RULE 128

[G.R. No. 120820. August 1, 2000]

SPS. FORTUNATO SANTOS and ROSALINDA R.
SANTOS, petitioners, vs. COURT OF APPEALS,
SPS. MARIANO R. CASEDA and CARMEN CASEDA,
respondents.

The Santoses then collected the rentals from the

tenants. Carmen approached petitioners and offered to
pay the balance of the purchase price for the house
and lot. The parties, however, could not agree, and the
deal could not push through because the Santoses
wanted a higher price.
Carmen is now praying that the Santoses execute the
final deed of conveyance over the property

QUISUMBING, J.:
FACTS: SANTOS vs. COURT OF APPEALS
G.R. No. 120820. August 1, 2000
Facts:
Spouses Santos owned the house and lot in Better
Living Subdivision, Paranaque, Metro Manila. The land
together with the house, was mortgaged with the
Rural Bank of Salinas, Inc., to secure a loan of P150K.
The bank sent Rosalinda Santos a letter demanding
payment of P16K in unpaid interest and other charges.
Since the Santos couple had no funds, Rosalinda
offered to sell the house and lot to Carmen Caseda.
After inspecting the real property, Carmen and her
husband agreed.
Carmen and Rosalinda signed a document, involving
the sale of the house P350K as full amount, P54K as
downpayment. Among other condition set is that
Caseda will pay the balance of the mortgage in the
bank, real estate taxes and the electric and water bills.
The Casedas complied with the bank mortgage and the
bills. The Santoses, seeing that the Casedas lacked the
means to pay the remaining installments and/or
amortization of the loan, repossessed the property.

RTC ruled in favor of Santoses. CA reversed the

decision of the RTC. The appellate court held that
rescission was not justified under the circumstances
and allowed the Caseda spouses a period of ninety
days within which to pay the balance of the agreed
purchase price.
ISSUES:
1. WON there is a question of fact
2. WON the contract is a contract to sell/ contract
of sale
HELD:
There is a question of law in a given case when
the doubt or difference arises as to what the law is on
a certain set of facts, and there is a question of fact
when the doubt or difference arises as to the truth or
falsehood of the alleged facts. But we note that the
first
assignment
of
error
submitted
by
respondents for consideration by the appellate
court dealt with the trial court's finding that
herein petitioners got back the property in
question because respondents did not have the
means
to
pay
the
installments
and/or
amortization of the loan. The resolution of this
question involved an evaluation of proof, and not

only a consideration of the applicable statutory

and case laws. Clearly, CA-G.R. CV No. 30955 did
not involve pure questions of law, hence the
Court of Appeals had jurisdiction and there was
no violation of our Circular No. 2-90.
Moreover, we find that petitioners took an active part
in the proceedings before the Court of Appeals, yet
they did not raise there the issue of jurisdiction. They
should have raised this issue at the earliest
opportunity before the Court of Appeals. A party
taking part in the proceedings before the appellate
court and submitting his case for as decision ought not
to later on attack the court's decision for want of
jurisdiction because the decision turns out to be
adverse to him.
The second and third issues deal with the question:
Did the Court of Appeals err in holding that a judicial
rescission of the agreement was necessary? In
resolving both issues, we must first make a
preliminary determination of the nature of the contract
in question: Was it a contract of sale, as insisted by
respondents or a mere contract to sell, as contended
by petitioners?
Petitioners argue that the transaction between them
and respondents was a mere contract to sell, and not
a contract of sale, since the sole documentary
evidence (Exh. D, receipt) referring to their agreement
clearly showed that they did not transfer ownership of
the property in question simultaneous with its delivery
and hence remained its owners, pending fulfillment of
the other suspensive conditions, i.e., full payment of
the balance of the purchase price and the loan
amortizations. Petitioners point to Manuel v.
Rodriguez, 109 Phil. 1 (1960) and Luzon Brokerage

Co., Inc. v. Maritime Building Co., Inc., 43 SCRA 93

(1972), where we held that Article 1592 of the Civil
Code is inapplicable to a contract to sell. They charge
the court a quo with reversible error in holding that
petitioners should have judicially rescinded the
agreement with respondents when the latter failed to
pay the amortizations on the bank loan.
Respondents insist that there was a perfected contract
of sale, since upon their partial payment of the
purchase price, they immediately took possession of
the property as vendees, and subsequently leased it,
thus exercising all the rights of ownership over the
property. This showed that transfer of ownership was
simultaneous with the delivery of the realty sold,
according to respondents.
It must be emphasized from the outset that a
contract is what the law defines it to be, taking
into consideration its essential elements, and not
what the contracting parties call it. Article
1458[15] of the Civil Code defines a contract of
sale. Note that the said article expressly obliges
the vendor to transfer ownership of the thing
sold as an essential element of a contract of sale.
This is because the transfer of ownership in
exchange for a price paid or promised is the very
essence of a contract of sale. We have carefully
examined the contents of the unofficial receipt, Exh.
D, with the terms and conditions informally agreed
upon by the parties, as well as the proofs submitted to
support their respective contentions. We are far from
persuaded that there was a transfer of
ownership simultaneously with the delivery of
the property purportedly sold. The records
clearly show that, notwithstanding the fact that
the Casedas first took then lost possession of the

disputed house and lot, the title to the property,

TCT No. 28005 (S-11029) issued by the Register
of Deeds of Paraaque, has remained always in
the name of Rosalinda Santos. Note further that
although the parties had agreed that the
Casedas would assume the mortgage, all
amortization payments made by Carmen Caseda
to the bank were in the name of Rosalinda
Santos. We likewise
find that the
bank's
cancellation and discharge of mortgage dated
January 20, 1990, was made in favor of
Rosalinda Santos. The foregoing circumstances
categorically and clearly show that no valid
transfer of ownership was made by the Santoses
to the Casedas. Absent this essential element,
their agreement cannot be deemed a contract of
sale. We agree with petitioners' averment that the
agreement between Rosalinda Santos and Carmen
Caseda is a contract to sell. In contracts to sell,
ownership is reserved by the vendor and is not
to pass until full payment of the purchase price.
This we find fully applicable and understandable
in this case, given that the property involved is a
titled realty under mortgage to a bank and would
require notarial and other formalities of law
before transfer thereof could be validly effected.
In view of our finding in the present case that the
agreement between the parties is a contract to sell, it
follows that the appellate court erred when it decreed
that a judicial rescission of said agreement was
necessary. This is because there was no rescission to
speak of in the first place. As we earlier pointed out, in
a contract to sell, title remains with the vendor and
does not pass on to the vendee until the purchase
price is paid in full. Thus, in a contract to sell, the
payment of the purchase price is a positive suspensive

condition. Failure to pay the price agreed upon is not a

mere breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey title
from acquiring an obligatory force. This is entirely
different from the situation in a contract of sale, where
non-payment of the price is a negative resolutory
condition. The effects in law are not identical. In a
contract of sale, the vendor has lost ownership of the
thing sold and cannot recover it, unless the contract of
sale is rescinded and set aside.In a contract to sell,
however, the vendor remains the owner for as long as
the vendee has not complied fully with the condition of
paying the purchase price. If the vendor should eject
the vendee for failure to meet the condition precedent,
he is enforcing the contract and not rescinding it.
When the petitioners in the instant case
repossessed the disputed house and lot for
failure of private respondents to pay the
purchase price in full, they were merely
enforcing the contract and not rescinding it. As
petitioners correctly point out, the Court of
Appeals erred when it ruled that petitioners
should have judicially rescinded the contract
pursuant to Articles 1592 and 1191 of the Civil
Code. Article 1592 speaks of non-payment of the
purchase price as a resolutory condition. It does not
apply to a contract to sell. As to Article 1191, it is
subordinated to the provisions of Article 1592 when
applied to sales of immovable property. Neither
provision is applicable in the present case.
As to the last issue, we need not tarry to make a
determination of whether the breach of contract by
private respondents is so substantial as to defeat the
purpose of the parties in entering into the agreement
and thus entitle petitioners to rescission. Having ruled

that there is no rescission to speak of in this case, the

question is moot.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 187109

WHEREFORE, the instant petition is GRANTED and the

assailed decision of the Court of Appeals in CA-G.R. CV
No. 30955 is REVERSED and SET ASIDE. The
judgment of the Regional Trial Court of Makati, Branch
133, with respect to the DISMISSAL of the complaint
in Civil Case No. 89-4759, is hereby REINSTATED. No
pronouncement as to costs.
SO ORDERED.

RULE 129, (Secs 1 to 3)

G.R. Nos. 184461-62

May 31, 2011

LT. COL. ROGELIO BOAC, LT. COL. FELIPE

ANOTADO
AND
LT.
FRANCIS
MIRABELLE
SAMSON, Petitioners,
vs.
ERLINDA T. CADAPAN AND CONCEPCION E.
EMPEO, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 184495
ERLINDA T. CADAPAN AND CONCEPCION E.
EMPEO, Petitioners,
vs.
GEN.
HERMOGENES
ESPERON,
P/DIR.GEN.
AVELINO
RAZON,
(RET.)
GEN.
ROMEO
TOLENTINO, (RET.) GEN. JOVITO PALPARAN, LT.
COL. ROGELIO BOAC, LT. COL. FELIPE ANOTADO,
ET AL., Respondents.

ERLINDA T. CADAPAN AND CONCEPCION E.

EMPEO, Petitioners,
vs.
GLORIA
MACAPAGAL-ARROYO,
GEN.
HERMOGENES ESPERON, P/DIR.GEN. AVELINO
RAZON, (RET.) GEN. ROMEO TOLENTINO, (RET.)
GEN. JOVITO PALPARAN, LT. COL. ROGELIO
BOAC, LT. COL. FELIPE ANOTADO, DONALD
CAIGAS, A.K.A. ALAN OR ALVIN, ARNEL
ENRIQUEZ
AND
LT.
FRANCIS
MIRABELLE
SAMSON, Respondents.
CARPIO MORALES, J.:
At 2:00 a.m. of June 26, 2006, armed men abducted
Sherlyn Cadapan (Sherlyn), Karen Empeo (Karen)
and Manuel Merino (Merino) from a house in San
Miguel, Hagonoy, Bulacan. The three were herded onto
a jeep bearing license plate RTF 597 that sped towards
an undisclosed location.
Having thereafter heard nothing from Sherlyn, Karen
and Merino, their respective families scoured nearby
police precincts and military camps in the hope of
finding them but the same yielded nothing.
On July 17, 2006, spouses Asher and Erlinda Cadapan
and Concepcion Empeo filed a petition for habeas
corpus1 before the Court, docketed as G.R. No.
173228, impleading then Generals Romeo Tolentino
and Jovito Palparan (Gen. Palparan), Lt. Col. Rogelio
Boac (Lt. Col. Boac), Arnel Enriquez and Lt. Francis
Mirabelle Samson (Lt. Mirabelle) as respondents. By

Resolution of July 19, 2006,2 the Court issued a writ

of habeas corpus, returnable to the Presiding Justice of
the Court of Appeals.
The habeas corpus petition was docketed at the
appellate court as CA-G.R. SP No. 95303.
By Return of the Writ dated July 21, 2006,3 the
respondents in the habeas corpus petition denied that
Sherlyn, Karen and Merino are in the custody of the
military. To the Return were attached affidavits from
the respondents, except Enriquez, who all attested
that they do not know Sherlyn, Karen and Merino; that
they had inquired from their subordinates about the
reported abduction and disappearance of the three but
their inquiry yielded nothing; and that the military
does not own nor possess a stainless steel jeep with
plate number RTF 597. Also appended to the Return
was a certification from the Land Transportation Office
(LTO) that plate number RTF 597 had not yet been
manufactured as of July 26, 2006.

house; that onboard a stainless jeep bearing plate

number RTF 597, he (Ramirez) was taken to a place in
Mercado, Hagonoy and was asked by one Enriquez if
he knew "Sierra," "Tanya," "Vincent" and "Lisa"; and
that Enriquez described the appearance of two ladies
which matched those of Sherlyn and Karen, whom he
was familiar with as the two had previously slept in his
house.5
Another witness, Oscar Leuterio, who was himself
previously abducted by armed men and detained for
five months, testified that when he was detained in
Fort Magsaysay in Nueva Ecija, he saw two women
fitting the descriptions of Sherlyn and Karen, and also
saw Merino, his kumpare.6
Lt. Col. Boac, the then commander of Task Force
Malolos, a special operations team tasked to neutralize
the intelligence network of communists and other
armed groups, declared that he conducted an inquiry
on the abduction of Sherlyn, Karen and Merino but his
subordinates denied knowledge thereof.7

Trial thereupon ensued at the appellate court.

Witness Wilfredo Ramos, owner of the house where
the three were abducted, recounted that on June 26,
2006, while he was inside his house in Hagonoy, he
witnessed armed men wearing bonnets abduct Sherlyn
and Karen from his house and also abduct Merino on
their way out; and that tied and blindfolded, the three
were boarded on a jeep and taken towards Iba in
Hagonoy.4
Witness Alberto Ramirez (Ramirez) recalled that on
June 28, 2006, while he was sleeping in his house, he
was awakened by Merino who, in the company of a
group of unidentified armed men, repaired to his

While he denied having received any order from Gen.

Palparan to investigate the disappearance of Sherlyn,
Karen and Merino, his assistance in locating the
missing persons was sought by the mayor of Hagonoy.
Major Dominador Dingle, the then division adjutant of
the Philippine Armys 7th Infantry Division in Fort
Magsaysay, denied that a certain Arnel Enriquez is a
member of his infantry as in fact his name did not
appear in the roster of troops.8
Roberto Se, a supervisor of the Equipment, Plate
Number and Supply Units of the LTO, denied that his

office manufactured and

bearing number RTF 597.9

issued

plate

number

On rebuttal, Lt. Mirabelle, Lt. Col. Boac and Gen.

Palparan took the witness stand as hostile witnesses.
Lt. Mirabelle testified that she did not receive any
report on the abduction of Sherlyn, Karen and Merino
nor any order to investigate the matter. And she
denied knowing anything about the abduction of
Ramirez nor who were Ka Tanya or Ka Lisa.10
Gen. Palparan testified that during a debate in a
televised program, he mentioned the names of Ka Lisa
and Ka Tanya as the ones involved in revolutionary tax
activities; and that he ordered Lt. Col. Boac to conduct
an investigation on the disappearance of Sherlyn,
Karen and Merino.11 When pressed to elaborate, he
stated: "I said that I got the report that it stated that
it was Ka Tanya and Ka Lisa that, I mean, that incident
happened in Hagonoy, Bulacan was the abduction of
Ka Lisa and Ka Tanya, Your Honor, and another one.
That was the report coming from the people in the
area."12
By Decision of March 29, 2007,13 the Court of Appeals
dismissed the habeas corpus petition in this wise:
As Sherlyn Cadapan, Karen Empeo and Manuel
Merino are indeed missing, the present petition for
habeas corpus is not the appropriate remedy since the
main office or function of the habeas corpus is to
inquire into the legality of ones detention which
presupposes that respondents have actual custody of
the persons subject of the petition. The reason
therefor is that the courts have limited powers, means
and resources to conduct an investigation. x x x.

It being the situation, the proper remedy is not a

habeas corpus proceeding but criminal proceedings by
initiating criminal suit for abduction or kidnapping as a
crime punishable by law. In the case of Martinez v.
Mendoza, supra, the Supreme Court restated the
doctrine that habeas corpus may not be used as a
means of obtaining evidence on the whereabouts of a
person, or as a means of finding out who has
specifically abducted or caused the disappearance of a
certain person. (emphasis and underscoring supplied)
Thus the appellate court disposed:
WHEREFORE, the petition for habeas corpus is hereby
DISMISSED, there being no strong evidence that the
missing persons are in the custody of the respondents.
The Court, however, further resolves to refer the case
to the Commission on Human Rights, the National
Bureau of Investigation and the Philippine National
Police for separate investigations and appropriate
actions as may be warranted by their findings and to
furnish the Court with their separate reports on the
outcome of their investigations and the actions taken
thereon.
Let copies of this decision be furnished the
Commission on Human Rights, the National Bureau of
Investigation and the Philippine National Police for
their appropriate actions.
SO ORDERED. (emphasis and underscoring supplied)
Petitioners in CA-G.R. SP No. 95303 moved for a
reconsideration of the appellate courts decision. They
also moved to present newly discovered evidence

consisting of the testimonies of Adoracion Paulino,

Sherlyns mother-in-law who was allegedly threatened
by soldiers; and Raymond Manalo who allegedly met
Sherlyn, Karen and Merino in the course of his
detention at a military camp.
During the pendency of the motion for reconsideration
in CA-G.R. SP No. 95303, Erlinda Cadapan and
Concepcion Empeo filed before this Court a Petition
for Writ of Amparo14 With Prayers for Inspection of
Place and Production of Documents dated October 24,
2007, docketed as G.R. No. 179994. The petition
impleaded the same respondents in the habeas corpus
petition, with the addition of then President Gloria
Macapagal-Arroyo, then Armed Forces of the Phil.
(AFP) Chief of Staff Hermogenes Esperon Jr., then Phil.
National Police (PNP) Chief Gen. Avelino Razon (Gen.
Razon), Lt. Col. Felipe Anotado (Lt. Col. Anotado) and
Donald Caigas.
Then President Arroyo was eventually dropped as
respondent in light of her immunity from suit while in
office.
Petitioners in G.R. No. 179994 also prayed that they
be allowed to inspect the detention areas of the
following places:
1. 7th Infantry Division at Fort Magsaysay, Laur, Nueva
Ecija
2. 24th Infantry Batallion at Limay, Bataan
3. Army Detachment inside Valmocina Farm, Pinaod,
San Ildefonso, Bulacan
4. Camp Tecson, San Miguel, Bulacan

5. The Resthouse of Donald Caigas alias Allan or Alvin

of the 24th Infantry Batallion at Barangay Banog,
Bolinao, Pangasinan
6. 56th Infantry
Hagonoy, Bulacan

Batallion

Headquarters

at

Iba,

7. Army Detachment at Barangay Mercado, Hagonoy,

Bulacan
8. Beach House [at] Iba, Zambales used as a
safehouse with a retired military personnel as a
caretaker;
By Resolution of October 25, 2007, the Court issued in
G.R. No. 179994 a writ of amparo returnable to the
Special Former Eleventh Division of the appellate
court, and ordered the consolidation of the amparo
petition with the pending habeas corpus petition.
Docketed as CA-G.R. SP No. 002, respondents in the
amparo case, through the Solicitor General, filed their
Return of the Writ on November 6, 2007.15 In the
Return, Gen. Palparan, Lt. Col. Boac and Lt. Mirabelle
reiterated their earlier narrations in the habeas corpus
case.
Gen. Hermogenes Esperon Jr. stated in the Return that
he immediately caused to investigate and verify the
identities of the missing persons and was aware of the
earlier decision of the appellate court ordering the
police, the Commission on Human Rights and the
National Bureau of Investigation to take further action
on the matter.16

Lt. Col. Felipe Anotado, the then battalion commander

of the 24th Infantry Battalion based in Balanga City,
Bataan, denied any involvement in the abduction.
While the 24th Infantry Battalion detachment was
reported to be a detention site of the missing persons,
Lt. Col. Anotado claimed that he found no untoward
incident when he visited said detachment. He also
claimed that there was no report of the death of
Merino per his inquiry with the local police.17
Police Director General Avelino Razon narrated that he
ordered the compilation of pertinent records, papers
and other documents of the PNP on the abduction of
the three, and that the police exhausted all possible
actions available under the circumstances.18
In addition to the witnesses already presented in the
habeas corpus case, petitioners called on Adoracion
Paulino and Raymond Manalo to testify during the trial.
Adoracion Paulino recalled that her daughter-in-law
Sherlyn showed up at home on April 11, 2007,
accompanied by two men and three women whom she
believed were soldiers. She averred that she did not
report the incident to the police nor inform Sherlyns
mother about the visit.19

59. Saan ka dinala mula sa Sapang?

Pagkalipas ng humigit kumulang 3 buwan sa Sapang,
dinala ako sa Camp Tecson sa ilalim ng 24th IB.
xxxx
Sa loob ng barracks ko nakilala si Sherlyn Cadapan,
isang estudyante ng UP.
Ipinapalinis din sa akin ang loob ng barracks. Sa isang
kwarto sa loob ng barracks, may nakita akong babae
na nakakadena[.] Noong una, pinagbawalan akong
makipag-usap sa kanya. Sa ikatlo o ikaapat na araw,
nakausap ko yung babaeng nagngangalang Sherlyn.
Binigyan ko siya ng pagkain. Sinabi niya sa akin na
dinukot si[ya] sa Hagonoy, Bulacan at matindi ang
tortyur na dinaranas niya. Sabi niya gusto niyang
umuwi at makasama ang kanyang magulang. Umiiyak
siya. Sabi niya sa akin ang buong pangalan niya ay
Sherlyn Cadapan, mula sa Laguna. Sa araw
tinatanggal ang kanyang kadena at inuutusan si
Sherlyn na maglaba.
x x x x.

Raymond Manalo (Manalo) claimed that he met the

three abducted persons when he was illegally detained
by military men in Camp Tecson in San Miguel,
Bulacan. His group was later taken to a camp in Limay,
Bataan. He recalled that Lt. Col. Anotado was the one
who interrogated him while in detention.20

61. Sino ang mga nakilala mo sa Camp Tecson?

In his Sinumpaang Salaysay,21 Manalo recounted:

Pagkalipas ng 2 araw matapos dalhin si Reynaldo sa

Camp Tecson dumating sina Karen Empeo at Manuel
Merino na mga bihag din. Inilagay si Karen at Manuel

xxxx

Dito sa Camp Tecson naming nakilala si Allan Alvin

(maya-maya nalaman naming na siya pala si Donald
Caigas), ng 24th IB, na tinatawag na master o
commander ng kanyang mga tauhan.

sa kwarto ni Allan[.] Kami naman ni Reynaldo ay

nasa katabing kwarto, kasama si Sherlyn.
xxxx
62. x x x x
Kaming mga lalake (ako, si Reynaldo at si Manuel) ay
ginawang utusan, habang sina Sherlyn at Karen ay
ginawang labandera.
Si Sherlyn ang pinahirapan nina Mickey, Donald at
Billy. Sabi ni Sherlyn sa akin na siyay ginahasa.
xxxx
63. x x x x

Lt. Col. Anotado denied seeing or meeting Manalo. He

posited that Manalo recognized him because he was
very active in conducting lectures in Bataan and even
appeared on television regarding an incident involving
the 24th Infantry Batallion. He contended that it was
impossible for Manalo, Sherlyn, Karen and Merino to
be detained in the Limay detachment which had no
detention area.
Col. Eduardo Boyles Davalan, the then chief of staff of
the First Scout Ranger Regiment in Camp Tecson,
testified that the camp is not a detention facility, nor
does it conduct military operations as it only serves as
a training facility for scout rangers. He averred that his
regiment does not have any command relation with
either the 7th Infantry Division or the 24th Infantry
Battalion.22

xxxx
Kaming lima (ako, si Reynaldo, si Sherlyn, si Karen at
si [Merino]) ang dinala sa Limay. Sinakay ako, si
Reynaldo, si Sherlyn at si [Merino] sa isang stainless
na jeep. Si Karen ay isinakay sa itim na sasakyan ni
Donald Caigas. x x x x
xxxx
66. Saan pa kayo dinala mula sa Limay, Bataan?
Mula sa Limay, kaming 5 (ako, si Reynaldo, si Sherlyn,
Si Karen at si Manuel) ay dinala sa isang safehouse sa
Zambales, tabi ng dagat. x x x x (underscoring
supplied; italics and emphasis in the original)
On rebuttal, Lt. Col. Anotado and Col. Eduardo Boyles
Davalan were called to the witness stand.

By Decision of September 17, 2008,23 the appellate

court granted the Motion for Reconsideration in CAG.R. SP No. 95303 (the habeas corpus case) and
ordered the immediate release of Sherlyn, Karen and
Merino in CA-G.R. SP No. 00002 (the amparo case).
Thus it disposed:
WHEREFORE, in CA-G.R. SP NO. 95303 (Habeas
Corpus case), the Motion for Reconsideration is
GRANTED.
Accordingly, in both CA-G.R. SP NO. 95303 (Habeas
Corpus case) and in CA-G.R. SP NO. 00002 (Amparo
case), the respondents are thereby ordered to
immediately RELEASE, or cause the release, from
detention the persons of Sher[lyn] Cadapan, Karen
Empeo and Manuel Merino.

Respondent Director General Avelino Razon is hereby

ordered to resume [the] PNPs unfinished investigation
so that the truth will be fully ascertained and
appropriate charges filed against those truly
responsible.
SO ORDERED.
In reconsidering its earlier Decision in the habeas
corpus case, the appellate court relied heavily on the
testimony of Manalo in this wise:
With the additional testimony of Raymond Manalo, the
petitioners have been able to convincingly prove the
fact of their detention by some elements in the
military. His testimony is a first hand account that
military and civilian personnel under the 7th Infantry
Division were responsible for the abduction of Sherlyn
Cadapan, Karen Empeo and Manuel Merino. He also
confirmed the claim of Oscar Leuterio that the latter
was detained in Fort Magsaysay. It was there where he
(Leuterio) saw Manuel Merino.
His testimony that Leuterio saw Manuel Merino in Fort
Magsaysay may be hearsay but not with respect to his
meeting with, and talking to, the three desaparecidos.
His testimony on those points was no hearsay.
Raymond Manalo saw the three with his very own eyes
as they were detained and tortured together. In fact,
he claimed to be a witness to the burning of Manuel
Merino. In the absence of confirmatory proof, however,
the Court will presume that he is still alive.
The testimony of Raymond Manalo can no longer be
ignored and brushed aside. His narration and those of
the earlier witnesses, taken together, constitute more
than substantial evidence warranting an order that the

three be released from detention if they are not being

held for a lawful cause. They may be moved from
place to place but still they are considered under
detention and custody of the respondents.
His testimony was clear, consistent and convincing. x x
x.
xxxx
The additional testimonies of Lt. Col. Felipe Anotado
and Col. Eduardo Boyles Davalan were of no help
either. Again, their averments were the same negative
ones which cannot prevail over those of Raymond
Manalo. Indeed, Camp Tecson has been utilized as a
training camp for army scout rangers. Even Raymond
Manalo noticed it but the camps use for purposes
other than training cannot be discounted.
xxxx
In view of the foregoing, there is now a clear and
credible evidence that the three missing persons,
[Sherlyn, Karen and Merino], are being detained in
military camps and bases under the 7th Infantry
Division. Being not held for a lawful cause, they should
be immediately released from detention. (italic in the
original; emphasis and underscoring supplied)
Meanwhile, in the amparo case, the appellate court
deemed it a superfluity to issue any inspection order
or production order in light of the release order. As it
earlier ruled in the habeas corpus case, it found that
the three detainees right to life, liberty and security
was being violated, hence, the need to immediately
release them, or cause their release. The appellate
court went on to direct the PNP to proceed further with

its investigation since there were enough leads as

indicated in the records to ascertain the truth and file
the appropriate charges against those responsible for
the abduction and detention of the three.

term "immediately" does not mean that that it is

automatically executory. There is nothing in the Rule
on the Writ of Amparo which states that a decision
rendered is immediately executory. x x x.

Lt. Col. Rogelio Boac, et al. challenged before this

Court, via petition for review, the September 17, 2008
Decision of the appellate court. This was docketed as
G.R. Nos. 184461-62, the first above-captioned casesubject of the present Decision.

Neither did the decision become final and executory

considering that both parties questioned the
Decision/Resolution before the Supreme Court. x x x.

Erlinda Cadapan and Concepcion Empeo, on the other

hand, filed their own petition for review also
challenging the same September 17, 2008 Decision of
the appellate court only insofar as the amparo aspect
is concerned. Their petition, docketed as G.R. No.
179994, was redocketed as G.R. No. 184495, the
second above-captioned case.
By Resolution of June 15, 2010, the Court ordered the
consolidation of G.R. No. 184495 with G.R. Nos.
1844461-62.24

Besides, the Court has no basis. The petitioners did

not file a motion for execution pending appeal under
Section 2 of Rule 39. There being no motion, the Court
could not have issued, and did not issue, a writ of
execution. x x x. (underscoring supplied)
Via a petition for certiorari filed on March 30, 2009
before this Court, Erlinda Cadapan and Concepcion
Empeo challenged the appellate courts March 5,
2009 Resolution denying their motion to cite
respondents in contempt. The petition was docketed
as G.R. No. 187109, the last above-captioned case
subject of the present Decision.

