000.00 back to the delinquent member. On its face, such a mechanism obviates the inequity
of the first example, and assures that the loss sustained by the delinquent member is
commensurate to the actual debt owed to Valley Golf. After all, applying civil law concepts, the
pecuniary injury sustained by Valley Golf attributable to the delinquent member is only to the
extent of the unpaid debt, and it would be difficult to foresee what right under law Valley Golf
would have to the remainder of the sale’s proceeds.

A refund mechanism may disquiet concerns of undue loss of property rights corresponding to
termination of membership. Yet noticeably, the by-laws of Valley Golf does not require the Club
to refund to the discharged member the remainder of the proceeds of the sale after the
outstanding obligation is extinguished. After petitioner had filed her complaint though, Valley Golf
did inform her that the heirs of Caram are entitled to such refund.

B.
Let us now turn to the other significant concern.

The by-laws does not provide for a mode of notice to the member before the board of directors
puts up the Golf Share for sale, yet the sale marks the termination of membership. Whatever
semblance of a notice that is afforded is bare at best, ambiguous at most. The member is entitled
to receive a statement of account every month; however, the mode by which the member is to
receive such notice is not elaborated upon. If the member fails to pay within 45 days from the
due date, Valley Golf is immediately entitled to have the member "posted as delinquent." While
the assignation of "delinquent status" is evident enough, it is not as clear what the word "posted"
entails. Connotatively, the word could imply the physical posting of the notice of delinquency
within the club premises, such as a bulletin board, which we recognize is often the case. Still, the
actual posting modality is uncertain from the language of the by-laws.

The moment the member is "posted as delinquent," Valley Golf is immediately enabled to seize
the share and sell the same, thereby terminating membership in the club. The by-laws does not
require any notice to the member from the time delinquency is posted to the day the sale of the
share is actually held. The setup is to the extreme detriment to the member, who upon being
notified that the lien on his share is due for execution would be duly motivated to settle his
accounts to foreclose such possibility.

Does the Corporation Code permit the termination of membership without due notice to the
member? The Code itself is silent on that matter, and the argument can be made that if no notice
is provided for in the articles of incorporation or in the by-laws, then termination may be effected
without any notice at all. Support for such an argument can be drawn from our ruling in Long v.
Basa,39 which pertains to a religious corporation that is also a non-stock corporation.40 Therein,
the Court upheld the expulsion of church members despite the absence of any provision on prior
notice in the by-laws, stating that the members had "waived such notice by adhering to those by-
laws[,] became members of the church voluntarily[,] entered into its covenant and subscribed to
its rules [and by] doing so, they are bound by their consent."41

However, a distinction should be made between membership in a religious corporation, which

ordinarily does not involve the purchase of ownership shares, and membership in a non-stock
corporation such as Valley Golf, where the purchase of an ownership share is a condition sine
qua non. Membership in Valley Golf entails the acquisition of a property right. In turn, the loss of
such property right could also involve the application of aspects of civil law, in addition to the
provisions of the Corporation Code. To put it simply, when the loss of membership in a non-stock
corporation also entails the loss of property rights, the manner of deprivation of such property
right should also be in accordance with the provisions of the Civil Code.

It has been held that a by-law providing that if a member fails to pay dues for a year, he shall be
deemed to have relinquished his membership and may be excluded from the rooms of the
association and his certificate of membership shall be sold at auction, and any surplus of the
proceeds be paid over him, does not ipso facto terminate the membership of one whose dues
are a year in arrears; the remedy given for non-payment of dues is not exclusive because the
corporation, so long as he remains a member, may sue on his agreement and collect them.42

V.

With these foregoing concerns in mind, were the actions of Valley Golf concerning the Golf Share
and membership of Caram warranted? We believe not.

It may be conceded that the actions of Valley Golf were, technically speaking, in accord with the
provisions of its by-laws on termination of membership, vaguely defined as these are. Yet
especially since the termination of membership in Valley Golf is inextricably linked to the
deprivation of property rights over the Golf Share, the emergence of such adverse consequences
make legal and equitable standards come to fore.
The commentaries of Lopez advert to an SEC Opinion dated 29 September 1987 which we can
cite with approval. Lopez cites:

[I]n order that the action of a corporation in expelling a member for cause may be valid, it is
essential, in the absence of a waiver, that there shall be a hearing or trial of the charge against
him, with reasonable notice to him and a fair opportunity to be heard in his defense. (Fletcher
Cyc. Corp., supra) If the method of trial is not regulated by the by-laws of the association, it
should at least permit substantial justice. The hearing must be conducted fairly and openly and
the body of persons before whom it is heard or who are to decide the case must be unprejudiced.
(SEC opinion dated September 29, 1987, Bacalaran-Sucat Drivers Association) 1avv phi1

It is unmistakably wise public policy to require that the termination of membership in a non-stock
corporation be done in accordance with substantial justice. No matter how one may precisely
define such term, it is evident in this case that the termination of Caram’s membership betrayed
the dictates of substantial justice.

Valley Golf alleges in its present petition that it was notified of the death of Caram only in March
of 1990,43 a claim which is reiterated in its Reply to respondent’s Comment.44 Yet this claim is
belied by the very demand letters sent by Valley Golf to Caram’s mailing address. The letters
dated 25 January 1987 and 7 March 1987, both of which were sent within a few months after
Caram’s death are both addressed to "Est. of Fermin Z. Caram, Jr.;" and the abbreviation "[e]st."
can only be taken to refer to "estate." This is to be distinguished from the two earlier letters, both
sent prior to Caram’s death on 6 October 1986, which were addressed to Caram himself.
Inexplicably, the final letter dated 3 May 1987 was again addressed to Caram himself, although
the fact that the two previous letters were directed at the estate of Caram stands as
incontrovertible proof that Valley Golf had known of Caram’s death even prior to the auction sale.

Interestingly, Valley Golf did not claim before the Court of Appeals that they had learned of
Caram’s death only after the auction sale. It also appears that Valley Golf had conceded before
the SEC that some of the notices it had sent were addressed to the estate of Caram, and not the
decedent himself.45

What do these facts reveal? Valley Golf acted in clear bad faith when it sent the final notice to
Caram under the pretense they believed him to be still alive, when in fact they had very well
known that he had already died. That it was in the final notice that Valley Golf had perpetrated
the duplicity is especially blameworthy, since it was that notice that carried the final threat that his
Golf Share would be sold at public auction should he fail to settle his account on or before 31
May 1987.

Valley Golf could have very well addressed that notice to the estate of Caram, as it had done
with the third and fourth notices. That it did not do so signifies that Valley Golf was bent on selling
the Golf Share, impervious to potential complications that would impede its intentions, such as
the need to pursue the claim before the estate proceedings of Caram. By pretending to assume
that Caram was then still alive, Valley Golf would have been able to capitalize on his previous
unresponsiveness to their notices and proceed in feigned good faith with the sale. Whatever the lawphil.net

reason Caram was unable to respond to the earlier notices, the fact remains that at the time of
the final notice, Valley Golf knew that Caram, having died and gone, would not be able to settle
the obligation himself, yet they persisted in sending him notice to provide a color of regularity to
the resulting sale.

That reason alone, evocative as it is of the absence of substantial justice in the sale of the Golf
Share, is sufficient to nullify the sale and sustain the rulings of the SEC and the Court of Appeals.

Moreover, the utter and appalling bad faith exhibited by Valley Golf in sending out the final notice
to Caram on the deliberate pretense that he was still alive could bring into operation Articles
Articles 19, 20 and 21 under the Chapter on Human Relations of the Civil Code.46 These
provisions enunciate a general obligation under law for every person to act fairly and in good
faith towards one another. Non-stock corporations and its officers are not exempt from that
obligation.

VI.

Another point. The by-laws of Valley Golf is discomfiting enough in that it fails to provide any
formal notice and hearing procedure before a member’s share may be seized and sold. The
Court would have been satisfied had the by-laws or the articles of incorporation established a
procedure which assures that the member would in reality be actually notified of the pending
accounts and provide the opportunity for such member to settle such accounts before the
membership share could be seized then sold to answer for the debt. As we have emphasized,
membership in Valley Golf and many other like-situated non-stock corporations actually involves
the purchase of a membership share, which is a substantially expensive property. As a result,
termination of membership does not only lead to loss of bragging rights, but the actual
deprivation of property.

The Court has no intention to interfere with how non-stock corporations should run their daily
affairs. The Court also respects the fact that membership is non-stock corporations is a voluntary
arrangement, and that the member who signs up is bound to adhere to what the articles of
incorporation or the by-laws provide, even if provisions are detrimental to the interest of the
member. At the same time, in the absence of a satisfactory procedure under the articles of
incorporation or the by-laws that affords a member the opportunity to defend against the
deprivation of significant property rights in accordance with substantial justice, the terms of the
by-laws or articles of incorporation will not suffice. There will be need in such case to refer to
substantive law. Such a flaw attends the articles of incorporation and by-laws of Valley Golf. The
Court deems it judicious to refer to the protections afforded by the Civil Code, with respect to the
preservation, maintenance, and defense from loss of property rights.

The arrangement provided for in the afore-quoted by-laws of Valley Golf whereby a lien is
constituted on the membership share to answer for subsequent obligations to the corporation
finds applicable parallels under the Civil Code. Membership shares are considered as movable
or personal property,47 and they can be constituted as security to secure a principal obligation,
such as the dues and fees. There are at least two contractual modes under the Civil Code by
which personal property can be used to secure a principal obligation. The first is through a
contract of pledge,48 while the second is through a chattel mortgage.49 A pledge would require the
pledgor to surrender possession of the thing pledged, i.e., the membership share, to the pledge
in order that the contract of pledge may be constituted.50

Is delivery of the share cannot be effected, the suitable security transaction is the chattel
mortgage. Under Article 2124 of the Civil Code, movables may be the object of a chattel
mortgage. The Chattel mortgage is governed by Act No. 1508, otherwise known The Chattel
Mortgage Law,51 and the Civil Code.

In this case, Caram had not signed any document that manifests his agreement to constitute his
Golf Share as security in favor of Valley Golf to answer for his obligations to the club. There is no
document we can assess that it is substantially compliant with the form of chattel mortgages
under Section 5 of Act No. 1508. The by-laws could not suffice for that purpose since it is not
designed as a bilateral contract between Caram and Valley Golf, or a vehicle by which Caram
expressed his consent to constitute his Golf Share as security for his account with Valley Golf.

VII.

We finally turn to the matter of damages. The award of damages sustained by the Court of
Appeals was for moral damages in the sum of ₱50,000.00 and exemplary damages in the sum of
₱10,000.00. Both awards should be sustained. In pretending to give actual notice to Caram
despite full knowledge that he was in fact dead, Valley Golf exhibited utter bad faith.

The award of moral damages was based on a finding by the hearing officer that Valley Golf had
"considerably besmirched the reputation and good credit standing of the plaintiff and her family,"
such justification having foundation under Article 2217 of the Civil Code. No cause has been
submitted to detract from such award. In addition, exemplary damages were awarded "to [Valley
Golf] defendant from repeating similar acts in the future and to protect the interest of its
stockholders… and by way of example or correction for the public good." Such conclusion is in
accordance with Article 2229 of the Civil Code, which establishes liability for exemplary
damages.

WHEREFORE, the petition is DENIED. Costs against petitioners.

SO ORDERED.

G.R. No. 164785 April 29, 2009

ELISEO F. SORIANO, Petitioner,

vs.
MA. CONSOLIZA P. LAGUARDIA, in her capacity as Chairperson of the Movie and
Television Review and Classification Board, MOVIE AND TELEVISION REVIEW AND
CLASSIFICATION BOARD, JESSIE L. GALAPON, ANABEL M. DELA CRUZ, MANUEL M.
HERNANDEZ, JOSE L. LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA, JR., MICHAEL
M. SANDOVAL, and ROLDAN A. GAVINO, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 165636 April 29, 2009

ELISEO F. SORIANO Petitioner,

vs.
MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD, ZOSIMO G. ALEGRE,
JACKIE AQUINO-GAVINO, NOEL R. DEL PRADO, EMMANUEL BORLAZA, JOSE E.
ROMERO IV, and FLORIMONDO C. ROUS, in their capacity as members of the Hearing and
Adjudication Committee of the MTRCB, JESSIE L. GALAPON, ANABEL M. DELA CRUZ,
MANUEL M. HERNANDEZ, JOSE L. LOPEZ, CRISANTO SORIANO, BERNABE S. YARIA,
JR., MICHAEL M. SANDOVAL, and ROLDAN A. GAVINO, in their capacity as complainants
before the MTRCB Respondents.

DECISION

VELASCO, JR., J.:

In these two petitions for certiorari and prohibition under Rule 65, petitioner Eliseo F. Soriano
seeks to nullify and set aside an order and a decision of the Movie and Television Review and
Classification Board (MTRCB) in connection with certain utterances he made in his television
show, Ang Dating Daan.

Facts of the Case

On August 10, 2004, at around 10:00 p.m., petitioner, as host of the program Ang Dating Daan,
aired on UNTV 37, made the following remarks:

Lehitimong anak ng demonyo; sinungaling;

Gago ka talaga Michael, masahol ka pa sa putang babae o di ba. Yung putang babae ang
gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana ang itaas, o di ba! O,
masahol pa sa putang babae yan. Sabi ng lola ko masahol pa sa putang babae yan. Sobra ang
kasinungalingan ng mga demonyong ito.1 x x x

Two days after, before the MTRCB, separate but almost identical affidavit-complaints were
lodged by Jessie L. Galapon and seven other private respondents, all members of the Iglesia ni
Cristo (INC),2 against petitioner in connection with the above broadcast. Respondent Michael M.
Sandoval, who felt directly alluded to in petitioner’s remark, was then a minister of INC and a
regular host of the TV program Ang Tamang Daan.3 Forthwith, the MTRCB sent petitioner a
notice of the hearing on August 16, 2004 in relation to the alleged use of some cuss words in the
August 10, 2004 episode of Ang Dating Daan.4

After a preliminary conference in which petitioner appeared, the MTRCB, by Order of August 16,
2004, preventively suspended the showing of Ang Dating Daan program for 20 days, in
accordance with Section 3(d) of Presidential Decree No. (PD) 1986, creating the MTRCB, in
relation to Sec. 3, Chapter XIII of the 2004 Implementing Rules and Regulations (IRR) of PD
1986 and Sec. 7, Rule VII of the MTRCB Rules of Procedure.5 The same order also set the case
for preliminary investigation.

The following day, petitioner sought reconsideration of the preventive suspension order, praying
that Chairperson Consoliza P. Laguardia and two other members of the adjudication board
recuse themselves from hearing the case.6 Two days after, however, petitioner sought to
withdraw7 his motion for reconsideration, followed by the filing with this Court of a petition for
certiorari and prohibition,8 docketed as G.R. No. 164785, to nullify the preventive suspension
order thus issued.

On September 27, 2004, in Adm. Case No. 01-04, the MTRCB issued a decision, disposing as
follows:

WHEREFORE, in view of all the foregoing, a Decision is hereby rendered, finding respondent
Soriano liable for his utterances and thereby imposing on him a penalty of three (3) months
suspension from his program, "Ang Dating Daan".

Co-respondents Joselito Mallari, Luzviminda Cruz and UNTV Channel 37 and its owner, PBC,
are hereby exonerated for lack of evidence.

SO ORDERED.9

Petitioner then filed this petition for certiorari and prohibition with prayer for injunctive relief,
docketed as G.R. No. 165636.

In a Resolution dated April 4, 2005, the Court consolidated G.R. No. 164785 with G.R. No.
165636.

In G.R. No. 164785, petitioner raises the following issues:

THE ORDER OF PREVENTIVE SUSPENSION PROMULGATED BY RESPONDENT [MTRCB]

DATED 16 AUGUST 2004 AGAINST THE TELEVISION PROGRAM ANG DATING DAAN x x x
IS NULL AND VOID FOR BEING ISSUED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION

(A) BY REASON THAT THE [IRR] IS INVALID INSOFAR AS IT PROVIDES FOR

THE ISSUANCE OF PREVENTIVE SUSPENSION ORDERS;
 (B) BY REASON OF LACK OF DUE HEARING IN THE CASE AT BENCH;

(C) FOR BEING VIOLATIVE OF EQUAL PROTECTION UNDER THE LAW;

(D) FOR BEING VIOLATIVE OF FREEDOM OF RELIGION; AND

(E) FOR BEING VIOLATIVE OF FREEDOM OF SPEECH AND EXPRESSION.10

In G.R. No. 165636, petitioner relies on the following grounds:

SECTION 3(C) OF [PD] 1986, IS PATENTLY UNCONSTITUTIONAL AND ENACTED WITHOUT

OR IN EXCESS OF JURISDICTION x x x CONSIDERING THAT:

SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON THE

CONSTITUTIONAL GUARANTEE OF FREEDOM OF RELIGION, SPEECH, AND
EXPRESSION AS IT PARTAKES OF THE NATURE OF A SUBSEQUENT PUNISHMENT
CURTAILING THE SAME; CONSEQUENTLY, THE IMPLEMENTING RULES AND
REGULATIONS, RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB
PURSUANT THERETO, I.E. DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED
19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED IN THE
CASE AT BENCH;

II

SECTION 3(C) OF [PD] 1986, AS APPLIED TO PETITIONER, UNDULY INFRINGES ON THE

CONSTITUTIONAL GUARANTEE OF DUE PROCESS OF LAW AND EQUAL PROTECTION
UNDER THE LAW; CONSEQUENTLY, THE [IRR], RULES OF PROCEDURE, AND OFFICIAL
ACTS OF THE MTRCB PURSUANT THERETO, I.E., DECISION DATED 27 SEPTEMBER 2004
AND ORDER DATED 19 OCTOBER 2004, ARE LIKEWISE CONSTITUTIONALLY INFIRM AS
APPLIED IN THE CASE AT BENCH; AND

III

[PD] 1986 IS NOT COMPLETE IN ITSELF AND DOES NOT PROVIDE FOR A SUFFICIENT
STANDARD FOR ITS IMPLEMENTATION THEREBY RESULTING IN AN UNDUE
DELEGATION OF LEGISLATIVE POWER BY REASON THAT IT DOES NOT PROVIDE FOR
THE PENALTIES FOR VIOLATIONS OF ITS PROVISIONS. CONSEQUENTLY, THE [IRR],
RULES OF PROCEDURE, AND OFFICIAL ACTS OF THE MTRCB PURSUANT THERETO, I.E.
DECISION DATED 27 SEPTEMBER 2004 AND ORDER DATED 19 OCTOBER 2004, ARE
LIKEWISE CONSTITUTIONALLY INFIRM AS APPLIED IN THE CASE AT BENCH 11

G.R. No. 164785

We shall first dispose of the issues in G.R. No. 164785, regarding the assailed order of
preventive suspension, although its implementability had already been overtaken and veritably
been rendered moot by the equally assailed September 27, 2004 decision.

It is petitioner’s threshold posture that the preventive suspension imposed against him and the
relevant IRR provision authorizing it are invalid inasmuch as PD 1986 does not expressly
authorize the MTRCB to issue preventive suspension.

Petitioner’s contention is untenable.

Administrative agencies have powers and functions which may be administrative, investigatory,
regulatory, quasi-legislative, or quasi-judicial, or a mix of the five, as may be conferred by the
Constitution or by statute.12 They have in fine only such powers or authority as are granted or
delegated, expressly or impliedly, by law.13 And in determining whether an agency has certain
powers, the inquiry should be from the law itself. But once ascertained as existing, the authority
given should be liberally construed.14

A perusal of the MTRCB’s basic mandate under PD 1986 reveals the possession by the agency
of the authority, albeit impliedly, to issue the challenged order of preventive suspension. And this
authority stems naturally from, and is necessary for the exercise of, its power of regulation and
supervision.

Sec. 3 of PD 1986 pertinently provides the following:

Section 3. Powers and Functions.—The BOARD shall have the following functions, powers and
duties:

xxxx

c) To approve or disapprove, delete objectionable portions from and/or prohibit the x x x

production, x x x exhibition and/or television broadcast of the motion pictures, television
programs and publicity materials subject of the preceding paragraph, which, in the judgment of
the board applying contemporary Filipino cultural values as standard, are objectionable for being
immoral, indecent, contrary to law and/or good customs, injurious to the prestige of the Republic
of the Philippines or its people, or with a dangerous tendency to encourage the commission of
violence or of wrong or crime such as but not limited to:

xxxx

vi) Those which are libelous or defamatory to the good name and reputation of any person,
whether living or dead;

xxxx

(d) To supervise, regulate, and grant, deny or cancel, permits for the x x x production, copying,
distribution, sale, lease, exhibition, and/or television broadcast of all motion pictures, television
programs and publicity materials, to the end that no such pictures, programs and materials as
are determined by the BOARD to be objectionable in accordance with paragraph (c) hereof shall
be x x x produced, copied, reproduced, distributed, sold, leased, exhibited and/or broadcast by
television;

xxxx

k) To exercise such powers and functions as may be necessary or incidental to the attainment of
the purposes and objectives of this Act x x x. (Emphasis added.)

The issuance of a preventive suspension comes well within the scope of the MTRCB’s authority
and functions expressly set forth in PD 1986, more particularly under its Sec. 3(d), as quoted
above, which empowers the MTRCB to "supervise, regulate, and grant, deny or cancel, permits
for the x x x exhibition, and/or television broadcast of all motion pictures, television programs and
publicity materials, to the end that no such pictures, programs and materials as are determined
by the BOARD to be objectionable in accordance with paragraph (c) hereof shall be x x x
exhibited and/or broadcast by television."
Surely, the power to issue preventive suspension forms part of the MTRCB’s express regulatory
and supervisory statutory mandate and its investigatory and disciplinary authority subsumed in or
implied from such mandate. Any other construal would render its power to regulate, supervise, or
discipline illusory.

Preventive suspension, it ought to be noted, is not a penalty by itself, being merely a preliminary
step in an administrative investigation.15 And the power to discipline and impose penalties, if
granted, carries with it the power to investigate administrative complaints and, during such
investigation, to preventively suspend the person subject of the complaint.16

To reiterate, preventive suspension authority of the MTRCB springs from its powers conferred
under PD 1986. The MTRCB did not, as petitioner insinuates, empower itself to impose
preventive suspension through the medium of the IRR of PD 1986. It is true that the matter of
imposing preventive suspension is embodied only in the IRR of PD 1986. Sec. 3, Chapter XIII of
the IRR provides:

Sec. 3. PREVENTION SUSPENSION ORDER.––Any time during the pendency of the case, and
in order to prevent or stop further violations or for the interest and welfare of the public, the
Chairman of the Board may issue a Preventive Suspension Order mandating the preventive x x x
suspension of the permit/permits involved, and/or closure of the x x x television network, cable
TV station x x x provided that the temporary/preventive order thus issued shall have a life of not
more than twenty (20) days from the date of issuance.

But the mere absence of a provision on preventive suspension in PD 1986, without more, would
not work to deprive the MTRCB a basic disciplinary tool, such as preventive suspension. Recall
that the MTRCB is expressly empowered by statute to regulate and supervise television
programs to obviate the exhibition or broadcast of, among others, indecent or immoral materials
and to impose sanctions for violations and, corollarily, to prevent further violations as it
investigates. Contrary to petitioner’s assertion, the aforequoted Sec. 3 of the IRR neither
amended PD 1986 nor extended the effect of the law. Neither did the MTRCB, by imposing the
assailed preventive suspension, outrun its authority under the law. Far from it. The preventive
suspension was actually done in furtherance of the law, imposed pursuant, to repeat, to the
MTRCB’s duty of regulating or supervising television programs, pending a determination of
whether or not there has actually been a violation. In the final analysis, Sec. 3, Chapter XIII of the
2004 IRR merely formalized a power which PD 1986 bestowed, albeit impliedly, on MTRCB.

Sec. 3(c) and (d) of PD 1986 finds application to the present case, sufficient to authorize the
MTRCB’s assailed action. Petitioner’s restrictive reading of PD 1986, limiting the MTRCB to
functions within the literal confines of the law, would give the agency little leeway to operate,
stifling and rendering it inutile, when Sec. 3(k) of PD 1986 clearly intends to grant the MTRCB a
wide room for flexibility in its operation. Sec. 3(k), we reiterate, provides, "To exercise such
powers and functions as may be necessary or incidental to the attainment of the purposes and
objectives of this Act x x x." Indeed, the power to impose preventive suspension is one of the
implied powers of MTRCB. As distinguished from express powers, implied powers are those that
can be inferred or are implicit in the wordings or conferred by necessary or fair implication of the
enabling act.17 As we held in Angara v. Electoral Commission, when a general grant of power is
conferred or a duty enjoined, every particular power necessary for the exercise of one or the
performance of the other is also conferred by necessary implication.18 Clearly, the power to
impose preventive suspension pending investigation is one of the implied or inherent powers of
MTRCB.

We cannot agree with petitioner’s assertion that the aforequoted IRR provision on preventive
suspension is applicable only to motion pictures and publicity materials. The scope of the
MTRCB’s authority extends beyond motion pictures. What the acronym MTRCB stands for would
suggest as much. And while the law makes specific reference to the closure of a television
network, the suspension of a television program is a far less punitive measure that can be
undertaken, with the purpose of stopping further violations of PD 1986. Again, the MTRCB would
regretfully be rendered ineffective should it be subject to the restrictions petitioner envisages.

Just as untenable is petitioner’s argument on the nullity of the preventive suspension order on
the ground of lack of hearing. As it were, the MTRCB handed out the assailed order after
petitioner, in response to a written notice, appeared before that Board for a hearing on private
respondents’ complaint. No less than petitioner admitted that the order was issued after the
adjournment of the hearing,19 proving that he had already appeared before the MTRCB. Under
Sec. 3, Chapter XIII of the IRR of PD 1986, preventive suspension shall issue "[a]ny time during
the pendency of the case." In this particular case, it was done after MTRCB duly apprised
petitioner of his having possibly violated PD 198620 and of administrative complaints that had
been filed against him for such violation.21

At any event, that preventive suspension can validly be meted out even without a hearing.22

Petitioner next faults the MTRCB for denying him his right to the equal protection of the law,
arguing that, owing to the preventive suspension order, he was unable to answer the criticisms
coming from the INC ministers.

Petitioner’s position does not persuade. The equal protection clause demands that "all persons
subject to legislation should be treated alike, under like circumstances and conditions both in the
privileges conferred and liabilities imposed."23 It guards against undue favor and individual
privilege as well as hostile discrimination.24 Surely, petitioner cannot, under the premises, place
himself in the same shoes as the INC ministers, who, for one, are not facing administrative
complaints before the MTRCB. For another, he offers no proof that the said ministers, in their TV
programs, use language similar to that which he used in his own, necessitating the MTRCB’s
disciplinary action. If the immediate result of the preventive suspension order is that petitioner
remains temporarily gagged and is unable to answer his critics, this does not become a
deprivation of the equal protection guarantee. The Court need not belabor the fact that the
circumstances of petitioner, as host of Ang Dating Daan, on one hand, and the INC ministers, as
hosts of Ang Tamang Daan, on the other, are, within the purview of this case, simply too different
to even consider whether or not there is a prima facie indication of oppressive inequality.

Petitioner next injects the notion of religious freedom, submitting that what he uttered was
religious speech, adding that words like "putang babae" were said in exercise of his religious
freedom.

The argument has no merit.

The Court is at a loss to understand how petitioner’s utterances in question can come within the
pale of Sec. 5, Article III of the 1987 Constitution on religious freedom. The section reads as
follows:

No law shall be made respecting the establishment of a religion, or prohibiting the free exercise
thereof. The free exercise and enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religious test shall be required for the
exercise of civil or political rights.

There is nothing in petitioner’s statements subject of the complaints expressing any particular
religious belief, nothing furthering his avowed evangelical mission. The fact that he came out with
his statements in a televised bible exposition program does not automatically accord them the
character of a religious discourse. Plain and simple insults directed at another person cannot be
elevated to the status of religious speech. Even petitioner’s attempts to place his words in
context show that he was moved by anger and the need to seek retribution, not by any religious
conviction. His claim, assuming its veracity, that some INC ministers distorted his statements
respecting amounts Ang Dating Daan owed to a TV station does not convert the foul language
used in retaliation as religious speech. We cannot accept that petitioner made his statements in
defense of his reputation and religion, as they constitute no intelligible defense or refutation of
the alleged lies being spread by a rival religious group. They simply illustrate that petitioner had
descended to the level of name-calling and foul-language discourse. Petitioner could have
chosen to contradict and disprove his detractors, but opted for the low road.

Petitioner, as a final point in G.R. No. 164785, would have the Court nullify the 20-day preventive
suspension order, being, as insisted, an unconstitutional abridgement of the freedom of speech
and expression and an impermissible prior restraint. The main issue tendered respecting the
adverted violation and the arguments holding such issue dovetails with those challenging the
three-month suspension imposed under the assailed September 27, 2004 MTRCB decision
subject of review under G.R. No. 165636. Both overlapping issues and arguments shall be jointly
addressed.

G.R. No. 165636

Petitioner urges the striking down of the decision suspending him from hosting Ang Dating Daan
for three months on the main ground that the decision violates, apart from his religious freedom,
his freedom of speech and expression guaranteed under Sec. 4, Art. III of the Constitution, which
reads:

No law shall be passed abridging the freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the government for redress of grievance.

He would also have the Court declare PD 1986, its Sec. 3(c) in particular, unconstitutional for
reasons articulated in this petition.

We are not persuaded as shall be explained shortly. But first, we restate certain general
concepts and principles underlying the freedom of speech and expression.

It is settled that expressions by means of newspapers, radio, television, and motion pictures
come within the broad protection of the free speech and expression clause.25 Each method
though, because of its dissimilar presence in the lives of people and accessibility to children,
tends to present its own problems in the area of free speech protection, with broadcast media, of
all forms of communication, enjoying a lesser degree of protection.26 Just as settled is the rule
that restrictions, be it in the form of prior restraint, e.g., judicial injunction against publication or
threat of cancellation of license/franchise, or subsequent liability, whether in libel and damage
suits, prosecution for sedition, or contempt proceedings, are anathema to the freedom of
expression. Prior restraint means official government restrictions on the press or other forms of
expression in advance of actual publication or dissemination.27 The freedom of expression, as
with the other freedoms encased in the Bill of Rights, is, however, not absolute. It may be
regulated to some extent to serve important public interests, some forms of speech not being
protected. As has been held, the limits of the freedom of expression are reached when the
expression touches upon matters of essentially private concern.28 In the oft-quoted expression of
Justice Holmes, the constitutional guarantee "obviously was not intended to give immunity for
every possible use of language."29 From Lucas v. Royo comes this line: "[T]he freedom to
express one’s sentiments and belief does not grant one the license to vilify in public the honor
and integrity of another. Any sentiments must be expressed within the proper forum and with
proper regard for the rights of others."30

Indeed, as noted in Chaplinsky v. State of New Hampshire,31 "there are certain well-defined and
narrowly limited classes of speech that are harmful, the prevention and punishment of which has
never been thought to raise any Constitutional problems." In net effect, some forms of speech
are not protected by the Constitution, meaning that restrictions on unprotected speech may be
decreed without running afoul of the freedom of speech clause.32 A speech would fall under the
unprotected type if the utterances involved are "no essential part of any exposition of ideas, and
are of such slight social value as a step of truth that any benefit that may be derived from them is
clearly outweighed by the social interest in order and morality."33 Being of little or no value, there
is, in dealing with or regulating them, no imperative call for the application of the clear and
present danger rule or the balancing-of-interest test, they being essentially modes of weighing
competing values,34 or, with like effect, determining which of the clashing interests should be
advanced.

Petitioner asserts that his utterance in question is a protected form of speech.

The Court rules otherwise. It has been established in this jurisdiction that unprotected speech or
low-value expression refers to libelous statements, obscenity or pornography, false or misleading
advertisement, insulting or "fighting words", i.e., those which by their very utterance inflict injury
or tend to incite an immediate breach of peace and expression endangering national security.

The Court finds that petitioner’s statement can be treated as obscene, at least with respect to the
average child. Hence, it is, in that context, unprotected speech. In Fernando v. Court of Appeals,
the Court expressed difficulty in formulating a definition of obscenity that would apply to all cases,
but nonetheless stated the ensuing observations on the matter:

There is no perfect definition of "obscenity" but the latest word is that of Miller v. California which
established basic guidelines, to wit: (a) whether to the average person, applying contemporary
standards would find the work, taken as a whole, appeals to the prurient interest; (b) whether the
work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the
applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic,
political, or scientific value. But, it would be a serious misreading of Miller to conclude that the
trier of facts has the unbridled discretion in determining what is "patently offensive." x x x What
remains clear is that obscenity is an issue proper for judicial determination and should be treated
on a case to case basis and on the judge’s sound discretion.35

Following the contextual lessons of the cited case of Miller v. California,36 a patently offensive
utterance would come within the pale of the term obscenity should it appeal to the prurient
interest of an average listener applying contemporary standards.

A cursory examination of the utterances complained of and the circumstances of the case reveal
that to an average adult, the utterances "Gago ka talaga x x x, masahol ka pa sa putang babae x
x x. Yung putang babae ang gumagana lang doon yung ibaba, [dito] kay Michael ang gumagana
ang itaas, o di ba!" may not constitute obscene but merely indecent utterances. They can be
viewed as figures of speech or merely a play on words. In the context they were used, they may
not appeal to the prurient interests of an adult. The problem with the challenged statements is
that they were uttered in a TV program that is rated "G" or for general viewership, and in a time
slot that would likely reach even the eyes and ears of children.

While adults may have understood that the terms thus used were not to be taken literally,
children could hardly be expected to have the same discernment. Without parental guidance, the
unbridled use of such language as that of petitioner in a television broadcast could corrupt
impressionable young minds. The term "putang babae" means "a female prostitute," a term
wholly inappropriate for children, who could look it up in a dictionary and just get the literal
meaning, missing the context within which it was used. Petitioner further used the terms, "ang
gumagana lang doon yung ibaba," making reference to the female sexual organ and how a
female prostitute uses it in her trade, then stating that Sandoval was worse than that by using his
mouth in a similar manner. Children could be motivated by curiosity and ask the meaning of what
petitioner said, also without placing the phrase in context. They may be inquisitive as to why
Sandoval is different from a female prostitute and the reasons for the dissimilarity. And upon
learning the meanings of the words used, young minds, without the guidance of an adult, may,
from their end, view this kind of indecent speech as obscene, if they take these words literally
and use them in their own speech or form their own ideas on the matter. In this particular case,
where children had the opportunity to hear petitioner’s words, when speaking of the average
person in the test for obscenity, we are speaking of the average child, not the average adult. The
average child may not have the adult’s grasp of figures of speech, and may lack the
understanding that language may be colorful, and words may convey more than the literal
meaning. Undeniably the subject speech is very suggestive of a female sexual organ and its
function as such. In this sense, we find petitioner’s utterances obscene and not entitled to
protection under the umbrella of freedom of speech.

Even if we concede that petitioner’s remarks are not obscene but merely indecent speech, still
the Court rules that petitioner cannot avail himself of the constitutional protection of free speech.
Said statements were made in a medium easily accessible to children. With respect to the young
minds, said utterances are to be treated as unprotected speech.

No doubt what petitioner said constitutes indecent or offensive utterances. But while a
jurisprudential pattern involving certain offensive utterances conveyed in different mediums has
emerged, this case is veritably one of first impression, it being the first time that indecent speech
communicated via television and the applicable norm for its regulation are, in this jurisdiction,
made the focal point. Federal Communications Commission (FCC) v. Pacifica Foundation,37 a
1978 American landmark case cited in Eastern Broadcasting Corporation v. Dans,
Jr.38 and Chavez v. Gonzales,39 is a rich source of persuasive lessons. Foremost of these relates
to indecent speech without prurient appeal component coming under the category of protected
speech depending on the context within which it was made, irresistibly suggesting that, within a
particular context, such indecent speech may validly be categorized as unprotected, ergo,
susceptible to restriction.

In FCC, seven of what were considered "filthy" words40 earlier recorded in a monologue by a
satiric humorist later aired in the afternoon over a radio station owned by Pacifica Foundation.
Upon the complaint of a man who heard the pre-recorded monologue while driving with his son,
FCC declared the language used as "patently offensive" and "indecent" under a prohibiting law,
though not necessarily obscene. FCC added, however, that its declaratory order was issued in a
"special factual context," referring, in gist, to an afternoon radio broadcast when children were
undoubtedly in the audience. Acting on the question of whether the FCC could regulate the
subject utterance, the US Supreme Court ruled in the affirmative, owing to two special features of
the broadcast medium, to wit: (1) radio is a pervasive medium and (2) broadcasting is uniquely
accessible to children. The US Court, however, hastened to add that the monologue would be
protected speech in other contexts, albeit it did not expound and identify a compelling state
interest in putting FCC’s content-based regulatory action under scrutiny.

The Court in Chavez41 elucidated on the distinction between regulation or restriction of protected
speech that is content-based and that which is content-neutral. A content-based restraint is
aimed at the contents or idea of the expression, whereas a content-neutral restraint intends to
regulate the time, place, and manner of the expression under well-defined standards tailored to
serve a compelling state interest, without restraint on the message of the expression. Courts
subject content-based restraint to strict scrutiny.

With the view we take of the case, the suspension MTRCB imposed under the premises was, in
one perspective, permissible restriction. We make this disposition against the backdrop of the
following interplaying factors: First, the indecent speech was made via television, a pervasive
medium that, to borrow from Gonzales v. Kalaw Katigbak,42easily "reaches every home where
there is a set [and where] [c]hildren will likely be among the avid viewers of the programs therein
shown"; second, the broadcast was aired at the time of the day when there was a reasonable
risk that children might be in the audience; and third, petitioner uttered his speech on a "G" or "for
general patronage" rated program. Under Sec. 2(A) of Chapter IV of the IRR of the MTRCB, a
show for general patronage is "[s]uitable for all ages," meaning that the "material for television x x
x in the judgment of the BOARD, does not contain anything unsuitable for children and minors,
and may be viewed without adult guidance or supervision." The words petitioner used were, by
any civilized norm, clearly not suitable for children. Where a language is categorized as indecent,
as in petitioner’s utterances on a general-patronage rated TV program, it may be readily
proscribed as unprotected speech.

A view has been advanced that unprotected speech refers only to pornography,43 false or
misleading advertisement,44 advocacy of imminent lawless action, and expression endangering
national security. But this list is not, as some members of the Court would submit, exclusive or
carved in stone. Without going into specifics, it may be stated without fear of contradiction that
US decisional law goes beyond the aforesaid general exceptions. As the Court has been
impelled to recognize exceptions to the rule against censorship in the past, this particular case
constitutes yet another exception, another instance of unprotected speech, created by the
necessity of protecting the welfare of our children. As unprotected speech, petitioner’s utterances
can be subjected to restraint or regulation.

Despite the settled ruling in FCC which has remained undisturbed since 1978, petitioner asserts
that his utterances must present a clear and present danger of bringing about a substantive evil
the State has a right and duty to prevent and such danger must be grave and imminent.45

Petitioner’s invocation of the clear and present danger doctrine, arguably the most permissive of
speech tests, would not avail him any relief, for the application of said test is uncalled for under
the premises. The doctrine, first formulated by Justice Holmes, accords protection for utterances
so that the printed or spoken words may not be subject to prior restraint or subsequent
punishment unless its expression creates a clear and present danger of bringing about a
substantial evil which the government has the power to prohibit.46 Under the doctrine, freedom of
speech and of press is susceptible of restriction when and only when necessary to prevent grave
and immediate danger to interests which the government may lawfully protect. As it were, said
doctrine evolved in the context of prosecutions for rebellion and other crimes involving the
overthrow of government.47 It was originally designed to determine the latitude which should be
given to speech that espouses anti-government action, or to have serious and substantial
deleterious consequences on the security and public order of the community.48 The clear and
present danger rule has been applied to this jurisdiction.49 As a standard of limitation on free
speech and press, however, the clear and present danger test is not a magic incantation that
wipes out all problems and does away with analysis and judgment in the testing of the legitimacy
of claims to free speech and which compels a court to release a defendant from liability the
moment the doctrine is invoked, absent proof of imminent catastrophic disaster.50 As we
observed in Eastern Broadcasting Corporation, the clear and present danger test "does not lend
itself to a simplistic and all embracing interpretation applicable to all utterances in all forums."51

To be sure, the clear and present danger doctrine is not the only test which has been applied by
the courts. Generally, said doctrine is applied to cases involving the overthrow of the government
and even other evils which do not clearly undermine national security. Since not all evils can be
measured in terms of "proximity and degree" the Court, however, in several cases—Ayer
Productions v. Capulong52 and Gonzales v. COMELEC,53 applied the balancing of interests test.
Former Chief Justice Fred Ruiz Castro, in Gonzales v. COMELEC, elucidated in his Separate
Opinion that "where the legislation under constitutional attack interferes with the freedom of
speech and assembly in a more generalized way and where the effect of the speech and
assembly in terms of the probability of realization of a specific danger is not susceptible even of
impressionistic calculation,"54 then the "balancing of interests" test can be applied.

The Court explained also in Gonzales v. COMELEC the "balancing of interests" test:

When particular conduct is regulated in the interest of public order, and the regulation results in
an indirect, conditional, partial abridgment of speech, the duty of the courts is to determine which
of the two conflicting interests demands the greater protection under the particular circumstances
presented. x x x We must, therefore, undertake the "delicate and difficult task x x x to weigh the
circumstances and to appraise the substantiality of the reasons advanced in support of the
regulation of the free enjoyment of rights x x x.
In enunciating standard premised on a judicial balancing of the conflicting social values and
individual interests competing for ascendancy in legislation which restricts expression, the court
in Douds laid the basis for what has been called the "balancing-of-interests" test which has found
application in more recent decisions of the U.S. Supreme Court. Briefly stated, the "balancing"
test requires a court to take conscious and detailed consideration of the interplay of interests
observable in a given situation or type of situation.

xxxx

Although the urgency of the public interest sought to be secured by Congressional power
restricting the individual’s freedom, and the social importance and value of the freedom so
restricted, "are to be judged in the concrete, not on the basis of abstractions," a wide range of
factors are necessarily relevant in ascertaining the point or line of equilibrium. Among these are
(a) the social value and importance of the specific aspect of the particular freedom restricted by
the legislation; (b) the specific thrust of the restriction, i.e., whether the restriction is direct or
indirect, whether or not the persons affected are few; (c) the value and importance of the public
interest sought to be secured by the legislation––the reference here is to the nature and gravity
of the evil which Congress seeks to prevent; (d) whether the specific restriction decreed by
Congress is reasonably appropriate and necessary for the protection of such public interest; and
(e) whether the necessary safeguarding of the public interest involved may be achieved by some
other measure less restrictive of the protected freedom.55

This balancing of interest test, to borrow from Professor Kauper,56 rests on the theory that it is the
court’s function in a case before it when it finds public interests served by legislation, on the one
hand, and the free expression clause affected by it, on the other, to balance one against the
other and arrive at a judgment where the greater weight shall be placed. If, on balance, it
appears that the public interest served by restrictive legislation is of such nature that it outweighs
the abridgment of freedom, then the court will find the legislation valid. In short, the balance-of-
interests theory rests on the basis that constitutional freedoms are not absolute, not even those
stated in the free speech and expression clause, and that they may be abridged to some extent
to serve appropriate and important interests.57 To the mind of the Court, the balancing of interest
doctrine is the more appropriate test to follow.

In the case at bar, petitioner used indecent and obscene language and a three (3)-month
suspension was slapped on him for breach of MTRCB rules. In this setting, the assertion by
petitioner of his enjoyment of his freedom of speech is ranged against the duty of the government
to protect and promote the development and welfare of the youth.

After a careful examination of the factual milieu and the arguments raised by petitioner in support
of his claim to free speech, the Court rules that the government’s interest to protect and promote
the interests and welfare of the children adequately buttresses the reasonable curtailment and
valid restraint on petitioner’s prayer to continue as program host of Ang Dating Daan during the
suspension period.

No doubt, one of the fundamental and most vital rights granted to citizens of a State is the
freedom of speech or expression, for without the enjoyment of such right, a free, stable, effective,
and progressive democratic state would be difficult to attain. Arrayed against the freedom of
speech is the right of the youth to their moral, spiritual, intellectual, and social being which the
State is constitutionally tasked to promote and protect. Moreover, the State is also mandated to
recognize and support the vital role of the youth in nation building as laid down in Sec. 13, Art. II
of the 1987 Constitution.

The Constitution has, therefore, imposed the sacred obligation and responsibility on the State to
provide protection to the youth against illegal or improper activities which may prejudice their
general well-being. The Article on youth, approved on second reading by the Constitutional
Commission, explained that the State shall "extend social protection to minors against all forms
of neglect, cruelty, exploitation, immorality, and practices which may foster racial, religious or
other forms of discrimination."58

Indisputably, the State has a compelling interest in extending social protection to minors against
all forms of neglect, exploitation, and immorality which may pollute innocent minds. It has a
compelling interest in helping parents, through regulatory mechanisms, protect their children’s
minds from exposure to undesirable materials and corrupting experiences. The Constitution, no
less, in fact enjoins the State, as earlier indicated, to promote and protect the physical, moral,
spiritual, intellectual, and social well-being of the youth to better prepare them fulfill their role in
the field of nation-building.59 In the same way, the State is mandated to support parents in the
rearing of the youth for civic efficiency and the development of moral character.60

Petitioner’s offensive and obscene language uttered in a television broadcast, without doubt, was
easily accessible to the children. His statements could have exposed children to a language that
is unacceptable in everyday use. As such, the welfare of children and the State’s mandate to
protect and care for them, as parens patriae,61 constitute a substantial and compelling
government interest in regulating petitioner’s utterances in TV broadcast as provided in PD 1986.

FCC explains the duty of the government to act as parens patriae to protect the children who,
because of age or interest capacity, are susceptible of being corrupted or prejudiced by offensive
language, thus:

[B]roadcasting is uniquely accessible to children, even those too young to read. Although
Cohen’s written message, ["Fuck the Draft"], might have been incomprehensible to a first grader,
Pacifica’s broadcast could have enlarged a child’s vocabulary in an instant. Other forms of
offensive expression may be withheld from the young without restricting the expression at its
source. Bookstores and motion picture theaters, for example, may be prohibited from making
indecent material available to children. We held in Ginsberg v. New York that the government’s
interest in the "well-being of its youth" and in supporting "parents’ claim to authority in their own
household" justified the regulation of otherwise protected expression. The ease with which
children may obtain access to broadcast material, coupled with the concerns recognized in
Ginsberg, amply justify special treatment of indecent broadcasting.

Moreover, Gonzales v. Kalaw Katigbak likewise stressed the duty of the State to attend to the
welfare of the young:

x x x It is the consensus of this Court that where television is concerned, a less liberal approach
calls for observance. This is so because unlike motion pictures where the patrons have to pay
their way, television reaches every home where there is a set. Children then will likely will be
among the avid viewers of the programs therein shown. As was observed by Circuit Court of
Appeals Judge Jerome Frank, it is hardly the concern of the law to deal with the sexual fantasies
of the adult population. It cannot be denied though that the State as parens patriae is called upon
to manifest an attitude of caring for the welfare of the young.62

The compelling need to protect the young impels us to sustain the regulatory action MTRCB took
in the narrow confines of the case. To reiterate, FCC justified the restraint on the TV broadcast
grounded on the following considerations: (1) the use of television with its unique accessibility to
children, as a medium of broadcast of a patently offensive speech; (2) the time of broadcast; and
(3) the "G" rating of the Ang Dating Daan program. And in agreeing with MTRCB, the court takes
stock of and cites with approval the following excerpts from FCC:

It is appropriate, in conclusion, to emphasize the narrowness of our holding. This case does not
involve a two-way radio conversation between a cab driver and a dispatcher, or a telecast of an
Elizabethan comedy. We have not decided that an occasional expletive in either setting would
justify any sanction. x x x The [FFC’s] decision rested entirely on a nuisance rationale under
which context is all important. The concept requires consideration of a host of variables. The time
of day was emphasized by the [FFC]. The content of the program in which the language is used
will affect the composition of the audience x x x. As Mr. Justice Sutherland wrote a ‘nuisance
may be merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard.’
We simply hold that when the [FCC] finds that a pig has entered the parlor, the exercise of its
regulatory power does not depend on proof that the pig is obscene. (Citation omitted.)

There can be no quibbling that the remarks in question petitioner uttered on prime-time television
are blatantly indecent if not outright obscene. It is the kind of speech that PD 1986 proscribes
necessitating the exercise by MTRCB of statutory disciplinary powers. It is the kind of speech
that the State has the inherent prerogative, nay duty, to regulate and prevent should such action
served and further compelling state interests. One who utters indecent, insulting, or offensive
words on television when unsuspecting children are in the audience is, in the graphic language of
FCC, a "pig in the parlor." Public interest would be served if the "pig" is reasonably restrained or
even removed from the "parlor."

Ergo, petitioner’s offensive and indecent language can be subjected to prior restraint.

Petitioner theorizes that the three (3)-month suspension is either prior restraint or subsequent
punishment that, however, includes prior restraint, albeit indirectly.

After a review of the facts, the Court finds that what MTRCB imposed on petitioner is an
administrative sanction or subsequent punishment for his offensive and obscene language in
Ang Dating Daan.

To clarify, statutes imposing prior restraints on speech are generally illegal and presumed
unconstitutional breaches of the freedom of speech. The exceptions to prior restraint are movies,
television, and radio broadcast censorship in view of its access to numerous people, including
the young who must be insulated from the prejudicial effects of unprotected speech. PD 1986
was passed creating the Board of Review for Motion Pictures and Television (now MTRCB) and
which requires prior permit or license before showing a motion picture or broadcasting a TV
program. The Board can classify movies and television programs and can cancel permits for
exhibition of films or television broadcast.
lavvphi1.net

The power of MTRCB to regulate and even impose some prior restraint on radio and television
shows, even religious programs, was upheld in Iglesia Ni Cristo v. Court of Appeals. Speaking
through Chief Justice Reynato S. Puno, the Court wrote:

We thus reject petitioner’s postulate that its religious program is per se beyond review by the
respondent Board. Its public broadcast on TV of its religious program brings it out of the bosom
of internal belief. Television is a medium that reaches even the eyes and ears of children. The
Court iterates the rule that the exercise of religious freedom can be regulated by the State when
it will bring about the clear and present danger of some substantive evil which the State is duty
bound to prevent, i.e., serious detriment to the more overriding interest of public health, public
morals, or public welfare. x x x

xxxx

While the thesis has a lot to commend itself, we are not ready to hold that [PD 1986] is
unconstitutional for Congress to grant an administrative body quasi-judicial power to preview and
classify TV programs and enforce its decision subject to review by our courts. As far back as
1921, we upheld this setup in Sotto vs. Ruiz, viz:

"The use of the mails by private persons is in the nature of a privilege which can be regulated in
order to avoid its abuse. Persons possess no absolute right to put into the mail anything they
please, regardless of its character."63
Bernas adds:

Under the decree a movie classification board is made the arbiter of what movies and television
programs or parts of either are fit for public consumption. It decides what movies are "immoral,
indecent, contrary to law and/or good customs, injurious to the prestige of the Republic of the
Philippines or its people," and what "tend to incite subversion, insurrection, rebellion or sedition,"
or "tend to undermine the faith and confidence of the people in their government and/or duly
constituted authorities," etc. Moreover, its decisions are executory unless stopped by a court.64

Moreover, in MTRCB v. ABS-CBN Broadcasting Corporation,65 it was held that the power of
review and prior approval of MTRCB extends to all television programs and is valid despite the
freedom of speech guaranteed by the Constitution. Thus, all broadcast networks are regulated by
the MTRCB since they are required to get a permit before they air their television programs.
Consequently, their right to enjoy their freedom of speech is subject to that requirement. As
lucidly explained by Justice Dante O. Tinga, government regulations through the MTRCB
became "a necessary evil" with the government taking the role of assigning bandwidth to
individual broadcasters. The stations explicitly agreed to this regulatory scheme; otherwise,
chaos would result in the television broadcast industry as competing broadcasters will interfere or
co-opt each other’s signals. In this scheme, station owners and broadcasters in effect waived
their right to the full enjoyment of their right to freedom of speech in radio and television
programs and impliedly agreed that said right may be subject to prior restraint—denial of permit
or subsequent punishment, like suspension or cancellation of permit, among others.

The three (3) months suspension in this case is not a prior restraint on the right of petitioner to
continue with the broadcast of Ang Dating Daan as a permit was already issued to him by
MTRCB for such broadcast. Rather, the suspension is in the form of permissible administrative
sanction or subsequent punishment for the offensive and obscene remarks he uttered on the
evening of August 10, 2004 in his television program, Ang Dating Daan. It is a sanction that the
MTRCB may validly impose under its charter without running afoul of the free speech clause.
And the imposition is separate and distinct from the criminal action the Board may take pursuant
to Sec. 3(i) of PD 1986 and the remedies that may be availed of by the aggrieved private party
under the provisions on libel or tort, if applicable. As FCC teaches, the imposition of sanctions on
broadcasters who indulge in profane or indecent broadcasting does not constitute forbidden
censorship. Lest it be overlooked, the sanction imposed is not per se for petitioner’s exercise of
his freedom of speech via television, but for the indecent contents of his utterances in a "G" rated
TV program.

More importantly, petitioner is deemed to have yielded his right to his full enjoyment of his
freedom of speech to regulation under PD 1986 and its IRR as television station owners,
program producers, and hosts have impliedly accepted the power of MTRCB to regulate the
broadcast industry.

Neither can petitioner’s virtual inability to speak in his program during the period of suspension
be plausibly treated as prior restraint on future speech. For viewed in its proper perspective, the
suspension is in the nature of an intermediate penalty for uttering an unprotected form of speech.
It is definitely a lesser punishment than the permissible cancellation of exhibition or broadcast
permit or license. In fine, the suspension meted was simply part of the duties of the MTRCB in
the enforcement and administration of the law which it is tasked to implement. Viewed in its
proper context, the suspension sought to penalize past speech made on prime-time "G" rated TV
program; it does not bar future speech of petitioner in other television programs; it is a
permissible subsequent administrative sanction; it should not be confused with a prior restraint
on speech. While not on all fours, the Court, in MTRCB,66sustained the power of the MTRCB to
penalize a broadcast company for exhibiting/airing a pre-taped TV episode without Board
authorization in violation of Sec. 7 of PD 1986.
Any simplistic suggestion, however, that the MTRCB would be crossing the limits of its authority
were it to regulate and even restrain the prime-time television broadcast of indecent or obscene
speech in a "G" rated program is not acceptable. As made clear in Eastern Broadcasting
Corporation, "the freedom of television and radio broadcasting is somewhat lesser in scope than
the freedom accorded to newspaper and print media." The MTRCB, as a regulatory agency,
must have the wherewithal to enforce its mandate, which would not be effective if its punitive
actions would be limited to mere fines. Television broadcasts should be subject to some form of
regulation, considering the ease with which they can be accessed, and violations of the
regulations must be met with appropriate and proportional disciplinary action. The suspension of
a violating television program would be a sufficient punishment and serve as a deterrent for
those responsible. The prevention of the broadcast of petitioner’s television program is justified,
and does not constitute prohibited prior restraint. It behooves the Court to respond to the needs
of the changing times, and craft jurisprudence to reflect these times.

Petitioner, in questioning the three-month suspension, also tags as unconstitutional the very law
creating the MTRCB, arguing that PD 1986, as applied to him, infringes also upon his freedom of
religion. The Court has earlier adequately explained why petitioner’s undue reliance on the
religious freedom cannot lend justification, let alone an exempting dimension to his licentious
utterances in his program. The Court sees no need to address anew the repetitive arguments on
religious freedom. As earlier discussed in the disposition of the petition in G.R. No. 164785, what
was uttered was in no way a religious speech. Parenthetically, petitioner’s attempt to
characterize his speech as a legitimate defense of his religion fails miserably. He tries to place
his words in perspective, arguing evidently as an afterthought that this was his method of refuting
the alleged distortion of his statements by the INC hosts of Ang Tamang Daan. But on the night
he uttered them in his television program, the word simply came out as profane language,
without any warning or guidance for undiscerning ears.

As to petitioner’s other argument about having been denied due process and equal protection of
the law, suffice it to state that we have at length debunked similar arguments in G.R. No. 164785.
There is no need to further delve into the fact that petitioner was afforded due process when he
attended the hearing of the MTRCB, and that he was unable to demonstrate that he was unjustly
discriminated against in the MTRCB proceedings.

Finally, petitioner argues that there has been undue delegation of legislative power, as PD 1986
does not provide for the range of imposable penalties that may be applied with respect to
violations of the provisions of the law.

The argument is without merit.

In Edu v. Ericta, the Court discussed the matter of undue delegation of legislative power in the
following wise:

It is a fundamental principle flowing from the doctrine of separation of powers that Congress may
not delegate its legislative power to the two other branches of the government, subject to the
exception that local governments may over local affairs participate in its exercise. What cannot
be delegated is the authority under the Constitution to make laws and to alter and repeal them;
the test is the completeness of the statute in all its term and provisions when it leaves the hands
of the legislature. To determine whether or not there is an undue delegation of legislative power,
the inquiry must be directed to the scope and definiteness of the measure enacted. The
legislature does not abdicate its functions when it describes what job must be done, who is to do
it, and what is the scope of his authority. For a complex economy, that may indeed be the only
way in which the legislative process can go forward. A distinction has rightfully been made
between delegation of power to make laws which necessarily involves a discretion as to what it
shall be, which constitutionally may not be done, and delegation of authority or discretion as to its
execution to be exercised under and in pursuance of the law, to which no valid objection can be
made. The Constitution is thus not to be regarded as denying the legislature the necessary
resources of flexibility and practicability.

To avoid the taint of unlawful delegation, there must be a standard, which implies at the very
least that the legislature itself determines matters of principle and lays down fundamental policy.
Otherwise, the charge of complete abdication may be hard to repel. A standard thus defines
legislative policy, marks its limits, maps out its boundaries and specifies the public agency to
apply it. It indicates the circumstances under which the legislative command is to be effected. It is
the criterion by which legislative purpose may be carried out. Thereafter, the executive or
administrative office designated may in pursuance of the above guidelines promulgate
supplemental rules and regulations.67

Based on the foregoing pronouncements and analyzing the law in question, petitioner’s
protestation about undue delegation of legislative power for the sole reason that PD 1986 does
not provide for a range of penalties for violation of the law is untenable. His thesis is that
MTRCB, in promulgating the IRR of PD 1986, prescribing a schedule of penalties for violation of
the provisions of the decree, went beyond the terms of the law.

Petitioner’s posture is flawed by the erroneous assumptions holding it together, the first
assumption being that PD 1986 does not prescribe the imposition of, or authorize the MTRCB to
impose, penalties for violators of PD 1986. As earlier indicated, however, the MTRCB, by
express and direct conferment of power and functions, is charged with supervising and
regulating, granting, denying, or canceling permits for the exhibition and/or television broadcast
of all motion pictures, television programs, and publicity materials to the end that no such
objectionable pictures, programs, and materials shall be exhibited and/or broadcast by television.
Complementing this provision is Sec. 3(k) of the decree authorizing the MTRCB "to exercise
such powers and functions as may be necessary or incidental to the attainment of the purpose
and objectives of [the law]." As earlier explained, the investiture of supervisory, regulatory, and
disciplinary power would surely be a meaningless grant if it did not carry with it the power to
penalize the supervised or the regulated as may be proportionate to the offense committed,
charged, and proved. As the Court said in Chavez v. National Housing Authority:

x x x [W]hen a general grant of power is conferred or duty enjoined, every particular power
necessary for the exercise of the one or the performance of the other is also conferred. x x x
[W]hen the statute does not specify the particular method to be followed or used by a
government agency in the exercise of the power vested in it by law, said agency has the
authority to adopt any reasonable method to carry out its function.68

Given the foregoing perspective, it stands to reason that the power of the MTRCB to regulate
and supervise the exhibition of TV programs carries with it or necessarily implies the authority to
take effective punitive action for violation of the law sought to be enforced. And would it not be
logical too to say that the power to deny or cancel a permit for the exhibition of a TV program or
broadcast necessarily includes the lesser power to suspend?

The MTRCB promulgated the IRR of PD 1986 in accordance with Sec. 3(a) which, for reference,
provides that agency with the power "[to] promulgate such rules and regulations as are
necessary or proper for the implementation of this Act, and the accomplishment of its purposes
and objectives x x x." And Chapter XIII, Sec. 1 of the IRR providing:

Section 1. VIOLATIONS AND ADMINISTRATIVE SANCTIONS.––Without prejudice to the

immediate filing of the appropriate criminal action and the immediate seizure of the pertinent
articles pursuant to Section 13, any violation of PD 1986 and its Implementing Rules and
Regulations governing motion pictures, television programs, and related promotional materials
shall be penalized with suspension or cancellation of permits and/or licenses issued by the Board
and/or with the imposition of fines and other administrative penalty/penalties. The Board
recognizes the existing Table of Administrative Penalties attached without prejudice to the power
of the Board to amend it when the need arises. In the meantime the existing revised Table of
Administrative Penalties shall be enforced. (Emphasis added.)

This is, in the final analysis, no more than a measure to specifically implement the aforequoted
provisions of Sec. 3(d) and (k). Contrary to what petitioner implies, the IRR does not expand the
mandate of the MTRCB under the law or partake of the nature of an unauthorized administrative
legislation. The MTRCB cannot shirk its responsibility to regulate the public airwaves and employ
such means as it can as a guardian of the public.

In Sec. 3(c), one can already find the permissible actions of the MTRCB, along with the
standards to be applied to determine whether there have been statutory breaches. The MTRCB
may evaluate motion pictures, television programs, and publicity materials "applying
contemporary Filipino cultural values as standard," and, from there, determine whether these
audio and video materials "are objectionable for being immoral, indecent, contrary to law and/or
good customs, [etc.] x x x" and apply the sanctions it deems proper. The lawmaking body cannot
possibly provide for all the details in the enforcement of a particular statute.69 The grant of the
rule-making power to administrative agencies is a relaxation of the principle of separation of
powers and is an exception to the non-delegation of legislative powers.70 Administrative
regulations or "subordinate legislation" calculated to promote the public interest are necessary
because of "the growing complexity of modern life, the multiplication of the subjects of
governmental regulations, and the increased difficulty of administering the law."71 Allowing the
MTRCB some reasonable elbow-room in its operations and, in the exercise of its statutory
disciplinary functions, according it ample latitude in fixing, by way of an appropriate issuance,
administrative penalties with due regard for the severity of the offense and attending mitigating or
aggravating circumstances, as the case may be, would be consistent with its mandate to
effectively and efficiently regulate the movie and television industry.

But even as we uphold the power of the MTRCB to review and impose sanctions for violations of
PD 1986, its decision to suspend petitioner must be modified, for nowhere in that issuance,
particularly the power-defining Sec. 3 nor in the MTRCB Schedule of Administrative Penalties
effective January 1, 1999 is the Board empowered to suspend the program host or even to
prevent certain people from appearing in television programs. The MTRCB, to be sure, may
prohibit the broadcast of such television programs or cancel permits for exhibition, but it may not
suspend television personalities, for such would be beyond its jurisdiction. The MTRCB cannot
extend its exercise of regulation beyond what the law provides. Only persons, offenses, and
penalties clearly falling clearly within the letter and spirit of PD 1986 will be considered to be
within the decree’s penal or disciplinary operation. And when it exists, the reasonable doubt must
be resolved in favor of the person charged with violating the statute and for whom the penalty is
sought. Thus, the MTRCB’s decision in Administrative Case No. 01-04 dated September 27,
2004 and the subsequent order issued pursuant to said decision must be modified. The
suspension should cover only the television program on which petitioner appeared and uttered
the offensive and obscene language, which sanction is what the law and the facts obtaining call
for.

In ending, what petitioner obviously advocates is an unrestricted speech paradigm in which

absolute permissiveness is the norm. Petitioner’s flawed belief that he may simply utter gutter
profanity on television without adverse consequences, under the guise of free speech, does not
lend itself to acceptance in this jurisdiction. We repeat: freedoms of speech and expression are
not absolute freedoms. To say "any act that restrains speech should be greeted with furrowed
brows" is not to say that any act that restrains or regulates speech or expression is per se invalid.
This only recognizes the importance of freedoms of speech and expression, and indicates the
necessity to carefully scrutinize acts that may restrain or regulate speech.

WHEREFORE, the decision of the MTRCB in Adm. Case No. 01-04 dated September 27, 2004
is hereby AFFIRMED with the MODIFICATION of limiting the suspension to the program Ang
Dating Daan. As thus modified, the fallo of the MTRCB shall read as follows:
WHEREFORE, in view of all the foregoing, a Decision is hereby rendered, imposing a penalty of
THREE (3) MONTHS SUSPENSION on the television program, Ang Dating Daan, subject of the
instant petition.

Co-respondents Joselito Mallari, Luzviminda Cruz, and UNTV Channel 37 and its owner, PBC,
are hereby exonerated for lack of evidence.

Costs against petitioner.

SO ORDERED.

G.R. No. 120639 September 25, 1998

BPI EXPRESS CARD CORPORATION, petitioner,

vs.
COURT OF APPEALS and RICARDO J. MARASIGAN, respondents.

KAPUNAN, J.:

The question before this Court is whether private respondent can recover moral damages arising
from the cancellation of his credit card by petitioner credit card corporation.

The facts of the case are as stated in the decision of the respondent court, 1 to wit:

The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J.
Marasigan by Café Adriatico, a business establishment accredited with the
defendant-appellate BPI Express Card Corporation (BECC for brevity), on
December 8, 1989 when the plaintiff entertained some guests thereat.

The records of this case show that plaintiff, who is a lawyer by profession, was a
complimentary member of BECC from February 1988 to February 1989 and was
issued Credit Card No. 100-012-5534 with a credit limit of P3,000.00 and with a
monthly billing every 27th of the month (Exh. N), subject to the terms and
conditions stipulated in the contract (Exh. 1-b). His membership was renewed for
another year or until February 1990 and the credit limit was increased to
P5,000.00 (Exh. A). The plaintiffs oftentimes exceeded his credit limits (Exhs. I, I-
1 to I-12) but this was never taken against him by the defendant and even his
mode of paying his monthly bills in check was tolerated. Their contractual
relations went on smoothly until his statement of account for October 1989
amounting to P8,987.84 was not paid in due time. The plaintiff admitted having
inadvertently failed to pay his account for the said month because he was in
Quezon province attending to some professional and personal commitments. He
was informed by his secretary that defendant was demanding immediate
payment of his outstanding account, was requiring him to issue a check for
P15,000.00 which would include his future bills, and was threatening to suspend
his credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in
the amount of P15,000.00, postdated December 15, 1989 which was received on
November 23, 1989 by Tess Lorenzo, an employee of the defendant (Exhs. J and
J-1), who in turn gave the said check to Jeng Angeles, a co-employee who
handles the account of the plaintiff. The check remained in the custody of Jeng
Angeles. Mr. Roberto Maniquiz, head of the collection department of defendant
was formally informed of the postdated check about a week later. On November
 28, 2989, defendant served plaintiff a letter by ordinary mail informing him of the
temporary suspension of the privileges of his credit card and the inclusion of his
account number in their Caution List. He was also told to refrain from further use
of his credit card to avoid any inconvenience/embarrassment and that unless he
settles his outstanding account with the defendant within 5 days from receipt of
the letter, his membership will be permanently cancelled (Exh. 3). There is no
showing that the plaintiff received this letter before December 8, 1989.
Confidential that he had settled his account with the issuance of the postdated
check, plaintiff invited some guests on December 8, 1989 and entertained them
at Café Adriatico. When he presented his credit card to Café Adriatico for the bill
amounting to P735.32, said card was dishonored. One of his guests, Mary Ellen
Ringler, paid the bill by using her own credit card a Unibankard (Exhs. M, M-1
and M-2).

In a letter addressed to the defendant dated December 12, 1989, plaintiff

requested that he be sent the exact billing due him as of December 15, 1989, to
withhold the deposit of his postdated check and that said check be returned to
him because he had already instructed his bank to stop the payment thereof as
the defendant violated their agreement that the plaintiff issue the check to the
defendant to cover his account amounting to only P8,987.84 on the condition that
the defendant will not suspend the effectivity of the card (Exh. D). A letter dated
December 16, 1989 was sent by the plaintiff to the manager of FEBTC, Ramada
Branch, Manila requesting the bank to stop the payment of the check (Exhs. E, E-
1). No reply was received by plaintiff from the defendant to his letter dated
December 12, 1989. Plaintiff sent defendant another letter dated March 12, 1990
reminding the latter that he had long rescinded and cancelled whatever
arrangement he entered into with defendant and requesting for his correct billing,
less the improper charges and penalties, and for an explanation within five (5)
days from receipt thereof why his card was dishonored on December 8, 1989
despite assurance to the contrary by defendant's personnel-in-charge, otherwise
the necessary court action shall be filed to hold defendant responsible for the
humiliation and embarrassment suffered by him (Exh. F). Plaintiff alleged further
that after a few days, a certain Atty. Albano, representing himself to be working
with the office of Atty. Lopez, called him inquiring as to how the matter can be
threshed out extrajudicially but the latter said that such is a serious matter cannot
be discussed over the phone. The defendant served its final demand to the
plaintiff dated March 21, 1990 requiring him to pay in full his overdue account,
including stipulated fees and charges, within 5 days from receipt thereof or face
court action and also to replace the postdated check with cash within the same
period or face criminal suit for violation of Bouncing Check Law (Exh. G/Exh. 13).
The plaintiff in a reply letter dated April 5, 1990 (Exh. H), demanded defendant's
compliance with his request in his first letter dated March 12, 1990 within three
(3) days from receipt, otherwise the plaintiff will file a case against them, . . . .2

Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before
the Regional Trial Court of Makati, Branch 150, docketed as Civil Case No. 90-1174.

After trial the trial court ruled for private respondent, finding that herein petitioner abused its right
in contravention of Article 19 of the Civil Code. 3 The dispositive portion of the decision reads:

Wherefore, judgment is hereby rendered ordering the defendant to pay plaintiff

the following:

1. P 100,000.00 as moral damages;

2. P 50,000.00 as exemplary damages; and

 3. P 20,000.00 by way of attorney's fees.

On the other hand, plaintiff is ordered to pay defendant its outstanding obligation
in the amount of P14,439.41, amount due as of December 15, 1989.4

The trial court's ruling was based on its findings and conclusions, to wit:

There is no question that plaintiff had been in default in the payment of his billings
for more than two months, prompting defendant to call him and reminded him of
his obligation. Unable to personally talk with him, this Court is convinced that
somehow one or another employee of defendant called him up more that once.

However, while it is true that as indicated in the terms and conditions of the
application for BPI credit card upon failure of the cardholder to pay his
outstanding obligation for more that thirty (30) days, the defendant can
automatically suspend or cancel the credit card, that reserved right should not
have been abused as it was in fact abused, in plaintiff's case. What is more
peculiar here is that there have been admitted communications between plaintiff
and defendant prior to the suspension or cancellation of plaintiff's credit card and
his inclusion in the cautions list. However, nowhere in any of these
communications was there ever a hint given to plaintiff that his card had already
been suspended or cancelled. In fact, the Court observed that while defendant
was trying its best to persuade plaintiff to update its account and pay its
obligation, it had already taken steps to suspend/cancel plaintiff's card and
include him in the caution list. While the Court admires defendant's diplomacy in
dealing with its clients, it cannot help but frown upon the backhanded way
defendant deal with plaintiff's case. For despite Tess Lorenzo's denial, there is
reason to believe that plaintiff was indeed assured by defendant of the continued
honoring of his credit card so long as he pays his obligation of P15,000.00.
Worst, upon receipt of the postdated check, defendant kept the same until a few
days before it became due and said check was presented to the head of the
collection department, Mr. Maniquiz, to take steps thereon, resulting to the
embarrassing situations plaintiff found himself in on December 8, 1989.
Moreover, Mr. Maniquiz himself admitted that his request for plaintiff to replace
the check with cash was not because it was a postdated check but merely to tally
the payment with the account due.

Likewise, the Court is not persuaded by the sweeping denials made by Tess
Lorenzo and her claim that her only participation was to receive the subject
check. Her immediate superior, Mr. Maniquiz testified that he had instructed
Lorenzo to communicate with plaintiff once or twice to request the latter to
replace the questioned check with cash, thus giving support to the testimony of
plaintiff's witness, Dolores Quizon, that it was one Tess Lorenzo whom she had
talked over the phone regarding plaintiff's account and plaintiff's own statement
that it was this woman who assured him that his card has not yet been and will
not be cancelled/suspended if he would pay defendant the sum of P15,000.00.

Now, on the issue of whether or not upon receipt of the subject check defendant
had agreed that the card shall remain effective the Court takes note of the
following:

1. An employee of defendant corporation unconditionally accepted the subject

check upon its delivery despite its being a postdated one; and the amount did not
tally with plaintiff's obligation;
 2. Defendant did not deny nor controvert plaintiff's claim that all of his payments
were made in checks;

3. Defendant's main witness, Mr. Maniquiz, categorically stated that the request
for plaintiff to replace his postdated check with a cash was merely for the purpose
of tallying plaintiff's outstanding obligation with his payment and not to question
the postdated check;

4. That the card was suspended almost a week after receipt of the postdated
check;

5. That despite the many instances that defendant could have informed plaintiff
over the phone of the cancellation or suspension of his credit card, it did not do
so, which could have prevented the incident of December 8, 1989, the notice
allegedly sent thru ordinary mail is not only unreliable but takes a long time. Such
action as suspension of credit card must be immediately relayed to the person
affected so as to avoid embarrassing situations.

6. And that the postdated check was deposited on December 20, 1989.

In view of the foregoing observations, it is needless to say that there was indeed
an arrangement between plaintiff and the defendant, as can be inferred from the
acts of the defendant's employees, that the subject credit card is still good and
could still be used by the plaintiff as it would be honored by the duly accredited
establishment of defendant.

Not satisfied with the Regional Trial Court's decision, petitioner appealed to the Court of Appeals,
which in a decision promulgated on March 9, 1995 ruled in its dispositive portion.

WHEREFORE, premises considered the decision appealed from is hereby

AFFIRMED with the MODIFICATION that the defendant-appellant shall pay the
plaintiff-appellee the following: P50,000.00 as moral damages: P25,000.00 as
exemplary damages; and P10,000.00 by way of attorney's fees.

SO ORDERED. 6

Hence, the present petition on the following assignment of errors:

THE LOWER COURT ERRED IN DECLARING THAT THERE WAS INDEED AN

AGREEMENT OR ARRANGEMENT ENTERED INTO BETWEEN THE PARTIES
WHEREIN THE DEFENDANT REQUIRED THE PLAINTIFF TO ISSUE A
POSTDATED CHECK IN ITS FAVOR IN THE AMOUNT OF P15,000.00 AS
PAYMENT FOR HIS OVERDUE ACCOUNTS, WITH THE CONDITION THAT
THE PLAINTIFF'S CREDIT CARD WILL NOT BE SUSPENDED OR
CANCELLED.

II

THE LOWER COURT ERRED IN HOLDING DEFENDANT LIABLE FOR

DAMAGES AND ATTORNEY'S FEES ARISING OUT FROM THE DISHONOR
OF THE PLAINTIFF'S CREDIT CARD. 7

We find the petition meritorious.

The first issue to be resolved is whether petitioner had the right to suspend the credit card of the
private respondent.

Under the terms and conditions of the credit card, signed by the private respondent, any card
with outstanding balances after thirty (30) days from original billing/statement shall automatically
be suspended, thus:

PAYMENT OF CHARGES — BECC shall furnish the Cardholder a monthly

statement of account made through the use of the CARD and the Cardholder
agrees that all charges made through the use of the CARD shall be paid by the
Cardholder on or before the last day for payment, which is twenty (20) days from
the date of the said statement of account; and such payment due date may be
changed to an earlier date if the Cardholder's account is considered overdue
and/or with balances in excess of the approved credit limit; or to such other date
as may be deemed proper by the CARD issuer with notice to the Cardholder on
the same monthly statement of account. If the last day for payment falls on a
Saturday, Sunday or Holiday, the last day for payment automatically becomes the
last working day prior to the said payment date. However, notwithstanding the
absence or lack of proof of service of the statement of charges to the Cardholder,
the latter shall pay any or all charges made through the use of the CARD within
thirty (30) days from the date or dates thereof. Failure of Cardholder to pay any
and all charges made through the CARD within the payment period as stated in
the statement of charges or with in thirty (30) days from actual date or dates
whichever occur earlier, shall render him in default without the necessity of
demand from BECC, which the Cardholder expressly waives. These charges or
balance thereof remaining unpaid after the payment due date indicated on the
monthly statement of account shall bear interest of 3% per month and an
additional penalty fee equivalent to another 3% of the amount due for every
month or a fraction of a month's delay. PROVIDED, that if there occurs any
changes on the prevailing market rates BECC shall have the option to adjust the
rate of interest and/or penalty fee due on the outstanding obligation with prior
notice to the Cardholder.

xxx xxx xxx

Any CARD with outstanding balances unpaid after thirty (30) days from original
billing/statement date shall automatically be suspended and those with accounts
unpaid after sixty (60) days from said original billing/statement date shall
automatically be cancelled without prejudice to BECC's right to suspend or cancel
any CARD any time and for whatever reason. In case of default in his obligation
as provided for in the preceding paragraph, Cardholder shall surrender his CARD
to BECC and shall in addition to the interest and penalty charges
aforementioned, pay the following liquidated damages and/or fees (a) a collection
fee of 25% of the amount due if the account is referred to a collection agency or
attorney; (b) a service fee of P100 for every dishonored check issued by the
Cardholder's in payment of his account, without prejudice; however to BECC's
right of considering Cardholder's obligation unpaid; cable cost for demanding
payment or advising cancellation of membership shall also be for Cardholder's
account; and (c) a final fee equivalent to 25% of the unpaid balance, exclusive of
litigation expenses and judicial costs, if the payment of the account is enforced
through court action. 8

The aforequoted provision of the card cannot be any clearer. By his own admission private
respondent no payment within thirty days for his billing/statement dated 27 September 1989.
Neither did he make payment for his original billing/statement dated 27 October 1989.
Consequently as early as 28 October 1989 thirty days from the non-payment of his billing dated
27 September 1989, petitioner corporation could automatically suspend his credit card.
The next issue is whether prior to the suspension of private respondent's credit card on 28
November 1989 the parties entered into an agreement whereby the card could still be used and
would be duly honored by duly accredited establishments.

We agree with the findings of the respondent court, that there was an arrangement between the
parties, wherein the petitioner required the private respondent to issue a check worth P15,000.00
as payment for the latter's billings. However we find that the private respondent was not able to
comply with this obligation.

As the testimony of private respondent himself bears out, the agreement was for the immediate
payment of the outstanding account:

Q In said statement of account that you are supposed to pay the

P8,974.84 the charge of interest and penalties, did you note that?

A Yes, sir I noted the date.

Q When?

A When I returned from the Quezon province, sir

Q When?

A I think November 22, sir.

Q So that before you used again the credit card you were not able
to pay immediately this P8,987.84 in cash?

A I paid P15,000.00, sir.

Q My question Mr. witness is, did you pay this P8,987.84 in

charge of interest and penalties immediately in cash?

A In cash no, but in check, sir.

Q You said that you noted the word "immediately" in bold letters
in your statement of accounts, why did not pay immediately?

A Because I received that late, sir.

Q Yes, on November 22 when you received from the secretary of

the defendant telling you to pay the principal amount of
P8,987.84, why did you not pay?

A There was a communication between me and the defendant, I

was required to pay P8,000.00 but I paid in check for P15,000.00,
sir.

Q Do you have any evidence to show that the defendant required

you to pay in check for P15,000.00?

A Yes, sir.

Q Where is it?
 A It was telecommunication, sir.

Q So there is no written communication between you and the

defendant?

A There was none, sir.

Q There is no written agreement which says that P8,987.84

should be paid for P15,000.00 in check, there is none?

A Yes, no written agreement, sir.

Q And you as a lawyer you know that a check is not considered

as cash specially when it is postdated sent to the defendant?

A That is correct, sir.

Clearly the purpose of the arrangement between the parties on November 22, 1989, was for the
immediate payment of the private respondent's outstanding account, in order that his credit card
would not be suspended.

As agreed upon by the parties, on the following day, private respondent did issue a check for
P15,000.00. However, the check was postdated 15 December 1989. Settled is the doctrine that a
check is only a substitute for money and not money, the delivery of such an instrument does not,
by itself operate as payment. 9 This is especially true in the case of a postdated check.

Thus, the issuance by the private respondent of the postdated check was not effective payment.
It did not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner
corporation was therefore justified in suspending his credit card.

Finally, we find no legal and factual basis for private respondent's assertion that in canceling the
credit card of the private respondent, petitioner abused its right under the terms and conditions of
the contract.

To find the existence of an abuse of right Article 19 the following elements must be present (1)
There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of
prejudicing or injuring another. 10

Time and again this Court has held that good faith is presumed and the burden of proving bad
faith is on the party alleging it. 11 This private respondent failed to do. In fact, the action of the
petitioner belies the existence of bad faith. As early as 28 October 1989, petitioner could have
suspended private respondent's card outright. Instead, petitioner allowed private respondent to
use his card for several weeks. Petitioner had even notified private respondent of the impending
suspension of his credit card and made special accommodations for him for setting his
outstanding account. As such, petitioner cannot be said to have capriciously and arbitrarily
canceled the private respondent's credit card.

We do not dispute the findings of the lower court that private respondent suffered damages as a
result of the cancellation of his credit card. However, there is a material distinction between
damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm
which results from the injury; and damages are the recompense or compensation awarded for
the damage suffered. Thus, there can be damage without injury in those instances in which the
loss or harm was not the results of a violation of a legal duty. In such cases, the consequences
must be borne by the injured person alone, the law affords no remedy for damages resulting from
an act which does not amount to a legal injury or wrong. These situations are often
called damnum absque
injuria. 12

In other words, in order that the plaintiff may maintain an action for the injuries of which he
complaints, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal responsibility by
the person causing it. The underlying basis for the award of tort damages is the premise that an
individual was injured in contemplation of law. Thus, there must first be a breach of some duty
and the imposition of liability for that breach before damages may be awarded; 13 and the breach
of such duty should be the proximate cause of the injury.

We therefore disagree with the ruling of the respondent court that the dishonor of the credit card
of the private respondent by Café Adriatico is attributable to petitioner for its willful or gross
neglect to inform the private respondent of the suspension of his credit card, the unfortunate
consequence of which brought social humiliation and embarrassment to the private
respondent. 14

It was petitioner's failure to settle his obligation which caused the suspension of his credit card
and subsequent dishonor at Café Adriatico. He can not now pass the blame to the petitioner for
not notifying him of the suspension of his card. As quoted earlier, the application contained the
stipulation that the petitioner could automatically suspend a card whose billing has not been paid
for more than thirty days. Nowhere is it stated in the terms and conditions of the application that
there is a need of notice before suspension may be affected as private respondent claims. 15

This notwithstanding on November 28, 1989, the day of the suspension of private respondent's
card, petitioner sent a letter by ordinary mail notifying private respondent that his card had been
temporarily suspended. Under the Rules on Evidence, there is a disputable presumption that
letters duly directed and mailed were received on the regular course of mail. 16 Aside from the
private respondent's bare denial he failed to present evidence to rebut the presumption that he
received said notice. In fact upon cross examination private respondent admitted that he did
receive the letter notifying him of the cancellation:

Q Now you were saying that there was a first letter sent to you by
the defendant?

A Your letter, sir.

Q Was that the first letter that you received?

A Yes, sir.

Q It is that there was a communication first between you and the

defendant?

A There was none, sir. I received a cancellation notice but that

was after November 27. 17

As it was private respondent's own negligence which was the proximate cause of his
embarrassing and humiliating experience, we find the award of damages by the respondent court
clearly unjustified. We take note of the fact that private respondent has not yet paid his
outstanding account with petitioner.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals ordering petitioner to pay
private respondent P100,000.00 as moral damages P50,000.00 as exemplary damages and
P20,000.00 as attorney's fees, is SET ASIDE. Private respondent is DIRECTED to pay his
outstanding obligation with the petitioner in the amount of P14,439.41.

SO ORDERED.

G.R. No. 190846, February 03, 2016

TOMAS P. TAN, JR., Petitioner, v. JOSE G. HOSANA, Respondent.

DECISION

BRION, J.:

Before us is a petition for review on certiorari1 challenging the August 28, 2009 decision2 and November
17, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 88645. chanRoblesvirtual Lawlib ra ry

The Facts

The respondent Jose G. Hosana (Jose) married Milagros C. Hosana (Milagros) on January 14,
1979.4During their marriage, Jose and Milagros bought a house and lot located at Tinago, Naga City,
which lot was covered by Transfer Certificate of Title (TCT) No. 21229.5 chanroblesvi rt uallawl ibra ry

On January 13, 1998, Milagros sold to the petitioner Tomas P. Tan, Jr. (Tomas) the subject property, as
evidenced by a deed of sale executed by Milagros herself and as attorney-in-fact of Jose, by virtue of a
Special Power of Attorney (SPA) executed by Jose in her favor.6 The Deed of Sale stated that the
purchase price for the lot was P200,000.00.7 After the sale, TCT No. 21229 was cancelled and TCT No.
32568 was issued in the name of Tomas.8 chanroblesvi rtua llawli bra ry

On October 19, 2001, Jose filed a Complaint for Annulment of Sale/Cancellation of Title/Reconveyance
and Damages against Milagros, Tomas, and the Register of Deeds of Naga City.9 The complaint was filed
before the Regional Trial Court (RTC), Branch 62, Naga City. In the complaint, Jose averred that while
he was working in Japan, Milagros, without his consent and knowledge, conspired with Tomas to execute
the SPA by forging Jose's signature making it appear that Jose had authorized Milagros to sell the
subject property to Tomas.10 chan roblesv irt uallawl ibrary

In his Answer, Tomas maintained that he was a buyer in good faith and for value.11 Before he paid the
full consideration of the sale, Tomas claimed he sought advice from his lawyer-friend who told him that
the title of the subject lot was authentic and in order.12 Furthermore, he alleged that the SPA authorizing
Milagros to sell the property was annotated at the back of the title.13 chan rob lesvi rtua llawlib ra ry

Tomas filed a cross-claim against Milagros and claimed compensatory and moral damages, attorney's
fees, and expenses, for litigation, in the event that judgment be rendered in favor of Jose.14 chan roblesv irtuallawl ib rary

The RTC declared Milagros in default for her failure to file her answer to Jose's complaint and Tomas'
cross-claim.15 On the other hand, it dismissed Tomas' complaint against the Register of Deeds since it
was only a nominal party.16 chanrob lesvirt uallawl ibra ry

After the pre-trial conference, trial on the merits ensued.17 chan roblesv irt uallawl ibra ry

Jose presented his brother, Bonifacio Hosana (Bonifacio), as sole witness. Bonifacio testified that he
learned of the sale of the subject property from Milagros' son.18 When Bonifacio confronted Milagros that
Jose would get angry because of the sale, Milagros retorted that she sold the property because she
needed the money. Bonifacio immediately informed Jose, who was then in Japan, of the sale.19 chanrob lesvi rtua llawli bra ry

Jose was furious when he learned of the sale and went back to the Philippines. Jose and Bonifacio
verified with the Register of Deeds and discovered that the title covering the disputed property had been
transferred to Tomas.20 chanroblesv irt uallawl ibra ry

Bonifacio further testified that Jose's signature in the SPA was forged.21 Bonifacio presented documents
containing the signature of Jose for comparison: Philippine passport, complaint-affidavit, duplicate
original of SPA dated 16 February 2002, notice of lis pendens, community tax certificate, voter's
affidavit, specimen signatures, and a handwritten letter.22 chan roble svirtuallaw lib rary

On the other hand, Tomas submitted his own account of events as corroborated by Rosana Robles
(Rosana), his goddaughter. Sometime in December 1997, Tomas directed Rosana to go to the house of
Milagros to confirm if Jose knew about the sale transaction. Through a phone call by Milagros to Jose,
Rosana was able to talk to Jose who confirmed that he was aware of the sale and had given his wife
authority to proceed with the sale. Rosana informed Tomas of Jose's confirmation.23 chan roblesv irt uallawl ibrary

With the assurance that all the documents were in order, Tomas made a partial payment of P350,000.00
and another P350,000.00 upon the execution of the Deed of Absolute Sale (Deed of Sale). Tomas
noticed that the consideration written by Milagros on the Deed of Sale was only P200,000.00; he
inquired why the written consideration was lower than the actual consideration paid. Milagros explained
that it was done to save on taxes. Tomas also learned from Milagros that she needed money badly and
had to sell the house because Jose had stopped sending her money.24 chanRoble svirtual Lawlib ra ry

The RTC Ruling

In its decision dated December 27, 2006,25 the RTC decided in favor of Jose and nullified the sale of the
subject property to Tomas. The RTC held that the SPA dated June 10, 1996, wherein Jose supposedly
appointed Milagros as his attorney-in-fact, was actually null and void.

