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 abovequoted 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 onehalf 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 1 returns as to his having renounced what was given him by his wife's will.

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 abovementioned 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-calledmodus 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 188201 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. 68116813) 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 VicePresident 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. Avelin a A. Magno Admini stratrix (16) Avelina A. Magno, it is alleged on information and belief, has paid and still is paying sums of money to sundry persons. (17) Joe Hodges through the undersigned attorneys manifested during the hearings before this Honorable Court on September 5 and 6, 1963 that the estate of C. N. Hodges was claiming all of the assets belonging to the deceased spouses Linnie Jane Hodges and C. N. Hodges situated in Philippines because of the aforesaid election by C. N. Hodges wherein he claimed and took possession as sole owner of all of said assets during the administration of the estate of Linnie Jane Hodges on the ground that he was the sole devisee and legatee under her Last Will and Testament.

(18) Avelina A. Magno has submitted no inventory and accounting of her administration as Administratrix of the estate of Linnie Jane Hodges and Special Administratrix of the estate of C. N. Hodges. However, from manifestations made by Avelina A. Magno and her legal counsel, Leon P. Gellada, there is no question she will claim that at least fifty per cent (50%) of the conjugal assets of the deceased spouses and the rents, emoluments and income therefrom belong to the Higdon family who are named in paragraphs Fourth and Fifth of the Will of Linnie Jane Hodges (p. 5, Rec. Sp. Proc. 1307). WHEREFORE, premises considered, movant respectfully prays that this Honorable Court, after due hearing, order: (1) Avelina A. Magno to submit an inventory and accounting of all of the funds, properties and assets of any character belonging to the deceased Linnie Jane Hodges and C. N. Hodges which have come into her possession, with full details of what she has done with them; (2) Avelina A. Magno to turn over and deliver to the Administrator of the estate of C. N. Hodges all of the funds, properties and assets of any character remaining in her possession; (3) Pending this Honorable Court's adjudication of the aforesaid issues, Avelina A. Magno to stop, unless she first secures the conformity of Joe Hodges (or his duly authorized representative, such as the undersigned attorneys) as the Co-administrator and attorney-in-fact of a majority of the beneficiaries of the estate of C. N. Hodges: (a) Advertising the sale and the sale of the properties of the estates: (b) Employing personnel and paying them any compensation. (4) Such other relief as this Honorable Court may deem just and equitable in the premises. (Annex "T", Petition.) Almost a year thereafter, or on September 14, 1964, after the co-administrators Joe Hodges and Fernando P. Mirasol were replaced by herein petitioner Philippine Commercial and Industrial Bank as sole administrator, pursuant to an agreement of all the heirs of Hodges approved by the court, and because the above motion of October 5, 1963 had not yet been heard due to the absence from the country of Atty. Gibbs, petitioner filed the following: MANIFESTATION AND MOTION, INCLUDING MOTION TO SET FOR HEARING AND RESOLVE "URGENT MOTION FOR AN ACCOUNTING AND DELIVERY TO ADMINISTRATORS OF THE ESTATE OF C. N. HODGES OF ALL THE ASSETS OF THE CONJUGAL PARTNERSHIP OF THE DECEASED LINNIE JANE HODGES AND C. N. HODGES EXISTING AS OF MAY 23, 1957 PLUS ALL OF THE RENTS,

EMOLUMENTS AND INCOME THEREFROM OF OCTOBER 5, 1963.

COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB), the administrator of the estate of C. N. Hodges, deceased, in Special Proceedings No. 1672, through its undersigned counsel, and to this Honorable Court respectfully alleges that:

1. On October 5, 1963, Joe Hodges acting as the co-administrator of the estate of C. N. Hodges filed, through the undersigned attorneys, an "Urgent Motion For An Accounting and Delivery To Administrator of the Estate of C. N. Hodges of all Of The Assets Of The Conjugal Partnership of The Deceased Linnie Jane Hodges and C. N. Hodges Existing as Of May, 23, 1957 Plus All Of The Rents, Emoluments and Income Therefrom" (pp. 536542, CFI Rec. S. P. No. 1672). 2. On January 24, 1964 this Honorable Court, on the basis of an amicable agreement entered into on January 23, 1964 by the two co-administrators of the estate of C. N. Hodges and virtually all of the heirs of C. N. Hodges (p. 912, CFI Rec., S. P. No. 1672), resolved the dispute over who should act as administrator of the estate of C. N. Hodges by appointing the PCIB as administrator of the estate of C. N. Hodges (pp. 905-906, CFI Rec. S. P. No. 1672) and issuing letters of administration to the PCIB. 3. On January 24, 1964 virtually all of the heirs of C. N. Hodges, Joe Hodges and Fernando P. Mirasol acting as the two co-administrators of the estate of C. N. Hodges, Avelina A. Magno acting as the administratrix of the estate of Linnie Jane Hodges, and Messrs. William Brown and Ardel Young Acting for all of the Higdon family who claim to be the sole beneficiaries of the estate of Linnie Jane Hodges and various legal counsel representing the aforenamed parties entered into an amicable agreement, which was approved by this Honorable Court, wherein the parties thereto agreed that certain sums of money were to be paid in settlement of different claims against the two estates and that the assets (to the extent they existed)of both estates would be administrated jointly by the PCIB as administrator of the estate of C. N. Hodges and Avelina A. Magno as administratrix of the estate of Linnie Jane Hodges, subject, however, to the aforesaid October 5, 1963 Motion, namely, the PCIB's claim to exclusive possession and 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 coadministrator 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 subdivide 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 andimmovable 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 orsimple 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 abovequoted, 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. n 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. L THE LOWER COURT ERRED IN APPROVING THE FINAL DEEDS OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED BY THE DECEASED, CHARLES NEWTON HODGES, AND THE CONTRACTS TO SELL COVERING WHICH WERE EXECUTED BY HIM DURING HIS LIFETIME. LI THE LOWER COURT ERRED IN APPROVING THE DEEDS OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH HE WAS IN ARREARS IN THE PAYMENTS AGREED UPON IN THE ORIGINAL CONTRACT TO SELL WHICH HE EXECUTED WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE AMOUNT OF P2,337.50. LII THE LOWER COURT ERRED IN APPROVING THE DEED OF SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING, ALTHOUGH THE SAME WAS NOT EXECUTED IN ACCORDANCE WITH THE RULES OF COURT. LIII to LXI THE LOWER COURT ERRED IN ORDERING THE APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK TO SURRENDER THE OWNER'S DUPLICATE CERTIFICATES OF TITLE OVER THE RESPECTIVE LOTS COVERED BY THE DEEDS OF SALE EXECUTED BY THE APPELLEE, AVELINA A. MAGNO, IN FAVOR OF THE OTHER APPELLEES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR S. GUZMAN, FLRENIA BARRIDO, PURIFICACION 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

I 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 certiorariand 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 thirtythree appeals which, unless resolved in one single proceeding, will inevitably cause the proliferation of more or less similar or closely related incidents and consequent eventual appeals. If for this consideration alone, and without taking account anymore of the unnecessary additional effort, expense and time which would be involved in as many individual appeals as the number of such incidents, it is logical and proper to hold, as We do hold, that the remedy of appeal is not adequate in the present cases. In determining whether or not a special civil action of certiorari or prohibition may be resorted to in lieu of appeal, in instances wherein lack or excess of jurisdiction or grave abuse of discretion is alleged, it is not enough that the remedy of appeal exists or is possible. It is indispensable that taking all the relevant circumstances of the given case, appeal would better serve the interests of justice. Obviously, the longer delay, augmented expense and trouble and unnecessary repetition of the same work attendant to the present multiple appeals, which, after all, deal with practically the same basic issues that can be more expeditiously resolved or determined in a single special civil action, make the remedies of certiorari and prohibition, pursued by petitioner, preferable, for purposes of resolving the common basic issues raised in all of them, despite the conceded availability of appeal. Besides, the settling of such common fundamental issues would naturally minimize the areas of conflict between the parties and render more simple the determination of the secondary issues in each of them. Accordingly, respondent Magno's objection to the present remedy of certiorari and prohibition must be overruled. We come now to the errors assigned by petitioner-appellant, Philippine Commercial & Industrial Bank, (PCIB, for short) in the petition as well as in its main brief as appellant. III

On Whether or Not There is Still Any Part of the 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 onehalf 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 coheirs. 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 coheirs 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 them 6 only during his lifetime, which means that while he could completely and absolutely dispose of any portion thereof inter vivos to anyone other than himself, he was not free to do so mortis causa, and all his rights to what might remain upon his death would cease entirely upon the occurrence of that contingency, inasmuch as the right of his brothers and sisters-in-law to the inheritance, although vested already upon the death of Mrs. Hodges, would automatically become operative upon the occurrence of the death of Hodges in the event of actual existence of any remainder of her estate then. Contrary to the view of respondent Magno, however, it was not the usufruct alone of her estate, as contemplated in Article 869 of the Civil Code, that she bequeathed to Hodges during his lifetime, but the full ownership thereof, although the same was to last also during his lifetime only, even as there was no restriction whatsoever against his disposing or conveying the whole or any portion thereof to anybody other than himself. The Court sees no legal impediment to this kind of institution, in this jurisdiction or under Philippine law, except that it cannot apply to the legitime of Hodges as the surviving spouse, consisting of one-half of the estate, considering that Mrs. Hodges had no surviving ascendants nor descendants. (Arts. 872, 900, and 904, New Civil Code.) But relative precisely to the question of how much of Mrs. Hodges' share of the conjugal partnership properties may be considered as her estate, the parties are in disagreement as to how Article 16 of the Civil Code 7 should be applied. On the one hand, petitioner claims that inasmuch as Mrs. Hodges was a resident of the Philippines at the time of her death, under said Article 16, construed in relation to the pertinent laws of Texas and the principle ofrenvoi, 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 onefourth 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. 1920, 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 proindiviso, 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-indivisoof 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, 1 1* all proceeds of remunerative transfers or dispositions made by Hodges after the death of his wife should be deemed as continuing to be parts of her estate and, therefore, subject to the terms of her will in favor of her brothers and sisters, in the sense that should there be no showing that such proceeds, whether in cash or property have been subsequently conveyed or assigned subsequently by Hodges to any third party by acts inter vivos with the result that they could not thereby belong to him anymore at the time of his death, they automatically became part of the inheritance of said brothers and sisters. The deeds here in question involve transactions which are exactly of this nature. Consequently, the payments made by the appellees should be considered as payments to the estate of Mrs. Hodges which is to be distributed and partitioned among her heirs specified in the will. The five deeds of sale predicated on contracts to sell executed Hodges during the lifetime of his wife, present a different situation. At first blush, it would appear that as to them, PCIB's position has some degree of plausibility. Considering, however, that the adoption of PCIB's theory would necessarily have tremendous repercussions and would bring about considerable disturbance of property rights that have somehow accrued already in favor of innocent third parties, the five purchasers aforenamed, the Court is inclined to take a pragmatic and practical view of the legal situation involving them by overlooking the possible technicalities in the way, the non-observance of which would not, after all, detract materially from what should substantially correspond to each and all of the parties concerned. 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 coappellees 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 beengratuitously 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 administrator 12; and this arrangement shall be maintained until the final resolution of the two issues of renvoi and renunciation hereby reserved for further hearing and determination, and the corresponding complete segregation and partition of the two estates in the proportions that may result from the said resolution. Generally and in all other respects, the parties and the court a quo are directed to adhere henceforth, in all their actuations in Special Proceedings 1307 and 1672, to the views passed and ruled upon by the Court in the foregoing opinion. Appellant PCIB is ordered to pay, within five (5) days from notice hereof, thirty-one additional appeal docket fees, but this decision shall nevertheless become final as to each of the parties herein after fifteen (15) days from the respective notices to them hereof in accordance with the rules. Costs against petitioner-appellant PCIB. Zaldivar, Castro, Esguerra and Fernandez, JJ., concur. Makasiar, Antonio, Muoz Palma and Aquino, JJ., concur in the result.

G.R. No. 178830

July 14, 2008

ROLEX SUPLICO, Petitioner, vs. NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, represented by NEDA SECRETARY ROMULO L. NERI, and the NEDA-INVESTMENT COORDINATION COMMITTEE, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), represented by DOTC SECRETARY LEANDRO MENDOZA, including the COMMISSION ON INFORMATION AND COMMUNICATIONS TECHNOLOGY, headed by its Chairman, RAMON P. SALES, THE TELECOMMUNICATIONS OFFICE, BIDS AND AWARDS FOR INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT), headed by DOTC ASSISTANT SECRETARY ELMER A. SONEJA as Chairman, and the TECHNICAL WORKING GROUP FOR ICT, AND DOTC ASSISTANT SECRETARY LORENZO FORMOSO, AND ALL OTHER OPERATING UNITS OF THE DOTC FOR INFORMATION AND COMMUNICATIONS TECHNOLOGY, and ZTE CORPORATION, AMSTERDAM HOLDINGS, INC., AND ALL PERSONS ACTING IN THEIR BEHALF, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 179317 AMSTERDAM HOLDINGS, INC., and NATHANIEL SAUZ, Petitioners, vs. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO MENDOZA, COMMISSION ON INFORMATION AND COMMUNICATIONS TECHNOLOGY, and ASSISTANT SECRETARY LORENZO FORMOSO III, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 179613 GALELEO P. ANGELES, VICENTE C. ANGELES, JOB FLORANTE L. CASTILLO, TRINI ANNE G. NIEVA, ROY ALLAN T. ARELLANO, CARLO MAGNO M. REONAL, ETHEL B. REGADIO, RAENAN B. MALIG, AND VINALYN M. POTOT, TOGETHER WITH LAWYERS AND ADVOCATES FOR ACCOUNTABILITY, TRANSPARENCY, INTEGRITY AND GOOD GOVERNANCE (LATIGO), Petitioners, vs. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), represented by DOTC SECRETARY LEANDRO MENDOZA, and ZHONG XING EQUIPMENT (ZTE) COMPANY, LTD., AND ANY AND ALL PERSONS ACTING ON THEIR BEHALF, Respondents. RESOLUTION REYES, R.T., J.:

Under consideration is the Manifestation and Motion1 dated October 26, 2007 of the Office of the Solicitor General (OSG) which states: The Office of the Solicitor General (OSG) respectfully avers that in an Indorsement dated October 24, 2007, the Legal Service of the Department of Transportation and Communications (DOTC) has informed it of the Philippine Governments decision not to continue with the ZTE National Broadband Network Project (see attachment 2). That said, there is no more justiciable controversy for this Honorable Court to resolve. WHEREFORE, public respondents respectfully pray that the present petitions be DISMISSED. On November 13, 2007, the Court noted the OSGs manifestation and motion and required petitioners in G.R. Nos. 178830, 179317, and 179613 to comment. On December 6, 2007, Rolex Suplico, petitioner in G.R. No. 178830, filed his Consolidated Reply and Opposition,3opposing the aforequoted OSG Manifestation and Motion, arguing that: 66. Aside from the fact that the Notes of the Meeting Between President Gloria Macapagal-Arroyo and Chinese President Hu Jintao held 2 October 2007 were not attached to the 26 October 2007 Manifestation and Motion thus depriving petitioners of the opportunity to comment thereon a mere verbally requested 1st Indorsement is not sufficient basis for the conclusion that the ZTE-DOTC NBN deal has been permanently scrapped. 67. Suffice to state, said 1st Indorsement is glaringly self-serving, especially without the Notes of the Meeting Between President Gloria Macapagal-Arroyo and Chinese President Hu Jintao to support its allegations or other proof of the supposed decision to cancel the ZTE-DOTC NBN deal. Public respondents can certainly do better than that.4 Petitioner Suplico further argues that: 79. Assuming arguendo that some aspects of the present Petition have been rendered moot (which is vehemently denied), this Honorable Court, consistent with well-entrenched jurisprudence, may still take cognizance thereof.5 Petitioner Suplico cites this Courts rulings in Gonzales v. Chavez,6 Rufino v. Endriga,7 and Alunan III v. Mirasol8that despite their mootness, the Court nevertheless took cognizance of these cases and ruled on the merits due to the Courts symbolic function of educating the bench and the bar by formulating guiding and controlling principles, precepts, doctrines, and rules. On January 31, 2008, Amsterdam Holdings, Inc. (AHI) and Nathaniel Sauz, petitioners in G.R. No. 179317, also filed their comment expressing their sentiments, thus: 3. First of all, the present administration has never been known for candor. The present administration has a very nasty habit of not keeping its word. It says one thing, but does another.

4. This being the case, herein petitioners are unable to bring themselves to feel even a bit reassured that the government, in the event that the above-captioned cases are dismissed, will not backtrack, re-transact, or even resurrect the now infamous NBNZTE transaction. This is especially relevant since what was attached to the OSGs Manifestation and Motion was a mere one (1) page written communication sent by the Department of Transportation and Communications (DOTC) to the OSG, allegedly relaying that the Philippine Government has decided not to continue with the NBN project "x x x due to several reasons and constraints." Petitioners AHI and Sauz further contend that because of the transcendental importance of the issues raised in the petition, which among others, included the Presidents use of the power to borrow, i.e., to enter into foreign loan agreements, this Court should take cognizance of this case despite its apparent mootness. On January 15, 2008, the Court required the OSG to file respondents reply to petitioners comments on its manifestation and motion. On April 18, 2008, the OSG filed respondents reply, reiterating their position that for a court to exercise its power of adjudication, there must be an actual case or controversy one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice.9 Respondents also insist that there is no perfected contract in this case that would prejudice the government or public interest. Explaining the nature of the NBN Project as an executive agreement, respondents stress that it remained in the negotiation stage. The conditions precedent10 for the agreement to become effective have not yet been complied with. Respondents further oppose petitioners claim of the right to information, which they contend is not an absolute right. They contend that the matters raised concern executive policy, a political question which the judicial branch of government would generally hesitate to pass upon. On July 2, 2008, the OSG filed a Supplemental Manifestation and Motion. Appended to it is the Highlights from the Notes of Meeting between President Gloria Macapagal-Arroyo and Chinese President Hu Jintao, held in XI Jiao Guesthouse, Shanghai, China, on October 2, 2007. In the Notes of Meeting, the Philippine Government conveyed its decision not to continue with the ZTE National Broadband Network Project due to several constraints. The same Notes likewise contained President Hu Jintaos expression of understanding of the Philippine Government decision. We resolve to grant the motion. Firstly, the Court notes the triple petitions to be for certiorari, prohibition and mandamus, with application for the issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction. The individual prayers in each of the three (3) consolidated petitions are:

G.R. No. 178830 WHEREFORE, it is respectfully prayed of this Honorable Court: 1. Upon the filing of this Petition, pursuant to the second paragraph of Rule 58, Section 5 of the Rules of Court, issue forthwith an ex parte temporary restraining order enjoining respondents, their subordinates, agents, representatives and any and all persons acting on their behalf from pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal; 2. Compel respondents, upon Writ of Mandamus, to forthwith produce and furnish petitioner or his undersigned counsel a certified true copy of the contract or agreement covering the NBN project as agreed upon with ZTE Corporation; 3. Schedule Oral Arguments in the present case pursuant to Rule 49 in relation to Section 2, Rule 56 of the revised Rules of Court; and, 4. Annul and set aside the award of the ZTE-DOTC Broadband Deal, and compel public respondents to forthwith comply with pertinent provisions of law regarding procurement of government ICT contracts and public bidding for the NBN contract.11 (Emphasis supplied) G.R. No. 179317 WHEREFORE, petitioners Amsterdam Holdings, Inc., and Nathaniel Sauz respectfully pray as follows: A. upon the filing of this Petition for Mandamus and conditioned upon the posting of a bond in such amount as the Honorable Court may fix, a temporary restraining order and/or writ of preliminary injunction be issued directing the Department of Transportation and Communication, the Commission on Information and Communications Technology, all other government agencies and instrumentalities, their officers, employees, and/or other persons acting for and on their behalf to desist during the pendency of the instant Petition for Mandamus from entering into any other agreements and from commencing with any kind, sort, or specie of activity in connection with the National Broadband Network Project; B. the instant Petition for Mandamus be given due course; and, C. after due consideration of all relevant issues, judgment be rendered directing respondents to allow herein petitioners access to all agreements entered into with the Government of China, the ZTE Corporation, and/or other entities, government instrumentalities, and/or individuals with regard to the National Broadband Network Project.12 (Emphasis supplied) G.R. No. 179613 WHEREFORE, it is respectfully prayed of this Honorable Court to:

1. Compel respondents, upon Writ of Mandamus, to forthwith produce and furnish petitioner or his undersigned counsel a certified true copy of the contract or agreement covering the NBN project as agreed upon with ZTE Corporation; 2. Schedule Oral Arguments in the present case pursuant to Rule 49 in relation to Section 2, Rule 56 of the Revised Rules of Court; 3. Annul and set aside the award of the contract for the national broadband network to respondent ZTE Corporation, upon the ground that said contract, as well as the procedures resorted to preparatory to the execution thereof, is contrary to the Constitution, to law and to public policy; 4. Compel public respondent to forthwith comply with pertinent provisions of law regarding procurement of government infrastructure projects, including public bidding for said contract to undertake the construction of the national broadband network.13 (Emphasis supplied) On September 11, 2007, the Court issued a TRO14 in G.R. No. 178830, enjoining the parties from "pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project" as prayed for. Pertinent parts of the said Order read: WHEREAS, the Supreme Court, on 11 September 2007, adopted a resolution in the aboveentitled case, to wit: "G.R. No. 178830 (Rolex Suplico vs. National Economic and Development Authority, represented by NEDA Secretary Romulo L. Neri, and the NEDA Investment Coordination Committee, Department of Transportation and Communications (DOTC), represented by DOTC Secretary Leandro Mendoza, including the Commission on Information and Communications Technology, headed by its Chairman, Ramon P. Sales, The Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), headed by DOTC Assistant Secretary Elmer A. Soneja as Chairman, and The Technical Working Group for ICT, and DOTC Assistant Secretary Lorenzo Formoso, and All Other Operating Units of the DOTC for Information and Communications Technology, and ZTE Corporation, Amsterdam Holdings, Inc., and ARESCOM, Inc.Acting on the instant petition with prayer for temporary restraining order and/or writ of preliminary injunction, the Court Resolved, without giving due course to the petition, to xxxx (d) Issue a TEMPORARY RESTRAINING ORDER, effective immediately and continuing until further orders from this Court, enjoining the (i) National Economic and Development Authority, (ii) NEDA-Investment Coordination Committee, (iii) Department of Transportation and Communications, Commission on Information and Communications Technology, (iv) Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), (v) Technical Working Group for ICT, and all other Operating Units of the DOTC for Information and Communications Technology, (vi) ZTE Corporation;

(vii) Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc., and any and all persons acting on their behalf from pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project as prayed for." NOW THEREFORE, effective immediately and continuing until further orders from this Court, You, Respondents (i) National Economic and Development Authority, (ii) NEDAInvestment Coordination Committee, (iii) Department of Transportation and Communications, Commission on Information and Communications Technology, (iv) Telecommunications Office, Bids and Awards for Information and Communications Technology Committee (ICT), (v) Technical Working Group for ICT, and all other Operating Units of the DOTC for Information and Communications Technology, (vi) ZTE Corporation; (vii) Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc., and any and all persons acting on their behalf are hereby ENJOINED from "pursuing, entering into indebtedness, disbursing funds, and implementing the ZTE-DOTC Broadband Deal and Project" as prayed for.15 (Emphasis supplied.) Petitioners in G.R. Nos. 178830 and 179613 pray that they be furnished certified true copies of the "contract or agreement covering the NBN project as agreed upon with ZTE Corporation." It appears that during one of the Senate hearings on the NBN project, copies of the supply contract16 were readily made available to petitioners.17Evidently, the said prayer has been complied with and is, thus, mooted. When President Gloria Macapagal-Arroyo, acting in her official capacity during the meeting held on October 2, 2007 in China, informed Chinas President Hu Jintao that the Philippine Government had decided not to continue with the ZTE-National Broadband Network (ZTENBN) Project due to several reasons and constraints, there is no doubt that all the other principal prayers in the three petitions (to annul, set aside, and enjoin the implementation of the ZTE-NBN Project) had also become moot. Contrary to petitioners contentions that these declarations made by officials belonging to the executive branch on the Philippine Governments decision not to continue with the ZTENBN Project are self-serving, hence, inadmissible, the Court has no alternative but to take judicial notice of this official act of the President of the Philippines. Section 1, Rule 129 of the Rules of Court provides: SECTION 1. Judicial Notice, when mandatory. A court shall take judicial notice, without introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. (Emphasis supplied) Under the rules, it is mandatory and the Court has no alternative but to take judicial notice of the official acts of the President of the Philippines, who heads the executive branch of our government. It is further provided in the above-quoted rule that the court shall take judicial notice of the foregoing facts without introduction of evidence. Since we consider the act of

cancellation by President Macapagal-Arroyo of the proposed ZTE-NBN Project during the meeting of October 2, 2007 with the Chinese President in China as an official act of the executive department, the Court must take judicial notice of such official act without need of evidence. In David v. Macapagal-Arroyo,18 We took judicial notice of the announcement by the Office of the President banning all rallies and canceling all permits for public assemblies following the issuance of Presidential Proclamation No. 1017 and General Order No. 5. In Estrada v. Desierto,19 the Court also resorted to judicial notice in resolving the factual ingredient of the petition. Moreover, under Section 2, paragraph (m) of Rule 131 of the Rules of Court, the official duty of the executive officials20 of informing this Court of the governments decision not to continue with the ZTE-NBN Project is also presumed to have been regularly performed, absent proof to the contrary. Other than petitioner AHIs unsavory insinuation in its comment, the Court finds no factual or legal basis to disregard this disputable presumption in the present instance. Concomitant to its fundamental task as the ultimate citadel of justice and legitimacy is the judiciarys role of strengthening political stability indispensable to progress and national development. Pontificating on issues which no longer legitimately constitute an actual case or controversy will do more harm than good to the nation as a whole. Wise exercise of judicial discretion militates against resolving the academic issues, as petitioners want this Court to do. This is especially true where, as will be further discussed, the legal issues raised cannot be resolved without previously establishing the factual basis or antecedents. Judicial power presupposes actual controversies, the very antithesis of mootness. In the absence of actual justiciable controversies or disputes, the Court generally opts to refrain from deciding moot issues. Where there is no more live subject of controversy, the Court ceases to have a reason to render any ruling or make any pronouncement. Kapag wala nang buhay na kaso, wala nang dahilan para magdesisyon ang Husgado. In Republic Telecommunications Holdings, Inc. v. Santiago,21 the lone issue tackled by the Court of Appeals (CA) was whether the Securities Investigation and Clearing Department (SICD) and Securities and Exchange Commission (SEC) en banc committed reversible error in issuing and upholding, respectively, the writ of preliminary injunction. The writ enjoined the execution of the questioned agreements between Qualcomm, Inc. and Republic Telecommunications Holdings, Inc. (RETELCOM). The implementation of the agreements was restrained through the assailed orders of the SICD and the SEC en banc which, however, were nullified by the CA decision. Thus, RETELCOM elevated the matter to this Court praying for the reinstatement of the writ of preliminary injunction of the SICD and the SEC en banc. However, before the matter was finally resolved, Qualcomm, Inc. withdrew from the negotiating table. Its withdrawal had thwarted the execution and enforcement of the contracts. Thus, the resolution of whether the implementation of said agreements should be enjoined became no longer necessary.

Equally applicable to the present case is the Court ruling in the above-cited Republic Telecommunications. There We held, thus: Indeed, the instant petition, insofar as it assails the Court of Appeals Decision nullifying the orders of the SEC en banc and the SICD, has been rendered moot and academic. To rule, one way or the other, on the correctness of the questioned orders of the SEC en banc and the SICD will be indulging in a theoretical exercise that has no practical worth in view of the supervening event. The rule is well-settled that for a court to exercise its power of adjudication, there must be an actual case or controversy one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. Where the issue has become moot and academic, there is no justiciable controversy, and an adjudication thereon would be of no practical use or value as courts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging. In the ultimate analysis, petitioners are seeking the reinstatement of the writ of injunction to prevent the concerned parties from pushing through with transactions with Qualcomm, Inc. Given that Qualcomm, Inc. is no longer interested in pursuing the contracts, there is no actual substantial relief to which petitioners would be entitled and which would be negated by the dismissal of the petition. The Court likewise finds it unnecessary to rule whether the assailed Court of Appeals Decision had the effect of overruling the Courts Resolution dated 29 January 1999, which set aside the TRO issued by the appellate court. A ruling on the matter practically partakes of a mere advisory opinion, which falls beyond the realm of judicial review. The exercise of the power of judicial review is limited to actual cases and controversies. Courts have no authority to pass upon issues through advisory opinions or to resolve hypothetical or feigned problems. While there were occasions when the Court passed upon issues although supervening events had rendered those petitions moot and academic, the instant case does not fall under the exceptional cases. In those cases, the Court was persuaded to resolve moot and academic issues to formulate guiding and controlling constitutional principles, precepts, doctrines or rules for future guidance of both bench and bar. In the case at bar, the resolution of whether a writ of preliminary injunction may be issued to prevent the implementation of the assailed contracts calls for an appraisal of factual considerations which are peculiar only to the transactions and parties involved in this controversy. Except for the determination of whether petitioners are entitled to a writ of preliminary injunction which is now moot, the issues raised in this petition do not call for a clarification of any constitutional principle or the interpretation of any statutory provision. 22 Secondly, even assuming that the Court will choose to disregard the foregoing considerations and brush aside mootness, the Court cannot completely rule on the merits of

the case because the resolution of the three petitions involves settling factual issues which definitely requires reception of evidence. There is not an iota of doubt that this may not be done by this Court in the first instance because, as has been stated often enough, this Court is not a trier of facts. Ang pagpapasiya sa tatlong petisyon ay nangangailangan ng paglilitis na hindi gawain ng Hukumang ito. Respondent ZTE, in its Comment in G.R. No. 178830,23 correctly pointed out that since petitioner Suplico filed his petition directly with this Court, without prior factual findings made by any lower court, a determination of pertinent and relevant facts is needed. ZTE enumerated some of these factual issues, to wit: (1) Whether an executive agreement has been reached between the Philippine and Chinese governments over the NBN Project; (2) Whether the ZTE Supply Contract was entered into by the Republic of the Philippines, through the DOTC, and ZTE International pursuant to, and as an integral part of, the executive agreement; (3) Whether a loan agreement for the NBN Project has actually been executed; (4) Whether the Philippine government required that the NBN Project be completed under a Build-Operate-and-Transfer Scheme; (5) Whether the AHI proposal complied with the requirements for an unsolicited proposal under the BOT Law; (6) Whether the Philippine government has actually earmarked public finds for disbursement under the ZTE Supply Contract; and (7) Whether the coverage of the NBN Project to be supplied under the ZTE Supply Contract is more extensive than that under the AHI proposal or such other proposal submitted therefor.24 Definitely, some very specific reliefs prayed for in both G.R. Nos. 178830 and 179613 require prior determination of facts before pertinent legal issues could be resolved and specific reliefs granted. In G.R. No. 178830, petitioner seeks to annul and set aside the award of the ZTE-DOTC Broadband Deal and compel public respondents to forthwith comply with pertinent provisions of law regarding procurement of government ICT contracts and public bidding for the NBN contract. In G.R. No. 179613, petitioners also pray that the Court annul and set aside the award of the contract for the national broadband network to respondent ZTE Corporation, upon the ground that said contract, as well as the procedures resorted to preparatory to the execution thereof, is contrary to the Constitution, to law and to public policy. They also ask the Court

to compel public respondent to forthwith comply with pertinent provisions of law regarding procurement of government infrastructure projects, including public bidding for said contract to undertake the construction of the national broadband network. It is simply impossible for this Court "to annul and set aside the award of the ZTE-DOTC Broadband Deal" without any evidence to support a prior factual finding pointing to any violation of law that could lead to such annulment order. For sure, the Supreme Court is not the proper venue for this factual matter to be threshed out. Thirdly, petitioner Suplico in G.R. No. 178830 prayed that this Court order "public respondents to forthwith comply with pertinent provisions of law regarding procurement of government ICT contracts and public bidding for the NBN contract."25 It would be too presumptuous on the part of the Court to summarily compel public respondents to comply with pertinent provisions of law regarding procurement of government infrastructure projects without any factual basis or prior determination of very particular violations committed by specific government officials of the executive branch. For the Court to do so would amount to a breach of the norms of comity among co-equal branches of government. A perceived error cannot be corrected by committing another error. Without proper evidence, the Court cannot just presume that the executive did not comply with procurement laws. Should the Court allow itself to fall into this trap, it would plainly commit grave error itself. Magiging kapangahasan sa Hukumang ito na pilitin ang mga pinipetisyon na tumalima sa batas sa pangongontrata ng pamahalaan kung wala pang pagtitiyak o angkop na ebidensiya ng nagawang paglabag dito. Let it be clarified that the Senate investigation in aid of legislation cannot be the basis of Our decision which requires a judicial finding of facts. Justice Antonio T. Carpio takes the view that the National Broadband Network Project should be declared null and void. The foregoing threefold reasons would suffice to address the concern of Our esteemed colleague. The Court is, therefore, constrained to dismiss the petitions and deny them due course because of mootness and because their resolution requires reception of evidence which cannot be done in an original petition brought before the Supreme Court. WHEREFORE, the petitions are DISMISSED. The Temporary Restraining Order issued on September 11, 2007 is DISSOLVED. SO ORDERED. G.R. No. 160236 October 16, 2009

"G" HOLDINGS, INC., Petitioner, vs. NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU); SHERIFFS RICHARD H. APROSTA and ALBERTO MUNOZ, all acting Sheriffs; DEPARTMENT OF

LABOR AND EMPLOYMENT, Region VI, Bacolod District Office, Bacolod City, Respondents. DECISION NACHURA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the October 14, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 75322. The Facts The petitioner, "G" Holdings, Inc. (GHI), is a domestic corporation primarily engaged in the business of owning and holding shares of stock of different companies. 2 It was registered with the Securities and Exchange Commission on August 3, 1992. Private respondent, National Mines and Allied Workers Union Local 103 (NAMAWU), was the exclusive bargaining agent of the rank and file employees of Maricalum Mining Corporation (MMC),3 an entity operating a copper mine and mill complex at Sipalay, Negros Occidental. 4 MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB) on October 19, 1984, on account of their foreclosure of Marinduque Mining and Industrial Corporations assets. MMC started its commercial operations in August 1985. Later, DBP and PNB transferred it to the National Government for disposition or privatization because it had become a non-performing asset.5 On October 2, 1992, pursuant to a Purchase and Sale Agreement 6 executed between GHI and Asset Privatization Trust (APT), the former bought ninety percent (90%) of MMCs shares and financial claims.7 These financial claims were converted into three Promissory Notes8 issued by MMC in favor of GHI totaling P500M and secured by mortgages over MMCs properties. The notes, which were similarly worded except for their amounts, read as follows: PROMISSORY NOTE AMOUNT - Php114,715,360.00 [Php186,550,560.00 in the second note, and Php248,734,080.00 in the third note.] MAKATI, METRO MANILA, PHILIPPINES, October 2, 1992 For Value Received, MARICALUM MINING CORPORATION (MMC) with postal address at 4th Floor, Manila Memorial Park Bldg., 2283 Pasong Tamo Extension, Makati, Metro Manila, Philippines, hereby promises to pay "G" HOLDINGS, INC., at its office at Phimco Compound, F. Manalo Street, Punta, Sta. Ana, Manila, the amount of PESOS ONE HUNDRED FOURTEEN MILLION, SEVEN HUNDRED FIFTEEN THOUSAND AND THREE HUNDRED SIXTY (Php114,715,360.00) ["PESOS ONE HUNDRED EIGHTY SIX MILLION

FIVE HUNDRED FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186,550,560.00)" in the second note, and "PESOS TWO HUNDRED FORTY EIGHT MILLION, SEVEN HUNDRED THIRTY FOUR THOUSAND AND EIGHTY (Php248,734,080.00)" in the third note], PHILIPPINE CURRENCY, on or before October 2, 2002. Interest shall accrue on the amount of this Note at a rate per annum equal to the interest of 90-day Treasury Bills prevailing on the Friday preceding the maturity date of every calendar quarter. As collateral security, MMC hereby establishes and constitutes in favor of "G" HOLDINGS, INC., its successors and/or assigns: 1. A mortgage over certain parcels of land, more particularly listed and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135, a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof; 2. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction conducted pursuant to the provisions of Act 1508, a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof. 3. Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC, a copy of which Catalogue is hereby made an integral part hereof by way of reference, as well as assets presently in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include all assets that may hereinafter be acquired by MMC. MARICALUM MINING CORPORATION (Maker) x x x x9 Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the stipulated down payment, GHI immediately took physical possession of the mine site and its facilities, and took full control of the management and operation of MMC.10 Almost four years thereafter, or on August 23, 1996, a labor dispute (refusal to bargain collectively and unfair labor practice) arose between MMC and NAMAWU, with the latter eventually filing with the National Conciliation and Mediation Board of Bacolod City a notice of strike.11 Then Labor Secretary, now Associate Justice of this Court, Leonardo A. Quisumbing, later assumed jurisdiction over the dispute and ruled in favor of NAMAWU. In his July 30, 1997 Order in OS-AJ-10-96-014 (Quisumbing Order), Secretary Quisumbing declared that the lay-off (of workers) implemented on May 7, 1996 and October 7, 1996 was illegal and that MMC committed unfair labor practice. He then ordered the reinstatement of the laid-off workers, with payment of full backwages and benefits, and directed the

execution of a new collective bargaining agreement (CBA) incorporating the terms and conditions of the previous CBA providing for an annual increase in the workers daily wage.12 In two separate casesG.R. Nos. 133519 and 138996filed with this Court, we sustained the validity of the Quisumbing Order, which became final and executory on January 26, 2000.13 On May 11, 2001, then Acting Department of Labor and Employment (DOLE) Secretary, now also an Associate Justice of this Court, Arturo D. Brion, on motion of NAMAWU, directed the issuance of a partial writ of execution (Brion Writ), and ordered the DOLE sheriffs to proceed to the MMC premises for the execution of the same. 14Much later, in 2006, this Court, in G.R. Nos. 157696-97, entitled Maricalum Mining Corporation v. Brion and NAMAWU,15 affirmed the propriety of the issuance of the Brion Writ. The Brion Writ was not fully satisfied because MMCs resident manager resisted its enforcement.16 On motion of NAMAWU, then DOLE Secretary Patricia A. Sto. Tomas ordered the issuance of the July 18, 2002 Alias Writ of Execution and Break-Open Order (Sto. Tomas Writ).17 On October 11, 2002, the respondent acting sheriffs, the members of the union, and several armed men implemented the Sto. Tomas Writ, and levied on the properties of MMC located at its compound in Sipalay, Negros Occidental. 18 On October 14, 2002, GHI filed with the Regional Trial Court (RTC) of Kabankalan City, Negros Occidental, Special Civil Action (SCA) No. 1127 for Contempt with Prayer for the Issuance of a Temporary Restraining Order (TRO) and Writ of Preliminary Injunction and to Nullify the Sheriffs Levy on Properties.19 GHI contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage, dated September 5, 199620executed by MMC in favor of GHI to secure the aforesaid P550M promissory notes; that this deed was registered on February 24, 2000;21 and that the mortgaged properties were already extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 3, 2001, as evidenced by the Certificate of Sale dated December 4, 2001.22 The trial court issued ex parte a TRO effective for 72 hours, and set the hearing on the application for a writ of injunction.23 On October 17, 2002, the trial court ordered the issuance of a Writ of Injunction (issued on October 18, 2002)24 enjoining the DOLE sheriffs from further enforcing the Sto. Tomas Writ and from conducting any public sale of the levied-on properties, subject to GHIs posting of a P5M bond.25 Resolving, among others, NAMAWUs separate motions for the reconsideration of the injunction order and for the dismissal of the case, the RTC issued its December 4, 2002 Omnibus Order,26 the dispositive portion of which reads: WHEREFORE, premises considered, respondent NAMAWU Local 103s Motion for Reconsideration dated October 23, 2002 for the reconsideration of the Order of this Court directing the issuance of Writ of Injunction prayed for by petitioner and the Order dated October 18, 2002 approving petitioners Injunction Bond in the amount ofP5,000,000.00 is hereby DENIED.

Respondents Motion to Dismiss as embodied in its Opposition to Extension of Temporary Restraining Order and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and Suspend Period to File Answer dated October 15, 2002 is likewise DENIED. Petitioners Urgent Motion for the return of the levied firearms is GRANTED. Pursuant thereto, respondent sheriffs are ordered to return the levied firearms and handguns to the petitioner provided the latter puts [up] a bond in the amount of P332,200.00. Respondents lawyer, Atty. Jose Lapak, is strictly warned not to resort again to disrespectful and contemptuous language in his pleadings, otherwise, the same shall be dealt with accordingly. SO ORDERED.27 Aggrieved, NAMAWU filed with the CA a petition for certiorari under Rule 65, assailing the October 17, 18 and December 4, 2002 orders of the RTC.28 After due proceedings, on October 14, 2003, the appellate court rendered a Decision setting aside the RTC issuances and directing the immediate execution of the Sto. Tomas Writ. The CA ruled, among others, that the circumstances surrounding the execution of the September 5, 1996 Deed of Real Estate and Chattel Mortgage yielded the conclusion that the deed was sham, fictitious and fraudulent; that it was executed two weeks after the labor dispute arose in 1996, but surprisingly, it was registered only on February 24, 2000, immediately after the Court affirmed with finality the Quisumbing Order. The CA also found that the certificates of title to MMCs real properties did not contain any annotation of a mortgage lien, and, suspiciously, GHI did not intervene in the long drawn-out labor proceedings to protect its right as a mortgagee of virtually all the properties of MMC. 29 The CA further ruled that the subsequent foreclosure of the mortgage was irregular, effected precisely to prevent the satisfaction of the judgment against MMC. It noted that the foreclosure proceedings were initiated in July 2001, shortly after the issuance of the Brion Writ; and, more importantly, the basis for the extrajudicial foreclosure was not the failure of MMC to pay the mortgage debt, but its failure "to satisfy any money judgment against it rendered by a court or tribunal of competent jurisdiction, in favor of any person, firm or entity, without any legal ground or reason."30 Further, the CA pierced the veil of corporate fiction of the two corporations.31 The dispositive portion of the appellate courts decision reads: WHEREFORE, in view of the foregoing considerations, the petition is GRANTED. The October 17, 2002 and the December 4, 2002 Order of the RTC, Branch 61 of Kabankalan City, Negros Occidental are hereby ANNULLED and SET ASIDE for having been issued in excess or without authority. The Writ of Preliminary Injunction issued by the said court is lifted, and the DOLE Sheriff is directed to immediately enforce the Writ of Execution issued by the Department of Labor and Employment in the case "In re: Labor Dispute in Maricalum Mining Corporation" docketed as OS-AJ-10-96-01 (NCMB-RB6-08-96).32 The Issues

Dissatisfied, GHI elevated the case to this Court via the instant petition for review on certiorari, raising the following issues: I WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU AND MMC. II WHETHER OR NOT, ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR ORDER IN THE SAID LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE ENFORCED AGAINST GHI, THERE IS ALREADY A FINAL DEETERMINATION BY THE SUPREME COURT OF THE RIGHTS OF THE PARTIES IN SAID LABOR DISPUTE CONSIDERING THE PENDENCY OF G.R. NOS. 157696-97. III WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES UNLAWFULLY GARNISHED BY RESPONDENTS SHERIFFS. IV WHETHER OR NOT THE HONORABLE HENRY D. ARLES CORRECTLY ISSUED A WRIT OF INJUNCTION AGAINST THE UNLAWFUL EXECUTIOIN ON GHIS PROPERTIES. V WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL AND CHATTEL MORTGAGE OVER THE SUBJECT PROPERTIES BETWEEN MMC AND GHI MAY BE COLLATERALLY ATTACKED. VI WHETHER OR NOT, ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL AND CHATTEL MORTGAGE MAY BE COLLATERALLY ATTACKED, THE SAID MORTGAGE IS SHAM, FICTITIOUS AND FRAUDULENT. VII WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM MMC. VIII

WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE ISSUANCE OF A RESTRAINING ORDER OR INJUNCTION FROM TAKING POSSESSION OR BE DISPOSSESSED OF ASSETS PURCHASED BY IT FROM APT.33 Stripped of non-essentials, the core issue is whether, given the factual circumstances obtaining, the RTC properly issued the writ of injunction to prevent the enforcement of the Sto. Tomas Writ. The resolution of this principal issue, however, will necessitate a ruling on the following key and interrelated questions: 1. Whether the mortgage of the MMCs properties to GHI was a sham; 2. Whether there was an effective levy by the DOLE upon the MMCs real and personal properties; and 3. Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI. Our Ruling Before we delve into an extended discussion of the foregoing issues, it is essential to take judicial cognizance of cases intimately linked to the present controversy which had earlier been elevated to and decided by this Court. Judicial Notice. Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v. Hon. Arturo D. Brion and NAMAWU,34 in which we upheld the right of herein private respondent, NAMAWU, to its labor claims. Upon the same principle of judicial notice, we acknowledge our Decision in Republic of the Philippines, through its trustee, the Asset Privatization Trust v. "G" Holdings, Inc.,35 in which GHI was recognized as the rightful purchaser of the shares of stocks of MMC, and thus, entitled to the delivery of the company notes accompanying the said purchase. These company notes, consisting of three (3) Promissory Notes, were part of the documents executed in 1992 in the privatization sale of MMC by the Asset Privatization Trust (APT) to GHI. Each of these notes uniformly contains stipulations "establishing and constituting in favor of GHI" mortgages over MMCs real and personal properties. The stipulations were subsequently formalized in a separate document denominated Deed of Real Estate and Chattel Mortgage on September 5, 1996. Thereafter, the Deed was registered on February 4, 2000.36 We find both decisions critically relevant to the instant dispute. In fact, they should have guided the courts below in the disposition of the controversy at their respective levels. To repeat, these decisions respectively confirm the right of NAMAWU to its labor claims 37 and affirm the right of GHI to its financial and mortgage claims over the real and personal properties of MMC, as will be explained below. The assailed CA decision apparently failed to consider the impact of these two decisions on the case at bar. Thus, we find it timely to reiterate that: "courts have also taken judicial notice of previous cases to determine whether or not the case pending is a moot one or whether or not a previous ruling is applicable to the case under consideration."38

However, the CA correctly assessed that the authority of the lower court to issue the challenged writ of injunction depends on the validity of the third partys (GHIs) claim of ownership over the property subject of the writ of execution issued by the labor department. Accordingly, the main inquiry addressed by the CA decision was whether GHI could be treated as a third party or a stranger to the labor dispute, whose properties were beyond the reach of the Writ of Execution dated December 18, 2001.39 In this light, all the more does it become imperative to take judicial notice of the two cases aforesaid, as they provide the necessary perspective to determine whether GHI is such a party with a valid ownership claim over the properties subject of the writ of execution. In Juaban v. Espina,40 we held that "in some instances, courts have also taken judicial notice of proceedings in other cases that are closely connected to the matter in controversy. These cases may be so closely interwoven, or so clearly interdependent, as to invoke a rule of judicial notice." The two cases that we have taken judicial notice of are of such character, and our review of the instant case cannot stray from the findings and conclusions therein. Having recognized these crucial Court rulings, situating the facts in proper perspective, we now proceed to resolve the questions identified above. The mortgage was not a sham. Republic etc., v. "G" Holdings, Inc. acknowledged the existence of the Purchase and Sale Agreement between the APT and the GHI, and recounts the facts attendant to that transaction, as follows: The series of negotiations between the petitioner Republic of the Philippines, through the APT as its trustee, and "G" Holdings culminated in the execution of a purchase and sale agreement on October 2, 1992. Under the agreement, the Republic undertook to sell and deliver 90% of the entire issued and outstanding shares of MMC, as well as its company notes, to "G" Holdings in consideration of the purchase price of P673,161,280. It also provided for a down payment of P98,704,000 with the balance divided into four tranches payable in installment over a period of ten years."41 The "company notes" mentioned therein were actually the very same three (3) Promissory Notes amounting toP550M, issued by MMC in favor of GHI. As already adverted to above, these notes uniformly contained stipulations "establishing and constituting" mortgages over MMCs real and personal properties. It may be remembered that APT acquired the MMC from the PNB and the DBP. Then, in compliance with its mandate to privatize government assets, APT sold the aforesaid MMC shares and notes to GHI. To repeat, this Court has recognized this Purchase and Sale Agreement in Republic, etc., v. "G" Holdings, Inc. The participation of the Government, through APT, in this transaction is significant. Because the Government had actively negotiated and, eventually, executed the agreement, then the transaction is imbued with an aura of official authority, giving rise to the presumption of regularity in its execution. This presumption would cover all related transactional acts and documents needed to consummate the privatization sale, inclusive of the Promissory Notes.

It is obvious, then, that the Government, through APT, consented to the "establishment and constitution" of the mortgages on the assets of MMC in favor of GHI, as provided in the notes. Accordingly, the notes (and the stipulations therein) enjoy the benefit of the same presumption of regularity accorded to government actions. Given the Government consent thereto, and clothed with the presumption of regularity, the mortgages cannot be characterized as sham, fictitious or fraudulent. Indeed, as mentioned above, the three (3) Promissory Notes, executed on October 2, 1992, "established and constituted" in favor of GHI the following mortgages: 1. A mortgage over certain parcels of land, more particularly listed and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135, a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof; 2. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction conducted pursuant to the provision of Act 1508, a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof. 3. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC, a copy of which Catalogue is hereby made an integral part hereof by way of reference, as well as assets presently in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include all assets that may hereinafter be acquired by MMC.42 It is difficult to conceive that these mortgages, already existing in 1992, almost four (4) years before NAMAWU filed its notice of strike, were a "fictitious" arrangement intended to defraud NAMAWU. After all, they were agreed upon long before the seeds of the labor dispute germinated. While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on September 5, 1996, it is beyond cavil that this formal document of mortgage was merely a derivative of the original mortgage stipulations contained in the Promissory Notes of October 2, 1992. The execution of this Deed in 1996 does not detract from, but instead reinforces, the manifest intention of the parties to "establish and constitute" the mortgages on MMCs real and personal properties. Apparently, the move to execute a formal document denominated as the Deed of Real Estate and Chattel Mortgage came about after the decision of the RTC of Manila in Civil Case No. 95-76132 became final in mid-1996. This conclusion surfaces when we consider the genesis of Civil Case No. 95-76132 and subsequent incidents thereto, as narrated in Republic, etc. v. "G" Holdings, Inc., viz:

Subsequently, a disagreement on the matter of when installment payments should commence arose between the parties. The Republic claimed that it should be on the seventh month from the signing of the agreement while "G" Holdings insisted that it should begin seven months after the fulfillment of the closing conditions. Unable to settle the issue, "G" Holdings filed a complaint for specific performance and damages with the Regional Trial Court of Manila, Branch 49, against the Republic to compel it to close the sale in accordance with the purchase and sale agreement. The complaint was docketed as Civil Case No. 95-76132. During the pre-trial, the respective counsels of the parties manifested that the issue involved in the case was one of law and submitted the case for decision. On June 11, 1996, the trial court rendered its decision. It ruled in favor of "G" Holdings and held: "In line with the foregoing, this Court having been convinced that the Purchase and Sale Agreement is indeed subject to the final closing conditions prescribed by Stipulation No. 5.02 and conformably to Rule 39, Section 10 of the Rules of Court, accordingly orders that the Asset Privatization Trust execute the corresponding Document of Transfer of the subject shares and financial notes and cause the actual delivery of subject shares and notes to "G" Holdings, Inc., within a period of thirty (30) days from receipt of this Decision, and after "G" Holdings Inc., shall have paid in full the entire balance, at its present value ofP241,702,122.86, computed pursuant to the prepayment provisions of the Agreement. Plaintiff shall pay the balance simultaneously with the delivery of the Deed of Transfer and actual delivery of the shares and notes. SO ORDERED." The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996. Contrary to the rules of procedure, however, the notice of appeal was filed with the Court of Appeals (CA), not with the trial court which rendered the judgment appealed from. No other judicial remedy was resorted to until July 2, 1999 when the Republic, through the APT, filed a petition for annulment of judgment with the CA. It claimed that the decision should be annulled on the ground of abuse of discretion amounting to lack of jurisdiction on the part of the trial court. x x x Finding that the grounds necessary for the annulment of judgment were inexistent, the appellate court dismissed the petition. x x x x43 With the RTC decision having become final owing to the failure of the Republic to perfect an appeal, it may have become necessary to execute the Deed of Real Estate and Chattel Mortgage on September 5, 1996, in order to enforce the trial courts decision of June 11, 1996. This appears to be the most plausible explanation for the execution of the Deed of Real Estate and Chattel Mortgage only in September 1996. Even as the parties had already validly constituted the mortgages in 1992, as explicitly provided in the Promissory Notes, a specific deed of mortgage in a separate document may have been deemed necessary for registration purposes. Obviously, this explanation is more logical and more sensible than

the strained conjecture that the mortgage was executed on September 5, 1996 only for the purpose of defrauding NAMAWU. It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented two weeks after NAMAWU filed its notice of strike against MMC on August 23, 1996. However, this fact alone cannot give rise to an adverse inference for two reasons. First, as discussed above, the mortgages had already been "established and constituted" as early as October 2, 1992 in the Promissory Notes, showing the clear intent of the parties to impose a lien upon MMCs properties. Second, the mere filing of a notice of strike by NAMAWU did not, as yet, vest in NAMAWU any definitive right that could be prejudiced by the execution of the mortgage deed. The fact that MMCs obligation to GHI is not reflected in the formers financial statementsa circumstance made capital of by NAMAWU in order to cast doubt on the validity of the mortgage deedis of no moment. By itself, it does not provide a sufficient basis to invalidate this public document. To say otherwise, and to invalidate the mortgage deed on this pretext, would furnish MMC a convenient excuse to absolve itself of its mortgage obligations by adopting the simple strategy of not including the obligations in its financial statements. It would ignore our ruling in Republic, etc. v. "G" Holdings, Inc., which obliged APT to deliver the MMC shares and financial notes to GHI. Besides, the failure of the mortgagor to record in its financial statements its loan obligations is surely not an essential element for the validity of mortgage agreements, nor will it independently affect the right of the mortgagee to foreclose. Contrary to the CA decision, Tanongon v. Samson44 is not "on all fours" with the instant case. There are material differences between the two cases. At issue in Tanongon was a third-party claim arising from a Deed of Absolute Sale executed between Olizon and Tanongon on July 29, 1997, after the NLRC decision became final and executory on April 29, 1997. In the case at bar, what is involved is a loan with mortgage agreement executed on October 2, 1992, well ahead of the unions notice of strike on August 23, 1996. No presumption of regularity inheres in the deed of sale in Tanongon, while the participation of APT in this case clothes the transaction in 1992 with such a presumption that has not been successfully rebutted. In Tanongon, the conduct of a full-blown trial led to the findingduly supported by evidencethat the voluntary sale of the assets of the judgment debtor was madein bad faith. Here, no trial was held, owing to the motion to dismiss filed by NAMAWU, and the CA failed to consider the factual findings made by this Court in Republic, etc. v. "G" Holdings, Inc. Furthermore, in Tanongon, the claimant did not exercise his option to file a separate action in court, thus allowing the NLRC Sheriff to levy on execution and to determine the rights of third-party claimants.45 In this case, a separate action was filed in the regular courts by GHI, the third-party claimant. Finally, the questioned transaction in Tanongon was a plain, voluntary transfer in the form of a sale executed by the judgment debtor in favor of a dubious third-party, resulting in the inability of the judgment creditor to satisfy the judgment. On the other hand, this case involves an involuntary transfer (foreclosure of mortgage) arising from a loan obligation that well-existed long before the commencement of the labor claims of the private respondent. Three other circumstances have been put forward by the CA to support its conclusion that the mortgage contract is a sham. First, the CA considered it highly suspect that the Deed of

Real Estate and Chattel Mortgage was registered only on February 4, 2000, "three years after its execution, and almost one month after the Supreme Court rendered its decision in the labor dispute."46 Equally suspicious, as far as the CA is concerned, is the fact that the mortgages were foreclosed on July 31, 2001, after the DOLE had already issued a Partial Writ of Execution on May 9, 2001.47 To the appellate court, the timing of the registration of the mortgage deed was too coincidental, while the date of the foreclosure signified that it was "effected precisely to prevent the satisfaction of the judgment awards." 48 Furthermore, the CA found that the mortgage deed itself was executed without any consideration, because at the time of its execution, all the assets of MMC had already been transferred to GHI.49 These circumstances provided the CA with sufficient justification to apply Article 1387 of the Civil Code on presumed fraudulent transactions, and to declare that the mortgage deed was void for being simulated and fictitious.50 We do not agree. We find this Courts ruling in MR Holdings, Ltd. v. Sheriff Bajar51 pertinent and instructive: Article 1387 of the Civil Code of the Philippines provides: "Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts contracted before the donation. Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been rendered in any instance or some writ of attachment has been issued. The decision or attachment need not refer to the property alienated, and need not have been obtained by the party seeking rescission. In addition to these presumptions, the design to defraud creditors may be proved in any other manner recognized by law and of evidence." This article presumes the existence of fraud made by a debtor. Thus, in the absence of satisfactory evidence to the contrary, an alienation of a property will be held fraudulent if it is made after a judgment has been rendered against the debtor making the alienation. This presumption of fraud is not conclusive and may be rebutted by satisfactory and convincing evidence. All that is necessary is to establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable consideration. The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations. Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of US$18,453,450.12 to ADB in satisfaction of Marcoppers remaining debt as of March 20, 1997. Solidbank cannot deny this fact considering that a substantial portion of the said payment, in the sum of US$13,886,791.06, was remitted in favor of the Bank of Nova Scotia, its major stockholder. The facts of the case so far show that the assignment contracts were executed in good faith. The execution of the "Assignment Agreement" on March 20, 1997 and the "Deed of

Assignment" on December 8,1997 is not the alphaof this case. While the execution of these assignment contracts almost coincided with the rendition on May 7, 1997 of the Partial Judgment in Civil Case No. 96-80083 by the Manila RTC, however, there was no intention on the part of petitioner to defeat Solidbanks claim. It bears reiterating that as early as November 4, 1992, Placer Dome had already bound itself under a "Support and Standby Credit Agreement" to provide Marcopper with cash flow support for the payment to ADB of its obligations. When Marcopper ceased operations on account of disastrous mine tailings spill into the Boac River and ADB pressed for payment of the loan, Placer Dome agreed to have its subsidiary, herein petitioner, pay ADB the amount of US$18,453,450.12. Thereupon, ADB and Marcopper executed, respectively, in favor of petitioner an "Assignment Agreement" and a "Deed of Assignment." Obviously, the assignment contracts were connected with transactions that happened long before the rendition in 1997 of the Partial Judgment in Civil Case No. 96-80083 by the Manila RTC. Those contracts cannot be viewed in isolation. If we may add, it is highly inconceivable that ADB, a reputable international financial organization, will connive with Marcopper to feign or simulate a contract in 1992 just to defraud Solidbank for its claim four years thereafter. And it is equally incredible for petitioner to be paying the huge sum of US$18,453,450.12 to ADB only for the purpose of defrauding Solidbank of the sum ofP52,970,756.89. It is said that the test as to whether or not a conveyance is fraudulent is does it prejudice the rights of creditors? We cannot see how Solidbanks right was prejudiced by the assignment contracts considering that substantially all of Marcoppers properties were already covered by the registered "Deed of Real Estate and Chattel Mortgage" executed by Marcopper in favor of ADB as early as November 11, 1992. As such, Solidbank cannot assert a better right than ADB, the latter being a preferred creditor. It is basic that mortgaged properties answer primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured creditor.Considering that petitioner assumed Marcoppers debt to ADB, it follows that Solidbanks right as judgment creditor over the subject properties must give way to that of the former.52 From this ruling in MR Holdings, we can draw parallel conclusions. The execution of the subsequent Deed of Real Estate and Chattel Mortgage on September 5, 1996 was simply the formal documentation of what had already been agreed in the seminal transaction (the Purchase and Sale Agreement) between APT and GHI. It should not be viewed in isolation, apart from the original agreement of October 2, 1992. And it cannot be denied that this original agreement was supported by an adequate consideration. The APT was even ordered by the court to deliver the shares and financial notes of MMC in exchange for the payments that GHI had made. It was also about this time, in 1996, that NAMAWU filed a notice of strike to protest nonpayment of its rightful labor claims.53 But, as already mentioned, the outcome of that labor dispute was yet unascertainable at that time, and NAMAWU could only have hoped for, or speculated about, a favorable ruling. To paraphrase MR Holdings, we cannot see how NAMAWUs right was prejudiced by the Deed of Real Estate and Chattel Mortgage, or by its delayed registration, when substantially all of the properties of MMC were already mortgaged to GHI as early as October 2, 1992. Given this reality, the Court of Appeals had

no basis to conclude that this Deed of Real Estate and Chattel Mortgage, by reason of its late registration, was a simulated or fictitious contract. The importance of registration and its binding effect is stated in Section 51 of the Property Registration Decree or Presidential Decree (P.D.) No. 1529,54 which reads: SECTION 51. Conveyance and other dealings by registered owner.An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms, deeds, mortgages, leases or other voluntary instrument as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or effect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the Office of the Register of Deeds for the province or the city where the land lies. 55 Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. Further, entrenched in our jurisdiction is the doctrine that registration in a public registry creates constructive notice to the whole world.56 Thus, Section 51 of Act No. 496, as amended by Section 52 of P.D. No. 1529, provides: SECTION 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering. But, there is nothing in Act No. 496, as amended by P.D. No. 1529, that imposes a period within which to register annotations of "conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land." If liens were not so registered, then it "shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration." If registered, it "shall be the operative act to convey or affect the land insofar as third persons are concerned." The mere lapse of time from the execution of the mortgage document to the moment of its registration does not affect the rights of a mortgagee. Neither will the circumstance of GHIs foreclosure of MMCs properties on July 31, 2001, or after the DOLE had already issued a Partial Writ of Execution on May 9, 2001 against MMC, support the conclusion of the CA that GHIs act of foreclosing on MMCs properties was "effected to prevent satisfaction of the judgment award." GHIs mortgage rights, constituted in 1992, antedated the Partial Writ of Execution by nearly ten (10) years. GHIs resort to foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. It was a reasonable option open to a mortgagee which, not being a party to the labor dispute between NAMAWU and MMC, stood to suffer a loss if it did not avail itself of the remedy of foreclosure.