Meanwhile, Erlinda Cadapan and Concepcion Empeo

filed before the appellate court a Motion to Cite
Respondents in Contempt of Court for failure of the
respondents in the amparo and habeas corpus cases
to comply with the directive of the appellate court to
immediately release the three missing persons. By
Resolution of March 5, 2009,25 the appellate court
denied the motion, ratiocinating thus:

Only Lt. Col. Anotado and Lt. Mirabelle remained of the

original respondents in the amparo and habeas corpus
cases as the other respondents had retired from
government service.26 The AFP has denied that Arnel
Enriquez was a member of the Philippine Army.27 The
whereabouts of Donald Caigas remain unknown.28

While the Court, in the dispositive portion, ordered the

respondents "to immediately RELEASE, or cause the
release, from detention the persons of Sherlyn
Cadapan, Karen Empeo and Manuel Merino," the
decision is not ipso facto executory. The use of the

I.
THE
COURT
OF
APPEALS
GROSSLY
MISAPPRECIATED THE VALUE OF THE TESTIMONY OF
RAYMOND MANALO.

In G.R. Nos. 184461-62, petitioners posit as follows:

II. THE PETITION[S] FOR HABEAS CORPUS AND WRIT

OF AMPARO SHOULD BE DISMISSED BECAUSE
RESPONDENTS FAILED TO PROVE BY THE REQUIRED
QUANTUM OF EVIDENCE THAT PETITIONERS HAVE
SHERLYN CADAPAN, KAREN EMPEO AND MANUEL
MERINO ARE IN THEIR CUSTODY.
III. PETITIONERS DENIALS PER SE SHOULD NOT
HAVE BEEN TAKEN AGAINST THEM BECAUSE THEY
DID NOT REALLY HAVE ANY INVOLVEMENT IN THE
ALLEGED ABDUCTION; MOREOVER, THE SUPPOSED
INCONSISTENCIES IN THEIR TESTIMONIES ARE ON
POINTS IRRELEVANT TO THE PETITION.
IV. THE DISPOSITIVE PORTION OF THE ASSAILED
DECISION IS VAGUE AND INCONGRUENT WITH THE
FINDINGS OF THE COURT OF APPEALS.
V. THE COURT OF APPEALS IGNORED AND FAILED TO
RULE UPON THE FATAL PROCEDURAL INFIRMITIES IN
THE PETITION FOR WRIT OF AMPARO.29

echelon of powers of the Armed Forces of the

Philippines, Philippine Army and the Seventh Infantry
Division of the Philippine Army to enforcibly disappear
[sic] the aggrieved parties
9. The Court of Appeals erred in dropping President
Gloria Macapagal Arroyo as party respondent in this
case;
10. The Court of Appeals erred in not finding that
President Gloria Macapagal Arroyo had command
responsibility in the enforced disappearance and
continued detention of the three aggrieved parties
11. The Court of Appeals erred in not finding that the
Armed Forces Chief of Staff then Hermogenes Esperon
and the Present Chief of Staff as having command
responsibility in the enforced disappearance and
continued detention of the three aggrieved parties30
In G.R. No. 187109, petitioners raise the following
issues:

In G.R. No. 184495, petitioners posit as follows:

5. The Court of Appeals erred in not granting the
Interim Relief for Inspection of Places;
6. The Court of Appeals erred in not granting the
Interim Relief for Production of Documents;
7. The Court of Appeals erred in not finding that the
Police Director Gen. Avelino Razon did not make
extraordinary diligence in investigating the enforced
disappearance of the aggrieved parties
8. The Court of Appeals erred in not finding that this
was not the command coming from the highest

[1] Whether the decision in the Court of Appeals has

become final and executory[.]
[2] Whetherthere is a need to file a motion for
execution in a Habeas Corpus decision or in an
Amparo decision[.]
[3] Whetheran appeal can stay the decision of a
Habeas Corpus [case] [or] an Amparo case[.]31
Essentially, the consolidated petitions present three
primary issues, viz: a) whether the testimony of
Raymond Manalo is credible; b) whether the chief of
the AFP, the commanding general of the Philippine

Army, as well as the heads of the concerned units had

command responsibility over the abduction and
detention of Sherlyn, Karen and Merino; and c)
whether there is a need to file a motion for execution
to cause the release of the aggrieved parties.
G.R. Nos. 184461-62
Petitioners Lt. Col. Boac, et al. contend that the
appellate court erred in giving full credence to the
testimony of Manalo who could not even accurately
describe the structures of Camp Tecson where he
claimed to have been detained along with Sherlyn,
Karen and Merino. They underscore that Camp Tecson
is not under the jurisdiction of the 24th Infantry
Batallion and that Manalos testimony is incredible and
full of inconsistencies.32
In Secretary of National Defense v. Manalo,33 an
original petition for Prohibition, Injunction and
Temporary Restraining Order which was treated as a
petition under the Amparo Rule, said Rule having
taken effect during the pendency of the petition, the
Court ruled on the truthfulness and veracity of the
personal account of Manalo which included his
encounter with Sherlyn, Kara and Merino while on
detention. Thus it held:
We affirm the factual findings of the appellate court,
largely based on respondent Raymond Manalos
affidavit and testimony, viz:

Raymonds affidavit and testimony were corroborated

by the affidavit of respondent Reynaldo Manalo. The
testimony and medical reports prepared by forensic
specialist Dr. Molino, and the pictures of the scars left
by the physical injuries inflicted on respondents, also
corroborate respondents accounts of the torture they
endured while in detention. Respondent Raymond
Manalos familiarity with the facilities in Fort
Magsaysay such as the "DTU," as shown in his
testimony and confirmed by Lt. Col. Jimenez to be the
"Division Training Unit," firms up respondents story
that they were detained for some time in said military
facility. (citations omitted; emphasis and underscoring
supplied)
On Manalos having allegedly encountered Sherlyn,
Karen and Merino while on detention, the Court in the
immediately cited case synthesized his tale as follows:
The next day, Raymonds chains were removed and he
was ordered to clean outside the barracks. It was then
he learned that he was in a detachment of the
Rangers. There were many soldiers, hundreds of them
were training. He was also ordered to clean inside the
barracks. In one of the rooms therein, he met Sherlyn
Cadapan from Laguna. She told him that she was a
student of the University of the Philippines and was
abducted in Hagonoy, Bulacan. She confided that she
had been subjected to severe torture and raped. She
was crying and longing to go home and be with her
parents. During the day, her chains were removed and
she was made to do the laundry.

x x x x.
We reject the claim of petitioners that respondent
Raymond Manalos statements were not corroborated
by other independent and credible pieces of evidence.

After a week, Reynaldo was also brought to Camp

Tecson. Two days from his arrival, two other captives,
Karen Empeo and Manuel Merino, arrived. Karen and
Manuel were put in the room with "Allan" whose name

they later came to know as Donald Caigas, called

"master" or "commander" by his men in the 24th
Infantry Battalion. Raymond and Reynaldo were put in
the adjoining room. At times, Raymond and Reynaldo
were threatened, and Reynaldo was beaten up. In the
daytime, their chains were removed, but were put
back on at night. They were threatened that if they
escaped, their families would all be killed.
On or about October 6, 2006, Hilario arrived in Camp
Tecson. He told the detainees that they should be
thankful they were still alive and should continue along
their "renewed life." Before the hearing of November 6
or 8, 2006, respondents were brought to their parents
to instruct them not to attend the hearing. However,
their parents had already left for Manila. Respondents
were brought back to Camp Tecson. They stayed in
that camp from September 2006 to November 2006,
and Raymond was instructed to continue using the
name "Oscar" and holding himself out as a military
trainee. He got acquainted with soldiers of the 24th
Infantry Battalion whose names and descriptions he
stated in his affidavit.
On November 22, 2006, respondents, along with
Sherlyn, Karen, and Manuel, were transferred to a
camp of the 24th Infantry Battalion in Limay, Bataan.
There were many huts in the camp. They stayed in
that camp until May 8, 2007. Some soldiers of the
battalion stayed with them. While there, battalion
soldiers whom Raymond knew as "Mar" and "Billy"
beat him up and hit him in the stomach with their
guns. Sherlyn and Karen also suffered enormous
torture in the camp. They were all made to clean,
cook, and help in raising livestock.

Raymond recalled that when "Operation Lubog" was

launched, Caigas and some other soldiers brought him
and Manuel with them to take and kill all sympathizers
of the NPA. They were brought to Barangay Bayanbayanan, Bataan where he witnessed the killing of an
old man doing kaingin. The soldiers said he was killed
because he had a son who was a member of the NPA
and he coddled NPA members in his house. Another
time, in another "Operation Lubog," Raymond was
brought to Barangay Orion in a house where NPA men
stayed. When they arrived, only the old man of the
house who was sick was there. They spared him and
killed only his son right before Raymonds eyes.
From Limay, Raymond, Reynaldo, Sherlyn, Karen, and
Manuel were transferred to Zambales, in a safehouse
near the sea. Caigas and some of his men stayed with
them. A retired army soldier was in charge of the
house. Like in Limay, the five detainees were made to
do errands and chores. They stayed in Zambales from
May 8 or 9, 2007 until June 2007.
In June 2007, Caigas brought the five back to the
camp in Limay. Raymond, Reynaldo, and Manuel were
tasked to bring food to detainees brought to the camp.
Raymond narrated what he witnessed and experienced
in the camp, viz:
x x x x.34 (emphasis and underscoring supplied)
The Court takes judicial notice of its Decision in the
just cited Secretary of National Defense v. Manalo35
which assessed the account of Manalo to be a candid
and forthright narrative of his and his brother
Reynaldos abduction by the military in 2006; and of
the corroborative testimonies, in the same case, of
Manalos brother Reynaldo and a forensic specialist, as

well as Manalos graphic description of the detention

area. There is thus no compelling reason for the Court,
in the present case, to disturb its appreciation in
Manalos testimony. The outright denial of petitioners
Lt. Col. Boac, et al. thus crumbles.

they were "concerned with Manuel Merino" as basis for

filing the petition on his behalf.37

Petitioners go on to point out that the assailed

Decision of the appellate court is "vague and
incongruent with [its] findings" for, so they contend,
while the appellate court referred to the perpetrators
as "misguided and self-righteous civilian and military
elements of the 7th Infantry Division," it failed to
identify who these perpetrators are. Moreover,
petitioners assert that Donald Caigas and Arnel
Enriquez are not members of the AFP. They
furthermore point out that their co-petitioners
Generals Esperon, Tolentino and Palparan have already
retired from the service and thus have no more control
of any military camp or base in the country.36

The petition may be filed by the aggrieved party or by

any qualified person or entity in the following order:

Section 2 of the Rule on the Writ of Amparo38

provides:

(a) Any member of the immediate family, namely: the

spouse, children and parents of the aggrieved party;
(b) Any ascendant, descendant or collateral relative of
the aggrieved party within the fourth civil degree of
consanguinity or affinity, in default of those mentioned
in the preceding paragraph; or
(c) Any concerned citizen, organization, association or
institution, if there is no known member of the
immediate family or relative of the aggrieved party.

There is nothing vague and/or incongruent about the

categorical order of the appellate court for petitioners
to release Sherlyn, Karen and Merino. In its discourse,
the appellate court merely referred to "a few
misguided self-righteous people who resort to the
extrajudicial process of neutralizing those who
disagree with the countrys democratic system of
government." Nowhere did it specifically refer to the
members of the 7th Infantry Division as the
"misguided self-righteous" ones.

Indeed, the parents of Sherlyn and Karen failed to

allege that there were no known members of the
immediate family or relatives of Merino. The exclusive
and successive order mandated by the above-quoted
provision must be followed. The order of priority is not
without reason"to prevent the indiscriminate and
groundless filing of petitions for amparo which may
even prejudice the right to life, liberty or security of
the aggrieved party."39

Petitioners finally point out that the parents of Sherlyn

and Karen do not have the requisite standing to file
the amparo petition on behalf of Merino. They call
attention to the fact that in the amparo petition, the
parents of Sherlyn and Karen merely indicated that

The Court notes that the parents of Sherlyn and Karen

also filed the petition for habeas corpus on Merinos
behalf. No objection was raised therein for, in a habeas
corpus proceeding, any person may apply for the writ
on behalf of the aggrieved party.40

It is thus only with respect to the amparo petition that

the parents of Sherlyn and Karen are precluded from
filing the application on Merinos behalf as they are not
authorized parties under the Rule.

amparo proceeding, a brief discussion of the concept

of command responsibility and its application insofar
as amparo cases already decided by the Court is in
order.

G.R. No. 184495

Rubrico v. Macapagal Arroyo43 expounded on the

concept of command responsibility as follows:

Preliminarily, the Court finds the appellate courts

dismissal of the petitions against then President
Arroyo well-taken, owing to her immunity from suit at
the time the habeas corpus and amparo petitions were
filed.41
Settled is the doctrine that the President, during his
tenure of office or actual incumbency, may not be sued
in any civil or criminal case, and there is no need to
provide for it in the Constitution or law. It will degrade
the dignity of the high office of the President, the Head
of State, if he can be dragged into court litigations
while serving as such. Furthermore, it is important
that he be freed from any form of harassment,
hindrance or distraction to enable him to fully attend
to the performance of his official duties and functions.
Unlike the legislative and judicial branch, only one
constitutes the executive branch and anything which
impairs his usefulness in the discharge of the many
great and important duties imposed upon him by the
Constitution necessarily impairs the operation of the
Government. x x x 42

The evolution of the command responsibility doctrine

finds its context in the development of laws of war and
armed combats. According to Fr. Bernas, "command
responsibility," in its simplest terms, means the
"responsibility of commanders for crimes committed
by subordinate members of the armed forces or other
persons subject to their control in international wars or
domestic
conflict."
In
this
sense,
command
responsibility is properly a form of criminal complicity.
The Hague Conventions of 1907 adopted the doctrine
of command responsibility, foreshadowing the presentday precept of holding a superior accountable for the
atrocities committed by his subordinates should he be
remiss in his duty of control over them. As then
formulated, command responsibility is "an omission
mode of individual criminal liability," whereby the
superior is made responsible for crimes committed by
his subordinates for failing to prevent or punish the
perpetrators (as opposed to crimes he ordered).
(citations omitted; emphasis in the original;
underscoring supplied)44

Parenthetically, the petitions are bereft of any

allegation that then President Arroyo permitted,
condoned or performed any wrongdoing against the
three missing persons.

It bears stressing that command responsibility is

properly a form of criminal complicity,45 and thus a
substantive
rule
that
points
to
criminal
or
administrative liability.

On the issue of whether a military commander may be

held liable for the acts of his subordinates in an

An amparo proceeding is not criminal in nature nor

does it ascertain the criminal liability of individuals or

entities involved. Neither does it partake of a civil or

administrative suit.46 Rather, it is a remedial measure
designed to direct specified courses of action to
government agencies to safeguard the constitutional
right to life, liberty and security of aggrieved
individuals.47
Thus Razon Jr. v. Tagitis 48 enlightens:
[An amparo proceeding] does nor determine guilt nor
pinpoint criminal culpability for the disappearance
[threats thereof or extrajudicial killings]; it determines
responsibility, or at least accountability, for the
enforced disappearancefor purposes of imposing the
appropriate remedies to address the disappearance
49 (emphasis and underscoring supplied)
Further,
Tagitis
defines
what
"responsibility" and "accountability," viz:

constitutes

x x x. Responsibility refers to the extent the actors

have been established by substantial evidence to have
participated in whatever way, by action or omission, in
an enforced disappearance, as a measure of the
remedies this Court shall craft, among them, the
directive to file the appropriate criminal and civil cases
against the responsible parties in the proper courts.
Accountability, on the other hand, refers to the
measure of remedies that should be addressed to
those who exhibited involvement in the enforced
disappearance without bringing the level of their
complicity to the level of responsibility defined above;
or who are imputed with knowledge relating to the
enforced disappearance and who carry the burden of
disclosure; or those who carry, but have failed to
discharge, the burden of extraordinary diligence in the
investigation of the enforced disappearance. In all

these cases, the issuance of the Writ of Amparo is

justified by our primary goal of addressing the
disappearance, so that the life of the victim is
preserved and his liberty and security are restored.50
(emphasis in the original; underscoring supplied)
Rubrico categorically
command responsibility
criminal liability.51 The
to this pronouncement
concerned.

denies the application of

in amparo cases to determine
Court maintains its adherence
as far as amparo cases are

Rubrico, however, recognizes a preliminary yet limited

application of command responsibility in amparo cases
to instances of determining the responsible or
accountable individuals or entities that are duty-bound
to abate any transgression on the life, liberty or
security of the aggrieved party.
If command responsibility were to be invoked and
applied to these proceedings, it should, at most, be
only to determine the author who, at the first
instance, is accountable for, and has the duty to
address,
the
disappearance
and
harassments
complained of, so as to enable the Court to devise
remedial measures that may be appropriate under the
premises to protect rights covered by the writ of
amparo.
As
intimated
earlier,
however,
the
determination should not be pursued to fix criminal
liability on respondents preparatory to criminal
prosecution, or as a prelude to administrative
disciplinary proceedings under existing administrative
issuances, if there be any.52 (emphasis and
underscoring supplied)
In other words, command responsibility may be
loosely applied in amparo cases in order to identify

those accountable individuals that have the power to

effectively implement whatever processes an amparo
court would issue.53 In such application, the amparo
court does not impute criminal responsibility but
merely pinpoint the superiors it considers to be in the
best position to protect the rights of the aggrieved
party.

The petitions against Generals Esperon, Razon and

Tolentino should be dismissed for lack of merit as
there is no showing that they were even remotely
accountable and responsible for the abduction and
continued detention of Sherlyn, Karen and Merino.
G.R. No. 187109.

Such identification of the responsible and accountable

superiors may well be a preliminary determination of
criminal liability which, of course, is still subject to
further investigation by the appropriate government
agency.
Relatedly, the legislature came up with Republic Act
No. 985154 (RA 9851) to include command
responsibility as a form of criminal complicity in crimes
against international humanitarian law, genocide and
other crimes.55 RA 9851 is thus the substantive law
that definitively imputes criminal liability to those
superiors who, despite their position, still fail to take
all necessary and reasonable measures within their
power to prevent or repress the commission of illegal
acts or to submit these matters to the competent
authorities for investigation and prosecution.
The Court finds that the appellate court erred when it
did not specifically name the respondents that it found
to be responsible for the abduction and continued
detention of Sherlyn, Karen and Merino. For, from the
records, it appears that the responsible and
accountable individuals are Lt. Col. Anotado, Lt.
Mirabelle, Gen. Palparan, Lt. Col. Boac, Arnel Enriquez
and Donald Caigas. They should thus be made to
comply with the September 17, 2008 Decision of the
appellate court to IMMEDIATELY RELEASE Sherlyn,
Karen and Merino.

Contrary to the ruling of the appellate court, there is

no need to file a motion for execution for an amparo
or habeas corpus decision. Since the right to life,
liberty and security of a person is at stake, the
proceedings should not be delayed and execution of
any decision thereon must be expedited as soon as
possible since any form of delay, even for a day, may
jeopardize the very rights that these writs seek to
immediately protect.
The Solicitor Generals argument that the Rules of
Court supplement the Rule on the Writ of Amparo is
misplaced. The Rules of Court only find suppletory
application in an amparo proceeding if the Rules
strengthen, rather than weaken, the procedural
efficacy of the writ. As it is, the Rule dispenses with
dilatory motions in view of the urgency in securing the
life, liberty or security of the aggrieved party. Suffice it
to state that a motion for execution is inconsistent
with the extraordinary and expeditious remedy being
offered by an amparo proceeding.
In fine, the appellate court erred in ruling that its
directive to immediately release Sherlyn, Karen and
Merino was not automatically executory. For that
would defeat the very purpose of having summary
proceedings56
in
amparo
petitions.
Summary
proceedings, it bears emphasis, are immediately

executory without prejudice to further appeals that

may be taken therefrom.57

for any responsibilities and/or accountabilities they

may have incurred during their incumbencies.

WHEREFORE, in light of the foregoing discussions, the

Court renders the following judgment:

Let copies of this Decision and the records of these

cases be furnished the Department of Justice (DOJ),
the Philippine National Police (PNP) and the Armed
Forces of the Philippines (AFP) for further investigation
to
determine
the
respective
criminal
and
administrative liabilities of respondents.

1. The Petitions in G.R. Nos. 184461-62 and G.R. No.

184495 are DISMISSED. The Decision of the Court of
Appeals dated September 17, 2008 is AFFIRMED with
modification in that respondents in G.R. No. 184495,
namely Lt. Col. Felipe Anotado, Lt. Francis Mirabelle
Samson, Gen. Jovito Palparan, Lt. Col. Rogelio Boac,
Arnel Enriquez and Donald Caigas are ordered to
immediately release Sherlyn Cadapan, Karen Empeo
and Manuel Merino from detention.

All the present petitions are REMANDED to the Court

of Appeals for appropriate action, directed at
monitoring of the DOJ, PNP and AFP investigations and
the validation of their results.
SO ORDERED.

The petitions against Generals Esperon, Razon and

Tolentino are DISMISSED.
2. The petition in G.R. No. 187109 is GRANTED. The
named respondents are directed to forthwith comply
with the September 17, 2008 Decision of the appellate
court. Owing to the retirement and/or reassignment to
other places of assignment of some of the respondents
herein and in G.R. No. 184495, the incumbent
commanding general of the 7th Infantry Division and
the incumbent battalion commander of the 24th
Infantry Battalion, both of the Philippine Army, are
enjoined to fully ensure the release of Sherlyn
Cadapan, Karen Empeo and Manuel Merino from
detention.1awphi1
Respondents Lt. Col. Felipe Anotado, Lt. Francis
Mirabelle Samson, Gen. Jovito Palparan, Lt. Col.
Rogelio Boac, Arnel Enriquez and Donald Caigas shall
remain personally impleaded in the petitions to answer

G.R. No. 184398

February 25, 2010

SILKAIR
(SINGAPORE)
PTE.
LTD.,
COMMISSIONER OF INTERNAL REVENUE,

versus

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review on Certiorari,
assailing the May 27, 2008 Decision[1] and the
subsequent September 5, 2008 Resolution[2] of the
Court of Tax Appeals (CTA) En Banc in C.T.A. E.B. No.
267. The decision dated May 27, 2008 denied the
petition for review filed by petitioner Silkair
(Singapore) Pte. Ltd., on the ground, among others, of
failure to prove that it was authorized to operate in the
Philippines for the period June to December 2000,
while the Resolution dated September 5, 2008 denied
petitioners motion for reconsideration for lack of merit.
The antecedent facts are as follows:

Petitioner, a foreign corporation organized under the

laws of Singapore with a Philippine representative
office in Cebu City, is an online international carrier
plying the Singapore-Cebu-Singapore and SingaporeCebu-Davao-Singapore routes.
Respondent Commissioner of Internal Revenue is
impleaded herein in his official capacity as head of the
Bureau of Internal Revenue (BIR), an attached agency
of the Department of Finance which is duly authorized
to decide, approve, and grant refunds and/or tax
credits of erroneously paid or illegally collected
internal revenue taxes.[3]
On June 24, 2002, petitioner filed with the BIR an
administrative claim for the refund of Three Million
Nine Hundred Eighty-Three Thousand Five Hundred
Ninety
Pesos
and
Forty-Nine
Centavos
(P3,983,590.49) in excise taxes which it allegedly
erroneously paid on its purchases of aviation jet fuel
from Petron Corporation (Petron) from June to
December 2000. Petitioner used as basis therefor BIR
Ruling No. 339-92 dated December 1, 1992, which
declared
that
the
petitioners
Singapore-CebuSingapore route is an international flight by an
international carrier and that the petroleum products
purchased by the petitioner should not be subject to
excise taxes under Section 135 of Republic Act No.
8424 or the 1997 National Internal Revenue Code
(NIRC).
Since the BIR took no action on petitioners claim for
refund, petitioner sought judicial recourse and filed on
June 27, 2002, a petition for review with the CTA
(docketed as CTA Case No. 6491), to prevent the lapse
of the two-year prescriptive period within which to
judicially claim a refund under Section 229[4] of the

NIRC. Petitioner invoked its exemption from payment

of excise taxes in accordance with the provisions of
Section 135(b) of the NIRC, which exempts from
excise taxes the entities covered by tax treaties,
conventions and other international agreements;
provided that the country of said carrier or exempt
entity likewise exempts from similar taxes the
petroleum products sold to Philippine carriers or
entities. In this regard, petitioner relied on the
reciprocity clause under Article 4(2) of the Air
Transport Agreement entered between the Republic of
the Philippines and the Republic of Singapore.
Section 135(b) of the NIRC provides:
SEC. 135. Petroleum Products Sold to International
Carriers and Exempt Entities or Agencies. Petroleum
products sold to the following are exempt from excise
tax:
xxxx
(b)
Exempt entities or agencies covered by tax
treaties,
conventions
and
other
international
agreements for their use or consumption: Provided,
however, That the country of said foreign international
carrier or exempt entities or agencies exempts from
similar taxes petroleum products sold to Philippine
carriers, entities or agencies; x x x.
Article 4(2) of the Air Transport Agreement between
the Philippines and Singapore, in turn, provides:
ART. 4. x x x.
xxxx

(2) Fuel, lubricants, spare parts, regular equipment

and aircraft stores introduced into, or taken on board
aircraft in the territory of one Contracting Party by, or
on behalf of, a designated airline of the other
Contracting Party and intended solely for use in the
operation of the agreed services shall, with the
exception of charges corresponding to the service
performed, be exempt from the same customs duties,
inspection fees and other duties or taxes imposed in
the territory of the first Contracting Party, even when
these supplies are to be used on the parts of the
journey performed over the territory of the
Contracting Party in which they are introduced into or
taken on board. The materials referred to above may
be required to be kept under customs supervision and
control.
In a Decision[5] dated July 27, 2006, the CTA First
Division found that petitioner was qualified for tax
exemption under Section 135(b) of the NIRC, as long
as the Republic of Singapore exempts from similar
taxes petroleum products sold to Philippine carriers,
entities or agencies under Article 4(2) of the Air
Transport Agreement quoted above. However, it ruled
that petitioner was not entitled to the excise tax
exemption for failure to present proof that it was
authorized to operate in the Philippines during the
period material to the case due to the non-admission
of some of its exhibits, which were merely
photocopies, including Exhibit A which was petitioners
Certificate of Registration with the Securities and
Exchange Commission (SEC) and Exhibits P, Q and R
which were its operating permits issued by the Civil
Aeronautics Board (CAB) to fly the Singapore-Cebu-

Singapore
and
Singapore-Cebu-Davao-Singapore
routes for the period October 1999 to October 2000.
Petitioner filed a motion for reconsideration but the
CTA First Division denied the same in a Resolution[6]
dated January 17, 2007.
Thereafter, petitioner elevated the case before the CTA
En Banc via a petition for review, which was initially
denied in a Resolution[7] dated May 17, 2007 for
failure of petitioner to establish its legal authority to
appeal the Decision dated July 27, 2006 and the
Resolution dated January 17, 2007 of the CTA First
Division.
Undaunted, petitioner moved for reconsideration. In
the Resolution[8] dated September 19, 2007, the CTA
En Banc set aside its earlier resolution dismissing the
petition for review and reinstated the same. It also
required respondent to file his comment thereon.
On May 27, 2008, the CTA En Banc promulgated the
assailed Decision and denied the petition for review,
thus:
WHEREFORE, premises considered, the instant petition
is hereby DENIED for lack of merit. The assailed
Decision dated July 27, 2006 dismissing the instant
petition on ground of failure of petitioner to prove that
it was authorized to operate in the Philippines for the
period from June to December 2000, is hereby
AFFIRMED WITH MODIFICATION that petitioner is
further not found to be the proper party to file the
instant claim for refund.[9]

In a separate Concurring and Dissenting Opinion,[10]

CTA Presiding Justice Ernesto D. Acosta opined that
petitioner was exempt from the payment of excise
taxes based on Section 135 of the NIRC and Article 4
of the Air Transport Agreement between the
Philippines and Singapore. However, despite said
exemption, petitioners claim for refund cannot be
granted since it failed to establish its authority to
operate in the Philippines during the period subject of
the claim. In other words, Presiding Justice Acosta
voted to uphold in toto the Decision of the CTA First
Division.
Petitioner again filed a motion for reconsideration
which was denied in the Resolution dated September
5, 2008. Hence, the instant petition for review on
certiorari, which raises the following issues:

of the President, pursuant to Sec. 10 of R.A. 776, as

amended by P.D. 1462.[11]
Moreover, petitioner argues that Exhibits P, Q and R,
which it previously filed with the CTA, were merely
flight schedules submitted to the CAB, and were not
its operating permits. Petitioner adds that it was
through inadvertence that only photocopies of these
exhibits were introduced during the hearing.
Petitioner also asserts that despite its failure to
present the original copy of its SEC Registration during
the hearings, the CTA should take judicial notice of its
SEC Registration since the same was already offered
and admitted in evidence in similar cases pending
before the CTA.