Tomas and Milagros were ordered to jointly and severally indemnify Jose the amount of P20,000.00 as
temperate damages.26 chanRoblesvi rtua lLawl ib rary

The CA Ruling

Tomas appealed the RTC's ruling to the CA.

In a decision dated August 28, 2009,27 the CA affirmed the RTC ruling that the deed of sale and the SPA
were void. However, the CA modified the judgment of the RTC: first, by deleting the award of temperate
damages; and second, by directing Jose and Milagros to reimburse Tomas the purchase price of
P200,000.00, with interest, under the principle of unjust enrichment. Despite Tomas' allegation that he
paid P700,000.00 for the subject lot, the CA found that there was no convincing evidence that
established this claim.28 cha nro blesvi rtua llawli bra ry

Tomas filed a motion for the reconsideration of the CA decision on the ground that the amount of
P200,000.00 as reimbursement for the purchase price of the house and lot was insufficient and not
supported by the evidence formally offered before and admitted by the RTC. Tomas contended that the
actual amount he paid as consideration for the sale was P700,000.00, as supported by his testimony
before the RTC.29 chanro blesvi rtua llawli bra ry

The C A denied the motion for reconsideration for lack of merit" in a resolution dated November 17,
2009.30chanRoble svi rtual Lawli bra ry

The Petition

Tomas filed the present petition for review on certiorari to challenge the CA ruling which ordered the
reimbursement of P200,000.00 only, instead of the actual purchase price he paid in the amount of
P700,000.00.31 chanrob lesvi rtua llawlib ra ry

Tomas argues that, first, all matters contained in the deed of sale, including the consideration stated,
cannot be used as evidence since it was declared null and void; second, the deed of sale was not
specifically offered to prove the actual consideration of the sale;32third, his testimony establishing the
actual purchase price of P700,000.00 paid was uncontroverted;33 and, fourth, Jose must return the full
amount actually paid under the principle of solutio indebiti.34 cha nro blesvi rtua llawli bra ry

Jose, on the other hand, argues that first, Jose is estopped from questioning the purchase price
indicated in the deed of dale for failing to immediately raise this question; and second, the terms of an
agreement reduced into writing are deemed to include all the terms agreed upon and no other evidence
can be admitted other than the terms of the agreement itself.35 cha nRoblesv irt ual Lawlib rary

The Issues

The core issues are (1) whether the deed of sale can be used as the basis for the amount of
consideration paid; and (2) whether the testimony of Tomas is sufficient to establish the actual purchase
price of the sale. chanRob lesvi rtual Lawl ibra ry

OUR RULING
We affirm the CA ruling and deny the petition.

Whether Tomas paid the purchase price of P700,000.00 is a question of fact not proper in a petition for
review on certiorari. Appreciation of evidence and inquiry on the correctness of the appellate court's
factual findings are not the functions of this Court, as we are not a trier of facts.36 chanroblesvi rtua llawli bra ry

This Court does not address questions of fact which require us to rule on "the truth or falsehood of
alleged facts,"37 except in the following cases: ChanRoble sVirtualawl ibra ry

(1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the
inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of
discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant
and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when 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
(10) when the findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record.38c han roblesv irt uallawl ibra ry

The present case does not fall under any of these exceptions.

Whether Tomas sufficiently proved that he paid P700,000.00 for the subject property is a factual
question that the CA had already resolved in the negative.39 The CA found Tomas' claim of paying
P700,000.00 for the subject property to be unsubstantiated as he failed to tender any convincing
evidence to establish his claim.

We uphold the CA's finding.

In civil cases, the basic rule is that the party making allegations has the burden of proving them by a
preponderance of evidence.40 Moreover, the parties must rely on the strength of their own evidence, not
upon the weakness of the defense offered by their opponent.41 chanro blesvi rtua llawli bra ry

Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side
and is usually considered to be synonymous with the term "greater weight of the evidence" or "greater
weight of the credible evidence."42 Preponderance of evidence is a phrase that, in the last analysis,
means probability of the truth. It is evidence that is more convincing to the court as it is worthier of
belief than that which is offered in opposition thereto.43 cha nrob lesvi rt uallawlib ra ry

We agree with the CA that Tomas' bare allegation that he paid Milagros the sum of P700,000.00 cannot
be considered as proof of payment, without any other convincing evidence to establish this claim.
Tomas' bare allegation, while uncontroverted, does not automatically entitle it to be given weight and
credence.

It is settled in jurisprudence that one who pleads payment has the burden of proving it;44 the burden
rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.45 A mere
allegation is not evidence,46 and the person who alleges has the burden of proving his or her allegation
with the requisite quantum of evidence, which in civil cases is preponderance of evidence.

The force and effect of a void contract is distinguished from its admissibility as evidence.

The next question to be resolved is whether the CA correctly ordered the reimbursement of
P200,000.00, which is the consideration stated in the Deed of Sale, based on the principle of unjust
enrichment.

The petitioner argues that the CA erred in relying on the consideration stated in the deed of sale as basis
for the reimbursable amount because a null and void document cannot be used as evidence.

We find no merit in the petitioner's argument.

A void or inexistent contract has no force and effect from the very beginning.47 This rule applies to
contracts that are declared void by positive provision of law, as in the case of a sale of conjugal property
without the other spouse's written consent.48 A void contract is equivalent to nothing and is absolutely
wanting in civil effects.49 It cannot be validated either by ratification or prescription.50 When, however,
any of the terms of a void contract have been performed, an action to declare its inexistence is
necessary to allow restitution of what has been given under it.51 cha nro blesvi rt uallawli bra ry

It is basic that if a void contract has already "been performed, the restoration of what has been given is
in order."52 This principle springs from Article 22 of the New Civil Code which states that "every person
who through an act of performance by another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal ground, shall return the same." Hence,
the restitution of what each party has given is a consequence of a void and inexistent contract.

While the terms and provisions of a void contract cannot be enforced since it is deemed inexistent, it
does not preclude the admissibility of the contract as evidence to prove matters that occurred in the
course of executing the contract, i.e., what each party has given in the execution of the contract.

Evidence is the means of ascertaining in a judicial proceeding the truth respecting a matter of fact,
sanctioned by the Rules of Court.53 The purpose of introducing documentary evidence is to ascertain the
truthfulness of a matter at issue, which can be the entire content or a specific provision/term in the
document.

The deed of sale as documentary evidence may be used as a means to ascertain the truthfulness of the
consideration stated and its actual payment. The purpose of introducing the deed of sale as evidence is
not to enforce the terms written in the contract, which is an obligatory force and effect of a valid
contract. The deed of sale, rather, is used as a means to determine matters that occurred in the
execution of such contract, i.e., the determination of what each party has given under the void contract
to allow restitution and prevent unjust enrichment.

Evidence is admissible when it is relevant to the issue and is not excluded by the law of these
rules.54There is no provision in the Rules of Evidence which excludes the admissibility of a void
document. The Rules only require that the evidence is relevant and not excluded by the Rules for its
admissibility.55
cha nrob lesvi rtua llawlib ra ry

Hence, a void document is admissible as evidence because the purpose of introducing it as evidence is
to ascertain the truth respecting a matter of fact, not to enforce the terms of the document itself.

It is also settled in jurisprudence that with respect to evidence which appears to be

of doubtful relevancy, incompetency, or admissibility, the safer policy is to be liberal and not reject them
on doubtful or technical grounds, but admit them unless plainly irrelevant, immaterial, or incompetent;
for the reason that their rejection places them beyond the consideration of the court, if they are
thereafter found relevant or competent. On the other hand, their admission, if they turn out later to be
irrelevant or incompetent, can easily be remedied by completely discarding them or ignoring them.56 cha nrob lesvi rtua llawli bra ry

In the present case, the deed of sale was declared null and void by positive provision of the law
prohibiting the sale of conjugal property without the spouse's consent. It does not, however, preclude
the possibility that Tomas paid the consideration stated therein. The admission of the deed of sale as
evidence is consistent with the liberal policy of the court to admit the evidence: which appears to be
relevant in resolving an issue before the courts.

An offer to prove the regular execution of the deed of sale is basis for the court to determine
the presence of the essential elements of the sale, including the consideration paid.

Tomas argues that the Deed of Sale was not specifically offered to prove the actual consideration of the
sale and, hence, cannot be considered by the court. Tomas is incorrect.

The deed of sale in the present case was formally offered by both parties as evidence.57 Tomas, in fact,
formally offered it for the purpose of proving its execution and the regularity of the sale.58chan roble svirtuallaw lib rary

The offer of the deed of sale to prove its regularity necessarily allowed the; lower courts to consider the
terms written therein to determine whether all the essential elements59 for a valid contract of sale are
present, including the consideration of the sale. The fact that the sale was declared null and void does
not prevent the court from relying on consideration stated in the deed of sale to determine the actual
amount paid by the petitioner for the purpose of preventing unjust enrichment.

Hence, the specific offer of the Deed of Sale to prove the actual consideration of the sale is not
necessary since it is necessarily included in determining the regular execution of the sale.

The consideration stated in the notarized Deed of Sale is prima facie evidence of the amount
paid by the petitioner.

The notarized deed of sale is a public document and is prima facie evidence of the truth of the facts
stated therein.60 chan roble svirtuallaw lib rary

Prima facie evidence is defined as evidence good and sufficient on its face. Such evidence as, in the
judgment of the law, is sufficient to establish a given fact, or the group or chain of facts constituting the
party's claim or defense and which if not rebutted or contradicted, will remain sufficient.61
chanroblesvirtuallawlibra ry

In the present case, the consideration stated in the deed of sale constitutes prima facie evidence of the
amount paid by Tomas for the transfer of the property to his name. Tomas failed to adduce satisfactory
evidence to rebut or contradict the consideration stated as the actual consideration and amount paid to
Milagros and Jose.

The deed of sale was declared null and void by a positive provision of law requiring the consent of both
spouses for the sale of conjugal property. There is, however, no question on the presence of the
consideration of the sale, except with respect to the actual amount paid. While the deed of sale has no
force and effect as a contract, it remains prima facie evidence of the actual consideration paid.

As earlier discussed, Tomas failed to substantiate his claim that he paid to Milagros the amount of
P700,000.00, instead of the amount of P200,000.00 stated in the deed of sale. No documentary or
testimonial evidence to prove payment of the higher amount was presented, apart from Tomas' sole
testimony. Tomas' sole testimony of payment is self-serving and insufficient to unequivocally prove that
Milagros received P700,000.00 for the subject property.

Hence, the consideration stated in the deed of sale remains sufficient evidence of the actual amount the
petitioner paid and the same amount which should be returned under the principle of unjust enrichment.

Unjust enrichment exists "when a person unjustly retains a benefit at the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity, and
good conscience."62 The prevention of unjust enrichment is a recognized public policy of the State and is
based on Article 22 of the Civil Code.63 chan rob lesvi rtual lawlib rary

The principle of unjust enrichment requires Jose to return what he or Milagros received under the void
contract which presumably benefitted their conjugal partnership.

Accordingly, the CA correctly ordered Jose to return the amount of P200,000.00 since this the
consideration stated in the Deed of Sale and given credence by the lower court. Indeed, even Jose
expressly stated in his comment that Tomas is entitled to recover the money paid by him in the amount
of P200,000.00 as appearing in the contract.

WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated August 28,
2009 and the resolution dated November 17, 2009, of the Court of Appeals in CA-G.R. CV No. 88645
is AFFIRMED. Costs against the petitioner.

SO ORDERED. cralawlawlibra ry

.R. No. 195670 December 3, 2012

WILLEM BEUMER, Petitioner,

vs.
AVELINA AMORES, Respondent.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of CoLlli
assailing the October 8, 2009 Decision2 and January 24, 2011 Resolution3 of the court of Appeals
(CA) in CA-G.R. CV No. 01940, which affirmed the February 28, 2007 Decision4 of the Regional
Trial Court (RTC) of Negros Oriental, Branch 34 in Civil Case No. I 2884. The foregoing rulings
dissolved the conjugal partnership of gains of Willem Beumer (petitioner) and Avelina Amores
(respondent) and distributed the properties forming part of the said property regime.

The Factual Antecedents

Petitioner, a Dutch National, and respondent, a Filipina, married in March 29, 1980. After several
years, the RTC of Negros Oriental, Branch 32, declared the nullity of their marriage in the
Decision5 dated November 10, 2000 on the basis of the former’s psychological incapacity as
contemplated in Article 36 of the Family Code.

Consequently, petitioner filed a Petition for Dissolution of Conjugal Partnership6 dated December
14, 2000 praying for the distribution of the following described properties claimed to have been
acquired during the subsistence of their marriage, to wit:

By Purchase:

a. Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete
Cadastre, covered by Transfer Certificate of Title (TCT) No. 22846, containing an area of
252 square meters (sq.m.), including a residential house constructed thereon.

b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No. 21974, containing an area
of 806 sq.m., including a residential house constructed thereon.

c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No. 21306, containing an area
of 756 sq.m.

d. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete
Cadastre, covered by TCT No. 21307, containing an area of 45 sq.m.

By way of inheritance:

e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by TCT No. 23567, containing
an area of 2,635 sq.m. (the area that appertains to the conjugal partnership is 376.45
sq.m.).

f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by TCT No. 23575, containing
an area of 360 sq.m. (the area that appertains to the conjugal partnership is 24 sq.m.).7

In defense,8 respondent averred that, with the exception of their two (2) residential houses on
Lots 1 and 2142, she and petitioner did not acquire any conjugal properties during their marriage,
the truth being that she used her own personal money to purchase Lots 1, 2142, 5845 and 4 out
of her personal funds and Lots 2055-A and 2055-I by way of inheritance.9 She submitted a joint
affidavit executed by her and petitioner attesting to the fact that she purchased Lot 2142 and the
improvements thereon using her own money.10 Accordingly, respondent sought the dismissal of
the petition for dissolution as well as payment for attorney’s fees and litigation expenses.11

During trial, petitioner testified that while Lots 1, 2142, 5845 and 4 were registered in the name of
respondent, these properties were acquired with the money he received from the Dutch
government as his disability benefit12 since respondent did not have sufficient income to pay for
their acquisition. He also claimed that the joint affidavit they submitted before the Register of
Deeds of Dumaguete City was contrary to Article 89 of the Family Code, hence, invalid.13

For her part, respondent maintained that the money used for the purchase of the lots came
exclusively from her personal funds, in particular, her earnings from selling jewelry as well as
products from Avon, Triumph and Tupperware.14 She further asserted that after she filed for
annulment of their marriage in 1996, petitioner transferred to their second house and brought
along with him certain personal properties, consisting of drills, a welding machine, grinders,
clamps, etc. She alleged that these tools and equipment have a total cost of P500,000.00.15

The RTC Ruling

On February 28, 2007, the RTC of Negros Oriental, Branch 34 rendered its Decision, dissolving
the parties’ conjugal partnership, awarding all the parcels of land to respondent as her
paraphernal properties; the tools and equipment in favor of petitioner as his exclusive properties;
the two (2) houses standing on Lots 1 and 2142 as co-owned by the parties, the dispositive of
which reads:

WHEREFORE, judgment is hereby rendered granting the dissolution of the conjugal partnership
of gains between petitioner Willem Beumer and respondent Avelina Amores considering the fact
that their marriage was previously annulled by Branch 32 of this Court. The parcels of land
covered by Transfer Certificate of Titles Nos. 22846, 21974, 21306, 21307, 23567 and 23575 are
hereby declared paraphernal properties of respondent Avelina Amores due to the fact that while
these real properties were acquired by onerous title during their marital union, Willem Beumer,
being a foreigner, is not allowed by law to acquire any private land in the Philippines, except
through inheritance.

The personal properties, i.e., tools and equipment mentioned in the complaint which were
brought out by Willem from the conjugal dwelling are hereby declared to be exclusively owned by
the petitioner.

The two houses standing on the lots covered by Transfer Certificate of Title Nos. 21974 and
22846 are hereby declared to be co-owned by the petitioner and the respondent since these
were acquired during their marital union and since there is no prohibition on foreigners from
owning buildings and residential units. Petitioner and respondent are, thereby, directed to subject
this court for approval their project of partition on the two houses aforementioned.

The Court finds no sufficient justification to award the counterclaim of respondent for attorney’s
fees considering the well settled doctrine that there should be no premium on the right to litigate.
The prayer for moral damages are likewise denied for lack of merit.

No pronouncement as to costs.

SO ORDERED.16

It ruled that, regardless of the source of funds for the acquisition of Lots 1, 2142, 5845 and 4,
petitioner could not have acquired any right whatsoever over these properties as petitioner still
attempted to acquire them notwithstanding his knowledge of the constitutional prohibition against
foreign ownership of private lands.17 This was made evident by the sworn statements petitioner
executed purporting to show that the subject parcels of land were purchased from the exclusive
funds of his wife, the herein respondent.18 Petitioner’s plea for reimbursement for the amount he
had paid to purchase the foregoing properties on the basis of equity was likewise denied for not
having come to court with clean hands.

The CA Ruling

Petitioner elevated the matter to the CA, contesting only the RTC’s award of Lots 1, 2142, 5845
and 4 in favor of respondent. He insisted that the money used to purchase the foregoing
properties came from his own capital funds and that they were registered in the name of his
former wife only because of the constitutional prohibition against foreign ownership. Thus, he
prayed for reimbursement of one-half (1/2) of the value of what he had paid in the purchase of
the said properties, waiving the other half in favor of his estranged ex-wife.19

On October 8, 2009, the CA promulgated a Decision20 affirming in toto the judgment rendered by
the RTC of Negros Oriental, Branch 34. The CA stressed the fact that petitioner was "well-aware
of the constitutional prohibition for aliens to acquire lands in the Philippines."21 Hence, he cannot
invoke equity to support his claim for reimbursement.
Consequently, petitioner filed the instant Petition for Review on Certiorari assailing the CA
Decision due to the following error:

UNDER THE FACTS ESTABLISHED, THE COURT ERRED IN NOT SUSTAINING THE
PETITIONER’S ATTEMPT AT SUBSEQUENTLY ASSERTING OR CLAIMING A RIGHT OF
HALF OR WHOLE OF THE PURCHASE PRICE USED IN THE PURCHASE OF THE REAL
PROPERTIES SUBJECT OF THIS CASE.22 (Emphasis supplied)

The Ruling of the Court

The petition lacks merit.

The issue to be resolved is not of first impression. In In Re: Petition For Separation of Property-
Elena Buenaventura Muller v. Helmut Muller23 the Court had already denied a claim for
reimbursement of the value of purchased parcels of Philippine land instituted by a foreigner
Helmut Muller, against his former Filipina spouse, Elena Buenaventura Muller. It held that Helmut
Muller cannot seek reimbursement on the ground of equity where it is clear that he willingly and
knowingly bought the property despite the prohibition against foreign ownership of Philippine
land24enshrined under Section 7, Article XII of the 1987 Philippine Constitution which reads:

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or

conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of
the public domain.

Undeniably, petitioner openly admitted that he "is well aware of the above-cited constitutional
prohibition"25 and even asseverated that, because of such prohibition, he and respondent
registered the subject properties in the latter’s name.26 Clearly, petitioner’s actuations showed his
palpable intent to skirt the constitutional prohibition. On the basis of such admission, the Court
finds no reason why it should not apply the Muller ruling and accordingly, deny petitioner’s claim
for reimbursement.

As also explained in Muller, the time-honored principle is that he who seeks equity must do
equity, and he who comes into equity must come with clean hands. Conversely stated, he who
has done inequity shall not be accorded equity. Thus, a litigant may be denied relief by a court of
equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent,
or deceitful.27

In this case, petitioner’s statements regarding the real source of the funds used to purchase the
subject parcels of land dilute the veracity of his claims: While admitting to have previously
executed a joint affidavit that respondent’s personal funds were used to purchase Lot 1,28 he
likewise claimed that his personal disability funds were used to acquire the same. Evidently,
these inconsistencies show his untruthfulness. Thus, as petitioner has come before the Court
with unclean hands, he is now precluded from seeking any equitable refuge.

In any event, the Court cannot, even on the grounds of equity, grant reimbursement to petitioner
given that he acquired no right whatsoever over the subject properties by virtue of its
unconstitutional purchase. It is well-established that equity as a rule will follow the law and will
not permit that to be done indirectly which, because of public policy, cannot be done
directly.29 Surely, a contract that violates the Constitution and the law is null and void, vests no
rights, creates no obligations and produces no legal effect at all.30 Corollary thereto, under Article
1412 of the Civil Code,31 petitioner cannot have the subject properties deeded to him or allow him
to recover the money he had spent for the purchase thereof. The law will not aid either party to
an illegal contract or agreement; it leaves the parties where it finds them.32 Indeed, one cannot
salvage any rights from an unconstitutional transaction knowingly entered into.
Neither can the Court grant petitioner’s claim for reimbursement on the basis of unjust
enrichment.33 As held in Frenzel v. Catito, a case also involving a foreigner seeking monetary
reimbursement for money spent on purchase of Philippine land, the provision on unjust
enrichment does not apply if the action is proscribed by the Constitution, to wit:

Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him. 1âwphi 1

The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST" (No person should unjustly enrich himself at the expense of another). An action for
recovery of what has been paid without just cause has been designated as an accion in rem
verso. This provision does not apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to bar
the petitioner from filing an accion in rem verso over the subject properties, or from recovering
the money he paid for the said properties, but, as Lord Mansfield stated in the early case of
Holman v. Johnson: "The objection that a contract is immoral or illegal as between the plaintiff
and the defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake,
however, that the objection is ever allowed; but it is founded in general principles of policy, which
the defendant has the advantage of, contrary to the real justice, as between him and the
plaintiff."34(Citations omitted)

Nor would the denial of his claim amount to an injustice based on his foreign
citizenship.35 Precisely, it is the Constitution itself which demarcates the rights of citizens and non-
citizens in owning Philippine land. To be sure, the constitutional ban against foreigners applies
only to ownership of Philippine land and not to the improvements built thereon, such as the two
(2) houses standing on Lots 1 and 2142 which were properly declared to be co-owned by the
parties subject to partition. Needless to state, the purpose of the prohibition is to conserve the
national patrimony36 and it is this policy which the Court is duty-bound to protect.

WHEREFORE, the petition is DENIED. Accordingly, the assailed October 8, 2009 Decision and
January 24, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 01940 are AFFIRMED.

SO ORDERED.

G.R. No. 170479 February 18, 2008

ANDRE T. ALMOCERA, petitioner,

vs.
JOHNNY ONG, respondent.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure which seeks to set aside the Decision1 of the Court of Appeals dated 18 July 2005 in
CA-G.R. CV No. 75610 affirming in toto the Decision2 of Branch 11 of the Regional Trial Court
(RTC) of Cebu City in Civil Case No. CEB-23687 and its Resolution3 dated 16 November 2005
denying petitioner’s motion for reconsideration. The RTC decision found petitioner Andre T.
Almocera, Chairman and Chief Executive Officer of First Builder Multi-Purpose Cooperative
(FBMC), solidarily liable with FMBC for damages.
Stripped of non-essentials, the respective versions of the parties have been summarized by the
Court of Appeals as follows:

Plaintiff Johnny Ong tried to acquire from the defendants a "townhome" described as Unit
No. 4 of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the selling
price of the unit was P3,400,000.00 pesos, for a lot area of eighty-eight (88) square
meters with a three-storey building. Out of the purchase price, plaintiff was able to pay
the amount of P1,060,000.00. Prior to the full payment of this amount, plaintiff claims that
defendants Andre Almocera and First Builders fraudulently concealed the fact that before
and at the time of the perfection of the aforesaid contract to sell, the property was already
mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition,
the construction of the house has long been delayed and remains unfinished. On March
13, 1999, Lot 4-a covered by TCT No. 148818, covering the unit was advertised in a local
tabloid for public auction for foreclosure of mortgage. It is the assertion of the plaintiff that
had it not for the fraudulent concealment of the mortgage and encumbrance by
defendants, he would have not entered into the contract to sell.

On the other hand, defendants assert that on March 20, 1995, First Builders Multi-
purpose Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong,
plaintiff’s brother. This amount was used to finance the documentation requirements of
the LBP for the funding of the Atrium Town Homes. This loan will be applied in payment
of one (1) town house unit which Tommy Ong may eventually purchase from the project.
When the project was under way, Tommy Ong wanted to buy another townhouse for his
brother, Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given
as additional partial payment. However, the particular unit was not yet identified. It was
only on January 10, 1997 that Tommy Ong identified Unit No. 4 plaintiff’s chosen unit and
again tendered P350,000.00 as his third partial payment. When the contract to sell for
Unit 4 was being drafted, Tommy Ong requested that another contract to sell covering
Unit 5 be made so as to give Johnny Ong another option to choose whichever unit he
might decide to have. When the construction was already in full blast, defendants were
informed by Tommy Ong that their final choice was Unit 5. It was only upon knowing that
the defendants will be selling Unit 4 to some other persons for P4million that plaintiff
changed his choice from Unit 5 to Unit 4.4

In trying to recover the amount he paid as down payment for the townhouse unit, respondent
Johnny Ong filed a complaint for Damages before the RTC of Cebu City, docketed as Civil Case
No. CEB-23687, against defendants Andre T. Almocera and FBMC alleging that defendants
were guilty of fraudulent concealment and breach of contract when they sold to him a townhouse
unit without divulging that the same, at the time of the perfection of their contract, was already
mortgaged with the Land Bank of the Philippines (LBP), with the latter causing the foreclosure of
the mortgage and the eventual sale of the townhouse unit to a third person.

In their Answer, defendants denied liability claiming that the foreclosure of the mortgage on the
townhouse unit was caused by the failure of complainant Johnny Ong to pay the balance of the
price of said townhouse unit.

After the pre-trial conference was terminated, trial on the merits ensued. Respondent and his
brother, Thomas Y. Ong, took the witness stand. For defendants, petitioner testified.

In a Decision dated 20 May 2002, the RTC disposed of the case in this manner:

WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in this
case in favor of the plaintiff and against the defendants:

(a) Ordering the defendants to solidarily pay to the plaintiff the sum of P1,060,000.00,
together with a legal interest thereon at 6% per annum from April 21, 1999 until its full
 payment before finality of the judgment. Thereafter, if the amount adjudged remains
unpaid, the interest rate shall be 12% per annum computed from the time when the
judgment becomes final and executory until fully satisfied;

(b) Ordering the defendants to solidarily pay to the plaintiff the sum of P100,000.00 as
moral damages, the sum of P50,000.00 as attorney’s fee and the sum of P15,619.80 as
expenses of litigation; and

(c) Ordering the defendants to pay the cost of this suit.5

The trial court ruled against defendants for not acting in good faith and for not complying with
their obligations under their contract with respondent. In the Contract to Sell6 involving Unit 4 of
the Atrium Townhomes, defendants agreed to sell said townhouse to respondent
for P3,400,000.00. The down payment was P1,000,000.00, while the balance of P2,400,000.00
was to be paid in full upon completion, delivery and acceptance of the townhouse. Under the
contract which was signed on 10 January 1997, defendants agreed to complete and convey to
respondent the unit within six months from the signing thereof.

The trial court found that respondent was able to make a down payment or partial payment
of P1,060,000.00 and that the defendants failed to complete the construction of, as well as
deliver to respondent, the townhouse within six months from the signing of the contract.
Moreover, respondent was not informed by the defendants at the time of the perfection of their
contract that the subject townhouse was already mortgaged to LBP. The mortgage was
foreclosed by the LBP and the townhouse was eventually sold at public auction. It said that
defendants were guilty of fraud in their dealing with respondent because the mortgage was not
disclosed to respondent when the contract was perfected. There was also non-compliance with
their obligations under the contract when they failed to complete and deliver the townhouse unit
at the agreed time. On the part of respondent, the trial court declared he was justified in
suspending further payments to the defendants and was entitled to the return of the down
payment.

Aggrieved, defendants appealed the decision to the Court of Appeals assigning the following as
errors:

1. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF HAS A VALID CAUSE
OF ACTION FOR DAMAGES AGAINST DEFENDANT(S).

2. THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT ANDRE T.

ALMOCERA IS SOLIDARILY LIABLE WITH THE COOPERATIVE FOR THE DAMAGES
TO THE PLAINTIFF.7

The Court of Appeals ruled that the defendants incurred delay when they failed to deliver the
townhouse unit to the respondent within six months from the signing of the contract to sell. It
agreed with the finding of the trial court that the nonpayment of the balance of P2.4M by
respondent to defendants was proper in light of such delay and the fact that the property subject
of the case was foreclosed and auctioned. It added that the trial court did not err in giving
credence to respondent’s assertion that had he known beforehand that the unit was used as
collateral with the LBP, he would not have proceeded in buying the townhouse. Like the trial
court, the Court of Appeals gave no weight to defendants’ argument that had respondent paid the
balance of the purchase price of the townhouse, the mortgage could have been released. It
explained:

We cannot find fault with the choice of plaintiff not to further dole out money for a
property that in all events, would never be his. Moreover, defendants could, if they were
really desirous of satisfying their obligation, demanded that plaintiff pay the outstanding
balance based on their contract. This they had not done. We can fairly surmise that
 defendants could not comply with their obligation themselves, because as testified to by
Mr. Almocera, they already signified to LBP that they cannot pay their outstanding loan
obligations resulting to the foreclosure of the townhouse.8

Moreover, as to the issue of petitioner’s solidary liability, it said that this issue was belatedly
raised and cannot be treated for the first time on appeal.

On 18 July 2005, the Court of Appeals denied the appeal and affirmed in toto the decision of the
trial court. The dispositive portion of the decision reads:

IN LIGHT OF ALL THE FOREGOING, this appeal is DENIED. The assailed decision of
the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB-23687
is AFFIRMED in toto.9

In a Resolution dated 16 November 2005, the Court of Appeals denied defendants’ motion for
reconsideration.

Petitioner is now before us pleading his case via a Petition for Review on Certiorari under Rule
45 of the 1997 Rules of Civil Procedure. The petition raises the following issues:

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT

DEFENDANT HAS INCURRED DELAY.

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING

RESPONDENT’S REFUSAL TO PAY THE BALANCE OF THE PURCHASE PRICE.

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT

DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH THE DEFENDANT
COOPERATIVE FOR DAMAGES TO PLAINTIFF.10

It cannot be disputed that the contract entered into by the parties was a contract to sell. The
contract was denominated as such and it contained the provision that the unit shall be conveyed
by way of an Absolute Deed of Sale, together with the attendant documents of Ownership – the
Transfer Certificate of Title and Certificate of Occupancy – and that the balance of the contract
price shall be paid upon the completion and delivery of the unit, as well as the acceptance
thereof by respondent. All these clearly indicate that ownership of the townhouse has not passed
to respondent.

In Serrano v. Caguiat, 11 we explained:

A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the
vendor’s obligation to transfer title is subordinated to the happening of a future and
uncertain event, so that if the suspensive condition does not take place, the parties would
stand as if the conditional obligation had never existed. The suspensive condition is
commonly full payment of the purchase price.

The differences between a contract to sell and a contract of sale are well-settled in
jurisprudence. As early as 1951, in Sing Yee v. Santos [47 O.G. 6372 (1951)], we held
that:

"x x x [a] distinction must be made between a contract of sale in which title
passes to the buyer upon delivery of the thing sold and a contract to sell x x x
where by agreement the ownership is reserved in the seller and is not to pass
until the full payment of the purchase price is made. In the first case, non-
payment of the price is a negative resolutory condition; in the second case, full
 payment is a positive suspensive condition. Being contraries, their effect in law
cannot be identical. In the first case, the vendor has lost and cannot recover the
ownership of the land sold until and unless the contract of sale is itself resolved
and set aside. In the second case, however, the title remains in the vendor if the
vendee does not comply with the condition precedent of making payment at the
time specified in the contract."

In other words, in a contract to sell, ownership is retained by the seller and is not
to pass to the buyer until full payment of the price.

The Contract to Sell entered into by the parties contains the following pertinent provisions:

4. TERMS OF PAYMENT:

4a. ONE MILLION PESOS (P1,000,000.00) is hereby acknowledged as Downpayment

for the above-mentioned Contract Price.

4b. The Balance, in the amount of TWO MILLION FOUR HUNDRED PESOS
(P2,400,000.00) shall be paid thru financing Institution facilitated by the SELLER,
preferably Landbank of the Philippines (LBP).

Upon completion, delivery and acceptance of the BUYER of the Townhouse Unit, the
BUYER shall have paid the Contract Price in full to the SELLER.

xxxx

6. COMPLETION DATES OF THE TOWNHOUSE UNIT:

The unit shall be completed and conveyed by way of an Absolute Deed of Sale together
with the attendant documents of Ownership in the name of the BUYER – the Transfer
Certificate of Title and Certificate of Occupancy within a period of six (6) months from the
signing of Contract to Sell.12

From the foregoing provisions, it is clear that petitioner and FBMC had the obligation to complete
the townhouse unit within six months from the signing of the contract. Upon compliance
therewith, the obligation of respondent to pay the balance of P2,400,000.00 arises. Upon
payment thereof, the townhouse shall be delivered and conveyed to respondent upon the
execution of the Absolute Deed of Sale and other relevant documents.

The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -- to
complete and deliver the townhouse within the six-month period. With petitioner and FBMC’s
non-fulfillment of their obligation, respondent refused to pay the balance of the contract price.
Respondent does not ask that ownership of the townhouse be transferred to him, but merely
asks that the amount or down payment he had made be returned to him.

Article 1169 of the Civil Code reads:

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may
exist:

(1) When the obligation or the law expressly so declares; or

 (2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is
not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the other begins.

The contract subject of this case contains reciprocal obligations which were to be fulfilled by the
parties, i.e., to complete and deliver the townhouse within six months from the execution of the
contract to sell on the part of petitioner and FBMC, and to pay the balance of the contract price
upon completion and delivery of the townhouse on the part of the respondent.

In the case at bar, the obligation of petitioner and FBMC which is to complete and deliver the
townhouse unit within the prescribed period, is determinative of the respondent’s obligation to
pay the balance of the contract price. With their failure to fulfill their obligation as stipulated in the
contract, they incurred delay and are liable for damages.13They cannot insist that respondent
comply with his obligation. Where one of the parties to a contract did not perform the undertaking
to which he was bound by the terms of the agreement to perform, he is not entitled to insist upon
the performance of the other party.14

On the first assigned error, petitioner insists there was no delay when the townhouse unit was
not completed within six months from the signing of the contract inasmuch as the mere lapse of
the stipulated six (6) month period is not by itself enough to constitute delay on his part and that
of FBMC, since the law requires that there must either be judicial or extrajudicial demand to fulfill
an obligation so that the obligor may be declared in default. He argues there was no evidence
introduced showing that a prior demand was made by respondent before the original action was
instituted in the trial court.

We do not agree.

Demand is not necessary in the instant case. Demand by the respondent would be useless
because the impossibility of complying with their (petitioner and FBMC) obligation was due to
their fault. If only they paid their loans with the LBP, the mortgage on the subject townhouse
would not have been foreclosed and thereafter sold to a third person.

Anent the second assigned error, petitioner argues that if there was any delay, the same was
incurred by respondent because he refused to pay the balance of the contract price.

We find his argument specious.

As above-discussed, the obligation of respondent to pay the balance of the contract price was
conditioned on petitioner and FBMC’s performance of their obligation. Considering that the latter
did not comply with their obligation to complete and deliver the townhouse unit within the period
agreed upon, respondent could not have incurred delay. For failure of one party to assume and
perform the obligation imposed on him, the other party does not incur delay.15

Under the circumstances obtaining in this case, we find that respondent is justified in refusing to
pay the balance of the contract price. He was never in possession of the townhouse unit and he
can no longer be its owner since ownership thereof has been transferred to a third person who
was not a party to the proceedings below. It would simply be the height of inequity if we are to
require respondent to pay the balance of the contract price. To allow this would result in the
unjust enrichment of petitioner and FBMC. The fundamental doctrine of unjust enrichment is the
transfer of value without just cause or consideration. The elements of this doctrine which are
present in this case are: enrichment on the part of the defendant; impoverishment on the part of
the plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the
expense of another. It is commonly accepted that this doctrine simply means a person shall not
be allowed to profit or enrich himself inequitably at another's expense.16Hence, to allow petitioner
and FBMC keep the down payment made by respondent amounting to P1,060,000.00 would
result in their unjust enrichment at the expense of the respondent. Thus, said amount should be
returned.

What is worse is the fact that petitioner and FBMC intentionally failed to inform respondent that
the subject townhouse which he was going to purchase was already mortgaged to LBP at the
time of the perfection of their contract. This deliberate withholding by petitioner and FBMC of the
mortgage constitutes fraud and bad faith. The trial court had this say:

In the light of the foregoing environmental circumstances and milieu, therefore, it appears
that the defendants are guilty of fraud in dealing with the plaintiff. They performed
voluntary and willful acts which prevent the normal realization of the prestation, knowing
the effects which naturally and necessarily arise from such acts. Their acts import a
dishonest purpose or some moral obliquity and conscious doing of a wrong. The said
acts certainly gtive rise to liability for damages (8 Manresa 72; Borrell-Macia 26-27; 3
Camus 34; O’Leary v. Macondray & Company, 454 Phil. 812; Heredia v. Salinas, 10 Phil.
157). Article 1170 of the New Civil Code of the Philippines provides expressly that "those
who in the performance of their obligations are guilty of fraud and those who in any
manner contravene the tenor thereof are liable for damages.17

On the last assigned error, petitioner contends that he should not be held solidarily liable with
defendant FBMC, because the latter is a separate and distinct entity which is the seller of the
subject townhouse. He claims that he, as Chairman and Chief Executive Officer of FBMC, cannot
be held liable because his representing FBMC in its dealings is a corporate act for which only
FBMC should be held liable.

This issue of piercing the veil of corporate fiction was never raised before the trial court. The
same was raised for the first time before the Court of Appeals which ruled that it was too late in
the day to raise the same. The Court of Appeals declared:

In the case below, the pleadings and the evidence of the defendants are one and the
same and never had it made to appear that Almocera is a person distinct and separate
from the other defendant. In fine, we cannot treat this error for the first time on appeal.
We cannot in good conscience, let the defendant Almocera raise the issue of piercing the
veil of corporate fiction just because of the adverse decision against him. x x x.18

To allow petitioner to pursue such a defense would undermine basic considerations of due
process. Points of law, theories, issues and arguments not brought to the attention of the trial
court will not be and ought not to be considered by a reviewing court, as these cannot be raised
for the first time on appeal. It would be unfair to the adverse party who would have no opportunity
to present further evidence material to the new theory not ventilated before the trial court.19

As to the award of damages granted by the trial court, and affirmed by the Court of Appeals, we
find the same to be proper and reasonable under the circumstances.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18 July 2005
in CA-G.R. CV No. 75610 is AFFIRMED. Costs against the petitioner.

SO ORDERED.

G.R. No. 183984 April 13, 2011

ARTURO SARTE FLORES, Petitioner,
vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 30 May 2008 Decision2 and the 4 August
2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 94003.

The Antecedent Facts

The facts, as gleaned from the Court of Appeals’ Decision, are as follows:

On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner)
amounting to ₱400,000 payable on 1 December 1995 with 3% compounded monthly interest and
3% surcharge in case of late payment. To secure the loan, Edna executed a Deed of Real Estate
Mortgage4 (the Deed) covering a property in the name of Edna and her husband Enrico (Enrico)
Lindo, Jr. (collectively, respondents). Edna also signed a Promissory Note5and the Deed for
herself and for Enrico as his attorney-in-fact.

Edna issued three checks as partial payments for the loan. All checks were dishonored for
insufficiency of funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage with
Damages against respondents. The case was raffled to the Regional Trial Court of Manila,
Branch 33 (RTC, Branch 33) and docketed as Civil Case No. 00-97942.

In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner was not entitled to
judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed was executed by
Edna without the consent and authority of Enrico. The RTC, Branch 33 noted that the Deed was
executed on 31 October 1995 while the Special Power of Attorney (SPA) executed by Enrico was
only dated 4 November 1995.

The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan from
Edna as he could file a personal action against her. However, the RTC, Branch 33 ruled that it
had no jurisdiction over the personal action which should be filed in the place where the plaintiff
or the defendant resides in accordance with Section 2, Rule 4 of the Revised Rules on Civil
Procedure.

Petitioner filed a motion for reconsideration. In its Order7 dated 8 January 2004, the RTC, Branch
33 denied the motion for lack of merit.

On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against
respondents. It was raffled to Branch 42 (RTC, Branch 42) of the Regional Trial Court of Manila,
and docketed as Civil Case No. 04-110858.

Respondents filed their Answer with Affirmative Defenses and Counterclaims where they
admitted the loan but stated that it only amounted to ₱340,000. Respondents further alleged that
Enrico was not a party to the loan because it was contracted by Edna without Enrico’s signature.
Respondents prayed for the dismissal of the case on the grounds of improper venue, res judicata
and forum-shopping, invoking the Decision of the RTC, Branch 33. On 7 March 2005,
respondents also filed a Motion to Dismiss on the grounds of res judicata and lack of cause of
action.
 The Decision of the Trial Court

On 22 July 2005, the RTC, Branch 42 issued an Order8 denying the motion to dismiss. The RTC,
Branch 42 ruled that res judicata will not apply to rights, claims or demands which, although
growing out of the same subject matter, constitute separate or distinct causes of action and were
not put in issue in the former action. Respondents filed a motion for reconsideration. In its
Order9 dated 8 February 2006, the RTC, Branch 42 denied respondents’ motion. The RTC,
Branch 42 ruled that the RTC, Branch 33 expressly stated that its decision did not mean that
petitioner could no longer recover the loan petitioner extended to Edna.

Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order before the Court of Appeals.

The Decision of the Court of Appeals

In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February
2006 Orders of the RTC, Branch 42 for having been issued with grave abuse of discretion.

The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory
and not appealable, the rule admits of exceptions. The Court of Appeals ruled that the RTC,
Branch 42 acted with grave abuse of discretion in denying respondents’ motion to dismiss.

The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure, a
party may not institute more than one suit for a single cause of action. If two or more suits are
instituted on the basis of the same cause of action, the filing of one on a judgment upon the
merits in any one is available ground for the dismissal of the others. The Court of Appeals ruled
that on a nonpayment of a note secured by a mortgage, the creditor has a single cause of action
against the debtor, that is recovery of the credit with execution of the suit. Thus, the creditor may
institute two alternative remedies: either a personal action for the collection of debt or a real
action to foreclose the mortgage, but not both. The Court of Appeals ruled that petitioner had
only one cause of action against Edna for her failure to pay her obligation and he could not split
the single cause of action by filing separately a foreclosure proceeding and a collection case. By
filing a petition for foreclosure of the real estate mortgage, the Court of Appeals held that
petitioner had already waived his personal action to recover the amount covered by the
promissory note.

Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of
Appeals denied the motion.

Hence, the petition before this Court.

The Issue

The sole issue in this case is whether the Court of Appeals committed a reversible error in
dismissing the complaint for collection of sum of money on the ground of multiplicity of suits.

The Ruling of this Court

The petition has merit.

The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that
is, to recover the debt.10 The mortgage-creditor has the option of either filing a personal action for
collection of sum of money or instituting a real action to foreclose on the mortgage security.11 An
election of the first bars recourse to the second, otherwise there would be multiplicity of suits in
which the debtor would be tossed from one venue to another depending on the location of the
mortgaged properties and the residence of the parties.12

The two remedies are alternative and each remedy is complete by itself.13 If the mortgagee opts
to foreclose the real estate mortgage, he waives the action for the collection of the debt, and vice
versa.14 The Court explained:

x x x in the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In
other words, he may pursue either of the two remedies, but not both. By such election, his cause
of action can by no means be impaired, for each of the two remedies is complete in itself. Thus,
an election to bring a personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the mortgaged property, an unsatisfied
judgment thereon would still give him the right to sue for deficiency judgment, in which case, all
the properties of the defendant, other than the mortgaged property, are again open to him for the
satisfaction of the deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election. On the other hand, a rule that would authorize
the plaintiff to bring a personal action against the debtor and simultaneously or successively
another action against the mortgaged property, would result not only in multiplicity of suits so
offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v.
San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in
the place of his residence or of the residence of the plaintiff, and then again in the place where
the property lies.15

The Court has ruled that if a creditor is allowed to file his separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, he will, in effect,
be authorized plural redress for a single breach of contract at so much costs to the court and with
so much vexation and oppressiveness to the debtor.16

In this case, however, there are circumstances that the Court takes into consideration.

Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that petitioner
was not entitled to judicial foreclosure because the Deed of Real Estate Mortgage was executed
without Enrico’s consent. The RTC, Branch 33 stated:

All these circumstances certainly conspired against the plaintiff who has the burden of proving
his cause of action. On the other hand, said circumstances tend to support the claim of
defendant Edna Lindo that her husband did not consent to the mortgage of their conjugal
property and that the loan application was her personal decision.

Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo
lacks the consent or authority of her husband Enrico Lindo, the Deed of Real Estate Mortgage is
void pursuant to Article 96 of the Family Code.

This does not mean, however, that the plaintiff cannot recover the ₱400,000 loan plus interest
which he extended to defendant Edna Lindo. He can institute a personal action against the
defendant for the amount due which should be filed in the place where the plaintiff resides, or
where the defendant or any of the principal defendants resides at the election of the plaintiff in
accordance with Section 2, Rule 4 of the Revised Rules on Civil Procedure. This Court has no
jurisdiction to try such personal action.17

Edna did not deny before the RTC, Branch 33 that she obtained the loan. She claimed, however,
that her husband did not give his consent and that he was not aware of the transaction.18 Hence,
the RTC, Branch 33 held that petitioner could still recover the amount due from Edna through a
personal action over which it had no jurisdiction.

Edna also filed an action for declaratory relief before the RTC, Branch 93 of San Pedro Laguna
(RTC, Branch 93), which ruled:

At issue in this case is the validity of the promissory note and the Real Estate Mortgage executed
by Edna Lindo without the consent of her husband.

The real estate mortgage executed by petition Edna Lindo over their conjugal property is
undoubtedly an act of strict dominion and must be consented to by her husband to be effective.
In the instant case, the real estate mortgage, absent the authority or consent of the husband, is
necessarily void. Indeed, the real estate mortgage is this case was executed on October 31,
1995 and the subsequent special power of attorney dated November 4, 1995 cannot be made to
retroact to October 31, 1995 to validate the mortgage previously made by petitioner.

The liability of Edna Lindo on the principal contract of the loan however subsists notwithstanding
the illegality of the mortgage. Indeed, where a mortgage is not valid, the principal obligation
which it guarantees is not thereby rendered null and void. That obligation matures and becomes
demandable in accordance with the stipulation pertaining to it. Under the foregoing
circumstances, what is lost is merely the right to foreclose the mortgage as a special remedy for
satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the
mortgage deed remains as evidence or proof of a personal obligation of the debtor and the
amount due to the creditor may be enforced in an ordinary action.

In view of the foregoing, judgment is hereby rendered declaring the deed of real estate mortgage
as void in the absence of the authority or consent of petitioner’s spouse therein. The liability of
petitioner on the principal contract of loan however subsists notwithstanding the illegality of the
real estate mortgage.19

The RTC, Branch 93 also ruled that Edna’s liability is not affected by the illegality of the real
estate mortgage.

Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.

Article 124 of the Family Code provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to
both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five years
from the date of contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of the
court or the written consent of the other spouse. In the absence of such authority or consent the
disposition or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other spouse or authorization
by the court before the offer is withdrawn by either or both offerors. (Emphasis supplied)

Article 124 of the Family Code of which applies to conjugal partnership property, is a
reproduction of Article 96 of the Family Code which applies to community property.
Both Article 96 and Article 127 of the Family Code provide that the powers do not include
disposition or encumbrance without the written consent of the other spouse. Any disposition or
encumbrance without the written consent shall be void. However, both provisions also state that
"the transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance by
the other spouse x x x before the offer is withdrawn by either or both offerors."

In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on 31
October 1995. The Special Power of Attorney was executed on 4 November 1995. The
execution of the SPA is the acceptance by the other spouse that perfected the continuing
offer as a binding contract between the parties, making the Deed of Real Estate Mortgage
a valid contract.

However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch 33
and the RTC, Branch 93 to become final and executory without asking the courts for an
alternative relief. The Court of Appeals stated that petitioner merely relied on the declarations of
these courts that he could file a separate personal action and thus failed to observe the rules and
settled jurisprudence on multiplicity of suits, closing petitioner’s avenue for recovery of the loan.

Nevertheless, petitioner still has a remedy under the law.

In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the
mortgage-debtor either a personal action for debt or a real action to foreclose the mortgage. The
Court ruled that the remedies are alternative and not cumulative and held that the filing of a
criminal action for violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for
the recovery of the mortgage-debt.21 In that case, however, this Court pro hac vice, ruled that
respondents could still be held liable for the balance of the loan, applying the principle that no
person may unjustly enrich himself at the expense of another.22

The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:

Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles of justice,
equity and good conscience."23 The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that such benefit is derived
at the expense of another.24 1avv phi 1

The main objective of the principle against unjust enrichment is to prevent one from enriching
himself at the expense of another without just cause or consideration.25 The principle is
applicable in this case considering that Edna admitted obtaining a loan from petitioners, and the
same has not been fully paid without just cause. The Deed was declared void erroneously at the
instance of Edna, first when she raised it as a defense before the RTC, Branch 33 and second,
when she filed an action for declaratory relief before the RTC, Branch 93. Petitioner could not be
expected to ask the RTC, Branch 33 for an alternative remedy, as what the Court of Appeals
ruled that he should have done, because the RTC, Branch 33 already stated that it had no
jurisdiction over any personal action that petitioner might have against Edna.

Considering the circumstances of this case, the principle against unjust enrichment, being a
substantive law, should prevail over the procedural rule on multiplicity of suits. The Court of
Appeals, in the assailed decision, found that Edna admitted the loan, except that she claimed it
only amounted to ₱340,000. Edna should not be allowed to unjustly enrich herself because of the
erroneous decisions of the two trial courts when she questioned the validity of the Deed.
Moreover, Edna still has an opportunity to submit her defenses before the RTC, Branch 42 on
her claim as to the amount of her indebtedness.

WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 94003 are SET ASIDE. The Regional Trial Court of Manila, Branch
42 is directed to proceed with the trial of Civil Case No. 04-110858.

SO ORDERED.

G.R. No. 158143 September 21, 2011

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

vs.
ANTONIO B. BALMACEDA and ROLANDO N. RAMOS, Respondents.

DECISION

BRION, J.:

Before us is a petition for review on certiorari,1 filed by the Philippine Commercial International
Bank2 (Bank or PCIB), to reverse and set aside the decision3 dated April 29, 2003 of the Court of
Appeals (CA) in CA-G.R. CV No. 69955. The CA overturned the September 22, 2000 decision of
the Regional Trial Court (RTC) of Makati City, Branch 148, in Civil Case No. 93-3181, which held
respondent Rolando Ramos liable to PCIB for the amount of ₱895,000.00.

FACTUAL ANTECEDENTS

On September 10, 1993, PCIB filed an action for recovery of sum of money with damages before
the RTC against Antonio Balmaceda, the Branch Manager of its Sta. Cruz, Manila branch. In its
complaint, PCIB alleged that between 1991 and 1993, Balmaceda, by taking advantage of his
position as branch manager, fraudulently obtained and encashed 31 Manager’s checks in the
total amount of Ten Million Seven Hundred Eighty Two Thousand One Hundred Fifty Pesos
(₱10,782,150.00).

On February 28, 1994, PCIB moved to be allowed to file an amended complaint to implead
Rolando Ramos as one of the recipients of a portion of the proceeds from Balmaceda’s alleged
fraud. PCIB also increased the number of fraudulently obtained and encashed Manager’s checks
to 34, in the total amount of Eleven Million Nine Hundred Thirty Seven Thousand One Hundred
Fifty Pesos (₱11,937,150.00). The RTC granted this motion.

Since Balmaceda did not file an Answer, he was declared in default. On the other hand, Ramos
filed an Answer denying any knowledge of Balmaceda’s scheme. According to Ramos, he is a
reputable businessman engaged in the business of buying and selling fighting cocks, and
Balmaceda was one of his clients. Ramos admitted receiving money from Balmaceda as
payment for the fighting cocks that he sold to Balmaceda, but maintained that he had no
knowledge of the source of Balmaceda’s money.

THE RTC DECISION

On September 22, 2000, the RTC issued a decision in favor of PCIB, with the following
dispositive portion:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants as follows:
 1. Ordering defendant Antonio Balmaceda to pay the amount of ₱11,042,150.00 with
interest thereon at the legal rate from [the] date of his misappropriation of the said
amount until full restitution shall have been made[.]

2. Ordering defendant Rolando Ramos to pay the amount of ₱895,000.00 with interest at
the legal rate from the date of misappropriation of the said amount until full restitution
shall have been made[.]

3. Ordering the defendants to pay plaintiff moral damages in the sum of ₱500,000.00 and
attorney’s fees in the amount of ten (10%) percent of the total misappropriated amounts
sought to be recovered.

4. Plus costs of suit.

SO ORDERED.4

From the evidence presented, the RTC found that Balmaceda, by taking undue advantage of his
position and authority as branch manager of the Sta. Cruz, Manila branch of PCIB, successfully
obtained and misappropriated the bank’s funds by falsifying several commercial documents. He
accomplished this by claiming that he had been instructed by one of the Bank’s corporate clients
to purchase Manager’s checks on its behalf, with the value of the checks to be debited from the
client’s corporate bank account. First, he would instruct the Bank staff to prepare the application
forms for the purchase of Manager’s checks, payable to several persons. Then, he would forge
the signature of the client’s authorized representative on these forms and sign the forms as
PCIB’s approving officer. Finally, he would have an authorized officer of PCIB issue the
Manager’s checks. Balmaceda would subsequently ask his subordinates to release the
Manager’s checks to him, claiming that the client had requested that he deliver the checks.5 After
receiving the Manager’s checks, he encashed them by forging the signatures of the payees on
the checks.

In ruling that Ramos acted in collusion with Balmaceda, the RTC noted that although the
Manager’s checks payable to Ramos were crossed checks, Balmaceda was still able to encash
the checks.6 After Balmaceda encashed three of these Manager’s checks, he deposited most of
the money into Ramos’ account.7 The RTC concluded that from the ₱11,937,150.00 that
Balmaceda misappropriated from PCIB, ₱895,000.00 actually went to Ramos. Since the RTC
disbelieved Ramos’ allegation that the sum of money deposited into his Savings Account (PCIB,
Pasig branch) were proceeds from the sale of fighting cocks, it held Ramos liable to pay PCIB
the amount of ₱895,000.00.

THE COURT OF APPEALS DECISION

On appeal, the CA dismissed the complaint against Ramos, holding that no sufficient evidence
existed to prove that Ramos colluded with Balmaceda in the latter’s fraudulent manipulations.8

According to the CA, the mere fact that Balmaceda made Ramos the payee in some of the
Manager’s checks does not suffice to prove that Ramos was complicit in Balmaceda’s fraudulent
scheme. It observed that other persons were also named as payees in the checks that
Balmaceda acquired and encashed, and PCIB only chose to go after Ramos. With PCIB’s failure
to prove Ramos’ actual participation in Balmaceda’s fraud, no legal and factual basis exists to
hold him liable.

The CA also found that PCIB acted illegally in freezing and debiting ₱251,910.96 from Ramos’
bank account. The CA thus decreed:
WHEREFORE, the appeal is granted. The Decision of the trial court rendered on September 22,
2000[,] insofar as appellant Ramos is concerned, is SET ASIDE, and the complaint below
against him is DISMISSED.

Appellee is hereby ordered to release the amount of ₱251,910.96 to appellant Ramos plus
interest at [the] legal rate computed from September 30, 1993 until appellee shall have fully
complied therewith.

Appellee is likewise ordered to pay appellant Ramos the following:

a) ₱50,000.00 as moral damages

b) ₱50,000.00 as exemplary damages, and

c) ₱20,000.00 as attorney’s fees.

No costs.

SO ORDERED.9

THE PETITION

In the present petition, PCIB avers that:

THE APPELLATE COURT ERRED IN HOLDING THAT THERE IS NO EVIDENCE TO

HOLD THAT RESPONDENT RAMOS ACTED IN COMPLICITY WITH RESPONDENT
BALMACEDA

II

THE APPELLATE COURT ERRED IN ORDERING THE PETITIONER TO RELEASE

THE AMOUNT OF ₱251,910.96 TO RESPONDENT RAMOS AND TO PAY THE
LATTER MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES10

PCIB contends that the circumstantial evidence shows that Ramos had knowledge of, and acted
in complicity with Balmaceda in, the perpetuation of the fraud. Ramos’ explanation that he is a
businessman and that he received the Manager’s checks as payment for the fighting cocks he
sold to Balmaceda is unconvincing, given the large sum of money involved. While Ramos
presented evidence that he is a reputable businessman, this evidence does not explain why the
Manager’s checks were made payable to him in the first place.

PCIB maintains that it had the right to freeze and debit the amount of ₱251,910.96 from Ramos’
bank account, even without his consent, since legal compensation had taken place between
them by operation of law. PCIB debited Ramos’ bank account, believing in good faith that Ramos
was not entitled to the proceeds of the Manager’s checks and was actually privy to the fraud
perpetrated by Balmaceda. PCIB cannot thus be held liable for moral and exemplary damages.

OUR RULING

We partly grant the petition.

At the outset, we observe that the petition raises mainly questions of fact whose resolution
requires the re-examination of the evidence on record. As a general rule, petitions for review on
certiorari only involve questions of law.11 By way of exception, however, we can delve into
evidence and the factual circumstance of the case when the findings of fact in the tribunals below
(in this case between those of the CA and of the RTC) are conflicting. When the exception
applies, we are given latitude to review the evidence on record to decide the case with finality.12

Ramos’ participation in Balmaceda’s scheme not proven

From the testimonial and documentary evidence presented, we find it beyond question that
Balmaceda, by taking advantage of his position as branch manager of PCIB’s Sta. Cruz, Manila
branch, was able to apply for and obtain Manager’s checks drawn against the bank account of
one of PCIB’s clients. The unsettled question is whether Ramos, who received a portion of the
money that Balmaceda took from PCIB, should also be held liable for the return of this money to
the Bank.

PCIB insists that it presented sufficient evidence to establish that Ramos colluded with
Balmaceda in the scheme to fraudulently secure Manager’s checks and to misappropriate their
proceeds. Since Ramos’ defense – anchored on mere denial of any participation in Balmaceda’s
wrongdoing – is an intrinsically weak defense, it was error for the CA to exonerate Ramos from
any liability.

In civil cases, the party carrying the burden of proof must establish his case by a preponderance
of evidence, or evidence which, to the court, is more worthy of belief than the evidence offered in
opposition.13 This Court, in Encinas v. National Bookstore, Inc.,14 defined "preponderance of
evidence" in the following manner:

"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on either
side and is usually considered to be synonymous with the term "greater weight of the evidence"
or "greater weight of the credible evidence." Preponderance of evidence is a phrase which, in the
last analysis, means probability of the truth. It is evidence which is more convincing to the court
as worthy of belief than that which is offered in opposition thereto.

The party, whether the plaintiff or the defendant, who asserts the affirmative of an issue has the
onus to prove his assertion in order to obtain a favorable judgment, subject to the overriding rule
that the burden to prove his cause of action never leaves the plaintiff. For the defendant, an
affirmative defense is one that is not merely a denial of an essential ingredient in the plaintiff's
cause of action, but one which, if established, will constitute an "avoidance" of the claim.15

Thus, PCIB, as plaintiff, had to prove, by preponderance of evidence, its positive assertion that
Ramos conspired with Balmaceda in perpetrating the latter’s scheme to defraud the Bank. In
PCIB’s estimation, it successfully accomplished this through the submission of the following
evidence:

[1] Exhibits "A," "D," "PPPP," "QQQQ," and "RRRR" and their submarkings, the
application forms for MCs, show that [these MCs were applied for in favor of Ramos;]

[2] Exhibits "K," "N," "SSSS," "TTTT," and "UUUU" and their submarkings prove that the
MCs were issued in favor of x x x Ramos[; and]

[3] [T]estimonies of the witness for [PCIB].16

We cannot accept these submitted pieces of evidence as sufficient to satisfy the burden of proof
that PCIB carries as plaintiff.
On its face, all that PCIB’s evidence proves is that Balmaceda used Ramos’ name as a payee
when he filled up the application forms for the Manager’s checks. But, as the CA correctly
observed, the mere fact that Balmaceda made Ramos the payee on some of the Manager’s
checks is not enough basis to conclude that Ramos was complicit in Balmaceda’s fraud; a
number of other people were made payees on the other Manager’s checks yet PCIB never
alleged them to be liable, nor did the Bank adduce any other evidence pointing to Ramos’
participation that would justify his separate treatment from the others. Also, while Ramos is
Balmaceda’s brother-in-law, their relationship is not sufficient, by itself, to render Ramos liable,
absent concrete proof of his actual participation in the fraudulent scheme.

Moreover, the evidence on record clearly shows that Balmaceda acted on his own when he
applied for the Manager’s checks against the bank account of one of PCIB’s clients, as well as
when he encashed the fraudulently acquired Manager’s checks.

Mrs. Elizabeth Costes, the Area Manager of PCIB at the time of the relevant events, testified that
Balmaceda committed all the acts necessary to obtain the unauthorized Manager’s checks –
from filling up the application form by forging the signature of the client’s representative, to
forging the signatures of the payees in order to encash the checks. As Mrs. Costes stated in her
testimony:

Q: I am going into [these] particular instances where you said that Mr. Balmaceda [has] been
making unauthorized withdrawals from particular account of a client or a client of yours at Sta.
Cruz branch. Would you tell us how he effected his unauthorized withdrawals?

A: He prevailed upon the domestic remittance clerk to prepare the application of a Manager’s
check which [has] been debited to a client’s account. This particular Manager’s check will be
payable to a certain individual thru his account as the instruction of the client.

Q: What was your findings in so far as the particular alleged instruction of a client is concerned?

A: We found out that he forged the signature of the client.

Q: On that particular application?

A: Yes sir.

Q: Showing to you several applications for Manager’s Check previously attached as Annexes "A,
B, C, D and E["] of the complaint. Could you please tell us where is that particular alleged
signature of a client applying for the Manager’s check which you claimed to have been forged by
Mr. Balmaceda?

A: Here sir.

xxxx

Q: After the accomplishment of this application form as you stated Mrs. witness, do you know
what happened to the application form?

A: Before that application form is processed it goes to several stages. Here for example this was
signed supposed to be by the client and his signature representing that, he certified the signature
based on their records to be authentic.

Q: When you said he to whom are you referring to?

A: Mr. Balmaceda. And at the same time he approved the transaction.

 xxxx

Q: Do you know if the corresponding checks applied for in the application forms were issued?

A: Yes sir.

Q: Could you please show us where these checks are now, the one applied for in Exhibit "A"
which is in the amount of ₱150,000.00, where is the corresponding check?

A: Rolando Ramos dated December 26, 1991 and one of the signatories with higher authority,
this is Mr. Balmaceda’s signature.

Q: In other words he is likewise approving signatory to the Manager’s check?

A: Yes sir. This is an authority that the check [has] been encashed.

Q: In other words this check issued to Rolando Ramos dated December 26, 1991 is a cross
check but nonetheless he allowed to encash by granting it.

Could you please show us?

ATTY. PACES: Witness pointing to an initial of the defendant Antonio Balmaceda, the notation
cross check.

A: And this is his signature.

xxxx

Q: How about the check corresponding to Exhibit E-2 which is an application for ₱125,000.00 for
a certain Rolando Ramos. Do you have the check?

A: Yes sir.

ATTY. PACES: Witness producing a check dated December 19, 1991 the amount of
₱125,000.00 payable to certain Rolando Ramos.

Q: Can you tell us whether the same modus operandi was ad[o]pted by Mr. Balmaceda in so far
as he is concerned?

A: Yes sir he is also the right signer and he authorized the cancellation of the cross
check.17 (emphasis ours)

xxxx

Q: These particular checks [Mrs.] witness in your findings, do you know if Mr. Balmaceda [has]
again any participation in these checks?

A: He is also the right signer and approved officer and he was authorized to debit on file.

xxxx

Q: And do you know if these particular checks marked as Exhibit G-2 to triple FFF were
subsequently encashed?
A: Yes sir.

Q: Were you able to find out who encashed?

A: Mr. Balmaceda himself and besides he approved the encashment because of the signature
that he allowed the encashment of the check.

xxxx

Q: Do you know if this particular person having in fact withdraw of received the proceeds of
[these] particular checks, the payee?

A: No sir.

Q: It was all Mr. Balmaceda dealing with you?

A: Yes sir.

Q: In other words it would be possible that Mr. Balmaceda himself gotten the proceeds of the
checks by forging the payees signature?

A: Yes sir.18 (emphases ours)

Mrs. Nilda Laforteza, the Commercial Account Officer of PCIB’s Sta. Cruz, Manila branch at the
time the events of this case occurred, confirmed Mrs. Costes’ testimony by stating that it was
Balmaceda who forged Ramos’ signature on the Manager’s checks where Ramos was the
payee, so as to encash the amounts indicated on the checks.19Mrs. Laforteza also testified that
Ramos never went to the PCIB, Sta. Cruz, Manila branch to encash the checks since Balmaceda
was the one who deposited the checks into Ramos’ bank account. As revealed during Mrs.
Laforteza’s cross-examination:

Q: Mrs. Laforteza, these checks that were applied for by Mr. Balmaceda, did you ever see my
client go to the bank to encash these checks?

A: No it is Balmaceda who is depositing in his behalf.

Q: Did my client ever call up the bank concerning this amount?

A: Yes he is not going to call PCIBank Sta. Cruz branch because his account is maintained at
Pasig.

Q: So Mr. Balmaceda was the one who just remitted or transmitted the amount that you claimed
[was sent] to the account of my client?

A: Yes.20 (emphases ours)

Even Mrs. Rodelia Nario, presented by PCIB as its rebuttal witness to prove that Ramos
encashed a Manager’s check for ₱480,000.00, could only testify that the money was deposited
into Ramos’ PCIB bank account. She could not attest that Ramos himself presented the
Manager’s check for deposit in his bank account.21 These testimonies clearly dispute PCIB’s
theory that Ramos was instrumental in the encashment of the Manager’s checks.

We also find no reason to doubt Ramos’ claim that Balmaceda deposited these large sums of
money into his bank account as payment for the fighting cocks that Balmaceda purchased from
him. Ramos presented two witnesses – Vicente Cosculluela and Crispin Gadapan – who testified
that Ramos previously engaged in the business of buying and selling fighting cocks, and that
Balmaceda was one of Ramos’ biggest clients.

Quoting from the RTC decision, PCIB stresses that Ramos’ own witness and business partner,
Cosculluela, testified that the biggest net profit he and Ramos earned from a single transaction
with Balmaceda amounted to no more than ₱100,000.00, for the sale of approximately 45
fighting cocks.22 In PCIB’s view, this testimony directly contradicts Ramos’ assertion that he
received approximately ₱400,000.00 from his biggest transaction with Balmaceda. To PCIB, the
testimony also renders questionable Ramos’ assertion that Balmaceda deposited large amounts
of money into his bank account as payment for the fighting cocks.

On this point, we find that PCIB misunderstood Cosculluela’s testimony. A review of the
testimony shows that Cosculluela specifically referred to the net profit that they earned from the
sale of the fighting cocks;23 PCIB apparently did not take into account the capital, transportation
and other expenses that are components of these transactions. Obviously, in sales transactions,
the buyer has to pay not only for the value of the thing sold, but also for the shipping costs and
other incidental costs that accompany the acquisition of the thing sold. Thus, while the biggest
net profit that Ramos and Cosculluela earned in a single transaction amounted to no more than
₱100,000.00,24 the inclusion of the actual acquisition costs of the fighting cocks, the
transportation expenses (i.e., airplane tickets from Bacolod or Zamboanga to Manila) and other
attendant expenses could account for the ₱400,000.00 that Balmaceda deposited into Ramos’
bank account.

Given that PCIB failed to establish Ramos’ participation in Balmaceda’s scheme, it was not even
necessary for Ramos to provide an explanation for the money he received from Balmaceda.
Even if the evidence adduced by the plaintiff appears stronger than that presented by the
defendant, a judgment cannot be entered in the plaintiff’s favor if his evidence still does not
suffice to sustain his cause of action;25 to reiterate, a preponderance of evidence as defined must
be established to achieve this result.

PCIB itself at fault as employer

In considering this case, one point that cannot be disregarded is the significant role that PCIB
played which contributed to the perpetration of the fraud. We cannot ignore that Balmaceda
managed to carry out his fraudulent scheme primarily because other PCIB employees failed to
carry out their assigned tasks – flaws imputable to PCIB itself as the employer.

Ms. Analiza Vega, an accounting clerk, teller and domestic remittance clerk working at the PCIB,
Sta. Cruz, Manila branch at the time of the incident, testified that Balmaceda broke the Bank’s
protocol when he ordered the Bank’s employees to fill up the application forms for the Manager’s
checks, to be debited from the bank account of one of the bank’s clients, without providing the
necessary Authority to Debit from the client.26 PCIB also admitted that these Manager’s checks
were subsequently released to Balmaceda, and not to the client’s representative, based solely on
Balmaceda’s word that the client had tasked him to deliver these checks.27

Despite Balmaceda’s gross violations of bank procedures – mainly in the processing of the
applications for Manager’s checks and in the releasing of the Manager’s checks – Balmaceda’s
co-employees not only turned a blind eye to his actions, but actually complied with his
instructions. In this way, PCIB’s own employees were unwitting accomplices in Balmaceda’s
fraud.

Another telling indicator of PCIB’s negligence is the fact that it allowed Balmaceda to encash the
Manager’s checks that were plainly crossed checks. A crossed check is one where two parallel
lines are drawn across its face or across its corner.28 Based on jurisprudence, the crossing of a
check has the following effects: (a) the check may not be encashed but only deposited in the
bank; (b) the check may be negotiated only once — to the one who has an account with the
bank; and (c) the act of crossing the check serves as a warning to the holder that the check has
been issued for a definite purpose and he must inquire if he received the check pursuant to this
purpose; otherwise, he is not a holder in due course.29 In other words, the crossing of a check is
a warning that the check should be deposited only in the account of the payee. When a check is
crossed, it is the duty of the collecting bank to ascertain that the check is only deposited to the
payee’s account.30 In complete disregard of this duty, PCIB’s systems allowed Balmaceda to
encash 26 Manager’s checks which were all crossed checks, or checks payable to the "payee’s
account only."

The General Banking Law of 200031 requires of banks the highest standards of integrity and
performance. The banking business is impressed with public interest. Of paramount importance
is the trust and confidence of the public in general in the banking industry. Consequently, the
diligence required of banks is more than that of a Roman pater familias or a good father of a
family.32 The highest degree of diligence is expected.33

While we appreciate that Balmaceda took advantage of his authority and position as the branch
manager to commit these acts, this circumstance cannot be used to excuse the manner the Bank
– through its employees –handled its clients’ bank accounts and thereby ignored established
bank procedures at the branch manager’s mere order. This lapse is made all the more glaring by
Balmaceda’s repetition of his modus operandi 33 more times in a period of over one year by the
Bank’s own estimation. With this kind of record, blame must be imputed on the Bank itself and its
systems, not solely on the weakness or lapses of individual employees.

Principle of unjust enrichment not applicable

PCIB maintains that even if Ramos did not collude with Balmaceda, it still has the right to recover
the amounts unjustly received by Ramos pursuant to the principle of unjust enrichment. This
principle is embodied in Article 22 of the Civil Code which provides:

Article 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.

To have a cause of action based on unjust enrichment, we explained in University of the

Philippines v. Philab Industries, Inc.34 that:

Unjust enrichment claims do not lie simply because one party benefits from the efforts or
obligations of others, but instead it must be shown that a party was unjustly enriched in the sense
that the term unjustly could mean illegally or unlawfully.

Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally
prove that another party knowingly received something of value to which he was not
entitled and that the state of affairs are such that it would be unjust for the person to keep
the benefit. Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that give rise to legal or
equitable obligation to account for them; to be entitled to remuneration, one must confer benefit
by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconvey.
Rather, it is a prerequisite for the enforcement of the doctrine of restitution.35 (emphasis ours)

Ramos cannot be held liable to PCIB on account of unjust enrichment simply because he
received payments out of money secured by fraud from PCIB. To hold Ramos accountable, it is
necessary to prove that he received the money from Balmaceda, knowing that he (Ramos) was
not entitled to it. PCIB must also prove that Ramos, at the time that he received the money from
Balmaceda, knew that the money was acquired through fraud. Knowledge of the fraud is the link
between Ramos and PCIB that would obligate Ramos to return the money based on the principle
of unjust enrichment.

However, as the evidence on record indicates, Ramos accepted the deposits that Balmaceda
made directly into his bank account, believing that these deposits were payments for the fighting
cocks that Balmaceda had purchased. Significantly, PCIB has not presented any evidence
proving that Ramos participated in, or that he even knew of, the fraudulent sources of
Balmaceda’s funds.

PCIB illegally froze and debited Ramos’ assets

We also find that PCIB acted illegally in freezing and debiting Ramos’ bank account. In BPI
Family Bank v. Franco,36 we cautioned against the unilateral freezing of bank accounts by banks,
noting that:

More importantly, [BPI Family Bank] does not have a unilateral right to freeze the accounts of
Franco based on its mere suspicion that the funds therein were proceeds of the multi-million
peso scam Franco was allegedly involved in. To grant [BPI Family Bank], or any bank for that
matter, the right to take whatever action it pleases on deposits which it supposes are derived
from shady transactions, would open the floodgates of public distrust in the banking industry.37

We see no legal merit in PCIB’s claim that legal compensation took place between it and Ramos,
thereby warranting the automatic deduction from Ramos’ bank account. For legal compensation
to take place, two persons, in their own right, must first be creditors and debtors of each
other.38 While PCIB, as the depositary bank, is Ramos’ debtor in the amount of his deposits,
Ramos is not PCIB’s debtor under the evidence the PCIB adduced. PCIB thus had no basis, in
fact or in law, to automatically debit from Ramos’ bank account.

On the award of damages

Although PCIB’s act of freezing and debiting Ramos’ account is unlawful, we cannot hold PCIB
liable for moral and exemplary damages. Since a contractual relationship existed between
Ramos and PCIB as the depositor and the depositary bank, respectively, the award of moral
damages depends on the applicability of Article 2220 of the Civil Code, which provides:

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith. [emphasis
ours]

Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious commission of a wrong; it partakes of the nature of fraud.39

As the facts of this case bear out, PCIB did not act out of malice or bad faith when it froze
Ramos’ bank account and subsequently debited the amount of ₱251,910.96 therefrom. While
PCIB may have acted hastily and without regard to its primary duty to treat the accounts of its
depositors with meticulous care and utmost fidelity,40 we find that its actions were propelled more
by the need to protect itself, and not out of malevolence or ill will. One may err, but error alone is
not a ground for granting moral damages.41

We also disallow the award of exemplary damages. Article 2234 of the Civil Code requires a
party to first prove that he is entitled to moral, temperate or compensatory damages before he
can be awarded exemplary damages. Since no reason exists to award moral damages, so too
1âwphi1

can there be no reason to award exemplary damages.

We deem it just and equitable, however, to uphold the award of attorney’s fees in Ramos’ favor.
Taking into consideration the time and efforts involved that went into this case, we increase the
award of attorney’s fees from ₱20,000.00 to ₱75,000.00.

WHEREFORE, the petition is PARTIALLY GRANTED. We AFFIRM the decision of the Court of
Appeals dated April 29, 2003 in CA-G.R. CV No. 69955 with the MODIFICATION that the award
of moral and exemplary damages in favor of Rolando N. Ramos is DELETED, while the award of
attorney’s fees is INCREASED to ₱75,000.00. Costs against the Philippine Commercial
International Bank.

SO ORDERED.

G.R. No. 133978 November 12, 2002

JOSE S. CANCIO, JR., represented by ROBERTO L. CANCIO, petitioner,

vs.
EMERENCIANA ISIP, respondent.

DECISION

YNARES-SANTIAGO, J.:

The instant petition for review under Rule 45 of the Rules of Court raises pure questions of law
involving the March 20, 19981 and June 1, 19982 Orders3 rendered by the Regional Trial Court of
Pampanga, Branch 49, in Civil Case No. G-3272.

The undisputed facts are as follows:

Petitioner, assisted by a private prosecutor, filed three cases of Violation of B.P. No. 22 and three
cases of Estafa, against respondent for allegedly issuing the following checks without sufficient
funds, to wit: 1) Interbank Check No. 25001151 in the amount of P80,000.00; 2) Interbank Check
No. 25001152 in the amount of P 80,000.00; and 3) Interbank Check No. 25001157 in the
amount of P30,000.00.4

The Office of the Provincial Prosecutor dismissed Criminal Case No. 13356, for Violation of B.P.
No. 22 covering check no. 25001151 on the ground that the check was deposited with the
drawee bank after 90 days from the date of the check. The two other cases for Violation of B.P.
No. 22 (Criminal Case No. 13359 and 13360) were filed with and subsequently dismissed by the
Municipal Trial Court of Guagua, Pampanga, Branch 1, on the ground of "failure to prosecute."5

Meanwhile, the three cases for Estafa were filed with the Regional Trial Court of Pampanga,
Branch 49, and docketed as Criminal Case Nos. G-3611 to G-3613. On October 21, 1997, after
failing to present its second witness, the prosecution moved to dismiss the estafa cases against
respondent. The prosecution likewise reserved its right to file a separate civil action arising from
the said criminal cases. On the same date, the trial court granted the motions of the prosecution.
Thus-

Upon motion of the prosecution for the dismissal of these cases without prejudice to the refiling
of the civil aspect thereof and there being no comment from the defense, let these cases be
dismissed without prejudice to the refiling of the civil aspect of the cases.

SO ORDER[ED].6

On December 15, 1997, petitioner filed the instant case for collection of sum of money, seeking
to recover the amount of the checks subject of the estafa cases. On February 18, 1998,
respondent filed a motion to dismiss the complaint contending that petitioner’s action is barred by
the doctrine of res judicata. Respondent further prayed that petitioner should be held in contempt
of court for forum-shopping.7

On March 20, 1998, the trial court found in favor of respondent and dismissed the complaint. The
court held that the dismissal of the criminal cases against respondent on the ground of lack of
interest or failure to prosecute is an adjudication on the merits which amounted to res judicata on
the civil case for collection. It further held that the filing of said civil case amounted to forum-
shopping.

On June 1, 1998, the trial court denied petitioner’s motion for reconsideration.8 Hence, the instant
petition.

The legal issues for resolution in the case at bar are: 1) whether the dismissal of the estafa cases
against respondent bars the institution of a civil action for collection of the value of the checks
subject of the estafa cases; and 2) whether the filing of said civil action violated the anti-forum-
shopping rule.

An act or omission causing damage to another may give rise to two separate civil liabilities on the
part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal
Code;9 and (2) independent civil liabilities, such as those (a) not arising from an act or omission
complained of as felony [e.g. culpa contractual or obligations arising from law under Article
3110 of the Civil Code,11 intentional torts under Articles 3212 and 34,13 and culpa aquiliana under
Article 217614 of the Civil Code]; or (b) where the injured party is granted a right to file an action
independent and distinct from the criminal action [Article 33,15 Civil Code].16 Either of these two
possible liabilities may be enforced against the offender subject, however, to the caveat under
Article 2177 of the Civil Code that the offended party "cannot recover damages twice for the
same act or omission" or under both causes.17

The modes of enforcement of the foregoing civil liabilities are provided for in the Revised Rules
of Criminal Procedure. Though the assailed order of the trial court was issued on March 20,
1998, the said Rules, which took effect on December 1, 2000, must be given retroactive effect in
the instant case considering that statutes regulating the procedure of the court are construed as
applicable to actions pending and undetermined at the time of their passage.18

Section 1, Rule 111, of the Revised Rules of Criminal Procedure provides:

SECTION 1. Institution of criminal and civil actions. – (a) When a criminal action is instituted, the
civil action for the recovery of civil liability arising from the offense charged shall be deemed
instituted with the criminal action unless the offended party waives the civil action, reserves the
right to institute it separately or institutes the civil action prior to the criminal action.

The reservation of the right to institute separately the civil action shall be made before the
prosecution starts presenting its evidence and under circumstances affording the offended party
a reasonable opportunity to make such reservation.

xxxxxxxxx

Where the civil action has been filed separately and trial thereof has not yet commenced, it may
be consolidated with the criminal action upon application with the court trying the latter case. If
the application is granted, the trial of both actions shall proceed in accordance with section 2 of
this Rule governing consolidation of the civil and criminal actions.

Under the 1985 Rules on Criminal Procedure, as amended in 1988 and under the present Rules,
the civil liability ex-delicto is deemed instituted with the criminal action, but the offended party is
given the option to file a separate civil action before the prosecution starts to present evidence.19
Anent the independent civil actions under Articles 31, 32, 33, 34 and 2176 of the Civil Code, the
old rules considered them impliedly instituted with the civil liability ex-delicto in the criminal
action, unless the offended party waives the civil action, reserves his right to institute it
separately, or institutes the civil action prior to the criminal action. Under the present Rules,
however, the independent civil actions may be filed separately and prosecuted independently
even without any reservation in the criminal action. The failure to make a reservation in the
criminal action is not a waiver of the right to file a separate and independent civil action based on
these articles of the Civil Code.20

In the case at bar, a reading of the complaint filed by petitioner show that his cause of action is
based on culpa contractual, an independent civil action. Pertinent portion of the complaint reads:

xxxxxxxxx

2. That plaintiff is the owner/proprietor to CANCIO’S MONEY EXCHANGE with office

address at Guagua, Pampanga;

3. That on several occasions, particularly on February 27, 1993 to April 17 1993,

inclusive, defendant drew, issued and made in favor of the plaintiff the following checks:

CHECK NO. DATE AMOUNT

1. Interbank Check No. 25001151 March 10, 1993 P80,000.00

2. Interbank Check No. 25001152 March 27, 1993 P80,000.00

3. Interbank Check No. 25001157 May 17, 1993 P30,000.00

in exchange of cash with the assurance that the said checks will be honored for
payment on their maturity dates, copy of the aforementioned checks are hereto
attached and marked.

4. That when the said checks were presented to the drawee bank for encashment, the
same were all dishonored for reason of DRAWN AGAINST INSUFFICIENT FUNDS
(DAIF);

5. That several demands were made upon the defendant to make good the checks but
she failed and refused and still fails and refuses without justifiable reason to pay plaintiff;

6. That for failure of the defendant without any justifiable reason to pay plaintiff the value
of the checks, the latter was forced to hire the services of undersigned counsel and
agreed to pay the amount of P30,000.00 as attorney’s fees and P1,000.00 per
appearance in court;

7. That for failure of the defendant without any justifiable reason to pay plaintiff and
forcing the plaintiff to litigate, the latter will incur litigation expenses in the amount of
P20,000.00.

IN VIEW OF THE FOREGOING, it is prayed of this Court that after due notice and hearing a
judgment be rendered ordering defendant to pay plaintiff as follows:

a. the principal sum of P190,000.00 plus the legal interest;

b. attorney’s fees of P30,000.00 plus P1,000.00 per court appearance;

 c. litigation expenses in the amount of P20,000.00

PLAINTIFF prays for other reliefs just and equitable under the premises.

x x x x x x x x x.21

Evidently, petitioner sought to enforce respondent’s obligation to make good the value of the
checks in exchange for the cash he delivered to respondent. In other words, petitioner’s cause of
action is the respondent’s breach of the contractual obligation. It matters not that petitioner
claims his cause of action to be one based on delict.22 The nature of a cause of action is
determined by the facts alleged in the complaint as constituting the cause of action. The purpose
of an action or suit and the law to govern it is to be determined not by the claim of the party filing
the action, made in his argument or brief, but rather by the complaint itself, its allegations and
prayer for relief.23

Neither does it matter that the civil action reserved in the October 21, 1997 order of the trial court
was the civil action ex delicto. To reiterate, an independent civil action arising from contracts, as
in the instant case, may be filed separately and prosecuted independently even without any
reservation in the criminal action. Under Article 31 of the Civil Code "[w]hen the civil action is
based on an obligation not arising from the act or omission complained of as a felony, [e.g. culpa
contractual] such civil action may proceed independently of the criminal proceedings and
regardless of the result of the latter." Thus, in Vitola, et al. v. Insular Bank of Asia and
America,24 the Court, applying Article 31 of the Civil Code, held that a civil case seeking to
recover the value of the goods subject of a Letter of Credit-Trust Receipt is a civil action ex
contractu and not ex delicto. As such, it is distinct and independent from the estafa case filed
against the offender and may proceed regardless of the result of the criminal proceedings.

One of the elements of res judicata is identity of causes of action.25 In the instant case, it must be
stressed that the action filed by petitioner is an independent civil action, which remains separate
and distinct from any criminal prosecution based on the same act.26 Not being deemed instituted
in the criminal action based on culpa criminal, a ruling on the culpability of the offender will have
no bearing on said independent civil action based on an entirely different cause of action, i.e.,
culpa contractual.

In the same vein, the filing of the collection case after the dismissal of the estafa cases against
respondent did not amount to forum-shopping. The essence of forum-shopping is the filing of
multiple suits involving the same parties for the same cause of action, either simultaneously or
successively, to secure a favorable judgment. Although the cases filed by petitioner arose from
the same act or omission of respondent, they are, however, based on different causes of action.
The criminal cases for estafa are based on culpa criminal while the civil action for collection is
anchored on culpa contractual. Moreover, there can be no forum-shopping in the instant case
because the law expressly allows the filing of a separate civil action which can proceed
independently of the criminal action.27

Clearly, therefore, the trial court erred in dismissing petitioner’s complaint for collection of the
value of the checks issued by respondent. Being an independent civil action which is separate
and distinct from any criminal prosecution and which require no prior reservation for its institution,
the doctrine of res judicata and forum-shopping will not operate to bar the same.

WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The March 20, 1998
and June 1, 1998 Orders of the Regional Trial Court of Pampanga, Branch 49, in Civil Case No.
G-3272 are REVERSED and SET ASIDE. The instant case is REMANDED to the trial court for
further proceedings.

SO ORDERED.
G.R. No. L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and

NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION,
INC., respondents.

Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial
Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.

LAUREL, J.:

The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-
entitled case has filed a motion for reconsideration and moves that, for the reasons stated in his
motion, we reconsider the following legal conclusions of the majority opinion of this Court:

1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o
que no sea para una determinada, termina o bien por voluntad de cualquiera de las
partes o cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre
en la localidad o cunado se termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya
colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus
tarbajos por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de
ser empleados u obreros de la misma;

3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus
osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se
niega a readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso,
no es culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley
No. 213 del Commonwealth, aunque su negativa a readmitir se deba a que dichos
obreros pertenecen a un determinado organismo obrero, puesto que tales ya han dejado
deser empleados suyos por terminacion del contrato en virtud del paro.

The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the
judgement rendered by the majority of this Court and the remanding of the case to the Court of
Industrial Relations for a new trial, and avers:

1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of
leather soles in ANG TIBAY making it necessary for him to temporarily lay off the
members of the National Labor Union Inc., is entirely false and unsupported by the
records of the Bureau of Customs and the Books of Accounts of native dealers in leather.

2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a
scheme to systematically prevent the forfeiture of this bond despite the breach of his
CONTRACT with the Philippine Army.