The well-settled rule is that a mortgage lien is inseparable from the property mortgaged.57 While it is true that GHIs foreclosure of MMCs mortgaged properties may have had the "effect to prevent satisfaction of the judgment award against the specific mortgaged property that first answers for a mortgage obligation ahead of any subsequent creditors," that same foreclosure does not necessarily translate to having been "effected to prevent satisfaction of the judgment award" against MMC. Likewise, we note the narration of subsequent facts contained in the Comment of the Office of the Solicitor General. Therein, it is alleged that after the Partial Writ of Execution was issued on May 9, 2001, a motion for reconsideration was filed by MMC; that the denial of the motion was appealed to the CA; that when the appeal was dismissed by the CA on January 24, 2002, it eventually became the subject of a review petition before this Court, docketed as G.R. No. 157696; and that G.R. No. 157696 was decided by this Court only on February 9, 2006. This chronology of subsequent events shows that February 9, 2006 would have been the earliest date for the unimpeded enforcement of the Partial Writ of Execution, as it was only then that this Court resolved the issue. This happened four and a half years after July 31, 2001, the date when GHI foreclosed on the mortgaged properties. Thus, it is not accurate to say that the foreclosure made on July 31, 2001 was "effected [only] to prevent satisfaction of the judgment award." We also observe the error in the CAs finding that the 1996 Deed of Real Estate and Chattel Mortgage was not supported by any consideration since at the time the deed was executed, "all the real and personal property of MMC had already been transferred in the hands of G Holdings."58 It should be remembered that the Purchase and Sale Agreement between GHI and APT involved large amounts (P550M) and even spawned a subsequent court action (Civil Case No. 95-76132, RTC of Manila). Yet, nowhere in the Agreement or in the RTC decision is there any mention of real and personal properties of MMC being included in the sale to GHI in 1992. These properties simply served as mortgaged collateral for the 1992 Promissory Notes.59 The Purchase and Sale Agreement and the Promissory Notes themselves are the best evidence that there was ample consideration for the mortgage. Thus, we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage executed in 1996 was a simulated transaction. On the issue of whether there had been an effective levy upon the properties of GHI. The well-settled principle is that the rights of a mortgage creditor over the mortgaged properties are superior to those of a subsequent attaching creditor. In Cabral v. Evangelista,60 this Court declared that: Defendants-appellants purchase of the mortgaged chattels at the public sheriff's sale and the delivery of the chattels to them with a certificate of sale did not give them a superior right to the chattels as against plaintiffs-mortgagees. Rule 39, Section 22 of the old Rules of Court (now Rule 39, Section 25 of the Revised Rules), cited by appellants precisely provides that "the sale conveys to the purchaser all the right which the debtor had in such property on the day the execution or attachment was levied." It has long been settled by this

Court that "The right of those who so acquire said properties should not and can not be superior to that of the creditor who has in his favor an instrument of mortgage executed with the formalities of the law, in good faith, and without the least indication of fraud. This is all the more true in the present case, because, when the plaintiff purchased the automobile in question on August 22, 1933, he knew, or at least, it is presumed that he knew, by the mere fact that the instrument of mortgage, Exhibit 2, was registered in the office of the register of deeds of Manila, that said automobile was subject to a mortgage lien. In purchasing it, with full knowledge that such circumstances existed, it should be presumed that he did so, very much willing to respect the lien existing thereon, since he should not have expected that with the purchase, he would acquire a better right than that which the vendor then had." In another case between two mortgagees, we held that "As between the first and second mortgagees, therefore, the second mortgagee has at most only the right to redeem, and even when the second mortgagee goes through the formality of an extrajudicial foreclosure, the purchaser acquires no more than the right of redemption from the first mortgagee." The superiority of the mortgagee's lien over that of a subsequent judgment creditor is now expressly provided in Rule 39, Section 16 of the Revised Rules of Court, which states with regard to the effect of levy on execution as to third persons that "The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing." Even in the matter of possession, mortgagees over chattel have superior, preferential and paramount rights thereto, and the mortgagor has mere rights of redemption. 61 Similar rules apply to cases of mortgaged real properties that are registered. Since the properties were already mortgaged to GHI, the only interest remaining in the mortgagor was its right to redeem said properties from the mortgage. The right of redemption was the only leviable or attachable property right of the mortgagor in the mortgaged real properties. We have held that The main issue in this case is the nature of the lien of a judgment creditor, like the petitioner, who has levied an attachment on the judgment debtor's (CMI) real properties which had been mortgaged to a consortium of banks and were subsequently sold to a third party, Top Rate. xxxx The sheriff's levy on CMI's properties, under the writ of attachment obtained by the petitioner, was actually a levy on the interest only of the judgment debtor CMI on those properties. Since the properties were already mortgaged to the consortium of banks, the only interest remaining in the mortgagor CMI was its right to redeem said properties from the mortgage. The right of redemption was the only leviable or attachable property right of CMI in the mortgaged real properties. The sheriff could not have attached the properties themselves, for they had already been conveyed to the consortium of banks by mortgage (defined as a "conditional sale"), so his levy must be understood to have attached only the mortgagor's remaining interest in the mortgaged property the right to redeem it from the mortgage.62

xxxx There appears in the record a factual contradiction relating to whether the foreclosure by GHI on July 13, 200163over some of the contested properties came ahead of the levy thereon, or the reverse. NAMAWU claims that the levy on two trucks was effected on June 22, 2001,64 which GHI disputes as a misstatement because the levy was attempted on July 18, 2002, and not 200165 What is undisputed though is that the mortgage of GHI was registered on February 4, 2000,66 well ahead of any levy by NAMAWU. Prior registration of a lien creates a preference, as the act of registration is the operative act that conveys and affects the land,67 even against subsequent judgment creditors, such as respondent herein. Its registration of the mortgage was not intended to defraud NAMAWU of its judgment claims, since even the courts were already judicially aware of its existence since 1992. Thus, at that moment in time, with the registration of the mortgage, either NAMAWU had no properties of MMC to attach because the same had been previously foreclosed by GHI as mortgagee thereof; or by virtue of the DOLEs levy to enforce NAMAWUs claims, the latters rights are subject to the notice of the foreclosure on the subject properties by a prior mortgagees right. GHIs mortgage right had already been registered by then, and "it is basic that mortgaged properties answer primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured creditor."68 On the issue of piercing the veil of corporate fiction. The CA found that: "Ordinarily, the interlocking of directors and officers in two different corporations is not a conclusive indication that the corporations are one and the same for purposes of applying the doctrine of piercing the veil of corporate fiction. However, when the legal fiction of the separate corporate personality is abused, such as when the same is used for fraudulent or wrongful ends, the courts have not hesitated to pierce the corporate veil (Francisco vs. Mejia, 362 SCRA 738). In the case at bar, the Deed of Real Estate and Chattel Mortgage was entered into between MMC and G Holdings for the purpose of evading the satisfaction of the legitimate claims of the petitioner against MMC. The notion of separate personality is clearly being utilized by the two corporations to perpetuate the violation of a positive legal duty arising from a final judgment to the prejudice of the petitioners right." 69 Settled jurisprudence70 has it that "(A) corporation, upon coming into existence, is invested by law with a personality separate and distinct from those persons composing it as well as from any other legal entity to which it may be related. By this attribute, a stockholder may not, generally, be made to answer for acts or liabilities of the said corporation, and vice versa. This separate and distinct personality is, however, merely a fiction created by law for convenience and to promote the ends of justice. For this reason, it may not be used or invoked for ends subversive to the policy and purpose behind its creation or which could not have been intended by law to which it owes its being. This is particularly true when the fiction is used to defeat public convenience, justify wrong, protect fraud, defend crime, confuse legitimate legal or judicial issues, perpetrate deception or otherwise circumvent the law. This is likewise true where the corporate entity is being used as an alter ego, adjunct, or business conduit for the sole

benefit of the stockholders or of another corporate entity. In all these cases, the notion of corporate entity will be pierced or disregarded with reference to the particular transaction involved. Given this jurisprudential principle and the factual circumstances obtaining in this case, we now ask: Was the CA correct in piercing the veil of corporate identity of GHI and MMC? In our disquisition above, we have shown that the CAs finding that there was a "simulated mortgage" between GHI and MMC to justify a wrong or protect a fraud has struggled vainly to find a foothold when confronted with the ruling of this Court in Republic v. "G" Holdings, Inc. The negotiations between the GHI and the Government--through APT, dating back to 1992-culminating in the Purchase and Sale Agreement, cannot be depicted as a contrived transaction. In fact, in the said Republic, etc., v. "G" Holdings, Inc., this Court adjudged that GHI was entitled to its rightful claims not just to the shares of MMC itself, or just to the financial notes that already contained the mortgage clauses over MMCs disputed assets, but also to the delivery of those instruments. Certainly, we cannot impute to this Courts findings on the case any badge of fraud. Thus, we reject the CAs conclusion that it was right to pierce the veil of corporate fiction, because the foregoing circumstances belie such an inference. Furthermore, we cannot ascribe to the Government, or the APT in particular, any undue motive to participate in a transaction designed to perpetrate fraud. Accordingly, we consider the CA interpretation unwarranted. We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to property conveyances, when there was already a judgment rendered or a writ of attachment issued, authorizes piercing the veil of corporate identity in this case. We find that Article 1387 finds less application to an involuntary alienation such as the foreclosure of mortgage made before any final judgment of a court. We thus hold that when the alienation is involuntary, and the foreclosure is not fraudulent because the mortgage deed has been previously executed in accordance with formalities of law, and the foreclosure is resorted to in order to liquidate a bona fide debt, it is not the alienation by onerous title contemplated in Article 1387 of the Civil Code wherein fraud is presumed. Since the factual antecedents of this case do not warrant a finding that the mortgage and loan agreements between MMC and GHI were simulated, then their separate personalities must be recognized. To pierce the veil of corporate fiction would require that their personalities as creditor and debtor be conjoined, resulting in a merger of the personalities of the creditor (GHI) and the debtor (MMC) in one person, such that the debt of one to the other is thereby extinguished. But the debt embodied in the 1992 Financial Notes has been established, and even made subject of court litigation (Civil Case No. 95-76132, RTC Manila). This can only mean that GHI and MMC have separate corporate personalities. Neither was MMC used merely as an alter ego, adjunct, or business conduit for the sole benefit of GHI, to justify piercing the formers veil of corporate fiction so that the latter could be held liable to claims of third-party judgment creditors, like NAMAWU. In this regard, we find American jurisprudence persuasive. In a decision by the Supreme Court of New York71 bearing upon similar facts, the Court denied piercing the veil of corporate fiction to

favor a judgment creditor who sued the parent corporation of the debtor, alleging fraudulent corporate asset-shifting effected after a prior final judgment. Under a factual background largely resembling this case at bar, viz: In this action, plaintiffs seek to recover the balance due under judgments they obtained against Lake George Ventures Inc. (hereinafter LGV), a subsidiary of defendant that was formed to develop the Top O the World resort community overlooking Lake George, by piercing the corporate veil or upon the theory that LGV's transfer of certain assets constituted fraudulent transfers under the Debtor and Creditor Law. We previously upheld Supreme Court's denial of defendant's motion for summary judgment dismissing the complaint (252 A.D.2d 609, 675 N.Y.S.2d 234) and the matter proceeded to a nonjury trial. Supreme Court thereafter rendered judgment in favor of defendant upon its findings that, although defendant dominated LGV, it did not use that domination to commit a fraud or wrong on plaintiffs. Plaintiffs appealed.
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The trial evidence showed that LGV was incorporated in November 1985. Defendant's principal, Francesco Galesi, initially held 90% of the stock and all of the stock was ultimately transferred to defendant. Initial project funding was provided through a $2.5 million loan from Chemical Bank, secured by defendant's guarantee of repayment of the loan and completion of the project. The loan proceeds were utilized to purchase the real property upon which the project was to be established. Chemical Bank thereafter loaned an additional $3.5 million to LGV, again guaranteed by defendant, and the two loans were consolidated into a first mortgage loan of $6 million. In 1989, the loan was modified by splitting the loan into a $1.9 term note on which defendant was primary obligor and a $4.1 million project note on which LGV was the obligor and defendant was a guarantor. Due to LGV's lack of success in marketing the project's townhouses and in order to protect itself from the exercise of Chemical Bank's enforcement remedies, defendant was forced to make monthly installments of principal and interest on LGV's behalf. Ultimately, defendant purchased the project note from Chemical Bank for $3.1 million, paid the $1.5 million balance on the term note and took an assignment of the first mortgage on the project's realty. After LGV failed to make payments on the indebtedness over the course of the succeeding two years, defendant brought an action to foreclose its mortgage. Ultimately, defendant obtained a judgment of foreclosure and sale in the amount of $6,070,246.50. Defendant bid in the property at the foreclosure sale and thereafter obtained a deficiency judgment in the amount of $3,070,246.50. Following the foreclosure sale, LGV transferred to defendant all of the shares of Top of the World Water Company, a separate entity that had been organized to construct and operate the water supply and delivery system for the project, in exchange for a $950,000 reduction in the deficiency judgment. the U.S. Supreme Court of New York held Based on the foregoing, and accepting that defendant exercised complete domination and control over LGV, we are at a loss as to how plaintiffs perceive themselves to have been inequitably affected by defendant's foreclosure action against LGV, by LGV's divestiture of the water company stock or the sports complex property, or by defendant's transfer to LGV

of a third party's uncollectible note, accomplished solely for tax purposes. It is undisputed that LGV was, and for some period of time had been, unable to meet its obligations and, at the time of the foreclosure sale, liens against its property exceeded the value of its assets by several million dollars, even including the water company and sports complex at the values plaintiffs would assign to them. In fact, even if plaintiffs' analysis were utilized to eliminate the entire $3 million deficiency judgment, the fact remains that subordinate mortgages totaling nearly an additional $2 million have priority over plaintiffs' judgments. As properly concluded by Supreme Court, absent a finding of any inequitable consequence to plaintiffs, both causes of action pleaded in the amended complaint must fail. Fundamentally, a party seeking to pierce the corporate veil must show complete domination and control of the subsidiary by the parent and also that such domination was used to commit a fraud or wrong against the plaintiff that resulted in the plaintiff's injury ( 252 A.D.2d 609, 610, 675 N.Y.S.2d 234, supra; see, Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157). Notably, "[e]vidence of domination alone does not suffice without an additional showing that it led to inequity, fraud or malfeasance" (TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749). xxxx In reaching that conclusion, we specifically reject a number of plaintiffs' assertions, including the entirely erroneous claims that our determination on the prior appeal (252 A.D.2d 609, 675 N.Y.S.2d 234, supra) set forth a "roadmap" for the proof required at trial and mandated a verdict in favor of plaintiffs upon their production of evidence that supported the decision's "listed facts". To the contrary, our decision was predicated upon the existence of such evidence, absent which we would have granted summary judgment in favor of defendant. We are equally unpersuaded by plaintiffs' continued reliance upon defendant's December 1991 unilateral conversion of its intercompany loans with LGV from debt to equity, which constituted nothing more than a "bookkeeping transaction" and had no apparent effect on LGV's obligations to defendant or defendant's right to foreclose on its mortgage. 72 This doctrine is good law under Philippine jurisdiction. In Concept Builders, Inc. v. National Labor Relations Commission,73 we laid down the test in determining the applicability of the doctrine of piercing the veil of corporate fiction, to wit: 1. Control, not mere majority or complete control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own. 2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest and, unjust act in contravention of plaintiffs legal rights; and, 3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

xxxx Time and again, we have reiterated that mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not, by itself, a sufficient ground for disregarding a separate corporate personality.74 It is basic that a corporation has a personality separate and distinct from that composing it as well as from that of any other legal entity to which it may be related. Clear and convincing evidence is needed to pierce the veil of corporate fiction.75 In this case, the mere interlocking of directors and officers does not warrant piercing the separate corporate personalities of MMC and GHI. Not only must there be a showing that there was majority or complete control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked, so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own. The mortgage deed transaction attacked as a basis for piercing the corporate veil was a transaction that was an offshoot, a derivative, of the mortgages earlier constituted in the Promissory Notes dated October 2, 1992. But these Promissory Notes with mortgage were executed by GHI with APT in the name of MMC, in a full privatization process. It appears that if there was any control or domination exercised over MMC, it was APT, not GHI, that wielded it. Neither can we conclude that the constitution of the loan nearly four (4) years prior to NAMAWUs notice of strike could have been the proximate cause of the injury of NAMAWU for having been deprived of MMCs corporate assets. On the propriety of injunction to prevent execution by the NLRC on the properties of third-party claimants It is settled that a Regional Trial Court can validly issue a Temporary Restraining Order (TRO) and, later, a writ of preliminary injunction to prevent enforcement of a writ of execution issued by a labor tribunal on the basis of a third-partys claim of ownership over the properties levied upon.76 While, as a rule, no temporary or permanent injunction or restraining order in any case involving or growing out of a labor dispute shall be issued by any court--where the writ of execution issued by a labor tribunal is sought to be enforced upon the property of a stranger to the labor dispute, even upon a mere prima facie showing of ownership of such claimant--a separate action for injunctive relief against such levy may be maintained in court, since said action neither involves nor grows out of a labor dispute insofar as the third party is concerned.77 Instructively, National Mines and Allied Workers Union v. Vera78 Petitioners' reliance on the provision of Art. 254 of the New Labor Code (herein earlier quoted) which prohibits injunctions or restraining orders in any case involving or growing out of a 'labor dispute' is not well-taken. This has no application to the case at bar. Civil Case No. 2749 is one which neither "involves" nor "grows out" of a labor dispute. What 'involves' or 'grows out' of a labor dispute is the NLRC case between petitioners and the judgment debtor, Philippine Iron Mines. The private respondents are not parties to the said NLRC case. Civil Case No. 2749 does not put in issue either the fact or validity of the proceeding in theNLRC case nor the decision therein rendered, much less the writ of execution issued thereunder. It does not seek to enjoin the execution of the decision against the properties of the judgment debtor. What is sought to be tried in Civil Case No. 2749 is whether the

NLRC's decision and writ of execution, above mentioned, shall be permitted to be satisfied against properties of private respondents, and not of the judgment debtor named in the NLRC decision and writ of execution. Such a recourse is allowed under the provisions of Section 17, Rule 39 of the Rules of Court. To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial imprimatur to deprivation of property without due process of law. Simply because a writ of execution was issued by the NLRC does not authorize the sheriff implementing the same to levy on anybody's property. To deny the victim of the wrongful levy, the recourse such as that availed of by the herein private respondents, under the pretext that no court of general jurisdiction can interfere with the writ of execution issued in a labor dispute, will be sanctioning a greater evil than that sought to be avoided by the Labor Code provision in question. Certainly, that could not have been the intendment of the law creating the NLRC. For well-settled is the rule that the power of a court to execute its judgment extends only over properties unquestionably belonging to the judgment debtor." Likewise, since the third-party claimant is not one of the parties to the action, he cannot, strictly speaking, appeal from the order denying his claim, but he should file a separate reivindicatory action against the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.79 A separate civil action for recovery of ownership of the property would not constitute interference with the powers or processes of the labor tribunal which rendered the judgment to execute upon the levied properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim and prima facie showing of ownership by the petitioner, cannot be considered as interference.80 Upon the findings and conclusions we have reached above, petitioner is situated squarely as such third-party claimant. The questioned restraining order of the lower court, as well as the order granting preliminary injunction, does not constitute interference with the powers or processes of the labor department. The registration of the mortgage document operated as notice to all on the matter of the mortgagees prior claims. Official proceedings relative to the foreclosure of the subject properties constituted a prima facie showing of ownership of such claimant to support the issuance of injunctive reliefs. As correctly held by the lower court: The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving the same, the Court believes, that the petitioner has a clear and unmistakable right over the levied properties. The existence of the subject Deed of Real Estate and Chattel Mortgage, the fact that petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-Officio Sheriff, RTC Branch 61, Kabankalan City on July 13, 2001, the fact that said Ex-Officio Sheriff and the Clerk of Court issue a Notice of Foreclosure, Possession and Control over said mortgaged properties on July 19, 2001 and the fact that a Sheriffs Certificate of Sale was issued on December 3, 2001 are the basis of its conclusion. Unless said mortgage contract is annulled or declared null and void, the presumption of

regularity of transaction must be considered and said document must be looked [upon] as valid. Notably, the Office of the Solicitor General also aptly observed that when the respondent maintained that the Deed of Real Estate and Chattel mortgage was entered into in fraud of creditors, it thereby admitted that the mortgage was not void, but merely rescissible under Article 1381(3) of the Civil Code; and, therefore, an independent action is needed to rescind the contract of mortgage.81 We, however, hold that such an independent action cannot now be maintained, because the mortgage has been previously recognized to exist, with a valid consideration, in Republic, etc., v. "G" Holdings, Inc. A final word The Court notes that the case filed with the lower court involves a principal action for injunction to prohibit execution over properties belonging to a third party not impleaded in the legal dispute between NAMAWU and MMC. We have observed, however, that the lower court and the CA failed to take judicial notice of, or to consider, our Decisions in Republic, etc., v. "G" Holdings, Inc., and Maricalum Mining Corporation v. Brion and NAMAWU, in which we respectively recognized the entitlement of GHI to the shares and the company notes of MMC (under the Purchase and Sale Agreement), and the rights of NAMAWU to its labor claims. At this stage, therefore, neither the lower court nor the CA, nor even this Court, can depart from our findings in those two cases because of the doctrine of stare decisis. From our discussion above, we now rule that the trial court, in issuing the questioned orders, did not commit grave abuse of discretion, because its issuance was amply supported by factual and legal bases. We are not unmindful, however, of the fact that the labor claims of NAMAWU, acknowledged by this Court in Maricalum, still awaits final execution. As success fades from NAMAWUs efforts to execute on the properties of MMC, which were validly foreclosed by GHI, we see that NAMAWU always had, and may still have, ample supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights against MMC. These include the examination of the judgment obligor when judgment is unsatisfied, 82 the examination of the obligors of judgment obligors,83 or even the resort to receivership.84
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While, theoretically, this case is not ended by this decision, since the lower court is still to try the case filed with it and decide it on the merits, the matter of whether the mortgage and foreclosure of the assets that are the subject of said foreclosure is ended herein, for the third and final time. So also is the consequential issue of the separate and distinct personalities of GHI and MMC. Having resolved these principal issues with certainty, we find no more need to remand the case to the lower court, only for the purpose of resolving again the matter of whether GHI owns the properties that were the subject of the latters foreclosure. WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated October 14, 2003 is SET ASIDE. The Omnibus Order dated December 4, 2002 of the

Regional Trial Court, Branch 61 of Kabankalan City, Negros Occidental is AFFIRMED. No costs. SO ORDERED. G.R. No. L-54886 September 10, 1981 REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS (Special Second Division), COURT OF FIRST INSTANCE OF BULACAN, TURANDOT, TRAVIATA, MARCELITA, MARLENE, PACITA, MATTHEW, VICTORIA and ROSARY, all surnamed ALDABA, respondents.

MAKASIAR, J.: Petitioner, through this petition for review by certiorari, seeks to annul and set aside the respondent Court of Appeals' April 29, 1980 decision and August 15, 1980 resolution in CA G.R. No. 10081-SP, entitled "Republic of the Philippines versus Hon. Roque Tamayo, et al. " a special action for certiorari, prohibition and mandamus sustaining the lower court's action in dismissing petitioner's appeal as not having been perfected on time. The root case is an expropriation proceedings initiated by the petitioner over a 15,000 square meter lot of private respondents situated in Barrio Tikay, Malolos, Bulacan, docketed in the lower court as Civil Case No. 525, entitled " Republic of the Philippines vs. Turandot Aldaba, et al. " The subject parcel of land is needed by the petitioner to set up a permanent site for the Bulacan Area Shop, Bureau of Equipment, Department of Public Highways, a public purpose authorized by law to be undertaken by the Ministry of Public Highways. On March 2, 1978, the lower court issued a writ of possession placing the petitioner in possession of the land in question, upon its deposit of the amount of P7,200.00 as provisional value. On March 31, 1978, counsel for private respondents filed a motion praying for the creation of a three (3)- man committee in accordance with Section 5, Rule 67 of the Rules of Court, to study and submit a report as to the just and reasonable compensation for the parcel of land subject of expropriation. On July 31, 1978, the lower court issued an order naming the chairman and members of the committee of three. On November 17. 1978, the three-man committee submitted a joint report to the lower court, recommending that the just compensation of the expropriated land be fixed at P50.00 per square meter. In this petition, the Solicitor General claims that he was not served copies of the aforementioned March 31, 1978 motion of private respondents, July 31, 1978 order of the respondent lower court and the November 17, 1978 report of the three-man committee. The records reveal that the Solicitor General authorized the provincial fiscal of Bulacan to represent him in that proceedings (pp. 11-12, C.A. rec.). Parenthetically, private respondents in their comment to this petition, alleged "that the Provincial Fiscal, being duly authorized by the office of the Solicitor General to represent the latter in this case, the court merely furnished the office of the Provincial Fiscal with all the pleadings and other papers of the case,, (p. 53, rec.).

On December 18, 1978, the Solicitor General received a copy of the lower court's order dated December 8, 1978. The order reads in part: The joint report filed by the three-man committee charged with the determination of the just compensation of the property herein sought to be condemned is hereby APPROVED, such that the just compensation of the land described in Paragraph 11 of the Complaint is fixed at Thirty Pesos (P30.00) per square meter. The defendant may now withdraw from the Philippine National Bank, Malolos, Branch, the sum of P7,200.00 deposited by the Third Regional Equipment Services, Department of Public Highways under Account No, 35109, said sum to be part of the total amount of P450,000.00 (15,000 square meters at P30.00 per square meter), which the Department of Public Highways, Third Regional Equipment Services, Malolos, Bulacan, shall, and is hereby ordered, to pay to the herein defendants as just compensation for the subject property. On December 22, 1978, the Solicitor General filed through the mail a notice of appeal as well as a first motion for extension of time of 30 days from January 17, 1979 within which to file record on appeal. The extension sought for was granted by the lower court in its order dated January 17, 1979. On February 13, 1979, the lower court, acting upon petitioner's manifestation filed on January 9, 1979 and motion filed on February 8, 1979, allowed the Solicitor General to borrow the records of the expropriation case "under proper receipt, the Clerk of Court taking the necessary steps to index and number the pages thereof and to ensure its integrity; and granted a second extension of thirty (30) days from February 17, 1979, within which to file the record on appeal of the Republic of the Philippines" (p. 79, C.A. rec.). Again, on March 22, 1979, the lower court granted petitioner's third motion for an extension of thirty (30) days from March 19, 1979 within which to file its record on appeal (p. 80, C.A. rec.). Subsequently, the lower court, in an order dated April 24, 1980, acted favorably upon petitioner's motion for a fourth extension of thirty (30) days from April 19, 1979 within which to file its record on appeal and petitioner's request that the records of the expropriation case be forwarded to the Solicitor General (p. 81, C.A. rec.). In a motion dated May 17, 1979, the petitioner, invoking heavy pressure of work, asked for a fifth extension of thirty (30) days from May 18, 1979 or until June 17, 1979, within which to file its record on appeal (pp. 82-83, C.A. rec.). On June 7, 1979, when its motion for a fifth extension has not yet been acted upon by the lower court, petitioner filed its record on appeal (p. 13, rec.). On June 15, 1979, eight (8) days after petitioner had filed its record on appeal, private respondents filed an opposition to the aforesaid fifth motion for extension (pp. 85-87, C.A.

rec.), and an objection to petitioner's record on appeal (pp. 88-89, C.A. rec.), on the ground that the same was filed beyond the reglementary period, because petitioner's motion dated May 17, 1979 for extension to file record on appeal was mailed only on May 21, 1979 (pp. 13-14, rec.). On June 27, 1979, petitioner filed its opposition to the aforesaid objection to its record on appeal, contending that the said May 17, 1979 motion for extension of time was actually mailed on May 18, 1979, which was the last day of the extended period allowed by the lower court's order of April 24, 1979 (p. 14, rec.). In an order dated August 13, 1979 but received by the Solicitor General only on September 10, 1979, the lower court dismissed the appeal of petitioner on the ground that the fifth motion for extension of time dated May 17,1979 within which to file the record on appeal and the record on appeal were filed out of time. The lower court found that the said fifth motion for extension of time was actually mailed on May 21, 1979 and not on May 18, 1979 as claimed by petitioner (pp. 14, 34-35, rec.). The order of dismissal reads: Upon consideration of the approval of the record on appeal filed by the Republic and acting on the manifestation filed on July 25, 1979 by the defendants thru counsel, the Court finds no merit in the same. The last motion of the Office of the Solicitor General for extension of time to file record on appeal was on May 17, 1979, seeking for an additional extension of thirty (30) days from April 18, 1979. The thirty-day period requested by the Solicitor General from May 18, 1979 therefore expired on June 17, 1979. But this last request for extension was not acted upon by the court. The Republic of the Philippines had therefore only up to May 17, 1979, within which to file record on appeal. The record on appeal was filed only on June 11, 1979 (should be June 7), which is well beyond the period to file record on appeal Moreover, the last motion for extension which was not acted upon by the Court had only been filed on May 21, 1979 as shown by the stamp of the Manila Post Office, the date of the mailing which should be reckoned with in computing periods of mailed pleadings, and received by the Court on June 22, 1979. Both the motion for extension filed on May 21, 1979 and the record on appeal filed on June 11, 1979 (should be June 7), have therefore been filed beyond the reglementary period of 30 days from April 18, 1979, or up to May 18,1979. xxx xxx xxx (pp. 34-35, rec.). On October 4, 1979, petitioner filed a motion for reconsideration claiming that "l) there is merit in plaintiff's appeal from tills Honorable Court's order of December 8, 1978, a copy of which was received on December 18, 1978; 2) plaintiff's May 17, 1979 motion for 30 days extension from May 17, 1979 to file Record on Appeal, was actually filed on May 18, 1919; and 3) the Honorable Court denied plaintiff's appeal without first resolving plaintiff's motion

for a 30-day extension, from May 18, 1979 to file Record on Appeal" (pp. 14-15, rec.; pp. 52-66, C.A. rec.). Relative to the timeliness of the filing of its fifth motion for extension of time, petitioner submitted a certification of the Postmaster of the Central Office of the Bureau of Posts, Manila, that registered letter No. 3273 containing the aforesaid motion addressed to the Clerk of Court of the Court of First Instance of Malolos, Bulacan ... was received by this Office late Friday afternoon, May 18, 1979. The letter was not included in the only morning dispatch of May 19 to Bulacan and was dispatched May 21, 1979, Monday (May 20, being a Sunday) under the Manila Malolos Bill No. 202, page 1, line 15" (p. 66, C.A. rec.). On the merits of the dismissed appeal, petitioner stressed that the creation of a three-man committee to fix the just compensation of the expropriated lot was without legal basis, because Section 5, Rule 6 of the Rules of Court upon which the same was anchored had already been repealed by the provisions of Presidential Decree No. 76 which took effect on December 6, 1972 under which the court has no alternative but to base the just compensation of expropriated property upon the current and fair market value declared by the owner or administrator. or such market value as determined by the assessor, whichever is lower. On October 31, 1979, the lower court denied petitioner's motion for reconsideration for lack of merit (pp. 36-40, rec.; pp. 2832, C.A. rec.), thus: The grounds advanced by the plaintiff Republic of the Philippines have been fully taken into account by the Court in its order of August 13, 1979, particularly the late filing of the record on appeal. Plaintiff's counsel should not have assumed that the motion for extension of the period for filing of the record on appeal would be granted.
The plaintiff's counsel's belief that their May 17, 1979 motion would be granted cannot be the basis for the plaintiff to be absolved of the effect of late filing of the record on appeal considering that the Court had liberally extended for five times *, each for thirty (30) days, the filing of said record. This Court considers said extensions as sufficient time for the counsel for plaintiff to prepare its record on appeal. Plaintiff's counsel, with all the resources it has to protect its client's interests, should have been vigilant enough not to assume and should not expect that their motion for extension would be granted. It is not correct therefore that only three days had elapsed after the reglementary period to perfect appeal because the reglementary period ended not on June 17, 1979, but on May 17, 1979, because the last motion for extension was not granted by the Court.

The Court deplores the insinuation of plaintiff's counsel that it took hook, line and sinker, defendant's allegation about the fact of mailing. I t has carefully gone over the record and found that the date of mailing of the motion for extension is May 21, 1979, as shown by the stamp 'Registered, Manila, Philippines, May 1, 1979 appearing on the covering envelope containing the motion for extension. Therefore, the explanation contained in Annex B of the motion for reconsideration to the effect that registered Letter No. 3273, addressed to the Clerk of Court, Court of First Instance of Malolos, Bulacan, was received by the Manila Post Office late Friday afternoon, May 18, 1979, but was not included in the "only" morning dispatch of May 19 to Bulacan and was dispatched May 21, 1979, Monday (May 20 being a Sunday), under the

ManilaMalolos Bill No. 202, page 1, line 15', can not overturn the fact of date of actual mailing which is May 21, 1979, because it is of judicial knowledge that a registered letter when posted is immediately stamped with the date of its receipt, indicating therein the number of the registry, both on the covering envelope itself and on the receipt delivered to the person who delivered the letter to the post office. The letter Annex B of the motion therefore lacks sufficient weight and persuasiveness to prove the fact that the letter asking for another extension was actually filed on May 18, 1979, and not May 21, 1979. Regarding the creation of a three-man committee which according to plaintiff the Court sorely lacked the prerogative to create pursuant to Sec. 5, Rule 67 of the Rules of Court because it has been superseded by the provisions of PD 76 which definitely fixed the guidelines for the determination of just compensation of private property acquired by the State for public use, the Court had to resort to this old method of determining fair market value, which is defined as: The "current and fair market value" shall be understood to mean the "price of which a willing seller would sell and a willing buyer would buy neither being under abnormal pressure", because, firstly; the plaintiff failed to show evidence thereof as declared by the owner or administrator of the property under the provisions of PD 76, or the valuation or assessment of the value as determined by the assessor, whichever is lower. Hence, for all intents and purposes, the findings of the threeman committee have become the basis of the evaluation, Paragraph Ill of the complaint notwithstanding, because allegation in the complaint, unless proved, are not binding as evidence. Presidential Decree No. 42, from its very caption, which reads: PRESIDENTIAL DECREE NO. 42 AUTHORIZING THE PLAINTIFF IN EMINENT DOMAIN PROCEEDINGS TO TAKE POSSESSION OF THE PROPERTY INVOLVED UPON DEPOSITING THE ASSESSED VALUE FOR PURPOSES OF TAXATION does not fix the value of the property to be expropriated, but rather for the purpose of taking possession of the property involved, the assessed value for purposes of taxation is required to be deposited in the Philippine National Bank or any of its branches or agencies. This is borne out by the first Whereas of the decree which finds the existing procedure for the exercise of the right of eminent domain not expeditious enough to enable the plaintiff to take or enter upon the possession of the real property involved, when needed for public purposes. The second Whereas states that the measure is in the national interest in order to effect the desired changes and

reforms to create a new society and economic order for the benefit of the country and its people. The body of the law does not specify the valuation of the property, but rather the method by which seizure of the property could be done immediately, and that is by the act of depositing with the Philippine National Bank, in its main office or any of its branches or agencies, an amount equivalent to the assessed value of the property for purposes of taxation, to be held by said bank subject to the orders and final disposition of the Court. Only in this respect are the provisions of Rule 67 of the Rules of Court and or any other existing law contrary to or inconsistent therewith repealed. If at an, the decree, PD 42, fixes only a provisional value of the property which does not necessarily represent the true and correct value of the land as defined in PD 76. It is only provisional or tentative to serve as the basis for the immediate occupancy of the property being expropriated by the condemnor. This is in line with the recent decision of the Honorable Supreme Court promulgated on October 18, 1979, in the case of the Municipality of Daet, Petitioner, vs. Court of Appeals and Li Seng Giap & Co., Inc., Respondents, G.R. No. L-45861, which states in part: ..., it can already be gleaned that said decree fixes only the provisional value of the property. As a provisional value, it does not necessarily represent the true and correct value of the land. The value is only "provisional" or "tentative" to serve as the basis for the immediate occupancy of the property being expropriated by the condemnor. xxx xxx xxx (pp. 28-32, rec.). Dissatisfied with the aforesaid orders of the lower court, petitioner on December 3, 1979 filed with the respondent Court of Appeals a petition for certiorari, prohibition and mandamus with preliminary injunction in CA-G.R. No. 10081-Sp, entitled: Republic of the Philippines versus Court of First Instance of Bulacan, Branch VI, presided over by Hon. Roque Tamayo, et al., whereby it prayed that: 1) This petition be given due course; 2) A writ of preliminary injunction and/or temporary retraining order be issued ex-parte restraining respondent court from executing, enforcing and/or implementing its Order dated December 8, 1978, ... and its orders dated August 13, 1979 and October 31, 1979 ...; 3) After hearing on the merits, judgment be rendered: [a] annulling and setting aside respondent court's Orders of August 13, 1979 ... : [b] Directing and compelling respondent court to allow and approve petitioner's record on appeal and to certify and elevate the same to this Honorable Court; [c] Declaring the writ of preliminary injunction and/or restraining order herein prayed for to be made permanent and perpetual" and for such other relief as the Court may deem just and equitable in the premises.

On December 14, 1979, respondent Court of Appeals issued a temporary restraining order to maintain the status quo, and required private respondents to file their comment (pp. 6768, C.A. rec.). On January 2, 1980, private respondents filed the required comment (pp. 69-91, C.A. rec.). On April 29, 1980, respondent Court of Appeals dismissed petitioner's action and set aside its December 14, 1979 restraining order. The respondent Court of Appeals ruled that "A review of the whole record convinces Us that the challenged orders are not a capricious and whimsical exercise of judgment as to constitute a grave abuse of discretion ..." (pp. 44-45, rec.). The Solicitor General received a copy of the aforesaid decision on May 19, 1980. On May 30, 1980, the Solicitor General sought a thirty-day extension from June 3, 1980 within which to file a motion for reconsideration (pp. 106-107, C.A. rec.). On June 20, 1980, the respondent Court of Appeals granted the extension sought (p. 108, C.A. rec.). On June 23, 1980, the Solicitor General filed his motion for reconsideration on the ground that, "The Honorable Court of Appeals was misled by private respondents' counsel in holding that petitioner's motion for extension of time to file record on appeal dated May 17, 1979 ... was filed on May 21, 1979, not on May 18, 1979 (which was the last day within which to file petitioner's record on appeal); hence, this Honorable Court was not correct in ARRIVING AT THE CONCLUSION THAT PETITIONER'S AFORESAID MOTION FOR EXTENSION was filed beyond the reglementary period" (pp. 109-118, C.A. rec.). Petitioner also moved to set the case for oral argument (p. 119, C.A. rec.). Petitioner vehemently insisted as it did in the main action (pp. 10-12, C.A. rec.), that it is erroneous to conclude that its ... motion for extension dated May 17, 1979 ... was filed on May 21, 1979 and not on May 18, 1979 which is the last day of the extended period fixed by respondent court for petitioner to file its record on appeal. It is submitted that the motion for extension dated May 17, 1979 ... was actually filed on May 18,1979 as there is incontrovertible proof that the same was in fact mailed on May 18, 1979 via registered mail (Registry Letter 3273) at the Manila Central Office of the Bureau of Posts. A letter dated September 26, 1979 of Delfin Celis, postmaster of Central Post Office, Manila, to the Chief of the Records Section of the Office of the Solicitor General shows that the envelope containing the May 17, 1979 motion was received by the Post Office of Manila on May 17, 1979. Said letter states: In compliance to your request in your letter dated September 20, 1979 in connection with registered letter No. 3273 addressed to the Clerk of Court, Court of First Instance Malolos, Bulacan, please be informed that it was received by this Office late Friday afternoon, May 18, 1979. The letter was not included in the only morning dispatch of May 19 to Bulacan and was dispatched May 21, 19719, Monday (May 20, being a

Sunday) under the Manila- Malolos Bill No. 202, page 1, line 15. Thus, it is conceded that the envelope containing the registered letter of petitioner's motion for extension to file record on appeal dated May 17, 1979 has on its face the date May 21, 1979 stamped thereon ... . If the aforesaid proof of mailing presented by private respondent is taken into account solely without taking into consideration the letter of postmaster Delfin Celis dated September 25, 1979 ... , then it could be said that petitioner's motion for extension to file record on appeal dated May 17, 1979 was filed out of time. However, the certification of the Postmaster stating that the letter was actually received in the Post Office on May 18, 1979 conclusively shows that such date is the date of mailing, and the date May 21, was thus wrongly stamped thereon by an employee of the Post Office. Petitioner should not be blamed for the mistake committed by the personnel of the Post Office of stamping May 21, 1979 on the envelope of said Registered Letter No. 3273. Petitioner's counsel had nothing to do with the aforesaid mistake that had been committed by the personnel of the Post Office. In resume it can be said with certainty that the records of the Office of the Solicitor General and the Post Office of Manila clearly show that the petitioner's motion for extension dated May 17, 1979 was seasonably filed on May 18, 1979 as the latter was actually the date of its mailing and therefore said date should be deemed as the actual date of its filing before respondent court. At this juncture, it may be stated that undersigned counsel were constrained to seek extension to file record on appeal because of the pressure of work and their need to borrow the records of the case from the trial court. Thus, as early as January 9, 19-i 9, they were borrowing the expediente of the case so as to enable them to prepare an accurate record on appeal. Petitioner in its motion and manifestation of January 9, 1979 stated why it wanted to borrow the expediente of the case at bar, as follows: 3. The records of the undersigned counsel may not be complete as it had authorized the Provincial Fiscal of Bulacan to appear in the hearings before this honorable Court, thus it is possible that the Office of the Solicitor General may not have been furnished copies of Orders of this honorable Court, as well as pleadings that may have been furnished the provincial Fiscal of Bulacan. 4. This being the case, undersigned counsel can not prepare an accurate and concise record on appeal, hence it is necessary that the records of the case be lent to the undersigned counsel pursuant to Sec. 14, Rule 1:36, of the Revised Rules of Court' (pp. 6-7 Motion for Reconsideration [in the CFI of Bulacan]; see pp. 52, 57-58, C.A. rec.),

On April 10, 1979, undersigned counsel reiterated their desire to borrow said expediente but it was not until May 3, 1979 that the expediente of the case consisting of 164 pages were received by the Docket Section of the Office of the Solicitor General. It was only on May 16, 1979 that said expedientewere delivered to undersigned Solicitor, thus compelling him to prepare the May 17, 1979 motion. And for the same reasons, it was only on June 7, 1979 that the record on appeal was filed, which was well within the 30 days extension from May 18, 1979 prayed for in petitioner's motion of May 17, 1979. xxx xxx xxx (pp. 109-113, C.A. rec.). On July 14, 1980, respondent Court of Appeals resolved to require private respondents to comment on the motion for reconsideration within ten (10) days from receipt of the resolution (p. 12 1, C.A. rec.). Earlier, however, or on July 8, 1980, private respondents mailed their opposition to the motion for reconsideration and their waiver to appear for oral argument (pp. 122-123, C.A. rec.), Both were received by the Court of Appeals on July 14, 1980, the very day the resolution requiring private respondents to comment on the motion for reconsideration, was released by the Court of Appeals. In the petition before this Court, the Solicitor General laments the fact that no copies of the aforesaid pleadings of the private respondents were ever served on and received by him (p. 18, rec.). Indeed, said pleadings of the private respondents do not show nor indicate that copies thereof were served on the Solicitor General (pp. 121-123, C.A. rec.). In the aforesaid opposition of private respondents, they claimed that The undersigned counsel merely stated that the date of filing the fifth motion for extension to file record on appeal by the office of the Solicitor General was on May 21, 1979, as shown on the envelope bearing the stamp of the Manila Post Office, which clearly reads 'May 21, 1979 and the undersigned counsel brought to the attention of the lower court that the date of filing of this fifth extension was the date shown when the mailing was made as stamped on the envelope. That there can be no other date than the date stamped on the envelope made by the Manila Post Office when the fifth request for extension of filing the record on appeal was mailed. This fact of the date of mailing, May 21, 1979, was stamped on the envelope. The office of the Solicitor General further alleged: If ... taken into account solely without taking into consideration the letter of the Post Master Delfin Cells, dated September 25, 1979 x x, then it could be said that petitioner's motion for extension to file record on appeal, dated May 17, 1979, was filed out of time.

From the above statement of the Office of the Solicitor General there can never be any abuse in the exercise of judgment as to constitute a grave abuse of discretion. the lower court chose to rely on the date stamped on the envelope by the Manila Post Office rather than considering as paramount a mere letter from the Manila Post Office employee, Delfin Cells. xxx xxx xxx If we are to believe that the stamped date, May 21, 1979, was wrongly stamped by an employee of the Manila Post Office, then thousands of mails received and or mailed on that date were all wrongly stamped. How can the lower court believe that the date May 21, 1979, was merely erroneously stamped on the envelope? The lower court's finding of facts on this regard, must also be sustained. The other reason given by the Office of the Solicitor General was that they have asked for the complete record of the case but that it was only forwarded to their office sometime on May 3, 1979. The record of the case cannot be easily forwarded to the Solicitor General because there was the case of motion for intervention filed in connection with the case. The failure on the part of the court to immediately comply with the request of the office of the Solicitor General cannot be a justifying reason for failure to comply with the rules of court and of the order of filing the record on appeal within the reglementary period, or time given by the court. The office of the Solicitor General gave the Provincial Fiscal of Bulacan the power to handle the case for (them) and the office of the Provincial Fiscal was furnished with all pleadings, orders and other papers of the case. The record therefore of the Office of the Provincial Fiscal can easily be available to them. Besides no less than five (5) extensions of time had been requested and the last one was not acted upon by the Court and yet the Office of the Solicitor General filed the Record on Appeal only on June 17, 1979 should be June 7, 1979), which is far beyond the reglementary period which was May 17, 1979 (should be May 18, 1979). xxx xxx xxx (pp. 123-125, C.A. rec.). On August 15, 1980, respondent Court of Appeals issued a resolution denying the motion for reconsideration, thus: Acting on the Motion for Reconsideration dated June 23, 1980 filed by the Solicitor General and the opposition thereto filed on July 8, 1980 by the respondents and considering that the said motion does not cite new matters

which have not been considered in the decision promulgated on April 29, 1980, the said motion is hereby denied. Petitioner's Motion to Set Case for Oral Argument' dated June 23, 1980 is likewise DENIED. Aforesaid resolution was received by the Solicitor General on August 20, 1980. Hence, this recourse. Petition was filed on October 24, 1980; two extensions of time of thirty (30) days each having been previously asked by and granted to petitioner Republic of the Philippines. On October 29, 1980, WE resolved to require respondents to comment on the petition within ten (10) days from notice of the resolution and at the same time issued a temporary restraining order enjoining respondents from executing, enforcing and/or implementing the decision dated April 28, 1980 issued in CA G.R. No. SP-10081, entitled "Republic of the Philippines, Petitioner, versus Hon. Roque Tamayo, etc., et al., Respondents" of the Court of Appeals, and the Order dated December 8, 1978 issued in Civil Case No. 5257-M, entitled "Republic of the Philippines. Plaintiff, versus Turandot Aldaba, et al., Defendants" of the Court of First Instance of Bulacan, Branch VI at Malolos, Bulacan, (pp. 49-51, rec.). On November 14, 1980, private respondents filed their comment to the petition contending that no abuse of discretion or act in excess of jurisdiction exists as to require a review by this honorable Court (pp. 52-64, rec.). On November 24, 1980, WE resolved to give due course to the petition and to declare the case submitted for decision (p. 65, rec.). But on December 22, 1980, private respondent filed a motion, praying for the outright dismissal of the instant petition on the main ground that the decision of the respondent Court of Appeals sought to be reviewed has already become final and executors hence, unappealable, because this petition was filed out of time as the petitioner's motion for reconsideration iii the Court of Appeals was pro forma (pp. 66-67, rec.). The main issue to be resolved in this case is whether or not respondent Court of Appeals itself committed a grave abuse of discretion in not finding that the respondent trial court committed a grave abuse of discretion in dismissing petitioner's appeal. The questioned orders should be set aside. I. It must be underscored that the basic provisions of the Rules of Court basis of the dismissal of the petitioner's appeal by the Court of First Instance of Bulacan as sustained by the respondent Court of Appeals are Section 13, Rule 41; Where the notice of appeal, appeal bond or record on appeal are not filed within the period of time herein provided, the appeal shall be dismissed; and Section 14, Rule 41; A motion to dismiss an appeal on any of the grounds mentioned in the preceding section may be filed in the Court of First Instance prior to the transmittal of the record to the appellate court.

The Court of First Instance of Bulacan dismissed herein petitioner's appeal on the bases of the foregoing provision upon its finding that the record on appeal of petitioner was filed out of time as it was filed only on June 7, 1979 or twenty (20) days after May 18, 1979, the last day of the appeal period s extended petitioner fifth extension of time of thirty days from May 18, 1979, not having been favorably acted upon by the Court of First Instance of Bulacan upon its finding that the same was also filed late or three days after the last day of the extended appeal period. The implication of the questioned orders of the Court of First Instance is that since the fifth extension of time was filed out of time, no action may be taken thereon by it; hence, petitioner Republic had only up to May 18, 1979 within which to file the record on appeal. Consequently, the filing thereof only on June 7, 1979 was too late. The petitioner, however, herein contends as it did before the Court of First Instance of Bulacan and before the respondent Court of Appeals, that its fifth extension of time was actually filed on May 18, 1979, not on May 21, 1979 as found out by the Court of First Instance and Court of Appeals and in support thereof, pointed to the certification of the postmaster of the Central Office of the Bureau of Posts, dated September 25, 1949 (P. 47, rec.) to the effect that the said motion for extension of time as contained in registered mail No. 3273 addressed to the Clerk of Court of First Instance of Bulacan (Malolos) ... was received by this office late Friday afternoon, May 8, 1979. The letter was not included in the only morning dispatch of May 19, to Bulacan and was dispatched May 21, 1979, Monday (May 20 being a Sunday) under the Manila-Malolos Bill No. 202 page 1, line 15." But the Court of First Instance of Bulacan opined that said certification cannot override the prevailing practice in post offices "that a registered letter when posted is immediately stamped with the date of its receipt, indicating therein the number of the registry, both on the covering envelope itself and on the receipt delivered to the person who delivered the letter to the office" of which it took judicial notice. WE entertain grave doubts that the aforesaid post office practice is a proper subject of judicial notice. Section 1 of Rule 129 on judicial notice provides that "The existence and territorial extent of states, their forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive, and judicial departments of the Philippines, the laws of nature, the measure of time, the geographical divisions and political history of the world and all similar matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions, shall be judicially recognized by the court without the introduction of proof; but the court may receive evidence upon any of the subjects in this section stated, when it shag find it necessary for its own information, and may resort for its aid to appropriate books or documents or reference." Undoubtedly, the post office practice of which the Court of First Instance took judicial notice is not covered by any of the specific instances cited above. Neither can it be classified under "matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions ... . " For a matter to be taken judicial notice of by the courts of law, it must be a subject of common and

general knowledge. In other words, Judicial notice of facts is measured by general knowledge of the same facts. A fact is said to be generally recognized or known when its existence or operation is accepted by the public without qualification or contention. The test is whether the 'act involved is so notoriously known as to make it proper to assume its existence without proof. The fact that a belief is not universal, however, is not controlling for it is very seldom that any belief is accepted by everyone. It is enough that the matters are familiarly known to the majority of mankind or those persons f with the particular matter in question (20 Am Jur 49-50; Martin, Rules of Court 37, Second Edition). Furthermore, a matter may be personally known to the judge and yet tot be a matter of judicial knowledge and vice versa, a matter may not be actually known to an individual judge, and nevertheless be a proper subject of judicial cognizance. The post office practice herein involved is not tested by the aforestated considerations, a proper matter of judicial notice. Moreover, the certification issued by the very postmaster of the post office where the letter containing the questioned motion for extension of time was posted, is a very clear manifestation that the said post office practice is not of unquestionable demonstration. Indeed, the doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take judicial notice is to be exercised by the courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubts upon the subject should be promptly resolved in the negative (31 CJS 522; Martin, Rules of Court 38, Second Edition). It is therefore manifest from the foregoing that the Court of First Instance of Bulacan committed a palpable error amounting to a grave abuse of discretion in relying on the alleged post office practice aforementioned over the uncontroverted certification of the postmaster earlier referred to. That being so, the dismissal of petitioner's appeal therefore lacks factual basis. It should have acted on petitioner's fifth motion for extension of time which WE find to have been filed on time. The records reveal that a favorable action on the aforesaid fifth motion for extension of time is warranted by the following circumstances: (1) the record on appeal was filed by petitioner even before the lower court could consider the questioned motion for extension of time; and private respondents objected to the said motion only after petitioner had filed the record on appeal; (2) the order of the lower court granting the fourth extension of time did not contain any caveat that no further extension shall be allowed; (3) the fact that the CFI records of the case were sent to the Solicitor General only on May 3, 1979 and ostensibly handed to the Solicitor assigned to the case only on May .16, 1979 or barely two (2) days before the expiration of the extended appeal period; and (4) pressure of work in the undermanned Office of the Solicitor General who is the counsel of the National Government and all other governmental agencies and instrumentalities; and (5) and the unconscionable amount of P450,000.00 for a parcel of 1.5 hectares situated in a barrio of Malolos, Bulacan, with only a provisional value of P7,200.00 obviously based upon its assessed value appearing on its tax declaration. No sugar, rice or coconut land of only 15,000 square meters could command such a fabulous price. WE therefore rule that the respondent Court of Appeals gravely abused its discretion in affirming the disputed orders of the Court of First Instance of Bulacan.

II. But even assuming that the motion for extension to file record on appeal dated May 17, 1979 was filed not on May 18, 1979 but on May 21, 1979 as claimed by private respondents, which is a delay of only one (1) working day, May 19 and 20 being Saturday and Sunday, respectively, that circumstance alone would not justify the outright dismissal of the appeal of petitioner Republic of the Philippines, especially so in the light of the undisputed fact that petitioner had already filed with the lower court the record on appeal at the time the questioned dismissal order was issued by the lower court. For, as ruled in one case, "... the delay of four days in filing a notice of appeal and a motion for an extension of time to file a record on appeal can be excused on the basis of equity and considering that the record on appeal is now with the respondent judge. ( Ramos vs. Bagasao, et al., G.R. No. 51552, February 28, 1980, Second Division; emphasis supplied). Moreover, WE have already liberalized in a number of cases the jurisprudence on the matter of perfection of appeals. For one, in De Las Alas vs. Court of Appeals (83 SCRA 200-216 [19781), WE ruled that: ... litigation should, as much as possible, be decided on their merits and not on technicality, and under the circumstances obtaining in this case, We said in the case of Gregorio vs. Court of Appeals (L-4351 1, July 23, 1976, 72 SCRA 120, 126), thus: ... Dismissal of appeals purely on technical grounds is frowned upon where the policy of the courts is to encourage hearing of appeals on their merits. The rules of procedure ought not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not override, substantial justice. If a technical and rigid enforcement of the rules is made, their aim would be defeated. xxx xxx xxx III. Moreover, a special circumstance which is the subject of one of the main issues raised by petitioner in its appeal warrants US to exercise once more OUR exclusive prerogative to suspend OUR own rules or to exempt a particular case from its operation as in the recent case of Republic of the Philippines vs. Court of Appeals, et al. (83 SCRA 459, 478-480 119781), thus: ... The Rules have been drafted with the primary objective of enhancing fair trials and expediting justice. As a corollary, if their application and operation tend to subvert and defeat instead of promote and enhance it, their suspension is justified. In the words of Justice Antonio P. Barredo in his concurring opinion in Estrada vs. Sto. Domingo, '(T)his Court, through the revered and eminent Mr. Justice Abad Santos, found occasion in the case of C. Viuda de Ordoverza v. Raymundo, to lay down for recognition in holding that ' "it is always in the power of the court (Supreme Court) to suspend its own rules or to except a particular case from its operation whenever the purposes of justice require it . . . . .' " (Emphasis supplied). As emphasized by the Solicitor General, if the questioned orders are not annulled and set aside, its enforcement and implementation will result to the prejudice of, and irreparable injury to, public interest." This is so because the Government would lose its opportunity to assail the order of the lower court dated December 8, 1978, the dispositive portion of which reads, as follows:

xxx xxx xxx The joint report filed by the three-man committee charged with the determination of the just compensation of the property herein sought to be condemned is hereby approved, such that the just compensation of the land described in Paragraph 11 of the Complaint is fixed at Thirty Pesos (P30.00) per square meter. The defendant may now withdraw from the Philippine National Bank, Malolos Branch, the sum of P7,200.00 deposited by the Third Regional Equipment Services, Department of Public Highways under Account No. 35109, said sum to be part of the total amount of P450,000.00 (15,000 square meters at P30.00 per square meter), which the Department of Public Highways, Third Regional Equipment Services, Malolos, Bulacan, shall, and is hereby ordered, to pay to the herein defendants as just compensation for the subject property. SO ORDERED (pp. 3-4, Order dated December 8, 1978). It must be stressed at this stage that the Government would lose no less than P425,000.00 if the lower court's order of December 8, 1978 is not scrutinized on appeal. It must be stated that the lower court was without jurisdiction to create a three-man committee because Sec. 5, Rule 67 of the Revised Rules of Court was repealed by P.D. 76 which took effect on December 6, 1972, the salient features of which read, as follows: The "current and fair market value" shall be understood to mean the price of which a willing seller would sell and a willing buyer would buy neither being under abnormal pressure. For purposes of just compensation in cases of private property acquired by the government for public use, the basis shall be the current and fair market value declared by the owner or administrator or such market value as determined by the assessor, whichever is lower. Thus, from December 6, 1972, the effectivity date of PD 76, the just compensation to be paid for private property acquired by the government for public use is the current and fair market value declared by the owner or administrator or such market value as determined by the Assessor whichever is lower. Pursuant to said Decree, the government's obligation to private respondent would only be P24,376.00. The lower court thus had no jurisdiction to fix an amount of just compensation higher than P24,376.00. It follows therefore that the joint report submitted by the three-man committee created by the lower court could not serve as a legal basis for the determination of the just compensation of the property sought to be condemned.

xxx xxx xxx (pp. 19-21, rec.). IV. With respect to the motion to dismiss filed on December 22, 1980 by private respondents, WE find no merit therein. The contention of private respondents that the June 23, 1980 motion for reconsideration of petitioner with the Court of Appeals was pro forma is belied by the results obtained in this petition before US. WHEREFORE, PETITION IS HEREBY GRANTED; THE DECISION DATED APRIL 29, 1980 AND THE RESOLUTION DATED AUGUST 15, 1980 OF THE RESPONDENT COURT OF APPEALS ARE HEREBY ANNULLED AND SET ASIDE; AND THE RESPONDENT COURT OF FIRST INSTANCE OF BULACAN IS HEREBY DIRECTED TO APPROVE PETITIONER'S RECORD ON APPEAL AND TO ELEVATE THE SAME TO THE HONORABLE COURT OF APPEALS. NO COST. SO ORDERED. G.R. No. 108028 July 30, 1996 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CRISTINA M HERNANDEZ, accused-appellant.

FRANCISCO, J.:p Accused-appellant Cristina Hernandez was charged with the crime of illegal recruitment committed in large scale in violating of Article 38 (a) and (b) in relation to Article 13 (b) and (c) of the New Labor Code 1, committed as follows:
That in or about and during the period comprised between December 14, 1988 to December 24, 1988, inclusive in the City of Manila, Philippines, the said accused representing herself to have the capacity to contract, enlist and transport Filipino workers for employment abroad, did then and there willfully and unlawfully for a fee, recruit and promise employment/job placement abroad to the following persons to wit: ROGELIO N. LEGASPI, ULDARICO P. LEGASPI, SONNY P. BERNABE, ARNEL B. MENDOZA, BENITO L. BERNABE, ARNOLD P. VALENZUELA, ARMANDO P. PAGULAYAN, GREGORIO P. MENDOZA, JR., RONALD T. CORREA, DANILO PALAD and ROBERT P. VELASQUEZ (herein known as private complainants) without first 2 having secured the required license or authority from the POEA. (Emphasis supplied.)

Upon arraignment, appellant pleaded not guilty and trial on the merits ensued. Of the fourteen (14) private complainants, four (4) were presented as witnesses for the prosecution, namely: Benito L. Bernabe, Robert P. Velasquez, Gregorio P. Mendoza and Arnel Mendoza. They testified to the following essential facts: Private complainants' first encounter with the appellant was on December 12, 1988 when one Josefa Cinco accompanied them to the office of the Philippine Thai Association,

Inc. (Philippine-Thai) in Ermita, Manila to meet the appellant. Introducing herself as the general manager of Philippine-Thai, appellant asserted that her company recruited workers for placement abroad and asked private complainants if they wanted to work as factory workers in Taipeh. Enticed by the assurance of immediate employment and an $800 per month salary, private complainants applied. Appellant required private complainants to pay placement and passport fees in the total amount of P22,500.00 per applicant, to be paid in three installments, to wit: P1,500 on December 14, 1988, P10,000.00 on December 16, 1988, and P11,000.00 on December 22, 1988. When the complainants-witnesses paid the first two installments, they were issued receipts by Liza Mendoza, the alleged treasurer of Philippine-Thai signed by the latter in the presence of the appellant. The receipts for the last installment paid by them were signed by Liza Mendoza, and the appellant. After having received the entire amount 3 from the witnesses, appellant assured them that they would be able to leave for Taipeh sometime before the end of December, 1988. But contrary to appellant's promise, complainants-witnesses were unable to leave for abroad. They demanded for the return of their money but to no avail. Appellant's unfulfilled promise of employment and her refusal to return the money that had been paid by way of placement and passport fees, triggered the filing of the complaint. For its part, the defense presented as its lone witness, the appellant whose testimony consisted mainly in denying the charges against her. Appellant claimed that she never met any of the complainants nor did she ever recruit any of them. She likewise denied having received money from anyone and asserted that she did not know any Liza Mendoza who is the alleged treasure of Philippine-Thai. Appellant maintained that although she had an office in Ermita Building located at Arquiza Street, Ermita, Manila, the said office belonged to B.C. Island Wood Products Corporation which was engaged in the logging business. However, when questioned further, appellant admitted being the president of Philippine-Thai but only in a nominal capacity, and claimed that as nominee-president, she did not participate in any of its transactions. Appellant likewise insisted that Philippine-Thai was engaged solely in the barong tagalog business. After careful calibration of the evidence presented by the prosecution and the defense, the court a quorendered a decision holding that the defense of "denial" interposed by the accused could not prevail over the positive and clear testimonies of the prosecution witnesses which had established the guilt of the accused beyond reasonable doubt. 4 The dispositive portion of the decision reads: WHEREFORE, premises considered, this Court hereby finds that the accused CRISTINA HERNANDEZ, (sic) guilty beyond reasonable doubt of the crime of illegal recruitment, committed in large scale, as defined in Article 38(a) & (b) of Presidential Decree No. 1412, . . . in relation to Article 13(b) and (c) . . . , accordingly, sentences the accused to suffer the penalty of life imprisonment (RECLUSION PERPETUA) with the accessory penalties provided for by law; to pay a fine of ONE HUNDRED THOUSAND (P100,000.00) PESOS without subsidiary imprisonment in case of insolvency; to return and pay to BENITO L. BERNABE the amount of TWENTY EIGHT

THOUSAND AND FIVE HUNDRED (P28,500) PESOS; to ROBERT P. VELASQUEZ the amount of TWENTY TWO THOUSAND AND FIVE HUNDRED (P22,500.00) PESOS; to GREGORIO P. MENDOZA the amount of TWENTY TWO THOUSAND FIVE HUNDRED (22,500.00) PESOS; to ARNEL MENDOZA the amount of TWENTY TWO THOUSAND FIVE HUNDRED (P22,500.00) PESOS also without subsidiary imprisonment in case of insolvency; and to pay the costs. SO ORDERED.
Manila, Philippines, November 29, 1991.
5

Appellant comes to this Court for the reversal of the judgment of conviction assigning the following errors against the lower court: I THE TRIAL COURT ERRED IN FINDING THE ACCUSED "LIABLE OF (sic) ILLEGAL RECRUITMENT COMMITTED IN A LARGE SCALE AND BY A SYNDICATE (sic)" FOR HAVING "MAINTAINED OFFICE WITHOUT LICENSE OR REGISTRATION FROM THE DEPARTMENT OF LABOR, THRU ITS OFFICE, THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA)." II THE TRIAL COURT ERRED IN TAKING JUDICIAL NOTICE OF THE "FACT THAT ACCUSED CRISTINA M. HERNANDEZ HAD BEEN CHARGED . . . OF ANOTHER ILLEGAL RECRUITMENT . . . DOCKETED AS CRIMINAL CASE NO. 88-62599" AND IN CONSIDERING THE PENDENCY THEREOF AS EVIDENCE OF THE "SCHEME AND STRATEGY ADOPTED BY THE ACCUSED . . . AND PRACTICED WITH THE HELP OF HER AGENTS AND OTHER PERSONS WORKING UNDER THE SHADE OF HER PROTECTION." III
THE TRIAL COURT ERRED IN NOT GIVING CREDENCE OR WEIGHT TO THE 6 DEFENSE OF THE ACCUSED.

The first assignment of error is anchored on the contention that the prosecution failed to prove one of the essential elements of the crime of illegal recruitment that the offender is a non-licensee or non-holder of authority to lawfully engage in the recruitment and placement of workers. 7 The aforementioned element, specifically the fact that neither appellant nor Philippine-Thai was licensed or authorized to recruit workers as shown by the records of the POEA, was the subject of a stipulation proposed by the prosecution and admitted by the defense during trial. Appellant assails as erroneous the reliance placed by the prosecution on the said

stipulation of facts in dispensing with the presentation of evidence to prove the said element of the crime of illegal recruitment. Appellant argues that: (1) the stipulation of facts was not tantamount to an admission by the appellant of the fact of nonpossession of the requisite authority or license from the POEA, but was merely an admission that the Chief Licensing Officer of the POEA, if presented in court, would testify to this fact, and (2) the stipulation of facts is null and void for being contrary to law and public policy. Appellant posits the foregoing arguments to bolster her contention that the stipulation of facts did not relieve the prosecution of its duty to present evidence to prove all the elements of the crime charged to the end that the guilt of the accused may be proven beyond reasonable doubt. At the outset, it should be said that the above contention and the arguments are insignificant in view of the fact that records disclose that the prosecution had in fact presented evidence to prove the said element of the crime of illegal recruitment. "EXHIBIT I", a certification issued by the Chief Licensing Branch of the POEA, attesting to the fact that neither appellant nor Philippine-Thai is licensed/authorized to recruit workers for employment abroad, was offered and admitted in evidence without the objection of the appellant. 8 Although appellant's arguments find no significant bearing in the face of the existence of "EXHIBIT I", they nonetheless require deeper scrutiny and a clear response for future application. Hence, the following discussion. Appellant correctly distinguishes between an admission that a particular witness if presented in court would testify to certain facts, and an admission of the facts themselves. According to the appellant, what was stipulated on between the prosecution and defense counsel at the hearing on June 6, 1990 was "merely that the testimony of the Chief Licensing Officer of the POEA would be to the effect that appellant is not licensed nor authorized to recruit workers", 9 Thus: Prosecutor . . . Before we call on our first witness, we propose some stipulations regarding the testimony of the Chief Licensing Branch of the POEA that Cristina Hernandez is not a (sic) licensed nor authorized by the Department of Labor to recruit workers abroad. Court Would you agree?
Atty. Ulep (Counsel for the Accused): Agreed, Your Honor.
10

She claims that the foregoing clearly indicate that there was no judicial admission of the fact of non-possession of a license/authority but rather a mere admission that the witness, if presented, would testify to such fact. This being the case, it remained incumbent upon the prosecution to present evidence of such fact. To buttress her position, the following was cited to note the distinction:

Suppose a case is set for trial and one of the parties moves for a continuance because of the absence of W, an important witness. His opponent, who is anxious to go to trial; asks what are the facts to which W would testify. The other attorney tells him, adding: "If I consent to the overruling of my motion, will you stipulate that those are the facts?" The attorney who is pressing for trial says: "No but I will stipulate that if W were called in this case as a witness, he would so testify." What is the difference between the two stipulations?
In the first stipulation proposed there is a judicial admission of the facts, and they cannot be contradicted. But the second stipulation proposed will only have the same effect as if 11 the witness had testified to the facts. Such testimony the party is free to contradict.

The distinction, though cogent, is unfortunately inapplicable to the case at bar. Conveniently omitted from the appellant's reply chief is the ensuing statement made by the court after counsel for the accused, Atty. Ulep agreed to the stipulation proposed by the prosecution, to wit: Atty. Ulep (counsel for the accused): Agreed, Your Honor. Court
The prosecution and the defense agreed to stipulate/admit that from the record of the POEA Licensing and Regulation Office, Dept. of Labor and Employment, accused Cristina Hernandez/Phil. etc., Ass. . . . is neither licensed nor authorized by the office to recruit workers overseas abroad and that if the duly authorized representative from the POEA Administration is to take the witness stand, he will confirm to this fact as borne by 12 the records. (Emphasis supplied.)

From the foregoing, it is evident that the prosecution and the defense counsel stipulated on two things: that ". . . from the record of the POEA, . . . accused Cristina Hernandez, Phil. etc. Ass. . . . is neither licensed nor authorized by that office to recruit workers for overseas abroad and that if the duly authorized representative from the POEA Administration (sic) is to take the witness stand, he will confirm to this fact . . . ." 13 The claim that the lower court mistakenly interpreted defense counsel's acquiescence to the prosecution's proposed stipulation as an admission of non-possession of the requisite POEA license or authority is belied by the fact that after the above enunciation by the court, no objection was interposed by defense counsel. Appellant further contends that granting arguendo that defense counsel had in fact agreed to the above stipulation of facts, the same is null and void for being contrary to the wellestablished rule that a stipulation of facts is not allowed in criminal cases. To bolster this contention, appellant cited the consistent ruling of this Court on the matter. Thus, as held in the case of U.S. vs. Donato: 14
Agreements between attorneys for the prosecution and for the defense in criminal cases, by which it is stipulated that certain witnesses, if present, would testify to certain facts 15 prevent a review of the evidence by the Supreme Court and arc in violation of the law.

The above ruling was reiterated in a subsequent case where the accused was convicted solely on the basis of an agreement between the fiscal and the counsel for the accused that certain witnesses would testify confirming the complaint in all its parts. In reversing the judgment of conviction, this Court held that:
It is neither proper nor permissible to consider a case closed, or to render judgment therein, by virtue of an agreement entered into between the provincial fiscal and the counsel for the accused with reference to facts, some of which are favorable to the defense, and others related to the prosecution, without any evidence being adduced or testimony taken from the witnesses mentioned in the agreement; such practice is not authorized and defeats the purposes of criminal law; it is an open violation of the rules of 16 criminal procedure . . . .

The rule prohibiting the stipulation of facts in criminal cases is grounded on the fundamental right of the accused to be presumed innocent until proven guilty, and corollary duty of the prosecution to prove the guilt of the accused beyond reasonable doubt. It is therefor advanced that the prosecution being duty-bound to prove all the elements of the crime, may not be relieve of this obligation by the mere expedient of stipulating with defense counsel on a matter constitutive of an essential elements of the crime charged. The rationale behind the proscription against this class of agreements between prosecution and defense was enunciated in the case of U.S. vs. Manlimos: 17
It is not supposed to be within the knowledge or competence of counsel to predict what a proposed witness shall say under the sanction of his oath and the test of crossexamination. A conviction for crime should not rest upon mere conjecture. Nor is it possible for a trial court to weigh with exact nicety the contradictory declaration of witnesses not produced so as to be subjected to its observation and its judgment as to 18 their credibility.

However, in the light of recent changes in our rules on criminal procedure, particularly the pre-trial provisions found in Rule 118, the prohibition against a stipulation of facts in criminal cases no longer holds true. Rule 118 provides the following: Sec. 1. Pre-trial; when proper To expedite trial, where the accused and counsel agree, the court shall conduct a pre-trial conference on the matters enunciated in Section 2 hereof, without impairing the rights of the accused. Sec. 2. Pre-trial conference; subjects . . . The pre-trial conference shall consider the following: (a) Plea bargaining; (b) Stipulation of facts; xxx xxx xxx (Emphasis supplied) By virtue of the foregoing rule, a stipulation facts in criminal cases is now expressly sanctioned by law. In further pursuit of the objective of expediting trial by dispensing with the presentation of evidence on matters that the accused is willing to admit, a stipulation of

fact should be allowed not only during pre-trial but also and with more reason, during trial proper itself. Parenthetically, although not expressly sanctioned under the old rules of court, a stipulation of facts by the parties in criminal cases has long been allowed and recognized as declarations constituting judicial admissions, hence, binding upon the parties. In the case of People vs. Mapa 19 where the accused was charged with illegal possession of firearms, the prosecution and the defense stipulated on the fact that the accused was found in possession of gun without the requisite permit or license. More at point is the case of People vs. Bocar 20 wherein the fiscal proposed the admission by the accused of the affidavits and other exhibits already presented by the prosecution to dispense with oral testimonies on the matter. Holding that the admissions made by the parties were binding, this Court stated that:
. . . [T]here is nothing unlawful or irregular about the above procedure. The declarations constitute judicial admission, which are binding on the parties, by virtue of which the prosecution dispensed with the introduction of additional evidence and the defense waived the right to contest or dispute the veracity of the statements contained in the 21 exhibits. (Emphasis supplied.)

American jurisprudence has established the acceptability of the practice of stipulating during the trial of criminal cases, and categorically stated in People vs. Hare 22 that: The record discloses that the defense counsel stipulated to what certain witnesses would testify if they were present in court. . . .
. . . The defendant contends that it was error for his counsel to make these stipulations. This court has held that an accused may by stipulation waive the necessity of a proof of all or any part of the case which the people have alleged against him and that having done so, he cannot complain in this Court of evidence which he has stipulated into the 23 record.

The collorally issue left for the determination of this Court is whether or not Section 4 of Rule 118requiring an agreement or admission made or entered during the pre-trial conference to be reduced in writing and signed by the accused and his counsel before the same may be used in evidence against the accused-equally applies to a stipulation of facts made during trial. We resolved this issue in the negative. A stipulation of facts entered into by the prosecution and defense counsel during trial in open court is automatically reduced into writing and contained in the official transcript of the proceedings had in court. The conformity of the accused in the form of his signature affixed thereto is unnecessary in view of the fact that: ". . . an attorney who is employed to manage a party's conduct of a lawsuit . . . has prima facie authority to make relevant admissions by pleadings, by oral or written stipulation, . . . which unless allowed to be withdrawn are conclusive." 24 (Emphasis supplied.) In fact, "judicial admission are frequently those of counsel or of the attorney of record, who is, for the purpose of the trial, the agent of his client. When such admissions are made . . . for the purpose of dispensing with proof of some fact, . . . they bind the client, whether made during, or even after, the trial." 25 The foregoing find basis in the general rule that a client is bound by the acts of his counsel who represents him. 26For all intents and purposes, the acts of a lawyer in the defense of a

case are the acts of his client. The rule extends even to the mistakes and negligence committed by the lawyer except only when such mistakes would result in serious injustice to the client. 27 No cogent reason exists to make such exception in this case. It is worth noting that Atty. Ulep, appellant's counsel in the lower court, agreed to the stipulation of facts proposed by the prosecution not out of mistake nor inadvertence, but obviously because the said stipulation of facts was also in conformity of defense's theory of the case. It may be recalled that throughout the entire duration of the trial, appellant staunchly denied ever having engaged in the recruitment business either in her personal capacity or through Philippine-Thai. Therefore, it was but logical to admit that the POEA records show that neither she nor Philippine-Thai was licensed or authorized to recruit workers. It is true that the rights of an accused during trial are given paramount importance in our laws on criminal procedure. Among the fundamental rights of the accused is the right to confront and cross-examine the witnesses against him. 28 But the right of confrontation guaranteed and secured to the accused is a personal privilege which may be waived. 29 Thus, in the case of U.S. vs. Anastasio, 30 this Court deemed as a waiver of the right of confrontation, the admission by the accused that witnesses if present would testify to certain facts stated in the affidavit of the prosecution. 31 In the same vein, it may be said that such an admission is a waiver of the right of an accused to present evidence on his behalf. Although the right to present evidence is guaranteed by no less than the Constitution itself for the protection of the accused, this right may be waived expressly or impliedly. 32 This is in consonance with the doctrine of waiver which recognizes that ". . . everyone has a right to waive, and agree to waive, the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, if it can be dispensed with and relinquished without infringing on any public right, and without detriment to the community at large." 33 The abovementioned doctrine is squarely applicable to the case at bar. Appellant was never prevented from presenting evidence contrary to the stipulation of facts. If appellant believed that the testimony of the Chief Licensing Officer of the POEA would be beneficial to her case, then it is the defense who should have presented him. Her continuous failure to do so during trial was a waiver of her right to present the pertinent evidence to contradict the stipulation of facts and establish her defense. In view of the foregoing, the stipulation of facts proposed during trial by prosecution and admitted by defense counsel is tantamount to a judicial admission by the appellant of the facts stipulated on. Controlling, therefore, is Section 4, Rule 129 of the Rules of Court which provides that: An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made. We now go to appellant's second and third assignment of errors. In her second assignment of error, appellant makes much ado of the "judicial notice" taken by the lower court of the fact that appellant had been charged with another illegal recruitment case, 34 and in

considering the pendency thereof as evidence of the scheme and strategy adopted by the accused. Appellant cites a violation of Section 3 of Rule 129 of the Rules of Court which provides that before the court may take judicial notice of any matter, the parties shall be heard thereon if such matter is decisive of a material issue in the case. It is claimed that the lower court never announced its intention to take judicial notice of the pendency of the other illegal recruitment case nor did it allow the accused to be heard thereon. It is true that as a general rule, courts are not authorized to take judicial notice of the contents of the records of other cases, even when such cases have been tried or are pending in the same court, and notwithstanding the fact that both cases may have been tried or are actually pending before the same judge. 35 However, this rule is subject to the exception that:
. . . in the absence of objection and as a matter of convenience to all parties, a court may properly treat all or any part of the original record of the case filed in its archives as read into the records of a case pending before it, when with the knowledge of the opposing party, reference is made to it, by name and number or in some other manner by which it 36 is sufficiently designated, . . . (emphasis supplied.)

The judicial notice taken by the lower court of the pendency of another illegal recruitment case against the appellant falls squarely under the above exception in view of the fact that it was the appellant herself who introduced evidence on the matter when she testified in open court as follows: Q: You mean to say . . . by the way, where (sic) were you at the NBI when Mrs. Cinco inquired from you about placement abroad? A: I was just invited by the personnel of the NBI and I was not allowed to go home. Q: Whey were you invited by the NBI? A: They told me that there was a complaint against me. Q: Complaint about what? A: The same case. Q: You mean illegal recruitment also? A: Yes, sir. xxx xxx xxx Q: You made mention that an illegal recruitment case which was supposed to be the cause of your detention at the NBI . . .

I am not referring to this case, Mrs. Hernandez what happened to that case, what is the status of that case? A: It is also in this sala.
COURT: It is already submitted for decision. 7
3

Even assuming, however, that the lower court improperly took judicial notice of the pendency of another illegal recruitment case against the appellant, the error would not be fatal to the prosecution's cause. The judgment of conviction was not based on the existence of another illegal recruitment case filed against appellant by a different group of complainants, but on the overwhelming evidence against her in the instant case. Anent the last assignment of error, suffice it to say that we do not find any compelling reason to reverse the findings of the lower court that appellant's bare denials cannot overthrow the positive testimonies of the prosecution witnesses against her. Well established is the rule that denials if unsubstantiated by clear and convincing evidence are negative, self-serving evidence which deserve no weight in law and cannot be given greater evidentiary weight over the testimony of credible witnesses who testify on affirmative matters. 38 That she did not merely deny, but likewise raised as an affirmative defense her appointment as mere nominee-president of Philippine-Thai is a futile attempt at exculpating herself and is of no consequence whatsoever when weighed against the positive declarations of witnesses that it was the appellant who executed the acts of illegal recruitment as complained of. Finally, under Article 39 of the New Labor Code, the penalty for illegal recruitment committed in large scale is life imprisonment and a fine of ONE HUNDRED THOUSAND PESOS (P100,000.00). As previously held by this Court, life imprisonment is not synonymous with reclusion perpetua. 39 The lower court erred in imposing "the penalty of life imprisonment (reclusion perpetua) with the accessory penalties provided for by law; . . . 40 (Emphasis supplied) WHEREFORE, appellant's conviction of the crime of illegal recruitment in large scale is hereby AFFIRMED, and the penalty imposed MODIFIED as follows: the court sentences the accused to suffer the penalty of life imprisonment and to pay a fine of ONE HUNDRED THOUSAND (P100,000.00) PESOS without subsidiary imprisonment in case of insolvency; to return and pay to BENITO L. BERNABE the amount of TWENTY EIGHT THOUSAND FIVE HUNDRED (P28,500.00) PESOS; to ROBERT P. VELASQUEZ the amount of TWENTY TWO THOUSAND FIVE HUNDRED (P22,500.00) PESOS; to GREGORIO P. MENDOZA the amount of TWENTY TWO THOUSAND FIVE HUNDRED (P22,500.00) PESOS; to ARNEL MENDOZA the amount of TWENTY TWO THOUSAND FIVE HUNDRED (P22,000.00) PESOS also without subsidiary imprisonment in case of insolvency; and to pay the costs. SO ORDERED.