I
Whether or not petitioner has substantially proven its
authority to operate in the Philippines.
II. Whether or not petitioner is the proper party to
claim for the refund/tax credit of excise taxes paid on
aviation fuel.
Petitioner maintains that it has proven its authority to
operate in the Philippines with the admission of its
Foreign Air Carriers Permit (FACP) as Exhibit B before
the CTA, which, in part, reads:
[T]his Board RESOLVED, as it hereby resolves to
APPROVE the petition of SILKAIR (SINGAPORE) PTE
LTD., for issuance of a regular operating permit
(Foreign Air Carriers Permit), subject to the approval

Petitioner further claims that the instant case involves

a clear grant of tax exemption to it by law and by
virtue of an international agreement between two
governments. Consequently, being the entity which
was granted the tax exemption and which made the
erroneous tax payment of the excise tax, it is the
proper party to file the claim for refund.
In his Comment[12] dated March 26, 2009,
respondent states that the admission in evidence of
petitioners FACP does not change the fact that
petitioner failed to formally offer in evidence the
original copies or certified true copies of Exhibit A, its
SEC Registration; and Exhibits P, Q and R, its
operating permits issued by the CAB to fly its
Singapore-Cebu-Singapore
and
Singapore-CebuDavao-Singapore routes for the period October 1999
to October 2000. Respondent emphasizes that
petitioners failure to present these pieces of evidence

amounts to its failure to prove its authority to operate

in the Philippines.

non-admission of Exhibits A, P, Q and R, wherein it

said that:

Likewise, respondent maintains that an excise tax,

being an indirect tax, is the direct liability of the
manufacturer or producer. Respondent reiterates that
when an excise tax on petroleum products is added to
the cost of goods sold to the buyer, it is no longer a
tax but becomes part of the price which the buyer has
to pay to obtain the article. According to respondent,
petitioner cannot seek reimbursement for its alleged
erroneous payment of the excise tax since it is neither
the entity required by law nor the entity statutorily
liable to pay the said tax.

Each and every case is distinct and separate in

character and matter although similar parties may
have been involved. Thus, in a pending case, it is not
mandatory upon the courts to take judicial notice of
pieces of evidence which have been offered in other
cases even when such cases have been tried or
pending in the same court. Evidence already presented
and admitted by the court in a previous case cannot
be adopted in a separate case pending before the
same court without the same being offered and
identified anew.

After careful examination of the records, we resolve to

deny the petition.

The cases cited by petitioner concerned similar parties

before the same court but do not cover the same
claim. A court is not compelled to take judicial notice
of pieces of evidence offered and admitted in a
previous case unless the same are properly offered or
have accordingly complied with the requirements on
the rules of evidence. In other words, the evidence
presented in the previous cases cannot be considered
in this instant case without being offered in evidence.

Petitioners assertion that the CTA may take judicial

notice of its SEC Registration, previously offered and
admitted in evidence in similar cases before the CTA,
is untenable.
We quote with approval the disquisition of the CTA En
Banc in its Decision dated May 27, 2008 on the nonadmission of petitioners Exhibits A, P, Q and R, to wit:
Anent petitioners argument that the Court in Division
should have taken judicial notice of the existence of
Exhibit A (petitioners SEC Certificate of Registration),
although not properly identified during trial as this has
previously been offered and admitted in evidence in
similar cases involving the subject matter between the
same parties before this Court, We are in agreement
with the ruling of the Court in Division, as discussed in
its Resolution dated April 12, 2005 resolving
petitioners Motion for Reconsideration on the courts

Moreover, Section 3 of Rule 129 of the Revised Rules

of Court provides that hearing is necessary before
judicial notice may be taken by the courts. To quote
said section:
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.
Furthermore, petitioner admitted that Exhibit A have
(sic) been offered and admitted in evidence in similar
cases involving the same subject matter filed before
this Court. Thus, petitioner is and should have been
aware of the rules regarding the offering of any
documentary evidence before the same can be
admitted in court.
As regards Exhibit[s] P, Q and R, the original copies of
these documents were not presented for comparison
and verification in violation of Section 3 of Rule 130 of
the 1997 Revised Rules of Court. The said section
specifically provides that when the subject of inquiry is
the contents of a document, no evidence shall be
admissible other than the original document itself x x
x. It is an elementary rule in law that documents shall
not be admissible in evidence unless and until the
original copies itself are offered or presented for
verification in cases where mere copies are offered,
save for the exceptions provided for by law. Petitioner
thus cannot hide behind the veil of judicial notice so as
to evade its responsibility of properly complying with
the rules of evidence. For failure of herein petitioner to
compare the subject documents with its originals, the
same may not be admitted. (Emphasis Ours)
Likewise, in the Resolution dated July 15, 2005 of the
Court in Division denying petitioners Omnibus Motion
seeking allowance to compare the denied exhibits with
their certified true copies, the court a quo explained
that:

Petitioner was already given enough time and

opportunity to present the originals or certified true
copies of the denied documents for comparison. When
petitioner received the resolution denying admission of
the provisionally marked exhibits, it should have
submitted the originals or certified true copies for
comparison, considering that these documents were
accordingly available. But instead of presenting these
documents,
petitioner,
in
its
Motion
for
Reconsideration, tried to hide behind the veil of judicial
notice so as to evade its responsibility of properly
applying the rules on evidence. It was even submitted
by petitioner that these documents should be admitted
for they were previously offered and admitted in
similar cases involving the same subject matter and
parties. If this was the case, then, there should have
been no reason for petitioner to seasonably present
the originals or certified true copies for comparison, or
even, marking. x x x.
In view of the foregoing discussion, the Court en banc
finds that indeed, petitioner indubitably failed to
establish its authority to operate in the Philippines for
the period beginning June to December 2000.[13]
This Court finds no reason to depart from the
foregoing findings of the CTA En Banc as petitioner
itself admitted on page 9[14] of its petition for review
that [i]t was through inadvertence that only
photocopies of Exhibits P, Q and R were introduced
during the hearing and that it was rather unfortunate
that petitioner failed to produce the original copy of its
SEC Registration (Exhibit A) for purposes of
comparison with the photocopy that was originally
presented.

Evidently, said documents cannot be admitted in

evidence by the court as the original copies were
neither offered nor presented for comparison and
verification during the trial. Mere identification of the
documents and the markings thereof as exhibits do
not confer any evidentiary weight on them as said
documents have not been formally offered by
petitioner and have been denied admission in evidence
by the CTA.
Furthermore, the documents are not among the
matters which the law mandatorily requires the Court
to take judicial notice of, without any introduction of
evidence, as petitioner would have the CTA do. Section
1, Rule 129 of the Rules of Court reads:
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.
Neither could it be said that petitioners SEC
Registration and operating permits from the CAB are
documents which are of public knowledge, capable of
unquestionable demonstration, or ought to be known
to the judges because of their judicial functions, in
order to allow the CTA to take discretionary judicial
notice of the said documents.[15]

Moreover, Section 3 of the same Rule[16] provides

that a hearing is necessary before judicial notice of
any matter may be taken by the court. This
requirement of a hearing is needed so that the parties
can be heard thereon if such matter is decisive of a
material issue in the case.
Given the above rules, it is clear that the CTA En Banc
correctly did not admit petitioners SEC Registration
and operating permits from the CAB which were
merely photocopies, without the presentation of the
original copies for comparison and verification. As
aptly held by the CTA En Banc, petitioner cannot rely
on the principle of judicial notice so as to evade its
responsibility of properly complying with the rules of
evidence. Indeed, petitioners contention that the said
documents were previously marked in other cases
before the CTA tended to confirm that the originals of
these documents were readily available and their nonpresentation in these proceedings was unjustified.
Consequently, petitioners failure to compare the
photocopied documents with their original renders the
subject exhibits inadmissible in evidence.
Going to the second issue, petitioner maintains that it
is the proper party to claim for refund or tax credit of
excise taxes since it is the entity which was granted
the tax exemption and which made the erroneous tax
payment. Petitioner anchors its claim on Section
135(b) of the NIRC and Article 4(2) of the Air
Transport Agreement between the Philippines and
Singapore. Petitioner also asserts that the tax
exemption, granted to it as a buyer of a certain
product, is a personal privilege which may not be
claimed or availed of by the seller. Petitioner submits
that since it is the entity which actually paid the excise

taxes, then it should be allowed to claim for refund or

tax credit.
At the outset, it is important to note that on two
separate occasions, this Court has already put to rest
the issue of whether or not petitioner is the proper
party to claim for the refund or tax credit of excise
taxes it allegedly paid on its aviation fuel purchases.
[17] In the earlier case of Silkair (Singapore) Pte, Ltd.
v. Commissioner of Internal Revenue,[18] involving
the same parties and the same cause of action but
pertaining to different periods of taxation, we have
categorically held that Petron, not petitioner, is the
proper party to question, or seek a refund of, an
indirect tax, to wit:
The proper party to question, or seek a refund of, an
indirect tax is the statutory taxpayer, the person on
whom the tax is imposed by law and who paid the
same even if he shifts the burden thereof to another.
Section 130 (A) (2) of the NIRC provides that [u]nless
otherwise specifically allowed, the return shall be filed
and the excise tax paid by the manufacturer or
producer before removal of domestic products from
place of production. Thus, Petron Corporation, not
Silkair, is the statutory taxpayer which is entitled to
claim a refund based on Section 135 of the NIRC of
1997 and Article 4(2) of the Air Transport Agreement
between RP and Singapore.
Even if Petron Corporation passed on to Silkair the
burden of the tax, the additional amount billed to
Silkair for jet fuel is not a tax but part of the price
which Silkair had to pay as a purchaser.

In the second Silkair[19] case, the Court explained

that an excise tax is an indirect tax where the burden
can be shifted or passed on to the consumer but the
tax liability remains with the manufacturer or seller.
Thus, the manufacturer or seller has the option of
shifting or passing on the burden of the tax to the
buyer. However, where the burden of the tax is shifted,
the amount passed on to the buyer is no longer a tax
but a part of the purchase price of the goods sold.
Petitioner contends that the clear intent of the
provisions of the NIRC and the Air Transport
Agreement is to exempt aviation fuel purchased by
petitioner as an exempt entity from the payment of
excise tax, whether such is a direct or an indirect tax.
According to petitioner, the excise tax on aviation fuel,
though initially payable by the manufacturer or
producer, attaches to the goods and becomes the
liability of the person having possession thereof.
We do not agree. The distinction between a direct tax
and an indirect tax is relevant to this issue. In
Commissioner of Internal Revenue v. Philippine Long
Distance
Telephone
Company,[20]
this
Court
explained:
Based on the possibility of shifting the incidence of
taxation, or as to who shall bear the burden of
taxation, taxes may be classified into either direct tax
or indirect tax.
In context, direct taxes are those that are exacted
from the very person who, it is intended or desired,
should pay them; they are impositions for which a
taxpayer is directly liable on the transaction or
business he is engaged in.

On the other hand, indirect taxes are those that are

demanded, in the first instance, from, or are paid by,
one person in the expectation and intention that he
can shift the burden to someone else. Stated elsewise,
indirect taxes are taxes wherein the liability for the
payment of the tax falls on one person but the burden
thereof can be shifted or passed on to another person,
such as when the tax is imposed upon goods before
reaching the consumer who ultimately pays for it.
When the seller passes on the tax to his buyer, he, in
effect, shifts the tax burden, not the liability to pay it,
to the purchaser as part of the purchase price of goods
sold or services rendered.
Title VI of the NIRC deals with excise taxes on certain
goods. Section 129 reads as follows:
SEC. 129. Goods Subject to Excise Taxes. Excise taxes
apply to goods manufactured or produced in the
Philippines for domestic sale or consumption or for any
other disposition and to things imported. x x x.
As used in the NIRC, therefore, excise taxes refer to
taxes applicable to certain specified or selected goods
or articles manufactured or produced in the Philippines
for domestic sale or consumption or for any other
disposition and to things imported into the Philippines.
These excise taxes may be considered taxes on
production as they are collected only from
manufacturers and producers. Basically an indirect
tax, excise taxes are directly levied upon the
manufacturer or importer upon removal of the taxable
goods from its place of production or from the customs
custody. These taxes, however, may be actually
passed on to the end consumer as part of the transfer

value or selling price of the goods sold, bartered or

exchanged.[21]
In Maceda v. Macaraig, Jr.,[22] this Court declared:
[I]ndirect taxes are taxes primarily paid by persons
who can shift the burden upon someone else. For
example, the excise and ad valorem taxes that oil
companies pay to the Bureau of Internal Revenue
upon removal of petroleum products from its refinery
can be shifted to its buyer, like the NPC, by adding
them to the cash and/or selling price.
And as noted by us in the second Silkair[23] case
mentioned above:
When Petron removes its petroleum products from its
refinery in Limay, Bataan, it pays the excise tax due
on the petroleum products thus removed. Petron, as
manufacturer or producer, is the person liable for the
payment of the excise tax as shown in the Excise Tax
Returns filed with the BIR. Stated otherwise, Petron is
the taxpayer that is primarily, directly and legally
liable for the payment of the excise taxes. However,
since an excise tax is an indirect tax, Petron can
transfer to its customers the amount of the excise tax
paid by treating it as part of the cost of the goods and
tacking it on the selling price.
As correctly observed by the CTA, this Court held in
Philippine Acetylene Co., Inc. v. Commissioner of
Internal Revenue:
It may indeed be that the economic burden of the tax
finally falls on the purchaser; when it does the tax

becomes part of the price which the purchaser must

pay.

may file an administrative claim for refund or tax

credit, to wit:

Even if the consumers or purchasers ultimately pay for

the tax, they are not considered the taxpayers. The
fact that Petron, on whom the excise tax is imposed,
can shift the tax burden to its purchasers does not
make the latter the taxpayers and the former the
withholding agent.

SEC. 204. Authority of the Commissioner to

Compromise, Abate, and Refund or Credit Taxes. The
Commissioner may

Petitioner, as the purchaser and end-consumer,

ultimately bears the tax burden, but this does not
transform petitioners status into a statutory taxpayer.
Thus, under Section 130(A)(2) of the NIRC, it is
Petron, the taxpayer, which has the legal personality
to claim the refund or tax credit of any erroneous
payment of excise taxes. Section 130(A)(2) states:
SEC. 130. Filing of Return and Payment of Excise Tax
on Domestic Products.
(A) Persons Liable to File a Return, Filing of Return on
Removal and Payment of Tax.
(1)

Persons Liable to File a Return. x x x

(2) Time for Filing of Return and Payment of the Tax.

Unless otherwise specifically allowed, the return shall
be filed and the excise tax paid by the manufacturer or
producer before removal of domestic products from
place of production: x x x. (Emphasis supplied.)
Furthermore, Section 204(C) of the NIRC provides a
two-year prescriptive period within which a taxpayer

xxxx
(C) Credit or refund taxes erroneously or illegally
received or penalties imposed without authority,
refund the value of internal revenue stamps when they
are returned in good condition by the purchaser, and,
in his discretion, redeem or change unused stamps
that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of
taxes or penalties shall be allowed unless the taxpayer
files in writing with the Commissioner a claim for
credit or refund within two (2) years after the payment
of the tax or penalty: Provided, however, That a return
filed showing an overpayment shall be considered as a
written claim for credit or refund. (Emphasis supplied.)
From the foregoing discussion, it is clear that the
proper party to question, or claim a refund or tax
credit of an indirect tax is the statutory taxpayer,
which is Petron in this case, as it is the company on
which the tax is imposed by law and which paid the
same even if the burden thereof was shifted or passed
on to another. It bears stressing that even if Petron
shifted or passed on to petitioner the burden of the
tax, the additional amount which petitioner paid is not
a tax but a part of the purchase price which it had to
pay to obtain the goods.

Time and again, we have held that tax refunds are in

the nature of tax exemptions which represent a loss of
revenue to the government. These exemptions,
therefore, must not rest on vague, uncertain or
indefinite inference, but should be granted only by a
clear and unequivocal provision of law on the basis of
language too plain to be mistaken.[24] Such
exemptions must be strictly construed against the
taxpayer, as taxes are the lifeblood of the government.

SO ORDERED.
G.R. No. 178551

October 11, 2010

ATCI OVERSEAS CORPORATION, AMALIA G.

IKDAL and MINISTRY OF PUBLIC HEALTHKUWAIT versus MA. JOSEFA ECHIN,
CARPIO MORALES, J.:

In fine, we quote from our ruling in the earlier

Silkair[25] case:
The exemption granted under Section 135 (b) of the
NIRC of 1997 and Article 4(2) of the Air Transport
Agreement between RP and Singapore cannot, without
a clear showing of legislative intent, be construed as
including indirect taxes. Statutes granting tax
exemptions must be construed in strictissimi juris
against the taxpayer and liberally in favor of the taxing
authority, and if an exemption is found to exist, it
must not be enlarged by construction.
This calls for the application of the doctrine, stare
decisis et non quieta movere. Follow past precedents
and do not disturb what has been settled. Once a case
has been decided one way, any other case involving
exactly the same point at issue, as in the case at bar,
should be decided in the same manner.[26]
WHEREFORE, the instant petition for review is
DENIED. We AFFIRM the assailed Decision dated May
27, 2008 and the Resolution dated September 5, 2008
of the Court of Tax Appeals En Banc in C.T.A. E.B. No.
267. No pronouncement as to costs.

Josefina Echin (respondent) was hired by petitioner

ATCI Overseas Corporation in behalf of its principal-copetitioner, the Ministry of Public Health of Kuwait (the
Ministry), for the position of medical technologist
under a two-year contract, denominated as a
Memorandum of Agreement (MOA), with a monthly
salary of US$1,200.00.
Under the MOA,[1] all newly-hired employees undergo
a probationary period of one (1) year and are covered
by Kuwaits Civil Service Board Employment Contract
No. 2.
Respondent was deployed on February 17, 2000 but
was terminated from employment on February 11,
2001, she not having allegedly passed the
probationary period.
As the Ministry denied respondents request for
reconsideration, she returned to the Philippines on
March 17, 2001, shouldering her own air fare.
On July 27, 2001, respondent filed with the National
Labor Relations Commission (NLRC) a complaint[2] for
illegal dismissal against petitioner ATCI as the local

recruitment agency, represented by petitioner, Amalia

Ikdal (Ikdal), and the Ministry, as the foreign principal.

severally with the foreign principal for any violation of

the recruitment agreement or contract of employment.

By Decision[3] of November 29, 2002, the Labor

Arbiter, finding that petitioners neither showed that
there was just cause to warrant respondents dismissal
nor that she failed to qualify as a regular employee,
held that respondent was illegally dismissed and
accordingly
ordered
petitioners
to
pay
her
US$3,600.00, representing her salary for the three
months unexpired portion of her contract.

As to Ikdals liability, the appellate court held that

under Sec. 10 of Republic Act No. 8042, the Migrant
and Overseas Filipinos Act of 1995, corporate officers,
directors and partners of a recruitment agency may
themselves be jointly and solidarily liable with the
recruitment agency for money claims and damages
awarded to overseas workers.

On appeal of petitioners ATCI and Ikdal, the NLRC

affirmed the Labor Arbiters decision by Resolution[4]
of January 26, 2004. Petitioners motion for
reconsideration having been denied by Resolution[5]
of April 22, 2004, they appealed to the Court of
Appeals, contending that their principal, the Ministry,
being a foreign government agency, is immune from
suit and, as such, the immunity extended to them;
and that respondent was validly dismissed for her
failure to meet the performance rating within the oneyear period as required under Kuwaits Civil Service
Laws. Petitioners further contended that Ikdal should
not be liable as an officer of petitioner ATCI.
By Decision[6] of March 30, 2007, the appellate court
affirmed the NLRC Resolution.
In brushing aside petitioners contention that they only
acted as agent of the Ministry and that they cannot be
held jointly and solidarily liable with it, the appellate
court noted that under the law, a private employment
agency shall assume all responsibilities for the
implementation of the contract of employment of an
overseas worker, hence, it can be sued jointly and

Petitioners motion for reconsideration having been

denied by the appellate court by Resolution[7] of June
27, 2007, the present petition for review on certiorari
was filed.
Petitioners maintain that they should not be held liable
because respondents employment contract specifically
stipulates that her employment shall be governed by
the Civil Service Law and Regulations of Kuwait. They
thus conclude that it was patent error for the labor
tribunals and the appellate court to apply the Labor
Code provisions governing probationary employment
in deciding the present case.
Further, petitioners argue that even the Philippine
Overseas Employment Act (POEA) Rules relative to
master employment contracts (Part III, Sec. 2 of the
POEA Rules and Regulations) accord respect to the
customs, practices, company policies and labor laws
and legislation of the host country.
Finally, petitioners posit that assuming arguendo that
Philippine labor laws are applicable, given that the
foreign principal is a government agency which is
immune from suit, as in fact it did not sign any
document agreeing to be held jointly and solidarily

liable, petitioner ATCI cannot likewise be held liable,

more so since the Ministrys liability had not been
judicially determined as jurisdiction was not acquired
over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency,
cannot evade responsibility for the money claims of
Overseas Filipino workers (OFWs) which it deploys
abroad by the mere expediency of claiming that its
foreign principal is a government agency clothed with
immunity from suit, or that such foreign principals
liability must first be established before it, as agent,
can be held jointly and solidarily liable.
In providing for the joint and solidary liability of
private recruitment agencies with their foreign
principals, Republic Act No. 8042 precisely affords the
OFWs with a recourse and assures them of immediate
and sufficient payment of what is due them. Skippers
United Pacific v. Maguad[8] explains:
. . . [T]he obligations covenanted in the recruitment
agreement entered into by and between the local
agent and its foreign principal are not coterminous
with the term of such agreement so that if either or
both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted
employees under the agreement do not at all end, but
the same extends up to and until the expiration of the
employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement.
Otherwise, this will render nugatory the very purpose
for which the law governing the employment of
workers for foreign jobs abroad was enacted.
(emphasis supplied)

The imposition of joint and solidary liability is in line

with the policy of the state to protect and alleviate the
plight of the working class.[9] Verily, to allow
petitioners to simply invoke the immunity from suit of
its foreign principal or to wait for the judicial
determination of the foreign principals liability before
petitioner can be held liable renders the law on joint
and solidary liability inutile.
As to petitioners contentions that Philippine labor laws
on probationary employment are not applicable since
it was expressly provided in respondents employment
contract, which she voluntarily entered into, that the
terms of her engagement shall be governed by
prevailing Kuwaiti Civil Service Laws and Regulations
as in fact POEA Rules accord respect to such rules,
customs and practices of the host country, the same
was not substantiated.
Indeed, a contract freely entered into is considered the
law between the parties who can establish
stipulations, clauses, terms and conditions as they
may deem convenient, including the laws which they
wish to govern their respective obligations, as long as
they are not contrary to law, morals, good customs,
public order or public policy.
It is hornbook principle, however, that the party
invoking the application of a foreign law has the
burden of proving the law, under the doctrine of
processual presumption which, in this case, petitioners
failed to discharge. The Courts ruling in EDIStaffbuilders Intl., v. NLRC[10] illuminates:

In the present case, the employment contract signed

by Gran specifically states that Saudi Labor Laws will
govern matters not provided for in the contract (e.g.
specific
causes
for
termination,
termination
procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating to
the termination of the employment of Gran.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden
of proving the foreign law. The foreign law is treated
as a question of fact to be properly pleaded and
proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to
know only domestic or forum law.
Unfortunately for petitioner, it did not prove the
pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity
approach or processual presumption comes into play.
Where a foreign law is not pleaded or, even if pleaded,
is not proved, the presumption is that foreign law is
the same as ours. Thus, we apply Philippine labor laws
in determining the issues presented before us.
(emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign
laws, hence, they must not only be alleged; they must
be proven. To prove a foreign law, the party invoking it
must present a copy thereof and comply with Sections
24 and 25 of Rule 132 of the Revised Rules of Court
which reads:
SEC. 24. Proof of official record. The record of public
documents referred to in paragraph (a) of Section 19,

when admissible for any purpose, may be evidenced

by an official publication thereof or by a copy attested
by the officer having the legal custody of the record,
or by his deputy, and accompanied, if the record is not
kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the
record is kept is in a foreign country, the certificate
may be made by a secretary of the embassy or
legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service
of the Philippines stationed in the foreign country in
which the record is kept, and authenticated by the seal
of his office. (emphasis supplied)
SEC. 25. What attestation of copy must state.
Whenever a copy of a document or record is attested
for the purpose of the evidence, the attestation must
state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may
be. The attestation must be under the official seal of
the attesting officer, if there be any, or if he be the
clerk of a court having a seal, under the seal of such
court.
To prove the Kuwaiti law, petitioners submitted the
following: MOA between respondent and the Ministry,
as represented by ATCI, which provides that the
employee is subject to a probationary period of one
(1) year and that the host countrys Civil Service Laws
and Regulations apply; a translated copy[11] (Arabic
to English) of the termination letter to respondent
stating that she did not pass the probation terms,
without specifying the grounds therefor, and a
translated copy of the certificate of termination,[12]
both of which documents were certified by Mr.
Mustapha Alawi, Head of the Department of Foreign

Affairs-Office of Consular Affairs Inslamic Certification

and Translation Unit; and respondents letter[13] of
reconsideration to the Ministry, wherein she noted that
in her first eight (8) months of employment, she was
given a rating of Excellent albeit it changed due to
changes in her shift of work schedule.
These documents, whether taken singly or as a whole,
do not sufficiently prove that respondent was validly
terminated as a probationary employee under Kuwaiti
civil service laws. Instead of submitting a copy of the
pertinent Kuwaiti labor laws duly authenticated and
translated by Embassy officials thereat, as required
under the Rules, what petitioners submitted were
mere certifications attesting only to the correctness of
the translations of the MOA and the termination letter
which does not prove at all that Kuwaiti civil service
laws differ from Philippine laws and that under such
Kuwaiti laws, respondent was validly terminated. Thus
the subject certifications read:
xxxx
This is to certify that the herein attached translation/s
from Arabic to English/Tagalog and or vice versa
was/were presented to this Office for review and
certification and the same was/were found to be in
order. This Office, however, assumes no responsibility
as to the contents of the document/s.
This certification is being issued upon request of the
interested party for whatever legal purpose it may
serve. (emphasis supplied)

Respecting Ikdals joint and solidary liability as a

corporate officer, the same is in order too following the
express provision of R.A. 8042 on money claims, viz:
SEC. 10. Money Claims.Notwithstanding any provision
of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas
deployment including claims for actual moral,
exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money
claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
(emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SO ORDERED.
G. R. No. 183622

February 8, 2012

MEROPE ENRIQUEZ VDA. DE CATALAN, versus

LOUELLA A. CATALAN-LEE

Spec. Proc. No. 228 covering the same estate was

already pending.

SERENO, J.:

The facts are as follows:

On the other hand, respondent alleged that petitioner

was not considered an interested person qualified to
file a petition for the issuance of letters of
administration of the estate of Orlando. In support of
her contention, respondent alleged that a criminal
case for bigamy was filed against petitioner before
Branch 54 of the RTC of Alaminos, Pangasinan, and
docketed as Crim. Case No. 2699-A.

Orlando B. Catalan was a naturalized American citizen.

After allegedly obtaining a divorce in the United States
from his first wife, Felicitas Amor, he contracted a
second marriage with petitioner herein.