3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re
supposed delay of leather soles from the States) was but a scheme to systematically
prevent the forfeiture of this bond despite the breach of his CONTRACT with the
Philippine Army.
 4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer
union dominated by Toribio Teodoro, the existence and functions of which are illegal.
(281 U.S., 548, petitioner's printed memorandum, p. 25.)

5. That in the exercise by the laborers of their rights to collective bargaining, majority rule
and elective representation are highly essential and indispensable. (Sections 2 and 5,
Commonwealth Act No. 213.)

6. That the century provisions of the Civil Code which had been (the) principal source of
dissensions and continuous civil war in Spain cannot and should not be made applicable
in interpreting and applying the salutary provisions of a modern labor legislation of
American origin where the industrial peace has always been the rule.

7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating
against the National Labor Union, Inc., and unjustly favoring the National Workers'
Brotherhood.

8. That the exhibits hereto attached are so inaccessible to the respondents that even with
the exercise of due diligence they could not be expected to have obtained them and
offered as evidence in the Court of Industrial Relations.

9. That the attached documents and exhibits are of such far-reaching importance and
effect that their admission would necessarily mean the modification and reversal of the
judgment rendered herein.

The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the
respondent National Labor Union, Inc.

In view of the conclusion reached by us and to be herein after stead with reference to the motion
for a new trial of the respondent National Labor Union, Inc., we are of the opinion that it is not
necessary to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed
to dispose of the motion for new trial of the respondent labor union. Before doing this, however,
we deem it necessary, in the interest of orderly procedure in cases of this nature, in interest of
orderly procedure in cases of this nature, to make several observations regarding the nature of
the powers of the Court of Industrial Relations and emphasize certain guiding principles which
should be observed in the trial of cases brought before it. We have re-examined the entire record
of the proceedings had before the Court of Industrial Relations in this case, and we have found
no substantial evidence that the exclusion of the 89 laborers here was due to their union
affiliation or activity. The whole transcript taken contains what transpired during the hearing and
is more of a record of contradictory and conflicting statements of opposing counsel, with sporadic
conclusion drawn to suit their own views. It is evident that these statements and expressions of
views of counsel have no evidentiary value.

The Court of Industrial Relations is a special court whose functions are specifically stated in the
law of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the
integrated judicial system of the nation. It is not intended to be a mere receptive organ of the
Government. Unlike a court of justice which is essentially passive, acting only when its
jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the
function of the Court of Industrial Relations, as will appear from perusal of its organic law, is more
active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the
determination of disputes between employers and employees but its functions in the
determination of disputes between employers and employees but its functions are far more
comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider,
investigate, decide, and settle any question, matter controversy or dispute arising between,
and/or affecting employers and employees or laborers, and regulate the relations between them,
subject to, and in accordance with, the provisions of Commonwealth Act No. 103 (section 1). It
shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any
industrial or agricultural dispute causing or likely to cause a strike or lockout, arising from
differences as regards wages, shares or compensation, hours of labor or conditions of tenancy or
employment, between landlords and tenants or farm-laborers, provided that the number of
employees, laborers or tenants of farm-laborers involved exceeds thirty, and such industrial or
agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of the
parties to the controversy and certified by the Secretary of labor as existing and proper to be by
the Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public
interest. (Section 4, ibid.) It shall, before hearing the dispute and in the course of such hearing,
endeavor to reconcile the parties and induce them to settle the dispute by amicable agreement.
(Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall
investigate and study all industries established in a designated locality, with a view to
determinating the necessity and fairness of fixing and adopting for such industry or locality a
minimum wage or share of laborers or tenants, or a maximum "canon" or rental to be paid by the
"inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary
arbitration in the settlement of industrial disputes; may employ mediation or conciliation for that
purpose, or recur to the more effective system of official investigation and compulsory arbitration
in order to determine specific controversies between labor and capital industry and in agriculture.
There is in reality here a mingling of executive and judicial functions, which is a departure from
the rigid doctrine of the separation of governmental powers.

In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated
September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G.
R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of
Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act
requires it to "act according to justice and equity and substantial merits of the case, without
regard to technicalities or legal forms and shall not be bound by any technicalities or legal forms
and shall not be bound by any technical rules of legal evidence but may inform its mind in such
manner as it may deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall
not be restricted to the specific relief claimed or demands made by the parties to the industrial or
agricultural dispute, but may include in the award, order or decision any matter or determination
which may be deemed necessary or expedient for the purpose of settling the dispute or of
preventing further industrial or agricultural disputes. (section 13, ibid.) And in the light of this
legislative policy, appeals to this Court have been especially regulated by the rules recently
promulgated by the rules recently promulgated by this Court to carry into the effect the avowed
legislative purpose. The fact, however, that the Court of Industrial Relations may be said to be
free from the rigidity of certain procedural requirements does not mean that it can, in justifiable
cases before it, entirely ignore or disregard the fundamental and essential requirements of due
process in trials and investigations of an administrative character. There are primary rights which
must be respected even in proceedings of this character:

(1) The first of these rights is the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit evidence in support thereof. In
the language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law.
ed. 1129, "the liberty and property of the citizen shall be protected by the rudimentary
requirements of fair play.

(2) Not only must the party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the tribunal must
consider the evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468,
56 S. Ct. 906, 80 law. ed. 1288.) In the language of this court in Edwards vs. McCoy, 22
Phil., 598, "the right to adduce evidence, without the corresponding duty on the part of
the board to consider it, is vain. Such right is conspicuously futile if the person or persons
to whom the evidence is presented can thrust it aside without notice or consideration."

(3) "While the duty to deliberate does not impose the obligation to decide right, it does
imply a necessity which cannot be disregarded, namely, that of having something to
support it is a nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This
principle emanates from the more fundamental is contrary to the vesting of unlimited
power anywhere. Law is both a grant and a limitation upon power.

(4) Not only must there be some evidence to support a finding or conclusion (City of
Manila vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G.
1335), but the evidence must be "substantial." (Washington, Virginia and Maryland
Coach Co. v. national labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81
Law. ed. 965.) It means such relevant evidence as a reasonable mind accept as
adequate to support a conclusion." (Appalachian Electric Power v. National Labor
Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson
Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National Labor
Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the rules of
evidence prevailing in courts of law and equity shall not be controlling.' The obvious
purpose of this and similar provisions is to free administrative boards from the
compulsion of technical rules so that the mere admission of matter which would be
deemed incompetent inn judicial proceedings would not invalidate the administrative
order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568,
48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co.,
227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and
Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable
flexibility in administrative procedure does not go far as to justify orders without a basis in
evidence having rational probative force. Mere uncorroborated hearsay or rumor does
not constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations
Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"

(5) The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected. (Interstate Commence
Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by
confining the administrative tribunal to the evidence disclosed to the parties, can the
latter be protected in their right to know and meet the case against them. It should not,
however, detract from their duty actively to see that the law is enforced, and for that
purpose, to use the authorized legal methods of securing evidence and informing itself of
facts material and relevant to the controversy. Boards of inquiry may be appointed for the
purpose of investigating and determining the facts in any given case, but their report and
decision are only advisory. (Section 9, Commonwealth Act No. 103.) The Court of
Industrial Relations may refer any industrial or agricultural dispute or any matter under its
consideration or advisement to a local board of inquiry, a provincial fiscal. a justice of the
peace or any public official in any part of the Philippines for investigation, report and
recommendation, and may delegate to such board or public official such powers and
functions as the said Court of Industrial Relations may deem necessary, but such
delegation shall not affect the exercise of the Court itself of any of its powers. (Section
10, ibid.)

(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his
own independent consideration of the law and facts of the controversy, and not simply
accept the views of a subordinate in arriving at a decision. It may be that the volume of
work is such that it is literally Relations personally to decide all controversies coming
before them. In the United States the difficulty is solved with the enactment of statutory
authority authorizing examiners or other subordinates to render final decision, with the
right to appeal to board or commission, but in our case there is no such statutory
authority.

(7) The Court of Industrial Relations should, in all controversial questions, render its
decision in such a manner that the parties to the proceeding can know the various issues
involved, and the reasons for the decision rendered. The performance of this duty is
inseparable from the authority conferred upon it.
In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as
to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood
(appendix A), the record is barren and does not satisfy the thirst for a factual basis upon which to
predicate, in a national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial prayed for the by
respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed
by Toribio Teodoro was but a scheme adopted to systematically discharged all the members of
the National Labor Union Inc., from work" and this avernment is desired to be proved by the
petitioner with the "records of the Bureau of Customs and the Books of Accounts of native
dealers in leather"; that "the National Workers Brotherhood Union of Ang Tibay is a company or
employer union dominated by Toribio Teodoro, the existence and functions of which are illegal."
Petitioner further alleges under oath that the exhibits attached to the petition to prove his
substantial avernments" are so inaccessible to the respondents that even within the exercise of
due diligence they could not be expected to have obtained them and offered as evidence in the
Court of Industrial Relations", and that the documents attached to the petition "are of such far
reaching importance and effect that their admission would necessarily mean the modification and
reversal of the judgment rendered herein." We have considered the reply of Ang Tibay and its
arguments against the petition. By and large, after considerable discussions, we have come to
the conclusion that the interest of justice would be better served if the movant is given
opportunity to present at the hearing the documents referred to in his motion and such other
evidence as may be relevant to the main issue involved. The legislation which created the Court
of Industrial Relations and under which it acts is new. The failure to grasp the fundamental issue
involved is not entirely attributable to the parties adversely affected by the result. Accordingly, the
motion for a new trial should be and the same is hereby granted, and the entire record of this
case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the
case, receive all such evidence as may be relevant and otherwise proceed in accordance with
the requirements set forth hereinabove. So ordered.

G.R. No. 82380 April 29, 1988

AYER PRODUCTIONS PTY. LTD. and McELROY & McELROY FILM

PRODUCTIONS, petitioners,
vs.
HON.IGNACIO M. CAPULONG and JUAN PONCE ENRILE, respondents.

G.R. No. 82398 April 29, 1988

HAL MCELROY petitioner,

vs.
HON. IGNACIO M. CAPULONG, in his capacity as Presiding Judge of the Regional Trial
Court of Makati, Branch 134 and JUAN PONCE ENRILE, respondents.

FELICIANO, J.:

Petitioner Hal McElroy an Australian film maker, and his movie production company, Petitioner Ayer Productions pty Ltd. (Ayer
Productions), 1 envisioned, sometime in 1987, the for commercial viewing and for Philippine and international release, the histolic
peaceful struggle of the Filipinos at EDSA (Epifanio de los Santos Avenue). Petitioners discussed this Project with local movie producer
Lope V. Juban who suggested th they consult with the appropriate government agencies and also with General Fidel V. Ramos and
Senator Juan Ponce Enrile, who had played major roles in the events proposed to be filmed.

The proposed motion picture entitled "The Four Day Revolution" was endorsed by the Movie
Television Review and Classification Board as wel as the other government agencies consulted.
General Fidel Ramos also signified his approval of the intended film production.
In a letter dated 16 December 1987, petitioner Hal McElroy informed private respondent Juan
Ponce Enrile about the projected motion picture enclosing a synopsis of it, the full text of which is
set out below:

The Four Day Revolution is a six hour mini-series about People Power—a unique
event in modern history that-made possible the Peaceful revolution in the
Philippines in 1986.

Faced with the task of dramatising these rerkble events, screenwriter David
Williamson and history Prof Al McCoy have chosen a "docu-drama" style and
created [four] fictitious characters to trace the revolution from the death of
Senator Aquino, to the Feb revolution and the fleeing of Marcos from the country.

These character stories have been woven through the real events to help our
huge international audience understand this ordinary period inFilipino history.

First, there's Tony O'Neil, an American television journalist working for major
network. Tony reflects the average American attitude to the Phihppinence —once
a colony, now the home of crucially important military bases. Although Tony is
aware of the corruption and of Marcos' megalomania, for him, there appears to
be no alternative to Marcos except the Communists.

Next, Angie Fox a fiery Australian photo-journalist. A 'new girl in town,' she is
quickly caught up in the events as it becomes dear that the time has come for a
change. Through Angle and her relationship with one of the Reform Army
Movement Colonels (a fictitious character), we follow the developing discontent in
the armed forces. Their dislike for General Ver, their strong loyalty to Defense
Minister Enrile, and ultimately their defection from Marcos.

The fourth fictitious character is Ben Balano, a middle-aged editor of a Manila

newspaper who despises the Marcos regime and is a supporter an promoter of
Cory Aquino. Ben has two daughters, Cehea left wing lawyer who is a secret
member of the New People's Army, and Eva--a -P.R. girl, politically moderate and
very much in love with Tony. Ultimately, she must choose between her love and
the revolution.

Through the interviews and experiences of these central characters, we show the
complex nature of Filipino society, and thintertwining series of events and
characters that triggered these remarkable changes. Through them also, we
meet all of the principal characters and experience directly dramatic recreation of
the revolution. The story incorporates actual documentary footage filmed during
the period which we hope will capture the unique atmosphere and forces that
combined to overthrow President Marcos.

David Williamson is Australia's leading playwright with some 14 hugely

successful plays to his credit(Don's Party,' 'The Club,' Travelling North) and 11
feature films (The Year of Living Dangerously,' Gallipoli,' 'Phar Lap').

Professor McCoy (University of New South Wales) is an American historian with

a deep understanding of the Philippines, who has worked on the research for this
project for some 18 months. Together with Davi Wilhamgon they have developed
a script we believe accurately depicts the complex issues and events that
occurred during th period .
 The six hour series is a McElroy and McElroy co-production with Home Box
Office in American, the Australian Broadcast Corporation in Australia and Zenith
Productions in the United Kingdom

The proposed motion picture would be essentially a re-enact. ment of the events that made
possible the EDSA revolution; it is designed to be viewed in a six-hour mini-series television play,
presented in a "docu-drama" style, creating four (4) fictional characters interwoven with real
events, and utilizing actual documentary footage as background.

On 21 December 1987, private respondent Enrile replied that "[he] would not and will not
approve of the use, appropriation, reproduction and/or exhibition of his name, or picture, or that
of any member of his family in any cinema or television production, film or other medium for
advertising or commercial exploitation" and further advised petitioners that 'in the production,
airing, showing, distribution or exhibition of said or similar film, no reference whatsoever (whether
written, verbal or visual) should not be made to [him] or any member of his family, much less to
any matter purely personal to them.

It appears that petitioners acceded to this demand and the name of private respondent Enrile
was deleted from the movie script, and petitioners proceeded to film the projected motion picture.

On 23 February 1988, private respondent filed a Complaint with application for Temporary
Restraining Order and Wilt of Pretion with the Regional Trial Court of Makati, docketed as Civil
Case No. 88-151 in Branch 134 thereof, seeking to enjoin petitioners from producing the movie
"The Four Day Revolution". The complaint alleged that petitioners' production of the mini-series
without private respondent's consent and over his objection, constitutes an obvious violation of
his right of privacy. On 24 February 1988, the trial court issued ex-parte a Temporary Restraining
Order and set for hearing the application for preliminary injunction.

On 9 March 1988, Hal McElroy flied a Motion to Dismiss with Opposition to the Petition for
Preliminary Injunction contending that the mini-series fim would not involve the private life of
Juan Ponce Enrile nor that of his family and that a preliminary injunction would amount to a prior
restraint on their right of free expression. Petitioner Ayer Productions also filed its own Motion to
Dismiss alleging lack of cause of action as the mini-series had not yet been completed.

In an Order 2 dated 16 March 1988, respondent court issued a writ of Preliminary Injunction
against the petitioners, the dispositive portion of which reads thus:

WHEREFORE, let a writ of preliminary injunction be issued, ordering defendants,

and all persons and entities employed or under contract with them, including
actors, actresses and members of the production staff and crew as well as all
persons and entities acting on defendants' behalf, to cease and desist from
producing and filming the mini-series entitled 'The Four Day Revolution" and from
making any reference whatsoever to plaintiff or his family and from creating any
fictitious character in lieu of plaintiff which nevertheless is based on, or bears rent
substantial or marked resemblance or similarity to, or is otherwise Identifiable
with, plaintiff in the production and any similar film or photoplay, until further
orders from this Court, upon plaintiff's filing of a bond in the amount of P
2,000,000.00, to answer for whatever damages defendants may suffer by reason
of the injunction if the Court should finally decide that plaintiff was not entitled
thereto.

xxx xxx xxx

(Emphasis supplied)
On 22 March 1988, petitioner Ayer Productions came to this Court by a Petition for certiorari
dated 21 March 1988 with an urgent prayer for Preliminary Injunction or Restraining Order, which
petition was docketed as G.R. No. L-82380.

A day later, or on 23 March 1988, petitiioner Hal McElroy also filed separate Petition for certiorari
with Urgent Prayer for a Restraining Order or Preliminary Injunction, dated 22 March 1988,
docketed as G.R. No. L-82398.

By a Resolution dated 24 March 1988, the petitions were consolidated and private respondent
was required to file a consolidated Answer. Further, in the same Resolution, the Court granted a
Temporary Restraining Order partially enjoining the implementation of the respondent Judge's
Order of 16 March 1988 and the Writ of Preliminary Injunction issued therein, and allowing the
petitioners to resume producing and filming those portions of the projected mini-series which do
not make any reference to private respondent or his family or to any fictitious character based on
or respondent.

Private respondent seasonably filed his Consolidated Answer on 6 April 1988 invoking in the
main a right of privacy.

The constitutional and legal issues raised by the present Petitions are sharply drawn. Petitioners'
claim that in producing and "The Four Day Revolution," they are exercising their freedom of
speech and of expression protected under our Constitution. Private respondent, upon the other
hand, asserts a right of privacy and claims that the production and filming of the projected mini-
series would constitute an unlawful intrusion into his privacy which he is entitled to enjoy.

Considering first petitioners' claim to freedom of speech and of expression the Court would once
more stress that this freedom includes the freedom to film and produce motion pictures and to
exhibit such motion pictures in theaters or to diffuse them through television. In our day and age,
motion pictures are a univesally utilized vehicle of communication and medium Of expression.
Along with the press, radio and television, motion pictures constitute a principal medium of mass
communication for information, education and entertainment. In Gonzales v. Katigbak, 3former
Chief Justice Fernando, speaking for the Court, explained:

1. Motion pictures are important both as a medium for the communication of

Ideas and the expression of the artistic impulse. Their effect on the perception by
our people of issues and public officials or public figures as well as the pre
cultural traits is considerable. Nor as pointed out in Burstyn v. Wilson(343 US 495
[19421) is the Importance of motion pictures as an organ of public opinion
lessened by the fact that they are designed to entertain as well as to inform' (Ibid,
501). There is no clear dividing line between what involves knowledge and what
affords pleasure. If such a distinction were sustained, there is a diminution of the
basic right to free expression. ...4

This freedom is available in our country both to locally-owned and to foreign-owned motion
picture companies. Furthermore the circumstance that the production of motion picture films is a
commercial activity expected to yield monetary profit, is not a disqualification for availing of
freedom of speech and of expression. In our community as in many other countries, media
facilities are owned either by the government or the private sector but the private sector-owned
media facilities commonly require to be sustained by being devoted in whole or in pailt to
revenue producing activities. Indeed, commercial media constitute the bulk of such facilities
available in our country and hence to exclude commercially owned and operated media from the
exerciseof constitutionally protected om of speech and of expression can only result in the drastic
contraction of such constitutional liberties in our country.
The counter-balancing of private respondent is to a right of privacy. It was demonstrated
sometime ago by the then Dean Irene R. Cortes that our law, constitutional and statutory, does
include a right of privacy. 5 It is left to case law, however, to mark out the precise scope and
content of this right in differing types of particular situations. The right of privacy or "the right to
be let alone," 6 like the right of free expression, is not an absolute right. A limited intrusion into a
person's privacy has long been regarded as permissible where that person is a public figure and
the information sought to be elicited from him or to be published about him constitute of apublic
character. 7 Succinctly put, the right of privacy cannot be invoked resist publication and
dissemination of matters of public interest. 8 The interest sought to be protected by the right of
privacy is the right to be free from unwarranted publicity, from the wrongful publicizing of the
private affairs and activities of an individual which are outside the realm of legitimate public
concern. 9

Lagunzad v. Vda. de Gonzales, 10 on which private respondent relies heavily, recognized a right
to privacy in a context which included a claim to freedom of speech and of
expression. Lagunzad involved a suit fortion picture producer as licensee and the widow and
family of the late Moises Padilla as licensors. This agreement gave the licensee the right to
produce a motion Picture Portraying the life of Moises Padilla, a mayoralty candidate of the
Nacionalista Party for the Municipality of Magallon, Negros Occidental during the November
1951 elections and for whose murder, Governor Rafael Lacson, a member of the Liberal Party
then in power and his men were tried and convicted. 11 In the judgment of the lower court
enforcing the licensing agreement against the licensee who had produced the motion picture and
exhibited it but refused to pay the stipulated royalties, the Court, through Justice Melencio-
Herrera, said:

Neither do we agree with petitioner's subon that the Licensing Agreement is null
and void for lack of, or for having an illegal cause or consideration, while it is true
that petitioner bad pled the rights to the book entitled "The Moises Padilla Story,"
that did not dispense with the need for prior consent and authority from the
deceased heirs to portray publicly episodes in said deceased's life and in that of
his mother and the member of his family. As held in Schuyler v. Curtis,
([1895],147 NY 434,42 NE 31 LRA 286.49 Am St Rep 671), 'a privilege may be
given the surviving relatives of a deperson to protect his memory, but the
privilege wts for the benefit of the living, to protect their feelings and to preventa
violation of their own rights in the character and memory of the deceased.'

Petitioners averment that private respondent did not have any property right over
the life of Moises Padilla since the latter was a public figure, is neither well taken.
Being a public figure ipso facto does not automatically destroy in toto a person's
right to privacy. The right to invade a person's privacy to disseminate public
information does not extend to a fictional or novelized representation of a person,
no matter how public a he or she may be (Garner v. Triangle Publications, DCNY
97 F. Supp., SU 549 [1951]). In the case at bar, while it is true that petitioner
exerted efforts to present a true-to-life Story Of Moises Padilla, petitioner admits
that he included a little romance in the film because without it, it would be a drab
story of torture and brutality. 12

In Lagunzad, the Court had need, as we have in the instant case, to deal with contraposed
claims to freedom of speech and of expression and to privacy. Lagunzad the licensee in effect
claimed, in the name of freedom of speech and expression, a right to produce a motion picture
biography at least partly "fictionalized" of Moises Padilla without the consent of and without
paying pre-agreed royalties to the widow and family of Padilla. In rejecting the licensee's claim,
the Court said:

Lastly, neither do we find merit in petitioners contention that the Licensing

Agreement infringes on the constitutional right of freedom of speech and of the
press, in that, as a citizen and as a newspaperman, he had the right to express
 his thoughts in film on the public life of Moises Padilla without prior restraint.The
right freedom of expression, indeed, occupies a preferred position in the
"hierarchy of civil liberties" (Philippine Blooming Mills Employees Organization v.
Philippine Blooming Mills Co., Inc., 51 SCRA 191 [1963]). It is not, however,
without limitations. As held in Gonzales v. Commission on Elections, 27 SCRA
835, 858 [1960]:

xxx xxx xxx

The prevailing doctine is that the clear and present danger rule is such a
limitation. Another criterion for permissible limitation on freedom of speech and
the press, which includes such vehicles of the mass media as radio, television
and the movies, is the "balancing of interest test" (Chief Justice Enrique M.
Fernando on the Bill of Rights, 1970 ed. p. 79). The principle "requires a court to
take conscious and detailed consideration of the interplay of interests observable
in given situation or type of situation" (Separation Opinion of the late Chief Justice
Castro in Gonzales v. Commission on Elections, supra, p. 899).

In the case at bar, the interests observable are the right to privacy asserted by
respondent and the right of freedom of expression invoked by petitioner. taking
into account the interplay of those interests, we hold that under the particular
circumstances presented, and considering the obligations assumed in the
Licensing Agreement entered into by petitioner, the validity of such agreement
will have to be upheld particularly because the limits of freedom of expression are
reached when expression touches upon matters of essentially private concern." 13

Whether the "balancing of interests test" or the clear and present danger test" be applied in
respect of the instant Petitions, the Court believes that a different conclusion must here be
reached: The production and filming by petitioners of the projected motion picture "The Four Day
Revolution" does not, in the circumstances of this case, constitute an unlawful intrusion upon
private respondent's "right of privacy."

1. It may be observed at the outset that what is involved in the instant case is a prior and direct
restraint on the part of the respondent Judge upon the exercise of speech and of expression by
petitioners. The respondent Judge has restrained petitioners from filming and producing the
entire proposed motion picture. It is important to note that in Lagunzad, there was no prior
restrain of any kind imposed upon the movie producer who in fact completed and exhibited the
film biography of Moises Padilla. Because of the speech and of expression, a weighty
presumption of invalidity vitiates. 14 The invalidity of a measure of prior restraint doesnot, of
course, mean that no subsequent liability may lawfully be imposed upon a person claiming to
exercise such constitutional freedoms. The respondent Judge should have stayed his hand,
instead of issuing an ex-parte Temporary Restraining Order one day after filing of a complaint by
the private respondent and issuing a Preliminary Injunction twenty (20) days later; for the
projected motion picture was as yet uncompleted and hence not exhibited to any audience.
Neither private respondent nor the respondent trial Judge knew what the completed film would
precisely look like. There was, in other words, no "clear and present danger" of any violation of
any right to privacy that private respondent could lawfully assert.

2. The subject matter of "The Four Day Revolution" relates to the non-bloody change of
government that took place at Epifanio de los Santos Avenue in February 1986, and the trian of
events which led up to that denouement. Clearly, such subject matter is one of public interest
and concern. Indeed, it is, petitioners' argue, of international interest. The subject thus relates to
a highly critical stage in the history of this countryand as such, must be regarded as having
passed into the public domain and as an appropriate subject for speech and expression and
coverage by any form of mass media. The subject mater, as set out in the synopsis provided by
the petitioners and quoted above, does not relate to the individual life and certainly not to the
private life of private respondent Ponce Enrile. Unlike in Lagunzad, which concerned the life story
of Moises Padilla necessarily including at least his immediate family, what we have here is not a
film biography, more or less fictionalized, of private respondent Ponce Enrile. "The Four Day
Revolution" is not principally about, nor is it focused upon, the man Juan Ponce Enrile' but it is
compelled, if it is to be historical, to refer to the role played by Juan Ponce Enrile in the
precipitating and the constituent events of the change of government in February 1986.

3. The extent of the instrusion upon the life of private respondent Juan Ponce Enrile that would
be entailed by the production and exhibition of "The Four Day Revolution" would, therefore, be
limited in character. The extent of that intrusion, as this Court understands the synopsis of the
proposed film, may be generally described as such intrusion as is reasonably necessary to keep
that film a truthful historical account. Private respondent does not claim that petitioners
threatened to depict in "The Four Day Revolution" any part of the private life of private
respondent or that of any member of his family.

4. At all relevant times, during which the momentous events, clearly of public concern, that
petitioners propose to film were taking place, private respondent was what Profs. Prosser and
Keeton have referred to as a "public figure:"

A public figure has been defined as a person who, by his accomplishments,

fame, or mode of living, or by adopting a profession or calling which gives the
public a legitimate interest in his doings, his affairs, and his character, has
become a 'public personage.' He is, in other words, a celebrity. Obviously to be
included in this category are those who have achieved some degree of reputation
by appearing before the public, as in the case of an actor, a professional baseball
player, a pugilist, or any other entertainment. The list is, however, broader than
this. It includes public officers, famous inventors and explorers, war heroes and
even ordinary soldiers, an infant prodigy, and no less a personage than the
Grand Exalted Ruler of a lodge. It includes, in short, anyone who has arrived at a
position where public attention is focused upon him as a person.

Such public figures were held to have lost, to some extent at least, their tight to
privacy. Three reasons were given, more or less indiscrimately, in the decisions"
that they had sought publicity and consented to it, and so could not complaint
when they received it; that their personalities and their affairs has already public,
and could no longer be regarded as their own private business; and that the
press had a privilege, under the Constitution, to inform the public about those
who have become legitimate matters of public interest. On one or another of
these grounds, and sometimes all, it was held that there was no liability when
they were given additional publicity, as to matters legitimately within the scope of
the public interest they had aroused.

The privilege of giving publicity to news, and other matters of public interest, was
held to arise out of the desire and the right of the public to know what is going on
in the world, and the freedom of the press and other agencies of information to
tell it. "News" includes all events and items of information which are out of the
ordinary hum-drum routine, and which have 'that indefinable quality of information
which arouses public attention.' To a very great extent the press, with its
experience or instinct as to what its readers will want, has succeeded in making
its own definination of news, as a glance at any morning newspaper will
sufficiently indicate. It includes homicide and othe crimes, arrests and police
raides, suicides, marriages and divorces, accidents, a death from the use of
narcotics, a woman with a rare disease, the birth of a child to a twelve year old
girl, the reappearance of one supposed to have been murdered years ago, and
undoubtedly many other similar matters of genuine, if more or less deplorable,
popular appeal.
 The privilege of enlightening the public was not, however, limited, to the
dissemination of news in the scene of current events. It extended also to
information or education, or even entertainment and amusement, by books,
articles, pictures, films and broadcasts concerning interesting phases of human
activity in general, as well as the reproduction of the public scene in newsreels
and travelogues. In determining where to draw the line, the courts were invited to
exercise a species of censorship over what the public may be permitted to read;
and they were understandably liberal in allowing the benefit of the doubt. 15

Private respondent is a "public figure" precisely because, inter alia, of his participation as a
principal actor in the culminating events of the change of government in February 1986. Because
his participation therein was major in character, a film reenactment of the peaceful revolution that
fails to make reference to the role played by private respondent would be grossly unhistorical.
The right of privacy of a "public figure" is necessarily narrower than that of an ordinary citizen.
Private respondent has not retired into the seclusion of simple private citizenship. he continues to
be a "public figure." After a successful political campaign during which his participation in the
EDSA Revolution was directly or indirectly referred to in the press, radio and television, he sits in
a very public place, the Senate of the Philippines.

5. The line of equilibrium in the specific context of the instant case between the constitutional
freedom of speech and of expression and the right of privacy, may be marked out in terms of a
requirement that the proposed motion picture must be fairly truthful and historical in its
presentation of events. There must, in other words, be no knowing or reckless disregard of truth
in depicting the participation of private respondent in the EDSA Revolution. 16 There must,
further, be no presentation of the private life of the unwilling private respondent and certainly no
revelation of intimate or embarrassing personal facts. 17 The proposed motion picture should not
enter into what Mme. Justice Melencio-Herrera in Lagunzad referred to as "matters of essentially
private concern." 18 To the extent that "The Four Day Revolution" limits itself in portraying the
participation of private respondent in the EDSA Revolution to those events which are directly and
reasonably related to the public facts of the EDSA Revolution, the intrusion into private
respondent's privacy cannot be regarded as unreasonable and actionable. Such portrayal may
be carried out even without a license from private respondent.

II

In a Manifestation dated 30 March 1988, petitioner Hal McElroy informed this Court that a
Temporary Restraining Order dated 25 March 1988, was issued by Judge Teofilo Guadiz of the
Regional Trial Court of Makati, Branch 147, in Civil Case No. 88-413, entitled "Gregorio B.
Honasan vs. Ayer Productions Pty. Ltd., McElroy Film Productions, Hal McElroy, Lope Juban and
PMP Motion for Pictures Production" enjoining him and his production company from further
filimg any scene of the projected mini-series film. Petitioner alleged that Honasan's complaint
was a "scissors and paste" pleading, cut out straight grom the complaint of private respondent
Ponce Enrile in Civil Case No. 88-151. Petitioner Ayer Productions, in a separate Manifestation
dated 4 April 1988, brought to the attention of the Court the same information given by petitoner
Hal McElroy, reiterating that the complaint of Gregorio B. Honasan was substantially identical to
that filed by private respondent herein and stating that in refusing to join Honasan in Civil Case
No. 88-151, counsel for private respondent, with whom counsel for Gregorio Honasan are
apparently associated, deliberately engaged in "forum shopping."

Private respondent filed a Counter-Manifestation on 13 April 1988 stating that the "slight
similarity" between private respondent's complaint and that on Honasan in the construction of
their legal basis of the right to privacy as a component of the cause of action is understandable
considering that court pleadings are public records; that private respondent's cause of action for
invasion of privacy is separate and distinct from that of Honasan's although they arose from the
same tortious act of petitioners' that the rule on permissive joinder of parties is not mandatory
and that, the cited cases on "forum shopping" were not in point because the parties here and
those in Civil Case No. 88-413 are not identical.
For reasons that by now have become clear, it is not necessary for the Court to deal with the
question of whether or not the lawyers of private respondent Ponce Enrile have engaged in
"forum shopping." It is, however, important to dispose to the complaint filed by former Colonel
Honasan who, having refused to subject himself to the legal processes of the Republic and
having become once again in fugitive from justice, must be deemed to have forfeited any right
the might have had to protect his privacy through court processes.

WHEREFORE,

a) the Petitions for Certiorari are GRANTED DUE COURSE, and the Order dated 16 March 1988
of respondent trial court granting a Writ of Preliminary Injunction is hereby SET ASIDE. The
limited Temporary Restraining Order granted by this Court on 24 March 1988 is hereby
MODIFIED by enjoining unqualifiedly the implementation of respondent Judge's Order of 16
March 1988 and made PERMANENT, and

b) Treating the Manifestations of petitioners dated 30 March 1988 and 4 April 1988 as separate
Petitions for Certiorari with Prayer for Preliminary Injunction or Restraining Order, the Court, in
the exercise of its plenary and supervisory jurisdiction, hereby REQUIRES Judge Teofilo Guadiz
of the Regional Trial Court of Makati, Branch 147, forthwith to DISMISS Civil Case No. 88-413
and accordingly to SET ASIDE and DISSOLVE his Temporary Restraining Order dated 25 March
1988 and any Preliminary Injunction that may have been issued by him.

No pronouncement as to costs.

SO ORDERED.

[G.R. No. 157547, February 23 : 2011]

HEIRS OF EDUARDO SIMON, PETITIONERS, VS. ELVIN* CHAN AND THE COURT OF APPEALS,
RESPONDENT.

DECISION

BERSAMIN, J.:

There is no independent civil action to recover the civil liability arising from the issuance of an unfunded
check prohibited and punished under Batas Pambansa Bilang 22 (BP 22).

Antecedents

On July 11, 1997, the Office of the City Prosecutor of Manila filed in the Metropolitan Trial Court of
Manila (MeTC) an information charging the late Eduardo Simon (Simon) with a violation of BP 22,
docketed as Criminal Case No. 275381 entitled People v. Eduardo Simon. The accusatory portion reads:

That sometime in December 1996 in the City of Manila, Philippines, the said accused, did then and there
willfully, unlawfully and feloniously make or draw and issue to Elvin Chan to apply on account or for
value Landbank Check No. 0007280 dated December 26, 1996 payable to cash in the amount of
P336,000.00 said accused well knowing that at the time of issue she/he/they did not have sufficient
funds in or credit with the drawee bank for payment of such check in full upon its presentment, which
check when presented for payment within ninety (90) days from the date thereof was subsequently
dishonored by the drawee bank for Account Closed and despite receipt of notice of such dishonor, said
accused failed to pay said Elvin Chan the amount of the check or to make arrangement for full payment
of the same within five (5) banking days after receiving said notice.

CONTRARY TO LAW. [1]

More than three years later, or on August 3, 2000, respondent Elvin Chan commenced in the MeTC in
Pasay City a civil action for the collection of the principal amount of P336,000.00, coupled with an
application for a writ of preliminary attachment (docketed as Civil Case No. 915-00).[2] He alleged in his
complaint the following:
 xxx

2. Sometime in December 1996 defendant employing fraud, deceit, and misrepresentation encashed a
check dated December 26, 1996 in the amount of P336,000.00 to the plaintiff assuring the latter that
the check is duly funded and that he had an existing account with the Land Bank of the Philippines,
xerox copy of the said check is hereto attached as Annex "A";

3. However, when said check was presented for payment the same was dishonored on the ground that
the account of the defendant with the Land Bank of the Philippines has been closed contrary to his
representation that he has an existing account with the said bank and that the said check was duly
funded and will be honored when presented for payment;

4. Demands had been made to the defendant for him to make good the payment of the value of the
check, xerox copy of the letter of demand is hereto attached as Annex "B", but despite such demand
defendant refused and continues to refuse to comply with plaintiff's valid demand;

5. Due to the unlawful failure of the defendant to comply with the plaintiff's valid demands, plaintiff has
been compelled to retain the services of counsel for which he agreed to pay as reasonable attorney's
fees the amount of P50,000.00 plus additional amount of P2,000.00 per appearance.

ALLEGATION IN SUPPORT OF PRAYER

FOR PRELIMINARY ATTACHMENT

6. The defendant as previously alleged has been guilty of fraud in contracting the obligation upon which
this action is brought and that there is no sufficient security for the claims sought in this action which
fraud consist in the misrepresentation by the defendant that he has an existing account and sufficient
funds to cover the check when in fact his account was already closed at the time he issued a check;

7. That the plaintiff has a sufficient cause of action and this action is one which falls under Section 1,
sub-paragraph (d), Rule 57 of the Revised Rules of Court of the Philippines and the amount due the
plaintiff is as much as the sum for which the plaintiff seeks the writ of preliminary attachment;

8. That the plaintiff is willing and able to post a bond conditioned upon the payment of damages should
it be finally found out that the plaintiff is not entitled to the issuance of a writ of preliminary
attachment.[3]

On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary attachment, which was
implemented on August 17, 2000 through the sheriff attaching a Nissan vehicle of Simon.[4]

On August 17, 2000, Simon filed an urgent motion to dismiss with application to charge plaintiff's
attachment bond for damages,[5] pertinently averring:

xxx

On the ground of litis pendentia, that is, as a consequence of the pendency of another action between
the instant parties for the same cause before the Metropolitan Trial Court of Manila, Branch X (10)
entitled "People of the Philippines vs. Eduardo Simon", docketed thereat as Criminal Case No. 275381-
CR, the instant action is dismissable under Section 1, (e), Rule 16, 1997 Rules of Civil Procedure, xxx
xxx

While the instant case is civil in nature and character as contradistinguished from the said Criminal Case
No. 915-00 in the Metropolitan Trial Court of Manila, Branch X (10), the basis of the instant civil action is
the herein plaintiff's criminal complaint against defendant arising from a charge of violation of Batas
Pambansa Blg. 22 as a consequence of the alleged dishonor in plaintiff's hands upon presentment for
payment with drawee bank a Land Bank Check No. 0007280 dated December 26, 1996 in the amount of
P336,000- drawn allegedly issued to plaintiff by defendant who is the accused in said case, a photocopy
of the Criminal information filed by the Assistant City Prosecutor of Manila on June 11, 1997 hereto
attached and made integral part hereof as Annex "1".

It is our understanding of the law and the rules, that, "when a criminal action is instituted, the civil
action for recovery of civil liability arising from the offense charged is impliedly instituted with the
criminal action, unless the offended party expressly waives the civil action or reserves his right to
institute it separately xxx.
On August 29, 2000, Chan opposed Simon's urgent motion to dismiss with application to charge
plaintiff's attachment bond for damages, stating:

1. The sole ground upon which defendant seeks to dismiss plaintiff's complaint is the alleged pendency
of another action between the same parties for the same cause, contending among others that the
pendency of Criminal Case No. 275381-CR entitled "People of the Philippines vs. Eduardo Simon"
renders this case dismissable;

2. The defendant further contends that under Section 1, Rule 111 of the Revised Rules of Court, the
filing of the criminal action, the civil action for recovery of civil liability arising from the offense charged
is impliedly instituted with the criminal action which the plaintiff does not contest; however, it is the
submission of the plaintiff that an implied reservation of the right to file a civil action has already been
made, first, by the fact that the information for violation of B.P. 22 in Criminal Case No. 2753841 does
not at all make any allegation of damages suffered by the plaintiff nor is there any claim for recovery of
damages; on top of this the plaintiff as private complainant in the criminal case, during the presentation
of the prosecution evidence was not represented at all by a private prosecutor such that no evidence has
been adduced by the prosecution on the criminal case to prove damages; all of these we respectfully
submit demonstrate an effective implied reservation of the right of the plaintiff to file a separate civil
action for damages;

3. The defendant relies on Section 3 sub-paragraph (a) Rule 111 of the Revised Rules of Court which
mandates that after a criminal action has been commenced the civil action cannot be instituted until final
judgment has been rendered in the criminal action; however, the defendant overlooks and conveniently
failed to consider that under Section 2, Rule 111 which provides as follows:

In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an
independent civil action entirely separate and distinct from the criminal action, may be brought by the
injured party during the pendency of criminal case provided the right is reserved as required in the
preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall
require only a preponderance of evidence.

In as much as the case is one that falls under Art. 33 of the Civil Code of the Philippines as it is based on
fraud, this action therefore may be prosecuted independently of the criminal action;

4. In fact we would even venture to state that even without any reservation at all of the right to file a
separate civil action still the plaintiff is authorized to file this instant case because the plaintiff seeks to
enforce an obligation which the defendant owes to the plaintiff by virtue of the negotiable instruments
law. The plaintiff in this case sued the defendant to enforce his liability as drawer in favor of the plaintiff
as payee of the check. Assuming the allegation of the defendant of the alleged circumstances relative to
the issuance of the check, still when he delivered the check payable to bearer to that certain Pedro
Domingo, as it was payable to cash, the same may be negotiated by delivery by who ever was the
bearer of the check and such negotiation was valid and effective against the drawer;

5. Indeed, assuming as true the allegations of the defendant regarding the circumstances relative to the
issuance of the check it would be entirely impossible for the plaintiff to have been aware that such check
was intended only for a definite person and was not negotiable considering that the said check was
payable to bearer and was not even crossed;

6. We contend that what cannot be prosecuted separate and apart from the criminal case without a
reservation is a civil action arising from the criminal offense charged. However, in this instant case since
the liability of the defendant are imposed and the rights of the plaintiff are created by the negotiable
instruments law, even without any reservation at all this instant action may still be prosecuted;

7. Having this shown, the merits of plaintiff's complaint the application for damages against the bond is
totally without any legal support and perforce should be dismissed outright.[6]

On October 23, 2000, the MeTC in Pasay City granted Simon's urgent motion to dismiss with application
to charge plaintiff's attachment bond for damages,[7] dismissing the complaint of Chan because:

xxx

After study of the arguments of the parties, the court resolves to GRANT the Motion to Dismiss and the
application to charge plaintiff's bond for damages.

For "litis pendentia" to be a ground for the dismissal of an action, the following requisites must concur:
(a) identity of parties or at least such as to represent the same interest in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity in
the two (2) cases should be such that the judgment, which may be rendered in one would, regardless of
which party is successful, amount to res judicata in the other. xxx

A close perusal of the herein complaint denominated as "Sum of Money" and the criminal case for
violation of BP Blg. 22 would readily show that the parties are not only identical but also the cause of
action being asserted, which is the recovery of the value of Landbank Check No. 0007280 in the amount
of P336,000.00. In both civil and criminal cases, the rights asserted and relief prayed for, the reliefs
being founded on the same facts, are identical.

Plaintiff's claim that there is an effective implied waiver of his right to pursue this civil case owing to the
fact that there was no allegation of damages in BP Blg. 22 case and that there was no private prosecutor
during the presentation of prosecution evidence is unmeritorious. It is basic that when a complaint or
criminal Information is filed, even without any allegation of damages and the intention to prove and
claim them, the offended party has the right to prove and claim for them, unless a waiver or reservation
is made or unless in the meantime, the offended party has instituted a separate civil action. xxx The
over-all import of the said provision conveys that the waiver which includes indemnity under the Revised
Penal Code, and damages arising under Articles 32, 33, and 34 of the Civil Code must be both clear and
express. And this must be logically so as the primordial objective of the Rule is to prevent the offended
party from recovering damages twice for the same act or omission of the accused.

Indeed, the evidence discloses that the plaintiff did not waive or made a reservation as to his right to
pursue the civil branch of the criminal case for violation of BP Blg. 22 against the defendant herein. To
the considered view of this court, the filing of the instant complaint for sum of money is indeed legally
barred. The right to institute a separate civil action shall be made before the prosecution starts to
present its evidence and under circumstances affording the offended party a reasonable opportunity to
make such reservation. xxx

Even assuming the correctness of the plaintiff's submission that the herein case for sum of money is one
based on fraud and hence falling under Article 33 of the Civil Code, still prior reservation is required by
the Rules, to wit:

"In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an
independent civil action entirely separate and distinct from the criminal action, may be brought by the
injured party during the pendency of criminal case provided the right is reserved as required in the
preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall
require only a preponderance of evidence."

xxx

WHEREFORE, premises considered, the court resolves to:

1. Dismiss the instant complaint on the ground of "litis pendentia";

2. Dissolve/Lift the Writ of Attachment issued by this court on August 14, 2000;

3. Charge the plaintiff's bond the amount of P336,000.00 in favor of the

defendant for the damages sustained by the latter by virtue of the
implementation of the writ of attachment;

4. Direct the Branch Sheriff of this Court to RESTORE with utmost dispatch to the
defendant's physical possession the vehicle seized from him on August 16,
2000; and

5. Direct the plaintiff to pay the defendant the sum of P5,000.00 by way of
attorney's fees.

SO ORDERED.

Chan's motion for reconsideration was denied on December 20, 2000,[8] viz:

Considering that the plaintiff's arguments appear to be a mere repetition of his previous submissions,
and which submissions this court have already passed upon; and taking into account the inapplicability
of the ratio decidendi in the Tactaquin vs. Palileo case which the plaintiff cited as clearly in that case, the
plaintiff therein expressly made a reservation to file a separate civil action, the Motion for
Reconsideration is DENIED for lack of merit.

SO ORDERED.

On July 31, 2001, the Regional Trial Court (RTC) in Pasay City upheld the dismissal of Chan's complaint,
disposing:[9]

WHEREFORE, finding no error in the appealed decision, the same is hereby AFFIRMED in toto.

SO ORDERED.

On September 26, 2001, Chan appealed to the Court of Appeals (CA) by petition for
review,[10]challenging the propriety of the dismissal of his complaint on the ground of litis pendentia.

In his comment, [11] Simon countered that Chan was guilty of bad faith and malice in prosecuting his
alleged civil claim twice in a manner that caused him (Simon) utter embarrassment and emotional
sufferings; and that the dismissal of the civil case because of the valid ground of litis pendentia based on
Section 1 (e), Rule 16 of the 1997 Rules of Civil Procedure was warranted.

On June 25, 2002, the CA promulgated its assailed decision,[12] overturning the RTC, viz:

xxx

As a general rule, an offense causes two (2) classes of injuries. The first is the social injury produced by
the criminal act which is sought to be repaired through the imposition of the corresponding penalty, and
the second is the personal injury caused to the victim of the crime which injury is sought to be
compensated through indemnity which is also civil in nature. Thus, "every person criminally liable for a
felony is also civilly liable."

The offended party may prove the civil liability of an accused arising from the commission of the offense
in the criminal case since the civil action is either deemed instituted with the criminal action or is
separately instituted.

Rule 111, Section 1 of the Revised Rules of Criminal Procedure, which became effective on December 1,
2000, provides that:

(a) When a criminal action is instituted, the civil action for the recovery of civil liability arising from the
offense charged shall be deemed instituted with the criminal action unless the offended party waives the
civil action, reserves the right to institute it separately or institute the civil action prior to the criminal
action.

Rule 111, Section 2 further states:

After the criminal action has been commenced, the separate civil action arising therefrom cannot be
instituted until final judgment has been entered in the criminal action.

However, with respect to civil actions for recovery of civil liability under Articles 32, 33, 34 and 2176 of
the Civil Code arising from the same act or omission, the rule has been changed.

In DMPI Employees Credit Association vs. Velez, the Supreme Court pronounced that only the civil
liability arising from the offense charged is deemed instituted with the criminal action unless the
offended party waives the civil action, reserves his right to institute it separately, or institutes the civil
action prior to the criminal action. Speaking through Justice Pardo, the Supreme Court held:

"There is no more need for a reservation of the right to file the independent civil action under Articles
32, 33, 34 and 2176 of the Civil Code of the Philippines. The reservation and waiver referred to refers
only to the civil action for the recovery of the civil liability arising from the offense charged. This does
not include recovery of civil liability under Articles 32, 33, 34, and 2176 of the Civil Code of the
Philippines arising from the same act or omission which may be prosecuted separately without a
reservation".

Rule 111, Section 3 reads:

Sec. 3. When civil action may proceed independently. In the cases provided in Articles 32, 33, 34, and
2176 of the Civil Code of the Philippines, the independent civil action may be brought by the offended
party. It shall proceed independently of the criminal action and shall require only a preponderance of
evidence. In no case, however, may the offended party recover damages twice for the same act or
omission charged in the criminal action.

The changes in the Revised Rules on Criminal Procedure pertaining to independent civil actions which
became effective on December 1, 2000 are applicable to this case.

Procedural laws may be given retroactive effect to actions pending and undetermined at the time of their
passage. There are no vested rights in the rules of procedure. xxx

Thus, Civil Case No. CV-94-124, an independent civil action for damages on account of the fraud
committed against respondent Villegas under Article 33 of the Civil Code, may proceed independently
even if there was no reservation as to its filing."

It must be pointed that the abovecited case is similar with the instant suit. The complaint was also
brought on allegation of fraud under Article 33 of the Civil Code and committed by the respondent in the
issuance of the check which later bounced. It was filed before the trial court, despite the pendency of
the criminal case for violation of BP 22 against the respondent. While it may be true that the changes in
the Revised Rules on Criminal Procedure pertaining to independent civil action became effective on
December 1, 2000, the same may be given retroactive application and may be made to apply to the
case at bench, since procedural rules may be given retroactive application. There are no vested rights in
the rules of procedure.

In view of the ruling on the first assigned error, it is therefore an error to adjudge damages in favor of
the petitioner.

WHEREFORE, the petition is hereby GRANTED. The Decision dated July 13, 2001 rendered by the
Regional Trial Court of Pasay City, Branch 108 affirming the dismissal of the complaint filed by petitioner
is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the trial court for further
proceedings.

SO ORDERED.

On March 14, 2003, the CA denied Simon's motion for reconsideration.[13]

Hence, this appeal, in which the petitioners submit that the CA erroneously premised its decision on the
assessment that the civil case was an independent civil action under Articles 32, 33, 34, and 2176 of
the Civil Code; that the CA's reliance on the ruling in DMPI Employees Credit Cooperative Inc. v.
Velez[14]stretched the meaning and intent of the ruling, and was contrary to Sections 1 and 2 of Rule 111
of the Rules of Criminal Procedure; that this case was a simple collection suit for a sum of money,
precluding the application of Section 3 of Rule 111 of the Rules of Criminal Procedure.[15]

In his comment,[16] Chan counters that the petition for review should be denied because the petitioners
used the wrong mode of appeal; that his cause of action, being based on fraud, was an independent civil
action; and that the appearance of a private prosecutor in the criminal case did not preclude the filing of
his separate civil action.

Issue

The lone issue is whether or not Chan's civil action to recover the amount of the unfunded check (Civil
Case No. 915-00) was an independent civil action.

Ruling

The petition is meritorious.

Applicable Law and Jurisprudence on the

Propriety of filing a separate civil action based on BP 22

The Supreme Court has settled the issue of whether or not a violation of BP 22 can give rise to civil
liability in Banal v. Judge Tadeo, Jr.,[17] holding:
 xxx

Article 20 of the New Civil Code provides:

Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the
latter for the same.

Regardless, therefore, of whether or not a special law so provides, indemnification of the offended party
may be had on account of the damage, loss or injury directly suffered as a consequence of the wrongful
act of another. The indemnity which a person is sentenced to pay forms an integral part of the penalty
imposed by law for the commission of a crime (Quemel v. Court of Appeals, 22 SCRA 44, citing Bagtas
v. Director of Prisons, 84 Phil 692). Every crime gives rise to a penal or criminal action for the
punishment of the guilty party, and also to civil action for the restitution of the thing, repair of the
damage, and indemnification for the losses (United States v. Bernardo, 19 Phil 265).
xxx

Civil liability to the offended party cannot thus be denied. The payee of the check is entitled to receive
the payment of money for which the worthless check was issued. Having been caused the damage, she
is entitled to recompense.

Surely, it could not have been the intendment of the framers of Batas Pambansa Blg. 22 to leave the
offended private party defrauded and empty-handed by excluding the civil liability of the offender, giving
her only the remedy, which in many cases results in a Pyrrhic victory, of having to file a separate civil
suit. To do so may leave the offended party unable to recover even the face value of the check due her,
thereby unjustly enriching the errant drawer at the expense of the payee. The protection which the law
seeks to provide would, therefore, be brought to naught.

xxx

However, there is no independent civil action to recover the value of a bouncing check issued in
contravention of BP 22. This is clear from Rule 111 of the Rules of Court, effective December 1, 2000,
which relevantly provides:

Section 1. Institution of criminal and civil actions. - (a) When a criminal action is instituted, the civil
action for the recovery of civil liability arising from the offense charged shall be deemed instituted with
the criminal action unless the offended party waives the civil action, reserves the right to institute it
separately or institutes the civil action prior to the criminal action.

The reservation of the right to institute separately the civil action shall be made before the prosecution
starts presenting its evidence and under circumstances affording the offended party a reasonable
opportunity to make such reservation.

When the offended party seeks to enforce civil liability against the accused by way of moral, nominal,
temperate, or exemplary damages without specifying the amount thereof in the complaint or
information, the filing fees therefor shall constitute a first lien on the judgment awarding such damages.

Where the amount of damages, other than actual, is specified in the complaint or information, the
corresponding filing fees shall be paid by the offended party upon the filing thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be required for actual damages.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case,
but any cause of action which could have been the subject thereof may be litigated in a separate civil
action. (1a)

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the
corresponding civil action. No reservation to file such civil action separately shall be
allowed.[18]

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing
fees based on the amount of the check involved, which shall be considered as the actual damages
claimed. Where the complaint or information also seeks to recover liquidated, moral, nominal, temperate
or exemplary damages, the offended party shall pay the filing fees based on the amounts alleged
therein. If the amounts are not so alleged but any of these damages are subsequently awarded by the
court, the filing fees based on the amount awarded shall constitute a first lien on the judgment.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be
consolidated with the criminal action upon application with the court trying the latter case. If the
application is granted, the trial of both actions shall proceed in accordance with section 2 of the Rule
governing consolidation of the civil and criminal actions.

Section 3. When civil action may proceed independently. - In the cases provided in Articles 32, 33, 34
and 2176 of the Civil Code of the Philippines, the independent civil action may be brought by the
offended party. It shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party recover damages twice for the
same act or omission charged in the criminal action.

The aforequoted provisions of the Rules of Court, even if not yet in effect when Chan commenced Civil
Case No. 915-00 on August 3, 2000, are nonetheless applicable. It is axiomatic that the retroactive
application of procedural laws does not violate any right of a person who may feel adversely affected,
nor is it constitutionally objectionable. The reason is simply that, as a general rule, no vested right may
attach to, or arise from, procedural laws.[19] Any new rules may validly be made to apply to cases
pending at the time of their promulgation, considering that no party to an action has a vested right in
the rules of procedure,[20] except that in criminal cases, the changes do not retroactively apply if they
permit or require a lesser quantum of evidence to convict than what is required at the time of the
commission of the offenses, because such retroactivity would be unconstitutional for being ex post
facto under the Constitution.[21]

Moreover, the application of the rule would not be precluded by the violation of any assumed vested
right, because the new rule was adopted from Supreme Court Circular 57-97 that took effect on
November 1, 1997.

Supreme Court Circular 57-97 states:

Any provision of law or Rules of Court to the contrary notwithstanding, the following rules and guidelines
shall henceforth be observed in the filing and prosecution of all criminal cases under Batas Pambansa
Blg. 22 which penalizes the making or drawing and issuance of a check without funds or credit:

1. The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to necessarily
include the corresponding civil action, and no reservation to file such civil action separately
shall be allowed or recognized.[22]

2. Upon the filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the
filing fees based upon the amount of the check involved which shall be considered as the actual
damages claimed, in accordance with the schedule of fees in Section 7 (a) and Section 8 (a), Rule 141 of
the Rules of Court as last amended by Administrative Circular No. 11-94 effective August 1, 1994.
Where the offended party further seeks to enforce against the accused civil liability by way of liquidated,
moral, nominal, temperate or exemplary damages, he shall pay the corresponding filing fees therefor
based on the amounts thereof as alleged either in the complaint or information. If not so alleged but any
of these damages are subsequently awarded by the court, the amount of such fees shall constitute a
first lien on the judgment.

3. Where the civil action has heretofore been filed separately and trial thereof has not yet commenced, it
may be consolidated with the criminal action upon application with the court trying the latter case. If the
application is granted, the trial of both actions shall proceed in accordance with the pertinent procedure
outlined in Section 2 (a) of Rule 111 governing the proceedings in the actions as thus consolidated.

4. This Circular shall be published in two (2) newspapers of general circulation and shall take effect on
November 1, 1997.

The reasons for issuing Circular 57-97 were amply explained in Hyatt Industrial Manufacturing
Corporation v. Asia Dynamic Electrix Corporation,[23] thus:

xxx

We agree with the ruling of the Court of Appeals that upon filing of the criminal cases for violation of
B.P. 22, the civil action for the recovery of the amount of the checks was also impliedly instituted under
Section 1(b) of Rule 111 of the 2000 Rules on Criminal Procedure. Under the present revised Rules, the
criminal action for violation of B.P. 22 shall be deemed to include the corresponding civil action. The
reservation to file a separate civil action is no longer needed. The Rules provide:
Section 1. Institution of criminal and civil actions. —

(a) x x x

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the
corresponding civil action. No reservation to file such civil action separately shall be allowed.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing
fees based on the amount of the check involved, which shall be considered as the actual damages
claimed. Where the complaint or information also seeks to recover liquidated, moral, nominal, temperate
or exemplary damages, the offended party shall pay additional filing fees based on the amounts alleged
therein. If the amounts are not so alleged but any of these damages are subsequently awarded by the
court, the filing fees based on the amount awarded shall constitute a first lien on the judgment.

Where the civil action has been filed separately and trial thereof has not yet commenced, it may be
consolidated with the criminal action upon application with the court trying the latter case. If the
application is granted, the trial of both actions shall proceed in accordance with section 2 of this Rule
governing consolidation of the civil and criminal actions.

The foregoing rule was adopted from Circular No. 57-97 of this Court. It specifically states that the
criminal action for violation of B.P. 22 shall be deemed to include the corresponding civil action. It also
requires the complainant to pay in full the filing fees based on the amount of the check involved.
Generally, no filing fees are required for criminal cases, but because of the inclusion of the civil action in
complaints for violation of B.P. 22, the Rules require the payment of docket fees upon the filing of the
complaint. This rule was enacted to help declog court dockets which are filled with B.P. 22
cases as creditors actually use the courts as collectors. Because ordinarily no filing fee is
charged in criminal cases for actual damages, the payee uses the intimidating effect of a
criminal charge to collect his credit gratis and sometimes, upon being paid, the trial court is
not even informed thereof. The inclusion of the civil action in the criminal case is expected to
significantly lower the number of cases filed before the courts for collection based on
dishonored checks. It is also expected to expedite the disposition of these cases. Instead of
instituting two separate cases, one for criminal and another for civil, only a single suit shall
be filed and tried. It should be stressed that the policy laid down by the Rules is to discourage
the separate filing of the civil action. The Rules even prohibit the reservation of a separate
civil action, which means that one can no longer file a separate civil case after the criminal
complaint is filed in court. The only instance when separate proceedings are allowed is when
the civil action is filed ahead of the criminal case. Even then, the Rules encourage the
consolidation of the civil and criminal cases. We have previously observed that a separate
civil action for the purpose of recovering the amount of the dishonored checks would only
prove to be costly, burdensome and time-consuming for both parties and would further delay
the final disposition of the case. This multiplicity of suits must be avoided. Where petitioners'
rights may be fully adjudicated in the proceedings before the trial court, resort to a separate
action to recover civil liability is clearly unwarranted. In view of this special rule governing
actions for violation of B.P. 22, Article 31 of the Civil Code cited by the trial court will not
apply to the case at bar.[24]

The CA's reliance on DMPI Employees Credit Association v. Velez[25] to give due course to the civil action
of Chan independently and separately of Criminal Case No. 275381 was unwarranted. DMPI
Employees, which involved a prosecution for estafa, is not on all fours with this case, which is a
prosecution for a violation of BP 22. Although the Court has ruled that the issuance of a bouncing check
may result in two separate and distinct crimes of i>estafa and violation of BP 22,[26] the procedures for
the recovery of the civil liabilities arising from these two distinct crimes are different and non-
interchangeable. In prosecutions of estafa, the offended party may opt to reserve his right to file a
separate civil action, or may institute an independent action based on fraud pursuant to Article 33 of
the Civil Code,[27] as DMPI Employees has allowed. In prosecutions of violations of BP 22, however, the
Court has adopted a policy to prohibit the reservation or institution of a separate civil action to claim the
civil liability arising from the issuance of the bouncing check upon the reasons delineated in Hyatt
Industrial Manufacturing Corporation, supra.

To repeat, Chan's separate civil action to recover the amount of the check involved in the prosecution for
the violation of BP 22 could not be independently maintained under both Supreme Court Circular 57-97
and the aforequoted provisions of Rule 111 of the Rules of Court, notwithstanding the allegations of
fraud and deceit.

B
 Aptness of the dismissal of the civil action
on the ground of litis pendentia

Did the pendency of the civil action in the MeTC in Manila (as the civil aspect in Criminal Case No.
275381) bar the filing of Civil Case No. 915-00 in the MeTC in Pasay City on the ground of litis
pendentia?

For litis pendentia to be successfully invoked as a bar to an action, the concurrence of the following
requisites is necessary, namely: (a) there must be identity of parties or at least such as represent the
same interest in both actions; (b) there must be identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts; and, (c) the identity in the two cases should be such that the
judgment that may be rendered in one would, regardless of which party is successful, amount to res
judicata in respect of the other. Absent the first two requisites, the possibility of the existence of the
third becomes nil.[28]

A perusal of Civil Case No. 01-0033 and Criminal Case No. 275381 ineluctably shows that all the
elements of litis pendentia are attendant. First of all, the parties in the civil action involved in Criminal
Case No. 275381 and in Civil Case No. 915-00, that is, Chan and Simon, are the same. Secondly, the
information in Criminal Case No. 275381 and the complaint in Civil Case No. 915-00 both alleged that
Simon had issued Landbank Check No. 0007280 worth P336,000.00 payable to "cash," thereby
indicating that the rights asserted and the reliefs prayed for, as well as the facts upon which the reliefs
sought were founded, were identical in all respects. And, thirdly, any judgment rendered in one case
would necessarily bar the other by res judicata; otherwise, Chan would be recovering twice upon the
same claim.

It is clear, therefore, that the MeTC in Pasay City properly dismissed Civil Case No. 915-00 on the
ground of litis pendentia through its decision dated October 23, 2000; and that the RTC in Pasay City did
not err in affirming the MeTC.

Wherefore, we grant the petition for review on certiorari, and, accordingly, we reverse and set aside
the decision promulgated by the Court of Appeals on June 25, 2002. We reinstate the decision rendered
on October 23, 2000 by the Metropolitan Trial Court, Branch 45, in Pasay City.

Costs of suit to be paid by the respondent.

SO ORDERED.

[ G.R. Nos. 159017-18, March 09, 2011 ]

PAULINO S. ASILO, JR., PETITIONER, VS. THE PEOPLE OF THE
PHILIPPINES AND SPOUSES VISITACION AND CESAR C. BOMBASI,
RESPONDENTS.

[G.R. No. 159059]

VICTORIA BUETA VDA. DE COMENDADOR, IN REPRESENTATION OF

DEMETRIO T. COMENDADOR, PETITIONER, VS. VISITACION C. BOMBASI
AND CESAR C. BOMBASI, RESPONDENTS.

DECISION
PEREZ, J.:
At bench are appeals by certiorari[1] from the Decision[2] of the Fourth Division of the Sandiganbayan; (1) finding
Demetrio T. Comendador[3] (Mayor Comendador) and Paulino S. Asilo, Jr.[4] guilty beyond reasonable doubt of
violation of Sec. 3(e) of Republic Act No. 3019; (2) dismissing the cases against accused Alberto S.
Angeles;[5] (3) ordering the defendants Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino
S. Asilo, Jr. to pay the plaintiffs now respondents Visitacion C. Bombasi (Visitacion) and Cesar C. Bombasi
damages; and (4) dismissing the cases against the spouses Alida and Teddy Coroza [6] and Benita and Isagani
Coronado.[7]

The factual antecedents of the case are:

On 15 March 1978, Private Respondent Visitacion's late mother Marciana Vda. De Coronado (Vda. De
Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo P.
Manalang) entered into a lease contract whereby the Municipality allowed the use and enjoyment of property
comprising of a lot and a store located at the corner of Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan,
Laguna, in favor of the respondent's mother for a period of twenty (20) years beginning on 15 March 1978 until
15 March 1998, extendible for another 20 years.[8]

The lease contract provided that the late Vda. De Coronado could build a firewall on her rented property which
must be at least as high as the store; and in case of modification of the public market, she or her heir/s would be
given preferential rights.

Visitacion took over the store when her mother died sometime in 1984. [9] From then on up to January 1993,
Visitacion secured the yearly Mayor's permits.[10]

Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacion's request for inspection on 15
May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public Works and
Highways,[11] Regional Office No. IV-A, found that the store of Visitacion remained intact and stood strong. This
finding of Engineer Gorospe was contested by the Municipality of Nagcarlan.

The store of Visitacion continued to operate after the fire until 15 October 1993.

On 1 September 1993, Visitacion received a letter[12] from Mayor Comendador directing her to demolish her store
within five (5) days from notice. Attached to the letter were copies of Sangguniang Bayan Resolution No.
156[13]dated 30 August 1993 and a Memorandum issued by Asst. Provincial Prosecutor Marianito Sasondoncillo
of Laguna.

The relevant provisos of the Resolution No. 156 states that:

NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize Hon. Demetrio T. Comendador to

enforce and order the Coronado's to demolish the building constructed on the space previously rented to them in
order to give way for the construction of a new municipal market building.

RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable Mayor of Nagcarlan to file an

Unlawful Detainer Case with damages for the expenses incurred due to the delay in the completion of the project
if the Coronado's continuously resists the order.

On 3 September 1993, Visitacion wrote a reply letter to Mayor Comendador saying that: (1) the lease contract
was still existing and legally binding; (2) she was willing to vacate the store as long as same place and area
would be given to her in the new public market; and (3) in case her proposals are not acceptable to Mayor
Comendador, for the latter to just file an unlawful detainer case against her pursuant to Sangguniang
Bayan Resolution No. 156. Pertinent portions of the letter read:

x x x With all due respect to the resolution of the Municipal Council and the opinion rendered by the Laguna Asst.
Provincial Prosecutor, it is my considered view, however, arrived at after consultation with my legal counsel, that
our existing lease contract is still legally binding and in full force and effect. Lest I appear to be defiant, let me
reiterate to you and the council that we are willing to vacate the said building provided that a new contract is
executed granting to us the same space or lot and the same area. I believe that our proposal is most reasonable
and fair under the circumstance. If you are not amenable to the said proposal, I concur with the position taken by
the Council for you to file the appropriate action in court for unlawful detainer to enable our court to finally thresh
out our differences.[14]

On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to Visitacion ordering her to
vacate the portion of the public market she was occupying within 15 days from her receipt of the letter; else, a
court action will be filed against her.

On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No. 183 authorizing
Mayor Comendador to demolish the store being occupied by Visitacion using legal means. The significant portion
of the Resolution reads:

Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA: Ang pagbibigay kapangyarihan kay
Kgg. Demetrio T. Comendador na ipagiba ang anumang istrakturang nagiging sagabal sa mabilis at maayos na
pagbabangon ng pamilihang bayan.[15]

On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo) also sent a letter [16] to Visitacion
informing her of the impending demolition of her store the next day. Within the same day, Visitacion wrote a reply
letter[17] to Asilo, alleging that there is no legal right to demolish the store in the absence of a court order and that
the Resolutions did not sanction the demolition of her store but only the filing of an appropriate unlawful detainer
case against her. She further replied that if the demolition will take place, appropriate administrative, criminal and
civil actions will be filed against Mayor Comendador, Asilo and all persons who will take part in the demolition.

On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan Resolution Nos. 183
and 156 authorized the demolition of the store with Asilo and Angeles supervising the work.

Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost of the demolished
property as amounting to P437,900.00[18]

On 19 August 1994, Visitacion, together with her husband Cesar Bombasi (Spouses Bombasi) filed with the
Regional Trial Court of San Pablo City, Laguna a Civil Case[19] for damages with preliminary injunction against
the Municipality of Nagcarlan, Laguna, Mayor Demetrio T. Comendador, Paulino S. Asilo, Jr., and Alberto S.
Angeles. The complaint was soon after amended to include the Spouses Benita and Isagani Coronado and
Spouses Alida and Teddy Coroza as formal defendants because they were then the occupants of the contested
area.

The spouses prayed for the following disposition:

1. RESTRAINING or ENJOINING defendant Municipality and defendant Municipal Mayor from leasing the
premises subject of lease Annex "A" hereof, part of which is now occupied by PNP Outpost and by the
Municipal Collectors' Office, and the equivalent adjacent area thereof, and to cause the removal of said stalls;

2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area of the leased areas being now
assigned to other persons by defendants Municipality and/or by defendant Municipal Mayor, and to allow
plaintiffs to construct their stalls thereon;

3. MAKING the injunction permanent, after trial;

4. ORDERING defendants to pay plaintiffs, jointly and severally, the following -

(a) P437,900.00 for loss of building/store and other items therein;

(b) P200,000.00 for exemplary damages;
(c) P200,000.00 for moral damages;
(d) P30,.00 for attorney's fees and P700.00 for every attendance of counsel in court.

5. GRANTING further reliefs upon plaintiffs as justice and equity may warrant in the premises.[20]

Spouses Bombasi, thereafter, filed a criminal complaint[21] against Mayor Comendador, Asilo and Angeles for
violation of Sec. 3(e) of Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act"
before the Office of the Ombudsman. On 22 February 1996, an Information [22] against Mayor Comendador, Asilo
and Angeles was filed, which reads:

That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, all public officers, accused Demetrio T. Comendador, being then
the Municipal Mayor, accused Paulino S. Asilo, Jr. being then the Municipal Administrator and accused Alberto S.
Angeles being then the Municipal Planning and Development Coordinator, all of the Municipality of Nagcarlan,
Laguna, committing the crime herein charged in relation to, while in the performance and taking advantage of
their official functions, conspiring and confederating with each other, and with evident bad faith, manifest partiality
or through gross inexcusable negligence, did then and there willfully, unlawfully, criminally cause the demolition
of a public market stall leased by the municipal government in favor of one Visitacion Coronado-Bombasi without
legal or justifiable ground therefor, thus, causing undue injury to the latter in the amount of PESOS: FOUR
HUNDRED THIRTY SEVEN THOUSAND AND NINE HUNDRED ONLY (P437,900.00).

Upon their arraignments, all the accused entered their separate pleas of "Not Guilty."

On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering the consolidation of Civil Case No. SP-
4064 (94)[23] with Criminal Case No. 23267 pending before the Third Division pursuant to Section 4, Presidential
Decree No. 1606, which pertinently reads:

Any provision of law or Rules of Court to the contrary notwithstanding, the criminal action and the corresponding
civil action for the recovery of civil liability arising from the offense charged shall at all times be simultaneously
instituted with, and jointly determined in the same proceeding by the Sandiganbayan or the appropriate courts,
the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to
reserve the filing of such civil action separately from the criminal action shall be recognized; Provided, however,
that where the civil action had heretofore been filed separately but judgment therein has not yet been rendered,
and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be
transferred to the Sandiganbayan or the appropriate court as the case may be, for consolidation and joint
determination with the criminal action, otherwise the separate civil action shall be deemed abandoned. [24]

During the pendency of the case, Alberto S. Angeles died on 16 November 1997. Accordingly, the counsel of
Angeles filed a motion to drop accused Angeles. On 22 September 1999, the Third Division of Sandiganbayan
issued an Order[25] DISMISSING the case against Angeles. The germane portion of the Order reads:

In view of the submission of the death certificate of accused/defendant Alberto S. Angeles, and there being no
objection on the part of the Public Prosecutor, cases against deceased accused/defendant Angeles only, are
hereby DISMISSED.

The death of Mayor Comendador followed on 17 September 2002. As a result, the counsel of the late Mayor
filed on 3 March 2003 a Manifestation before the Sandiganbayan informing the court of the fact of Mayor
Comendador's death.

On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

In Criminal Case No. 23267, the court finds accused Demetrio T. Comendador and Paulino S. Asilo, Jr. guilty
beyond reasonable doubt of violation of Sec. 3(e) of Republic Act. No. 3019 as amended, and in the absence of
aggravating and mitigating circumstances, applying the Indeterminate Sentence Law, said accused are
sentenced to suffer the indeterminate penalty of 6 years and 2 months imprisonment as minimum to 10 years and
1 day as maximum.

The order of the court dated September 22, 1999 dismissing the cases against the accused Alberto S. Angeles,
who died on November 16, 1997 is hereby reiterated.

In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino S.
Asilo, Jr. are hereby ordered jointly and severally to pay plaintiff P437,900.00 as actual damages for the
destruction of the store; P100,000.00 as moral damages; P30,000.00 as attorney's fees, and to pay the cost of
the suit. The prayer for exemplary damages is denied as the court found no aggravating circumstances in the
commission of the crime.

In view of this court's finding that the defendant spouses Alida and Teddy Coroza are lawful occupants of the
subject market stalls from which they cannot be validly ejected without just cause, the complaint against them is
dismissed. The complaint against defendant spouses Benita and Isagani Coronado is likewise dismissed, it
appearing that they are similarly situated as the spouses Coroza. Meanwhile, plaintiff Visitacion Bombasi is
given the option to accept market space being given to her by the municipality, subject to her payment of the
appropriate rental and permit fees.

The prayer for injunctive relief is denied, the same having become moot and academic.

The compulsory counterclaim of defendant Comendador is likewise denied for lack of merit. [26]

Within the same day, Asilo, through his counsel, filed a Motion for Reconsideration[27] of the Decision alleging that
there was only an error of judgment when he complied with and implemented the order of his superior, Mayor
Comendador. He likewise alleged that there is no liability when a public officer commits in good faith an error of
judgment. The Sandiganbayan, on its Resolution[28] dated 21 July 2003 denied the Motion for Reconsideration
on the ground that good faith cannot be argued to support his cause in the face of the court's finding that bad
faith attended the commission of the offense charged. The Court further explained that the invocation of
compliance with an order of a superior is of no moment for the "demolition [order] cannot be described as having
the semblance of legality inasmuch as it was issued without the authority and therefore the same was patently
illegal."[29]

The counsel for the late Mayor also filed its Motion for Reconsideration [30] on 12 May 2003 alleging that the death
of the late Mayor had totally extinguished both his criminal and civil liability. The Sandiganbayan on its
Resolution[31]granted the Motion insofar as the extinction of the criminal liability is concerned and denied the
extinction of the civil liability holding that the civil action is an independent civil action.

Hence, these Petitions for Review on Certiorari.[32]

Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e) of Republic Act No. 3019 or "The Anti-
Graft and Corrupt Practices Act," the public officer must have acted with manifest partiality, evident bad faith or
gross negligence. He also contended that he and his co-accused acted in good faith in the demolition of the
market and, thereby, no liability was incurred.
On the other hand, Petitioner Victoria argues that the death of Mayor Comendador prior to the promulgation of
the decision extinguished NOT ONLY Mayor Comendador's criminal liability but also his civil liability. She also
asserted good faith on the part of the accused public officials when they performed the demolition of the market
stall. Lastly, she contended that assuming arguendo that there was indeed liability on the part of the accused
public officials, the actual amount of damages being claimed by the Spouses Bombasi has no basis and was not
duly substantiated.

Liability of the accused public officials

under Republic Act No. 3019

Section 3(e) of Republic Act No. 3019 provides:

In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:

xxxx

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official, administrative or judicial
functions throughmanifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply
to officers and employees of offices or government corporations charged with the grant of licenses or permits or
other concessions.

The elements of the offense are as follows: (1) that the accused are public officers or private persons charged in
conspiracy with them; (2) that said public officers commit the prohibited acts during the performance of their
official duties or in relation to their public positions; (3) that they caused undue injury to any party, whether the
Government or a private party; (4) OR that such injury is caused by giving unwarranted benefits, advantage or
preference to the other party; and (5) that the public officers have acted with manifest partiality, evident bad
faith or gross inexcusable negligence.[33]

We sustain the Sandiganbayan in its finding of criminal and civil liabilities against petitioner Asilo and petitioner
Mayor Comendador as here represented by his widow Victoria Bueta.

We agree with the Sandiganbayan that it is undisputable that the first two requisites of the criminal offense were
present at the time of the commission of the complained acts and that, as to the remaining elements, there is
sufficient amount of evidence to establish that there was an undue injury suffered on the part of the Spouses
Bombasi and that the public officials concerned acted with evident bad faith when they performed the demolition
of the market stall.

Causing undue injury to any party, including the government, could only mean actual injury or damage which
must be established by evidence.[34]

In jurisprudence, "undue injury" is consistently interpreted as "actual." Undue has been defined as "more than
necessary, not proper, [or] illegal;" and injury as "any wrong or damage done to another, either in his person,
rights, reputation or property [that is, the] invasion of any legally protected interest of another." Actual damage, in
the context of these definitions, is akin to that in civil law.[35]

It is evident from the records, as correctly observed by the Sandiganbayan, that Asilo and Mayor Comendador as
accused below did not deny that there was indeed damage caused the Spouses Bombasi on account of the
demolition. We affirm the finding that:

xxx. Clearly, the demolition of plaintiff's store was carried out without a court order, and notwithstanding a
restraining order which the plaintiff was able to obtain. The demolition was done in the exercise of official duties
which apparently was attended by evident bad faith, manifest partiality or gross inexcusable negligence as there
is nothing in the two (2) resolutions which gave the herein accused the authority to demolish plaintiff's store.

"Evident bad faith" connotes not only bad judgment but also palpably and patently fraudulent and dishonest
purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. [36] [It] contemplates a
state of mind affirmatively operating with furtive design or with some motive or self-interest or ill will or for ulterior
purposes.[37]

It is quite evident in the case at bar that the accused public officials committed bad faith in performing the
demolition.

First, there can be no merit in the contention that respondents' structure is a public nuisance. The abatement of
a nuisance without judicial proceedings is possible if it is nuisance per se.[38] Nuisance per se is that which is
nuisance at all times and under any circumstance, regardless of location and surroundings.[39] In this case, the
market stall cannot be considered as a nuisance per se because as found out by the Court, the buildings had not
been affected by the 1986 fire. This finding was certified to by Supervising Civil Engineer Wilfredo A. Sambrano
of the Laguna District Engineer Office.[40] To quote:

An inspection has been made on the building (a commercial establishment) cited above and found out the
following:
1. It is a two-storey building, sketch of which is attached.
2. It is located within the market site.
3. The building has not been affected by the recent fire.
4. The concrete wall[s] does not even show signs of being exposed to fire. [41]

Second, the Sangguniang Bayan resolutions are not enough to justify demolition. Unlike its predecessor
law,[42] the present Local Government Code[43] does not expressly provide for the abatement of nuisance. [44] And
even assuming that the power to abate nuisance is provided for by the present code, the accused public officials
were under the facts of this case, still devoid of any power to demolish the store. A closer look at the contested
resolutions reveals that Mayor Comendador was only authorized to file an unlawful detainer case in case of
resistance to obey the order or to demolish the building using legal means. Clearly, the act of demolition without
legal order in this case was not among those provided by the resolutions, as indeed, it is a legally impossible
provision.

Furthermore, the Municipality of Nagcarlan, Laguna, as represented by the then Mayor Comendador, was placed
in estoppel after it granted yearly business permits [45] in favor of the Spouses Bombasi. Art. 1431 of the New
Civil Code provides that, through estoppel, an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person relying thereon. The representation
made by the municipality that the Spouses Bombasi had the right to continuously operate its store binds the
municipality. It is utterly unjust for the Municipality to receive the benefits of the store operation and later on claim
the illegality of the business.

The bad faith of the petitioners completes the elements of the criminal offense of violation of Sec. 3(e) of
Republic Act No. 3019. The same bad faith serves as the source of the civil liability of Asilo, Angeles, and Mayor
Comendador.

It must be noted that when Angeles died on 16 November 1997, a motion to drop him as an accused was filed by
his counsel with no objection on the part of the prosecution. The Sandiganbayan acted favorably on the motion
and issued an Order dismissing all the cases filed against Angeles. On the other hand, when Mayor
Comendador died and an adverse decision was rendered against him which resulted in the filing of a motion for
reconsideration by Mayor Comendador's counsel, the prosecution opposed the Motion specifying the ground that
the civil liability did not arise from delict, hence, survived the death of the accused. The Sandiganbayan upheld
the opposition of the prosecution which disposition was not appealed.

We note, first off, that the death of Angeles and of Mayor Comendador during the pendency of the case
extinguished their criminal liabilities.

We now hold, as did the Sandiganbayan that the civil liability of Mayor Comendador survived his death; and that
of Angeles could have likewise survived had it not been for the fact that the resolution of the Sandiganbayan that
his death extinguished the civil liability was not questioned and lapsed into finality.

We laid down the following guidelines in People v. Bayotas:[46]

Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability
based solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final
judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the
offense committed, i.e., civil liability ex delicto in senso strictiore."

Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also
be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these
other sources of obligation from which the civil liability may arise as a result of the same act or omission:

a) Law
b) Contracts
c) Quasi-contracts
d) Acts or omissions punished by law; and
e) Quasi-delicts. (Emphasis ours)

Where the civil liability survives, as explained [above], an action for recovery therefore may be pursued but only
by way of filing a separate civil action[47] and subject to Section 1, Rule 111 of the 1985 Rules on Criminal
Procedure as amended. This separate civil action may be enforced either against the executor/administrator or
the estate of the accused, depending on the source of obligation upon which the same is based as explained
above.

Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by
prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private-
offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of the criminal case, conformably with provisions of Article
1155 of the New Civil Code, which should thereby avoid any apprehension on a possible privation of right by
prescription.

Upon death of the accused pending appeal of his conviction, the criminal action is extinguished inasmuch as
there is no longer a defendant to stand as the accused; the civil action instituted therein for recovery of civil
liability ex delictois ipso facto extinguished, grounded as it is on the criminal.[48]

The New Civil Code provisions under the Chapter, Human Relations, were cited by the prosecution to
substantiate its argument that the civil action based therein is an independent one, thus, will stand despite the
death of the accused during the pendency of the case.

On the other hand, the defense invoked Section 4 of Presidential Decree No. 1606, as amended by Republic Act
No. 8249, in support of its argument that the civil action was dependent upon the criminal action, thus, was
extinguished upon the death of the accused. The law provides that:

Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the
corresponding civil action for the recovery of civil liability arising from the offense charged shall at all
times be simultaneously instituted with, and jointly determined in the same proceeding by, the
Sandiganbayan, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil
action, and no right to reserve the filing of such action shall be recognized. (Emphasis ours)

We agree with the prosecution.

Death of Mayor Comendador during the pendency of the case could have extinguished the civil liability if the
same arose directly from the crime committed. However, in this case, the civil liability is based on another source
of obligation, the law on human relations.[49] The pertinent articles follow:

Art. 31 of the Civil Code states:

When the civil action is based on an obligation not arising from the act or omission complained of as a felony,
such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter.

And, Art. 32(6) states:

Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in
any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the
latter for damages:

(6) The right against deprivation of property without due process of law;

xxxx

In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal
offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages,
and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be
instituted), and may be proved by a preponderance of evidence.

As held in Aberca v. Ver:

It is obvious that the purpose of the above codal provision [Art. 32 of the New Civil Code] is to provide a sanction
to the deeply cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may
seek to violate those sacred rights with impunity. x x x. [50]

Indeed, the basic facts of this case point squarely to the applicability of the law on human relations. First, the
complaint for civil liability was filed way AHEAD of the information on the Anti-Graft Law. And, the complaint for
damages specifically invoked defendant Mayor Comendador's violation of plaintiff's right to due process. Thus:
xxxx

In causing or doing the forcible demolition of the store in question, the individual natural defendants did not only
act with grave abuse of authority but usurped a power which belongs to our courts of justice; such actuations
were done with malice or in bad faith and constitute an invasion of the property rights of plaintiff(s) without due
process of law.

xxxx

The Court is in one with the prosecution that there was a violation of the right to private property of the Spouses
Bombasi. The accused public officials should have accorded the spouses the due process of law guaranteed by
the Constitution and New Civil Code. The Sangguniang Bayan Resolutions as asserted by the defense will not,
as already shown, justify demolition of the store without court order. This Court in a number of decisions[51] held
that even if there is already a writ of execution, there must still be a need for a special order for the purpose of
demolition issued by the court before the officer in charge can destroy, demolish or remove improvements over
the contested property.[52] The pertinent provisions are the following:

Before the removal of an improvement must take place, there must be a special order, hearing and reasonable
notice to remove. Section 10(d), Rule 39 of the Rules of Court provides:

(d) Removal of improvements on property subject of execution. - When the property subject of execution contains
improvements constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish
or remove said improvements except upon special order of the court, issued upon motion of the judgment obligee
after due hearing and after the former has failed to remove the same within a reasonable time fixed by the court.

The above-stated rule is clear and needs no interpretation. If demolition is necessary, there must be a hearing on
the motion filed and with due notices to the parties for the issuance of a special order of demolition.[53]

This special need for a court order even if an ejectment case has successfully been litigated, underscores the
independent basis for civil liability, in this case, where no case was even filed by the municipality.

The requirement of a special order of demolition is based on the rudiments of justice and fair play. It frowns upon
arbitrariness and oppressive conduct in the execution of an otherwise legitimate act. It is an amplification of the
provision of the Civil Code that every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith. [54]

Notably, the fact that a separate civil action precisely based on due process violations was filed even ahead of
the criminal case, is complemented by the fact that the deceased plaintiff Comendador was substituted by his
widow, herein petitioner Victoria who specified in her petition that she has "substituted him as petitioner in the
above captioned case." Section 1, Rule III of the 1985 Rules in Criminal Procedure mentioned in Bayotas is,
therefore, not applicable. Truly, the Sandiganbayan was correct when it maintained the separate docketing of the
civil and criminal cases before it although their consolidation was erroneously based on Section 4 of Presidential
Decree No. 1606 which deals with civil liability "arising from the offense charged."

We must, however, correct the amount of damages awarded to the Spouses Bombasi.

To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a reasonable degree
of certainty, premised upon competent proof and on the best evidence obtainable. [55] In this case, the Court finds
that the only evidence presented to prove the actual damages incurred was the itemized list of damaged and lost
items[56] prepared by Engineer Cabrega, an engineer commissioned by the Spouses Bombasi to estimate
the costs.

As held by this Court in Marikina Auto Line Transport Corporation v. People of the Philippines,[57]

x x x [W]e agree with the contention of petitioners that respondents failed to prove that the damages to the
terrace caused by the incident amounted to P100,000.00. The only evidence adduced by respondents to
prove actual damages claimed by private respondent were the summary computation of damage made
by Engr. Jesus R. Regal, Jr. amounting to P171,088.46 and the receipt issued by the BB Construction and
Steel Fabricator to private respondent for P35,000.00 representing cost for carpentry works, masonry,
welding, and electrical works. Respondents failed to present Regal to testify on his estimation. In its five-page
decision, the trial court awarded P150,000.00 as actual damages to private respondent but failed to state the
factual basis for such award. Indeed, the trial court merely declared in the decretal portion of its decision that the
"sum of P150,000.00 as reasonable compensation sustained by plaintiff for her damaged apartment." The
appellate court, for its part, failed to explain how it arrived at the amount of P100,000.00 in its three-page
decision. Thus, the appellate court merely declared:
With respect to the civil liability of the appellants, they contend that there was no urgent necessity to completely
demolish the apartment in question considering the nature of the damages sustained as a result of the accident.
Consequently, appellants continue, the award of P150,000.00 as compensation sustained by the plaintiff-
appellee for her damaged apartment is an unconscionable amount.