[G.R. No. 134972. March 22, 2001]

SPS. ERNESTO and MINA CATUNGAL, petitioners, vs. DORIS HAO, respondent. DECISION
KAPUNAN, J.:

This is a petition for review of the Decision of the Court of Appeals dated 10 March 1998 and Resolution dated 30 July 1998 in the case entitled Doris Hao vs. Sps. Ernesto and Mina Catungal docketed as CA-G.R. SP No. 46158. Said decision affirmed with modification the judgment rendered by the Regional Trial Court. The antecedents of this case are as follows: On December 28, 1972, the original owner, Aniana Galang, leased a three-storey building situated at Quirino Avenue, Baclaran, Paraaque, Metro Manila, to the Bank of the Philippine Islands (BPI) for a period of about fifteen (15) years, to expire on June 20, 1986. During the existence of the lease, BPI subleased the ground floor of said building to respondent Doris Hao. On August 24, 1984, Galang and respondent executed a contract of lease on the second and third floors of the building. The lease was for a term of four (4) years commencing on August 15, 1984 and ending on August 15, 1988. On August 15, 1986, petitioner spouses Ernesto and Mina Catungal bought the property from Aniana Galang. Invoking her right of first refusal purportedly based on the lease contract between her and Aniana Galang, respondent filed a complaint for Annulment of Sale with Damages docketed as Civil Case No. 88-491 of the Regional Trial Court (RTC) of Makati, Metro Manila. Meanwhile, the lease agreement between BPI and Galang expired. Upon expiration of the lease agreements, petitioner spouses sent demand letters to respondent for her to vacate the building. The demand letters were unheeded by respondent causing petitioners to file two complaints for ejectment, docketed as Civil Cases Nos. 7666 and 7667 of the Metropolitan Trial Court (MeTC) of Paraaque, Metro Manila. The institution of the ejectment cases prompted respondent to file an action for injunction docketed as Civil Case No. 90-758 of the RTC of Makati, to stop the MeTC of Paraaque from proceeding therewith pending the settlement of the issue of ownership raised in Civil Case No. 88-491. These two cases for annulment of sale

and for injunction were also consolidated before Branch 63 of the RTC of Makati which rendered a Decision dated September 19, 1991, granting the injunction and annulling the contract of sale between Aniana Galang and petitioners. On appeal,[1] the Court of Appeals reversed and set aside the decision of the RTC and the complaints in Civil Cases Nos. 88-491 and 90-758 were accordingly dismissed. Not satisfied, respondent elevated the above decision of the CA before this Court. We, however, denied respondent's petition on April 10, 1996.[2] The MeTC of Paraaque, after the reversal of the decision in Civil Case No. 90758 for injunction, proceeded with the trial of the ejectment cases. On January 22, 1997, the MeTC of Paraaque rendered a Decision, the dispositive portion of which reads: In view of the foregoing, judgment is hereby rendered ordering the defendant Doris T. Hao who is in actual possession of the property and all persons claiming rights under her to vacate the premises in question and to pay the plaintiffs the amount of P20,000.00 a month from June 28, 1988, until she finally vacates the premises and to pay attorneys fees of P20,000.00. With costs against the defendant.[3] Petitioners filed a motion for clarificatory or amended judgment on the ground that although MeTC "ordered the defendant to vacate the entire subject property, it only awarded rent or compensation for the use of said property and attorney's fees for said ground floor and not the entire subject property. Compensation for the use of the subject property's second and third floors and attorney's fees as prayed for in Civil Case No. 7767 were not awarded."[4] In response to said motion, the MeTC issued an Order dated March 3, 1997, the dispositive portion of which reads: In view of the foregoing, the Decision of this Court is hereby clarified in such a way that the dispositive portion would read as follows: in view of the foregoing, judgment is hereby rendered ordering the defendant Doris T. Hao who is in actual possession of the property and all persons claiming rights under her to vacate the premises and to pay the plaintiffs the amount of P8,000.00 a month in Civil Case No. 7666 for the use and occupancy of the first floor of the premises in question from June 28, 1998 until she finally vacates the premises and to pay the plaintiff a rental of P5,000.00 a month in Civil Case No. 7667 from June 28, 1988, until she finally vacates the premises and to pay attorneys fees of P20,000.00. With costs against defendant. So ordered.[5]

Petitioners sought reconsideration of the above order, praying that respondent be ordered to pay P20,000.00 monthly for the use and occupancy of the ground floor and P10,000.00 each monthly for the second and third floors. Respondent, on the other hand, filed a notice of appeal. Instead of resolving the motion for reconsideration, on May 7, 1997, the MeTC of Paraaque issued an Order, elevating the case to the Regional Trial Court: Considering the Motion for Reconsideration of the Order of this Court dated March 3, 1997 and the Comment and Opposition thereto of the counsel for the defendant, the Court finds that the said Motion for Reconsideration should already be addressed to the Regional Trial Court considering that whatever disposition that this Court will award will still be subject to the appeal taken by the defendant and considering further that the supersedeas bond posted by the defendant covered the increased rental.[6] On September 30, 1997, the RTC of Paraaque, Branch 259, rendered a Decision modifying that of the MeTC, the dispositive portion of which reads: In the Light of the foregoing, the appealed decision, being in accordance with law, is hereby affirmed as to the order to vacate the property in question and modified as to the amount of rentals which is hereby increased to P20,000.00 a month for the ground floor starting June 28, 1988 and P10,000.00 a month for the second floor and also P10,000.00 a month for the third floor (or) a total of P40,000.00 monthly rentals commencing June 28, 1988 until the subject property has been vacated and possession thereof turner [sic] over to the plaintiffs-appellees; to pay attorneys fees in the amount of P20,000.00; and with costs.[7] In her Motion dated October 6, 1997, respondent sought a reconsideration of the above ruling of the RTC. The same was denied on November 25, 1997. Respondent elevated her case to the Court of Appeals. The CA rendered the Decision subject of this petition the dispositive portion thereof reads: Wherefore, the decision appealed from is hereby modified by reducing the amount of rentals for both the second and third floors from P20,000.00 to P10,000.00 monthly. With this modification, the judgment below is AFFIRMED in all other respects.[8] The parties filed their respective motions for reconsideration to the Court of Appeals. Petitioners asked that the decision of the Regional Trial Court fixing the total monthly rentals at P40,000.00 be sustained. On the other hand, respondent sought a revival of the decision of the MeTC on the ground that since petitioners did

not interpose an appeal from the amended judgment of the MeTC, the RTC could not validly increase the amount of rentals awarded by the former. In its Resolution dated 30 July 1998, the Court of Appeals resolved the parties motions for reconsideration in favor of the respondent. It ruled that the motion for reconsideration filed by the petitioners before the MeTC was a prohibited pleading under the Rules of Summary Procedure. Such being the case, said motion for reconsideration did not produce any legal effect and thus the amended judgment of the MeTC had become final and executory insofar as the petitioners are concerned. The dispositive portion of the CA's resolution reads as follows: Wherefore, the decision appealed from is hereby MODIFIED by reducing the monthly rentals for the first/ground floor from P20,000.00 to P8,000.00 and for the second and third floors from P10,000.00 each to P5,000.00 for both floors. With this modification the judgment below is affirmed in all other respects. No pronouncement as to costs. So ordered.[9] Petitioners now come before this Court assigning the following errors:
A.

IN THE ASSAILED DECISION, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE FINDINGS OF THE REGIONAL TRIAL COURT BY USING AS BASIS FOR REDUCING THE RENTAL ONLY THE EVIDENCE SUBMITTED BY THE PARTIES AND IGNORING CIRCUMSTANCES OF WHICH THE REGIONAL TRIAL COURT PROPERLY TOOK JUDICIAL NOTICE.
B.

IN THE ASSAILED DECISION, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ITS FINDINGS THAT THE REGIONAL TRIAL COURT HAD NO JURISDICTION TO MODIFY THE APPEALED JUDGMENT BY INCREASING THE AWARD OF MONTHLY RENTALS FROM P13,000.00 TO P40,000.00.[10] We required respondent to comment on the petition.[11] In her Comment/Compliance, respondent contends that the petition should be dismissed and the resolution of the case should be based on the following issues:
1. DID THE RESPONDENT APPELLATE COURT COMMITTED [sic] ANY REVERSIBLE ERROR WHEN IT CONSIDERED PETITIONERS' "MOTION FOR

RECONSIDERATION" (ANNEX "I" - PETITION) FILED WITH THE MTC-COURT AS A PROHIBITVE [sic] PLEADING IN A SUMMARY PROCEDURE CASE SUCH AS THE ONE AT BAR[?] 2. DID THE RESPONDENT APPELLATE COURT COMMITTED [sic] ANY REVERSIBLE ERROR WHEN IT RESOLVED TO RESTORE, REINSTATE, AFFIRM AND UPHOLD THE MTC - AMENDED JUDGMENT OF MARCH 3, 1997 FIXING THE TOTAL AWARD OF P13,000.00 GROUNDED ON A PROHIBITIVE [sic] PLEADING AND FAILURE TO FILE A NOTICE OF APPEAL[?] 3. DID THE APPELLATE COURT COMMITTED [sic] ANY REVERSIBLEERROR WHEN IT RESOLVED TO SUSTAIN RESPONDENT'S POSITION CONSISTENT WITH THE LAW AND JURISPRUDENCE THAT FOR PETITIONERS' FAILURE TO APPEAL AND HAVING FILED A PROHIBITIVE [sic] PLEADING, THEY CANNOT ASK FOR AFFIRMATIVE RELIEF SUCH AS INCREASE IN RENTAL[?][12]

There is no question that after the expiration of the lease contracts which respondent contracted with Aniana Galang and BPI, she lost her right to possess the property since, as early as the actual expiration date of the lease contract, petitioners were not negligent in enforcing their right of ownership over the property. While respondent was finally evicted from the leased premises, the amount of monthly rentals which respondent should pay the petitioners as forced lessors of said property from 20 June 1988 (for the ground floor) and 15 August 1988 until 6 January 1998 (for the second and third floors), or a period of almost ten years remains to be resolved. Petitioners, in the main, posit that there should be a reinstatement of the decision of the regional trial court which fixed the monthly rentals to be paid by herein respondent at the total of P40,000.00, P20,000.00 for the occupancy of the first floor, and P10,000.00 each for the occupancy of the second and third floors of the building, effective after the lapse of the original lease contract between respondent and the original owner of the building. On the other hand, respondent insists on the ruling of the Metropolitan Trial Court, which was thereafter reinstated by the Court of Appeals in its 30 July 1998 Resolution, that the monthly rental rates of only P8,000.00 for the first floor and P5,000.00 for each of the second and third floors should prevail. At the outset, it should be recalled that there existed no consensual lessor-lessee relationship between the parties. At most, what we have is a forced lessor-lessee relationship inasmuch as the respondent, by way of detaining the property without the consent of herein petitioners, was in unlawful possession of the property belonging to petitioner spouses. We cannot allow the respondent to insist on the payment of a measly sum of P8,000 for the rentals of the first floor of the property in question and P5,000.00 for each of the second and the third floors of the leased premises. The plaintiff in an

ejectment case is entitled to damages caused by his loss of the use and possession of the premises.[13] Damages in the context of Section 17, Rule 70 of the 1997 Rules of Civil Procedure is limited to rent or fair rental value or the reasonable compensation for the use and occupation of the property.[14] What therefore constitutes the fair rental value in the case at bench? In ruling that the increased rental rates of P40,000.00 should be awarded the petitioners, the regional trial court based its decision on the doctrine of judicial notice. The RTC held, thus: While this Court is fully in agreement with the Court of Origin that plaintiffsappellees have the better right to the possession of the premises in question being the present owners and the contract of lease between the former owner and herein defendant-appellant had already expired, the amount of rentals as laid down in the Clarificatory Order dated 3 March 1997 is inadequate, if not unreasonable. The Court a quo misappreciated the nature of the property, its location and the business practice in the vicinity and indeed committed an error in fixing the amount of rentals in the aforementioned Order. Said premises is situated along Quirino Avenue, a main thoroughfare in Barangay Baclaran, Paraaque, Metro Manila, a fully developed commercial area and the place where the famous shrine of the Mother of Perpetual Help stands. Withal, devotees, traders, tourists and practically people from all walks of life visit said barangay making it suitable for commerce, not to mention thousand of residents therein. Needless to say, every square meter of said community is valuable for all kinds of business or commerce of man. Further, considering that the questioned property has three floors and strategically located along the main road and consistent with the prevailing rental rates in said business area which is between P20,000.00 and P30,000.00 as testified to by Divina Q. Roco, a real estate agent and Mina Catungal, this Court finds the amount of P20,000.00 a month for the ground floor and P10,000.00 a month each for the second floor and third floor or a total of P40,000.00 monthly rentals as appropriate and reasonable rentals for the use and occupation of said premises. Finally, worth mentioning here as parallel is [the] ruling of the Supreme Court in the case of Manila Bay Club Corporation vs. Court of Appeals, 245 SCRA 715 and 731-732 citing Licmay vs. Court of Appeals, 215 SCRA 1 (1992) and Commander Realty Inc. v. Court of Appeals, 168 SCRA 181. It reads as follows: It is worth stressing at this juncture that the trial court had the authority to fix the reasonable value for the continued use and occupancy of the leased premises after the termination of the lease contract, and that it was not bound by the stipulated rental in the contract of lease since it is equally settled that upon termination or expiration of

the Contract of Lease, the rental stipulated therein may no longer be the reasonable value for the use and occupation of the premises as a result or by reason of the change or rise in values. Moreover, the trial court can take judicial notice of the general increase in rentals of real estate especially of business establishments like the leased building owned by the private respondents.[15] We find that the RTC correctly applied and construed the legal concept of judicial notice in the case at bench. Judicial knowledge may be defined as the cognizance of certain facts which a judge under rules of legal procedure or otherwise may properly take or act upon without proof because they are already known to him, or is assumed to have, by virtue of his office.[16] Judicial cognizance is taken only of those matters that are commonly known. The power of taking judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the negative.[17] Matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of jurisdiction of the court. The RTC correctly took judicial notice of the nature of the leased property subject of the case at bench based on its location and the commercial viability. The above quoted assessment by the RTC of the Baclaran area, where the subject property is located, is fairly grounded. Furthermore, the RTC also had factual basis in arriving at the said conclusion, the same being based on testimonies of witnesses, such as real estate broker Divina Roco and the petitioner Mina Catungal. The RTC rightly modified the rental award from P13,000.00 to P40,000.00, considering that it is settled jurisprudence that courts may take judicial notice of the general increase in rentals of lease contract renewals much more with business establishments. Thus, We held in Manila Bay Club Corporation vs. Court of Appeals:[18] It is worth stressing at this juncture that the trial court had the authority to fix the reasonable value for the continued use and occupancy of the leased premises after the termination of the lease contract, and that it was not bound by the stipulated rental in the contract of lease since it is equally settled that upon termination or expiration of the contract of lease, the rental stipulated therein may no longer be the reasonable value for the use and occupation of the premises as a result or by reason of the change or rise in values. Moreover, the trial court can take judicial notice of the general increase in rentals of real estate especially of business establishments like the leased building owned by the private respondent.[19]

The increased award of rentals ruled by the RTC is reasonable given the circumstances of the case at bench. We note that respondent was able to deny petitioners the benefits, including possession, of their rightful ownership over the subject property for almost a decade. The Court of Appeals failed to justify its reduction of the P40,000.00 fair rental value as determined by the RTC. Neither has respondent shown that the rental pegged by the RTC is exorbitant or unconscionable. This is because the burden of proof to show that the rental demanded is unconscionable or exorbitant rests upon private respondent as the lessee.[20] Here, respondent neither discharged this burden when she omitted to present any evidence at all on what she considers to be fair rental value, nor did she controvert the evidence submitted by petitioners by way of testimonies of the real estate broker and petitioner Mina Catungal. Thus, in Sia v. CA, we ruled: xxx On the contrary, the records bear out that the P5,000.00 monthly rental is a reasonable amount, considering that the subject lot is prime commercial real property whose value has significantly increased and that P5,000.00 is within the range of prevailing rental rates in that vicinity. Moreover, petitioner has not proffered controverting evidence to support what he believes to be the fair rental value of the leased building since the burden of proof to show that the rental demanded is unconscionable or exorbitant rests upon the lessee. Thus, here and now we rule, as we did in the case of Manila Bay Club v. Court of Appeals, that petitioner having failed to prove its claim of excessive rentals, the valuation made by the Regional Trial Court, as affirmed by the respondent Court of Appeals, stands.[21] The Court of Appeals merely anchored its decision to reduce the P40,000.00 rental on procedural grounds. According to the Court of Appeals, the motion for reconsideration filed by petitioners before the MeTC is a prohibited pleading under the Rule on Summary Procedure and did not have any effect in stalling the running of the period to appeal the decision nor could it be considered as notice of appeal and consequently this affected the elevation of the case to the RTC. Not having appealed the case to the RTC, the amended judgment of the MeTC fixing the rental rate at P13,000.00 is final and executory as far as petitioners are concerned. We disagree. A reading of the order issued by the MeTC will show that said court elevated the issue on the amount of rentals raised by the petitioner to the RTC because the appeal of respondent had already been perfected, thus: Considering the Motion for Reconsideration of the Order of this Court dated March 3, 1997 and the Comment and Opposition thereto of the counsel for the defendant, the Court finds the said Motion for Reconsideration should already be addressed to the Regional Trial Court considering that whatever disposition that this Court will award

will still be subject to the appeal taken by the defendant and considering further that the supersedeas bond posted by the defendant covered the increased rental. In order that this case will be immediately forwarded to the Regional Trial Court in view of the appeal of the defendant, the Court deemed it wise not to act on the said motion for reconsideration and submit the matter to the Regional Trial Court who has the final say on whether the rental or the premises in question will be raised or not. It will be to the advantage of both parties that this Court refrain from acting on the said Motion for Reconsideration so as to expedite the remanding (sic) of this Court to the Regional Trial Court.[22] When the MeTC referred petitioners motion to the RTC for its disposition, respondent could have opposed such irregularity in the proceeding. This respondent failed to do. Before this Court, respondent now insists that the petition should be denied on the ground that the Motion for Reconsideration filed before the MeTC is a prohibited pleading and hence could not be treated as a notice of appeal. Respondent is precluded by estoppel from doing so. To grant respondents prayer will not only do injustice to the petitioners, but also it will make a mockery of the judicial process as it will result in the nullity of the entire proceedings already had on a mere technicality, a practice frowned upon by the Court. Our ruling in Martinez, et al. vs. De la Merced, et al.[23] is illustrative : xxx In fine, these are acts amounting to a waiver of the irregularity of the proceedings. For it has been consistently held by this Court that while lack of jurisdiction may be assailed at any stage, a party's active participation in the proceedings before a court without jurisdiction will estop such party from assailing such lack of jurisdiction. The Court of Appeals in the assailed Decision correctly observed that the peculiar circumstances attendant to the ejectment cases warrant departure from the presumption that a party who did not interject an appeal is satisfied with the adjudication made by the lower court: As regard the issue on the propriety of the increase in the award of damages/rentals made by the RTC, the Court notes that, while respondent spouses did not formally appeal the decision in the ejectment cases, their motion for reconsideration assailing the clarificatory order reducing the award of damages/rentals was, by order of the MTC, referred to the RTC for appropriate action. Reason for such action is stated in the Order of May 7, 1997, thus: xxx

Neither petitioner nor respondent spouses assailed the above order. In fact, in their appeal memorandum, respondent spouses reiterated their claim, first ventilated in their motion for reconsideration dated March 24, 1997, that the MTC grievously erred in finding that plaintiffs-appellees are only entitled to a meager monthly rental of P8,000.00 for the ground floor and P5,000.00 for the second and third floors. Hence, while the entrenched procedure in this jurisdiction is that a party who has not himself appealed cannot obtain from the appellate court affirmative relief other than those granted in the decision of the lower court, the peculiar circumstances attendant to the ejectment cases warrant a departure therefrom. The rule is premised on the presumption that a party who did not interpose an appeal is satisfied with the adjudication made by the lower court. Respondent spouses, far from showing satisfaction with the clarificatory order of March 3, 1997, assailed it in their motion for reconsideration which, however, was referred to the RTC for appropriate action in view of the appeal taken by the petitioner. Clearly, the increase in the damages/rentals awarded by the MTC was an issue the RTC could validly resolve in the ejectment cases.[24] Respondent, argues that ejectment cases are tried under the Revised Rule on Summary Procedure,[25] hence, the motion for reconsideration filed by petitioner was a prohibited pleading and could not take the place of the required notice of appeal. The argument by respondent is misleading. Simply because the case was one for ejectment does not automatically mean that the same was triable under the Rules of Summary Procedure. At the time of the filing of the complaint by petitioner in 1989, said Rules provide: SECTION 1. SCOPE - THIS RULE SHALL GOVERN THE PROCEDURE IN THE METROPOLITAN TRIAL COURTS, THE MUNICIPAL CIRCUIT TRIAL COURTS IN THE FOLLOWING CASES: A. CIVIL CASES: (1) CASES OF FORCIBLE ENTRY AND UNLAWFUL DETAINER, EXCEPT WHERE THE QUESTION OF OWNERSHIP IS INVOLVED, OR WHERE THE DAMAGES OR UNPAID RENTALS SOUGHT TO BE RECOVERED BY THE PLAINTIFF EXCEED TWENTY THOUSAND PESOS (P20,000.00) AT THE TIME OF THE FILING OF COMPLAINT. x x x In their complaint, petitioners prayed, among others, for rentals for the period covering June 1988 to April 1989, at a rate of P20,000.00 for the first floor alone, as well as P10,000.00 for attorney's fees. Clearly, considering the amount of rentals and

damages claimed by petitioners, said case before the MeTC was not governed by the Rules on Summary Procedure. Said case was governed by the ordinary rules where the general proposition is that the filing of a motion for reconsideration of a final judgment is allowed. In the interest of substantial justice, in this particular case, we rule that the MeTC did not err in treating the motion for reconsideration filed by petitioner as a notice of appeal. Finally, respondent questions why petitioners would want to reinstate the RTC decision when in fact they had already applied for a writ of execution of the 8 March 1997 Decision. Respondent is of the view that since petitioners had already moved for the execution of the decision awarding a smaller amount of damages or fair rental value, the same is inconsistent with a petition asking for a greater fair rental value and, therefore, a possible case of unjust enrichment in favor of the petitioners. We are not persuaded. In order to avoid further injustice to a lawful possessor, an immediate execution of a judgment is mandated and the courts duty to order such execution is practically ministerial.[26] In City of Manila, et al. vs. CA, et al.,[27] We held that Section 8 (now Section 19), Rule 70, on execution pending appeal, also applies even if the plaintifflessor appeals where, as in that case, judgment was rendered in favor of the lessor but it was not satisfied with the increased rentals granted by the trial court, hence the appeal xxx. As above discussed, the petitioners have long been deprived of the exercise of their proprietary rights over the leased premises and the rightful amount of rentals at the rate of P40,000.00 a month. Consequently, petitioners are entitled to accrued monthly rentals of P27,000.00, which is the difference between P40,000.00 awarded by the Regional Trial Court and P13,000.00 awarded by the MeTC and affirmed by the Court of Appeals. Said amount of P27,000.00 should rightly be the subject of another writ of execution being distinct from the subject of the first writ of execution filed by petitioners. The Court also awards interest in favor of petitioners. In Eastern Shipping Lines, Inc. vs. Court of Appeals, we gave the following guidelines in the award of interest: xxx II With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest

from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. The back rentals in this case being equivalent to a loan or forbearance of money, the interest due thereon in twelve percent (12%) per annum from the time of extrajudicial demand on September 27, 1988. WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners by reinstating the decision of the RTC, with modifications, and ordering respondent to further pay: 1. The sum of Twenty Seven Thousand Pesos (P27,000.00), corresponding to the difference between the P40,000.00 awarded by the Regional Trial Court and the P13,000.00 awarded by the Metropolitan Trial Court, as monthly arrears, computed from respondents unlawful detainer, 20 June 1988 (for the ground floor) and 15 August 1988 (for the second and third floors) of the subject property until the time she vacated the premises on 7 January 1998; 2. Legal interest of twelve percent (12%) per annum on the foregoing sum from the date of notice of demand on 27 September 1988 until fully paid; 3. The sum of Twenty Thousand Pesos (P20,000.00) as and for attorneys fees and; 4. The costs of suit. SO ORDERED.
A.M. No. RTJ-92-876 September 19, 1994 STATE PROSECUTORS, complainants, vs. JUDGE MANUEL T. MURO, Regional Trial Court, Branch 54, Manila, respondent.

PER CURIAM: In assaying the requisite norms for qualifications and eminence of a magistrate, legal authorities place a premium on how he has complied with his continuing duty to know the law. A quality thus considered essential to the judicial character is that of "a man of learning who spends tirelessly the weary hours after midnight acquainting himself with the great body of traditions and the learning of the law; is profoundly learned in all the learning of the law; and knows how to use that learning." 1

Obviously, it is the primary duty of a judge, which he owes to the public and to the legal profession, to know the very law he is supposed to apply to a given controversy. He is called upon to exhibit more than just a cursory acquaintance with the statutes and procedural rules. Party litigants will have great faith in the administration of justice if judges cannot justly be accused of apparent deficiency in their grasp of the legal principles. For, service in the judiciary means a continuous study and research on the law from beginning to end. 2 In a letter-complaint 3 dated August 19, 1992, respondent Judge Manuel T. Muro of the Regional Trial Court (RTC) of Manila, Branch 54, was charged by State Prosecutors Nilo C. Mariano, George C. Dee and Paterno V. Tac-an with ignorance of the law, grave misconduct and violations of Rules 2.01, 3.01 and 3.02 of the Code of Judicial Conduct, committed as follows: 1. That on August 13, 1992, respondent judge issued an Order dismissing eleven (11) cases (docketed as Crim. Cases Nos. 92-101959 to 92- 101969, inclusive) filed by the undersigned complainant prosecutors (members of the DOJ Panel of Prosecutors) against the accused Mrs. Imelda Romualdez Marcos, for Violation of Central Bank Foreign Exchange Restrictions, as consolidated in CB Circular No. 960, in relation to the penal provisions of Sec. 34 of R.A. 265, as amended, . . .; 2. That respondent Judge issued his Order solely on the basis of newspaper reports (August 11, 1992 issues of the Philippine Daily Inquirer and the Daily Globe) concerning the announcement on August 10, 1992 by the President of the Philippines of the lifting by the government of all foreign exchange restrictions and the arrival at such decision by the Monetary Board as per statement of Central Bank Governor Jose Cuisia; 3. That claiming that the reported announcement of the Executive Department on the lifting of foreign exchange restrictions by two newspapers which are reputable and of national circulation had the effect of repealing Central Bank Circular No. 960, as allegedly supported by Supreme Court decisions . . ., the Court contended that it was deprived of jurisdiction, and, therefore, motu, prop(r)io had to dismiss all the eleven cases aforementioned "for not to do so opens this Court to charges of trying cases over which it has no more jurisdiction;" 4. That in dismissing aforecited cases on August 13, 1992 on the basis of a Central Bank Circular or Monetary Board Resolution which as of date hereof, has not even been officially issued, and basing his Order/decision on a mere newspaper account of the advance announcement made by the President of the said fact of lifting or liberalizing foreign exchange controls, respondent judge acted prematurely and in indecent haste, as he had no way of determining the full intent of the new CB Circular or Monetary Board resolution, and whether the same provided for exception, as in the case of persons who had pending criminal cases before the courts for violations of Central Bank Circulars and/or regulations previously issued on the matter;

5. That respondent Judge's arrogant and cavalier posture in taking judicial notice purportedly as a matter of public knowledge a mere newspaper account that the President had announced the lifting of foreign exchange restrictions as basis for his assailed order of dismissal is highly irregular, erroneous and misplaced. For the respondent judge to take judicial notice thereof even before it is officially released by the Central Bank and its full text published as required by law to be effective shows his precipitate action in utter disregard of the fundamental precept of due process which the People is also entitled to and exposes his gross ignorance of the law, thereby tarnishing public confidence in the integrity of the judiciary. How can the Honorable Judge take judicial notice of something which has not yet come into force and the contents, shape and tenor of which have not yet been published and ascertained to be the basis of judicial action? The Honorable Judge had miserably failed to "endeavor diligently to ascertain the facts" in the case at bar contrary to Rule 3.02 of the Code of Judicial Conduct constituting Grave Misconduct; 6. That respondent Judge did not even ha(ve) the prudence of requiring first the comment of the prosecution on the effect of aforesaid Central Bank Circular/Monetary Board resolution on the pending cases before dismissing the same, thereby denying the Government of its right to due process; 7. That the lightning speed with which respondent Judge acted to dismiss the cases may be gleaned from the fact that such precipitate action was undertaken despite already scheduled continuation of trial dates set in the order of the court (the prosecution having started presenting its evidence . . .) dated August 11, 1992 to wit: August 31, September 3, 10, 21, & 23 and October 1, 1992, all at 9:30 o'clock in the morning, in brazen disregard of all notions of fair play, thereby depriving the Government of its right to be heard, and clearly exposing his bias and partiality; and 8. That, in fact, the motive of respondent Judge in dismissing the case without even waiting for a motion to quash filed by the counsel for accused has even placed his dismissal Order suspect. Pursuant to a resolution of this Court dated September 8, 1992, respondent judge filed his comment, 4contending, inter alia, that there was no need to await publication of the Central Bank (CB) circular repealing the existing law on foreign exchange controls for the simple reason that the public announcement made by the President in several newspapers of general circulation lifting foreign exchange controls was total, absolute, without qualification, and was immediately effective; that having acted only on the basis of such announcement, he cannot be blamed for relying on the erroneous statement of the President that the new foreign exchange rules rendered moot and academic the cases filed against Mrs. Marcos, and which was corrected only on August 17, 1992 but published in the newspapers on August 18, 1992, and only after respondent judge had issued his order of dismissal dated August 13, 1992; that the President was ill-advised by his advisers and, instead of rescuing the Chief Executive from embarrassment by assuming responsibility for errors in the latter's announcement, they chose to toss the blame for the consequence of their failures to

respondent judge who merely acted on the basis of the announcements of the President which had become of public knowledge; that the "saving clause" under CB Circular No. 1353 specifically refers only to pending actions or investigations involving violations of CB Circular No. 1318, whereas the eleven cases dismissed involved charges for violations of CB Circular No. 960, hence the accused cannot be tried and convicted under a law different from that under which she was charged; that assuming that respondent judge erred in issuing the order of dismissal, the proper remedy should have been an appeal therefrom but definitely not an administrative complaint for his dismissal; that a mistake committed by a judge should not necessarily be imputed as ignorance of the law; and that a "court can reverse or modify a doctrine but it does not show ignorance of the justices or judges whose decisions were reversed or modified" because "even doctrines initiated by the Supreme Court are later reversed, so how much more for the lower courts?" He further argued that no hearing was necessary since the prosecution had nothing to explain because, as he theorized, "What explanation could have been given? That the President was talking 'through his hat' (to use a colloquialism) and should not be believed? That I should wait for the publication (as now alleged by complainants), of a still then nonexistent CB circular? . . . As it turned out, CB Circular No. 3153 (sic) does not affect my dismissal order because the said circular's so-called saving clause does not refer to CB Circular 960 under which the charges in the dismissed cases were based;" that it was discretionary on him to take judicial notice of the facts which are of public knowledge, pursuant to Section 2 of Rule 129; that the contention of complainants that he acted prematurely and in indecent haste for basing his order of dismissal on a mere newspaper account is contrary to the wordings of the newspaper report wherein the President announced the lifting of controls as an accomplished fact, not as an intention to be effected in the future, because of the use of the present perfect tense or past tense "has lifted," not that he "intends to lift," foreign exchange controls. Finally, respondent judge asseverates that complainants who are officers of the Department of Justice, violated Section 6, Rule 140 of the Rules of Court which provides that "proceedings against judges of first instance shall be private and confidential" when they caused to be published in the newspapers the filing of the present administrative case against him; and he emphasizes the fact that he had to immediately resolve a simple and pure legal matter in consonance with the admonition of the Supreme Court for speedy disposition of cases. In their reply 5 and supplemental reply, 6 complainants aver that although the saving clause under Section 16 of CB Circular No. 1353 made specific reference to CB Circular No. 1318, it will be noted that Section 111 of Circular No. 1318, which contains a saving clause substantially similar to that of the new circular, in turn refers to and includes Circular No. 960. Hence, whether under Circular No. 1318 or Circular No. 1353, pending cases involving violations of Circular No. 960 are excepted from the coverage thereof. Further, it is alleged that the precipitate dismissal of the eleven cases, without according the prosecution the opportunity to file a motion to quash or a comment, or even to show cause why the cases against accused Imelda R. Marcos should not be dismissed, is clearly reflective of respondent's partiality and bad faith. In effect, respondent judge acted as if he were the advocate of the accused.

On December 9, 1993, this Court issued a resolution referring the complaint to the Office of the Court Administrator for evaluation, report and recommendation, pursuant to Section 7, Rule 140 of the Rules of Court, as revised, there being no factual issues involved. The corresponding report and recommendation, 7 dated February 14, 1994, was submitted by Deputy Court Administrator Juanito A. Bernad, with the approval of Court Administrator Ernani Cruz-Pao. The questioned order 8 of respondent judge reads as follows: These eleven (11) cases are for Violation of Central Bank Foreign Exchange Restrictions as consolidated in CB Circular No. 960 in relation to the penal provision of Sec. 34 of R.A. 265, as amended. The accused Mrs. Imelda R. Marcos pleaded not guilty to all these cases; apparently the other accused in some of these cases, Roberto S. Benedicto, was not arrested and therefore the Court did not acquire jurisdiction over his person; trial was commenced as against Mrs. Marcos. His Excellency, the President of the Philippines, announced on August 10, 1992 that the government has lifted all foreign exchange restrictions and it is also reported that Central Bank Governor Jose Cuisia said that the Monetary Board arrived at such decision (issue of the Philippine Daily Inquirer, August 11, 1992 and issue of the Daily Globe of the same date). The Court has to give full confidence and credit to the reported announcement of the Executive Department, specially from the highest official of that department; the Courts are charged with judicial notice of matters which are of public knowledge, without introduction of proof, the announcement published in at least the two newspapers cited above which are reputable and of national circulation. Per several cases decided by the Supreme Court (People vs. Alcaras, 56 Phil. 520, People vs. Francisco, 56 Phil. 572, People vs. Pastor, 77 Phil. 1000, People vs. Crisanto Tamayo, 61 Phil. 225), among others, it was held that the repeal of a penal law without re-enactment extinguishes the right to prosecute or punish the offense committed under the old law and if the law repealing the prior penal law fails to penalize the acts which constituted the offense defined and penalized in the repealed law, the repealed law carries with it the deprivation of the courts of jurisdiction to try, convict and sentence persons charged with violations of the old law prior to its repeal. Under the aforecited decisions this doctrine applies to special laws and not only to the crimes punishable in the Revised Penal Code, such as the Import Control Law. The Central Bank Circular No. 960 under which the accused Mrs. Marcos is charged is considered as a penal law because violation thereof is penalized with specific reference to the provision of Section 34 of Republic Act 265, which penalizes violations of Central Bank Circular No. 960, produces the effect cited in the Supreme Court decisions and since according to the decisions that repeal deprives the Court of jurisdiction, this Court motu proprio dismisses all the eleven (11) cases as a forestated in the caption, for

not to do so opens this Court to charges of trying cases over which it has no more jurisdiction. This order was subsequently assailed in a petition for certiorari filed with the Court of Appeals, entitled "People of the Philippines vs. Hon. Manuel T. Muro, Judge, RTC of Manila, Br. 54 and Imelda R. Marcos," docketed as CA-G.R. SP No. 29349. When required to file her comment, private respondent Marcos failed to file any. Likewise, after the appellate court gave due course to the petition, private respondent was ordered, but again failed despite notice, to file an answer to the petition and to show cause why no writ of preliminary injunction should issue. Eventually, on April 29, 1993, the Court of Appeals rendered a decision 9 setting aside the order of August 13, 1992, and reinstating Criminal Cases Nos. 92-101959 to 92-101969. In finding that respondent judge acted in excess of jurisdiction and with grave abuse of discretion in issuing the order of dismissal, the appellate court held that: The order was issued motu proprio, i.e., without any motion to dismiss filed by counsel for the accused, without giving an opportunity for the prosecution to be heard, and solely on the basis of newspaper reports announcing that the President has lifted all foreign exchange restrictions. The newspaper report is not the publication required by law in order that the enactment can become effective and binding. Laws take effect after fifteen days following the completion of their publication in the Official Gazette or in a newspaper of general circulation unless it is otherwise provided (Section 1, Executive Order No. 200). The full text of CB Circular 1353, series of 1992, entitled "Further Liberalizing Foreign Exchange Regulation" was published in the August 27, 1992 issue of the Manila Chronicle, the Philippine Star and the Manila Bulletin. Per certification of the CB Corporate Affairs Office, CB Circular No. 1353 took effect on September 2 . . . . Considering that respondent judge admittedly had not seen the official text of CB Circular No. 1353, he was in no position to rule judiciously on whether CB Circular No. 960, under which the accused Mrs. Marcos is charged, was already repealed by CB Circular No. 1353. . . . xxx xxx xxx A cursory reading of the . . . provision would have readily shown that the repeal of the regulations on non-trade foreign exchange transactions is not absolute, as there is a provision that with respect to violations of former regulations that are the subject of pending actions or investigations, they shall be governed by the regulations existing at the time the cause of action (arose). Thus his conclusion that he has lost jurisdiction over the criminal cases is precipitate and hasty. Had he awaited the filing of a motion to dismiss by the accused, and given opportunity for the prosecution to comment/oppose the same, his resolution would have been the result of deliberation, not speculation.

I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the negative. 10 Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. 11 The provincial guide in determining what facts may be assumed to be judicially known is that of notoriety. 12 Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. 13 To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. 14 This is because the court assumes that the matter is so notorious that it will not be disputed. 15 But judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he is not authorized to make his individual knowledge of a fact, not generally or professionally known, the basis of his action. Judicial cognizance is taken only of those matters which are "commonly" known. 16 Things of "common knowledge," of which courts take judicial notice, may be matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. 17 Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person. 18 Respondent judge, in the guise of exercising discretion and on the basis of a mere newspaper account which is sometimes even referred to as hearsay evidence twice removed, took judicial notice of the supposed lifting of foreign exchange controls, a matter which was not and cannot be considered of common knowledge or of general notoriety. Worse, he took cognizance of an administrative regulation which was not yet in force when the order of dismissal was issued. Jurisprudence dictates that judicial notice cannot be taken of a statute before it becomes effective. 19 The reason is simple. A law which is not yet in force and hence, still inexistent, cannot be of common knowledge capable of ready and unquestionable demonstration, which is one of the requirements before a court can take judicial notice of a fact. Evidently, it was impossible for respondent judge, and it was definitely not proper for him, to have taken cognizance of CB Circular No. 1353, when the same was not yet in force at the time the improvident order of dismissal was issued. II. Central Bank Circular No. 1353, which took effect on September 1, 1992, further liberalized the foreign exchange regulations on receipts and disbursements of residents arising from non-trade and trade transactions. Section 16 thereof provides for a saving clause, thus:

Sec. 16. Final Provisions of CB Circular No. 1318. - All the provisions in Chapter X of CB Circular No. 1318 insofar as they are not inconsistent with, or contrary to the provisions of this Circular, shall remain in full force and effect: Provided, however, that any regulation on non-trade foreign exchange transactions which has been repealed, amended or modified by this Circular, violations of which are the subject of pending actions or investigations, shall not be considered repealed insofar as such pending actions or investigations are concerned, it being understood that as to such pending actions or investigations, the regulations existing at the time the cause of action accrued shall govern. Respondent judge contends that the saving clause refers only to the provisions of Circular No. 1318, whereas the eleven criminal cases he dismissed involve a violation of CB Circular No. 960. Hence, he insists, Circular No. 960 is deemed repealed by the new circular and since the former is not covered by the saving clause in the latter, there is no more basis for the charges involved in the criminal cases which therefore warrant a dismissal of the same. The contention is patently unmeritorious. Firstly, the second part of the saving clause in Circular No. 1353 explicitly provides that "any regulation on non-trade foreign transactions which has been repealed, amended or modified by this Circular, violations of which are the subject of pending actions or investigations, shall not be considered repealed insofar as such pending actions or investigations are concerned, it being understood that as to such pending actions or investigations, theregulations existing at the time the cause of action accrued shall govern." The terms of the circular are clear and unambiguous and leave no room for interpretation. In the case at bar, the accused in the eleven cases had already been arraigned, had pleaded not guilty to the charges of violations of Circular No. 960, and said cases had already been set for trial when Circular No. 1353 took effect. Consequently, the trial court was and is supposed to proceed with the hearing of the cases in spite of the existence of Circular No. 1353. Secondly, had respondent judge only bothered to read a little more carefully the texts of the circulars involved, he would have readily perceived and known that Circular No. 1318 also contains a substantially similar saving clause as that found in Circular No. 1353, since Section 111 of the former provides: Sec. 111. Repealing clause. - All existing provisions of Circulars 365, 960 and 1028, including amendments thereto, with the exception of the second paragraph of Section 68 of Circular 1028, as well as all other existing Central Bank rules and regulations or parts thereof, which are inconsistent with or contrary to the provisions of this Circular, are hereby repealed or modified accordingly: Provided, however, that regulations, violations of which are the subject of pending actions or investigations, shall be considered repealed insofar as such pending actions or investigations are concerned, it being understood that as to such pending actions or investigations, the regulations existing at the time the cause of action accrued shall govern.

It unequivocally appears from the section above quoted that although Circular No. 1318 repealed Circular No. 960, the former specifically excepted from its purview all cases covered by the old regulations which were then pending at the time of the passage of the new regulations. Thus, any reference made to Circular No. 1318 necessarily involves and affects Circular No. 960. III. It has been said that next in importance to the duty of rendering a righteous judgment is that of doing it in such a manner as will beget no suspicion of the fairness and integrity of the judge. 20 This means that a judge should not only render a just, correct and impartial decision but should do so in such a manner as to be free from any suspicion as to its fairness and impartiality and as to his integrity. While a judge should possess proficiency in law in order that he can competently construe and enforce the law, it is more important that he should act and behave in such a manner that the parties before him should have confidence in his impartiality. Thus, it is not enough that he decides cases without bias and favoritism. Nor is it sufficient that he in fact rids himself of prepossessions. His actuations should moreover inspire that belief. Like Caesar's wife, a judge must not only be pure but beyond suspicion. 21 Moreover, it has always heretofore been the rule that in disposing of controverted cases, judges should show their full understanding of the case, avoid the suspicion of arbitrary conclusion, promote confidence in their intellectual integrity and contribute useful precedents to the growth of the law. 22 A judge should be mindful that his duty is the application of general law to particular instances, that ours is a government of laws and not of men, and that he violates his duty as a minister of justice under such a system if he seeks to do what he may personally consider substantial justice in a particular case and disregards the general law as he knows it to be binding on him. Such action may have detrimental consequences beyond the immediate controversy. He should administer his office with due regard to the integrity of the system of the law itself, remembering that he is not a depository of arbitrary power, but a judge under the sanction of the law. 23 These are immutable principles that go into the very essence of the task of dispensing justice and we see no reason why they should not be duly considered in the present case. The assertion of respondent judge that there was no need to await publication of Circular No. 1353 for the reason that the public announcement made by the President in several newspapers of general circulation lifting foreign exchange controls is total, absolute, without qualification, and immediately effective, is beyond comprehension. As a judge of the Regional Trial Court of Manila, respondent is supposed to be well-versed in the elementary legal mandates on the publication of laws before they take effect. It is inconceivable that respondent should insist on an altogether different and illogical interpretation of an established and well-entrenched rule if only to suit his own personal opinion and, as it were, to defend his indefensible action. It was not for him to indulge or even to give the appearance of catering to the at-times human failing of yielding to first impressions. 24 He having done so, in the face of the foregoing premises, this Court is hard put to believe that he indeed acted in good faith. IV. This is not a simple case of a misapplication or erroneous interpretation of the law. The very act of respondent judge in altogether dismissing sua sponte the eleven criminal cases without even a motion to quash having been filed by the accused, and without at least

giving the prosecution the basic opportunity to be heard on the matter by way of a written comment or on oral argument, is not only a blatant denial of elementary due process to the Government but is palpably indicative of bad faith and partiality. The avowed desire of respondent judge to speedily dispose of the cases as early as possible is no license for abuse of judicial power and discretion, 25 nor does such professed objective, even if true, justify a deprivation of the prosecution's right to be heard and a violation of its right to due process of law. 26 The lightning speed, to borrow the words of complainants, with which respondent judge resolved to dismiss the cases without the benefit of a hearing and without reasonable notice to the prosecution inevitably opened him to suspicion of having acted out of partiality for the accused. Regardless of how carefully he may have evaluated changes in the factual situation and legal standing of the cases, as a result of the newspaper report, the fact remains that he gave the prosecution no chance whatsoever to show or prove that it had strong evidence of the guilt of the accused. To repeat, he thereby effectively deprived the prosecution of its right to due process. 27 More importantly, notwithstanding the fact that respondent was not sure of the effects and implications of the President's announcement, as by his own admission he was in doubt whether or not he should dismiss the cases, 28 he nonetheless deliberately refrained from requiring the prosecution to comment thereon. In a puerile defense of his action, respondent judge can but rhetorically ask: "What explanation could have been given? That the President was talking 'through his hat' and should not be believed? That I should wait for the publication of a still then non- existent CB Circular?" The pretended cogency of this ratiocination cannot stand even the minutest legal scrutiny. In order that bias may not be imputed to a judge, he should have the patience and circumspection to give the opposing party a chance to present his evidence even if he thinks that the oppositor's proofs might not be adequate to overthrow the case for the other party. A display of petulance and impatience in the conduct of the trial is a norm of conduct which is inconsistent with the "cold neutrality of an impartial judge." 29 At the very least, respondent judge acted injudiciously and with unjustified haste in the outright dismissal of the eleven cases, and thereby rendered his actuation highly dubious. V. It bears stressing that the questioned order of respondent judge could have seriously and substantially affected the rights of the prosecution had the accused invoked the defense of double jeopardy, considering that the dismissal was ordered after arraignment and without the consent of said accused. This could have spawned legal complications and inevitable delay in the criminal proceedings, were it not for the holding of the Court of Appeals that respondent judge acted with grave abuse of discretion amounting to lack of jurisdiction. This saved the day for the People since in the absence of jurisdiction, double jeopardy will not set in. To stress this point, and as acaveat to trial courts against falling into the same judicial error, we reiterate what we have heretofore declared: It is settled doctrine that double jeopardy cannot be invoked against this Court's setting aside of the trial court's judgment of dismissal or acquittal where the prosecution which represents the sovereign people in criminal cases is denied due process. . . . .

Where the prosecution is deprived of a fair opportunity to prosecute and prove its case, its right to due process is thereby violated.
The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted of their jurisdiction. Thus, the violation of the State's right to due process raises a serious jurisdictional issue . . . which cannot be glossed over or disregarded at will. Where the denial of the fundamental right of due process is apparent, a decision 30 rendered in disregard of that right is void for lack of jurisdiction . . . .

It is also significant that accused Marcos, despite due notice, never submitted either her comment on or an answer to the petition for certiorari as required by the Court of Appeals, nor was double jeopardy invoked in her defense. This serves to further underscore the fact that the order of dismissal was clearly unjustified and erroneous. Furthermore, considering that the accused is a prominent public figure with a record of influence and power, it is not easy to allay public skepticism and suspicions on how said dismissal order came to be, to the consequent although undeserved discredit of the entire judiciary. VI. To hold a judge liable for rendering a manifestly unjust order through inexcusable negligence or ignorance, it must be clearly shown that although he has acted without malice, he failed to observe in the performance of his duty that diligence, prudence and care which the law is entitled to exact in the rendering of any public service. Negligence and ignorance are inexcusable if they imply a manifest injustice which cannot be explained by a reasonable interpretation, and even though there is a misunderstanding or error of the law applied, it nevertheless results logically and reasonably, and in a very clear and indisputable manner, in the notorious violation of the legal precept. 31 In the present case, a cursory perusal of the comment filed by respondent judge reveals that no substantial argument has been advanced in plausible justification of his act. He utterly failed to show any legal, factual, or even equitable justification for the dismissal of the eleven criminal cases. The explanation given is no explanation at all. The strained and fallacious submissions therein do not speak well of respondent and cannot but further depreciate his probity as a judge. On this point, it is best that pertinent unedited excerpts from his comment 32 be quoted by way of graphic illustration and emphasis: On the alleged ignorance of the law imputed to me, it is said that I issued the Order dismissing the eleven (11) cases against Mrs. Imelda R. Marcos on the basis of newspaper reports referred to in paragraph 2 of the letter complaint without awaiting the official publication of the Central Bank Circular. Ordinarily a Central Bank Circular/Resolution must be published in the Official Gazette or in a newspaper of general circulation, but the lifting of "all foreign exchange controls" was announced by the President of the Philippines WITHOUT QUALIFICATIONS; as published in the Daily Globe, August 11, 1992" the government has lifted ALL foreign exchange controls," and in the words of the Philippine Daily Inquirer report of the same date "The government yesterday LIFTED the LAST remaining restrictions on foreign exchange transactions, . . ." (emphasis in both quotations supplied) not only the President made the announcement but also the Central Bank Governor Jose Cuisia joined in the announcement by saying that "the Monetary Board arrived at the decision after noting how the "partial liberalization" initiated early this year worked."

Therefore, because of the ABSOLUTE lifting of ALL restrictions on foreign exchange transactions, there was no need to await the publication of the repealing circular of the Central Bank. The purpose of requiring publication of laws and administrative rules affecting the public is to inform the latter as to how they will conduct their affairs and how they will conform to the laws or the rules. In this particular case, with the total lifting of the controls, there is no need to await publication. It would have been different if the circular that in effect repealed Central Bank Circular No. 960, under which the accused was charged in the cases dismissed by me, had provided for penalties and/or modified the provisions of said Circular No. 960. The Complainants state that the lifting of controls was not yet in force when I dismissed the cases but it should be noted that in the report of the two (2) newspapers aforequoted, the President's announcement of the lifting of controls was stated in the present perfect tense (Globe) or past tense (Inquirer). In other words, it has already been lifted; the announcement did not say that the government INTENDS to lift all foreign exchange restrictions but instead says that the government "has LIFTED all foreign exchange controls," and in the other newspaper cited above, that "The government yesterday lifted the last remaining restrictions on foreign exchange transactions". The lifting of the last remaining exchange regulations effectively cancelled or repealed Circular No. 960. The President, who is the Chief Executive, publicly announced the lifting of all foreign exchange regulations. The President has within his control directly or indirectly the Central Bank of the Philippines, the Secretary of Finance being the Chairman of the Monetary Board which decides the policies of the Central Bank. No official bothered to correct or qualify the President's announcement of August 10, published the following day, nor made an announcement that the lifting of the controls do not apply to cases already pending, not until August 17 (the fourth day after my Order, and the third day after report of said order was published) and after the President said on August 17, reported in the INQUIRER's issue of August 18, 1992, that the "new foreign exchange rules have nullified government cases against Imelda R. Marcos, telling reporters that the charges against the widow of former President Marcos "have become moot and academic" because of new ruling(s) which allow free flow of currency in and out of the country" (Note, parenthetically, the reference to "new rules" not to "rules still to be drafted"). The INQUIRER report continues: "A few hours later, presidential spokeswoman Annabelle Abaya said, RAMOS (sic) had "corrected himself'." "He had been belatedly advised by the Central Bank Governor Jose Cuisia and Justice Secretary Franklin Drilon that the Monetary Board Regulation excluded from its coverage all criminal cases pending in court and such a position shall stand legal scrutiny', Mrs. Abaya, said." I will elaborate on two points:

1. If the President was wrong in making the August 10 announcement (published in August 11, 1992, newspapers) and in the August 17 announcement, SUPRA, and thus I should have relied on the Presidential announcements, and there is basis to conclude that the President was at the very least ILL-SERVED by his financial and legal advisers, because no one bothered to advise the President to correct his announcements, not until August 17, 1992, a few hours after the President had made another announcement as to the charges against Imelda Marcos having been rendered moot and academic. The President has a lot of work to do, and is not, to my knowledge, a financier, economist, banker or lawyer. It therefore behooved his subalterns to give him timely (not "belated") advice, and brief him on matters of immediate and far-reaching concerns (such as the lifting of foreign exchange controls, designed, among others to encourage the entry of foreign investments). Instead of rescuing the Chief Executive from embarrassment by assuming responsibility for errors in the latter's announcement, these advisers have chosen to toss the blame for the consequence of their failing to me, who only acted on the basis of announcements of their Chief, which had become of public knowledge. xxx xxx xxx The Court strongly feels that it has every right to assume and expect that respondent judge is possessed with more than ordinary credentials and qualifications to merit his appointment as a presiding judge in the Regional Trial Court of the National Capital Judicial Region, stationed in the City of Manila itself. It is, accordingly, disheartening and regrettable to note the nature of the arguments and the kind of logic that respondent judge would want to impose on this Court notwithstanding the manifest lack of cogency thereof. This calls to mind similar scenarios and how this Court reacted thereto. In one case, an RTC Judge was administratively charged for acquitting the accused of a violation of CB Circular No. 960 despite the fact that the accused was apprehended with US$355,349.00 while boarding a plane for Hongkong, erroneously ruling that the State must first prove criminal intent to violate the law and benefit from the illegal act, and further ordering the return of US$3,000.00 out of the total amount seized, on the mistaken interpretation that the CB circular exempts such amount from seizure. Respondent judge therein was ordered dismissed from the government service for gross incompetence and ignorance of the law. 33 Subsequently, the Court dismissed another RTC judge, with forfeiture of retirement benefits, for gross ignorance of the law and for knowingly rendering an unjust order or judgment when he granted bail to an accused charged with raping an 11-year old girl, despite the contrary recommendation of the investigating judge, and thereafter granted the motion to dismiss the case allegedly executed by the complainant. 34 Similarly, an RTC judge who was described by this Court as one "who is ignorant of fairly elementary and quite familiar legal principles and administrative regulations, has a marked penchant for applying unorthodox, even strange theories and concepts in the adjudication of controversies, exhibits indifference to and even disdain for due process and the rule of law,

applies the law whimsically, capriciously and oppressively, and displays bias and impartiality," was dismissed from the service with forfeiture of all retirement benefits and with prejudice to reinstatement in any branch of the government or any of its agencies or instrumentalities. 35 Still in another administrative case, an RTJ judge was also dismissed by this Court for gross ignorance of the law after she ordered, in a probate proceeding, the cancellation of the certificates of title issued in the name of the complainant, without affording due process to the latter and other interested parties. 36 Only recently, an RTC judge who had been reinstated in the service was dismissed after he acquitted all the accused in four criminal cases for illegal possession of firearms, on the ground that there was no proof of malice or deliberate intent on the part of the accused to violate the law. The Court found him guilty of gross ignorance of the law, his error of judgment being almost deliberate and tantamount to knowingly rendering an incorrect and unjust judgment. 37 ACCORDINGLY, on the foregoing premises and considerations, the Court finds respondent Judge Manuel T. Muro guilty of gross ignorance of the law. He is hereby DISMISSED from the service, such dismissal to carry with it cancellation of eligibility, forfeiture of leave credits and retirement benefits, and disqualification from reemployment in the government service. 38 Respondent is hereby ordered to CEASE and DESIST immediately from rendering any judgment or order, or continuing any judicial action or proceeding whatsoever, effective upon receipt of this decision. SO ORDERED. Narvasa, Cruz, Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug and Kapunan, JJ., concur. Bidin, is on official leave.

G.R. No. 152392

May 26, 2005

EXPERTRAVEL & TOURS, INC., petitioner, vs. COURT OF APPEALS and KOREAN AIRLINES, respondent. DECISION CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 61000 dismissing the petition for certiorari and mandamus filed by Expertravel and Tours, Inc. (ETI). The Antecedents Korean Airlines (KAL) is a corporation established and registered in the Republic of South Korea and licensed to do business in the Philippines. Its general manager in the Philippines is Suk Kyoo Kim, while its appointed counsel was Atty. Mario Aguinaldo and his law firm. On September 6, 1999, KAL, through Atty. Aguinaldo, filed a Complaint 2 against ETI with the Regional Trial Court (RTC) of Manila, for the collection of the principal amount of P260,150.00, plus attorneys fees and exemplary damages. The verification and certification against forum shopping was signed by Atty. Aguinaldo, who indicated therein that he was the resident agent and legal counsel of KAL and had caused the preparation of the complaint. ETI filed a motion to dismiss the complaint on the ground that Atty. Aguinaldo was not authorized to execute the verification and certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of Court. KAL opposed the motion, contending that Atty. Aguinaldo was its resident agent and was registered as such with the Securities and Exchange Commission (SEC) as required by the Corporation Code of the Philippines. It was further alleged that Atty. Aguinaldo was also the corporate secretary of KAL. Appended to the said opposition was the identification card of Atty. Aguinaldo, showing that he was the lawyer of KAL. During the hearing of January 28, 2000, Atty. Aguinaldo claimed that he had been authorized to file the complaint through a resolution of the KAL Board of Directors approved during a special meeting held on June 25, 1999. Upon his motion, KAL was given a period of 10 days within which to submit a copy of the said resolution. The trial court granted the motion. Atty. Aguinaldo subsequently filed other similar motions, which the trial court granted. Finally, KAL submitted on March 6, 2000 an Affidavit3 of even date, executed by its general manager Suk Kyoo Kim, alleging that the board of directors conducted a special teleconference on June 25, 1999, which he and Atty. Aguinaldo attended. It was also averred that in that same teleconference, the board of directors approved a resolution authorizing Atty. Aguinaldo to execute the certificate of non-forum shopping and to file the complaint. Suk Kyoo Kim also alleged, however, that the corporation had no written copy of the aforesaid resolution. On April 12, 2000, the trial court issued an Order4 denying the motion to dismiss, giving credence to the claims of Atty. Aguinaldo and Suk Kyoo Kim that the KAL Board of Directors indeed conducted a teleconference on June 25, 1999, during which it approved a resolution as quoted in the submitted affidavit.

ETI filed a motion for the reconsideration of the Order, contending that it was inappropriate for the court to take judicial notice of the said teleconference without any prior hearing. The trial court denied the motion in its Order5dated August 8, 2000. ETI then filed a petition for certiorari and mandamus, assailing the orders of the RTC. In its comment on the petition, KAL appended a certificate signed by Atty. Aguinaldo dated January 10, 2000, worded as follows: SECRETARYS/RESIDENT AGENTS CERTIFICATE KNOW ALL MEN BY THESE PRESENTS: I, Mario A. Aguinaldo, of legal age, Filipino, and duly elected and appointed Corporate Secretary and Resident Agent of KOREAN AIRLINES, a foreign corporation duly organized and existing under and by virtue of the laws of the Republic of Korea and also duly registered and authorized to do business in the Philippines, with office address at Ground Floor, LPL Plaza Building, 124 Alfaro St., Salcedo Village, Makati City, HEREBY CERTIFY that during a special meeting of the Board of Directors of the Corporation held on June 25, 1999 at which a quorum was present, the said Board unanimously passed, voted upon and approved the following resolution which is now in full force and effect, to wit: RESOLVED, that Mario A. Aguinaldo and his law firm M.A. Aguinaldo & Associates or any of its lawyers are hereby appointed and authorized to take with whatever legal action necessary to effect the collection of the unpaid account of Expert Travel & Tours. They are hereby specifically authorized to prosecute, litigate, defend, sign and execute any document or paper necessary to the filing and prosecution of said claim in Court, attend the PreTrial Proceedings and enter into a compromise agreement relative to the above-mentioned claim. IN WITNESS WHEREOF, I have hereunto affixed my signature this 10th day of January, 1999, in the City of Manila, Philippines. (Sgd.) MARIO A. AGUINALDO Resident Agent SUBSCRIBED AND SWORN to before me this 10th day of January, 1999, Atty. Mario A. Aguinaldo exhibiting to me his Community Tax Certificate No. 14914545, issued on January 7, 2000 at Manila, Philippines. Doc. No. 119; Page No. 25; Book No. XXIV Series of 2000. (Sgd.) ATTY. HENRY D. ADASA Notary Public Until December 31, 2000

PTR #889583/MLA 1/3/20006 On December 18, 2001, the CA rendered judgment dismissing the petition, ruling that the verification and certificate of non-forum shopping executed by Atty. Aguinaldo was sufficient compliance with the Rules of Court. According to the appellate court, Atty. Aguinaldo had been duly authorized by the board resolution approved on June 25, 1999, and was the resident agent of KAL. As such, the RTC could not be faulted for taking judicial notice of the said teleconference of the KAL Board of Directors. ETI filed a motion for reconsideration of the said decision, which the CA denied. Thus, ETI, now the petitioner, comes to the Court by way of petition for review on certiorari and raises the following issue: DID PUBLIC RESPONDENT COURT OF APPEALS DEPART FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT RENDERED ITS QUESTIONED DECISION AND WHEN IT ISSUED ITS QUESTIONED RESOLUTION, ANNEXES A AND B OF THE INSTANT PETITION?7 The petitioner asserts that compliance with Section 5, Rule 7, of the Rules of Court can be determined only from the contents of the complaint and not by documents or pleadings outside thereof. Hence, the trial court committed grave abuse of discretion amounting to excess of jurisdiction, and the CA erred in considering the affidavit of the respondents general manager, as well as the Secretarys/Resident Agents Certification and the resolution of the board of directors contained therein, as proof of compliance with the requirements of Section 5, Rule 7 of the Rules of Court. The petitioner also maintains that the RTC cannot take judicial notice of the said teleconferencewithout prior hearing, nor any motion therefor. The petitioner reiterates its submission that the teleconference and the resolution adverted to by the respondent was a mere fabrication. The respondent, for its part, avers that the issue of whether modern technology is used in the field of business is a factual issue; hence, cannot be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. On the merits of the petition, it insists that Atty. Aguinaldo, as the resident agent and corporate secretary, is authorized to sign and execute the certificate of non-forum shopping required by Section 5, Rule 7 of the Rules of Court, on top of the board resolution approved during the teleconference of June 25, 1999. The respondent insists that "technological advances in this time and age are as commonplace as daybreak." Hence, the courts may take judicial notice that the Philippine Long Distance Telephone Company, Inc. had provided a record of corporate conferences and meetings through FiberNet using fiber-optic transmission technology, and that such technology facilitates voice and image transmission with ease; this makes constant communication between a foreign-based office and its Philippine-based branches faster and easier, allowing for cost-cutting in terms of travel concerns. It points out that even the ECommerce Law has recognized this modern technology. The respondent posits that the courts are aware of this development in technology; hence, may take judicial notice thereof without need of hearings. Even if such hearing is required, the requirement is nevertheless satisfied if a party is allowed to file pleadings by way of comment or opposition thereto.

In its reply, the petitioner pointed out that there are no rulings on the matter of teleconferencing as a means of conducting meetings of board of directors for purposes of passing a resolution; until and after teleconferencing is recognized as a legitimate means of gathering a quorum of board of directors, such cannot be taken judicial notice of by the court. It asserts that safeguards must first be set up to prevent any mischief on the public or to protect the general public from any possible fraud. It further proposes possible amendments to the Corporation Code to give recognition to such manner of board meetings to transact business for the corporation, or other related corporate matters; until then, the petitioner asserts, teleconferencing cannot be the subject of judicial notice. The petitioner further avers that the supposed holding of a special meeting on June 25, 1999 through teleconferencing where Atty. Aguinaldo was supposedly given such an authority is a farce, considering that there was no mention of where it was held, whether in this country or elsewhere. It insists that the Corporation Code requires board resolutions of corporations to be submitted to the SEC. Even assuming that there was such a teleconference, it would be against the provisions of the Corporation Code not to have any record thereof. The petitioner insists that the teleconference and resolution adverted to by the respondent in its pleadings were mere fabrications foisted by the respondent and its counsel on the RTC, the CA and this Court. The petition is meritorious. Section 5, Rule 7 of the Rules of Court provides: 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. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. 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.

It is settled that the requirement to file a certificate of non-forum shopping is mandatory8 and that the failure to comply with this requirement cannot be excused. The certification is a peculiar and personal responsibility of the party, an assurance given to the court or other tribunal that there are no other pending cases involving basically the same parties, issues and causes of action. Hence, the certification must be accomplished by the party himself because he has actual knowledge of whether or not he has initiated similar actions or proceedings in different courts or tribunals. Even his counsel may be unaware of such facts.9 Hence, the requisite certification executed by the plaintiffs counsel will not suffice. 10 In a case where the plaintiff is a private corporation, the certification may be signed, for and on behalf of the said corporation, by a specifically authorized person, including its retained counsel, who has personal knowledge of the facts required to be established by the documents. The reason was explained by the Court in National Steel Corporation v. Court of Appeals,11 as follows: Unlike natural persons, corporations may perform physical actions only through properly delegated individuals; namely, its officers and/or agents. The corporation, such as the petitioner, has no powers except those expressly conferred on it by the Corporation Code and those that are implied by or are incidental to its existence. In turn, a corporation exercises said powers through its board of directors and/or its duly-authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly-authorized for the purpose by corporate by-laws or by specific act of the board of directors. "All acts within the powers of a corporation may be performed by agents of its selection; and except so far as limitations or restrictions which may be imposed by special charter, by-law, or statutory provisions, the same general principles of law which govern the relation of agency for a natural person govern the officer or agent of a corporation, of whatever status or rank, in respect to his power to act for the corporation; and agents once appointed, or members acting in their stead, are subject to the same rules, liabilities and incapacities as are agents of individuals and private persons." For who else knows of the circumstances required in the Certificate but its own retained counsel. Its regular officers, like its board chairman and president, may not even know the details required therein. Indeed, the certificate of non-forum shopping may be incorporated in the complaint or appended thereto as an integral part of the complaint. The rule is that compliance with the rule after the filing of the complaint, or the dismissal of a complaint based on its noncompliance with the rule, is impermissible. However, in exceptional circumstances, the court may allow subsequent compliance with the rule. 12 If the authority of a partys counsel to execute a certificate of non-forum shopping is disputed by the adverse party, the former is required to show proof of such authority or representation.

In this case, the petitioner, as the defendant in the RTC, assailed the authority of Atty. Aguinaldo to execute the requisite verification and certificate of non-forum shopping as the resident agent and counsel of the respondent. It was, thus, incumbent upon the respondent, as the plaintiff, to allege and establish that Atty. Aguinaldo had such authority to execute the requisite verification and certification for and in its behalf. The respondent, however, failed to do so. The verification and certificate of non-forum shopping which was incorporated in the complaint and signed by Atty. Aguinaldo reads: I, Mario A. Aguinaldo of legal age, Filipino, with office address at Suite 210 Gedisco Centre, 1564 A. Mabini cor. P. Gil Sts., Ermita, Manila, after having sworn to in accordance with law hereby deposes and say: THAT 1. I am the Resident Agent and Legal Counsel of the plaintiff in the above entitled case and have caused the preparation of the above complaint; 2. I have read the complaint and that all the allegations contained therein are true and correct based on the records on files; 3. I hereby further certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency. If I subsequently learned that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any tribunal or agency, I will notify the court, tribunal or agency within five (5) days from such notice/knowledge. (Sgd.) MARIO A. AGUINALDO Affiant CITY OF MANILA SUBSCRIBED AND SWORN TO before me this 30th day of August, 1999, affiant exhibiting to me his Community Tax Certificate No. 00671047 issued on January 7, 1999 at Manila, Philippines. Doc. No. 1005; Page No. 198; Book No. XXI Series of 1999. (Sgd.) ATTY. HENRY D. ADASA Notary Public Until December 31, 2000 PTR No. 320501 Mla. 1/4/9913

As gleaned from the aforequoted certification, there was no allegation that Atty. Aguinaldo had been authorized to execute the certificate of non-forum shopping by the respondents

Board of Directors; moreover, no such board resolution was appended thereto or incorporated therein. While Atty. Aguinaldo is the resident agent of the respondent in the Philippines, this does not mean that he is authorized to execute the requisite certification against forum shopping. Under Section 127, in relation to Section 128 of the Corporation Code, the authority of the resident agent of a foreign corporation with license to do business in the Philippines is to receive, for and in behalf of the foreign corporation, services and other legal processes in all actions and other legal proceedings against such corporation, thus: SEC. 127. Who may be a resident agent. A resident agent may either be an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That in the case of an individual, he must be of good moral character and of sound financial standing. SEC. 128. Resident agent; service of process. The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of attorney designating some persons who must be a resident of the Philippines, on whom any summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the dulyauthorized officers of the foreign corporation as its home office. 14 Under the law, Atty. Aguinaldo was not specifically authorized to execute a certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of Court. This is because while a resident agent may be aware of actions filed against his principal (a foreign corporation doing business in the Philippines), such resident may not be aware of actions initiated by its principal, whether in the Philippines against a domestic corporation or private individual, or in the country where such corporation was organized and registered, against a Philippine registered corporation or a Filipino citizen. The respondent knew that its counsel, Atty. Aguinaldo, as its resident agent, was not specifically authorized to execute the said certification. It attempted to show its compliance with the rule subsequent to the filing of its complaint by submitting, on March 6, 2000, a resolution purporting to have been approved by its Board of Directors during a teleconference held on June 25, 1999, allegedly with Atty. Aguinaldo and Suk Kyoo Kim in attendance. However, such attempt of the respondent casts veritable doubt not only on its claim that such a teleconference was held, but also on the approval by the Board of Directors of the resolution authorizing Atty. Aguinaldo to execute the certificate of non-forum shopping. In its April 12, 2000 Order, the RTC took judicial notice that because of the onset of modern technology, persons in one location may confer with other persons in other places, and, based on the said premise, concluded that Suk Kyoo Kim and Atty. Aguinaldo had a teleconference with the respondents Board of Directors in South Korea on June 25, 1999. The CA, likewise, gave credence to the respondents claim that such a teleconference took

place, as contained in the affidavit of Suk Kyoo Kim, as well as Atty. Aguinaldos certification. Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety.[15] Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. 16 Things of "common knowledge," of which courts take judicial matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person. As the common knowledge of man ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no constructive knowledge.17 In this age of modern technology, the courts may take judicial notice that business transactions may be made by individuals through teleconferencing. Teleconferencing is interactive group communication (three or more people in two or more locations) through an electronic medium. In general terms, teleconferencing can bring people together under one roof even though they are separated by hundreds of miles.18 This type of group communication may be used in a number of ways, and have three basic types: (1) video conferencing - television-like communication augmented with sound; (2) computer conferencing - printed communication through keyboard terminals, and (3) audioconferencing-verbal communication via the telephone with optional capacity for telewriting or telecopying.19 A teleconference represents a unique alternative to face-to-face (FTF) meetings. It was first introduced in the 1960s with American Telephone and Telegraphs Picturephone. At that time, however, no demand existed for the new technology. Travel costs were reasonable and consumers were unwilling to pay the monthly service charge for using the picturephone, which was regarded as more of a novelty than as an actual means for everyday communication.20 In time, people found it advantageous to hold teleconferencing in the course of business and corporate governance, because of the money saved, among other advantages include: 1. People (including outside guest speakers) who wouldnt normally attend a distant FTF meeting can participate.