Apparently, Felicitas Amor filed a Complaint for

bigamy, alleging that petitioner contracted a second
marriage to Orlando despite having been married to
one Eusebio Bristol on 12 December 1959.

On 18 November 2004, Orlando died intestate in the

Philippines.

On 6 August 1998, the RTC had acquitted petitioner of

bigamy.[3] The trial court ruled that since the
deceased was a divorced American citizen, and since
that divorce was not recognized under Philippine
jurisdiction, the marriage between him and petitioner
was not valid.

Before us is a Petition for Review assailing the Court of

Appeals (CA) Decision[1] and Resolution[2] regarding
the issuance of letters of administration of the
intestate estate of Orlando B. Catalan.

Thereafter, on 28 February 2005, petitioner filed with

the Regional Trial Court (RTC) of Dagupan City a
Petition for the issuance of letters of administration for
her appointment as administratrix of the intestate
estate of Orlando. The case was docketed as Special
Proceedings (Spec. Proc.) No. 228.
On 3 March 2005, while Spec. Proc. No. 228 was
pending, respondent Louella A. Catalan-Lee, one of
the children of Orlando from his first marriage, filed a
similar petition with the RTC docketed as Spec. Proc.
No. 232.

Furthermore, it took note of the action for declaration

of nullity then pending action with the trial court in
Dagupan City filed by Felicitas Amor against the
deceased and petitioner. It considered the pending
action to be a prejudicial question in determining the
guilt of petitioner for the crime of bigamy.
Finally, the trial court found that, in the first place,
petitioner had never been married to Eusebio Bristol.

The two cases were subsequently consolidated.

Petitioner prayed for the dismissal of Spec. Proc. No.
232 on the ground of litis pendentia, considering that

On 26 June 2006, Branch 70 of the RTC of Burgos,

Pangasinan dismissed the Petition for the issuance of
letters of administration filed by petitioner and granted

that of private respondent. Contrary to its findings in

Crim. Case No. 2699-A, the RTC held that the
marriage between petitioner and Eusebio Bristol was
valid and subsisting when she married Orlando.
Without expounding, it reasoned further that her
acquittal in the previous bigamy case was fatal to her
cause. Thus, the trial court held that petitioner was
not an interested party who may file a petition for the
issuance of letters of administration.[4]
After the subsequent denial of her Motion for
Reconsideration, petitioner elevated the matter to the
Court of Appeals (CA) via her Petition for Certiorari,
alleging grave abuse of discretion on the part of the
RTC in dismissing her Petition for the issuance of
letters of administration.
Petitioner reiterated before the CA that the Petition
filed by respondent should have been dismissed on the
ground of litis pendentia. She also insisted that, while
a petition for letters of administration may have been
filed by an uninterested person, the defect was cured
by the appearance of a real party-in-interest. Thus,
she insisted that, to determine who has a better right
to administer the decedents properties, the RTC
should have first required the parties to present their
evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed
Decision. First, it held that petitioner undertook the
wrong remedy. She should have instead filed a petition
for review rather than a petition for certiorari.
Nevertheless, since the Petition for Certiorari was filed
within the fifteen-day reglementary period for filing a
petition for review under Sec. 4 of Rule 43, the CA
allowed the Petition and continued to decide on the
merits of the case. Thus, it ruled in this wise:

As to the issue of litis pendentia, we find it not

applicable in the case. For litis pendentia to be a
ground for the dismissal of an action, there must be:
(a) identity of the parties or at least such as to
represent the same interest in both actions; (b)
identity of rights asserted and relief prayed for, the
relief being founded on the same acts, and (c) the
identity in the two cases should be such that the
judgment which may be rendered in one would,
regardless of which party is successful, amount to res
judicata in the other. A petition for letters of
administration is a special proceeding. A special
proceeding is an application or proceeding to establish
the status or right of a party, or a particular fact. And,
in contrast to an ordinary civil action, a special
proceeding involves no defendant or respondent. The
only party in this kind of proceeding is the petitioner of
the applicant. Considering its nature, a subsequent
petition for letters of administration can hardly be
barred by a similar pending petition involving the
estate of the same decedent unless both petitions are
filed by the same person. In the case at bar, the
petitioner was not a party to the petition filed by the
private respondent, in the same manner that the latter
was not made a party to the petition filed by the
former. The first element of litis pendentia is wanting.
The contention of the petitioner must perforce fail.
Moreover, to yield to the contention of the petitioner
would render nugatory the provision of the Rules
requiring a petitioner for letters of administration to be
an interested party, inasmuch as any person, for that
matter, regardless of whether he has valid interest in
the estate sought to be administered, could be
appointed as administrator for as long as he files his
petition ahead of any other person, in derogation of

the rights of those specifically mentioned in the order

of preference in the appointment of administrator
under Rule 78, Section 6 of the Revised Rules of
Court, which provides:
xxx xxx xxx
The petitioner, armed with a marriage certificate, filed
her petition for letters of administration. As a spouse,
the petitioner would have been preferred to administer
the estate of Orlando B. Catalan. However, a marriage
certificate, like any other public document, is only
prima facie evidence of the facts stated therein. The
fact that the petitioner had been charged with bigamy
and was acquitted has not been disputed by the
petitioner. Bigamy is an illegal marriage committed by
contracting a second or subsequent marriage before
the first marriage has been dissolved or before the
absent spouse has been declared presumptively dead
by a judgment rendered in a proper proceedings. The
deduction of the trial court that the acquittal of the
petitioner in the said case negates the validity of her
subsequent marriage with Orlando B. Catalan has not
been disproved by her. There was not even an attempt
from the petitioner to deny the findings of the trial
court. There is therefore no basis for us to make a
contrary finding. Thus, not being an interested party
and a stranger to the estate of Orlando B. Catalan, the
dismissal of her petition for letters of administration by
the trial court is in place.
xxx xxx xxx
WHEREFORE, premises considered, the petition is
DISMISSED for lack of merit. No pronouncement as to
costs.

SO ORDERED.[5] (Emphasis supplied)

Petitioner moved for a reconsideration of this Decision.
[6] She alleged that the reasoning of the CA was
illogical in stating, on the one hand, that she was
acquitted of bigamy, while, on the other hand, still
holding that her marriage with Orlando was invalid.
She insists that with her acquittal of the crime of
bigamy, the marriage enjoys the presumption of
validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special
proceedings failed to appreciate the finding of the RTC
in Crim. Case No. 2699-A that petitioner was never
married to Eusebio Bristol. Thus, the trial court
concluded that, because petitioner was acquitted of
bigamy, it follows that the first marriage with Bristol
still existed and was valid. By failing to take note of
the findings of fact on the nonexistence of the
marriage between petitioner and Bristol, both the RTC
and CA held that petitioner was not an interested
party in the estate of Orlando.
Second, it is imperative to note that at the time the
bigamy case in Crim. Case No. 2699-A was dismissed,
we had already ruled that under the principles of
comity, our jurisdiction recognizes a valid divorce
obtained by a spouse of foreign nationality. This
doctrine was established as early as 1985 in Van Dorn
v. Romillo, Jr.[7] wherein we said:
It is true that owing to the nationality principle
embodied in Article 15 of the Civil Code, only

Philippine nationals are covered by the policy against

absolute divorces[,] the same being considered
contrary to our concept of public policy and morality.
However, aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided they
are valid according to their national law. In this case,
the divorce in Nevada released private respondent
from the marriage from the standards of American
law, under which divorce dissolves the marriage. xxx

For failing to apply these doctrines, the decision of the

Court of Appeals must be reversed. We hold that the
divorce obtained by Lorenzo H. Llorente from his first
wife Paula was valid and recognized in this jurisdiction
as a matter of comity. xxx

We reiterated this principle in Llorente v. Court of

Appeals,[8] to wit:

Respondent is getting ahead of himself. Before a

foreign judgment is given presumptive evidentiary
value, the document must first be presented and
admitted in evidence. A divorce obtained abroad is
proven by the divorce decree itself. Indeed the best
evidence of a judgment is the judgment itself. The
decree purports to be a written act or record of an act
of an official body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other
hand, a writing or document may be proven as a
public or official record of a foreign country by either
(1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the
document. If the record is not kept in the Philippines,
such copy must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in
the Philippine foreign service stationed in the foreign
country in which the record is kept and (b)
authenticated by the seal of his office.
The divorce decree between respondent and Editha
Samson appears to be an authentic one issued by an
Australian family court. However, appearance is not
sufficient; compliance with the aforementioned rules
on evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce
decree of May 18, 1989 was submitted in evidence,
counsel for petitioner objected, not to its admissibility,

In Van Dorn v. Romillo, Jr. we held that owing to the

nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the
policy against absolute divorces, the same being
considered contrary to our concept of public policy and
morality. In the same case, the Court ruled that aliens
may obtain divorces abroad, provided they are valid
according to their national law.
Citing this landmark case, the Court held in Quita v.
Court of Appeals, that once proven that respondent
was no longer a Filipino citizen when he obtained the
divorce from petitioner, the ruling in Van Dorn would
become applicable and petitioner could very well lose
her right to inherit from him.
In Pilapil v. Ibay-Somera, we recognized the divorce
obtained by the respondent in his country, the Federal
Republic of Germany. There, we stated that divorce
and its legal effects may be recognized in the
Philippines insofar as respondent is concerned in view
of the nationality principle in our civil law on the status
of persons.

Nonetheless, the fact of divorce must still first be

proven as we have enunciated in Garcia v. Recio,[9] to
wit:

but only to the fact that it had not been registered in

the Local Civil Registry of Cabanatuan City. The trial
court ruled that it was admissible, subject to
petitioner's qualification. Hence, it was admitted in
evidence and accorded weight by the judge. Indeed,
petitioner's failure to object properly rendered the
divorce decree admissible as a written act of the
Family Court of Sydney, Australia.
Compliance with the quoted articles (11, 13 and 52) of
the Family Code is not necessary; respondent was no
longer bound by Philippine personal laws after he
acquired Australian citizenship in 1992. Naturalization
is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a citizen.
Naturalized citizens, freed from the protective cloak of
their former states, don the attires of their adoptive
countries. By becoming an Australian, respondent
severed his allegiance to the Philippines and the
vinculum juris that had tied him to Philippine personal
laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove
Australian divorce law falls upon petitioner, because
she is the party challenging the validity of a foreign
judgment. He contends that petitioner was satisfied
with the original of the divorce decree and was
cognizant of the marital laws of Australia, because she
had lived and worked in that country for quite a long
time. Besides, the Australian divorce law is allegedly
known by Philippine courts; thus, judges may take
judicial notice of foreign laws in the exercise of sound
discretion.
We are not persuaded. The burden of proof lies with
the party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an action.
In civil cases, plaintiffs have the burden of proving the
material allegations of the complaint when those are

denied by the answer; and defendants have the

burden of proving the material allegations in their
answer when they introduce new matters. Since the
divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law
validating it falls squarely upon him.
It is well-settled in our jurisdiction that our courts
cannot take judicial notice of foreign laws. Like any
other facts, they must be alleged and proved.
Australian marital laws are not among those matters
that judges are supposed to know by reason of their
judicial function. The power of judicial notice must be
exercised with caution, and every reasonable doubt
upon the subject should be resolved in the negative.
(Emphasis supplied)
It appears that the trial court no longer required
petitioner to prove the validity of Orlandos divorce
under the laws of the United States and the marriage
between petitioner and the deceased. Thus, there is a
need to remand the proceedings to the trial court for
further reception of evidence to establish the fact of
divorce.
Should petitioner prove the validity of the divorce and
the subsequent marriage, she has the preferential
right to be issued the letters of administration over the
estate. Otherwise, letters of administration may be
issued to respondent, who is undisputedly the
daughter or next of kin of the deceased, in accordance
with Sec. 6 of Rule 78 of the Revised Rules of Court.
This is consistent with our ruling in San Luis v. San
Luis,[10] in which we said:
Applying the above doctrine in the instant case, the
divorce decree allegedly obtained by Merry Lee which
absolutely allowed Felicisimo to remarry, would have

vested Felicidad with the legal personality to file the

present petition as Felicisimo's surviving spouse.
However, the records show that there is insufficient
evidence to prove the validity of the divorce obtained
by Merry Lee as well as the marriage of respondent
and Felicisimo under the laws of the U.S.A. In Garcia
v. Recio, the Court laid down the specific guidelines for
pleading and proving foreign law and divorce
judgments. It held that presentation solely of the
divorce decree is insufficient and that proof of its
authenticity and due execution must be presented.
Under Sections 24 and 25 of Rule 132, a writing or
document may be proven as a public or official record
of a foreign country by either (1) an official publication
or (2) a copy thereof attested by the officer having
legal custody of the document. If the record is not
kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his
office.

Thus, it is imperative for the trial court to first

determine the validity of the divorce to ascertain the
rightful party to be issued the letters of administration
over the estate of Orlando B. Catalan.

With regard to respondent's marriage to Felicisimo

allegedly solemnized in California, U.S.A., she
submitted photocopies of the Marriage Certificate and
the annotated text of the Family Law Act of California
which purportedly show that their marriage was done
in accordance with the said law. As stated in Garcia,
however, the Court cannot take judicial notice of
foreign laws as they must be alleged and proved.

The Case

Therefore, this case should be remanded to the trial

court for further reception of evidence on the divorce
decree obtained by Merry Lee and the marriage of
respondent and Felicisimo. (Emphasis supplied)

WHEREFORE, premises considered, the Petition is

hereby PARTIALLY GRANTED. The Decision dated 18
October 2007 and the Resolution dated 20 June 2008
of the Court of Appeals are hereby REVERSED and SET
ASIDE. Let this case be REMANDED to Branch 70 of
the Regional Trial Court of Burgos, Pangasinan for
further proceedings in accordance with this Decision.
SO ORDERED.
G.R. No. 144413

July 30, 2004

REPUBLIC GLASS CORPORATION

and GERVEL, INC.vs LAWRENCE C. QUA
CARPIO, J.:

Before the Court is a petition for review[1] assailing

the 6 March 2000 Decision[2] and the 26 July 2000
Resolution of the Court of Appeals in CA-G.R. CV No.
54737. The Court of Appeals set aside the Order[3] of
3 May 1996 of the Regional Trial Court of Makati,
Branch 63 (RTC-Branch 63), in Civil Case No. 88-2643
and reinstated the Decision[4] of 12 January 1996 in
respondents favor.

The Facts
Petitioners Republic Glass Corporation (RGC) and
Gervel, Inc. (Gervel) together with respondent
Lawrence C. Qua (Qua) were stockholders of Ladtek,
Inc. (Ladtek). Ladtek obtained loans from Metropolitan
Bank and Trust Company (Metrobank)[5] and Private
Development Corporation of the Philippines[6] (PDCP)
with RGC, Gervel and Qua as sureties. Among
themselves,
RGC,
Gervel
and
Qua
executed
Agreements for Contribution, Indemnity and Pledge of
Shares of Stocks (Agreements).[7]
The Agreements all state that in case of default in the
payment of Ladteks loans, the parties would reimburse
each other the proportionate share of any sum that
any might pay to the creditors.[8] Thus, a common
provision appears in the Agreements:
RGC, GERVEL and QUA each covenant that each will
respectively reimburse the party made to pay the
Lenders to the extent and subject to the limitations set
forth herein, all sums of money which the party made
to pay the Lenders shall pay or become liable to pay
by reason of any of the foregoing, and will make such
payments within five (5) days from the date that the
party made to pay the Lenders gives written notice to
the parties hereto that it shall have become liable
therefor and has advised the Lenders of its willingness
to pay whether or not it shall have already paid out
such sum or any part thereof to the Lenders or to the
persons entitled thereto. (Emphasis supplied)
Under the same Agreements, Qua pledged 1,892,360
common shares of stock of General Milling Corporation
(GMC) in favor of RGC and Gervel. The pledged shares

of stock served as security for the payment of any

sum which RGC and Gervel may be held liable under
the Agreements.
Ladtek defaulted on its loan obligations to Metrobank
and PDCP. Hence, Metrobank filed a collection case
against Ladtek, RGC, Gervel and Qua docketed as Civil
Case No. 8364 (Collection Case No. 8364) which was
raffled to the Regional Trial Court of Makati, Branch
149 (RTC-Branch 149). During the pendency of
Collection Case No. 8364, RGC and Gervel paid
Metrobank P7 million. Later, Metrobank executed a
waiver and quitclaim dated 7 September 1988 in favor
of RGC and Gervel. Based on this waiver and
quitclaim,[9] Metrobank, RGC and Gervel filed on 16
September 1988 a joint motion to dismiss Collection
Case No. 8364 against RGC and Gervel. Accordingly,
RTC-Branch 149 dismissed the case against RGC and
Gervel, leaving Ladtek and Qua as defendants.[10]
In a letter dated 7 November 1988, RGC and Gervels
counsel, Atty. Antonio C. Pastelero, demanded that
Qua pay P3,860,646, or 42.22% of P8,730,543.55,
[11] as reimbursement of the total amount RGC and
Gervel paid to Metrobank and PDCP. Qua refused to
reimburse the amount to RGC and Gervel.
Subsequently, RGC and Gervel furnished Qua with
notices of foreclosure of Quas pledged shares.
Qua filed a complaint for injunction and damages with
application for a temporary restraining order, docketed
as Civil Case No. 88-2643 (Foreclosure Case No. 882643), with RTC-Branch 63 to prevent RGC and Gervel
from foreclosing the pledged shares. Although it issued
a temporary restraining order on 9 December 1988,
RTC-Branch 63 denied on 2 January 1989 Quas Urgent
Petition to Suspend Foreclosure Sale. RGC and Gervel
eventually foreclosed all the pledged shares of stock at

public auction. Thus, Quas application for the issuance

of a preliminary injunction became moot.[12]
Trial in Foreclosure Case No. 88-2643 ensued. RGC
and Gervel offered Quas Motion to Dismiss[13] in
Collection Case No. 8364 as basis for the foreclosure
of Quas pledged shares. Quas Motion to Dismiss
states:

On 12 January 1996, RTC-Branch 63 rendered a

Decision in Foreclosure Case No. 88-2643 (12 January
1996 Decision) ordering RGC and Gervel to return the
foreclosed shares of stock to Qua. The dispositive
portion of the 12 January 1996 Decision reads:

8.
The foregoing facts show that the
payment of defendants Republic Glass Corporation and
Gervel, Inc. was for the entire obligation covered by
the Continuing Surety Agreements which were
Annexes B and C of the Complaint, and that the same
naturally redound[ed] to the benefit of defendant Qua
herein, as provided for by law, specifically Article 1217
of the Civil Code, which states that:

WHEREFORE, premises considered, this Court hereby

renders judgment ordering defendants jointly and
severally liable to return to plaintiff the 1,892,360
shares of common stock of General Milling Corporation
which they foreclosed on December 9, 1988, or should
the return of these shares be no longer possible then
to pay to plaintiff the amount of P3,860,646.00 with
interest at 6% per annum from December 9, 1988
until fully paid and to pay plaintiff P100,000.00 as and
for attorneys fees. The costs will be for defendants
account.

xxx

SO ORDERED.[15]

10. It is very clear that the payment of defendants

Republic Glass Corporation and Gervel, Inc. was much
more than the amount stipulated in the Continuing
Surety Agreement which is the basis for the action
against them and defendant Qua, which was just SIX
MILLION TWO HUNDRED [THOUSAND] PESOS
(P6,200,000.00), hence, logically the said alleged
obligation must now be considered as fully paid and
extinguished.

However,
on
RGC
and
Gervels
Motion
for
Reconsideration, RTC-Branch 63 issued its Order of 3
May 1996 (3 May 1996 Order) reconsidering and
setting aside the 12 January 1996 Decision. The 3 May
1996 Order states:

RGC and Gervel likewise offered as evidence in

Foreclosure Case No. 88-2643 the Order dismissing
Collection Case No. 8364,[14] which RTC-Branch 149
subsequently reversed on Metrobanks motion for
reconsideration. Thus, RTC-Branch 149 reinstated
Collection Case No. 8364 against Qua.

After a thorough review of the records of the case, and

an evaluation of the evidence adduced by the parties
as well as their contentions, the issues to be resolved
boil down to the following:
1. Whether or not the parties obligation to reimburse,
under the Indemnity Agreements was premised on the
payment by any of them of the entire obligation;

2. Whether or not there is basis to plaintiffs

apprehension that he would be made to pay twice for
the single obligation; and
3. Whether or not plaintiff was benefited by the
payments made by defendants.
Regarding the first issue, a closer scrutiny of the
pertinent provisions of the Indemnity Agreements
executed by the parties would not reveal any
significant indication that the parties liabilities are
indeed premised on the payment by any of them of
the entire obligation. These agreements clearly
provide that the parties obligation to reimburse
accrues upon mere advice that one of them has paid
or will so pay the obligation. It is not specified whether
the payment is for the entire obligation or not.
Accordingly, the Court stands corrected in this regard.
The obvious conclusion that can be seen now is that
payment of the entire obligation is not a condition sine
qua non for the paying party to demand
reimbursement. The parties have expressly contracted
that each will reimburse whoever is made to pay the
obligation whether entirely or just a portion thereof.
On the second issue, plaintiffs apprehension that he
would be made to pay twice for the single obligation is
unfounded. Under the above-mentioned Indemnity
Agreements, in the event that the creditors are able to
collect from him, he has the right to ask defendants to
pay their proportionate share, in the same way
defendants had collected from the plaintiff, by
foreclosing his pledged shares of stock, his
proportionate share, after they had made payments.
From all indications, the provisions of the Indemnity

Agreements
parties.

have

remained

binding

between

the

On the third issue, there is merit to defendants

assertion that plaintiff has benefited from the
payments made by defendants. As alleged by
defendants, and this has not been denied by plaintiff,
in Civil Case No. 8364 filed before Branch 149 of this
Court, where the creditors were enforcing the parties
liabilities as sureties, plaintiff succeeded in having the
case dismissed by arguing that defendants payments
[were] for the entire obligation, hence, the obligation
should be considered fully paid and extinguished. With
the dismissal of the case, the indications are that the
creditors are no longer running after plaintiff to
enforce his liabilities as surety of Ladtek.
Whether or not the surety agreements signed by the
parties and the creditors were novated is not material
in this controversy. The fact is that there was payment
of the obligation. Hence, the Indemnity Agreements
govern.
In the final analysis, defendants payments gave rise to
plaintiffs obligation to reimburse the former. Having
failed to do so, upon demand, defendants were
justified in foreclosing the pledged shares of stocks.
xxx
WHEREFORE, premises considered, the decision dated
January 12, 1996 is reconsidered and set aside. The
above-entitled complaint against defendants is
DISMISSED.
Likewise, defendants counterclaim is also dismissed.

SO ORDERED.[16] (Emphasis supplied)

The Counterclaims of the defendants Ladtek, Inc. and

Lawrence C. Qua against the plaintiff are hereby
dismissed.

Qua filed a motion for reconsideration of the 3 May

1996 Order which RTC-Branch 63 denied.

Likewise, the cross-claims of the defendants are

dismissed.

Aggrieved, Qua appealed to the Court of Appeals.

During the pendency of the appeal, Qua filed a
Manifestation[17] with the Court of Appeals attaching
the Decision[18] of 21 November 1996 rendered in
Collection Case No. 8364. The dispositive portion of
the decision reads:
WHEREFORE, premises considered, judgment is
hereby rendered ordering defendants Ladtek, Inc. and
Lawrence C. Qua:

SO ORDERED.[19] (Emphasis supplied)

On 6 March 2000, the Court of Appeals rendered the
questioned Decision setting aside the 3 May 1996
Order of RTC-Branch 63 and reinstating the 12
January 1996 Decision ordering RGC and Gervel to
return the foreclosed shares of stock to Qua.[20]
Hence, this petition.

1.
To pay, jointly and severally, the plaintiff
the amount of P44,552,738.34 as of October 31, 1987
plus the stipulated interest of 30.73% per annum and
penalty charges of 12% per annum from November 1,
1987 until the whole amount is fully paid, less
P7,000,000.00 paid by defendants Republic Glass
Corporation and Gervel, Inc., but the liability of
defendant Lawrence C. Qua should be limited only to
P5,000,000.00 and P1,200,000.00, the amount stated
in the Continuing Suretyship dated June 15, 1983,
Exh. D and Continuing Suretyship dated December 14,
1981, Exh. D-1, respectively, plus the stipulated
interest and expenses incurred by the plaintiff.
2.
To pay, jointly and severally, the plaintiff
an amount equivalent to ten (10%) percent of the
total amount due as and by way of attorneys fees;
3.

To pay the cost of suit.