Further, in one case,[58] this Court held that the amount claimed by the respondent-claimant's witness as to
the actual amount of damages "should be admitted with extreme caution considering that, because it
was a bare assertion, it should be supported by independent evidence." The Court further said that
whatever claim the respondent witness would allege must be appreciated in consideration of his
particular self-interest.[59] There must still be a need for the examination of the documentary evidence
presented by the claimants to support its claim with regard to the actual amount of damages.

The price quotation made by Engineer Cabrega presented as an exhibit [60] partakes of the nature of hearsay
evidence considering that the person who issued them was not presented as a witness. [61] Any evidence, whether
oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but
on the knowledge of another person who is not on the witness stand. Hearsay evidence, whether objected to or
not, has no probative value unless the proponent can show that the evidence falls within the exceptions to the
hearsay evidence rule.[62] Further, exhibits do not fall under any of the exceptions provided under Sections 37 to
47 of Rule 130 of the Rules of Court.

Though there is no sufficient evidence to award the actual damages claimed, this Court grants temperate
damages for P200,000.00 in view of the loss suffered by the Spouses Bombasi. Temperate damages are
awarded in accordance with Art. 2224 of the New Civil Code when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proven with certainty. The amount of
temperate or moderated damages is usually left to the discretion of the courts but the same should be
reasonable, bearing in mind that the temperate damages should be more than nominal but less than
compensatory.[63] Without a doubt, the Spouses Bombasi suffered some form of pecuniary loss in the impairment
of their store. Based on the record of the case,[64]the demolished store was housed on a two-story building
located at the market's commercial area and its concrete walls remained strong and not affected by the
fire. However, due to the failure of the Spouses Bombasi to prove the exact amount of damage in accordance
with the Rules of Evidence,[65] this court finds that P200,000.00 is the amount just and reasonable under the
circumstances.

WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of the Sandiganbayan dated 28 April
2003 is hereby AFFIRMED WITH MODIFICATION. The Court affirms the decision finding the accused Paulino
S. Asilo, Jr. and Demetrio T. Comendador guilty of violating Section 3(e) of Republic Act No. 3019. We declare
the finality of the dismissal of both the criminal and civil cases against Alberto S. Angeles as the same was not
appealed. In view of the death of Demetrio T. Comendador pending trial, his criminal liability is extinguished; but
his civil liability survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T. Comendador, as
substituted by Victoria Bueta Vda. De Comendador, are hereby declared solidarily liable to the Spouses Bombasi
for temperate damages in the amount of P200,000.00 and moral damages in the amount of P100,000.00.

Costs against the petitioners-appellants.

SO ORDERED.

G.R. No. 108017 April 3, 1995

MARIA BENITA A. DULAY, in her own behalf and in behalf of the minor children
KRIZTEEN ELIZABETH, BEVERLY MARIE and NAPOLEON II, all surnamed
DULAY, petitioners,
vs.
THE COURT OF APPEALS, Former Eighth Division, HON. TEODORO P. REGINO, in his
capacity as Presiding Judge of the Regional Trial Court National Capital Region, Quezon
City, Br. 84, SAFEGUARD INVESTIGATION AND SECURITY CO., INC., and SUPERGUARD
SECURITY CORPORATION, respondents.

BIDIN, J.:

This petition for certiorari prays for the reversal of the decision of the Court of Appeals dated
October 29, 1991 in CA-G.R. CV No. 24646 which affirmed the order of the Regional Trial Court
dismissing Civil Case No. Q-89-1751, and its resolution dated November 17, 1991 denying
herein, petitioner's motion for reconsideration.

The antecedent facts of the case are as follows:

On December 7, 1988, an altercation between Benigno Torzuela and Atty. Napoleon Dulay
occurred at the "Big Bang Sa Alabang," Alabang Village, Muntinlupa as a result of which Benigno
Torzuela, the security guard on duty at the said carnival, shot and killed Atty. Napoleon Dulay.

Herein petitioner Maria Benita A. Dulay, widow of the deceased Napoleon Dulay, in her own
behalf and in behalf of her minor children, filed on February 8, 1989 an action for damages
against Benigno Torzuela and herein private respondents Safeguard Investigation and Security
Co., Inc., ("SAFEGUARD") and/or Superguard Security Corp. ("SUPERGUARD"), alleged
employers of defendant Torzuela. The complaint, docketed as Civil Case No. Q-89-1751 among
others alleges the following:

1. . . .

Defendants SAFEGUARD INVESTIGATION AND SECURITY CO., INC.,

(Defendant Safeguard) and SUPERGUARD SECURITY CORPORATION
(Defendant Superguard) are corporations duly organized and existing in
accordance with Philippine laws, with offices at 10th Floor, Manufacturers
Building, Inc., Plaza Santa Cruz, Manila. They are impleaded as alternative
defendants for, while the former appears to be the employer of defendant
BENIGNO TORZUELA (defendant TORZUELA), the latter impliedly
acknowledged responsibility for the acts of defendant TORZUELA by extending
its sympathies to plaintiffs.

Defendant BENIGNO TORZUELA is of legal age, an employee of defendant

SAFEGUARD and/or defendant SUPERGUARD and, at the time of the incident
complained of, was under their control and supervision. . . .

3. On December 7, 1988 at around 8:00 a.m., defendant TORZUELA, while he

was on duty as security guard at the "Big Bang sa Alabang," Alabang Village,
Muntinlupa, Metro Manila shot and killed NAPOLEON V. DULAY with a .38
caliber revolver belonging to defendant SAFEGUARD, and/or SUPERGUARD
(per Police Report dated January 7, 1989, copy attached as Annex A);

4. The incident resulting in the death of NAPOLEON V. DULAY was due to the
concurring negligence of the defendants. Defendant TORZUELA'S wanton and
reckless discharge of the firearm issued to him by defendant SAFEGUARD
and/or SUPERGUARD was the immediate and proximate cause of the injury,
while the negligence of defendant SAFEGUARD and/or SUPERGUARD consists
in its having failed to exercise the diligence of a good father of a family in the
supervision and control of its employee to avoid the injury.

xxx xxx xxx

(Rollo, pp. 117-118)

Petitioners prayed for actual, compensatory, moral and exemplary damages, and attorney's fees.
The said Civil Case No. Q-89-1751 was raffled to Branch 84 of the Regional Trial Court of
Quezon City, presided by respondent Judge Teodoro Regino.
On March 2, 1989, private respondent SUPERGUARD filed a Motion to Dismiss on the ground
that the complaint does not state a valid cause of action. SUPERGUARD claimed that Torzuela's
act of shooting Dulay was beyond the scope of his duties, and that since the alleged act of
shooting was committed with deliberate intent (dolo), the civil liability therefor is governed by
Article 100 of the Revised Penal Code, which states:

Art. 100. Civil liability of a person guilty of a felony. — Every person criminally
liable for a felony is also civilly liable.

Respondent SUPERGUARD further alleged that a complaint for damages based on negligence
under Article 2176 of the New Civil Code, such as the one filed by petitioners, cannot lie, since
the civil liability under Article 2176 applies only to quasi-offenses under Article 365 of the Revised
Penal Code. In addition, the private respondent argued that petitioners' filing of the complaint is
premature considering that the conviction of Torzuela in a criminal case is a condition sine qua
non for the employer's subsidiary liability (Rollo, p. 55-59).

Respondent SAFEGUARD also filed a motion praying that it be excluded as defendant on the
ground that defendant Torzuela is not one of its employees (Rollo, p. 96).

Petitioners opposed both motions, stating that their cause of action against the private
respondents is based on their liability under Article 2180 of the New Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.

xxx xxx xxx

Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or an industry.

xxx xxx xxx

(Emphasis supplied)

Petitioners contended that a suit against alternative defendants is allowed under Rule 3, Section
13 of the Rules of Court. Therefore, the inclusion of private respondents as alternative
defendants in the complaint is justified by the following: the Initial Investigation Report prepared
by Pat. Mario Tubon showing that Torzuela is an employee of SAFEGUARD; and through overt
acts, SUPERGUARD extended its sympathies to petitioners (Rollo, pp. 64 and 98).

Meanwhile, an Information dated March 21, 1989 charging Benigno Torzuela with homicide was
filed before the Regional Trial Court of Makati and was docketed as Criminal Case No. 89-1896.

On April 13, 1989, respondent Judge Regino issued an order granting SUPERGUARD'S motion
to dismiss and SAFEGUARD'S motion for exclusion as defendant. The respondent judge held
that the complaint did not state facts necessary or sufficient to constitute a quasi-delict since it
does not mention any negligence on the part of Torzuela in shooting Napoleon Dulay or that the
same was done in the performance of his duties. Respondent judge ruled that mere allegations
of the concurring negligence of the defendants (private respondents herein) without stating the
facts showing such negligence are mere conclusions of law (Rollo, p. 106). Respondent judge
also declared that the complaint was one for damages founded on crimes punishable under
Articles 100 and 103 of the Revised Penal Code as distinguished from those arising from, quasi-
delict. The dispositive portion of the order dated April 13, 1989 states:
 WHEREFORE, this Court holds that in view of the material and ultimate facts
alleged in the verified complaint and in accordance with the applicable law on the
matter as well as precedents laid down by the Supreme Court, the complaint
against the alternative defendants Superguard Security Corporation and
Safeguard Investigation and Security Co., Inc., must be and (sic) it is hereby
dismissed. (Rollo, p. 110)

The above order was affirmed by the respondent court and petitioners' motion for reconsideration
thereof was denied.

Petitioners take exception to the assailed decision and insist that quasi-delicts are not limited to
acts of negligence but also cover acts that are intentional and voluntary, citing Andamo v. IAC
(191 SCRA 195 [1990]). Thus, petitioners insist that Torzuela' s act of shooting Napoleon Dulay
constitutes a quasi-delict actionable under Article 2176 of the New Civil Code.

Petitioners further contend that under Article 2180 of the New Civil Code, private respondents
are primarily liable for their negligence either in the selection or supervision of their employees.
This liability is independent of the employee's own liability for fault or negligence and is distinct
from the subsidiary civil liability under Article 103 of the Revised Penal Code. The civil action
against the employer may therefore proceed independently of the criminal action pursuant to
Rule 111 Section 3 of the Rules of Court. Petitioners submit that the question of whether
Torzuela is an employee of respondent SUPERGUARD or SAFEGUARD would be better
resolved after trial.

Moreover, petitioners argue that Torzuela's act of shooting Dulay is also actionable under Article
33 of the New Civil Code, to wit:

Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for
damages, entirely separate and distinct from the criminal action, may be brought
by the injured party. Such civil action shall proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence. (Emphasis
supplied)

In the same vein, petitioners cite Section 3, Rule 111 of the Rules of Court which provides:

Rule 111. . . . .

Sec. 3. When civil action may proceed independently — In the cases provided for
in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the
independent civil action which has been reserved may be brought by the
offended party, shall proceed independently of the criminal action, and shall
require only a preponderance of evidence. (Emphasis supplied)

The term "physical injuries" under Article 33 has been held to include consummated, frustrated
and attempted homicide. Thus, petitioners maintain that Torzuela's prior conviction is
unnecessary since the civil action can proceed independently of the criminal action. On the other
hand, it is the private respondents' argument that since the act was not committed with
negligence, the petitioners have no cause of action under Articles 2116 and 2177 of the New
Civil Code. The civil action contemplated in Article 2177 is not applicable to acts committed with
deliberate intent, but only applies to quasi-offenses under Article 365 of the Revised Penal Code.
Torzuela's act of shooting Atty. Dulay to death, aside from being purely personal, was done with
deliberate intent and could not have been part of his duties as security guard. And since Article
2180 of the New Civil Code covers only: acts done within the scope of the employee's assigned
tasks, the private respondents cannot be held liable for damages.

We find for petitioners.

It is undisputed that Benigno Torzuela is being prosecuted for homicide for the fatal shooting of
Napoleon Dulay. Rule 111 of the Rules on Criminal Procedure provides:

Sec. 1. Institution of criminal and civil actions. When a criminal action is instituted,
the civil action for the recovery of civil liability is impliedly instituted with the
criminal action, unless the offended party waives the civil action , reserves his
right to institute it separately or institutes the civil action prior to the criminal
action.

Such civil action includes recovery of indemnity under the Revised Penal Code,
and damages under Articles 32, 33, 34, and 2176 of the Civil Code of the
Philippines arising from the same act or omission of the accused. (Emphasis
supplied)

It is well-settled that the filing of an independent civil action before the prosecution in the criminal
action presents evidence is even far better than a compliance with the requirement of express
reservation (Yakult Philippines v. Court of Appeals, 190 SCRA 357 [1990]). This is precisely what
the petitioners opted to do in this case. However, the private respondents opposed the civil
action on the ground that the same is founded on a delict and not on a quasi-delict as the
shooting was not attended by negligence. What is in dispute therefore is the nature of the
petitioner's cause of action.

The nature of a cause of action is determined by the facts alleged in the complaint as constituting
the cause of action (Republic v. Estenzo, 158 SCRA 282 [1988]). The purpose of an action or
suit and the law to govern it is to be determined not by the claim of the party filing the action,
made in his argument or brief, but rather by the complaint itself, its allegations and prayer for
relief. (De Tavera v. Philippine Tuberculosis Society, 112 SCRA 243 [1982]). An examination of
the complaint in the present case would show that the plaintiffs, petitioners herein, are invoking
their right to recover damages against the private respondents for their vicarious responsibility for
the injury caused by Benigno Torzuela's act of shooting and killing Napoleon Dulay, as stated in
paragraphs 1 and 2 of the complaint.

Article 2176 of the New Civil Code provides:

Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties is
called a quasi-delict and is governed by the provisions of this Chapter.

Contrary to the theory of private respondents, there is no justification for limiting the scope of
Article 2176 of the Civil Code to acts or omissions resulting from negligence. Well-entrenched is
the doctrine that article 2176 covers not only acts committed with negligence, but also acts which
are voluntary and intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA 98
[1977]), this Court already held that:

. . . Article 2176, where it refers to "fault or negligence," covers not only acts "not
punishable by law" but also acts criminal in character; whether intentional and
voluntary or negligent. Consequently, a separate civil action against the offender
in a criminal act, whether or not he is criminally prosecuted and found guilty or
acquitted, provided that the offended party is not allowed, if he is actually charged
also criminally, to recover damages on both scores, and would be entitled in such
eventuality only to the bigger award of the two, assuming the awards made in the
two cases vary. In other words, the extinction of civil liability referred to in Par. (e)
of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of
the Revised Penal Code, whereas the civil liability for the same act considered as
quasi-delict only and not as a crime is not extinguished even by a declaration in
 the criminal case that the criminal act charged has not happened or has not been
committed by the accused. Briefly stated, We here hold, in reiteration of Garcia,
that culpa aquiliana includes voluntary and negligent acts which may be
punishable by law. (Emphasis supplied)

The same doctrine was echoed in the case of Andamo v. Intermediate Appellate Court (191
SCRA 195 [1990]), wherein the Court held:

Article 2176, whenever it refers to "fault or negligence," covers not only acts
criminal in character, whether intentional and voluntary or negligent.
Consequently, a civil action lies against the offender in a criminal act, whether or
not he is prosecuted or found guilty or acquitted, provided that the offended party
is not allowed, (if the tortfeasor is actually also charged criminally), to recover
damages on both scores, and would be entitled in such eventuality only to the
bigger award of the two, assuming the awards made in the two cases vary. [citing
Virata v. Ochoa, 81 SCRA 472] (Emphasis supplied)

Private respondents submit that the word "intentional" in the Andamo case is inaccurate obiter,
and should be read as "voluntary" since intent cannot be coupled with negligence as defined by
Article 365 of the Revised Penal Code. In the absence of more substantial reasons, this Court
will not disturb the above doctrine on the coverage of Article 2176.

Private respondents further aver that Article 33 of the New Civil Code applies only to injuries
intentionally committed pursuant to the ruling in Marcia v. CA (120 SCRA 193 [1983]), and that
the actions for damages allowed thereunder are ex-delicto. However, the term "physical injuries"
in Article 33 has already been construed to include bodily injuries causing death (Capuno v.
Pepsi-Cola Bottling Co. of the Philippines, 121 Phil. 638 [1965); Carandang v. Santiago, 97 Phil.
94 [1955]). It is not the crime of physical injuries defined in the Revised Penal Code. It includes
not only physical injuries but also consummated, frustrated, and attempted homicide (Madeja v.
Caro, 126 SCRA 293 [1983]). Although in the Marcia case (supra), it was held that no
independent civil action may be filed under Article 33 where the crime is the result of criminal
negligence, it must be noted however, that Torzuela, the accused in the case at bar, is charged
with homicide, not with reckless imprudence, whereas the defendant in Marcia was charged with
reckless imprudence. Therefore, in this case, a civil action based on Article 33 lies.

Private respondents also contend that their liability is subsidiary under the Revised Penal Code;
and that they are not liable for Torzuela's act which is beyond the scope of his duties as a
security guard. It having been established that the instant action is not ex-delicto, petitioners may
proceed directly against Torzuela and the private respondents. Under Article 2180 of the New
Civil Code as aforequoted, when an injury is caused by the negligence of the employee, there
instantly arises a presumption of law that there was negligence on the part of the master or
employer either in the selection of the servant or employee, or in supervision over him after
selection or both (Layugan v. Intermediate Appellate Court, 167 SCRA 363 [1988]). The liability
of the employer under Article 2180 is direct and immediate; it is not conditioned upon prior
recourse against the negligent employee and a prior showing of the insolvency of such employee
(Kapalaran Bus Lines v. Coronado, 176 SCRA 792 [1989]). Therefore, it is incumbent upon the
private respondents to prove that they exercised the diligence of a good father of a family in the
selection and supervision of their employee.

Since Article 2176 covers not only acts of negligence but also acts which are intentional and
voluntary, it was therefore erroneous on the part of the trial court to dismiss petitioner's complaint
simply because it failed to make allegations of attendant negligence attributable to private
respondents.

With respect to the issue of whether the complaint at hand states a sufficient cause of action, the
general rule is that the allegations in a complaint are sufficient to constitute a cause of action
against the defendants if, admitting the facts alleged, the court can render a valid judgment upon
the same in accordance with the prayer therein. A cause of action exist if the following elements
are present, namely: (1) a right in favor of the plaintiff by whatever means and under whatever
law it arises or is created; (2) an obligation on the part of the named defendant to respect or not
to violate such right; and (3) an act or omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which
the latter may maintain an action for recovery of damages (Del Bros Hotel Corporation v. CA,
210 SCRA 33 [1992]); Development Bank of the Philippines v. Pundogar, 218 SCRA 118 [1993])

This Court finds, under the foregoing premises, that the complaint sufficiently alleged an
actionable breach on the part of the defendant Torzuela and respondents SUPERGUARD and/or
SAFEGUARD. It is enough that the complaint alleged that Benigno Torzuela shot Napoleon
Dulay resulting in the latter's death; that the shooting occurred while Torzuela was on duty; and
that either SUPERGUARD and/or SAFEGUARD was Torzuela's employer and responsible for
his acts. This does not operate however, to establish that the defendants below are liable.
Whether or not the shooting was actually reckless and wanton or attended by negligence and
whether it was actually done within the scope of Torzuela's duties; whether the private
respondents SUPERGUARD and/or SAFEGUARD failed to exercise the diligence of a good
father of a family; and whether the defendants are actually liable, are questions which can be
better resolved after trial on the merits where each party can present evidence to prove their
respective allegations and defenses. In determining whether the allegations of a complaint are
sufficient to support a cause of action, it must be borne in mind that the complaint does not have
to establish or allege the facts proving the existence of a cause of action at the outset; this will
have to be done at the trial on the merits of the case (Del Bros Hotel Corporation v. CA, supra). If
the allegations in a complaint can furnish a sufficient basis by which the complaint can be
maintained, the same should not be dismissed regardless of the defenses that may be assessed
by the defendants (Rava Dev't. Corp. v. CA, 211 SCRA 152 [1992] citing Consolidated Bank &
Trust Corporation v. Court of Appeals, 197 SCRA 663 [1991]). To sustain a motion to dismiss for
lack of cause of action, the complaint must show that the claim for relief does not exist rather
than that a claim has been defectively stated, is ambiguous, indefinite or uncertain (Azur v.
Provincial Board, 27 SCRA 50 [1969]). Since the petitioners clearly sustained an injury to their
rights under the law, it would be more just to allow them to present evidence of such injury.

WHEREFORE, premises considered, the petition for review is hereby GRANTED. The decision
of the Court of Appeals as well as the Order of the Regional Trial Court dated April 13, 1989 are
hereby REVERSED and SET ASIDE. Civil Case No. Q-89-1751 is remanded to the Regional
Trial Court for trial on the merits. This decision is immediately executory.

SO ORDERED.

G.R. No. 159323 July 31, 2008

COCA-COLA BOTTLERS (PHILS.), INC. and ERIC MONTINOLA, Petitioners,

vs.
SOCIAL SECURITY COMMISSION and DR. DEAN CLIMACO, Respondents.

DECISION

REYES, R.T., J.:

WE are confronted with triple remedial issues on prejudicial question, forum shopping, and litis
pendentia.

We review on certiorari the Decision1 of the Court of Appeals (CA) upholding the order of the
Social Security Commission (SSC),2 denying petitioners’ motion to dismiss respondent Climaco’s
petition for compulsory coverage with the Social Security System (SSS).
 The Facts

Petitioner Coca-Cola Bottlers (Phils.), Inc. is a corporation engaged in the manufacture and sale
of softdrink beverages.3 Co-petitioner Eric Montinola was the general manager of its plant in
Bacolod City.4 Respondent Dr. Dean Climaco was a former retainer physician at the company’s
plant in Bacolod City.5

In 1988, petitioner company and Dr. Climaco entered into a Retainer Agreement6 for one year,
with a monthly compensation of ₱3,800.00,7 where he "may charge professional fees for hospital
services rendered in line with his specialization."8 The agreement further provided that "either
party may terminate the contract upon giving thirty (30)-day written notice to the other."9 In
consideration of the retainer’s fee, Dr. Climaco "agrees to perform the duties and
obligations"10 enumerated in the Comprehensive Medical Plan,11 which was attached and made
an integral part of the agreement.

Explicit in the contract, however, is the provision that no employee-employer relationship shall
exist between the company and Dr. Climaco while the contract is in effect.12 In case of its
termination, Dr. Climaco "shall be entitled only to such retainer fee as may be due him at the time
of termination."13

Dr. Climaco continuously served as the company physician, performing all the duties stipulated in
the Retainer Agreement and the Comprehensive Medical Plan. By 1992, his salary was
increased to ₱7,500.00 per month.14

Meantime, Dr. Climaco inquired with the Department of Labor and Employment and the SSS
whether he was an employee of the company. Both agencies replied in the affirmative.15 As a
result, Dr. Climaco filed a complaint16before the National Labor Relations Commission (NLRC),
Bacolod City. In his complaint, he sought recognition as a regular employee of the company and
demanded payment of his 13th month pay, cost of living allowance, holiday pay, service
incentive leave pay, Christmas bonus and all other benefits.17

During the pendency of the complaint, the company terminated its Retainer Agreement with Dr.
Climaco. Thus, Dr. Climaco filed another complaint18 for illegal dismissal against the company
before the NLRC Bacolod City. He asked that he be reinstated to his former position as company
physician of its Bacolod Plant, without loss of seniority rights, with full payment of backwages,
other unpaid benefits, and for payment of damages.19

The Labor Arbiter, in each of the complaints, ruled in favor of petitioner company.20 The first
complaint was dismissed after Labor Arbiter Jesus N. Rodriguez, Jr. found that the company did
not have the power of control over Dr. Climaco’s performance of his duties and responsibilities.
The validity of the Retainer Agreement was also recognized. Labor Arbiter Benjamin Pelaez
likewise dismissed the second complaint in view of the dismissal of the first complaint.
1avvphi1

On appeal, the NLRC, Fourth Division, Cebu City, affirmed the Arbiter disposition.21 On petition
for review before the CA, the NLRC ruling was reversed.22 The appellate court ruled that using
the four-fold test, an employer-employee relationship existed between the company and Dr.
Climaco. Petitioners elevated the case through a petition for review on certiorari23 before this
Court.

Meantime, on November 9, 1994, while the NLRC cases were pending, Dr. Climaco filed with the
SSC in Bacolod City, a petition24 praying, among others, that petitioner Coca-Cola Bottlers
(Phils.), Inc. be ordered to report him for compulsory social security coverage.

On April 12, 1995, petitioners moved for the dismissal of the petition on the ground of lack of
jurisdiction. They argued that there is no employer-employee relationship between the company
and Dr. Climaco; and that his services were engaged by virtue of a Retainer Agreement.25
Dr. Climaco opposed the motion.26 According to Dr. Climaco, "[t]he fact that the petitioner [i.e.,
respondent Dr. Climaco] does not enjoy the other benefits of the company is a question that is
being raised by the petitioner in his cases filed with the National Labor Relations Commission
(NLRC), Bacolod City, against the respondent [i.e., petitioner company]."27

On July 24, 1995, the SSC issued an order stating among others, that the resolution of petitioner
company’s motion to dismiss is held in abeyance "pending reception of evidence of the parties."28

In view of the statements of Dr. Climaco in his opposition to the company’s motion to dismiss,
petitioners again, on March 1, 1996, moved for the dismissal of Dr. Climaco’s complaint, this time
on the grounds of forum shopping and litis pendentia.29

SSC and CA Dispositions

On January 17, 1997, the SSC denied petitioners’ motion to dismiss, disposing as follows:

WHEREFORE, PREMISES CONSIDERED, the respondents’ Motion to Dismiss is hereby denied

for lack of merit.

Accordingly, let this case be remanded to SSS Bacolod Branch Office for reception of evidence
of the parties pursuant to the Order dated July 24, 1995.

SO ORDERED.30

Petitioners’ motion for reconsideration31 received the same fate.32

On April 29, 1997, the company filed a petition for certiorari before the CA. On March 15, 2002,
the CA dismissed the petition, with a fallo reading:

WHEREFORE, under the premises, the Court holds that public respondent Social Security
Commission did not act with grave abuse of discretion in issuing the disputed orders, and the
herein petition is therefore DISMISSED for want of merit.

SO ORDERED.33

Hence, the present recourse.

Issues

Petitioners raise the following issues for Our consideration:

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN RENDERING
THE ASSAILED RESOLUTIONS, HAVING DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT, CONSIDERING THAT:

I.

THE PREVIOUS COMPLAINT FOR REGULARIZATION AND/OR ILLEGAL DISMISSAL,

WHICH IS NOW PENDING RESOLUTION BEFORE THE SUPREME COURT, POSES
A PREJUDICIAL QUESTION TO THE SUBJECT OF THE PRESENT CASE.

II.
 GIVEN THE ATTENDANT CIRCUMSTANCES, RESPONDENT CLIMACO IS GUILTY
OF FORUM SHOPPING, WHICH THEREBY CALLED FOR THE OUTRIGHT
DISMISSAL OF HIS PETITION BEFORE THE SOCIAL SECURITY COMMISSION.

III.

THE PETITION SHOULD HAVE ALSO BEEN DISMISSED OUTRIGHT ON THE

GROUND OF LITIS PENDENTIA, AS THERE ARE OTHER ACTIONS PENDING
BETWEEN THE SAME PARTIES FOR THE SAME CAUSE OF
ACTION.34 (Underscoring supplied)

Our Ruling

The petition fails.

The Court notes that petitioners, in their petition, averred that the appeal from the NLRC and CA
dispositions on the illegal dismissal of respondent Climaco is still pending with this Court. Upon
verification, however, it was unveiled that the said case had already been decided by this Court’s
First Division on February 5, 2007.

While we deplore the failure of petitioners and counsel in updating the Court on the resolution of
the said related case, We hasten to state that it did not operate to moot the issues pending
before Us. We take this opportunity to address the questions on prejudicial question, forum
shopping, and litis pendentia.

No prejudicial question exists.

Petitioners allege that Dr. Climaco previously filed separate complaints before the NLRC seeking
recognition as a regular employee. Necessarily then, a just resolution of these cases hinge on a
determination of whether or not Dr. Climaco is an employee of the company.35 The issue of
whether Dr. Climaco is entitled to employee benefits, as prayed for in the NLRC cases, is closely
intertwined with the issue of whether Dr. Climaco is an employee of the company who is subject
to compulsory coverage under the SSS Law. Hence, they argue, said regularization/illegal
dismissal case is a prejudicial question.

The argument is untenable.

Our concept of prejudicial question was lifted from Spain, where civil cases are tried exclusively
by civil courts, while criminal cases are tried exclusively in criminal courts. Each kind of court is
jurisdictionally distinct from and independent of the other. In the Philippines, however, courts are
invariably tribunals of general jurisdiction. This means that courts here exercise jurisdiction over
both civil and criminal cases. Thus, it is not impossible that the criminal case, as well as the civil
case in which a prejudicial question may rise, may be both pending in the same court. For this
reason, the elements of prejudicial question have been modified in such a way that the phrase
"pendency of the civil case in a different tribunal" has been eliminated.36

The rule is that there is prejudicial question when (a) the previously instituted civil action involves
an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b)
the resolution of such issue determines whether or not the criminal action may proceed.37 It
comes into play generally in a situation where a civil action and a criminal action both pend and
there exists in the former an issue which must be preemptively resolved before the criminal
action may proceed. This is so because howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or innocence of the accused in the criminal
case.38
Here, no prejudicial question exists because there is no pending criminal case.39 The
consolidated NLRC cases cannot be considered as "previously instituted civil action." In Berbari
v. Concepcion,40 it was held that a prejudicial question is understood in law to be that which must
precede the criminal action, that which requires a decision with which said question is closely
related.

Neither can the doctrine of prejudicial question be applied by analogy. The issue in the
case filed by Dr. Climaco with the SSC involves the question of whether or not he is an employee
of Coca-Cola Bottlers (Phils.), Inc. and subject to the compulsory coverage of the Social Security
System. On the contrary, the cases filed by Dr. Climaco before the NLRC involved different
issues. In his first complaint,41 Dr. Climaco sought recognition as a regular employee of the
company and demanded payment of his 13th month pay, cost of living allowance, holiday pay,
service incentive leave pay, Christmas bonus and all other benefits.42 The second
complaint43 was for illegal dismissal, with prayer for reinstatement to his former position as
company physician of the company’s Bacolod Plant, without loss of seniority rights, with full
payment of backwages, other unpaid benefits, and for payment of damages.44 Thus, the issues in
the NLRC cases are not determinative of whether or not the SSC should proceed. It is settled
that the question claimed to be prejudicial in nature must be determinative of the case before the
court.45

There is no forum shopping.

Anent the second issue, petitioners posit that since the issues before the NLRC and the SSC are
the same, the SSC cannot make a ruling on the issue presented before it without necessarily
having a direct effect on the issue before the NLRC. It was patently erroneous, if not malicious,
for Dr. Climaco to invoke the jurisdiction of the SSC through a separate petition.46 Thus,
petitioners contend, Dr. Climaco was guilty of forum shopping.

Again, We turn down the contention.

Forum shopping is a prohibited malpractice and condemned as trifling with the courts and their
processes.47 It is proscribed because it unnecessarily burdens the courts with heavy caseloads. It
also unduly taxes the manpower and financial resources of the judiciary. It mocks the judicial
processes, thus, affecting the efficient administration of justice.48

The grave evil sought to be avoided by the rule against forum shopping is the rendition by two (2)
competent tribunals of two (2) separate and contradictory decisions. Unscrupulous litigants,
taking advantage of a variety of competent tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached.49

It is well to note that forum shopping traces its origin in private international law on choice of
venues, which later developed to a choice of remedies. In First Philippine International Bank v.
Court of Appeals,50 the Court had occasion to outline the origin of the rule on forum shopping.
Said the Court:

x x x forum shopping originated as a concept in private international law, where non-resident

litigants are given the option to choose the forum or place wherein to bring their suit for various
reasons or excuses, including to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue. To combat these
less than honorable excuses, the principle of forum non conveniens was developed whereby a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most
"convenient" or available forum and the parties are not precluded from seeking remedies
elsewhere.

xxxx
In the Philippines, forum shopping has acquired a connotation encompassing not only a choice of
venues, as it was originally understood in conflicts of laws, but also to a choice of remedies. As
to the first (choice of venues), the Rules of Court, for example, allow a plaintiff to commence
personal actions "where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff" (Rule 4, Sec.
2[b]). As to remedies, aggrieved parties, for example, are given a choice of pursuing civil
liabilities independently of the criminal, arising from the same set of facts. A passenger of a
public utility vehicle involved in a vehicular accident may sue on culpa contractual, culpa
aquiliana or culpa criminal – each remedy being available independently of the others – although
he cannot recover more than once.

"In either of these situations (choice of venue or choice of remedy), the litigant actually shops for
a forum of his action. This was the original concept of the term forum shopping.

"Eventually, however, instead of actually making a choice of the forum of their actions, litigants,
through the encouragement of their lawyers, file their actions in all available courts, or invoke all
relevant remedies simultaneously. This practice had not only resulted to (sic) conflicting
adjudications among different courts and consequent confusion enimical (sic) to an orderly
administration of justice. It had created extreme inconvenience to some of the parties to the
action.

"Thus, ‘forum-shopping’ had acquired a different concept – which is unethical professional legal
practice. And this necessitated or had given rise to the formulation of rules and canons
discouraging or altogether prohibiting the practice."

What therefore started both in conflicts of laws and in our domestic law as a legitimate device for
solving problems has been abused and misused to assure scheming litigants of dubious reliefs.51

Thus, in order to prevent forum shopping, the 1997 Rules of Civil Procedure now provide:

SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been filed.52

Forum shopping is not only strictly prohibited but also condemned. So much so that "[f]ailure to
comply with the foregoing requirements shall not be curable by mere amendment of the initiatory
pleading but shall be cause for the dismissal of the case without prejudice. The submission of a
false certification or non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with prejudice and shall constitute direct contempt
as well as a cause for administrative sanctions."53

There is forum shopping when one party repetitively avails of several judicial remedies in
different courts, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising substantially the
same issues either pending in, or already resolved adversely, by some other court.54 In short,
forum shopping exists where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in the other.55
There is res judicata when (1) there is a final judgment or order; (2) the court rendering it has
jurisdiction over the subject matter and the parties; (3) the judgment or order is on the merits; and
(4) there is between the two cases identity of parties, subject matter and causes of action.56

Measured by the foregoing yardstick, Dr. Climaco is not guilty of forum shopping. While it is true
that the parties are identical in the NLRC and in the SSC, the reliefs sought and the causes of
action are different.

Admittedly, Dr. Climaco’s basis in filing the cases before the NLRC and the SSC is his Retainer
Agreement with the company. This does not mean, however, that his causes of action are the
same:

x x x Some authorities declare the distinction between demands or rights of action which are
single and entire and those which are several and distinct to be that the former arise out of one
and the same act or contract and the latter out of different acts or contracts. This rule has
been declared to be unsound, however, and as evidence of its unsoundness, reference has been
made to the fact that several promissory notes may, and often do, grow out of one and the same
transaction, and yet they do not constitute an entire demand. The better rule is that the bare fact
that different demands spring out of the same or contract does not ipso facto render a judgment
on one a bar to a suit on another, however distinct. It is clear that the right of a plaintiff to
maintain separate actions cannot be determined by the fact that the claims might have been
prosecuted in a single action. A plaintiff having separate demands against a defendant may, at
his election, join them in the same action, or he may prosecute them separately, subject of the
power of the court to order their consolidation. There may be only one cause of action although
the plaintiff is entitled to several forms and kinds of relief, provided there is not more than one
primary right sought to be enforced or one subject of controversy presented for
adjudication.57 (Underscoring supplied)

As the SSC and the CA correctly observed, different laws are applicable to the cases before the
two tribunals. The Labor Code and pertinent social legislations would govern the cases before
the NLRC, while the Social Security Law would govern the case before the SSC. Clearly, as the
issues pending before the NLRC and the SSC are diverse, a ruling on the NLRC cases would not
amount to res judicata in the case before the SSC.

The elements of litis pendentia are absent.

Lastly, petitioners contend that the petition of Dr. Climaco before the SSC is defective because
there were pending actions between the same parties and involving the same issues in different
fora.58

For litis pendentia to exist, there must be (1) identity of the parties or at least such as
representing the same interests in both actions; (2) identity of the rights asserted and relief
prayed for, the relief founded on the same facts; and (3) identity of the two cases such that
judgment in one, regardless of which party is successful, would amount to res judicata in the
other.59

In the case under review, there is no litis pendentia to speak of. As previously explained,
although the parties in the cases before the NLRC and the SSC are similar, the nature of the
cases filed, the rights asserted, and reliefs prayed for in each tribunal, are different.
lawp++il

As a last attempt, however, petitioners invoke Rule 16, Section 1(e) of the 1997 Rules of Civil
Procedure. Petitioners contend that the petition Dr. Climaco lodged with the SSC is "another
action" prohibited by the Rule.60

In Solancio v. Ramos,61 the issue centered on whether the pending administrative case before
the Bureau of Lands is "another action," which would justify the dismissal of the complaint of
plaintiff against defendants before the then Court of First Instance (now RTC) of Cagayan. Ruling
in the negative, the Court noted that "both parties as well as the trial court have missed the
extent or meaning of the ground of the motion to dismiss as contemplated under the Rules of
Court."62 Mr. Justice Regala, who wrote the opinion of the Court, explained the phrase "another
action" in this wise:

This is not what is contemplated under the law because under Section 1(d), Rule 16 (formerly
Rule 8) of the Rules of Court, [now Rule 1, Section 16(e) of the Rules of Court, supra] one of the
grounds for the dismissal of an action is that "there is another action pending between the same
parties for the same cause." Note that the Rule uses the phrase "another action." This phrase
should be construed in line with Section 1 of Rule 2, which defines the word action, thus –

"Action means an ordinary suit in a court of justice, by which one party prosecutes another for
the enforcement or protection of a right, or the prevention or redress of a wrong. Every other
remedy is a special proceeding."63

Evidently, there is no "another action" pending between petitioners and Dr. Climaco at the time
when the latter filed a petition before the SSC.

WHEREFORE, the petition is DENIED and the appealed decision AFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. Nos. L-50441-42 September 18, 1980

ALENJANDRO RAS, petitioner,

vs.
HON. JAINAL D. RASUL, District Judge of the Court of First Instance of Basilan, and
PEOPLE OF THE PHILIPPINES, respondents.

TEEHANKEE, J.:

This is a petition brought by the petitioner to review and set aside the order of respondent Judge
dated December 12, 1978 in Criminal Case No. 240 of the Court of First Instance of Basilan
denying petitioner's motion as accused therein to suspend proceedings due to the existence of a
prejudicial question in Civil Case No. 73 of the same court. Finding the petition and the Solicitor
General's concurrence therewith to be meritorious, this Court hereby grants the petition and
accordingly sets aside the questioned order and hereby enjoins the respondent Judge from
further proceeding with Criminal Case No. 73 until Civil Case No. 240 is finally decided and
terminated.

A chronological statement of the antecedent facts follows:

On or about April 27, 1978, Luis Pichel filed a complaint against petitioner Alejandro Ras and a
certain Bienvenido Martin before the Court of First Instance of Basilan, docketed therein as Civil
Case No. 73 praying for the nullification of the deed of sale executed by Alejandro Ras in favor of
his codefendant Bienvenido Martin and for the declaration of the prior deed of sale allegedly
executed in his favor by the defendant Alejandro Ras as valid.

In their answer, the defendants (the Ras spouses) alleged that they never sold the property to
Pichel and that the signatures appearing in the deed of sale in favor of plaintiff Pichel (in Civil
Case No. 73) were forgeries and that therefore the alleged deed of sale in Pichel's favor sought
to be declared valid was fictitious and inexistent.

While Civil Case No. 73 was being tried before the Court of First Instance of Basilan, the
Provincial Fiscal of Basilan filed on or about September 5, 1978 an Information for Estafa in the
same court against Alejandro Ras arising from the same alleged double sale subject matter of
the civil complaint filed by Luis Pichel. The case was docketed as Criminal Case No. 240 of the
Court of First Instance of Basilan.

On November 6, 1978, petitioner, through counsel, filed a "Motion for Suspension of Action" in
said Criminal Case No. 240 claiming that the same facts and issues were involved in both the
civil and criminal case and that the resolution of the issues in the civil case would necessarily be
determinative of the guilt or innocence of the accused.

The Provincial Fiscal of Basilan filed his opposition on December 4, 1978.

In his Order of December 12, 1978, the respondent judge saw no prejudicial question and
accordingly denied the motion. Hence, the present petition.

A prejudicial question is defined as that which arises in a case the resolution of which is a logical
antecedent of the issue involved therein, and the cognizance of which pertains to another
tribunal. The prejudicial question must be determinative of the case before the court but the
jurisdiction to try and resolve the question must be lodged in another court or tribunal 1 It is a
question based on a fact distinct and separate from the crime but so intimately connected with it
that it determines the guilt or innocence of the accused. 2

For a civil case to be considered prejudicial to a criminal action as to cause the suspension of the
criminal action pending the determination of the civil, it must appear not only that the civil case
involves the same facts upon which the criminal pro. prosecution is based, but also that the
resolution of the issues raised in said civil action would be necessary determinative of the guilt or
innocence of the accused. 3

On the basis of the issues raised in both the criminal and civil cases against petitioner and in the
light of the foregoing concepts of a prejudicial question, there indeed appears to be a prejudicial
question in the case at bar, considering that petitioner Alejandro Ras' defense (as defendant) in
Civil Case No. 73 of the nullity and forgery of the alleged prior deed of sale in favor of Luis Pichel
(plaintiff in the civil case and complaining witness in the criminal case) is based on the very same
facts which would be necessarily determinative of petitioner Ras' guilt or innocence as accused
in the criminal case. If the first alleged sale in favor of Pichel is void or fictitious, then there would
be no double sale and petitioner would be innocent of the offense charged. A conviction in the
criminal case (if it were allowed to proceed ahead) would be a gross injustice and would have to
be set aside if it were finally decided in the civil action that indeed the alleged prior deed of sale
was a forgery and spurious.

The Solicitor General in his comment expressed his concurrence with the petition thus: "The
petitioner Alejandro Ras claims in his answer to the complaint in Civil Case No. 73 that he had
never sold the property in litigation to the plaintiff (Luis Pichel) and that his signatures in the
alleged deed of and that of his wife were forged by the plaintiff. It is, therefore, necessary that the
truth or falsity of such claim be first determined because if his claim is true, then he did not sell
his property twice and no estafa was committed. The question of nullity of the sale is distinct and
from the crime of estafa (alleged double sale) but so intimately connected with it that it
determines the guilt or innocence of herein petitioner in the c action."

Wherefore, the Order of respondent judge in Criminal Case No. 240 dated December 12, 1978 is
hereby set aside. The temporary restraining order issued by this Court on May 16, 1979 is
hereby made permanent and respondent judge is enjoined from proceeding with the arraignment
and trial of Criminal Case No. 240 until and unless Civil Case No. 73 shall have been finally
decided and terminated adversely against petitioner. No costs.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.

G.R. No. 159186 June 5, 2009

JESSE Y. YAP, Petitioner,

vs.
HON. MONICO G. CABALES, Presiding Judge, Regional Trial Court, Branch 35, General
Santos City; MUNICIPAL TRIAL COURT, Branch 1, General Santos City; COURT OF
APPEALS, PEOPLE OF THE PHILIPPINES, JOVITA DIMALANTA and MERGYL
MIRABUENO, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court with prayer for the
issuance of a writ of preliminary injunction and/or issuance of status quo order seeking to annul
and set aside the Resolution1 of the Court of Appeals (CA) dated July 17, 2003 denying
petitioner's motion for reconsideration of the Decision2 dated April 30, 2003 in CA-G.R. SP No.
68250.

The facts of the case are as follows:

Petitioner Jesse Y. Yap and his spouse Bessie Yap are engaged in the real estate business
through their company Primetown Property Group.

Sometime in 1996, petitioner purchased several real properties from a certain Evelyn Te
(Evelyn). In consideration of said purchases, petitioner issued several Bank of the Philippine
Islands (BPI) postdated checks to Evelyn. Thereafter, spouses Orlando and Mergyl Mirabueno
and spouses Charlie and Jovita Dimalanta, rediscounted the checks from Evelyn.

In the beginning, the first few checks were honored by the bank, but in the early part of 1997,
when the remaining checks were deposited with the drawee bank, they were dishonored for the
reason that the "Account is Closed." Demands were made by Spouses Mirabueno and Spouses
Dimalanta to the petitioner to make good the checks. Despite this, however, the latter failed to
pay the amounts represented by the said checks.

On December 8, 1997, Spouses Mirabueno filed a civil action for collection of sum of money,
damages and attorney's fee with prayer for the issuance of a writ of preliminary attachment
against petitioner before the Regional Trial Court (RTC) of General Santos City, docketed as
Civil Case No. 6231.3 On December 15, 1997, Spouses Dimalanta followed suit and instituted a
similar action, which was docketed as Civil Case No. 6238.4

Subsequently, on various dates, the Office of the City Prosecutor of General Santos City filed
several informations for violation of Batas Pambansa Bilang (B.P. Blg.) 22 against the petitioner
with the Municipal Trial Court in Cities (MTCC), General Santos City. The criminal complaints
were docketed as Criminal Case Nos. 34873, 34874, 34862 to 34869, and Criminal Case No.
35522-I.5

In the criminal cases, petitioner filed separate motions to suspend proceedings on account of the
existence of a prejudicial question and motion to exclude the private prosecutor from participating
in the proceedings.6 Petitioner prayed that the proceedings in the criminal cases be suspended
until the civil cases pending before the RTC were finally resolved.

The MTCC, in its Orders7 dated June 21, 2000 and July 4, 2000, denied the motions for lack of
merit. Petitioner filed a Partial Motion for Reconsideration8 relative to Criminal Case Nos. 34873,
34874, 34862 to 34869 and a Motion for Reconsideration of the Part of the Order Denying the
Motion to Suspend Proceedings on Account of the Existence of a Prejudicial Question relative to
Criminal Case No. 35522-I.9 The subsequent motions were denied in the Order10 dated October
18, 2000.

Aggrieved, petitioner filed a Petition for Certiorari with a Prayer for the Issuance of a Writ of
Preliminary Injunction11before the RTC, docketed as SPL. Civil Case No. 539, imputing grave
abuse of discretion on the part of the MTCC Judge. On July 2, 2001, the RTC issued an
Order12 denying the petition.

Petitioner then filed a Motion for Reconsideration,13 which was denied in an Order dated October
18, 2001.14

Thereafter, petitioner filed with the CA a Petition for Certiorari Prohibition and Mandamus with
Urgent Prayer for the Issuance of Status Quo Order and Writ of Preliminary
Injunction,15 docketed as CA-G.R. SP No. 68250.

On April 30, 2003, the CA rendered a Decision16 dismissing the petition for lack of merit. The CA
opined that Civil Case Nos. 6231 and 6238 did not pose a prejudicial question to the prosecution
of the petitioner for violation of B.P. Blg. 22.

The CA ruled:

In the instant case, a careful perusal of Civil Cases Nos. 6231 and 6238 reveals that the issue
involved therein is not the validity of the sale as incorrectly pointed out by the petitioner, but it is,
whether or not the complainants therein are entitled to collect from the petitioner the sum or the
value of the checks which they have rediscounted from Evelyn Te. It behooves this Court to state
that the sale and the rediscounting of the checks are two transactions, separate and distinct from
each other. It so happened that in the subject civil cases it is not the sale that is in question, but
rather the rediscounting of the checks. Therefore, petitioner's contention that the main issue
involved in said civil cases is the validity of the sale stands on hollow ground. Furthermore, if it is
indeed the validity of the sale that is contested in the subject civil cases, then, We cannot fathom
why the petitioner never contested such sale by filing an action for the annulment thereof or at
least invoked or prayed in his answer that the sale be declared null and void. Accordingly, even if
Civil Cases Nos. 6231 and 6238 are tried and the resolution of the issues therein is had, it cannot
be deduced therefrom that the petitioner cannot be held liable anymore for violation of B.P. Blg.
22.17

Petitioner filed a Motion for Reconsideration,18 which was denied in the Order19 dated July 17,
2003.

Hence, the petition assigning the following errors:

1. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THERE IS NO

PREJUDICIAL QUESTION IN THE CIVIL CASES (FOR COLLECTION OF SUMS OF
MONEY INSTITUTED BY PRIVATE RESPONDENTS OVER CHECKS ISSUED BY THE
PETITIONER, CIVIL CASE NOS. 6238 AND 6231) THAT WOULD WARRANT
SUSPENSION OF THE CRIMINAL CASES (CASE NO. 35522-1, FOR VIOLATION OF
B.P. 22, SUBJECT OF WHICH ARE THE VERY SAME CHECKS).
 2. THE HONORABLE COURT OF APPEALS ERRED IN NOT GRANTING THE
PRAYER FOR THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION AND/OR
STATUS QUO ORDER.20

The main contention of the petitioner is that a prejudicial question, as defined by law and
jurisprudence, exists in the present case. It is the petitioner's assertion that Civil Case Nos. 6231
and 6238 for collection of sum of money and damages were filed ahead of the criminal cases for
violation of B.P. Blg. 22. He further alleged that, in the pending civil cases, the issue as to
whether private respondents are entitled to collect from the petitioner despite the lack of
consideration, is an issue that is a logical antecedent to the criminal cases for violation of B.P.
Blg. 22. For if the court rules that there is no valid consideration for the check's issuance, as
petitioner contends, then it necessarily follows that he could not also be held liable for violation of
B.P. Blg. 22.

Petitioner further avers that B.P. Blg. 22 specifically requires, among other elements, that the
check should have been issued for account or for value. There must be a valid consideration;
otherwise, no violation of the said law could be rightfully pursued. Petitioner said that the reason
for the dishonor of the checks was his order to the drawee bank to stop payment and to close his
account in order to avoid necessary penalty from the bank. He made this order due to the failure
of Evelyn to deliver to him the titles to the purchased properties to him.

On the other hand, the Office of the Solicitor General (OSG) contends that there is no prejudicial
question in Civil Case Nos. 6231 and 6238 which would warrant the suspension of the
proceedings in the criminal cases for violation of B.P. Blg. 22 against the petitioner. The issue in
the civil cases is not the validity of the sale between the petitioner and Evelyn, but whether the
complainants therein are entitled to damages arising from the checks. These checks were issued
by the petitioner in favor of Evelyn, who, thereafter, negotiated the same checks to private
complainants. The checks were subsequently dishonored due to insufficiency of funds. The OSG
maintains that the resolution of such issue has absolutely no bearing on the issue of whether
petitioner may be held liable for violation of B.P. Blg. 22.21

The present case hinges on the determination of whether there exists a prejudicial question that
necessitates the suspension of the proceedings in the MTCC.

We find that there is none and, thus, we resolve to deny the petition.

A prejudicial question generally exists in a situation where a civil action and a criminal action are
both pending, and there exists in the former an issue that must be preemptively resolved before
the latter may proceed, because howsoever the issue raised in the civil action is resolved would
be determinative juris et de jure of the guilt or innocence of the accused in the criminal case. The
rationale behind the principle of prejudicial question is to avoid two conflicting decisions. It has
two essential elements: (i) the civil action involves an issue similar or intimately related to the
issue raised in the criminal action; and (ii) the resolution of such issue determines whether or not
the criminal action may proceed.22

If both civil and criminal cases have similar issues, or the issue in one is intimately related to the
issues raised in the other, then a prejudicial question would likely exist, provided the other
element or characteristic is satisfied. It must appear not only that the civil case involves the same
facts upon which the criminal prosecution would be based, but also that the resolution of the
issues raised in the civil action would be necessarily determinative of the guilt or innocence of the
accused. If the resolution of the issue in the civil action will not determine the criminal
responsibility of the accused in the criminal action based on the same facts, or if there is no
necessity that the civil case be determined first before taking up the criminal case, the civil case
does not involve a prejudicial question.23 Neither is there a prejudicial question if the civil and the
criminal action can, according to law, proceed independently of each other.24
The issue in the criminal cases is whether the petitioner is guilty of violating B.P. Blg. 22, while in
the civil case, it is whether the private respondents are entitled to collect from the petitioner the
sum or the value of the checks that they have rediscounted from Evelyn. lavvphil

The resolution of the issue raised in the civil action is not determinative of the guilt or innocence
of the accused in the criminal cases against him, and there is no necessity that the civil case be
determined first before taking up the criminal cases.

In the aforementioned civil actions, even if petitioner is declared not liable for the payment of the
value of the checks and damages, he cannot be adjudged free from criminal liability for violation
of B.P. Blg. 22. The mere issuance of worthless checks with knowledge of the insufficiency of
funds to support the checks is in itself an offense.25

In Jose v. Suarez,26 the prejudicial question under determination was whether the daily interest
rate of 5% was void, such that the checks issued by respondents to cover said interest were
likewise void for being contra bonos mores, and thus the cases for B.P. Blg. 22 will no longer
prosper. In resolving the issue, We ruled that "whether or not the interest rate imposed by
petitioners is eventually declared void for being contra bonos mores will not affect the outcome of
the BP Blg. 22 cases because what will ultimately be penalized is the mere issuance of bouncing
checks. In fact, the primordial question posed before the court hearing the B.P. Blg. 22 cases is
whether the law has been breached; that is, if a bouncing check has been issued."

Further, We held in Ricaforte v. Jurado,27 that:

The gravamen of the offense punished by B.P. Blg. 22 is the act of making and issuing a
worthless check; that is, a check that is dishonored upon its presentation for payment. In Lozano
v. Martinez, we have declared that it is not the non-payment of an obligation which the law
punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of
the law is to prohibit, under pain of penal sanctions, the making and circulation of worthless
checks. Because of its deleterious effects on the public interest, the practice is proscribed by the
law. The law punishes the act not as an offense against property, but an offense against public
order. In People v. Nitafan, we said that a check issued as an evidence of debt - though not
intended to be presented for payment - has the same effect as an ordinary check and would fall
within the ambit of B.P. Blg. 22.

xxxx

x x x The mere act of issuing a worthless check - whether as a deposit, as a guarantee or even
as evidence of pre-existing debt - is malum prohibitum.

To determine the reason for which checks are issued, or the terms and conditions for their
issuance, will greatly erode the faith the public reposes in the stability and commercial value of
checks as currency substitutes, and bring about havoc in trade and in banking communities. So
what the law punishes is the issuance of a bouncing check and not the purpose for which it was
issued or the terms and conditions relating to its issuance. The mere act of issuing a worthless
check is malum prohibitum.28

Moreover, petitioner's reliance on Ras v. Rasul29 is misplaced. The case of Ras involves a
complaint for nullification of a deed of sale on the ground of an alleged double sale. While the
civil case was pending, an information for estafa was filed against Ras (the defendant in the civil
case) arising from the same alleged double sale, subject matter of the civil complaint. The Court
ruled that there was a prejudicial question considering that the defense in the civil case was
based on the very same facts that would be determinative of the guilt or innocence of the
accused in the estafa case.
The instant case is different from Ras, inasmuch as the determination of whether the petitioner is
liable to pay the private respondents the value of the checks and damages, will not affect the
guilt or innocence of the petitioner because the material question in the criminal cases is whether
petitioner had issued bad checks, regardless of the purpose or condition of its issuance.

Guided by the following legal precepts, it is clear that the determination of the issues involved in
Civil Case Nos. 6231 and 6238 for collection of sum of money and damages is irrelevant to the
guilt or innocence of the petitioner in the criminal cases for violation of B.P. Blg. 22.

In addition, petitioner's claim of lack of consideration may be raised as a defense during the trial
of the criminal cases against him. The validity and merits of a party’s defense and accusation, as
well as the admissibility and weight of testimonies and evidence brought before the court, are
better ventilated during trial proper.

Precisely, the reason why a state has courts of law is to ascertain the respective rights of the
parties, to examine and to put to test all their respective allegations and evidence through a well
designed machinery termed "trial."Thus, all the defenses available to the accused should be
invoked in the trial of the criminal cases. This court is not the proper forum that should ascertain
the facts and decide the case for violation of B.P. Blg. 22 filed against the petitioner.

In fine, the CA committed no reversible error in affirming the decision of the RTC.

WHEREFORE, the petition is DENIED and the Decision dated April 30, 2003 and the Resolution
dated July 17, 2003 of the Court of Appeals in CA-G.R. SP No. 68250 are AFFIRMED.

SO ORDERED.

G.R. No. 120600 September 22, 1998

ERNESTO C. DAWSON, LOUIS P. DAWSON, JR., BENJAMIN C. DAWSON, JOSEPHINE

DAWSON SOLIVEN, RALPH D. CUDILLA, ELIZA C. ISIP and LARRY D. ISIP, petitioners,
vs.
REGISTER OF DEEDS OF QUEZON CITY and JUDGE OF REGIONAL TRIAL COURT OF
QUEZON CITY, BRANCH 85, respondents.

PANGANIBAN, J.:

In a contract to sell, the title over the subject property vests in the vendee only upon full payment
of the consideration. Where the installments agreed on have not been completely paid upon the
death of the original vendee and the certificate of title was erroneously issued in his name, his
heirs, who assumed his obligations and completed the payment, can resort to the summary
proceedings under Section 108 of Presidential Decree (PD) 1529 to correct the manifest mistake.

The Case

Before us is; a petition for review assailing the February 9, 1995 Decision and the May 29, 1995
Resolution of the Court of Appeals 1 in CA-GR SP No. 34515 entitled "Dr. Ernesto
Dawson, et. al., v. Register of Deeds of Quezon City, Judge of RTC, QC, Branch 85." The
assailed Decision affirmed the Resolution 2 of the trial court 3 dated December 29, 1993 in LRC
Case No. Q-6403 (93), dismissing the petition for cancellation of Transfer Certificate of Title
(TCT) No. RT-58706 (248057). The May 29, 1995 Resolution denied petitioners' Motion for
Reconsideration.
 The Facts

The undisputed facts, as summarized by Respondent Court of Appeals, are reproduced

hereunder: 4

On October 7, 1993, the petitioners herein filed a petition with the Regional Trial Court in Quezon
City alleging, inter alia, the following:

— On May 2, 1967, during his lifetime. Louis P. Dawson offered to buy on

installment from the SISKA DEVELOPMENT CORPORATION, per contract to
sell, a parcel of land in Quezon City, consisting of 638 square meters for
P27,632.00, now covered by Transfer Certificate of Title No. RT-58706 (248057);

— On June 3, 1971, Louis P. Dawson died intestate;

— Upon his death, the petitioners assumed the rights and obligations of
deceased Louis P. Dawson in the aforementioned contract to sell, paying in full
the selling price of the lot from their own funds, which payment was completed in
1978;

— With said full payment, vendor SISKA DEVELOPMENT CORPORATION

executed on March 16, 1978 a deed of absolute sale in favor of deceased Louis
P. Dawson who had died seven (7) years earlier, instead of in favor of the
petitioners who assumed and to whom [were] transferred the rights and
obligations of deceased Louis P. Dawson upon the latter's death;

— Because of the obvious error, Transfer Certificate of Title No. RT-58706

(248057) was issued in the name of deceased Louis P. Dawson instead of those
of petitioners — hence, the petition for the cancellation and correction of TCT No.
RT - 58706 (248057) in the name of Louis P. Dawson and the issuance of a new
title in the names of herein petitioners, to wit: Dr. Ernesto C. Dawson (1/5), Louis
P. Dawson, Jr. (1/5), Benjamin C. Dawson (1/5), Josephine Dawson Soliven
(1/5), Ralph D. Cudilla (1/15), Eliza C. Isip (1/15) and Larry D. Cudilla (1/15);

— this petition is filed pursuant to Section 108 of P.D. 1529 (formerly Section 112
of Act No. 496);

— the herein petition is not without legal precedent;

— the petition is not controversial, considering the unanimity among all the
interested parties, who are all petitioners herein, being the only surviving heirs of
deceased Louis P. Dawson. (pages 1-6 of the Record).

On December 1, 1993, the respondent court issued an Order allowing the

petitioners to present ex-parte their evidence before the Branch Clerk of Court.
(page 16 of the Record).

On December 20, 1993, the respondent court rendered its first assailed Resolution (pages 36-38
thereof), the dispositive portion of which was earlier quoted.

On February 2, 1993, the petitioner herein filed a motion for reconsideration

(pages 39-48 of the Record) from the afore-quoted Resolution of the respondent
court.
 Said motion was denied by the respondent court in its second assailed Order
(dated March 21, 1994) which was earlier quoted.

Hence, this petition for review. 5

Ruling of the Court of Appeals

In affirming the dismissal of the petition for cancellation of TCT No. RT-58706 (248057), the
Court of Appeals held that the summary proceedings under Section 108, PD 1529, do not apply
to the present case, viz.:

Petitioners' contention that the respondent court erred in holding that Section 108
of Presidential Decree No. 1529 "does not apply" was torpedoed by the following:

— Wrong Action. Petitioners' evidence showed that their father, Louis P. Dawson,
died on June 3, 1971 (Exhibit 'D'), while the deed of absolute sale for the subject
parcel was executed on March 16, 1978 by the Siska Development. Corporation
in favor of Louis P. Dawson, (Exhibit 'E'). It was on this basis that a certificate of
title (TCT No. RT-58706) was issued in the name of Louis P. Dawson, which title
was entered at the Office of the Register of Deeds in Quezon City on August 17,
1978. As per the tax declaration and real property tax bill, the subject parcel is
still in the name of Louis P. Dawson (pages 23-24, tsn of December 8, 1993),
although his wife (Soledad Dawson) died in 1988 (Exhibit 'I'). We are intrigued
why the petitioners only took action by filing the petition for cancellation of the
certificate of title in their father's name only on October 7, 1993. Was it designed
to evade the payment of the necessary taxes to the government?

— Legal shortcut. As aptly observed by the respondent court in its assailed

resolution, "the case at bar pertains more to the partition of the estate which will
in effect transfer ownership of title of the property to the petitioners as compulsory
heirs of the decedent." Hence, Section 108 of Presidential Decree No. 1529
(which calls for summary proceedings) does not apply. Certainly, to allow
petitioners' move will open the floodgate [of] tax evasion[s]. Petitioners' posture
can be likened to a petition seeking to change/alter one's paternity or citizenship
by merely seeking the correction/revision of birth certificate. Such is not allowable
— there must be a petition for naturalization. In the case at bench, [w]e further
took note of the fact that the wife of the property owner (Soledad Dawson) died in
1988, almost ten years after a certificate of title was issued by the respondent
Register of Deeds in the name of Louis P. Dawson.

With the foregoing, [w]e find no error committed by the respondent court in
handing down its assailed resolution (dated December 20, 1993) and Order
(dated March 21, 1994). The law abhors shortcuts. 6

The Issue

Petitioners submit, for the consideration of the Court, a single issue:

The Court of Appeals erred in affirming that Section 108 of P.D. 1529 does not
apply herein.

The Court's Ruling

The petition is meritorious.

 Sole Issue: Applicability of Section 108, PD 1529

Sec. 108 of PD 1529 reads:

Sec. 108. Amendment and alteration of certificates. — No erasure, alteration, or

amendment shall be made upon the registration book after the entry of a
certificate of title or of a memorandum thereon and the attestation of the same by
the Register of Deeds, except by order of the proper Court of First Instance. A
registered owner or other person having an interest in registered property, or, in
proper cases, the Register of Deeds with the approval of the Commissioner of
Land Registration, may apply by petition to the court upon the ground that the
registered interests of any description, whether vested, contingent, expectant or
inchoate appearing on the certificate, have terminated and ceased; or that [a]
new interest not appearing upon the certificate have arisen or been created; or
that an omission or error was made in entering a certificate or any memorandum
thereon, or on any duplicate certificate; or that the name of any person on the
certificate has been changed; or that the registered owner has married, or, if
registered as married, that the marriage has been terminated and no right or
interest of heirs or creditors will thereby be affected; or that a corporation which
owned registered land and has been dissolved has not conveyed the same within
three years after its dissolution; or upon any other reasonable ground; and the
court may hear and determine the petition after notice to all parties in interest,
and may order the entry or cancellation of a new certificate, the entry or
cancellation of a memorandum upon a certificate, or grant any other relief upon
such terms and conditions, requiring security or bond if necessary, as it may
consider proper; Provided, however, that this section shall not be construed to
give the court authority to reopen the judgment or decree of registration, and that
nothing shall be done or ordered by the court which shall impair the title or other
interest of a purchaser holding a certificate for value in good faith, or his heirs and
assigns, without his or their written consent. Where the owner's duplicate
certificate is not presented, a similar petition may be filed as provided in the
preceding section.

All petitions or motions filed under this section as well as under any other
provision of this Decree after original registration shall be filed and entitled in the
original case in which the decree or registration was
entered. 7

Petitioners contend that, as the sole heirs of Louis P. Dawson, they assumed upon his death in
1971 the obligations under the contract to sell that he had entered into in 1967. Thus, when the
contract price was fully paid by them in 1978, ownership over the property in question should
have been transferred to them, and not to the deceased, Louis P. Dawson. Since the issuance of
the aforesaid TCT in the name of the deceased was manifestly an error, petitioners posit that
they can avail of the remedy provided under the aforecited statutory provision.

On the other hand, the Court of Appeals and the trial court ruled that petitioners could not avail
themselves of the summary proceedings under the said provision, because the present
controversy involved not the cancellation of a certificate of title but the partition of the estate of
the deceased.

In his Comment 8 dated May 8, 1996 and Memorandum 9 dated May 5, 1998, the Office of the
Solitor General sides with petitioners and argues that, under the given factual circumstances, a
resort to Section 108 of PD 1529 is proper.

We agree with both the petitioners and the solicitor general.

On May 2, 1967, Louis P. Dawson and Siska Development Corporation executed a contract to
sell, the subject of which was the parcel of land in question. By the nature of a contract to sell,
the title over the subject property is transferred to the vendee only upon the full payment of the
stipulated consideration. Unlike in a contract of sale, the title does not pass to the vendee upon
the execution of the agreement or the delivety of the thing sold. In Salazar v. Court of
Appeals, 10 this Court explained the distinction between a contract to sell and a contract of sale:

In a contract of sale, the title to the property passes to the vendee upon the
delivery of the thing sold; in a contract to sell, ownership is, by agreement,
reserved in the vendor and is not to pass to the vendee until full payment of the
purchase price. Otherwise stated, in a contract of sale, the vendor loses
ownership over the property and cannot recover it until and unless the contract is
resolved or rescinded; whereas in a contract to sell, title is retained by the vendor
until full payment of the price. In the latter contract, payment of the price is a
positive suspensive condition, failure of which is not a breach but an event that
prevents the obligation of the vendor to convey title from becoming effective.

It is undisputed that Louis P. Dawson died in June 1971, without having completed the
installments on the property. His heirs, herein petitioners, then took over the contrac to sell,
assumed his obligations by paying the selling price of the lot from their own funds, and
completed the payment in 1978. Accordingly, the ownership of the lot had not been vested in
Louis P. Dawson during his lifetime.

Indeed, on March 16, 1978, Siska Development Corporation could not have transferred the title
over the lot, through a Deed of Absolute Sale, to Louis P. Dawson who had died seven years
earlier in 1971. In 1978, the deceased had no more civil personality or juridical capacity. 11 "His
juridical capacity, which is the fitness to be the subject of legal relations, was lost through
death." 12

In other words, the said property did not become part of the estate of Louis P Dawson.
Necessarily, partition is not the remedy to determine ownership thereof and to consolidate title in
herein petitioners.

Hence, we agree with the following assertion of the solicitor general: "Having stepped into the
shoes of the deceased Louis P. Dawson upon his death in June, 1971 with respect to the said
contract, and being the ones who continued the installment payments of the selling price from
their own funds until its full payment in 1978, petitioners necessarily became the lawful owners of
the said lot in whose favor the deed of absolute sale should have been executed by vendor Siska
Development Corporation." 13

In view of the circumstances of this case, Section 108 of PD is clearly available as a remedy to
correct the erroneous issuance of the subject TCT in the name of Louis P. Dawson. The issue is
not really novel. Faced with substantially similar facts in Cruz v. Tan, 14 this Court also allowed
the application of Section 112 of the Public Land Act, which is identical to Section 108 of PD
1529. A translation of the said case from Spanish reads: 15

Simeon de la Cruz purchased a parcel of land on a ten-year installment basis. He

died in 1939 and his wife died in 1942, leaving three children. The vendor of the
land executed the corresponding deed of sale over the land in 1950 upon
completion of the payment. The transfer certificate of title was then issued in the
name of the deceased buyer, Simeon de la Cruz. Petitioner filed this petition
under the original land registration case praying that the court order the Register
of Deeds to substitute the name of Regino de la Cruz, petitioner herein, for that of
Simeon de la Cruz in the transfer certificate of title. Petitioner claimed that
Simeon during his lifetime transferred all rights over, the land to him. The petition
carried the conformity of the heirs of the deceased Simeon de la Cruz.
 Respondent court denied the petition on the ground that the substitution of
owners cannot be ordered by the court acting on its jurisdiction granted by the
Land Registration Law, because Simeon de la Cruz and Regino de la Cruz are
two different persons. The court also said that the petition should be brought
before an ordinary court for the protection of the interested parties.

Held: The danger that respondent judge feared that other interested parties might
be prejudiced of their rights is remote, considering that the heirs of Simeon de la
Cruz signified their conformity to the petition. Intestate proceedings are not
necessary when the heirs have amicably settled the estate among themselves
and when the deceased left no debts. Section 112 of the Land Registration Law
(now Section 108 of Presidential Decree No. 1529) authorizes the court upon
proper petition and notification to order the cancellation of a certificate of title and
substitute the name of the person who appears to be entitled to the property. The
order of respondent judge is revoked and the Register of Deeds is ordered to
make the necessary substitution.

Accordingly, petitioners may avail of the remedy provided under Section 108 of PD 1529. This,
however, does not necessarily mean that they are automatically entitled to the relief prayed for —
the cancellation of the title issued in the name of Louis P. Dawson and the issuance of new titles.
It is incumbent upon them to satisfy the requirements and conditions prescribed under the
statutory provision.

Respondent Court questioned the filing of the petition for cancellation only in 1993, hinting that
the remedy was "designed to evade the payment of the necessary taxes to the government."
Respondent Court, however, failed to state which taxes petitioners sought to avoid. Although
they are required to pay capital gains tax and, thereafter, real estate tax, there is no showing that
said taxes have not been paid. Thus, we cannot withhold the relief prayed for by petitioners,
merely on the basis of some speculation of improper motivation.

WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED and SET
ASIDE. The Regional Trial Court of Quezon City is ORDERED to cause the cancellation of TCT
No. RT-58706 (248057) issued in the name of Louis P. Dawson and to cause the issuance, in
lieu thereof, of a new certificate of title in the names of the petitioners as co-owners of the subject
property, after said petitioners have fulfilled the requirements stated in Section 108 of PD 1529.
No cost.

SO ORDERED.

G.R. No. 182836 October 13, 2009

CONTINENTAL STEEL MANUFACTURING CORPORATION, Petitioner,

vs.
HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAÑO and
NAGKAKAISANG MANGGAGAWA NG CENTRO STEEL CORPORATION-SOLIDARITY OF
UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (NMCSC-
SUPER), Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing
the Decision1 dated 27 February 2008 and the Resolution2 dated 9 May 2008 of the Court of
Appeals in CA-G.R. SP No. 101697, affirming the Resolution3 dated 20 November 2007 of
respondent Accredited Voluntary Arbitrator Atty. Allan S. Montaño (Montaño) granting
bereavement leave and other death benefits to Rolando P. Hortillano (Hortillano), grounded on
the death of his unborn child.

The antecedent facts of the case are as follows:

Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental

Steel) and a member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-
Solidarity of Trade Unions in the Philippines for Empowerment and Reforms (Union) filed on 9
January 2006, a claim for Paternity Leave, Bereavement Leave and Death and Accident
Insurance for dependent, pursuant to the Collective Bargaining Agreement (CBA) concluded
between Continental and the Union, which reads:

ARTICLE X: LEAVE OF ABSENCE

xxxx

Section 2. BEREAVEMENT LEAVE—The Company agrees to grant a bereavement leave with

pay to any employee in case of death of the employee’s legitimate dependent (parents, spouse,
children, brothers and sisters) based on the following:

2.1 Within Metro Manila up to Marilao, Bulacan - 7 days

2.2 Provincial/Outside Metro Manila - 11 days

xxxx

ARTICLE XVIII: OTHER BENEFITS

xxxx

Section 4. DEATH AND ACCIDENT INSURANCE—The Company shall grant death and
accidental insurance to the employee or his family in the following manner:

xxxx

4.3 DEPENDENTS—Eleven Thousand Five Hundred Fifty Pesos (Php11,550.00) in case of

death of the employees legitimate dependents (parents, spouse, and children). In case the
employee is single, this benefit covers the legitimate parents, brothers and sisters only with
proper legal document to be presented (e.g. death certificate).4

The claim was based on the death of Hortillano’s unborn child. Hortillano’s wife, Marife V.
Hortillano, had a premature delivery on 5 January 2006 while she was in the 38th week of
pregnancy.5 According to the Certificate of Fetal Death dated 7 January 2006, the female fetus
died during labor due to fetal Anoxia secondary to uteroplacental insufficiency.6

Continental Steel immediately granted Hortillano’s claim for paternity leave but denied his claims
for bereavement leave and other death benefits, consisting of the death and accident insurance.7

Seeking the reversal of the denial by Continental Steel of Hortillano’s claims for bereavement
and other death benefits, the Union resorted to the grievance machinery provided in the CBA.
Despite the series of conferences held, the parties still failed to settle their dispute,8 prompting
the Union to file a Notice to Arbitrate before the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment (DOLE), National Capital Region
(NCR).9 In a Submission Agreement dated 9 October 2006, the Union and Continental Steel
submitted for voluntary arbitration the sole issue of whether Hortillano was entitled to
bereavement leave and other death benefits pursuant to Article X, Section 2

and Article XVIII, Section 4.3 of the CBA.10 The parties mutually chose Atty. Montaño, an
Accredited Voluntary Arbitrator, to resolve said issue.11

When the preliminary conferences again proved futile in amicably settling the dispute, the parties
proceeded to submit their respective Position Papers, 12 Replies,13 and Rejoinders14 to Atty.
Montaño.

The Union argued that Hortillano was entitled to bereavement leave and other death benefits
pursuant to the CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section
4.3 of the CBA did not specifically state that the dependent should have first been born alive or
must have acquired juridical personality so that his/her subsequent death could be covered by
the CBA death benefits. The Union cited cases wherein employees of MKK Steel Corporation
(MKK Steel) and Mayer Steel Pipe Corporation (Mayer Steel), sister companies of Continental
Steel, in similar situations as Hortillano were able to receive death benefits under similar
provisions of their CBAs.

The Union mentioned in particular the case of Steve L. Dugan (Dugan), an employee of Mayer
Steel, whose wife also prematurely delivered a fetus, which had already died prior to the delivery.
Dugan was able to receive paternity leave, bereavement leave, and voluntary contribution under
the CBA between his union and Mayer Steel.15 Dugan’s child was only 24 weeks in the womb
and died before labor, as opposed to Hortillano’s child who was already 37-38 weeks in the
womb and only died during labor.

The Union called attention to the fact that MKK Steel and Mayer Steel are located in the same
compound as Continental Steel; and the representatives of MKK Steel and Mayer Steel who
signed the CBA with their respective employees’ unions were the same as the representatives of
Continental Steel who signed the existing CBA with the Union.

Finally, the Union invoked Article 1702 of the Civil Code, which provides that all doubts in labor
legislations and labor contracts shall be construed in favor of the safety of and decent living for
the laborer.

On the other hand, Continental Steel posited that the express provision of the CBA did not
contemplate the death of an unborn child, a fetus, without legal personality. It claimed that there
are two elements for the entitlement to the benefits, namely: (1) death and (2) status as
legitimate dependent, none of which existed in Hortillano’s case. Continental Steel, relying on
Articles 40, 41 and 4216 of the Civil Code, contended that only one with civil personality could die.
Hence, the unborn child never died because it never acquired juridical personality. Proceeding
from the same line of thought, Continental Steel reasoned that a fetus that was dead from the
moment of delivery was not a person at all. Hence, the term dependent could not be applied to a
fetus that never acquired juridical personality. A fetus that was delivered dead could not be
considered a dependent, since it never needed any support, nor did it ever acquire the right to be
supported.

Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since
neither of the parties qualified the terms used in the CBA, the legally accepted definitions thereof
were deemed automatically accepted by both parties. The failure of the Union to have unborn
child included in the definition of dependent, as used in the CBA – the death of whom would have
qualified the parent-employee for bereavement leave and other death benefits – bound the Union
to the legally accepted definition of the latter term.

Continental Steel, lastly, averred that similar cases involving the employees of its sister
companies, MKK Steel and Mayer Steel, referred to by the Union, were irrelevant and
incompetent evidence, given the separate and distinct personalities of the companies. Neither
could the Union sustain its claim that the grant of bereavement leave and other death benefits to
the parent-employee for the loss of an unborn child constituted "company practice."

On 20 November 2007, Atty. Montaño, the appointed Accredited Voluntary Arbitrator, issued a
Resolution17 ruling that Hortillano was entitled to bereavement leave with pay and death benefits.

Atty. Montaño identified the elements for entitlement to said benefits, thus:

This Office declares that for the entitlement of the benefit of bereavement leave with pay by the
covered employees as provided under Article X, Section 2 of the parties’ CBA, three (3)
indispensable elements must be present: (1) there is "death"; (2) such death must be of
employee’s "dependent"; and (3) such dependent must be "legitimate".

On the otherhand, for the entitlement to benefit for death and accident insurance as provided
under Article XVIII, Section 4, paragraph (4.3) of the parties’ CBA, four (4) indispensable
elements must be present: (a) there is "death"; (b) such death must be of employee’s
"dependent"; (c) such dependent must be "legitimate"; and (d) proper legal document to be
presented.18

Atty. Montaño found that there was no dispute that the death of an employee’s legitimate
dependent occurred. The fetus had the right to be supported by the parents from the very
moment he/she was conceived. The fetus had to rely on another for support; he/she could not
have existed or sustained himself/herself without the power or aid of someone else, specifically,
his/her mother. Therefore, the fetus was already a dependent, although he/she died during the
labor or delivery. There was also no question that Hortillano and his wife were lawfully married,
making their dependent, unborn child, legitimate.

In the end, Atty. Montaño decreed:

WHEREFORE, premises considered, a resolution is hereby rendered ORDERING [herein

petitioner Continental Steel] to pay Rolando P. Hortillano the amount of Four Thousand Nine
Hundred Thirty-Nine Pesos (₱4,939.00), representing his bereavement leave pay and the
amount of Eleven Thousand Five Hundred Fifty Pesos (₱11,550.00) representing death benefits,
or a total amount of ₱16,489.00

The complaint against Manuel Sy, however, is ORDERED DISMISSED for lack of merit.

All other claims are DISMISSED for lack of merit.

Further, parties are hereby ORDERED to faithfully abide with the herein dispositions.

Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on
Certiorari,19 under Section 1, Rule 43 of the Rules of Court, docketed as CA-G.R. SP No.
101697.

Continental Steel claimed that Atty. Montaño erred in granting Hortillano’s claims for
bereavement leave with pay and other death benefits because no death of an employee’s
dependent had occurred. The death of a fetus, at whatever stage of pregnancy, was excluded
from the coverage of the CBA since what was contemplated by the CBA was the death of a legal
person, and not that of a fetus, which did not acquire any juridical personality. Continental Steel
pointed out that its contention was bolstered by the fact that the term death was qualified by the
phrase legitimate dependent. It asserted that the status of a child could only be determined upon
said child’s birth, otherwise, no such appellation can be had. Hence, the conditions sine qua non
for Hortillano’s entitlement to bereavement leave and other death benefits under the CBA were
lacking.

The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaño’s
Resolution dated 20 November 2007. The appellate court interpreted death to mean as follows:

[Herein petitioner Continental Steel’s] exposition on the legal sense in which the term "death" is
used in the CBA fails to impress the Court, and the same is irrelevant for ascertaining the
purpose, which the grant of bereavement leave and death benefits thereunder, is intended to
serve. While there is no arguing with [Continental Steel] that the acquisition of civil personality of
a child or fetus is conditioned on being born alive upon delivery, it does not follow that such event
of premature delivery of a fetus could never be contemplated as a "death" as to be covered by
the CBA provision, undoubtedly an event causing loss and grief to the affected employee, with
whom the dead fetus stands in a legitimate relation. [Continental Steel] has proposed a narrow
and technical significance to the term "death of a legitimate dependent" as condition for granting
bereavement leave and death benefits under the CBA. Following [Continental Steel’s] theory,
there can be no experience of "death" to speak of. The Court, however, does not share this view.
A dead fetus simply cannot be equated with anything less than "loss of human life", especially for
the expectant parents. In this light, bereavement leave and death benefits are meant to assuage
the employee and the latter’s immediate family, extend to them solace and support, rather than
an act conferring legal status or personality upon the unborn child. [Continental Steel’s]
insistence that the certificate of fetal death is for statistical purposes only sadly misses this
crucial point.20

Accordingly, the fallo of the 27 February 2008 Decision of the Court of Appeals reads:

WHEREFORE, premises considered, the present petition is hereby DENIED for lack of merit.
The assailed Resolution dated November 20, 2007 of Accredited Voluntary Arbitrator Atty. Allan
S. Montaño is hereby AFFIRMED and UPHELD.

With costs against [herein petitioner Continental Steel].21

In a Resolution22 dated 9 May 2008, the Court of Appeals denied the Motion for
Reconsideration23 of Continental Steel.

Hence, this Petition, in which Continental Steel persistently argues that the CBA is clear and
unambiguous, so that the literal and legal meaning of death should be applied. Only one with
juridical personality can die and a dead fetus never acquired a juridical personality.

We are not persuaded.

As Atty. Montaño identified, the elements for bereavement leave under Article X, Section 2 of the
CBA are: (1) death; (2) the death must be of a dependent, i.e., parent, spouse, child, brother, or
sister, of an employee; and (3) legitimate relations of the dependent to the employee. The
requisites for death and accident insurance under Article XVIII, Section 4(3) of the CBA are: (1)
death; (2) the death must be of a dependent, who could be a parent, spouse, or child of a
married employee; or a parent, brother, or sister of a single employee; and (4) presentation of the
proper legal document to prove such death, e.g., death certificate.

It is worthy to note that despite the repeated assertion of Continental Steel that the provisions of
the CBA are clear and unambiguous, its fundamental argument for denying Hortillano’s claim for
bereavement leave and other death benefits rests on the purportedly proper interpretation of the
terms "death" and "dependent" as used in the CBA. If the provisions of the CBA are indeed clear
and unambiguous, then there is no need to resort to the interpretation or construction of the
same. Moreover, Continental Steel itself admitted that neither management nor the Union sought
to define the pertinent terms for bereavement leave and other death benefits during the
negotiation of the CBA.

The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal
definition of death is misplaced. Article 40 provides that a conceived child acquires personality
only when it is born, and Article 41 defines when a child is considered born. Article 42 plainly
states that civil personality is extinguished by death.

First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code
on natural persons, must be applied in relation to Article 37 of the same Code, the very first of
the general provisions on civil personality, which reads:

Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in
every natural person and is lost only through death. Capacity to act, which is the power to do
acts with legal effect, is acquired and may be lost.

We need not establish civil personality of the unborn child herein since his/her juridical capacity
and capacity to act as a person are not in issue. It is not a question before us whether the unborn
child acquired any rights or incurred any obligations prior to his/her death that were passed on to
or assumed by the child’s parents. The rights to bereavement leave and other death benefits in
the instant case pertain directly to the parents of the unborn child upon the latter’s death.

Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death.
Moreover, while the Civil Code expressly provides that civil personality may be extinguished by
death, it does not explicitly state that only those who have acquired juridical personality could die.

And third, death has been defined as the cessation of life.24 Life is not synonymous with civil
personality. One need not acquire civil personality first before he/she could die. Even a child
inside the womb already has life. No less than the Constitution recognizes the life of the unborn
from conception,25 that the State must protect equally with the life of the mother. If the unborn
already has life, then the cessation thereof even prior to the child being delivered, qualifies as
death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel
itself defines, a dependent is "one who relies on another for support; one not able to exist or
sustain oneself without the power or aid of someone else." Under said general definition,26 even
an unborn child is a dependent of its parents. Hortillano’s child could not have reached 38-39
weeks of its gestational life without depending upon its mother, Hortillano’s wife, for sustenance.
Additionally, it is explicit in the CBA provisions in question that the dependent may be the parent,
spouse, or child of a married employee; or the parent, brother, or sister of a single employee.
The CBA did not provide a qualification for the child dependent, such that the child must have
been born or must have acquired civil personality, as Continental Steel avers. Without such
qualification, then child shall be understood in its more general sense, which includes the unborn
fetus in the mother’s womb.

The term legitimate merely addresses the dependent child’s status in relation to his/her parents.
In Angeles v. Maglaya,27 we have expounded on who is a legitimate child, viz:

A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove the
element of lawful union and there is strictly no legitimate filiation between parents and child.
Article 164 of the Family Code cannot be more emphatic on the matter: "Children conceived or
born during the marriage of the parents are legitimate." (Emphasis ours.)

Conversely, in Briones v. Miguel,28 we identified an illegitimate child to be as follows:

The fine distinctions among the various types of illegitimate children have been eliminated in the
Family Code. Now, there are only two classes of children -- legitimate (and those who, like the
legally adopted, have the rights of legitimate children) and illegitimate. All
children conceived and born outside a valid marriage are illegitimate, unless the law itself gives
them legitimate status. (Emphasis ours.)

It is apparent that according to the Family Code and the afore-cited jurisprudence, the legitimacy
or illegitimacy of a child attaches upon his/her conception. In the present case, it was not
disputed that Hortillano and his wife were validly married and that their child was conceived
during said marriage, hence, making said child legitimate upon her conception. 1avv phi 1

Also incontestable is the fact that Hortillano was able to comply with the fourth element entitling
him to death and accident insurance under the CBA, i.e., presentation of the death certificate of
his unborn child.

Given the existence of all the requisites for bereavement leave and other death benefits under
the CBA, Hortillano’s claims for the same should have been granted by Continental Steel.

We emphasize that bereavement leave and other death benefits are granted to an employee to
give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the
loss of a loved one. It cannot be said that the parents’ grief and sense of loss arising from the
death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died
during delivery, is any less than that of parents whose child was born alive but died
subsequently.

Being for the benefit of the employee, CBA provisions on bereavement leave and other death
benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the
Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor.29 In the same way, the CBA
and CBA provisions should be interpreted in favor of labor. In Marcopper Mining v. National
Labor Relations Commission,30 we pronounced:

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that
"when the pendulum of judgment swings to and fro and the forces are equal on both sides, the
same must be stilled in favor of labor." While petitioner acknowledges that all doubts in the
interpretation of the Labor Code shall be resolved in favor of labor, it insists that what is involved-
here is the amended CBA which is essentially a contract between private persons. What
petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to
accord utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold.

In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA 451 (1990)], we
categorically stated that:

When conflicting interests of labor and capital are to be weighed on the scales of social justice,
the heavier influence of the latter should be counter-balanced by sympathy and compassion the
law must accord the underprivileged worker.

Likewise, in Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)], we
declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social
justice policy.

IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27 February 2008 and
Resolution dated 9 May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the
Resolution dated 20 November 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montaño,
which granted to Rolando P. Hortillano bereavement leave pay and other death benefits in the
amounts of Four Thousand Nine Hundred Thirty-Nine Pesos (₱4,939.00) and Eleven Thousand
Five Hundred Fifty Pesos (₱11,550.00), respectively, grounded on the death of his unborn child,
are AFFIRMED. Costs against Continental Steel Manufacturing Corporation.

SO ORDERED.

G.R. No. 203775 August 5, 2014

ASSOCIATION OF FLOOD VICTIMS and JAIME AGUILAR HERNANDEZ, Petitioners,

vs.
COMMISSION ON ELECTIONS, ALAY BUHAY COMMUNITY DEVELOPMENT
FOUNDATION, INC., and WESLIE TING GATCHALIAN, Respondents.