2. Follow-up to earlier meetings can be done with relative ease and little expense. 3. Socializing is minimal compared to an FTF meeting; therefore, meetings are shorter and more oriented to the primary purpose of the meeting. 4. Some routine meetings are more effective since one can audio-conference from any location equipped with a telephone. 5. Communication between the home office and field staffs is maximized. 6. Severe climate and/or unreliable transportation may necessitate teleconferencing. 7. Participants are generally better prepared than for FTF meetings. 8. It is particularly satisfactory for simple problem-solving, information exchange, and procedural tasks. 9. Group members participate more equally in well-moderated teleconferences than an FTF meeting.21 On the other hand, other private corporations opt not to hold teleconferences because of the following disadvantages: 1. Technical failures with equipment, including connections that arent made. 2. Unsatisfactory for complex interpersonal communication, such as negotiation or bargaining. 3. Impersonal, less easy to create an atmosphere of group rapport. 4. Lack of participant familiarity with the equipment, the medium itself, and meeting skills. 5. Acoustical problems within the teleconferencing rooms. 6. Difficulty in determining participant speaking order; frequently one person monopolizes the meeting. 7. Greater participant preparation time needed. 8. Informal, one-to-one, social interaction not possible.22 Indeed, teleconferencing can only facilitate the linking of people; it does not alter the complexity of group communication. Although it may be easier to communicate via teleconferencing, it may also be easier to miscommunicate. Teleconferencing cannot satisfy the individual needs of every type of meeting. 23

In the Philippines, teleconferencing and videoconferencing of members of board of directors of private corporations is a reality, in light of Republic Act No. 8792. The Securities and Exchange Commission issued SEC Memorandum Circular No. 15, on November 30, 2001, providing the guidelines to be complied with related to such conferences. 24 Thus, the Court agrees with the RTC that persons in the Philippines may have a teleconference with a group of persons in South Korea relating to business transactions or corporate governance. Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference along with the respondents Board of Directors, the Court is not convinced that one was conducted; even if there had been one, the Court is not inclined to believe that a board resolution was duly passed specifically authorizing Atty. Aguinaldo to file the complaint and execute the required certification against forum shopping. The records show that the petitioner filed a motion to dismiss the complaint on the ground that the respondent failed to comply with Section 5, Rule 7 of the Rules of Court. The respondent opposed the motion on December 1, 1999, on its contention that Atty. Aguinaldo, its resident agent, was duly authorized to sue in its behalf. The respondent, however, failed to establish its claim that Atty. Aguinaldo was its resident agent in the Philippines. Even the identification card25 of Atty. Aguinaldo which the respondent appended to its pleading merely showed that he is the company lawyer of the respondents Manila Regional Office. The respondent, through Atty. Aguinaldo, announced the holding of the teleconference only during the hearing of January 28, 2000; Atty. Aguinaldo then prayed for ten days, or until February 8, 2000, within which to submit the board resolution purportedly authorizing him to file the complaint and execute the required certification against forum shopping. The court granted the motion.26 The respondent, however, failed to comply, and instead prayed for 15 more days to submit the said resolution, contending that it was with its main office in Korea. The court granted the motion per its Order27 dated February 11, 2000. The respondent again prayed for an extension within which to submit the said resolution, until March 6, 2000.28 It was on the said date that the respondent submitted an affidavit of its general manager Suk Kyoo Kim, stating, inter alia, that he and Atty. Aguinaldo attended the said teleconference on June 25, 1999, where the Board of Directors supposedly approved the following resolution: RESOLVED, that Mario A. Aguinaldo and his law firm M.A. Aguinaldo & Associates or any of its lawyers are hereby appointed and authorized to take with whatever legal action necessary to effect the collection of the unpaid account of Expert Travel & Tours. They are hereby specifically authorized to prosecute, litigate, defend, sign and execute any document or paper necessary to the filing and prosecution of said claim in Court, attend the Pre-trial Proceedings and enter into a compromise agreement relative to the above-mentioned claim.29 But then, in the same affidavit, Suk Kyoo Kim declared that the respondent "do[es] not keep a written copy of the aforesaid Resolution" because no records of board resolutions approved during teleconferences were kept. This belied the respondents earlier allegation in its February 10, 2000 motion for extension of time to submit the questioned resolution that it was in the custody of its main office in Korea. The respondent gave the trial court the

impression that it needed time to secure a copy of the resolution kept in Korea, only to allege later (via the affidavit of Suk Kyoo Kim) that it had no such written copy. Moreover, Suk Kyoo Kim stated in his affidavit that the resolution was embodied in the Secretarys/Resident Agents Certificate signed by Atty. Aguinaldo. However, no such resolution was appended to the said certificate. The respondents allegation that its board of directors conducted a teleconference on June 25, 1999 and approved the said resolution (with Atty. Aguinaldo in attendance) is incredible, given the additional fact that no such allegation was made in the complaint. If the resolution had indeed been approved on June 25, 1999, long before the complaint was filed, the respondent should have incorporated it in its complaint, or at least appended a copy thereof. The respondent failed to do so. It was only on January 28, 2000 that the respondent claimed, for the first time, that there was such a meeting of the Board of Directors held on June 25, 1999; it even represented to the Court that a copy of its resolution was with its main office in Korea, only to allege later that no written copy existed. It was only on March 6, 2000 that the respondent alleged, for the first time, that the meeting of the Board of Directors where the resolution was approved was held via teleconference. Worse still, it appears that as early as January 10, 1999, Atty. Aguinaldo had signed a Secretarys/Resident Agents Certificate alleging that the board of directors held a teleconference on June 25, 1999. No such certificate was appended to the complaint, which was filed on September 6, 1999. More importantly, the respondent did not explain why the said certificate was signed by Atty. Aguinaldo as early as January 9, 1999, and yet was notarized one year later (on January 10, 2000); it also did not explain its failure to append the said certificate to the complaint, as well as to its Compliance dated March 6, 2000. It was only on January 26, 2001 when the respondent filed its comment in the CA that it submitted the Secretarys/Resident Agents Certificate30 dated January 10, 2000. The Court is, thus, more inclined to believe that the alleged teleconference on June 25, 1999 never took place, and that the resolution allegedly approved by the respondents Board of Directors during the said teleconference was a mere concoction purposefully foisted on the RTC, the CA and this Court, to avert the dismissal of its complaint against the petitioner. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 61000 is REVERSED and SET ASIDE. The Regional Trial Court of Manila is hereby ORDERED to dismiss, without prejudice, the complaint of the respondent. SO ORDERED.
EN BANC [G.R. No. 178541, March 27, 2008] PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. ANGELO ZETA, ACCUSEDAPPELLANT. DECISION

CHICO-NAZARIO, J.: For review is the Decision dated 30 June 2006 of the Court of Appeals in CA-G.R. CR-H.C. No. 02054,[1] affirming in toto the Decision[2] dated 29 November 2002 of the Quezon City Regional Trial Court (RTC), Branch 88, in Criminal Case No. Q-95-63787, finding accused-appellant Angelo Zeta and his wife, Petronilla Zeta (Petronilla), guilty of murder. The facts are as follows: On 6 November 1995, an Information[3] was filed before the RTC charging appellant and Petronilla of Murder, thus: That on or about the 28th day of October 1995, in Quezon City, Philippines, the said accused, conspiring together, confederating with and mutually helping each other, with intent to kill, did then and there, willfully, unlawfully and feloniously with evident premeditation, treachery, assault, attack and employ personal violence upon the person of RAMON GARCIA y LOPEZ by then and there shooting the latter with the use of a .45 cal. pistol hitting him on the different parts of his body, thereby causing the instant and immediate cause of his death, to the damage and prejudice of the heirs of said RAMON GARCIA Y LOPEZ. When arraigned on 20 December 1995, appellant and Petronilla, assisted by their respective counsels de parte, pleaded "Not Guilty" to the charge of murder.[4] Trial on the merits thereafter ensued. The prosecution presented as witnesses Aleine Mercado (Aleine), Dr. Maria Cristina Freyra (Dr. Freyra), Police Inspector Solomon Segundo (Inspector Segundo), Rey Jude Naverra (Rey), Edwin Ronk (Edwin), Francisco Garcia (Francisco), SPO1 Carlos Villarin (SPO1 Villarin), and SPO2 Wakab Magundacan (SPO2 Magundacan). Their testimonies, taken together, bear the following: On 28 October 1995, at around 12:00 midnight, Edwin, Rey and a certain Melvin Castillo (Melvin) had a drinking spree outside the house of Rey located at No. 30-B Tacio Street, La Loma, Quezon City. At about 2:00 in the morning of the same date, a car stopped in front of the three. Appellant was driving the car while Petronilla was seated beside him. Petronilla opened the car's window and asked Edwin if he knows Ramon and the latter's address at No. 25-C General Tinio Street, La Loma, Quezon City. Edwin replied that he did not know Ramon or his address. Thereafter, appellant and Petronilla left on board the car and proceeded to General Tinio Street, La Loma, Quezon City.[5] At about 2:15 in the morning of the same date, the car boarded by appellant and Petronilla stopped in front of Ramon's house at No. 25-C General Tinio Street, La Loma, Quezon City. After parking nearby, appellant and Petronilla alighted from the car and proceeded to Ramon's house. Petronilla repeatedly called Ramon. Aleine (niece of Cristina Mercado, Ramon's common-law wife) was awakened by the repeated calls and opened the door. Petronilla requested Aleine to call Ramon. Aleine told Petronilla that she would wake up Ramon who was then sleeping with Cristina at the second floor of the house. Aleine invited appellant and Petronilla inside the house but the two replied that they would just wait for Ramon outside. Aleine proceeded to the second floor of the house and knocked at the door of Ramon's room. Ramon woke up. Subsequently, Aleine went downstairs and proceeded to the dining table. While Ramon was walking down the stairs, appellant suddenly entered the house and shot Ramon several times on different parts of the body with a caliber .45 Llama pistol. Upon seeing appellant shooting Ramon, Aleine hid inside the restroom. When the gunshots ceased, Aleine went out

of the restroom and saw Ramon sprawled and bloodied on the ground floor.[6] Edwin, Rey and Melvin were still drinking when they heard the gunshots. They rushed to the direction of Ramon's house. When they were nearing Ramon's house, Petronilla suddenly stepped out of the main door of Ramon's house followed by appellant. Melvin uttered, "Mamamatay tao." Petronilla merely looked at them and entered the car. Appellant also proceeded inside the car and thereafter the car sped away.[7] Subsequently, Aleine went out of the house and called for help. Edwin, Rey and Melvin approached her. They carried Ramon and placed him inside a vehicle owned by a neighbor. While they were on their way to the Chinese General Hospital, Ramon told Aleine that the one who shot him was "asawa ni Nellie na kapitbahay namin sa Las Pias." Ramon died due to gunshot wounds while being operated on at the Chinese General Hospital. Thereafter, the police arrived at the crime scene and recovered several empty bullet shells and slugs.[8] At about 10:55 the following morning, SPO2 Magundacan received a report that a carnapped vehicle was parked along Lakandula Street, P. Tuazon Blvd., Quezon City. SPO2 Magundacan proceeded thereat and saw appellant about to board a car armed with a gun visibly tucked in his waist. SPO2 Magundacan approached appellant and asked him for a license and/or registration papers of the gun but appellant did not show any. SP02 Magundacan also inquired from Petronilla, who was inside the car also armed with a gun tucked in her waist, if she had a license but Petronilla likewise failed to show any. Thus, SPO2 Magundacan brought appellant and Petronilla to Police Precinct 8, Project 4, Quezon City, for investigation. Subsequently, appellant and Petronilla, upon the request of the La Loma police, were turned over to the police station for investigation as regards the killing of Ramon. Appellant and Petronilla were thereafter charged with murder.[9] The prosecution also adduced documentary and object evidence to buttress the testimonies of its witnesses, to wit: (1) death certificate of Ramon;[10] (2) sworn statement of Aleine;[11] (3) request for autopsy examination of Ramon's body;[12](4) medico-legal report issued and signed by Dr. Freyra stating that Ramon died due to gunshot wounds;[13] (5) anatomical sketch of a human body signed by Dr. Freyra indicating the location of the gunshot wounds on Ramon's body;[14] (6) physical science report stating that a paraffin test was conducted on both hands of Ramon and they were found negative for gunpowder nitrates;[15] (7) handwritten sketch made by Edwin depicting the streets of Tacio and General Tinio;[16] (8) request for ballistic examination of the object evidence recovered from the crime scene;[17] (9) ballistic report issued and signed by Inspector Segundo stating that the bullet extracted from Ramon's body and other bullets recovered from the crime scene were similar to the bullets of the caliber .45 Llama pistol seized from appellant;[18] (10) certification from the Personnel Division of the Philippine Long Distance Telephone Company (PLDT) affirming that Ramon was its regular employee from 14 February 1981 up to 27 October 1995 and that he was receiving a monthly salary of P13,687.00 plus other benefits;[19] (11) summary of expenses and receipts for the wake of Ramon;[20] (12) joint affidavit of SPO2 Magundacan and a certain PO2 Ronald Zamora;[21] (13) photographs showing the spot where appellant and Petronilla stood while waiting for Ramon, the stairs where Ramon walked down shortly before he was shot several times by appellant, the area inside Ramon's house where appellant positioned himself while shooting at Ramon, and the location where Ramon fell down after he was shot several times by appellant;[22] (14) nine empty shells and seven deformed slugs fired from a caliber .45 pistol which were recovered by SPO1 Villarin from the crime scene;[23] (15) a deformed slug fired from a caliber .45 pistol which was extracted from Ramon's body; (16) test bullets fired from the caliber .45 Llama pistol seized from appellant; [24] (17) the caliber

.45 Llama pistol with Serial Number C-27854 seized from appellant;[25] and (18) a calling card recovered from Ramon with the print label "Cristine Rent A Car," "Angelo D. Zeta" and with telephone numbers and addresses.[26] For its part, the defense presented the testimonies of appellant, Petronilla, and Annabelle Vergara (Annabelle) to refute the foregoing allegations. Their version of the incident is as follows: On 27 October 1995, at about 10:00 in the evening, appellant, Petronilla and Annabelle (housemaid of the couple) were in the couple's house at Cainta, Rizal.[27]Later, appellant took Petronilla's caliber .38 pistol and went to his brother's (Jose Zeta, Jr.) house in Marikina arriving therein at around 12:00 midnight. Jose was out of the house so appellant waited for him. At about 2:30 in the morning of 28 October 1995, Jose arrived. Thereafter, appellant demanded from Jose the return of his three firearms, one of which is a caliber .45 pistol. Jose, however, handed only the caliber .45 pistol to appellant. Appellant berated Jose for refusing to return the two other firearms. Irked, Jose drew a gun. Appellant also drew the caliber .45 pistol and shot Jose four times. Jose fell down on the ground. Afterwards, appellant left the house, took Jose's car which was parked near the house, and proceeded to Police Precinct 8, Project 4, Quezon City, where he waited for a certain Tony Tolentino whom he claims to be a policeman assigned at the Southern Police District. At about 9:00 in the morning of 28 October 1995, the policeman on duty at Precinct 8 informed appellant that the latter's car parked inside the precinct was a carnapped vehicle. The policemen searched the car and found several guns including the caliber .45 and the caliber .38. Appellant was thereupon detained and charged with illegal possession of firearms and carnapping.[28] At about 10:00 in the morning of 28 October 1995, Petronilla received a telephone call informing her that appellant was at Police Precinct 8, Project 4, Quezon City. She immediately proceeded thereat and presented documents relative to her ownership and license of the caliber .38 seized from appellant. Thereafter, she went home at about 11:00 in the evening.[29] On 2 November 1995, Petronilla visited appellant at Precinct 8. During the visit, Aleine arrived at Precinct 8 and pointed to appellant and Petronilla. Subsequently, appellant and Petronilla were informed by the police that they were suspects in the killing of Ramon. Thereafter, they were charged with murder.[30] After trial, the RTC rendered a Decision on 29 November 2002 convicting appellant and Petronilla of murder. It held that appellant and Petronilla conspired in killing Ramon. It also ruled that Ramon's killing was attended by the aggravating circumstances of evident premeditation and nocturnity. In conclusion, it imposed the death penalty on appellant while Petronilla was merely sentenced to reclusion perpetua "owing to her being a mother and her lesser degree of participation in the killing of Ramon." The fallo of the decision reads: Accordingly, based on the evidence presented by the prosecution and the defense and finding both accused guilty beyond reasonable doubt of the crime of MURDER attended by the aggravating circumstances of evident premeditation and nocturnity without being offset by any mitigating circumstances, the accused Angelo Zeta is hereby sentenced to death by lethal injection. The wife and co-accused Petronilla Zeta, although a co-conspirator in the commission of the offense charged, is hereby sentenced to RECLUSION PERPETUA owing to her being a mother and her lesser degree of participation in the act of murder. The accused Angelo Zeta and Petronilla Zeta are also sentenced to indemnify in SOLIDUM the heirs of

the victim in the amount of P50,000.00 for the death of Ramon Garcia; P146,000.00 for the hospital and burial expenses; and P1,642,440.00 for the lost income of the deceased reckoned at 10 years of productive life, plus costs. The .45 caliber Llama pistol with Serial Number C-27854 is confiscated in favor of the Government to be kept by the Philippine National Police as mandated by law.[31] On 9 December 2002, the RTC issued an Order forwarding the records of the instant case to Us for automatic review because of the death penalty imposed on appellant.[32] On 24 December 2002, Petronilla filed a Notice of Appeal with the RTC stating that she would appeal her conviction to this Court.[33] On 28 April 2004, Petronilla, through counsel, filed a Motion to Withdraw Appeal before us [34] stating that: After a thorough review of the available stenographic notes obtained by the close relatives of the accused-appellant from the Regional Trial Court, the undersigned counsel found out that there are no testimonial and/or documentary evidence presented before the lower Trial Court that could sufficiently serve as justifiable basis to warrant the reversal of the appealed decision rendered insofar as PETRONILLA ZETA is concerned. Moreover, the undersigned counsel sustained serious physical injuries that render difficult to further handle the appeal that will require lengthy preparation of appellant's brief and other legal pleadings as may be required under the Rules of Court. Consequently, after discussion with accused-appellant PETRONILLA ZETA, the undersigned counsel informed her that he is now constrained to withdraw his appearance in the above-entitled appealed case. Upon being informed of the health predicament of the undersigned counsel and after being enlightened about the weakness of the appeal, accused-appellant PETRONILLA ZETA willfully and voluntarily decided to WITHDRAW the appeal and do hereby signify to the Honorable Court that she is no longer interested in the further prosecution of her appeal. She, likewise, has no objection to the withdrawal of the appearance of Atty. Alfredo E. Anasco, as her counsel in the above-entitled case. WHEREFORE, it is respectfully prayed that the above-entitled appeal be ordered withdrawn and the MOTION TO WITHDRAW APPEAL be GRANTED, and the withdrawal of appearance of counsel be given due course. On 28 September 2004, we issued a Resolution granting Petronilla's motion to withdraw appeal. [35] On 22 November 2005, we issued a Resolution remanding the instant case to the Court of Appeals for proper disposition pursuant to our ruling in People v. Mateo.[36]On 30 June 2006, the Court of Appeals promulgated its Decision affirming in toto the Decision of the RTC. Thus: Thus, after finding that the trial court's conclusions are supported by the evidence presented and in full accord with existing law and jurisprudence, We find no reason to set it aside. WHEREFORE, based on the foregoing premises, the appeal is hereby DISMISSED. The November 29, 2002 Decision of the Regional Trial Court of Quezon City, Branch 88 in Criminal Case No. Q-95-63787 is AFFIRMED.[37]

Appellant elevated the present case before us on the following grounds: I. THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT DESPITE THE FACT THAT THE PROSECUTION WITNESSES DID NOT POSITIVELY IDENTIFY HIM; II. THE TRIAL COURT ERRED IN DISREGARDING THE DEFENSE OF DENIAL AND ALIBI INTERPOSED BY THE ACCUSED-APPELLANT; III. THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT DESPITE THE FACT THAT HIS GUILT WAS UNDER A SHADOW OF DOUBT.[38] Apropos the first issue, appellant claims that although Edwin and Rey positively identified Petronilla as the one who asked them about Ramon and his address shortly before the incident occurred, the two, nevertheless, failed to identify appellant as Petronilla's companion during the said questioning. He also argues that Aleine's testimony identifying him as the one who shot Ramon during the incident is not morally certain because Aleine narrated that she saw only the side portion of his face and the color of the shirt he wore during the incident.[39] It appears that Edwin and Rey did not actually see appellant shoot Ramon during the incident. Nonetheless, Aleine saw appellant shoot Ramon on that fateful night. Her positive identification of appellant and direct account of the shooting incident is clear, thus:
ATTY. A. OLIVETTI (DIRECT EXAMINATION) Q. Aleine Mercado, are you the same Aleine Mercado who is listed as one of the witnesses in this case? WITNESS A. Yes, sir. Q. Do you know the accused in this case? A. Yes, sir. Q. If they are inside the courtroom, will you identify them? A. Yes, sir. Q. Will you please look around and point before the Honorable Court the person of the accused in this case? A. Yes, sir. That man wearing yellow T-shirt and that lady who is also wearing yellow shirt. (witness pointing to a man who when asked of his name identified himself as Angelo Zeta and to a lady beside Angelo Zeta who when asked of her name identified herself as Petronilla Zeta.) xxx Q. On October 28, 1995, at about 2:15 in the morning, do you remember if there was an unusual incident that happened? A. Yes, sir. Q. Will you please tell the Court briefly what that unusual incident was? A. Tito Ramon Garcia was shot, Sir. Q. And who is this Tito Ramon Garcia that you are talking about?

A. He is the live-in partner of my aunt Cristy. Q. A while ago you mentioned that you have been living with your auntie and Tito Ramon Garcia in Gen. Tinio, La Loma, Quezon City. Will you please describe before the Honorable Court the residence or your house at that time where you were living with your auntie and Tito Ramon Garcia? A. It is a small house we were living in. It has a mezzanine and it measures 4 x 3 meters, sir. xxxx Q. Do you know the person who shot your Tito Ramon Garcia? A. Yes, sir. Q. Will you please tell the Honorable Court the name of the person who shot Ramon Garcia?

A. Angelo Zeta. Q. Where in particular did Mr. Angelo Zeta shot Mr. Ramon Garcia? A. Inside our house, sir. Q. And how was he able to enter your house? A. Our door then was opened, sir. Q. Why was your door opened at that time? A. I heard a woman calling for my Tito Ramon and so I opened the door, sir. Q. What time was this Madam Witness? A. 2:15. Q. 2:15 in the afternoon? A. 2:15 in the morning, your honor. xxxx ATTY. A. OLIVETTI Q. And who was that woman that you saw was outside calling Mr. Ramon Garcia? A. Petronilla Zeta, sir. Q. When you opened the door and you saw this woman, what happened between you and her? A. She asked me if a certain Ramon Garcia was there. Q. What was your reply? A. I told her he was sleeping. He was upstairs. Q. And what did the woman do after that if she did anything? A. She told me to call for my Tito Ramon. Q. What did you do after she asked you to call Mr. Ramon Garcia? A. I told her to enter before I call my Tito Ramon but they answered that they will remain outside. Q. And so after they refused to enter the house, what did you do as they were asking you to call Mr. Ramon Garcia? A. I told them to wait and then I went upstairs. Q. What did you do upstairs? A. I knocked at the door to wake up my Tito Ramon. xxxx Q. And was your Tito Ramon able to wake up?

A. When I felt that they were awakened, I went downstairs. Q. Where in particular downstairs did you go? A. Near our dining table, sir. Q. How long was it from the door? How far was it from the door? A. Two-arms-length, sir, or "dalawang dipa," sir. Q. And what happened as you stood by downstairs? A. While Tito Ramon was going down, sir, Angelo Zeta suddenly entered our house and immediately shot him several times. Q. How far were you from Mr. Angelo Zeta when you saw him? I withdraw that. How far were you from Mr. Angelo Zeta when you saw him suddenly entered the house and shot Mr. Ramon Garcia? A. Less than one meter, sir. x x x x. Q. Where was Petronilla Zeta at that time that the shooting occurred? A. She was outside the door, sir. xxxx Q. What did you do as you were standing and while Mr. Angelo Zeta was shooting Mr. Ramon Garcia inside the house? A. When I heard two shots, I run to the C.R. or comfort room. Q. As you were in the C.R., what happened? A. I heard successive shots, sir. Q. How long did you stay in the C.R.? A. Until the shots had stopped Until the firing had stopped, sir. Q. And you sensed that the firing had stopped, what did you do? A. I slowly opened the door to take a look if Angelo Zeta and companion were still there. Q. And what did you see? A. They were no longer there, sir. Q. And you saw that they have guns, what did you do? A. I went out of the C.R. and I returned to the place where I was before where I was previously standing. Q. And what did you see when you reached that portion that you are talking about? A. I saw Tito Ramon lying frustrate and blooded. Q And what did you do when you see (sic) him on that particular condition?

A. I peeped at the door to find out if Angelo Zeta and companion were still there. Q. And what did you see? A. They were no longer there. Q. And what did you do after that? A. I knocked at the door of the owner of the house to ask for help.[40]

It should be emphasized that the testimony of a single witness, if positive and credible, as in the case of Aleine, is sufficient to support a conviction even in the charge of murder.[41]

Appellant's argument that Aleine's testimony identifying him as the one who shot Ramon is not morally certain because she saw only the side portion of his face and the color of the shirt he wore during the incident, deserves scant consideration. A person can still be properly identified and recognized even by merely looking at the side portion of his face. To be sure, Aleine recognized and identified appellant in the police line-up and during trial as the one who shot Ramon. Experience dictates that precisely because of the unusual acts of violence committed right before their eyes, witnesses can remember with a high degree of reliability the identity of criminals at any given time.[42] A startling or frightful experience creates an indelible impression in the mind that can be recalled vividly.[43] It bears stressing that Aleine was less than one meter away from appellant when the latter shot Ramon. The crime scene was also well-lighted during the incident because there was a fluorescent bulb inside the house.[44] The testimonies of Aleine and of the other prosecution witnesses are in harmony with the documentary and object evidence submitted by the prosecution. The RTC and the Court of Appeals found their testimonies to be credible and trustworthy. The rule is that the findings of the trial court, its calibration of the testimonies of the witnesses and its assessment of the probative weight thereof, as well as its conclusions anchored on said findings are accorded respect if not conclusive effect. This is more true if such findings were affirmed by the appellate court. When the trial court's findings have been affirmed by the appellate court, said findings are generally binding upon this Court.[45] Anent the second and third issues, appellant contends that his conviction is unwarranted based on the following reasons: (1) the prosecution failed to establish any possible motive for the appellant to kill Ramon; (2) there is an inconsistency in the testimony of the prosecution witnesses regarding the type and color of the car boarded by appellant and Petronilla before and after the incident. Edwin testified that appellant and Petronilla left the scene on board a gold-colored Mitsubishi Lancer; while SPO2 Magundacan narrated that he apprehended appellant while the latter was about to board a blue Toyota Corona Macho; (3) Jose could have been the one who fatally shot Ramon and appellant could have been mistakenly identified as Jose because they have the same physical appearance and facial features; (4) if appellant was indeed the one who shot Ramon, he could have immediately confessed such crime to the police just like what he did after killing Jose; and (5) there is no proof that appellant is the husband of a certain "Mely." Ramon's dying declaration to Aleine was that it was the husband of "Mely," his former neighbor in Las Pinas, who shot him. Further, Petronilla's nickname could either be "Nellie" or "Nelia" and not "Mely" as referred to by Ramon.[46] Lack of motive does not preclude conviction when the crime and the participation of the accused in the crime are definitely shown, particularly when we consider that it is a matter of judicial knowledge that persons have killed or committed serious offenses for no reason at all. Motive gains importance only when the identity of the culprit is doubtful.[47] Where a reliable eyewitness has fully and satisfactorily identified the accused as the perpetrator of the felony, motive becomes immaterial to the successful prosecution of a criminal case.[48] It is obvious from the records that Aleine positively and categorically identified appellant as the person who shot Ramon during the incident. Her testimony was corroborated on relevant points by Edwin and Rey. There is no inconsistency in the testimonies of the prosecution witnesses regarding the car boarded by appellant and Petronilla in leaving the crime scene and, subsequently, at the time they were apprehended. Edwin testified that appellant and Petronilla left the scene after the incident which was between 2:15 and 2:30 in the morning on board a gold-colored Mitsubishi Lancer.[49] SPO2 Magundacan told the court that he apprehended appellant at around 10:55 in the morning of the same

day while the latter was about to board a blue Toyota Corona Macho.[50] In his affidavit attached to the records, Jan Ryan Zeta, son of Jose, narrated that Jose was shot by appellant at about 4:00 in the morning of the same date.[51] Appellant admitted that after shooting Jose on the early morning of 28 October 1995, he took the latter's Toyota Corona Macho and left.[52] Thus, it is probable that after leaving the crime scene at La Loma on board a gold Mitsubishi Lancer at about 2:15 or 2:30 in the morning, appellant and Petronilla then proceeded to Marikina and took Jose's blue Toyota Corona Macho. This explains why the car of appellant and Petronilla used in leaving the crime scene was different from that which they used at the time of their apprehension. Appellant's theory of alibi that it was physically impossible for him to be at the crime scene in La Loma when the incident occurred because he was in Marikina, and that Jose could have been the one who fatally shot Ramon is flimsy and cannot prevail over the positive and credible testimony of Aleine. Appellant was mistakenly identified as Jose because they have the same physical appearance and facial feature. In addition, the empty bullet shells and slugs recovered from the crime scene were found to have the same characteristics as those of the bullets of appellant's caliber .45 Llama pistol. Further, there is no testimonial or documentary proof showing that it was Jose who shot Ramon. Appellant himself testified that he met Jose in the latter's house in Marikina at about 2:30 in the morning of 28 October 1995. On the other hand, the shooting of Ramon at La Loma, Quezon City occurred at about 2:15 in the morning of the same date. Hence, it was impossible for Jose to be at La Loma, Quezon City and to have shot Ramon at such time and place. It is insignificant whether Petronilla was referred to by Ramon in his dying declaration as "Mely" or "Nellie." As correctly observed by the Court of Appeals, Ramon sustained twelve gunshot wounds and was catching his breath when he uttered the name or nickname of Petronilla as the wife of appellant. Thus, understandably, he could not have spoken clearly in such a difficult situation. Moreover, Ramon referred to "Nellie" or "Mely" as his former neighbor in Las Pias. Likewise, appellant and Petronilla admitted that Ramon was their former neighbor in Las Pias.[53] We now go to the propriety of the penalty imposed and the damages awarded by the RTC which the Court of Appeals affirmed. The RTC held that the killing of Ramon qualifies as murder because of the presence of the aggravating circumstances of evident premeditation and nighttime or nocturnity. It is a rule of evidence that aggravating circumstances must be proven as clearly as the crime itself.[54] Evident premeditation qualifies the killing of a person to murder if the following elements are present: (1) the time when the offender determined to commit the crime; (2) an act manifestly indicating that the culprit clung to his resolve; and (3) a sufficient interval of time between the determination or conception and the execution of the crime to allow him to reflect upon the consequence of his act and to allow his conscience to overcome the resolution of his will if he desired to hearken to its warning. [55] The first two elements of evident premeditation are present in the case at bar. The time manifesting Petronilla and appellant's determination to kill Ramon was when they, at about 2:00 in the morning of 28 October 1995, repeatedly asked Edwin about Ramon and the latter's address, and when they subsequently proceeded to the house of Ramon. The fact that appellant and Petronilla waited for Ramon, and appellant's subsequent act of shooting

him at around 2:15-2:30 in the morning of 28 October 1995 indicate that they had clung to their determination to kill Ramon. The third element of evident premeditation, however, is lacking in the instant case. The span of thirty minutes or half an hour from the time appellant and Petronilla showed their determination to kill Ramon (2:00 in the morning of 28 October 1995) up to the time appellant shot to death Ramon (2:15-2:30 in the morning of 28 October 1995) could not have afforded them full opportunity for meditation and reflection on the consequences of the crime they committed.[56] We have held that the lapse of thirty minutes between the determination to commit a crime and the execution thereof is insufficient for a full meditation on the consequences of the act.[57] The essence of premeditation is that the execution of the criminal act must be preceded by cool thought and reflection on the resolution to carry out the criminal intent during a space of time sufficient to arrive at a calm judgment. To justify the inference of deliberate premeditation, there must be a period sufficient in a judicial sense to afford full opportunity for meditation and reflection and to allow the conscience of the actor to overcome the resolution of his will if he desires to hearken to its warning. Where no sufficient lapse of time is appreciable from the determination to commit the crime until its execution, evident premeditation cannot be appreciated.[58] Nonetheless, we find that treachery attended the killing of Ramon. There is treachery when the offender commits any of the crimes against a person, employing means, methods or forms in the execution thereof which tend directly and specially to ensure its execution, without risk to himself arising from any defensive or retaliatory act which the victim might make.[59] The essence of treachery is a deliberate and sudden attack that renders the victim unable and unprepared to defend himself by reason of the suddenness and severity of the attack. Two essential elements are required in order that treachery can be appreciated: (1) the employment of means, methods or manner of execution that would ensure the offender's safety from any retaliatory act on the part of the offended party who has, thus, no opportunity for self-defense or retaliation; and (2) a deliberate or conscious choice of means, methods or manner of execution. Further, this aggravating circumstance must be alleged in the information and duly proven.[60] In the case at bar, treachery was alleged in the information and all its elements were duly established by the prosecution. It has been established that Ramon, still groggy after having been awakened by Aleine, was walking down the stairs when appellant suddenly shot him. The suddenness and unexpectedness of the appellant's attack rendered Ramon defenseless and without means of escape. Appellant admitted that he was a member of a gun club and was proficient in using his caliber .45 Llama pistol.[61] In fact, he was good at shooting a moving target during his practice.[62] He also stated that he owned five firearms.[63] Evidently, appellant took advantage of his experience and skill in practice shooting and in guns to exact the death of Ramon. There is no doubt that appellant's use of a caliber .45 Llama pistol, as well as his act of positioning himself in a shooting stance and of shooting Ramon several times on the chest area and on other parts of body, were obviously adopted by him to prevent Ramon from retaliating or escaping. Considering that Ramon was unarmed, groggy from sleep, and was casually walking down narrow stairs unmindful of the danger that lurked behind, there was absolutely no way for him to defend himself or escape.

As regards the appreciation by the RTC of the aggravating circumstance of nocturnity, it should be underscored that nocturnity or nighttime is, by and of itself, not an aggravating circumstance. It becomes so only when (1) it was especially sought by the offender; or (2) it was taken advantage of by him; or (3) it facilitated the commission of the crime by ensuring the offender's immunity from capture.[64] Although the crime in the instant case was committed between 2:15 and 2:30 in the morning, no evidence was presented showing that nighttime was especially and purposely sought by appellant to facilitate the commission of the crime, or that it was availed of for the purpose of impunity. Moreover, the crime scene was well-lighted by a fluorescent bulb. We have held that nocturnity is not aggravating where the place of the commission of the crime was well-illuminated.[65] Even if we were to assume that nocturnity was present in the case at bar, this cannot still be appreciated in view of the presence of treachery that attended the killing of Ramon. Nighttime cannot be considered an aggravating circumstance separate from treachery, since nighttime is absorbed in treachery.[66] Accordingly, the death penalty imposed by the RTC on appellant should be modified. Article 248 of the Revised Penal Code states that murder is punishable by reclusion perpetua to death. Article 63 of the same Code provides that if the penalty is composed of two indivisible penalties, as in the instant case, and there are no aggravating or mitigating circumstances, the lesser penalty shall be applied. Since there is no mitigating or aggravating circumstance in the instant case, and treachery cannot be considered as an aggravating circumstance as it was already considered as a qualifying circumstance, the lesser penalty of reclusion perpetua should be imposed.[67] The award of damages and its corresponding amount rendered by the RTC should also be modified in line with current jurisprudence. In addition to the civil indemnity of P50,000.00 for Ramon's death, the award of moral damages amounting to P50,000.00 is also proper since it is mandatory in murder cases, without need of proof and allegation other than the death of the victim.[68] The heirs of Ramon are also entitled to exemplary damages in the amount of P25,000.00, since the qualifying circumstance of treachery was firmly established.[69] The amount of actual damages should be reduced from P146,000.00 to P115,473.00 per computation of the official receipts attached to the records.[70] The heirs of Ramon should also be indemnified for loss of earning capacity pursuant to Article 2206 of the New Civil Code.[71] Consistent with our previous decisions,[72] the formula for the indemnification of loss of earning capacity is: Net Earning Capacity = Life Expectancy x Gross Annual Income (GAI) - Living Expenses = 2/3 (80 - age of deceased) x (GAI - 50% of GAI). Ramon's death certificate states that he was 37 years old at the time of his demise. [73] A certification from Ramon's employer, Philippine Long Distance Telephone Company, shows that Ramon was

earning an annual gross income of P164,244.00.[74] Applying the above-stated formula, the indemnity for the loss of earning capacity of Ramon is P2,354,163.99, computed as follows: Net Earning Capacity = 2/3 (43) x (P164,244.00 - P82,122.00) = 28.66 x P82,122.00 = P2,354,163.99 WHEREFORE, after due deliberation, the Decision of the Court of Appeals dated 30 June 2006 in CAG.R. CR-H.C. No. 02054 is hereby AFFIRMED with the following MODIFICATIONS: (1) the penalty of death imposed on appellant is lowered toreclusion perpetua; (2) appellant is ordered to pay the heirs of Ramon Garcia the amounts of P50,000.00 as moral damages and P25,000.00 as exemplary damages; (3) the award of actual damages is reduced to P115,473.00; and (4) the indemnity for Ramon's loss of earning capacity is increased to P2,354,163.99. The award of civil indemnity in the amount of P50,000.00 is maintained. Appellant's caliber .45 Llama pistol with Serial Number C-27854 is hereby confiscated in favor of the Government.

G.R. No. 159507

April 19, 2006

ANICETO G. SALUDO, JR., Petitioner, vs. AMERICAN EXPRESS INTERNATIONAL, INC., and/or IAN T. FISH and DOMINIC MASCRINAS, Respondents. DECISION CALLEJO, SR., J.: Before the Court is the Petition for Review on Certiorari filed by Aniceto G. Saludo, Jr. seeking to reverse and set aside the Decision1 dated May 22, 2003 of the Court of Appeals in CA-G.R. SP No. 69553. The assailed decision directed the Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch 25 thereof, to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002 in Civil Case No. R-3172, and enjoined the presiding judge2 thereof from conducting further proceedings in said case, except to dismiss the complaint filed therewith on ground of improper venue. The petition also seeks to reverse and set aside the appellate court's Resolution dated August 14, 2003 denying the motion for reconsideration of the assailed decision. The factual and procedural antecedents are as follows: Aniceto G. Saludo, Jr. filed a complaint for damages against the American Express International, Inc. (AMEX) and/or its officers Ian T. Fish, Vice-President and Country

Manager, and Dominic Mascrinas, Head of Operations, with the RTC of Maasin City, Southern Leyte. The case was raffled to Branch 25 of the said court. The complaint alleged, inter alia, that plaintiff (herein petitioner Saludo) "is a Filipino citizen, of legal age, and a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte, Philippines." On the other hand, defendant (herein respondent AMEX, Inc.) "is a corporation doing business in the Philippines and engaged in providing credit and other credit facilities and allied services with office address at 4th floor, ACE Building, Rada Street, Legaspi Village, Makati City." The other defendants (herein respondents Fish and Mascrinas) are officers of respondent AMEX, and may be served with summons and other court processes at their office address. The complaint's cause of action stemmed from the alleged wrongful dishonor of petitioner Saludo's AMEX credit card and the supplementary card issued to his daughter. The first dishonor happened when petitioner Saludo's daughter used her supplementary credit card to pay her purchases in the United States some time in April 2000. The second dishonor occurred when petitioner Saludo used his principal credit card to pay his account at the Hotel Okawa in Tokyo, Japan while he was there with other delegates from the Philippines to attend the Congressional Recognition in honor of Mr. Hiroshi Tanaka. The dishonor of these AMEX credit cards were allegedly unjustified as they resulted from respondents' unilateral act of suspending petitioner Saludo's account for his failure to pay its balance covering the period of March 2000. Petitioner Saludo denied having received the corresponding statement of account. Further, he was allegedly wrongfully charged for late payment in June 2000. Subsequently, his credit card and its supplementary cards were canceled by respondents on July 20, 2000. Petitioner Saludo claimed that he suffered great inconvenience, wounded feelings, mental anguish, embarrassment, humiliation and besmirched political and professional standing as a result of respondents' acts which were committed in gross and evident bad faith, and in wanton, reckless and oppressive manner. He thus prayed that respondents be adjudged to pay him, jointly and severally, actual, moral and exemplary damages, and attorney's fees. In their answer, respondents specifically denied the allegations in the complaint. Further, they raised the affirmative defenses of lack of cause of action and improper venue. On the latter, respondents averred that the complaint should be dismissed on the ground that venue was improperly laid because none of the parties was a resident of Leyte. They alleged that respondents were not residents of Southern Leyte. Moreover, notwithstanding the claim in his complaint, petitioner Saludo was not allegedly a resident thereof as evidenced by the fact that his community tax certificate, which was presented when he executed the complaint's verification and certification of non-forum shopping, was issued at Pasay City. To buttress their contention, respondents pointed out that petitioner Saludo's complaint was prepared in Pasay City and signed by a lawyer of the said city. Respondents prayed for the dismissal of the complaint a quo. Thereafter, respondents filed an Opposition to Ex-Parte Motion (to Set Case for Pre-Trial) and Motion for Preliminary Hearing (on Affirmative Defense of Improper Venue) to which petitioner Saludo filed his Comments and/or Objections to the Affirmative Defense of

Improper Venue. He asserted that any allegation refuting his residency in Southern Leyte was baseless and unfounded considering that he was the congressman of the lone district thereof at the time of the filing of his complaint. He urged the court a quo to take judicial notice of this particular fact. As a member of Congress, he possessed all the qualifications prescribed by the Constitution including that of being a resident of his district. He was also a member of the Integrated Bar of the Philippines-Southern Leyte Chapter, and has been such ever since his admission to the Bar. His community tax certificate was issued at Pasay City only because he has an office thereat and the office messenger obtained the same in the said city. In any event, the community tax certificate is not determinative of one's residence. In the Order dated September 10, 2001, the court a quo denied the affirmative defenses interposed by respondents. It found the allegations of the complaint sufficient to constitute a cause of action against respondents. The court a quo likewise denied respondents' affirmative defense that venue was improperly laid. It reasoned, thus: x x x [T]he fact alone that the plaintiff at the time he filed the complaint was and still is, the incumbent Congressman of the Lone District of Southern Leyte with residence at Ichon, Macrohon, Southern Leyte, is enough to dispell any and all doubts about his actual residence. As a high-ranking government official of the province, his residence there can be taken judicial notice of. As such his personal, actual and physical habitation or his actual residence or place of abode can never be in some other place but in Ichon, Macrohon, Southern Leyte. It is correctly stated by the plaintiff, citing the case of Core v. Core, 100 Phil. 321 that, "residence, for purposes of fixing venue of an action, is synonymous with domicile. This is defined as the permanent home, the place to which, whenever absent for business or pleasure, one intends to return, and depends on the facts and circumstances, in the sense that they disclose intent. A person can have but one domicile at a time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. Venue could be at place of his residence. (Masa v. Mison, 200 SCRA 715 [1991])3 Respondents sought the reconsideration thereof but the court a quo denied the same in the Order dated January 2, 2002. They then filed with the appellate court a petition for certiorari and prohibition alleging grave abuse of discretion on the part of the presiding judge of the court a quo in issuing the September 10, 2001 and January 2, 2002 Orders. Upon respondents' posting of a bond, the appellate court issued on March 14, 2002 a temporary restraining order which enjoined the presiding judge of the court a quo from conducting further proceedings in Civil Case No. R-3172. On May 22, 2003, the appellate court rendered the assailed decision granting respondents' petition for certiorari as it found that venue was improperly laid. It directed the court a quo to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002, and enjoined the presiding judge thereof from further proceeding in the case, except to dismiss the complaint. The appellate court explained that the action filed by petitioner Saludo against respondents is governed by Section 2, Rule 4 of the Rules of Court. The said rule on venue of personal actions basically provides that personal actions may be commenced and tried where

plaintiff or any of the principal plaintiffs resides, or where defendant or any of the principal defendants resides, at the election of plaintiff. Venue was improperly laid in the court a quo, according to the appellate court, because not one of the parties was a resident of Southern Leyte. Specifically, it declared that petitioner Saludo was not a resident thereof. The appellate court pronounced that, for purposes of venue, the residence of a person is his personal, actual or physical habitation, or his actual residence or place of abode, which may not necessarily be his legal residence or domicile provided he resides therein with continuity and consistency.4 The appellate court quoted the following discussion in Koh v. Court of Appeals 5 where the Court distinguished the terms "residence" and "domicile" in this wise: x x x [T]he term domicile is not exactly synonymous in legal contemplation with the term residence, for it is [an] established principle in Conflict of Laws that domicile refers to the relatively more permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. xxxx "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 intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile."6 (Italicized for emphasis) In holding that petitioner Saludo is not a resident of Maasin City, Southern Leyte, the appellate court referred to his community tax certificate, as indicated in his complaint's verification and certification of non-forum shopping, which was issued at Pasay City. Similarly, it referred to the same community tax certificate, as indicated in his complaint for deportation filed against respondents Fish and Mascrinas. Under Republic Act No. 7160,7 the community tax certificate shall be paid in the place of residence of the individual, or in the place where the principal office of the juridical entity is located.8 It also pointed out that petitioner Saludo's law office, which was also representing him in the present case, is in Pasay City. The foregoing circumstances were considered by the appellate court as judicial admissions of petitioner Saludo which are conclusive upon him and no longer required proof. The appellate court chided the court a quo for stating that as incumbent congressman of the lone district of Southern Leyte, judicial notice could be taken of the fact of petitioner Saludo's residence thereat. No evidence had yet been adduced that petitioner Saludo was

then the congressman of Southern Leyte and actual resident of Ichon, Macrohon of the said province. The appellate court held that, based on his complaint, petitioner Saludo was actually residing in Pasay City. It faulted him for filing his complaint with the court a quo when the said venue is inconvenient to the parties to the case. It opined that under the rules, the possible choices of venue are Pasay City or Makati City, or any place in the National Capital Judicial Region, at the option of petitioner Saludo. It stressed that while the choice of venue is given to plaintiff, said choice is not left to his caprice and cannot deprive a defendant of the rights conferred upon him by the Rules of Court.9 Further, fundamental in the law governing venue of actions that the situs for bringing real and personal civil actions is fixed by the rules to attain the greatest possible convenience to the party litigants by taking into consideration the maximum accessibility to them - i.e., to both plaintiff and defendant, not only to one or the other - of the courts of justice.10 The appellate court concluded that the court a quo should have given due course to respondents' affirmative defense of improper venue in order to avoid any suspicion that petitioner Saludo's motive in filing his complaint with the court a quo was only to vex and unduly inconvenience respondents or even to wield influence in the outcome of the case, petitioner Saludo being a powerful and influential figure in the said province. The latter circumstance could be regarded as a "specie of forum shopping" akin to that in Investors Finance Corp. v. Ebarle11 where the Court mentioned that the filing of the civil action before the court in Pagadian City "was a specie of forum shopping" considering that plaintiff therein was an influential person in the locality. The decretal portion of the assailed Decision dated May 22, 2003 of the appellate court reads: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged orders must be, as they hereby are, VACATED and SET ASIDE and the respondent judge, or any one acting in his place or stead, is instructed and enjoined to desist from further proceeding in the case, except to dismiss it. The temporary restraining order earlier issued is hereby converted into a writ of preliminary injunction, upon the posting this time by petitioners [herein respondents], within five (5) days from receipt of this decision, of a bond in the amount of Five Million Pesos (P5,000,000.00), to answer for all damages that private respondent [herein petitioner] may sustain by reason of the issuance of such injunction should the Court finally decide that petitioners are not entitled thereto. Private respondent, if he so minded, may refile his case for damages before the Regional Trial Court of Makati City or Pasay City, or any of the Regional Trial Courts of the National Capital Judicial Region. Without costs. SO ORDERED.12 Petitioner Saludo sought the reconsideration of the said decision but the appellate court, in the Resolution dated August 14, 2003, denied his motion for reconsideration. Hence, he filed the instant petition for review with the Court alleging that:

The Court of Appeals, (Special Fourth Division), in promulgating the afore-mentioned Decision and Resolution, has decided a question of substance in a way probably not in accord with law or with applicable decisions of this Honorable Court. (a) the Court of Appeals erred in not taking judicial notice of the undisputed fact that herein petitioner is the incumbent congressman of the lone district of Southern Leyte and as such, he is a residence (sic) of said district; (b) the Court of Appeals erred in dismissing the complaint on the basis of improper venue due to the alleged judicial admission of herein petitioner; (c) the Court of Appeals in dismissing the complaint ignored applicable decisions of this Honorable Court; and
1avv phil.net

(d) the Court of Appeals erred in deciding that herein petitioner violated the rules on venue, and even speculated that herein petitioner's motive in filing the complaint in Maasin City was only to vex the respondents.13 In gist, the sole substantive issue for the Court's resolution is whether the appellate court committed reversible error in holding that venue was improperly laid in the court a quo in Civil Case No. R-3172 because not one of the parties, including petitioner Saludo, as plaintiff therein, was a resident of Southern Leyte at the time of filing of the complaint. The petition is meritorious. Petitioner Saludo's complaint for damages against respondents before the court a quo is a personal action. As such, it is governed by Section 2, Rule 4 of the Rules of Courts which reads: SEC. 2. Venue of personal actions. - All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. The choice of venue for personal actions cognizable by the RTC is given to plaintiff but not to plaintiff's caprice because the matter is regulated by the Rules of Court. 14 The rule on venue, like other procedural rules, is designed to insure a just and orderly administration of justice, or the impartial and evenhanded determination of every action and proceeding.15 The option of plaintiff in personal actions cognizable by the RTC is either the place where defendant resides or may be found, or the place where plaintiff resides. If plaintiff opts for the latter, he is limited to that place. 16 Following this rule, petitioner Saludo, as plaintiff, had opted to file his complaint with the court a quo which is in Maasin City, Southern Leyte. He alleged in his complaint that he was a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte to comply with the residency requirement of the rule.

However, the appellate court, adopting respondents' theory, made the finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint. It hinged the said finding mainly on the fact that petitioner Saludo's community tax certificate, indicated in his complaint's verification and certification of non-forum shopping, was issued at Pasay City. That his law office is in Pasay City was also taken by the appellate court as negating petitioner Saludo's claim of residence in Southern Leyte. The appellate court committed reversible error in finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint, and consequently holding that venue was improperly laid in the court a quo. In Dangwa Transportation Co., Inc. v. Sarmiento,17 the Court had the occasion to explain at length the meaning of the term "resides" for purposes of venue, thus: In Koh v. Court of Appeals, we explained that the term "resides" as employed in the rule on venue on personal actions filed with the courts of first instance means the place of abode, whether permanent or temporary, of the plaintiff or the defendant, as distinguished from "domicile" which denotes a fixed permanent residence to which, when absent, one has the intention of returning. "It is fundamental in the law governing venue of actions (Rule 4 of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the rules to attain the greatest convenience possible to the parties-litigants by taking into consideration the maximum accessibility to them of the courts of justice. It is, likewise, undeniable that the term domicile is not exactly synonymous in legal contemplation with the term residence, for it is an established principle in Conflict of Laws that domicile refers to the relatively more permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. "This Court held in the case of Uytengsu v. Republic, 50 O.G. 4781, October, 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil. 36, and Nuval v. Guray, 52 Phil. 645, that '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 one and the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile.' (Italicized for emphasis) "We note that the law on venue in Courts of First Instance (Section 2, of Rule 4, Rules of Court) in referring to the parties utilizes the words 'resides or may be found,' and not 'is domiciled,' thus:

'Sec. 2(b) Personal actions - All other actions may be commenced and tried 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.' (Italicized for emphasis) "Applying the foregoing observation to the present case, We are fully convinced that private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, based on his manifested intention to return there after the retirement of his wife from government service to justify his bringing of an action for damages against petitioner in the C.F.I. of Ilocos Norte, is entirely of no moment since what is of paramount importance is where he actually resided or where he may be found at the time he brought the action, to comply substantially with the requirements of Sec. 2(b) of Rule 4, Rules of Court, on venue of personal actions." (Koh v. Court of Appeals, supra, pp. 304-305.) The same construction of the word "resides" as used in Section 1, Rule 73, of the Revised Rules of Court, was enunciated in Fule v. Court of Appeals, et al. (G.R. No. L-40502) and Fule v. Hon. Ernani C. Pao, et al. (G.R. No. L-42670), decided on November 29, 1976. Thus, this Court, in the aforecited cases, stated: "2. But, the far-ranging question is this: What does the term 'resides' mean? Does it refer to the actual residence or domicile of the decedent at the time of his death? We lay down the doctrinal rule that the term 'resides' connotes ex vi termini 'actual residence' as distinguished from 'legal residence or domicile.' This term 'resides,' like the terms 'residing' and 'residence' is elastic and should be interpreted in the light of the object or purposes of the statute or rule in which it is employed. In the application of venue statutes and rules Section 1, Rule 73 of the Revised Rules of Court is of such nature - residence rather than domicile is the significant factor. Even where the statute uses the word 'domicile' still it is construed as meaning residence and not domicile in the technical sense. Some cases make a distinction between the terms 'residence' and 'domicile' but as generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term 'inhabitant.' In other words, 'resides' should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. No particular length of time of residence is required though; however, the residence must be more than temporary."18 There is no dispute that petitioner Saludo was the congressman or the representative of the lone district of Southern Leyte at the time of filing of his complaint with the court a quo. Even the appellate court admits this fact as it states that "it may be conceded that private respondent ever so often travels to Maasin City, Southern Leyte, because he is its representative in the lower house."19 As a member of the House of Representatives, petitioner Saludo was correctly deemed by the court a quo as possessing the requirements for the said position,20 including that he was then a resident of the district which he was representing, i.e., Southern Leyte. Significantly, for purposes of election law, the term "residence" is synonymous with "domicile," thus:

x x x [T]he Court held that "domicile" and "residence" are synonymous. The term "residence," as used in the election law, imports not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention. "Domicile" denotes a fixed permanent residence to which when absent for business or pleasure, or for like reasons, one intends to return. x x x21 It can be readily gleaned that the definition of "residence" for purposes of election law is more stringent in that it is equated with the term "domicile." Hence, for the said purpose, the term "residence" imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention." 22 When parsed, therefore, the term "residence" requires two elements: (1) intention to reside in the particular place; and (2) personal or physical presence in that place, coupled with conduct indicative of such intention. As the Court elucidated, "the place where a party actually or constructively has a permanent home, 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." 23 On the other hand, for purposes of venue, the less technical definition of "residence" is adopted. Thus, it is understood to mean as "the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile."24 Since petitioner Saludo, as congressman or the lone representative of the district of Southern Leyte, had his residence (or domicile) therein as the term is construed in relation to election laws, necessarily, he is also deemed to have had his residence therein for purposes of venue for filing personal actions. Put in another manner, Southern Leyte, as the domicile of petitioner Saludo, was also his residence, as the term is understood in its popular sense. This is because "residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time." Reliance by the appellate court on Koh v. Court of Appeals25 is misplaced. Contrary to its holding,26 the facts of the present case are not similar to the facts therein. In Koh, the complaint was filed with the Court of First Instance in San Nicolas, Ilocos Norte by plaintiff who admitted that he was a resident of Kamias, Quezon City. Save for the fact that he grew up in San Nicolas, Ilocos Norte and that he manifested the intent to return there after retirement, plaintiff therein had not established that he was actually a resident therein at the time of the filing of his complaint. Neither did he establish that he had his domicile therein because although he manifested the intent to go back there after retirement, the element of personal presence in that place was lacking. To reiterate, domicile or residence, as the terms are taken as synonyms, imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention." 27 In contrast, petitioner Saludo was the congressman or representative of Southern Leyte at the time of filing of his complaint with the court a quo. Absent any evidence to the contrary, he is deemed to possess the qualifications for the said position, including that he was a

resident therein. And following the definition of the term "residence" for purposes of election law, petitioner Saludo not only had the intention to reside in Southern Leyte, but he also had personal presence therein, coupled with conduct indicative of such intention. The latter element, or his bodily presence as an inhabitant in Southern Leyte, was sufficient for petitioner Saludo to be considered a resident therein for purposes of venue. The following ratiocination of the court a quo is apt: Residence in 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. (Quetulio v. Ruiz, S.C. Off. Gaz. 156, Commentaries and Jurisprudence in Civil Law, Vol. 1, page 211, Tolentino). Residence is acquired by living in a 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. Thus, if a person lives with his family habitually in Quezon City, he would have his domicile in Quezon City. If he also has a house for vacation purposes in the City of Baguio, and another house in connection with his business in the City of Manila, he would have residence in all three places (Tolentino, Commentaries and Jurisprudence on Civil Law, Vol. 1, Page 212, 1990 Edition) so that one[']s legal residence or domicile can also be his actual, personal or physical residence or habitation or place of abode if he stays there with intention to stay there permanently. In the instant case, since plaintiff has a house in Makati City for the purpose of exercising his profession or doing business and also a house in Ichon, Macrohon, Southern Leyte, for doing business and/or for election or political purposes where he also lives or stays physically, personally and actually then he can have residences in these two places. Because it would then be preposterous to acknowledge and recognize plaintiff Aniceto G. Saludo, Jr. as congressman of Southern Leyte without also recognizing him as actually, personally and physically residing thereat, when such residence is required by law. 28 The fact then that petitioner Saludo's community tax certificate was issued at Pasay City is of no moment because granting arguendo that he could be considered a resident therein, the same does not preclude his having a residence in Southern Leyte for purposes of venue. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence.29 That petitioner Saludo was the congressman or representative of the lone district of Southern Leyte at the time of the filing of his complaint was admitted as a fact by the court a quo. In this connection, it consequently held that, as such, petitioner Saludo's residence in Southern Leyte, the district he was the representing, could be taken judicial notice of. The court a quo cannot be faulted for doing so because courts are allowed "to take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions." 30 Courts are likewise bound to take judicial notice, without the introduction of evidence, of the law in force in the Philippines, 31 including its Constitution.

The concept of "facts of common knowledge" in the context of judicial notice has been explained as those facts that are "so commonly known in the community as to make it unprofitable to require proof, and so certainly known to as to make it indisputable among reasonable men." 32 Moreover, "though usually facts of 'common knowledge' will be generally known throughout the country, it is sufficient as a basis for judicial notice that they be known in the local community where the trial court sits." 33 Certainly, the fact of petitioner Saludo being the duly elected representative of Southern Leyte at the time could be properly taken judicial notice of by the court a quo, the same being a matter of common knowledge in the community where it sits. Further, petitioner Saludo's residence in Southern Leyte could likewise be properly taken judicial notice of by the court a quo. It is bound to know that, under the Constitution, one of the qualifications of a congressman or representative to the House of Representatives is having a residence in the district in which he shall be elected. In fine, petitioner Saludo's act of filing his complaint with the court a quo cannot be characterized as a "specie of forum-shopping" or capricious on his part because, under the rules, as plaintiff, he is precisely given this option. Finally, respondents' claim that the instant petition for review was not properly verified by petitioner Saludo deserves scant consideration. Section 4, Rule 7 of the Rules of Court reads: Sec. 4. Verification. - Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on "information and belief," or upon "knowledge, information and belief," or lacks proper verification, shall be treated as an unsigned pleading. Petitioner Saludo's verification and certification of non-forum shopping states that he has "read the contents thereof [referring to the petition] and the same are true and correct of my own personal knowledge and belief and on the basis of the records at hand." The same clearly constitutes substantial compliance with the above requirements of the Rules of Court. WHEREFORE, premises considered, the petition is GRANTED. The Decision dated May 22, 2003 and Resolution dated August 14, 2003 of the Court of Appeals in CA-G.R. SP No. 69553 are REVERSED and SET ASIDE. The Orders dated September 10, 2001 and January 2, 2002 of the Regional Trial Court of Maasin City, Southern Leyte, Branch 25 thereof, in Civil Case No. R-3172 are REINSTATED. SO ORDERED.