The Ruling of the Court of Appeals

In reversing the 3 May 1996 Order and reinstating the

12 January 1996 Decision, the appellate court quoted
the RTC-Branch 63s 12 January 1996 Decision:
The liability of each party under the indemnity
agreements therefore is premised on the payment by
any of them of the entire obligation. Without such
payment, there would be no corresponding share to
reimburse. Payment of the entire obligation naturally
redounds to the benefit of the other solidary debtors
who must then reimburse the paying co-debtors to the
extent of his corresponding share.
In the case at bar, Republic Glass and Gervel made
partial payments only, and so they did not extinguish
the entire obligation. But Republic Glass and Gervel

nevertheless obtained quitclaims in their favor and so

they ceased to be solidarily liable with plaintiff for the
balance of the debt (Exhs. D, E, and I). Plaintiff thus
became solely liable for the unpaid portion of the debt
even as he is being held liable for reimbursement on
the said portion.
What happened therefore, was that Metrobank and
PDCP in effect enforced the Suretyship Agreements
jointly
as
against
plaintiff
and
defendants.
Consequently, the solidary obligation under the
Suretyship Agreements was novated by the substantial
modification of its principal conditions. xxx The
resulting change was from one with three solidary
debtors to one in which Lawrence Qua became the
sole solidary co-debtor of Ladtek.
Defendants cannot simply pay off a portion of the debt
and then absolve themselves from any further liability
when the obligation has not been totally extinguished.
xxx
In the final reckoning, this Court finds that the
foreclosure and sale of the shares pledged by plaintiff
was totally unjustified and without basis because the
obligation secured by the underlying pledge had been
extinguished by novation. xxx[21]
The Court of Appeals further held that there was an
implied novation or substantial incompatibility in the
suretys mode or manner of payment from one for the
entire obligation to one merely of proportionate share.
The appellate court ruled that RGC and Gervels
payment to the creditors only amounted to their

proportionate shares of the obligation, considering the

following evidence:
The letter of the Republic to the appellant, Exhibit G,
dated June 25, 1987, which mentioned the letter from
PDCP confirming its willingness to release the joint and
solidary obligation of the Republic and Gervel subject
to some terms and conditions, one of which is the
appellants acceptable repayment plan of his pro-rata
share; and the letter of PDCP to the Republic, Exhibit
H, mentioning full payment of the pro rata share of the
Republic and Gervel, and the need of the appellant to
submit an acceptable repayment plan covering his prorata share, the release from solidary liability by PDCP,
Exhibit J, mentioning full payment by the Republic and
Gervel of their pro rata share in the loan, as solidary
obligors, subject however to the terms and conditions
of the hold out agreement; and the non-payment in
full of the loan, subject of the May 10, 1984
Promissory Note, except the 7 million payment by
both Republic and Gervel, as mentioned in the
Decision (Case No. 8364, Metrobank vs. Ladtek, et al).
Precisely, Ladtek and the appellant, in said Decision
were directed to pay Metrobank the balance of
P9,560,798, supposedly due and unpaid.
Thus, the payment did not extinguish the entire
obligation and did not benefit Qua. Accordingly, RGC
and Gervel cannot demand reimbursement. The Court
of Appeals also held that Qua even became solely
answerable for the unpaid balance of the obligations
by virtue of the quitclaims executed by Metrobank and
PDCP in favor of RGC and Gervel. RGC and Gervel
ceased to be solidarily liable for Ladteks loan
obligations.[22]

The Issues

RGC and Gervel

resolution:

raise

the

following

issues

for

I.
WHETHER THE PRINCIPLE OF ESTOPPEL APPLIES TO
QUAS JUDICIAL STATEMENTS THAT RGC AND GERVEL
PAID THE ENTIRE OBLIGATION.
II.
WHETHER PAYMENT OF THE ENTIRE OBLIGATION IS A
CONDITION SINE QUA NON FOR RGC AND GERVEL TO
DEMAND REIMBURSEMENT FROM QUA UNDER THE
INDEMNITY AGREEMENTS EXECUTED BY THEM AFTER
RGC AND GERVEL PAID METROBANK UNDER THE
SURETY AGREEMENT.
III.
ASSUMING ARGUENDO THAT THERE WAS NOVATION
OF THE SURETY AGREEMENTS SIGNED BY THE
PARTIES AND THE CREDITORS, WHETHER THE
NOVATION IS MATERIAL IN THIS CASE.[23]

RGC and Gervel contend that Qua is in estoppel for

making conflicting statements in two different and
separate cases. Qua cannot now claim that the
payment made to Metrobank was not for the entire
obligation because of his Motion to Dismiss Collection
Case No. 8364 where he stated that RGC and Gervels
payment was for the entire obligation.
The essential elements of estoppel in pais are
considered in relation to the party to be estopped, and
to the party invoking the estoppel in his favor. On the
party to be estopped, such party (1) commits conduct
amounting to false representation or concealment of
material facts or at least calculated to convey the
impression that the facts are inconsistent with those
which the party subsequently attempts to assert; (2)
has the intent, or at least expectation that his conduct
shall at least influence the other party; and (3) has
knowledge, actual or constructive, of the real facts. On
the party claiming the estoppel, such party (1) has
lack of knowledge and of the means of knowledge of
the truth on the facts in question; (2) has relied, in
good faith, on the conduct or statements of the party
to be estopped; (3) has acted or refrained from acting
based on such conduct or statements as to change the
position or status of the party claiming the estoppel, to
his injury, detriment or prejudice.[24]

The Courts Ruling

In this case, the essential elements of estoppel are
inexistent.
We deny the petition.
Whether Qua was in estoppel

While Quas statements in Collection Case No. 8364

conflict with his statements in Foreclosure Case No.
88-2643, RGC and Gervel miserably failed to show
that Qua, in making those statements, intended to

falsely represent or conceal the material facts. Both

parties undeniably know the real facts.
Nothing in the records shows that RGC and Gervel
relied on Quas statements in Collection Case No. 8364
such that they changed their position or status, to
their injury, detriment or prejudice. RGC and Gervel
repeatedly point out that it was the presiding
judge[25] in Collection Case No. 8364 who relied on
Quas statements in Collection Case No. 8364. RGC and
Gervel claim that Qua deliberately led the Presiding
Judge to believe that their payment to Metrobank was
for the entire obligation. As a result, the presiding
judge ordered the dismissal of Collection Case No.
8364 against Qua.[26]
RGC and Gervel further invoke Section 4 of Rule 129
of the Rules of Court to support their stance:
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.

admission must be made in the same case in which it

is offered. If made in another case or in another court,
the fact of such admission must be proved as in the
case of any other fact, although if made in a judicial
proceeding it is entitled to greater weight.[28]
RGC and Gervel introduced Quas Motion to Dismiss
and the Order dismissing Collection Case No. 8364 to
prove Quas claim that the payment was for the entire
obligation. Qua does not deny making such statement
but explained that he honestly believed and pleaded in
the lower court and in CA-G.R. CV No. 58550 that the
entire debt was fully extinguished when the petitioners
paid P7 million to Metrobank.[29]
We find Quas explanation substantiated by the
evidence on record. As stated in the Agreements,
Ladteks original loan from Metrobank was only P6.2
million. Therefore, Qua reasonably believed that RGC
and Gervels P7 million payment to Metrobank
pertained
to
the
entire
obligation.
However,
subsequent facts indisputably show that RGC and
Gervels payment was not for the entire obligation.
RTC-Branch 149 reinstated Collection Case No. 8364
against Qua and ruled in Metrobanks favor, ordering
Qua to pay P6.2 million.

A party may make judicial admissions in (a) the

pleadings filed by the parties, (b) during the trial
either by verbal or written manifestations or
stipulations, or (c) in other stages of the judicial
proceeding.[27]

Whether payment of the entire obligation is an

essential condition for reimbursement

The elements of judicial admissions are absent in this

case. Qua made conflicting statements in Collection
Case No. 8364 and in Foreclosure Case No. 88-2643,
and not in the same case as required in Section 4 of
Rule 129. To constitute judicial admission, the

RGC and Gervel assail the Court of Appeals ruling that

the parties liabilities under the Agreements depend on
the full payment of the obligation. RGC and Gervel
insist that it is not an essential condition that the

entire obligation must first be paid before they can

seek reimbursement from Qua. RGC and Gervel
contend that Qua should pay 42.22% of any amount
which they paid or would pay Metrobank and PDCP.
RGC and Gervels contention is partly meritorious.
Payment of the entire obligation by one or some of the
solidary debtors results in a corresponding obligation
of the other debtors to reimburse the paying debtor.
[30] However, we agree with RGC and Gervels
contention that in this case payment of the entire
obligation is not an essential condition before they can
seek reimbursement from Qua. The words of the
Agreements are clear.
RGC, GERVEL and QUA each covenant that each will
respectively reimburse the party made to pay the
Lenders to the extent and subject to the limitations set
forth herein, all sums of money which the party made
to pay the Lenders shall pay or become liable to pay
by reason of any of the foregoing, and will make such
payments within five (5) days from the date that the
party made to pay the Lenders gives written notice to
the parties hereto that it shall have become liable
therefor and has advised the Lenders of its willingness
to pay whether or not it shall have already paid out
such sum or any part thereof to the Lenders or to the
persons entitled thereto. (Emphasis supplied)
The Agreements are contracts of indemnity not only
against actual loss but against liability as well. In
Associated Insurance & Surety Co., Inc. v. Chua,[31]
we distinguished between a contract of indemnity

against loss and a contract of indemnity against

liability, thus:[32]
The agreement here sued upon is not only one of
indemnity against loss but of indemnity against
liability. While the first does not render the indemnitor
liable until the person to be indemnified makes
payment or sustains loss, the second becomes
operative as soon as the liability of the person
indemnified arises irrespective of whether or not he
has suffered actual loss. (Emphasis supplied)
Therefore, whether the solidary debtor has paid the
creditor, the other solidary debtors should indemnify
the former once his liability becomes absolute.
However, in this case, the liability of RGC, Gervel and
Qua became absolute simultaneously when Ladtek
defaulted in its loan payment. As a result, RGC, Gervel
and Qua all became directly liable at the same time to
Metrobank and PDCP. Thus, RGC and Gervel cannot
automatically claim for indemnity from Qua because
Qua himself is liable directly to Metrobank and PDCP.
If we allow RGC and Gervel to collect from Qua his
proportionate share, then Qua would pay much more
than his stipulated liability under the Agreements. In
addition to the P3,860,646 claimed by RGC and
Gervel, Qua would have to pay his liability of P6.2
million to Metrobank and more than P1 million to
PDCP. Since
Qua
would
surely
exceed
his
proportionate share, he would then recover from RGC
and Gervel the excess payment. This situation is
absurd and circuitous.
Contrary to RGC and Gervels claim, payment of any
amount will not automatically result in reimbursement.

If a solidary debtor pays the obligation in part, he can

recover reimbursement from the co-debtors only in so
far as his payment exceeded his share in the
obligation.[33] This is precisely because if a solidary
debtor pays an amount equal to his proportionate
share in the obligation, then he in effect pays only
what is due from him. If the debtor pays less than his
share in the obligation, he cannot demand
reimbursement because his payment is less than his
actual debt.
To determine whether RGC and Gervel have a right to
reimbursement, it is indispensable to ascertain the
total obligation of the parties. At this point, it becomes
necessary to consider the decision in Collection Case
No. 8364 on the parties obligation to Metrobank. To
repeat, Metrobank filed Collection Case No. 8364
against Ladtek, RGC, Gervel and Qua to collect
Ladteks unpaid loan.
RGC and Gervel assail the Court of Appeals
consideration of the decision in Collection Case No.
8364[34] because Qua did not offer the decision in
evidence during the trial in Foreclosure Case No. 882643 subject of this petition. RTC-Branch 62[35]
rendered the decision in Collection Case No. 8364 on
21 November 1996 while Qua filed his Notice of Appeal
of the 3 May 1996 Order on 19 June 1996. Qua could
not have possibly offered in evidence the decision in
Collection Case No. 8364 because RTC-Branch 62
rendered the decision only after Qua elevated the
present case to the Court of Appeals. Hence, Qua
submitted the decision in Collection Case No. 8364
during the pendency of the appeal of Foreclosure Case
No. 88-2643 in the Court of Appeals.

As found by RTC-Branch 62, RGC, Gervel and Quas

total obligation was P14,200,854.37 as of 31 October
1987.[36] During the pendency of Collection Case No.
8364, RGC and Gervel paid Metrobank P7 million.
Because of the payment, Metrobank executed a
quitclaim[37] in favor of RGC and Gervel. By virtue of
Metrobanks quitclaim, RTC-Branch 62 dismissed
Collection Case No. 8364 against RGC and Gervel,
leaving Ladtek and Qua as defendants. Considering
that RGC and Gervel paid only P7 million out of the
total obligation of P14,200,854.37, which payment
was less than RGC and Gervels combined shares in the
obligation,[38] it was clearly partial payment.
Moreover, if it were full payment, then the obligation
would have been extinguished. Metrobank would have
also released Qua from his obligation.
RGC and Gervel also made partial payment to PDCP.
Proof of this is the Release from Solidary Liability that
PDCP executed in RGC and Gervels favor which stated
that their payment of P1,730,543.55 served as full
payment of their corresponding proportionate share in
Ladteks foreign currency loan.[39] Moreover, PDCP
filed a collection case against Qua alone, docketed as
Civil Case No. 2259, in the Regional Trial Court of
Makati, Branch 150.[40]
Since they only made partial payments, RGC and
Gervel should clearly and convincingly show that their
payments to Metrobank and PDCP exceeded their
proportionate shares in the obligations before they can
seek reimbursement from Qua. This RGC and Gervel
failed to do. RGC and Gervel, in fact, never claimed
that their payments exceeded their shares in the
obligations. Consequently, RGC and Gervel cannot
validly seek reimbursement from Qua.

Whether there was novation of the Agreements

RGC and Gervel contend that there was no novation of
the Agreements. RGC and Gervel further contend that
any novation of the Agreements is immaterial to this
case. RGC and Gervel disagreed with the Court of
Appeals on the effect of the implied novation which
supposedly transpired in this case. The Court of
Appeals found that there was an implied novation or
substantial incompatibility in the mode or manner of
payment by the surety from the entire obligation, to
one merely of proportionate share. RGC and Gervel
claim that if it is true that an implied novation
occurred, then the effect would be to release
respondent (Qua) as the entire obligation is
considered extinguished by operation of law. Thus,
Qua should now reimburse RGC and Gervel his
proportionate share under the surety agreements.
Novation extinguishes an obligation by (1) changing its
object or principal conditions; (2) substituting the
person of the debtor; and (3) subrogating a third
person in the rights of the creditor. Article 1292 of the
Civil Code clearly provides that in order that an
obligation may be extinguished by another which
substitutes the same, it should be declared in
unequivocal terms, or that the old and new obligations
be on every point incompatible with each other.[41]
Novation may either be extinctive or modificatory.
Novation is extinctive when an old obligation is
terminated by the creation of a new obligation that
takes the place of the former. Novation is merely
modificatory when the old obligation subsists to the
extent it remains compatible with the amendatory
agreement.[42]

We find that there was no novation of the Agreements.

The parties did not constitute a new obligation to
substitute the Agreements. The terms and conditions
of the Agreements remain the same. There was also
no showing of complete incompatibility in the manner
of payment of the parties obligations. Contrary to the
Court of Appeals ruling, the mode or manner of
payment by the parties did not change from one for
the entire obligation to one merely of proportionate
share. The creditors, namely Metrobank and PDCP,
merely proceeded against RGC and Gervel for their
proportionate shares only.[43] This preference is
within the creditors discretion which did not
necessarily affect the nature of the obligations as well
as the terms and conditions of the Agreements. A
creditor may choose to proceed only against some and
not all of the solidary debtors. The creditor may also
choose to collect part of the debt from some of the
solidary debtors, and the remaining debt from the
other solidary debtors.
In sum, RGC and Gervel have no legal basis to seek
reimbursement from Qua. Consequently, RGC and
Gervel cannot validly foreclose the pledge of Quas
GMC shares of stock which secured his obligation to
reimburse.[44] Therefore, the foreclosure of the
pledged shares of stock has no leg to stand on.
WHEREFORE, we DENY the petition. The Decision
dated 6 March 2000 of the Court of Appeals in CA-G.R.
CV No. 54737 is AFFIRMED. Costs against petitioners.
SO ORDERED.
GR 166859

REPUBLIC V SANDIGANBAYAN

the resolution promulgated on June 24, 2005[6]

modifying the resolution of October 8, 2003; and

BERSAMIN, J.:
For over two decades, the issue of whether the
sequestered sizable block of shares representing 20%
of the outstanding capital stock of San Miguel
Corporation (SMC) at the time of acquisition belonged
to their registered owners or to the coconut farmers
has remained unresolved. Through this decision, the
Court aims to finally resolve the issue and terminate
the uncertainty that has plagued that sizable block of
shares since then.
These consolidated cases were initiated on various
dates by the Republic of the Philippines (Republic) via
petitions for certiorari in G.R. Nos. 166859[1] and
169023,[2] and via petition for review on certiorari in
180702,[3] the first two petitions being brought to
assail the following resolutions issued in Civil Case No.
0033-F by the Sandiganbayan, and the third being
brought to appeal the adverse decision promulgated
on November 28, 2007 in Civil Case No. 0033-F by the
Sandiganbayan.
Specifically, the petitions and their particular reliefs
are as follows:
(a)
G.R. No. 166859 (petition for certiorari), to
assail the resolution promulgated on December 10,
2004[4] denying the Republics Motion For Partial
Summary Judgment;
(b)
G.R. No. 169023 (petition for certiorari), to
nullify and set aside, firstly, the resolution
promulgated on October 8, 2003,[5] and, secondly,

(c)
G.R. No. 180702 (petition for review on
certiorari), to appeal the decision promulgated on
November 28, 2007.[7]
ANTECEDENTS
On July 31, 1987, the Republic commenced Civil Case
No. 0033 in the Sandiganbayan by complaint,
impleading as defendants respondent Eduardo M.
Cojuangco, Jr. (Cojuangco) and 59 individual
defendants. On October 2, 1987, the Republic
amended the complaint in Civil Case No. 0033 to
include two additional individual defendants. On
December 8, 1987, the Republic further amended the
complaint through its Amended Complaint [Expanded
per Court-Approved Plaintiffs Manifestation/Motion
Dated Dec. 8, 1987] albeit dated October 2, 1987.
More than three years later, on August 23, 1991, the
Republic once more amended the complaint apparently
to avert the nullification of the writs of sequestration
issued against properties of Cojuangco. The amended
complaint dated August 19, 1991, designated as Third
Amended Complaint [Expanded Per Court-Approved
Plaintiffs Manifestation/Motion Dated Dec. 8, 1987],[8]
impleaded in addition to Cojuangco, President Marcos,
and First Lady Imelda R. Marcos nine other individuals,
namely: Edgardo J. Angara, Jose C. Concepcion,
Avelino V. Cruz, Eduardo U. Escueta, Paraja G.
Hayudini, Juan Ponce Enrile, Teodoro D. Regala, and
Rogelio Vinluan, collectively, the ACCRA lawyers, and
Danilo Ursua, and 71 corporations.

On March 24, 1999, the Sandiganbayan allowed the

subdivision of the complaint in Civil Case No. 0033 into
eight complaints, each pertaining to distinct
transactions and properties and impleading as
defendants only the parties alleged to have
participated in the relevant transactions or to have
owned the specific properties involved. The subdivision
resulted into the following subdivided complaints, to
wit:
Subdivided Complaint Subject Matter
1.
Civil Case No. 0033-A
Anomalous Purchase and Use of First United Bank
(now United Coconut Planters Bank)
2.
Civil Case No. 0033-B
Creation of Companies Out of Coco Levy Funds
3.
Civil Case No. 0033-C
Creation and Operation of Bugsuk Project and Award
of P998 Million Damages to Agricultural Investors, Inc.

4.
Civil Case No. 0033-D
Disadvantageous Purchases and Settlement of the
Accounts of Oil Mills Out of Coco Levy Funds
5.
Civil Case No. 0033-E

Unlawful Disbursement and Dissipation of Coco Levy

Funds
6.
Civil Case No. 0033-F
Acquisition of SMC shares of stock
7.
Civil Case No. 0033-G
Acquisition of Pepsi-Cola
8.
Civil Case No. 0033-H
Behest Loans and Contracts
In Civil Case No. 0033-F, the individual defendants
were Cojuangco, President Marcos and First Lady
Imelda R. Marcos, the ACCRA lawyers, and Ursua.
Impleaded as corporate defendants were Southern
Luzon Oil Mills, Cagayan de Oro Oil Company,
Incorporated, Iligan Coconut Industries, Incorporated,
San Pablo Manufacturing Corporation, Granexport
Manufacturing Corporation, Legaspi Oil Company,
Incorporated, collectively referred to herein as the
CIIF Oil Mills, and their 14 holding companies, namely:
Soriano
Shares,
Incorporated,
Roxas
Shares,
Incorporated, Arc Investments, Incorporated, Toda
Holdings,
Incorporated,
ASC
Investments,
Incorporated, Randy Allied Ventures, Incorporated, AP
Holdings, Incorporated, San Miguel Corporation
Officers,
Incorporated,
Te
Deum
Resources,
Incorporated, Anglo Ventures, Incorporated, Rock
Steel Resources, Incorporated, Valhalla Properties,
Incorporated, and First Meridian Development,
Incorporated.

Allegedly, Cojuangco purchased a block of 33,000,000

shares of SMC stock through the 14 holding companies
owned by the CIIF Oil Mills. For this reason, the block
of 33,133,266 shares of SMC stock shall be referred to
as the CIIF block of shares.
Also impleaded as defendants in Civil Case No. 0033-F
were several corporations[9] alleged to have been
under Cojuangcos control and used by him to acquire
the block of shares of SMC stock totaling 16,276,879
at the time of acquisition (representing approximately
20% percent of the capital stock of SMC). These
corporations are referred to as Cojuangco corporations
or companies, to distinguish them from the CIIF Oil
Mills. Reference hereafter to Cojuangco and the
Cojuangco corporations or companies shall be as
Cojuangco, et al., unless the context requires
individualization.
The material averments of the Republics Third
Amended Complaint (Subdivided)[10] in Civil Case No.
0033-F included the following:
12. Defendant Eduardo Cojuangco, Jr., served as a
public officer during the Marcos administration. During
the period of his incumbency as a public officer, he
acquired assets, funds, and other property grossly and
manifestly disproportionate to his salaries, lawful
income and income from legitimately acquired
property.
13. Having fully established himself as the undisputed
coconut king with unlimited powers to deal with the
coconut levy funds, the stage was now set for
Defendant Eduardo M. Cojuangco, Jr. to launch his
predatory forays into almost all aspects of Philippine
economic activity namely: softdrinks, agribusiness, oil

mills, shipping, cement manufacturing, textile, as

more fully described below.
14. Defendant Eduardo Cojuangco, Jr. taking undue
advantage of his association, influence and connection,
acting in unlawful concert with Defendants Ferdinand
E. Marcos and Imelda R. Marcos, and the individual
defendants, embarked upon devices, schemes and
stratagems,
including
the
use
of
defendant
corporations as fronts, to unjustly enrich themselves
at the expense of Plaintiff and the Filipino people, such
as when he misused coconut levy funds to buy out
majority of the outstanding shares of stock of San
Miguel Corporation in order to control the largest agribusiness, foods and beverage company in the
Philippines, more particularly described as follows:
(a) Having control over the coconut levy, Defendant
Eduardo M. Cojuangco invested the funds in diverse
activities, such as the various businesses SMC was
engaged in (e.g. large beer, food, packaging, and
livestock);
(b) He entered SMC in early 1983 when he bought
most of the 20 million shares Enrique Zobel owned in
the Company. The shares, worth $49 million,
represented 20% of SMC;
(c) Later that year, Cojuangco also acquired the
Soriano stocks through a series of complicated and
secret agreements, a key feature of which was a
voting trust agreement that stipulated that Andres, Jr.
or his heir would proxy over the vote of the shares
owned by Soriano and Cojuangco. This agreement,
which accounted for 30% of the outstanding shares of
SMC and which lasted for five (5) years, enabled the
Sorianos to retain management control of SMC for the
same period;

(d) Furthermore, in exchange for an SMC investment

of $45 million in non-voting preferred shares in UCPB,
Soriano served as the vice-chairman of the supposed
bank of the coconut farmers, UCPB, and in return,
Cojuangco, for investing funds from the coconut levy,
was named vice-chairman of SMC;
(e) Consequently, Cojuangco enjoyed the privilege of
appointing his nominees to the SMC Board, to which
he appointed key members of the ACCRA Law Firm
(herein Defendants) instead of coconut farmers whose
money really funded the sale;
(f) The scheme of Cojuangco to use the lawyers of the
said Firm was revealed in a document which he signed
on 19 February 1983 entitled Principles and
Framework of Mutual Cooperation and Assistance
which governed the rules for the conduct of
management of SMC and the disposition of the shares
which he bought.
(g) All together, Cojuangco purchased 33 million
shares of the SMC through the following 14 holding
companies:
a) Soriano Shares, Inc. 1,249,163
b) ASC Investors, Inc. 1,562,449
c) Roxas Shares, Inc. 2,190,860
d) ARC Investors, Inc. 4,431,798
e) Toda Holdings, Inc. 3,424,618
f) AP Holdings, Inc. 1,580,997
g) Fernandez Holdings, Inc. 838,837
h) SMC Officers Corps., Inc. 2,385,987
i) Te Deum Resources, Inc. 2,674,899
j) Anglo Ventures Corp. 1,000.000
k) Randy Allied Ventures, Inc. 1,000,000

l) Rock Steel Resources, Inc. 2,432,625

m) Valhalla Properties Ltd., Inc. 1,361,033
n) First Meridian Development, Inc. 1,000,000
___________
33,133,266
3.1. The same fourteen companies were in turn owned
by the following six (6) so-called CIIF Companies
which were:
a) San Pablo Manufacturing Corp. 19%
b) Southern Luzon Coconut Oil Mills, Inc. 11%
c) Granexport Manufacturing Corporation 19%
d) Legaspi Oil Company, Inc. 18%
e) Cagayan de Oro Oil Company, Inc. 18%
f) Iligan Coconut Industries, Inc. 15%
_____
100%
(h) Defendant Corporations are but shell corporations
owned by interlocking shareholders who have
previously admitted that they are just nominee
stockholders who do not have any proprietary interest
over the shares in their names. The respective
affidavits of the following, namely: Jose C.
Concepcion, Florentino M. Herrera III, Teresita J.
Herbosa, Teodoro D. Regala, Victoria C. de los Reyes,
Manuel R. Roxas, Rogelio A. Vinluan, Eduardo U.
Escuete and Franklin M. Drilon, who were all, at the
time they became such stockholders, lawyers of the
Angara Abello Concepcion Regala & Cruz (ACCRA) Law
Offices, the previous counsel who incorporated said
corporations, prove that they were merely nominee
stockholders thereof.
(i) Mr. Eduardo M. Cojuangco, Jr., acquired a total of
16,276,879 shares of San Miguel Corporation from the

Ayala group: of said shares, a total of 8,138,440

(broken into 7,128,227 Class A and 1,010,213 Class B
shares) were placed in the names of Meadowlark
Plantations, Inc. (2,034,610) and Primavera Farms,
Inc. (4,069,220). The Articles of Incorporation of these
three companies show that Atty. Jose C. Concepcion of
ACCRA owns 99.6% of the entire outstanding stock.
The same shareholder executed three (3) separate
Declaration of Trust and Assignment of Subscription:
in favor of a BLANK assignee pertaining to his
shareholdings in Primavera Farms, Inc., Silver Leaf
Plantations, Inc. and Meadowlark Plantations, Inc.
(k) The other respondent Corporations are owned by
interlocking shareholders who are likewise lawyers in
the ACCRA Law Offices and had admitted their status
as nominee stockholders only.
(k-1) The corporations: Agricultural Consultancy
Services, Inc., Archipelago Realty Corporation, Balete
Ranch, Inc., Black Stallion Ranch, Inc., Discovery
Realty Corporation, First United Transport, Inc.,
Kaunlaran
Agricultural
Corporation,
LandAir
International Marketing Corporation, Misty Mountains
Agricultural Corporation, Pastoral Farms, Inc., Oro
Verde Services, Inc. Radyo Filipino Corporation,
Reddee Developers, Inc., Verdant Plantations, Inc. and
Vesta Agricultural Corporation, were incorporated by
lawyers of ACCRA Law Offices.
(k-2) With respect to PCY Oil Manufacturing
Corporation and Metroplex Commodities, Inc., they are
controlled respectively by HYCO, Inc. and Ventures
Securities, Inc., both of which were incorporated
likewise by lawyers of ACCRA Law Offices.

(k-3) The stockholders who appear as incorporators in

most of the other Respondents corporations are also
lawyers of the ACCRA Law Offices, who as early as
1987 had admitted under oath that they were acting
only as nominee stockholders.
(l) These companies, which ACCRA Law Offices
organized for Defendant Cojuangco to be able to
control more than 60% of SMC shares, were funded by
institutions which depended upon the coconut levy
such as the UCPB, UNICOM, United Coconut Planters
Assurance
Corp.
(COCOLIFE),
among
others.
Cojuangco and his ACCRA lawyers used the funds from
6 large coconut oil mills and 10 copra trading
companies to borrow money from the UCPB and
purchase these holding companies and the SMC
stocks. Cojuangco used $150 million from the coconut
levy, broken down as follows:
Amount Source Purpose
(in million)
$22.26 Oil Mills equity in holding
companies
$65.6 Oil Mills loan to holding
companies
$61.2 UCPB loan to holding
companies [164]
The entire amount, therefore, came from the coconut
levy, some passing through the Unicom Oil mills,
others directly from the UCPB.
(m) With his entry into the said Company, it began to
get favors from the Marcos government, significantly

the lowering of the excise taxes (sales and specific

taxes) on beer, one of the main products of SMC.
(n) Defendant Cojuangco controlled SMC from 1983
until his co-defendant Marcos was deposed in 1986.
(o) Along with Cojuangco, Defendant Enrile and
ACCRA also had interests in SMC, broken down as
follows:
% of SMC Owner
Cojuangco
31.3% coconut levy money
18% companies linked to Cojuangco

COCOMARK. CIC, and more than twenty other coconut

levy-funded corporations, including the acquisition of
San
Miguel
Corporation
shares
and
its
institutionalization through presidential directives of
the coconut monopoly. Through insidious means and
machinations, ACCRA, being the wholly-owned
investment arm, ACCRA Investments Corporation,
became the holder of approximately fifteen million
shares representing roughly 3.3% of the total
outstanding capital stock of UCPB as of 31 March
1987. This ranks ACCRA Investments Corporation
number 44 among the top 100 biggest stockholders of
UCPB
which
has
approximately
1,400,000
shareholders. On the other hand, the corporate books
show the name Edgardo J. Angara as holding
approximately 3,744 shares as of February, 1984.