RESOLUTION

CARPIO, Acting C.J.:

The Case

This is a Petition for Certiorari and/or Mandamus under Rule 65 of the Rules of Court, assailing
the Minute Resolution No. 12-0859 dated 2 October 2012 of the Commission on Elections
(COMELEC). The COMELEC Minute Resolution No. 12-0859, among others, (1) confirmed the
re-computation of the allocation of seats of the Party-List System of Representation in the House
of Representatives in the 10 May 2010 automated national and local elections, (2) proclaimed
Alay Buhay Community Development Foundation, Inc. (Alay-Buhay) Party-List as a winning
party-list group in the 10 May 2010 elections, and (3) declared the first nominee [Weslie T.
Gatchalian] of Alay Buhay Party-List as its Party-List Representative in the House of
Representatives.

The Facts

On 28 August 2012, the Supreme Court affirmed COMELEC Resolution SPP 10-013, dated 11
October 2011, cancelling the certificate of registration of the Alliance of Barangay Concerns
(ABC) Party-List which won in the party-list elections in the 2010 national elections. The
disqualification of the ABC Party-List resulted in the re-computation of the party-list allocations in
the House of Representatives, in which the COMELEC followed the formula outlined in the case
of Barangay Association for National Advancement and Transparency (BANAT) v. Commission
on Elections.1

The COMELEC then issued Minute Resolution No. 12-0859, in which it resolved:

1. TO GRANT the September 14, 2012 Urgent Motion for Proclamation of Alay Buhay
Community Development Foundation, Inc. (Alay Buhay) Party-List;

2. TO DENY the September 20, 2012 Very Very Urgent Ex-Parte Motion of Coalition of
Associations of Senior Citizens of the Philippines, Inc. (Senior Citizens) Party-List;

3. TO NOTE the September 24, 2012 Opposition to Senior CitizensParty-List’s "Very

Very UrgentEx-Parte Motion" of Alay Buhay Community Development Foundation, Inc.
(Alay Buhay) Party-List;

4. TO CONFIRM the herein RE-COMPUTATION OF THE ALLOCATION OF SEATS of

the Party-List System of Representation in the House of Representatives in the May 10,
2010 Automated National and Local Elections;
 5. TO PROCLAIM Alay Buhay Community Development Foundation, Inc. (Alay Buhay)
Party-List as a winning party-list group in the Party-List System of Representation in the
House of Representatives in the May 10, 2010 Automated National and Local Elections;
and

6. TO DECLARE the First (1st) NOMINEE of Alay Buhay Community Development

Foundation, Inc. (Alay Buhay) Party-List, as the FIRST (1st) SITTING
REPRESENTATIVE in the Party-List System of Representation in the House of
Representatives in accordance with the Order of Nominees per the List appearing in its
March 17, 2010 Certificate of Nomination.2

On 25 October 2012, petitioners Association of Flood Victims and Jaime Aguilar Hernandez
(Hernandez) filed with this Court a special civil action for certiorari and/or mandamus under Rule
65 of the Rules of Court. Petitioners assert that the COMELEC committed grave abuse of
discretion when it issued Minute Resolution No. 12-0859. Furthermore, petitioners pray for the
issuance of a writ of mandamus to compel publication of the COMELEC Minute Resolution No.
12-0859.

The Issues

The issues raised in this case are: (1) whether the COMELEC committed grave abuse of
discretion in issuing Minute Resolution No. 12-0859, and (2) whether the COMELEC may be
compelled through mandamus to publish Minute Resolution No. 12-0859.

The Ruling of the Court

We dismiss the petition.

Petitioners do not have legal capacity to sue. Sections 1 and 2, Rule 3 of the 1997 Rules of Civil
Procedure read:

SECTION 1. Who may be parties; plaintiff and defendant. – Only natural or juridical persons, or
entities authorized by law may be parties in a civil action. The term "plaintiff" may refer to the
claiming party, the counter-claimant, the cross-claimant, or the third (fourth, etc.) -party plaintiff.
The term "defendant" may refer to the original defending party, the defendant in a counterclaim,
the cross-defendant, or the third (fourth, etc.) -party defendant.

SECTION 2. Parties in interest. – A real party in interest is the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must be prosecuted or defended in the
name of the real party in interest.

Under Sections 1 and 2 of Rule 3, only natural or juridical persons, or entities authorized by law
may be parties in a civil action, which must be prosecuted or defended in the name of the real
party in interest. Article 44 of the Civil Code lists the juridical persons with capacity to sue, thus:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by
law; their personality begins as soon as they have been constituted according to law;
 (3) Corporations, partnerships and associations for private interest or purpose to which
the law grants a juridical personality, separate and distinct from that of each shareholder,
partner or member. (Emphasis supplied)

Section 4, Rule 8 of the Rules of Court mandates that "[f]acts showing the capacity of a party to
sue or be sued or the authority of a party to sue or be sued in a representative capacity or the
legal existence of an organized association of persons that is made a party, must be averred."

In their petition, it is stated that petitioner Association of Flood Victims "is a non-profit and non-
partisan organization in the process of formal incorporation, the primary purpose of which is for
the benefit of the common or general interest of many flood victims who are so numerous that it
is impracticable to join all as parties," and that petitioner Hernandez "is a Tax Payer and the Lead
Convenor of the Association of Flood Victims."3 Clearly, petitioner Association of Flood Victims,
which is still in the process of incorporation, cannot be considered a juridical person or an entity
authorized by law, which can be a party to a civil action.4

Petitioner Association of Flood Victims is an unincorporated association not endowed with a

distinct personality of its own. An unincorporated association, in the absence of an enabling law,
has no juridical personality and thus, cannot sue in the name of the association.5 Such
unincorporated association is not a legal entity distinct from its members. If an association, like
petitioner Association of Flood Victims, has no juridical personality, then all members of the
association must be made parties in the civil action.6 In this case, other than his bare allegation
that he is the lead convenor of the Association of Flood Victims, petitioner Hernandez showed no
proof that he was authorized by said association. Aside from petitioner Hernandez, no other
member was made signatory to the petition. Only petitioner Hernandez signed the Verification
and Sworn Certification Against Forum Shopping,7 stating that he caused the preparation of the
petition. There was no accompanying document showing that the other members of the
Association of Flood Victims authorized petitioner Hernandez to represent them and the
association in the petition.

In Dueñas v. Santos Subdivision Homeowners Association,8 the Court held that the Santos
Subdivision Homeowners Association (SSHA), which was an unincorporated association, lacks
capacity to sue in its own name, and that the members of the association cannot represent the
association without valid authority, thus:

There is merit in petitioner's contention. Under Section 1, Rule 3 of the Revised Rules of Court,
only natural or juridical persons or entities authorized by law may be parties in a civil action.
Article44 of the Civil Code enumerates the various classes of juridical persons. Under said
Article, an association is considered a juridical person if the law grants it a personality separate
and distinct from that of its members. The records of the present case are bare of any showing
by SSHA that it is an association duly organized under Philippine law. It was thus error for the
HLURBNCR Office to give due course to the complaint in HLURB Case No. REM-070297-9821,
given SSHA's lack of capacity to sue in its own name. Nor was it proper for said agency to treat
the complaint as a suit by all the parties who signed and verified the complaint. The members
cannot represent their association in any suit without valid and legal authority. Neither can their
signatures confer on the association any legal capacity to sue. Nor will the fact that SSHA
belongs to the Federation of Valenzuela Homeowners Association, Inc., suffice to endow SSHA
with the personality and capacity to sue. Mere allegations of membership in a federation are
insufficient and inconsequential. The federation itself has a separate juridical personality and was
not impleaded as a party in HLURB Case No. REM-070297-9821 nor in this case. Neither was it
shown that the federation was authorized to represent SSHA. Facts showing the capacity of a
party to sue or be sued or the authority of a party to sue or be sued in a representative capacity
or the legal existence of an organized association of persons that is made a party, must be
averred. Hence, for failing to show that it is a juridical entity, endowed by law with capacity to
bring suits in its own name, SSHA is devoid of any legal capacity, whatsoever, to institute any
action.9
More so in this case where there is no showing that petitioner Hernandez is validly authorized to
represent petitioner Association of Flood Victims.

Since petitioner Association of Flood Victims has no legal capacity to sue, petitioner Hernandez,
who is filing this petition as a representative of the Association of Flood Victims, is likewise
devoid of legal personality to bring an action in court. Neither can petitioner Hernandez sue as a
1âwphi1

taxpayer because he failed to show that there was illegal expenditure of money raised by
taxation10 or that public funds are wasted through the enforcement of an invalid or
unconstitutional law.11

Besides, petitioners have no locus standi or legal standing. Locus standi or legal standing is
defined as:

x x x a personal and substantial interest in the case such that the party has sustained or will
sustain a direct injury as a result of the governmental act that is being challenged. The term
"interest" means a material interest, an. interest in issue affected by the decree, as distinguished
from mere interest in the question involved, or a mere incidental interest. The gist of the question
of standing is whether a party alleges such personal stake in the outcome of the controversy as
to assure that concrete adverseness which sharpens the presentation of issues upon which the
court depends for illumination of difficult constitutional questions.12

In this case, petitioners failed to allege personal or substantial interest . in the questioned
governmental act which is the issuance of COMELEC Minute Resolution No. 12-0859, which
confirmed the re-computation of the allocation of seats of the Party-List System of
Representation in the House of Representatives in the 10 May 2010 Automated National and
Local Elections. Petitioner Association of Flood Victims is not even a party-list candidate in the
10 May 2010 elections, and thus, could not have been directly affected by COMELEC Minute
Resolution No. 12-0859.

In view of our holding that petitioners do not have legal capacity to sue and have no standing to
file the present petition, we shall no longer discuss the issues raised in this petition.
WHEREFORE, we DISMISS the petition.

SO ORDERED.

G.R. No. 142840 May 7, 2001

ANTONIO BENGSON III, petitioner,

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

CONCURRING OPINION

DISSENTING OPINION

KAPUNAN, J.:

The citizenship of respondent Teodoro C. Cruz is at issue in this case, in view of the
constitutional requirement that "no person shall be a Member of the House of Representative
unless he is a natural-born citizen."1

Respondent Cruz was a natural-born citizen of the Philippines. He was born in San Clemente,
Tarlac, on April 27, 1960, of Filipino parents. The fundamental law then applicable was the 1935
Constitution.2
On November 5, 1985, however, respondent Cruz enlisted in the United States Marine Corps
and without the consent of the Republic of the Philippines, took an oath of allegiance to the
United States. As a Consequence, he lost his Filipino citizenship for under Commonwealth Act
No. 63, section 1(4), a Filipino citizen may lose his citizenship by, among other, "rendering
service to or accepting commission in the armed forces of a foreign country." Said provision of
law reads:

SECTION 1. How citizenship may be lost. – A Filipino citizen may lose his citizenship in
any of the following ways and/or events:

xxx

(4) By rendering services to, or accepting commission in, the armed of a foreign
country: Provided, That the rendering of service to, or the acceptance of such
commission in, the armed forces of a foreign country, and the taking of an oath of
allegiance incident thereto, with the consent of the Republic of the Philippines, shall not
divest a Filipino of his Philippine citizenship if either of the following circumstances is
present:

(a) The Republic of the Philippines has a defensive and/or offensive pact of alliance with
said foreign country; or

(b) The said foreign country maintains armed forces on Philippine territory with the
consent of the Republic of the Philippines: Provided, That the Filipino citizen concerned,
at the time of rendering said service, or acceptance of said commission, and taking the
oath of allegiance incident thereto, states that he does so only in connection with his
service to said foreign country; And provided, finally, That any Filipino citizen who is
rendering service to, or is commissioned in, the armed forces of a foreign country under
any of the circumstances mentioned in paragraph (a) or (b), shall not be Republic of the
Philippines during the period of his service to, or commission in, the armed forces of said
country. Upon his discharge from the service of the said foreign country, he shall be
automatically entitled to the full enjoyment of his civil and politically entitled to the full
enjoyment of his civil political rights as a Filipino citizen x x x.

Whatever doubt that remained regarding his loss of Philippine citizenship was erased by his
naturalization as a U.S. citizen on June 5, 1990, in connection with his service in the U.S. Marine
Corps.

On March 17, 1994, respondent Cruz reacquired his Philippine citizenship through repatriation
under Republic Act No. 2630.3 He ran for and was elected as the Representative of the Second
District of Pangasinan in the May 11, 1998 elections. He won by a convincing margin of 26,671
votes over petitioner Antonio Bengson III, who was then running for reelection. 1âwphi1.nêt

Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent House of
Representatives Electoral Tribunal (HRET) claiming that respondent Cruz was not qualified to
become a member of the House of Representatives since he is not a natural-born citizen as
required under Article VI, section 6 of the Constitution.4

On March 2, 2000, the HRET rendered its decision5 dismissing the petition for quo warranto and
declaring Cruz the duly elected Representative of the Second District of Pangasinan in the May
1998 elections. The HRET likewise denied petitioner's motion for reconsideration of the decision
in its resolution dated April 27, 2000.6

Petitioner thus filed the present petition for certiorari assailing the HRET's decision on the
following grounds:
 1. The HRET committed serious errors and grave abuse of discretion, amounting to
excess of jurisdiction, when it ruled that private respondent is a natural-born citizen of the
Philippines despite the fact that he had ceased being such in view of the loss and
renunciation of such citizenship on his part.

2. The HRET committed serious errors and grave abuse of discretion, amounting to
excess of jurisdiction, when it considered private respondent as a citizen of the
Philippines despite the fact he did not validly acquire his Philippine citizenship.

3. Assuming that private respondent's acquisition of Philippine citizenship was invalid, the
HRET committed serious errors and grave abuse of discretion, amounting to excess of
jurisdiction, when it dismissed the petition despite the fact that such reacquisition could
not legally and constitutionally restore his natural-born status.7

The issue now before us is whether respondent Cruz, a natural-born Filipino who became an
American citizen, can still be considered a natural-born Filipino upon his reacquisition of
Philippine citizenship.

Petitioner asserts that respondent Cruz may no longer be considered a natural-born Filipino
since he lost h is Philippine citizenship when he swore allegiance to the United States in 1995,
and had to reacquire the same by repatriation. He insists that Article citizens are those who are
from birth with out having to perform any act to acquire or perfect such citizenship.

Respondent on the other hand contends that he reacquired his status as natural-born citizen
when he was repatriated since the phrase "from birth" in Article IV, Section 2 refers to the innate,
inherent and inborn characteristic of being a natural-born citizen.

The petition is without merit.

The 1987 Constitution enumerates who are Filipino citizens as follow:

(1) Those who are citizens of the Philippines at the time of the adoption of this
Constitution;

(2) Those whose fathers or mothers are citizens of the Philippines;

(3) Those born before January 17, 1973 of Filipino mother, who elect Philippine
citizenship upon reaching the age of majority, and

(4) Those who are naturalized in accordance with law.8

There are two ways of acquiring citizenship: (1) by birth, and (2) by naturalization. These ways of
acquiring citizenship correspond to the two kinds of citizens: the natural-born citizen, and the
naturalized citizen. A person who at the time of his birth is a citizen of a particular country, is a
natural-born citizen thereof.9

As defined in the same Constitution, natural-born citizens "are those citizens of the Philippines
from birth without having to perform any act to acquire or perfect his Philippine citezenship."10

On the other hand, naturalized citizens are those who have become Filipino citizens through
naturalization, generally under Commonwealth Act No. 473, otherwise known as the Revised
Naturalization Law, which repealed the former Naturalization Law (Act No. 2927), and by
Republic Act No. 530.11 To be naturalized, an applicant has to prove that he possesses all the
qualifications12 and none of the disqualification13 provided by law to become a Filipino citizen. The
decision granting Philippine citizenship becomes executory only after two (2) years from its
promulgation when the court is satisfied that during the intervening period, the applicant has (1)
not left the Philippines; (2) has dedicated himself to a lawful calling or profession; (3) has not
been convicted of any offense or violation of Government promulgated rules; or (4) committed
any act prejudicial to the interest of the nation or contrary to any Government announced
policies.14

Filipino citizens who have lost their citizenship may however reacquire the same in the manner
provided by law. Commonwealth Act. No. (C.A. No. 63), enumerates the three modes by which
Philippine citizenship may be reacquired by a former citizen: (1) by naturalization, (2) by
repatriation, and (3) by direct act of Congress.15

Naturalization is mode for both acquisition and reacquisition of Philippine citizenship. As a mode
of initially acquiring Philippine citizenship, naturalization is governed by Commonwealth Act No.
473, as amended. On the other hand, naturalization as a mode for reacquiring Philippine
citizenship is governed by Commonwealth Act No. 63.16 Under this law, a former Filipino citizen
who wishes to reacquire Philippine citizenship must possess certain qualifications17and none of
the disqualification mentioned in Section 4 of C.A. 473.18

Repatriation, on the other hand, may be had under various statutes by those who lost their
citizenship due to: (1) desertion of the armed forces;19 services in the armed forces of the allied
forces in World War II;20 (3) service in the Armed Forces of the United States at any other
time,21 (4) marriage of a Filipino woman to an alien;22 and (5) political economic necessity.23

As distinguished from the lengthy process of naturalization, repatriation simply consists of the
taking of an oath of allegiance to the Republic of the Philippine and registering said oath in the
Local Civil Registry of the place where the person concerned resides or last resided.

In Angat v. Republic,24 we held:

xxx. Parenthetically, under these statutes [referring to RA Nos. 965 and 2630], the
person desiring to reacquire Philippine citizenship would not even be required to file a
petition in court, and all that he had to do was to take an oath of allegiance to the
Republic of the Philippines and to register that fact with the civil registry in the place of
his residence or where he had last resided in the Philippines. [Italics in the original.25

Moreover, repatriation results in the recovery of the original nationality.26 This means that a
naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized
Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost his
Philippine citizenship, he will be restored to his former status as a natural-born Filipino.

In respondent Cruz's case, he lost his Filipino citizenship when he rendered service in the Armed
Forces of the United States. However, he subsequently reacquired Philippine citizenship under
R.A. No. 2630, which provides:

Section 1. Any person who had lost his Philippine citizenship by rendering service to, or
accepting commission in, the Armed Forces of the United States, or after separation from
the Armed Forces of the United States, acquired United States citizenship, may reacquire
Philippine citizenship by taking an oath of allegiance to the Republic of the Philippines
and registering the same with Local Civil Registry in the place where he resides or last
resided in the Philippines. The said oath of allegiance shall contain a renunciation of any
other citizenship.

Having thus taken the required oath of allegiance to the Republic and having registered the same
in the Civil Registry of Magantarem, Pangasinan in accordance with the aforecited provision,
respondent Cruz is deemed to have recovered his original status as a natural-born citizen, a
status which he acquired at birth as the son of a Filipino father.27 It bears stressing that the act of
repatriation allows him to recover, or return to, his original status before he lost his
Philippine citizenship.

Petitioner's contention that respondent Cruz is no longer a natural-born citizen since he had to
perform an act to regain his citizenship is untenable. As correctly explained by the HRET in its
decision, the term "natural-born citizen" was first defined in Article III, Section 4 of the 1973
Constitution as follows:

Sec. 4. A natural-born citizen is one who is a citizen of the Philippines from birth without
having to perform any act to acquire or perfect his Philippine citizenship.

Two requisites must concur for a person to be considered as such: (1) a person must be a
Filipino citizen birth and (2) he does not have to perform any act to obtain or perfect his
Philippine citizenship.

Under the 1973 Constitution definition, there were two categories of Filipino citizens which were
not considered natural-born: (1) those who were naturalized and (2) those born before January
17, 1973,38 of Filipino mothers who, upon reaching the age of majority, elected Philippine
citizenship. Those "naturalized citizens" were not considered natural-born obviously because
they were not Filipino at birth and had to perform an act to acquire Philippine citizenship. Those
born of Filipino mothers before the effectively of the 1973 Constitution were likewise not
considered natural-born because they also had to perform an act to perfect their Philippines
citizenship.

The present Constitution, however, now consider those born of Filipino mothers before the
effectivity of the 1973 Constitution and who elected Philippine citizenship upon reaching the
majority age as natural-born. After defining who re natural-born citizens, Section 2 of Article IV
adds a sentence: "Those who elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens." Consequently, only naturalized Filipinos
are considered not natural-born citizens. It is apparent from the enumeration of who are citizens
under the present Constitution that there are only two classes of citizens: (1) those who are
natural-born and (2) those who are naturalized in accordance with law. A citizen who is not a
naturalized Filipino, i.e., did not have to undergo the process of naturalization to obtain Philippine
citizenship, necessarily is natural-born Filipino. Noteworthy is the absence in said enumeration of
a separate category for persons who, after losing Philippine citizenship, subsequently reacquire
it. The reason therefor is clear: as to such persons, they would either be natural-born or
naturalized depending on the reasons for the loss of their citizenship and the mode prescribed by
the applicable law for the reacquisition thereof. As respondent Cruz was not required by law to
go through naturalization proceeding in order to reacquire his citizenship, he is perforce a
natural-born Filipino. As such, he possessed all the necessary qualifications to be elected as
member of the House of Representatives.

A final point. The HRET has been empowered by the Constitution to be the "sole judge" of all
contests relating to the election, returns, and qualifications of the members of the House.29 The
Court's jurisdiction over the HRET is merely to check "whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction" on the part of the latter.30 In the
absence thereof, there is no occasion for the Court to exercise its corrective power and annul the
decision of the HRET nor to substitute the Court's judgement for that of the latter for the simple
reason that it is not the office of a petition for certiorari to inquire into the correctness of the
assailed decision.31 There is no such showing of grave abuse of discretion in this case.

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.

G.R. No. 160869 May 11, 2007

AASJS (ADVOCATES AND ADHERENTS OF SOCIAL JUSTICE FOR SCHOOL TEACHERS
AND ALLIED WORKERS) MEMBER - HECTOR GUMANGAN CALILUNG, Petitioner,
vs.
THE HONORABLE SIMEON DATUMANONG, in his official capacity as the Secretary of
Justice, Respondent.

DECISION

QUISUMBING, J.:

This is an original action for prohibition under Rule 65 of the 1997 Revised Rules of Civil
Procedure.

Petitioner filed the instant petition against respondent, then Secretary of Justice Simeon
Datumanong, the official tasked to implement laws governing citizenship.1 Petitioner prays that a
writ of prohibition be issued to stop respondent from implementing Republic Act No. 9225,
entitled "An Act Making the Citizenship of Philippine Citizens Who Acquire Foreign Citizenship
Permanent, Amending for the Purpose Commonwealth Act No. 63, As Amended, and for Other
Purposes." Petitioner avers that Rep. Act No. 9225 is unconstitutional as it violates Section 5,
Article IV of the 1987 Constitution that states, "Dual allegiance of citizens is inimical to the
national interest and shall be dealt with by law."

Rep. Act No. 9225, signed into law by President Gloria M. Arroyo on August 29, 2003, reads:

SECTION 1. Short Title.-This Act shall be known as the "Citizenship Retention and Reacquisition
Act of 2003."

SEC. 2. Declaration of Policy.-It is hereby declared the policy of the State that all Philippine
citizens who become citizens of another country shall be deemed not to have lost their Philippine
citizenship under the conditions of this Act.

SEC. 3. Retention of Philippine Citizenship.-Any provision of law to the contrary notwithstanding,

natural-born citizens of the Philippines who have lost their Philippine citizenship by reason of
their naturalization as citizens of a foreign country are hereby deemed to have reacquired
Philippine citizenship upon taking the following oath of allegiance to the Republic:

"I ___________________________, solemnly swear (or affirm) that I will support and defend the
Constitution of the Republic of the Philippines and obey the laws and legal orders promulgated
by the duly constituted authorities of the Philippines; and I hereby declare that I recognize and
accept the supreme authority of the Philippines and will maintain true faith and allegiance
thereto; and that I impose this obligation upon myself voluntarily without mental reservation or
purpose of evasion."

Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens of a
foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.

SEC. 4. Derivative Citizenship. - The unmarried child, whether legitimate, illegitimate or adopted,
below eighteen (18) years of age, of those who reacquire Philippine citizenship upon effectivity of
this Act shall be deemed citizens of the Philippines.

SEC. 5. Civil and Political Rights and Liabilities. - Those who retain or reacquire Philippine
citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines and the following conditions:
 (1) Those intending to exercise their right of suffrage must meet the requirements
under Section 1, Article V of the Constitution, Republic Act No. 9189, otherwise
known as "The Overseas Absentee Voting Act of 2003" and other existing laws;

(2) Those seeking elective public office in the Philippines shall meet the
qualifications for holding such public office as required by the Constitution and
existing laws and, at the time of the filing of the certificate of candidacy, make a
personal and sworn renunciation of any and all foreign citizenship before any
public officer authorized to administer an oath;

(3) Those appointed to any public office shall subscribe and swear to an oath of
allegiance to the Republic of the Philippines and its duly constituted authorities
prior to their assumption of office: Provided, That they renounce their oath of
allegiance to the country where they took that oath;

(4) Those intending to practice their profession in the Philippines shall apply with
the proper authority for a license or permit to engage in such practice; and

(5) That right to vote or be elected or appointed to any public office in the
Philippines cannot be exercised by, or extended to, those who:

(a) are candidates for or are occupying any public office in the country of which
they are naturalized citizens; and/or

(b) are in the active service as commissioned or noncommissioned officers in the

armed forces of the country which they are naturalized citizens.

SEC. 6. Separability Clause. - If any section or provision of this Act is held unconstitutional or
invalid, any other section or provision not affected thereby shall remain valid and effective.

SEC. 7. Repealing Clause. - All laws, decrees, orders, rules and regulations inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

SEC. 8. Effectivity Clause. - This Act shall take effect after fifteen (15) days following its
publication in the Official Gazette or two (2) newspapers of general circulation.

In this petition for prohibition, the following issues have been raised: (1) Is Rep. Act No. 9225
unconstitutional? (2) Does this Court have jurisdiction to pass upon the issue of dual allegiance?

We shall discuss these issues jointly.

Petitioner contends that Rep. Act No. 9225 cheapens Philippine citizenship. He avers that
Sections 2 and 3 of Rep. Act No. 9225, together, allow dual allegiance and not dual citizenship.
Petitioner maintains that Section 2 allows all Filipinos, either natural-born or naturalized, who
become foreign citizens, to retain their Philippine citizenship without losing their foreign
citizenship. Section 3 permits dual allegiance because said law allows natural-born citizens of the
Philippines to regain their Philippine citizenship by simply taking an oath of allegiance without
forfeiting their foreign allegiance.2 The Constitution, however, is categorical that dual allegiance is
inimical to the national interest.

The Office of the Solicitor General (OSG) claims that Section 2 merely declares as a state policy
that "Philippine citizens who become citizens of another country shall be deemed not to have lost
their Philippine citizenship." The OSG further claims that the oath in Section 3 does not allow
dual allegiance since the oath taken by the former Filipino citizen is an effective renunciation and
repudiation of his foreign citizenship. The fact that the applicant taking the oath recognizes and
accepts the supreme authority of the Philippines is an unmistakable and categorical affirmation of
his undivided loyalty to the Republic.3

In resolving the aforecited issues in this case, resort to the deliberations of Congress is
necessary to determine the intent of the legislative branch in drafting the assailed law. During the
deliberations, the issue of whether Rep. Act No. 9225 would allow dual allegiance had in fact
been the subject of debate. The record of the legislative deliberations reveals the following:

xxxx

Pursuing his point, Rep. Dilangalen noted that under the measure, two situations exist - - the
retention of foreign citizenship, and the reacquisition of Philippine citizenship. In this case, he
observed that there are two citizenships and therefore, two allegiances. He pointed out that
under the Constitution, dual allegiance is inimical to public interest. He thereafter asked whether
with the creation of dual allegiance by reason of retention of foreign citizenship and the
reacquisition of Philippine citizenship, there will now be a violation of the Constitution…

Rep. Locsin underscored that the measure does not seek to address the constitutional injunction
on dual allegiance as inimical to public interest. He said that the proposed law aims to facilitate
the reacquisition of Philippine citizenship by speedy means. However, he said that in one sense,
it addresses the problem of dual citizenship by requiring the taking of an oath. He explained that
the problem of dual citizenship is transferred from the Philippines to the foreign country because
the latest oath that will be taken by the former Filipino is one of allegiance to the Philippines and
not to the United States, as the case may be. He added that this is a matter which the Philippine
government will have no concern and competence over.

Rep. Dilangalen asked why this will no longer be the country's concern, when dual allegiance is
involved.

Rep. Locsin clarified that this was precisely his objection to the original version of the bill, which
did not require an oath of allegiance. Since the measure now requires this oath, the problem of
dual allegiance is transferred from the Philippines to the foreign country concerned, he explained.

xxxx

Rep. Dilangalen asked whether in the particular case, the person did not denounce his foreign
citizenship and therefore still owes allegiance to the foreign government, and at the same time,
owes his allegiance to the Philippine government, such that there is now a case of dual
citizenship and dual allegiance.

Rep. Locsin clarified that by swearing to the supreme authority of the Republic, the person
implicitly renounces his foreign citizenship. However, he said that this is not a matter that he
wishes to address in Congress because he is not a member of a foreign parliament but a
Member of the House.

xxxx

Rep. Locsin replied that it is imperative that those who have dual allegiance contrary to national
interest should be dealt with by law. However, he said that the dual allegiance problem is not
addressed in the bill. He then cited the Declaration of Policy in the bill which states that "It is
hereby declared the policy of the State that all citizens who become citizens of another country
shall be deemed not to have lost their Philippine citizenship under the conditions of this Act." He
stressed that what the bill does is recognize Philippine citizenship but says nothing about the
other citizenship.
Rep. Locsin further pointed out that the problem of dual allegiance is created wherein a natural-
born citizen of the Philippines takes an oath of allegiance to another country and in that oath
says that he abjures and absolutely renounces all allegiance to his country of origin and swears
allegiance to that foreign country. The original Bill had left it at this stage, he explained. In the
present measure, he clarified, a person is required to take an oath and the last he utters is one of
allegiance to the country. He then said that the problem of dual allegiance is no longer the
problem of the Philippines but of the other foreign country.4 (Emphasis supplied.)

From the above excerpts of the legislative record, it is clear that the intent of the legislature in
drafting Rep. Act No. 9225 is to do away with the provision in Commonwealth Act No. 635 which
takes away Philippine citizenship from natural-born Filipinos who become naturalized citizens of
other countries. What Rep. Act No. 9225 does is allow dual citizenship to natural-born Filipino
citizens who have lost Philippine citizenship by reason of their naturalization as citizens of a
foreign country. On its face, it does not recognize dual allegiance. By swearing to the supreme
authority of the Republic, the person implicitly renounces his foreign citizenship. Plainly, from
Section 3, Rep. Act No. 9225 stayed clear out of the problem of dual allegiance and shifted the
burden of confronting the issue of whether or not there is dual allegiance to the concerned
foreign country. What happens to the other citizenship was not made a concern of Rep. Act No.
9225.

Petitioner likewise advances the proposition that although Congress has not yet passed any law
on the matter of dual allegiance, such absence of a law should not be justification why this Court
could not rule on the issue. He further contends that while it is true that there is no enabling law
yet on dual allegiance, the Supreme Court, through Mercado v. Manzano,6 already had drawn up
the guidelines on how to distinguish dual allegiance from dual citizenship.7

For its part, the OSG counters that pursuant to Section 5, Article IV of the 1987 Constitution, dual
allegiance shall be dealt with by law. Thus, until a law on dual allegiance is enacted by Congress,
the Supreme Court is without any jurisdiction to entertain issues regarding dual allegiance.8

To begin with, Section 5, Article IV of the Constitution is a declaration of a policy and it is not a
self-executing provision. The legislature still has to enact the law on dual allegiance. In Sections
2 and 3 of Rep. Act No. 9225, the framers were not concerned with dual citizenship per se, but
with the status of naturalized citizens who maintain their allegiance to their countries of origin
even after their naturalization.9 Congress was given a mandate to draft a law that would set
specific parameters of what really constitutes dual allegiance.10 Until this is done, it would be
premature for the judicial department, including this Court, to rule on issues pertaining to dual
allegiance.

Neither can we subscribe to the proposition of petitioner that a law is not needed since the case
of Mercado had already set the guidelines for determining dual allegiance. Petitioner
misreads Mercado. That case did not set the parameters of what constitutes dual allegiance but
merely made a distinction between dual allegiance and dual citizenship.

Moreover, in Estrada v. Sandiganbayan,11 we said that the courts must assume that the
legislature is ever conscious of the borders and edges of its plenary powers, and passed laws
with full knowledge of the facts and for the purpose of promoting what is right and advancing the
welfare of the majority. Hence, in determining whether the acts of the legislature are in tune with
the fundamental law, we must proceed with judicial restraint and act with caution and
forbearance.12 The doctrine of separation of powers demands no less. We cannot arrogate the
duty of setting the parameters of what constitutes dual allegiance when the Constitution itself has
clearly delegated the duty of determining what acts constitute dual allegiance for study and
legislation by Congress.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 135083 May 26, 1999

ERNESTO S. MERCADO, petitioner,

vs.
EDUARDO BARRIOS MANZANO and the COMMISSION ON ELECTIONS, respondents.

MENDOZA, J.:

Petitioner Ernesto S. Mercado and private respondent Eduardo B. Manzano were candidates for
vice mayor of the City of Makati in the May 11, 1998 elections. The other one was Gabriel V.
Daza III. The results of the election were as follows:

Eduardo B. Manzano 103,853

Ernesto S. Mercado 100,894

Gabriel V. Daza III 54,2751

The proclamation of private respondent was suspended in view of a pending petition for
disqualification filed by a certain Ernesto Mamaril who alleged that private respondent was not a
citizen of the Philippines but of the United States.

In its resolution, dated May 7, 1998,2 the Second Division of the COMELEC granted the petition
of Mamaril and ordered the cancellation of the certificate of candidacy of private respondent on
the ground that he is a dual citizen and, under §40(d) of the Local Government Code, persons
with dual citizenship are disqualified from running for any elective position. The COMELEC's
Second Division said:

What is presented before the Commission is a petition for disqualification of

Eduardo Barrios Manzano as candidate for the office of Vice-Mayor of Makati
City in the May 11, 1998 elections. The petition is based on the ground that the
respondent is an American citizen based on the record of the Bureau of
Immigration and misrepresented himself as a natural-born Filipino citizen.

In his answer to the petition filed on April 27, 1998, the respondent admitted that
he is registered as a foreigner with the Bureau of Immigration under Alien
Certificate of Registration No. B-31632 and alleged that he is a Filipino citizen
because he was born in 1955 of a Filipino father and a Filipino mother. He was
born in the United States, San Francisco, California, September 14, 1955, and is
considered in American citizen under US Laws. But notwithstanding his
registration as an American citizen, he did not lose his Filipino citizenship.

Judging from the foregoing facts, it would appear that respondent Manzano is
born a Filipino and a US citizen. In other words, he holds dual citizenship.

The question presented is whether under our laws, he is disqualified from the
position for which he filed his certificate of candidacy. Is he eligible for the office
he seeks to be elected?

Under Section 40(d) of the Local Government Code, those holding dual
citizenship are disqualified from running for any elective local position.
 WHEREFORE, the Commission hereby declares the respondent Eduardo Barrios
Manzano DISQUALIFIED as candidate for Vice-Mayor of Makati City.

On May 8, 1998, private respondent filed a motion for reconsideration.3 The motion remained
pending even until after the election held on May 11, 1998.

Accordingly, pursuant to Omnibus Resolution No. 3044, dated May 10, 1998, of the COMELEC,
the board of canvassers tabulated the votes cast for vice mayor of Makati City but suspended the
proclamation of the winner.

On May 19, 1998, petitioner sought to intervene in the case for disqualification.4 Petitioner's
motion was opposed by private respondent.

The motion was not resolved. Instead, on August 31, 1998, the COMELEC en banc rendered its
resolution. Voting 4 to 1, with one commissioner abstaining, the COMELEC en banc reversed the
ruling of its Second Division and declared private respondent qualified to run for vice mayor of
the City of Makati in the May 11, 1998 elections.5 The pertinent portions of the resolution of the
COMELEC en banc read:

As aforesaid, respondent Eduardo Barrios Manzano was born in San Francisco,

California, U.S.A. He acquired US citizenship by operation of the United States
Constitution and laws under the principle ofjus soli.

He was also a natural born Filipino citizen by operation of the 1935 Philippine
Constitution, as his father and mother were Filipinos at the time of his birth. At the
age of six (6), his parents brought him to the Philippines using an American
passport as travel document. His parents also registered him as an alien with the
Philippine Bureau of Immigration. He was issued an alien certificate of
registration. This, however, did not result in the loss of his Philippine citizenship,
as he did not renounce Philippine citizenship and did not take an oath of
allegiance to the United States.

It is an undisputed fact that when respondent attained the age of majority, he

registered himself as a voter, and voted in the elections of 1992, 1995 and 1998,
which effectively renounced his US citizenship under American law. Under
Philippine law, he no longer had U.S. citizenship.

At the time of the May 11, 1998 elections, the resolution of the Second Division,
adopted on May 7, 1998, was not yet final. Respondent Manzano obtained the
highest number of votes among the candidates for vice-mayor of Makati City,
garnering one hundred three thousand eight hundred fifty three (103,853) votes
over his closest rival, Ernesto S. Mercado, who obtained one hundred thousand
eight hundred ninety four (100,894) votes, or a margin of two thousand nine
hundred fifty nine (2,959) votes. Gabriel Daza III obtained third place with fifty
four thousand two hundred seventy five (54,275) votes. In applying election laws,
it would be far better to err in favor of the popular choice than be embroiled in
complex legal issues involving private international law which may well be settled
before the highest court (Cf. Frivaldo vs. Commission on Elections, 257 SCRA
727).

WHEREFORE, the Commission en banc hereby REVERSES the resolution of

the Second Division, adopted on May 7, 1998, ordering the cancellation of the
respondent's certificate of candidacy.
 We declare respondent Eduardo Luis Barrios Manzano to be QUALIFIED as a
candidate for the position of vice-mayor of Makati City in the May 11, 1998,
elections.

ACCORDINGLY, the Commission directs the Makati City Board of Canvassers,

upon proper notice to the parties, to reconvene and proclaim the respondent
Eduardo Luis Barrios Manzano as the winning candidate for vice-mayor of Makati
City.

Pursuant to the resolution of the COMELEC en banc, the board of canvassers, on the evening of
August 31, 1998, proclaimed private respondent as vice mayor of the City of Makati.

This is a petition for certiorari seeking to set aside the aforesaid resolution of the COMELEC en
banc and to declare private respondent disqualified to hold the office of vice mayor of Makati
City. Petitioner contends that —

[T]he COMELEC en banc ERRED in holding that:

A. Under Philippine law, Manzano was no longer a U.S. citizen when he:

1. He renounced his U.S. citizenship when he attained the age of

majority when he was already 37 years old; and,

2. He renounced his U.S. citizenship when he (merely) registered

himself as a voter and voted in the elections of 1992, 1995 and
1998.

B. Manzano is qualified to run for and or hold the elective office of Vice-Mayor of
the City of Makati;

C. At the time of the May 11, 1998 elections, the resolution of the Second
Division adopted on 7 May 1998 was not yet final so that, effectively, petitioner
may not be declared the winner even assuming that Manzano is disqualified to
run for and hold the elective office of Vice-Mayor of the City of Makati.

We first consider the threshold procedural issue raised by private respondent Manzano —
whether petitioner Mercado his personality to bring this suit considering that he was not an
original party in the case for disqualification filed by Ernesto Mamaril nor was petitioner's motion
for leave to intervene granted.

I. PETITIONER'S RIGHT TO BRING THIS SUIT

Private respondent cites the following provisions of Rule 8 of the Rules of Procedure of the
COMELEC in support of his claim that petitioner has no right to intervene and, therefore, cannot
bring this suit to set aside the ruling denying his motion for intervention:

Sec. 1. When proper and when may be permitted to intervene. — Any person
allowed to initiate an action or proceeding may, before or during the trial of an
action or proceeding, be permitted by the Commission, in its discretion to
intervene in such action or proceeding, if he has legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or
when he is so situated as to be adversely affected by such action or proceeding.

xxx xxx xxx

 Sec. 3. Discretion of Commission. — In allowing or disallowing a motion for
intervention, the Commission or the Division, in the exercise of its discretion, shall
consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties and whether or not the intervenor's
rights may be fully protected in a separate action or proceeding.

Private respondent argues that petitioner has neither legal interest in the matter in
litigation nor an interest to protect because he is "a defeated candidate for the vice-
mayoralty post of Makati City [who] cannot be proclaimed as the Vice-Mayor of Makati
City if the private respondent be ultimately disqualified by final and executory judgment."

The flaw in this argument is it assumes that, at the time petitioner sought to intervene in the
proceedings before the COMELEC, there had already been a proclamation of the results of the
election for the vice mayoralty contest for Makati City, on the basis of which petitioner came out
only second to private respondent. The fact, however, is that there had been no proclamation at
that time. Certainly, petitioner had, and still has, an interest in ousting private respondent from
the race at the time he sought to intervene. The rule in Labo v. COMELEC,6 reiterated in several
cases,7 only applies to cases in which the election of the respondent is contested, and the
question is whether one who placed second to the disqualified candidate may be declared the
winner. In the present case, at the time petitioner filed a "Motion for Leave to File Intervention" on
May 20, 1998, there had been no proclamation of the winner, and petitioner's purpose was
precisely to have private respondent disqualified "from running for [an] elective local position"
under §40(d) of R.A. No. 7160. If Ernesto Mamaril (who originally instituted the disqualification
proceedings), a registered voter of Makati City, was competent to bring the action, so was
petitioner since the latter was a rival candidate for vice mayor of Makati City.

Nor is petitioner's interest in the matter in litigation any less because he filed a motion for
intervention only on May 20, 1998, after private respondent had been shown to have garnered
the highest number of votes among the candidates for vice mayor. That petitioner had a right to
intervene at that stage of the proceedings for the disqualification against private respondent is
clear from §6 of R.A. No. 6646, otherwise known as the Electoral Reform Law of 1987, which
provides:

Any candidate who his been declared by final judgment to be disqualified shall
not be voted for, and the votes cast for him shall not be counted. If for any reason
a candidate is not declared by final judgment before an election to be disqualified
and he is voted for and receives the winning number of votes in such election, the
Court or Commission shall continue with the trial and hearing of action, inquiry, or
protest and, upon motion of the complainant or any intervenor, may during the
pendency thereof order the suspension of the proclamation of such candidate
whenever the evidence of guilt is strong.

Under this provision, intervention may be allowed in proceedings for disqualification even after
election if there has yet been no final judgment rendered.

The failure of the COMELEC en banc to resolve petitioner's motion for intervention was
tantamount to a denial of the motion, justifying petitioner in filing the instant petition for certiorari.
As the COMELEC en banc instead decided the merits of the case, the present petition properly
deals not only with the denial of petitioner's motion for intervention but also with the substantive
issues respecting private respondent's alleged disqualification on the ground of dual citizenship.

This brings us to the next question, namely, whether private respondent Manzano possesses
dual citizenship and, if so, whether he is disqualified from being a candidate for vice mayor of
Makati City.

II. DUAL CITIZENSHIP AS A GROUND FOR DISQUALIFICATION

The disqualification of private respondent Manzano is being sought under §40 of the Local
Government Code of 1991 (R.A. No. 7160), which declares as "disqualified from running for any
elective local position: . . . (d) Those with dual citizenship." This provision is incorporated in the
Charter of the City of Makati. 8

Invoking the maxim dura lex sed lex, petitioner, as well as the Solicitor General, who sides with
him in this case, contends that through §40(d) of the Local Government Code, Congress has
"command[ed] in explicit terms the ineligibility of persons possessing dual allegiance to hold local
elective office."

To begin with, dual citizenship is different from dual allegiance. The former arises when, as a
result of the concurrent application of the different laws of two or more states, a person is
simultaneously considered a national by the said states.9 For instance, such a situation may arise
when a person whose parents are citizens of a state which adheres to the principle of jus
sanguinis is born in a state which follows the doctrine of jus soli. Such a person, ipso facto and
without any voluntary act on his part, is concurrently considered a citizen of both states.
Considering the citizenship clause (Art. IV) of our Constitution, it is possible for the following
classes of citizens of the Philippines to possess dual citizenship:

(1) Those born of Filipino fathers and/or mothers in foreign countries which follow
the principle of jus soli;

(2) Those born in the Philippines of Filipino mothers and alien fathers if by the
laws of their father's' country such children are citizens of that country;

(3) Those who marry aliens if by the laws of the latter's country the former are
considered citizens, unless by their act or omission they are deemed to have
renounced Philippine citizenship.

There may be other situations in which a citizen of the Philippines may, without performing any
act, be also a citizen of another state; but the above cases are clearly possible given the
constitutional provisions on citizenship.

Dual allegiance, on the other hand, refers to the situation in which a person simultaneously owes,
by some positive act, loyalty to two or more states. While dual citizenship is involuntary, dual
allegiance is the result of an individual's volition.

With respect to dual allegiance, Article IV, §5 of the Constitution provides: "Dual allegiance of
citizens is inimical to the national interest and shall be dealt with by law." This provision was
included in the 1987 Constitution at the instance of Commissioner Blas F. Ople who explained its
necessity as follows: 10

. . . I want to draw attention to the fact that dual allegiance is not dual citizenship.
I have circulated a memorandum to the Bernas Committee according to which a
dual allegiance — and I reiterate a dual allegiance — is larger and more
threatening than that of mere double citizenship which is seldom intentional and,
perhaps, never insidious. That is often a function of the accident of mixed
marriages or of birth on foreign soil. And so, I do not question double citizenship
at all.

What we would like the Committee to consider is to take constitutional

cognizance of the problem of dual allegiance. For example, we all know what
happens in the triennial elections of the Federation of Filipino-Chinese Chambers
of Commerce which consists of about 600 chapters all over the country. There is
a Peking ticket, as well as a Taipei ticket. Not widely known is the fact chat the
Filipino-Chinese community is represented in the Legislative Yuan of the
 Republic of China in Taiwan. And until recently, sponsor might recall, in Mainland
China in the People's Republic of China, they have the Associated Legislative
Council for overseas Chinese wherein all of Southeast Asia including some
European and Latin countries were represented, which was dissolved after
several years because of diplomatic friction. At that time, the Filipino-Chinese
were also represented in that Overseas Council.

When I speak of double allegiance, therefore, I speak of this unsettled kind of

allegiance of Filipinos, of citizens who are already Filipinos but who, by their acts,
may be said to be bound by a second allegiance, either to Peking or Taiwan. I
also took close note of the concern expressed by some Commissioners
yesterday, including Commissioner Villacorta, who were concerned about the
lack of guarantees of thorough assimilation, and especially Commissioner
Concepcion who has always been worried about minority claims on our natural
resources.

Dull allegiance can actually siphon scarce national capital to Taiwan, Singapore,
China or Malaysia, and this is already happening. Some of the great commercial
places in downtown Taipei are Filipino-owned, owned by Filipino-Chinese — it is
of common knowledge in Manila. It can mean a tragic capital outflow when we
have to endure a capital famine which also means economic stagnation,
worsening unemployment and social unrest.

And so, this is exactly what we ask — that the Committee kindly consider
incorporating a new section, probably Section 5, in the article on Citizenship
which will read as follows: DUAL ALLEGIANCE IS INIMICAL TO CITIZENSHIP
AND SHALL BE DEALT WITH ACCORDING TO LAW.

In another session of the Commission, Ople spoke on the problem of these citizens with dual
allegiance, thus: 11

. . . A significant number of Commissioners expressed their concern about dual

citizenship in the sense that it implies a double allegiance under a double
sovereignty which some of us who spoke then in a freewheeling debate thought
would be repugnant to the sovereignty which pervades the Constitution and to
citizenship itself which implies a uniqueness and which elsewhere in the
Constitution is defined in terms of rights and obligations exclusive to that
citizenship including, of course, the obligation to rise to the defense of the State
when it is threatened, and back of this, Commissioner Bernas, is, of course, the
concern for national security. In the course of those debates, I think some noted
the fact that as a result of the wave of naturalizations since the decision to
establish diplomatic relations with the People's Republic of China was made in
1975, a good number of these naturalized Filipinos still routinely go to Taipei
every October 10; and it is asserted that some of them do renew their oath of
allegiance to a foreign government maybe just to enter into the spirit of the
occasion when the anniversary of the Sun Yat-Sen Republic is commemorated.
And so, I have detected a genuine and deep concern about double citizenship,
with its attendant risk of double allegiance which is repugnant to our sovereignty
and national security. I appreciate what the Committee said that this could be left
to the determination of a future legislature. But considering the scale of the
problem, the real impact on the security of this country, arising from, let us say,
potentially great numbers of double citizens professing double allegiance, will the
Committee entertain a proposed amendment at the proper time that will prohibit,
in effect, or regulate double citizenship?
Clearly, in including §5 in Article IV on citizenship, the concern of the Constitutional Commission
was not with dual citizens per se but with naturalized citizens who maintain their allegiance to
their countries of origin even after their naturalization. Hence, the phrase "dual citizenship" in
R.A. No. 7160, §40(d) and in R.A. No. 7854, §20 must be understood as referring to "dual
allegiance." Consequently, persons with mere dual citizenship do not fall under this
disqualification. Unlike those with dual allegiance, who must, therefore, be subject to strict
process with respect to the termination of their status, for candidates with dual citizenship, it
should suffice if, upon the filing of their certificates of candidacy, they elect Philippine citizenship
to terminate their status as persons with dual citizenship considering that their condition is the
unavoidable consequence of conflicting laws of different states. As Joaquin G. Bernas, one of the
most perceptive members of the Constitutional Commission, pointed out: "[D]ual citizenship is
just a reality imposed on us because we have no control of the laws on citizenship of other
countries. We recognize a child of a Filipino mother. But whether she is considered a citizen of
another country is something completely beyond our control." 12

By electing Philippine citizenship, such candidates at the same time forswear allegiance to the
other country of which they are also citizens and thereby terminate their status as dual citizens. It
may be that, from the point of view of the foreign state and of its laws, such an individual has not
effectively renounced his foreign citizenship. That is of no moment as the following discussion on
§40(d) between Senators Enrile and Pimentel clearly shows: 13

SENATOR ENRILE. Mr. President, I would like to ask clarification of line 41, page
17: "Any person with dual citizenship" is disqualified to run for any elective local
position. Under the present Constitution, Mr. President, someone whose mother
is a citizen of the Philippines but his father is a foreigner is a natural-born citizen
of the Republic. There is no requirement that such a natural born citizen, upon
reaching the age of majority, must elect or give up Philippine citizenship.

On the assumption that this person would carry two passports, one belonging to
the country of his or her father and one belonging to the Republic of the
Philippines, may such a situation disqualify the person to run for a local
government position?

SENATOR PIMENTEL. To my mind, Mr. President, it only means that at the

moment when he would want to run for public office, he has to repudiate one of
his citizenships.

SENATOR ENRILE. Suppose he carries only a Philippine passport but the

country of origin or the country of the father claims that person, nevertheless, as
a citizen? No one can renounce. There are such countries in the world.

SENATOR PIMENTEL. Well, the very fact that he is running for public office
would, in effect, be an election for him of his desire to be considered as a Filipino
citizen.

SENATOR ENRILE. But, precisely, Mr. President, the Constitution does not
require an election. Under the Constitution, a person whose mother is a citizen of
the Philippines is, at birth, a citizen without any overt act to claim the citizenship.

SENATOR PIMENTEL. Yes. What we are saying, Mr. President, is: Under the
Gentleman's example, if he does not renounce his other citizenship, then he is
opening himself to question. So, if he is really interested to run, the first thing he
should do is to say in the Certificate of Candidacy that: "I am a Filipino citizen,
and I have only one citizenship."
 SENATOR ENRILE. But we are talking from the viewpoint of Philippine law, Mr.
President. He will always have one citizenship, and that is the citizenship
invested upon him or her in the Constitution of the Republic.

SENATOR PIMENTEL. That is true, Mr. President. But if he exercises acts that
will prove that he also acknowledges other citizenships, then he will probably fall
under this disqualification.

This is similar to the requirement that an applicant for naturalization must renounce "all
allegiance and fidelity to any foreign prince, potentate, state, or sovereignty" 14 of which at the
time he is a subject or citizen before he can be issued a certificate of naturalization as a citizen of
the Philippines. In Parado v. Republic, 15 it was held:

[W]hen a person applying for citizenship by naturalization takes an oath that he

renounce, his loyalty to any other country or government and solemnly declares
that he owes his allegiance to the Republic of the Philippines, the condition
imposed by law is satisfied and compiled with. The determination whether such
renunciation is valid or fully complies with the provisions of our Naturalization Law
lies within the province and is an exclusive prerogative of our courts. The latter
should apply the law duly enacted by the legislative department of the Republic.
No foreign law may or should interfere with its operation and application. If the
requirement of the Chinese Law of Nationality were to be read into our
Naturalization Law, we would be applying not what our legislative department has
deemed it wise to require, but what a foreign government has thought or intended
to exact. That, of course, is absurd. It must be resisted by all means and at all
cost. It would be a brazen encroachment upon the sovereign will and power of
the people of this Republic.

III. PETITIONER'S ELECTION OF PHILIPPINE CITIZENSHIP

The record shows that private respondent was born in San Francisco, California on September 4,
1955, of Filipino parents. Since the Philippines adheres to the principle of jus sanguinis, while the
United States follows the doctrine of jus soli, the parties agree that, at birth at least, he was a
national both of the Philippines and of the United States. However, the COMELEC en banc held
that, by participating in Philippine elections in 1992, 1995, and 1998, private respondent
"effectively renounced his U.S. citizenship under American law," so that now he is solely a
Philippine national.

Petitioner challenges this ruling. He argues that merely taking part in Philippine elections is not
sufficient evidence of renunciation and that, in any event, as the alleged renunciation was made
when private respondent was already 37 years old, it was ineffective as it should have been
made when he reached the age of majority.

In holding that by voting in Philippine elections private respondent renounced his American
citizenship, the COMELEC must have in mind §349 of the Immigration and Nationality Act of the
United States, which provided that "A person who is a national of the United States, whether by
birth or naturalization, shall lose his nationality by: . . . (e) Voting in a political election in a foreign
state or participating in an election or plebiscite to determine the sovereignty over foreign
territory." To be sure this provision was declared unconstitutional by the U.S. Supreme Court
in Afroyim v. Rusk 16 as beyond the power given to the U.S. Congress to regulate foreign
relations. However, by filing a certificate of candidacy when he ran for his present post, private
respondent elected Philippine citizenship and in effect renounced his American citizenship.
Private respondent's certificate of candidacy, filed on March 27, 1998, contained the following
statements made under oath:
 6. I AM A FILIPINO CITIZEN (STATE IF "NATURAL-BORN" OR
"NATURALIZED") NATURAL-BORN

xxx xxx xxx

10. I AM A REGISTERED VOTER OF PRECINCT NO. 747-A, BARANGAY SAN

LORENZO, CITY/MUNICIPALITY OF MAKATI, PROVINCE OF NCR.

11. I AM NOT A PERMANENT RESIDENT OF, OR IMMIGRANT TO, A

FOREIGN COUNTRY.

12. I AM ELIGIBLE FOR THE OFFICE I SEEK TO BE ELECTED. I WILL

SUPPORT AND DEFEND THE CONSTITUTION OF THE PHILIPPINES AND
WILL MAINTAIN TRUE FAITH AND ALLEGIANCE THERETO; THAT I WILL
OBEY THE LAWS, LEGAL ORDERS AND DECREES PROMULGATED BY THE
DULY CONSTITUTED AUTHORITIES OF THE REPUBLIC OF THE
PHILIPPINES; AND THAT I IMPOSE THIS OBLIGATION UPON MYSELF
VOLUNTARILY, WITHOUT MENTAL RESERVATION OR PURPOSE OF
EVASION. I HEREBY CERTIFY THAT THE FACTS STATED HEREIN ARE
TRUE AND CORRECT OF MY OWN PERSONAL KNOWLEDGE.

The filing of such certificate of candidacy sufficed to renounce his American citizenship,
effectively removing any disqualification he might have as a dual citizen. Thus, in Frivaldo
v. COMELEC it was held: 17

It is not disputed that on January 20, 1983 Frivaldo became an American. Would
the retroactivity of his repatriation not effectively give him dual citizenship, which
under Sec. 40 of the Local Government Code would disqualify him "from running
for any elective local position?" We answer this question in the negative, as there
is cogent reason to hold that Frivaldo was really STATELESS at the time he took
said oath of allegiance and even before that, when he ran for governor in 1988. In
his Comment, Frivaldo wrote that he "had long renounced and had long
abandoned his American citizenship — long before May 8, 1995. At best,
Frivaldo was stateless in the interim — when he abandoned and renounced his
US citizenship but before he was repatriated to his Filipino citizenship."

On this point, we quote from the assailed Resolution dated December 19, 1995:

By the laws of the United States, petitioner Frivaldo lost his

American citizenship when he took his oath of allegiance to the
Philippine Government when he ran for Governor in 1988, in
1992, and in 1995. Every certificate of candidacy contains an oath
of allegiance to the Philippine Government.

These factual findings that Frivaldo has lost his foreign nationality long before the
elections of 1995 have not been effectively rebutted by Lee. Furthermore, it is
basic that such findings of the Commission are conclusive upon this Court,
absent any showing of capriciousness or arbitrariness or abuse.

There is, therefore, no merit in petitioner's contention that the oath of allegiance contained in
private respondent's certificate of candidacy is insufficient to constitute renunciation that, to be
effective, such renunciation should have been made upon private respondent reaching the age of
majority since no law requires the election of Philippine citizenship to be made upon majority
age.
Finally, much is made of the fact that private respondent admitted that he is registered as an
American citizen in the Bureau of Immigration and Deportation and that he holds an American
passport which he used in his last travel to the United States on April 22, 1997. There is no merit
in this. Until the filing of his certificate of candidacy on March 21, 1998, he had dual citizenship.
The acts attributed to him can be considered simply as the assertion of his American nationality
before the termination of his American citizenship. What this Court said in Aznar
v. COMELEC 18 applies mutatis mundatis to private respondent in the case at bar:

. . . Considering the fact that admittedly Osmeña was both a Filipino and an
American, the mere fact that he has a Certificate staring he is an American does
not mean that he is not still a Filipino. . . . [T]he Certification that he is an
American does not mean that he is not still a Filipino, possessed as he is, of both
nationalities or citizenships. Indeed, there is no express renunciation here of
Philippine citizenship; truth to tell, there is even no implied renunciation of said
citizenship. When We consider that the renunciation needed to lose Philippine
citizenship must be "express," it stands to reason that there can be no such loss
of Philippine citizenship when there is no renunciation, either "express" or
"implied."

To recapitulate, by declaring in his certificate of candidacy that he is a Filipino citizen; that he is

not a permanent resident or immigrant of another country; that he will defend and support the
Constitution of the Philippines and bear true faith and allegiance thereto and that he does so
without mental reservation, private respondent has, as far as the laws of this country are
concerned, effectively repudiated his American citizenship and anything which he may have said
before as a dual citizen.

On the other hand, private respondent's oath of allegiance to the Philippines, when considered
with the fact that he has spent his youth and adulthood, received his education, practiced his
profession as an artist, and taken part in past elections in this country, leaves no doubt of his
election of Philippine citizenship.

His declarations will be taken upon the faith that he will fulfill his undertaking made under oath.
Should he betray that trust, there are enough sanctions for declaring the loss of his Philippine
citizenship through expatriation in appropriate proceedings. In Yu v. Defensor-Santiago, 19 we
sustained the denial of entry into the country of petitioner on the ground that, after taking his oath
as a naturalized citizen, he applied for the renewal of his Portuguese passport and declared in
commercial documents executed abroad that he was a Portuguese national. A similar sanction
can be taken against any one who, in electing Philippine citizenship, renounces his foreign
nationality, but subsequently does some act constituting renunciation of his Philippine citizenship.

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit. 1âwphi1.nêt

SO ORDERED.

G.R. No. 182701 July 23, 2008

EUSEBIO EUGENIO K. LOPEZ, Petitioner,

vs.
COMMISSION ON ELECTIONS and TESSIE P. VILLANUEVA, Respondents.

RESOLUTION

REYES, R.T., J.:

A Filipino-American or any dual citizen cannot run for any elective public position in the
Philippines unless he or she personally swears to a renunciation of all foreign citizenship at the
time of filing the certificate of candidacy.

This is a petition for certiorari under Rule 65, in relation to Rule 64 of the Rules on Civil
Procedure assailing the (1) Resolution1 and (2) Omnibus Order2 of the Commission on Elections
(COMELEC), Second Division, disqualifying petitioner from running as Barangay Chairman.

Petitioner Eusebio Eugenio K. Lopez was a candidate for the position of Chairman of Barangay
Bagacay, San Dionisio, Iloilo City in the synchronized Barangay and Sangguniang Kabataan
Elections held on October 29, 2007.

On October 25, 2007, respondent Tessie P. Villanueva filed a petition3 before the Provincial
Election Supervisor of the Province of Iloilo, praying for the disqualification of petitioner on the
ground that he is an American citizen, hence, ineligible from running for any public office. In his
Answer,4 petitioner argued that he is a dual citizen, a Filipino and at the same time an American,
by virtue of Republic Act (R.A.) No. 9225, otherwise known as the Citizenship Retention and Re-
acquisition Act of 2003.5 He returned to the Philippines and resided in Barangay Bagacay. Thus,
he said, he possessed all the qualifications to run for Barangay Chairman.

After the votes for Barangay Chairman were canvassed, petitioner emerged as the winner.6

On February 6, 2008, COMELEC issued the assailed Resolution granting the petition for
disqualification, disposing as follows:

WHEREFORE, premises considered, the instant Petition for Disqualification is GRANTED and
respondent Eusebio Eugenio K. Lopez is DISQUALIFIED from running as Barangay Chairman of
Barangay Bagacay, San Dionisio, Iloilo.

SO ORDERED.7

In ruling against petitioner, the COMELEC found that he was not able to regain his Filipino
citizenship in the manner provided by law. According to the poll body, to be able to qualify as a
candidate in the elections, petitioner should have made a personal and sworn renunciation of any
and all foreign citizenship. This, petitioner failed to do.

His motion for reconsideration having been denied, petitioner resorted to the present petition,
imputing grave abuse of discretion on the part of the COMELEC for disqualifying him from
running and assuming the office of Barangay Chairman.

We dismiss the petition.

Relying on Valles v. Commission on Elections,8 petitioner argues that his filing of a certificate of
candidacy operated as an effective renunciation of foreign citizenship.

We note, however, that the operative facts that led to this Court’s ruling in Valles are substantially
different from the present case. In Valles, the candidate, Rosalind Ybasco Lopez, was a dual
citizen by accident of birth on foreign soil.9 Lopez was born of Filipino parents in Australia, a
country which follows the principle of jus soli. As a result, she acquired Australian citizenship by
lauuphi 1

operation of Australian law, but she was also considered a Filipino citizen under Philippine law.
She did not perform any act to swear allegiance to a country other than the Philippines.

In contrast, petitioner was born a Filipino but he deliberately sought American citizenship and
renounced his Filipino citizenship. He later on became a dual citizen by re-acquiring Filipino
citizenship.
1awphi 1
More importantly, the Court’s 2000 ruling in Valles has been superseded by the enactment of
R.A. No. 922510 in 2003. R.A. No. 9225 expressly provides for the conditions before those who
re-acquired Filipino citizenship may run for a public office in the Philippines. Section 5 of the said
law states:

Section 5. Civil and Political Rights and Liabilities. – Those who retain or re-acquire Philippine
citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines and the following conditions:

xxxx

(2) Those seeking elective public office in the Philippines shall meet the qualification for holding
such public office as required by the Constitution and existing laws and, at the time of the filing of
the certificate of candidacy, make a personal and sworn renunciation of any and all foreign
citizenship before any public officer authorized to administer an oath. (Emphasis added)

Petitioner re-acquired his Filipino citizenship under the cited law. This new law explicitly provides
that should one seek elective public office, he should first "make a personal and sworn
renunciation of any and all foreign citizenship before any public officer authorized to administer
an oath."

Petitioner failed to comply with this requirement. We quote with approval the COMELEC
observation on this point:

While respondent was able to regain his Filipino Citizenship by virtue of the Dual Citizenship Law
when he took his oath of allegiance before the Vice Consul of the Philippine Consulate General’s
Office in Los Angeles, California, the same is not enough to allow him to run for a public office.
The above-quoted provision of law mandates that a candidate with dual citizenship must make a
personal and sworn renunciation of any and all foreign citizenship before any public officer
authorized to administer an oath. There is no evidence presented that will show that respondent
complied with the provision of R.A. No. 9225. Absent such proof we cannot allow respondent to
run for Barangay Chairman of Barangay Bagacay.

For the renunciation to be valid, it must be contained in an affidavit duly executed before an
officer of law who is authorized to administer an oath. The affiant must state in clear and
unequivocal terms that he is renouncing all foreign citizenship for it to be effective. In the instant
case, respondent Lopez’s failure to renounce his American citizenship as proven by the absence
of an affidavit that will prove the contrary leads this Commission to believe that he failed to
comply with the positive mandate of law. For failure of respondent to prove that he abandoned
his allegiance to the United States, this Commission holds him disqualified from running for an
elective position in the Philippines.11 (Emphasis added)

While it is true that petitioner won the elections, took his oath and began to discharge the
functions of Barangay Chairman, his victory can not cure the defect of his candidacy. Garnering
the most number of votes does not validate the election of a disqualified candidate because the
application of the constitutional and statutory provisions on disqualification is not a matter of
popularity.12

In sum, the COMELEC committed no grave abuse of discretion in disqualifying petitioner as

candidate for Chairman in the Barangay elections of 2007.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.
G.R. No. 187567 February 15, 2012

THE REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
NORA FE SAGUN, Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari filed by the Solicitor General on behalf of the
Republic of the Philippines, seeking the reversal of the April 3, 2009 Decision1 of the Regional
Trial Court (RTC), Branch 3, of Baguio City in Spcl. Pro. Case No. 17-R. The RTC granted the
petition2 filed by respondent Nora Fe Sagun entitled "In re: Judicial Declaration of Election of
Filipino Citizenship, Nora Fe Sagun v. The Local Civil Registrar of Baguio City."

The facts follow:

Respondent is the legitimate child of Albert S. Chan, a Chinese national, and Marta Borromeo, a
Filipino citizen. She was born on August 8, 1959 in Baguio City3 and did not elect Philippine
citizenship upon reaching the age of majority. In 1992, at the age of 33 and after getting married
to Alex Sagun, she executed an Oath of Allegiance4 to the Republic of the Philippines. Said
document was notarized by Atty. Cristeta Leung on December 17, 1992, but was not recorded
and registered with the Local Civil Registrar of Baguio City.

Sometime in September 2005, respondent applied for a Philippine passport. Her application was
denied due to the citizenship of her father and there being no annotation on her birth certificate
that she has elected Philippine citizenship. Consequently, she sought a judicial declaration of her
election of Philippine citizenship and prayed that the Local Civil Registrar of Baguio City be
ordered to annotate the same on her birth certificate.

In her petition, respondent averred that she was raised as a Filipino, speaks Ilocano and Tagalog
fluently and attended local schools in Baguio City, including Holy Family Academy and the Saint
Louis University. Respondent claimed that despite her part-Chinese ancestry, she always
thought of herself as a Filipino. She is a registered voter of Precinct No. 0419A of Barangay
Manuel A. Roxas in Baguio City and had voted in local and national elections as shown in the
Voter Certification5 issued by Atty. Maribelle Uminga of the Commission on Elections of Baguio
City.

She asserted that by virtue of her positive acts, she has effectively elected Philippine citizenship
and such fact should be annotated on her record of birth so as to entitle her to the issuance of a
Philippine passport.

On August 7, 2007, the Office of the Solicitor General (OSG) entered its appearance as counsel
for the Republic of the Philippines and authorized the City Prosecutor of Baguio City to appear in
the above mentioned case.6 However, no comment was filed by the City Prosecutor.

After conducting a hearing, the trial court rendered the assailed Decision on April 3, 2009
granting the petition and declaring respondent a Filipino citizen. The fallo of the decision reads:

WHEREFORE, the instant petition is hereby GRANTED. Petitioner Nora Fe Sagun y Chan is
hereby DECLARED [a] FILIPINO CITIZEN, having chosen or elected Filipino citizenship.

Upon payment of the required fees, the Local Civil Registrar of Baguio City is hereby directed to
annotate [on] her birth certificate, this judicial declaration of Filipino citizenship of said petitioner.
IT IS SO ORDERED.7

Contending that the lower court erred in so ruling, petitioner, through the OSG, directly filed the
instant recourse viaa petition for review on certiorari before us. Petitioner raises the following
issues:

Whether or not an action or proceeding for judicial declaration of Philippine citizenship is

procedurally and jurisdictionally permissible; and,

II

Whether or not an election of Philippine citizenship, made twelve (12) years after
reaching the age of majority, is considered to have been made "within a reasonable time"
as interpreted by jurisprudence.8

Petitioner argues that respondent’s petition before the RTC was improper on two counts: for one,
law and jurisprudence clearly contemplate no judicial action or proceeding for the declaration of
Philippine citizenship; and for another, the pleaded registration of the oath of allegiance with the
local civil registry and its annotation on respondent’s birth certificate are the ministerial duties of
the registrar; hence, they require no court order. Petitioner asserts that respondent’s petition
before the trial court seeking a judicial declaration of her election of Philippine citizenship
undeniably entails a determination and consequent declaration of her status as a Filipino citizen
which is not allowed under our legal system. Petitioner also argues that if respondent’s intention
in filing the petition is ultimately to have her oath of allegiance registered with the local civil
registry and annotated on her birth certificate, then she does not have to resort to court
proceedings.

Petitioner further argues that even assuming that respondent’s action is sanctioned, the trial
court erred in finding respondent as having duly elected Philippine citizenship since her
purported election was not in accordance with the procedure prescribed by law and was not
made within a "reasonable time." Petitioner points out that while respondent executed an oath of
allegiance before a notary public, there was no affidavit of her election of Philippine citizenship.
Additionally, her oath of allegiance which was not registered with the nearest local civil registry
was executed when she was already 33 years old or 12 years after she reached the age of
majority. Accordingly, it was made beyond the period allowed by law.

In her Comment,9 respondent avers that notwithstanding her failure to formally elect Filipino
citizenship upon reaching the age of majority, she has in fact effectively elected Filipino
citizenship by her performance of positive acts, among which is the exercise of the right of
suffrage. She claims that she had voted and participated in all local and national elections from
the time she was of legal age. She also insists that she is a Filipino citizen despite the fact that
her "election" of Philippine citizenship was delayed and unregistered.

In reply,10 petitioner argues that the special circumstances invoked by respondent, like her
continuous and uninterrupted stay in the Philippines, her having been educated in schools in the
country, her choice of staying here despite the naturalization of her parents as American citizens,
and her being a registered voter, cannot confer on her Philippine citizenship as the law
specifically provides the requirements for acquisition of Philippine citizenship by election.

Essentially, the issues for our resolution are: (1) whether respondent’s petition for declaration of
election of Philippine citizenship is sanctioned by the Rules of Court and jurisprudence; (2)
whether respondent has effectively elected Philippine citizenship in accordance with the
procedure prescribed by law.
The petition is meritorious.

At the outset, it is necessary to stress that a direct recourse to this Court from the decisions, final
resolutions and orders of the RTC may be taken where only questions of law are raised or
involved. There is a question of law when the doubt or difference arises as to what the law is on
a certain state of facts, which does not call for an examination of the probative value of the
evidence presented by the parties-litigants. On the other hand, there is a question of fact when
the doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when
there is no dispute as to fact, the question of whether the conclusion drawn therefrom is correct
or not, is a question of law.11

In the present case, petitioner assails the propriety of the decision of the trial court declaring
respondent a Filipino citizen after finding that respondent was able to substantiate her election of
Filipino citizenship. Petitioner contends that respondent’s petition for judicial declaration of
election of Philippine citizenship is procedurally and jurisdictionally impermissible. Verily,
petitioner has raised questions of law as the resolution of these issues rest solely on what the
law provides given the attendant circumstances.

In granting the petition, the trial court stated:

This Court believes that petitioner was able to fully substantiate her petition regarding her
election of Filipino citizenship, and the Local Civil Registrar of Baguio City should be ordered to
annotate in her birth certificate her election of Filipino citizenship. This Court adds that the
petitioner’s election of Filipino citizenship should be welcomed by this country and people
because the petitioner has the choice to elect citizenship of powerful countries like the United
States of America and China, however, petitioner has chosen Filipino citizenship because she
grew up in this country, and has learned to love the Philippines. Her choice of electing Filipino
citizenship is, in fact, a testimony that many of our people still wish to live in the Philippines, and
are very proud of our country.

WHEREFORE, the instant petition is hereby GRANTED. Petitioner Nora Fe Sagun y Chan is
hereby DECLARED as FILIPINO CITIZEN, having chosen or elected Filipino citizenship.12

For sure, this Court has consistently ruled that there is no proceeding established by law, or the
Rules for the judicial declaration of the citizenship of an individual.13 There is no specific
legislation authorizing the institution of a judicial proceeding to declare that a given person is part
of our citizenry.14 This was our ruling in Yung Uan Chu v. Republic15citing the early case of Tan v.
Republic of the Philippines,16 where we clearly stated:

Under our laws, there can be no action or proceeding for the judicial declaration of the citizenship
of an individual. Courts of justice exist for settlement of justiciable controversies, which imply a
given right, legally demandable and enforceable, an act or omission violative of said right, and a
remedy, granted or sanctioned by law, for said breach of right. As an incident only of the
adjudication of the rights of the parties to a controversy, the court may pass upon, and make a
pronouncement relative to their status. Otherwise, such a pronouncement is beyond judicial
power. x x x

Clearly, it was erroneous for the trial court to make a specific declaration of respondent’s Filipino
citizenship as such pronouncement was not within the court’s competence.

As to the propriety of respondent’s petition seeking a judicial declaration of election of Philippine

citizenship, it is imperative that we determine whether respondent is required under the law to
make an election and if so, whether she has complied with the procedural requirements in the
election of Philippine citizenship.
When respondent was born on August 8, 1959, the governing charter was the 1935 Constitution,
which declares as citizens of the Philippines those whose mothers are citizens of the Philippines
and elect Philippine citizenship upon reaching the age of majority. Sec. 1, Art. IV of the 1935
Constitution reads:

Section 1. The following are citizens of the Philippines:

xxxx

(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of majority,
elect Philippine citizenship.

Under Article IV, Section 1(4) of the 1935 Constitution, the citizenship of a legitimate child born of
a Filipino mother and an alien father followed the citizenship of the father, unless, upon reaching
the age of majority, the child elected Philippine citizenship. The right to elect Philippine
citizenship was recognized in the 1973 Constitution when it provided that "[t]hose who elect
Philippine citizenship pursuant to the provisions of the Constitution of nineteen hundred and
thirty-five" are citizens of the Philippines.17 Likewise, this recognition by the 1973 Constitution was
carried over to the 1987 Constitution which states that "[t]hose born before January 17, 1973 of
Filipino mothers, who elect Philippine citizenship upon reaching the age of majority" are
Philippine citizens.18 It should be noted, however, that the 1973 and 1987 Constitutional
provisions on the election of Philippine citizenship should not be understood as having a curative
effect on any irregularity in the acquisition of citizenship for those covered by the 1935
Constitution. If the citizenship of a person was subject to challenge under the old charter, it
remains subject to challenge under the new charter even if the judicial challenge had not been
commenced before the effectivity of the new Constitution.19

Being a legitimate child, respondent’s citizenship followed that of her father who is Chinese,
unless upon reaching the age of majority, she elects Philippine citizenship. It is a settled rule that
only legitimate children follow the citizenship of the father and that illegitimate children are under
the parental authority of the mother and follow her nationality.20 An illegitimate child of Filipina
need not perform any act to confer upon him all the rights and privileges attached to citizens of
the Philippines; he automatically becomes a citizen himself.21 But in the case of respondent, for
her to be considered a Filipino citizen, she must have validly elected Philippine citizenship upon
reaching the age of majority.

Commonwealth Act (C.A.) No. 625,22 enacted pursuant to Section 1(4), Article IV of the 1935
Constitution, prescribes the procedure that should be followed in order to make a valid election of
Philippine citizenship, to wit:

Section 1. The option to elect Philippine citizenship in accordance with subsection (4), [S]ection
1, Article IV, of the Constitution shall be expressed in a statement to be signed and sworn to by
the party concerned before any officer authorized to administer oaths, and shall be filed with the
nearest civil registry. The said party shall accompany the aforesaid statement with the oath of
allegiance to the Constitution and the Government of the Philippines.

Based on the foregoing, the statutory formalities of electing Philippine citizenship are: (1) a
statement of election under oath; (2) an oath of allegiance to the Constitution and Government of
the Philippines; and (3) registration of the statement of election and of the oath with the nearest
civil registry.23

Furthermore, no election of Philippine citizenship shall be accepted for registration under C.A.
No. 625 unless the party exercising the right of election has complied with the requirements of
the Alien Registration Act of 1950. In other words, he should first be required to register as an
alien.24 Pertinently, the person electing Philippine citizenship is required to file a petition with the
Commission of Immigration and Deportation (now Bureau of Immigration) for the cancellation of
his alien certificate of registration based on his aforesaid election of Philippine citizenship and
said Office will initially decide, based on the evidence presented the validity or invalidity of said
election.25 Afterwards, the same is elevated to the Ministry (now Department) of Justice for final
determination and review.26 1âwphi1

It should be stressed that there is no specific statutory or procedural rule which authorizes the
direct filing of a petition for declaration of election of Philippine citizenship before the courts. The
special proceeding provided under Section 2, Rule 108 of the Rules of Court on Cancellation or
Correction of Entries in the Civil Registry, merely allows any interested party to file an action for
cancellation or correction of entry in the civil registry, i.e., election, loss and recovery of
citizenship, which is not the relief prayed for by the respondent.

Be that as it may, even if we set aside this procedural infirmity, still the trial court’s conclusion
that respondent duly elected Philippine citizenship is erroneous since the records undisputably
show that respondent failed to comply with the legal requirements for a valid election.
Specifically, respondent had not executed a sworn statement of her election of Philippine
citizenship. The only documentary evidence submitted by respondent in support of her claim of
alleged election was her oath of allegiance, executed 12 years after she reached the age of
majority, which was unregistered. As aptly pointed out by the petitioner, even
assuming arguendo that respondent’s oath of allegiance suffices, its execution was not within a
reasonable time after respondent attained the age of majority and was not registered with the
nearest civil registry as required under Section 1 of C.A. No. 625. The phrase "reasonable time"
has been interpreted to mean that the election should be made generally within three (3) years
from reaching the age of majority.27 Moreover, there was no satisfactory explanation proffered by
respondent for the delay and the failure to register with the nearest local civil registry.

Based on the foregoing circumstances, respondent clearly failed to comply with the procedural
requirements for a valid and effective election of Philippine citizenship. Respondent cannot
assert that the exercise of suffrage and the participation in election exercises constitutes a
positive act of election of Philippine citizenship since the law specifically lays down the
requirements for acquisition of citizenship by election. The mere exercise of suffrage, continuous
and uninterrupted stay in the Philippines, and other similar acts showing exercise of Philippine
citizenship cannot take the place of election of Philippine citizenship. Hence, respondent cannot
now be allowed to seek the intervention of the court to confer upon her Philippine citizenship
when clearly she has failed to validly elect Philippine citizenship. As we held in Ching,28 the
prescribed procedure in electing Philippine citizenship is certainly not a tedious and painstaking
process. All that is required of the elector is to execute an affidavit of election of Philippine
citizenship and, thereafter, file the same with the nearest civil registry. Having failed to comply
with the foregoing requirements, respondent’s petition before the trial court must be denied.

WHEREFORE, the petition is GRANTED. The Decision dated April 3, 2009 of the Regional Trial
Court, Branch 3 of Baguio City in Spcl. Pro. Case No. 17-R is REVERSED and SET ASIDE. The
petition for judicial declaration of election of Philippine citizenship filed by respondent Nora Fe
Sagun is hereby DISMISSED for lack of merit.

No costs.

SO ORDERED.

G.R. No. 162224 June 7, 2007

2nd LT. SALVADOR PARREÑO represented by his daughter Myrna P. Caintic, petitioner,
vs.
COMMISSION ON AUDIT and CHIEF OF STAFF, ARMED FORCES OF THE
PHILIPPINES, respondents.
 DECISION

CARPIO, J.:

The Case

Before the Court is a petition for certiorari1 assailing the 9 January 2003 Decision2 and 13
January 2004 Resolution3 of the Commission on Audit (COA).

The Antecedent Facts

Salvador Parreño (petitioner) served in the Armed Forces of the Philippines (AFP) for 32 years.
On 5 January 1982, petitioner retired from the Philippine Constabulary with the rank of 2nd
Lieutenant. Petitioner availed, and received payment, of a lump sum pension equivalent to three
years pay. In 1985, petitioner started receiving his monthly pension amounting to ₱13,680.

Petitioner migrated to Hawaii and became a naturalized American citizen. In January 2001, the
AFP stopped petitioner’s monthly pension in accordance with Section 27 of Presidential Decree
No. 16384 (PD 1638), as amended by Presidential Decree No. 1650.5 Section 27 of PD 1638, as
amended, provides that a retiree who loses his Filipino citizenship shall be removed from the
retired list and his retirement benefits terminated upon loss of Filipino citizenship. Petitioner
requested for reconsideration but the Judge Advocate General of the AFP denied the request.

Petitioner filed a claim before the COA for the continuance of his monthly pension.

The Ruling of the Commission on Audit

In its 9 January 2003 Decision, the COA denied petitioner’s claim for lack of jurisdiction. The
COA ruled:

It becomes immediately noticeable that the resolution of the issue at hand hinges upon the
validity of Section 27 of P.D. No. 1638, as amended. Pursuant to the mandate of the
Constitution, whenever a dispute involves the validity of laws, "the courts, as guardians of the
Constitution, have the inherent authority to determine whether a statute enacted by the
legislature transcends the limit imposed by the fundamental law. Where the statute violates the
Constitution, it is not only the right but the duty of the judiciary to declare such act as
unconstitutional and void." (Tatad vs. Secretary of Department of Energy, 281 SCRA 330) That
being so, prudence dictates that this Commission defer to the authority and jurisdiction of the
judiciary to rule in the first instance upon the constitutionality of the provision in question.

Premises considered, the request is denied for lack of jurisdiction to adjudicate the same.
Claimant is advised to file his claim with the proper court of original jurisdiction.6

Petitioner filed a motion for reconsideration. Petitioner alleged that the COA has the power and
authority to incidentally rule on the constitutionality of Section 27 of PD 1638, as amended.
Petitioner alleged that a direct recourse to the court would be dismissed for failure to exhaust
administrative remedies. Petitioner further alleged that since his monthly pension involves
government funds, the reason for the termination of the pension is subject to COA’s authority and
jurisdiction.

In its 13 January 2004 Resolution, the COA denied the motion. The COA ruled that the doctrine
of exhaustion of administrative remedies does not apply if the administrative body has, in the first
place, no jurisdiction over the case. The COA further ruled that even if it assumed jurisdiction
over the claim, petitioner’s entitlement to the retirement benefits he was previously receiving
must necessarily cease upon the loss of his Filipino citizenship in accordance with Section 27 of
PD 1638, as amended.

Hence, the petition before this Court.

The Issues

Petitioner raises the following issues:

1. Whether Section 27 of PD 1638, as amended, is constitutional;

2. Whether the COA has jurisdiction to rule on the constitutionality of Section 27 of PD 1638, as
amended; and

3. Whether PD 1638, as amended, has retroactive or prospective effect.7

The Ruling of this Court

The petition has no merit.

Jurisdiction of the COA

Petitioner filed his money claim before the COA. A money claim is "a demand for payment of a
sum of money, reimbursement or compensation arising from law or contract due from or owing to
a government agency."8 Under Commonwealth Act No. 327,9 as amended by Presidential
Decree No. 1445,10 money claims against the government shall be filed before the COA.11

Section 2(1), Article IX(D) of the 1987 Constitution prescribes the powers of the COA, as follows:

Sec. 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit,
and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of
funds and property, owned or held in trust by, or pertaining to, the Government, or any of its
subdivisions, agencies, or instrumentalities, including government-owned or controlled
corporations with original charters, and on a post-audit basis; (a) constitutional bodies,
commissions and offices that have been granted fiscal autonomy under this Constitution; (b)
autonomous state colleges and universities; (c) other government-owned or controlled
corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the Government, which are required by law or the
granting institution to submit such audit as a condition of subsidy or equity. However, where the
internal control system of the audited agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are necessary and appropriate to correct
the deficiencies. It shall keep the general accounts of the Government and, for such period as
may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

The jurisdiction of the COA over money claims against the government does not include the
power to rule on the constitutionality or validity of laws. The 1987 Constitution vests the power of
judicial review or the power to declare unconstitutional a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance, or regulation in this Court and in all
Regional Trial Courts.12 Petitioner’s money claim essentially involved the constitutionality of
Section 27 of PD 1638, as amended. Hence, the COA did not commit grave abuse of discretion
in dismissing petitioner’s money claim.
Petitioner submits that the COA has the authority to order the restoration of his pension even
without ruling on the constitutionality of Section 27 of PD 1638, as amended. The COA actually
ruled on the matter in its 13 January 2004 Resolution, thus:

Furthermore, assuming arguendo that this Commission assumed jurisdiction over the instant
case, claimant’s entitlement to the retirement benefits he was previously receiving must
necessarily be severed or stopped upon the loss of his Filipino citizenship as prescribed in
Section 27, P.D. No. 1638, as amended by P.D. No. 1650.13

The COA effectively denied petitioner’s claim because of the loss of his Filipino citizenship.

Application of PD 1638, as amended

Petitioner alleges that PD 1638, as amended, should apply prospectively. The Office of the
Solicitor General (OSG) agrees with petitioner. The OSG argues that PD 1638, as amended,
should apply only to those who joined the military service after its effectivity, citing Sections 33
and 35, thus:

Section 33. Nothing in this Decree shall be construed in any manner to reduce whatever
retirement and separation pay or gratuity or other monetary benefits which any person is
heretofore receiving or is entitled to receive under the provisions of existing law.

xxxx

Section. 35. Except those necessary to give effect to the provisions of this Decree and to
preserve the rights granted to retired or separated military personnel, all laws, rules and
regulations inconsistent with the provisions of this Decree are hereby repealed or modified
accordingly.

The OSG further argues that retirement laws are liberally construed in favor of the retirees.
Article 4 of the Civil Code provides: "Laws shall have no retroactive effect, unless the contrary is
provided." Section 36 of PD 1638, as amended, provides that it shall take effect upon its
approval. It was signed on 10 September 1979. PD 1638, as amended, does not provide for its
retroactive application. There is no question that PD 1638, as amended, applies prospectively.

However, we do not agree with the interpretation of petitioner and the OSG that PD 1638, as
amended, should apply only to those who joined the military after its effectivity. Since PD 1638,
as amended, is about the new system of retirement and separation from service of military
personnel, it should apply to those who were in the service at the time of its approval. In fact,
Section 2 of PD 1638, as amended, provides that "th[e] Decree shall apply to all military
personnel in the service of the Armed Forces of the Philippines." PD 1638, as amended, was
signed on 10 September 1979. Petitioner retired in 1982, long after the approval of PD 1638, as
amended. Hence, the provisions of PD 1638, as amended, apply to petitioner.