G.R. No. 150949

June 21, 2007

JUDGE DOLORES L. ESPAOL,* Presiding Judge, Regional Trial Court, Branch 90, Dasmarias, Cavite,petitioner, vs. ATTY. BENJAMIN S. FORMOSO and SPOUSES BENITO SEE and MARLY SEE, respondents. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a Petition for Review on Certiorari assailing the Decision1 dated September 12, 2001 and Resolution dated November 15, 2001 of the Court of Appeals in CA-G.R. SP No. 65652. The facts are: On April 15, 1994, Sharcons Builders Philippines, Inc. (Sharcons) bought from Evanswinda Morales a piece of land consisting of 33,130 square meters in Paliparan, Dasmarias, Cavite. The property is covered by Transfer Certificate of Title (TCT) No. T-278479 issued in her name by the Register of Deeds of Trece Martires City. Thus, TCT No. T-278479 in Evanswindas name was cancelled and in lieu thereof, TCT No. T-511462 was issued in the name of Sharcons. However, when the latters workers tried to fence and take possession of the lot, they were prevented by the caretaker of spouses Joseph and Enriqueta Mapua. The caretaker claimed that spouses Mapua are the owners of the land. Sharcons verified the status of the title and found that TCT No. T-107163 was indeed registered in the names of spouses Mapua as early as July 13, 1979. On January 25, 2000, Sharcons filed with the Regional Trial Court (RTC), Branch 90, Dasmarias, Cavite a complaint for quieting of title, docketed as Civil Case No. 2035-00. Impleaded as defendants were spouses Mapua, Evanswinda Morales, and the Register of Deeds of Trece Martires City. In their answer, spouses Mapua alleged, among others, that all the documents relied upon by Sharcons are spurious and falsified. In the course of the proceedings, or on July 9, 2001, Judge Dolores L. Espaol, petitioner, issued an Order stating that Benito See and Marly See, president and treasurer, respectively, of Sharcons, and its counsel, Atty. Benjamin Formoso, respondents, have used a spurious certificate of title and tax declaration when it (Sharcons) filed with the RTC its complaint for quieting of title. Consequently, petitioner declared respondents guilty of direct contempt of court and ordered their confinement for ten (10) days in the municipal jail of Dasmarias, Cavite. Petitioners Order is partly reproduced as follows:

From the foregoing circumstances, this Court is of the view and so holds that the instant case is a callous and blatant imposition of lies, falsehoods, deceptions, and fraudulent manipulations, through the extensive use of falsified documents by the plaintiff corporation and its former counsel, Atty. Benjamin S. Formoso, defendant Evanswinda C. Morales and even the Geodetic Engineer who connived with this private group on one hand, and some officials and employees of the government agencies responsible for the processing and issuance of spurious or falsified titles, on the other. Unless these fraudulent operations are put to a complete and drastic halt, the Courts are at the mercy of these unscrupulous people for their own personal gain. Using the presumption that whoever is in possession and user of falsified document is the forger thereof (Gamido v. Court of Appeals, 25 SCRA 101 [1995]), let the appropriate falsification charges be filed against Benito See and Marly See together with Evanswinda C. Morales. Thus, let a copy of this Order be forwarded to the National Bureau of Investigation and the Department of Justice for their appropriate action. As regards Atty. Benjamin S. Formoso, let a copy of this Order be forwarded to the Bar Confidants Office, Supreme Court. Manila. Further, Benito See and Marly See, President and Treasurer of Sharcons Builders Phils. Inc., respectively, and Atty. Benjamin S. Formoso, counsel for Sharcons until March 13, 2001, are declared and held in contempt for foisting falsehoods and using falsified and spurious documents in the pursuit of their nefarious activities pursuant to the instant case filed before this Court. Let the corresponding Warrants of Arrest be issued against the aforesaid respondents who should serve ten (10) days of detention at the Dasmarias Municipal Jail, Cavite. Likewise, the title issued to Sharcons Builders Philippines, Inc., under TCT No. T511462 allegedly issued on November 11, 1994, being spurious, is hereby cancelled, it having been derived from another spurious title with TCT No. T-278479 allegedly issued to Evanswinda C. Morales on December 29, 1989. The Declaration of Real Property No. 4736 is likewise hereby cancelled for being spurious. Let a copy of this Order be forwarded to the Registry of Deeds for its implementation with respect to the two (2) titles for cancellation and to the Assessors Office of the Municipality of Dasmarias, Cavite, to stave off the proliferation of these spurious instruments. WHEREFORE, in view of the foregoing, the instant case is DISMISSED WITH PREJUDICE, whereas, the private defendants counterclaims, which need further substantiation, are likewise dismissed. However, the said private defendants are not precluded from pursuing their rightful course(s) of action in the interest of justice. SO ORDERED. Petitioner stated that in determining the merits of Sharcons' complaint for quieting of title, she "stumbled" upon Civil Case No. 623-92 for cancellation of title and damages filed with the RTC, Branch 20, Imus, Cavite, presided by then Judge Lucenito N. Tagle. 2 Petitioner

then took judicial notice of the judges Decision declaring that Sharcons' TCT and other supporting documents are falsified and that respondents are responsible therefor. On July 12, 2001, petitioner issued warrants of arrest against respondents. They were confined in the municipal jail of Dasmarias, Cavite. That same day, respondents filed a motion for bail and a motion to lift the order of arrest. But they were denied outright by petitioner. Respondents then filed with the Court of Appeals a petition for a writ of habeas corpus, docketed as CA-G.R. SP No. 65652. On July 19, 2001, the Court of Appeals granted the petition. On September 12, 2001, the Court of Appeals promulgated its Decision, the dispositive portion of which reads: IN THE LIGHT OF ALL THE FOREGOING, finding the instant petition to be meritorious, the same is hereby GRANTED. Respondent judges July 9, 2001 Order, insofar as it declared herein petitioners in direct contempt and ordered their incarceration for ten (10) days, as well as the Warrant of Arrest, dated July 12, 2001, and the Order of Commitment, dated July 13, 2001, which the respondent judge issued against the persons of the herein petitioners, are hereby NULLIFIED and SET ASIDE. SO ORDERED. The Court of Appeals ruled that Judge Espaol erred in taking cognizance of the Decision rendered by then Judge Tagle in Civil Case No. 623-92 since it was not offered in evidence in Civil Case No. 2035-00 for quieting of title. Moreover, as the direct contempt of court is criminal in nature, petitioner should have conducted a hearing. Thus, she could have determined whether respondents are guilty as charged. Petitioner filed a motion for reconsideration but the Court of Appeals denied the same in its Resolution of November 15, 2001. Hence, this petition. The basic question before us is whether petitioner erred in ruling that respondents are guilty of direct contempt of court for using falsified documents when Sharcons filed its complaint for quieting of title. The early case of In re Jones3 defined contempt of court as "some act or conduct which tends to interfere with the business of the court, by a refusal to obey some lawful order of the court, or some act of disrespect to the dignity of the court which in some way tends to interfere with or hamper the orderly proceedings of the court and thus lessens the general efficiency of the same." It has also been described as "a defiance of the authority, justice or dignity of the court; such conduct as tends to bring the authority and administration of the law into disrespect or to interfere with or prejudice parties litigants or their witnesses during litigation."4 Simply put, it is despising of the authority, justice, or dignity of the court. 5

The offense of contempt traces its origin to that time in England when all courts in the realm were but divisions of the Curia Regia, the supreme court of the monarch, and to scandalize a court was an affront to the sovereign.6This concept was adopted by the Americans and brought to our shores with modifications. In this jurisdiction, it is now recognized that courts have the inherent power to punish for contempt on the ground that respect for the courts guarantees the very stability of the judicial institution. 7 Such stability is essential to the preservation of order in judicial proceedings, to the enforcement of judgments, orders, and mandates of the courts, and, consequently, to the very administration of justice.8 Rule 71 of the 1997 Rules of Civil Procedure, as amended, provides: SEC. 1. Direct contempt punished summarily. A person guilty of misbehavior in the presence of or so near a court as to obstruct or interrupt the proceedings before the same, including disrespect toward the court, offensive personalities toward others, or refusal to be sworn or to answer as a witness, or to subscribe an affidavit or deposition when lawfully required to do so, may be summarily adjudged in contempt by such court and punished by a fine not exceeding two thousand pesos or imprisonment not exceeding ten (10) days, or both, if it be a Regional Trial Court or a court of equivalent or higher rank, or by a fine not exceeding two hundred pesos or imprisonment, not exceeding one (1) day, or both, if it be a lower court. In Narcida v. Bowen,9 this Court characterized direct contempt as one done "in the presence of or so near the court or judge as to obstruct the administration of justice." It is a contumacious act done facie curiae and may be punished summarily without hearing.10 In other words, one may be summarily adjudged in direct contempt at the very moment or at the very instance of the commission of the act of contumely. Section 3, Rule 71 of the same Rules states: SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has been filed and an opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to be heard by himself or by counsel, a person guilty of any of the following acts may be punished for indirect contempt: (a) Misbehavior of an officer of court in the performance of his official duties or in his official transactions; (b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the act of a person who, after being dispossessed or ejected from any real property by the judgment or process of any court of competent jurisdiction, enters or attempts or induces another to enter into or upon such real property, for the purpose of executing acts of ownership or possession, or in any manner disturbs the possession given to the person adjudged to be entitled thereto; (c) Any abuse of or any unlawful interference with the processes or proceedings of a court not constituting direct contempt under Section 1 of this Rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice; (e) Assuming to be an attorney or an officer of a court and acting as such without authority; (f) Failure to obey a subpoena duly served; (g) The rescue, or attempted rescue, of a person or property in the custody of an officer by virtue of an order or process of a court held by him. But nothing in this section shall be so construed as to prevent the court from issuing process to bring the respondent into court, or from holding him in custody pending such proceedings. Indirect or constructive contempt, in turn, is one perpetrated outside of the sitting of the court and may include misbehavior of an officer of a court in the performance of his official duties or in his official transactions, disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court, or injunction granted by a court or a judge, any abuse or any unlawful interference with the process or proceedings of a court not constituting direct contempt, or any improper conduct tending directly or indirectly to impede, obstruct or degrade the administration of justice.11 We agree with petitioner that the use of falsified and forged documents is a contumacious act. However, it constitutes indirect contempt not direct contempt. Pursuant to the above provision, such act is an improper conduct which degrades the administration of justice. In Santos v. Court of First Instance of Cebu, Branch VI,12 we ruled that the imputed use of a falsified document, more so where the falsity of the document is not apparent on its face, merely constitutes indirect contempt, and as such is subject to such defenses as the accused may raise in the proper proceedings. Thus, following Section 3, Rule 71, a contemner may be punished only after a charge in writing has been filed, and an opportunity has been given to the accused to be heard by himself and counsel. 13Moreover, settled is the rule that a contempt proceeding is not a civil action, but a separate proceeding of a criminal nature in which the court exercises limited jurisdiction.14 Thus, the modes of procedure and the rules of evidence in contempt proceedings are assimilated as far as practicable to those adapted to criminal prosecutions.15 Perforce, petitioner judge erred in declaring summarily that respondents are guilty of direct contempt and ordering their incarceration. She should have conducted a hearing with notice to respondents. Petitioner, in convicting respondents for direct contempt of court, took judicial notice of the Decision in Civil Case No. 623-92, assigned to another RTC branch, presided by then Judge Tagle. Section 1, Rule 129 of the Revised Rules of Court provides: SEC. 1. Judicial notice, when mandatory. A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government, and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative,

executive andjudicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. In Gener v. De Leon,16 we held that courts are not authorized to take judicial notice of the contents of records of other cases even when such cases have been tried or pending in the same court. Hence, we reiterate that petitioner took judicial notice of the Decision rendered by another RTC branch and on the basis thereof, concluded that respondents used falsified documents (such as land title and tax declaration) when Sharcons filed its complaint for quieting. Verily, the Court of Appeals did not err in ruling that respondents are not guilty of direct contempt of court. Meanwhile, the instant petition challenging the Decision of the Court of Appeals granting the writ of habeas corpusin favor of respondents has become moot. We recall that respondents were released after posting the required bail as ordered by the Court of Appeals. A writ of habeas corpus will not lie on behalf of a person who is not actually restrained of his liberty. And a person discharged on bail is not restrained of his liberty as to be entitled to a writ of habeas corpus.17 WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 65652 are AFFIRMED. No costs. SO ORDERED. G.R. No. 177809 October 16, 2009

SPOUSES OMAR and MOSHIERA LATIP, Petitioners, vs. ROSALIE PALAA CHUA, Respondent. DECISION NACHURA, J.: Challenged in this petition for review on certiorari is the Court of Appeals (CA) Decision in CA-G.R. SP No. 89300:1 (1) reversing the decision of the Regional Trial Court (RTC), Branch 274, Paraaque City in Civil Case No. 04-0052;2 and (2) reinstating and affirming in toto the decision of the Metropolitan Trial Court (MeTC), Branch 78, of the same city in Civil Case No. 2001-315.3 First, we sift through the varying facts found by the different lower courts. The facts parleyed by the MeTC show that respondent Rosalie Chua (Rosalie) is the owner of Roferxane Building, a commercial building, located at No. 158 Quirino Avenue corner Redemptorist Road, Barangay Baclaran, Paraaque City. On July 6, 2001, Rosalie filed a complaint for unlawful detainer plus damages against petitioners, Spouses Omar and Moshiera Latip (Spouses Latip). Rosalie attached to the

complaint a contract of lease over two cubicles in Roferxane Bldg., signed by Rosalie, as lessor, and by Spouses Latip, as lessees thereof.
1 a vv p h ! 1

The contract of lease reads: CONTRACT OF LEASE KNOW ALL MEN BY THESE PRESENTS: This Contract of Lease is entered into by and between: ROSALIE PALAA CHUA, Filipino, of legal age, married with office at 2/F JOFERXAN Building, F.B. Harrison St., Brgy. Baclaran, Paraaque City, and hereinafter referred to as the LESSOR, - and OMAR LATIEF marriage to MOSHIERA LATIEF, also both Filipino, of legal age with address at 24 Anahan St. RGV Homes Paraaque City, and hereinafter referred to as the LESSEES. WITNESSETH 1. That the LESSOR is the owner of the commercial building erected at the lot of the Toribio G. Reyes Realty, Inc. situated at 158 Quirino Ave. corner Redemptorist Road, Barangay Baclaran in Paraaque Ctiy; 2. That LESSOR hereby leases two (2) cubicles located at the 1st & 2nd Floor, of said building with an area of 56 square meters under the following terms and conditions, to wit: a. That the monthly rental of the two (2) cubicles in PESOS, SIXTY THOUSAND (P60,000.00), Philippine Currency. However, due to unstable power of the peso LESSEES agrees to a yearly increase of ten (10%) percent of the monthly rental; b. That any rental in-arrears shall be paid before the expiration of the contract to the LESSOR; c. That LESSEES agree to pay their own water and electric consumptions in the said premises; d. That the LESSEES shall not sub-let or make any alteration in the cubicles without a written permission from the LESSOR. Provided, however, that at the termination of the Contract, the lessee shall return the two cubicles in its original conditions at their expenses;

e. That the LESSEES agree to keep the cubicles in a safe and sanitary conditions, and shall not keep any kinds of flammable or combustible materials. f. That in case the LESSEES fail to pay the monthly rental every time it falls due or violate any of the above conditions shall be enough ground to terminate this Contract of Lease. Provided, further, that, if the LESSEES preterminate this Contract they shall pay the rentals for the unused month or period by way of liquidated damages in favor of the LESSOR. 3. That this Contract of Lease is for six (6) yrs. only starting from December _____, 1999 or up to December ______, 2005. IN WITNESS WHEREOF, the parties have hereunto affixed their hands this ___th day of December, 1999 at City of Manila, Philippines. (sgd.) ROSALIE PALAA-CHUA LESSOR (sgd.) OMAR LATIEF LESSEE SIGNED IN THE PRESENCE OF: (sgd.) 1. Daisy C. Ramos Republic of the Philippines) City of Manila)s.s. ACKNOWLEDGMENT BEFORE ME, a Notary Public for and in the City of Manila personally appeared the following persons: Rosalie P. Chua with CTC No. 05769706 at Paraaque City on 2/1/99; Moshiera Latief with CTC No. 12885654 at Paraaque City on 11/11/99; Omar Latief with CTC No. 12885653 Paraaque City on Nov. 11, 1999. known to me and to me known to be the same persons who executed this instrument consisting of two (2) pages duly signed by them and the two (2) instrumental witnesses and acknowledged to me that the same is their free and voluntarily acts and deeds. IN FAITH AND TESTIMONY WHEREOF, I have hereunto affixed my hand and Notarial Seal this ____th day of December, 1999 at the City of Manila, Philippines. (sgd.) 2. Ferdinand C. Chua (sgd.) MOSHIERA LATIEF LESSEE

Doc. No. _____ Page No. _____ Book No. LXV Series of 1999

ATTY. CALIXTRO B. RAMOS NOTARY PUBLIC Until December 31, 2000 PTR # 374145-1/11/99/-Mla. IBP # 00262-Life Member4

A year after the commencement of the lease and with Spouses Latip already occupying the leased cubicles, Rosalie, through counsel, sent the spouses a letter demanding payment of back rentals and should they fail to do so, to vacate the leased cubicles. When Spouses Latip did not heed Rosalies demand, she instituted the aforesaid complaint. In their Answer, Spouses Latip refuted Rosalies claims. They averred that the lease of the two (2) cubicles had already been paid in full as evidenced by receipts showing payment to Rosalie of the total amount of P2,570,000.00. The three (3) receipts, in Rosalies handwriting, read: 1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,] Baclaran P[ara]aque City. ROFERLAND5 Bldg. with the terms 6 yrs. Contract. P2,000,000.00 CHECK # 3767924 FAR EAST BANK (sgd.) ____________________ Rosalie Chua

(sgd.) ____________________ Ferdinand Chua 2. Received cash P500,000.00 From Moshiera Latip (sgd.) Rosalie Chua ____________________ Received by

12/10/99

3. Received cash P70,000.00 from Moshiera Latip (sgd.) ____________________ Received by:6

12-11-99

Spouses Latip asseverated that sometime in October 1999, Rosalie offered for sale lease rights over two (2) cubicles in Roferxane Bldg. Having in mind the brisk sale of goods during the Christmas season, they readily accepted Rosalies offer to purchase lease rights in Roferxane Bldg., which was still under construction at the time. According to Spouses Latip, the immediate payment of P2,570,000.00 would be used to finish construction of the building giving them first priority in the occupation of the finished cubicles. Thereafter, in December 1999, as soon as two (2) cubicles were finished, Spouses Latip occupied them without waiting for the completion of five (5) other stalls. Spouses Latip averred that the contract of lease they signed had been novated by their purchase of lease rights of the subject cubicles. Thus, they were surprised to receive a demand letter from Rosalies counsel and the subsequent filing of a complaint against them. The MeTC ruled in favor of Rosalie, viz.: WHEREFORE, premises considered, the [Spouses Latip] and all persons claiming rights under them are hereby ordered to VACATE the property subject of this case located at the 1st and 2nd floors of a Roferxane Building situated at No. 158 Quirino Avenue corner Redemptorist Road, Barangay Baclaran, Paraaque City. The [Spouses Latip] are also ordered to PAY [Rosalie] the amount of SEVEN HUNDRED TWENTY THOUSAND PESOS (P720,000.00) as rent arrearages for the period of December 1999 to December 2000 and thereafter to PAY [Rosalie] the amount of SEVENTY TWO THOUSAND PESOS (P72,000.00) per month from January 2001 to December 2002, plus ten percent (10%) increase for each and every succeeding years thereafter as stipulated in paragraph 2(a) of the Contract of Lease x x x, until the [Spouses Latip] have completely vacated the leased premises subject of this lease. Finally[,] the [Spouses Latip] are hereby ordered to PAY [Rosalie] the amount of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees and TWO THOUSAND PESOS (P2,000.00) per [Rosalies] appearance in Court as appearance fee and to PAY the cost of this suit. [Spouses Latips] counterclaim is hereby DISMISSED for lack of merit. SO ORDERED.7 In stark contrast, the RTC reversed the MeTC and ruled in favor of Spouses Latip. The RTC did not give credence to the contract of lease, ruling that it was not notarized and, in all other substantial aspects, incomplete. Further on this point, the RTC noted that the contract of lease lacked: (1) the signature of Ferdinand Chua, Rosalies husband; (2) the signatures of Spouses Latip on the first page thereof; (3) the specific dates for the term of the contract which only stated that the lease is for "six (6) y[ea]rs only starting from December 1999 or up to December 2005"; (4) the exact date of execution of the document, albeit the month of December and year 1999 are indicated therein; and (5) the provision for payment of deposit or advance rental which is supposedly uncommon in big commercial lease contracts. The RTC believed the claim of Spouses Latip that the contract of lease was modified and supplemented; and the entire lease rentals for the two (2) cubicles for six (6) years had already been paid by Spouses Latip in the amount of P2,570,000.00. As to Rosalies claim that her receipt of P2,570,000.00 was simply goodwill payment by prospective lessees to

their lessor, and not payment for the purchase of lease rights, the RTC shot this down and pointed out that, apart from her bare allegations, Rosalie did not adduce evidence to substantiate this claim. On the whole, the RTC declared an existent lease between the parties for a period of six (6) years, and already fully paid for by Spouses Latip. Thus, Spouses Latip could not be ejected from the leased premises until expiration of the lease period. The RTC disposed of the appeal, viz.: WHEREFORE, all the foregoing considered, the appealed decision of the [MeTC] dated January 13, 2004 is reversed as judgment is hereby rendered for the [Spouses Latip] and against [Rosalie], ordering the latter to pay the former (1) the sum of PhP1,000,000.00 as moral damages; (2) the sum of PhP500,000.00 as exemplary damages; (3) the sum of PhP250,000.00 plus PhP3,000.00 per court appearance as and for attorneys fees; and (4) costs of suit. SO ORDERED.8 In yet another turn of events, the CA, as previously mentioned, reversed the RTC and reinstated the decision of the MeTC. The CA ruled that the contract of lease, albeit lacking the signature of Ferdinand and not notarized, remained a complete and valid contract. As the MeTC had, the CA likewise found that the alleged defects in the contract of lease did not render the contract ineffective. On the issue of whether the amount of P2,570,000.00 merely constituted payment of goodwill money, the CA took judicial notice of this common practice in the area of Baclaran, especially around the Redemptorist Church. According to the appellate court, this judicial notice was bolstered by the Joint Sworn Declaration of the stallholders at Roferxane Bldg. that they all had paid goodwill money to Rosalie prior to occupying the stalls thereat. Thus, ruling on Rosalies appeal, the CA disposed of the case: WHEREFORE, in view of the foregoing, the Petition for Review is hereby GRANTED. The assailed decision of RTC Paraaque City Branch 274 dated September 24, 2004 is hereby REVERSED and SET ASIDE, and the January 13, 2004 decision of the MeTC is REINSTATED and AFFIRMED en toto. SO ORDERED.9 Not surprisingly, Spouses Latip filed the present appeal. The singular issue for our resolution is whether Spouses Latip should be ejected from the leased cubicles.

As previously adverted to, the CA, in ruling for Rosalie and upholding the ejectment of Spouses Latip, took judicial notice of the alleged practice of prospective lessees in the Baclaran area to pay goodwill money to the lessor. We disagree. Sections 1 and 2 of Rule 129 of the Rules of Court declare when the taking of judicial notice is mandatory or discretionary on the courts, thus: SECTION 1. Judicial notice, when mandatory. A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. SEC. 2. Judicial notice, when discretionary. A court may take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration or ought to be known to judges because of their judicial functions. On this point, State Prosecutors v. Muro10 is instructive: I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to take judicial notice is to be exercised by courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the negative. Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This is because the court assumes that the matter is so notorious that it will not be disputed. But judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he is not authorized to make his individual knowledge of a fact, not generally or professionally known, the basis of his action. Judicial cognizance is taken only of those matters which are "commonly" known. Things of "common knowledge," of which courts take judicial notice, may be matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided

they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person.11 We reiterated the requisite of notoriety for the taking of judicial notice in the recent case of Expertravel & Tours, Inc. v. Court of Appeals,12 which cited State Prosecutors: Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. Things of "common knowledge," of which courts take judicial notice, may be matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are such of universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person. As the common knowledge of man ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no constructive knowledge.
1avv phi 1

From the foregoing provisions of law and our holdings thereon, it is apparent that the matter which the appellate court took judicial notice of does not meet the requisite of notoriety. To begin with, only the CA took judicial notice of this supposed practice to pay goodwill money to the lessor in the Baclaran area. Neither the MeTC nor the RTC, with the former even ruling in favor of Rosalie, found that the practice was of "common knowledge" or notoriously known. We note that the RTC specifically ruled that Rosalie, apart from her bare allegation, adduced no evidence to prove her claim that the amount of P2,570,000.00 simply constituted the payment of goodwill money. Subsequently, Rosalie attached an annex to her petition for review before the CA, containing a joint declaration under oath by other stallholders in Roferxane Bldg. that they had paid goodwill money to Rosalie as their lessor. On this score, we emphasize that the reason why our rules on evidence provide for matters that need not be proved under Rule 129, specifically on judicial notice, is to dispense with the taking of the usual form of evidence on a certain matter so notoriously known, it will not be disputed by the parties. However, in this case, the requisite of notoriety is belied by the necessity of attaching documentary evidence, i.e., the Joint Affidavit of the stallholders, to Rosalies appeal before

the CA. In short, the alleged practice still had to be proven by Rosalie; contravening the title itself of Rule 129 of the Rules of Court What need not be proved. Apparently, only that particular division of the CA had knowledge of the practice to pay goodwill money in the Baclaran area. As was held in State Prosecutors, justices and judges alike ought to be reminded that the power to take judicial notice must be exercised with caution and every reasonable doubt on the subject should be ample reason for the claim of judicial notice to be promptly resolved in the negative. Ultimately, on the issue of whether Spouses Latip ought to be ejected from the leased cubicles, what remains in evidence is the documentary evidence signed by both parties the contract of lease and the receipts evidencing payment of P2,570,000.00. We need not be unduly detained by the issue of which documents were executed first or if there was a novation of the contract of lease. As had been found by the RTC, the lease contract and the receipts for the amount ofP2,570,000.00 can be reconciled or harmonized. The RTC declared: Definitely, the parties entered into a lease agreement over two (2) cubicles of the 1st and 2nd floors of Roferxane (Roferland) Building, a commercial building located at 158 Quirino Avenue, corner Redemptorist Road, Baclaran, Paraaque City and belonging to [Rosalie]. The lease agreement is for a term of six (6) years commencing in December 1999 up to December 2005. This agreement was embodied in a Contract of Lease x x x. The terms of this lease contract, however, are modified or supplemented by another agreement between the parties executed and or entered into in or about the time of execution of the lease contract, which exact date of execution of the latter is unclear. 13 We agree with the RTCs holding only up to that point. There exists a lease agreement between the parties as set forth in the contract of lease which is a complete document. It need not be signed by Ferdinand Chua as he likewise did not sign the other two receipts for P500,000.00 and P70,000.00, respectively, which contained only the signature of Rosalie. Besides, it is undisputed that Rosalie owns and leases the stalls in Roferxane Bldg.; thus, doing away with the need for her husbands consent. The findings of the three lower courts concur on this fact. The contract of lease has a period of six (6) years commencing in December 1999. This fact is again buttressed by Spouses Latips admission that they occupied the property forthwith in December 1999, bearing in mind the brisk sales during the holiday season. On the conflicting interpretations by the lower courts of the receipts amounting to P2,570,000.00, we hold that the practice of payment of goodwill money in the Baclaran area is an inadequate subject of judicial notice. Neither was Rosalie able to provide sufficient evidence that, apart from the belatedly submitted Joint Affidavit of the stallholders of Roferxane Bldg., the said amount was simply for the payment of goodwill money, and not payment for advance rentals by Spouses Latip. In interpreting the evidence before us, we are guided by the Civil Code provisions on interpretation of contracts, to wit:

Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. Art. 1372. However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those which the parties intended to agree. Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be understood as bearing that import which is most adequate to render it effectual. The RTC was already on the right track when it declared that the receipts for P2,570,000.00 modified or supplemented the contract of lease. However, it made a quantum leap when it ruled that the amount was payment for rentals of the two (2) cubicles for the entire six-year period. We cannot subscribe to this finding. To obviate confusion and for clarity, the contents of the receipts, already set forth above, are again reproduced: 1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,] Baclaran P[ara]que City. ROFERLAND Bldg. with the terms 6 yrs. Contract. P2,000,000.00 CHECK # 3767924 FAR EAST BANK (sgd.) ____________________ Rosalie Chua

(sgd.) ____________________ Ferdinand Chua 2. Received cash P500,000.00 From Moshiera Latip (sgd.) Rosalie Chua ____________________ Received by

12/10/99

3. Received cash P70,000.00 from Moshiera Latip (sgd.) ____________________ Received by:14

12-11-99

There is nothing on the receipts and on record that the payment and receipt of P2,570,000.00 referred to full payment of rentals for the whole period of the lease. All three receipts state Rosalies receipt of cash in varying amounts. The first receipt for P2,000,000.00 did state payment for two (2) cubicles, but this cannot mean full payment of rentals for the entire lease period when there are no words to that effect. Further, two receipts were subsequently executed pointing to the obvious fact that the P2,000,000.00 is not for full payment of rentals. Thus, since the contract of lease remained operative, we find that Rosalies receipt of the monies should be considered as advanced rentals on the leased cubicles. This conclusion is bolstered by the fact that Rosalie demanded payment of the lease rentals only in 2000, a full year after the commencement of the lease. Finally, we note that the lease ended in 2005. Consequently, Spouses Latip can be ejected from the leased premises. They are liable to Rosalie for unpaid rentals on the lease of the two (2) cubicles in accordance with the stipulations on rentals in the Contract of Lease. However, the amount of P2,570,000.00, covering advance rentals, must be deducted from this liability of Spouses Latip to Rosalie. WHEREFORE, premises considered, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 89300 is REVERSED. The petitioners, spouses Omar and Moshiera Latip, are liable to respondent Rosalie Chua for unpaid rentals minus the amount of P2,570,000.00 already received by her as advance rentals. No costs. SO ORDERED. G.R. No. 156052 March 7, 2007

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S. TUMBOKON,Petitioners, vs. HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent. DECISION CORONA, J.: In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T. Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of the City of Manila, to enforce Ordinance No. 8027. The antecedents are as follows. On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No. 8027.2 Respondent mayor approved the ordinance on November 28, 2001.3 It became effective on December 28, 2001, after its publication.4 Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units, a principle described as the power inherent in a government to enact

laws, within constitutional limits, to promote the order, safety, health, morals and general welfare of the society.5 This is evident from Sections 1 and 3 thereof which state: SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety, and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan in the west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from Industrial II to Commercial I. xxx xxx xxx SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of effectivity of this Ordinance within which to cease and desist from the operation of businesses which are hereby in consequence, disallowed. Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the owners and operators of businesses disallowed under Section 1 to cease and desist from operating their businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the area are the so-called "Pandacan Terminals" of the oil companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation. However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the oil companies agreed to perform the following: Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing of this MOU, undertake a program to scale down the Pandacan Terminals which shall include, among others, the immediate removal/decommissioning process of TWENTY EIGHT (28) tanks starting with the LPG spheres and the commencing of works for the creation of safety buffer and green zones surrounding the Pandacan Terminals. xxx Section 2. Consistent with the scale-down program mentioned above, the OIL COMPANIES shall establish joint operations and management, including the operation of common, integrated and/or shared facilities, consistent with international and domestic technical, safety, environmental and economic considerations and standards. Consequently, the joint operations of the OIL COMPANIES in the Pandacan Terminals shall be limited to the common and integrated areas/facilities. A separate agreement covering the commercial and operational terms and conditions of the joint operations, shall be entered into by the OIL COMPANIES.

Section 3. - The development and maintenance of the safety and green buffer zones mentioned therein, which shall be taken from the properties of the OIL COMPANIES and not from the surrounding communities, shall be the sole responsibility of the OIL COMPANIES. The City of Manila and the DOE, on the other hand, committed to do the following: Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with the view of implementing the spirit and intent thereof. Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU, enable the OIL COMPANIES to continuously operate in compliance with legal requirements, within the limited area resulting from the joint operations and the scale down program. Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES compliance with the provisions of this MOU. Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and green zones and shall exert all efforts at preventing future occupation or encroachment into these areas by illegal settlers and other unauthorized parties. The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution, the Sangguniandeclared that the MOU was effective only for a period of six months starting July 25, 2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special business permits to the oil companies. Resolution No. 13, s. 2003 also called for a reassessment of the ordinance. 10 Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the terminals of the oil companies.11 The issues raised by petitioners are as follows: 1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order the removal of the Pandacan Terminals, and 2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal Ordinance No. 8027.12 Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the Local Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the Pandacan Terminals of the oil companies. Instead, he has allowed them to stay. Respondents defense is that Ordinance No. 8027 has been superseded by the MOU and the resolutions.14However, he also confusingly argues that the ordinance and MOU are not

inconsistent with each other and that the latter has not amended the former. He insists that the ordinance remains valid and in full force and effect and that the MOU did not in any way prevent him from enforcing and implementing it. He maintains that the MOU should be considered as a mere guideline for its full implementation.15 Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station. Mandamus is an extraordinary writ that is employed to compel the performance, when refused, of a ministerial duty that is already imposed on the respondent and there is no other plain, speedy and adequate remedy in the ordinary course of law. The petitioner should have a well-defined, clear and certain legal right to the performance of the act and it must be the clear and imperative duty of respondent to do the act required to be done. 17 Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is questionable or over which a substantial doubt exists. The principal function of the writ of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is neither the office nor the aim of the writ to secure a legal right but to implement that which is already established. Unless the right to the relief sought is unclouded, mandamus will not issue.18 To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance, petitioner SJS states that it is a political party registered with the Commission on Elections and has its offices in Manila. It claims to have many members who are residents of Manila. The other petitioners, Cabigao and Tumbokon, are allegedly residents of Manila. We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding concerns a public right and its object is to compel a public duty, the people who are interested in the execution of the laws are regarded as the real parties in interest and they need not show any specific interest.19 Besides, as residents of Manila, petitioners have a direct interest in the enforcement of the citys ordinances. Respondent never questioned the right of petitioners to institute this proceeding. On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor, to "enforce all laws and ordinances relative to the governance of the city.">20 One of these is Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it has not been repealed by theSanggunian or annulled by the courts.21 He has no other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing the duty. The reason for this is obvious. It might seriously hinder the transaction of public business if these officers were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing duties upon them and which have not judicially been declared unconstitutional. Officers of the government from the highest to the lowest are creatures of the law and are bound to obey it. 23

The question now is whether the MOU entered into by respondent with the oil companies and the subsequent resolutions passed by the Sanggunian have made the respondents duty to enforce Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend or repeal Ordinance No. 8027.

We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of Manila expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing Ordinance No. 8027.24

Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade Center in New York City. The objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely occur in case of a terrorist attack 25 on the Pandacan Terminals. No reason exists why such a protective measure should be delayed.

WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance No. 8027.

SO ORDERED.

RENATO C. CORONA Associate Justice

[G.R. Nos. 135695-96. October 12, 2000]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, TUNDAG, accused-appellant. DECISION

QUISUMBING, J.:

vs. TOMAS

For automatic review is the judgment of the Regional Trial Court of Mandaue City, Branch 28, in Criminal Cases Nos.DU-6186 and DU-6203, finding appellant Tomas Tundag guilty of two counts of incestuous rape and sentencing him to death twice. On November 18, 1997, private complainant Mary Ann Tundag filed with the Mandaue City Prosecutors Office two separate complaints for incestuous rape. The first complaint, docketed as Criminal Case No. DU-6186, alleged: That on or about the 5th day of September, 1997, in the City of Mandaue, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, being the father of complainant MARY ANN TUNDAG, who is a 13-year-old girl, with deliberate intent, did then and there wilfully, unlawfully and feloniously have sexual intercourse with the said offended party against the latters will. CONTRARY TO LAW.[1]

The other, docketed as Criminal Case No. DU-6203, averred: That on or about the 7th day of November, 1997, in the City of Mandaue, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, being the father of complainant MARY ANN TUNDAG, who is a 13-year-old girl, with deliberate intent, did then and there wilfully, unlawfully and feloniously have sexual intercourse with the said offended party against the latters will. CONTRARY TO LAW.[2] Upon arraignment appellant, assisted by counsel de parte, pleaded Not Guilty to the charges. The two cases were consolidated and a joint trial ensued. Appellants defense was bare denial. He claimed that private complainant had fabricated the rape charges against him since he and his daughter, had a quarrel when he accordingly reprimanded her for going out whenever he was not at home.[3] Appellant did not present any witness to reinforce his testimony. On August 31, 1998, the trial court rendered its decision, thus: WHEREFORE, foregoing premises considered, Joint Judgment is hereby rendered, to wit: I. In Criminal Case No. DU-6186 a) Finding the herein accused TOMAS TUNDAG guilty beyond reasonable doubt for the crime of rape, said accused is hereby sentenced to the penalty of death; b) To indemnify the offended party Mary Ann Tundag the following amounts: (1) P50,000.00 by reason of the commission of the offense of rape upon her; and (2) Another P50,000.00 as moral and exemplary damages under Article 2219 in relation to Articles 2217 and 2230 of the New Civil Code for the pain and moral shock suffered by her and for the commission of the crime of rape with one qualifying aggravating circumstance; and c) To pay the costs. II. In Criminal Case No. DU-6203 -

a) Finding the herein accused TOMAS TUNDAG guilty beyond reasonable doubt for the crime of rape, said accused is hereby sentenced to the penalty of death; b) To indemnify the offended party Mary Ann Tundag the following amounts: (1) P50,000.00 by reason of the commission of the offense of rape upon her; and (2) Another P50,000.00 as moral and exemplary damages under Article 2219 in relation to Articles 2217 and 2230 of the New Civil Code for the pain and moral shock suffered by her and for the commission of the crime of rape with one qualifying aggravating circumstance; and (3) To pay the costs. SO ORDERED.[4] In its judgment, the court below gave credence to complainants version of what accused did to her. The evidence for the prosecution as adduced during the trial on the merits clearly shows that private complainant Mary Ann Tundag is a 13 year old girl who does not know how to read and write and has an IQ of 76% which is a very low general mental ability and was living with her father, the herein accused, at Galaxy Compound, Mandaue City. xxx That on September 5, 1997 at about 10:00 oclock in the evening, she was in the house together with her father. But before she went to sleep, her father was already lying down on the mat while herself (sic) just lied down at his head side which was not necessarily beside him. However, when she was already sleeping, she noticed that her father who was already undressed was beside her and was embracing her. Then, he undressed her which she resisted but her father used a knife and told her that he would kill her if she shouts and after that, he inserted his penis into her vagina and told her not to shout or tell anyone. In effect, his penis penetrated her genital, which made her vagina bleed and was very painful. That when the penis of her father was already inserted in her vagina, her father was all the time asking by saying (sic) : Does it feel good? And at the same time, he was laughing and further, told her that a woman who does not marry can never enter heaven and he got angry with her when she contradicted his statement.

That while the penis of her father was inside her vagina and (he) was humping over her, she felt intense pain that she cried and told him to pull it out but did not accede and in fact, said: Why will I pull it out when it feels so good(?) That after removing his penis from her vagina and after telling her that she could not go to heaven if she did not get married, her father just stayed there and continued smoking while she cried. That in the evening of November 7, 1997, she was at home washing the dishes while her father was just smoking and squatting. That after she finished washing the dishes, she lied (sic) down to sleep when her father embraced her and since she does not like what he did to her, she placed a stool between them but he just brushed it aside and laid down with her and was able to take her womanhood again by using a very sharp knife which he was holding and was pointing it at the right side of her neck which made her afraid. That in the early morning of the following day, she left her fathers place and went to her neighbor by the name of Bebie Cabahug and told her what had happened to her, who, in turn, advised her to report the matter to the police, which she did and accompanied by the policemen, she went to the Southern Islands Hospital where she was examined and after her medical examination, she was brought back by the police and was investigated by them.[5] Appellants claim that the complainants charges were manufactured did not impress the trial court, which found him twice guilty of rape. Now before us, appellant assails his double conviction, simply contending that:[6] THE TRIAL COURT HAS COMMITTED AN ERROR IN NOT ABSOLVING THE ACCUSED-APPELLANT OF THE CRIMES CHARGED IN THE INFORMATIONS DESPITE THE PRESENCE OF REASONABLE DOUBT TO EXCULPATE HIM OF THE SAME. Appellant flatly denies that the incidents complained of ever took place. He contends that on September 5, 1997, he was working as a watch repairman near Gals Bakery in Mandaue City Market and went home tired and sleepy at around 11:00 oclock that evening. On November 7, 1997, he claims he was at work. In his brief, he argues that it was impossible for him to have raped his daughter because when the incidents allegedly transpired, he went to work and naturally, being exhausted and tired, it is impossible for him to do such wrongdoings.[7]

The Office of the Solicitor General disagrees with appellant and urges the Court to affirm the trial courts decision, with the recommendation that the award of damages and indemnity ex delicto be modified to conform to prevailing jurisprudence. Considering the gravity of the offense charged as a heinous crime and the irreversibility of the penalty of death imposed in each of these cases before us, the Court leaves no stone unturned in its review of the records, including the evidence presented by both the prosecution and the defense. Conviction must rest on nothing less than a moral certainty of guilt.[8] But here we find no room to disturb the trial courts judgment concerning appellants guilt, because his defense is utterly untenable. Appellants defense of alibi and denial is negative and self-serving. It hardly counts as a worthy and weighty ground for exculpation in a trial involving his freedom and his life. Against the testimony of private complainant who testified on affirmative matters,[9] such defense is not only trite but pathetic. Denial is an inherently weak defense, which becomes even weaker in the face of the positive identification by the victim of the appellant as the violator of her honor.[10] Indeed, we find that private complainant was unequivocal in charging appellant with ravishing her. The victims account of the rapes complained of was straightforward, detailed, and consistent.[11] Her testimony never wavered even after it had been explained to her that her father could be meted out the death penalty if found guilty by the court.[12] In a prosecution for rape, the complainants credibility is the single most important issue.[13] The determination of the credibility of witnesses is primarily the function of the trial court. The rationale for this is that the trial court has the advantage of having observed at first hand the demeanor of the witnesses on the stand and, therefore, is in a better position to form an accurate impression and conclusion.[14]Absent any showing that certain facts of value have clearly been overlooked, which if considered could affect the result of the case, or that the trial courts finding are clearly arbitrary, the conclusions reached by the court of origin must be respected and the judgment rendered affirmed.[15] Moreover, we note here that private complainants testimony is corroborated by medical findings that lacerations were present in her hymen. The examination conducted by Dr. Bessie Acebes upon the private complainant yielded the following results: Genitalia: grossly female Pubic Hairs: scanty

Labia Majora: coaptated Labia Minora: do Fourchette: U-shaped Vestibule: pinkish Hymen: + old healed laceration at 3 and 9 oclock position(s). Orifice: admits 2 fingers with ease Vagina: Walls: pinkish Ruganities: prominent Uterus: small Cervix: closed Discharges: Mucoid, minimal Smears: Conclusions: sperm identification (-) Gram staining of vaginal disc.[16] Dr. Acebes testified that her findings of healed hymenal lacerations in the complainants private parts meant a history of sexual congress on her part.[17] According to her, the lacerations may have been caused by the entry of an erect male organ into complainants genitals. The examining physician likewise pointed out that previous coitus may be inferred from complainants U-shaped fourchette since the fourchette of a female who has not yet experienced sexual intercourse is V-shaped.[18] While Dr. Acebes conceded under cross-examination, that the existence of the datum U-shape(d) fourchette does not conclusively and absolutely mean that there was sexual intercourse or contact because it can be caused by masturbation of fingers or other things,[19] nonetheless, the presence of the hymenal lacerations tends to support private complainants claim that she was raped by appellant.

Appellant next contends that his daughter pressed the rape charges against him because she had quarreled with him after he had castigated her for misbehavior. He stresses that the prosecution did not rebut his testimony regarding his quarrel or misunderstanding with private complainant. He urges us to consider the charges filed against him as the result of his frequent castigation of her delinquent behavior.[20] Such allegation of a family feud, however, does not explain the charges away. Filing a case for incestuous rape is of such a nature that a daughters accusation must be taken seriously. It goes against human experience that a girl would fabricate a story which would drag herself as well as her family to a lifetime of dishonor, unless that is the truth, for it is her natural instinct to protect her honor.[21] More so, where her charges could mean the death of her own father, as in this case. Appellant likewise points out that it was very unlikely for him to have committed the crimes imputed to him considering that he and his wife had ten children to attend to and care for. This argument, however, is impertinent and immaterial. Appellant was estranged from his wife, and private complainant was the only child who lived with him.[22] As pointed out by the Solicitor General, appellant was thus free to do as he wished to satisfy his bestial lust on his daughter.[23] Nor does appellants assertion that private complainant has some psychological problems and a low IQ of 76 in any way favor his defense. These matters did not affect the credibility of her testimony that appellant raped her twice. We note that the victim understood the consequences of prosecuting the rape charges against her own father, as shown by the following testimony of the victim on cross-examination:
Q : Were you informed that if, and when your father will be found guilty, your father will be sentenced to death? A : Yes. Q : Until now you wanted that your father will be sentenced by death? A (Witness nodding.)

xxx
Q : I will inform you, Miss Witness, that you have filed two cases against your father and in case your father would be found guilty, two death sentences will be imposed against him? A: Yes. Q: With that information, do you still want this case would proceed? A: I want this to proceed.[24]

Indeed, appellant is guilty. But is the penalty of death imposed on him correct? Section 335 of the Revised Penal Code, as amended by Section 11 of R.A. No. 7659,[25] penalizes rape of a minor daughter by her father as qualified rape[26] and a heinous crime. In proving such felony, the prosecution must allege and prove the elements of rape: (1) sexual congress; (2) with woman; (3) by force or without her consent[27] and in order to warrant the imposition of capital punishment, the additional elements that: (4) the victim is under 18 years of age at the time of the rape and (5) the offender is a parent of the victim.[28] In this case, it was sufficiently alleged and proven that the offender was the victims father.[29] But the victims age was not properly and sufficiently proved beyond reasonable doubt. She testified that she was thirteen years old at the time of the rapes. However, she admitted that she did not know exactly when she was born because her mother did not tell her. She further said that her birth certificate was likewise with her mother. In her own words, the victim testified - [30]
COURT TO WITNESS Q: When were you born? A: I do not know. Q: You do not know your birthday? A: My mama did not tell me exactly when I asked her. COURT: Proceed. FISCAL PEREZ: For our failure to secure the Birth Certificate Your Honor, may we just request for judicial notice that the victim here is below 18 years old. ATTY. SURALTA: Admitted.

Judicial notice is the cognizance of certain facts which judges may properly take and act on without proof because they already know them.[31] Under the Rules of Court, judicial notice may either be mandatory or discretionary. Section 1 of Rule 129 of the Rules of Court provides when court shall take mandatory judicial notice of facts SECTION 1. Judicial notice, when mandatory. - A court shall take judicial notice without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive

and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. Section 2 of Rule 129 enumerates the instances when courts may take discretionary judicial notice of facts SEC. 2. Judicial notice, when discretionary. - A court may take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration or ought to be known to judges because of their judicial functions. Thus, it can be considered of public knowledge and judicially noticed that the scene of the rape is not always nor necessarily isolated or secluded for lust is no respecter of time or place. The offense of rape can and has been committed in places where people congregate, e.g. inside a house where there are occupants, a five (5) meter room with five (5) people inside, or even in the same room which the victim is sharing with the accuseds sister.[32] The Court has likewise taken judicial notice of the Filipinas inbred modesty and shyness and her antipathy in publicly airing acts which blemish her honor and virtue.[33] On the other hand, matters which are capable of unquestionable demonstration pertain to fields of professional and scientific knowledge. For example, in People v. Alicante,[34] the trial court took judicial notice of the clinical records of the attending physicians concerning the birth of twin baby boys as premature since one of the alleged rapes had occurred 6 to 7 months earlier. As to matters which ought to be known to judges because of their judicial functions, an example would be facts which are ascertainable from the record of court proceedings, e.g. as to when court notices were received by a party. With respect to other matters not falling within the mandatory or discretionary judicial notice, the court can take judicial notice of a fact pursuant to the procedure in Section 3 of Rule 129 of the Rules of Court which requires that SEC. 3. Judicial notice, when hearing necessary. - During the trial, the court, on its own initiative, or on request of a party, may announce its intention to take judicial notice of any matter and allow the parties to be heard thereon. After the trial, and before judgment or on appeal, the proper court, on its own initiative or on request of a party, may take judicial notice of any matter and allow the parties to be heard thereon if such matter is decisive of a material issue in the case.

In this case, judicial notice of the age of the victim is improper, despite the defense counsels admission, thereof acceding to the prosecutions motion. As required by Section 3 of Rule 129, as to any other matters such as age, a hearing is required before courts can take judicial notice of such fact. Generally, the age of the victim may be proven by the birth or baptismal certificate of the victim, or in the absence thereof, upon showing that said documents were lost or destroyed, by other documentary or oral evidence sufficient for the purpose. Thus, in People v. Rebancos, 172 SCRA 426 (1989), the victim was below 12 and we found that the rape committed was statutory rape. The mother testified that her daughter was born on October 26, 1974, and so was only 9 years old at the time of the rape on February 12, 1984. Although no birth certificate was presented because the victims birth had allegedly not been registered, her baptismal certificate was duly presented. Hence, we ruled that the mothers testimony coupled with the presentation of the baptismal certificate was sufficient to establish that the victim was below 12 at the time of the rape. However, in People v. Vargas, 257 SCRA 603 (1996), we ruled that appellant can only be convicted of simple rape, and not statutory rape, because of failure of the prosecution to prove the minority of the victim, who was allegedly 10 years old at the time of the rape. The prosecution failed to present either the birth or baptismal certificate of the victim. Also there was no showing that the said documents were lost or destroyed to justify their nonpresentation. We held that testimony of the victim and her aunt were hearsay, and that it was not correct for the trial court to judge the age of the victim by her appearance. In several recent cases, we have emphasized the need for independent proof of the age of the victim, aside from testimonial evidence from the victim or her relatives. In People v. Javier,[35] we stressed that the prosecution must present independent proof of the age of the victim, even though it is not contested by the defense. The minority of the victim must be proved with equal certainty and clearness as the crime itself. In People v. Cula,[36] we reiterated that it is the burden of the prosecution to prove with certainty the fact that the victim was below 18 when the rape was committed in order to justify the imposition of the death penalty. Since the record of the case was bereft of any independent evidence thereon, such as the victims duly certified Certificate of Live Birth, accurately showing private complainants age, appellant could not be convicted of rape in its qualified form. In People v. Veloso,[37] the victim was alleged to have been only 9 years of age at the time of the rape. It held that the trial court was correct when it ruled that the

prosecution failed to prove the victims age other than through the testimony of her father and herself. Considering the statutory requirement in Section 335 of the Revised Penal Code as amended by R.A. No. 7659 and R.A. No. 8353, we reiterate here what the Court has held in Javier without any dissent, that the failure to sufficiently establish victims age by independent proof is a bar to conviction for rape in its qualified form. For, in the words of Melo, J., independent proof of the actual age of a rape victim becomes vital and essential so as to remove an iota of doubt that the case falls under the qualifying circumstances for the imposition of the death penalty set by the law. In this case, the first rape was committed on September 5, 1997 and is therefore governed by the death penalty law, R.A. 7659. The penalty for the crime of simple rape or rape in its unqualified form under Art. 335 of the Revised Penal Code, as amended by Sec. 11 of R.A. 7659, is reclusion perpetua. The second rape was committed on November 7, 1997, after the effectivity of R.A. 8353, also known as the Anti-Rape Law of 1997, which took effect on October 22, 1997. The penalty for rape in its unqualified form remains the same. As to civil indemnity, the trial court correctly awarded P50,000.00 for each count of rape as civil indemnity. However, the award of another P50,000.00 as moral and exemplary damages under Article 2219 in relation to Articles 2217 and 2230 of the Civil Code for each count is imprecise. In rape cases, the prevailing jurisprudence permits the award of moral damages without need for pleading or proof as to the basis thereof.[38] Thus, pursuant to current jurisprudence, we award the amount of P50,000.00 as moral damages for each count of rape. The award of exemplary damages separately is also in order, but on a different basis and for a different amount. Appellant being the father of the victim, a fact duly proved during trial, we find that the alternative circumstance of relationship should be appreciated here as an aggravating circumstance. Under Article 2230 of the New Civil Code, exemplary damages may be imposed when the crime was committed with one or more aggravating circumstances. Hence, we find an award of exemplary damages in the amount of P25,000.00 proper. Note that generally, in rape cases imposing the death penalty, the rule is that relationship is no longer appreciated as a generic aggravating circumstance in view of the amendments introduced by R.A. Nos. 7659 and 8353. The father-daughter relationship has been treated by Congress in the nature of a special circumstance which makes the imposition of the death penalty mandatory.[39] However, in this case, the

special qualifying circumstance of relationship was proved but not the minority of the victim, taking the case out of the ambit of mandatory death sentence. Hence, relationship can be appreciated as a generic aggravating circumstance in this instance so that exemplary damages are called for. In rapes committed by fathers on their own daughters, exemplary damages may be imposed to deter other fathers with perverse tendency or aberrant sexual behavior from sexually abusing their own daughters.[40] WHEREFORE, the judgment of the Regional Trial Court of Mandaue City, Branch 28, in Criminal Case Nos. DU-6186 and DU-6203, is hereby MODIFIED as follows: appellant Tomas Tundag is found guilty of two (2) counts of simple rape; and for each count, sentenced to reclusion perpetua and ordered to pay the victim the amount of P50,000.00 as indemnity, P50,000.00 as moral damages, and P25,000.00 as exemplary damages. No pronouncement as to costs. SO ORDERED.
G.R. No. L-37420 July 31, 1984 MACARIA A. TORRES, petitioner, vs. COURT OF APPEALS, VICENTE SANTILLAN, ALFREDO NARCISO, TOMAS NARCISO, AMADO NARCISO, SALUD NARCISO, DEMETRIA NARCISO and ADELINA NARCISO, respondents. G.R. No. L-37421 July 31, 1984 MACARIA A. TORRES, petitioner, vs. COURT OF APPEALS, VICENTE SANTILLAN, ALFREDO NARCISO, SALUD NARCISO, BALDOMERO BUENAVENTURA, DEMETRIA NARCISO, LEONARDO QUINTO, ADELINA NARCISO, CESARIO PUNZALAN, TOMAS NARCISO and AMADO NARCISO, respondents. Juan R. Liwag for petitioner. Cesar Nocon for respondents.

MELENCIO-HERRERA, J.: This Petition for Review on Certiorari, treated as a special civil action. 1 prays that the judgment rendered by the then Court of Appeals in the consolidated cases, CA-G.R. NO.

34998-R entitled "Macaria A. Torres, plaintiff-appellee vs. Vicente Santillan, et al., defendants-appellants", and CA-G.R. No. 34999-R entitled "Vicente Santillan, et al., plaintiffs-appellants vs. Macaria A. Bautista, et al., defendants-appellees and the Resolution denying the Motion for Reconsideration and Petition for New Trial, be set aside; and that, instead, The Order of the Court of First Instance of August 7, 1963 be affirmed, or, in the alternative, that the case be remanded to it for new trial. Involved in this controversy are the respective claims of petitioner and private respondents over Lot No. 551 of the Sta. Cruz de Malabon Estate (part of the friar lands) in Tanza, Cavite, with an area of approximately 1,622 square meters. covered by Transfer Certificate of Title No. T-6804 issued in the name of the legal heirs of Margarita Torres. The facts of the case cover three generations. The propositus, Margarita Torres, during the Spanish regime, was married to Claro Santillan. Vicente and Antonina were begotten of this union. Claro died leaving Margarita a widow. Antonina married and had six children, namely: Alfredo, Salud (married to Baldomero Buenaventura), Demetria (married to Leonardo Quinto), Adelina (married to Cesario Punzalan), Tomas and Amado all surnamed Narciso, who, together with Vicente Santillan, are the private respondents. Antonina died before the institution of the cases while Vicente died on June 4, 1957, 2 during the pendency of the cases in the Trial Courts, without progeny . After the death of her husband, Margarita Torres cohabited with Leon Arvisu Arbole, without benefit of marriage. Out of their cohabitation, petitioner Macaria Torres (later married to Francisco Bautista) was born on June 20, 1898, and baptized on June 26, 1898. In a Certificate of Baptism issued by the Parish Priest of Tanza, Cavite, Leon Arvisu Arbole and Margarita Torres were named as father and mother of petitioner whose name was listed as Macaria Arvisu", (Exhibit "C" Another Baptismal Certificate, however, listed her name as Macaria Torres, while her father's name was left blank (Exhibit "4"). Subsequently, or on June 7, 1909, Leon Arbole and Margarita Torres were married (Exhibit "A"). Petitioner lived with and was reared by her parents. Margarita, the mother, died on December 20, 1931 (Exhibit "D"), while Leon, the father, passed away on September 14, 1933 (Exhibit " E "). Lot No. 551, an urban lot with an area of 1,622 sq. ms., more or less, had been leased temporarily by the Government (Lease No. 17) to Margarita Torres who was the actual occupant of the lot. The date of the lease cannot be determined with exactitude from the records. On December 13, 1910, the Government, through the Director of Lands, issued to Margarita Torres, Sale Certificate No. 222 (Exhibit "B") over the said lot at the price of P428.80, payable in 20 annual installments of P20.00 each. The rental/s previously paid of P17.40 was credited to the purchase price. Testimonial evidence is to the effect that Leon Arbole paid the installments out of his earnings as a water tender at the Bureau of Lands, Tanza, Cavite. The last installment, however, was paid on December 17, 1936, or three (3) years after his death. On August 25, 1933, twenty (20) days before his death, Leon Arbole sold and transferred in a notarial deed all his rights and interest to the one-half (1/2) portion of Lot No. 551 in favor of petitioner, for the sum of P300.00. 3

On June 6, 1953, Vicente Santillan executed an Affidavit claiming possession of Lot No. 551 and asking for the issuance of title in his name, which he filed with the Bureau of Lands. Based thereon, the Bureau of Lands issued the corresponding patent in the name of the legal heirs of Margarita Torres. Transfer Certificate of Title No. T-6804 was eventually issued by the Register of Deeds of Cavite on November 7, 1957, also in the name of said heirs. On June 3, 1954, private respondents filed a complaint against petitioner for Forcible Entry, with the Justice of the Peace Court of Tanza, Cavite, alleging that petitioner had entered a portion of Lot No. 551 without their consent, constructed a house. and refused to vacate upon demand. For her part, petitioner claimed that she is a co-owner of the lot in question, being one of the daughters of Margarita Torres. The ejectment case was decided against petitioner and the latter appealed to the then Court of First Instance of Cavite, where it was docketed as Civil Case No. 5547 (Ejectment Case). On June 8, 1954, petitioner instituted an action for partition of Lot No. 551 before the then Court of First Instance of Cavite, docketed as Civil Case No. 5505 (Partition Case), alleging that said lot was conjugal property of the spouses Margarita Torres and Leon Arbole, and that she is their legitimated child. Private respondents filed an Answer alleging that the lot belonged exclusively to Margarita Torres; that they are her only heirs, and that the complaint for partition should be dismissed. The Ejectment Case and the Partition Case were jointly tried and decided on November 20, 1958 with a finding that Lot No. 551 is the paraphernal property of Margarita Torres and adjudicating to private respondents two-thirds (2/3) of the property in equal shares, and to petitioner a one-third (1/3) portion. 4 Petitioner moved for reconsideration, which private respondents opposed. Pending its resolution, the Provincial Capitol of Cavite was burned, resulting in the complete destruction of the records of the two cases, which, however, were later partially reconstituted. On August 7, 1963, the then Court of First Instance of Cavite, Branch 1, issued an Order granting reconsideration and amending the Decision of November 20, 1958. The positive portion thereof reads as follows: Wherefore, judgment is hereby rendered in Civil Case No. .5505: (1) Declaring Macaria A. Torres as the legitimated child of the spouses Leon Arbole and Margarita Torres; (2) Declaring that Lot No. 551 of the Sta. Cruz de Malabon Estate is a conjugal partnership property of the spouses Leon Arbole and Margarita Torres; (3) Adjudicating four-sixths (4/6th of Lot No. 551 of S.C. de Malabon Estate to Macaria Torres, and two-sixths (2/6th) in equal shares to Alfredo, Tomas, Amado, Salud, Demetria and Adelina, all surnamed Narciso, legitimate children and heirs of the deceased Antonina Santillan, since Vicente Santillan is already dead. The parties may make the partition among themselves by

proper instruments of conveyance, subject to confirmation by the Court. In fairness, however, to the parties, each party should be alloted that portion of the lot where his or her house has been constructed, as far as this is possible. In case the parties are unable to agree upon the partition, the Court shall appoint three commissioners to make the partition. As to Civil Case No. 5547, the same is hereby dismissed.
Without costs in both cases.
5

In concluding that petitioner is a legitimated child, the Trial Court opined:

It is undisputed that when Macaria A. Torres was born on June 20, 1898, her parents, Leon Arbole and Margarita Torres, had the capacity to marry each other. There was no legal impediment for them to marry It has also been established that Macaria A. Torres had been taken care of, brought up and reared by her parents until they died. The certificate of baptism (Exh. "G") also shows that Macaria Torres was given the family name of Arvisu, which is also the family name of her father, Leon Arbole, and that her father is Leon Arvisu and her mother is Margarita Torres. Such being the case, Macaria A. Torres possessed the status of an acknowledged natural child. And when her parents were married on June 7, 1909, she became the legitimated daughter of on Arbole and 6 Margarita Torres.

Private respondents appealed. On April 2, 1973, the then Court of Appeals 7 rendered the judgment sought to be set aside herein, the decretal part of which states: Wherefore, judgment is hereby rendered in Civil Case No. 5505: (1) Declaring that Macaria A. Torres is not the legitimated child of the spouses Leon Arbole and Margarita Torres; (2) Declaring that Lot No. 551 of the Sta Cruz de Malabon Estate is a conjugal partnership property of the spouses Leon Arbole and Margarita Torres; and (3) Adjudicating one-half (1/2) of Lot No. 551 of S.C. de Malabon Estate to Macaria Torres, and the other half (1/2) in equal shares to Alfredo, Tomas, Amado, Salud, Demetria and Adelina, an surnamed Narciso, legitimate children and heirs of Antonina Santillan, since Vicente Santillan is already dead. The parties may make the partition among themselves by proper instruments of conveyance, subject to confirmation by the Court. In fairness, however, to the parties, each party should be alloted that portion of the lot where his or her house has been constructed, as far as this is possible. In case the parties are unable to agree upon the partition, the Court shall appoint three commissioners to make the partition. As to Civil Case No. 5547, the same is hereby dismissed.
Without costs in both cases.
8

The Appellate Court was of the opinion that: Macaria A. Torres is not a legitimated daughter of Leon Arvisu Arbole and Margarita Torres, the former not having been legally acknowledged before or after the marriage of her parents. As correctly pointed out by the appellants in their brief, the fact that she was taken cared of, brought up and reared by her parents until they died, and that the certificate of baptism (Exhibit "C") shows that she was given the family name of Arvisu did not bestow upon her the status of an acknowledged natural child.
Under Article 121 of the old Civil Code, the governing law on the matter, children shall be considered legitimated by subsequent marriage only when they have been acknowledged by the parents before or after the celebration thereof, and Article 131 of the same code provides that the acknowledgement of a natural child must be in the record of birth, in a will or in some public document. Article 131 then prescribed the form in which the acknowledgment of a natural child should be made. The certificate of baptism of Macaria A. Torres (Exhibit "C") is not the record of birth referred to in Article 131. This article of the old Civil Code 'requires that unless the acknowledgement is made in a will or other public document, it must be made in the record of birth, or in other words, in the civil 9 register (Samson vs. Corrales Tan, 48 PhiL 406).

A Motion for Reconsideration and for New Trial, dated April 16, 1973, was filed by petitioner. In support thereof, petitioner submitted a typewritten Sworn Statement, dated March 5, 1930, of spouses Leon Arvisu (Arbole) and Margarita Torres, 10 reading in full as follows: SWORN STATEMENT We, Leon Arvisu and Margarita Torres husband and wife respectively, of majority age, and residents of the Municipality of Tanza, Province of Cavite, P.I., after being duly sworn to according to law depose and say That Macaria de Torres is our legitimized daughter she being born out of wedlock on the 26 th of June 1898 all Tanza, Cavite, but as stated she was legitimized by our subsequent marriage. That at the time of her birth or conception, we, her parents could have married without dispensation had we desired. That as natural child our aforesaid daughter was surnamed de Torres after that of her mother's at the time she was baptized as per record on file in the Church. That as a legitimized daughter she should now be surnamed Arvisu after her father's family name. Wherefore, it is respectfully requested to anybody concerned that proper remedy be made for the change of the surname of said Macaria de Torres as desired.

In testimony hereof, we hereunto signed out names at Tanza, Cavite, this 5th day of March 1930.

(Thumbmarked) (Thumbmarked) LEON ARVISU MARGARITA TORRES Signed in the prsence of: (Sgd.) Illegible (Sgd.) Macaria Bautista x----------------------------------------------------x UNITED STATES OF AMERICA ) PHILIPPINE ISLANDS ) MUNICIPALITY OF TANZA ) ss PROVINCE OF CAVITE ) Subscribed and sworn to before me this 5th day of March 1930. The affiant Leon Arvisu exhibited to me no cedula certificate being exempt on account of going over 60 years of age and Margarita Torres having exhibited no cedula certificate being exempt on account of her sex. Witness my hand and seal of office on the date and place aforesaid. CONSTANCIO T. VELASCO Notary Public, Cavite Province Until Dec. 31, 1930.
Not. Reg. No. 56 P. No. 2 Book No. III Series of 1930. 11

The reason given for the non-production of the notarial document during trial was that the same was only found by petitioner's daughter, Nemensia A. Bautista, among the personal belongings of private respondent, Vicente Santillan, an adverse party, after his death and who may have attempted to suppress it. Private respondents, for their part, argued against new trial, and contended that it is not newly discovered evidence which could not have been produced during the trial by the exercise of due diligence. The Decision of the Appellate Court was rendered by a Division of three, composed of Justices Jesus Y. Perez, Jose N. Leuterio and Luis B. Reyes, ponente. When the Motion for Reconsideration and New Trial was considered, there was disagreement, possibly as to whether or not new trial should be granted in respect of the sworn statement of March 5, 1930. A Special Division of five was then formed, composed of Justices Antonio Lucero

Magno S. Gatmaitan, Lourdes P. San Diego, Jose N. Leuterio and Luis B. Reyes (Justice Perez having retired or having disqualified himself). In a minute resolution of August 24, 1973, the Division of five, by a vote of three or two, denied both reconsideration and new trial. To warrant review, petitioner, has summarized her submission based on two assignments of error. The first was expressed as follows: Although the Court of Appeals is correct in declaring that Macaria A. Torres is not the legitimated child of the spouses Leon Arbole and Margarita Torres, it has overlooked to include in its findings of facts the admission made by Vicente Santillan and the heirs of Antonina Santillan (herein respondents) that Macaria A. Torres and Vicente Santillan and Antonina Santillan are brother and sisters with a common mother Margarita Torres and they are the legal heirs and nearest of relatives of Margarita Torres, and as a consequence thereof, the Court of Appeals had drawn an incorrect conclusion in adjudicating the entire share of Margarita Torres in the conjugal property solely to Vicente Santillan and the heirs of Antonina Santillan. (emphasis supplied) As we understand it, petitioner has conceded, with which we concur, that, without taking account of the sworn statement of March 5, 1930, she cannot be considered a legitimated child of her parents. Continuous possession of the status of a natural child, fact of delivery by the mother, etc. will not amount to automatic recognition, but an action for compulsory recognition is still necessary, which action may be commenced only during the lifetime of the putative parents, subject to certain exceptions. 12 The admission adverted to appears in paragraph 3 of private respondents' original complaint in the Ejectment Case reading: the plaintiffs and the defendant Macaria A. Bautista are the legal heirs and nearest of kins of Margarita Torres, who died in Tanza, Cavite on December 20, 1931. (Emphasis supplied). The statement, according to petitioner, is an admission of her legitimation and is controlling in the determination of her participation in the disputed property. We are not persuaded. In the Amended Complaint filed by private respondents in the same Ejectment Case, the underlined portion was deleted so that the statement simply read: That the plaintiffs are the legal heirs and nearest of kin of Margarita Torres, who died at Tanza, Cavite, on December 20, 1931. In virtue thereof, the Amended Complaint takes the place of the original. The latter is regarded as abandoned and ceases to perform any further function as a pleading. The original complaint no longer forms part of the record. 13

If petitioner had desired to utilize the original complaint she should have offered it in evidence. Having been amended, the original complaint lost its character as a judicial admission, which would have required no proof, and became merely an extrajudicial admission, the admissibility of which, as evidence, required its formal offer. Contrary to petitioner's submission, therefore there can be no estoppel by extrajudicial admission made in the original complaint, for failure to offer it in evidence. 14 It should be noted that in the Partition Case private respondents, in their Answer (parag. 4), denied the legitimacy of petitioner. The second error attributed to the Appellate Court has been pleaded as follows: Also, the Court of Appeals has gravely abused its discretion when it denied the petition for new trial, knowing as it does that the judgment is clearly erroneous in view of the evidence which is offered and no amount of diligence on the part of the petitioner could it be produced in court at any time before it was offered as it was found from the personal belongings of Vicente Santillan, an adverse party, after his death. It is our considered opinion that new trial was warranted to prevent a possible miscarriage of justice. Assuming that the genuineness and due execution of the Sworn Statement of March 5, 1930 is established in accordance with procedural due process, a new trial would resolve such vital considerations as (1) whether or not said Sworn Statement qualifies as the public document prescribed in Article 131 of the old Civil Code; 15 (2) whether or not it conforms to an act of acknowledgment by the parents after the celebration of their marriage as required by Article 121 of the same code; 16 and (3) whether or not petitioner's signature as a witness to said document was the equivalent of the consent necessary for acknowledgment of an adult person under Article 133 of that Code. 17Affirmative answers would confer upon petitioner the status of a legitimated child of her parents, and would entitle her to enjoy hereditary rights to her mother's estate. Private respondents stress that since petitioner signed as a witness to the document she should be chargeable with knowledge of its existence, and, therefore, the Sworn Statement was not newly discovered evidence. In our view, the document can reasonably qualify as newly discovered evidence, which could not have been produced during the trial even with the exercise of due diligence; specially if it really had been in the possession of Vicente Santillan, an adverse party who, it was alleged, suppressed the document. In the interest of judicial expediency, the new trial can be conducted by respondent Appellate Court, now empowered to do so under Section 9 of Batas Pambansa Blg. 129. WHEREFORE, this case is hereby remanded to the now Intermediate Appellate Court for new trial, and depending on its outcome, said Court shall also resolve the respective participation of the parties in the disputed property, inclusive of the estate of the deceased Vicente Santillan. No costs. SO ORDERED.

Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.

G.R. No. 119053 January 23, 1997 FLORENTINO ATILLO III, petitioner, vs. COURT OF APPEALS, AMANCOR, INC. and MICHELL LHUILLIER, respondents. RESOLUTION

FRANCISCO, J.: This is a petition for review on certiorari of the decision of the respondent Court of Appeals in CA-G.R. No. 3677 promulgated on August 4, 1994 affirming in toto the decision of Branch 7 of the Regional Trial Court of Cebu City in Civil Case No. CEB-9801 entitled "Florentino L. Atillo III versus Amancor, Inc. and Michell Lhuillier". The material antecedents are as follows: On August 15, 1985, respondent Amancor, Inc. (hereinafter referred to as AMANCOR for brevity), a corporation then owned and controlled by petitioner Florentino L. Atillo III , contracted a loan in the amount of P1,000,000.00 with Metropolitan Bank and Trust Company, secured by real estate properties owned by the petitioner. 1 Before the said loan could be paid, petitioner entered into a Memorandum of Agreement dated June 14, 1988 (Annex "A" of the Complaint) with respondent Michell Lhuillier (hereinafter referred to as LHUILLIER for brevity) whereby the latter bought shares of stock in AMANCOR. As a consequence of the foregoing transaction, petitioner and LHUILLIER each became owner of 47% of the outstanding shares of stock of AMANCOR while the officers of the corporation owned the remaining 6%. 2 In view of the urgent and immediate need for fresh capital to support the business operations of AMANCOR, petitioner and LHUILLLER executed another Memorandum of Agreement on February 13, 1989 (Annex "B" of the Complaint) by virtue of which LHUILLIER undertook to invest additional capital in AMANCOR. 3 As an addendum to the foregoing, a Supplemental Memorandum of Agreement was entered into by the petitioner and LHUILLIER on March 11, 1989. 4 Relevant to the case at bar is a stipulation in the said Supplemental Memorandum of Agreement which provides as follows:
4. F.L. Atillo III may dispose off (sic) his properties at P. del Rosario St., Cebu City which may involve pre-payment of AMANCOR'S mortgage loan to the bank estimated at P300,000.00 and while AMANCOR may not yet be in the position to re-pay said amount 5 to him, it shall pay the interests to him equivalent to prevailing bank rate.

Pursuant to this stipulation, petitioner assumed AMANCOR's outstanding loan balance of P300,000.00 with Metropolitan Bank and Trust Company. After offsetting the amount of P300,000.00 with some of the accounts that petitioner had with AMANCOR, the amount which remained due to the petitioner was P199,888.89. Because of the failure of AMANCOR to satisfy its obligation to repay petitioner, the latter filed a complaint for collection of a sum of money docketed as Civil Case No. Ceb-9801 against AMANCOR and LHUILLLER before Branch 7 of the Regional Trial Court of Cebu City. At the pre-trial conference, petitioner, AMANCOR and LHUILLIER, assisted by their respective counsels, stipulated on the following: 1. That the parties admit the due execution and genuineness of the Memorandum of Agreement dated 14 June 1988 (Annex A), the Memorandum of Agreement dated 13 February 1989 (Annex B and Supplemental Agreement dated 11 March 1989 (Annex C);
2. That the defendants admit that the claim of the plaintiff amounted to P199,888.89 as of 6 October 1, 1990;

and submitted the following issues to be resolved by the trial court: a. From the aforesaid Annexes A, B and C, is Michell J. Lhuillier personally liable to the plaintiff?
b. What rate of interests shall the defendant corporation and Michell J. Lhuillier, if the 7 latter is liable, pay the plaintiff? (Emphasis supplied.)

On the basis of the stipulation of facts and the written arguments of the parties, the trial court rendered a decision in favor of the petitioner, ordering AMANCOR to pay petitioner the amount of P199,888.89 with interest equivalent to the bank rate prevailing as of March 11, 1989. LHUILLIER was, however, absolved of any personal liability therefor. 8 It is from the trial court's conclusion of non-liability that petitioner appealed to respondent court, arguing therein that as LHULLLIER signed the Memorandum of Agreement without the official participation nor ratification of AMANCOR, LHUILLIER should have been declared jointly and severally liable with AMANCOR. 9 The respondent court found petitioner's contention bereft of merit and held in part that: Contrary to plaintiffs-appellants (sic) allegation, the indebtedness of P199,888.89 was incurred by defendant AMANCOR, INC., alone. A thorough study of the records shows that plaintiff's cause of action for collection of a sum of money arose from "his payment of the defendant corporation's outstanding loan balance of P300,000.00 with Metropolitan Bank & Trust Company" . . . Considering the allegations in the complaint and those contained in the Memorandum of Agreement, the respondent court properly ruled that the liability was incurred by defendant AMANCOR, INC., singly. We grant that if plaintiff really believes that the indebtedness was incurred by

defendant Lhuillier in his personal capacity, he should not have offsetted (sic) some of his accounts with the defendant corporation, . . . As it is, plaintiff could have ofted (sic) to sue defendant Lhuillier in his personal capacity the whole amount of indebtedness and not implead the defendant corporation as co-defendant. xxx xxx xxx
. . . [T]he indebtedness was incurred by the defendant corporation as a legal entity to pay the mortgage loan. Defendant Lhuillier acted only as an officer/agent of the corporation 10 by signing the said Memorandum of Agreement.

Aggrieved by the decision of respondent court, petitioner brought this instant petition submitting the following issue for the resolution of this Court:
When a party, by his judicial admissions, has affirmed that he has personal liability in a certain transaction, may a court rule against such an admission despite clear indications 11 that it was not affected by mistakes palpable or otherwise?

Petitioner claims that LHUILLIER made a judicial admission of his personal liability in his Answer wherein he stated that: 3.11. In all the subject dealings, it was between plaintiff and Lhuillier personally without the official participation of Amancor, Inc. xxx xxx xxx
3.14. Since the board of Amancor, Inc. did not formally ratify nor acceded (sic) to the personal agreement between plaintiff and Lhuillier through no fault of the latter, the corporation is not bound and the actionable documents are, at most, unenforceable 12 insofar as the subject claim of plaintiff is concerned.

And on the basis of such admission, petitioner contends that the decision of the respondent court absolving LHUILLIER of personal liability is manifest error for being contrary to law, particularly Section 4 of Rule 129 of the Rules of Court which provides that: An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made. Petitioner would want to further strengthen his contention by adverting to the consistent pronouncement of this Court that: ". . . an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith, should be ignored, whether objection is interposed by the party or not . . . 13

We find petitioner's contention to be without merit and the reliance on the general rule regarding judicial admissions enunciated by the abovementioned provision of law and jurisprudence misplaced. As provided for in Section 4 of Rule 129 of the Rules of Court, the general rule that a judicial admission is conclusive upon the party making it and does not require proof admits of two exceptions: 1) when it is shown that the admission was made through palpable mistake, and 2) when it is shown that no such admission was in fact made. 14 The latter exception allows one to contradict an admission by denying that he made such an admission. For instance, if a party invokes an "admission" by an adverse party, but cites the admission "out of context", then the one making the admission may show that he made no "such" admission, or that his admission was taken out of context.
This may be interpreted as to mean "not in the sense in which the admission is made to appear." That is the reason for the modifier 15 "such". [Emphasis supplied.]

Here, petitioner appears to have taken the admissions made by LHUILLIER in paragraph 3.11 of his Answer "out of context". Petitioner is seemingly misleading this Court by isolating paragraph 3.11 of the said Answer from the preceding paragraphs. A careful scrutiny of the Answer in its entirety will show that paragraph 3.11 is part of the affirmative allegations recounting how LHUILLIER was persuaded to invest in AMANCOR which was previously owned and managed by petitioner. 16 Paragraph 3.11 has reference to the fact that in all investments made with AMANCOR through stock purchases, only petitioner and LHUILLIER dealt with each other. 17 It is more than obvious that paragraph 3.11 has nothing to do with the obligation of AMANCOR to petitioner which is the subject of the present case. Contrary to petitioner's allegations, LHUILLIER had categorically denied personal liability for AMANCOR's corporate debts, and in the succeeding paragraphs of the said Answer asserted the following: 3.12. As evident in the wordings of par. 12 of the Actionable Memorandum of Agreement dated 13 February 1989 (Annex B) and par. 4 of the actionable Supplemental Memorandum of Agreement dated 11 March 1989 (Annex C), Lhuillier did not engage to personally pay the corporate loans secured by plaintiff's property as to release the property to plaintiff. On the contrary, as explicitly stated in the aforesaid par. 4 of Annex C, ". . . while Amancor may not yet be in the position to repay said amount to him, IT shall pay the interests to him equivalent to prevailing bank rate."
3.13. At most, therefore, Lhuillier . . . only agreed, for the corporation to repay plaintiff the amount of the pre-terminated corporate loans with the bank and, pending improvement of Amancor's finances, for said corporation to pay interest at prevailing bank rate. . . 18 . (Emphasis supplied.)

Furthermore, petitioner was well aware that LHUILLIER had never admitted personal liability for the said obligation. In fact, in delineating the issues to be resolved by the trial court, both parties submitted for the determination of the court, the question of whether or

not LHUILLIER is personally liable for the obligation of AMANCOR to petitioner. 19 Moreover, as correctly observed by respondent court, if petitioner really believed that the liability was incurred by LHULLLIER in his personal capacity, then he should not have offset his accounts with those of AMANCOR's. The foregoing act of petitioner is a clear indication that he recognized AMANCOR and not LHUILLIER as the obligor. Granting arguendo that LHUILLIER had in fact made the alleged admission of personal liability in his Answer, We hold that such admission is not conclusive upon him. Applicable by analogy is our ruling in the case of Gardner vs.Court of Appeals which allowed a party's testimony in open court to override admissions he made in his answer. Thus:
The fact, however, that the allegations made by Ariosto Santos in his pleadings and in his declarations in open court differed will not militate against the findings herein made nor support the reversal by respondent court. As a general rule, facts alleged in a party's pleading are deemed admissions of that party and are binding upon it,but this is not an absolute and inflexible rule. An answer is a mere statement of fact which the party filing it expects to prove, but it is not evidence. As ARIOSTO SANTOS himself, in open court, had repudiated the defenses he had raised in his ANSWER and against his own interest, his testimony is deserving of weight and credence. Both the Trial Court and the Appellate Court believed in his credibility and we find no reason to overturn their factual findings 20 thereon. (Emphasis supplied.)