5.2% government
5.2% SMC employee retirement fund
Enrile & ACCRA
1.8% Enrile
1.8% Jaka Investment Corporation

16. The acts of Defendants, singly or collectively,

and/or in unlawful concert with one another, constitute
gross abuse of official position and authority, flagrant
breach of public trust and fiduciary obligations, brazen
abuse of right and power, unjust enrichment, violation
of the constitution and laws of the Republic of the
Philippines, to the grave and irreparable damage of
Plaintiff and the Filipino people.[11]

1.8% ACCRA Investment Corporation

15. Defendants Eduardo Cojuangco, Jr., Edgardo J.
Angara, Jose C. Concepcion, Teodoro Regala, Avelino
Cruz, Rogelio Vinluan, Eduardo U. Escueta and Paraja
G. Hayudini of the Angara Concepcion Cruz Regala and
Abello law offices (ACCRA) plotted, devised, schemed,
conspired and confederated with each other in setting
up, through the use of coconut levy funds, the
financial and corporate framework and structures that
led to the establishment of UCPB, UNICOM, COCOLIFE,

On June 17, 1999, Ursua and Enrile each filed his

separate Answer with Compulsory Counterclaims.
Before filing their answer, the ACCRA lawyers sought
their exclusion as defendants in Civil Case No. 0033,
averring that even as they admitted having assisted in
the organization and acquisition of the companies
included in Civil Case No. 0033, they had acted as
mere nominees-stockholders of corporations involved
in the sequestration proceedings pursuant to office

practice. After the Sandiganbayan denied their motion,

they elevated their cause to this Court, which
ultimately ruled in their favor in the related cases of
Regala, et al. v. Sandiganbayan, et al.[12] and
Hayudini v. Sandiganbayan, et al.,[13] as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the
Resolutions of respondent Sandiganbayan (First
Division) promulgated on March 18, 1992 and May 21,
1992 are hereby ANNULLED and SET ASIDE.
Respondent Sandiganbayan is further ordered to
exclude petitioners Teodoro D. Regala, Edgardo J.
Angara, Avelino V. Cruz, Jose C. Concepcion, Victor P.
Lazatin, Eduardo U. Escueta and Paraja G. Hayudini as
parties-defendants in SB Civil Case No. 0033 entitled
Republic of the Philippines v. Eduardo Cojuangco, Jr.,
et al.
SO ORDERED.
Conformably with the ruling, the Sandiganbayan
excluded the ACCRA lawyers from the case on May 24,
2000.[14]
On June 23, 1999, Cojuangco filed his Answer to the
Third Amended Complaint,[15] averring the following
affirmative defenses, to wit:
7.00.
The
Presidential
Commission
on
Good
Government (PCGG) is without authority to act in the
name and in behalf of the Republic of the Philippines.
7.01. As constituted in E.O. No. 1, the PCGG was
composed of Minister Jovito R. Salonga, as Chairman,
Mr. Ramon Diaz, Mr. Pedro L. Yap, Mr. Raul Daza and
Ms. Mary Concepcion Bautista, as Commissioners.
When the complaint in the instant case was filed,

Minister Salonga, Mr. Pedro L. Yap and Mr. Raul Daza

had already left the PCGG. By then the PCGG had
become functus officio.
7.02. The Sandiganbayan has no jurisdiction over the
complaint or over the transaction alleged in the
complaint.
7.03. The complaint does not allege any cause of
action.
7.04. The complaint is not brought in the name of the
real parties in interest, assuming any cause of action
exists.
7.05. Indispensable and necessary parties have not
been impleaded.
7.06. There is improper joinder of causes of action
(Sec. 6, Rule 2, Rules of Civil Procedure). The causes
of action alleged, if any, do not arise out of the same
contract, transaction or relation between the parties,
nor are they simply for money, or are of the same
nature and character.
7.07. There is improper joinder of parties defendants
(Sec. 11, Rule 3, Rules of Civil Procedure).The causes
of action alleged as to defendants, if any, do not
involve a single transaction or a related series of
transactions. Defendant is thus compelled to litigate in
a suit regarding matters as to which he has no
involvement. The questions of fact and law involved
are not common to all defendants.
7.08. In so far as the complaint seeks the forfeiture of
assets allegedly acquired by defendant manifestly out
of proportion to their salaries, to their other lawful

income and income from legitimately acquired

property, under R.A. 1379, the previous inquiry similar
to preliminary investigation in criminal cases required
to be conducted under Sec. 2 of that law before any
suit for forfeiture may be instituted, was not
conducted; as a consequence, the Court may not
acquire and exercise jurisdiction over such a suit.
7.09. The complaint in the instant suit was filed July
31, 1987, or within one year before the local election
held on January 18, 1988. If this suit involves an
action under R.A. 1379, its institution was also in
direct violation of Sec. 2, R.A. No. 1379.
7.10. E.O. No. 1, E.O. No. 2, E.O. No. 14 and 14-A,
are unconstitutional. They violate due process, equal
protection, ex post facto and bill of attainder
provisions of the Constitution.
7.11. Acts imputed to defendant which he had
committed were done pursuant to law and in good
faith.
The Cojuangco corporations Answer[16] had the same
tenor as the Answer of Cojuangco.
In his own Answer with Compulsory Counterclaims,
[17] Ursua averred affirmative and special defenses.
In his own Answer with Compulsory Counterclaims,
[18] Enrile specifically denied the material averments
of the Third Amended Complaint and asserted
affirmative defenses.
The CIIF Oil Mills
affirmative defenses.

Answer[19]

also

contained

On December 20, 1999, the Sandiganbayan scheduled

the pre-trial in Civil Case No. 0033-F on March 8,
2000, giving the parties sufficient time to file their PreTrial Briefs prior to that date. Subsequently, the
parties filed their respective Pre-Trial Briefs, as follows:
Cojuangco and the Cojuangco corporations, jointly on
February 14, 2000; Enrile, on March 1, 2000; the CIIF
Oil Mills, on March 3, 2000; and Ursua, on March 6,
2000. However, the Republic sought several extensions
to file its own Pre-Trial Brief, and eventually did so on
May 9, 2000.
In the meanwhile, some non-parties sought to
intervene. On November 22, 1999, GABAY Foundation,
Inc. (GABAY) filed its complaint-in-intervention. On
February 24, 2000, the Philippine Coconut Producers
Federation, Inc., Maria Clara L. Lobregat, Jose R.
Eleazar, Jr., Domingo Espina, Jose Gomez, Celestino
Sabate, Manuel del Rosario, Jose Martinez, Jr., and
Eladio Chato (collectively referred to as COCOFED,
considering that the co-intervenors were its officers)
also sought to intervene, citing the October 2, 1989
ruling in G.R. No. 75713 entitled COCOFED v. PCGG
whereby the Court recognized COCOFED as the private
national association of coconut producers certified in
1971 by the PHILCOA as having the largest
membership among such producers and as such
entrusted it with the task of maintaining continuing
liaison with the different sectors of the industry, the
government and its mass base. Pending resolution of
its motion for intervention, COCOFED filed a Pre-Trial
Brief on March 2, 2000.
On May 24, 2000, the Sandiganbayan denied GABAYs
intervention without prejudice because it found that
the allowance of GABAY to enter under the special
character in which it presents itself would be to open

the doors to other groups of coconut farmers whether

of the same kind or of any other kind which could be
considered a sub-class or a sub-classification of the
coconut planters or the coconut industry of this
country.[20]
COCOFEDs intervention as defendant was allowed on
May 24, 2000, however, because the position taken by
the COCOFED is relevant to the proceedings herein, if
only to state that there is a special function which the
COCOFED and the coconut planters have in the matter
of the coconut levy funds and the utilization of those
funds, part of which is in dispute in the instant matter.
[21]
The pre-trial was actually held on May 24, 2000,[22]
during which the Sandiganbayan sought clarification
from the parties, particularly the Republic, on their
respective positions, but at the end it found the
clarifications inadequately enlightening. Nonetheless,
the Sandiganbayan, not disposed to reset, terminated
the pre-trial:
xxx primarily because the Court is given a very clear
impression that the plaintiff does not know what
documents will be or whether they are even available
to prove the causes of action in the complaint. The
Court has pursued and has exerted every form of
inquiry to see if there is a way by which the plaintiff
could explain in any significant particularity the acts
and the evidence which will support its claim of wrongdoing by the defendants. The plaintiff has failed to do
so.[23]
The following material portions of the pre-trial
order[24] are quoted to provide a proper perspective
of what transpired during the pre-trial, to wit:

Upon oral inquiry from the Court, the issues which

were being raised by plaintiff appear to have been
made on a very generic character. Considering that
any claim for violation or breach of trust or deception
cannot be made on generic statements but rather by
specific acts which would demonstrate fraud or breach
of trust or deception, together with the evidence in
support thereof, the same was not acceptable to the
Court.
The plaintiff through its designated counsel for this
morning, Atty. Dennis Taningco, has represented to
this Court that the annexes to its pre-trial brief, more
particularly the findings of the COA in its various
examinations, copies of which COA reports are
attached to the pre-trial brief, would demonstrate the
wrong, the act or omission attributed to the
defendants or to several of them and the basis,
therefore, for the relief that plaintiff seeks in its
complaint. It would appear, however, that the plaintiff
through its counsel at this time is not prepared to go
into the specifics of the identification of these wrongs
or omissions attributed to plaintiff.
The Court has reminded the plaintiff that a COA report
proves itself only in proceedings where the issue arises
from a review of the accountability of particular
officers and, therefore, to show the existence of
shortages or deficiencies in an examination conducted
for that purpose, provided that such a report is
accompanied by its own working papers and other
supporting documents.
In civil cases such as this, a COA report would not
have the same independent probative value since it is
not a review of the accountability of public officers for

public property in their custody as accountable

officers. It has been the stated view of this Court that
a COA report, to be of significant evidence, may itself
stand only on the basis of the supporting documents
that upon which it is based and upon an analysis made
by those who are competent to do so. The Court,
therefore, sought a more specific statement from
plaintiff as to what these documents were and which
of them would prove a particular act or omission or a
series of acts or omissions purportedly committed by
any, by several or by all of the defendants in any
particular stage of the chain of alleged wrong-doing in
this case.
The plaintiff was not in a position to do so.
The Court has remonstrated with the plaintiff, insofar
as its inadequacy is concerned, primarily because this
case was set for pre-trial as far back as December and
has been reset from its original setting, with the
undertaking by the plaintiff to prepare itself for these
proceedings. It appears to this Court at this time that
the failure of the plaintiff to have available responses
and specific data and documents at this stage is not
because the matter has been the product of oversight
or notes and papers left elsewhere; rather, the
agitation of this Court arises from the fact that at this
very stage, the plaintiff through its counsel does not
know what these documents are, where these
documents will be and is still anticipating a submission
or a delivery thereof by COA at an undetermined time.
The justification made by counsel for this stance is
that this is only pre-trial and this information and the
documents are not needed yet.
The Court is not prepared to postpone the pre-trial
anew primarily because the Court is given a very clear

impression that the plaintiff does not know what

documents will be or whether they are even available
to prove the causes of action in the complaint. The
Court has pursued and has exerted every form of
inquiry to see if there is a way by which the plaintiff
could explain in any significant particularity the acts
and the evidence which will support its claim of wrongdoing by the defendants. The plaintiff has failed to do
so.
Defendants Cojuangco have come back and reiterated
their previous inquiry as to the statement of the cause
of action and the description thereof. While the Court
acknowledges that logically, that statement along that
line would be primary, the Court also recognizes that
sometimes the phrasing of the issue may be
determined or may arise after a statement of the
evidence is determined by this Court because the
Court can put itself in a position of more clearly and
perhaps more accurately stating what the issues are.
The Pre-Trial Order, after all, is not so much a
reflection of merely separate submissions by all of the
parties involved, witnesses by the Court, as to what
the subject matter of litigation will be, including the
determination of what matters of fact remain
unresolved. At this time, the plaintiff has not taken the
position on any factual statement or any piece of
evidence which can be subject of admission or denial,
nor any specifics of any act which could be disputed by
the defendants; what plaintiff through counsel has
stated are general conclusions, general statements of
abuse and misuse and opportunism.
After an extended break requested by some of the
parties, the sessions were resumed and nothing anew
arose from the plaintiff. The plaintiff sought fifteen
(15) days to file a reply to the comments and

observations made by defendant Cojuangco to the

pre-trial brief of the plaintiff. This Court denied this
Request since the submissions in preparation for pretrial are not litigious or contentious matters. They are
mere assertions or positions which may or may not be
meritorious depending upon the view of the Court of
the entire case and if useful at the pre-trial. At this
stage, the plaintiff then reiterated its earlier request to
consider the pre-trial terminated. The Court sought
the positions of the other parties, whether or not they
too were prepared to submit their respective positions
on the basis of what was before the Court at pre-trial.
All of the parties, in the end, have come to an
agreement that they were submitting their own
respective positions for purpose of pre-trial on the
basis of the submissions made of record.
With all of the above, the pre-trial is now deemed
terminated.
This Order has been overly extended simply because
there has been a need to put on record all of the
events that have taken place leading to the
conclusions which were drawn herein.
The parties have indicated a desire to make their
submissions outside of trial as a consequence of this
terminated pre-trial, with the plea that the transcript
of the proceedings this morning be made available to
them, so that they may have the basis for whatever
assertions they will have to make either before this
Court or elsewhere. The Court deems the same
reasonable and the Court now gives the parties fifteen
(15) days after notice to them that the transcript of
stenographic notes of the proceedings herein are
complete and ready for them to be retrieved. Settings
for trial or for any other proceeding hereafter will be

fixed by this Court either upon request of the parties

or when the Court itself shall have determined that
nothing else has to be done.
The Court has sought confirmation from the parties
present as to the accuracy of the recapitulation herein
of the proceedings this morning and the Court has
gotten assent from all of the parties.
xxx
SO ORDERED.[25]
In the meanwhile, the Sandiganbayan, in order to
conform with the ruling in Presidential Commission on
Good Government v. Cojuangco, et al.,[26] resolved
COCOFEDs Omnibus Motion (with prayer for
preliminary injunction) relative to who should vote the
UCPB shares under sequestration, holding as follows:
[27]
In the light of all of the above, the Court submits itself
to jurisprudence and with the statements of the
Supreme Court in G.R. No. 115352 entitled Enrique
Cojuangco, Jr., et al. vs. Jaime Calpo, et al. dated
January 27, 1997, as well as the resolution of the
Supreme Court promulgated on January 27, 1999 in
the case of PCGG vs. Eduardo Cojuangco, Jr., et al.,
G.R. No. 13319 which included the Sandiganbayan as
one of the respondents. In these two cases, the
Supreme Court ruled that the voting of sequestered
shares of stock is governed by two considerations,
namely:
1. whether there is prima facie evidence showing that
the said shares are ill-gotten and thus belong to the
State; and

2. whether there is an imminent danger of dissipation

thus necessitating their continued sequestration and
voting by the PCGG while the main issue pends with
the Sandiganbayan.
xxx xxx xxx.
In view hereof, the movants COCOFED, et al and
Ballares, et al. as well as Eduardo Cojuangco, et al.
who were acknowledged to be registered stockholders
of the UCPB are authorized, as are all other registered
stockholders of the United Coconut Planters Bank,
until further orders from this Court, to exercise their
rights to vote their shares of stock and themselves to
be voted upon in the United Coconut Planters Bank
(UCPB) at the scheduled Stockholders Meeting on
March 6, 2001 or on any subsequent continuation or
resetting thereof, and to perform such acts as will
normally follow in the exercise of these rights as
registered stockholders.
xxx xxx xxx.
Consequently, on March 1, 2001, the Sandiganbayan
issued a writ of preliminary injunction to enjoin the
PCGG from voting the sequestered shares of stock of
the UCPB.
On July 25, 2002, before Civil Case No. 0033-F could
be set for trial, the Republic filed a Motion for
Judgment on the Pleadings and/or for Partial Summary
Judgment (Re: Defendants CIIF Companies, 14
Holding Companies and COCOFED, et al.).[28]
Cojuangco, Enrile, and COCOFED separately opposed
the motion. Ursua adopted COCOFEDs opposition.
Thereafter, the Republic likewise filed a Motion for
Partial Summary Judgment [Re: Shares in San Miguel

Corporation Registered in the Respective Names of

Defendant Eduardo M. Cojuangco, Jr. and the
Defendant Cojuangco Companies].[29]
Cojuangco, et al. opposed the motion,[30] after which
the Republic submitted its reply.[31]
On February 23, 2004, the Sandiganbayan issued an
order,[32] in which it enumerated the admitted facts
or facts that appeared to be without substantial
controversy in relation to the Republics Motion for
Judgment on the Pleadings and/or for Partial Summary
Judgment [Re: Defendants CIIF Companies, 14
Holding Companies and COCOFED, et al.].
Commenting on the order of February 23, 2004,
Cojuangco, et al. specified the items they considered
as inaccurate, but particularly interposed no objection
to item no. 17 (to the extent that item no. 17 stated
that Cojuangco had disclaimed any interest in the CIIF
block SMC shares of stock registered in the names of
the 14 corporations listed in item no. 1 of the order).
[33]
The Republic also filed its Comment,[34] but
COCOFED denied the admitted facts summarized in
the order of February 23, 2004.[35]
Earlier, on October 8, 2003,[36] the Sandiganbayan
resolved the various pending motions and pleadings
relative to the writs of sequestration issued against the
defendants, disposing:
IN VIEW OF THE FOREGOING, the Writs of
Sequestration Nos. (a) 86-0042 issued on April 8,
1986, (b) 86-0062 issued on April 21, 1986, (c) 860069 issued on April 22, 1986, (d) 86-0085 issued on
May 9, 1986, (e) 86-0095 issued on May 16, 1986, (f)

86-0096 dated May 16, 1986, (g) 86-0097 issued on

May 16, 1986, (h) 86-0098 issued on May 16, 1986
and (i) 87-0218 issued on May 27, 1987 are hereby
declared automatically lifted for being null and void.
Despite the lifting of the writs of sequestration, since
the Republic continues to hold a claim on the shares
which is yet to be resolved, it is hereby ordered that
the following shall be annotated in the relevant
corporate books of San Miguel Corporation:
(1) any sale, pledge, mortgage or other disposition of
any of the shares of the Defendants Eduardo
Cojuangco, et al. shall be subject to the outcome of
this case;
(2) the Republic through the PCGG shall be given
twenty (20) days written notice by Defendants
Eduardo Cojuangco, et al. prior to any sale, pledge,
mortgage or other disposition of the shares;
(3) in the event of sale, mortgage or other disposition
of the shares, by the Defendants Cojuangco, et al., the
consideration therefore, whether in cash or in kind,
shall be placed in escrow with Land Bank of the
Philippines, subject to disposition only upon further
orders of this Court; and
(4) any cash dividends that are declared on the shares
shall be placed in escrow with the Land Bank of the
Philippines, subject to disposition only upon further
orders of this Court. If in case stock dividends are
declared, the conditions on the sale, pledge, mortgage
and other disposition of any of the shares as abovementioned in conditions 1, 2 and 3, shall likewise
apply.

In so far as the matters raised by Defendants Eduardo

Cojuangco, et al. in their Omnibus Motion dated
September
23,
1996
and
Reply
to
PCGGs
Comment/Opposition with Motion to Order PCGG to
Complete Inventory, to Nullify Writs of Sequestration
and to Enjoin PCGG from Voting Sequestered Shares
of Stock dated January 3, 1997, considering the above
conclusion, this Court rules that it is no longer
necessary to delve into the matters raised in the said
Motions.
SO ORDERED.[37]
Cojuangco, et al. moved for the modification of the
resolution,[38] praying for the deletion of the
conditions for allegedly restricting their rights. The
Republic also sought reconsideration of the resolution.
[39]
Eventually, on June 24, 2005, the Sandiganbayan
denied both motions, but reduced the restrictions
thuswise:
WHEREFORE, the Motion for Reconsideration (Re:
Resolution dated September 17, 2003 Promulgated on
October 8, 2003) dated October 24, 2003 of Plaintiff
Republic is hereby DENIED for lack of merit. As to the
Motion for Modification (Re: Resolution Promulgated
on October 8, 2003) dated October 22, 2003, the
same is hereby DENIED for lack of merit. However, the
restrictions imposed by this Court in its Resolution
dated September 17, 2003 and promulgated on
October 8, 2003 shall now read as follows:
Despite the lifting of the writs of sequestration, since
the Republic continues to hold a claim on the shares
which is yet to be resolved, it is hereby ordered that

the following shall be annotated in the relevant

corporate books of San Miguel Corporation:
a) any sale, pledge, mortgage or other disposition of
any of the shares of the Defendants Eduardo
Cojuangco, et al. shall be subject to the outcome of
this case.

On May 6, 2004, the Sandiganbayan denied SMCs

motion to intervene.[44] SMC sought reconsideration,
[45] and its motion to that effect was opposed by
COCOFED and the Republic.

b) the Republic through the PCGG shall be given

twenty (20) days written notice by Defendants
Eduardo Cojuangco, et al. prior to any sale, pledge,
mortgage or other disposition of the shares.

On May 7, 2004, the Sandiganbyan granted the

Republics Motion for Judgment on the Pleadings
and/or Partial Summary Judgment (Re: Defendants
CIIF Companies, 14 Holding Companies and
COCOFED, et al.) and rendered a Partial Summary
Judgment,[46] the dispositive portion of which reads
as follows:

SO ORDERED.[40]

WHEREFORE, in view of the foregoing, we hold that:

Pending resolution of the motions relative to the lifting

of the writs of sequestration, SMC filed a Motion for
Intervention with attached Complaint-in-Intervention,
[41] alleging, among other things, that it had an
interest in the matter in dispute between the Republic
and defendants CIIF Companies for being the owner
by purchase of a portion (i.e., 25,450,000 SMC shares
covered by Stock Certificate Nos. A0004129 and
B0015556 of the so-called CIIF block of SMC shares of
stock sought to be recovered as alleged ill-gotten
wealth).
Although Cojuangco, et al. interposed no objection to
SMCs intervention, the Republic opposed,[42] averring
that the intervention would be improper and was a
mere attempt to litigate anew issues already raised
and passed upon by the Supreme Court. COCOFED
similarly opposed SMCs intervention,[43] and Ursua
adopted its opposition.

The Motion for Partial Summary Judgment (Re:

Defendants CIIF Companies, 14 Holding Companies
and Cocofed, et al.) filed by Plaintiff is hereby
GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1.
2.
3.
4.
5.
6.

Southern Luzon Coconut Oil Mills (SOLCOM);

Cagayan de Oro Oil Co., Inc. (CAGOIL);
Iligan Coconut Industries, Inc. (ILICOCO);
San Pablo Manufacturing Corp. (SPMC);
Granexport Manufacturing Corp. (GRANEX); and
Legaspi Oil Co., Inc. (LEGOIL),

AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:

1.
2.
3.
4.
5.
6.
7.

Soriano Shares, Inc.;

ACS Investors, Inc.;
Roxas Shares, Inc.;
Arc Investors, Inc.;
Toda Holdings, Inc.;
AP. Holdings, Inc.;
Fernandez Holdings, Inc.;

8. SMC Officers Corps. Inc.;

9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION
(SMC) SHARES OF STOCK TOTALING 33,133,266
SHARES AS OF 1983 TOGETHER WITH ALL DIVIDENDS
DECLARED, PAID AND ISSUED THEREON AS WELL AS
ANY INCREMENTS THERETO ARISING FROM, BUT NOT
LIMITED TO, EXERCISE OF PRE-EMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT IN-TRUST
FOR ALL THE COCONUT FARMERS AND ORDERED
RECONVEYED TO THE GOVERNMENT.
Let the trial of this Civil Case proceed with respect to
the issues which have not been disposed of in this
partial
Summary
Judgment,
including
the
determination of whether the CIIF Block of SMC
Shares adjudged to be owned by the Government
represents 27% of the issued and outstanding capital
stock of SMC according to plaintiff or 31.3% of said
capital stock according to COCOFED, et al. and
Ballares, et al.
SO ORDERED.[47]
In the same resolution of May 7, 2004, the
Sandiganbayan considered the Motions to Dismiss filed
by Cojuangco, et al. on August 2, 2000 and by Enrile
on September 4, 2000 as overtaken by the Republics
Motion for Judgment on the Pleadings and/or Partial
Summary Judgment.[48]

On May 25, 2004, Cojuangco, et al. filed their Motion

for Reconsideration.[49]
COCOFED filed its so-called Class Action Omnibus
Motion: (a) Motion to Dismiss for Lack of Subject
Matter Jurisdiction and Alternatively, (b) Motion for
Reconsideration dated May 26, 2004.[50]
The Republic submitted its Consolidated Comment.
[51]
Relative to the resolution of May 7, 2004, the
Sandiganbayan issued its resolution of December 10,
2004,[52] denying the Republics Motion for Partial
Summary Judgment (Re: Shares in San Miguel
Corporation Registered in the Respective Names of
Defendants Eduardo M. Cojuangco, Jr. and the
defendant Cojuangco Companies) upon the following
reasons:
In the instant case, a circumspect review of the
records show that while there are facts which appear
to be undisputed, there are also genuine factual issues
raised by the defendants which need to be threshed
out in a full-blown trial. Foremost among these issues
are the following:
1)
What are the various sources of funds, which
the defendant Cojuangco and his companies claim
they utilized to acquire the disputed SMC shares?
2)
Whether or not such funds acquired from
alleged various sources can be considered coconut
levy funds;
3)
Whether or not defendant Cojuangco had indeed
served in the governing bodies of PC, UCPB and/or

CIIF Oil Mills at the time the funds used to purchase

the SMC shares were obtained such that he owed a
fiduciary duty to render an account to these entities as
well as to the coconut farmers;
4)
Whether or not defendant Cojuangco took
advantage of his position and/or close ties with then
President Marcos to obtain favorable concessions or
exemptions from the usual financial requirements from
the lending banks and/or coco-levy funded companies,
in order to raise the funds to acquire the disputed SMC
shares; and if so, what are these favorable
concessions or exemptions?
Answers to these issues are not evident from the
submissions of the plaintiff and must therefore be
proven through the presentation of relevant and
competent evidence during trial. A perusal of the
subject Motion shows that the plaintiff hastily derived
conclusions from the defendants statements in their
previous pleadings although such conclusions were not
supported by categorical facts but only mere
inferences. In the Reply dated October 2, 2003, the
plaintiff construed the supposed meaning of the
phrase various sources (referring to the source of
defendant Cojuangcos funds which were used to
acquire the subject SMC shares), which plaintiff said
was quite obvious from the defendants admission in
his Pre-Trial Brief, which we quote:
According to Cojuangcos own Pre-Trial Brief, these socalled various sources, i.e., the sources from which he
obtained the funds he claimed to have used in buying
the 20% SMC shares are not in fact various as he
claims them to be. He says he obtained loans from
UCPB and advances from the CIIF Oil Mills. He even
goes as far as to admit that his only evidence in this

case would have been records of UCPB and a

representative of the CIIF Oil Mills obviously the
records of UCPB relate to the loans that Cojuangco
claims to have obtained from UCPB of which he was
President and CEO while the representative of the CIIF
Oil Mills will obviously testify on the advances
Cojuangco obtained from CIIF Oil Mills of which he was
also the President and CEO.
From the foregoing premises, plaintiff went on to
conclude that:
These admissions of defendant Cojuangco are outright
admissions that he (1) took money from the bank
entrusted by law with the administration of coconut
levy funds and (2) took more money from the very
corporations/oil mills in which part of those coconut
levy funds (the CIIF) was placed treating the funds of
UCPB and the CIIF as his own personal capital to buy
his SMC shares.
We cannot agree with the plaintiffs contention that the
defendants statements in his Pre-Trial Brief regarding
the presentation of a possible CIIF witness as well as
UCPB records, can already be considered as
admissions of the defendants exclusive use and
misuse of coconut levy funds to acquire the subject
SMC shares and defendant Cojuangcos alleged taking
advantage of his positions to acquire the subject SMC
shares. Moreover, in ruling on a motion for summary
judgment, the court should take that view of the
evidence most favorable to the party against whom it
is directed, giving such party the benefit of all
inferences. Inasmuch as this issue cannot be resolved
merely from an interpretation of the defendants
statements in his brief, the UCPB records must be
produced and the CIIF witness must be heard to

ensure that the conclusions that will be derived have

factual basis and are thus, valid.

justified because any appeal by the defendants of the

Partial Summary Judgment would be merely dilatory.

WHEREFORE, in view of the forgoing, the Motion for

Partial Summary Judgment dated July 11, 2003 is
hereby DENIED for lack of merit.