Petitioner Has No Vested Right to his

Retirement Benefits

Petitioner alleges that Section 27 of PD 1638, as amended, deprives him of his property which
the Constitution and statutes vest in him. Petitioner alleges that his pension, being a property
vested by the Constitution, cannot be removed or taken from him just because he became a
naturalized American citizen. Petitioner further alleges that the termination of his monthly pension
is a penalty equivalent to deprivation of his life.
The allegations have no merit. PD 1638, as amended, does not impair any vested right or
interest of petitioner. Where the employee retires and meets the eligibility requirements, he
acquires a vested right to the benefits that is protected by the due process clause.14 At the time
of the approval of PD 1638 and at the time of its amendment, petitioner was still in active service.
Hence, petitioner’s retirement benefits were only future benefits and did not constitute a vested
right. Before a right to retirement benefits or pension vests in an employee, he must have met the
stated conditions of eligibility with respect to the nature of employment, age, and length of
service.15 It is only upon retirement that military personnel acquire a vested right to retirement
benefits. Retirees enjoy a protected property interest whenever they acquire a right to immediate
payment under pre-existing law.16

Further, the retirement benefits of military personnel are purely gratuitous in nature. They are not
similar to pension plans where employee participation is mandatory, hence, the employees have
contractual or vested rights in the pension which forms part of the compensation.17

Constitutionality of Section 27 of PD 1638

Section 27 of PD 1638, as amended, provides:

Section 27. Military personnel retired under Sections 4, 5, 10, 11 and 12 shall be carried in the
retired list of the Armed Forces of the Philippines. The name of a retiree who loses his Filipino
citizenship shall be removed from the retired list and his retirement benefits terminated upon
such loss.

The OSG agrees with petitioner that Section 27 of PD 1638, as amended, is unconstitutional.
The OSG argues that the obligation imposed on petitioner to retain his Filipino citizenship as a
condition for him to remain in the AFP retired list and receive his retirement benefit is contrary to
public policy and welfare, oppressive, discriminatory, and violative of the due process clause of
the Constitution. The OSG argues that the retirement law is in the nature of a contract between
the government and its employees. The OSG further argues that Section 27 of PD 1638, as
amended, discriminates against AFP retirees who have changed their nationality.

We do not agree.

The constitutional right to equal protection of the laws is not absolute but is subject to reasonable
classification.18 To be reasonable, the classification (a) must be based on substantial distinctions
which make real differences; (b) must be germane to the purpose of the law; (c) must not be
limited to existing conditions only; and (d) must apply equally to each member of the class.19

There is compliance with all these conditions. There is a substantial difference between retirees
who are citizens of the Philippines and retirees who lost their Filipino citizenship by naturalization
in another country, such as petitioner in the case before us. The constitutional right of the state to
require all citizens to render personal and military service20 necessarily includes not only private
citizens but also citizens who have retired from military service. A retiree who had lost his Filipino
citizenship already renounced his allegiance to the state. Thus, he may no longer be compelled
by the state to render compulsory military service when the need arises. Petitioner’s loss of
Filipino citizenship constitutes a substantial distinction that distinguishes him from other retirees
who retain their Filipino citizenship. If the groupings are characterized by substantial distinctions
that make real differences, one class may be treated and regulated differently from another.21

Republic Act No. 707722 (RA 7077) affirmed the constitutional right of the state to a Citizen
Armed Forces. Section 11 of RA 7077 provides that citizen soldiers or reservists include ex-
servicemen and retired officers of the AFP. Hence, even when a retiree is no longer in the active
service, he is still a part of the Citizen Armed Forces. Thus, we do not find the requirement
imposed by Section 27 of PD 1638, as amended, oppressive, discriminatory, or contrary to public
policy. The state has the right to impose a reasonable condition that is necessary for national
defense. To rule otherwise would be detrimental to the interest of the state.

There was no denial of due process in this case. When petitioner lost his Filipino citizenship, the
AFP had no choice but to stop his monthly pension in accordance with Section 27 of PD 1638, as
amended. Petitioner had the opportunity to contest the termination of his pension when he
requested for reconsideration of the removal of his name from the list of retirees and the
termination of his pension. The Judge Advocate General denied the request pursuant to Section
27 of PD 1638, as amended.

Petitioner argues that he can reacquire his Filipino citizenship under Republic Act No. 922523 (RA
9225), in which case he will still be considered a natural-born Filipino. However, petitioner
alleges that if he reacquires his Filipino citizenship under RA 9225, he will still not be entitled to
his pension because of its prior termination. This situation is speculative. In the first place,
petitioner has not shown that he has any intention of reacquiring, or has done anything to
reacquire, his Filipino citizenship. Secondly, in response to the request for opinion of then AFP
Chief of Staff, General Efren L. Abu, the Department of Justice (DOJ) issued DOJ Opinion No.
12, series of 2005, dated 19 January 2005, thus:

[T]he AFP uniformed personnel retirees, having re-acquired Philippine citizenship pursuant to
R.A. No. 9225 and its IRR, are entitled to pension and gratuity benefits reckoned from the date
they have taken their oath of allegiance to the Republic of the Philippines. It goes without saying
that these retirees have no right to receive such pension benefits during the time that they have
ceased to be Filipinos pursuant to the aforequoted P.D. No. 1638, as amended, and any
payment made to them should be returned to the AFP. x x x.24

Hence, petitioner has other recourse if he desires to continue receiving his monthly pension. Just
recently, in AASJS Member-Hector Gumangan Calilung v. Simeon Datumanong,25 this Court
upheld the constitutionality of RA 9225. If petitioner reacquires his Filipino citizenship, he will
even recover his natural-born citizenship.26 In Tabasa v. Court of Appeals,27 this Court reiterated
that "[t]he repatriation of the former Filipino will allow him to recover his natural-born citizenship x
x x."

Petitioner will be entitled to receive his monthly pension should he reacquire his Filipino
citizenship since he will again be entitled to the benefits and privileges of Filipino citizenship
reckoned from the time of his reacquisition of Filipino citizenship. There is no legal obstacle to
the resumption of his retirement benefits from the time he complies again with the condition of
the law, that is, he can receive his retirement benefits provided he is a Filipino citizen.

We acknowledge the service rendered to the country by petitioner and those similarly situated.
However, petitioner failed to overcome the presumption of constitutionality of Section 27 of PD
1638, as amended. Unless the provision is amended or repealed in the future, the AFP has to
apply Section 27 of PD 1638, as amended.

WHEREFORE, we DISMISS the petition. We AFFIRM the 9 January 2003 Decision and 13
January 2004 Resolution of the Commission on Audit.

SO ORDERED.

G.R. No. 191970 April 24, 2012

ROMMEL APOLINARIO JALOSJOS, Petitioner,

vs.
THE COMMISSION ON ELECTIONS and DAN ERASMO, SR.,

DECISION
ABAD, J.:

This case is about the proof required to establish the domicile of a reinstated Filipino citizen who
seeks election as governor of a province.

The Facts and the Case

Petitioner Rommel Jalosjos was born in Quezon City on October 26, 1973. He migrated to
Australia in 1981 when he was eight years old and there acquired Australian citizenship. On
November 22, 2008, at age 35, he decided to return to the Philippines and lived with his brother,
Romeo, Jr., in Barangay Veteran’s Village, Ipil, Zamboanga Sibugay. Four days upon his return,
he took an oath of allegiance to the Republic of the Philippines, resulting in his being issued a
Certificate of Reacquisition of Philippine Citizenship by the Bureau of Immigration.1 On
September 1, 2009 he renounced his Australian citizenship, executing a sworn renunciation of
the same2 in compliance with Republic Act (R.A.) 9225.3

From the time of his return, Jalosjos acquired a residential property in the same village where he
lived and a fishpond in San Isidro, Naga, Zamboanga Sibugay. He applied for registration as a
voter in the Municipality of Ipil but respondent Dan Erasmo, Sr., the Barangay Captain of
Barangay Veteran’s Village, opposed the same. Acting on the application, the Election
Registration Board approved it and included Jalosjos’ name in the Commission on Elections’
(COMELEC’s) voters list for Precinct 0051F of Barangay Veterans Village, Ipil, Zamboanga
Sibugay.4

Undaunted, Erasmo filed before the 1st Municipal Circuit Trial Court (MCTC) of Ipil-Tungawan-
R.T. Lim in Ipil a petition for the exclusion of Jalosjos’ name from the official voters list. After
hearing, the MCTC rendered a decision, denying the petition.5 On appeal,6 the Regional Trial
Court (RTC) affirmed the MCTC decision. The RTC decision became final and executory.

On November 28, 2009 Jalosjos filed his Certificate of Candidacy (COC) for Governor of
Zamboanga Sibugay Province for the May 10, 2010 elections. Erasmo promptly filed a petition to
deny due course or to cancel Jalosjos’ COC7 on the ground that the latter made material
misrepresentation in the same since he failed to comply with (1) the requirements of R.A. 9225
and (2) the one-year residency requirement of the Local Government Code.

After hearing, the Second Division of the COMELEC ruled that, while Jalosjos had regained
Philippine citizenship by complying with the requirements of R.A. 9225, he failed to prove the
residency requirement for a gubernatorial candidate. He failed to present ample proof of a bona
fide intention to establish his domicile in Ipil, Zamboanga Sibugay. On motion for reconsideration,
the COMELEC En Banc affirmed the Second Division’s decision, ruling that Jalosjos had been a
mere guest or transient visitor in his brother’s house and, for this reason, he cannot claim Ipil as
his domicile.

Acting on Jalosjos’ prayer for the issuance of a temporary restraining order, the Court resolved
on May 7, 2010 to issue a status quo ante order, enjoining the COMELEC from enforcing its
February 11, 2010 decision pending further orders. Meanwhile, Jolosjos won the election and
was proclaimed winner of the 2010 gubernatorial race in the Province of Zamboanga Sibugay.8

The Issue Presented

The sole issue presented in this case is whether or not the COMELEC acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in ruling that Jalosjos failed to present
ample proof of a bona fide intention to establish his domicile in Ipil, Zamboanga Sibugay.

The Court’s Ruling

The Local Government Code requires a candidate seeking the position of provincial governor to
be a resident of the province for at least one year before the election.9 For purposes of the
election laws, the requirement of residence is synonymous with domicile,10 meaning that a person
must not only intend to reside in a particular place but must also have personal presence in such
place coupled with conduct indicative of such intention.11

There is no hard and fast rule to determine a candidate’s compliance with residency requirement
since the question of residence is a question of intention.12 Still, jurisprudence has laid down the
following guidelines: (a) every person has a domicile or residence somewhere; (b) where once
established, that domicile remains until he acquires a new one; and (c) a person can have but
one domicile at a time.13

It is inevitable under these guidelines and the precedents applying them that Jalosjos has met
the residency requirement for provincial governor of Zamboanga Sibugay.

One. The COMELEC appears hasty in concluding that Jalosjos failed to prove that he
successfully changed his domicile to Zamboanga Sibugay. The COMELEC points out that, since
he was unable to discharge the burden of proving Zamboanga Sibugay to be his rightful domicile,
it must be assumed that his domicile is either Quezon City or Australia.

But it is clear from the facts that Quezon City was Jalosjos’ domicile of origin, the place of his
birth. It may be taken for granted that he effectively changed his domicile from Quezon City to
Australia when he migrated there at the age of eight, acquired Australian citizenship, and lived in
that country for 26 years. Australia became his domicile by operation of law and by choice.14

On the other hand, when he came to the Philippines in November 2008 to live with his brother in
Zamboanga Sibugay, it is evident that Jalosjos did so with intent to change his domicile for good.
He left Australia, gave up his Australian citizenship, and renounced his allegiance to that country.
In addition, he reacquired his old citizenship by taking an oath of allegiance to the Republic of the
Philippines, resulting in his being issued a Certificate of Reacquisition of Philippine Citizenship by
the Bureau of Immigration. By his acts, Jalosjos forfeited his legal right to live in Australia, clearly
proving that he gave up his domicile there. And he has since lived nowhere else except in Ipil,
Zamboanga Sibugay.

To hold that Jalosjos has not establish a new domicile in Zamboanga Sibugay despite the loss of
his domicile of origin (Quezon City) and his domicile of choice and by operation of law (Australia)
would violate the settled maxim that a man must have a domicile or residence somewhere.

Two. The COMELEC concluded that Jalosjos has not come to settle his domicile in Ipil since he
has merely been staying at his brother’s house. But this circumstance alone cannot support such
conclusion. Indeed, the Court has repeatedly held that a candidate is not required to have a
house in a community to establish his residence or domicile in a particular place. It is sufficient
that he should live there even if it be in a rented house or in the house of a friend or relative.15 To
insist that the candidate own the house where he lives would make property a qualification for
public office. What matters is that Jalosjos has proved two things: actual physical presence in Ipil
and an intention of making it his domicile.

Jalosjos presented the affidavits of next-door neighbors, attesting to his physical presence at his
residence in Ipil. These adjoining neighbors are no doubt more credible since they have a better
chance of noting his presence or absence than his other neighbors, whose affidavits Erasmo
presented, who just sporadically passed by the subject residence. Further, it is not disputed that
Jalosjos bought a residential lot in the same village where he lived and a fish pond in San Isidro,
Naga, Zamboanga Sibugay. He showed correspondences with political leaders, including local
and national party-mates, from where he lived. Moreover, Jalosjos is a registered voter of Ipil by
final judgment of the Regional Trial Court of Zamboanga Sibugay. 1âwphi 1
Three. While the Court ordinarily respects the factual findings of administrative bodies like the
COMELEC, this does not prevent it from exercising its review powers to correct palpable
misappreciation of evidence or wrong or irrelevant considerations.16 The evidence Jalosjos
presented is sufficient to establish Ipil, Zamboanga Sibugay, as his domicile. The COMELEC
gravely abused its discretion in holding otherwise.

Four. Jalosjos won and was proclaimed winner in the 2010 gubernatorial race for Zamboanga
Sibugay. The Court will respect the decision of the people of that province and resolve all doubts
regarding his qualification in his favor to breathe life to their manifest will.

WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Resolution of the
COMELEC Second Division dated February 11, 2010 and the Resolution of the COMELEC En
Banc dated May 4, 2010 that disqualified petitioner Rommel Jalosjos from seeking election as
Governor of Zamboanga Sibugay.

SO ORDERED.

G.R. No. 119976 September 18, 1995

IMELDA ROMUALDEZ-MARCOS, petitioner,

vs.
COMMISSION ON ELECTIONS and CIRILO ROY MONTEJO, respondents.

KAPUNAN, J.:

A constitutional provision should be construed as to give it effective operation and suppress the
mischief at which it is aimed.1 The 1987 Constitution mandates that an aspirant for election to the
House of Representatives be "a registered voter in the district in which he shall be elected, and a
resident thereof for a period of not less than one year immediately preceding the election."2 The
mischief which this provision — reproduced verbatim from the 1973 Constitution — seeks to
prevent is the possibility of a "stranger or newcomer unacquainted with the conditions and needs
of a community and not identified with the latter, from an elective office to serve that community."3

Petitioner Imelda Romualdez-Marcos filed her Certificate of Candidacy for the position of
Representative of the First District of Leyte with the Provincial Election Supervisor on March 8,
1995, providing the following information in item no. 8:4

RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO BE ELECTED

IMMEDIATELY PRECEDING THE ELECTION: __________ Years
and seven Months.

On March 23, 1995, private respondent Cirilo Roy Montejo, the incumbent Representative of the
First District of Leyte and a candidate for the same position, filed a "Petition for Cancellation and
Disqualification"5 with the Commission on Elections alleging that petitioner did not meet the
constitutional requirement for residency. In his petition, private respondent contended that Mrs.
Marcos lacked the Constitution's one year residency requirement for candidates for the House of
Representatives on the evidence of declarations made by her in Voter Registration Record 94-
No. 33497726 and in her Certificate of Candidacy. He prayed that "an order be issued declaring
(petitioner) disqualified and canceling the certificate of candidacy."7
On March 29, 1995, petitioner filed an Amended/Corrected Certificate of Candidacy, changing
the entry "seven" months to "since childhood" in item no. 8 of the amended certificate.8 On the
same day, the Provincial Election Supervisor of Leyte informed petitioner that:

[T]his office cannot receive or accept the aforementioned Certificate of Candidacy

on the ground that it is filed out of time, the deadline for the filing of the same
having already lapsed on March 20, 1995. The Corrected/Amended Certificate of
Candidacy should have been filed on or before the March 20, 1995 deadline.9

Consequently, petitioner filed the Amended/Corrected Certificate of Candidacy with the

COMELEC's Head Office in Intramuros, Manila on
March 31, 1995. Her Answer to private respondent's petition in SPA No. 95-009 was likewise
filed with the head office on the same day. In said Answer, petitioner averred that the entry of the
word "seven" in her original Certificate of Candidacy was the result of an "honest
misinterpretation" 10 which she sought to rectify by adding the words "since childhood" in her
Amended/Corrected Certificate of Candidacy and that "she has always maintained Tacloban City
as her domicile or residence. 11 Impugning respondent's motive in filing the petition seeking her
disqualification, she noted that:

When respondent (petitioner herein) announced that she was intending to

register as a voter in Tacloban City and run for Congress in the First District of
Leyte, petitioner immediately opposed her intended registration by writing a letter
stating that "she is not a resident of said city but of Barangay Olot, Tolosa, Leyte.
After respondent had registered as a voter in Tolosa following completion of her
six month actual residence therein, petitioner filed a petition with the COMELEC
to transfer the town of Tolosa from the First District to the Second District and
pursued such a move up to the Supreme Court, his purpose being to remove
respondent as petitioner's opponent in the congressional election in the First
District. He also filed a bill, along with other Leyte Congressmen, seeking the
creation of another legislative district to remove the town of Tolosa out of the First
District, to achieve his purpose. However, such bill did not pass the Senate.
Having failed on such moves, petitioner now filed the instant petition for the same
objective, as it is obvious that he is afraid to submit along with respondent for the
judgment and verdict of the electorate of the First District of Leyte in an honest,
orderly, peaceful, free and clean elections on May 8, 1995. 12

On April 24, 1995, the Second Division of the Commission on Elections (COMELEC), by a vote
of 2 to 1, 13 came up with a Resolution 1) finding private respondent's Petition for Disqualification
in SPA 95-009 meritorious; 2) striking off petitioner's Corrected/Amended Certificate of
Candidacy of March 31, 1995; and 3) canceling her original Certificate of Candidacy. 14 Dealing
with two primary issues, namely, the validity of amending the original Certificate of Candidacy
after the lapse of the deadline for filing certificates of candidacy, and petitioner's compliance with
the one year residency requirement, the Second Division held:

Respondent raised the affirmative defense in her Answer that the printed word
"Seven" (months) was a result of an "honest misinterpretation or honest mistake"
on her part and, therefore, an amendment should subsequently be allowed. She
averred that she thought that what was asked was her "actual and physical"
presence in Tolosa and not residence of origin or domicile in the First Legislative
District, to which she could have responded "since childhood." In an
accompanying affidavit, she stated that her domicile is Tacloban City, a
component of the First District, to which she always intended to return whenever
absent and which she has never abandoned. Furthermore, in her memorandum,
she tried to discredit petitioner's theory of disqualification by alleging that she has
been a resident of the First Legislative District of Leyte since childhood, although
she only became a resident of the Municipality of Tolosa for seven months. She
asserts that she has always been a resident of Tacloban City, a component of the
First District, before coming to the Municipality of Tolosa.

Along this point, it is interesting to note that prior to her registration in Tolosa,
respondent announced that she would be registering in Tacloban City so that she
can be a candidate for the District. However, this intention was rebuffed when
petitioner wrote the Election Officer of Tacloban not to allow respondent since
she is a resident of Tolosa and not Tacloban. She never disputed this claim and
instead implicitly acceded to it by registering in Tolosa.

This incident belies respondent's claim of "honest misinterpretation or honest

mistake." Besides, the Certificate of Candidacy only asks for RESIDENCE. Since
on the basis of her Answer, she was quite aware of "residence of origin" which
she interprets to be Tacloban City, it is curious why she did not cite Tacloban City
in her Certificate of Candidacy. Her explanation that she thought what was asked
was her actual and physical presence in Tolosa is not easy to believe because
there is none in the question that insinuates about Tolosa. In fact, item no. 8 in
the Certificate of Candidacy speaks clearly of "Residency in the
CONSTITUENCY where I seek to be elected immediately preceding the
election." Thus, the explanation of respondent fails to be persuasive.

From the foregoing, respondent's defense of an honest mistake or

misinterpretation, therefore, is devoid of merit.

To further buttress respondent's contention that an amendment may be made,

she cited the case of Alialy v. COMELEC (2 SCRA 957). The reliance of
respondent on the case of Alialy is misplaced. The case only applies to the
"inconsequential deviations which cannot affect the result of the election, or
deviations from provisions intended primarily to secure timely and orderly conduct
of elections." The Supreme Court in that case considered the amendment only as
a matter of form. But in the instant case, the amendment cannot be considered
as a matter of form or an inconsequential deviation. The change in the number of
years of residence in the place where respondent seeks to be elected is a
substantial matter which determines her qualification as a candidacy, specially
those intended to suppress, accurate material representation in the original
certificate which adversely affects the filer. To admit the amended certificate is to
condone the evils brought by the shifting minds of manipulating candidate, of the
detriment of the integrity of the election.

Moreover, to allow respondent to change the seven (7) month period of her
residency in order to prolong it by claiming it was "since childhood" is to allow an
untruthfulness to be committed before this Commission. The arithmetical
accuracy of the 7 months residency the respondent indicated in her certificate of
candidacy can be gleaned from her entry in her Voter's Registration Record
accomplished on January 28, 1995 which reflects that she is a resident of Brgy.
Olot, Tolosa, Leyte for 6 months at the time of the said registration (Annex A,
Petition). Said accuracy is further buttressed by her letter to the election officer of
San Juan, Metro Manila, dated August 24, 1994, requesting for the cancellation
of her registration in the Permanent List of Voters thereat so that she can be re-
registered or transferred to Brgy. Olot, Tolosa, Leyte. The dates of these three (3)
different documents show the respondent's consistent conviction that she has
transferred her residence to Olot, Tolosa, Leyte from Metro Manila only for such
limited period of time, starting in the last week of August 1994 which on March 8,
1995 will only sum up to 7 months. The Commission, therefore, cannot be
persuaded to believe in the respondent's contention that it was an error.
 xxx xxx xxx

Based on these reasons the Amended/Corrected Certificate of Candidacy cannot

be admitted by this Commission.

xxx xxx xxx

Anent the second issue, and based on the foregoing discussion, it is clear that
respondent has not complied with the one year residency requirement of the
Constitution.

In election cases, the term "residence" has always been considered as

synonymous with "domicile" which imports not only the intention to reside in a
fixed place but also personal presence in-that place, coupled with conduct
indicative of such intention. Domicile denotes a fixed permanent residence to
which when absent for business or pleasure, or for like reasons, one intends to
return. (Perfecto Faypon vs. Eliseo Quirino, 96 Phil 294; Romualdez vs. RTC-
Tacloban, 226 SCRA 408). In respondent's case, when she returned to the
Philippines in 1991, the residence she chose was not Tacloban but San Juan,
Metro Manila. Thus, her animus revertendi is pointed to Metro Manila and not
Tacloban.

This Division is aware that her claim that she has been a resident of the First
District since childhood is nothing more than to give her a color of qualification
where she is otherwise constitutionally disqualified. It cannot hold ground in the
face of the facts admitted by the respondent in her affidavit. Except for the time
that she studied and worked for some years after graduation in Tacloban City,
she continuously lived in Manila. In 1959, after her husband was elected Senator,
she lived and resided in San Juan, Metro Manila where she was a registered
voter. In 1965, she lived in San Miguel, Manila where she was again a registered
voter. In 1978, she served as member of the Batasang Pambansa as the
representative of the City of Manila and later on served as the Governor of Metro
Manila. She could not have served these positions if she had not been a resident
of the City of Manila. Furthermore, when she filed her certificate of candidacy for
the office of the President in 1992, she claimed to be a resident of San Juan,
Metro Manila. As a matter of fact on August 24, 1994, respondent wrote a letter
with the election officer of San Juan, Metro Manila requesting for the cancellation
of her registration in the permanent list of voters that she may be re-registered or
transferred to Barangay Olot, Tolosa, Leyte. These facts manifest that she could
not have been a resident of Tacloban City since childhood up to the time she filed
her certificate of candidacy because she became a resident of many places,
including Metro Manila. This debunks her claim that prior to her residence in
Tolosa, Leyte, she was a resident of the First Legislative District of Leyte since
childhood.

In this case, respondent's conduct reveals her lack of intention to make Tacloban
her domicile. She registered as a voter in different places and on several
occasions declared that she was a resident of Manila. Although she spent her
school days in Tacloban, she is considered to have abandoned such place when
she chose to stay and reside in other different places. In the case of Romualdez
vs. RTC (226 SCRA 408) the Court explained how one acquires a new domicile
by choice. There must concur: (1) residence or bodily presence in the new
locality; (2) intention to remain there; and (3) intention to abandon the old
domicile. In other words there must basically be animus manendi with animus
non revertendi. When respondent chose to stay in Ilocos and later on in Manila,
coupled with her intention to stay there by registering as a voter there and
 expressly declaring that she is a resident of that place, she is deemed to have
abandoned Tacloban City, where she spent her childhood and school days, as
her place of domicile.

Pure intention to reside in that place is not sufficient, there must likewise be
conduct indicative of such intention. Respondent's statements to the effect that
she has always intended to return to Tacloban, without the accompanying
conduct to prove that intention, is not conclusive of her choice of residence.
Respondent has not presented any evidence to show that her conduct, one year
prior the election, showed intention to reside in Tacloban. Worse, what was
evident was that prior to her residence in Tolosa, she had been a resident of
Manila.

It is evident from these circumstances that she was not a resident of the First
District of Leyte "since childhood."

To further support the assertion that she could have not been a resident of the
First District of Leyte for more than one year, petitioner correctly pointed out that
on January 28, 1995 respondent registered as a voter at precinct No. 18-A of
Olot, Tolosa, Leyte. In doing so, she placed in her Voter Registration Record that
she resided in the municipality of Tolosa for a period of six months. This may be
inconsequential as argued by the respondent since it refers only to her residence
in Tolosa, Leyte. But her failure to prove that she was a resident of the First
District of Leyte prior to her residence in Tolosa leaves nothing but a convincing
proof that she had been a resident of the district for six months only. 15

In a Resolution promulgated a day before the May 8, 1995 elections, the COMELEC en
banc denied petitioner's Motion for Reconsideration 16 of the April 24, 1995 Resolution declaring
her not qualified to run for the position of Member of the House of Representatives for the First
Legislative District of Leyte. 17 The Resolution tersely stated:

After deliberating on the Motion for Reconsideration, the Commission

RESOLVED to DENY it, no new substantial matters having been raised therein to
warrant re-examination of the resolution granting the petition for disqualification. 18

On May 11, 1995, the COMELEC issued a Resolution allowing petitioner's proclamation should
the results of the canvass show that she obtained the highest number of votes in the
congressional elections in the First District of Leyte. On the same day, however, the COMELEC
reversed itself and issued a second Resolution directing that the proclamation of petitioner be
suspended in the event that she obtains the highest number of votes. 19

In a Supplemental Petition dated 25 May 1995, petitioner averred that she was the overwhelming
winner of the elections for the congressional seat in the First District of Leyte held May 8, 1995
based on the canvass completed by the Provincial Board of Canvassers on May 14, 1995.
Petitioner alleged that the canvass showed that she obtained a total of 70,471 votes compared to
the 36,833 votes received by Respondent Montejo. A copy of said Certificate of Canvass was
annexed to the Supplemental Petition.

On account of the Resolutions disqualifying petitioner from running for the congressional seat of
the First District of Leyte and the public respondent's Resolution suspending her proclamation,
petitioner comes to this court for relief.

Petitioner raises several issues in her Original and Supplemental Petitions. The principal issues
may be classified into two general areas:

I. The issue of Petitioner's qualifications

 Whether or not petitioner was a resident, for election purposes, of the First
District of Leyte for a period of one year at the time of the May 9, 1995 elections.

II. The Jurisdictional Issue

a) Prior to the elections

Whether or not the COMELEC properly exercised its jurisdiction in disqualifying

petitioner outside the period mandated by the Omnibus Election Code for
disqualification cases under Article 78 of the said Code.

b) After the Elections

Whether or not the House of Representatives Electoral Tribunal assumed

exclusive jurisdiction over the question of petitioner's qualifications after the May
8, 1995 elections.

I. Petitioner's qualification

A perusal of the Resolution of the COMELEC's Second Division reveals a startling confusion in
the application of settled concepts of "Domicile" and "Residence" in election law. While the
COMELEC seems to be in agreement with the general proposition that for the purposes of
election law, residence is synonymous with domicile, the Resolution reveals a tendency to
substitute or mistake the concept of domicile for actual residence, a conception not intended for
the purpose of determining a candidate's qualifications for election to the House of
Representatives as required by the 1987 Constitution. As it were, residence, for the purpose of
meeting the qualification for an elective position, has a settled meaning in our jurisdiction.

Article 50 of the Civil Code decrees that "[f]or the exercise of civil rights and the fulfillment of civil
obligations, the domicile of natural persons is their place of habitual residence." In Ong
vs. Republic 20 this court took the concept of domicile to mean an individual's "permanent home",
"a place to which, whenever absent for business or for pleasure, one intends to return, and
depends on facts and circumstances in the sense that they disclose intent." 21Based on the
foregoing, domicile includes the twin elements of "the fact of residing or physical presence in a
fixed place" and animus manendi, or the intention of returning there permanently.

Residence, in its ordinary conception, implies the factual relationship of an individual to a certain
place. It is the physical presence of a person in a given area, community or country. The
essential distinction between residence and domicile in law is that residence involves the intent
to leave when the purpose for which the resident has taken up his abode ends. One may seek a
place for purposes such as pleasure, business, or health. If a person's intent be to remain, it
becomes his domicile; if his intent is to leave as soon as his purpose is established it is
residence. 22 It is thus, quite perfectly normal for an individual to have different residences in
various places. However, a person can only have a single domicile, unless, for various reasons,
he successfully abandons his domicile in favor of another domicile of choice. In Uytengsu
vs. Republic, 23 we laid this distinction quite clearly:

There is a difference between domicile and residence. "Residence" is used to

indicate a place of abode, whether permanent or temporary; "domicile" denotes a
fixed permanent residence to which, when absent, one has the intention of
returning. A man may have a residence in one place and a domicile in another.
Residence is not domicile, but domicile is residence coupled with the intention to
remain for an unlimited time. A man can have but one domicile for the same
purpose at any time, but he may have numerous places of residence. His place
of residence is generally his place of domicile, but it is not by any means
 necessarily so since no length of residence without intention of remaining will
constitute domicile.

For political purposes the concepts of residence and domicile are dictated by the peculiar criteria
of political laws. As these concepts have evolved in our election law, what has clearly and
unequivocally emerged is the fact that residence for election purposes is used synonymously
with domicile.

In Nuval vs. Guray, 24 the Court held that "the term residence. . . is synonymous with domicile
which imports not only intention to reside in a fixed place, but also personal presence in that
place, coupled with conduct indicative of such intention." 25 Larena vs. Teves 26 reiterated the
same doctrine in a case involving the qualifications of the respondent therein to the post of
Municipal President of Dumaguete, Negros Oriental. Faypon vs. Quirino, 27 held that the absence
from residence to pursue studies or practice a profession or registration as a voter other than in
the place where one is elected does not constitute loss of residence. 28 So settled is the concept
(of domicile) in our election law that in these and other election law cases, this Court has stated
that the mere absence of an individual from his permanent residence without the intention to
abandon it does not result in a loss or change of domicile.

The deliberations of the 1987 Constitution on the residence qualification for certain elective
positions have placed beyond doubt the principle that when the Constitution speaks of
"residence" in election law, it actually means only "domicile" to wit:

Mr. Nolledo: With respect to Section 5, I remember that in the 1971 Constitutional
Convention, there was an attempt to require residence in the place not less than
one year immediately preceding the day of the elections. So my question is: What
is the Committee's concept of residence of a candidate for the legislature? Is it
actual residence or is it the concept of domicile or constructive residence?

Mr. Davide: Madame President, insofar as the regular members of the National
Assembly are concerned, the proposed section merely provides, among others,
"and a resident thereof", that is, in the district for a period of not less than one
year preceding the day of the election. This was in effect lifted from the 1973
Constitution, the interpretation given to it was domicile. 29

xxx xxx xxx

Mrs. Rosario Braid: The next question is on Section 7, page 2. I think

Commissioner Nolledo has raised the same point that "resident" has been
interpreted at times as a matter of intention rather than actual residence.

Mr. De los Reyes: Domicile.

Ms. Rosario Braid: Yes, So, would the gentleman consider at the proper time to
go back to actual residence rather than mere intention to reside?

Mr. De los Reyes: But we might encounter some difficulty especially considering
that a provision in the Constitution in the Article on Suffrage says that Filipinos
living abroad may vote as enacted by law. So, we have to stick to the original
concept that it should be by domicile and not physical residence. 30

In Co vs. Electoral Tribunal of the House of Representatives, 31 this Court concluded that the
framers of the 1987 Constitution obviously adhered to the definition given to the term residence
in election law, regarding it as having the same meaning as domicile. 32
In the light of the principles just discussed, has petitioner Imelda Romualdez Marcos satisfied the
residency requirement mandated by Article VI, Sec. 6 of the 1987 Constitution? Of what
significance is the questioned entry in petitioner's Certificate of Candidacy stating her residence
in the First Legislative District of Leyte as seven (7) months?

It is the fact of residence, not a statement in a certificate of candidacy which ought to be decisive
in determining whether or not and individual has satisfied the constitution's residency
qualification requirement. The said statement becomes material only when there is or appears to
be a deliberate attempt to mislead, misinform, or hide a fact which would otherwise render a
candidate ineligible. It would be plainly ridiculous for a candidate to deliberately and knowingly
make a statement in a certificate of candidacy which would lead to his or her disqualification.

It stands to reason therefore, that petitioner merely committed an honest mistake in jotting the
word "seven" in the space provided for the residency qualification requirement. The
circumstances leading to her filing the questioned entry obviously resulted in the subsequent
confusion which prompted petitioner to write down the period of her actual stay in Tolosa, Leyte
instead of her period of residence in the First district, which was "since childhood" in the space
provided. These circumstances and events are amply detailed in the COMELEC's Second
Division's questioned resolution, albeit with a different interpretation. For instance, when herein
petitioner announced that she would be registering in Tacloban City to make her eligible to run in
the First District, private respondent Montejo opposed the same, claiming that petitioner was a
resident of Tolosa, not Tacloban City. Petitioner then registered in her place of actual residence
in the First District, which is Tolosa, Leyte, a fact which she subsequently noted down in her
Certificate of Candidacy. A close look at said certificate would reveal the possible source of the
confusion: the entry for residence (Item No. 7) is followed immediately by the entry for residence
in the constituency where a candidate seeks election thus:

7. RESIDENCE (complete Address): Brgy. Olot, Tolosa, Leyte

POST OFFICE ADDRESS FOR ELECTION PURPOSES: Brgy. Olot, Tolosa,

Leyte

8. RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO

BE ELECTED IMMEDIATELY PRECEDING THE ELECTION:_________ Years
and Seven Months.

Having been forced by private respondent to register in her place of actual residence in Leyte
instead of petitioner's claimed domicile, it appears that petitioner had jotted down her period of
stay in her legal residence or domicile. The juxtaposition of entries in Item 7 and Item 8 — the
first requiring actual residence and the second requiring domicile — coupled with the
circumstances surrounding petitioner's registration as a voter in Tolosa obviously led to her
writing down an unintended entry for which she could be disqualified. This honest mistake should
not, however, be allowed to negate the fact of residence in the First District if such fact were
established by means more convincing than a mere entry on a piece of paper.

We now proceed to the matter of petitioner's domicile.

In support of its asseveration that petitioner's domicile could not possibly be in the First District of
Leyte, the Second Division of the COMELEC, in its assailed Resolution of April 24,1995
maintains that "except for the time when (petitioner) studied and worked for some years after
graduation in Tacloban City, she continuously lived in Manila." The Resolution additionally cites
certain facts as indicative of the fact that petitioner's domicile ought to be any place where she
lived in the last few decades except Tacloban, Leyte. First, according to the Resolution,
petitioner, in 1959, resided in San Juan, Metro Manila where she was also registered voter.
Then, in 1965, following the election of her husband to the Philippine presidency, she lived in
San Miguel, Manila where she as a voter. In 1978 and thereafter, she served as a member of the
Batasang Pambansa and Governor of Metro Manila. "She could not, have served these positions
if she had not been a resident of Metro Manila," the COMELEC stressed. Here is where the
confusion lies.

We have stated, many times in the past, that an individual does not lose his domicile even if he
has lived and maintained residences in different places. Residence, it bears repeating, implies a
factual relationship to a given place for various purposes. The absence from legal residence or
domicile to pursue a profession, to study or to do other things of a temporary or semi-permanent
nature does not constitute loss of residence. Thus, the assertion by the COMELEC that "she
could not have been a resident of Tacloban City since childhood up to the time she filed her
certificate of candidacy because she became a resident of many places" flies in the face of
settled jurisprudence in which this Court carefully made distinctions between (actual) residence
and domicile for election law purposes. In Larena vs. Teves, 33 supra, we stressed:

[T]his court is of the opinion and so holds that a person who has his own house
wherein he lives with his family in a municipality without having ever had the
intention of abandoning it, and without having lived either alone or with his family
in another municipality, has his residence in the former municipality,
notwithstanding his having registered as an elector in the other municipality in
question and having been a candidate for various insular and provincial positions,
stating every time that he is a resident of the latter municipality.

More significantly, in Faypon vs. Quirino, 34 We explained that:

A citizen may leave the place of his birth to look for "greener pastures," as the
saying goes, to improve his lot, and that, of course includes study in other places,
practice of his avocation, or engaging in business. When an election is to be held,
the citizen who left his birthplace to improve his lot may desire to return to his
native town to cast his ballot but for professional or business reasons, or for any
other reason, he may not absent himself from his professional or business
activities; so there he registers himself as voter as he has the qualifications to be
one and is not willing to give up or lose the opportunity to choose the officials who
are to run the government especially in national elections. Despite such
registration, the animus revertendi to his home, to his domicile or residence of
origin has not forsaken him. This may be the explanation why the registration of a
voter in a place other than his residence of origin has not been deemed sufficient
to constitute abandonment or loss of such residence. It finds justification in the
natural desire and longing of every person to return to his place of birth. This
strong feeling of attachment to the place of one's birth must be overcome by
positive proof of abandonment for another.

From the foregoing, it can be concluded that in its above-cited statements supporting its
proposition that petitioner was ineligible to run for the position of Representative of the First
District of Leyte, the COMELEC was obviously referring to petitioner's various places of (actual)
residence, not her domicile. In doing so, it not only ignored settled jurisprudence on residence in
election law and the deliberations of the constitutional commission but also the provisions of the
Omnibus Election Code (B.P. 881). 35

What is undeniable, however, are the following set of facts which establish the fact of petitioner's
domicile, which we lift verbatim from the COMELEC's Second Division's assailed Resolution: 36

In or about 1938 when respondent was a little over 8 years old, she established
her domicile in Tacloban, Leyte (Tacloban City). She studied in the Holy Infant
Academy in Tacloban from 1938 to 1949 when she graduated from high school.
She pursued her college studies in St. Paul's College, now Divine Word
University in Tacloban, where she earned her degree in Education. Thereafter,
 she taught in the Leyte Chinese School, still in Tacloban City. In 1952 she went
to Manila to work with her cousin, the late speaker Daniel Z. Romualdez in his
office in the House of Representatives. In 1954, she married ex-President
Ferdinand E. Marcos when he was still a congressman of Ilocos Norte and
registered there as a voter. When her husband was elected Senator of the
Republic in 1959, she and her husband lived together in San Juan, Rizal where
she registered as a voter. In 1965, when her husband was elected President of
the Republic of the Philippines, she lived with him in Malacanang Palace and
registered as a voter in San Miguel, Manila.

[I]n February 1986 (she claimed that) she and her family were abducted and
kidnapped to Honolulu, Hawaii. In November 1991, she came home to Manila. In
1992, respondent ran for election as President of the Philippines and filed her
Certificate of Candidacy wherein she indicated that she is a resident and
registered voter of San Juan, Metro Manila.

Applying the principles discussed to the facts found by COMELEC, what is inescapable is that
petitioner held various residences for different purposes during the last four decades. None of
these purposes unequivocally point to an intention to abandon her domicile of origin in Tacloban,
Leyte. Moreover, while petitioner was born in Manila, as a minor she naturally followed the
domicile of her parents. She grew up in Tacloban, reached her adulthood there and eventually
established residence in different parts of the country for various reasons. Even during her
husband's presidency, at the height of the Marcos Regime's powers, petitioner kept her close ties
to her domicile of origin by establishing residences in Tacloban, celebrating her birthdays and
other important personal milestones in her home province, instituting well-publicized projects for
the benefit of her province and hometown, and establishing a political power base where her
siblings and close relatives held positions of power either through the ballot or by appointment,
always with either her influence or consent. These well-publicized ties to her domicile of origin
are part of the history and lore of the quarter century of Marcos power in our country. Either they
were entirely ignored in the COMELEC'S Resolutions, or the majority of the COMELEC did not
know what the rest of the country always knew: the fact of petitioner's domicile in Tacloban,
Leyte.

Private respondent in his Comment, contends that Tacloban was not petitioner's domicile of
origin because she did not live there until she was eight years old. He avers that after leaving the
place in 1952, she "abandoned her residency (sic) therein for many years and . . . (could not) re-
establish her domicile in said place by merely expressing her intention to live there again." We do
not agree.

First, minor follows the domicile of his parents. As domicile, once acquired is retained until a new
one is gained, it follows that in spite of the fact of petitioner's being born in Manila, Tacloban,
Leyte was her domicile of origin by operation of law. This domicile was not established only when
her father brought his family back to Leyte contrary to private respondent's averments.

Second, domicile of origin is not easily lost. To successfully effect a change of domicile, one
must demonstrate: 37

1. An actual removal or an actual change of domicile;

2. A bona fide intention of abandoning the former place of residence and

establishing a new one; and

3. Acts which correspond with the purpose.

In the absence of clear and positive proof based on these criteria, the residence of origin should
be deemed to continue. Only with evidence showing concurrence of all three requirements can
the presumption of continuity or residence be rebutted, for a change of residence requires an
actual and deliberate abandonment, and one cannot have two legal residences at the same
time. 38 In the case at bench, the evidence adduced by private respondent plainly lacks the
degree of persuasiveness required to convince this court that an abandonment of domicile of
origin in favor of a domicile of choice indeed occurred. To effect an abandonment requires the
voluntary act of relinquishing petitioner's former domicile with an intent to supplant the former
domicile with one of her own choosing (domicilium voluntarium).

In this connection, it cannot be correctly argued that petitioner lost her domicile of origin by
operation of law as a result of her marriage to the late President Ferdinand E. Marcos in 1952.
For there is a clearly established distinction between the Civil Code concepts of "domicile" and
"residence." 39 The presumption that the wife automatically gains the husband's domicile by
operation of law upon marriage cannot be inferred from the use of the term "residence" in Article
110 of the Civil Code because the Civil Code is one area where the two concepts are well
delineated. Dr. Arturo Tolentino, writing on this specific area explains:

In the Civil Code, there is an obvious difference between domicile and residence.
Both terms imply relations between a person and a place; but in residence, the
relation is one of fact while in domicile it is legal or juridical, independent of the
necessity of physical presence. 40

Article 110 of the Civil Code provides:

Art. 110. — The husband shall fix the residence of the family. But the court may
exempt the wife from living with the husband if he should live abroad unless in
the service of the Republic.

A survey of jurisprudence relating to Article 110 or to the concepts of domicile or residence as

they affect the female spouse upon marriage yields nothing which would suggest that the female
spouse automatically loses her domicile of origin in favor of the husband's choice of residence
upon marriage.

Article 110 is a virtual restatement of Article 58 of the Spanish Civil Code of 1889 which states:

La mujer esta obligada a seguir a su marido donde quiera que fije su residencia.
Los Tribunales, sin embargo, podran con justa causa eximirla de esta obligacion
cuando el marido transende su residencia a ultramar o' a pais extranjero.

Note the use of the phrase "donde quiera su fije de residencia" in the aforequoted article, which
means wherever (the husband) wishes to establish residence. This part of the article clearly
contemplates only actual residence because it refers to a positive act of fixing a family home or
residence. Moreover, this interpretation is further strengthened by the phrase "cuando el marido
translade su residencia" in the same provision which means, "when the husband shall
transfer his residence," referring to another positive act of relocating the family to another home
or place of actual residence. The article obviously cannot be understood to refer to domicile
which is a fixed,
fairly-permanent concept when it plainly connotes the possibility of transferring from one place to
another not only once, but as often as the husband may deem fit to move his family, a
circumstance more consistent with the concept of actual residence.

The right of the husband to fix the actual residence is in harmony with the intention of the law to
strengthen and unify the family, recognizing the fact that the husband and the wife bring into the
marriage different domiciles (of origin). This difference could, for the sake of family unity, be
reconciled only by allowing the husband to fix a single place of actual residence.
Very significantly, Article 110 of the Civil Code is found under Title V under the heading: RIGHTS
AND OBLIGATIONS BETWEEN HUSBAND AND WIFE. Immediately preceding Article 110 is
Article 109 which obliges the husband and wife to live together, thus:

Art. 109. — The husband and wife are obligated to live together, observe mutual
respect and fidelity and render mutual help and support.

The duty to live together can only be fulfilled if the husband and wife are physically together. This
takes into account the situations where the couple has many residences (as in the case of the
petitioner). If the husband has to stay in or transfer to any one of their residences, the wife should
necessarily be with him in order that they may "live together." Hence, it is illogical to conclude
that Art. 110 refers to "domicile" and not to "residence." Otherwise, we shall be faced with a
situation where the wife is left in the domicile while the husband, for professional or other
reasons, stays in one of their (various) residences. As Dr. Tolentino further explains:

Residence and Domicile — Whether the word "residence" as used with reference
to particular matters is synonymous with "domicile" is a question of some
difficulty, and the ultimate decision must be made from a consideration of the
purpose and intent with which the word is used. Sometimes they are used
synonymously, at other times they are distinguished from one another.

xxx xxx xxx

Residence in the civil law is a material fact, referring to the physical presence of a
person in a place. A person can have two or more residences, such as a country
residence and a city residence. Residence is acquired by living in place; on the
other hand, domicile can exist without actually living in the place. The important
thing for domicile is that, once residence has been established in one place, there
be an intention to stay there permanently, even if residence is also established in
some other
place. 41

In fact, even the matter of a common residence between the husband and the wife during the
marriage is not an iron-clad principle; In cases applying the Civil Code on the question of a
common matrimonial residence, our jurisprudence has recognized certain situations 42 where the
spouses could not be compelled to live with each other such that the wife is either allowed to
maintain a residence different from that of her husband or, for obviously practical reasons, revert
to her original domicile (apart from being allowed to opt for a new one). In De la Vina
vs.Villareal 43 this Court held that "[a] married woman may acquire a residence or domicile
separate from that of her husband during the existence of the marriage where the husband has
given cause for divorce." 44 Note that the Court allowed the wife either to obtain new residence or
to choose a new domicile in such an event. In instances where the wife actually opts, .under the
Civil Code, to live separately from her husband either by taking new residence or reverting to her
domicile of origin, the Court has held that the wife could not be compelled to live with her
husband on pain of contempt. In Arroyo vs. Vasques de Arroyo 45 the Court held that:

Upon examination of the authorities, we are convinced that it is not within the
province of the courts of this country to attempt to compel one of the spouses to
cohabit with, and render conjugal rights to, the other. Of course where the
property rights of one of the pair are invaded, an action for restitution of such
rights can be maintained. But we are disinclined to sanction the doctrine that an
order, enforcible (sic) by process of contempt, may be entered to compel the
restitution of the purely personal right of consortium. At best such an order can be
effective for no other purpose than to compel the spouses to live under the same
roof; and he experience of those countries where the courts of justice have
assumed to compel the cohabitation of married people shows that the policy of
 the practice is extremely questionable. Thus in England, formerly the
Ecclesiastical Court entertained suits for the restitution of conjugal rights at the
instance of either husband or wife; and if the facts were found to warrant it, that
court would make a mandatory decree, enforceable by process of contempt in
case of disobedience, requiring the delinquent party to live with the other and
render conjugal rights. Yet this practice was sometimes criticized even by the
judges who felt bound to enforce such orders, and in Weldon v. Weldon (9 P.D.
52), decided in 1883, Sir James Hannen, President in the Probate, Divorce and
Admiralty Division of the High Court of Justice, expressed his regret that the
English law on the subject was not the same as that which prevailed in Scotland,
where a decree of adherence, equivalent to the decree for the restitution of
conjugal rights in England, could be obtained by the injured spouse, but could not
be enforced by imprisonment. Accordingly, in obedience to the growing sentiment
against the practice, the Matrimonial Causes Act (1884) abolished the remedy of
imprisonment; though a decree for the restitution of conjugal rights can still be
procured, and in case of disobedience may serve in appropriate cases as the
basis of an order for the periodical payment of a stipend in the character of
alimony.

In the voluminous jurisprudence of the United States, only one court, so far as we
can discover, has ever attempted to make a preemptory order requiring one of
the spouses to live with the other; and that was in a case where a wife was
ordered to follow and live with her husband, who had changed his domicile to the
City of New Orleans. The decision referred to (Bahn v. Darby, 36 La. Ann., 70)
was based on a provision of the Civil Code of Louisiana similar to article 56 of the
Spanish Civil Code. It was decided many years ago, and the doctrine evidently
has not been fruitful even in the State of Louisiana. In other states of the
American Union the idea of enforcing cohabitation by process of contempt is
rejected. (21 Cyc., 1148).

In a decision of January 2, 1909, the Supreme Court of Spain appears to have

affirmed an order of the Audiencia Territorial de Valladolid requiring a wife to
return to the marital domicile, and in the alternative, upon her failure to do so, to
make a particular disposition of certain money and effects then in her possession
and to deliver to her husband, as administrator of the ganancial property, all
income, rents, and interest which might accrue to her from the property which she
had brought to the marriage. (113 Jur. Civ., pp. 1, 11) But it does not appear that
this order for the return of the wife to the marital domicile was sanctioned by any
other penalty than the consequences that would be visited upon her in respect to
the use and control of her property; and it does not appear that her disobedience
to that order would necessarily have been followed by imprisonment for
contempt.

Parenthetically when Petitioner was married to then Congressman Marcos, in 1954, petitioner
was obliged — by virtue of Article 110 of the Civil Code — to follow her husband's actual place of
residence fixed by him. The problem here is that at that time, Mr. Marcos had several places of
residence, among which were San Juan, Rizal and Batac, Ilocos Norte. There is no showing
which of these places Mr. Marcos did fix as his family's residence. But assuming that Mr. Marcos
had fixed any of these places as the conjugal residence, what petitioner gained upon marriage
was actual residence. She did not lose her domicile of origin.

On the other hand, the common law concept of "matrimonial domicile" appears to have been
incorporated, as a result of our jurisprudential experiences after the drafting of the Civil Code of
1950, into the New Family Code. To underscore the difference between the intentions of the Civil
Code and the Family Code drafters, the term residence has been supplanted by the term
domicile in an entirely new provision (Art. 69) distinctly different in meaning and spirit from that
found in Article 110. The provision recognizes revolutionary changes in the concept of women's
rights in the intervening years by making the choice of domicile a product of mutual agreement
between the spouses. 46

Without as much belaboring the point, the term residence may mean one thing in civil law (or
under the Civil Code) and quite another thing in political law. What stands clear is that insofar as
the Civil Code is concerned-affecting the rights and obligations of husband and wife — the term
residence should only be interpreted to mean "actual residence." The inescapable conclusion
derived from this unambiguous civil law delineation therefore, is that when petitioner married the
former President in 1954, she kept her domicile of origin and merely gained a new home, not
a domicilium necessarium.

Even assuming for the sake of argument that petitioner gained a new "domicile" after her
marriage and only acquired a right to choose a new one after her husband died, petitioner's acts
following her return to the country clearly indicate that she not only impliedly but expressly chose
her domicile of origin (assuming this was lost by operation of law) as her domicile. This "choice"
was unequivocally expressed in her letters to the Chairman of the PCGG when petitioner sought
the PCGG's permission to "rehabilitate (our) ancestral house in Tacloban and Farm in Olot,
Leyte. . . to make them livable for the Marcos family to have a home in our
homeland." 47 Furthermore, petitioner obtained her residence certificate in 1992 in Tacloban,
Leyte, while living in her brother's house, an act which supports the domiciliary intention clearly
manifested in her letters to the PCGG Chairman. She could not have gone straight to her home
in San Juan, as it was in a state of disrepair, having been previously looted by vandals. Her
"homes" and "residences" following her arrival in various parts of Metro Manila merely qualified
as temporary or "actual residences," not domicile. Moreover, and proceeding from our discussion
pointing out specific situations where the female spouse either reverts to her domicile of origin or
chooses a new one during the subsistence of the marriage, it would be highly illogical for us to
assume that she cannot regain her original domicile upon the death of her husband absent a
positive act of selecting a new one where situations exist within the subsistence of the marriage
itself where the wife gains a domicile different from her husband.

In the light of all the principles relating to residence and domicile enunciated by this court up to
this point, we are persuaded that the facts established by the parties weigh heavily in favor of a
conclusion supporting petitioner's claim of legal residence or domicile in the First District of
Leyte.

II. The jurisdictional issue

Petitioner alleges that the jurisdiction of the COMELEC had already lapsed considering that the
assailed resolutions were rendered on April 24, 1995, fourteen (14) days before the election in
violation of Section 78 of the Omnibus Election Code. 48 Moreover, petitioner contends that it is
the House of Representatives Electoral Tribunal and not the COMELEC which has jurisdiction
over the election of members of the House of Representatives in accordance with Article VI Sec.
17 of the Constitution. This is untenable.

It is a settled doctrine that a statute requiring rendition of judgment within a specified time is
generally construed to be merely directory, 49 "so that non-compliance with them does not
invalidate the judgment on the theory that if the statute had intended such result it would have
clearly indicated it." 50 The difference between a mandatory and a directory provision is often
made on grounds of necessity. Adopting the same view held by several American authorities,
this court in Marcelino vs. Cruz held that: 51

The difference between a mandatory and directory provision is often determined

on grounds of expediency, the reason being that less injury results to the general
public by disregarding than enforcing the letter of the law.
 In Trapp v. Mc Cormick, a case calling for the interpretation of a statute
containing a limitation of thirty (30) days within which a decree may be entered
without the consent of counsel, it was held that "the statutory provisions which
may be thus departed from with impunity, without affecting the validity of statutory
proceedings, are usually those which relate to the mode or time of doing that
which is essential to effect the aim and purpose of the Legislature or some
incident of the essential act." Thus, in said case, the statute under examination
was construed merely to be directory.

The mischief in petitioner's contending that the COMELEC should have abstained from rendering
a decision after the period stated in the Omnibus Election Code because it lacked jurisdiction,
lies in the fact that our courts and other quasi-judicial bodies would then refuse to render
judgments merely on the ground of having failed to reach a decision within a given or prescribed
period.

In any event, with the enactment of Sections 6 and 7 of R.A. 6646 in relation to Section 78 of
B.P. 881, 52 it is evident that the respondent Commission does not lose jurisdiction to hear and
decide a pending disqualification case under Section 78 of B.P. 881 even after the elections.

As to the House of Representatives Electoral Tribunal's supposed assumption of jurisdiction over

the issue of petitioner's qualifications after the May 8, 1995 elections, suffice it to say that
HRET's jurisdiction as the sole judge of all contests relating to the elections, returns and
qualifications of members of Congress begins only after a candidate has become a member of
the House of Representatives. 53 Petitioner not being a member of the House of Representatives,
it is obvious that the HRET at this point has no jurisdiction over the question.

It would be an abdication of many of the ideals enshrined in the 1987 Constitution for us to either
to ignore or deliberately make distinctions in law solely on the basis of the personality of a
petitioner in a case. Obviously a distinction was made on such a ground here. Surely, many
established principles of law, even of election laws were flouted for the sake perpetuating power
during the pre-EDSA regime. We renege on these sacred ideals, including the meaning and spirit
of EDSA ourselves bending established principles of principles of law to deny an individual what
he or she justly deserves in law. Moreover, in doing so, we condemn ourselves to repeat the
mistakes of the past.

WHEREFORE, having determined that petitioner possesses the necessary residence

qualifications to run for a seat in the House of Representatives in the First District of Leyte, the
COMELEC's questioned Resolutions dated April 24, May 7, May 11, and May 25, 1995 are
hereby SET ASIDE. Respondent COMELEC is hereby directed to order the Provincial Board of
Canvassers to proclaim petitioner as the duly elected Representative of the First District of Leyte.

SO ORDERED.

G.R. No. 120265 September 18, 1995

AGAPITO A. AQUINO, petitioner,

vs.
COMMISSION ON ELECTIONS, MOVE MAKATI, MATEO BEDON and JUANITO
ICARO, respondents.

KAPUNAN, J.:

The sanctity of the people's will must be observed at all times if our nascent democracy is to be
preserved. In any challenge having the effect of reversing a democratic choice, expressed
through the ballot, this Court should be ever so vigilant in finding solutions which would give
effect to the will of the majority, for sound public policy dictates that all elective offices are filled
by those who have received the highest number of votes cast in an election. When a challenge to
a winning candidate's qualifications however becomes inevitable, the ineligibility ought to be so
noxious to the Constitution that giving effect to the apparent will of the people would ultimately do
harm to our democratic institutions.

On March 20, 1995, petitioner Agapito A. Aquino filed his Certificate of Candidacy for the position
of Representative for the new Second Legislative District of Makati City. Among others, Aquino
provided the following information in his certificate of candidacy, viz:.

(7) RESIDENCE (Complete Address): 284 AMAPOLA COR. ADALLA STS.,

PALM VILLAGE, MAKATI.

xxx xxx xxx

(8) RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO BE ELECTED

IMMEDIATELY PRECEDING THE ELECTION: ______ Years and 10 Months.

xxx xxx xxx

THAT I AM ELIGIBLE for said Office; That I will support and defend the
Constitution of the Republic of the Philippines and will maintain true faith and
allegiance thereto; That I will obey the law, rules and decrees promulgated by the
duly constituted authorities; That the obligation imposed to such is assumed
voluntarily, without mental reservation or purpose of evasion, and that the facts
therein are true to the best of my knowledge.1

On April 24, 1995, Move Makati, a duly registered political party, and Mateo Bedon, Chairman of
the LAKAS-NUCD-UMDP of Barangay Cembo, Makati City, filed a petition to disqualify Agapito
A. Aquino2 on the ground that the latter lacked the residence qualification as a candidate for
congressman which, under Section 6, Art. VI of the 1987 the Constitution, should be for a period
not less than one (1) year immediately preceding the May 8, 1995 elections. The petition was
docketed as SPA No. 95-113 and was assigned to the Second Division of the Commission on
Elections (COMELEC).

On April 25, 1995, a day after said petition for disqualification was filed, petitioner filed another
certificate of candidacy amending the certificate dated March 20, 1995. This time, petitioner
stated in Item 8 of his certificate that he had resided in the constituency where he sought to be
elected for one (l) year and thirteen (13) days.3

On May 2, 1995, petitioner filed his Answer dated April 29, 1995 praying for the dismissal of the
disqualification case.4

On the same day, May 2, 1995, a hearing was conducted by the COMELEC wherein petitioner
testified and presented in evidence, among others, his Affidavit dated May 2, 1995,5 lease
contract between petitioner and Leonor Feliciano dated April 1, 1994,6 Affidavit of Leonor
Feliciano dated April 28,19957 and Affidavit of Daniel Galamay dated April 28, 1995.8

After hearing of the petition for disqualification, the Second Division of the COMELEC
promulgated a Resolution dated May 6, 1995, the decretal portion of which reads:

WHEREFORE, in view of the foregoing, this Commission (Second Division)

RESOLVES to DISMISS the instant: petition for Disqualification against
 respondent AGAPITO AQUINO and declares him ELIGIBLE to run for the Office
of Representative in the Second Legislative District of Makati City.

SO ORDERED.9

On May 7, 1995, Move Makati and Mateo Bedon filed a Motion for Reconsideration of the May 6,
1995 resolution with the COMELEC en banc.

Meanwhile, on May 8, 1995, elections were held. In Makati City where three (3) candidates vied
for the congressional seat in the Second District, petitioner garnered thirty eight thousand five
hundred forty seven (38,547) votes as against another candidate, Agusto Syjuco, who obtained
thirty five thousand nine hundred ten (35,910) votes.10

On May 10, 1995, private respondents Move Makati and Bedon filed an Urgent Motion Ad
Cautelum to Suspend Proclamation of petitioner. Thereafter, they filed an Omnibus Motion for
Reconsideration of the COMELEC's Second Division resolution dated May 6, 1995 and a 2nd
Urgent Motion Ad Cautelum to Suspend Proclamation of petitioner.

On May 15, 1995, COMELEC en banc issued an Order suspending petitioner's proclamation.
The dispositive portion of the order reads:

WHEREFORE, pursuant to the provisions of Section 6 of Republic Act No. 6646,

the Board of Canvassers of the City of Makati is hereby directed to complete the
canvassing of election returns of the Second District of Makati, but to suspend
the proclamation of respondent Agapito A. Aquino should he obtain the winning
number of votes for the position of Representative of the Second District of the
City of Makati, until the motion for reconsideration filed by the petitioners on May
7, 1995, shall have been resolved by the Commission.

The Executive Director, this Commission, is directed to cause the immediate

implementation of this Order. The Clerk of Court of the Commission is likewise
directed to inform the parties by the fastest means available of this Order, and to
calendar the hearing of the Motion for Reconsideration on May 17, 1995, at 10:00
in the morning, PICC Press Center, Pasay City.

SO ORDERED.11

On May 16, 1995, petitioner filed his Comment/Opposition with urgent motion to lift order of
suspension of proclamation.

On June 1, 1995, petitioner filed a "Motion to File Supplemental Memorandum and Motion to
Resolve Urgent Motion to Resolve Motion to Lift Suspension of Proclamation" wherein he
manifested his intention to raise, among others, the issue of whether of not the determination of
the qualifications of petitioner after the elections is lodged exclusively in the House of
Representatives Electoral Tribunal pursuant to Section 17, Article VI of the 1987 Constitution.

Resolving petitioner's motion to lift suspension of his proclamation, the COMELEC en

banc issued an Order on June 2, 1995, the decretal portion thereof residing:

Pursuant to the said provisions and considering the attendant circumstances of

the case, the Commission RESOLVED to proceed with the promulgation but to
suspend its rules, to accept the filing of the aforesaid motion, and to allow the
parties to be heard thereon because the issue of jurisdiction now before the
Commission has to be studied with more reflection and judiciousness. 12
On the same day, June 2, 1995, the COMELEC en banc issued a Resolution reversing the
resolution of the Second Division dated May 6, 1995. The fallo reads as follows:

WHEREFORE, in view of the foregoing, petitioners' Motion for Reconsideration of

the Resolution of the Second Division, promulgated on May 6, 1995, is
GRANTED. Respondent Agapito A. Aquino is declared ineligible and thus
disqualified as a candidate for the Office of Representative of the Second
Legislative District of Makati City in the May 8, 1995 elections, for lack of the
constitutional qualification of residence. Consequently, the order of suspension of
proclamation of the respondent should he obtain the winning number of votes,
issued by this Commission on May 15, 1995 is now made permanent.

Upon the finality of this Resolution, the Board of Canvassers of the City of Makati
shall immediately reconvene and, on the basis of the completed canvass of
election returns, determine the winner out of the remaining qualified candidates,
who shall be immediately be proclaimed.

SO ORDERED. 13

Hence, the instant Petition for Certiorari 14 assailing the orders dated May 15, 1995 and June 2,
1995, as well as the resolution dated June 2, 1995 issued by the COMELEC en banc.
Petitioner's raises the following errors for consideration, to wit:

THE COMELEC HAS NO JURISDICTION TO DETERMINE AND ADJUDGE

THE DISQUALIFICATION ISSUE INVOLVING CONGRESSIONAL
CANDIDATES AFTER THE MAY 8, 1995 ELECTIONS, SUCH
DETERMINATION BEING RESERVED TO AND LODGE EXCLUSIVELY WITH
THE HOUSE OF REPRESENTATIVE ELECTORAL TRIBUNAL

ASSUMING ARGUENDO THAT THE COMELEC HAS JURISDICTION, SAID

JURISDICTION CEASED IN THE INSTANT CASE AFTER THE ELECTIONS,
AND THE REMEDY/IES AVAILABLE TO THE ADVERSE PARTIES LIE/S IN
ANOTHER FORUM WHICH, IT IS SUBMITTED, IS THE HRET CONSISTENT
WITH SECTION 17, ARTICLE VI OF THE 1987 CONSTITUTION

THE COMELEC COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT

PROCEEDED TO PROMULGATE ITS QUESTIONED DECISION (ANNEX "C",
PETITION) DESPITE IT OWN RECOGNITION THAT A THRESHOLD ISSUE OF
JURISDICTION HAS TO BE JUDICIOUSLY REVIEWED AGAIN,
ASSUMING ARGUENDO THAT THE COMELEC HAS JURISDICTION, THE
COMELEC COMMITTED GRAVE ABUSE OF DISCRETION, AND SERIOUS
ERROR IN DIRECTING WITHOUT NOTICE THE SUSPENSION OF THE
PROCLAMATION OF THE PETITIONER AS THE WINNING CONGRESSIONAL
CANDIDATE AND DESPITE THE MINISTERIAL NATURE OF SUCH DUTY TO
PROCLAIM (PENDING THE FINALITY OF THE DISQUALIFICATION CASE
AGAINST THE PETITIONER) IF ONLY NOT TO THWART THE PEOPLE'S
WILL.

D
 THE COMELEC'S FINDING OF NON-COMPLIANCE WITH THE RESIDENCY
REQUIREMENT OF ONE YEAR AGAINST THE PETITIONER IS CONTRARY
TO EVIDENCE AND TO APPLICABLE LAWS AND JURISPRUDENCE.

IN ANY CASE, THE COMELEC CRITICALLY ERRED IN FAILING TO

APPRECIATE THE LEGAL IMPOSSIBILITY OF ENFORCING THE ONE YEAR
RESIDENCY REQUIREMENT OF CONGRESSIONAL CANDIDATES IN NEWLY
CREATED POLITICAL DISTRICTS WHICH WERE ONLY EXISTING FOR LESS
THAN A YEAR AT THE TIME OF THE ELECTION AND BARELY FOUR
MONTHS IN THE CASE OF PETITIONER'S DISTRICT IN MAKATI OF
CONGRESSIONAL.

THE COMELEC COMMITTED SERIOUS ERROR AMOUNTING TO LACK OF

JURISDICTION WHEN IT ORDERED THE BOARD OF CANVASSERS TO
"DETERMINE AND PROCLAIM THE WINNER OUT OF THE REMAINING
QUALIFIED CANDIDATES" AFTER THE ERRONEOUS DISQUALIFICATION
OF YOUR PETITIONER IN THAT SUCH DIRECTIVE IS IN TOTAL DISREGARD
OF THE WELL SETTLED DOCTRINE THAT A SECOND PLACE CANDIDATE
OR PERSON WHO WAS REPUDIATED BY THE ELECTORATE IS A LOSER
AND CANNOT BE PROCLAIMED AS SUBSTITUTE
WINNER.15

In his first three assignments of error, petitioner vigorously contends that after the May 8, 1995
elections, the COMELEC lost its jurisdiction over the question of petitioner's qualifications to run
for member of the House of Representatives. He claims that jurisdiction over the petition for
disqualification is exclusively lodged with the House of Representatives Electoral Tribunal
(HRET). Given the yet unresolved question of jurisdiction, petitioner avers that the COMELEC
committed serious error and grave abuse of discretion in directing the suspension of his
proclamation as the winning candidate in the Second Congressional District of Makati City. We
disagree.

Petitioner conveniently confuses the distinction between an unproclaimed candidate to the

House of Representatives and a member of the same. Obtaining the highest number of votes in
an election does not automatically vest the position in the winning candidate. Section 17 of
Article VI of the 1987 Constitution reads:

The Senate and the House of Representatives shall have an Electoral Tribunal
which shall be the sole judge of all contests relating to the election, returns and
qualifications of their respective Members.

Under the above-stated provision, the electoral tribunal clearly assumes jurisdiction over all
contests relative to the election, returns and qualifications of candidates for either the Senate or
the House only when the latter become members of either the Senate or the House of
Representatives. A candidate who has not been proclaimed 16 and who has not taken his oath of
office cannot be said to be a member of the House of Representatives subject to Section. 17 of
the Constitution. While the proclamation of a winning candidate in an election is ministerial, B.P.
881 in conjunction with Sec 6 of R.A. 6646 allows suspension of proclamation under
circumstances mentioned therein. Thus, petitioner's contention that "after the conduct of the
election and (petitioner) has been established the winner of the electoral exercise from the
moment of election, the COMELEC is automatically divested of authority to pass upon the
question of qualification" finds no basis, because even after the elections the COMELEC is
empowered by Section 6 (in relation to Section 7) of R.A. 6646 to continue to hear and decide
questions relating to qualifications of candidates Section 6 states:

Sec. 6. Effect of Disqualification Case. — Any candidate, who has been declared
by final judgment to be disqualified shall not be voted for, and the votes cast for
him shall not be counted. If for any reason a candidate is not declared by final
judgment before an election to be disqualified and he is voted for and receives
the winning number of votes in such election, the Court or Commission shall
continue with the trial and hearing of the action, inquiry or protest and, upon
motion of the complainant or any intervenor, may during the pendency thereof
order the suspension of the proclamation of such candidate whenever the
evidence of guilt is strong.

Under the above-quoted provision, not only is a disqualification case against a candidate allowed
to continue after the election (and does not oust the COMELEC of its jurisdiction), but his
obtaining the highest number of votes will not result in the suspension or termination of the
proceedings against him when the evidence of guilt is strong. While the phrase "when the
evidence of guilt is strong" seems to suggest that the provisions of Section 6 ought to be
applicable only to disqualification cases under Section 68 of the Omnibus Election Code, Section
7 of R.A. 6646 allows the application of the provisions of Section 6 to cases involving
disqualification based on ineligibility under Section 78 of B.P. 881. Section 7 states:

Sec. 7. Petition to Deny Due Course or to Cancel a Certificate of Candidacy. —

The procedure hereinabove provided shall apply to petition to deny due course to
or cancel a certificate of candidacy based on Sec. 78 of Batas Pambansa 881.

II

We agree with COMELEC's contention that in order that petitioner could qualify as a candidate
for Representative of the Second District of Makati City the latter "must prove that he has
established not just residence but domicile of choice. 17

The Constitution requires that a person seeking election to the House of Representatives should
be a resident of the district in which he seeks election for a period of not less than one (l) year
prior to the elections. 18 Residence, for election law purposes, has a settled meaning in our
jurisdiction.

In Co v. Electoral Tribunal of the House of Representatives 19 this Court held that the term
"residence" has always been understood as synonymous with "domicile" not only under the
previous Constitutions but also under the 1987 Constitution. The Court there held: 20

The deliberations of the Constitutional Commission reveal that the meaning of

residence vis-a-vis the qualifications of a candidate for Congress continues to
remain the same as that of domicile, to wit:

Mr. Nolledo: With respect to Section 5, I remember that in the

1971 Constitutional Convention, there was an attempt to require
residence in the place not less than one year immediately
preceding the day of elections. So my question is: What is the
Committee's concept of domicile or constructive residence?

Mr. Davide: Madame President, insofar as the regular members

of the National Assembly are concerned, the proposed section
merely provides, among others, and a resident thereof', that is, in
the district, for a period of not less than one year preceding the
 day of the election. This was in effect lifted from the 1973
Constitution, the interpretation given to it was domicile (emphasis
ours) Records of the 1987 Constitutional Convention, Vol. II, July
22, 1986, p. 87).

xxx xxx xxx

Mrs. Rosario Braid: The next question is on section 7, page 2. I

think Commissioner Nolledo has raised the same point that
"resident" has been interpreted at times as a matter of intention
rather than actual residence.

Mr. De Los Reyes: Domicile.

Ms. Rosario Braid: Yes, So, would the gentlemen consider at the
proper time to go back to actual residence rather than mere
intention to reside?

Mr. De los Reyes: But We might encounter some difficulty

especially considering that the provision in the Constitution in the
Article on Suffrage says that Filipinos living abroad may vote as
enacted by law. So, we have to stick to the original concept that it
should be by domicile and not physical and actual residence.
(Records of the 1987 Constitutional Commission, Vol. II, July 22,
1986, p. 110).

The framers of the Constitution adhered to the earlier definition given to the word
"residence" which regarded it as having the same meaning as domicile.

Clearly, the place "where a party actually or constructively has his permanent home," 21 where he,
no matter where he may be found at any given time, eventually intends to return and remain, i.e.,
his domicile, is that to which the Constitution refers when it speaks of residence for the purposes
of election law. The manifest purpose of this deviation from the usual conceptions of residency in
law as explained in Gallego vs. Vera at 22 is "to exclude strangers or newcomers unfamiliar with
the conditions and needs of the community" from taking advantage of favorable circumstances
existing in that community for electoral gain. While there is nothing wrong with the practice of
establishing residence in a given area for meeting election law requirements, this nonetheless
defeats the essence of representation, which is to place through the assent of voters those most
cognizant and sensitive to the needs of a particular district, if a candidate falls short of the period
of residency mandated by law for him to qualify. That purpose could be obviously best met by
individuals who have either had actual residence in the area for a given period or who have been
domiciled in the same area either by origin or by choice. It would, therefore, be imperative for this
Court to inquire into the threshold question as to whether or not petitioner actually was a resident
for a period of one year in the area now encompassed by the Second Legislative District of
Makati at the time of his election or whether or not he was domiciled in the same.

As found by the COMELEC en banc petitioner in his Certificate of Candidacy for the May 11,
1992 elections, indicated not only that he was a resident of San Jose, Concepcion, Tarlac in
1992 but that he was a resident of the same for 52 years immediately preceding that
election. 23 At the time, his certificate indicated that he was also a registered voter of the same
district. 24 His birth certificate places Concepcion, Tarlac as the birthplace of both of his parents
Benigno and Aurora. 25 Thus, from data furnished by petitioner himself to the COMELEC at
various times during his political career, what stands consistently clear and unassailable is that
this domicile of origin of record up to the time of filing of his most recent certificate of candidacy
for the 1995 elections was Concepcion, Tarlac.
Petitioner's alleged connection with the Second District of Makati City is an alleged lease
agreement of condominium unit in the area. As the COMELEC, in its disputed Resolution noted:

The intention not to establish a permanent home in Makati City is evident in his
leasing a condominium unit instead of buying one. While a lease contract maybe
indicative of respondent's intention to reside in Makati City it does not engender
the kind of permanency required to prove abandonment of one's
original domicile especially since, by its terms, it is only for a period of two (2)
years, and respondent Aquino himself testified that his intention was really for
only one (l) year because he has other "residences" in Manila or Quezon City. 26

While property ownership is not and should never be an indicia of the right to vote or to be voted
upon, the fact that petitioner himself claims that he has other residences in Metro Manila coupled
with the short length of time he claims to be a resident of the condominium unit in Makati (and
the fact, of his stated domicile in Tarlac) "indicate that the sole purpose of (petitioner) in
transferring his physical residence" 27 is not to acquire's new residence or domicile "but only to
qualify as a candidate for Representative of the Second District of Makati City." 28 The absence of
clear and positive proof showing a successful abandonment of domicile under the conditions
stated above, the lack of identification — sentimental, actual or otherwise — with the area, and
the suspicious circumstances under which the lease agreement was effected all belie petitioner's
claim of residency for the period required by the Constitution, in the Second District of Makati. As
the COMELEC en banc emphatically pointed out:

[T]he lease agreement was executed mainly to support the one year residence
requirement as a qualification for a candidate of Representative, by establishing a
commencement date of his residence. If a perfectly valid lease agreement
cannot, by itself establish; a domicile of choice, this particular lease agreement
cannot do better. 29

Moreover, his assertion that he has transferred his domicile from Tarlac to Makati is a bare
assertion which is hardly supported by the facts in the case at bench. Domicile of origin is not
easily lost. To successfully effect a change of domicile, petitioner must prove an actual removal
or an actual change of domicile; a bona fide intention of abandoning the former place of
residence and establishing a new one and definite acts which correspond with the
purpose.30 These requirements are hardly met by the evidence adduced in support of petitioner's
claims of a change of domicile from Tarlac to the Second District of Makati. In the absence of
clear and positive proof, the domicile of origin be deemed to continue requirements are hardly
met by the evidence adduced in support of petitioner's claims of a change of domicile from Tarlac
to the Second District of Makati. In the absence of clear and positive proof, the domicile of origin
should be deemed to continue.

Finally, petitioner's submission that it would be legally impossible to impose the one year
residency requirement in a newly created political district is specious and lacks basis in logic. A
new political district is not created out of thin air. It is carved out from part of a real and existing
geographic area, in this case the old Municipality of Makati. That people actually lived or were
domiciled in the area encompassed by the new Second District cannot be denied. Modern-day
carpetbaggers cannot be allowed take advantage of the creation of new political districts by
suddenly transplanting themselves in such new districts, prejudicing their genuine residents in
the process of taking advantage of existing conditions in these areas. It will be noted, as
COMELEC did in its assailed resolution, that petitioner was disqualified from running in the
Senate because of the constitutional two-term limit, and had to shop around for a place where he
could run for public office. Nothing wrong with that, but he must first prove with reasonable
certainty that he has effected a change of residence for election law purposes for the period
required by law. This he has not effectively done.

III
The next issue here is whether or not the COMELEC erred in issuing it Order instructing the
Board of Canvassers of Makati City to proclaim as winner the candidate receiving the next higher
number of votes. The answer must be in the negative.

To contend that Syjuco should be proclaimed because he was the "first" among the qualified
candidates in the May 8, 1995 elections is to misconstrue the nature of the democratic electoral
process and the sociological and psychological underpinnings behind voters' preferences. The
result suggested by private respondent would lead not only to our reversing the doctrines firmly
entrenched in the two cases of Labo vs. Comelec 31 but also to a massive disenfranchisement of
the thousands of voters who cast their vote in favor of a candidate they believed could be validly
voted for during the elections. Had petitioner been disqualified before the elections, the choice,
moreover, would have been different. The votes for Aquino given the acrimony which attended
the campaign, would not have automatically gone to second placer Syjuco. The nature of the
playing field would have substantially changed. To simplistically assume that the second placer
would have received the other votes would be to substitute our judgment for the mind of the
voter. The second placer is just that, a second placer. He lost the elections. He was repudiated
by either a majority or plurality of voters. He could not be considered the first among qualified
candidates because in a field which excludes the disqualified candidate, the conditions would
have substantially changed. We are not prepared to extrapolate the results under such
circumstances.

In these cases, the pendulum of judicial opinion in our country has swung from one end to the
other. In the early case of Topacio v. Paredes. 32 we declared as valid, votes cast in favor of a
disqualified, ineligilble or dead candidate provided the people who voted for such candidate
believed in good faith that at the time of the elections said candidate was either qualified, eligible
or alive. The votes cast in favor of a disqualified, ineligible or dead candidate who obtained the
next higher number of votes cannot be proclaimed as winner. According to this Court in the said
case, "there is not, strictly speaking, a contest, that wreath of victory cannot be transferred from
an ineligible candidate to any other candidate when the sole question is the eligibility of the one
receiving the plurality of the legally cast ballots."

Then in Ticson v. Comelec, 33 this Court held that votes cast in favor of a non-candidate in view of
his unlawful change of party affiliation (which was then a ground for disqualification) cannot be
considered in the canvassing of election returns and the votes fall into the category of invalid and
nonexistent votes because a disqualified candidate is no candidate at all and is not a candidate
in the eyes of the law. As a result, this Court upheld the proclamation of the only candidate left in
the disputed position.

In Geronimo v. Ramos 34 we reiterated our ruling in Topacio v. Paredes that the candidate who
lost in an election cannot be proclaimed the winner in the event the candidate who ran for the
portion is ineligible. We held in Geronimo:

[I]t would be extremely repugnant to the basic concept of the constitutionally

guaranteed right to suffrage if a candidate who has not acquired the majority or
plurality of votes is proclaimed a winner and imposed as the representative of a
constituency, the majority of which have positively declared through their ballots
that they do not choose him.

Sound policy dictates that public elective offices are filled by those who have
received the highest number of votes cast in the election for that office, and it is
fundamental idea in all republican forms of government that no one can be
declared elected and no measure can be declared carried unless he or it receives
a majority or plurality of the legal votes cast in the elections. (20 Corpus Juris
2nd, S 243, p. 676.)
However, in Santos v. Comelec 35 we made a turnabout from our previous ruling in Geronimo
v. Ramos and pronounced that "votes cast for a disqualified candidate fall within the category of
invalid or non-existent votes because a disqualified candidate is no candidate at all in the eyes of
the law," reverting to our earlier ruling in Ticson v. Comelec.

In the more recent cases of Labo, Jr. v. Comelec 36 Abella v. Comelec; 37 and Benito
v. Comelec, 38 this Court reiterated and upheld the ruling in Topacio v. Paredes and Geronimo
v. Ramos to the effect that the ineligibility of a candidate receiving the next higher number of
votes to be declared elected, and that a minority or defeated candidate cannot be declared
elected to the office. In these cases, we put emphasis on our pronouncement in Geronimo
v. Ramos that:

The fact that a candidate who obtained the highest number of votes is later
declared to be disqualified or not eligible for the office to which he was elected
does not necessarily entitle the candidate who obtained the second highest
number of votes to be declared the winner of the elective office. The votes cast
for a dead, disqualified, or non-eligible person may be valid to vote the winner
into office or maintain him there. However, in the absence of a statute which
clearly asserts a contrary political and legislative policy on the matter, if the votes
were cast in sincere belief that candidate was alive, qualified, or eligible; they
should not be treated as stray, void or meaningless.

Synthesizing these rulings we declared in the latest case of Labo, Jr. v. COMELEC that: 39

While Ortega may have garnered the second highest number of votes for the
office of city mayor, the fact remains that he was not the choice of the sovereign
will. Petitioner Labo was overwhelmingly voted by the electorate for the office of
mayor in the belief that he was then qualified to serve the people of Baguio City
and his subsequent disqualification does not make respondent Ortega the mayor-
elect. This is the import of the recent case of Abella v. Comelec (201 SCRA 253
[1991]), wherein we held that:

While it is true that SPC No. 88-546 was originally a petition to

deny due course to the certificate of candidacy of Larrazabal and
was filed before Larrazabal could be proclaimed the fact remains
that the local elections of Feb. 1, 1988 in the province of
Leyte proceeded with Larrazabal considered as a bona fide
candidate. The voters of the province voted for her in the sincere
belief that she was a qualified candidate for the position of
governor.Her votes was counted and she obtained the highest
number of votes. The net effect is that petitioner lost in the
election. He was repudiated by the electorate. . . What matters is
that in the event a candidate for an elected position who is voted
for and who obtains the highest number of votes is disqualified for
not possessing the eligibility, requirements at the time of the
election as provided by law, the candidate who obtains the
second highest number of votes for the same position cannot
assume the vacated position. (Emphasis supplied).

Our ruling in Abella applies squarely to the case at bar and we see no compelling
reason to depart therefrom. Like Abella, petitioner Ortega lost in the election. He
was repudiated by the electorate. He was obviously not the choice of the people
of Baguio City.

Thus, while respondent Ortega (G.R. No. 105111) originally filed a

disqualification case with the Comelec (docketed as SPA-92-029) seeking to
deny due course to petitioner's (Labo's) candidacy, the same did not deter the
people of Baguio City from voting for petitioner Labo, who, by then, was allowed
by the respondent Comelec to be voted upon, the resolution for his
disqualification having yet to attain the degree of finality (Sec. 78, Omnibus
Election Code).

And in the earlier case of Labo v. Comelec. (supra), We held:

Finally, there is the question of whether or not the private

respondent, who filed the quo warranto petition, can replace the
petitioner as mayor. He cannot. The simple reason is that as he
obtained only the second highest number of votes in the election,
he was obviously not the choice of the people of Baguio City.

The latest ruling of the Court in this issue is Santos

v. Commission on Election, (137 SCRA 740) decided in 1985. In
that case, the candidate who placed second was proclaimed
elected after the votes for his winning rival, who was disqualified
as a turncoat and considered a non-candidate, were all
disregarded as stray. In effect, the second placer won by default.
That decision was supported by eight members of the Court then
(Cuevas J., ponente, with Makasiar, Concepcion, Jr., Escolin,
Relova, De la Fuente, Alampay, and Aquino, JJ., concurring) with
three dissenting (Teehankee, acting C.J., Abad Santos and
Melencio-Herrera) and another two reserving their votes (Plana
and Gutierrez, Jr.). One was on official leave (Fernando, C.J.)

Re-examining that decision, the Court finds, and so holds, that it should be
reversed in favor of the earlier case of Geronimo v. Santos (136 SCRA 435),
which represents the more logical and democratic rule. That case, which
reiterated the doctrine first announced in 1912 in Topacio vs. Paredes (23 Phil.
238) was supported by ten members of the Court. . . .

The rule, therefore, is: the ineligibility of a candidate receiving majority votes does
not entitle the eligible candidate receiving the next highest number of votes to be
declared elected. A minority or defeated candidate cannot be deemed elected to
the office.

Indeed, this has been the rule in the United States since 1849 (State ex rel.
Dunning v. Giles, 52 Am. Dec. 149).

It is therefore incorrect to argue that since a candidate has been disqualified, the
votes intended for the disqualified candidate should, in effect, be considered null
and void. This would amount to disenfranchising the electorate in whom,
sovereignty resides. At the risk of being repetitious, the people of Baguio City
opted to elect petitioner Labo bona fide without any intention to missapply their
franchise, and in the honest belief that Labo was then qualified to be the person
to whom they would entrust the exercise of the powers of the government.
Unfortunately, petitioner Labo turned out to be disqualified and cannot assume
the office.

Whether or not the candidate whom the majority voted for can or cannot be
installed, under no circumstances can a minority or defeated candidate be
deemed elected to the office. Surely, the 12,602 votes cast for petitioner Ortega
is not a larger number than the 27,471 votes cast for petitioner Labo (as certified
by the Election Registrar of Baguio City; rollo, p. 109; G.R. No. 105111).
This, it bears repeating, expresses the more logical and democratic view. We cannot, in another
shift of the pendulum, subscribe to the contention that the runner-up in an election in which the
winner has been disqualified is actually the winner among the remaining qualified candidates
because this clearly represents a minority view supported only by a scattered number of obscure
American state and English court decisions. 40 These decisions neglect the possibility that the
runner-up, though obviously qualified, could receive votes so measly and insignificant in number
that the votes they receive would be tantamount to rejection. Theoretically, the "second placer"
could receive just one vote. In such a case, it is absurd to proclaim the totally repudiated
candidate as the voters' "choice." Moreover, even in instances where the votes received by the
second placer may not be considered numerically insignificant, voters preferences are
nonetheless so volatile and unpredictable that the result among qualified candidates, should the
equation change because of the disqualification of an ineligible candidate, would not be self-
evident. Absence of the apparent though ineligible winner among the choices could lead to a
shifting of votes to candidates other than the second placer. By any mathematical formulation,
the runner-up in an election cannot be construed to have obtained a majority or plurality of votes
cast where an "ineligible" candidate has garnered either a majority or plurality of the votes.

In fine, we are left with no choice but to affirm the COMELEC's conclusion declaring herein
petitioner ineligible for the elective position of Representative of Makati City's Second District on
the basis of respondent commission's finding that petitioner lacks the one year residence in the
district mandated by the 1987 Constitution. A democratic government is necessarily a
government of laws. In a republican government those laws are themselves ordained by the
people. Through their representatives, they dictate the qualifications necessary for service in
government positions. And as petitioner clearly lacks one of the essential qualifications for
running for membership in the House of Representatives, not even the will of a majority or
plurality of the voters of the Second District of Makati City would substitute for a requirement
mandated by the fundamental law itself.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED. Our Order
restraining respondent COMELEC from proclaiming the candidate garnering the next highest
number of votes in the congressional elections for the Second District of Makati City is made
PERMANENT.

SO ORDERED.

G.R. No. 167684 July 31, 2006

JAIME O.SEVILLA, petitioner,

vs.
CARMELITA N. CARDENAS, respondent.

DECISION

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari seeks the reversal of the Decision1 of the Court of Appeals
in CA-G.R. CV No. 74416 dated 20 December 2004 which set aside the Decision2 of the
Regional Trial Court (RTC) of Makati City, in Civil Case No. 94-1285 dated 25 January 2002.