Prescinding from the foregoing, it is clear that in spite of the presence of judicial admissions in a party's pleading, the trial court is still given leeway to consider other evidence presented. This rule should apply with more reason when the parties had agreed to submit an issue for resolution of the trial court on the basis of the evidence presented. As distinctly stated in the stipulation of facts entered into during the pre-trial conference, the parties agreed that the determination of LHUILLIER's liability shall be based on the Memoranda of Agreement designated as ANNEXES "A", "B" and "C" of the Complaint. Thus, the trial court correctly relied on the provisions contained in the said Memoranda of Agreement when it absolved LHUILLIER of personal liability for the obligation of AMANCOR to petitioner. Furthermore, on the basis of the same evidence abovementioned, respondent court did not err when it refused to pierce the veil of corporate fiction, thereby absolving LHUILLIER of liability for corporate obligations and deciding the question in this wise:
The separate personality of the corporation may be disregarded, or the veil of corporation fiction may be pierced and the individual shareholder may be personally liable (sic) to the obligations of the corporation only when the corporation is used as "a cloak or cover for fraud or illegality, or to work an injustice, or where necessary to achieve equity or when necessary for the protection of the creditors. This situation does not obtain in this case.In the case at bar, plaintiff-appellant failed to show that defendant Lhuillier acted otherwise than what is required of him as an agent of a corporation. It does not appear either that defendant-appellee Michel (sic) Lhuillier is jointly and severally liable with AMANCOR, INC., absent an express stipulation to that effect and sans clear and convincing evidence 21 as to his personal liability."

The foregoing pronouncement is based on factual findings of the lower court which were upheld by the respondent court, and which are thus, conclusive upon us pursuant to the

well established rule that factual findings of the Court of Appeals, supported by substantial evidence on the record, are final and conclusive and may not be reviewed on appeal. 22 ACCORDINGLY, finding no reversible error, the decision appealed from is hereby AFFIRMED and this petition is DENIED. SO ORDERED. G.R. No. 117728 June 26, 1996 SERVICEWIDE SPECIALISTS, INC., petitioner, vs. COURT OF APPEALS, SPOUSES EDUARDO and FELISA TOLOSA, BINAN MOTOR SALES CORPORATION, and EDUARDO GARCIA, respondents.

PUNO, J.:p Petitioner Servicewide Specialists, Inc. seeks a review of the Decision of the Court of Appeals in CA-G.R. CV No. 20921 1 modifying the Decision of the Regional Trial Court, Branch LIV, Manila in Civil Case No. 81-604. 2 The records show that on December 15, 1981, petitioner Servicewide Specialists, Inc. (Servicewide) filed a complaint for replevin and/or sum of money with damages before the then Court of First Instance Manila, Branch V against private respondents Eduardo and Felisa Tolosa (Tolosa spouses) and one John Doe. 3 Servicewide alleged that on January 15, 1981, the Tolosa spouses purchased from Amante Motor Works one (1) Isuzu passenger-type jeepney with Motor No. C240-317331 and Serial No. CMCI-81063-C for the sum of P48,432.00 to be paid in 24 monthly installments; 4 that the spouses executed a promissory note and drew a deed of chattel mortgage over the vehicle in favor of Amante Motor Works; that on the same day, Amante Motor Works, with notice to the Tolosas, assigned the promissory note and chattel mortgage to Filinvest Finance and Leasing Corporation; that Filinvest Finance and Leasing Corporation also assigned its rights and interest in said promissory note and chattel mortgage to Filinvest Credit Corporation; that Servicewide later acquired the rights and interests of Filinvest Credit Corporation over said note and mortgage; that the Tolosa spouses failed to pay the installments due on the purchase price despite several demands. In its prayer, Servicewide demanded from the spouses and John Doe, the person in possession of the vehicle, the return of the vehicle or the payment of the balance of P34,224.78 and damages. 5 On January 13, 1982, the trial court issued an order for the seizure of the vehicle subject of the complaint. 6 The Tolosa spouses filed their Answer on March 22,1982. They claimed that they purchased one jeepney unit from Binan Motor Sales Corporation (Binan Motors), not Amante Motor Works; that in January 1981, they ordered another unit from the same corporation through the proddings of its President and General Manager, Eduardo Garcia;

that Garcia informed the spouses that the additional unit shall be "house financed" by Binan Motors; that Eduardo Tolosa noticed that the vendor indicated in the deed of sale was not Binan Motors but Amante Motor Works; that Garcia explained to Tolosa that he (Garcia) was to make full payment on the jeepney to Amante Motor Works and that he (Tolosa) was to pay Garcia the monthly installments thereon; that Tolosa never received any notice from Binan Motors about the jeepney unit he ordered; that on December 17, 1981, Tolosa received a receipt from Filinvest Finance and Leasing Corporation about payment he allegedly made on a jeepney unit he purchased from Amante Motor Works; that Garcia informed him he was in possession of the jeepney and said that he made the initial payment on the vehicle and that he himself would pay its monthly amortization; that Garcia prepared and executed a "Deed of Sale with Assumption of Mortgage" where it appears that Tolosa sold and transferred to Garcia the said jeepney. 7 On June 10, 1982, Servicewide amended its complaint by adding Eduardo Garcia as the defendant in place of John Doe. Servicewide alleged that the Tolosa spouses, without Servicewide's knowledge and consent, executed and delivered to Eduardo Garcia a "Deed of Sale with Assumption of Mortgage" over the jeepney sought to be recovered. 8 On June 16, 1982, the trial court admitted the amended complaint and ordered the issuance of summons on Garcia as additional defendant. On October 28, 1982, the Tolosa spouses filed an "Amended Answer with Third-Party Complaint" impleading as third-party defendants Binan Motors and Eduardo Garcia. The trial court ordered service of summons on the third-party defendants. On January 18, 1983, the sheriff seized the subject vehicle from the possession of one Lourdes Bartina. 9 Three days later, Bartina filed a "Third-Party Claim" and "Urgent Motion for Release" alleging ownership of the jeepney. She claimed that she purchased the vehicle from Binan Motors and regularly paid its subsequent installments to the Commercial Credit Corporation of Las Pinas. 10 On February 21, 1983, the trial court released the vehicle to Bartina on an indemnity bond of P34,000.00. The court found that the documents supporting Bartina's ownership of the jeepney were in due form and executed prior to the documents of the Tolosa spouses. On March 2, 1983, Binan Motors and Eduardo Garcia filed their "Answer to Third-Party Complaint" claiming that the third-party plaintiffs (Tolosa spouses) had no cause of action against them as it was Amante Motor Works that invoiced the vehicle; that the Tolosa spouses purchased a jeepney unit from them but their check for downpayment bounced; that they initiated a complaint for violation of the Bouncing Checks Law against Eduardo Tolosa for which an information was filed on December 2, 1982; that if the Tolosa spouses were prejudiced it was because of their unreasonable neglect to make good their initial payment on the vehicle. 11 A reply was filed by the Tolosa spouses. Despite the court's order of February 21, 1983, the subject jeepney was not released to Bartina. Thus, on June 14, 1984, Bartina filed her "Complaint in Intervention." 12 Third-party defendants Garcia and Binan Motors filed their "Answer to Complaint in Intervention." They claimed that they acquired the subject vehicle from the Tolosas "in consideration of the

value of one Celeste jeepney in the amount of P56,000.00" but that the Tolosas failed to pay the downpayment on the vehicle; that they came to court with clean hands and that they are actually the victims of the Tolosas. 13 Servicewide manifested that it was adopting its complaint in the principal case as its comment or answer to the complaint-inintervention. 14 At the pretrial conference of November 7, 1984, the trial court noted that summons and copy of the amended complaint had not been served on Eduardo Garcia as additional defendant. It deferred the pretrial until such service shall have been effected. 15 On January 10, 1985, the trial court ordered Servicewide to turn over possession of the subject jeepney to Bartina upon filing of the increased bond of P55,000.0. Pretrial was again scheduled on February 27, 1985 but for one reason or another, was postponed several times until October 7, 1985. On October 7, 1985, all parties, through their respective counsels, appeared except the Tolosas and their counsel. The trial court declared the Tolosas as in default with respect to the principal complaint and scheduled the reception of evidence for Servicewide. The Tolosas were likewise declared nonsuited with respect to their third-party complaint against Binan Motors and Garcia. With regard to the complaint-in-intervention, the trial court scheduled a pretrial conference, thus:
When this case was called for pretrial, Atty. Ocaya, for plaintiff, Atty. Alfred Juntilla for 16 Intervenor-Tolosas (sic) and Atty. Manuel Ramirez for third-party defendants appeared. However, defendants Eduardo and Felisa Tolosa failed to appear notwithstanding due notice. For failure on the part of defendants to appear notwithstanding due notice, upon motion of the plaintiff, defendants are hereby declared as in default and let the reception of evidence insofar as said defendants are concerned be reset on November 7, 1985 at 8:30 a.m.

Due to the absence of the defendant third-party plaintiff notwithstanding due notice, upon motion of the third-party defendant, the third party complaint in so far as the third-party defendant is concerned is hereby dismissed and likewise, said defendant being third-party plaintiff is declared nonsuited without special pronouncement as to costs. In so far as the intervention is concerned which is directed against the Plaintiff and considering that there is an on-going possibility of settlement between the Intervenor and the Plaintiff, the pre-trial in so far as the Intervenor and Plaintiff are concerned is hereby cancelled and reset on November 7, 1985 at 8:30 a.m. Atty. Ocaya, Atty. A. Juntilla and Atty. Manuel Ramirez are notified of this order in open Court and let a copy of this order be furnished defendants Tolosas. SO ORDERED. Manila, October 7, 1985.

(SGD.) ERNE STO S. TENG O (Pairin g Judge)

1

At the hearing of February 4, 1986 for reception of Servicewide's evidence, the Tolosas again failed to appear despite due notice. Servicewide presented its legal accounts analyst, Ms. Nannette Navea, who testified on the outstanding obligation of the Tolosas and Garcia. 18 It also presented several documents consisting of the promissory note, deed of chattel mortgage, the deed of assignment of the Tolosas' credit by Filinvest Finance and Leasing Corporation, and the notice and demand letter to the Tolosas. 19 Servicewide then submitted the case for decision. Pretrial for the complaint-in-intervention originally scheduled on November 7, 1985 was postponed several times until March 1, 1988. The Tolosas were notified but again failed to appear on said date. For the second time, the trial court declared them to have waived their right to present evidence as against the complaint and dismissed with prejudice their thirdparty complaint against Garcia and Binan Motors. The court also declared them as in default with respect to the complaint-in-intervention of Bartina and scheduled the reception of Bartina's evidence accordingly. The order reads as follows: ORDER Considering that counsel for the intervenor arrived in Court although late and pre-trial proceedings were had as between the intervenor and the plaintiff; considering the non-appearance of the defendants Eduardo and Felisa Tolosa, the said two defendants are deemed to have waived their right to present evidence as against the Complaint and also they are deemed to be as in default with respect to the Complaint-in-Intervention of Lourdes Bartina; the Third-Party Complaint against Eduardo Garcia is dismissed with prejudice and with costs against the said defendants; this case is set for trial for the reception of intervenor's evidence on April 27, 1988 and May 5, 1988 at 9:00 o'clock in the morning. Notify Eduardo and Felisa Tolosa at their respective addresses it appearing that their counsel has already withdrawn his appearance. SO ORDERED. Given in open Court, March 1, 1988.

(SGD.) MANU EL T. MURO Judge

20

On April 27, 1988, at the hearing for reception of evidence on Bartina's complaint-inintervention, the Tolosas again did not appear despite due notice. Intervenor Bartina testified that the vehicle subject of the complaint was sold to her by Binan Motors owned by Eduardo Garcia and that the vehicle was in her possession when it was seized by the sheriff and thereafter turned over to Servicewide. 21 Bartina thereafter identified and offered various documents proving her ownership of the subject vehicle. 22 On May 23, 1988, Bartina and the defendants-in-intervention Eduardo Garcia and Binan Motors, with the assistance of their respective counsels, moved to dismiss the complaint-inintervention. They alleged that they had "arrived at an amicable settlement of their claims." 23 The court granted the motion on May 24, 1988. 24 On August 3, 1988, a decision was rendered by the trial court. It ruled in favor of Servicewide granting it the right to either foreclose the mortgage on the subject vehicle or to demand from defendants, jointly and severally, payment of P34,224.78 plus interest and damages. The court held:
WHEREFORE, judgment is hereby rendered in the alternative, for the plaintiff to either foreclose the mortgage on the motor vehicle subject matter of this case which is in its possession or to have the defendants jointly and severally pay plaintiff the sum of P34,224.78, plus interest at 24% per annum from December 3, 1981 until fully paid, and in either case, for said defendants to pay plaintiff also jointly and severally the sum of P18,385.68 as attorney's fees, liquidated damages, bonding fees and other expenses 25 incurred as well as the costs of the suit.

Defendant Eduardo Garcia moved for reconsideration and clarification of the decision on the ground that he was not one of the defendants in the principal case. He claimed that the court did not acquire jurisdiction over his person because he was never served nor did he receive summons on the amended complaint naming him as an additional defendant. In an order dated September 9, 1988, the trial court denied the motion for reconsideration. It however amended the dispositive portion of the decision to include Eduardo Garcia as one of the defendants liable to Servicewide, to wit: Re "Motion for Reconsideration and Clarification" dated August 20, 1988: 1. The dispositive portion of the Decision controls over the narration of facts and discussion, hence all defendants are liable as per such dispositive portion;
2. The tenth line on page 2 of the Decision is hereby corrected to include Eduardo 26 Garcia, the omission of his name being thru inadvertence.

Eduardo Garcia appealed to the Court of Appeals. 27 In a decision dated October 27, 1994, the appellate court found that no summons on the amended complaint had been served on Garcia; however, since Garcia filed several pleadings as a third-party defendant in the trial court, he was deemed to have submitted himself to its jurisdiction. Nonetheless, it found no sufficient evidence to hold Garcia solidarily liable with the Tolosa spouses on the principal complaint. The Court of Appeals therefore modified the trial court's decision and relieved Garcia from liability. Hence this petition. Before us, petitioner submits that: 1. IT IS A SERIOUS ERROR FOR THE PUBLIC RESPONDENT COURT OF APPEALS TO DWELL ON QUESTIONS NOT RAISED AS AN ERROR ON APPEAL BY THE APPELLANT; 2. THE HONORABLE COURT OF APPEALS PALPABLY ERRED IN HOLDING THAT THERE IS NO EVIDENCE ADDUCED TO HOLD EDUARDO GARCIA LIABLE IN THIS CASE; 3. THE HONORABLE COURT OF APPEALS PALPABLY ERRED IN DISREGARDING THE EVIDENCE ADDUCED BY INTERVENOR LOURDES BARTINA IN DECIDING THE INSTANT CASE. It is petitioner's claim that in releasing Eduardo Garcia from liability, the appellate court decided an issue that was never raised by Garcia himself. On appeal, Garcia only contended that the trial court erred "in finding him one of the defendants referred to in the dispositive portion of the decision" because he was not a defendant in the principal complaint, jurisdiction not having been acquired over him. 29 According to petitioner, the appellate court should have confined itself to the sole issue of jurisdiction over Garcia's person and should not have determined his liability. 30 We reject petitioner's submission. An appellate court is clothed with ample authority to review rulings even if they are not assigned as errors in the appeal. This is especially so if the court finds that their consideration is necessary in arriving at a just decision of the case before it. We have consistently held that an unassigned error closely related to an error properly assigned or upon which a determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error. 31 In ruling on the liability of Garcia, the respondent appellate court can hardly be said to have treated an issue unrelated to those litigated before the trial court. On the basis of the records, the appellate court found that Eduardo Garcia had submitted himself voluntarily to the jurisdiction of the trial court. To avoid dispensing piecemeal justice, it proceeded to determine whether Garcia was indeed liable on the obligation. The procedure followed by

respondent court is in accord with the desideratum that calls for a complete adjudication of a case to speed up the dispensation of justice. We come now to the main issue of whether there is sufficient evidence on record to hold Garcia, together with the Tolosa spouses, solidarily liable to petitioner for the return of the subject motor vehicle or payment of its equivalent value in money. Petitioner insists that there is enough evidence to prove Garcia's liability, viz.: (1) the pleadings filed by Garcia and Binan Motors, specifically, the "Answer" to the complaint and the "Answer to Complaint in Intervention" where Garcia admitted selling the mortgaged vehicle to the Tolosas which also show that he sold the same vehicle to Bartina during the effectivity of the mortgage; (2) the testimony of Lourdes Bartina where she declared that the same mortgaged vehicle was indeed sold to her by Garcia and Binan Motors; (3) Garcia's subsequent compromise with Bartina which proves his liability for the obligation. We do not agree. Garcia and Binan Motors did not file an "Answer" to the complaint. The records of the case do not show that both or either of them were served any summons on the amended complaint. This is precisely why Garcia raised the issue of lack of jurisdiction. Garcia and Binan Motors however filed an "Answer to Third Party Complaint" and "Answer to Complaint in Intervention." It must be stressed that the third-party complaint filed by the Tolosas was dismissed twice by the trial court -- first at the pretrial of October 7, 1985 for the principal complaint and second at the pretrial of March 1, 1988 for the complaint-in-intervention. The second dismissal was with prejudice. The complaint-in-intervention was, upon motion of the partiesin-intervention, also dismissed by the trial court on May 24, 1988. A dismissal or discontinuance of an action operates to annul orders, rulings or judgments previously made in the case. 32 It also annuls all proceedings had in connection therewith and renders all pleadings ineffective. 33 A dismissal or nonsuit leaves the situation as though no suit had ever been brought. Further proceedings in the action are arrested and what has been done therein is also annulled, so that the action is as if it had never been. 34 It carries down with it previous proceedings and orders in the action, and all pleadings of both parties, and all issues with respect to the plaintiff's claim. 35 The records do not show that petitioner adopted the "Answer to Third Party Complaint" and the "Answer to Complaint in Intervention" filed by Binan Motors and Garcia, and the testimony of Bartina as part of its evidence in the trial court. It cannot rely on them on appeal for evidence not formally offered before the trial court cannot be considered. 36 To consider them at this stage will deny the other parties their right to rebut them. Assuming arguendo that the said pleadings of Garcia and Binan Motors and the evidence of Bartina can be considered in favor of petitioner, still, they do not sufficiently prove Garcia's liability on the matter.

For one, the motor vehicle described in the "Answer to Third-Party Complaint" has different motor and serial numbers from the vehicle subject of the complaint. The subject vehicle is a galvanized silver jeepney with Motor No. C240-317331 and Serial No. CMCI-81063-C while the vehicle in said pleading is a red stainless jeepney with Motor No. C-221-443144 and Serial No. CMCI-81795-C. 37 What Garcia and Binan Motors admittedly sold to the Tolosas was not the subject vehicle. In the "Answer to the Complaint in Intervention," Garcia and Binan Motors admitted that they acquired from the Tolosas the "vehicle subject of the complaint in consideration of one Celeste jeepney valued at P56,000.00." The vehicle subject of the complaint was the one found in the possession of Bartira. Under the two pleadings, however, what Garcia and Binan Motors sold to the Tolosa spouses was a different vehicle from the one they acquired from said spouses and which they allegedly sold to Bartina. A double sale of the same jeepney could not arise because there appears to be two different jeepneys in the pleadings. Even in the "Deed of Sale with Assumption of Mortgage" where the Tolosa spouses allegedly sold to Garcia the jeepney subject of the complaint, the vehicle described therein had different motor and chassis numbers. The deed reveals that what the Tolosas sold to Garcia was a red jeepney with Motor No. C240-328332 and Chassis No. CMCI-82062-C. 38 The documentary evidence of Bartina merely shows that the jeepney subject of the complaint was indeed sold to her by Binan Motors represented by Juliet Garcia, Eduardo Garcia's daughter. There is nothing to show that Eduardo Garcia sold to Bartina the vehicle that he previously sold to the Tolosas. We also hold that the compromise between Bartina and Garcia and Binan Motors cannot be taken as an admission of Garcia's liability. In civil cases, an offer of compromise is not an admission of any liability. 39 With more reason, a compromise agreement should not be treated as an admission of liability on the part of the partiesvis-a-vis a third person. The compromise settlement of a claim or cause of action is not an admission that the claim is valid, but merely admits that there is a dispute, and that an amount is paid to be rid of the controversy, 40 nor is a compromise with one person an admission of any liability to someone else. 41 The policy of the law should be, and is, to encourage compromises. 42 When they are made, the rights of third parties are not in any way affected thereby. 43 On the whole, petitioner's evidence consists of the promissory note, the deed of chattel mortgage and the deed of assignment and the notice and demand letter. The promissory note in favor of Amante Motor Works was signed by the Tolosa spouses. 44 This same promissory note provides that any payment thereon shall be made "to the order of Filinvest Finance and Leasing Corporation." 45 Both spouses also signed as mortgagors the deed of chattel mortgage of the said jeepney in favor of Amante Motor Works. Amante Motor Works assigned in the same deed all its rights over the chattel mortgage to Filinvest Finance and Leasing Corporation. 46 Filinvest Finance and Leasing Corporation likewise assigned its rights and interest over the promissory note and deed of chattel mortgage to Filinvest Credit Corporation which in turn assigned it to petitioner. 47 The Tolosa spouses defaulted on the

obligation and refused to pay the installments due despite notice to them. By no stretch of logic can they prove Garcia's solidary liability. IN VIEW WHEREOF, the petition is denied and the Decision dated October 27, 1994 of the Court of Appeals in CA-G.R. CV No. 20921 is affirmed. SO ORDERED.

REPUBLIC OF THE PHILIPPINES, represented by the AIR TRANSPORTATION OFFICE (ATO), Petitioner,

G.R. No. 157847 Present: PANGANIBAN, J.,Chairman SANDOVAL-GUTIERREZ, CORONA, CARPIO MORALES, and GARCIA, JJ.

- versus -

LEODIGARIO SARABIA, HERMENIGILDO DE LA CRUZ, DELIA REBUTAR, MILDRED ROSE, ANITA DE LA CRUZ, ERLINDA LUCERIO, GEORGIE DE LA CRUZ, FELMA DE LA CRUZ, FELINO DE LA CRUZ, TERESITA SAMSON, andEVANGELINE COLOMER, Respondents.

Promulgated:

August 25, 2005

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

DECISION GARCIA, J.:

Before the Court is this petition for review on certiorari under Rule 45 of the Rules of Court, assailing the decision[1] dated November 18, 2002 of the Court of Appeals in CA-G.R. CV No. 66124, which affirmed the November 26, 1999 decision of the Regional Trial Court at Aklan, Branch 5, in an expropriation case thereat filed by the petitioner. The affirmed decision of the trial court dispositively reads:
WHEREFORE, judgment is hereby rendered:

1. Fixing the amount of P800.00 per square meter as just compensation to be paid by plaintiff to defendants for the taking of the subject property indicated as Lot 6068-A in the Sketch Plan (Annex B, complaint) containing an area of 4,901 square meters which is a portion of the bigger parcel of land covered by Original Certificate of Title No. P-15596. The aggregate amount shall earn legal interest of 6% per annum commencing from November 11, 1999 until the finality of this Decision, thereafter, 12% interest per annum from the finality of the Decision on the remaining unpaid amount until full payment. 2. Ordering the defendants to withdraw the amount of P50,000.00 deposited provisionally with the Land Bank Kalibo Branch, Kalibo, Aklan, by the Air Transportation Office under Savings Account No. 0452-1084-45 to be deducted therefrom the costs of P10,600.00 and balance shall be deducted from the aggregate amount of the just compensation; and 3. Declaring the plaintiffs lawful right to retain possession of the subject property and to appropriate it for the public purpose it was intended for, i.e., the operations of the airport control tower, Kalibo crash fire rescue station, airport terminal and headquarters of the PNP Aviation Security, upon full payment of the just compensation thereat as fixed in paragraph 1 hereof. Plaintiff is directed to pay the costs of P9,600.00 representing the Commissioners fees equivalent to P800.00 per session for each commissioner, and P1,000.00 to Mr. Remegio M. Bautista as the designated secretary of the commissioners.

SO ORDERED.[2]

Sometime in 1956, the Air Transportation Office (ATO) took possession and control of some 4,901 square-meter portion of Lot 6068, a 10,468 square-meter lot located at Pook Kalibo, Aklan. Lot 6068 is covered by Original Certificate of Title No. P-15596 of the Register of Deeds of Aklan in the names of the private respondents who are heirs of the late Segundo De la Cruz. Initially, the ATO utilized the subject occupied portion of Lot 6068 as an airport parking area. In time, several structures were erected thereon, including the control tower, the Kalibo crash fire rescue station, the Kalibo airport terminal and the headquarters of the PNP Aviation Security Group. In 1995, stores and restaurants made of light materials were constructed on the area outside the 4,901 square-meter portion occupied by ATO. In 1997, private respondents filed a complaint for Recovery of Possession with Damages before the Municipal Trial Court of Kalibo. The case, docketed as Civil Case No. 1644, is now pending in said court. ATO intervened in that case and alleged that the occupants of the stores and restaurants are its lessees. Petitioner assured private respondents that they would be paid the fair market value of the subject land. However, the parties did not agree on the amount of compensation therefor. On June 25, 1998, petitioner Republic of the Philippines, represented by the Air Transportation Office, filed with the Regional Trial Court at Aklan an action for the expropriation of the entire Lot 6068, thereat docketed as Civil Case No. 5543.

On August 6, 1999, the trial court appointed three (3) commissioners to ascertain the just compensation for the subject property. Upon conduct of ocular inspection and hearing, the commissioners submitted a report to the trial court with the following recommendation: NOW THEREFORE, after a brief discussion and in consideration of the premises herein above presented, the Commissioners hereby recommends (sic) and fix the value of 4,901 sq. m. at P800.00 pesos per square meter and the remaining area of 5,567 square meters at P500.00 per square meter as offered by the defendants.

On pre-trial, petitioner submitted a sketch plan of Lot 6068, showing the relative location of the 4,901 square-meter portion it actually occupied. During the hearing of September 3, 1999, the trial court directed petitioner to present evidence to prove that the remaining portion not actually and physically occupied by the government is still needed for public purpose. However, petitioner countered that there is no need to present evidence thereon considering that almost one-half (1/2) of the entire property subject of the case has already been in fact occupied and devoted to public purpose. The trial court ignored petitioners posturing order disposing, as follows:
[3]

and issued an

WHEREFORE, the Court finds and so holds that the additional area consisting of 5,567 square meters or Lot 6068-B (unshaded portion in Annex B- Complaint) is not needed by the plaintiff for public use or purpose, but only the shaded portion, Lot 6068-A, containing an area of 4,901 square meters. SO ORDERED.

Eventually, in a decision dated November 26, 1999,[4] the trial court adopted the aforestated commissioners report which fixed the just compensation for the 4,901 square-meter portion of Lot 6068 at P800.00 per square meter, the current market value of the property in 1999. In so adjudging, the trial court relied on Republic vs. Honorable Lucerito Tagle, et al.,[5] and thus fixed the just compensation for the 4,901 square-meter portion based on the current market value not at the time of the taking which was in 1956, but at the time of the issuance of the writ of possession on November 11, 1999. To the trial court, the date of the issuance of the writ has to be considered in fixing the just compensation because the same signified petitioners proper acquisition and taking of the property which involves not only physical possession but also the legal right to possess and own the same. Unable to accept the trial courts decision for allegedly being contrary to law and established jurisprudence, petitioner Republic filed a notice of appeal and record on appeal, which the trial court approved on January 18, 2000. Hence, the entire records of the case were transmitted to the Court of Appeals, whereat the Republics appeal was docketed as CA-G.R. CV No. 66124. In the herein assailed decision[6] dated November 18, 2002, the Court of Appeals AFFIRMED the appealed decision of the trial court, thus:
WHEREFORE, premises considered, the assailed decision dated November 26, 1999 of the Regional Trial Court, Branch 5, Kalibo, Aklan in Civil Case No. 5543 is hereby AFFIRMED. SO ORDERED.

In its decision, the appellate court placed emphasis on the alleged failure of petitioner prove that the taking of the occupied 4,901 square-meter portion of Lot 6068 occurred in 1956. More specifically, it ruled:
Granting that indeed plaintiff-appellants possession took place in 1956, said possession pertained to a portion of said lot. The admission of plaintiff-appellant that the encroachment covered a wider and wider area as time passed, puts into issue the character of said possession. Was it taking in the sense of expropriation? The expropriation of real property does not include mere physical entry or occupation of land. The physical entry and occupation of the property in 1956 should include all the rights that may be exercised by an owner of the subject property. Plaintiff-appellant failed to show that it intended to acquire physical possession but also the legal right to possess and ultimately to own the subject property. Disconsolately, the assailed decision reveals inaction of plaintiffappellant in proving its present claim which should have been done the earliest possible opportunity. It was stated that: The plaintiff, despite receipt of copy of aforesaid report and the expiration of the prescribed period to file any comment thereto, opted not to file any pleading relative thereto. Upon the other hand, the defendants interposed no objection to said report. Hence, there appears no error in the lower courts ruling that the taking for the purposes of fixing just compensation be considered on November 11, 1999, the date of the issuance of the writ of possession, as well as the lower courts adherence to the recommendation of the commissioners.

Petitioner moved for a reconsideration of the appellate courts decision but its motion was denied by said court in its resolution of April 1, 2003. Hence, petitioners present recourse.

As we see it, the sole question presented herein involves the precise time at which just compensation should be fixed: whether as of the time of actual taking of possession by the expropriating entity, as insisted by petitioner Republic, or at the issuance of the writ of possession pursuant to the expropriation proceedings, as maintained by the respondents and sustained by both the trial court and the Court of Appeals. Before going any further, however, we take exception to the appellate courts finding that evidence is wanting on the fact of petitioners taking possession of the disputed 4,901 square-meter portion in 1956. Petitioner contends that contrary to what the appellate court found, the taking of the property in 1956 or at least a wide portion thereof, was adequately established. We agree with petitioner Republic that sufficient evidence exists to prove that the taking occurred sometime in 1956.

As borne by the records, private respondents Answer and Pre-Trial Brief contain irrefutable admissions. Thus, in their Answer,[7] respondents declared, among others, as follows:
1. That they admit each and every allegation in paragraphs 1,2,3,4,5 and 6 of the complaint. They admit that the portion of the land sought to be expropriated which is indicated by the white shaded of the sketch plan which is attached as ANNEX B of the complaint with an area of 4,901 square meters, more or less, has been in the possession of the plaintiff since 1956 up to the present.

Significantly, paragraph 6 of the complaint[8] which is among those admitted by the respondents, reads: 6. The subject property has been in possession and control of ATO since 1956 and was initially devoted to parking area. At present, several structures, are erected on the area, to wit: the control tower, Kalibo crash fire rescue station, the Kalibo airport terminal and the headquarters of the Philippine National Police (PNP) Aviation Security Group. Also, a part of the lot is leased to concessionaires selling local products and souvenir items. The remaining portion is intended for the expansion and other improvement of the airport.

Besides, respondents no less averred in their Pre-Trial Brief:[9]

I. BRIEF STATEMENT CLAIM 1. OF THE RESPONDENTS

That the defendants are the owners of that certain parcel of land located at Pook, Kalibo, Aklan, Philippines, which is covered by Original Certificate Title No. T-1559-6. A portion of the land has been occupied by the plaintiff for many years now which portion of land is indicated on the sketch plan which is marked Annex B of the complaint. xxx xxx xxx

I1.

ADMISSION xxx xxx xxx

2.

That this land has been in the possession of the plaintiff for many years now without paying any rental to the defendants. (Emphasis supplied) xxx xxx xxx

Surely, private respondents admissions in their Answer and Pre-Trial Brief are judicial admissions which render the taking of the lot in 1956 conclusive or even immutable. And well-settled is the rule that an admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof.[10] A judicial admission is an admission made by a party in the course of the proceedings in the same case, for purposes of the truth of some alleged fact, which said party cannot thereafter disprove.[11] Indeed, an admission made in the pleading cannot be controverted by the party making such admission and are conclusive as to him, and that all proofs submitted by him contrary thereto or inconsistent therewith should be ignored whether objection is interposed by a party or not.[12] This Court is thus convinced that the taking of the occupied 4,901 square-meter portion of Lot 6068 occurred in 1956. In the context of the States inherent power of eminent domain, there is a taking when the owner is actually deprived or dispossessed of his property; where there is a practical destruction or a material impairment of the value of his property; or when he is deprived of the ordinary use thereof.[13] There is a taking in this sense when the expropriator enters private property not only for a momentary period but for a more permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof.[14] After all, ownership is nothing without the inherent rights of possession, control and enjoyment. Where, as here, the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is taking within the constitutional sense.[15]

This brings us to the issue of when the just compensation for the property taken should be reckoned. Petitioner argues, and rightly so, that the just compensation fixed by the trial court based on the market value of the property after the commencement of the expropriation proceedings contradicts established jurisprudence that the value of the property as it was when the government took possession of the land represents its true value. In a long line of cases, we have consistently ruled that compensation for property expropriated must be determined as of the time the expropriating authority takes possession thereof and not as of the institution of the proceedings.[16] So it is that in Republic vs. Lara, et al,[17] this Court, quoting from its earlier decision in Provincial Government vs. Caro,[18] ruled:
The value of the property should be fixed as of the date when it was taken and not the date of the filing of the proceedings. For where property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or, there may have been a natural increase in the value of the property from the time it is taken to the time the complaint is filed, due to general economic conditions. The owner of private property should be compensated only for what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at the time it is taken. This is the only way the compensation to be paid can be truly just; i.e., just not only to the individual whose property is taken, but to the public, which is to pay for it xxx.

The instant case is akin to that of Jose Ma. Ansaldo vs. Francisco S. Tantuico, Jr. and Baltazar Aquino,[19] decided 1990, where two (2) lots of

private ownership were taken by the government and used for the widening of a road more than 40 years without the benefit of any action of eminent domain or agreement with its owners, albeit without protest by the latter. In a decision in that case, penned by then Chief Justice Andres Narvasa, this Court, citing the earlier case of Republic vs. PNB,[20] wrote:
Normally, of course, where the institution of an expropriation action precedes the taking of the property subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so provided by the Rules of Court, the assumption of possession by the expropriator ordinarily being conditioned on its deposits with the National or Provincial Treasurer of the value of the property as provisionally ascertained by the court having jurisdiction of the proceedings. There are instances, however, where the expropriating agency takes over the property prior to the expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that possession was taken by the expropriator more than 40 years prior to suit. In these instances, this Court has ruled that the just compensation shall be determined as of the time of taking, not as of the time of filing of the action of eminent domain. xxx xxx xxx

(W)hen plaintiff takes possession before the institution of the condemnation proceedings, the value should be fixed as of the time of the taking of said possession, not of filing of the complaint and the latter should be the basis for the determination of the value, when the taking of the property involved coincides with or is subsequent to, the commencement of the proceedings. Indeed, otherwise, the provision of Rule 69, Section 3, directing that compensation be determined as of the date of the filing of the complaint would never be operative.

We are not, however, in accord with petitioners assertion that the just compensation for the entire Lot 6068 should be fixed in the amount based on its assessed value in 1956. There is nothing on record that

petitioner occupied the remaining 5,567 square-meter portion of Lot 6068, neither did it ever present proof that said unoccupied portion is necessary for public use, except for its self-serving allegation that said portion is needed for the expansion and other improvement of the airport. WHEREFORE, the petition is PARTIALLY GRANTED. The November 18, 2002 decision of the Court of Appeals in CA-G.R CV No. 66124 is MODIFIED in the sense that the computation of just compensation for the 4,901 square-meter portion of Lot 6860 should be based on its fair market value in 1956. SO ORDERED. SPS. JOSE N. BINARAO andPRECIOSISIMA BINARAO, Petitioners, G.R. No. 154430 Present:

-versus-

PUNO, J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ.

PLUS BUILDERS, INC., Respondent.

Promulgated:

June 16, 2006 x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] dated July 19, 2002, of the Court of Appeals in CA-G.R. CV No. 68921, entitled Sps. Jose N. Binarao and Preciosisima Binarao v. Plus Builders, Inc.

The facts are: Bahayang Pag-asa, Inc., and its sister corporation, Delfin Hermanos, Inc., are the owners and developers of Bahayang Pag-asa Subdivision in Cavite City. Plus Builders, Inc., herein respondent, is in charge of the construction and sale of the houses therein. On April 19, 1990, spouses Jose and Preciosisima N. Binarao, petitioners, purchased a house and lot in Bahayang Pag-asa Subdivision for a total price of P327,491.95. Petitioner Jose Binarao executed an Affidavit of Undertaking on Equity whereby he agreed to pay respondent P96,791.95 in the following manner: P5,000.00 upon signing of the contract, and the remaining P91,791.95 within 15 days thereafter. However, petitioners failed to comply with their undertaking, prompting respondents counsel to send them a demand letter. On July 6, 1998, petitioners paid respondent P20,000.00, leaving a balance of P65,571.22 payable in three installments. On March 10, 1999, respondents counsel sent petitioners another demand letter, but they refused to pay.

Consequently, respondent filed with the Metropolitan Trial Court (MTC), Branch 25, Manila a complaint for a sum of money against petitioners, docketed as Civil Case No. 163822-CV. On June 11, 2001, the MTC rendered a Decision[2] in favor of respondent, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff Plus Builders, Inc. and against defendants Spouses Jose and Preciosisima Binarao ordering the latter jointly and severally to pay the former the sum of P65,571.75, plus interest thereon at the stipulated rate of 16% per annum computed from March 22, 1990, and a sum equivalent to 25% of the amount due as liquidated damages until the same is fully paid, and the sum equivalent to 25% of the unpaid balance as and by way of attorneys fees and the costs of suit. SO ORDERED.

On appeal, the Regional Trial Court, Branch 7, Manila, rendered a Decision[3] dated November 23, 2001, affirming in toto the MTC Decision, holding that petitioners, in their answer, did not deny respondents allegation in its complaint that they have still an outstanding balance of P65,571.22. Petitioners filed a motion for reconsideration but was denied by the RTC in an Order[4] dated January 15, 2002. Petitioners then filed with the Court of Appeals a petition for review. On July 19, 2002, the Appellate Court rendered a Decision affirming in toto the RTC Decision. The Court of Appeals held:
x x x Section 11, Rule 8 of the 1997 Rules of Court states:

Sec. 11. Allegations not specifically denied deemed admitted. Material averment in the complaint, other than those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied under oath. And, Section 10, Rule 8 of the 1997 Rules of Court, as to the manner of making denials, provides: Sec. 10. Specific denial. A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny only the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial. In the instant case, petitioners did not deny the allegations as stipulated in paragraph 4 of the complaint of herein respondent corporation. In fact, petitioners even admitted the allegations thereon. xxx Petitioners, in their answer, specifically paragraph 1 thereof, stated: 1. Defendants admit paragraphs 1 and 4 of the complaint. While it is true that paragraph 7 of petitioners answer to the complaint qualified the fact that they didnt sign any payment plan, this qualification however neither denies nor negates the other facts, as admitted, that were stated in paragraph 4 of the complaint which actually states three facts: (1) that petitioner paid the amount of P20,000.00 to respondent; (2) that petitioner still has a balance of P65,571.22; and (3) that such unpaid balance is to be paid in three (3) agreed payment plan. What is denied by petitioners in paragraph 7 of their answer, if at all, is the fact that there is no agreed payment plan. But, as to the fact, to repeat, that petitioners still owe P65,571.22, as balance after payment of P20,000.00, is admitted by petitioners as this fact is never denied by them.

Such admission, being made in the pleading, is considered as judicial admission. Being so, the allegations, statements, or admissions contained in the pleading are conclusive as against the pleader, in this case, petitioners. By admitting therefore that petitioners still owe P65,571.22 to respondent corporation, such is conclusive to petitioners. Petitioners, on the other hand, may be relieved, as provided for in Section 2, Rule 129 of the Rules of Court, of the effects of such admission in their pleading if they can show that the admission had been made through palpable mistake. However, petitioners failed to show any palpable mistake on their part. xxx WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit. The assailed Order dated January 15, 2002 of the Regional Trial Court, Branch 7, Manila, and its Decision dated November 23, 2001 in Civil Case No. 01-101401, are hereby AFFIRMED in toto. SO ORDERED.

Hence, this petition for review raising this basic issue:

WHETHER OR NOT PETITIONERS ADMITTED ABSOLUTELY IN THEIR ANSWER THEIR LIABILITY UNDER THE PROPOSED PAYMENT PLAN DATED 06 JULY 1998.

Petitioners contend that they did not agree to pay respondent P96,791.95 and that they did not admit in their answer they are liable to respondent. Respondent maintains that petitioners admission of liability in their answer binds them. The petition lacks merit. Sec. 4, Rule 129 of the Revised Rules of Court provides:

Sec. 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

A party may make judicial admissions in (a) the pleadings, (b) during the trial, either by verbal or written manifestations or stipulations, or (c) in other stages of the judicialproceeding.[5] Here, petitioners admitted in their answer the allegation in paragraph 4 of respondents complaint. As correctly ruled by the Court of Appeals, petitioners admitted that: (a) they paid the amount of P20,000.00; (b) they still have a balance of P65,571.72; and (c) the unpaid balance is to be paid in three installments. It is well-settled that judicial admissions cannot be contradicted by the admitter who is the party himself[6] and binds the person who makes the same, and absent any showing that this was made thru palpable mistake (as in this case) , no amount of rationalization can offset it.[7] WHEREFORE, the petition is DENIED. The assailed Decision dated July 19, 2002 of the Court of Appeals in CA-G.R. CV No. 68921 is AFFIRMED. Costs against petitioners. SO ORDERED.
ST. MARY'S FARM, INC., PETITIONER, VS. PRIMA REAL PROPERTIES, INC., RODOLFO A. AGANA, JR., AND THE REGISTER OF DEEDS OF LAS PIAS, METRO MANILA RESPONDENTS. DECISION
NACHURA, J.: This is a petition for review of the decision[1] of the Court of Appeals (CA) affirming in toto the decision[2] of the Regional Trial Court (RTC), Branch 254, Las Pias City, which dismissed for lack of

merit the complaint for annulment of sale. The factual antecedents of the case, as narrated by the RTC, are as follows: [I]t appears that herein plaintiff was the registered owner of an originally twenty-five thousand five hundred ninety-eight (25,598) square meters of land situated at Bo. Pugad Lawin, Las Pias City under Transfer Certificate of Title No. S-1648 (11521-A) of the Registry of Deeds of Las Pias City. In compliance with a final court decision in Civil Case No. 87-42915 of the Regional Trial Court, Branch XL of Manila, plaintiff passed and approved on 27 June 1988 a board resolution authorizing defendant Rodolfo A. Agana to cede to T.S. Cruz Subdivision four thousand (4,000) square meters of the land covered by the aforecited Transfer Certificate of Title No. S-1648 (11521-A). Allegedly, after the consummation of this transaction, defendant Rodolfo A. Agana did not return to plaintiff the borrowed aforementioned title and[,] instead, allegedly forged a board resolution of the plaintiff corporation supposedly to the effect that plaintiff had authorized him to sell the remaining twenty-one thousand five hundred ninety-eight (21,598) square meters of the subject property. A series of transactions thereafter took place between defendant Rodolfo A. Agana and defendant Prima Real Properties, Inc. (Prima) which transactions culminated to the signing on 5 September 1988 of an absolute deed of sale transferring the ownership of the subject land from herein plaintiff to herein defendant Prima. After the consummation of the sale, defendant Prima effected the cancellation of Transfer Certificate of Title No. S-1648 (11521-A) in the name of plaintiff and in lieu thereof another Transfer Certificate of Title No. T-6175 in the name of defendant Prima was issued by defendant Alejandro R. Villanueva in his capacity as Register of Deeds of Las Pias City. Subsequent developments had it that on 6 October 1988, defendant Prima duly purchased from T.S. Cruz Subdivision the aforementioned four thousand (4,000) square meters portion of the subject property which development thereafter led to the cancellation of the aforementioned Transfer Certificate of Title No. T-6175 and the issuance by the Registry of Deeds of Las Pias City of two separate titles both in the name of defendant Prima, Transfer Certificate of Title No. 7863 covering the aforementioned four thousand square meters and Transfer Certificate of Title No. T-7864 covering the herein twenty-one thousand five hundred ninety-eighty (21,598) square meter subject property. In its complaint which was amended twice, the second amendment even needed the intervention of the Court of Appeals in a petition for certiorari and mandamus after the same was denied admission by Hon. N.C. Perello, Presiding Judge of the then Assisting Court of Makati, [Muntinlupa], Metro Manila, herein plaintiff alleged inter alia that the authorization certified to by Antonio V. Agcaoili, Corporate Secretary of the plaintiff and used by defendant Rodolfo A. Agana in selling the subject property to defendant Prima was a forgery as the board of directors of the plaintiff never enacted a resolution authorizing herein defendant Rodolfo A. Agana to sell herein subject property to defendant Prima or to anyone else for that matter. Plaintiff further claimed that defendant Prima in collusion with defendant Rodolfo A. Agana acted maliciously and in bad faith in relying on the forged authority without taking any step to verify the same with the plaintiff as owner of the subject property. According to plaintiff, the deed of absolute sale entered into between defendants Prima and Rodolfo A. Agana being the result of fraudulent transaction was void thereby, among others, causing damage to the plaintiff. For canceling Transfer Certificate of Title No. S-1648 (11521-A) knowing fully well that the authorization to sell [to] defendant Rodolfo A. Agana was a forgery, defendant Alejandro R. Villanueva was likewise made liable for damages. On the other hand, defendant Prima separately with defendant Rodolfo A. Agana in their respective

answers, sought and insisted constantly on the dismissal of the complaint based solidly on the ground that Venice B. Agana and Ma. Natividad A. Villacorta who filed in behalf of the plaintiff the original complaint and the amended and the second amended complaints as well, respectively, lacked legal capacity to sue because they were not authorized therefor by the board of directors of the plaintiff. Furthermore, defendant Prima argued that it acted in good faith when it relied solely on the face of the purported authorization of defendant Rodolfo A. Agana and entered into the deed of absolute sale and paid in full the purchase price of PhP2,567,760.00 of the subject property. This fact, according to defendant Prima, made it a buyer in good faith and for value. To cap its argument, defendant Prima in adopting the defense of defendant Rodolfo A. Agana asserted that even assuming that the authorization of defendant Rodolfo A. Agana was forged when plaintiff, through its President, Marcelino A. Agana, Jr. (brother of Rodolfo) accepted/received part of the aforestated purchase price knowing fully well the same to be the proceeds of the sale of the subject property, plaintiff has been precluded as it is now estopped from asking for rescission of the deed of absolute sale and reconveyance of the subject property.[3] After due hearing, the trial court rendered judgment on April 7, 2000, dismissing the complaint for annulment of sale with damages filed by the petitioner.[4] The trial court found that the respondent was a buyer in good faith and for value, relying on the authority of Rodolfo A. Agana to sell the property in behalf of the petitioner company, as evidenced by a notarized board resolution. As such, the trial court ruled that the petitioner was bound by the acts of its agent and must necessarily bear whatever damage may have been caused by this alleged breach of trust. On appeal, the CA affirmed in toto. Thus, petitioner filed the instant petition raising the following errors: I The Court of Appeals gravely erred in ruling that Respondent Agana was duly authorized by Petitioner under the Certification dated June 30, 1988 (Exhibits "D" and "3") to enter into the sale of the subject property with Respondent Prima Real. (A) There is no proof of the Certification's authenticity and due execution; (B) There is clear and convincing evidence that the Certification was forged. (C) Even assuming that the Certification was authentic and duly executed, it was not sufficient in form and by its terms to authorize Respondent Agana to sell the subject property or receive payment on behalf of Petitioner. II The Court of Appeals gravely erred in not holding that Respondent Prima Real was the author of its own damage by not making reasonable and prudent inquiries into the fact, nature and extent of Respondent Agana's authority, and by causing the issuance of checks in the name of Respondent Agana. The petition must fail.

A cursory reading of the issues reveals that these are factual matters which are not within the province of the Court to look into, save only in exceptional circumstances which are not present in the case at bar. Well settled is the rule that in petitions for review on certiorari under Rule 45, only questions of law must be raised.[5] As a matter of procedure, the Court defers and accords finality to the factual findings of trial courts, especially when, as in the case at bar, such findings are affirmed by the appellate court. This factual determination, as a matter of long and sound appellate practice, deserves great weight and shall not be disturbed on appeal. It is not the function of the Court to analyze and weigh all over again the evidence or premises supportive of the factual holding of the lower courts.[6] Petitioner insists that "the sale of the realty entered into between respondent Agana, purportedly on behalf of the petitioner, and respondent Prima is null and void for lack of authority on the part of respondent Agana to sell the property."[7] The board resolution allegedly granting Rodolfo Agana the authority to sell in behalf of the company, as certified by Corporate Secretary Atty. Antonio V. Agcaoili, is alleged to be a forgery. Ma. Natividad A. Villacorta, who served as assistant to Marcelino A. Agana, Jr., the President of St. Mary's Farm, Inc., in 1988 testified that the board of directors did not hold any meeting on June 27, 1988; that, in fact, the signature of Atty. Antonio Agcaoili was not genuine; and that said document was merely presented to the notary public for notarization without Atty. Agcaoili appearing before him. Despite this insistence, we find no cogent reason to deviate from the findings and conclusions of the respondent court affirming those of the trial court on this matter. Anent the forged signature of Atty. Agcaoili, the CA did not err in not giving evidentiary weight to the findings of the Document Examiner of the National Bureau of Investigation (NBI) on the ground that the findings were not really conclusive. In the first place, the procedure for the investigation of questionable handwriting was not properly followed. There is nothing on record that will conclusively show that the alleged standard sample signatures of Atty. Antonio Agcaoili, which were submitted to the NBI and made the basis of comparison, were the genuine signatures of the same Atty. Antonio Agcaoili. Moreover, the examiner testified that it was possible to have variations in the standard signatures of Atty. Agcaoili, caused by certain factors such as passage of time, pressure and physical condition of the writer which may have decisive influences on his handwriting's characteristics. [8] Thus, in the instant case, it cannot readily be concluded that a particular signature appearing in those documents is not genuine for lack of proper identification and a more accurate comparison of signatures. Mere allegation of forgery is not evidence and the burden of proof lies in the party making the allegation. [9] Unfortunately, in the case at bar, the petitioner failed to discharge this burden. Further challenging the due execution of the board resolution bearing the Secretary's Certification, petitioner wants us to consider the same as inadmissible on the ground that Atty. Agcaoili did not appear before a notary public for notarization. We do not agree, because in the past, we have already held that the non-appearance of the party before the notary public who notarized the deed does not necessarily nullify or render the parties' transaction void ab initio.[10] However, the non-appearance of the party exposes the notary public to administrative liability which warrants sanction by the Court. This fact notwithstanding, we agree with the respondent court that it is not enough to overcome the presumption of the truthfulness of the statements contained in the board resolution. To overcome the presumption, there must be sufficient, clear and convincing evidence as to exclude all reasonable controversy as to the falsity of the certificate.[11] In the absence of such proof, the document must be upheld. Notarization converts a private document into a public document, making it admissible in court without further proof of its authenticity.[12]

On the basis of this notarized board resolution, respondent had every reason to rely on Rodolfo Agana's authority to sell the subject property. Undeniably then, the respondent is an innocent purchaser for value in good faith. Our pronouncement inBautista v. Silva[13] is instructive: A buyer for value in good faith is one who buys property of another, without notice that some other person has a right to, or interest in such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the well-founded belief that the person from whom he receives the thing had title to the property and capacity to convey it. To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title. Such degree of proof of good faith, however, is sufficient only when the following conditions concur: first,the seller is the registered owner of the land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.[14] All the conditions enumerated in the aforementioned case are present in the case at bar, enough for us to consider Prima as a buyer in good faith. Prima Real Properties, Inc. is a company engaged in the buying and selling of real properties. As borne out by the records, respondent exerted efforts to verify the true background of the subject property. Rodolfo Agana presented to respondent the (1) notarized board resolution which stated that at a special meeting held on June 27, 1988, the board of directors authorized Mr. Rodolfo A. Agana, Treasurer, to sell the subject property covered by Transfer Certificate of Title (TCT) No. S-1648;[15] (2) a separate Certification by the petitioner's president, Marcelino A. Agana, Jr., authorizing its Treasurer, Rodolfo Agana, to sell said property; [16] and, (3) TCT No. T-1648 of the subject property. Convinced that Rodolfo Agana had the authority to sell on behalf of the company after being presented all these documents, the sale between the parties was thereby consummated. A deed of sale was executed on September 5, 1988 [17]and the full consideration of P2,567,760.00 for the subject property was paid.[18] It is of no moment that the checks were made payable to Rodolfo Agana and not to the company which, according to the petitioner, should have alerted the respondent to inquire further into the extent of Agana's authority to transfer the subject property. This was no longer necessary considering that respondent had every reason to rely on Rodolfo Agana's authority to sell, evidenced by the notarized Certification. As explained in the Bautista case: When the document under scrutiny is a special power of attorney that isduly notarized, we know it to be a public document where the notarial acknowledgment is prima facie evidence of the fact of its due execution. A buyer presented with such a document would have no choice between knowing and finding out whether a forger lurks beneath the signature on it. The notarial acknowledgment has removed that choice from him and replaced it with a presumption sanctioned by law that the affiant appeared before the notary public and acknowledged that he executed the document, understood its import and signed it. In reality, he is deprived of such choice not because he is incapable of knowing and finding out but because, under our notarial system, he has been given the luxury of merely relying on the presumption of regularity of a duly notarized SPA. And he cannot be faulted for that because it is precisely that fiction of regularity which holds together commercial transactions across borders and time. In sum, all things being equal, a person dealing with a seller who has [in his] possession title to the

property but whose capacity to sell is restricted, qualifies as a buyer in good faith if he proves that he inquired into the title of the seller as well as into the latter's capacity to sell; and that in his inquiry, he relied on the notarial acknowledgment found in the seller's duly notarized special power of attorney. He need not prove anything more for it is already the function of the notarial acknowledgment to establish the appearance of the parties to the document, its due execution and authenticity.[19] Aside from the pertinent documents presented, respondent also relied on the confirmation and certification of the Register of Deeds of Las Pias City and Mr. Timoteo S. Cruz, owner of the land likewise sold by Rodolfo Agana for the petitioner, with similar authorization by the petitioner and signed by the corporate secretary Atty. Agcaoili. Agana acted as petitioner's authorized agent and had full authority to bind the company in that transaction with Cruz. Contrary to the allegations of the petitioner that respondent Agana's authority was only limited to negotiate and not to sell the subject property, suffice it to state that the board resolution further averred that he was "authorized and empowered to sign any and all documents, instruments, papers or writings which may be required and necessary for this purpose to bind the Corporation in this undertaking." [20] The certification of the President, Marcelino Agana, Jr. also attests to this fact. With this notarized board resolution, respondent Agana, undeniably, had the authority to cede the subject property, carrying with it all the concomitant powers necessary to implement said transaction. On the strength of the deed of absolute sale executed pursuant to such authority, title over the land in petitioner's name was cancelled and a new certificate of title - TCT No. T-6175[21] - was already issued in the name of Prima Real Properties, Inc. Thus, it is too late in the day to have the sale voided, notwithstanding the retraction made by Rodolfo Agana in his Comment[22] on the Petition filed with this Court. Therein, he admits that he acted solely and without proper authority of the corporation. Agana states that he wishes to end once and for all the rift that had occurred in the corporation; and in order to buy peace for all the parties and for himself, he is willing to return the money paid by Prima so that ownership of the property can be returned to the petitioner. In light of this admission that Agana had no authority, petitioner posits that there is justifiable reason for the Court to re-visit or evaluate the facts of the case anew. Unfortunately, the Court cannot give weight to this magnanimous gesture of Agana; neither will the Court lend credence to Agana's assertion that he acted solely and without proper authority from the corporation, inasmuch as it was raised for the very first time in this Court and only after 8 years from the inception of the case. In all the pleadings filed by respondent Agana in court, he was steadfast in his position that he had authority to sell the subject property. A judicial admission conclusively binds the party making it. He cannot thereafter take a position contradictory to, or inconsistent with his pleadings. Acts or facts admitted do not require proof and cannot be contradicted unless it is shown that the admission was made through palpable mistake or that no such admission was made.[23] In the instant case, there is no proof of these exceptional circumstances. Clearly, the retraction was merely an afterthought on the part of respondent Agana with the intention to end the rift in the family corporation. Considering all the foregoing, it cannot be gainsaid that respondent Prima is an innocent purchaser in good faith and for value. WHEREFORE, the petition is DENIED. The decision of the Court of Appeals isAFFIRMED. SO ORDERED.

THE PEOPLE OF THEPHILIPPINES, Plaintiff-Appellee,

G.R. No. 151952 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, ** TINGA, VELASCO, JR., and BRION, JJ.
* *

- versus

Promulgated: HERACLEO ABELLO YFORTADA, Accused-Appellant. March 25, 2009

x-------------------------------------------------------------------------------------- x DECISION BRION, J.: We review in this appeal the decision of the Court of Appeals in CA-G.R. CR No. 23746,[1] which affirmed with modification the joint decision of the Regional Trial Court (RTC), Branch 170, Malabon City, in Criminal Case Nos. 19623-MN, 19624-MN and 19625-MN.[2]

Appellant Heracleo Abello y Fortada (Abello) stands convicted of one (1) count of violation of paragraph 2, Article 266-A of the Revised Penal Code (RPC), as amended;[3] and two (2) counts of violation of sexual abuse under Republic Act (R.A.) No. 7610 (Child Abuse Law). For these crimes, he was sentenced to suffer

imprisonment of twelve (12) years of prision mayor, as minimum, to twenty (20) years of reclusion temporal, and two reclusion perpetuas, respectively. The following Informations (all dated July 8, 1998) were filed against the appellant:

Criminal Case No. 19623-MN

That on or about the 8th day of July 1998, in Navotas, Metro Manila, and within the jurisdiction of this Honorable Court, the above-named accused, being a step-father (sic) of victim AAA,[4] with lewd design and by means of force and intimidation, did then and there willfully, unlawfully and feloniously putting his penis inside the mouth of said AAA, against her will and without her consent. CONTRARY TO LAW.[5]

Criminal Case No. 19624-MN

That on or about the 30th day of June 1998, in Navotas, Metro Manila, and within the jurisdiction of this Honorable Court, the above-named accused, being a step-father (sic) of victim AAA, a (sic) years old, and Polio Striken (sic), with lewd design by means of violence and intimidation, did then and there willfully, unlawfully and feloniously mashing her breast, against her will and without her consent.[6] CONTRARY TO LAW.

Criminal Case No. 19625-MN

That on or about the 2nd day of July 1998, in Navotas, Metro Manila, and within the jurisdiction of this Honorable Court, the above-named accused, being a step-father (sic) of victim AAA, a (sic) 21 years old, and Polio Striken (sic), with lewd design by means of violence and intimidation, did then and there willfully, unlawfully and feloniously mashing her breast, against her will and without her consent.[7] CONTRARY TO LAW.

Abello, with the assistance of counsel, pleaded not guilty to these charges. The cases were jointly tried since they arose from similar incidents involving the same parties.[8] The prosecution relied on testimony of the victim, AAA, who identified Abello as the perpetrator of the rape and sexual abuses against her. Abellos defense was confined to his denial of the accusations. The Background Facts The RTC summarized the facts as follows:
The victim in these cases is twenty-one (21) year old AAA. She contracted polio when she was seven (7) months old. She was not able to study on account of her difficulty in walking. Hence, she could only read and write her name including that of her friends. On June 30, 1998 at around 4:00 oclock (sic) in the early morning, AAA was sleeping in their house in Kalyeng Impiyerno, Navotas, Metro Manila along with her sister-in-law and nephew. She was suddenly awakened when Abello mashed her breast. Come July 2, 1999 at around 3:00 a.m. Abello again mashed the breast of AAA practically under the same previous situation while the latter was sleeping. In these two occasions AAA was able to recognize Abello because of the light coming from outside which illuminated the house. Then on July 8, 1998, at around 2:00 a.m., Abello this time placed his soft penis inside the mouth of AAA. The latter got awaken when Abello accidentally kneeled on her right hand. AAA exclaimed Aray forcing the accused to hurriedly enter his room. He was nevertheless seen by AAA. The victim on the same date reported the incident to her sister-in-law and mother.

Amidst the accusation of raping and twice sexually abusing AAA, Abello interposed the defense of denial. In all of the instances, Abello claimed that he merely stepped on the victim at the sala on his way to his room after retiring home.

The RTC found Abello guilty under the three Informations. The dispositive portion of the decision states:
WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. In Criminal Case No. 19623-MN, the Court finds accused Heracleo Abello y Fortada guilty beyond reasonable doubt of the crime of Violation of Paragraph 2, Article 226-A, Republic Act [No.] 8353 and hereby sentences him to suffer an indeterminate penalty of Seven (7) Years of prision mayor, as minimum, to Thirteen (13) Years of reclusion temporal, as maximum;[9] 2. In Criminal Case Nos. 19624-MN and 19625-MN, the Court finds accused Heracleo Abello y Fortada guilty beyond reasonable doubt of two (2) counts of Violation of Section 5, Article III ofRepublic Act [No.] 7610 and hereby sentences him in each of the two cases to suffer an indeterminate penalty of Four (4) Years of prision correctional (sic), as minimum, to Twelve (12) Years and One (1) Day of prision mayor, as maximum.[10] [Emphasis theirs]

The CA affirmed Abellos conviction on appeal but modified the penalties imposed. The dispositive portion of its decision reads:
WHEREFORE, the appealed judgement (sic) hereby AFFIRMED subject to the following MODIFICATIONS: is

1.In Criminal Case No. 19623-MN, appellant is hereby sentenced to suffer an indeterminate penalty of twelve (12) years of prision mayor, as minimum, to twenty (20) years of reclusion temporal, as maximum; Appellant is further ordered to pay complainant, AAA, moral damages in the amount of P50,000.00 2. In Criminal Case Nos. 19624-MN and 19625-MN, appellant is hereby sentenced to suffer the penalty of reclusion perpetua in each of the two cases.[11]

The Issues Abello contends in his Brief that:[12] 1. The court a quo erred in not absolving the accused-appellant of the crime of violation of paragraph 2, Article 266-A of the Revised Penal Code, as amended; 2. The court a quo has committed an error in not exculpating the accused-appellant of the crime of violation of Section 5, Article III of R.A. No. 7610.[13]

He emphasizes that it was impossible for him to have committed these crimes considering that: (a) he is AAAs stepfather who has a healthy sexual relationship with her mother; (b) AAA was not alone during these alleged incidents; and (c) AAA admitted that she was asleep when these incidents happened making it likely that she could have just dreamed of them. The Office of the Solicitor General maintains the correctness of Abellos conviction on the basis of AAAs positive and candid narration covering the elements constituting the crimes of rape by sexual assault and sexual abuse. Our Ruling We affirm Abellos conviction on all three charges.

Determining the guilt or innocence of an accused, based solely on the victims testimony, is not an easy task in reviewing convictions for rape and sexual abuse cases. For one, these crimes are usually committed in private so that only the

two direct parties can attest to what happened; thus, the testimonies are largely uncorroborated as to the exact details of the rape, and are usually in conflict with one another. With this in mind, we exercise utmost care in scrutinizing the parties testimonies to determine who of them is believable. Oftentimes, we rely on the surrounding circumstances as shown by the evidence, and on common human experience. We carefully reviewed AAAs testimony in light of the issues Abello raised in his appeal, and in light of matters he did not raise but which materially affect his innocence or culpability. After due consideration, we find no reason to doubt the veracity of AAAs testimony and her version of the events that led to the filing of the present charges. In her testimony, AAA positively and unequivocally narrated the details of her rape and sexual abuse she suffered in Abellos hands, as follows:
Q: A: Q: A: Q: A: Q: A: Q: A: Q: A: Do you remember any unusual incident that happened on June 30, 1999, inside your mothers house at around 4:00 oclock (sic)? I remembered on that date that he hold (sic) my breast, sir. Who hold (sic) your breast? He is the one, sir. (Witness pointed to the accused.) What else did he do to you at that time? That was again repeated on July 2 more or less 3:00 oclock (sic), sir. What did he do to you on July 2 at 3:00 oclock (sic)? The same he mashed my breast, sir. Was that repeated? On July 8 at around 2:00 oclock in the morning, sir. What happened then? He placed his penis on (sic) my mouth, sir.

Q: A:

While his penis was inside your mouth, what else was he doing to you? He suddenly entered the room of my mother because I saw him and I was sure that it was him who was doing that to me, sir. When was that when the accused placed his penis inside your mouth? I was sleeping at that time, sir. Were you awaken (sic)? Yes, sir. When you were awakened, what did you see? His organ was in my mouth while I was sleeping, I got awaken (sic) because I felt pain after he accidentally kneeled on my right hand and because of that I cried aray, x x x x x x So, it cannot take one minute or thirty seconds that the penis of the accused was inserted on (sic) your mouth open? I notice that my mouth was open, Your Honor. So, you were not sure whether it lasted for one second or one minute? It lasted for one second, Your Honor. And you were awakened? Yes, Your Honor. How do you know that it was the penis of the accused? I saw it, Your Honor. Whom did you see? Him, you honor. While the penis was inside your mouth, were you sleeping or awaken already? I got awaken because of the placement of his penis on (sic) my mouth, sir. Was his penis soft or hard? I got hold of it, Your honor. x x x

Q: A: Q: A: Q: A:

Q: A: Q: A: Q: A: Q: A: Q: A: Q: A: Q: A:

Q: A:

How were you able to hold the penis? I hold (sic) the penis to push it out on (sic) my mouth, Your honor.[14]

We note that both the RTC and CA found AAAs testimony to be positive, direct, and categorical, while the RTC found the defenses version too strained to be believed for being contrary to human experience; the RTC refused to accept the claim that Abello was prosecuted for rape and sexual abuse simply because he stepped with his knees on her stepdaughters hand.[15] A material point we noted is that Abello could not say why AAA would falsely accuse him. [16] The substance and tenor of the testimony and the element of motivation are critical points for us since a straightforward, categorical and candid narration by the victim deserves credence if no ill motive can be shown driving her to falsely testify against the accused.[17]

Our consideration of Abellos defense of denial and his other arguments lead us to reject them for the following reasons: First, the issue of his credibility is reduced to a choice between the offended partys positive testimony and the denial of the accused. In this case, AAA categorically and unmistakably identified Abello as her rapist and sexual abuser;[18] the identification was positive because the scene was illuminated by a light coming from outside the parties house at the time of the incidents. [19] She also testified that during the rape, she saw Abello suddenly enter the room of her mother after she yelped in pain when he stepped with his knee on her hand.[20] Settled jurisprudence tells us that the mere denial of ones involvement in a crime cannot take precedence over the positive testimony of the offended party.[21] Abello likewise admitted that in the wee hours of the mornings of June 30, July 2, and July 8, 1998, he passed by the sala of their house where AAA and her companions were sleeping.[22] This admission shows that he had the opportunity

and the means to commit these crimes in terms of his location and close proximity to AAA who, together with her companions, were then sleeping. Second, we flatly reject Abellos argument that his relationship with AAA insulates him from the crimes charged. Our judicial experience tells us that in handling these types of cases, the relationship between the offender and the offended party has never been an obstacle to the commission of the crime against chastity. Although alarming to admit, this kind and degree of relationship is now quite common in these types of crimes. Studies show a rising incidence of family and domestic violence where 98.8% of the victims are women; an estimated 26.7% of these cases involve sexual abuse, while 33% involve incest committed against children.[23] In these cases, the male spouse, the father of the victim, or close male relatives, have been identified as frequent abusers. [24] Third, we find the claim that AAA could have just dreamed of the incidents complained of, to be preposterous. It is highly unlikely that a woman in her right mind would expose and declare herself a victim of rape and sexual abuse, when she would thereby open herself to the humiliating experience of a public trial and to the possible social stigma of being a victim of rape and sexual abuse. In the normal course, a woman will not expose herself to these risks unless she is certain of what happened and she seeks to obtain justice against the perpetrator. We note in this regard AAAs categorical testimony that she filed the criminal charges because she did not know what to do; she thus reported the incidents to her mother and sister-in-law who thereafter sought police assistance.[25] The record also shows that AAA lived a sheltered life cared for by her relatives because of her polio.[26] Unless the contrary is shown, it is highly unusual

for her to have the worldly sophistication to invent or fabricate the charges she made, particularly one made against her stepfather. A charge against ones stepfather, too, is unusual in our socio-cultural context because of the respect we give our elders, and is only understandable if there is a deeply felt cause for complaint. We particularly note that no imputation has been made at any time in the case that AAA is not normal, save for her physical disability, or has a strained relationship with her stepfather prior to the acts charged. Based on these considerations and in the absence of clear indications of errors in giving credence to AAAs testimony, we find no reason to disturb the factual findings of the RTC and the CA. Rape by sexual assault

R.A. No. 8353 which took effect on October 22, 1997 introduced into the Philippine legal system the concept of rape by sexual assault. This amendment not only reclassified rape as a crime against persons, but also expanded the definition of rape from the traditional concept of a sexual intercourse committed by a man against an unwilling woman. The second paragraph of Article 266-A of the RPC, as amended defines rape by sexual assault as committed by any person who, under any of the circumstance mentioned in paragraph 1 shall commit an act of sexual assault by inserting his penis into another persons mouth or anal orifice, or any instrument or object, into the genital or anal orifice of another person. The elements of rape by sexual assault are:
(1)That the offender commits an act of sexual assault;

(2)That the act of sexual assault is committed by any of the following means: (a) By inserting his penis into another persons mouth or anal orifice; or x x x

(3) That the act of sexual assault is accomplished under any of the following circumstances: (a) By using force or intimidation; (b) When a woman is deprived of reason or otherwise unconscious; x x x[27]

AAAs testimony covers the commission of the sexual assault through the insertion of Abellos male organ into her mouth; AAA also consistently identified Abello as the perpetrator of the sexual assault. These statements satisfy the first and second elements of the rape. Her testimony that she was roused from sleep with Abellos male organ inserted in her mouth, goes into the third element of the crime. [28] In this respect, we observe that both the RTC and the CA failed to notice the variance between the allegations in the Information for rape and that proven at the trial on the mode of committing the offense. The Information alleges force and intimidation as the mode of commission, while AAA testified during the trial that she was asleep at the time it happened and only awoke to find Abellos male organ inside her mouth. This variance is not fatal to Abellos conviction for rape by sexual assault. In People v. Corpuz, [29] we ruled that a variance in the mode of commission of the

offense is binding upon the accused if he fails to object to evidence showing that the crime was committed in a different manner than what was alleged. In the present case, Abello did not object to the presentation of evidence showing that the crime charged was committed in a different manner than what was stated in the Information. Thus, the variance is not a bar to Abellos conviction of the crime charged in the Information.