Cojuangco, et al. opposed the motion.[61]

SO ORDERED.
Thereafter, on December 28, 2004, the Sandiganbayan
resolved the other pending motions,[53] viz:
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration dated May 25, 2004 filed by
defendant Eduardo M. Cojuangco, Jr., et al. and the
Class Action Omnibus Motion: (a) Motion to Dismiss
for Lack of Subject Matter Jurisdiction and
Alternatively, (b) Motion for Reconsideration dated May
26, 2004 filed by COCOFED, et al. and Ballares, et al.
are hereby DENIED for lack of merit.
SO ORDERED.[54]
COCOFED moved to set the case for trial,[55] but the
Republic opposed the motion.[56] On their part,
Cojuangco, et al. also moved to set the trial,[57] with
the Republic similarly opposing the motion.[58]
On March 23, 2006, the Sandiganbayan granted the
motions to set for trial and set the trial on August 8,
10, and 11, 2006.[59]
In the meanwhile, on August 9, 2005, the Republic
filed a Motion for Execution of Partial Summary
Judgment (re: CIIF block of SMC Shares of Stock),[60]
contending that an execution pending appeal was

The Sandiganbayan denied the Republics Motion for

Execution of Partial Summary Judgment (re: CIIF
block of SMC Shares of Stock),[62] to wit:
WHEREFORE, the MOTION FOR EXECUTION OF
PARTIAL SUMMARY JUDGMENT (RE: CIIF BLOCK OF
SMC SHARES OF STOCK) dated August 8, 2005 of the
plaintiff is hereby denied for lack of merit. However,
this Court orders the severance of this particular claim
of Plaintiff. The Partial Summary Judgment dated May
7, 2004 is now considered a separate final and
appealable judgment with respect to the said CIIF
Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7,
2004 is modified by deleting the last paragraph of the
dispositive portion which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re:
Defendants CIIF Companies, 14 Holding Companies
and Cocofed, et al.) filed by Plaintiff is hereby
GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1. Southern Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp.
(GRANEX); and

6. Legaspi Oil Co., Inc. (LEGOIL),

SO ORDERED.[63]

AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:

During the pendency of the Republics motion for

execution, Cojuangco, et al. filed a Motion for
Authority to Sell San Miguel Corporation (SMC) shares,
praying for leave to allow the sale of SMC shares to
proceed, exempted from the conditions set forth in the
resolutions promulgated on October 3, 2003 and June
24, 2005.[64] The Republic opposed, contending that
the requested leave to sell would be tantamount to
removing jurisdiction over the res or the subject of
litigation.[65]

1. Soriano Shares, Inc.;

2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION
(SMC) SHARES OF STOCK TOTALING 33,133,266
SHARES AS OF 1983 TOGETHER WITH ALL DIVIDENDS
DECLARED, PAID AND ISSUED THEREON AS WELL AS
ANY INCREMENTS THERETO ARISING FROM, BUT NOT
LIMITED TO, EXERCISE OF PRE-EMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT IN TRUST
FOR ALL THE COCONUT FARMERS AND ORDERED
RECONVEYED TO THE GOVERNMENT.
The aforementioned Partial Summary Judgment is now
deemed a separate appealable judgment which finally
disposes of the ownership of the CIIF Block of SMC
Shares, without prejudice to the continuation of
proceedings with respect to the remaining claims
particularly those pertaining to the Cojuangco, et al.
block of SMC shares.

However, the Sandiganbayan eventually granted the

Motion for Authority to Sell San Miguel Corporation
(SMC) shares.[66]
Thereafter, Cojuangco, et al. manifested to the
Sandiganbayan that the shares would be sold to the
San Miguel Corporation Retirement Plan.[67] Ruling on
the manifestations of Cojuangco, et al., the
Sandiganbayan issued its resolution of July 30, 2007
allowing the sale of the shares, to wit:
This notwithstanding however, while the Court
exempts the sale from the express condition that it
shall be subject to the outcome of the case,
defendants Cojuangco, et al. may well be reminded
that despite the deletion of the said condition, they
cannot transfer to any buyer any interest higher than
what they have. No one can transfer a right to another
greater than what he himself has. Hence, in the event
that the Republic prevails in the instant case,
defendants Cojuangco, et al. hold themselves liable to
their transferees-buyers, especially if they are buyers
in good faith and for value. In such eventuality,
defendants Cojuangco, et al. cannot be shielded by the
cloak of principle of caveat emptor because case law

has it that this rule only requires the purchaser to

exercise such care and attention as is usually
exercised by ordinarily prudent men in like business
affairs, and only applies to defects which are open and
patent to the service of one exercising such care.
Moreover, said defendants Eduardo M. Cojuangco, et
al. are hereby ordered to render their report on the
sale within ten (10) days from completion of the
payment by the San Miguel Corporation Retirement
Plan.
SO ORDERED.[68]
Cojuangco, et al. later rendered a complete accounting
of the proceeds from the sale of the Cojuangco block
of shares of SMC stock, informing that a total amount
of P 4,786,107,428.34 had been paid to the UCPB as
loan repayment.[69]
It appears that the trial concerning the disputed block
of shares was not scheduled because the consideration
and resolution of the aforecited motions for summary
judgment occupied much of the ensuing proceedings.
At the hearing of August 8, 2006, the Republic
manifested[70] that it did not intend to present any
testimonial evidence and asked for the marking of
certain exhibits that it would have the Sandiganbayan
take judicial notice of. The Republic was then allowed
to mark certain documents as its Exhibits A to I,
inclusive, following which it sought and was granted
time within which to formally offer the exhibits.
On August 31, 2006, the Republic filed its
Manifestation of Purposes (Re: Matters Requested or
Judicial Notice on the 20% Shares in San Miguel

Corporation Registered in the Respective Names of

defendant Eduardo M. Cojuangco, Jr. and the
defendant Cojuangco Companies).[71]
On September 18, 2006, the Sandiganbayan issued
the following resolution,[72] to wit:
Acting on the Manifestation of Purposes (Re: Matters
Requested or Judicial Notice on the 20% Shares in San
Miguel Corporation Registered in the Respective names
of Defendant Eduardo M. Cojuangco, Jr. and the
Defendant Cojuangco Companies) dated 28 August
2006 filed by the plaintiff, which has been considered
its formal offer of evidence, and the Comment of
Defendants Eduardo M. Cojuangco, Jr., et al. on
Plaintiffs Manifestation of Purposes Dated August 30,
2006 dated September 15, 2006, the court resolves to
ADMIT all the exhibits offered, i.e.:
Exhibit A the Answer of defendant Eduardo M.
Cojuangco, Jr. to the Third Amended Complaint
(Subdivided) dated June 23, 1999, as well as the submarkings (Exhibit A-1 to A-4;
Exhibit B the Pre-Trial Brief dated January 11, 2000 of
defendant CIIF Oil Mills and fourteen (14) CIIF Holding
Companies, as well as the sub-markings Exhibits B-1
and B-2
Exhibit C the Pre-Trial Brief dated January 11, 2000 of
defendant Eduardo M. Cojuangco, Jr. as well as the
sub-markings Exhibits C-1, C-1-a and C-1-b;
Exhibit D the Plaintiffs Motion for Summary Judgment
[Re: Shares in San Miguel Corporation Registered in
the Respective Names of Defendant Eduardo M.
Cojuangco, Jr. and the Defendant Cojuangco
Companies] dated July 11, 2003, as well as the submarkings Exhibits D-1 to D-4

the said exhibits being part of the record of the case,

as well as
Exhibit E Presidential Decree No. 961 dated July 11,
1976;
Exhibit F Presidential Decree No. 755 dated July 29,
1975;
Exhibit G Presidential Decree No. 1468 dated June 11,
1978;
Exhibit H Decision of the Supreme Court in Republic
vs. COCOFED, et al., G.R. Nos. 147062-64, December
14, 2001, 372 SCRA 462

which to file their respective memoranda and replymemoranda.

Thereafter, on February 23, 2007, the Sandiganbayan
considered the case submitted for decision.[76]
ISSUES
The various issues submitted for consideration by the
Court are summarized hereunder.
G.R. No. 166859

the aforementioned exhibits being matters of public

record.
The admission of these exhibits is being made over the
objection of the defendants Cojuangco, et al. as to the
relevance thereof and as to the purposes for which
they were offered in evidence, which matters shall be
taken into consideration by the Court in deciding the
case on the merits.
The trial hereon shall proceed on November 21, 2006,
at 8:30 in the morning as previously scheduled.[73]
During the hearing on November 24, 2006, Cojuangco,
et al. filed their Submission and Offer of Evidence of
Defendants,[74] formally offering in evidence certain
documents to substantiate their counterclaims, and
informing that they found no need to present
countervailing evidence because the Republics
evidence did not prove the allegations of the
Complaint. On December 5, 2006, after the Republic
submitted its Comment,[75] the Sandiganbayan
admitted the exhibits offered by Cojuangco, et al., and
granted the parties a non-extendible period within

The Republic came to the Court via petition for

certiorari[77] to assail the denial of its Motion for
Partial Summary Judgment through the resolution
promulgated on December 10, 2004, insisting that the
Sandiganbayan thereby committed grave abuse of
discretion: (a) in holding that the various sources of
funds used in acquiring the SMC shares of stock
remained disputed; (b) in holding that it was disputed
whether or not Cojuangco had served in the governing
bodies of PCA, UCPB, and/or the CIIF Oil Mills; and (c)
in not finding that Cojuangco had taken advantage of
his position and had violated his fiduciary obligations
in acquiring the SMC shares of stock in issue.
The Court will consider and resolve the issues thereby
raised alongside the issues presented in G.R. No.
180702.
G.R. No. 169203
In the resolution promulgated on October 8, 2003, the
Sandiganbayan declared as automatically lifted for
being null and void nine writs of sequestration (WOS)
issued against properties of Cojuangco and Cojuangco

companies, considering that: (a) eight of them (i.e.,

WOS No. 86-0062 dated April 21, 1986; WOS No. 860069 dated April 22, 1986; WOS No. 86-0085 dated
May 9, 1986; WOS No. 86-0095 dated May 16, 1986;
WOS No. 86-0096 dated May 16, 1986; WOS No. 860097 dated May 16, 1986; WOS No. 86-0098 dated
May 16, 1986; and WOS No. 87-0218 dated May 27,
1987) had been issued by only one PCGG
Commissioner, contrary to the requirement of Section
3 of the Rules of the PCGG for at least two
Commissioners to issue the WOS; and (b) the ninth
(i.e., WOS No. 86-0042 dated April 8, 1986), although
issued prior to the promulgation of the Rules of the
PCGG requiring at least two Commissioners to issue
the WOS, was void for being issued without prior
determination by the PCGG of a prima facie basis for
sequestration.
Nonetheless, despite its lifting of the nine WOS, the
Sandiganbayan prescribed four conditions to be still
annotated in the relevant corporate books of San
Miguel Corporation considering that the Republic
continues to hold a claim on the shares which is yet to
be resolved.[78]
In its resolution promulgated on June 24, 2005, the
Sandiganbayan denied the Republics Motion for
Reconsideration
filed
vis-a-vis
the
resolution
promulgated on October 8, 2003, but reduced the
conditions earlier imposed to only two.[79]
On September 1, 2005, the Republic filed a petition for
certiorari[80] to annul the resolutions promulgated on
October 8, 2003 and on June 24, 2005 on the ground
that the Sandiganbayan had thereby committed grave
abuse of discretion:

I.
XXX IN LIFTING WRIT OF SEQUESTRATION NOS. 860042 AND 87-0218 DESPITE EXISTENCE OF THE
BASIC
REQUISITES
FOR
THE
VALIDITY
OF
SEQUESTRATION.
II.
XXX WHEN IT DENIED PETITIONERS ALTERNATIVE
PRAYER IN ITS MOTION FOR RECONSIDERATION FOR
THE ISSUANCE OF AN ORDER OF SEQUESTRATION
AGAINST ALL THE SUBJECT SHARES OF STOCK IN
ACCORDNCE WITH THE RULING IN REPUBLIC VS.
SANDIGANBAYAN, 258 SCRA 685 (1996).
III.
XXX IN SUBSEQUENTLY DELETING THE LAST TWO (2)
CONDITIONS WHICH IT EARLIER IMPOSED ON THE
SUBJECT SHARES OF STOCK.[81]

G.R. No. 180702

On November 28, 2007, the Sandiganbayan
promulgated its decision,[82] decreeing as follows:
WHEREFORE, in view of all the foregoing, the Court is
constrained to DISMISS, as it hereby DISMISSES, the
Third Amended Complaint in subdivided Civil Case No.
0033-F for failure of plaintiff to prove by
preponderance of evidence its causes of action against
defendants with respect to the twenty percent (20%)
outstanding shares of stock of San Miguel Corporation
registered in defendants names, denominated herein
as the Cojuangco, et al. block of SMC shares. For lack
of satisfactory warrant, the counterclaims in
defendants Answers are likewise ordered dismissed.

SO ORDERED.
Hence, the Republic appeals, positing:
I.
COCONUT LEVY FUNDS ARE PUBLIC FUNDS. THE SMC
SHARES, WHICH WERE ACQUIRED BY RESPONDENTS
COJUANGCO, JR. AND THE COJUANGCO COMPANIES
WITH THE USE OF COCONUT LEVY FUNDS IN
VIOLATION OF RESPONDENT COJUANGCO, JR.S
FIDUCIARY OBLIGATION ARE, NECESSARILY, PUBLIC
IN CHARACTER AND SHOULD BE RECONVEYED TO
THE GOVERNMENT.
II.
PETITIONER HAS CLEARLY DEMONSTRATED ITS
ENTITLEMENT, AS A MATTER OF LAW, TO THE RELIEFS
PRAYED FOR.[83]
and urging the following issues to be resolved, to wit:
I.
WHETHER
THE
HONORABLE
SANDIGANBAYAN
COMMITTED A REVERSIBLE ERROR WHEN IT
DISMISSED CIVIL CASE NO. 0033-F; AND
II.
WHETHER OR NOT THE SUBJECT SHARES IN SMC,
WHICH WERE ACQUIRED BY, AND ARE IN THE
RESPECTIVE NAMES OF RESPONDENTS COJUANGCO,
JR. AND THE COJUANGCO COMPANIES, SHOULD BE
RECONVEYED TO THE REPUBLIC OF THE PHILIPPINES
FOR HAVING BEEN ACQUIRED USING COCONUT LEVY
FUNDS.[84]

On their part, the petitioners-in-intervention[85]

submit the following issues, to wit:
I
WHETHER OR NOT THE COURT A QUO GRAVELY
ERRED AND DECIDED THE CASE A QUO IN VIOLATION
OF LAW AND APPLICABLE RULINGS OF THE
HONORABLE COURT IN RULING THAT, WHILE
ADMITTEDLY THE SUBJECT SMC SHARES WERE
PURCHASED FROM LOAN PROCEEDS FROM UCPB AND
ADVANCES FROM THE CIIF OIL MILLS, SAID SUBJECT
SMC SHARES ARE NOT PUBLIC PROPERTY
II
WHETHER OR NOT THE COURT A QUO GRAVELY
ERRED AND DECIDED THE CASE A QUO IN VIOLATION
OF LAW AND APPLICABLE RULINGS OF THE
HONORABLE COURT IN FAILING TO RULE THAT, EVEN
ASSUMING FOR THE SAKE OF ARGUMENT THAT LOAN
PROCEEDS FROM UCPB ARE NOT PUBLIC FINDS,
STILL, SINCE RESPONDENT COJUANGCO, IN THE
PURCHASE OF THE SUBJECT SMC SHARES FROM
SUCH LOAN PROCEEDS, VIOLATED HIS FIDUCIARY
DUTIES AND TOOK A COMMERCIAL OPPORTUNITY
THAT RIGHTFULLY BELONGED TO UCPB (A PUBLIC
CORPORATION), THE SUBJECT SMC SHARES SHOULD
REVERT BACK TO THE GOVERNMENT.
RULING
We deny all the petitions of the Republic.
I
Lifting of nine WOS for violation of PCGG Rules
did not constitute grave abuse of discretion

Through its resolution promulgated on June 24, 2005,

assailed on certiorari in G.R. No. 169203, the
Sandiganbayan lifted the nine WOS for the following
reasons, to wit:
Having studied the antecedent facts, this Court shall
now resolve the pending incidents especially
defendants Motion to Affirm that the Writs or Orders of
Sequestration Issued on Defendants Properties Were
Unauthorized, Invalid and Never Became Effective
dated March 5, 1999.
Section 3 of the PCGG Rules and
promulgated on April 11, 1986, provides:

Regulations

Sec. 3. Who may issue. A writ of sequestration or a

freeze or hold order may be issued by the Commission
upon the authority of at least two Commissioners,
based on the affirmation or complaint of an interested
party or motu propio (sic) the issuance thereof is
warranted.
In this present case, of all the questioned writs of
sequestration issued after the effectivity of the PCGG
Rules and Regulations or after April 11, 1986, only writ
no. 87-0218 issued on May 27, 1987 complied with
the requirement that it be issued by at least two
Commissioners, the same having been issued by
Commissioners Ramon E. Rodrigo and Quintin S.
Doromal. However, even if Writ of Sequestration No.
87-0218 complied with the requirement that the same
be issued by at least two Commissioners, the records
fail to show that it was issued with factual basis or
with factual foundation as can be seen from the
Certification of the Commission Secretary of the PCGG

of the excerpt of the minutes of the meeting of the

PCGG held on May 26, 1987, stating therein that:
The Commission approved the recommendation of Dir.
Cruz to sequester all the shares of stock, assets,
records, and documents of Balete Ranch, Inc. and the
appointment of the Fiscal Committee with ECI
Challenge, Inc./Pepsi-Cola for Balete Ranch, Inc. and
the Aquacor Marketing Corp. vice Atty. S. Occena. The
objective is to consolidate the Fiscal Committee
activities covering three associated entities of Mr.
Eduardo Cojuangco.Upon recommendation of Comm.
Rodrigo, the reconstitution of the Board of Directors of
the three companies was deferred for further study.
Nothing in the above-quoted certificate shows that
there was a prior determination of a factual basis or
factual foundation. It is the absence of a prima facie
basis for the issuance of a writ of sequestration and
not the lack of authority of two (2) Commissioners
which renders the said writ void ab initio. Thus, being
the case, Writ of Sequestration No. 87-0218 must be
automatically lifted.
As declared by the Honorable Supreme Court in two
cases it has decided,
The absence of a prior determination by the PCGG of a
prima facie basis for the sequestration order is,
unavoidably, a fatal defect which rendered the
sequestration of respondent corporation and its
properties void ab initio. And
The corporation or entity against which such writ is
directed will not be able to visually determine its
validity, unless the required signatures of at least two
commissioners authorizing its issuance appear on the

very document itself. The issuance of sequestration

orders requires the existence of a prima facie case.
The two commissioner rule is obviously intended to
assure a collegial determination of such fact. In this
light, a writ bearing only one signature is an obvious
transgression of the PCGG Rules.
Consequently, the writs of sequestration nos. 86-0062,
86-0069, 86-0085, 86-0095, 86-0096, 86-0097 and
86-0098 must be lifted for not having complied with
the pertinent provisions of the PCGG Rules and
Regulations, all of which were issued by only one
Commissioner and after April 11, 1986 when the PCGG
Rules and Regulations took effect, an utter disregard
of the PCGGs Rules and Regulations. The Honorable
Supreme Court has stated that:
Obviously, Section 3 of the PCGG Rules was intended
to protect the public from improvident, reckless and
needless sequestrations of private property. And since
these Rules were issued by Respondent Commission, it
should be the first entity to observe them.
Anent the writ of sequestration no. 86-0042 which was
issued on April 8, 1986 or prior to the promulgation of
the PCGG Rules and Regulations on April 11, 1986, the
same cannot be declared void on the ground that it
was signed by only one Commissioner because at the
time it was issued, the Rules and Regulations of the
PCGG were not yet in effect. However, it again appears
that there was no prior determination of the existence
of a prima facie basis or factual foundation for the
issuance of the said writ. The PCGG, despite sufficient
time afforded by this Court to show that a prima facie
basis existed prior to the issuance of Writ No. 860042, failed to do so. Nothing in the records submitted
by the PCGG in compliance of the Resolutions and

Order of this Court would reveal that a meeting was

held by the Commission for the purpose of
determining the existence of a prima facie evidence
prior to its issuance. In a case decided by the
Honorable Supreme Court, wherein it involved a writ
of sequestration issued by the PCGG on March 19,
1986 against all assets, movable and immovable, of
Provident International Resources Corporation and
Philippine
Casino
Operators
Corporation,
the
Honorable Supreme Court enunciated:
The questioned sequestration order was, however
issued on March 19, 1986, prior to the promulgation of
the PCGG Rules and Regulations. As a consequence,
we cannot reasonably expect the commission to abide
by said rules, which were nonexistent at the time the
subject writ was issued by then Commissioner Mary
Concepcion Bautista. Basic is the rule that no statute,
decree, ordinance, rule or regulation (and even
policies) shall be given retrospective effect unless
explicitly stated so. We find no provision in said Rules
which expressly gives them retroactive effect, or
implies the abrogation of previous writs issued not in
accordance with the same Rules. Rather, what said
Rules provide is that they shall be effective
immediately, which in legal parlance, is understood as
upon promulgation. Only penal laws are given
retroactive effect insofar as they favor the accused.
We distinguish this case from Republic vs.
Sandiganbayan, Romualdez and Dio Island Resort,
G.R. No. 88126, July 12, 1996 where the
sequestration order against Dio Island Resort, dated
April 14, 1986, was prepared, issued and signed not
by two commissioners of the PCGG, but by the head of
its task force in Region VIII. In holding that said order

was not valid since it was not issued in accordance

with PCGG Rules and Regulations, we explained:
(Sec. 3 of the PCGG Rules and Regulations), couched
in clear and simple language, leaves no room for
interpretation. On the basis thereof, it is indubitable
that under no circumstances can a sequestration or
freeze order be validly issued by one not a
commissioner of the PCGG.
xxxxxxxxx
Even assuming arguendo that Atty. Ramirez had been
given prior authority by the PCGG to place Dio Island
Resort
under
sequestration,
nevertheless,
the
sequestration order he issued is still void since PCGG
may not delegate its authority to sequester to its
representatives and subordinates, and any such
delegation is valid and ineffective.
We further said:
In the instant case, there was clearly no prior
determination made by the PCGG of a prima facie
basis for the sequestration of Dio Island Resort, Inc. x
xx
xxxxxxxxx
The absence of a prior determination by the PCGG of a
prima facie basis for the sequestration order is,
unavoidably, a fatal defect which rendered the
sequestration of respondent corporation and its
properties void ab initio. Being void ab initio, it is
deemed nonexistent, as though it had never been
issued, and therefore is not subject to ratification by
the PCGG.

What were obviously lacking in the above case were

the basic requisites for the validity of a sequestration
order which we laid down in BASECO vs. PCGG, 150
SCRA 181, 216, May 27, 1987, thus:
Section (3) of the Commissions Rules and regulations
provides that sequestration or freeze (and takeover)
orders issue upon the authority of at least two
commissioners, based on the affirmation or complaint
of an interested party, or motu propio (sic) when the
Commission has reasonable grounds to believe that
the issuance thereof is warranted.
In the case at bar, there is no question as to the
presence of prima facie evidence justifying the
issuance of the sequestration order against respondent
corporations. But the said order cannot be nullified for
lack of the other requisite (authority of at least two
commissioners) since, as explained earlier, such
requisite was nonexistent at the time the order was
issued.
As to the argument of the Plaintiff Republic that
Defendants Cojuangco, et al. have not shown any
contrary prima facie proof that the properties subject
matter of the writs of sequestration were legitimate
acquisitions, the same is misplaced. It is a basic legal
doctrine, as well as many times enunciated by the
Honorable Supreme Court that when a prima facie
proof is required in the issuance of a writ, the party
seeking such extraordinary writ must establish that it
is entitled to it by complying strictly with the
requirements for its issuance and not the party against
whom the writ is being sought for to establish that the
writ should not be issued against it.

According to the Republic, the Sandiganbayan thereby

gravely abused its discretion in: (a) in lifting WOS No.
86-0042 and No. 87-0218 despite the basic requisites
for the validity of sequestration being existent; (b) in
denying the Republics alternative prayer for the
issuance of an order of sequestration against all the
subject shares of stock in accordance with the ruling in
Republic v. Sandiganbayan, 258 SCRA 685, as stated
in its Motion For Reconsideration; and (c) in deleting
the last two conditions the Sandiganbayan had earlier
imposed on the subject shares of stock.

Similarly, WOS No. 86-0042 dated April 8, 1986 and

WOS No. 87-0218 dated May 27, 1987 were lawfully
and correctly nullified notwithstanding that WOS No.
86-0042, albeit signed by only one Commissioner (i.e.,
Commissioner Mary Concepcion Bautista), was not at
the time of its issuance subject to the twoCommissioners rule, and WOS No. 87-0218, albeit
already issued under the signatures of two
Commissioners considering that both had been issued
without a prior determination by the PCGG of a prima
facie basis for the sequestration.

We sustain the lifting of the nine WOS for the reasons

made extant in the assailed resolution of October 8,
2003, supra.

Plainly enough, the irregularities infirming the issuance

of the several WOS could not be ignored in favor of
the Republic and resolved against the persons whose
properties were subject of the WOS. Where the Rules
of the PCGG instituted safeguards under Section 3,
supra, by requiring the concurrent signatures of two
Commissioners to every WOS issued and the existence
of a prima facie case of ill gotten wealth to support the
issuance, the non-compliance with either of the
safeguards nullified the WOS thus issued. It is already
settled that sequestration, due to its tendency to
impede or limit the exercise of proprietary rights by
private citizens, is construed strictly against the State,
conformably with the legal maxim that statutes in
derogation of common rights are generally strictly
construed and rigidly confined to the cases clearly
within their scope and purpose.[86]

Section 3 of the Rules of the PCGG, promulgated on

April 11, 1986, provides:
Section 3. Who may issue. A writ of sequestration or a
freeze or hold order may be issued by the Commission
upon the authority of at least two Commissioners,
based on the affirmation or complaint of an interested
party or motu proprio when the Commission has
reasonable grounds to believe that the issuance
thereof is warranted.
Conformably with Section 3, supra, WOS No. 86-0062
dated April 21, 1986; WOS No. 86-0069 dated April
22, 1986; WOS No. 86-0085 dated May 9, 1986; WOS
No. 86-0095 dated May 16, 1986; WOS No. 86-0096
dated May 16, 1986; WOS No. 86-0097 dated May 16,
1986; and WOS No. 86-0098 dated May 16, 1986
were lawfully and correctly nullified considering that
only one PCGG Commissioner had issued them.

Consequently, the nullification of the nine WOS, being

in implementation of the safeguards the PCGG itself
had instituted, did not constitute any abuse of its
discretion, least of all grave, on the part of the
Sandiganbayan.