In a Complaint3 dated 28 March 1994 filed by Jaime O. Sevilla before the RTC, he claimed that
on 19 May 1969, through machinations, duress and intimidation employed upon him by
Carmelita N. Cardenas and the latter's father, retired Colonel Jose Cardenas of the Armed forces
of the Philippines, he and Carmelita went to the City Hall of Manila and they were introduced to a
certain Reverend Cirilo D. Gonzales, a supposed Minister of the Gospel. On the said date, the
father of Carmelita caused him and Carmelita to sign a marriage contract before the said Minister
of the Gospel. According to Jaime, he never applied for a marriage license for his supposed
marriage to Carmelita and never did they obtain any marriage license from any Civil Registry,
consequently, no marriage license was presented to the solemnizing officer.

For her part, Carmelita refuted these allegations of Jaime, and claims that she and Jaime were
married civilly on 19 May 1969,4 and in a church ceremony thereafter on 31 May 19695 at the
Most Holy Redeemer Parish in Quezon City. Both marriages were registered with the local civil
registry of Manila and the National Statistics Office. He is estopped from invoking the lack of
marriage license after having been married to her for 25 years.

The trial court made the following findings:

In support of his complaint, plaintiff [Jaime] testified that on May 19, 1969, he and
defendant [Carmelita] appeared before a certain Rev. Cirilo D. Gonzales, a Minister of
the Gospel, at the city hall in Manila where they executed a Marriage Contract (Exh. "A")
in civil rites. A certain Godofredo Occena who, plaintiff alleged, was an aide of
defendant's father accompanied them, and who, together with another person, stood as
witness to the civil wedding. That although marriage license no. 2770792 allegedly
issued in San Juan, Rizal on May 19, 1969 was indicated in the marriage contract, the
same was fictitious for he never applied for any marriage license, (Ibid., p. 11). Upon
verifications made by him through his lawyer, Atty. Jose M. Abola, with the Civil Registry
of San Juan, a Certification dated March 11, 1994 (Exh. "E") was issued by Rafael D.
Aliscad, Jr., Local Civil Registrar of San Juan, that "no marriage license no. 2770792 was
ever issued by said office." On May 31, 1969, he and defendant were again wed, this
time in church rites, before Monsignor Juan Velasco at the Most Holy Redeemer Parish
Church in Brixton Hills, Quezon City, where they executed another marriage contract
(Exh. "F") with the same marriage license no. 2770792 used and indicated. Preparations
and expenses for the church wedding and reception were jointly shared by his and
defendant's parents. After the church wedding, he and defendant resided in his house at
Brixton Hills until their first son, Jose Gabriel, was born in March 1970. As his parents
continued to support him financially, he and defendant lived in Spain for some time, for
his medical studies. Eventually, their marital relationship turned bad because it became
difficult for him to be married he being a medical student at that time. They started living
apart in 1976, but they underwent family counseling before they eventually separated in
1978. It was during this time when defendant's second son was born whose paternity
plaintiff questioned. Plaintiff obtained a divorce decree against defendant in the United
States in 1981 and later secured a judicial separation of their conjugal partnership in
1983.

Atty. Jose M. Abola, then counsel for the plaintiff, himself manifested that when his
service was engaged by plaintiff, and after the latter narrated to him the circumstances of
his marriage, he made inquiries with the Office of Civil Registry of San Juan where the
supposed marriage license was obtained and with the Church of the Most Holy
Redeemer Parish where the religious wedding ceremony was celebrated. His request
letters dated March 3, 1994 (Exh. "J"), March 7, 1994 (Exh. "L"), March 9, 1994 (Exh.
"M") and March 11, 1994 (Exh. "K") were all sent to and received by the Civil Registrar of
San Juan, who in reply thereto, issued Certifications dated March 4, 1994 (Exh. "I"), and
March 11, 1994 (Exh. "E") and September 20, 1994 (Exh. "C"), that "no marriage license
no. 2770792 was ever issued by that office." Upon his inquiry, the Holy Redeemer Parish
Church issued him a certified copy of the marriage contract of plaintiff and defendant
(Exh. "F") and a Certificate of Marriage dated April 11, 1994 (Exh. "G"), wherein it noted
that it was a "purely religious ceremony, having been civilly married on May 19, 1969 at
the City Hall, Manila, under Marriage License No. 2770792 issued at San Juan, Rizal on
May 19, 1969."

Perlita Mercader, Registration Officer III of the Local Registry of San Juan, identified the
Certificates dated March 4, 1994, March 11, 1994 and September 20, 1994 issued by
Rafael Aliscad, Jr., the Local Civil Registrar, and testified that their office failed to locate
the book wherein marriage license no. 2770792 may have been registered (TSN, 8-6-96,
p. 5).

Defendant Carmelita Cardenas testified that she and plaintiff had a steady romantic
relationship after they met and were introduced to each other in October 1968. A model,
she was compelled by her family to join the Mutya ng Pilipinas beauty pageant when
plaintiff who was afraid to lose her, asked her to run away with him to Baguio. Because
she loved plaintiff, she turned back on her family and decided to follow plaintiff in Baguio.
When they came back to Manila, she and plaintiff proceeded to the latter's home in
Brixton Hills where plaintiff's mother, Mrs. Sevilla, told her not to worry. Her parents were
hostile when they learned of the elopement, but Mrs. Sevilla convinced them that she will
take care of everything, and promised to support plaintiff and defendant. As plaintiff was
still fearful he may lose her, he asked her to marry him in civil rites, without the
knowledge of her family, more so her father (TSN, 5-28-98, p. 4) on May 19, 1969, before
a minister and where she was made to sign documents. After the civil wedding, they had
lunch and later each went home separately. On May 31, 1969, they had the church
wedding, which the Sevilla family alone prepared and arranged, since defendant's mother
just came from hospital. Her family did not participate in the wedding preparations.
Defendant further stated that there was no sexual consummation during their honeymoon
and that it was after two months when they finally had sex. She learned from Dr.
Escudero, plaintiff's physician and one of their wedding sponsors that plaintiff was
undergoing psychiatric therapy since age 12 (TSN, 11-2-98, p. 15) for some traumatic
problem compounded by his drug habit. She found out plaintiff has unusual sexual
behavior by his obsession over her knees of which he would take endless pictures of.
Moreover, plaintiff preferred to have sex with her in between the knees which she called
"intrafemural sex," while real sex between them was far and between like 8 months,
hence, abnormal. During their marriage, plaintiff exhibited weird sexual behavior which
defendant attributed to plaintiff's drug addiction (TSN, 11-5-98, pp. 5-8). A compulsive
liar, plaintiff has a bad temper who breaks things when he had tantrums. Plaintiff took
drugs like amphetamines, benzedrine and the like, "speed" drugs that kept him from
sleep and then would take barbiturates or downers, like "mogadon." Defendant tried very
hard to keep plaintiff away from drugs but failed as it has become a habit to him. They
had no fixed home since they often moved and partly lived in Spain for about four and a
half years, and during all those times, her mother-in-law would send some financial
support on and off, while defendant worked as an English teacher. Plaintiff, who was
supposed to be studying, did nothing. Their marriage became unbearable, as plaintiff
physically and verbally abused her, and this led to a break up in their marriage. Later,
she learned that plaintiff married one Angela Garcia in 1991 in the United States.

Jose Cardenas, father of defendant, testified that he was not aware of the civil wedding
of his daughter with the plaintiff; that his daughter and grandson came to stay with him
after they returned home from Spain and have lived with him and his wife ever since. His
grandsons practically grew up under his care and guidance, and he has supported his
daughter's expenses for medicines and hospital confinements (Exhs. "9" and "10").

Victoria Cardenas Navarro, defendant's sister, testified and corroborated that it was
plaintiff's family that attended to all the preparations and arrangements for the church
wedding of her sister with plaintiff, and that she didn't know that the couple wed in civil
rites some time prior to the church wedding. She also stated that she and her parents
were still civil with the plaintiff inspite of the marital differences between plaintiff and
defendant.

As adverse witness for the defendant, plaintiff testified that because of irreconcilable
differences with defendant and in order for them to live their own lives, they agreed to
divorce each other; that when he applied for and obtained a divorce decree in the United
States on June 14, 1983 (Exh. "13"), it was with the knowledge and consent of defendant
who in fact authorized a certain Atty. Quisumbing to represent her (TSN, 12-7-2000, p.
 21). During his adverse testimony, plaintiff identified a recent certification dated July 25,
2000 (Exh. "EE") issued by the Local Civil Registrar of San Juan, that the marriage
license no. 2770792, the same marriage license appearing in the marriage contract (Exh.
"A"), is inexistent, thus appears to be fictitious.6

In its Decision dated 25 January 2002, declaring the nullity of the marriage of the parties, the trial
court made the following justifications:

Thus, being one of the essential requisites for the validity of the marriage, the lack or
absence of a license renders the marriage void ab initio. It was shown under the various
certifications (Exhs. "I", "E", and "C") earlier issued by the office of the Local Civil
Registrar of the Municipality of San Juan, and the more recent one issued on July 25,
2000 (Exh. "EE") that no marriage license no. 2770792 was ever issued by that office,
hence, the marriage license no. 2770792 appearing on the marriage contracts executed
on May 19, 1969 (Exh. "A") and on May 31, 1969 (Exh. "F") was fictitious. Such a
certification enjoys probative value under the rules on evidence, particularly Section 28,
Rule 132 of the Rules of Court, x x x.

xxxx

WHEREFORE, the Court hereby declares the civil marriage between Jaime O. Sevilla
and Carmelita N. Cardenas solemnized by Rev. Cirilo D. Gonzales at the Manila City Hall
on May 19, 1969 as well as their contract of marriage solemnized under religious rites by
Rev. Juan B. Velasco at the Holy Redeemer Parish on May 31, 1969, NULL and VOID
for lack of the requisite marriage license. Let the marriage contract of the parties under
Registry No. 601 (e-69) of the registry book of the Local Civil Registry of Manila be
cancelled.

Let copies of this Decision be duly recorded in the proper civil and property registries in
accordance with Article 52 of the Family Code. Likewise, let a copy hereof be forwarded
the Office of the Solicitor General for its record and information.7

Carmelita filed an appeal with the Court of Appeals. In a Decision dated 20 December 2004, the
Court of Appeals disagreed with the trial court and held:

In People v. De Guzman (G.R. No. 106025, February 9, 1994), the Supreme Court
explained that: "The presumption of regularity of official acts may be rebutted
by affirmative evidence of irregularity or failure to perform a duty. The presumption,
however, prevails until it is overcome by no less than clear and convincing evidence to
the contrary. Thus, unless the presumption is rebutted, it becomes conclusive."

In this case, We note that a certain Perlita Mercader of the local civil registry of San
Juan testified that they "failed to locate the book wherein marriage license no.
2770792 is registered," for the reason that "the employee handling is already
retired." With said testimony We cannot therefore just presume that the marriage license
specified in the parties' marriage contract was not issued for in the end the failure of the
office of the local civil registrar of San Juan to produce a copy of the marriage license
was attributable not to the fact that no such marriage license was issued but rather,
because it "failed to locate the book wherein marriage license no. 2770792 is registered."
Simply put, if the pertinent book were available for scrutiny, there is a strong possibility
that it would have contained an entry on marriage license no. 2720792.

xxxx

Indeed, this Court is not prepared to annul the parties' marriage on the basis of a mere
perception of plaintiff that his union with defendant is defective with respect to an
 essential requisite of a marriage contract, a perception that ultimately was not
substantiated with facts on record.8

Jaime filed a Motion for Reconsideration dated 6 January 2005 which the Court of Appeals
denied in a Resolution dated 6 April 2005.

This denial gave rise to the present Petition filed by Jaime.

He raises the following issues for Resolution.

1. Whether or not a valid marriage license was issued in accordance with law to the
parties herein prior to the celebration of the marriages in question;

2. Whether or not the Court of Appeals correctly applied and relied on the presumption of
regularity of officials acts, particularly the issuance of a marriage license, arising solely
from the contents of the marriage contracts in question which show on their face that a
marriage license was purportedly issued by the Local Civil Registry of San Juan, Metro
Manila, and

3. Whether or not respondent could validly invoke/rely upon the presumption of validity of
a marriage arising from the admitted "fact of marriage."9

At the core of this controversy is the determination of whether or not the certifications from the
Local Civil Registrar of San Juan stating that no Marriage License No. 2770792 as appearing in
the marriage contract of the parties was issued, are sufficient to declare their marriage as null
and void ab initio.

We agree with the Court of Appeals and rule in the negative.

Pertinent provisions of the Civil Code which was the law in force at the time of the marriage of
the parties are Articles 53,10 5811 and 80.12

Based on the foregoing provisions, a marriage license is an essential requisite for the validity of
marriage. The marriage between Carmelita and Jaime is of no exception.

At first glance, this case can very well be easily dismissed as one involving a marriage that is null
and void on the ground of absence of a marriage license based on the certifications issued by
the Local Civil Registar of San Juan. As ruled by this Court in the case of Cariño v. Cariño13:

[A]s certified by the Local Civil Registrar of San Juan, Metro Manila, their office has no
record of such marriage license. In Republic v. Court of Appeals, the Court held that such
a certification is adequate to prove the non-issuance of a marriage license. Absent any
circumstance of suspicion, as in the present case, the certification issued by the local civil
registrar enjoys probative value, he being the officer charged under the law to keep a
record of all date relative to the issuance of a marriage license.

Such being the case, the presumed validity of the marriage of petitioner and the
deceased has been sufficiently overcome. It then became the burden of petitioner to
prove that their marriage is valid and that they secured the required marriage license.
Although she was declared in default before the trial court, petitioner could have squarely
met the issue and explained the absence of a marriage license in her pleadings before
the Court of Appeals and this Court. But petitioner conveniently avoided the issue and
chose to refrain from pursuing an argument that will put her case in jeopardy. Hence, the
presumed validity of their marriage cannot stand.
 It is beyond cavil, therefore, that the marriage between petitioner Susan Nicdao and the
deceased, having been solemnized without the necessary marriage license, and not
being one of the marriages exempt from the marriage license requirement, is
undoubtedly void ab initio.

The foregoing Decision giving probative value to the certifications issued by the Local Civil
Registrar should be read in line with the decision in the earlier case of Republic v. Court of
Appeals,14 where it was held that:

The above Rule authorized the custodian of documents to certify that despite diligent
search, a particular document does not exist in his office or that a particular entry
of a specified tenor was not to be found in a register. As custodians of public
documents, civil registrars are public officers charged with the duty, inter alia, of
maintaining a register book where they are required to enter all applications for marriage
licenses, including the names of the applicants, the date the marriage license was issued
and such other relevant data. (Emphasis supplied.)

Thus, the certification to be issued by the Local Civil Registrar must categorically state that the
document does not exist in his office or the particular entry could not be found in the register
despite diligent search. Such certification shall be sufficient proof of lack or absence of record as
stated in Section 28, Rule 132 of the Rules of Court:

SEC. 28. Proof of lack of record. – a written statement signed by an officer having the
custody of an official record or by his deputy that after diligent search, no record or entry
of a specified tenor is found to exist in the records of his office, accompanied by a
certificate as above provided, is admissible as evidence that the records of his office
contain no such record or entry.

We shall now proceed to scrutinize whether the certifications by the Local Civil Registrar of San
Juan in connection with Marriage License No. 2770792 complied with the foregoing requirements
and deserved to be accorded probative value.

The first Certification15 issued by the Local Civil Registrar of San Juan, Metro Manila, was dated
11 March 1994. It reads:

TO WHOM IT MAY CONCERN:

No Marriage License Number 2770792 were (sic) ever issued by this Office. With regards
(sic) to Marriage License Number 2880792,16 we exert all effort but we cannot find the
said number.

Hope and understand our loaded work cannot give you our full force locating the above
problem.

San Juan, Metro Manila

March 11, 1994

(SGD)RAFAEL D. ALISCAD, JR.

Local Civil Registrar

The second certification17 was dated 20 September 1994 and provides:

TO WHOM IT MAY CONCERN:

 This is to certify that no marriage license Number 2770792 were ever issued by this
Office with regards to Marriage License Number 2880792, we exert all effort but we
cannot find the said number.

Hope and understand our loaded work cannot give you our full force locating the above
problem.

San Juan, Metro Manila

September 20, 1994

(SGD)RAFAEL D. ALISCAD, JR.

Local Civil Registrar

The third Certification,18 issued on 25 July 2000, states:

TO WHOM IT MAY CONCERN:

This is to certify that according to the records of this office, no Marriage License
Application was filed and no Marriage License No. 2770792 allegedly dated May 19,
1969 was issued by this Office to MR. JAIME O. SEVILLA and MS. CARMELITA
CARDENAS-SEVILLA.

This is to further certify that the said application and license do not exist in our Local Civil
Registry Index and, therefore, appear to be fictitious.

This certification is being issued upon the request of the interested party for whatever
legal intent it may serve.

San Juan, Metro Manila

July 25, 2000

(SGD)RAFAEL D. ALISCAD, JR.

Local Civil Registrar

Note that the first two certifications bear the statement that "hope and understand our loaded
work cannot give you our full force locating the above problem." It could be easily implied from
the said statement that the Office of the Local Civil Registrar could not exert its best efforts to
locate and determine the existence of Marriage License No. 2770792 due to its "loaded work."
Likewise, both certifications failed to state with absolute certainty whether or not such license
was issued.

This implication is confirmed in the testimony of the representative from the Office of the Local
Civil Registrar of San Juan, Ms. Perlita Mercader, who stated that they cannot locate the logbook
due to the fact that the person in charge of the said logbook had already retired. Further, the
testimony of the said person was not presented in evidence. It does not appear on record that
the former custodian of the logbook was deceased or missing, or that his testimony could not be
secured. This belies the claim that all efforts to locate the logbook or prove the material contents
therein, had been exerted.

As testified to by Perlita Mercader:

 Q Under the subpoena duces tecum, you were required to bring to this Court among
other things the register of application of/or (sic) for marriage licenses received by the
Office of the :Local Civil Registrar of San Juan, Province of Rizal, from January 19, 1969
to May 1969. Did you bring with you those records?

A I brought may 19, 1969, sir.

Q Is that the book requested of you under no. 3 of the request for subpoena?

A Meron pang January. I forgot, January . . .

Q Did you bring that with you?

A No, sir.

Q Why not?

A I cannot locate the book. This is the only book.

Q Will you please state if this is the register of marriage of marriage applications that your
office maintains as required by the manual of the office of the Local Civil Registrar?

COURT

May I see that book and the portion marked by the witness.

xxxx

COURT

Why don't you ask her direct question whether marriage license 2880792 is the
number issued by their office while with respect to license no. 2770792 the office
of the Local Civil Registrar of San Juan is very definite about it it was never
issued. Then ask him how about no. 2880792 if the same was ever issued by
their office. Did you ask this 2887092, but you could not find the record? But for
the moment you cannot locate the books? Which is which now, was this issued or
not?

A The employee handling it is already retired, sir.19

Given the documentary and testimonial evidence to the effect that utmost efforts were not
exerted to locate the logbook where Marriage License No. 2770792 may have been entered, the
presumption of regularity of performance of official function by the Local Civil Registrar in issuing
the certifications, is effectively rebutted.

According to Section 3(m),20 Rule 131 of the Rules of Court, the presumption that official duty
has been regularly performed is among the disputable presumptions.

In one case, it was held:

A disputable presumption has been defined as a species of evidence that may be

accepted and acted on where there is no other evidence to uphold the contention for
which it stands, or one which may be overcome by other evidence. One such
 disputable/rebuttable presumption is that an official act or duty has been regularly
performed. x x x.21

The presumption of regularity of official acts may be rebutted by affirmative evidence of

irregularity or failure to perform a duty.22

The presumption of regularity of performance of official duty is disputable and can be overcome
by other evidence as in the case at bar where the presumption has been effectively defeated by
the tenor of the first and second certifications.

Moreover, the absence of the logbook is not conclusive proof of non-issuance of Marriage
License No. 2770792. It can also mean, as we believed true in the case at bar, that the logbook
just cannot be found. In the absence of showing of diligent efforts to search for the said logbook,
we cannot easily accept that absence of the same also means non-existence or falsity of entries
therein.

Finally, the rule is settled that every intendment of the law or fact leans toward the validity of the
marriage, the indissolubility of the marriage bonds.23 The courts look upon this presumption with
great favor. It is not to be lightly repelled; on the contrary, the presumption is of great weight.24

The Court is mindful of the policy of the 1987 Constitution to protect and strengthen the family as
the basic autonomous social institution and marriage as the foundation of the family. Thus, any
doubt should be resolved in favor of the validity of the marriage.25

The parties have comported themselves as husband and wife and lived together for several
years producing two offsprings,26 now adults themselves. It took Jaime several years before he
filed the petition for declaration of nullity. Admittedly, he married another individual sometime in
1991.27 We are not ready to reward petitioner by declaring the nullity of his marriage and give him
his freedom and in the process allow him to profit from his own deceit and perfidy.28

Our Constitution is committed to the policy of strengthening the family as a basic social
institution. Our family law is based on the policy that marriage is not a mere contract, but a social
institution in which the State is vitally interested. The State can find no stronger anchor than on
good, solid and happy families. The break-up of families weakens our social and moral fabric;
hence, their preservation is not the concern of the family members alone.29

"The basis of human society throughout the civilized world is x x x marriage. Marriage in this
jurisdiction is not only a civil contract, but it is a new relation, an institution in the maintenance of
which the public is deeply interested. Consequently, every intendment of the law leans toward
legalizing matrimony. Persons dwelling together in apparent matrimony are presumed, in the
absence of any counterpresumption or evidence special to the case, to be in fact married. The
reason is that such is the common order of society, and if the parties were not what they thus
hold themselves out as being, they would be living in the constant violation of decency and of
law. A presumption established by our Code of Civil Procedure is `that a man and a woman
deporting themselves as husband and wife have entered into a lawful contract of
marriage.' Semper praesumitur pro matrimonio – Always presume marriage."30

This jurisprudential attitude towards marriage is based on the prima facie presumption that a man
and a woman deporting themselves as husband and wife have entered into a lawful contract of
marriage.31

By our failure to come to the succor of Jaime, we are not trifling with his emotion or deepest
sentiments. As we have said in Carating-Siayngco v. Siayngco,32 regrettably, there are situations
like this one, where neither law nor society can provide the specific answers to every individual
problem.
WHEREFORE, premises considered, the instant Petition is DENIED. The Decision of the Court
of Appeals dated 20 December 2004 and the Resolution dated 6 April 2005 are AFFIRMED.
Costs against the petitioner.

SO ORDERED.

G.R. No. 186400 October 20, 2010

CYNTHIA S. BOLOS, Petitioner,

vs.
DANILO T. BOLOS, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a review of
the December 10, 2008 Decision1 of the Court of Appeals (CA) in an original action
for certiorari under Rule 65 entitled "Danilo T. Bolos v. Hon. Lorifel Lacap Pahimna and Cynthia
S. Bolos," docketed as CA-G.R. SP. No. 97872, reversing the January 16, 2007 Order of the
Regional Trial Court of Pasig City, Branch 69 (RTC), declaring its decision pronouncing the
nullity of marriage between petitioner and respondent final and executory.

On July 10, 2003, petitioner Cynthia Bolos (Cynthia) filed a petition for the declaration of nullity of
her marriage to respondent Danilo Bolos (Danilo) under Article 36 of the Family Code, docketed
as JDRC No. 6211.

After trial on the merits, the RTC granted the petition for annulment in a Decision, dated August
2, 2006, with the following disposition:

WHEREFORE, judgment is hereby rendered declaring the marriage between petitioner

CYNTHIA S. BOLOS and respondent DANILO T. BOLOS celebrated on February 14, 1980 as
null and void ab initio on the ground of psychological incapacity on the part of both petitioner and
respondent under Article 36 of the Family Code with all the legal consequences provided by law.

Furnish the Local Civil Registrar of San Juan as well as the National Statistics Office (NSO) copy
of this decision.

SO ORDERED.2

A copy of said decision was received by Danilo on August 25, 2006. He timely filed the Notice of
Appeal on September 11, 2006.

In an order dated September 19, 2006, the RTC denied due course to the appeal for Danilo’s
failure to file the required motion for reconsideration or new trial, in violation of Section 20 of the
Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages.

On November 23, 2006, a motion to reconsider the denial of Danilo’s appeal was likewise
denied.

On January 16, 2007, the RTC issued the order declaring its August 2, 2006 decision final and
executory and granting the Motion for Entry of Judgment filed by Cynthia.

Not in conformity, Danilo filed with the CA a petition for certiorari under Rule 65 seeking to annul
the orders of the RTC as they were rendered with grave abuse of discretion amounting to lack or
in excess of jurisdiction, to wit: 1) the September 19, 2006 Order which denied due course to
Danilo’s appeal; 2) the November 23, 2006 Order which denied the motion to reconsider the
September 19, 2006 Order; and 3) the January 16, 2007 Order which declared the August 2,
2006 decision as final and executory. Danilo also prayed that he be declared psychologically
capacitated to render the essential marital obligations to Cynthia, who should be declared guilty
of abandoning him, the family home and their children.

As earlier stated, the CA granted the petition and reversed and set aside the assailed orders of
the RTC. The appellate court stated that the requirement of a motion for reconsideration as a
prerequisite to appeal under A.M. No. 02-11-10-SC did not apply in this case as the marriage
between Cynthia and Danilo was solemnized on February 14, 1980 before the Family Code took
effect. It relied on the ruling of this Court in Enrico v. Heirs of Sps. Medinaceli3 to the effect that
the "coverage [of A.M. No. 02-11-10-SC] extends only to those marriages entered into during the
effectivity of the Family Code which took effect on August 3, 1988."

Cynthia sought reconsideration of the ruling by filing her Manifestation with Motion for Extension
of Time to File Motion for Reconsideration and Motion for Partial Reconsideration [of the
Honorable Court’s Decision dated December 10, 2008]. The CA, however, in its February 11,
2009 Resolution,4 denied the motion for extension of time considering that the 15-day
reglementary period to file a motion for reconsideration is non-extendible, pursuant to Section 2,
Rule 40, 1997 Rules on Civil Procedure citing Habaluyas v. Japson, 142 SCRA 208. The motion
for partial reconsideration was likewise denied.

Hence, Cynthia interposes the present petition via Rule 45 of the Rules of Court raising the
following

ISSUES

THE COURT OF APPEALS GRAVELY ERRED IN ISSUING THE QUESTIONED DECISION

DATED DECEMBER 10, 2008 CONSIDERING THAT:

A. THE PRONOUNCEMENT OF THE HONORABLE COURT IN ENRICO V.

SPS. MEDINACELI IS NOT APPLICABLE TO THE INSTANT CASE
CONSIDERING THAT THE FACTS AND THE ISSUE THEREIN ARE NOT
SIMILAR TO THE INSTANT CASE.

B. ASSUMING ARGUENDO THAT THE PRONOUNCEMENT OF THE

HONORABLE COURT IS APLLICABLE TO THE INSTANT CASE, ITS RULING
IN ENRICO V. SPS. MEDINACELI IS PATENTLY ERRONEOUS BECAUSE
THE PHRASE "UNDER THE FAMILY CODE" IN A.M. NO. 02-11-10-SC
PERTAINS TO THE WORD "PETITIONS" RATHER THAN TO THE WORD
"MARRIAGES."

C. FROM THE FOREGOING, A.M. NO. 02-11-10-SC ENTITLED "RULE ON

DECLARATION OF ABSOLUTE NULLITY OF VOID MARRIAGES AND
ANNULMENT OF VOIDABLE MARRIAGES" IS APPLICABLE TO
MARRIAGES SOLEMNIZED BEFORE THE EFFECTIVITY OF THE FAMILY
CODE. HENCE, A MOTION FOR RECONSIDERATION IS A PRECONDITION
FOR AN APPEAL BY HEREIN RESPONDENT.

D. CONSIDERING THAT HEREIN RESPONDENT REFUSED TO COMPLY

WITH A PRECONDITION FOR APPEAL, A RELAXATION OF THE RULES ON
APPEAL IS NOT PROPER IN HIS CASE.
 II

THE COURT OF APPEALS GRAVELY ERRED IN ISSUING THE QUESTIONED

RESOLUTION DATED FEBRUARY 11, 2009 CONSIDERING THE FOREGOING AND THE
FACTUAL CIRCUMSTANCES OF THIS CASE.

III

THE TENETS OF JUSTICE AND FAIR PLAY, THE NOVELTY AND IMPORTANCE OF THE
ISSUE AND THE SPECIAL CIRCUMSTANCES IN THIS CASE JUSTIFY AND WARRANT A
LIBERAL VIEW OF THE RULES IN FAVOR OF THE PETITIONER. MOREOVER, THE
INSTANT PETITION IS MERITORIOUS AND NOT INTENDED FOR DELAY.5

From the arguments advanced by Cynthia, the principal question to be resolved is whether or not
A.M. No. 02-11-10-SC entitled "Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages," is applicable to the case at bench.

Petitioner argues that A.M. No. 02-11-10-SC is also applicable to marriages solemnized before
the effectivity of the Family Code. According to Cynthia, the CA erroneously anchored its
decision to an obiter dictum in the aforecited Enrico case, which did not even involve a marriage
solemnized before the effectivity of the Family Code.

She added that, even assuming arguendo that the pronouncement in the said case constituted a
decision on its merits, still the same cannot be applied because of the substantial disparity in the
factual milieu of the Enrico case from this case. In the said case, both the marriages sought to be
declared null were solemnized, and the action for declaration of nullity was filed, after the
effectivity of both the Family Code in 1988 and of A.M. No. 02-11-10-SC in 2003. In this case, the
marriage was solemnized before the effectivity of the Family Code and A.M. No. 02-11-10-SC
while the action was filed and decided after the effectivity of both.

Danilo, in his Comment,6 counters that A.M. No. 02-11-10-SC is not applicable because his
marriage with Cynthia was solemnized on February 14, 1980, years before its effectivity. He
further stresses the meritorious nature of his appeal from the decision of the RTC declaring their
marriage as null and void due to his purported psychological incapacity and citing the mere
"failure" of the parties who were supposedly "remiss," but not "incapacitated," to render marital
obligations as required under Article 36 of the Family Code.

The Court finds the petition devoid of merit.

Petitioner insists that A.M. No. 02-11-10-SC governs this case. Her stance is unavailing. The
Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages
as contained in A.M. No. 02-11-10-SC which the Court promulgated on March 15, 2003, is
explicit in its scope. Section 1 of the Rule, in fact, reads:

Section 1. Scope – This Rule shall govern petitions for declaration of absolute nullity of void
marriages and annulment of voidable marriages under the Family Code of the Philippines.

The Rules of Court shall apply suppletorily.

The categorical language of A.M. No. 02-11-10-SC leaves no room for doubt. The coverage
extends only to those marriages entered into during the effectivity of the Family Code which took
effect on August 3, 1988.7 The rule sets a demarcation line between marriages covered by the
Family Code and those solemnized under the Civil Code.8
The Court finds Itself unable to subscribe to petitioner’s interpretation that the phrase "under the
Family Code" in A.M. No. 02-11-10-SC refers to the word "petitions" rather than to the word
"marriages."

A cardinal rule in statutory construction is that when the law is clear and free from any doubt or
ambiguity, there is no room for construction or interpretation. There is only room for
application.9 As the statute is clear, plain, and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. This is what is known as the plain-
meaning rule or verba legis. It is expressed in the maxim, index animi sermo, or "speech is the
index of intention." Furthermore, there is the maxim verba legis non est recedendum, or "from the
words of a statute there should be no departure."10

There is no basis for petitioner’s assertion either that the tenets of substantial justice, the novelty
and importance of the issue and the meritorious nature of this case warrant a relaxation of the
Rules in her favor. Time and again the Court has stressed that the rules of procedure must be
faithfully complied with and should not be discarded with the mere expediency of claiming
substantial merit.11 As a corollary, rules prescribing the time for doing specific acts or for taking
certain proceedings are considered absolutely indispensable to prevent needless delays and to
orderly and promptly discharge judicial business. By their very nature, these rules are regarded
as mandatory.12

The appellate court was correct in denying petitioner’s motion for extension of time to file a
motion for reconsideration considering that the reglementary period for filing the said motion for
reconsideration is non-extendible. As pronounced in Apex Mining Co., Inc. v. Commissioner of
Internal Revenue, 13

The rule is and has been that the period for filing a motion for reconsideration is non-extendible.
The Court has made this clear as early as 1986 in Habaluyas Enterprises vs. Japzon. Since
then, the Court has consistently and strictly adhered thereto. 1avv phil

Given the above, we rule without hesitation that the appellate court’s denial of petitioner’s motion
for reconsideration is justified, precisely because petitioner’s earlier motion for extension of time
did not suspend/toll the running of the 15-day reglementary period for filing a motion for
reconsideration. Under the circumstances, the CA decision has already attained finality when
petitioner filed its motion for reconsideration. It follows that the same decision was already
beyond the review jurisdiction of this Court.

In fine, the CA committed no reversible error in setting aside the RTC decision which denied due
course to respondent’s appeal and denying petitioner’s motion for extension of time to file a
motion for reconsideration.

Appeal is an essential part of our judicial system. Its purpose is to bring up for review a final
judgment of the lower court. The courts should, thus, proceed with caution so as not to deprive a
party of his right to appeal.14 In the recent case of Almelor v. RTC of Las Pinas City, Br. 254,15 the
Court reiterated: While the right to appeal is a statutory, not a natural right, nonetheless it is an
essential part of our judicial system and courts should proceed with caution so as not to deprive
a party of the right to appeal, but rather, ensure that every party-litigant has the amplest
opportunity for the proper and just disposition of his cause, free from the constraints of
technicalities.

In the case at bench, the respondent should be given the fullest opportunity to establish the
merits of his appeal considering that what is at stake is the sacrosanct institution of marriage.

No less than the 1987 Constitution recognizes marriage as an inviolable social institution. This
constitutional policy is echoed in our Family Code. Article 1 thereof emphasizes its permanence
and inviolability, thus:
Article 1. Marriage is a special contract of permanent union between a man and a woman
entered into in accordance with law for the establishment of conjugal and family life. It is the
foundation of the family and an inviolable social institution whose nature, consequences, and
incidents are governed by law and not subject to stipulation, except that marriage settlements
may fix the property relations during the marriage within the limits provided by this Code.

This Court is not unmindful of the constitutional policy to protect and strengthen the family as the
basic autonomous social institution and marriage as the foundation of the family.16

Our family law is based on the policy that marriage is not a mere contract, but a social institution
in which the State is vitally interested. The State finds no stronger anchor than on good, solid and
happy families. The break up of families weakens our social and moral fabric and, hence, their
preservation is not the concern alone of the family members.17

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 158298 August 11, 2010

ISIDRO ABLAZA, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

BERSAMIN, J.:

Whether a person may bring an action for the declaration of the absolute nullity of the marriage
of his deceased brother solemnized under the regime of the old Civil Code is the legal issue to
be determined in this appeal brought by the petitioner whose action for that purpose has been
dismissed by the lower courts on the ground that he, not being a party in the assailed marriage,
had no right to bring the action.

Antecedents

On October 17, 2000, the petitioner filed in the Regional Trial Court (RTC) in Cataingan, Masbate
a petition for the declaration of the absolute nullity of the marriage contracted on December 26,
1949 between his late brother Cresenciano Ablaza and Leonila Honato.1 The case was docketed
as Special Case No. 117 entitled In Re: Petition for Nullification of Marriage Contract between
Cresenciano Ablaza and Leonila Honato; Isidro Ablaza, petitioner.

The petitioner alleged that the marriage between Cresenciano and Leonila had been celebrated
without a marriage license, due to such license being issued only on January 9, 1950, thereby
rendering the marriage void ab initio for having been solemnized without a marriage license. He
insisted that his being the surviving brother of Cresenciano who had died without any issue
entitled him to one-half of the real properties acquired by Cresenciano before his death, thereby
making him a real party in interest; and that any person, himself included, could impugn the
validity of the marriage between Cresenciano and Leonila at any time, even after the death of
Cresenciano, due to the marriage being void ab initio.2

Ruling of the RTC

On October 18, 2000, 3 the RTC dismissed the petition, stating:

Considering the petition for annulment of marriage filed, the Court hereby resolved to DISMISS
the petition for the following reasons: 1) petition is filed out of time (action had long prescribed)
and 2) petitioner is not a party to the marriage (contracted between Cresenciano Ablaza and
Leonila Nonato on December 26, 1949 and solemnized by Rev. Fr. Eusebio B. Calolot).

SO ORDERED.

The petitioner seasonably filed a motion for reconsideration, but the RTC denied the motion for
reconsideration on November 14, 2000.

Ruling of the Court of Appeals

The petitioner appealed to the Court of Appeals (CA), assigning the lone error that:

The trial court erred in dismissing the petition for being filed out of time and that the petitioner is
not a party to the marriage.

In its decision dated January 30, 2003,4 however, the CA affirmed the dismissal order of the
RTC, thus:

While an action to declare the nullity of a marriage considered void from the beginning does not
prescribe, the law nonetheless requires that the same action must be filed by the proper party,
which in this case should be filed by any of the parties to the marriage. In the instant case, the
petition was filed by Isidro Ablaza, a brother of the deceased-spouse, who is not a party to the
marriage contracted by Cresenciano Ablaza and Leonila Honato. The contention of petitioner-
appellant that he is considered a real party in interest under Section 2, Rule 3 of the 1997 Rules
of Civil Procedure, as he stands to be benefited or injured by the judgment in the suit, is simply
misplaced. Actions for annulment of marriage will not prosper if persons other than those
specified in the law file the case.

Certainly, a surviving brother of the deceased spouse is not the proper party to file the subject
petition. More so that the surviving wife, who stands to be prejudiced, was not even impleaded as
a party to said case.

WHEREFORE, finding no reversible error therefrom, the Orders now on appeal are hereby
AFFIRMED. Costs against the petitioner-appellant.

SO ORDERED.5

Hence, this appeal.

Issues

The petitioner raises the following issues:

I.

WHETHER OR NOT THE DECISION OF THIS HONORABLE COURT OF APPEALS IN

CA-G.R. CV. NO. 69684 AFFIRMING THE ORDER OF DISMISSAL OF THE REGIONAL
TRIAL COURT, BRANCH 49 AT CATAINGAN, MASBATE IN SPECIAL PROCEEDING
NO. 117 IS IN ACCORDANCE WITH APPLICABLE LAWS AND JURISPRUDENCE;

II.
 WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS IN
CA-G.R. CV NO. 69684 (SHOULD) BE REVERSED BASED ON EXECUTIVE ORDER
NO. 209 AND EXISTING JURISPRUDENCE.

The issues, rephrased, boil down to whether the petitioner is a real party in interest in the action
to seek the declaration of nullity of the marriage of his deceased brother.

Ruling

The petition is meritorious.

A valid marriage is essential in order to create the relation of husband and wife and to give rise to
the mutual rights, duties, and liabilities arising out of such relation. The law prescribes the
requisites of a valid marriage. Hence, the validity of a marriage is tested according to the law in
force at the time the marriage is contracted.6 As a general rule, the nature of the marriage
already celebrated cannot be changed by a subsequent amendment of the governing law.7 To
illustrate, a marriage between a stepbrother and a stepsister was void under the Civil Code, but
is not anymore prohibited under the Family Code; yet, the intervening effectivity of the Family
Code does not affect the void nature of a marriage between a stepbrother and a stepsister
solemnized under the regime of the Civil Code. The Civil Code marriage remains void,
considering that the validity of a marriage is governed by the law in force at the time of the
marriage ceremony.8

Before anything more, the Court has to clarify the impact to the issue posed herein of
Administrative Matter (A.M.) No. 02-11-10-SC (Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages), which took effect on March 15, 2003.

Section 2, paragraph (a), of A.M. No. 02-11-10-SC explicitly provides the limitation that a petition
for declaration of absolute nullity of void marriage may be filed solely by the husband or wife.
Such limitation demarcates a line to distinguish between marriages covered by the Family Code
and those solemnized under the regime of the Civil Code.9 Specifically, A.M. No. 02-11-10-SC
extends only to marriages covered by the Family Code, which took effect on August 3, 1988, but,
being a procedural rule that is prospective in application, is confined only to proceedings
commenced after March 15, 2003.10

Based on Carlos v. Sandoval,11 the following actions for declaration of absolute nullity of a
marriage are excepted from the limitation, to wit:

1. Those commenced before March 15, 2003, the effectivity date of A.M. No. 02-11-10-
SC; and

2. Those filed vis-à-vis marriages celebrated during the effectivity of the Civil Code and,
those celebrated under the regime of the Family Code prior to March 15, 2003.

Considering that the marriage between Cresenciano and Leonila was contracted on December
26, 1949, the applicable law was the old Civil Code, the law in effect at the time of the celebration
of the marriage. Hence, the rule on the exclusivity of the parties to the marriage as having the
right to initiate the action for declaration of nullity of the marriage under A.M. No. 02-11-10-SC
had absolutely no application to the petitioner.

The old and new Civil Codes contain no provision on who can file a petition to declare the nullity
of a marriage, and when. Accordingly, in Niñal v. Bayadog,12 the children were allowed to file
after the death of their father a petition for the declaration of the nullity of their father’s marriage
to their stepmother contracted on December 11, 1986 due to lack of a marriage license. There,
the Court distinguished between a void marriage and a voidable one, and explained how and
when each might be impugned, thuswise:
Jurisprudence under the Civil Code states that no judicial decree is necessary in order to
establish the nullity of a marriage. "A void marriage does not require a judicial decree to restore
the parties to their original rights or to make the marriage void but though no sentence of
avoidance be absolutely necessary, yet as well for the sake of good order of society as for the
peace of mind of all concerned, it is expedient that the nullity of the marriage should be
ascertained and declared by the decree of a court of competent jurisdiction." "Under ordinary
circumstances, the effect of a void marriage, so far as concerns the conferring of legal rights
upon the parties, is as though no marriage had ever taken place. And therefore, being good for
no legal purpose, its invalidity can be maintained in any proceeding in which the fact of marriage
may be material, either direct or collateral, in any civil court between any parties at any time,
whether before or after the death of either or both the husband and the wife, and upon mere
proof of the facts rendering such marriage void, it will be disregarded or treated as non-existent
by the courts." It is not like a voidable marriage which cannot be collaterally attacked except in
direct proceeding instituted during the lifetime of the parties so that on the death of either, the
marriage cannot be impeached, and is made good ab initio. But Article 40 of the Family Code
expressly provides that there must be a judicial declaration of the nullity of a previous marriage,
though void, before a party can enter into a second marriage and such absolute nullity can be
based only on a final judgment to that effect. For the same reason, the law makes either the
action or defense for the declaration of absolute nullity of marriage imprescriptible. Corollarily, if
the death of either party would extinguish the cause of action or the ground for defense, then the
same cannot be considered imprescriptible.

However, other than for purposes of remarriage, no judicial action is necessary to declare a
marriage an absolute nullity. For other purposes, such as but not limited to determination of
heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime,
or a criminal case for that matter, the court may pass upon the validity of marriage even in a suit
not directly instituted to question the same so long as it is essential to the determination of the
case. This is without prejudice to any issue that may arise in the case. When such need arises, a
final judgment of declaration of nullity is necessary even if the purpose is other than to remarry.
The clause "on the basis of a final judgment declaring such previous marriage void" in Article 40
of the Family Code connotes that such final judgment need not be obtained only for purpose of
remarriage.13

It is clarified, however, that the absence of a provision in the old and new Civil Codes cannot be
construed as giving a license to just any person to bring an action to declare the absolute nullity
of a marriage. According to Carlos v. Sandoval,14 the plaintiff must still be the party who stands to
be benefited by the suit, or the party entitled to the avails of the suit, for it is basic in procedural
law that every action must be prosecuted and defended in the name of the real party in
interest.15 Thus, only the party who can demonstrate a "proper interest" can file the
action.16Interest within the meaning of the rule means material interest, or an interest in issue to
be affected by the decree or judgment of the case, as distinguished from mere curiosity about the
question involved or a mere incidental interest. One having no material interest to protect cannot
invoke the jurisdiction of the court as plaintiff in an action. When the plaintiff is not the real party
in interest, the case is dismissible on the ground of lack of cause of action.17

Here, the petitioner alleged himself to be the late Cresenciano’s brother and surviving heir.
Assuming that the petitioner was as he claimed himself to be, then he has a material interest in
the estate of Cresenciano that will be adversely affected by any judgment in the suit. Indeed, a
brother like the petitioner, albeit not a compulsory heir under the laws of succession, has the right
to succeed to the estate of a deceased brother under the conditions stated in Article 1001 and
Article 1003 of the Civil Code, as follows:

Article 1001. Should brothers and sisters or their children survive with the widow or widower, the
latter shall be entitled to one half of the inheritance and the brothers and sisters or their children
to the other half.
Article 1003. If there are no descendants, ascendants, illegitimate children, or a surviving
spouse, the collateral relatives shall succeed to the entire estate of the deceased in accordance
with the following articles.

Pursuant to these provisions, the presence of descendants, ascendants, or illegitimate children

of the deceased excludes collateral relatives like the petitioner from succeeding to the
deceased’s estate.18 Necessarily, therefore, the right of the petitioner to bring the action hinges
upon a prior determination of whether Cresenciano had any descendants, ascendants, or
children (legitimate or illegitimate), and of whether the petitioner was the late Cresenciano’s
surviving heir. Such prior determination must be made by the trial court, for the inquiry thereon
involves questions of fact.

As can be seen, both the RTC and the CA erroneously resolved the issue presented in this case.
We reverse their error, in order that the substantial right of the petitioner, if any, may not be
prejudiced.

Nevertheless, we note that the petitioner did not implead Leonila, who, as the late Cresenciano’s
surviving wife,19stood to be benefited or prejudiced by the nullification of her own marriage. It is
relevant to observe, moreover, that not all marriages celebrated under the old Civil Code
required

a marriage license for their validity;20 hence, her participation in this action is made all the more
necessary in order to shed light on whether the marriage had been celebrated without a marriage
license and whether the marriage might have been a marriage excepted from the requirement of
a marriage license. She was truly an indispensable party who must be joined herein:

xxx under any and all conditions, [her] presence being a sine qua non for the exercise of judicial
power. It is precisely "when an indispensable party is not before the court [that] the action
1avv phi1

should be dismissed." The absence of an indispensable party renders all subsequent actions of
the court null and void for want of authority to act, not only as to the absent parties but even as to
those present.21

We take note, too, that the petitioner and Leonila were parties in C.A.-G.R. CV No. 91025
entitled Heirs of Cresenciano Ablaza, namely: Leonila G. Ablaza and Leila Ablaza Jasul v.
Spouses Isidro and Casilda Ablaza, an action to determine who between the parties were the
legal owners of the property involved therein. Apparently, C.A.-G.R. CV No. 91025 was decided
on November 26, 2009, and the petitioner’s motion for reconsideration was denied on June 23,
2010. As a defendant in that action, the petitioner is reasonably presumed to have knowledge
that the therein plaintiffs, Leonila and Leila, were the wife and daughter, respectively, of the late
Cresenciano. As such, Leila was another indispensable party whose substantial right any
judgment in this action will definitely affect. The petitioner should likewise implead Leila.

The omission to implead Leonila and Leila was not immediately fatal to the present action,
however, considering that Section 11,22 Rule 3, Rules of Court, states that neither misjoinder nor
non-joinder of parties is a ground for the dismissal of an action. The petitioner can still amend his
initiatory pleading in order to implead her, for under the same rule, such amendment to implead
an indispensable party may be made "on motion of any party or on (the trial court’s) own initiative
at any stage of the action and on such terms as are just."

WHEREFORE, the petition for review on certiorari is granted.

We reverse and set aside the decision dated January 30, 2003 rendered by the Court of
Appeals.

Special Case No. 117 entitled In Re: Petition for Nullification of Marriage Contract between
Cresenciano Ablaza and Leonila Honato; Isidro Ablaza, petitioner, is reinstated, and its records
are returned to the Regional Trial Court, Branch 49, in Cataingan, Masbate, for further
proceedings, with instructions to first require the petitioner to amend his initiatory pleading in
order to implead Leonila Honato and her daughter Leila Ablaza Jasul as parties-defendants; then
to determine whether the late Cresenciano Ablaza had any ascendants, descendants, or children
(legitimate or illegitimate) at the time of his death as well as whether the petitioner was the
brother and surviving heir of the late Cresenciano Ablaza entitled to succeed to the estate of said
deceased; and thereafter to proceed accordingly.

No costs of suit.

SO ORDERED.

G.R. No. 103047 September 2, 1994

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS AND ANGELINA M. CASTRO, respondents.

Parungao, Abesamis, Eleazar & Pulgar Law Offices for private respondent.

PUNO, J.:

The case at bench originated from a petition filed by private respondent Angelina M. Castro in
the Regional Trial Court of Quezon City seeking a judicial declaration of nullity of her marriage to
Edwin F. Cardenas.1 As ground therefor, Castro claims that no marriage license was ever issued
to them prior to the solemnization of their marriage.

Despite notice, defendant Edwin F. Cardenas failed to file his answer. Consequently, he was
declared in default. Trial proceeded in his absence.

The controlling facts are undisputed:

On June 24, 1970, Angelina M. Castro and Edwin F. Cardenas were married in a civil ceremony
performed by Judge Pablo M. Malvar, City Court Judge of Pasay City. The marriage was
celebrated without the knowledge of Castro's parents. Defendant Cardenas personally attended
to the processing of the documents required for the celebration of the marriage, including the
procurement of the marriage, license. In fact, the marriage contract itself states that marriage
license no. 3196182 was issued in the name of the contracting parties on June 24, 1970 in
Pasig, Metro Manila.

The couple did not immediately live together as husband and wife since the marriage was
unknown to Castro's parents. Thus, it was only in March 1971, when Castro discovered she was
pregnant, that the couple decided to live together. However, their cohabitation lasted only for four
(4) months. Thereafter, the couple parted ways. On October 19, 1971, Castro gave birth. The
baby was adopted by Castro's brother, with the consent of Cardenas.

The baby is now in the United States. Desiring to follow her daughter, Castro wanted to put in
order her marital status before leaving for the States. She thus consulted a lawyer, Atty.
Frumencio E. Pulgar, regarding the possible annulment of her marriage. Through her lawyer's
efforts, they discovered that there was no marriage license issued to Cardenas prior to the
celebration of their marriage.
As proof, Angelina Castro offered in evidence a certification from the Civil Register of Pasig,
Metro Manila. It reads:

February 20, 1987

TO WHOM IT MAY CONCERN:

This is to certify that the names EDWIN F. CARDENAS and ANGELINA M.

CASTRO who were allegedly married in the Pasay City Court on June 21, 1970
under an alleged (s)upportive marriage license
no. 3196182 allegedly issued in the municipality on June 20, 1970 cannot be
located as said license no. 3196182 does not appear from our records.

Issued upon request of Mr. Ed Atanacio.

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Castro testified that she did not go to the civil registrar of Pasig on or before June 24, 1970 in
order to apply for a license. Neither did she sign any application therefor. She affixed her
signature only on the marriage contract on June 24, 1970 in Pasay City.

The trial court denied the petition. 2 It held that the above certification was inadequate to establish
the alleged non-issuance of a marriage license prior to the celebration of the marriage between
the parties. It ruled that the "inability of the certifying official to locate the marriage license is not
conclusive to show that there was no marriage license issued."

Unsatisfied with the decision, Castro appealed to respondent appellate court. She insisted that
the certification from the local civil registrar sufficiently established the absence of a marriage
license.

As stated earlier, respondent appellate court reversed the Decision of the trial court. 3 It declared
the marriage between the contracting parties null and void and directed the Civil Registrar of
Pasig to cancel the subject marriage contract.

Hence this petition for review on certiorari.

Petitioner Republic of the Philippines urges that respondent appellate court erred when it ruled
that the certification issued by the civil registrar that marriage license no. 3196182 was not in
their record adequately proved that no such license was ever issued. Petitioner also faults the
respondent court for relying on the self-serving and uncorroborated testimony of private
respondent Castro that she had no part in the procurement of the subject marriage license.
Petitioner thus insists that the certification and the uncorroborated testimony of private
respondent are insufficient to overthrow the legal presumption regarding the validity of a
marriage.

Petitioner also points that in declaring the marriage between the parties as null and void,
respondent appellate court disregarded the presumption that the solemnizing officer, Judge
Pablo M. Malvar, regularly performed his duties when he attested in the marriage contract that
marriage license no. 3196182 was duly presented to him before the solemnization of the subject
marriage.

The issues, being interrelated, shall be discussed jointly.

The core issue presented by the case at bench is whether or not the documentary and
testimonial evidence presented by private respondent are sufficient to establish that no marriage
license was issued by the Civil Registrar of Pasig prior to the celebration of the marriage of
private respondent to Edwin F. Cardenas.

We affirm the impugned Decision.

At the time the subject marriage was solemnized on June 24, 1970, the law governing marital
relations was the New Civil Code. The law 4 provides that no marriage shall be solemnized
without a marriage license first issued by a local civil registrar. Being one of the essential
requisites of a valid marriage, absence of a license would render the marriage void ab initio. 5
Petitioner posits that the certification of the local civil registrar of due search and inability to find a
record or entry to the effect that marriage license no. 3196182 was issued to the parties is not
adequate to prove its non-issuance.

We hold otherwise. The presentation of such certification in court is sanctioned by Section 29,
Rule 132 of the Rules of Court, viz.:

Sec. 29. Proof of lack of record. — A written statement signed by an officer

having custody of an official record or by his deputy, that after diligent search, no
record or entry of a specified tenor is found to exist in the records of his office,
accompanied by a certificate as above provided, is admissible as evidence that
the records of his office contain no such record or entry.

The above Rule authorized the custodian of documents to certify that despite diligent search, a
particular document does not exist in his office or that a particular entry of a specified tenor was
not to be found in a register. As custodians of public documents, civil registrars are public officers
charged with the duty, inter alia, of maintaining a register book where they are required to enter
all applications for marriage licenses, including the names of the applicants, the date the
marriage license was issued and such other relevant data. 6

The certification of "due search and inability to find" issued by the civil registrar of Pasig enjoys
probative value, he being the officer charged under the law to keep a record of all data relative to
the issuance of a marriage license. Unaccompanied by any circumstance of suspicion and
pursuant to Section 29, Rule 132 of the Rules of Court, a certificate of "due search and inability
to find" sufficiently proved that his office did not issue marriage license no. 3196182 to the
contracting parties.

The fact that private respondent Castro offered only her testimony in support of her petition is, in
itself, not a ground to deny her petition. The failure to offer any other witness to corroborate her
testimony is mainly due to the peculiar circumstances of the case. It will be remembered that the
subject marriage was a civil ceremony performed by a judge of a city court. The subject marriage
is one of those commonly known as a "secret marriage" — a legally non-existent phrase but
ordinarily used to refer to a civil marriage celebrated without the knowledge of the relatives
and/or friends of either or both of the contracting parties. The records show that the marriage
between Castro and Cardenas was initially unknown to the parents of the former.

Surely, the fact that only private respondent Castro testified during the trial cannot be held
against her. Her husband, Edwin F. Cardenas, was duly served with notice of the proceedings
and a copy of the petition. Despite receipt thereof, he chose to ignore the same. For failure to
answer, he was properly declared in default. Private respondent cannot be faulted for her
husband's lack of interest to participate in the proceedings. There was absolutely no evidence on
record to show that there was collusion between private respondent and her husband Cardenas.

It is noteworthy to mention that the finding of the appellate court that the marriage between the
contracting parties is null and void for lack of a marriage license does not discount the fact that
indeed, a spurious marriage license, purporting to be issued by the civil registrar of Pasig, may
have been presented by Cardenas to the solemnizing officer.

In fine, we hold that, under the circumstances of the case, the documentary and testimonial
evidence presented by private respondent Castro sufficiently established the absence of the
subject marriage license.

IN VIEW WHEREOF, the petition is DENIED there being no showing of any reversible error
committed by respondent appellate court.

SO ORDERED.
A.M. No. MTJ-02-1390 April 11, 2002
(Formerly IPI No. 01-1049-MTJ)

MERCEDITA MATA ARAÑES, petitioner,

vs.
JUDGE SALVADOR M. OCCIANO, respondent.

PUNO, J.:

Petitioner Mercedita Mata Arañes charges respondent judge with Gross Ignorance of the
Law via a sworn Letter-Complaint dated 23 May 2001. Respondent is the Presiding Judge of the
Municipal Trial Court of Balatan, Camarines Sur. Petitioner alleges that on 17 February 2000,
respondent judge solemnized her marriage to her late groom Dominador B. Orobia without the
requisite marriage license and at Nabua, Camarines Sur which is outside his territorial
jurisdiction.

They lived together as husband and wife on the strength of this marriage until her husband
passed away. However, since the marriage was a nullity, petitioner's right to inherit the "vast
properties" left by Orobia was not recognized. She was likewise deprived of receiving the
pensions of Orobia, a retired Commodore of the Philippine Navy. 1âwphi 1.nêt

Petitioner prays that sanctions be imposed against respondent judge for his illegal acts and
unethical misrepresentations which allegedly caused her so much hardships, embarrassment
and sufferings.

On 28 May 2001, the case was referred by the Office of the Chief Justice to then Acting Court
Administrator Zenaida N. Elepaño for appropriate action. On 8 June 2001, the Office of the Court
Administrator required respondent judge to comment.

In his Comment dated 5 July 2001, respondent judge averred that he was requested by a certain
Juan Arroyo on 15 February 2000 to solemnize the marriage of the parties on 17 February 2000.
Having been assured that all the documents to the marriage were complete, he agreed to
solemnize the marriage in his sala at the Municipal Trial Court of Balatan, Camarines Sur.
However, on 17 February 2000, Arroyo informed him that Orobia had a difficulty walking and
could not stand the rigors of travelling to Balatan which is located almost 25 kilometers from his
residence in Nabua. Arroyo then requested if respondent judge could solemnize the marriage in
Nabua, to which request he acceded.

Respondent judge further avers that before he started the ceremony, he carefully examined the
documents submitted to him by petitioner. When he discovered that the parties did not possess
the requisite marriage license, he refused to solemnize the marriage and suggested its resetting
to another date. However, due to the earnest pleas of the parties, the influx of visitors, and the
delivery of provisions for the occasion, he proceeded to solemnize the marriage out of human
compassion. He also feared that if he reset the wedding, it might aggravate the physical
condition of Orobia who just suffered from a stroke. After the solemnization, he reiterated the
necessity for the marriage license and admonished the parties that their failure to give it would
render the marriage void. Petitioner and Orobia assured respondent judge that they would give
the license to him in the afternoon of that same day. When they failed to comply, respondent
judge followed it up with Arroyo but the latter only gave him the same reassurance that the
marriage license would be delivered to his sala at the Municipal Trial Court of Balatan,
Camarines Sur.

Respondent judge vigorously denies that he told the contracting parties that their marriage is
valid despite the absence of a marriage license. He attributes the hardships and embarrassment
suffered by the petitioner as due to her own fault and negligence.
On 12 September 2001, petitioner filed her Affidavit of Desistance dated 28 August 2001 with the
Office of the Court Administrator. She attested that respondent judge initially refused to
solemnize her marriage due to the want of a duly issued marriage license and that it was
because of her prodding and reassurances that he eventually solemnized the same. She
confessed that she filed this administrative case out of rage. However, after reading the
Comment filed by respondent judge, she realized her own shortcomings and is now bothered by
her conscience.

Reviewing the records of the case, it appears that petitioner and Orobia filed their Application for
Marriage License on 5 January 2000. It was stamped in this Application that the marriage license
shall be issued on 17 January 2000. However, neither petitioner nor Orobia claimed it.

It also appears that the Office of the Civil Registrar General issued a Certification that it has no
record of such marriage that allegedly took place on 17 February 2000. Likewise, the Office of
the Local Civil Registrar of Nabua, Camarines Sur issued another Certification dated 7 May 2001
that it cannot issue a true copy of the Marriage Contract of the parties since it has no record of
their marriage.

On 8 May 2001, petitioner sought the assistance of respondent judge so the latter could
communicate with the Office of the Local Civil Registrar of Nabua, Camarines Sur for the
issuance of her marriage license. Respondent judge wrote the Local Civil Registrar of Nabua,
Camarines Sur. In a letter dated 9 May 2001, a Clerk of said office, Grace T. Escobal, informed
respondent judge that their office cannot issue the marriage license due to the failure of Orobia to
submit the Death Certificate of his previous spouse.

The Office of the Court Administrator, in its Report and Recommendation dated 15 November
2000, found the respondent judge guilty of solemnizing a marriage without a duly issued
marriage license and for doing so outside his territorial jurisdiction. A fine of P5,000.00 was
recommended to be imposed on respondent judge.

We agree.

Under the Judiciary Reorganization Act of 1980, or B.P. 129, the authority of the regional trial
court judges and judges of inferior courts to solemnize marriages is confined to their territorial
jurisdiction as defined by the Supreme Court. 1âwphi1.nêt

The case at bar is not without precedent. In Navarro vs. Domagtoy,1 respondent judge held
office and had jurisdiction in the Municipal Circuit Trial Court of Sta. Monica-Burgos, Surigao del
Norte. However, he solemnized a wedding at his residence in the municipality of Dapa, Surigao
del Norte which did not fall within the jurisdictional area of the municipalities of Sta. Monica and
Burgos. We held that:

"A priest who is commissioned and allowed by his local ordinance to marry the faithful is
authorized to do so only within the area or diocese or place allowed by his Bishop. An
appellate court Justice or a Justice of this Court has jurisdiction over the entire
Philippines to solemnize marriages, regardless of the venue, as long as the requisites of
the law are complied with. However, judges who are appointed to specific
jurisdictions, may officiate in weddings only within said areas and not beyond.
Where a judge solemnizes a marriage outside his court's jurisdiction, there is a
resultant irregularity in the formal requisite laid down in Article 3, which while it
may not affect the validity of the marriage, may subject the officiating official to
administrative liability."2 (Emphasis supplied.)

In said case, we suspended respondent judge for six (6) months on the ground that his act of
solemnizing a marriage outside his jurisdiction constitutes gross ignorance of the law. We further
held that:
 "The judiciary should be composed of persons who, if not experts, are at least, proficient
in the law they are sworn to apply, more than the ordinary laymen. They should be skilled
and competent in understanding and applying the law. It is imperative that they be
conversant with basic legal principles like the ones involved in the instant case. x x x
While magistrates may at times make mistakes in judgment, for which they are not
penalized, the respondent judge exhibited ignorance of elementary provisions of law, in
an area which has greatly prejudiced the status of married persons."3

In the case at bar, the territorial jurisdiction of respondent judge is limited to the municipality of
Balatan, Camarines Sur. His act of solemnizing the marriage of petitioner and Orobia in Nabua,
Camarines Sur therefore is contrary to law and subjects him to administrative liability. His act
may not amount to gross ignorance of the law for he allegedly solemnized the marriage out of
human compassion but nonetheless, he cannot avoid liability for violating the law on marriage.

Respondent judge should also be faulted for solemnizing a marriage without the requisite
marriage license. In People vs. Lara,4 we held that a marriage which preceded the issuance of
the marriage license is void, and that the subsequent issuance of such license cannot render
valid or even add an iota of validity to the marriage. Except in cases provided by law, it is the
marriage license that gives the solemnizing officer the authority to solemnize a marriage.
Respondent judge did not possess such authority when he solemnized the marriage of petitioner.
In this respect, respondent judge acted in gross ignorance of the law. 1âwphi1.nêt

Respondent judge cannot be exculpated despite the Affidavit of Desistance filed by petitioner.
This Court has consistently held in a catena of cases that the withdrawal of the complaint does
not necessarily have the legal effect of exonerating respondent from disciplinary action.
Otherwise, the prompt and fair administration of justice, as well as the discipline of court
personnel, would be undermined.5 Disciplinary actions of this nature do not involve purely private
or personal matters. They can not be made to depend upon the will of every complainant who
may, for one reason or another, condone a detestable act. We cannot be bound by the unilateral
act of a complainant in a matter which involves the Court's constitutional power to discipline
judges. Otherwise, that power may be put to naught, undermine the trust character of a public
office and impair the integrity and dignity of this Court as a disciplining authority.6

WHEREFORE, respondent Judge Salvador M. Occiano, Presiding Judge of the Municipal Trial
Court of Balatan, Camarines Sur, is fined P5,000.00 pesos with a STERN WARNING that a
repetition of the same or similar offense in the future will be dealt with more severely.

SO ORDERED.

G.R. No. 183896 January 30, 2013

SYED AZHAR ABBAS, Petitioner,

vs.
GLORIA GOO ABBAS, Respondent.

DECISION

VELASCO, JR., J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
questioning the Decision1 of the Court of Appeals (CA) dated March 11, 2008 in CA-G.R. CV No.
86760, which reversed the Decision2 in Civil Case No. 03-0382-CFM dated October 5, 2005 of
the Regional Trial Court (RTC), Branch 109, Pasay City, and the CA Resolution dated July 24,
2008, denying petitioner's Motion for Reconsideration of the CA Decision.
The present case stems from a petition filed by petitioner Syed Azhar Abbas (Syed) for the
declaration of nullity of his marriage to Gloria Goo-Abbas (Gloria) with the RTC of Pasay City,
docketed as Civil Case No. 03-0382-CFM, and raffled to RTC Branch 109. Syed alleged the
absence of a marriage license, as provided for in Article 4, Chapter I, Title 1 of Executive Order
No. 269, otherwise known as the Family Code of the Philippines, as a ground for the annulment
of his marriage to Gloria.

In the Marriage Contract3 of Gloria and Syed, it is stated that Marriage License No. 9969967,
issued at Carmona, Cavite on January 8, 1993, was presented to the solemnizing officer. It is this
information that is crucial to the resolution of this case.

At the trial court, Syed, a Pakistani citizen, testified that he met Gloria, a Filipino citizen, in
Taiwan in 1991, and they were married on August 9, 1992 at the Taipei Mosque in Taiwan.4 He
arrived in the Philippines in December of 1992. On January 9, 1993, at around 5 o’clock in the
afternoon, he was at his mother-in-law’s residence, located at 2676 F. Muñoz St., Malate, Manila,
when his mother-in-law arrived with two men. He testified that he was told that he was going to
undergo some ceremony, one of the requirements for his stay in the Philippines, but was not told
of the nature of said ceremony. During the ceremony he and Gloria signed a document. He
claimed that he did not know that the ceremony was a marriage until Gloria told him later. He
further testified that he did not go to Carmona, Cavite to apply for a marriage license, and that he
had never resided in that area. In July of 2003, he went to the Office of the Civil Registrar of
Carmona, Cavite, to check on their marriage license, and was asked to show a copy of their
marriage contract wherein the marriage license number could be found.5 The Municipal Civil
Registrar, Leodivinia C. Encarnacion, issued a certification on July 11, 2003 to the effect that the
marriage license number appearing in the marriage contract he submitted, Marriage License No.
9969967, was the number of another marriage license issued to a certain Arlindo Getalado and
Myra Mabilangan.6 Said certification reads as follows:

11 July 2003

TO WHOM IT MAY CONCERN:

This is to certify as per Registry Records of Marriage License filed in this office, Marriage License
No. 9969967 was issued in favor of MR. ARLINDO GETALADO and MISS MYRA MABILANGAN
on January 19, 1993.

No Marriage License appear [sic] to have been issued to MR. SYED AZHAR ABBAS and MISS
GLORIA F. GOO on January 8, 1993.

This certification is being issued to Mr. Syed Azhar Abbas for whatever legal purpose or intents it
may serve.7

On cross-examination, Syed testified that Gloria had filed bigamy cases against him in 2001 and
2002, and that he had gone to the Municipal Civil Registrar of Carmona, Cavite to get
certification on whether or not there was a marriage license on advice of his counsel.8

Petitioner also presented Norberto Bagsic (Bagsic), an employee of the Municipal Civil Registrar
of Carmona, Cavite. Bagsic appeared under a letter of authority from the Municipal Civil
Registrar of Carmona, Cavite, and brought documents pertaining to Marriage License No.
9969967, which was issued to Arlindo Getalado and Myra Mabilangan on January 20, 1993.9

Bagsic testified that their office issues serial numbers for marriage licenses and that the numbers
are issued chronologically.10 He testified that the certification dated July 11, 2003, was issued
and signed by Leodivina Encarnacion, Registrar of the Municipality of Carmona, Cavite, certifying
that Marriage License No. 9969967 was issued for Arlindo Getalado and Myra Mabilangan on
January 19, 1993, and that their office had not issued any other license of the same serial
number, namely 9969967, to any other person.11

For her part, Gloria testified on her own behalf, and presented Reverend Mario Dauz, Atty.
Lorenzo Sanchez, Felicitas Goo and May Ann Ceriola.

Reverend Mario Dauz (Rev. Dauz) testified that he was a minister of the Gospel and a barangay
captain, and that he is authorized to solemnize marriages within the Philippines.12 He testified
that he solemnized the marriage of Syed Azhar Abbas and Gloria Goo at the residence of the
bride on January 9, 1993.13 He stated that the witnesses were Atty. Lorenzo Sanchez (Atty.
Sanchez) and Mary Ann Ceriola.14 He testified that he had been solemnizing marriages since
1982, and that he is familiar with the requirements.15 Rev. Dauz further testified that Atty.
Sanchez gave him the marriage license the day before the actual wedding, and that the marriage
contract was prepared by his secretary.16 After the solemnization of the marriage, it was
registered with the Local Civil Registrar of Manila, and Rev. Dauz submitted the marriage
contract and copy of the marriage license with that office.17

Atty. Sanchez testified that he was asked to be the sponsor of the wedding of Syed Abbas and
Gloria Goo by the mother of the bride, Felicitas Goo.18 He testified that he requested a certain
Qualin to secure the marriage license for the couple, and that this Qualin secured the license and
gave the same to him on January 8, 1993.19 He further testified that he did not know where the
marriage license was obtained.20 He attended the wedding ceremony on January 9, 1993, signed
the marriage contract as sponsor, and witnessed the signing of the marriage contract by the
couple, the solemnizing officer and the other witness, Mary Ann Ceriola.21

Felicitas Goo testified that Gloria Goo is her daughter and Syed Azhar Abbas is her son-in-law,
and that she was present at the wedding ceremony held on January 9, 1993 at her house.22 She
testified that she sought the help of Atty. Sanchez at the Manila City Hall in securing the marriage
license, and that a week before the marriage was to take place, a male person went to their
house with the application for marriage license.23 Three days later, the same person went back to
their house, showed her the marriage license before returning it to Atty. Sanchez who then gave
it to Rev. Dauz, the solemnizing officer.24 She further testified that she did not read all of the
contents of the marriage license, and that she was told that the marriage license was obtained
from Carmona.25 She also testified that a bigamy case had been filed by Gloria against Syed at
the Regional Trial Court of Manila, evidenced by an information for Bigamy dated January 10,
2003, pending before Branch 47 of the Regional Trial Court of Manila.26

As to Mary Ann Ceriola’s testimony, the counsels for both parties stipulated that: (a) she is one of
the sponsors at the wedding of Gloria Goo and Syed Abbas on January 9, 1993; (b) she was
seen in the wedding photos and she could identify all the persons depicted in said photos; and
(c) her testimony corroborates that of Felicitas Goo and Atty. Sanchez.

The respondent, Gloria, testified that Syed is her husband, and presented the marriage contract
bearing their signatures as proof.27 She and her mother sought the help of Atty. Sanchez in
securing a marriage license, and asked him to be one of the sponsors. A certain Qualin went to
their house and said that he will get the marriage license for them, and after several days
returned with an application for marriage license for them to sign, which she and Syed did. After
Qualin returned with the marriage license, they gave the license to Atty. Sanchez who gave it to
Rev. Dauz, the solemnizing officer. Gloria testified that she and Syed were married on January 9,
1993 at their residence.28

Gloria further testified that she has a daughter with Syed, born on June 15, 1993.29

Gloria also testified that she filed a bigamy case against Syed, who had married a certain Maria
Corazon Buenaventura during the existence of the previous marriage, and that the case was
docketed as Criminal Case No. 02A-03408, with the RTC of Manila.30
Gloria stated that she and Syed had already been married on August 9, 1992 in Taiwan, but that
she did not know if said marriage had been celebrated under Muslim rites, because the one who
celebrated their marriage was Chinese, and those around them at the time were Chinese.31

The Ruling of the RTC

In its October 5, 2005 Decision, the Pasay City RTC held that no valid marriage license was
issued by the Municipal Civil Registrar of Carmona, Cavite in favor of Gloria and Syed, as
Marriage License No. 9969967 had been issued to Arlindo Getalado and Myra Mabilangan, and
the Municipal Civil Registrar of Carmona, Cavite had certified that no marriage license had been
issued for Gloria and Syed.32 It also took into account the fact that neither party was a resident of
Carmona, Cavite, the place where Marriage License No. 9969967 was issued, in violation of
Article 9 of the Family Code.33 As the marriage was not one of those exempt from the license
requirement, and that the lack of a valid marriage license is an absence of a formal requisite, the
marriage of Gloria and Syed on January 9, 1993 was void ab initio.

The dispositive portion of the Decision reads as follows:

WHEREFORE, judgment is hereby rendered in favor of the petitioner, and against the
respondent declaring as follows:

1. The marriage on January 9, 1993 between petitioner Syed Azhar Abbas and
respondent Gloria Goo-Abbas is hereby annulled;

2. Terminating the community of property relations between the petitioner and the
respondent even if no property was acquired during their cohabitation by reason of the
nullity of the marriage of the parties.

3. The Local Civil Registrar of Manila and the Civil Registrar General, National Statistics
Office, are hereby ordered to cancel from their respective civil registries the marriage
contracted by petitioner Syed Azhar Abbas and respondent Gloria Goo-Abbas on
January 9, 1993 in Manila.

SO ORDERED.34

Gloria filed a Motion for Reconsideration dated November 7, 2005, but the RTC denied the
same, prompting her to appeal the questioned decision to the Court of Appeals.

The Ruling of the CA

In her appeal to the CA, Gloria submitted the following assignment of errors:

THE LOWER COURT ERRED IN DECLARING THE MARRIAGE BETWEEN THE

PETITIONER AND RESPONDENT AS NULL AND VOID DUE TO THE ABSENCE OF A
MARRIAGE LICENSE DESPITE EVIDENCE CLEARLY SHOWING THAT THERE WAS
ONE.

II

THE LOWER COURT ERRED IN NOT CONSIDERING, AS A REQUISITE OF A VALID

MARRIAGE, THE OVERWHELMING EVIDENCE SHOWING THAT A MARRIAGE
CEREMONY TOOK PLACE WITH THE APPEARANCE OF THE CONTRACTING
PARTIES BEFORE THE SOLEMNIZING OFFICER AND THEIR PERSONAL
 DECLARATION THAT THEY TOOK EACH OTHER AS HUSBAND AND WIFE IN THE
PRESENCE OF NOT LESS THAN TWO WITNESSES OF LEGAL AGE.

III

THE LOWER COURT ERRED IN NOT RULING ON THE ISSUE OF ESTOPPEL BY

LACHES ON THE PART OF THE PETITIONER, AN ISSUE TIMELY RAISED IN THE
COURT BELOW.35

The CA gave credence to Gloria’s arguments, and granted her appeal. It held that the
certification of the Municipal Civil Registrar failed to categorically state that a diligent search for
the marriage license of Gloria and Syed was conducted, and thus held that said certification
could not be accorded probative value.36 The CA ruled that there was sufficient testimonial and
documentary evidence that Gloria and Syed had been validly married and that there was
compliance with all the requisites laid down by law.37

It gave weight to the fact that Syed had admitted to having signed the marriage contract. The CA
also considered that the parties had comported themselves as husband and wife, and that Syed
only instituted his petition after Gloria had filed a case against him for bigamy.38

The dispositive portion of the CA Decision reads as follows:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision dated 05 October
2005 and Order dated 27 January 2006 of the Regional Trial Court of Pasay City, Branch 109, in
Civil Case No. 03-0382-CFM are REVERSED and SET ASIDE and the Petition for Declaration of
Nullity of Marriage is DISMISSED. The marriage between Shed [sic] Azhar Abbas and Gloria
Goo Abbas contracted on 09 January 1993 remains valid and subsisting. No costs.

SO ORDERED.39

Syed then filed a Motion for Reconsideration dated April 1, 200840 but the same was denied by
the CA in a Resolution dated July 24, 2008.41

Hence, this petition.

Grounds in Support of Petition

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN

CITING REPUBLIC VS. COURT OF APPEALS AS THE SAME IS DIAMETRICALLY
INCONSISTENT AND CONTRARY TO THE COURT’S OWN FINDINGS AND
CONCLUSIONS IN THIS CASE.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING AND

SETTING ASIDE, WITHOUT ANY FACTUAL AND LEGAL BASIS, THE DECISION OF
THE REGIONAL TRIAL COURT GRANTING THE PETITION FOR DECLARATION OF
NULLITY OF MARRIAGE.42

The Ruling of this Court

The petition is meritorious.

As the marriage of Gloria and Syed was solemnized on January 9, 1993, Executive Order No.
209, or the Family Code of the Philippines, is the applicable law. The pertinent provisions that
would apply to this particular case are Articles 3, 4 and 35(3), which read as follows:

Art. 3. The formal requisites of marriage are:

(1) Authority of the solemnizing officer;

(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title;
and

(3) A marriage ceremony which takes place with the appearance of the contracting
parties before the solemnizing officer and their personal declaration that they take each
other as husband and wife in the presence of not less than two witnesses of legal age.

Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab
initio, except as stated in Article 35(2).

A defect in any of the essential requisites shall render the marriage voidable as provided in
Article 45.

An irregularity in the formal requisites shall not affect the validity of the marriage but the party or
parties responsible for the irregularity shall be civilly, criminally and administratively liable.

Art. 35. The following marriages shall be void from the beginning:

xxxx

(3) Those solemnized without a license, except those covered by the preceding Chapter.

There is no issue with the essential requisites under Art. 2 of the Family Code, nor with the
formal requisites of the authority of the solemnizing officer and the conduct of the marriage
ceremony. Nor is the marriage one that is exempt from the requirement of a valid marriage
license under Chapter 2, Title I of the Family Code. The resolution of this case, thus, hinges on
whether or not a valid marriage license had been issued for the couple. The RTC held that no
valid marriage license had been issued. The CA held that there was a valid marriage license.

We find the RTC to be correct in this instance.

Respondent Gloria failed to present the actual marriage license, or a copy thereof, and relied on
the marriage contract as well as the testimonies of her witnesses to prove the existence of said
license. To prove that no such license was issued, Syed turned to the office of the Municipal Civil
Registrar of Carmona, Cavite which had allegedly issued said license. It was there that he
requested certification that no such license was issued. In the case of Republic v. Court of
Appeals43 such certification was allowed, as permitted by Sec. 29, Rule 132 of the Rules of
Court, which reads:

SEC. 28. Proof of lack of record. – A written statement signed by an officer having the custody of
an official record or by his deputy that after diligent search, no record or entry of a specified tenor
is found to exist in the records of his office, accompanied by a certificate as above provided, is
admissible as evidence that the records of his office contain no such record or entry.

In the case of Republic, in allowing the certification of the Civil Registrar of Pasig to prove the
non-issuance of a marriage license, the Court held:
The above Rule authorized the custodian of the documents to certify that despite diligent search,
a particular document does not exist in his office or that a particular entry of a specified tenor was
not to be found in a register. As custodians of public documents, civil registrars are public officers
charged with the duty, inter alia, of maintaining a register book where they are required to enter
all applications for marriage licenses, including the names of the applicants, the date the
marriage license was issued and such other relevant data.44

The Court held in that case that the certification issued by the civil registrar enjoyed probative
value, as his duty was to maintain records of data relative to the issuance of a marriage license.

The Municipal Civil Registrar of Carmona, Cavite, where the marriage license of Gloria and Syed
was allegedly issued, issued a certification to the effect that no such marriage license for Gloria
and Syed was issued, and that the serial number of the marriage license pertained to another
couple, Arlindo Getalado and Myra Mabilangan. A certified machine copy of Marriage License
No. 9969967 was presented, which was issued in Carmona, Cavite, and indeed, the names of
Gloria and Syed do not appear in the document.

In reversing the RTC, the CA focused on the wording of the certification, stating that it did not
comply with Section 28, Rule 132 of the Rules of Court.

The CA deduced that from the absence of the words "despite diligent search" in the certification,
and since the certification used stated that no marriage license appears to have been issued, no
diligent search had been conducted and thus the certification could not be given probative value.

To justify that deduction, the CA cited the case of Republic v. Court of Appeals.45 It is worth
noting that in that particular case, the Court, in sustaining the finding of the lower court that a
marriage license was lacking, relied on the Certification issued by the Civil Registrar of Pasig,
which merely stated that the alleged marriage license could not be located as the same did not
appear in their records. Nowhere in the Certification was it categorically stated that the officer
involved conducted a diligent search, nor is a categorical declaration absolutely necessary for
Sec. 28, Rule 132 of the Rules of Court to apply.

Under Sec. 3(m), Rule 131 of the Rules of Court, it is a disputable presumption that an official
duty has been regularly performed, absent contradiction or other evidence to the contrary. We
held, "The presumption of regularity of official acts may be rebutted by affirmative evidence of
irregularity or failure to perform a duty."46 No such affirmative evidence was shown that the
Municipal Civil Registrar was lax in performing her duty of checking the records of their office,
thus the presumption must stand. In fact, proof does exist of a diligent search having been
conducted, as Marriage License No. 996967 was indeed located and submitted to the court. The
fact that the names in said license do not correspond to those of Gloria and Syed does not
overturn the presumption that the registrar conducted a diligent search of the records of her
office.

It is telling that Gloria failed to present their marriage license or a copy thereof to the court. She
failed to explain why the marriage license was secured in Carmona, Cavite, a location where,
admittedly, neither party resided. She took no pains to apply for the license, so she is not the
best witness to testify to the validity and existence of said license. Neither could the other
witnesses she presented prove the existence of the marriage license, as none of them applied
for the license in Carmona, Cavite. Her mother, Felicitas Goo, could not even testify as to the
contents of the license, having admitted to not reading all of its contents. Atty. Sanchez, one of
the sponsors, whom Gloria and Felicitas Goo approached for assistance in securing the license,
admitted not knowing where the license came from. The task of applying for the license was
delegated to a certain Qualin, who could have testified as to how the license was secured and
thus impeached the certification of the Municipal Civil Registrar as well as the testimony of her
representative. As Gloria failed to present this Qualin, the certification of the Municipal Civil
Registrar still enjoys probative value.
It is also noted that the solemnizing officer testified that the marriage contract and a copy of the
marriage license were submitted to the Local Civil Registrar of Manila. Thus, a copy of the
marriage license could have simply been secured from that office and submitted to the court.
However, Gloria inexplicably failed to do so, further weakening her claim that there was a valid
marriage license issued for her and Syed.

In the case of Cariño v. Cariño,47 following the case of Republic,48 it was held that the certification
of the Local Civil Registrar that their office had no record of a marriage license was adequate to
prove the non-issuance of said license. The case of Cariño further held that the presumed
validity of the marriage of the parties had been overcome, and that it became the burden of the
party alleging a valid marriage to prove that the marriage was valid, and that the required
marriage license had been secured.49 Gloria has failed to discharge that burden, and the only
conclusion that can be reached is that no valid marriage license was issued. It cannot be said
that there was a simple irregularity in the marriage license that would not affect the validity of the
marriage, as no license was presented by the respondent. No marriage license was proven to
have been issued to Gloria and Syed, based on the certification of the Municipal Civil Registrar of
Carmona, Cavite and Gloria’s failure to produce a copy of the alleged marriage license.

To bolster its ruling, the CA cited other evidence to support its conclusion that Gloria and Syed
were validly married. To quote the CA:

Moreover, the record is replete with evidence, testimonial and documentary, that appellant and
appellee have been validly married and there was compliance with all the requisites laid down by
law. Both parties are legally capacitated to marry. A certificate of legal capacity was even issued
by the Embassy of Pakistan in favor of appellee. The parties herein gave their consent freely.
Appellee admitted that the signature above his name in the marriage contract was his. Several
pictures were presented showing appellant and appellee, before the solemnizing officer, the
witnesses and other members of appellant’s family, taken during the marriage ceremony, as well
as in the restaurant where the lunch was held after the marriage ceremony. Most telling of all is
Exhibit "5-C" which shows appellee signing the Marriage Contract.

xxxx

The parties have comported themselves as husband and wife and has [sic] one offspring, Aliea
Fatima Goo Abbas, who was born on 15 June 1993. It took appellee more than ten (10) years
before he filed on 01 August 2003 his Petition for Declaration of Nullity of Marriage under Article
4 of the Family Code. We take serious note that said Petition appears to have been instituted by
him only after an Information for Bigamy (Exhibit "1") dated 10 January 2003 was filed against
him for contracting a second or subsequent marriage with one Ma. Corazon (Maryam) T.
Buenaventura. We are not ready to reward (appellee) by declaring the nullity of his marriage and
give him his freedom and in the process allow him to profit from his own deceit and perfidy.50

All the evidence cited by the CA to show that a wedding ceremony was conducted and a
marriage contract was signed does not operate to cure the absence of a valid marriage license.
Article 4 of the Family Code is clear when it says, "The absence of any of the essential or formal
requisites shall render the marriage void ab initio, except as stated in Article 35(2)." Article 35(3)
of the Family Code also provides that a marriage solemnized without a license is void from the
beginning, except those exempt from the license requirement under Articles 27 to 34, Chapter 2,
Title I of the same Code.51 Again, this marriage cannot be characterized as among the
exemptions, and thus, having been solemnized without a marriage license, is void ab initio. 1âw phi 1

As to the motive of Syed in seeking to annul his marriage to Gloria, it may well be that his
motives are less than pure, that he seeks to evade a bigamy suit. Be that as it may, the same
does not make up for the failure of the respondent to prove that they had a valid marriage
license, given the weight of evidence presented by petitioner. The lack of a valid marriage license
cannot be attributed to him, as it was Gloria who took steps to procure the same. The law must
be applied. As the marriage license, a formal requisite, is clearly absent, the marriage of Gloria
and Syed is void ab initio.

WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed Decision
dated March 11, 2008 and Resolution dated July 24, 2008 of the Court of Appeals in CA-G.R. CV
No. 86760 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court,
Branch 109, Pasay City dated October 5, 2005 in Civil Case No. 03-0382-CFM annulling the
marriage of petitioner with respondent on January 9, 1993 is hereby REINSTATED.

No costs.

SO ORDERED.

ADMINISTRATIVE ORDER NO. 125-2007

GUIDELINES ON THE SOLEMNIZATION OF MARRIAGE BY THE MEMBERS OF THE

JUDICIARY

WHEREAS, marriage under the Constitution, is an inviolable social institution and the foundation
of the family and shall be protected by the
State (Section 2, Article XV, 1987 Constitution);

WHEREAS, the Family Code likewise provides that the nature, consequences and incidents of
marriage are governed by law and not
subject to any stipulation (Article 1, Family Code);

WHEREAS, the Supreme Court has declared that the State has surrounded marriage with
safeguards to “monitor its purity, continuity and
permanence”;1

WHEREAS, for the above purposes, there is a need to lay down rules to enable solemnizing
authorities of the Judiciary to secure and safeguard the sanctity of marriage as a social institution;

NOW, THEREFORE, the following Guidelines on the Solemnization of Marriage by the Members
of the Judiciary are hereby promulgated:

A. Justices of the Supreme Court and other appellate courts and Judges of the Regional Trial
Courts, Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts and
Municipal Circuit Trial Courts

Section 1. Authority of solemnizing officer. — a. Incumbent Justices of the Supreme Court, Court
of Appeals, Sandiganbayan and Court of Tax
Appeals have authority to solemnize marriages in any part of the Philippines, regardless of the
venue, provided the requisites of the law are
complied with;2 and

b. Judges of the Regional Trial Courts, Metropolitan Trial Courts,

Municipal Trial Courts in Cities, Municipal Trial Courts and Municipal

Circuit Trial Courts have authority to solemnize marriages within the
court’s jurisdiction.3

Sec. 2. Raffle of requests for solemnization of marriages in multiple-sala courts. — Requests for
solemnization of marriages submitted to first and second level courts in stations with two or more
branches shall be governed by the rules and procedures in the raffle of cases prescribed by
existing resolutions and issuances. Raffle of requests shall be effected upon payment of the
appropriate legal fees.