Acts of lasciviousness

Abello was convicted of two (2) counts of sexual abuse under Section 5 (b), Article III of R.A. No. 7610, which defines and penalizes acts of lasciviousness committed against a child:
Section 5. Child Prostitution and Other Sexual Abuse. Children, whether male or female, who for money, profit, or any other consideration or due to the coercion or influence of any adult, syndicate or group, indulge in sexual intercourse or lascivious conduct, are deemed to be children exploited in prostitution and other sexual abuse. x x x (b) Those who commit the act of sexual intercourse or lascivious conduct with a child exploited in prostitution or subject to other sexual abuse; Provided, That when the victims is under twelve (12) years of age, the perpetrators shall be prosecuted under Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended, the Revised Penal Code, for rape or lascivious conduct, as the case may be: Provided, That the penalty for lascivious conduct when the victim is under twelve (12) years of age shall be reclusion temporal in its medium period; and

The essential elements of this provision are:

1. The accused commits the act of sexual intercourse or lascivious conduct. 2. The said act is performed with a child exploited in prostitution or subjected to other sexual abuse. 3. The child whether male or female, is below 18 years of age. [30]

Paragraph (h), Section 2 of the Implementing Rules and Regulations of R.A. 7610[31] (implementing rules) defines lascivious conduct as a crime committed through the intentional touching, either directly or through the clothing of the genitalia, anus, groin, breast, inner thigh or buttocks with the intent to abuse, humiliate, harass, degrade, or arouse or gratify the sexual desire of any person, among others. Records show that AAA duly established this element when she positively testified that Abello fondled her breasts on two separate occasions while she slept. The second element requires that the lascivious conduct be committed on a child who is either exploited in prostitution or subjected to other sexual abuse. This second element requires evidence proving that: (a) AAA was either exploited in prostitution or subjected to sexual abuse and (b) she is a child as defined under R.A. No. 7610. In Olivarez v. Court of Appeals,[32] we explained that the phrase, other sexual abuse in the above provision covers not only a child who is abused for profit, but also one who engages in lascivious conduct through the coercion or intimidation by an adult. In the latter case, there must be some form of compulsion equivalent to intimidation which subdues the free exercise of the offended partys will.[33]

In the present case, the prosecution failed to present any evidence showing that force or coercion attended Abellos sexual abuse on AAA; the evidence reveals that she was asleep at the time these crimes happened and only awoke when she felt her breasts being fondled. Hence, she could have not resisted Abellos advances as she was unconscious at the time it happened. In the same manner, there was also no evidence showing that Abello compelled her, or cowed her into silence to bear his sexual assault, after being roused from sleep. Neither is there evidence that she had the time to manifest conscious lack of consent or resistance to Abellos assault. More importantly, AAA cannot be considered a child under Section

3(a) of R.A. No. 7610 which reads: (a) Children refers to person below eighteen (18) years of age or those over but are unable to fully take care of themselves or protect themselves from abuse, neglect, cruelty, exploitation or discrimination because of a physical or mental disability or condition; [Emphasis supplied] The implementing rules elaborated on this definition when it defined a child as one who is below 18 years of age or over said age who, upon evaluation of a qualified physician, psychologist or psychiatrist, is found to be incapable of taking care of herself fully because of a physical or mental disability or condition or of protecting herself from abuse. While the records show that the RTC, the CA and the investigating prosecutor who filed the corresponding Informations, considered AAAs polio as a physical disability that rendered her incapable of normal function, no evidence was in fact presented showing the prosecutions compliance with the implementing rules. Specifically, the prosecution did not present any evidence, testimonial or documentary, of any medical evaluation or medical finding from a qualified physician, psychologist or psychiatrist attesting that AAAs physical condition rendered her incapable of fully taking care of herself or of protecting herself against sexual abuse. Under the circumstances, we cannot consider AAA a child under Section 3(a) of R.A. No. 7610. In arriving at this conclusion, we consider that since R.A. No. 7610 is a special law referring to a particular class in society, the prosecution must show that the victim truly belongs to this particular class to warrant the application of the statutes provisions. Any doubt in this regard we must resolve in favor of the accused. From another perspective, we also note that no evidence has been adduced showing that AAAs physical disability prevented her from resisting Abellos

attacks; the evidence only reveals that Abello took advantage of the opportunity presented to him (i.e., that AAA and her companions who were then asleep) to commit the sexual abuses; this inference is supported by the fact that he stopped his sexual assault when AAA started to awaken. It can also be reasonably deduced from these circumstances that Abello sought to commit the sexual abuses with impunity -- without AAAs knowledge and without any interference on her part. In light of these conclusions, we cannot hold Abello liable under R.A. No. 7610. However, we still find him liable for acts of lasciviousness under Article 336 of the RPC, as amended. In Olivarez, we emphasized that the character of the crime is not determined by the caption or preamble of the information or from the specification of the provision of law alleged to have been violated; the crime committed is determined by the recital of the ultimate facts and circumstances in the complaint or information.[34] In the present case, although the two Informations wrongly designated R.A. No. 7610 as the law violated; the allegations therein sufficiently constitute acts punishable under Article 336 of the RPC whose elements are:
1. That the offender commits any act of lasciviousness; 2. That the offended party is another person of either sex; and 3. That it is done under any of the following circumstances: a. By using force or intimidation; or b. When the offended party is deprived of reason or otherwise unconscious; or c. When the offended party is under 12 years of age or is demented.[35]

The presence of the first and second elements of the offense has been earlier discussed, albeit in the consideration of a charge under R.A. No. 7610. The prosecution established these elements through AAAs testimony that her breasts were fondled while she was asleep. While she did not actually see Abello fondling her (as the fondling was done while she was asleep and stopped when she awakened), she related that she identified Abello because she saw him enter her mothers room immediately after she felt her breasts fondled and after he stepped with his knees on her hand.[36] AAA also testified that Abello was illuminated by a light coming from outside their house.[37] Further, the perpetrator could only be Abello as the only other occupants of the house at the time were her mother, her sister-in-law and her young nephew who were all asleep.[38] The third element was proven by her testimony that, on two occasions, Abello mashed her breasts while she was sleeping.[39] As we discussed above, the Informations alleged the element of violence and intimidation as the mode of committing the sexual abuses, contrary to what the prosecution established during the trial that AAA was asleep on the two occasions when the offenses were committed. Pursuant to our above discussions citing Corpuz,[40] the deficiencies in the allegations will not relieve Abello of liability under the circumstances of this case. The Penalty The three Informations all alleged the stepfather-stepdaughter relationship between AAA and Abello. Relationship as an alternative circumstance under Article 15 of the RPC, as amended, and is an aggravating circumstance in crimes against chastity and in rape.[41] This modifying circumstance, however, was not duly proven in the present case due to the prosecutions failure to present the marriage contract between Abello and AAAs mother. If the fact of marriage came out in the evidence at all, it was via an admission by Abello of his marriage to

AAAs mother. This admission, however, is inconclusive evidence to prove the marriage to AAAs mother,[42] as the marriage contract still remains the best evidence to prove the fact of marriage.[43] This stricter requirement is only proper as relationship is an aggravating circumstance that increases the imposable penalty, and hence must be proven by competent evidence. Rape by sexual assault is penalized by prision mayor which has a range of six (6) years and one (1) day to twelve (12) years. Applying the Indeterminate Sentence Law, the minimum of the indeterminate penalty shall be within the full range of the penalty that is one degree lower than prision mayor, in this case, prision correccional which has a range of penalty from six (6) months and one (1) day to six (6) years. In the absence of any mitigating or aggravating circumstance, the maximum of the indeterminate penalty shall be taken within the medium period of prision mayor, or eight (8) years and one (1) day to ten (10) years.[44] Hence, Abello may be sentenced to suffer an indeterminate penalty ranging from six (6) months and one (1) day to six (6) years of prision correccional, as minimum, to eight (8) years and one (1) day to ten (10) years, as maximum, for the crime of rape. The imposable penalty for acts of lasciviousness under Article 336 of the RPC, as amended, is prision correccional. Under Scale No. 1 of Article 71 of this law, one degree lower from prision correccional is arresto mayor which has a range of penalty from one (1) month and one (1) day to six (6) months. Applying the Indeterminate Sentence Law, the minimum of the indeterminate penalty shall be taken from the full range of arresto mayor. Absent any mitigating or aggravating circumstance in the case, the maximum of the indeterminate penalty shall be taken from the medium period of prision correccional or two (2) years,

four (4) months and one (1) day to four (4) years and two (2) months. Accordingly, Abello may be meted an indeterminate penalty ranging from one (1) month and one (1) day to six (6) months of arresto mayor, as minimum, to two (2) years, four (4) months and one (1) day to four (4) years and two (2) months of prision correccional, as maximum, for each count of acts of lasciviousness. The Civil Liability A victim of rape by sexual assault is entitled to an award of P30,000 as civil indemnity and P30,000 as moral damages.[45] Civil indemnity is separate and distinct from the award of moral damages which is automatically granted in rape cases.[46] Moral damages are additionally awarded without need of further pleading or proof; it is presumed that the victim necessarily suffered injury due to the odiousness of the crime.[47] For acts of lasciviousness, AAA is awarded P20,000 as civil indemnity and P30,000 as moral damages for each count in line with existing jurisprudence.[48] The Court further awards exemplary damages in the amount of P25,000 for the rape through sexual assault committed upon AAA and P2,000 for each count of acts of lasciviousness.[49] Article 2230 of the Civil Code allows an award of exemplary damages when the crime is committed with one or more aggravating circumstances. Although not alleged in the Informations (as now required by Sections 8 and 9, Rule 110 of the 2000 Revised Rules of Criminal Procedure),[50] the aggravating circumstance of dwelling was nonetheless proven during the trial when AAA testified that she was sexually abused by Abello while she was asleep in their house.[51]

Additionally, Article 266-B of the RPC, as amended, recognizes knowledge by the offender of the mental disability, emotional disorder and/or physical handicap of the offended party at the time of the commission of the crime, as a qualifying circumstance. Again, this knowledge by Abello of AAAs polio was duly proven during the trial; this matter was not alleged in the Information.[52] These aggravating and qualifying circumstances of dwelling and Abellos knowledge of AAAs physical disability may be appreciated in awarding the victim exemplary damages in line with our ruling in People v. Catubig[53] where we held that the presence of an aggravating circumstance, whether ordinary or qualifying, entitles the offended party to an award of exemplary damages. WHEREFORE, premises considered, the decision dated January 3, 2002 of the Court of Appeals in CA-G.R. CR No. 23746 is AFFIRMED with the followingMODIFICATIONS in that: (1) In Criminal Case No. 19623, we find appellant Heracleo Abello y Fortada GUILTY of rape by sexual assault defined and penalized under Articles 266-A and 266-B of the Revised Penal Code, as amended. We sentence him to suffer an indeterminate prison term of six (6) years of prision correccional, as minimum, to ten (10) years of prision mayor, as maximum. He is ORDERED to pay AAA P30,000.00 as civil liability; P30,000.00 as moral damages and P25,000.00 as exemplary damages; (2) In Criminal Case Nos. 19624-MN and 19625-MN, we find appellant Heracleo Abello y Fortada GUILTY of acts of lasciviousness, defined and penalized under Article 336 of the Revised Penal Code, as amended.

For each count, he is sentenced to an indeterminate prison term of six (6) months of arresto mayor, as minimum, to four (4) years and two (2) months of prision correccional, as maximum. He is further ORDERED to pay AAA the amounts of P20,000.00 as civil indemnity; P30,000.00 as moral damages andP2,000.00 as exemplary damages, in each case. ARMANDO VIDAR @ Ricky, G.R. No. 177361 () NORBERTO BUTALON, SONNY Present: MARBELLA @ Spike and JOHN DOES and PETER DOES, Petitioners, CARPIO, J., Chairperson, CORONA, BRION, - versus DEL CASTILLO, and PEREZ, JJ. Promulgated: PEOPLE OF THE PHILIPPINES, Respondent. February 1, 2010 x------------------------------------------------------------------x

DECISION
DEL CASTILLO, J.: A person is killed, either by reason or on occasion of the robbery. To sustain a conviction for robbery with homicide, the prosecution must prove the following elements: (1) taking of personal property belonging to another; (2) with intent to gain; (3) with the use of violence or intimidation against a person; and (4) on the occasion or by reason of the robbery, the crime of homicide, as used in its generic sense, was committed. A conviction requires certitude that the robbery is the malefactors main purpose and objective, and the killing is merely incidental to the robbery. The intent to rob must

precede the taking of human life, but the killing may occur before, during, or after the robbery.[1] In the instant case, the prosecution satisfactorily proved that the crime committed by the petitioners was robbery with homicide. Factual Antecedents It was early evening of April 30, 2001, when army officer, Sgt. Julio D. Dioneda (Dioneda), was brutally murdered and valuables taken from his house located at Sitio Burabod, Barangay Poblacion, Bacon District, Sorsogon City. Consequently, a criminal charge for Robbery with Homicide against herein petitioners Armando Vidar @ Ricky (Vidar), Norberto Butalon (Butalon), Sonny Marbella @ Spike (Marbella), and several Does was filed under an Information[2] which reads:
The undersigned accuses ARMANDO VIDAR @ Ricky of Sto. Domingo, Pto. Diaz, Sorsogon, NORBERTO BUTALON, of Maslog, Legaspi City, and SONNY MARBELLA @ Spike of Lungib, Pilar, Sorsogon and several other JOHN DOES and PETER DOES, of the crime of ROBBERY WITH HOMICIDE, defined and penalized under Article 294 par. 1 of the Revised Penal Code, committed as follows: That on or about the 30th day of April 2001, at about 7:00 oclock in the evening at Sitio Burabod, Barangay Poblacion, Bacon District, Sorsogon City, Philippines and within the jurisdiction of this Honorable Court, the above named accused, conspiring and confederating together and helping one another, armed with firearms, did then and there willfully, unlawfully and feloniously and with intent to gain, enter the dwelling of one Sgt. Julio D. Dioneda and once inside, took therefrom at gunpoint a Cal. 45 pistol, a wallet containing P1,000.00 cash, a crash helmet and a motorcycle all belonging to the said Sgt. Julio D. Dioneda; that on the occasion of the said robbery and for the purpose of enabling them to take, steal and carry away the items above mentioned with ease, herein accused, in pursuance of their conspiracy, did then and there, willfully, unlawfully and feloniously, with treachery and taking

advantage of their superior number and strength and with intent to kill, attack, assault and repeatedly shot the said Sgt. Julio D. Dioneda, inflicting upon him multiple gunshot wounds that caused his instantaneous death, to the damage and prejudice of his legal heirs. CONTRARY TO LAW. Sorsogon City, Sorsogon, July 8, 2002.

Petitioners, assisted by their counsel de parte, pleaded not guilty to the crime of Robbery with Homicide as charged in the Information. After pre-trial was terminated, trial on the merits followed. The antecedent facts of this case as recounted by the prosecution witnesses Florecita Dioneda (Florecita) and Nia Dioneda Elemanco (Nia) that led to the conviction of the petitioners are as follows: At about 7:00 oclock in the evening of April 30, 2001, Florecita, wife of the victim, and her sister-in-law Nia, were inside the formers house at Burabod, Poblacion, Bacon District,Sorsogon City. They were watching television when three armed men suddenly barged inside. One of them, later identified as Marbella, poked a gun at Florecita while the other two ransacked the house taking a wallet, crash helmet and a .45 caliber firearm with its magazine. These items belong to Dioneda who was then taking a bath outside the house. Florecita and Nia followed the three men when the latter went out. At the yard, they saw the three men together with more or less 10 other persons surrounding Dioneda who was lying facing the ground. Despite Florecitas pleas not to kill her husband, Marbella and Vidar still fired a volley of shots causing Dionedas instantaneous death. The three then boarded Dionedas motorcylcle and fled the area. Nia corroborated the material details of the robbery and the killing and testified further that she could not forget the faces of the three malefactors as she was very sure that they were the ones who barged inside the house and later killed her brother.

Petitioners vehemently denied the accusations against them. Marbella averred that he does not know Dioneda and that he was in his house in Lungib, Pilar, Sorsogon on April 30, 2001 while Vidar asserted that he has no knowledge of the killing of Dioneda. Butalon, on the other hand, professed his innocence, claiming that he also does not know Dioneda and that he was in his house at Omoroy, Legaspi City on April 30, 2001. Collectively, they alleged that the possible motive behind the charge against them is that they were known members of the New Peoples Army (NPA). Ruling of the Regional Trial Court The Regional Trial Court of Sorsogon, Branch 52, relying on the credible and positive testimonies of the prosecution witnesses, rejected the defense interposed by the petitioners and accordingly rendered a Decision[3] on September 2, 2004 finding all of them guilty of the crime of robbery with homicide. The dispositive portion of said Decision reads:
WHEREFORE-, premises considered, the Court finds accused Armando Vidar @ Ricky, Norberto Butalon, and Sonny Marbella @ Spike guilty beyond reasonable doubt of the crime of Robbery with Homicide, defined and penalized under Article 294 of the Revised Penal Code with the aggravating circumstance of treachery, and applying the provision of Art. 63, par. 1 of the Revised Penal Code, in relation to Article 294 par. 1 of the Revised Penal Code, the Court hereby sentences each one of them to suffer the maximum penalty of DEATH and to pay jointly and severally, the heirs of the victim the amount of P50,000.00 as civil indemnity and the further sum of P5,500.00 as actual damages, the sum of P50,000.00 as moral damages, the amount of P3,336,768.00 as unearned income and the amount of P50,000.00 as exemplary damages without subsidiary imprisonment in case of insolvency and to pay the costs. The Clerk of Court is hereby ordered to transmit the records of this case to the Honorable Supreme Court for automatic review, and to prepare the Mittimus immediately. The Warden of the Bureau of Jail Management and Penology (BJMP) Sorsogon City and/or Legaspi City is hereby ordered to deliver the

accused to the National Penitentiary, Muntinlupa City, with proper escort and security immediately. SO ORDERED.

Ruling of the Court of Appeals On appeal, petitioners raised the following errors: I The Honorable Court a quo erred in finding the accused-appellants guilty of the crime of robbery with homicide despite the insufficiency of evidence for the prosecution to support the same.
II The Honorable Court a quo erred in not finding that robbery and homicide were committed in furtherance of rebellion as admitted both by the prosecution and the defense witnesses that the victim was killed by reason of his being a member of the Philippine Army and in the performance of his duty and the assailants are members of the New Peoples Army (NPA) of which the accused- appellants are also members even up to the time of their arrest.

On December 18, 2006, the Court of Appeals (CA) rendered its Decision[4] finding the appeal to be unmeritorious. The appellate court gave credence to the eyewitnesses account of the victims death and the identity of herein petitioners. Accordingly, the CA affirmed the findings of the trial court but modified the penalty imposed from Death to reclusion perpetua. The decretal portion of the decision reads:
WHEREFORE, the judgment of the Regional Trial Court of Sorsogon City, Branch 52, dated September 2, 2004 convicting the accused-appellants ARMANDO VIDAR alias RICKY, NORBERTO BUTALON, SONNY MARBELLA alias SPIKE of the crime of Robbery with Homicide is AFFIRMED. Considering, however, the repeal of R.A 7659 with the passage of Republic Act No. 9346 on June 24, 2006 prohibiting the imposition of the death penalty, in lieu of the trial courts imposition of the death penalty, each of the accused-appellants is hereby

sentenced to suffer reclusion perpetua. They are further directed to indemnify the heirs of the victim the amount of P50, 000.00 as civil indemnity, P50,000.00 as moral damages, P50,000.00 as exemplary damages, P5,500.00 as actual damages and P2,224,512.00 for the victims loss of earning capacity. SO ORDERED.[5]

Hence, this petition. On August 8, 2007, we issued a Resolution[6] treating the instant petition as petitioners Supplemental Brief and notified the Office of the Solicitor General (OSG) that it may file a supplemental brief within 30 days from notice thereof, if it so desires. The OSG filed a Manifestation[7] (in lieu of Supplemental Brief) that it had already exhaustively argued all the issues relevant to the case in its Appellees Brief[8] dated October 17, 2005. Petitioners Arguments Petitioners contend that the appellate court erred in affirming the decision of the trial court despite the absence of proof adduced before the court below establishing beyond reasonable doubt that they committed the crime of robbery with homicide. They maintain that the delay of almost a year in filing formal charges against them cast serious doubt on the intention and motive of the complainant. They aver that while the incident took place on April 30, 2001, formal charges against them were filed only in February 2002. Respondents Arguments In refuting petitioners contention, the OSG representing the respondent, reiterated the ruling of the court a quo and sought the affirmation of the assailed decision. Our Ruling

Petitioners arguments are bereft of merit. The delay did not greatly weaken the credibility of the testimonies of the prosecution witnesses. In the light of the circumstances obtaining in the case at bar, we believe that the delay in reporting to the police authorities the attendant facts of the crime for which the petitioners have been charged is consistent with normal human behavior considering that after a tragic incident, the last thing that the bereaved would want is to provoke further reprisals from the perpetrators of the felonious act. Although there is a natural tendency to seek the ends of justice for the treacherous killing of a dearly departed, personal safety takes priority as dictated by our culture. Moreover, considering private complainants honest belief that petitioners are known to be members of the NPA, the fear of reprisal from them was ever present which caused her momentary silence. After all, delay in reporting the occurrence of a crime or other unusual event in rural areas is well known.[9] Others reveal the perpetrator of the crime only after the lapse of one year or so to make sure that the possibility of a threat to his life or to his loved ones is already diminished if not totally avoided. In People v. Gornes[10] we held that:
It is true that the charge against the appellant was initiated only three and a half years after the commission of the crime. However, the fact of delay alone does not work against the witness.

Thus, the fact of delay attributed to the prosecution witnesses cannot be taken against them.[11] What is important is that their testimonies regarding the incident bear the earmarks of truth and dependability. One thing which bolsters the prosecution witnesses credibility is the fact that they had no motive to prevaricate against the petitioners. They were not actuated by improper motive to fabricate the facts and to foist a very serious offense against them. Where there is no evidence, as in this case, to indicate that the prosecution witnesses were actuated by improper motive, the presumption is that they were not so actuated and that their testimonies are entitled to full faith and credit.[12] For personal motive on the part of a witness to testify against the accused to be appreciated as showing bias, its presence should be supported by satisfactory proof.[13] Aside from their bare allegation, petitioners

miserably failed in this regard. On the contrary, we are not prepared to disbelieve the prosecution witnesses testimonies on their vital points substantiating the circumstances of time and place of the offense charged against petitioners. Petitioners likewise contend that their identification by the prosecution witnesses was attended with irregularity considering that they were identified merely from among the four photographs presented at Camp Escudero. They posit that this manner of identification provides an incredible suggestive procedure. We beg to disagree. In ascertaining whether an out-of-court identification is positive or derivative, the Court has adopted the totality of circumstances test wherein the following factors are taken into consideration: 1) the witnesss opportunity to view the criminal at the time of the crime; 2) the witnesss degree of attention at that time; 3) the accuracy of any prior description given by the witness; 4) the level of certainty demonstrated by the witness at the identification; 5) the length of time between the crime and the identification; and 6) the suggestiveness of the identification procedure.[14] We have scrutinized with great caution the witnesses manner of identifying petitioners vis-a-vis the foregoing factors and we discern nothing irregular that would result in an erroneous identification. At the outset, it must be stressed that the prosecution witnesses had an unobstructed view of the petitioners appearance who were not donning masks to hide their faces when the latter barged inside the house. There is no indication that darkness prevailed inside the house so as to have an obscure view at the time. They even testified that one of the petitioners even poked a gun at them while the others were ransacking the house. Thus even for a while, there was a frontal confrontation between petitioners and the witnesses, giving the latter an opportunity to take a good look at petitioners. Nothing in the records allows the presence of any distraction that would have disrupted the witnesses attention during the occurrence of the incident. Nia even described to the

policemen the physical appearance of petitioners though no cartographic sketch was presented.[15] Experience dictates, precisely because of the unusual acts of violence committed right before witnesses eyes, that they remember with a high degree of reliability the identity of criminals.[16] Though a considerable length of time had elapsed, the witnesses never wavered in their identification of petitioners. They cannot forget their faces. It is worth mentioning also that the identification of petitioners was effectively admitted when petitioners failed to dispute the same before the lower courts. The incourt identification of the petitioners later on dispels any doubt as to the correctness of their identities. As we held in People v. Rivera:[17]
Even assuming arguendo that the appellant Alfonso Riveras out-ofcourt identification was tainted with irregularity, his subsequent identification in court cured any flaw that may have attended it. Without hesitation, the two prosecution witnesses, Renato Losaria and Juanito Baylon identified the appellant as one of the assailants. In People v. Timon, the accused were identified through a show-up. The accused assailed the process of identification because no other suspect was presented in a police line-up. We ruled that a police line-up is not essential in identification and upheld the identification of the accused through a show-up. We also held that even assuming arguendo that the out-of-court identification was defective, the defect was cured by the subsequent positive identification in court for the inadmissibility of a police line-up identification x x x should not necessarily foreclose the admissibility of an independent in-court identification.

Moreover, the burden is on petitioners to prove that their mug shot identification was unduly suggestive. There is no evidence that the authorities had supplied or even suggested to the witnesses that petitioners were the suspected gunmen. We, therefore, fail to see any flaw that would invalidate the eyewitnesses identification. As aptly observed by the CA: Both Florecita Dioneda and Nia Elemanco gave a credible eyewitness account of the victims x x x death [by gunshots] in the hands of accused-appellant. Their testimony [sic] giving details of a startling and shocking incident that cannot easily be fabricated deserves credence and full probative weight for it indicates sincerity and truthfulness in the narration of

events. Both of these witnesses had a good look at the victims assailants, who did not at any time during the incident attempt to conceal their faces. Accused-appellant MARBELLA even stood less [than] a meter from Florecita Dioneda as he pointed a gun at her while another accused-appellant even [etched] upon her a distinct impression of his baldness as repeatedly mentioned by her during her testimony. As there is nothing to indicate that these two principal witnesses were moved by improper motives, their positive declarations on the witness stand deserve full faith and credit.[18]

The fact that the prosecution witnesses are related to the victim will not necessarily taint their testimonies. The weight of testimony of witnesses is neither impaired nor in any way affected by their relationship to the victim when there is no showing of improper motive on their part.[19] Relationship per se of a witness with the victim of the crime does not necessarily mean that the witness is biased.[20] These prosecution witnesses are the most aggrieved parties, being the victims widow and sister. Thus, their motive of putting the killers behind bars cannot be considered improper.[21] It would be unnatural for a relative who is interested in avenging the crime to implicate persons other than the real culprit lest the guilty go unpunished.[22] Deeply entrenched in our jurisprudence is the rule that the assessment of the credibility of witnesses is a domain best left to the trial court judge because of his unique opportunity to observe their deportment and demeanor on the witness stand; a vantage point denied appellate courts and when his findings have been affirmed by the Court of Appeals, these are generally binding and conclusive upon this Court.[23] Significantly, in the pleadings filed before the trial court and in the appellate court, petitioners were steadfast in their position that the crime was committed in furtherance of rebellion, obviously to escape criminal liability for the present charge. This is judicial admission that they indeed committed the crime. A judicial admission conclusively binds the party making it. He cannot thereafter take a position contradictory to or inconsistent with his pleading. Acts or facts admitted do not require proof and cannot be contradicted unless it is shown that the admission was made through palpable mistake or that no such admission was made.[24] Moreover, when a party adopts a certain theory in the court below, he is not allowed to change his theory on appeal, for to allow him to do

so would not only be unfair to the other party but would also be offensive to the basic rules of fair play, justice and due process.[25] Treachery was also duly proven. The deadly and successive actions of the petitioners did not allow the victim any opportunity to defend himself. The victim was innocently taking a bath totally unaware of the planned attack against him. Or while he may have realized a possible danger to his person, the attack was executed in such a manner as to make defense, not to say counter attack, impossible. The suddenness of the assault, without the slightest provocation from him who was unarmed and with nary an opportunity to repel the aggression or defend himself, ineluctably qualified the crime with alevosia.[26] The twin defenses of denial and alibi raised by petitioners must necessarily fail in view of the positive identification made by the prosecution witnesses. Alibi and denial are inherently weak defenses and must be brushed aside when the prosecution has sufficiently and positively ascertained the identity of the accused.[27] And it is only axiomatic that positive testimony prevails over negative testimony.[28] The testimonies of the prosecution witnesses thus established beyond reasonable doubt the elements of robbery with homicide, namely: 1) the taking of personal property was committed with violence or intimidation against persons; 2) the property taken belongs to another; 3) the taking was done with animo lucrandi; and 4) by reason of the robbery or on the occasion thereof, the crime of homicide which is therein used in a generic sense, was committed.[29] As to damages, we find the amounts awarded by the trial court as modified by the CA with respect to the amount of the loss of earning capacity to have been duly substantiated and warranted. We see no cogent reason to reverse the same. Finally, we take note that petitioner Butalon died before final judgment. According to the written report of the Penal Superintendent,[30] Butalon died at the New Bilibid PrisonHospital on October 21, 2004. Thus, consistent with our ruling

in People v. Bayotas[31] that the death of an accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon, we declare the dismissal of the petition of the late Norberto Butalon. WHEREFORE, the petition for review is DENIED. The challenged Decision of the Court of Appeals in CA-G.R. CR H.C. No. 00554 dated December 18, 2006 is AFFIRMED with MODIFICATION that the petition of Norberto Butalon is dismissed, his criminal and civil liability having been extinguished by reason of his death. SO ORDERED. PEOPLE OF THE PHILIPPINES, Appellee, G.R. No. 181829

Present: CORONA, C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ.

- versus -

Promulgated: SATURNINO VILLANUEVA, Appellant. September 1, 2010 x----------------------------------------------------------x

DECISION
DEL CASTILLO, J.: On appeal is the November 5, 2007 Decision[1] of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02210 which affirmed with modification the November 28, 2003

Decision[2]of the Regional Trial Court (RTC) of Tayug, Pangasinan, Branch 51. The CA found appellant Saturnino Villanueva guilty beyond reasonable doubt of three counts of qualified rape and sentenced him to suffer the penalty of reclusion perpetua and to pay his victim the amounts of P75,000.00 as civil indemnity, P75,000.00 as moral damages, and P25,000.00 as exemplary damages, for each count.

Factual Antecedents: On November 6, 2002, three Informations were filed against appellant for the crime of rape. The accusatory portions of the Informations read: Crim. Case No. T-3157:
That on or about the 9th day of June, 2002, at dawn, x x x, province of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused who is the father of complainant, armed with a bladed weapon, by means of force, threat and intimidation, did then and there willfully, unlawfully and feloniously have sexual intercourse with one AAA,[3] a minor 12 years of age, against her will and consent, to the damage and prejudice of said AAA. CONTRARY to Article 335 of the Revised Penal Code, as amended by Republic Act 8353.[4]

Crim. Case No. T-3158:

That on or about the 27th day of September, 1999, in the evening, at x x x, province of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused who is the father of complainant, armed with a bladed weapon, by means of force, threat and intimidation, did then and there willfully, unlawfully and feloniously have sexual intercourse with one AAA, a minor 9 years of age, against her will and consent, to the damage and prejudicie of said AAA.

CONTRARY to Article 335 of the Revised Penal Code, as amended by Republic Act 8353.[5]

Crim. Case No. T-3159:

That on or about the 28th day of September, 1999, at dawn, at x x x, province of Pangasinan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused who is the father of complainant, armed with a bladed weapon, by means of force, threat and intimidation, did then and there willfully, unlawfully and feloniously have sexual intercourse with one AAA, a minor 9 years of age, against her will and consent, to the damage and prejudice of said AAA. CONTRARY to Article 335 of the Revised Penal Code, as amended by Republic Act 8353.[6]

When arraigned on November 14, 2002, appellant pleaded not guilty to all charges.[7] During pre-trial, the parties stipulated that the appellant is the father of AAA. It was likewise agreed that AAA was below 12 years of age when the rape incidents happened.[8] AAAs birth and medical certificates were likewise marked as Exhibits A and C, respectively.[9] Thereafter, the cases were tried jointly.[10] Version of the Prosecution The prosecution presented AAA as its witness. AAA narrated that when she was about 4 years old, her mother left her in the care of her father, herein appellant. Since then, she had been living with her father. AAA claimed that appellant sexually abused her on September 27 and 28, 1999 and on June 9, 2002. During her testimony, AAA narrated that:

PROS. ULANDAY: Q Will you please state your name, age and other personal circumstances? WITNESS: A I am AAA, 13 years old, out-of-school youth, presently residing at x x x[11] xxxx PROS. ULANDAY: Q Madam Witness, do you still remember September 27, 1999? A Yes, sir. Q A sir. xxxx Q A xxxx PROS. ULANDAY: Q You claimed that your father touched and used you. How did he begin in touching you? A He tied me, sir. xxxx Q A Q A What part of your body was x x x tied by your father? My mouth, sir. What other parts of your body, if there [are] any? My hands and my feet, sir. Who rape[d] you? My papa, sir. Witness pointed to the accused. Why do you remember that particular date? That was the birthday of my father and the date when he touched me,

PROS. ULANDAY: My witness is crying, your Honor.[12]

xxxx Q A Now, after your father tied you on September 27, 1999, what did he do, if theres any? He raped me, sir.

COURT: Q What do you mean by x x x saying he raped you? xxxx A xxxx COURT: And we make of record that [witness is now] in tears.[13] xxxx He undressed me, sir.

PROS. ULANDAY: Q Madam Witness, during the last hearing you uttered the word incua na. What do you mean by that? A He inserted his penis into my vagina, sir. Q A Q A Q A Q A Q How long a time did your father [insert] his penis into your vagina? About two minutes, sir. At early dawn of September 28, 1999, what happened if any, between you and your father? The same, sir. What do you mean by the same? That he inserted his penis into my vagina, sir. Before your father inserted his penis into your vagina, what did he do, if there was any? He first undressed me, sir. While he was undressing you what were you doing, if any?

A Q A Q A Q A

I failed to do any, sir. Why did you fail to do any? Because I was afraid, sir. Why were you afraid at the time? Because he threatened me, sir. How did he [threaten] you? That if I would report the matter to anyone he would kill the person to whom I will report, sir. Do you remember June 9, 2002 at 3:00 oclock dawn? Yes, sir. Why do you remember that particular date? Because he again raped me, sir. Who raped you? My father, sir. In what particular place [were] you raped? In our house, sir.

Q A Q A Q A Q A xxxx Q A Q A Q A Q A Q A

You claimed that you were raped by your father, how did he rape you? He undressed me, sir. What else did he do aside from undressing you? He poked a knife at me, sir. And after poking a knife at you, what happened next, if any? Then he touched (kinuti) me, sir. What part of your body was touched by your father? My vagina, sir. How did he touch your vagina? He inserted his penis into my vagina, sir.

Q A

What happened when he inserted his penis into your vagina? I cried, sir.[14]

After the presentation of AAAs testimony, the prosecution rested its case.

Version of the Defense The defense presented appellant as its first witness. In his testimony, appellant admitted that AAA is his daughter.[15] He also admitted that on September 27 and 28, 1999 and June 9, 2002, he was living in the same house as AAA.[16] However, when asked regarding the rape charges filed against him by his daughter, appellant denied the same. Thus:
Q And this daughter of your[s] now charge you [with] rape in Crim. Case Nos. T-3157/3158/3159 for allegedly having sexual intercourse with her against her will and consent. What can you say against these charges by your daughter? [Those are] not true, sir.[17]

The defense next presented Marcelino Villanueva (Marcelino) who testified that he is the father of the appellant.[18] He claimed that AAA filed the rape cases against appellant because the latter forbade her to entertain suitors.[19] Marcelino also alleged that after appellant was incarcerated, AAA eloped with her 20-year old boyfriend and that AAA only separated from her boyfriend when she was brought under the care of the Department of Social Welfare and Development.[20] When asked how old AAA was when she allegedly eloped with her boyfriend, Marcelino answered that AAA was only 13 years old.[21] Ruling of the Regional Trial Court

The trial court lent credence to the testimony of AAA. However, it noted that although it was agreed upon during the pre-trial that AAA was a minor below 12 years of age, the fact remains that AAA was 12 years, six months and 19 days when she was ravished by the appellant on June 9, 2002.[22] The court below also observed that AAA has always been a pathetic child of oppression, abuse and neglect and that [h]er innocence, tender age, dependence [on appellant] for survival, and her virtual orphanhood sufficed to qualify every sexual molestation perpetrated by her father as rape x x x.[23] The dispositive portion of the Decision reads:
WHEREFORE, finding the accused SATURNINO VILLANUEVA guilty beyond reasonable doubt of three counts of rape, defined and penalized by Article 266-A of the Revised Penal Code, perpetrated against [his] daughter on September 27, 1999, September 28, 1999 and June 9, 2002, x x x and as mandated by Article 266-B, same Code, the Court hereby sentences him to suffer the penalty of DEATH for each offense, to indemnify the complainant AAA for damages in the amount of P50,000.00 per [count], and to pay the costs. SO ORDERED.[24]

Ruling of the Court of Appeals In his brief filed before the appellate court, appellant claimed that the prosecution failed to present evidence that would overcome the presumption of his innocence. Appellant also alleged that the trial court erred in lending credence to the unrealistic and unnatural testimony of AAA.[25] He claimed that it was unusual for AAA not to offer any resistance to the advances allegedly made by him considering that he was unarmed. According to the appellant, AAA should have struggled or at least offered some resistance because she was not completely helpless.[26] Appellant also suggested that AAA must have been coached because initially, she did not know the

acts which constitute rape. However, during the succeeding hearings, AAA allegedly testified in detail the bestial acts committed against her.[27] Moreover, appellant argued that the prosecution failed to formally offer in evidence the medical certificate and to present the doctor who conducted the medical examination to testify on his findings.[28] Likewise, AAAs birth certificate was not formally offered. Neither did the Municipal Civil Registrar who allegedly prepared the same take the witness stand. Thus appellant claimed that assuming he was indeed guilty of the crimes charged, he should only be held liable for simple rape and not qualified rape because the minority of the victim was not duly established.[29] Further, with the passage of Republic Act No. 9346, appellant should not be sentenced to death.[30] On the other hand, appellee maintained that AAAs credibility was beyond doubt and that it was unnecessary to offer proof of resistance where the assailant exercised moral ascendancy against his victim, as in this case.[32] Appellee insisted that the crimes committed were three counts of qualified, and not simple, rape considering that AAA was a minor and the offender was her father,[33] and that the parties had already stipulated during pre-trial as regards the age of the victim.[34]
[31]

On November 5, 2007, the appellate court rendered its Decision disposing thus:
WHEREFORE, premises considered, the Decision dated 28 November 2003 of the Regional Trial Court of Tayug, Pangasinan, Branch 51 in Crim. Case Nos. T-3157, T-3158 and T-3159 finding accused-appellant Saturnino Villanueva guilty beyond reasonable doubt of three (3) counts of qualified rape under Articles 266-A and 266-B is AFFIRMED with the MODIFICATION that pursuant to Republic Act No. 9346, the penalty of death imposed on appellant is reduced to reclusion perpetua for each count of qualified rape, without eligibility for parole under Act No. 4103, as amended. Further, accused-appellant is ordered to pay the private complainant/victim [AAA], for each count of qualified rape, the amounts of Php 75,000.00 as civil indemnity, Php 75,000.00 as moral damages and Php 25,000.00 as exemplary damages. SO ORDERED.[35]

The appellate court found no reason to reverse the findings of the trial court on the credibility of AAA.[36] Although there were occasions when AAA would not immediately answer the questions propounded to her, the CA opined that it was because she was either distressed in recounting her horrible experiences or in tears.[37] The appellate court likewise considered the fact that AAA was only 13 years old when she testified on her harrowing experiences.[38] The appellate court likewise brushed aside appellants contention that AAA did not offer any resistance. According to the CA, appellants moral ascendancy over AAA substitutes for violence or intimidation.[39] The CA also concluded that even without the medical certificate, appellant could still be held liable for three counts of rape. His conviction could rest exclusively on the credible testimony of AAA and the medical certificate would only be corroborative evidence.[40] Anent the birth certificate, the CA recalled that during pre-trial, the minority of the victim and her relationship with the appellant had already been stipulated upon. Hence, the said elements have been sufficiently alleged in the Informations and proven during trial.[41] Finally, the CA held that appellants denial is intrinsically weak and self-serving especially considering AAAs credible and straightforward testimony.[42] Our Ruling Both the appellant and the appellee opted not to file their supplemental briefs.[43] The appeal is partly meritorious. At the outset, we must state that we entertain no doubt that appellant thrice raped his daughter, AAA. We examined the records and we find AAAs testimony

convincing and straightforward. We therefore have no reason to reverse or modify the findings of the trial court on the credibility of the victims testimony, more so in this case where the said findings were affirmed by the CA. We also agree with the ruling of the appellate court that appellant could be convicted of rape even without the medical certificate. In rape cases, the accused may be convicted solely on the testimony of the victim, provided the testimony is credible, natural, convincing, and consistent with human nature and the normal course of things.[44] As stated above, AAAs testimony was credible and convincing. As such, appellants conviction could rest solely on it. The medical certificate would only serve as corroborative evidence. We, however, agree with the appellant that both the medical certificate and AAAs birth certificate, although marked as exhibits during the pre-trial, should not have been considered by the trial court and the CA because they were not formally offered in evidence. Section 34, Rule 132 of the Rules of Court explicitly provides: The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified. In this case, we note that after the marking of the exhibits during pre-trial, the prosecution did not formally offer the said medical certificate or birth certificate in evidence. In fact, the prosecution rested its case after presenting the testimony of AAA without formally offering any documentary exhibit at all. Our ruling in Heirs of Pedro Pasag v. Parocha[45] is instructive, thus:
The rule on formal offer of evidence is not a trivial matter. Failure to make a formal offer within a considerable period of time shall be deemed a waiver to submit it. Consequently, as in this case, any evidence that has not been offered shall be excluded and rejected. xxxx The Rules of Court [provide] that the court shall consider no evidence which has not been formally offered. A formal offer is necessary because

judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered by the parties at the trial. Its function is to enable the trial judge to know the purpose or purposes for which the proponent is presenting the evidence. On the other hand, this allows opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate court will not be required to review documents not previously scrutinized by the trial court. xxxx Thus, the trial court is bound to consider only the testimonial evidence presented and exclude the documents not offered. Documents which may have been identified and marked as exhibits during pre-trial or trial but which were not formally offered in evidence cannot in any manner be treated as evidence. Neither can such unrecognized proof be assigned any evidentiary weight and value. It must be stressed that there is a significant distinction between identification of documentary evidence and its formal offer. The former is done in the course of the pre-trial, and trial is accompanied by the marking of the evidence as an exhibit; while the latter is done only when the party rests its case. The mere fact that a particular document is identified and marked as an exhibit does not mean that it has already been offered as part of the evidence. It must be emphasized that any evidence which a party desires to submit for the consideration of the court must formally be offered by the party; otherwise, it is excluded and rejected.[46]

We reiterated the above ruling in Dizon v. Court of Tax Appeals[47] where one of the issues presented was whether the Court of Tax Appeals and the CA gravely abused their discretion in allowing the admission of the pieces of evidence which were not formally offered by the Bureau of Internal Revenue.[48] In finding the case impressed with merit, the Court held that:
Under Section 8 of RA 1125, the CTA is categorically described as a court of record. As cases filed before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Indubitably, no evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on documentary evidence require that these documents must be formally offered before the CTA. x x x

xxxx x x x [T]he presentation of the BIRs evidence is not a mere procedural technicality which may be disregarded considering that it is the only means by which the CTA may ascertain and verify the truth of BIRs claims against the Estate. The BIRs failure to formally offer these pieces of evidence, despite CTAs directives, is fatal to its cause. Such failure is aggravated by the fact that not even a single reason was advanced by the BIR to justify such fatal omission. This, we take against the BIR.[49]

We are not unaware that there is an exception to the above-stated rule. In People v. Mate,[50] Silvestre Mate (Mate) was charged with the crime of Kidnapping for Ransom with Murder and Frustrated Murder.[51] During arraignment, he entered a plea of guilty. The court then propounded clarificatory questions to determine whether the accused understood the consequences of his plea. Immediately thereafter, the trial court promulgated its decision finding the accused guilty as charged and sentenced him to death.[52] It was only after the rendition of the judgment that the trial court conducted hearings for the reception of the prosecutions evidence.[53]

From the prosecutions evidence, it would appear that during the investigation, Mate voluntarily made extra-judicial statements as contained in Exhibits A, B, and J. Also, after his conviction, he appeared as witness for the prosecution against his coaccused where he affirmed his extra-judicial statements in Exhibits A, B, and J. However, the state prosecutor failed to formally offer said exhibits. In debunking the defenses contentions that the trial court erred in rendering a judgment of conviction on Mate even before the prosecution could present its evidence, and in considering the exhibits which were not formally offered, the Court held thus:
The defense contends that the trial court committed a serious error in rendering judgment of conviction immediately after Mate had pleaded guilty to the crime charged on the basis of his plea of guilty and before receiving any

evidence. While the trial court committed an error in rendering judgment immediately after the accused had pleaded guilty, and, thereafter, conducted hearings for the reception of the evidence for the prosecution, such an irregularity, is insufficient to justify the setting aside of the judgment of conviction, considering that it is supported by the judicial and extra-judicial confessions of the accused and by other evidence. x x x xxxx The defense questions also the failure of the state prosecutor Cornelio Melendres to make a formal offer of his exhibits, although they have been marked and identified. Such an oversight appears trivial because the entire evidence for the prosecution is recorded. Even without the exhibits which have been incorporated into the records of the case, the prosecution can still establish the case because the witnesses properly identified those exhibits and their testimonies are recorded. Exhibits A, B, and J are all admissible against Mate because it appears with clarity that he voluntarily and spontaneously gave those narrations without compulsion from anybody. In fact, . . . when he testified against Ben Bohol he affirmed those narrations again.[54]

In Mato v. Court of Appeals,[55] we concretized the above ruling by holding that evidence, although not formally offered in evidence, may be admitted and considered by the trial court provided the following requirements are present, viz: first, the same must have been duly identified by testimony duly recorded and, second, the same must have been incorporated in the records of the case.[56] In Ramos v. Dizon,[57] we deemed the exhibits to have been incorporated into the records because they had been presented and marked during the pre-trial of the case.[58] Likewise, the first requisite was deemed satisfied because one of the parties therein explained the contents of the exhibits when interrogated by the respondents counsel.[59] In the instant case, we find the rulings espoused in People v. Mate,[60] Mato v. Court of Appeals,[61] and Ramos v. Dizon[62] not applicable. Thus, we find that both the trial court and the CA erred in allowing the admission of AAAs medical certificate and birth certificate. The records would show that the lone witness for the prosecution

did not identify the said exhibits or explain their contents. When AAA was placed on the witness stand, she merely stated that she was 13 years old. No reference was ever made to her birth certificate. The same is true with the medical certificate. After the marking during the pre-trial, the prosecution did not refer to it in any stage of the proceedings. Neither did it present the doctor who prepared the same. Moreover, appellants admission during the pre-trial that AAA was a minor below 12 years of age[63] would not help the prosecutions case. First, the trial court found this admission inaccurate as in fact, AAA was already above 12 years of age when the rape incident transpired on June 9, 2002. Second and more important, appellants admission during pre-trial is not admissible as it violates Section 2, Rule 118 of the Rules of Court which explicitly provides that: All agreements or admissions made or entered during the pre-trial conference shall be reduced in writing and signed by the accused and his counsel, otherwise they cannot be used against the accused. x x x. In People v. Chua Uy,[64] we held that:
Even granting for the sake of argument that RAMON admitted during the pre-trial that Exhibits D to D-4, inclusive, and Exhibit E contained methamphetamine hydrochloride, the admission cannot be used in evidence against him because the Joint Order was not signed by RAMON and his counsel. Section 4 of Rule 118 of the Rules of Court expressly provides: SEC. 4. Pre-trial agreements must be signed. No agreement or admission made or entered during the pre-trial conference shall be used in evidence against the accused unless reduced to writing and signed by his counsel. Put in another way, to bind the accused the pre-trial order must be signed not only by him but his counsel as well. The purpose of this requirement is to further safeguard the rights of the accused against improvident or unauthorized agreements or admissions which his counsel may have entered into without his knowledge, as he may have waived his presence at the pre-trial conference; eliminate any doubt on the conformity of the accused of the facts agreed upon.

In this case, records would show that the Pre-trial Order was not signed by both appellant and his counsel. In view of the foregoing, we find that the prosecution did not present any satisfactory evidence to prove AAAs minority. In the prosecution of criminal cases, x x x, nothing but proof beyond reasonable doubt of every fact necessary to constitute the crime with which an accused is charged must be established. Qualifying circumstances or special qualifying circumstances must be proved with equal certainty and clearness as the crime itself; otherwise, there can be no conviction of the crime in its qualified form. As a qualifying circumstance of the crime of rape, the concurrence of the victims minority and her relationship to the accused-appellant must be both alleged and proven beyond reasonable doubt.[65] In view of the foregoing, we find appellant guilty only of three counts of simple rape the penalty for which is reclusion perpetua for each count. Accordingly, the awards of civil indemnity must be reduced to P50,000.00 and moral damages to P50,000.00. Finally, the award of exemplary damages is proper. Exemplary damages may be awarded in criminal cases as part of civil liability if the crime was committed with one or more aggravating circumstances. Relationship as an alternative circumstance under Article 15 of the Revised Penal Code is considered aggravating in the crime of rape.[67] In this case, the aggravating circumstance of relationship was duly established. Appellant himself admitted when he testified in open court that he is AAAs father. However, the award of P25,000.00 as exemplary damages must be increased to P30,000.00 in line with prevailing jurisprudence.[68]
[66]

WHEREFORE, we find appellant Saturnino Villanueva GUILTY of three counts of simple rape and accordingly sentence him to suffer the penalty of reclusion perpetua and to indemnify his victim AAA the amounts of P50,000.00 as civil indemnity, P50,000.00 as moral damages, and P30,000.00 as exemplary damages, for each count. SO ORDERED.

Sison v Ancheta G.R. No. L-59431. July 25, 1984.

C. J. Fernando Declaratory Relief Facts: Petitioners challenged the constitutionality of Section 1 of Batas Pambansa Blg. 135. It amended Section 21 of the National Internal Revenue Code of 1977, which provides for rates of tax on citizens or residents on (a) taxable compensation income, (b) taxable net income, (c) royalties, prizes, and other winnings, (d) interest from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements, (e) dividends and share of individual partner in the net profits of taxable partnership, (f) adjusted gross income. Petitioner as taxpayer alleged that "he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers." He characterizes the above section as arbitrary amounting to class legislation, oppressive and capricious in character. For petitioner, therefore, there is a transgression of both the equal protection and due process clauses of the

Constitution as well as of the rule requiring uniformity in taxation. The OSG prayed for dismissal of the petition due to lack of merit. Issue: Whether the imposition of a higher tax rate on taxable net income derived from business or profession than on compensation is constitutionally infirm. (WON there is a transgression of both the equal protection and due process clauses of the Constitution as well as of the rule requiring uniformity in taxation) Held: No. Petition dismissed Ratio: The need for more revenues is rationalized by the government's role to fill the gap not done by public enterprise in order to meet the needs of the times. It is better equipped to administer for the public welfare. The power to tax, an inherent prerogative, has to be availed of to assure the performance of vital state functions. It is the source of the bulk of public funds.

The power to tax is an attribute of sovereignty and the strongest power of the government. There are restrictions, however, diversely affecting as it does property rights, both the due process and equal protection clauses may properly be invoked, as petitioner does, to invalidate in appropriate cases a revenue measure. If it were otherwise, taxation would be a destructive power. The petitioner failed to prove that the statute ran counter to the Constitution. He used arbitrariness as basis without a factual foundation. This is merely to adhere to the authoritative doctrine that where the due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property. That would be a clear abuse of power. It has also been held that where the assailed tax measure is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is subject to attack on due process grounds.

For equal protection, the applicable standard to determine whether this was denied in the exercise of police power or eminent domainwas the presence of the purpose of hostility or unreasonable discrimination. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For theprinciple is that equal protection and security shall be given to every person under circumstances, which if not identical are analogous. If law be looks upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest. The equal protection clause is, of course, inspired by the noble concept of approximating the ideal of the laws's benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the idea of law. The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract

propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, addressed to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same. Lutz v Araneta- it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation. Petitioner- kindred concept of uniformity- Court- Philippine Trust Company- The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation"

There was a difference between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. The discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. As there is practically no overhead expense, these taxpayers are not entitled to make deductions for income tax purposes because they are in the same situation more or less. Taxpayers who are recipients of compensation income are set apart as a class. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There was a lack of a factual foundation, the forcer of doctrines on due process and equal protection, and he reasonableness of the distinction between compensation and

taxable net income of professionals and businessmen not being a dubious classification. You might also like:

G.R. No. L-59431 July 25, 1984 ANTERO M. SISON, JR., petitioner, vs. RUBEN B. ANCHETA, Acting Commissioner, Bureau of Internal Revenue; ROMULO VILLA, Deputy Commissioner, Bureau of Internal Revenue; TOMAS TOLEDO Deputy Commissioner, Bureau of Internal Revenue; MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO, Chairman, Commissioner on Audit, and CESAR E. A. VIRATA, Minister of Finance, respondents. Antero Sison for petitioner and for his own behalf. The Solicitor General for respondents.

FERNANDO, C.J.: The success of the challenge posed in this suit for declaratory relief or prohibition proceeding 1 on the validity of Section I of Batas Pambansa Blg. 135 depends upon a showing of its constitutional infirmity. The assailed provision further amends Section 21 of the National Internal Revenue Code of 1977, which provides for rates of tax on citizens or residents on (a) taxable compensation income, (b) taxable net income, (c) royalties, prizes, and other winnings, (d) interest from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements, (e) dividends and share of individual partner in the net profits of taxable partnership, (f) adjusted gross income. 2 Petitioner 3 as taxpayer alleges that by virtue thereof, "he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers. 4 He characterizes the above sction as arbitrary amounting to class legislation, oppressive and capricious in character 5For petitioner, therefore, there is a transgression of both the equal protection and due process clauses 6 of the Constitution as well as of the rule requiring uniformity in taxation. 7 The Court, in a resolution of January 26, 1982, required respondents to file an answer within 10 days from notice. Such an answer, after two extensions were granted the Office of the Solicitor General, was filed on May 28, 1982.8 The facts as alleged were admitted but not the allegations which to their mind are "mere arguments, opinions or conclusions on the part of the petitioner, the truth [for them] being those stated [in their] Special and Affirmative

Defenses." 9 The answer then affirmed: "Batas Pambansa Big. 135 is a valid exercise of the State's power to tax. The authorities and cases cited while correctly quoted or paraghraph do not support petitioner's stand." 10 The prayer is for the dismissal of the petition for lack of merit. This Court finds such a plea more than justified. The petition must be dismissed. 1. It is manifest that the field of state activity has assumed a much wider scope, The reason was so clearly set forth by retired Chief Justice Makalintal thus: "The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally, and only 'because it was better equipped to administer for the public welfare than is any private individual or group of individuals,' continue to lose their welldefined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times." 11 Hence the need for more revenues. The power to tax, an inherent prerogative, has to be availed of to assure the performance of vital state functions. It is the source of the bulk of public funds. To praphrase a recent decision, taxes being the lifeblood of the government, their prompt and certain availability is of the essence. 12 2. The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of sovereignty. It is the strongest of all the powers of of government." 13 It is, of course, to be admitted that for all its plenitude 'the power to tax is not unconfined. There are restrictions. The Constitution sets forth such limits . Adversely affecting as it does properly rights, both the due process and equal protection clauses inay properly be invoked, all petitioner does, to invalidate in appropriate cases a revenue measure. if it were otherwise, there would -be truth to the 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy." 14 In a separate opinion in Graves v. New York, 15 Justice Frankfurter, after referring to it as an 1, unfortunate remark characterized it as "a flourish of rhetoric [attributable to] the intellectual fashion of the times following] a free use of absolutes." 16 This is merely to emphasize that it is riot and there cannot be such a constitutional mandate. Justice Frankfurter could rightfully conclude: "The web of unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmess pen: 'The power to tax is not the power to destroy while this Court sits." 17 So it is in the Philippines. 3. This Court then is left with no choice. The Constitution as the fundamental law overrides any legislative or executive, act that runs counter to it. In any case therefore where it can be demonstrated that the challenged statutory provision as petitioner here alleges fails to abide by its command, then this Court must so declare and adjudge it null. The injury thus is centered on the question of whether the imposition of a higher tax rate on taxable net income derived from business or profession than on compensation is constitutionally infirm. 4, The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here. does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a provision as void or its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that were the due process and equal protection clauses are invoked, considering that they arc not fixed rules but rather broad standards, there is a need for of such

persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail. 18 5. It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property. That would be a clear abuse of power. It then becomes the duty of this Court to say that such an arbitrary act amounted to the exercise of an authority not conferred. That properly calls for the application of the Holmes dictum. It has also been held that where the assailed tax measure is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is subject to attack on due process grounds. 19 6. Now for equal protection. The applicable standard to avoid the charge that there is a denial of this constitutional mandate whether the assailed act is in the exercise of the lice power or the power of eminent domain is to demonstrated that the governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumtances which if not Identical are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest." 20 That same formulation applies as well to taxation measures. The equal protection clause is, of course, inspired by the noble concept of approximating the Ideal of the laws benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the Idea of law. There is, however, wisdom, as well as realism in these words of Justice Frankfurter: "The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, address to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same." 21Hence the constant reiteration of the view that classification if rational in character is allowable. As a matter of fact, in a leading case of Lutz V. Araneta, 22 this Court, through Justice J.B.L. Reyes, went so far as to hold "at any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.'" 23 7. Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: "The rule of taxation shag be uniform and equitable." 24 This requirement is met according to Justice Laurel in Philippine Trust Company v. Yatco, 25 decided in 1940, when the tax "operates with the same force and effect in every place where the subject may be found. " 26 He likewise added: "The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable." 27 The problem of classification did not present itself in that case. It did not arise until nine years later, when the Supreme Court

held: "Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation, ... . 28 As clarified by Justice Tuason, where "the differentiation" complained of "conforms to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause and is therefore uniform." 29 There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation." 30 8. Further on this point. Apparently, what misled petitioner is his failure to take into consideration the distinction between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different categories. To repeat, it. is enough that the classification must rest upon substantial distinctions that make real differences. In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the, discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no overhead expense, these taxpayers are e not entitled to make deductions for income tax purposes because they are in the same situation more or less. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system of income taxation to compensation income, while continuing the system of net income taxation as regards professional and business income. 9. Nothing can be clearer, therefore, than that the petition is without merit, considering the (1) lack of factual foundation to show the arbitrary character of the assailed provision; 31 (2) the force of controlling doctrines on due process, equal protection, and uniformity in taxation and (3) the reasonableness of the distinction between compensation and taxable net income of professionals and businessman certainly not a suspect classification, WHEREFORE, the petition is dismissed. Costs against petitioner. Makasiar, Concepcion, Jr., Guerero, Melencio-Herrera, Escolin, Relova, Gutierrez, Jr., De la Fuente and Cuevas, JJ., concur. Teehankee, J., concurs in the result. Plana, J., took no part.

PHILIPPINE HEALTH CARE PROVIDERS, INC., PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

DECISION
CORONA, J.: Is a health care agreement in the nature of an insurance contract and therefore subject to the documentary stamp tax (DST) imposed under Section 185 of Republic Act 8424 (Tax Code of 1997)? This is an issue of first impression. The Court of Appeals (CA) answered it affirmatively in its August 16, 2004 decision[1] in CA-G.R. SP No. 70479. Petitioner Philippine Health Care Providers, Inc. believes otherwise and assails the CA decision in this petition for review under Rule 45 of the Rules of Court. Petitioner is a domestic corporation whose primary purpose is "[t]o establish, maintain, conduct and operate a prepaid group practice health care delivery system or a health maintenance organization to take care of the sick and disabled persons enrolled in the health care plan and to provide for the administrative, legal, and financial responsibilities of the organization."[2] Individuals enrolled in its health care programs pay an annual membership fee and are entitled to various preventive, diagnostic and curative medical services provided by its duly licensed physicians, specialists and other professional technical staff participating in the group practice health delivery system at a hospital or clinic owned, operated or accredited by it.[3] The pertinent part of petitioner's membership or health care agreement [4] provides: VII BENEFITS Subject to paragraphs VIII [on pre-existing medical condition] and X [on claims for reimbursement] of this Agreement, Members shall have the following Benefits under this Agreement: In-Patient Services. In the event that a Member contract[s] sickness or suffers injury which requires confinement in a participating Hospital[,] the services or benefits stated below shall be provided to the Member free of charge, but in no case shall [petitioner] be liable to pay more than P75,000.00 in benefits with respect to anyone sickness, injury or related causes. If a member has exhausted such maximum benefits with respect to a particular sickness, injury or related causes, all accounts in excess of P75,000.00 shall be borne by the enrollee. It is[,] however, understood that the payment by [petitioner] of the said maximum in In-Patient Benefits to any one member shall preclude a subsequent payment of benefits to such member in respect of an unrelated sickness, injury or related causes happening during the remainder of his membership term.
(a) (b) (c) (d) (e) (f) (g) (h) (i) Room and Board Services of physician and/or surgeon or specialist Use of operating room and recovery room Standard Nursing Services Drugs and Medication for use in the hospital except those which are used to dissolve blood clots in the vascular systems (i.e., trombolytic agents) Anesthesia and its administration Dressings, plaster casts and other miscellaneous supplies Laboratory tests, x-rays and other necessary diagnostic services Transfusion of blood and other blood elements

Condition for in-Patient Care. The provision of the services or benefits mentioned in the

immediately preceding paragraph shall be subject to the following conditions:

(a) (b) (c) (d) The Hospital Confinement must be approved by [petitioner's] Physician, Participating Physician or [petitioner's] Medical Coordinator in that Hospital prior to confinement. The confinement shall be in a Participating Hospital and the accommodation shall be in accordance with the Member[`]s benefit classification. Professional services shall be provided only by the [petitioner's] Physicians or Participating Physicians. If discharge from the Hospital has been authorized by [petitioner's] attending Physician or Participating Physician and the Member shall fail or refuse to do so, [petitioner] shall not be responsible for any charges incurred after discharge has been authorized.

Out-Patient Services. A Member is entitled free of charge to the following services or benefits which shall be rendered or administered either in [petitioner's] Clinic or in a Participating Hospital under the direction or supervision of [petitioner's] Physician, Participating Physician or [petitioner's] Medical Coordinator.
(a) Gold Plan Standard Annual Physical Examination on the anniversary date of membership, to be done at [petitioner's] designated hospital/clinic, to wit: (i) Taking a medical history (ii) Physical examination (iii) Chest x-ray (iv) Stool examination (v) Complete Blood Count (vi) Urinalysis (vii) Fasting Blood Sugar (FBS) (viii) SGPT (ix) Creatinine (x) Uric Acid (xi) Resting Electrocardiogram (xii) Pap Smear (Optional for women 40 years and above) Platinum Family Plan/Gold Family Plan and Silver Annual Physical Examination. The following tests are to be done as part of the Member[`]s Annual check-up program at [petitioner's] designated clinic, to wit: 1) Routine Physical Examination 2) CBC (Complete Blood Count) * Hemoglobin * Hematocrit * Differential * RBC/WBC 3) Chest X-ray 4) Urinalysis 5) Fecalysis Preventive Health Care, which shall include: (i) Periodic Monitoring of Health Problems (ii) Family planning counseling (iii) Consultation and advices on diet, exercise and other healthy habits (iv) Immunization but excluding drugs for vaccines used Out-Patient Care, which shall include: (i) Consultation, including specialist evaluation (ii) Treatment of injury or illness (iii) Necessary x-ray and laboratory examination (iv) Emergency medicines needed for the immediate relief of symptoms (v) Minor surgery not requiring confinement

(b)

(c)

(d)

Emergency Care. Subject to the conditions and limitations in this Agreement and those specified below, a Member is entitled to receive emergency care [in case of emergency. For this purpose, all hospitals and all attending physician(s) in the Emergency Room automatically become accredited. In participating hospitals, the member shall be entitled to the following services free of charge: (a) doctor's fees, (b) emergency room fees, (c) medicines used for immediate relief and during treatment, (d) oxygen, intravenous fluids and whole blood and human blood products, (e) dressings, casts and

sutures and (f) x-rays, laboratory and diagnostic examinations and other medical services related to the emergency treatment of the patient.][5] Provided, however, that in no case shall the total amount payable by [petitioner] for said Emergency, inclusive of hospital bill and professional fees, exceed P75,000.00. If the Member received care in a non-participating hospital, [petitioner] shall reimburse [him][6] 80% of the hospital bill or the amount of P5,000.00[,] whichever is lesser, and 50% of the professional fees of non-participating physicians based on [petitioner's] schedule of fees provided that the total amount[,] inclusive of hospital bills and professional fee shall not exceed P5,000.00. On January 27, 2000, respondent Commissioner of Internal Revenue sent petitioner a formal demand letter and the corresponding assessment notices demanding the payment of deficiency taxes, including surcharges and interest, for the taxable years 1996 and 1997 in the total amount of P224,702,641.18. The assessment represented the following:
1996 1997 Value Added Tax (VAT) P 45,767,596.23 54,738,434.03 P 100,506,030.26 DST P 55,746,352.19 68,450,258.73 P 124,196,610.92

The deficiency DST assessment was imposed on petitioner's health care agreement with the members of its health care program pursuant to Section 185 of the 1997 Tax Code which provides: Section 185. Stamp tax on fidelity bonds and other insurance policies. -On all policies of insurance or bonds or obligations of the nature of indemnity for loss, damage, or liability made or renewed by any person, association or company or corporation transacting the business of accident, fidelity, employer's liability, plate, glass, steam boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except life, marine, inland, and fire insurance), and all bonds, undertakings, or recognizances, conditioned for the performance of the duties of any office or position, for the doing or not doing of anything therein specified, and on all obligations guaranteeing the validity or legality of any bond or other obligations issued by any province, city, municipality, or other public body or organization, and on all obligations guaranteeing the title to any real estate, or guaranteeing any mercantile credits, which may be made or renewed by any such person, company or corporation, there shall be collected a documentary stamp tax of fifty centavos (P0.50) on each four pesos (P4.00), or fractional part thereof, of the premium charged. (emphasis supplied) Petitioner protested the assessment in a letter dated February 23, 2000. As respondent did not act on the protest, petitioner filed a petition for review in the Court of Tax Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments. On April 5, 2002, the CTA rendered a decision,[7] the dispositive portion of which read: WHEREFORE, in view of the foregoing, the instant Petition for Review is PARTIALLY GRANTED. Petitioner is hereby ORDERED to PAY the deficiency VAT amounting to P22,054,831.75 inclusive of 25% surcharge plus 20% interest from January 20, 1997 until fully paid for the 1996 VAT deficiency and P31,094,163.87 inclusive of 25% surcharge plus 20% interest from January 20, 1998 until fully paid for the 1997 VAT deficiency. Accordingly, VAT Ruling No. [231]-88 is declared void and without force and effect. The 1996 and 1997 deficiency DST assessment against petitioner is hereby CANCELLED AND SET ASIDE. Respondent is ORDERED to DESIST from collecting the said DST deficiency tax. SO ORDERED.[8]

Respondent appealed the CTA decision to the CA[9] insofar as it cancelled the DST assessment. He claimed that petitioner's health care agreement was a contract of insurance subject to DST under Section 185 of the 1997 Tax Code. On August 16, 2004, the CA rendered its decision.[10] It held that petitioner's health care agreement was in the nature of a non-life insurance contract subject to DST: WHEREFORE, the petition for review is GRANTED. The Decision of the Court of Tax Appeals, insofar as it cancelled and set aside the 1996 and 1997 deficiency documentary stamp tax assessment and ordered petitioner to desist from collecting the same is REVERSED and SET ASIDE. Respondent is ordered to pay the amounts of P55,746,352.19 and P68,450,258.73 as deficiency Documentary Stamp Tax for 1996 and 1997, respectively, plus 25% surcharge for late payment and 20% interest per annum from January 27, 2000, pursuant to Sections 248 and 249 of the Tax Code, until the same shall have been fully paid. SO ORDERED.[11] Petitioner moved for reconsideration but the CA denied it. Hence, this petition. Petitioner essentially argues that its health care agreement is not a contract of insurance but a contract for the provision on a prepaid basis of medical services, including medical check-up, that are not based on loss or damage. Petitioner also insists that it is not engaged in the insurance business. It is a health maintenance organization regulated by the Department of Health, not an insurance company under the jurisdiction of the Insurance Commission. For these reasons, petitioner asserts that the health care agreement is not subject to DST. We do not agree. The DST is levied on the exercise by persons of certain privileges conferred by law for the creation, revision, or termination of specific legal relationships through the execution of specific instruments.[12] It is an excise upon the privilege, opportunity, or facility offered at exchanges for the transaction of the business.[13] In particular,the DST under Section 185 of the 1997 Tax Code is imposed on the privilege of making or renewing any policy of insurance (except life, marine, inland and fire insurance), bond or obligation in the nature of indemnity for loss, damage, or liability. Under the law, a contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.[14] The event insured against must be designated in the contract and must either be unknown or contingent.[15] Petitioner's health care agreement is primarily a contract of indemnity. And in the recent case of Blue Cross Healthcare, Inc. v. Olivares,[16] this Court ruled that a health care agreement is in the nature of a non-life insurance policy. Contrary to petitioner's claim, its health care agreement is not a contract for the provision of medical services. Petitioner does not actually provide medical or hospital services but merely arranges for the same[17] and pays for them up to the stipulated maximum amount of coverage. It is also incorrect to say that the health care agreement is not based on loss or damage because, under the said

agreement, petitioner assumes the liability and indemnifies its member for hospital, medical and related expenses (such as professional fees of physicians). The term "loss or damage" is broad enough to cover the monetary expense or liability a member will incur in case of illness or injury. Under the health care agreement, the rendition of hospital, medical and professional services to the member in case of sickness, injury or emergency or his availment of so-called "out-patient services" (including physical examination, x-ray and laboratory tests, medical consultations, vaccine administration and family planning counseling) is the contingent event which gives rise to liability on the part of the member. In case of exposure of the member to liability, he would be entitled to indemnification by petitioner. Furthermore, the fact that petitioner must relieve its member from liability by paying for expenses arising from the stipulated contingencies belies its claim that its services are prepaid. The expenses to be incurred by each member cannot be predicted beforehand, if they can be predicted at all. Petitioner assumes the risk of paying for the costs of the services even if they are significantly and substantially more than what the member has "prepaid." Petitioner does not bear the costs alone but distributes or spreads them out among a large group of persons bearing a similar risk, that is, among all the other members of the health care program. This is insurance. Petitioner's health care agreement is substantially similar to that involved inPhilamcare Health Systems, Inc. v. CA.[18] The health care agreement in that case entitled the subscriber to avail of the hospitalization benefits, whether ordinary or emergency, listed therein. It also provided for "outpatient benefits" such as annual physical examinations, preventive health care and other out-patient services. This Court ruled in Philamcare Health Systems, Inc.: [T]he insurable interest of [the subscriber] in obtaining the health care agreement was his own health. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingency, the health care provider must pay for the same to the extent agreed upon under the contract.[19] (emphasis supplied) Similarly, the insurable interest of every member of petitioner's health care program in obtaining the health care agreement is his own health. Under the agreement, petitioner is bound to indemnify any member who incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingency to the extent agreed upon under the contract. Petitioner's contention that it is a health maintenance organization and not an insurance company is irrelevant. Contracts between companies like petitioner and the beneficiaries under their plans are treated as insurance contracts.[20] Moreover, DST is not a tax on the business transacted but an excise on the privilege, opportunity, or facility offered at exchanges for the transaction of the business.[21] It is an excise on the facilities used in the transaction of the business, separate and apart from the business itself.[22] WHEREFORE, the petition is hereby DENIED. The August 16, 2004 decision of the Court of Appeals in CA-G.R. SP No. 70479 is AFFIRMED. Petitioner is ordered to pay the amounts of P55,746,352.19 and P68,450,258.73 as deficiency documentary stamp tax for 1996 and 1997, respectively, plus 25% surcharge for late payment and 20% interest per annum from January 27, 2000 until full payment thereof.

Costs against petitioner. SO ORDERED.