Sec. 3. Venue of marriage ceremony solemnized by Judges. — As a general rule, a marriage shall
be solemnized publicly in the chambers of the judge or in open court except in the following
instances:

a. A marriage contracted at the point of death or solemnized in a remote place under Article 29 of
the Family Code; or

b. A marriage where both parties submit a written request to the solemnizing officer that the
marriage be solemnized at a house or place designated by them in a sworn statement to this effect.

Sec. 4. Duties of solemnizing officer before the performance of marriage ceremony. — Before
performing the marriage ceremony, the solemnizing officer shall:

a. Ensure that the parties appear personally and are the same contracting parties to the marriage;

b. Personally interview the contracting parties and examine the documents submitted to ascertain
if there is compliance with the essential and formal requisites of marriage under the Family Code;
and

c. Personally examine the marriage license presented, unless a marriage license is not required
under the relevant provisions of the Family Code, to determine the authenticity, completeness and
validity of the said license;

In the event that either or both of the contracting parties be citizens of a foreign country, the
solemnizing officer shall also examine the certificate of legal capacity to contract marriage issued
by the respective diplomatic or consular officials and attached to the marriage license.

Sec. 5. Other duties of solemnizing officer before the solemnization of the marriage in legal
ratification of cohabitation. — In the case of a marriage effecting legal ratification of cohabitation,
the solemnizing officer shall (a) personally interview the contracting parties to determine their
qualifications to marry; (b) personally examine the affidavit of the contracting parties as to the fact
of having lived together as husband and wife for at least five [5] years and the absence of any legal
impediments to marry each other; and (c) execute a sworn statement showing compliance with (a)
and (b) and that the solemnizing officer found no legal impediment to the marriage.

Sec. 6. Duty of solemnizing officer during the solemnization of the marriage.– The solemnizing
officer shall require the contracting parties to personally declare before him and in the presence of
not less than two witnesses of legal age that the said parties take each other as husband and wife.

Sec. 7. Duties of solemnizing officer after solemnization of the marriage. — After performing the
marriage ceremony, the solemnizing officer shall:

a. Ensure that the marriage certificate is properly accomplished and has the complete entries, i.e.,
(1) the declaration that the contracting parties take each other as husband and wife; (2) the true
and correct information and statements required under Article 22 of the Family Code; (3) it is signed
by the contracting parties and their witnesses; and (4) it is attested by him;

b. See to it that the marriage is properly documented in accordance with Article 23 of the Family
Code, as follows:

(1) By furnishing either of the contracting parties with the original of the marriage certificate referred
to in Article 6 of the Family Code;
(2) By transmitting the duplicate and triplicate copies of the marriage certificate not later than fifteen
(15) days after the marriage to the local civil registrar of the place where the marriage was
solemnized; and

(3) By retaining in the court’s files (1) the quadruplicate copy of the marriage certificate, (2) the
original of the marriage license, and, in proper cases, (3) the affidavit of the contracting parties
regarding the solemnization of the marriage in a place other than the Justice’s/judge’s chambers
or in open court.

Sec. 8. Other duties of solemnizing officer after the solemnization of

the marriage where marriage license is not required. — In cases of marriage in articulo mortis or
a marriage in a remote or distant area referred to under Articles 27 and 28, respectively, of the
Family Code, the solemnizing officer shall prepare an affidavit stating the following:

(a) that the marriage was performed in articulo mortis or that the residence of either party,
specifying the barrio or barangay, is so located that there are no means of transportation to enable
such party to appear personally before the local civil registrar;

(b) that the necessary steps were taken to ascertain the ages and relationship of the contracting
parties; and

(c) that there are no legal impediments to the marriage.

The solemnizing officer (a) shall execute the affidavit before the local civil registrar or any other
person legally authorized to administer oaths; and (b) shall file or send the original of the affidavit,
together with a legible copy of the marriage contract, to the local civil registrar of the municipality
where it was performed within the period of thirty [30] days after the performance of the marriage.

Sec. 9. Recording of marriages solemnized and safekeeping of documents. — a. The solemnizing

officer shall cause to be kept in the court a record book of all marriages solemnized. Marriages
conducted shall be entered sequentially and each entry shall set forth the names of the contracting
parties, their respective nationalities and current actual places of residence, the date of marriage
and the date of the marriage license.

b. The solemnizing officer shall cause to be filed in the court the quadruplicate copy of the marriage
certificate, the original of the marriage
license, the certificate of legal capacity when one or both parties are
foreigners or a copy thereof, and, when applicable, the affidavit of the
contracting parties regarding the request for change in the venue for the
marriage. All documents pertaining to a marriage shall be kept in one file
which file shall be properly labeled, catalogued and their integrity and
safety secured.

B. Judges of the Shari’a District Courts and Shari’a Circuit Courts

Sec. 10. Authority to Solemnize Marriages. — a. Incumbent Judges of the Shari’a District Courts
and Shari’a Circuit Courts and any person designated by the judge, should the proper wali
(guardian for marriage) refuse without justifiable reason, to authorize the solemnization, shall have
authority to solemnize marriages within the court’s jurisdiction (Article 18,
Code of Muslim Personal Laws).

Sec. 11. Venue of the Marriage Ceremony. — The marriage shall be solemnized publicly in any
mosque, office of the Shari’a judge, office of the District or Circuit Registrar, residence of the bride
or her wali, or at any other suitable place agreed upon by the parties (Article 19, Code of Muslim
Personal Laws).
Sec. 12. Marriages among Muslims without marriage license. — Marriages among Muslims may
be performed validly without the necessity of a marriage license, provided that they are solemnized
in accordance with their customs, rites or practices. (Article 33, Family Code).

Sec. 13. Duties of the solemnizing officer before the marriage ceremony. — Before performing the
marriage ceremony, the solemnizing officer shall:

a. Ensure that the parties appearing personally before him are the same contracting parties to the
marriage to be solemnized; and

b. Personally interview the contracting parties to satisfy himself that the essential requisites for the
marriage prescribed by Article 15, Code of Muslim Personal Laws, are present.

Sec. 14. Other duties of the solemnizing officer before the marriage ceremony. –In case where
one of the contracting parties is a female who though less than fifteen but not below twelve years
of age has attained puberty, the solemnizing officer shall check whether or not, upon petition of a
proper wali, an order has been issued by a judge of the Shari’a District Court for the solemnization
of the marriage (Article 16, Code of Muslim Personal Laws).

Sec. 15. Duty of the solemnizing officer during the marriage

ceremony. –The solemnizing officer shall ensure that the ijab (offer) and the qabul (acceptance) in
marriage are (a) declared publicly in his presence and of two competent witnesses; (b) set forth in
an instrument (in triplicate) signed or marked by the contracting parties and the said witnesses;
and that the declaration is attested by him (Article 17, Code of Muslim Personal Laws).

Sec. 16. Duty of the solemnizing officer after the marriage ceremony. — The solemnizing officer
shall (a) give one copy of the declaration to the contracting parties; (b) sent another copy of the
declaration to the Circuit Registrar; and (c) keep the third copy (Article 17, Code of Muslim Personal
Laws).

C. Miscellaneous Common Provisions

Sec. 17. Cases not covered by the Guidelines. — In all other cases
not covered by the Guidelines, the solemnizing officer shall comply and act in accordance with the
requirements prescribed by the relevant provisions of the Family Code, the Code of Muslim
Personal Laws of the Philippines, and Sections 37-45, Republic Act No. 3631 or the Marriage Law
Act of
1929.

Sec. 18. Fees for the Solemnization of Marriages. — For the performance of marriage ceremony
and issuance of marriage certificate and subject further to the provisions of AM No. 04-2-04-SC
(16 August 2004) the legal fees in the following amounts shall be collected:

(a) For marriages solemnized by Justices of the Supreme Court and other appellate courts – Three
hundred (P300.00) pesos;

(b) For marriages solemnized by Judges of the Regional Trial Courts and Shari’a District Courts –
Three hundred (P300.00) pesos; and

(c) For marriages solemnized by Judges of the Metropolitan Trial

Courts, Municipal Trial Courts in Cities, Municipal Trial Courts; Municipal Circuit Trial Courts and
Shari’a Circuit Courts – Three hundred (P300.00) pesos.

All fees collected for the solemnization of marriage shall accrue to

the Judiciary Development Fund.
Sec. 19. Payment of legal fees in Philippine legal tender. — All fees shall be paid in Philippine
currency and such fees collected shall be properly officially receipted.

Sec. 20. Unauthorized demand for and receipt of marriage

solemnization fees. — The demand for or solicitation, collection or receipt of fees for the
solemnization of any marriage in excess of the amounts stated herein shall be considered a
violation of these Guidelines and shall subject the solemnizing authority to administrative
disciplinary measures.4

Sec. 21. Facilitation of marriage ceremony. — Any judge or employee of the court who, alone or
with the connivance of other court personnel or third persons not employed by the court, intervenes
so that the marriage of contracting parties is facilitated or performed despite lack of or without the
necessary supporting documents, or performs other acts that tends to cause the solemnization of
the marriage with undue haste shall be subjected to appropriate administrative disciplinary
proceedings.

Sec.22. Reporting of marriages solemnized. –All marriages solemnized shall be duly entered and
indicated in the monthly report of cases to be accomplished by the solemnizing officer.

Sec.23. Posting of the Guidelines. –All Executive Judges/Presiding Judges shall post copies of
these Guidelines (a) in conspicuous places in their respective Halls of Justice or courthouses; and
(b) on the bulletin board of each court at the entrance to the courtroom.

Sec.24. Violations of the Guidelines. — Violations of any of the provisions of the Guidelines shall
be ground for the appropriate administrative disciplinary proceedings.

Sec. 25. – Repealing clause. — The provisions of administrative orders, circulars and other
issuances of the Supreme Court inconsistent herewith are deemed amended or revoked.

Sec. 26. Effectivity. –These Guidelines shall take effect immediately.

August 9, 2007.

G.R. No. 155733 January 27, 2006

IN THE MATTER OF THE INTESTATE ESTATES OF THE DECEASED JOSEFA DELGADO

AND GUILLERMO RUSTIA CARLOTA DELGADO VDA. DE DE LA ROSA and other HEIRS
OF LUIS DELGADO, namely, HEIRS OF CONCHA VDA. DE AREVALO, HEIRS OF LUISA
DELGADO VDA. DE DANAO, ANGELA DELGADO ARESPACOCHAGA, TERESA DELGADO
PERLAS, CAROLINA DELGADO-ARESPACOCHAGA, RODOLFO DELGADO, BENJAMIN
DELGADO, GLICERIA DELGADO and CLEOFAS DELGADO; and HEIRS OF GORGONIO
DELGADO, namely, RAMON DELGADO CAMPO, CARLOS DELGADO CAMPO, CLARITA
DELGADO CAMPO-REIZA, YOLANDA DELGADO ENCINAS, FELISA DELGADO CAMPO-
ENCINAS and MELINDA DELGADO CAMPO-MADARANG, Petitioners,
vs.
HEIRS OF MARCIANA RUSTIA VDA. DE DAMIAN, namely, GUILLERMO R. DAMIAN and
JOSE R. DAMIAN; HEIRS OF HORTENCIA RUSTIA CRUZ, namely, TERESITA CRUZ-
SISON, HORACIO R. CRUZ, JOSEFINA CRUZ-RODIL, AMELIA CRUZ-ENRIQUEZ and FIDEL
R. CRUZ, JR.; HEIRS OF ROMAN RUSTIA, SR., namely, JOSEFINA RUSTIA ALBANO,
VIRGINIA RUSTIA PARAISO, ROMAN RUSTIA, JR., SERGIO RUSTIA, FRANCISCO RUSTIA,
LETICIA RUSTIA-MIRANDA; and GUILLERMINA RUSTIA, as Oppositors;1 and GUILLERMA
RUSTIA, as Intervenor,2 Respondents.3

DECISION
CORONA, J.:

In this petition for review on certiorari, petitioners seek to reinstate the May 11, 1990 decision of
the Regional Trial Court (RTC) of Manila, Branch 55,4 in SP Case No. 97668, which was
reversed and set aside by the Court of Appeals in its decision5 dated October 24, 2002.

FACTS OF THE CASE

This case concerns the settlement of the intestate estates of Guillermo Rustia and Josefa
Delgado.6 The main issue in this case is relatively simple: who, between petitioners and
respondents, are the lawful heirs of the decedents. However, it is attended by several collateral
issues that complicate its resolution.

The claimants to the estates of Guillermo Rustia and Josefa Delgado may be divided into two
groups: (1) the alleged heirs of Josefa Delgado, consisting of her half- and full-blood siblings,
nephews and nieces, and grandnephews and grandnieces, and (2) the alleged heirs of Guillermo
Rustia, particularly, his sisters,7 his nephews and nieces,8 his illegitimate child,9 and the de
facto adopted child10 (ampun-ampunan) of the decedents.

The alleged heirs of Josefa Delgado

The deceased Josefa Delgado was the daughter of Felisa11 Delgado by one Lucio Campo. Aside
from Josefa, five other children were born to the couple, namely, Nazario, Edilberta, Jose,
Jacoba, and Gorgonio, all surnamed Delgado. Felisa Delgado was never married to Lucio
Campo, hence, Josefa and her full-blood siblings were all natural children of Felisa Delgado.

However, Lucio Campo was not the first and only man in Felisa Delgado’s life. Before him was
Ramon Osorio12 with whom Felisa had a son, Luis Delgado. But, unlike her relationship with
Lucio Campo which was admittedly one without the benefit of marriage, the legal status of
Ramon Osorio’s and Felisa Delgado’s union is in dispute.

The question of whether Felisa Delgado and Ramon Osorio ever got married is crucial to the
claimants because the answer will determine whether their successional rights fall within the
ambit of the rule against reciprocal intestate succession between legitimate and illegitimate
relatives.13 If Ramon Osorio and Felisa Delgado had been validly married, then their only child
Luis Delgado was a legitimate half-blood brother of Josefa Delgado and therefore excluded from
the latter’s intestate estate. He and his heirs would be barred by the principle of absolute
separation between the legitimate and illegitimate families. Conversely, if the couple were never
married, Luis Delgado and his heirs would be entitled to inherit from Josefa Delgado’s intestate
estate, as they would all be within the illegitimate line.

Petitioners allege that Ramon Osorio and Felisa Delgado were never married. In support thereof,
they assert that no evidence was ever presented to establish it, not even so much as an
allegation of the date or place of the alleged marriage. What is clear, however, is that Felisa
retained the surname Delgado. So did Luis, her son with Ramon Osorio. Later on, when Luis got
married, his Partida de Casamiento14 stated that he was "hijo natural de Felisa Delgado" (the
natural child of Felisa Delgado),15 significantly omitting any mention of the name and other
circumstances of his father.16 Nevertheless, oppositors (now respondents) insist that the absence
of a record of the alleged marriage did not necessarily mean that no marriage ever took place.

Josefa Delgado died on September 8, 1972 without a will. She was survived by Guillermo Rustia
and some collateral relatives, the petitioners herein. Several months later, on June 15, 1973,
Guillermo Rustia executed an affidavit of self-

adjudication of the remaining properties comprising her estate.

The marriage of Guillermo Rustia and Josefa Delgado

Sometime in 1917, Guillermo Rustia proposed marriage to Josefa Delgado17 but whether a
marriage in fact took place is disputed. According to petitioners, the two eventually lived together
as husband and wife but were never married. To prove their assertion, petitioners point out that
no record of the contested marriage existed in the civil registry. Moreover, a baptismal certificate
naming Josefa Delgado as one of the sponsors referred to her as "Señorita" or unmarried
woman.

The oppositors (respondents here), on the other hand, insist that the absence of a marriage
certificate did not of necessity mean that no marriage transpired. They maintain that Guillermo
Rustia and Josefa Delgado were married on June 3, 1919 and from then on lived together as
husband and wife until the death of Josefa on September 8, 1972. During this period spanning
more than half a century, they were known among their relatives and friends to have in fact been
married. To support their proposition, oppositors presented the following pieces of evidence:

1. Certificate of Identity No. 9592 dated [December 1, 1944] issued to Mrs. Guillermo J.
Rustia by Carlos P. Romulo, then Resident Commissioner to the United States of the
Commonwealth of the Philippines;

2. Philippine Passport No. 4767 issued to Josefa D. Rustia on June 25, 1947;

3. Veterans Application for Pension or Compensation for Disability Resulting from

Service in the Active Military or Naval Forces of the United States- Claim No. C-4, 004,
503 (VA Form 526) filed with the Veterans Administration of the United States of America
by Dr. Guillermo J. Rustia wherein Dr. Guillermo J. Rustia himself [swore] to his marriage
to Josefa Delgado in Manila on 3 June 1919;18

4. Titles to real properties in the name of Guillermo Rustia indicated that he was married
to Josefa Delgado.

The alleged heirs of Guillermo Rustia

Guillermo Rustia and Josefa Delgado never had any children. With no children of their own, they
took into their home the youngsters Guillermina Rustia Rustia and Nanie Rustia. These children,
never legally adopted by the couple, were what was known in the local dialect as ampun-
ampunan.

During his life with Josefa, however, Guillermo Rustia did manage to father an illegitimate
child,19 the intervenor-respondent Guillerma Rustia, with one Amparo Sagarbarria. According to
Guillerma, Guillermo Rustia treated her as his daughter, his own flesh and blood, and she
enjoyed open and continuous possession of that status from her birth in 1920 until her father’s
demise. In fact, Josefa Delgado’s obituary which was prepared by Guillermo Rustia, named the
intervenor-respondent as one of their children. Also, her report card from the University of Santo
Tomas identified Guillermo Rustia as her parent/guardian.20

Oppositors (respondents here) nonetheless posit that Guillerma Rustia has no interest in the
intestate estate of Guillermo Rustia as she was never duly acknowledged as an illegitimate child.
They contend that her right to compulsory acknowledgement prescribed when Guillermo died in
1974 and that she cannot claim voluntary acknowledgement since the documents she presented
were not the authentic writings prescribed by the new Civil Code.21

On January 7, 1974, more than a year after the death of Josefa Delgado, Guillermo Rustia filed a
petition for the adoption22 of their ampun-ampunan Guillermina Rustia. He stated under oath
"[t]hat he ha[d] no legitimate, legitimated, acknowledged natural children or natural children by
legal fiction."23 The petition was overtaken by his death on February 28, 1974.
Like Josefa Delgado, Guillermo Rustia died without a will. He was survived by his sisters
Marciana Rustia vda. deDamian and Hortencia Rustia-Cruz, and by the children of his
predeceased brother Roman Rustia Sr., namely, Josefina Rustia Albano, Virginia Rustia Paraiso,
Roman Rustia, Jr., Sergio Rustia, Francisco Rustia and Leticia Rustia Miranda.24

ANTECEDENT PROCEEDINGS

On May 8, 1975, Luisa Delgado vda. de Danao, the daughter of Luis Delgado, filed the original
petition for letters of administration of the intestate estates of the "spouses Josefa Delgado and
Guillermo Rustia" with the RTC of Manila, Branch 55.25 This petition was opposed by the
following: (1) the sisters of Guillermo Rustia, namely, Marciana Rustia vda. de Damian and
Hortencia Rustia-Cruz;26 (2) the heirs of Guillermo Rustia’s late brother, Roman Rustia, Sr., and
(3) the ampun-ampunan Guillermina Rustia Rustia. The opposition was grounded on the theory
that Luisa Delgado vda. de Danao and the other claimants were barred under the law from
inheriting from their illegitimate half-blood relative Josefa Delgado.

In November of 1975, Guillerma Rustia filed a motion to intervene in the proceedings, claiming
she was the only surviving descendant in the direct line of Guillermo Rustia. Despite the
objections of the oppositors (respondents herein), the motion was granted.

On April 3, 1978, the original petition for letters of administration was amended to state that
Josefa Delgado and Guillermo Rustia were never married but had merely lived together as
husband and wife.

On January 24, 1980, oppositors (respondents herein) filed a motion to dismiss the petition in the
RTC insofar as the estate of Guillermo Rustia was concerned. The motion was denied on the
ground that the interests of the petitioners and the other claimants remained in issue and should
be properly threshed out upon submission of evidence.

On March 14, 1988, Carlota Delgado vda. de de la Rosa substituted for her sister, Luisa
Delgado vda. de Danao, who had died on May 18, 1987.

On May 11, 1990, the RTC appointed Carlota Delgado vda. de de la Rosa as administratrix of
both estates.27 The dispositive portion of the decision read:

WHEREFORE, in view of all the foregoing, petitioner and her co-claimants to the estate of the
late Josefa Delgado listed in the Petitions, and enumerated elsewhere in this Decision, are
hereby declared as the only legal heirs of the said Josefa Delgado who died intestate in the City
of Manila on September 8, 1972, and entitled to partition the same among themselves in
accordance with the proportions referred to in this Decision.

Similarly, the intervenor Guillerma S. Rustia is hereby declared as the sole and only surviving
heir of the late Dr. Guillermo Rustia, and thus, entitled to the entire estate of the said decedent,
to the exclusion of the oppositors and the other parties hereto.

The Affidavit of Self-Adjudication of the estate of Josefa Delgado executed by the late Guillermo
J. Rustia on June 15, 1973 is hereby SET ASIDE and declared of no force and effect.

As the estates of both dece[d]ents have not as yet been settled, and their settlement [is]
considered consolidated in this proceeding in accordance with law, a single administrator
therefor is both proper and necessary, and, as the petitioner Carlota Delgado Vda. de dela Rosa
has established her right to the appointment as administratrix of the estates, the Court hereby
APPOINTS her as the ADMINISTRATRIX of the intestate estate of the decedent JOSEFA
DELGADO in relation to the estate of DR. GUILLERMO J. RUSTIA.
Accordingly, let the corresponding LETTERS OF ADMINISTRATION issue to the petitioner
CARLOTA DELGADO VDA. DE DE LA ROSA upon her filing of the requisite bond in the sum of
FIVE HUNDRED THOUSAND PESOS (P500,000.00).

Finally, oppositor GUILLERMINA RUSTIA RUSTIA is hereby ordered to cease and desist from
her acts of administration of the subject estates, and is likewise ordered to turn over to the
appointed administratix all her collections of the rentals and income due on the assets of the
estates in question, including all documents, papers, records and titles pertaining to such estates
to the petitioner and appointed administratix CARLOTA DELGADO VDA. DE DE LA ROSA,
immediately upon receipt of this Decision. The same oppositor is hereby required to render an
accounting of her actual administration of the estates in controversy within a period of sixty (60)
days from receipt hereof.

SO ORDERED.28

On May 20, 1990, oppositors filed an appeal which was denied on the ground that the record on
appeal was not filed on time.29 They then filed a petition for certiorari and mandamus30 which was
dismissed by the Court of Appeals.31 However, on motion for reconsideration and after hearing
the parties’ oral arguments, the Court of Appeals reversed itself and gave due course to
oppositors’ appeal in the interest of substantial justice.32

In a petition for review to this Court, petitioners assailed the resolution of the Court of Appeals,
on the ground that oppositors’ failure to file the record on appeal within the reglementary period
was a jurisdictional defect which nullified the appeal. On October 10, 1997, this Court allowed the
continuance of the appeal. The pertinent portion of our decision33 read:

As a rule, periods prescribed to do certain acts must be followed. However, under exceptional
circumstances, a delay in the filing of an appeal may be excused on grounds of substantial
justice.

xxx xxx xxx

The respondent court likewise pointed out the trial court’s pronouncements as to certain matters
of substance, relating to the determination of the heirs of the decedents and the party entitled to
the administration of their estate, which were to be raised in the appeal, but were barred
absolutely by the denial of the record on appeal upon too technical ground of late filing.

xxx xxx xxx

In this instance, private respondents’ intention to raise valid issues in the appeal is apparent and
should not have been construed as an attempt to delay or prolong the administration
proceedings.

xxx xxx xxx

A review of the trial court’s decision is needed.

xxx xxx xxx

WHEREFORE, in view of the foregoing considerations, the Court hereby AFFIRMS the
Resolution dated November 27, 1991 of the Court of Appeals in CA-G.R. SP No. 23415, for
the APPROVAL of the private respondents’ Record on Appeal and the CONTINUANCE of the
appeal from the Manila, Branch LV Regional Trial Court’s May 11, 1990 decision.

SO ORDERED.
Acting on the appeal, the Court of Appeals34 partially set aside the trial court’s decision. Upon
motion for reconsideration,35 the Court of Appeals amended its earlier decision.36 The dispositive
portion of the amended decision read:

With the further modification, our assailed decision is RECONSIDERED and VACATED.
Consequently, the decision of the trial court is REVERSED and SET ASIDE. A new one is
hereby RENDERED declaring: 1.) Dr. Guillermo Rustia and Josefa Delgado Rustia to have been
legally married; 2.) the intestate estate of Dr. Guillermo Rustia, Jacoba Delgado-Encinas and the
children of Gorgonio Delgado (Campo) entitled to partition among themselves the intestate
estate of Josefa D. Rustia in accordance with the proportion referred to in this decision; 3.) the
oppositors-appellants as the legal heirs of the late Dr. Guillermo Rustia and thereby entitled to
partition his estate in accordance with the proportion referred to herein; and 4.) the intervenor-
appellee Guillerma S. Rustia as ineligible to inherit from the late Dr. Guillermo Rustia; thus
revoking her appointment as administratrix of his estate.

The letters of administration of the intestate estate of Dr. Guillermo Rustia in relation to the
intestate estate of Josefa Delgado shall issue to the nominee of the oppositors-appellants upon
his or her qualification and filing of the requisite bond in the sum of FIVE HUNDRED
THOUSAND PESOS (P500,000.00).

Oppositor-appellant Guillermina Rustia Rustia is hereby ordered to cease and desist from her
acts of administration of the subject estates and to turn over to the appointed administrator all her
collections of the rentals and incomes due on the assets of the estates in question, including all
documents, papers, records and titles pertaining to such estates to the appointed administrator,
immediately upon notice of his qualification and posting of the requisite bond, and to render an
accounting of her (Guillermina Rustia Rustia) actual administration of the estates in controversy
within a period of sixty (60) days from notice of the administrator’s qualification and posting of the
bond.

The issue of the validity of the affidavit of self-adjudication executed by Dr. Guillermo Rustia on
June 15, 1973 is REMANDED to the trial court for further proceedings to determine the extent of
the shares of Jacoba Delgado-Encinas and the children of Gorgonio Delgado (Campo) affected
by the said adjudication.

Hence, this recourse.

The issues for our resolution are:

1. whether there was a valid marriage between Guillermo Rustia and Josefa Delgado;

2. who the legal heirs of the decedents Guillermo Rustia and Josefa Delgado are;

3. who should be issued letters of administration.

The marriage of Guillermo Rustia and Josefa Delgado

A presumption is an inference of the existence or non-existence of a fact which courts are

permitted to draw from proof of other facts. Presumptions are classified into presumptions of law
and presumptions of fact. Presumptions of law are, in turn, either conclusive or disputable.37

Rule 131, Section 3 of the Rules of Court provides:

Sec. 3. Disputable presumptions. — The following presumptions are satisfactory if

uncontradicted, but may be contradicted and overcome by other evidence:
 xxx xxx xxx

(aa) That a man and a woman deporting themselves as husband and wife have entered into a
lawful contract of marriage;

xxx xxx xxx

In this case, several circumstances give rise to the presumption that a valid marriage existed
between Guillermo Rustia and Josefa Delgado. Their cohabitation of more than 50 years cannot
be doubted. Their family and friends knew them to be married. Their reputed status as husband
and wife was such that even the original petition for letters of administration filed by Luisa
Delgado vda. de Danao in 1975 referred to them as "spouses."

Yet, petitioners maintain that Josefa Delgado and Guillermo Rustia had simply lived together as
husband and wife without the benefit of marriage. They make much of the absence of a record of
the contested marriage, the testimony of a witness38 attesting that they were not married, and a
baptismal certificate which referred to Josefa Delgado as "Señorita" or unmarried woman.39

We are not persuaded.

First, although a marriage contract is considered a primary evidence of marriage, its absence is
not always proof that no marriage in fact took place.40 Once the presumption of marriage arises,
other evidence may be presented in support thereof. The evidence need not necessarily or
directly establish the marriage but must at least be enough to strengthen the presumption of
marriage. Here, the certificate of identity issued to Josefa Delgado as Mrs. Guillermo
Rustia,41 the passport issued to her as Josefa D. Rustia,42 the declaration under oath of no less
than Guillermo Rustia that he was married to Josefa Delgado43 and the titles to the properties in
the name of "Guillermo Rustia married to Josefa Delgado," more than adequately support the
presumption of marriage. These are public documents which are prima facie evidence of the
facts stated therein.44 No clear and convincing evidence sufficient to overcome the presumption
of the truth of the recitals therein was presented by petitioners.

Second, Elisa vda. de Anson, petitioners’ own witness whose testimony they primarily relied
upon to support their position, confirmed that Guillermo Rustia had proposed marriage to Josefa
Delgado and that eventually, the two had "lived together as husband and wife." This again could
not but strengthen the presumption of marriage.

Third, the baptismal certificate45 was conclusive proof only of the baptism administered by the
priest who baptized the child. It was no proof of the veracity of the declarations and statements
contained therein,46 such as the alleged single or unmarried ("Señorita") civil status of Josefa
Delgado who had no hand in its preparation.

Petitioners failed to rebut the presumption of marriage of Guillermo Rustia and Josefa Delgado.
In this jurisdiction, every intendment of the law leans toward legitimizing matrimony. Persons
dwelling together apparently in marriage are presumed to be in fact married. This is the usual
order of things in society and, if the parties are not what they hold themselves out to be, they
would be living in constant violation of the common rules of law and propriety. Semper
praesumitur pro matrimonio. Always presume marriage.47

The Lawful Heirs Of Josefa Delgado

To determine who the lawful heirs of Josefa Delgado are, the questioned status of the
cohabitation of her mother Felisa Delgado with Ramon Osorio must first be addressed.
As mentioned earlier, presumptions of law are either conclusive or disputable. Conclusive
presumptions are inferences which the law makes so peremptory that no contrary proof, no
matter how strong, may overturn them.48On the other hand, disputable presumptions, one of
which is the presumption of marriage, can be relied on only in the absence of sufficient evidence
to the contrary.

Little was said of the cohabitation or alleged marriage of Felisa Delgado and Ramon Osorio. The
oppositors (now respondents) chose merely to rely on the disputable presumption of marriage
even in the face of such countervailing evidence as (1) the continued use by Felisa and Luis (her
son with Ramon Osorio) of the surname Delgado and (2) Luis Delgado’s and Caridad
Concepcion’s Partida de Casamiento49 identifying Luis as "hijo natural de Felisa Delgado" (the
natural child of Felisa Delgado).50

All things considered, we rule that these factors sufficiently overcame the rebuttable presumption
of marriage. Felisa Delgado and Ramon Osorio were never married. Hence, all the children born
to Felisa Delgado out of her relations with Ramon Osorio and Lucio Campo, namely, Luis and his
half-blood siblings Nazario, Edilberta, Jose, Jacoba, Gorgonio and the decedent Josefa, all
surnamed Delgado,51 were her natural children.52

Pertinent to this matter is the following observation:

Suppose, however, that A begets X with B, and Y with another woman, C; then X and Y would be
natural brothers and sisters, but of half-blood relationship. Can they succeed each other
reciprocally?

The law prohibits reciprocal succession between illegitimate children and legitimate children of
the same parent, even though there is unquestionably a tie of blood between them. It seems that
to allow an illegitimate child to succeed ab intestato (from) another illegitimate child begotten with
a parent different from that of the former, would be allowing the illegitimate child greater rights
than a legitimate child. Notwithstanding this, however, we submit that

succession should be allowed, even when the illegitimate brothers and sisters are only of the
half-blood. The reason impelling the prohibition on reciprocal successions between legitimate
and illegitimate families does not apply to the case under consideration. That prohibition has for
its basis the difference in category between illegitimate and legitimate relatives. There is no such
difference when all the children are illegitimate children of the same parent, even if begotten with
different persons. They all stand on the same footing before the law, just like legitimate children
of half-blood relation. We submit, therefore, that the rules regarding succession of legitimate
brothers and sisters should be applicable to them. Full blood illegitimate brothers and sisters
should receive double the portion of half-blood brothers and sisters; and if all are either of the full
blood or of the half-blood, they shall share equally.53

Here, the above-named siblings of Josefa Delgado were related to her by full-blood, except Luis
Delgado, her half-brother. Nonetheless, since they were all illegitimate, they may inherit from
each other. Accordingly, all of them are entitled to inherit from Josefa Delgado.

We note, however, that the petitioners before us are already the nephews, nieces,
grandnephews and grandnieces of Josefa Delgado. Under Article 972 of the new Civil Code, the
right of representation in the collateral line takes place only in favor of the children of brothers
and sisters (nephews and nieces). Consequently, it cannot be exercised by grandnephews and
grandnieces.54 Therefore, the only collateral relatives of Josefa Delgado who are entitled to
partake of her intestate estate are her brothers and sisters, or their children who were still alive at
the time of her death on September 8, 1972. They have a vested right to participate in the
inheritance.55 The records not being clear on this matter, it is now for the trial court to determine
who were the surviving brothers and sisters (or their children) of Josefa Delgado at the time of
her death. Together with Guillermo Rustia,56 they are entitled to inherit from Josefa Delgado in
accordance with Article 1001 of the new Civil Code:57

Art. 1001. Should brothers and sisters or their children survive with the widow or widower, the
latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children
to the other one-half.

Since Josefa Delgado had heirs other than Guillermo Rustia, Guillermo could not have validly
adjudicated Josefa’s estate all to himself. Rule 74, Section 1 of the Rules of Court is clear.
Adjudication by an heir of the decedent’s entire estate to himself by means of an affidavit is
allowed only if he is the sole heir to the estate:

SECTION 1. Extrajudicial settlement by agreement between heirs. – If the decedent left no will
and no debts and the heirs are all of age, or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may, without securing letters of
administration, divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they disagree, they may do so in
an ordinary action of partition. If there is only one heir, he may adjudicate to himself the
estate by means of an affidavit filed in the office of the register of deeds. x x x (emphasis
supplied)

The Lawful Heirs Of Guillermo Rustia

Intervenor (now co-respondent) Guillerma Rustia is an illegitimate child58 of Guillermo Rustia. As

such, she may be entitled to successional rights only upon proof of an admission or recognition
of paternity.59 She, however, claimed the status of an acknowledged illegitimate child of
Guillermo Rustia only after the death of the latter on February 28, 1974 at which time it was
already the new Civil Code that was in effect.

Under the old Civil Code (which was in force till August 29, 1950), illegitimate children absolutely
had no hereditary rights. This draconian edict was, however, later relaxed in the new Civil Code
which granted certain successional rights to illegitimate children but only on condition that they
were first recognized or acknowledged by the parent.

Under the new law, recognition may be compulsory or voluntary.60 Recognition is compulsory in
any of the following cases:

(1) in cases of rape, abduction or seduction, when the period of the offense coincides
more or less with that of the conception;

(2) when the child is in continuous possession of status of a child of the alleged father (or
mother)61 by the direct acts of the latter or of his family;

(3) when the child was conceived during the time when the mother cohabited with the
supposed father;

(4) when the child has in his favor any evidence or proof that the defendant is his
father. 62

On the other hand, voluntary recognition may be made in the record of birth, a will, a statement
before a court of record or in any authentic writing.63

Intervenor Guillerma sought recognition on two grounds: first, compulsory recognition through the
open and continuous possession of the status of an illegitimate child and second, voluntary
recognition through authentic writing.
There was apparently no doubt that she possessed the status of an illegitimate child from her
birth until the death of her putative father Guillermo Rustia. However, this did not constitute
acknowledgment but a mere ground by which she could have compelled acknowledgment
through the courts.64 Furthermore, any (judicial) action for compulsory acknowledgment has a
dual limitation: the lifetime of the child and the lifetime of the putative parent.65 On the death of
either, the action for compulsory recognition can no longer be filed.66 In this case, intervenor
Guillerma’s right to claim compulsory acknowledgment prescribed upon the death of Guillermo
Rustia on February 28, 1974.

The claim of voluntary recognition (Guillerma’s second ground) must likewise fail. An authentic
writing, for purposes of voluntary recognition, is understood as a genuine or indubitable writing of
the parent (in this case, Guillermo Rustia). This includes a public instrument or a private writing
admitted by the father to be his.67 Did intervenor’s report card from the University of Santo Tomas
and Josefa Delgado’s obituary prepared by Guillermo Rustia qualify as authentic writings under
the new Civil Code? Unfortunately not. The report card of intervenor Guillerma did not bear the
signature of Guillermo Rustia. The fact that his name appears there as intervenor’s
parent/guardian holds no weight since he had no participation in its preparation. Similarly, while
witnesses testified that it was Guillermo Rustia himself who drafted the notice of death of Josefa
Delgado which was published in the Sunday Times on September 10, 1972, that published
obituary was not the authentic writing contemplated by the law. What could have been admitted
as an authentic writing was the original manuscript of the notice, in the handwriting of Guillermo
Rustia himself and signed by him, not the newspaper clipping of the obituary. The failure to
present the original signed manuscript was fatal to intervenor’s claim.

The same misfortune befalls the ampun-ampunan, Guillermina Rustia Rustia, who was never
adopted in accordance with law. Although a petition for her adoption was filed by Guillermo
Rustia, it never came to fruition and was dismissed upon the latter’s death. We affirm the ruling
of both the trial court and the Court of Appeals holding her a legal stranger to the deceased
spouses and therefore not entitled to inherit from them ab intestato. We quote:

Adoption is a juridical act, a proceeding in rem, which [created] between two persons a
relationship similar to that which results from legitimate paternity and filiation. Only an adoption
made through the court, or in pursuance with the procedure laid down under Rule 99 of the Rules
of Court is valid in this jurisdiction. It is not of natural law at all, but is wholly and entirely artificial.
To establish the relation, the statutory requirements must be strictly carried out, otherwise, the
adoption is an absolute nullity. The fact of adoption is never presumed, but must be affirmatively
[proven] by the person claiming its existence.68

Premises considered, we rule that two of the claimants to the estate of Guillermo Rustia, namely,
intervenor Guillerma Rustia and the ampun-ampunan Guillermina Rustia Rustia, are not lawful
heirs of the decedent. Under Article 1002 of the new Civil Code, if there are no descendants,
ascendants, illegitimate children, or surviving spouse, the collateral relatives shall succeed to the
entire estate of the deceased. Therefore, the lawful heirs of Guillermo Rustia are the remaining
claimants, consisting of his sisters,69 nieces and nephews.70

Entitlement To Letters Of Administration

An administrator is a person appointed by the court to administer the intestate estate of the
decedent. Rule 78, Section 6 of the Rules of Court prescribes an order of preference in the
appointment of an administrator:

Sec. 6. When and to whom letters of administration granted. – If no executor is named in the will,
or the executor or executors are incompetent, refuse the trust, or fail to give a bond, or a person
dies intestate, administration shall be granted:
 (a) To the surviving husband or wife, as the case may be, or next of kin, or both, in the
discretion of the court, or to such person as such surviving husband or wife, or next of
kin, requests to have appointed, if competent and willing to serve;

(b) If such surviving husband or wife, as the case may be, or next of kin, or the person
selected by them, be incompetent or unwilling, or if the husband or widow or next of kin,
neglects for thirty (30) days after the death of the person to apply for administration or to
request that the administration be granted to some other person, it may be granted to
one or more of the principal creditors, if competent and willing to serve;

(c) If there is no such creditor competent and willing to serve, it may be granted to such
other person as the court may select.

In the appointment of an administrator, the principal consideration is the interest in the estate of
the one to be appointed.71 The order of preference does not rule out the appointment of co-
administrators, specially in cases where

justice and equity demand that opposing parties or factions be represented in the management
of the estates,72 a situation which obtains here.

It is in this light that we see fit to appoint joint administrators, in the persons of Carlota
Delgado vda. de de la Rosa and a nominee of the nephews and nieces of Guillermo Rustia. They
are the next of kin of the deceased spouses Josefa Delgado and Guillermo Rustia, respectively.

WHEREFORE, the petition (which seeks to reinstate the May 11, 1990 decision of the RTC
Manila, Branch 55) is hereby DENIED. The assailed October 24, 2002 decision of the Court of
Appeals is AFFIRMED with the following modifications:

1. Guillermo Rustia’s June 15, 1973 affidavit of self-adjudication is hereby ANNULLED.

2. the intestate estate of Guillermo Rustia shall inherit half of the intestate estate of
Josefa Delgado. The remaining half shall pertain to (a) the full and half-siblings of Josefa
Delgado who survived her and (b) the children of any of Josefa Delgado’s full- or half-
siblings who may have predeceased her, also surviving at the time of her death. Josefa
Delgado’s grandnephews and grandnieces are excluded from her estate. In this
connection, the trial court is hereby ordered to determine the identities of the relatives of
Josefa Delgado who are entitled to share in her estate.

3. Guillermo Rustia’s estate (including its one-half share of Josefa Delgado’s estate) shall
be inherited by Marciana Rustia vda. de Damian and Hortencia Rustia Cruz (whose
respective shares shall be per capita) and the children of the late Roman Rustia, Sr. (who
survived Guillermo Rustia and whose respective shares shall be per stirpes). Considering
that Marciana Rustia vda. de Damian and Hortencia Rustia Cruz are now deceased, their
respective shares shall pertain to their estates.

4. Letters of administration over the still unsettled intestate estates of Guillermo Rustia
and Josefa Delgado shall issue to Carlota Delgado vda. de de la Rosa and to a nominee
from among the heirs of Guillermo Rustia, as joint administrators, upon their qualification
and filing of the requisite bond in such amount as may be determined by the trial court.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 206220, August 19, 2015

 LUIS UY, SUBSTITUTED BY LYDIA UY VELASQUEZ AND SHIRLEY UY
MACARAIG, Petitioner, v.SPOUSES JOSE LACSAMANA AND ROSAURA* MENDOZA, SUBSTITUTED
BY CORAZON BUENA, Respondents.

DECISION

CARPIO, J.:

This is a petition for review on certiorari1 assailing the Decision dated 14 September 20112 and
Resolution dated 1 March 20133 of the Court of Appeals (CA) in CA-G.R. CV No. 93786.

The subject of the litigation involves a parcel of land known as Lot 5506 of the Cadastral Survey of
Batangas plan (LRC) SWO-2817, L.R. Case No. N-445, L.R.C. Record No. N-22499. The land, situated in
Barrio Alangilan, Batangas City, contains an area of 484 square meters under Transfer Certificate of Title
(TCT) No. T-24660.4 The land was previously owned by spouses Anastacio Manuel and Mariquita de Villa
(Spouses Manuel) under Original Certificate of Title (OCT) No. 0-2840.

On 4 May 1979, petitioner Luis Uy (Uy) filed with the Regional Trial Court (RTC) of Pallocan West,
Batangas City, Branch 4, a Complaint5 for Declaration of Nullity of Documents with Damages against
respondents Petra Rosca (Rosca), and spouses Jose Lacsamana and Rosaura Mendoza (Spouses
Lacsamana).

In the Complaint, Uy alleged that he was the lawful husband of Rosca. He stated that they lived together
as husband and wife from the time they were married in 1944 until 1973 when they separated and lived
apart. Uy and Rosca had eight children.

Uy alleged that on 29 January 1964,6 he and his wife acquired a 484 square meter residential land for a
consideration of P1,936 evidenced by a Deed of Sale7 from the Spouses Manuel. The sellers' OCT No. 0-
2840 was cancelled and TCT No. T-24660 was issued in the name of "Petra Rosca, married to Luis G.
Uy."

On 15 June 1964, Uy and Rosca allegedly purchased, as evidenced by a Deed of Absolute Sale,8 another
residential land adjacent to the 484 square meter land from the spouses Felix Contreras and Maxima de
Guzman (Spouses Contreras). The second purchase consisted of 215 square meters, as declared under
Tax Declaration No. 61724, for a consideration of P700. Thereafter, a split level house with a floor area
of 208.50 square meters was constructed on the 484 square meter land.

Uy further alleged that Rosca, in gross and evident bad faith, executed and signed a false and simulated
Deed of Sale9 dated 18 April 1979 on the 484 square meter land, together with the house erected
thereon, for a consideration of P80,000 in favor of Spouses Lacsamana.

Uy prayed that (1) the Deed of Sale dated 18 April 1979 executed by Rosca in favor of Spouses
Lacsamana be declared null and void with respect to his rights, interest, and ownership; (2) that
defendants be directed to pay, jointly and severally, to Uy the amounts of P100,000 as moral damages,
P10,000 as attorney's fees, P2,000 as expenses incident to litigation, plus costs of suit; (3) upon
declaration of the nullity of the Deed of Sale, the Register of Deeds of Batangas City and the City
Assessor be directed to register Uy as the sole owner of the real properties; (4) if defendant Spouses
Lacsamana are found by the court to be buyers in good faith, Rosca be ordered to turn over to Uy the
entire proceeds of sale of the properties and be adjudged to pay the damages; and (5) that the sum of
P600,000 taken by Rosca from Uy be collated into the mass of the conjugal partnership properties.

In her Answer with Counterclaim dated 22 May 1979, Rosca denied the allegations of Uy and claimed
that she lawfully acquired the subject real properties using her paraphernal funds. Rosca added that she
was never married to Uy and prayed for the dismissal of the complaint for lack of merit. In her
Counterclaim, Rosca prayed that the court award her (1) P200,000 as moral damages; (2) P100,000 as
exemplary damages; (3) P12,000 as attorney's fees; (4) P3,000 as incidental litigation expenses; and
(5) costs of suit. Spouses Lacsamana also filed their Answer with Counterclaim dated 21 May 1979
claiming that they were buyers in good faith and for value and that they relied on the Torrens title which
stated that Rosca was the owner of the subject property.

In the meantime, Uy questioned the registrability of the Deed of Sale before the Office of the Register of
Deeds of Batangas City. The Register of Deeds elevated the matter, on consulta,10 with the Land
Registration Commission (LRC) because of an affidavit subsequently filed by Uy contesting the sale and
alleging, among others, that the property was conjugal in nature and sold without his marital consent.

In a Resolution11 dated 7 November 1979, the LRC decided in favor of registration stating that since the
property in question was registered in Rosca's name, such circumstance indicated that the property
belonged to Rosca, as her paraphernal property. The LRC added that litigious matters, such as a protest
from the other party based on justifiable and legal grounds, were to be decided not by the Register of
Deeds but by a court of competent jurisdiction. The dispositive portion of the Resolution states: Lawlibra ryofCRAl aw

WHEREFORE, this Commission is of the opinion that the subject document should be admitted for
registration.

SO ORDERED.12

On 18 February 1981, Uy died.13 His two daughters, Lydia Uy Velasquez (Lydia) and Shirley Uy Macaraig
(Shirley) substituted him in the case. Fifteen years later or on 10 May 1996, Rosca also died.14 Earlier,
respondent Jose Lacsamana died on 20 March 1991.15 redarc law

Meanwhile, on 24 December 1982, Spouses Lacsamana sold the property to Corazon Buena (Buena)
through a Deed of Absolute Sale.16 Thus, both Rosca and the Spouses Lacsamana were substituted by
Buena as respondent in this case.

During the trial, Uy presented the testimonies of his two daughters, Lydia and Shirley, as his own
witnesses, as well as Rosca, as an adverse witness.

Lydia testified that the Uy family lived in the house built on the land acquired by Uy and Rosca. She
alleged that the house existed until it was demolished by Buena's agent sometime in 2006. Lydia also
stated that the funds used to construct the family dwelling came from Uy's business. Shirley
corroborated the testimony of Lydia on all material points.

Rosca, on the other hand, testified that sometime before or during World War II, she and Uy cohabited
and settled in Batangas. The couple attempted to formalize their marital union with a marriage
ceremony. However, the celebration was not consummated because of the bombings which occurred on
the day of the ceremony. Likewise, they were unable to secure a marriage contract.

Rosca stated that on 29 January 1964, she alone purchased, as sole vendee, with money coming from
her own personal and paraphernal funds, the land covered by OCT No. 0-2840 and owned by Spouses
Manuel. Thereafter, on 15 June 1964, she again purchased, using her own personal and paraphernal
funds, the land adjacent to the first purchased property owned by Spouses Contreras and covered by
Tax Declaration No. 61724. Immediately after, she caused the construction of a split level house on the
land using her own paraphernal funds which became their family dwelling.

Rosca alleged that Uy had an affair with another woman and sired children with her which led to their
physical separation before the year 1973. On 17 September 1976, Rosca obtained a real estate loan in
the amount of P50,000 from Philippine Banking Corporation (PBC) using the house and lot as collateral.
In support of this loan, Rosca executed an Affidavit of Ownership17 dated 27 September 1976, stating
that (1) she was the lawful and sole owner of the 484 square meter land, together with the building
erected thereon, and (2) the land was registered under her name and that the phrase "Petra Rosca,
married to Luis G. Uy" in TCT No. T-24660 was merely a description of her status.

Defendants offered the testimony of Rosca, Atty. Teodulfo Dequito, Jr., Rosaura Mendoza, and Buena.

Atty. Teodulfo Dequito, Jr. testified that Uy questioned the registrability of the Deed of Sale before the
Office of the Register of Deeds of Batangas City. The Register of Deeds elevated the matter
on consultawith the LRC, which issued a Resolution dated 7 November 1979 recognizing Rosca as the
sole registered owner of the property.

Rosaura Mendoza testified that she and her husband purchased, in the amount of P80,000, the 484
square meter property of Rosca on 18 April 1979 through a Deed of Absolute Sale of House and
Lot.18The Registry of Deeds of Batangas City cancelled TCT No. T-24660 and issued TCT No. T-3519 in
favor of the spouses. Then, Spouses Lacsamana mortgaged the property to PBC for P48,000. Upon full
payment of the mortgage debt on 15 April 1982, PBC issued a Release of Real Estate Mortgage.

Buena testified that she purchased the same property under TCT No. T-35 from Spouses Lacsamana on
24 December 1982 for a consideration of P80,000. Consequently, the Registry of Deeds of Batangas City
cancelled TCT No. T-35 and issued TCT No. T-324420 in her name. Likewise, the Assessor's Office of
Batangas City issued Tax Declaration No. 90210.21 redarc law

Before the resolution of the case, Shirley and Lydia filed a Motion for Issuance of Preliminary Injunction
and/or Temporary Restraining Order. They claimed that Buena entered the property and caused the
construction of structures without any court order. Consequently, the RTC issued an Order dated 21
September 2007 granting the preliminary injunction. Thereafter, the case was submitted for resolution.

In a Decision22 dated 21 April 2009, the RTC decided the case in favor of respondents. The lower court
found that (1) there was no valid marriage between Uy and Rosca; (2) the Deed of Sale executed by
Rosca over the house and lot in favor of Spouses Lacsamana was valid; and (3) both parties were not
entitled to their respective claims for damages. The dispositive portion of the Decision states: Lawlibra ryofCRAlaw

WHEREFORE, all premises considered, the instant Complaint filed by plaintiff Uy is hereby DISMISSED.
The preliminary injunction and bond are cancelled and are rendered of no force and effect. The claims
for damages of both parties are hereby DENIED. Cost against both parties.

SO ORDERED.23

Uy filed an appeal24 with the CA. In a Decision25 dated 14 September 2011, the CA affirmed the ruling of
the trial court. The appellate court found that respondents were able to overthrow the presumption of
marriage and that the subject property was Rosca's paraphernal property. The appellate court also
upheld the validity of the sale. The dispositive portion of the Decision states:
Lawlibra ryofCRAlaw

WHEREFORE, the appealed Decision dated April 21, 2009 is AFFIRMED.

SO ORDERED.26

Uy then filed a Motion for Reconsideration which was denied by the appellate court in a
Resolution27dated 1 March 2013.

Hence, the instant petition.

The Issue

The main issue for our resolution is whether the Deed of Sale dated 18 April 1979, executed by Rosca
alone, without Uy's consent, in favor of Spouses Lacsamana, is valid.

The Court's Ruling

The petition lacks merit.

Uy contends that the Deed of Sale executed by Rosca is not valid for being simulated or fictitious for lack
of consideration and consent. Uy states that no proof was presented by Spouses Lacsamana to show
that they actually paid P80,000 to Rosca for the purchase of the property. Uy also insists that he did not
give his consent to the sale which prejudiced his rights and interest. Uy argues that Rosca did not give
physical possession of the house and lot to the alleged buyers. Further, Uy adds, without admitting that
the sale is valid, that the consideration paid was unreasonably low and unconscionable such that it
constitutes an equitable mortgage. Uy insists that Spouses Lacsamana and Buena cannot be considered
buyers in good faith.

Respondents, on the other hand, assert that the contentions of Uy rely on the re-examination and re-
evaluation of the evidence of the parties which had previously been passed upon exhaustively by both
the trial and appellate courts. Respondents added that only questions of law may be raised under Rule
45. Since the findings of fact of the trial and appellate courts were supported by substantial evidence
and none of the recognized exceptions allowing this Court to exercise its power to review is present,
then the petition should be dismissed.

We agree with respondents.

The issues raised by Uy had been thoroughly passed upon by the trial and appellate courts. We find no
reason to disturb their factual findings. In petitions for review on certiorari as a mode of appeal under
Rule 45, like in the present case, a petitioner can raise only questions of law. Here, Uy would like us to
review again the factual circumstances surrounding the Deed of Sale executed by Rosca with the
Spouses Lacsamana and to declare the Deed of Sale invalid for being simulated due to lack of
consideration and consent. Clearly, these are questions of fact which are within the purview of the trial
and appellate courts to determine. Also, the issues raised do not come within the purview of the
recognized exceptions28 for this Court to take cognizance of the case. We have reiterated time and again
that this Court is not the proper venue to consider factual issues as it is not a trier of facts.
Here, the main issue in determining the validity of the sale of the property by Rosca alone is anchored
on whether Uy and Rosca had a valid marriage. There is a presumption established in our Rules "that a
man and woman deporting themselves as husband and wife have entered into a lawful contract of
marriage."29Semper praesumitur pro matrimonio — Always presume marriage.30 However, this
presumption may be contradicted by a party and overcome by other evidence.

Marriage may be proven by any competent and relevant evidence. In Pugeda v. Trias,31 we held that
testimony by one of the parties to the marriage, or by one of the witnesses to the marriage, as well as
the person who officiated at the solemnization of the marriage, has been held to be admissible to prove
the fact of marriage.

Documentary evidence may also be shown. In Villanueva v. Court of Appeals,32 we held that the best
documentary evidence of a marriage is the marriage contract itself. Under Act No. 3613 or the Marriage
Law of 1929,33 as amended by Commonwealth Act No. 114,34 which is applicable to the present case
being the marriage law in effect at the time Uy and Rosca cohabited, the marriage certificate, where the
contracting parties state that they take each other as husband and wife, must be furnished by the
person solemnizing the marriage to (1) either of the contracting parties, and (2) the clerk of the
Municipal Court of Manila or the municipal secretary of the municipality where the marriage was
solemnized. The third copy of the marriage contract, the marriage license and the affidavit of the
interested party regarding the solemnization of the marriage other than those mentioned in Section 5 of
the same Act shall be kept by the official, priest, or minister who solemnized the marriage.

Here, Uy was not able to present any copy of the marriage certificate which he could have sourced from
his own personal records, the solemnizing officer, or the municipal office where the marriage allegedly
took place. Even the findings of the RTC revealed that Uy did not show a single relevant evidence that
he was actually married to Rosca. On the contrary, the documents Uy submitted showed that he and
Rosca were not legally married to each other. The pertinent portions of the RTC Decision state: Lawlib raryofCRAlaw

x x x In the case under consideration, the presumption of marriage, on which plaintiff Uy anchored his
allegations, has been sufficiently offset. Records reveal that there is plethora of evidence showing that
plaintiff Uy and defendant Rosca were never actually married to each other, to wit: Lawl ibra ryofCRAl aw

First. In his Petition for Naturalization as a Filipino citizen filed before the then Court of First Instance of
Batangas on 12 November 1953, plaintiff Uy himself stated in the fifth paragraph of his Petition, to
quote: "I am married (not legally)."

Second. The Sworn Statement of no less than the Governor of the Province of Batangas executed in
support of the plaintiff Uy's Petition for Naturalization categorically states, in Nos. 2 and 4 thereof, that
plaintiff Uy was married (not legally).

Third. The Immigrant Certificate of Residence shows that as late as 9 October 1951, plaintiff Uy also
known by his Chinese name of Uy Suan Tee, regarded himself as "single" when filling up his civil status
therein.

Fourth. The Alien Certificate of Registration No. 83758 establishes that plaintiff Uy was an alien duly
registered with the Bureau of Immigration of the Philippines and that his civil status was single.

Fifth. The Affidavit of Vicente J. Caedo, a prominent citizen of Batangas, establishes in Nos. 2 and 4
thereof that plaintiff Uy was not legally married to defendant Rosca.

Sixth. The testimony of defendant Rosca as an adverse witness reveals that plaintiff Uy was not legally
married to her because their marriage was not consummated.

For his part, plaintiff Uy tried to justify the non-presentation of their marriage certificate by presenting
public documents, namely: Lawlib raryofC RAlaw

First. Decision in the case entitled: "In the matter of the Petition of Uy Suan Tee alias Luis G. Uy, to be
admitted a citizen of the Philippines";

Second. Certificate of Live Birth of Violeta Uy, daughter of plaintiff Uy and defendant Rosca and the
descriptive word "legitimate" showing that Violeta Uy was legitimate;

Third. Death Claim under SSS Employee Compensation executed and signed by defendant Rosca,
stating that she is the wife of plaintiff Uy;

Fourth. Various pictures of the plaintiff Uy and defendant Rosca with their children;
Fifth. Special Power of Attorney executed by defendant Rosca dated 19 July 1985 wherein she admitted
being the wife of plaintiff Uy;

Sixth. Sinumpaang Salaysay dated 3 August 1982 executed by defendant Rosca admitting she is the
widow of plaintiff Uy which was not testified to nor identified by Rosca;

Seventh. Affidavit of Ownership dated 27 September 1976 signed by defendant Rosca admitting her
status as married;

to establish the fact of his marriage with defendant Rosca. Likewise, plaintiff Uy presented defendant
Rosca as an adverse witness purportedly to elicit from her the fact of his marriage with the latter.
However, this presumption had been debunked by plaintiff Uy's own evidence and most importantly, by
the more superior evidence presented by the defendants.

While it is true that plaintiff Uy and defendant Rosca cohabited as husband and wife, defendant Rosca's
testimony revealed that plaintiff Uy was not legally married to her because their marriage was not
consummated. In People vs. Borromeo, this Court held that persons living together in apparent
matrimony are presumed, absent any counter presumption or evidence special to the case, to be in fact
married. Consequently, with the presumption of marriage sufficiently overcome, the onus probandi of
defendant Rosca shifted to plaintiff Uy. It then became the burden of plaintiff Uy to prove that he and
defendant Rosca, were legally married. It became necessary for plaintiff Uy therefore to submit
additional proof to show that they were legally married. He, however, dismally failed to do so.35

Since Uy failed to discharge the burden that he was legally married to Rosca, their property relations
would be governed by Article 147 of the Family Code which applies when a couple living together were
not incapacitated from getting married. Article 147 provides: Law lib raryofCRAlaw

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each
other as husband and wife without the benefit of marriage or under a void marriage, their wages and
salaries shall be owned by them in equal shares and the property acquired by both of them through their
work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed
to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal
shares. For purposes of this Article, a party who did not participate in the acquisition by the other party
of any property shall be deemed to have contributed jointly in the acquisition thereof if the former's
efforts consisted in the care and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired
during cohabitation and owned in common, without the consent of the other, until after the termination
of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the
co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any
or all of the common children or their descendants, each vacant share shall belong to the respective
surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In
all cases, the forfeiture shall take place upon termination of the cohabitation.

The provision states that properties acquired during cohabitation are presumed co-owned unless there is
proof to the contrary. We agree with both the trial and appellate courts that Rosca was able to prove
that the subject property is not co-owned but is paraphernal.

First, in the Resolution dated 7 November 1979 of the LRC in LRC Consulta No. 1194, Rosca was
recognized as the sole registered owner of the property.36 redarclaw

Second, in the Deed of Sale dated 29 January 1964 between Spouses Manuel and Rosca covering the
484 square meter land, Uy served as a mere witness to Rosca's purchase of the land as evidenced by his
signature under "signed in the presence of."37 This could only mean that Uy admitted the paraphernal
nature of Rosca's ownership over the property.

Third, in the Affidavit of Ownership dated 27 September 1976 executed by Rosca in support of her real
estate loan application with PBC in the amount of P5 0,000, Rosca stated that she was the sole and
lawful owner of the subject property and that the land was registered under her name and that the
phrase "Petra Rosca, married to Luis G. Uy" in TCT No. T-24660 was merely a description of her
status.38
redarclaw
Last, the title to the property in the name of "Petra Rosca, married to Luis G. Uy" was notice to the
world, including her heirs and successors-in-interest, that such belonged to Rosca as her paraphernal
property.39 The words "married to" were merely descriptive of Rosca's status at the time the property
was registered in her name.40 Otherwise, if the property was conjugal, the title to the property should
have been in the names of Luis Uy and Petra Rosca.41 redarclaw

In Ruiz v. Court of Appeals,42 the property subject of the mortgage was registered in the name of
"Corazon G. Ruiz, of legal age, married to Rogelio Ruiz, Filipinos." This Court ruled that the title is
registered in the name of Corazon alone because the phrase "married to Rogelio Ruiz" is merely
descriptive of the civil status of Corazon and should not be construed to mean that her husband is also a
registered owner.

Based on the evidence she presented, Rosca was able to sufficiently overcome the presumption that any
property acquired while living together shall be owned by the couple in equal shares. The house and lot
were clearly Rosca's paraphernal properties and she had every right to sell the same even without Uy's
consent.

Uy further contends that the Deed of Sale executed by Rosca is not valid for being simulated or fictitious
for lack of consideration. Uy states that no proof was presented by Spouses Lacsamana to show that
they actually paid P80,000 to Rosca for the purchase of the property or even if there was consideration,
such was unreasonably low and unconscionable. Thus, Spouses Lacsamana and Buena cannot be
considered as buyers in good faith.

We disagree.

Uy did not present any proof to show that Rosca did not receive any consideration for the sale. Neither
did he submit any evidence, whether documentary or testimonial, showing the fair market value of the
property at the time of the sale to prove that the purchase price was unreasonably low or
unconscionable. It was even mentioned by the appellate court that "appellants failed to prove that on
April 18, 1979, the property might have been worth millions of pesos." Thus, Uy's allegations lack
sufficient substantiation.

Moreover, the factual findings of the appellate court carry great weight and are binding on this Court
when they coincide with the factual findings of the trial court. This Court will not weigh the evidence all
over again since payment of the purchase price and the consideration for the sale are factual issues
which cannot be raised in this petition.

In sum, we find that the Deed of Sale, executed by Rosca on her paraphernal property in favor of
Spouses Lacsamana, is valid.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 14 September 2011 and
Resolution dated 1 March 2013 of the Court of Appeals in CA-G.R. CV No. 93786.

SO ORDERED. cralawlawlibra ry

G.R. No. 169766 March 30, 2011

ESTRELLITA JULIANO-LLAVE, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, HAJA PUTRI ZORAYDA A. TAMANO and ADIB AHMAD
A. TAMANO,Respondents.

DECISION

DEL CASTILLO, J.:

A new law ought to affect the future, not what is past. Hence, in the case of subsequent marriage
laws, no vested rights shall be impaired that pertain to the protection of the legitimate union of a
married couple.

This petition for review on certiorari assails the Decision1 dated August 17, 2004 of the Court of
Appeals (CA) in CA-G.R. CV No. 61762 and its subsequent Resolution2 dated September 13,
2005, which affirmed the Decision of the Regional Trial Court (RTC) of Quezon City, Branch 89
declaring petitioner Estrellita Juliano-Llave’s (Estrellita) marriage to Sen. Mamintal A.J. Tamano
(Sen. Tamano) as void ab initio.

Factual Antecedents

Around 11 months before his death, Sen. Tamano married Estrellita twice – initially under the
Islamic laws and tradition on May 27, 1993 in Cotabato City3 and, subsequently, under a civil
ceremony officiated by an RTC Judge at Malabang, Lanao del Sur on June 2, 1993.4 In their
marriage contracts, Sen. Tamano’s civil status was indicated as ‘divorced.’

Since then, Estrellita has been representing herself to the whole world as Sen. Tamano’s wife,
and upon his death, his widow.

On November 23, 1994, private respondents Haja Putri Zorayda A. Tamano (Zorayda) and her
son Adib Ahmad A. Tamano (Adib), in their own behalf and in behalf of the rest of Sen. Tamano’s
legitimate children with Zorayda,5 filed a complaint with the RTC of Quezon City for the
declaration of nullity of marriage between Estrellita and Sen. Tamano for being bigamous. The
complaint6 alleged, inter alia, that Sen. Tamano married Zorayda on May 31, 1958 under civil
rites, and that this marriage remained subsisting when he married Estrellita in 1993. The
complaint likewise averred that:

11. The marriage of the deceased and Complainant Zorayda, having been celebrated
under the New Civil Code, is therefore governed by this law. Based on Article 35 (4) of
the Family Code, the subsequent marriage entered into by deceased Mamintal with
Defendant Llave is void ab initio because he contracted the same while his prior marriage
to Complainant Zorayda was still subsisting, and his status being declared as "divorced"
has no factual or legal basis, because the deceased never divorced Complainant
Zorayda in his lifetime, and he could not have validly done so because divorce is not
allowed under the New Civil Code;

11.1 Moreover, the deceased did not and could not have divorced Complainant Zorayda
by invoking the provision of P.D. 1083, otherwise known as the Code of Muslim Personal
Laws, for the simple reason that the marriage of the deceased with Complainant Zorayda
was never deemed, legally and factually, to have been one contracted under Muslim law
as provided under Art. 186 (2) of P.D. 1083, since they (deceased and Complainant
Zorayda) did not register their mutual desire to be thus covered by this law;7

Summons was then served on Estrellita on December 19, 1994. She then asked from the court
for an extension of 30 days to file her answer to be counted from January 4, 1995,8 and again,
another 15 days9 or until February 18, 1995, both of which the court granted.10

Instead of submitting her answer, however, Estrellita filed a Motion to Dismiss11 on February 20,
1995 where she declared that Sen. Tamano and Zorayda are both Muslims who were married
under the Muslim rites, as had been averred in the latter’s disbarment complaint against Sen.
Tamano.12 Estrellita argued that the RTC has no jurisdiction to take cognizance of the case
because under Presidential Decree (PD) No. 1083, or the Code of Muslim Personal Laws of the
Philippines (Muslim Code), questions and issues involving Muslim marriages and divorce fall
under the exclusive jurisdiction of shari’a courts.

The trial court denied Estrellita’s motion and asserted its jurisdiction over the case for declaration
of nullity.13 Thus, Estrellita filed in November 1995 a certiorari petition with this Court questioning
the denial of her Motion to Dismiss. On December 15, 1995, we referred the petition to the
CA14 which was docketed thereat as CA-G.R. SP No. 39656.
During the pendency of CA-G.R. SP No. 39656, the RTC continued to try the case since there
can be no default in cases of declaration of nullity of marriage even if the respondent failed to file
an answer. Estrellita was allowed to participate in the trial while her opposing parties presented
their evidence. When it was Estrellita’s turn to adduce evidence, the hearings set for such
purpose15 were postponed mostly at her instance until the trial court, on March 22, 1996,
suspended the proceedings16 in view of the CA’s temporary restraining order issued on February
29, 1996, enjoining it from hearing the case.17

Eventually, however, the CA resolved the petition adverse to Estrellita in its Decision dated
September 30, 1996.18Estrellita then elevated the appellate court’s judgment to this Court by way
of a petition for review on certiorari docketed as G.R. No. 126603.19

Subsequent to the promulgation of the CA Decision, the RTC ordered Estrellita to present her
evidence on June 26, 1997.20 As Estrellita was indisposed on that day, the hearing was reset to
July 9, 1997.21 The day before this scheduled hearing, Estrellita again asked for a
postponement.22

Unhappy with the delays in the resolution of their case, Zorayda and Adib moved to submit the
case for decision,23reasoning that Estrellita had long been delaying the case. Estrellita opposed,
on the ground that she has not yet filed her answer as she still awaits the outcome of G.R. No.
126603.24

On June 29, 1998, we upheld the jurisdiction of the RTC of Quezon City,25 stating as one of the
reasons that as shari’a courts are not vested with original and exclusive jurisdiction in cases of
marriages celebrated under both the Civil Code and PD 1083, the RTC, as a court of general
jurisdiction, is not precluded from assuming jurisdiction over such cases. In our Resolution dated
August 24, 1998,26 we denied Estrellita’s motion for reconsideration27 with finality.

A few days before this resolution, or on August 18, 1998, the RTC rendered the aforementioned
judgment declaring Estrellita’s marriage with Sen. Tamano as void ab initio.28

Ruling of the Regional Trial Court

The RTC, finding that the marital ties of Sen. Tamano and Zorayda were never severed,
declared Sen. Tamano’s subsequent marriage to Estrellita as void ab initio for being bigamous
under Article 35 of the Family Code of the Philippines and under Article 83 of the Civil Code of
the Philippines.29 The court said:

A comparison between Exhibits A and B (supra) immediately shows that the second marriage of
the late Senator with [Estrellita] was entered into during the subsistence of his first marriage with
[Zorayda]. This renders the subsequent marriage void from the very beginning. The fact that the
late Senator declared his civil status as "divorced" will not in any way affect the void character of
the second marriage because, in this jurisdiction, divorce obtained by the Filipino spouse is not
an acceptable method of terminating the effects of a previous marriage, especially, where the
subsequent marriage was solemnized under the Civil Code or Family Code.30

Ruling of the Court of Appeals

In her appeal,31 Estrellita argued that she was denied her right to be heard as

the RTC rendered its judgment even without waiting for the finality of the Decision of the
Supreme Court in G.R. No. 126603. She claimed that the RTC should have required her to file
her answer after the denial of her motion to dismiss. She maintained that Sen. Tamano is
capacitated to marry her as his marriage and subsequent divorce with Zorayda is governed by
the Muslim Code. Lastly, she highlighted Zorayda’s lack of legal standing to question the validity
of her marriage to the deceased.
In dismissing the appeal in its Decision dated August 17, 2004,32 the CA held that Estrellita can
no longer be allowed to file her answer as she was given ample opportunity to be heard but
simply ignored it by asking for numerous postponements. She never filed her answer despite the
lapse of around 60 days, a period longer than what was prescribed by the rules. It also ruled that
Estrellita cannot rely on her pending petition for certiorari with the higher courts since, as an
independent and original action, it does not interrupt the proceedings in the trial court.

As to the substantive merit of the case, the CA adjudged that Estrellita’s marriage to Sen.
Tamano is void ab initio for being bigamous, reasoning that the marriage of Zorayda and Sen.
Tamano is governed by the Civil Code, which does not provide for an absolute divorce. It noted
that their first nuptial celebration was under civil rites, while the subsequent Muslim celebration
was only ceremonial. Zorayda then, according to the CA, had the legal standing to file the action
as she is Sen. Tamano’s wife and, hence, the injured party in the senator’s subsequent
bigamous marriage with Estrellita.

In its September 13, 2005 Resolution,33 the CA denied Estrellita’s Motion for
Reconsideration/Supplemental Motion for Reconsideration where it debunked the additional
errors she raised. The CA noted that the allegation of lack of the public prosecutor’s report on the
existence of collusion in violation of both Rule 9, Section 3(e) of the Rules of Court34 and Article
48 of the Family Code35 will not invalidate the trial court’s judgment as the proceedings between
the parties had been adversarial, negating the existence of collusion. Assuming that the issues
have not been joined before the RTC, the same is attributable to Estrellita’s refusal to file an
answer. Lastly, the CA disregarded Estrellita’s allegation that the trial court erroneously rendered
its judgment way prior to our remand to the RTC of the records of the case ratiocinating that G.R.
No. 126603 pertains to the issue on the denial of the Motion to Dismiss, and not to the issue of
the validity of Estrellita’s marriage to Sen. Tamano.

The Parties’ Respective Arguments

Reiterating her arguments before the court a quo, Estrellita now argues that the CA erred in
upholding the RTC judgment as the latter was prematurely issued, depriving her of the
opportunity to file an answer and to present her evidence to dispute the allegations against the
validity of her marriage. She claims that Judge Macias v. Macias36laid down the rule that the filing
of a motion to dismiss instead of an answer suspends the period to file an answer and,
consequently, the trial court is obliged to suspend proceedings while her motion to dismiss on the
ground of lack of jurisdiction has not yet been resolved with finality. She maintains that she
merely participated in the RTC hearings because of the trial court’s assurance that the
proceedings will be without prejudice to whatever action the High Court will take on her petition
questioning the RTC’s jurisdiction and yet, the RTC violated this commitment as it rendered an
adverse judgment on August 18, 1998, months before the records of G.R. No. 126603 were
remanded to the CA on November 11, 1998.37 She also questions the lack of a report of the
public prosecutor anent a finding of whether there was collusion, this being a prerequisite before
further proceeding could be held when a party has failed to file an answer in a suit for declaration
of nullity of marriage.

Estrellita is also steadfast in her belief that her marriage with the late senator is valid as the latter
was already divorced under the Muslim Code at the time he married her. She asserts that such
law automatically applies to the marriage of Zorayda and the deceased without need of
registering their consent to be covered by it, as both parties are Muslims whose marriage was
solemnized under Muslim law. She pointed out that Sen. Tamano married all his wives under
Muslim rites, as attested to by the affidavits of the siblings of the deceased.38

Lastly, Estrellita argues that Zorayda and Adib have no legal standing to file suit because only
the husband or the wife can file a complaint for the declaration of nullity of marriage under
Supreme Court Resolution A.M. No. 02-11-10-SC.39
Refuting the arguments, the Solicitor General (Sol Gen) defends the CA’s reasoning and
stresses that Estrellita was never deprived of her right to be heard; and, that filing an original
action for certiorari does not stay the proceedings of the main action before the RTC.

As regards the alleged lack of report of the public prosecutor if there is collusion, the Sol Gen
says that this is no longer essential considering the vigorous opposition of Estrellita in the suit
that obviously shows the lack of collusion. The Sol Gen also supports private respondents’ legal
standing to challenge the validity of Estrellita’s purported marriage with Sen. Tamano, reasoning
that any proper interested party may attack directly or collaterally a void marriage, and Zorayda
and Adib have such right to file the action as they are the ones prejudiced by the marital union.

Zorayda and Adib, on the other hand, did not file any comment.

Issues

The issues that must be resolved are the following:

1. Whether the CA erred in affirming the trial court’s judgment, even though the latter was
rendered prematurely because: a) the judgment was rendered without waiting for the
Supreme Court’s final resolution of her certiorari petition, i.e., G.R. No. 126603; b) she
has not yet filed her answer and thus was denied due process; and c) the public
prosecutor did not even conduct an investigation whether there was collusion;

2. Whether the marriage between Estrellita and the late Sen. Tamano was bigamous;
and

3. Whether Zorayda and Adib have the legal standing to have Estrellita’s marriage
declared void ab initio.

Our Ruling

Estrellita’s refusal to file an answer eventually led to the loss of her right to answer; and her
pending petition for certiorari/review on certiorari questioning the denial of the motion to dismiss
before the higher courts does not at all suspend the trial proceedings of the principal suit before
the RTC of Quezon City.

Firstly, it can never be argued that Estrellita was deprived of her right to due process. She was
never declared in default, and she even actively participated in the trial to defend her interest.

Estrellita invokes Judge Macias v. Macias40 to justify the suspension of the period to file an
answer and of the proceedings in the trial court until her petition for certiorari questioning the
validity of the denial of her Motion to Dismiss has been decided by this Court. In said case, we
affirmed the following reasoning of the CA which, apparently, is Estrellita’s basis for her
argument, to wit:

However, she opted to file, on April 10, 2001, a ‘Motion to Dismiss,’ instead of filing an Answer to
the complaint. The filing of said motion suspended the period for her to file her Answer to the
complaint. Until said motion is resolved by the Respondent Court with finality, it behooved the
Respondent Court to suspend the hearings of the case on the merits. The Respondent Court, on
April 19, 2001, issued its Order denying the ‘Motion to Dismiss’ of the Petitioner. Under Section
6, Rule 16 of the 1997 Rules of Civil Procedure [now Section 4], the Petitioner had the balance of
the period provided for in Rule 11 of the said Rules but in no case less than five (5) days
computed from service on her of the aforesaid Order of the Respondent Court within which to file
her Answer to the complaint: x x x41 (Emphasis supplied.)
Estrellita obviously misappreciated Macias. All we pronounced therein is that the trial court is
mandated to suspend trial until it finally resolves the motion to dismiss that is filed before it.
Nothing in the above excerpt states that the trial court should suspend its proceedings should the
issue of the propriety or impropriety of the motion to dismiss be raised before the appellate
courts. In Macias, the trial court failed to observe due process in the course of the proceeding of
the case because after it denied the wife’s motion to dismiss, it immediately proceeded to allow
the husband to present evidence ex parte and resolved the case with undue haste even when,
under the rules of procedure, the wife still had time to file an answer. In the instant case,
Estrellita had no time left for filing an answer, as she filed the motion to dismiss beyond the
extended period earlier granted by the trial court after she filed motions for extension of time to
file an answer.

Estrellita argues that the trial court prematurely issued its judgment, as it should have waited first
for the resolution of her Motion to Dismiss before the CA and, subsequently, before this Court.
However, in upholding the RTC, the CA correctly ruled that the pendency of a petition for
certiorari does not suspend the proceedings before the trial court. "An application for certiorari is
an independent action which is not part or a continuation of the trial which resulted in the
rendition of the judgment complained of."42 Rule 65 of the Rules of Court is explicit in stating that
"[t]he petition shall not interrupt the course of the principal case unless a temporary restraining
order or a writ of preliminary injunction has been issued against the public respondent from
further proceeding in the case."43 In fact, the trial court respected the CA’s temporary restraining
order and only after the CA rendered judgment did the RTC again require Estrellita to present her
evidence.

Notably, when the CA judgment was elevated to us by way of Rule 45, we never issued any
order precluding the trial court from proceeding with the principal action. With her numerous
requests for postponements, Estrellita remained obstinate in refusing to file an answer or to
present her evidence when it was her turn to do so, insisting that the trial court should wait first
for our decision in G.R. No. 126603. Her failure to file an answer and her refusal to present her
evidence were attributable only to herself and she should not be allowed to benefit from her own
dilatory tactics to the prejudice of the other party. Sans her answer, the trial court correctly
proceeded with the trial and rendered its Decision after it deemed Estrellita to have waived her
right to present her side of the story. Neither should the lower court wait for the decision in G.R.
No. 126603 to become final and executory, nor should it wait for its records to be remanded back
to it because G.R. No. 126603 involves strictly the propriety of the Motion to Dismiss and not the
issue of validity of marriage.

The Public Prosecutor issued a report as

to the non-existence of collusion.

Aside from Article 48 of the Family Code and Rule 9, Section 3(e) of the Rules of Court, the Rule
on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M.
No. 02-11-10-SC)44 also requries the participation of the public prosecutor in cases involving void
marriages. It specifically mandates the prosecutor to submit his investigation report to determine
whether there is collusion between the parties:

Sec. 9. Investigation report of public prosecutor.–(1) Within one month after receipt of the
court order mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a
report to the court stating whether the parties are in collusion and serve copies thereof on the
parties and their respective counsels, if any.

(2) If the public prosecutor finds that collusion exists, he shall state the basis thereof in
his report. The parties shall file their respective comments on the finding of collusion
within ten days from receipt of a copy of the report. The court shall set the report for
hearing and if convinced that the parties are in collusion, it shall dismiss the petition.
 (3) If the public prosecutor reports that no collusion exists, the court shall set the case for
pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-
trial.

Records show that the trial court immediately directed the public prosecutor to submit the
required report,45 which we find to have been sufficiently complied with by Assistant City
Prosecutor Edgardo T. Paragua in his Manifestation dated March 30, 1995,46 wherein he attested
that there could be no collusion between the parties and no fabrication of evidence because
Estrellita is not the spouse of any of the private respondents.

Furthermore, the lack of collusion is evident in the case at bar. Even assuming that there is a
lack of report of collusion or a lack of participation by the public prosecutor, just as we held in
Tuason v. Court of Appeals,47 the lack of participation of a fiscal does not invalidate the
proceedings in the trial court:

The role of the prosecuting attorney or fiscal in annulment of marriage and legal separation
proceedings is to determine whether collusion exists between the parties and to take care that
the evidence is not suppressed or fabricated. Petitioner's vehement opposition to the annulment
proceedings negates the conclusion that collusion existed between the parties. There is no
allegation by the petitioner that evidence was suppressed or fabricated by any of the parties.
Under these circumstances, we are convinced that the non-intervention of a prosecuting attorney
to assure lack of collusion between the contending parties is not fatal to the validity of the
proceedings in the trial court.48

The Civil Code governs the marriage of Zorayda and the late Sen. Tamano; their marriage was
never invalidated by PD 1083. Sen. Tamano’s subsequent marriage to Estrellita is void ab initio.

The marriage between the late Sen. Tamano and Zorayda was celebrated in 1958, solemnized
under civil and Muslim rites.49 The only law in force governing marriage relationships between
Muslims and non-Muslims alike was the Civil Code of 1950, under the provisions of which only
one marriage can exist at any given time.50 Under the marriage provisions of the Civil Code,
divorce is not recognized except during the effectivity of Republic Act No. 39451 which was not
availed of during its effectivity.

As far as Estrellita is concerned, Sen. Tamano’s prior marriage to Zorayda has been severed by
way of divorce under PD 1083,52 the law that codified Muslim personal laws. However, PD 1083
cannot benefit Estrellita. Firstly, Article 13(1) thereof provides that the law applies to "marriage
and divorce wherein both parties are Muslims, or wherein only the male party is a Muslim and the
marriage is solemnized in accordance with Muslim law or this Code in any part of the
Philippines." But we already ruled in G.R. No. 126603 that "Article 13 of PD 1083 does not
provide for a situation where the parties were married both in civil and Muslim rites."53

Moreover, the Muslim Code took effect only on February 4, 1977, and this law cannot
retroactively override the Civil Code which already bestowed certain rights on the marriage of
Sen. Tamano and Zorayda. The former explicitly provided for the prospective application of its
provisions unless otherwise provided:

Art. 186 (1). Effect of code on past acts. —Acts executed prior to the effectivity of this Code shall
be governed by the laws in force at the time of their execution, and nothing herein except as
otherwise specifically provided, shall affect their validity or legality or operate to extinguish any
right acquired or liability incurred thereby.

It has been held that:

The foregoing provisions are consistent with the principle that all laws operate prospectively,
unless the contrary appears or is clearly, plainly and unequivocably expressed or necessarily
implied; accordingly, every case of doubt will be resolved against the retroactive operation of
laws. Article 186 aforecited enunciates the general rule of the Muslim Code to have its provisions
applied prospectively, and implicitly upholds the force and effect of a pre-existing body of law,
specifically, the Civil Code – in respect of civil acts that took place before the Muslim Code’s
enactment.54

An instance of retroactive application of the Muslim Code is Article 186(2) which states:

A marriage contracted by a Muslim male prior to the effectivity of this Code in accordance with
non-Muslim law shall be considered as one contracted under Muslim law provided the spouses
register their mutual desire to this effect.

Even granting that there was registration of mutual consent for the marriage to be considered as
one contracted under the Muslim law, the registration of mutual consent between Zorayda and
Sen. Tamano will still be ineffective, as both are Muslims whose marriage was celebrated under
both civil and Muslim laws. Besides, as we have already settled, the Civil Code governs their
personal status since this was in effect at the time of the celebration of their marriage. In view of
Sen. Tamano’s prior marriage which subsisted at the time Estrellita married him, their
subsequent marriage is correctly adjudged by the CA as void ab initio.

Zorayda and Adib, as the injured parties, have the legal personalities to file the declaration of
nullity of marriage. A.M. No. 02-11-10-SC, which limits to only the husband or the wife the filing
of a petition for nullity is prospective in application and does not shut out the prior spouse from
filing suit if the ground is a bigamous subsequent marriage.

Her marriage covered by the Family Code of the Philippines,55 Estrellita relies on A.M. No. 02-11-
10-SC which took effect on March 15, 2003 claiming that under Section 2(a)56 thereof, only the
husband or the wife, to the exclusion of others, may file a petition for declaration of absolute
nullity, therefore only she and Sen. Tamano may directly attack the validity of their own marriage.

Estrellita claims that only the husband or the wife in a void marriage can file a petition for
declaration of nullity of marriage. However, this interpretation does not apply if the reason behind
the petition is bigamy.

In explaining why under A.M. No. 02-11-10-SC only the spouses may file the petition to the
exclusion of compulsory or intestate heirs, we said:

The Rationale of the Rules on Annulment of Voidable Marriages and Declaration of Absolute
Nullity of Void Marriages, Legal Separation and Provisional Orders explicates on Section 2(a) in
the following manner, viz:

(1) Only an aggrieved or injured spouse may file petitions for annulment of voidable marriages
and declaration of absolute nullity of void marriages. Such petitions cannot be filed by the
compulsory or intestate heirs of the spouses or by the State. [Section 2; Section 3, paragraph a]

Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or
declaration of absolute nullity of void marriages. Such petition cannot be filed by compulsory or
intestate heirs of the spouses or by the State. The Committee is of the belief that they do not
have a legal right to file the petition. Compulsory or intestate heirs have only inchoate rights prior
to the death of their predecessor, and hence can only question the validity of the marriage of the
spouses upon the death of a spouse in a proceeding for the settlement of the estate of the
deceased spouse filed in the regular courts. On the other hand, the concern of the State is to
preserve marriage and not to seek its dissolution.57
Note that the Rationale makes it clear that Section 2(a) of A.M. No. 02-11-10-SC refers to the
"aggrieved or injured spouse." If Estrellita’s interpretation is employed, the prior spouse is
unjustly precluded from filing an action. Surely, this is not what the Rule contemplated.

The subsequent spouse may only be expected to take action if he or she had only discovered
during the connubial period that the marriage was bigamous, and especially if the conjugal bliss
had already vanished. Should parties in a subsequent marriage benefit from the bigamous
marriage, it would not be expected that they would file an action to declare the marriage void and
thus, in such circumstance, the "injured spouse" who should be given a legal remedy is the one
in a subsisting previous marriage. The latter is clearly the aggrieved party as the bigamous
marriage not only threatens the financial and the property ownership aspect of the prior marriage
but most of all, it causes an emotional burden to the prior spouse. The subsequent marriage will
always be a reminder of the infidelity of the spouse and the disregard of the prior marriage which
sanctity is protected by the Constitution.

Indeed, Section 2(a) of A.M. No. 02-11-10-SC precludes the son from impugning the subsequent
marriage. But in the case at bar, both Zorayda and Adib have legal personalities to file an action
1âw phi 1

for nullity. Albeit the Supreme Court Resolution governs marriages celebrated under the Family
Code, such is prospective in application and does not apply to cases already commenced before
March 15, 2003.58

Zorayda and Adib filed the case for declaration of nullity of Estrellita’s marriage in November
1994. While the Family Code is silent with respect to the proper party who can file a petition for
declaration of nullity of marriage prior to A.M. No. 02-11-10-SC, it has been held that in a void
marriage, in which no marriage has taken place and cannot be the source of rights, any
interested party may attack the marriage directly or collaterally without prescription, which may
be filed even beyond the lifetime of the parties to the marriage.59 Since A.M. No. 02-11-10-SC
does not apply, Adib, as one of the children of the deceased who has property rights as an heir,
is likewise considered to be the real party in interest in the suit he and his mother had filed since
both of them stand to be benefited or injured by the judgment in the suit.60

Since our Philippine laws protect the marital union of a couple, they should be interpreted in a
way that would preserve their respective rights which include striking down bigamous marriages.
We thus find the CA Decision correctly rendered.

WHEREFORE, the petition is DENIED. The assailed August 17, 2004 Decision of the Court of
Appeals in CA-G.R. CV No. 61762, as well as its subsequent Resolution issued on September
13, 2005, are hereby AFFIRMED.

SO ORDERED.