G.R. No. 149110

April 9, 2003

NATIONAL POWER CORPORATION, petitioner, vs. CITY OF CABANATUAN, respondent. PUNO, J.: This is a petition for review1 of the Decision2 and the Resolution3 of the Court of Appeals dated March 12, 2001 and July 10, 2001, respectively, finding petitioner National Power Corporation (NPC) liable to pay franchise tax to respondent City of Cabanatuan. Petitioner is a government-owned and controlled corporation created under Commonwealth Act No. 120, as amended.4 It is tasked to undertake the "development of hydroelectric generations of power and the production of electricity from nuclear, geothermal and other sources, as well as, the transmission of electric power on a nationwide basis." 5 Concomitant to its mandated duty, petitioner has, among others, the power to construct, operate and maintain power plants, auxiliary plants, power stations and substations for the purpose of developing hydraulic power and supplying such power to the inhabitants.6 For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-92,8 the respondent assessed the petitioner a franchise tax amounting to P808,606.41, representing 75% of 1% of the latter's gross receipts for the preceding year. 9 Petitioner, whose capital stock was subscribed and paid wholly by the Philippine Government,10 refused to pay the tax assessment. It argued that the respondent has no authority to impose tax on government entities. Petitioner also contended that as a nonprofit organization, it is exempted from the payment of all forms of taxes, charges, duties or fees11 in accordance with sec. 13 of Rep. Act No. 6395, as amended, viz: "Sec.13. Non-profit Character of the Corporation; Exemption from all Taxes, Duties, Fees, Imposts and Other Charges by Government and Governmental Instrumentalities.- The Corporation shall be non-profit and shall devote all its return from its capital investment, as well as excess revenues from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the policy enunciated in Section one of this Act, the Corporation is hereby exempt: (a) From the payment of all taxes, duties, fees, imposts, charges, costs and service fees in any court or administrative proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities;

(b) From all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities; (c) From all import duties, compensating taxes and advanced sales tax, and wharfage fees on import of foreign goods required for its operations and projects; and (d) From all taxes, duties, fees, imposts, and all other charges imposed by the Republic of the Philippines, its provinces, cities, municipalities and other government agencies and instrumentalities, on all petroleum products used by the Corporation in the generation, transmission, utilization, and sale of electric power." 12 The respondent filed a collection suit in the Regional Trial Court of Cabanatuan City, demanding that petitioner pay the assessed tax due, plus a surcharge equivalent to 25% of the amount of tax, and 2% monthly interest.13Respondent alleged that petitioner's exemption from local taxes has been repealed by section 193 of Rep. Act No. 7160, 14 which reads as follows: "Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code." On January 25, 1996, the trial court issued an Order15 dismissing the case. It ruled that the tax exemption privileges granted to petitioner subsist despite the passage of Rep. Act No. 7160 for the following reasons: (1) Rep. Act No. 6395 is a particular law and it may not be repealed by Rep. Act No. 7160 which is a general law; (2) section 193 of Rep. Act No. 7160 is in the nature of an implied repeal which is not favored; and (3) local governments have no power to tax instrumentalities of the national government. Pertinent portion of the Order reads: "The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative intent. The lawmakers may expressly repeal a law by incorporating therein repealing provisions which expressly and specifically cite(s) the particular law or laws, and portions thereof, that are intended to be repealed. A declaration in a statute, usually in its repealing clause, that a particular and specific law, identified by its number or title is repealed is an express repeal; all others are implied repeal. Sec. 193 of R.A. No. 7160 is an implied repealing clause because it fails to identify the act or acts that are intended to be repealed. It is a well-settled rule of statutory construction that repeals of statutes by implication are not favored. The presumption is against inconsistency and repugnancy for the legislative is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes. It is also a well-settled rule that, generally, general law does not repeal a special law unless it clearly appears that the legislative has intended by the latter general act to modify or repeal the earlier special law. Thus, despite the

passage of R.A. No. 7160 from which the questioned Ordinance No. 165-92 was based, the tax exemption privileges of defendant NPC remain. Another point going against plaintiff in this case is the ruling of the Supreme Court in the case of Basco vs. Philippine Amusement and Gaming Corporation, 197 SCRA 52, where it was held that: 'Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government. xxx Being an instrumentality of the government, PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected to control by mere local government.' Like PAGCOR, NPC, being a government owned and controlled corporation with an original charter and its shares of stocks owned by the National Government, is beyond the taxing power of the Local Government. Corollary to this, it should be noted here that in the NPC Charter's declaration of Policy, Congress declared that: 'xxx (2) the total electrification of the Philippines through the development of power from all services to meet the needs of industrial development and dispersal and needs of rural electrification are primary objectives of the nations which shall be pursued coordinately and supported by all instrumentalities and agencies of the government, including its financial institutions.' (underscoring supplied). To allow plaintiff to subject defendant to its tax-ordinance would be to impede the avowed goal of this government instrumentality. Unlike the State, a city or municipality has no inherent power of taxation. Its taxing power is limited to that which is provided for in its charter or other statute. Any grant of taxing power is to be construed strictly, with doubts resolved against its existence. From the existing law and the rulings of the Supreme Court itself, it is very clear that the plaintiff could not impose the subject tax on the defendant." 16 On appeal, the Court of Appeals reversed the trial court's Order17 on the ground that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the exemptions granted to the petitioner.18 It ordered the petitioner to pay the respondent city government the following: (a) the sum of P808,606.41 representing the franchise tax due based on gross receipts for the year 1992, (b) the tax due every year thereafter based in the gross receipts earned by NPC, (c) in all cases, to pay a surcharge of 25% of the tax due and unpaid, and (d) the sum of P 10,000.00 as litigation expense. 19 On April 4, 2001, the petitioner filed a Motion for Reconsideration on the Court of Appeal's Decision. This was denied by the appellate court, viz: "The Court finds no merit in NPC's motion for reconsideration. Its arguments reiterated therein that the taxing power of the province under Art. 137 (sic) of the Local Government Code refers merely to private persons or corporations in which

category it (NPC) does not belong, and that the LGC (RA 7160) which is a general law may not impliedly repeal the NPC Charter which is a special lawfinds the answer in Section 193 of the LGC to the effect that 'tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations except local water districts xxx are hereby withdrawn.' The repeal is direct and unequivocal, not implied. IN VIEW WHEREOF, the motion for reconsideration is hereby DENIED. SO ORDERED."20 In this petition for review, petitioner raises the following issues: "A. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC, A PUBLIC NON-PROFIT CORPORATION, IS LIABLE TO PAY A FRANCHISE TAX AS IT FAILED TO CONSIDER THAT SECTION 137 OF THE LOCAL GOVERNMENT CODE IN RELATION TO SECTION 131 APPLIES ONLY TO PRIVATE PERSONS OR CORPORATIONS ENJOYING A FRANCHISE. B. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT NPC'S EXEMPTION FROM ALL FORMS OF TAXES HAS BEEN REPEALED BY THE PROVISION OF THE LOCAL GOVERNMENT CODE AS THE ENACTMENT OF A LATER LEGISLATION, WHICH IS A GENERAL LAW, CANNOT BE CONSTRUED TO HAVE REPEALED A SPECIAL LAW. C. THE COURT OF APPEALS GRAVELY ERRED IN NOT CONSIDERING THAT AN EXERCISE OF POLICE POWER THROUGH TAX EXEMPTION SHOULD PREVAIL OVER THE LOCAL GOVERNMENT CODE."21 It is beyond dispute that the respondent city government has the authority to issue Ordinance No. 165-92 and impose an annual tax on "businesses enjoying a franchise," pursuant to section 151 in relation to section 137 of the LGC, viz: "Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction. In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereof, as provided herein." (emphasis supplied) x x x

Sec. 151. Scope of Taxing Powers.- Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes." Petitioner, however, submits that it is not liable to pay an annual franchise tax to the respondent city government. It contends that sections 137 and 151 of the LGC in relation to section 131, limit the taxing power of the respondent city government to private entities that are engaged in trade or occupation for profit.22 Section 131 (m) of the LGC defines a "franchise" as "a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of the public welfare, security and safety." From the phraseology of this provision, the petitioner claims that the word "private" modifies the terms "persons" and "corporations." Hence, when the LGC uses the term "franchise," petitioner submits that it should refer specifically to franchises granted to private natural persons and to private corporations. 23 Ergo, its charter should not be considered a "franchise" for the purpose of imposing the franchise tax in question. On the other hand, section 131 (d) of the LGC defines "business" as "trade or commercial activity regularly engaged in as means of livelihood or with a view to profit." Petitioner claims that it is not engaged in an activity for profit, in as much as its charter specifically provides that it is a "non-profit organization." In any case, petitioner argues that the accumulation of profit is merely incidental to its operation; all these profits are required by law to be channeled for expansion and improvement of its facilities and services.24 Petitioner also alleges that it is an instrumentality of the National Government, 25 and as such, may not be taxed by the respondent city government. It cites the doctrine in Basco vs. Philippine Amusement and Gaming Corporation26 where this Court held that local governments have no power to tax instrumentalities of the National Government, viz: "Local governments have no power to tax instrumentalities of the National Government. PAGCOR has a dual role, to operate and regulate gambling casinos. The latter role is governmental, which places it in the category of an agency or instrumentality of the Government. Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected to control by a mere local government. 'The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional laws enacted by

Congress to carry into execution the powers vested in the federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)' This doctrine emanates from the 'supremacy' of the National Government over local governments. 'Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the States to touch, in that way (taxation) at least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision can regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities, or even seriously burden it from accomplishment of them.' (Antieau, Modern Constitutional Law, Vol. 2, p. 140, italics supplied) Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirable activities or enterprise using the power to tax as ' a tool regulation' (U.S. v. Sanchez, 340 US 42). The power to tax which was called by Justice Marshall as the 'power to destroy' (Mc Culloch v. Maryland,supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to wield it."27 Petitioner contends that section 193 of Rep. Act No. 7160, withdrawing the tax privileges of government-owned or controlled corporations, is in the nature of an implied repeal. A special law, its charter cannot be amended or modified impliedly by the local government code which is a general law. Consequently, petitioner claims that its exemption from all taxes, fees or charges under its charter subsists despite the passage of the LGC, viz: "It is a well-settled rule of statutory construction that repeals of statutes by implication are not favored and as much as possible, effect must be given to all enactments of the legislature. Moreover, it has to be conceded that the charter of the NPC constitutes a special law. Republic Act No. 7160, is a general law. It is a basic rule in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly than the general statute."28 Finally, petitioner submits that the charter of the NPC, being a valid exercise of police power, should prevail over the LGC. It alleges that the power of the local government to impose franchise tax is subordinate to petitioner's exemption from taxation; "police power being the most pervasive, the least limitable and most demanding of all powers, including the power of taxation."29 The petition is without merit.

Taxes are the lifeblood of the government,30 for without taxes, the government can neither exist nor endure. A principal attribute of sovereignty,31 the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. The theory behind the exercise of the power to tax emanates from necessity;32 without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people. In recent years, the increasing social challenges of the times expanded the scope of state activity, and taxation has become a tool to realize social justice and the equitable distribution of wealth, economic progress and the protection of local industries as well as public welfare and similar objectives.33 Taxation assumes even greater significance with the ratification of the 1987 Constitution. Thenceforth, the power to tax is no longer vested exclusively on Congress; local legislative bodies are now given direct authority to levy taxes, fees and other charges34 pursuant to Article X, section 5 of the 1987 Constitution, viz: "Section 5.- Each Local Government unit shall have the power to create its own sources of revenue, to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the Local Governments." This paradigm shift results from the realization that genuine development can be achieved only by strengthening local autonomy and promoting decentralization of governance. For a long time, the country's highly centralized government structure has bred a culture of dependence among local government leaders upon the national leadership. It has also "dampened the spirit of initiative, innovation and imaginative resilience in matters of local development on the part of local government leaders."35 The only way to shatter this culture of dependence is to give the LGUs a wider role in the delivery of basic services, and confer them sufficient powers to generate their own sources for the purpose. To achieve this goal, section 3 of Article X of the 1987 Constitution mandates Congress to enact a local government code that will, consistent with the basic policy of local autonomy, set the guidelines and limitations to this grant of taxing powers, viz: "Section 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units." To recall, prior to the enactment of the Rep. Act No. 7160, 36 also known as the Local Government Code of 1991 (LGC), various measures have been enacted to promote local autonomy. These include the Barrio Charter of 1959,37 the Local Autonomy Act of 1959,38 the Decentralization Act of 196739 and the Local Government Code of 1983.40 Despite these initiatives, however, the shackles of dependence on the national government remained. Local government units were faced with the same problems that

hamper their capabilities to participate effectively in the national development efforts, among which are: (a) inadequate tax base, (b) lack of fiscal control over external sources of income, (c) limited authority to prioritize and approve development projects, (d) heavy dependence on external sources of income, and (e) limited supervisory control over personnel of national line agencies.41 Considered as the most revolutionary piece of legislation on local autonomy, 42 the LGC effectively deals with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes which were prohibited by previous laws such as the imposition of taxes on forest products, forest concessionaires, mineral products, mining operations, and the like. The LGC likewise provides enough flexibility to impose tax rates in accordance with their needs and capabilities. It does not prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates and leaves the determination of the actual rates to the respective sanggunian.43 One of the most significant provisions of the LGC is the removal of the blanket exclusion of instrumentalities and agencies of the national government from the coverage of local taxation. Although as a general rule, LGUs cannot impose taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, this rule now admits an exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or charges on the aforementioned entities, viz: "Section 133. Common Limitations on the Taxing Powers of the Local Government Units.- Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: x x x

(o) Taxes, fees, or charges of any kind on the National Government, its agencies and instrumentalities, and local government units." (emphasis supplied) In view of the afore-quoted provision of the LGC, the doctrine in Basco vs. Philippine Amusement and Gaming Corporation44 relied upon by the petitioner to support its claim no longer applies. To emphasize, the Basco case was decided prior to the effectivity of the LGC, when no law empowering the local government units to tax instrumentalities of the National Government was in effect. However, as this Court ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs. Marcos,45 nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax.46 In enacting the LGC, Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees fit. Thus, after reviewing the specific provisions of the LGC, this Court held that MCIAA, although an instrumentality of the national government, was subject to real property tax, viz: "Thus, reading together sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in section 133, the taxing power of local governments cannot extend to the levy of inter alia, 'taxes, fees and charges of any kind on the national government, its agencies and instrumentalities, and local government units';

however, pursuant to section 232, provinces, cities and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, 'real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted for consideration or otherwise, to a taxable person as provided in the item (a) of the first paragraph of section 12.'"47 In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to impose on the petitioner the franchise tax in question. In its general signification, a franchise is a privilege conferred by government authority, which does not belong to citizens of the country generally as a matter of common right. 48 In its specific sense, a franchise may refer to a general or primary franchise, or to a special or secondary franchise. The former relates to the right to exist as a corporation, by virtue of duly approved articles of incorporation, or a charter pursuant to a special law creating the corporation.49 The right under a primary or general franchise is vested in the individuals who compose the corporation and not in the corporation itself.50 On the other hand, the latter refers to the right or privileges conferred upon an existing corporation such as the right to use the streets of a municipality to lay pipes of tracks, erect poles or string wires.51 The rights under a secondary or special franchise are vested in the corporation and may ordinarily be conveyed or mortgaged under a general power granted to a corporation to dispose of its property, except such special or secondary franchises as are charged with a public use.52 In section 131 (m) of the LGC, Congress unmistakably defined a franchise in the sense of a secondary or special franchise. This is to avoid any confusion when the word franchise is used in the context of taxation. As commonly used, a franchise tax is "a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state."53 It is not levied on the corporation simply for existing as a corporation, upon its property54 or its income,55 but on its exercise of the rights or privileges granted to it by the government. Hence, a corporation need not pay franchise tax from the time it ceased to do business and exercise its franchise.56 It is within this context that the phrase "tax on businesses enjoying a franchise" in section 137 of the LGC should be interpreted and understood. Verily, to determine whether the petitioner is covered by the franchise tax in question, the following requisites should concur: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and (2) that it is exercising its rights or privileges under this franchise within the territory of the respondent city government. Petitioner fulfills the first requisite. Commonwealth Act No. 120, as amended by Rep. Act No. 7395, constitutes petitioner's primary and secondary franchises. It serves as the petitioner's charter, defining its composition, capitalization, the appointment and the specific duties of its corporate officers, and its corporate life span.57 As its secondary franchise, Commonwealth Act No. 120, as amended, vests the petitioner the following powers which are not available to ordinary corporations, viz: "x x x

(e) To conduct investigations and surveys for the development of water power in any part of the Philippines; (f) To take water from any public stream, river, creek, lake, spring or waterfall in the Philippines, for the purposes specified in this Act; to intercept and divert the flow of waters from lands of riparian owners and from persons owning or interested in waters which are or may be necessary for said purposes, upon payment of just compensation therefor; to alter, straighten, obstruct or increase the flow of water in streams or water channels intersecting or connecting therewith or contiguous to its works or any part thereof: Provided, That just compensation shall be paid to any person or persons whose property is, directly or indirectly, adversely affected or damaged thereby; (g) To construct, operate and maintain power plants, auxiliary plants, dams, reservoirs, pipes, mains, transmission lines, power stations and substations, and other works for the purpose of developing hydraulic power from any river, creek, lake, spring and waterfall in the Philippines and supplying such power to the inhabitants thereof; to acquire, construct, install, maintain, operate, and improve gas, oil, or steam engines, and/or other prime movers, generators and machinery in plants and/or auxiliary plants for the production of electric power; to establish, develop, operate, maintain and administer power and lighting systems for the transmission and utilization of its power generation; to sell electric power in bulk to (1) industrial enterprises, (2) city, municipal or provincial systems and other government institutions, (3) electric cooperatives, (4) franchise holders, and (5) real estate subdivisions x x x; (h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was created: Provided, That in case a right of way is necessary for its transmission lines, easement of right of way shall only be sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost thereof shall be the fair market value at the time of the taking of such property; (i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway or railway of private and public ownership, as the location of said works may require xxx; (j) To exercise the right of eminent domain for the purpose of this Act in the manner provided by law for instituting condemnation proceedings by the national, provincial and municipal governments; x x x

(m) To cooperate with, and to coordinate its operations with those of the National Electrification Administration and public service entities;

(n) To exercise complete jurisdiction and control over watersheds surrounding the reservoirs of plants and/or projects constructed or proposed to be constructed by the Corporation. Upon determination by the Corporation of the areas required for watersheds for a specific project, the Bureau of Forestry, the Reforestation Administration and the Bureau of Lands shall, upon written advice by the Corporation, forthwith surrender jurisdiction to the Corporation of all areas embraced within the watersheds, subject to existing private rights, the needs of waterworks systems, and the requirements of domestic water supply; (o) In the prosecution and maintenance of its projects, the Corporation shall adopt measures to prevent environmental pollution and promote the conservation, development and maximum utilization of natural resources xxx "58 With these powers, petitioner eventually had the monopoly in the generation and distribution of electricity. This monopoly was strengthened with the issuance of Pres. Decree No. 40,59 nationalizing the electric power industry. Although Exec. Order No. 21560 thereafter allowed private sector participation in the generation of electricity, the transmission of electricity remains the monopoly of the petitioner. Petitioner also fulfills the second requisite. It is operating within the respondent city government's territorial jurisdiction pursuant to the powers granted to it by Commonwealth Act No. 120, as amended. From its operations in the City of Cabanatuan, petitioner realized a gross income of P107,814,187.96 in 1992. Fulfilling both requisites, petitioner is, and ought to be, subject of the franchise tax in question. Petitioner, however, insists that it is excluded from the coverage of the franchise tax simply because its stocks are wholly owned by the National Government, and its charter characterized it as a "non-profit" organization. These contentions must necessarily fail. To stress, a franchise tax is imposed based not on the ownership but on the exercise by the corporation of a privilege to do business. The taxable entity is the corporation which exercises the franchise, and not the individual stockholders. By virtue of its charter, petitioner was created as a separate and distinct entity from the National Government. It can sue and be sued under its own name,61 and can exercise all the powers of a corporation under the Corporation Code.62 To be sure, the ownership by the National Government of its entire capital stock does not necessarily imply that petitioner is not engaged in business. Section 2 of Pres. Decree No. 202963 classifies government-owned or controlled corporations (GOCCs) into those performing governmental functions and those performing proprietary functions, viz: "A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent

corporation or subsidiary corporation, to the extent of at least a majority of its outstanding voting capital stock x x x." (emphases supplied) Governmental functions are those pertaining to the administration of government, and as such, are treated as absolute obligation on the part of the state to perform while proprietary functions are those that are undertaken only by way of advancing the general interest of society, and are merely optional on the government.64 Included in the class of GOCCs performing proprietary functions are "business-like" entities such as the National Steel Corporation (NSC), the National Development Corporation (NDC), the Social Security System (SSS), the Government Service Insurance System (GSIS), and the National Water Sewerage Authority (NAWASA),65 among others. Petitioner was created to "undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis."66 Pursuant to this mandate, petitioner generates power and sells electricity in bulk. Certainly, these activities do not partake of the sovereign functions of the government. They are purely private and commercial undertakings, albeit imbued with public interest. The public interest involved in its activities, however, does not distract from the true nature of the petitioner as a commercial enterprise, in the same league with similar public utilities like telephone and telegraph companies, railroad companies, water supply and irrigation companies, gas, coal or light companies, power plants, ice plant among others; all of which are declared by this Court as ministrant or proprietary functions of government aimed at advancing the general interest of society. 67 A closer reading of its charter reveals that even the legislature treats the character of the petitioner's enterprise as a "business," although it limits petitioner's profits to twelve percent (12%), viz:68 "(n) When essential to the proper administration of its corporate affairs or necessary for the proper transaction of its business or to carry out the purposes for which it was organized, to contract indebtedness and issue bonds subject to approval of the President upon recommendation of the Secretary of Finance; (o) To exercise such powers and do such things as may be reasonably necessary to carry out the business and purposes for which it was organized, or which, from time to time, may be declared by the Board to be necessary, useful, incidental or auxiliary to accomplish the said purpose xxx."(emphases supplied) It is worthy to note that all other private franchise holders receiving at least sixty percent (60%) of its electricity requirement from the petitioner are likewise imposed the cap of twelve percent (12%) on profits.69 The main difference is that the petitioner is mandated to devote "all its returns from its capital investment, as well as excess revenues from its operation, for expansion"70 while other franchise holders have the option to distribute their profits to its stockholders by declaring dividends. We do not see why this fact can be a source of difference in tax treatment. In both instances, the taxable entity is the corporation, which exercises the franchise, and not the individual stockholders.

We also do not find merit in the petitioner's contention that its tax exemptions under its charter subsist despite the passage of the LGC. As a rule, tax exemptions are construed strongly against the claimant. Exemptions must be shown to exist clearly and categorically, and supported by clear legal provisions.71 In the case at bar, the petitioner's sole refuge is section 13 of Rep. Act No. 6395 exempting from, among others, "all income taxes, franchise taxes and realty taxes to be paid to the National Government, its provinces, cities, municipalities and other government agencies and instrumentalities." However, section 193 of the LGC withdrew, subject to limited exceptions, the sweeping tax privileges previously enjoyed by private and public corporations. Contrary to the contention of petitioner, section 193 of the LGC is an express, albeit general, repeal of all statutes granting tax exemptions from local taxes.72 It reads: "Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code." (emphases supplied) It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius.73 Not being a local water district, a cooperative registered under R.A. No. 6938, or a non-stock and non-profit hospital or educational institution, petitioner clearly does not belong to the exception. It is therefore incumbent upon the petitioner to point to some provisions of the LGC that expressly grant it exemption from local taxes. But this would be an exercise in futility. Section 137 of the LGC clearly states that the LGUs can impose franchise tax "notwithstanding any exemption granted by any law or other special law." This particular provision of the LGC does not admit any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO's exemption from the payment of franchise taxes was brought as an issue before this Court. The same issue was involved in the subsequent case of Manila Electric Company v. Province of Laguna.75 Ruling in favor of the local government in both instances, we ruled that the franchise tax in question is imposable despite any exemption enjoyed by MERALCO under special laws, viz: "It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to support their position that MERALCO's tax exemption has been withdrawn. The explicit language of section 137 which authorizes the province to impose franchise tax 'notwithstanding any exemption granted by any law or other special law' is all-encompassing and clear. The franchise tax is imposable despite any exemption enjoyed under special laws. Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise provided in this Code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations except (1) local water districts, (2) cooperatives duly registered under R.A. 6938, (3) non-stock and non-profit hospitals

and educational institutions, are withdrawn upon the effectivity of this code, the obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. In the absence of any provision of the Code to the contrary, and we find no other provision in point, any existing tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn. Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar based on the incoming receipts realized within its territorial jurisdiction. The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used on (sic) Sections 137 and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to attempt to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC provided for an express, albeit general, withdrawal of such exemptions or privileges. No more unequivocal language could have been used."76 (emphases supplied). It is worth mentioning that section 192 of the LGC empowers the LGUs, through ordinances duly approved, to grant tax exemptions, initiatives or reliefs.77 But in enacting section 37 of Ordinance No. 165-92 which imposes an annual franchise tax "notwithstanding any exemption granted by law or other special law," the respondent city government clearly did not intend to exempt the petitioner from the coverage thereof. Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people. As this Court observed in the Mactan case, "the original reasons for the withdrawal of tax exemption privileges granted to governmentowned or controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises."78 With the added burden of devolution, it is even more imperative for government entities to share in the requirements of development, fiscal or otherwise, by paying taxes or other charges due from them. IN VIEW WHEREOF, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals dated March 12, 2001 and July 10, 2001, respectively, are hereby AFFIRMED. SO ORDERED. Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur. G.R. No. L- 41383 August 15, 1988

PHILIPPINE AIRLINES, INC., plaintiff-appellant, vs. ROMEO F. EDU in his capacity as Land Transportation Commissioner, and UBALDO CARBONELL, in his capacity as National Treasurer, defendants-appellants. Ricardo V. Puno, Jr. and Conrado A. Boro for plaintiff-appellant.

GUTIERREZ, JR., J.: What is the nature of motor vehicle registration fees? Are they taxes or regulatory fees? This question has been brought before this Court in the past. The parties are, in effect, asking for a re-examination of the latest decision on this issue. This appeal was certified to us as one involving a pure question of law by the Court of Appeals in a case where the then Court of First Instance of Rizal dismissed the portionabout complaint for refund of registration fees paid under protest. The disputed registration fees were imposed by the appellee, Commissioner Romeo F. Elevate pursuant to Section 8, Republic Act No. 4136, otherwise known as the Land Transportation and Traffic Code. The Philippine Airlines (PAL) is a corporation organized and existing under the laws of the Philippines and engaged in the air transportation business under a legislative franchise, Act No. 42739, as amended by Republic Act Nos. 25). and 269.1 Under its franchise, PAL is exempt from the payment of taxes. The pertinent provision of the franchise provides as follows: Section 13. In consideration of the franchise and rights hereby granted, the grantee shall pay to the National Government during the life of this franchise a tax of two per cent of the gross revenue or gross earning derived by the grantee from its operations under this franchise. Such tax shall be due and payable quarterly and shall be in lieu of all taxes of any kind, nature or description, levied, established or collected by any municipal, provincial or national automobiles, Provided, that if, after the audit of the accounts of the grantee by the Commissioner of Internal Revenue, a deficiency tax is shown to be due, the deficiency tax shall be payable within the ten days from the receipt of the assessment. The grantee shall pay the tax on its real property in conformity with existing law. On the strength of an opinion of the Secretary of Justice (Op. No. 307, series of 1956) PAL has, since 1956, not been paying motor vehicle registration fees. Sometime in 1971, however, appellee Commissioner Romeo F. Elevate issued a regulation requiring all tax exempt entities, among them PAL to pay motor vehicle registration fees.

Despite PAL's protestations, the appellee refused to register the appellant's motor vehicles unless the amounts imposed under Republic Act 4136 were paid. The appellant thus paid, under protest, the amount of P19,529.75 as registration fees of its motor vehicles. After paying under protest, PAL through counsel, wrote a letter dated May 19,1971, to Commissioner Edu demanding a refund of the amounts paid, invoking the ruling in Calalang v. Lorenzo (97 Phil. 212 [1951]) where it was held that motor vehicle registration fees are in reality taxes from the payment of which PAL is exempt by virtue of its legislative franchise. Appellee Edu denied the request for refund basing his action on the decision in Republic v. Philippine Rabbit Bus Lines, Inc., (32 SCRA 211, March 30, 1970) to the effect that motor vehicle registration fees are regulatory exceptional. and not revenue measures and, therefore, do not come within the exemption granted to PAL? under its franchise. Hence, PAL filed the complaint against Land Transportation Commissioner Romeo F. Edu and National Treasurer Ubaldo Carbonell with the Court of First Instance of Rizal, Branch 18 where it was docketed as Civil Case No. Q-15862. Appellee Romeo F. Elevate in his capacity as LTC Commissioner, and LOI Carbonell in his capacity as National Treasurer, filed a motion to dismiss alleging that the complaint states no cause of action. In support of the motion to dismiss, defendants repatriation the ruling in Republic v. Philippine Rabbit Bus Lines, Inc., (supra) that registration fees of motor vehicles are not taxes, but regulatory fees imposed as an incident of the exercise of the police power of the state. They contended that while Act 4271 exempts PAL from the payment of any tax except two per cent on its gross revenue or earnings, it does not exempt the plaintiff from paying regulatory fees, such as motor vehicle registration fees. The resolution of the motion to dismiss was deferred by the Court until after trial on the merits. On April 24, 1973, the trial court rendered a decision dismissing the appellant's complaint "moved by the later ruling laid down by the Supreme Court in the case or Republic v. Philippine Rabbit Bus Lines, Inc., (supra)." From this judgment, PAL appealed to the Court of Appeals which certified the case to us. Calalang v. Lorenzo (supra) and Republic v. Philippine Rabbit Bus Lines, Inc. (supra) cited by PAL and Commissioner Romeo F. Edu respectively, discuss the main points of contention in the case at bar. Resolving the issue in the Philippine Rabbit case, this Court held: "The registration fee which defendant-appellee had to pay was imposed by Section 8 of the Revised Motor Vehicle Law (Republic Act No. 587 [1950]). Its heading speaks of "registration fees." The term is repeated four times in the body thereof. Equally so, mention is made of the "fee for registration." (Ibid., Subsection G) A subsection starts with a categorical statement "No fees shall be charged." (lbid., Subsection H) The conclusion is difficult to resist therefore that the Motor Vehicle Act requires the payment not of a tax but of a registration fee under the police power. Hence the incipient, of the section relied upon by defendant-appellee under the Back Pay Law, It is not held

liable for a tax but for a registration fee. It therefore cannot make use of a backpay certificate to meet such an obligation. Any vestige of any doubt as to the correctness of the above conclusion should be dissipated by Republic Act No. 5448. ([1968]. Section 3 thereof as to the imposition of additional tax on privately-owned passenger automobiles, motorcycles and scooters was amended by Republic Act No. 5470 which is (sic) approved on May 30, 1969.) A special science fund was thereby created and its title expressly sets forth that a tax on privately-owned passenger automobiles, motorcycles and scooters was imposed. The rates thereof were provided for in its Section 3 which clearly specifies the" Philippine tax."(Cooley to be paid as distinguished from the registration fee under the Motor Vehicle Act. There cannot be any clearer expression therefore of the legislative will, even on the assumption that the earlier legislation could by subdivision the point be susceptible of the interpretation that a tax rather than a fee was levied. What is thus most apparent is that where the legislative body relies on its authority to tax it expressly so states, and where it is enacting a regulatory measure, it is equally exploded (at p. 22,1969 In direct refutation is the ruling in Calalang v. Lorenzo (supra), where the Court, on the other hand, held: The charges prescribed by the Revised Motor Vehicle Law for the registration of motor vehicles are in section 8 of that law called "fees". But the appellation is no impediment to their being considered taxes if taxes they really are. For not the name but the object of the charge determines whether it is a tax or a fee. Geveia speaking, taxes are for revenue, whereas fees are exceptional. for purposes of regulation and inspection and are for that reason limited in amount to what is necessary to cover the cost of the services rendered in that connection. Hence, a charge fixed by statute for the service to be person,When by an officer, where the charge has no relation to the value of the services performed and where the amount collected eventually finds its way into the treasury of the branch of the government whose officer or officers collected the chauffeur, is not a fee but a tax."(Cooley on Taxation, Vol. 1, 4th ed., p. 110.) From the data submitted in the court below, it appears that the expenditures of the Motor Vehicle Office are but a small portionabout 5 per centumof the total collections from motor vehicle registration fees. And as proof that the money collected is not intended for the expenditures of that office, the law itself provides that all such money shall accrue to the funds for the construction and maintenance of public roads, streets and bridges. It is thus obvious that the fees are not collected for regulatory purposes, that is to say, as an incident to the enforcement of regulations governing the operation of motor vehicles on public highways, for their express object is to provide revenue with which the Government is to discharge one of its principal functionsthe construction and maintenance of public highways for everybody's use. They are veritable taxes, not merely fees.

As a matter of fact, the Revised Motor Vehicle Law itself now regards those fees as taxes, for it provides that "no other taxes or fees than those prescribed in this Act shall be imposed," thus implying that the charges therein imposedthough called feesare of the category of taxes. The provision is contained in section 70, of subsection (b), of the law, as amended by section 17 of Republic Act 587, which reads: Sec. 70(b) No other taxes or fees than those prescribed in this Act shall be imposed for the registration or operation or on the ownership of any motor vehicle, or for the exercise of the profession of chauffeur, by any municipal corporation, the provisions of any city charter to the contrary notwithstanding: Provided, however, That any provincial board, city or municipal council or board, or other competent authority may exact and collect such reasonable and equitable toll fees for the use of such bridges and ferries, within their respective jurisdiction, as may be authorized and approved by the Secretary of Public Works and Communications, and also for the use of such public roads, as may be authorized by the President of the Philippines upon the recommendation of the Secretary of Public Works and Communications, but in none of these cases, shall any toll fee." be charged or collected until and unless the approved schedule of tolls shall have been posted levied, in a conspicuous place at such toll station. (at pp. 213-214) Motor vehicle registration fees were matters originally governed by the Revised Motor Vehicle Law (Act 3992 [19511) as amended by Commonwealth Act 123 and Republic Acts Nos. 587 and 1621. Today, the matter is governed by Rep. Act 4136 [1968]), otherwise known as the Land Transportation Code, (as amended by Rep. Acts Nos. 5715 and 64-67, P.D. Nos. 382, 843, 896, 110.) and BP Blg. 43, 74 and 398). Section 73 of Commonwealth Act 123 (which amended Sec. 73 of Act 3992 and remained unsegregated, by Rep. Act Nos. 587 and 1603) states: Section 73. Disposal of moneys collected.Twenty per centum of the money collected under the provisions of this Act shall accrue to the road and bridge funds of the different provinces and chartered cities in proportion to the centum shall during the next previous year and the remaining eighty per centum shall be deposited in the Philippine Treasury to create a special fund for the construction and maintenance of national and provincial roads and bridges. as well as the streets and bridges in the chartered cities to be alloted by the Secretary of Public Works and Communications for projects recommended by the Director of Public Works in the different provinces and chartered cities. ....

Presently, Sec. 61 of the Land Transportation and Traffic Code provides: Sec. 61. Disposal of Mortgage. CollectedMonies collected under the provisions of this Act shall be deposited in a special trust account in the National Treasury to constitute the Highway Special Fund, which shall be apportioned and expended in accordance with the provisions of the" Philippine Highway Act of 1935. "Provided, however, That the amount necessary to maintain and equip the Land Transportation Commission but not to exceed twenty per cent of the total collection during one year, shall be set aside for the purpose. (As amended by RA 64-67, approved August 6, 1971). It appears clear from the above provisions that the legislative intent and purpose behind the law requiring owners of vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of highways and to a much lesser degree, pay for the operating expenses of the administering agency. On the other hand, thePhilippine Rabbit case mentions a presumption arising from the use of the term "fees," which appears to have been favored by the legislature to distinguish fees from other taxes such as those mentioned in Section 13 of Rep. Act 4136 which reads: Sec. 13. Payment of taxes upon registration.No original registration of motor vehicles subject to payment of taxes, customs s duties or other charges shall be accepted unless proof of payment of the taxes due thereon has been presented to the Commission. referring to taxes other than those imposed on the registration, operation or ownership of a motor vehicle (Sec. 59, b, Rep. Act 4136, as amended). Fees may be properly regarded as taxes even though they also serve as an instrument of regulation, As stated by a former presiding judge of the Court of Tax Appeals and writer on various aspects of taxpayers It is possible for an exaction to be both tax arose. regulation. License fees are changes. looked to as a source of revenue as well as a means of regulation (Sonzinky v. U.S., 300 U.S. 506) This is true, for example, of automobile license fees. Isabela such case, the fees may properly be regarded as taxes even though they also serve as an instrument of regulation. If the purpose is primarily revenue, or if revenue is at least one of the real and substantial purposes, then the exaction is properly called a tax. (1955 CCH Fed. tax Course, Par. 3101, citing Cooley on Taxation (2nd Ed.) 592, 593; Calalang v. Lorenzo. 97 Phil. 213-214) Lutz v. Araneta 98 Phil. 198.) These exactions are sometimes called regulatory taxes. (See Secs. 4701, 4711, 4741, 4801, 4811, 4851, and 4881, U.S. Internal Revenue Code of 1954, which classify taxes on tobacco and alcohol as regulatory taxes.) (Umali, Reviewer in Taxation, 1980, pp. 12-13, citing Cooley on Taxation, 2nd Edition, 591-593). Indeed, taxation may be made the implement of the state's police power (Lutz v. Araneta, 98 Phil. 148).

If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax (Umali, Id.) Such is the case of motor vehicle registration fees. The conclusions become inescapable in view of Section 70(b) of Rep. Act 587 quoted in the Calalang case. The same provision appears as Section 591593). in the Land Transportation code. It is patent therefrom that the legislators had in mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership of a motor vehicle as a "tax or fee." Though nowhere in Rep. Act 4136 does the law specifically state that the imposition is a tax, Section 591-593). speaks of "taxes." or fees ... for the registration or operation or on the ownership of any motor vehicle, or for the exercise of the profession of chauffeur ..." making the intent to impose a tax more apparent. Thus, even Rep. Act 5448 cited by the respondents, speak of an "additional" tax," where the law could have referred to an original tax and not one in addition to the tax already imposed on the registration, operation, or ownership of a motor vehicle under Rep. Act 41383. Simply put, if the exaction under Rep. Act 4136 were merely a regulatory fee, the imposition in Rep. Act 5448 need not be an "additional" tax. Rep. Act 4136 also speaks of other "fees," such as the special permit fees for certain types of motor vehicles (Sec. 10) and additional fees for change of registration (Sec. 11). These are not to be understood as taxes because such fees are very minimal to be revenue-raising. Thus, they are not mentioned by Sec. 591-593). of the Code as taxes like the motor vehicle registration fee and chauffers' license fee. Such fees are to go into the expenditures of the Land Transportation Commission as provided for in the last proviso of see. 61, aforequoted. It is quite apparent that vehicle registration fees were originally simple exceptional. intended only for rigidly purposes in the exercise of the State's police powers. Over the years, however, as vehicular traffic exploded in number and motor vehicles became absolute necessities without which modem life as we know it would stand still, Congress found the registration of vehicles a very convenient way of raising much needed revenues. Without changing the earlier deputy. of registration payments as "fees," their nature has become that of "taxes." In view of the foregoing, we rule that motor vehicle registration fees as at present exacted pursuant to the Land Transportation and Traffic Code are actually taxes intended for additional revenues. of government even if one fifth or less of the amount collected is set aside for the operating expenses of the agency administering the program. May the respondent administrative agency be required to refund the amounts stated in the complaint of PAL? The answer is NO. The claim for refund is made for payments given in 1971. It is not clear from the records as to what payments were made in succeeding years. We have ruled that Section 24 of Rep. Act No. 5448 dated June 27, 1968, repealed all earlier tax exemptions Of corporate taxpayers found in legislative franchises similar to that invoked by PAL in this case. In Radio Communications of the Philippines, Inc. v. Court of Tax Appeals, et al. (G.R. No. 615)." July 11, 1985), this Court ruled:

Under its original franchise, Republic Act No. 21); enacted in 1957, petitioner Radio Communications of the Philippines, Inc., was subject to both the franchise tax and income tax. In 1964, however, petitioner's franchise was amended by Republic Act No. 41-42). to the effect that its franchise tax of one and one-half percentum (1-1/2%) of all gross receipts was provided as "in lieu of any and all taxes of any kind, nature, or description levied, established, or collected by any authority whatsoever, municipal, provincial, or national from which taxes the grantee is hereby expressly exempted." The issue raised to this Court now is the validity of the respondent court's decision which ruled that the exemption under Republic Act No. 41-42). was repealed by Section 24 of Republic Act No. 5448 dated June 27, 1968 which reads: "(d) The provisions of existing special or general laws to the contrary notwithstanding, all corporate taxpayers not specifically exempt under Sections 24 (c) (1) of this Code shall pay the rates provided in this section. All corporations, agencies, or instrumentalities owned or controlled by the government, including the Government Service Insurance System and the Social Security System but excluding educational institutions, shall pay such rate of tax upon their taxable net income as are imposed by this section upon associations or corporations engaged in a similar business or industry. " An examination of Section 24 of the Tax Code as amended shows clearly that the law intended all corporate taxpayers to pay income tax as provided by the statute. There can be no doubt as to the power of Congress to repeal the earlier exemption it granted. Article XIV, Section 8 of the 1935 Constitution and Article XIV, Section 5 of the Constitution as amended in 1973 expressly provide that no franchise shall be granted to any individual, firm, or corporation except under the condition that it shall be subject to amendment, alteration, or repeal by the legislature when the public interest so requires. There is no question as to the public interest involved. The country needs increased revenues. The repealing clause is clear and unambiguous. There is a listing of entities entitled to tax exemption. The petitioner is not covered by the provision. Considering the foregoing, the Court Resolved to DENY the petition for lack of merit. The decision of the respondent court is affirmed. Any registration fees collected between June 27, 1968 and April 9, 1979, were correctly imposed because the tax exemption in the franchise of PAL was repealed during the period. However, an amended franchise was given to PAL in 1979. Section 13 of Presidential Decree No. 1590, now provides: In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine Government during the lifetime of this franchise whichever of subsections (a) and (b) hereunder will result in a lower taxes.)

(a) The basic corporate income tax based on the grantee's annual net taxable income computed in accordance with the provisions of the Internal Revenue Code; or (b) A franchise tax of two per cent (2%) of the gross revenues. derived by the grantees from all specific. without distinction as to transport or nontransport corporations; provided that with respect to international airtransport service, only the gross passengers, mail, and freight revenues. from its outgoing flights shall be subject to this law. The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties, royalties, registration, license and other fees and charges of any kind, nature or description imposed, levied, established, assessed, or collected by any municipal, city, provincial, or national authority or government, agency, now or in the future, including but not limited to the following: xxx xxx xxx (5) All taxes, fees and other charges on the registration, license, acquisition, and transfer of airtransport equipment, motor vehicles, and all other personal or real property of the gravitates (Pres. Decree 1590, 75 OG No. 15, 3259, April 9, 1979). PAL's current franchise is clear and specific. It has removed the ambiguity found in the earlier law. PAL is now exempt from the payment of any tax, fee, or other charge on the registration and licensing of motor vehicles. Such payments are already included in the basic tax or franchise tax provided in Subsections (a) and (b) of Section 13, P.D. 1590, and may no longer be exacted. WHEREFORE, the petition is hereby partially GRANTED. The prayed for refund of registration fees paid in 1971 is DENIED. The Land Transportation Franchising and Regulatory Board (LTFRB) is enjoined functions-the collecting any tax, fee, or other charge on the registration and licensing of the petitioner's motor vehicles from April 9, 1979 as provided in Presidential Decree No. 1590. SO ORDERED.

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

G.R. No. 159647

Present:

Panganiban, J., Chairman, Sandoval-Gutierrez, - versus Corona, Carpio Morales, and Garcia, JJ

CENTRAL LUZON DRUG CORPORATION, Respondent.

Promulgated:

April 15, 2005

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

DECISION

PANGANIBAN, J.:

he 20 percent discount required by the law to be given to senior citizens is a tax credit, not merely a tax deduction from the gross income or gross sale of the establishment concerned. A tax RA 7432

credit is used by a private establishment only after the tax has been computed; a tax deduction, before the tax is computed. unconditionally grants a tax credit to all covered entities. Thus, the provisions of the revenue regulation that withdraw or modify such grant are void. Basic is the rule that administrative regulations cannot amend or revoke the law. The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the August 29, 2002 Decision [2] and the August 11, 2003 Resolution[3]of the Court of Appeals (CA) in CA-GR SP No. 67439. The assailed Decision reads as follows:
WHEREFORE, premises considered, appealed from is AFFIRMED in toto. No costs.[4] the Resolution

The

assailed

Resolution

denied

petitioners

Motion

for

Reconsideration.

The Facts

The CA narrated the antecedent facts as follows:

Respondent is a domestic corporation primarily engaged in retailing of medicines and other pharmaceutical products. In 1996, it operated six (6) drugstores under the business name and style Mercury Drug.

From January to December 1996, respondent granted twenty (20%) percent sales discount to qualified senior citizens on their purchases of medicines pursuant to Republic Act No. [R.A.] 7432 and its Implementing Rules and Regulations. For the said period, the amount allegedly representing the 20% sales discount granted by respondent to qualified senior citizens totaled P904,769.00.

On April 15, 1997, respondent filed its Annual Income Tax Return for taxable year 1996 declaring therein that it incurred net losses from its operations.

On January 16, 1998, respondent filed with petitioner a claim for tax refund/credit in the amount of P904,769.00 allegedly arising from the 20% sales discount granted by respondent to qualified senior citizens in compliance with [R.A.] 7432. Unable to obtain affirmative response from petitioner, respondent elevated its claim to the Court of Tax Appeals [(CTA or Tax Court)] via a Petition for Review.

On February 12, 2001, the Tax Court rendered a Decision[5] dismissing respondents Petition for lack of merit. In said decision, the [CTA] justified its ruling with the following ratiocination:

x x x, if no tax has been paid to the government, erroneously or illegally, or if no amount is due and collectible from the taxpayer, tax refund or tax credit is unavailing. Moreover, whether the recovery of the tax is made by means of a claim for refund or tax credit, before recovery is allowed[,] it must be first established that there was an actual collection and receipt by the government of the tax sought to be recovered. x x x. x x x xxx xxx

Prescinding from the above, it could logically be deduced that tax credit is premised on the existence of tax liability on the part of taxpayer. In other words, if there is no tax liability, tax credit is not available.

Respondent lodged a Motion for Reconsideration. The [CTA], in its assailed resolution,[6] granted respondents motion for reconsideration and ordered herein petitioner to issue a Tax Credit Certificate in favor of respondent citing the decision of the then Special Fourth Division of [the CA] in CA G.R. SP No. 60057 entitled Central [Luzon] Drug Corporation vs. Commissioner of Internal Revenue promulgated on May 31, 2001, to wit:

However, Sec. 229 clearly does not apply in the instant case because the tax sought to be refunded or credited by petitioner was not erroneously paid or illegally collected. We take exception to the CTAs sweeping but unfounded statement that both tax refund and tax credit are modes of recovering taxes which are either erroneously or illegally paid to the government. Tax refunds or credits do not exclusively pertain to illegally collected or erroneously paid taxes as they may be other

circumstances where a refund is warranted. The tax refund provided under Section 229 deals exclusively with illegally collected or erroneously paid taxes but there are other possible situations, such as the refund of excess estimated corporate quarterly income tax paid, or that of excess input tax paid by a VAT-registered person, or that of excise tax paid on goods locally produced or manufactured but actually exported. The standards and mechanics for the grant of a refund or credit under these situations are different from that under Sec. 229. Sec. 4[.a)] of R.A. 7432, is yet another instance of a tax credit and it does not in any way refer to illegally collected or erroneously paid taxes, x x [7] x.

Ruling of the Court of Appeals

The CA affirmed in toto the Resolution of the Court of Tax Appeals (CTA) ordering petitioner to issue a tax credit certificate in favor of respondent in the reduced amount of P903,038.39. It reasoned that Republic Act No. (RA) 7432 required neither a tax liability nor a payment of taxes by private establishments prior to the availment of a tax credit. Moreover, such credit is not tantamount to an unintended benefit from the

law, but rather a just compensation for the taking of private property for public use.

Hence this Petition.[8]

The Issues

Petitioner raises the following issues for our consideration:

Whether the Court of Appeals erred in holding that respondent may claim the 20% sales discount as a tax credit instead of as a deduction from gross income or gross sales.

Whether the Court of Appeals erred in holding that respondent is entitled to a refund.[9]

These two issues may be summed up in only one: whether respondent, despite incurring a net loss, may still claim the 20 percent sales discount as a tax credit.

The Courts Ruling The Petition is not meritorious.

Sole Issue:

Claim of 20 Percent Sales Discount as Tax Credit Despite Net Loss

Section 4a) of RA 7432[10] grants to senior citizens the privilege of obtaining a 20 percent discount on their purchase of medicine from any private establishment in the country.[11] The latter may then claim the cost of the discount as a tax credit.[12] But can such credit be claimed, even though an establishment operates at a loss?

We answer in the affirmative.

Tax Credit versus

Tax Deduction

Although the term is not specifically defined in our Tax Code, [13] tax credit generally refers to an amount that is subtracted directly from ones total tax liability.[14] It is an allowance against the tax itself[15] or a deduction from what is owed[16] by a taxpayer to the government. Examples of tax credits are withheld taxes, payments of estimated tax, and investment tax credits.[17]

Tax credit should be understood in relation to other tax concepts. One of these is tax deduction -- defined as a subtraction from income for tax purposes,[18] or an amount that is allowed by law to reduce income prior to [the] application of the tax rate to compute the amount of tax which is due.[19] An example of a tax deduction is any of the allowable deductions enumerated in Section 34[20] of the Tax Code.

A tax credit differs from a tax deduction. On the one hand, a tax credit reduces the tax due, including -- whenever applicable -- the income tax that is determined after applying the corresponding tax rates to taxable income.[21] A tax deduction, on the other, reduces the income that is subject to

tax[22] in order to arrive at taxable income.[23] To think of the former as the latter is to avoid, if not entirely confuse, the issue. A tax credit is used only after the tax has been computed; a tax deduction, before.

Tax Liability Required for Tax Credit

Since a tax credit is used to reduce directly the tax that is due, there ought to be a tax liability before the tax credit can be applied. Without that liability, any tax creditapplication will be useless. There will be no reason for deducting the latter when there is, to begin with, no existing obligation to the government. However, as will be presented shortly, the existence of a tax credit or its grant by law is not the same as the availment or use of such credit. While the grant is mandatory, the availment or use is not.

If a net loss is reported by, and no other taxes are currently due from, a business establishment, there will obviously be no tax liability against which any tax credit can be applied.[24] For the establishment to choose the immediate availment of a tax credit will be premature and impracticable. Nevertheless, the irrefutable fact remains that, under RA 7432, Congress

has granted without conditions a tax credit benefit to all covered establishments.

Although this tax credit benefit is available, it need not be used by losing ventures, since there is no tax liability that calls for its application. Neither can it be reduced to nil by the quick yet callow stroke of an administrative pen, simply because no reduction of taxes can instantly be effected. By its nature, the tax credit may still be deducted from a future, not a present, tax liability, without which it does not have any use. In the meantime, it need not move. But it breathes.

Prior Tax Payments Not Required for Tax Credit

While a tax liability is essential to the availment or use of any tax credit, prior tax payments are not. On the contrary, for the existence or grant solely of such credit, neither a tax liability nor a prior tax payment is needed. The Tax Code is in fact replete with provisions granting or allowing tax credits, even though no taxes have been previously paid.

For example, in computing the estate tax due, Section 86(E) allows a tax credit -- subject to certain limitations -- for estate taxes paid to a foreign country. Also found in Section 101(C) is a similar provision for donors taxes -- again when paid to a foreign country -- in computing for the donors tax due. The tax credits in both instances allude to the prior payment of taxes, even if not made to our government.

Under Section 110, a VAT (Value-Added Tax)- registered person engaging in transactions -- whether or not subject to the VAT -- is also allowed a tax credit that includes a ratable portion of any input tax not directly attributable to either activity. This input tax may either be the VAT on the purchase or importation of goods or services that is merely due from -- not necessarily paid by -- such VAT-registered person in the course of trade or business; or the transitional input tax determined in accordance with Section 111(A). The latter type may in fact be an amount equivalent to only eight percent of the value of a VAT-registered persons beginning inventory of goods, materials and supplies, when such amount -- as computed -- is higher than the actual VAT paid on the said items.[25] Clearly from this provision, the tax creditrefers to an input tax that is either due only or given a value by mere comparison with the VAT actually paid - then later prorated. No tax is actually paid prior to the availment of such credit.

In Section 111(B), a one and a half percent input tax credit that is merely presumptive is allowed. For the purchase of primary agricultural products used as inputs -- either in the processing of sardines, mackerel and milk, or in the manufacture of refined sugar and cooking oil -- and for the contract price of public work contracts entered into with the government, again, no prior tax payments are needed for the use of the tax credit.

More important, a VAT-registered person whose sales are zero-rated or effectively zero-rated may, under Section 112(A), apply for the issuance of a tax creditcertificate for the amount of creditable input taxes merely due -- again not necessarily paid to -- the government and attributable to such sales, to the extent that the input taxes have not been applied against output taxes.[26] Where a taxpayer

is engaged in zero-rated or effectively zero-rated sales and also in taxable or exempt sales, the amount of creditable input taxes due that are not directly and entirely attributable to any one of these transactions shall be proportionately allocated on the basis of the volume of sales. Indeed, in availing of such tax credit for VAT purposes, this provision -- as well as the one earlier mentioned -- shows that the prior payment of taxes is not a requisite.

It may be argued that Section 28(B)(5)(b) of the Tax Code is another illustration of a tax credit allowed, even though no prior tax payments are not required. Specifically, in this provision, the imposition of a final withholding tax rate on cash and/or property dividends received by a nonresident foreign corporation from a domestic corporation is subjected to the condition that a foreign tax credit will be given by the domiciliary country in an amount equivalent to taxes that are merely deemed paid.[27] Although true, this provision actually refers to the tax credit as a condition only for the imposition of a lower tax rate, not as a deduction from the corresponding tax liability. Besides, it is not our government but the domiciliary country that credits against the income tax payable to the latter by the foreign corporation, the tax to be foregone or spared.[28]

In contrast, Section 34(C)(3), in relation to Section 34(C)(7)(b), categorically allows as credits, against the income tax imposable under Title II, the amount of income taxes merely incurred -- not necessarily paid -- by a domestic corporation during a taxable year in any foreign country. Moreover, Section 34(C)(5) provides that for such taxes incurred but not paid, a tax credit may be allowed, subject to the condition precedent that the taxpayer shall simply give a bond with sureties satisfactory to and approved by petitioner, in such sum as may be required; and further conditioned upon payment by the taxpayer of any tax found due, upon petitioners redetermination of it.

In addition to the above-cited provisions in the Tax Code, there are also tax treaties and special laws that grant or allow tax credits, even though no prior tax payments have been made.

Under the treaties in which the tax credit method is used as a relief to avoid double taxation, income that is taxed in the state of source is also taxable in the state of residence, but the tax paid in the former is merely allowed as a credit against the tax levied in the latter.[29] Apparently, payment is made to the state of source, not the state of residence. No tax, therefore, has been previously paid to the latter.

Under special laws that particularly affect businesses, there can also be tax credit incentives. To illustrate, the incentives provided for in Article 48 of Presidential Decree No. (PD) 1789, as amended by Batas Pambansa Blg. (BP) 391, include tax credits equivalent to either five percent of the net value earned, or five or ten percent of the net local content of exports.[30] In order to avail of such credits under the said law and still achieve its objectives, no prior tax payments are necessary.

From all the foregoing instances, it is evident that prior tax payments are not indispensable to the availment of a tax credit. Thus, the CA correctly held that the availment under RA 7432 did not require prior tax payments by private establishments concerned.[31] However, we do not agree with its finding[32] that the carry-over of tax credits under the said special law to succeeding taxable periods, and even their application against internal revenue taxes, did not necessitate the existence of a tax liability.

The examples above show that a tax liability is certainly important in the availment or use, not the existence or grant, of a tax credit. Regarding this matter, a private establishment reporting a net loss in its financial statements is no different from another that presents a net income. Both are entitled to

the tax credit provided for under RA 7432, since the law itself accords that unconditional benefit. usance. However, for the losing establishment to immediately apply such credit, where no tax is due, will be an improvident

Sections 2.i and 4 of Revenue Regulations No. 2-94 Erroneous

RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts they grant.[33] In turn, the Implementing Rules and Regulations, issued pursuant thereto, provide the procedures for its availment.[34] To deny such credit, despite the plain mandate of the law and the regulations carrying out that mandate, is indefensible.

First, the definition given by petitioner is erroneous. It refers to tax credit as the amount representing the 20 percent discount that shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes.[35] In ordinary business language, the tax credit represents the amount of such discount. However, the manner by which the discount

shall be credited against taxes has not been clarified by the revenue regulations.

By ordinary acceptation, a discount is an abatement or reduction made from the gross amount or value of anything.[36] To be more precise, it is in business parlance a deduction or lowering of an amount of money;[37] or a reduction from the full amount or value of something, especially a price.[38] In business there are many kinds of discount, the most common of which is that affecting the income statement[39] or financial report upon which the income tax is based.

Business Discounts Deducted from Gross Sales

A cash discount, for example, is one granted by business establishments to credit customers for their prompt payment.[40] It is a reduction in price offered to the purchaser if payment is made within a shorter period of time than the maximum time specified. [41] Also referred to as a sales discount on the part of the seller and apurchase discount on the part of the buyer, it may be expressed in such

terms as 5/10, n/30.[42]

A quantity discount, however, is a reduction in price allowed for purchases made in large quantities, justified by savings in packaging, shipping, and handling.[43] It is also called a volume or bulk discount.[44]

A percentage reduction from the list price x x x allowed by manufacturers to wholesalers and by wholesalers to retailers[45] is known as a trade discount. No entry for it need be made in the manual or computerized books of accounts, since the purchase or sale is already valued at the net price actually charged the buyer.[46] The purpose for the discount is to encourage trading or increase sales, and the prices at which the purchased goods may be resold are also suggested.[47] Even a chain discount - a series of discounts from one list price -- is recorded at net.[48]

Finally, akin to a trade discount is a functional discount. It is a suppliers price discount given to a purchaser based on the [latters] role in the [formers] distribution system.[49] This role usually involves warehousing or advertising.

Based on this discussion, we find that the nature of a sales discount is peculiar. Applying generally accepted accounting principles (GAAP) in the country, this type of discount is reflected in the income statement[50] as a line item deducted -- along with returns, allowances, rebates and other similar expenses -- from gross sales to arrive at net sales.[51] This type of presentation is resorted to, because the accounts receivable and sales figures that arise from sales discounts, -- as well as from quantity, volume or bulk discounts-- are recorded in the manual and computerized books of accounts and reflected in the financial statements at the gross amounts of the invoices.[52] This manner of recording credit sales -- known as the gross method -- is most widely used, because it is simple, more convenient to apply than the net method, and produces no material errors over time.[53]

However,

under

the net

method used

in

recording trade, chain or functional discounts, only the net amounts of the invoices -- after the discounts have been deducted -- are recorded in the books of accounts[54] and reflected in the financial statements. A separate line item cannot be shown,[55] because the transactions themselves involving bothaccounts receivable and sales have already been entered into, net of the said discounts.

The term sales discounts is not expressly defined in the Tax Code, but one provision adverts to amounts whose sum -- along with sales returns, allowances and cost of goods sold[56] -- is deducted from gross sales to come up with the gross income, profit or margin[57] derived from business.[58] In another provision therein, sales discounts that are granted and indicated in the invoices at the time of sale -- and that do not depend upon the happening of any future event -- may be excluded from the gross sales within the same quarter they were given.[59] While determinative only of the VAT, the latter provision also appears as a suitable reference point for income tax purposes already embraced in the former. After all, these two provisions affirm that sales discounts are amounts that are always deductible from gross sales.

Reason for the Senior Citizen Discount: The Law, Not Prompt Payment

A distinguishing feature of the implementing rules of RA 7432 is the private establishments outright deduction of the discount from the invoice price of the medicine sold to the senior citizen.[60] It is, therefore, expected that for each retail sale made under this law, the discount period lasts no more than a day, because such discount is given -- and the net amount

thereof collected -- immediately upon perfection of the sale.[61] Although prompt payment is made for an arms-length transaction by the senior citizen, the real and compelling reason for the private establishment giving the discount is that the law itself makes it mandatory.

What RA 7432 grants the senior citizen is a mere discount privilege, not a sales discount or any of the above discounts in particular. Prompt payment is not the reason for (although a necessary consequence of) such grant. To be sure, the privilege enjoyed by the senior citizen must be equivalent to the tax credit benefit enjoyed by the private establishment granting the discount. Yet, under the revenue regulations promulgated by our tax authorities, this benefit has been erroneously likened and confined to a sales discount.

To a senior citizen, the monetary effect of the privilege may be the same as that resulting from a sales discount. However, to a private establishment, the effect is different from a simple reduction in price that results from such discount. In other words, the tax credit benefit is not the same as a sales discount. To repeat from our earlier discourse, this benefit cannot and should not be treated as a tax deduction.

To stress, the effect of a sales discount on the income statement and income tax return of an establishment covered by RA 7432 is different from that resulting from theavailment or use of its tax credit benefit. While the former is a deduction before, the latter is a deduction after, the income tax is computed. As mentioned earlier, a discount is not necessarily a sales discount, and a tax credit for a simple discount privilege should not be automatically treated like a sales discount. Ubi lex non distinguit, nec nos distinguere debemus. Where the law does not distinguish, we ought not to distinguish.

Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent discount deductible from gross income for income tax purposes, or from gross sales for VAT or other percentage tax purposes. In effect, the tax credit benefit under RA 7432 is related to a sales discount. This contrived definition is improper, considering that the latter has to be deducted from gross sales in order to compute the gross income in the income statement and cannot be deducted again, even for purposes of computing the income tax.

When the law says that the cost of the discount may be claimed as a tax credit, it means that the amount -- when claimed -- shall be treated as a

reduction from any tax liability, plain and simple. The option to avail of the tax credit benefit depends upon the existence of a tax liability, but to limit the benefit to a sales discount -- which is not even identical to the discount privilege that is granted by law -- does not define it at all and serves no useful purpose. The definition must, therefore, be stricken down.

Laws Not Amended by Regulations

Second, the law cannot be amended by a mere regulation. In fact, a regulation that operates to create a rule out of harmony with

the statute is a mere nullity;[62] it cannot prevail.

It is a cardinal rule that courts will and should respect the contemporaneous construction placed upon a statute by the executive officers whose duty it is to enforce it x x x. [63] In the scheme of judicial tax administration, the need for certainty and predictability in the implementation of tax laws is crucial.[64] Our tax authorities fill in the details that Congress may not have the opportunity or competence to provide.[65] The regulations these authorities issue are relied upon by taxpayers, who are certain that these will be followed by the courts.[66] Courts, however, will not uphold these authorities interpretations when clearly absurd, erroneous or improper.

In the present case, the tax authorities have given the term tax credit in Sections 2.i and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides. Their interpretation has muddled up the intent of Congress in granting a mere discount privilege, not a sales discount. The administrative agency issuing these regulations may not enlarge, alter or restrict the provisions of the law it administers; it cannot engraft additional requirements not contemplated by the legislature.[67]

In case of conflict, the law must prevail.[68] A regulation adopted pursuant to law is law.[69] Conversely, a regulation or any portion thereof not adopted pursuant to law is no law and has neither the force nor the effect of law.[70]

Availment of Tax
Credit Voluntary

Third, the word may in the text of the statute[71] implies that the

availability of the tax credit benefit is neither unrestricted nor mandatory.[72] There is no absolute right conferred upon respondent, or any similar taxpayer, to avail itself of the tax credit remedy whenever it chooses; neither does it impose a duty on the part of the government to sit back and allow an important facet of tax collection to be at the sole control and discretion of the taxpayer.[73] For the tax authorities to compel respondent to deduct the 20 percent discount from either its gross income or its gross sales[74] is, therefore, not only to make an imposition without basis in law, but also to blatantly contravene the law itself.

What Section 4.a of RA 7432 means is that the tax credit benefit is merely permissive, not imperative. Respondent is given two options -either to claim or not to claim the cost of the discounts as a tax credit. In fact, it may even ignore the credit and simply consider the gesture as an act of beneficence, an expression of its social conscience.

Granting that there is a tax liability and respondent claims such cost as a tax credit, then the tax credit can easily be applied. If there is none, the credit cannot be used and will just have to be carried over and revalidated[75] accordingly. If, however, the business continues to operate at a loss and no other taxes are due, thus compelling it to close shop, the credit can never be applied and will be lost altogether.

In other words, it is the existence or the lack of a tax liability that determines whether the cost of the discounts can be used as a tax credit. RA 7432 does not give respondent the unfettered right to avail itself of the credit whenever it pleases. Neither does it allow our tax administrators to expand or contract the legislative mandate. The plain meaning rule or verba legis in statutory construction is thus applicable x x x. Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.[76]

Tax Credit Benefit

Deemed Just Compensation

Fourth, Sections 2.i and 4 of RR 2-94 deny the exercise by the State of its power of eminent domain. Be it stressed that the privilege enjoyed by senior citizens does not come directly from the State, but rather from the private establishments concerned. Accordingly, the tax credit benefit granted to these establishments can be deemed as their just compensation for private property taken by the State for public use.[77]

The concept of public use is no longer confined to the traditional notion of use by the public, but held synonymous with public interest, public benefit, public welfare, and public convenience.[78] The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned, were it not for RA 7432. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit.

As a result of the 20 percent discount imposed by RA 7432, respondent becomes entitled to a just compensation. This term refers not only to the issuance of a tax creditcertificate indicating the correct amount of the discounts given, but also to the promptness in its release. Equivalent to the payment of property taken by the State, such issuance -when not done within a reasonable time from the grant of the discounts -cannot be considered as just compensation. In effect, respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt, through the certificate, of the equivalent amount it needs to cope with the reduction in its revenues.[79]

Besides, the taxation power can also be used as an implement for the exercise of the power of eminent domain.[80] Tax measures are but enforced contributions exacted on pain of penal sanctions[81] and clearly imposed for a public purpose.[82] In recent years, the power to tax has indeed become a most effective tool to realize social justice, public welfare, and the equitable distribution of wealth.[83]

While it is a declared commitment under Section 1 of RA 7432, social justice cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to

protection. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto.[84] For this reason, a just compensation for income that is taken away from respondent becomes necessary. It is in the tax creditthat our legislators find support to realize social justice, and no administrative body can alter that fact.

To put it differently, a private establishment that merely breaks even[85] -- without the discounts yet -- will surely start to incur losses because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if all its sales come from retail purchases by senior citizens. Aside from the observation we have already raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales. Operating at a loss through no fault of its own, it will realize that the tax credit limitation under RR 2-94 is inutile, if not improper. Worse, profitgenerating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing, because no taxes are due from the latter.

Grant of Tax Credit

Intended by the Legislature

Fifth, RA 7432 itself seeks to adopt measures whereby senior citizens are assisted by the community as a whole and to establish a program beneficial to them.[86] These objectives are consonant with the constitutional policy of making health x x x services available to all the people at affordable cost[87] and of giving priority for the needs of the x x x elderly.[88] Sections 2.i and 4 of RR 2-94, however, contradict these constitutional policies and statutory objectives.

Furthermore, Congress has allowed all private establishments a simple tax credit, not a deduction. In fact, no cash outlay is required from the government for theavailment or use of such credit. The deliberations on February 5, 1992 of the Bicameral Conference Committee Meeting on Social Justice, which finalized RA 7432, disclose the true intent of our legislators to treat the sales discounts as a tax credit, rather than as a deduction from gross income. We quote from those deliberations as follows:

"THE CHAIRMAN (Rep. Unico). By the way, before that ano, about deductions from taxable income. I think we incorporated there a provision na - on the responsibility of the private hospitals and drugstores, hindi ba?

SEN. ANGARA.

Oo.

THE CHAIRMAN.

(Rep. Unico), So, I think we have to put in also a provision here about the deductions from taxable income of that private hospitals, di ba ganon 'yan?

MS. ADVENTO.

Kaya lang po sir, and mga discounts po nila affecting government and public institutions, so, puwede na po nating hindi isama yung mga less deductions ng taxable income.

THE CHAIRMAN.

(Rep. Unico). Puwede na. Yung about the private hospitals. Yung isiningit natin?

MS. ADVENTO.

Singit na po ba yung 15% on credit. (inaudible/did not use the microphone).

SEN. ANGARA.

Hindi pa, hindi pa.

THE CHAIRMAN.

(Rep. Unico) Ah, 'di pa ba naisama natin?

SEN. ANGARA.

Oo. You want to insert that?

THE CHAIRMAN

(Rep. Unico). Senator Shahani, e.

Yung ang proposal ni

SEN. ANGARA.

In the case of private hospitals they got the grant of 15% discount, provided that, the private hospitals can claim the expense as a tax credit.

REP. AQUINO.

Yah could be allowed as deductions in the perpetrations of (inaudible) income.

SEN. ANGARA.

I-tax credit na lang natin para walang cash-out ano?

REP. AQUINO.

Oo, tax credit. Tama, Okay. Hospitals ba o lahat ng establishments na covered.

THE CHAIRMAN.

(Rep. Unico). Sa kuwan lang yon, as private hospitals lang.

REP. AQUINO.

Ano ba yung establishments na covered?

SEN. ANGARA.

Restaurant lodging houses, recreation centers.

REP. AQUINO.

All establishments covered siguro?

SEN. ANGARA.

From all establishments. Alisin na natin 'Yung kuwan kung ganon. Can we go back to Section 4 ha?

REP. AQUINO.

Oho.

SEN. ANGARA.

Letter A. To capture that thought, we'll say the grant of 20% discount from all establishments et cetera, et cetera, provided that said establishments provided that private establishments may claim the cost as a tax credit. Ganon ba 'yon?

REP. AQUINO.

Yah.

SEN. ANGARA.

Dahil kung government, they don't need to claim it.

THE CHAIRMAN.

(Rep. Unico). Tax credit.

SEN. ANGARA.

As a tax credit [rather] than a kuwan - deduction, Okay.

REP. AQUINO

Okay.

SEN. ANGARA.

Sige Okay. Di subject to style na lang sa Letter A".[89]

Special Law

Over General Law

Sixth and last, RA 7432 is a special law that should prevail over the Tax Code -- a general law. x x x [T]he rule is that on a specific matter the special law shall prevail over the general law, which shall

be resorted to only to supply deficiencies in the former.[90] In addition, [w]here there are two statutes, the earlier special and the later general -the terms of the general broad enough to include the matter provided for in the special -- the fact that one is special and the other is general creates a presumption that the special is to be considered as remaining an exception to the general,[91] one as a general law of the land, the other as the law of a particular case.[92] It is a canon of statutory construction that a later statute, general statute.[93] in its terms and not expressly repealing a prior special statute, will ordinarily not affect the special provisions of such earlier

RA 7432 is an earlier law not expressly repealed by, and therefore remains an exception to, the Tax Code -- a later law. When the former states that a tax credit may be claimed, then the requirement of prior tax payments under certain provisions of the latter, as discussed above, cannot be made to apply. Neither can the instances of or references to a tax deduction under the Tax Code[94] be made to restrict RA 7432. No provision of any revenue regulation can supplant or modify the acts of Congress.

WHEREFORE, the Petition is hereby DENIED. The assailed Decision and Resolution of the Court of Appeals AFFIRMED. No pronouncement as to costs. SO ORDERED.