Nor did the Sandiganbayan gravely abuse its discretion

in reducing from four to only two the conditions
imposed for the lifting of the WOS. The Sandiganbayan
thereby acted with the best of intentions, being all too
aware that the claim of the Republic to the
sequestered assets and properties might be prejudiced
or harmed pendente lite unless the protective
conditions were annotated in the corporate books of
SMC. Moreover, the issue became academic following
the Sandiganbayans promulgation of its decision
dismissing the Republics Amended Complaint, which
thereby removed the stated reason the Republic
continues to hold a claim on the shares which is yet to
be resolved underlying the need for the annotation of
the conditions (whether four or two).
II
The Concept and Genesis of
Ill-Gotten Wealth in the Philippine Setting
A brief review of the Philippine law and jurisprudence
pertinent to ill-gotten wealth should furnish an
illuminating backdrop for further discussion.
In the immediate aftermath of the peaceful 1986
EDSA Revolution, the administration of President
Corazon C. Aquino saw to it, among others, that rules
defining the authority of the government and its
instrumentalities were promptly put in place. It is
significant
to
point
out,
however, that
the
administration likewise defined the limitations of the
authority.
The first official issuance of President Aquino, which
was made on February 28, 1986, or just two days
after the EDSA Revolution, was Executive Order (E.O.)
No. 1, which created the Presidential Commission on

Good Government (PCGG). Ostensibly, E.O. No. 1 was

the first issuance in light of the EDSA Revolution
having come about mainly to address the pillage of the
nations wealth by President Marcos, his family, and
cronies.
E.O. No. 1 contained only two WHEREAS Clauses, to
wit:
WHEREAS, vast resources of the government have
been amassed by former President Ferdinand E.
Marcos, his immediate family, relatives, and close
associates both here and abroad;
WHEREAS, there is an urgent need to recover all illgotten wealth;[87]
Paragraph (4) of E.O. No. 2[88] further required that
the wealth, to be ill-gotten, must be acquired by them
through or as a result of improper or illegal use of or
the conversion of funds belonging to the Government
of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of their
official position, authority, relationship, connection or
influence to unjustly enrich themselves at the expense
and to the grave damage and prejudice of the Filipino
people and the Republic of the Philippines.
Although E.O. No. 1 and the other issuances dealing
with ill-gotten wealth (i.e., E.O. No. 2, E.O. No. 14,
and E.O. No. 14-A) only identified the subject matter
of ill-gotten wealth and the persons who could amass
ill-gotten wealth and did not include an explicit
definition of ill-gotten wealth, we can still discern the

meaning and concept of ill-gotten wealth from the

WHEREAS Clauses themselves of E.O. No. 1, in that illgotten wealth consisted of the vast resources of the
government amassed by former President Ferdinand E.
Marcos, his immediate family, relatives and close
associates both here and abroad. It is clear, therefore,
that ill-gotten wealth would not include all the
properties of President Marcos, his immediate family,
relatives, and close associates but only the part that
originated from the vast resources of the government.
In time and unavoidably, the Supreme Court
elaborated on the meaning and concept of ill-gotten
wealth. In Bataan Shipyard & Engineering Co., Inc. v.
Presidential Commission on Good Government,[89] or
BASECO, for the sake of brevity, the Court held that:
xxx until it can be determined, through appropriate
judicial proceedings, whether the property was in truth
ill-gotten, i.e., acquired through or as a result of
improper or illegal use of or the conversion of funds
belonging to the Government or any of its branches,
instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of official
position,
authority, relationship, connection
or
influence, resulting in unjust enrichment of the
ostensible owner and grave damage and prejudice to
the State. And this, too, is the sense in which the term
is commonly understood in other jurisdictions.[90]
The BASECO definition of ill-gotten wealth was
reiterated in Presidential Commission on Good
Government v. Lucio C. Tan,[91] where the Court said:

On this point, we find it relevant to define ill-gotten

wealth. In Bataan Shipyard and Engineering Co., Inc.,
this Court described ill-gotten wealth as follows:
Ill-gotten wealth is that acquired through or as a result
of improper or illegal use of or the conversion of funds
belonging to the Government or any of its branches,
instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of official
position,
authority, relationship, connection
or
influence, resulting in unjust enrichment of the
ostensible owner and grave damage and prejudice to
the State. And this, too, is the sense in which the term
is commonly understood in other jurisdiction.
Concerning respondents shares of stock here, there is
no evidence presented by petitioner that they belong
to the Government of the Philippines or any of its
branches, instrumentalities, enterprises, banks or
financial institutions. Nor is there evidence that
respondents, taking undue advantage of their
connections or relationship with former President
Marcos or his family, relatives and close associates,
were able to acquire those shares of stock.
Incidentally, in its 1998 ruling in Chavez v. Presidential
Commission on Good Government,[92] the Court
rendered an identical definition of ill-gotten wealth,
viz:
xxx. We may also add that ill-gotten wealth, by its
very nature, assumes a public character. Based on the
aforementioned Executive Orders, ill-gotten wealth
refers to assets and properties purportedly acquired,
directly or indirectly, by former President Marcos, his
immediate family, relatives and close associates

through or as a result of their improper or illegal use

of government funds or properties; or their having
taken undue advantage of their public office; or their
use of powers, influence or relationships, resulting in
their unjust enrichment and causing grave damage
and prejudice to the Filipino people and the Republic of
the Philippines. Clearly, the assets and properties
referred
to
supposedly
originated
from
the
government itself. To all intents and purposes,
therefore, they belong to the people. As such, upon
reconveyance they will be returned to the public
treasury, subject only to the satisfaction of positive
claims of certain persons as may be adjudged by
competent courts. Another declared overriding
consideration for the expeditious recovery of ill-gotten
wealth is that it may be used for national economic
recovery.
All these judicial pronouncements demand two
concurring elements to be present before assets or
properties were considered as ill-gotten wealth,
namely: (a) they must have originated from the
government itself, and (b) they must have been taken
by former President Marcos, his immediate family,
relatives, and close associates by illegal means.
But settling the sources and the kinds of assets and
property covered by E.O. No. 1 and related issuances
did not complete the definition of ill-gotten wealth.
The further requirement was that the assets and
property should have been amassed by former
President Marcos, his immediate family, relatives, and
close associates both here and abroad. In this regard,
identifying former President Marcos, his immediate
family, and relatives was not difficult, but identifying
other persons who might be the close associates of
former President Marcos presented an inherent
difficulty, because it was not fair and just to include

within the term close associates everyone who had

had any association with President Marcos, his
immediate family, and relatives.
Again, through several rulings, the Court became the
arbiter to determine who were the close associates
within the coverage of E.O. No. 1.
In Republic v. Migrio,[93] the Court held that
respondents Migrio, et al. were not necessarily among
the persons covered by the term close subordinate or
close associate of former President Marcos by reason
alone of their having served as government officials or
employees during the Marcos administration, viz:
It does not suffice, as in this case, that the respondent
is or was a government official or employee during the
administration of former Pres. Marcos. There must be
a prima facie showing that the respondent unlawfully
accumulated wealth by virtue of his close association
or relation with former Pres. Marcos and/or his wife.
This is so because otherwise the respondents case will
fall under existing general laws and procedures on the
matter. xxx
In Cruz, Jr. v. Sandiganbayan,[94] the Court declared
that the petitioner was not a close associate as the
term was used in E.O. No. 1 just because he had
served as the President and General Manager of the
GSIS during the Marcos administration.
In Republic v. Sandiganbayan,[95] the Court stated
that respondent Maj. Gen. Josephus Q. Ramas having
been a Commanding General of the Philippine Army
during
the
Marcos
administration
d[id]
not
automatically make him a subordinate of former
President Ferdinand Marcos as this term is used in

Executive Order Nos. 1, 2, 14 and 14-A absent a

showing that he enjoyed close association with former
President Marcos.
It is well to point out, consequently, that the
distinction laid down by E.O. No. 1 and its related
issuances, and expounded by relevant judicial
pronouncements unavoidably required competent
evidentiary substantiation made in appropriate judicial
proceedings to determine: (a) whether the assets or
properties involved had come from the vast resources
of government, and (b) whether the individuals
owning or holding such assets or properties were close
associates of President Marcos. The requirement of
competent
evidentiary
substantiation
made
in
appropriate judicial proceedings was imposed because
the factual premises for the reconveyance of the
assets or properties in favor of the government due to
their being ill-gotten wealth could not be simply
assumed. Indeed, in BASECO,[96] the Court made this
clear enough by emphatically observing:
6. Governments Right and Duty to Recover All Illgotten Wealth
There can be no debate about the validity and eminent
propriety of the Governments plan to recover all illgotten wealth.
Neither can there be any debate about the proposition
that assuming the above described factual premises of
the Executive Orders and Proclamation No. 3 to be
true, to be demonstrable by competent evidence, the
recovery from Marcos, his family and his minions of
the assets and properties involved, is not only a right
but a duty on the part of Government.

But however plain and valid that right and duty may
be, still a balance must be sought with the equally
compelling necessity that a proper respect be
accorded and adequate protection assured, the
fundamental rights of private property and free
enterprise which are deemed pillars of a free society
such as ours, and to which all members of that society
may without exception lay claim.
xxx Democracy, as a way of life enshrined in the
Constitution, embraces as its necessary components
freedom of conscience, freedom of expression, and
freedom in the pursuit of happiness. Along with these
freedoms are included economic freedom and freedom
of enterprise within reasonable bounds and under
proper control. xxx Evincing much concern for the
protection of property, the Constitution distinctly
recognizes the preferred position which real estate has
occupied in law for ages. Property is bound up with
every aspect of social life in a democracy as
democracy is conceived in the Constitution. The
Constitution realizes the indispensable role which
property, owned in reasonable quantities and used
legitimately, plays in the stimulation to economic effort
and the formation and growth of a solid social middle
class that is said to be the bulwark of democracy and
the backbone of every progressive and happy country.
a.
Suit

Need of Evidentiary Substantiation in Proper

Consequently, the factual premises of the Executive

Orders cannot simply be assumed. They will have to
be duly established by adequate proof in each case, in
a proper judicial proceeding, so that the recovery of
the ill-gotten wealth may be validly and properly
adjudged and consummated; although there are some

who maintain that the fact that an immense fortune,

and vast resources of the government have been
amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both
here and abroad, and they have resorted to all sorts of
clever schemes and manipulations to disguise and hide
their illicit acquisitions is within the realm of judicial
notice, being of so extensive notoriety as to dispense
with proof thereof. Be this as it may, the requirement
of evidentiary substantiation has been expressly
acknowledged, and the procedure to be followed
explicitly laid down, in Executive Order No. 14. [97]
Accordingly, the Republic should furnish to the
Sandiganbayan in proper judicial proceedings the
competent evidence proving who were the close
associates of President Marcos who had amassed
assets and properties that would be rightly considered
as ill-gotten wealth.
III.
Summary Judgment was not warranted;
The Republic should have adduced evidence
to substantiate its allegations against the Respondents
We affirm the decision of November 28, 2007, because
the Republic did not discharge its burden as the
plaintiff to establish by preponderance of evidence that
the respondents SMC shares were illegally acquired
with coconut-levy funds.
The decision of November 28, 2007 fully explained
why the Sandiganbayan dismissed the Republics case
against Cojuangco, et al., viz:

Going over the evidence, especially the laws, i.e., P.D.

No. 961, P.D. No. 755, and P.D. No. 1468, over which
plaintiff prayed that Court to take judicial notice of, it
is worth noting that these same laws were cited by
plaintiff when it filed its motion for judgment on the
pleadings and/or summary judgment regarding the
CIIF block of SMC shares of stock. Thus, the Court has
already passed upon the same laws when it arrived at
judgment determining ownership of the CIIF block of
SMC shares of stock. Pertinently, in the Partial
Summary Judgment promulgated on May 7, 2004, the
Court gave the following rulings finding certain
provisions
of
the
above-cited
laws
to
be
constitutionally infirmed, thus:
In this case, Section 2(d) and Section 9 and 10, Article
III, of P.D. Nos. 961 and 1468 mandated the UCPB to
utilize the CIIF, an accumulation of a portion of the
CCSF and the CIDF, for investment in the form of
shares of stock in corporations organized for the
purpose of engaging in the establishment and the
operation of industries and commercial activities and
other allied business undertakings relating to coconut
and other palm oils industry in all aspects. The
investments made by UCPB in CIIF companies are
required by the said Decrees to be equitably
distributed for free by the said bank to the coconut
farmers (Sec. 10, P.D. No. 961 and Sec. 10, P.D. No.
1468). The public purpose sought to be served by the
free distribution of the shares of stock acquired with
the use of public funds is not evident in the laws
mentioned. More specifically, it is not clear how private
ownership of the shares of stock acquired with public
funds can serve a public purpose. The mode of
distribution of the shares of stock also left much room
for the diversion of assets acquired through public
funds into private uses or to serve directly private

interests, contrary to the Constitution. In the said

distribution, defendants COCOFED, et al. and Ballares,
et al. admitted that UCPB followed the administrative
issuances of PCA which we found to be constitutionally
objectionable in our Partial Summary Judgment in Civil
Case No. 0033-A, the pertinent portions of which are
quoted hereunder:
xxx xx xxx.
The distribution for free of the shares of stock of the
CIIF Companies is tainted with the above-mentioned
constitutional infirmities of the PCA administrative
issuances. In view of the foregoing, we cannot
consider the provision of P.D. No. 961 and P.D. No.
1468 and the implementing regulations issued by the
PCA as valid legal basis to hold that assets acquired
with public funds have legitimately become private
properties.
The CIIF Companies having been acquired with public
funds, the 14 CIIF-owned Holding Companies and all
their assets, including the CIIF Block of SMC Shares,
being public in character, belong to the government.
Even granting that the 14 Holding Companies acquired
the SMC Shares through CIIF advances and UCPB
loans, said advances and loans are still the obligations
of the said companies. The incorporating equity or
capital of the 14 Holding Companies, which were
allegedly used also for the acquisition of the subject
SMC shares, being wholly owned by the CIIF
Companies, likewise form part of the coconut levy
funds, and thus belong to the government in trust for
the ultimate beneficiaries thereof, which are all the
coconut farmers.
xxx xxx xxx.

And, with the above-findings of the Court, the CIIF

block of SMC shares were subsequently declared to be
of public character and should be reconveyed to the
government in trust for coconut farmers. The
foregoing findings notwithstanding, a question now
arises on whether the same laws can likewise serve as
ultimate basis for a finding that the Cojuangco, et al.
block of SMC shares are also imbued with public
character and should rightfully be reconveyed to the
government.
On this point, the Court disagrees with plaintiff that
reliance on said laws would suffice to prove that
defendants Cojuangco, et al.s acquisition of SMC
shares of stock was illegal as public funds were used.
For one, plaintiffs reliance thereon has always had
reference only to the CIIF block of shares, and the
Court has already settled the same by going over the
laws and quoting related findings in the Partial
Summary judgment rendered in Civil Case No. 0033A. For another, the allegations of plaintiff pertaining to
the Cojuangco block representing twenty percent
(20%) of the outstanding capital stock of SMC stress
defendant Cojuangcos acquisition by virtue of his
positions as Chief Executive Officer of UCPB, a
member-director of the Philippine Coconut Authority
(PCA) Governing Board, and a director of the CIIF Oil
Mills. Thus, reference to the said laws would not settle
whether there was abuse on the part of defendants
Cojuangco, et al. of their positions to acquire the SMC
shares. [98]
Besides, in the Resolution of the Court on plaintiffs
Motion for Parial Summary Judgment (Re: Shares in
San Miguel Corporation Registered in the Respective
Names of Defendants Eduardo M. Cojuangco, Jr. and

the defendant Cojuangco Companies), the Court

already rejected plaintiffs reference to said laws. In
fact, the Court declined to grant plaintiffs motion for
partial summary judgment because it simply
contended that defendant Cojuangcos statements in
his pleadings, which plaintiff again offered in evidence
herein, regarding the presentation of a possible CIIF
witness as well as UCPB records can already be
considered admissions of defendants exclusive use and
misuse of coconut levy funds. In the said resolution,
the Court already reminded plaintiff that the issues
cannot be resolved by plaintiffs interpretation of
defendant Cojuangcos statements in his brief. Thus,
the substantial portion of the Resolution of the Court
denying plaintiffs motion for partial summary
judgment is again quoted for emphasis: [99]
We cannot agree with the plaintiffs contention that the
defendants statements in his Pre-Trial Brief regarding
the presentation of a possible CIIF witness as well as
UCPB records, can already be considered as
admissions of the defendants exclusive use and
misuse of coconut levy funds to acquire the subject
SMC shares and defendant Cojuangcos alleged taking
advantage of his positions to acquire the subject SMC
shares. Moreover, in ruling on a motion for summary
judgment, the court should take that view of the
evidence most favorable to the party against whom it
is directed, giving such party the benefit of all
favorable inferences. Inasmuch as this issue cannot be
resolved merely from an interpretation of the
defendants statements in his brief, the UCPB records
must be produced and the CIIF witness must be heard
to ensure that the conclusions that will be derived
have factual basis and are thus, valid. [100]

WHEREFORE, in view of the foregoing, the Motion for

Partial Summary Judgment dated July 11, 2003 is
hereby DENIED for lack of merit.
SO ORDERED.
(Emphasis supplied)
Even assuming that, as plaintiff prayed for, the Court
takes judicial notice of the evidence it offered with
respect to the Cojuangco block of SMC shares of stock,
as contained in plaintiffs manifestation of purposes,
still its evidence do not suffice to prove the material
allegations in the complaint that Cojuangco took
advantage of his positions in UCPB and PCA in order to
acquire the said shares. As above-quoted, the Court,
itself, has already ruled, and hereby stress that UCPB
records must be produced and the CIIF witness must
be heard to ensure that the conclusions that will be
derived have factual basis and are thus, valid. Besides,
the Court found that there are genuine factual issues
raised by defendants that need to be threshed out in a
full-blown trial, and which plaintiff had the burden to
substantially prove. Thus, the Court outlined these
genuine factual issues as follows:
1) What are the various sources of funds, which
defendant Cojuangco and his companies claim they
utilized to acquire the disputed SMC shares?
2) Whether or not such funds acquired from alleged
various sources can be considered coconut levy funds;
3) Whether or not defendant Cojuangco had indeed
served in the governing bodies of PCA, UCPB and/or
CIIF Oil Mills at the time the funds used to purchase
the SMC shares were obtained such that he owed a

fiduciary duty to render an account to these entities as

well as to the coconut farmers;
4) Whether or not defendant Cojuangco took
advantage of his position and/or close ties with then
President Marcos to obtain favorable concessions or
exemptions from the usual financial requirements from
the lending banks and/or coco-levy funded companies,
in order to raise the funds to acquire the disputed SMC
shares; and if so, what are these favorable
concessions or exemptions?[101]
Answers to these issues are not evident from the
submissions of plaintiff and must therefore be proven
through the presentation of relevant and competent
evidence during trial. A perusal of the subject Motion
shows that the plaintiff hastily derived conclusions
from the defendants statements in their previous
pleadings although such conclusions were not
supported by categorical facts but only mere
inferences. xxx xxx xxx. (Emphasis supplied) [102]
Despite the foregoing pronouncement of the Court,
plaintiff did not present any other evidence during the
trial of this case but instead made its manifestation of
purposes, that later served as its offer of evidence in
the instant case, that merely used the same evidence
it had already relied upon when it moved for partial
summary judgment over the Cojuangco block of SMC
shares. Altogether, the Court finds the same
insufficient to prove plaintiffs allegations in the
complaint because more than judicial notices, the
factual issues require the presentation of admissible,
competent and relevant evidence in accordance with
Sections 3 and 4, Rule 128 of the Rules on Evidence.

Moreover, the propriety of taking judicial notice of

plaintiffs exhibits is aptly questioned by defendants
Cojuangco, et al. Certainly, the Court can take judicial
notice of laws pertaining to the coconut levy funds as
well as decisions of the Supreme Court relative
thereto, but taking judicial notice does not mean that
the Court would accord full probative value to these
exhibits. Judicial notice is based upon convenience and
expediency for it would certainly be superfluous,
inconvenient, and expensive both to parties and the
court to require proof, in the ordinary way, of facts
which are already known to courts. However, a court
cannot take judicial notice of a factual matter in
controversy. Certainly, there are genuine factual
matters in the instant case, as above-cited, which
plaintiff ought to have proven with relevant and
competent evidence other than the exhibits it offered.
Referring to plaintiffs causes of action against
defendants Cojuangco, et al., the Court finds its
evidence insufficient to prove that the source of funds
used to purchase SMC shares indeed came from
coconut levy funds. In fact, there is no direct link that
the loans obtained by defendant Cojuangco, Jr. were
the same money used to pay for the SMC shares. The
scheme alleged to have been taken by defendant
Cojuangco, Jr. was not even established by any paper
trail or testimonial evidence that would have identified
the same. On account of his positions in the UCPB,
PCA and the CIIF Oil Mills, the Court cannot conclude
that he violated the fiduciary obligations of the
positions he held in the absence of proof that he was
so actuated and that he abused his positions.[103]
It was plain, indeed, that Cojuangco, et al. had
tendered genuine issues through their responsive

pleadings and did not admit that the acquisition of the

Cojuangco block of SMC shares had been illegal, or
had been made with public funds. As a result, the
Republic needed to establish its allegations with
preponderant competent evidence, because, as earlier
stated, the fact that property was ill gotten could not
be presumed but must be substantiated with
competent
proof
adduced
in
proper
judicial
proceedings. That the Republic opted not to adduce
competent evidence thereon despite stern reminders
and warnings from the Sandiganbayan to do so
revealed that the Republic did not have the competent
evidence to prove its allegations against Cojuangco, et
al.
Still, the Republic, relying on the 2001 holding in
Republic v. COCOFED,[104] pleads in its petition for
review (G.R. No. 180702) that:
With all due respect, the Honorable Sandiganbayan
failed to consider legal precepts and procedural
principles
vis--vis the records of the case showing that the funds
or various loans or advances used in the acquisition of
the disputed SMC Shares ultimately came from the
coconut levy funds.
As discussed hereunder, respondents own admissions
in their Answers and Pre-Trial Briefs confirm that the
various sources of funds utilized in the acquisition of
the disputed SMC shares came from borrowings and
advances from the UCPB and the CIIF Oil Mills.[105]
Thereby, the Republic would have the Sandiganbayan
pronounce the block of SMC shares of stock acquired
by Cojuangco, et al. as ill-gotten wealth even without
the Republic first presenting preponderant evidence

establishing that such block had been acquired illegally

and with the use of coconut levy funds.
The Court cannot heed the Republics pleas for the
following reasons:
To begin with, it is notable that the decision of
November 28, 2007 did not rule on whether coconut
levy funds were public funds or not. The silence of the
Sandiganbayan on the matter was probably due to its
not seeing the need for such ruling following its
conclusion that the Republic had not preponderantly
established the source of the funds used to pay the
purchase price of the concerned SMC shares, and
whether the shares had been acquired with the use of
coconut levy funds.
Secondly, the ruling in Republic v. COCOFED[106]
determined only whether certain stockholders of the
UCPB could vote in the stockholders meeting that had
been called. The issue now before the Court could not
be controlled by the ruling in Republic v. COCOFED,
however, for even as that ruling determined the issue
of voting, the Court was forthright enough about not
thereby preempting the Sandiganbayans decisions on
the merits on ill-gotten wealth in the several cases
then pending, including this one, viz:
In making this ruling, we are in no way preempting
the proceedings the Sandiganbayan may conduct or
the final judgment it may promulgate in Civil Case No.
0033-A, 0033-B and 0033-F. Our determination here is
merely prima facie, and should not bar the anti-graft
court from making a final ruling, after proper trial and
hearing, on the issues and prayers in the said civil

cases, particularly in reference to the ownership of the

subject shares.
We also lay down the caveat that, in declaring the
coco levy funds to be prima facie public in character,
we are not ruling in any final manner on their
classification whether they are general or trust or
special funds since such classification is not at issue
here. Suffice it to say that the public nature of the
coco levy funds is decreed by the Court only for the
purpose of determining the right to vote the shares,
pending the final outcome of the said civil cases.
Neither are we resolving in the present case the
question of whether the shares held by Respondent
Cojuangco are, as he claims, the result of private
enterprise. This factual matter should also be taken up
in the final decision in the cited cases that are pending
in the court a quo. Again, suffice it to say that the only
issue settled here is the right of PCGG to vote the
sequestered shares, pending the final outcome of said
cases.
Thirdly, the Republics assertion that coconut levy
funds had been used to source the payment for the
Cojuangco block of SMC shares was premised on its
allegation that the UCPB and the CIIF Oil Mills were
public corporations. But the premise was grossly
erroneous and overly presumptuous, because:
(a) The fact of the UCPB and the CIIF Oil Mills being
public
corporations
or
government-owned
or
government-controlled
corporations
precisely
remained controverted by Cojuangco, et al. in light of
the lack of any competent to that effect being in the
records;

(b) Cojuangco explicitly averred in paragraph 2.01.(b)

of his Answer that the UCPB was a private corporation;
and
(c) The Republic did not competently identify or
establish which ones of the Cojuangco corporations
had supposedly received advances from the CIIF Oil
Mills.
Fourthly, the Republic asserts that the contested block
of shares had been paid for with borrowings from the
UCPB and advances from the CIIF Oil Mills, and that
such borrowings and advances had been illegal
because the shares had not been purchased for the
benefit of the Coconut Farmers. To buttress its
assertion, the Republic relied on the admissions
supposedly made in paragraph 2.01 of Cojuangcos
Answer in relation to paragraph 4 of the Republics
Amended Complaint.
The best way to know what paragraph 2.01 of
Cojuangcos Answer admitted is to refer to both
paragraph 4 of the Amended Complaint and paragraph
2.01 of his Answer, which are hereunder quoted:
Paragraph 4 of the Amended Complaint
4. Defendant EDUARDO M. COJUANGCO, JR., was
Governor of Tarlac, Congressman of then First District
of Tarlac and Ambassador-at-Large in the Marcos
Administration. He was commissioned Lieutenant
Colonel in the Philippine Air Force, Reserve. Defendant
Eduardo M. Cojuangco, Jr., otherwise known as the
Coconut King was head of the coconut monopoly which
was instituted by Defendant Ferdinand E. Marcos, by

virtue of the Presidential Decrees. Defendant Eduardo

E. Cojuangco, Jr., who was also one of the closest
associates of the Defendant Ferdinand E. Marcos, held
the positions of Director of the Philippine Coconut
Authority, the United Coconut Mills, Inc., President and
Board Director of the United Coconut Planters Bank,
United Coconut Planters Life Assurance Corporation,
and United Coconut Chemicals, Inc. He was also the
Chairman of the Board and Chief Executive Officer and
the controlling stockholder of the San Miguel
Corporation. He may be served summons at 45 Balete
Drive, Quezon City or at 136 East 9th Street, Quezon
City.
Paragraph 2.01 of Respondent Cojuangcos Answer
2.01. Herein defendant admits paragraph 4 only
insofar as it alleges the following:
(a) That herein defendant has held the following
positions in government: Governor of Tarlac,
Congressman of the then First District of Tarlac,
Ambassador-at-Large, Lieutenant Colonel in the
Philippine Air Force and Director of the Philippines
Coconut Authority;

Herein defendant specifically denies the rest of the

allegations of paragraph 4, including any insinuation
that whatever association he may have had with the
late Ferdinand Marcos or Imelda Marcos has been in
connection with any of the acts or transactions alleged
in the complaint or for any unlawful purpose.
It is basic in remedial law that a defendant in a civil
case must apprise the trial court and the adverse party
of the facts alleged by the complaint that he admits
and of the facts alleged by the complaint that he
wishes to place into contention. The defendant does
the former either by stating in his answer that they
are true or by failing to properly deny them. There are
two ways of denying alleged facts: one is by general
denial, and the other, by specific denial.[107]

(b) That he held the following positions in private

corporations: Member of the Board of Directors of the
United Coconut Oil Mills, Inc.; President and member
of the Board of Directors of the United Coconut
Planters Bank, United Coconut Planters Life Assurance
Corporation, and United Coconut Chemicals, Inc.;
Chairman of the Board and Chief Executive of San
Miguel Corporation; and

In this jurisdiction, only a specific denial shall be

sufficient to place into contention an alleged fact.[108]
Under Section 10,[109] Rule 8 of the Rules of Court, a
specific denial of an allegation of the complaint may be
made in any of three ways, namely: (a) a defendant
specifies each material allegation of fact the truth of
which he does not admit and, whenever practicable,
sets forth the substance of the matters upon which he
relies to support his denial; (b) a defendant who
desires to deny only a part of an averment specifies so
much of it as is true and material and denies only the
remainder; and (c) a defendant who is without
knowledge or information sufficient to form a belief as
to the truth of a material averment made in the
complaint states so, which has the effect of a denial.

(c) That he may be served with summons at 136 East

9th Street, Quezon City.

The express qualifications contained in paragraph 2.01

of Cojuangcos Answer constituted efficient specific

denials of the averments of paragraph 2 of the

Republics Amended Complaint under the first method
mentioned in Section 10 of Rule 8, supra. Indeed, the
aforequoted paragraphs of the Amended Complaint
and of Cojuangcos Answer indicate that Cojuangco
thereby expressly qualified his admission of having
been the President and a Director of the UCPB with the
averment that the UCPB was a private corporation;
that his Answers allegation of his being a member of
the Board of Directors of the United Coconut Oil Mills,
Inc. did not admit that he was a member of the Board
of Directors of the CIIF Oil Mills, because the United
Coconut Oil Mills, Inc. was not one of the CIIF Oil
Mills; and that his Answer nowhere contained any
admission or statement that he had held the various
positions in the government or in the private
corporations at the same time and in 1983, the time
when the contested acquisition of the SMC shares of
stock took place.
What the Court stated in Bitong v. Court of Appeals
(Fifth Division)[110] as to admissions is illuminating:
When taken in its totality, the Amended Answer to the
Amended Petition, or even the Answer to the Amended
Petition alone, clearly raises an issue as to the legal
personality of petitioner to file the complaint. Every
alleged admission is taken as an entirety of the fact
which makes for the one side with the qualifications
which limit, modify or destroy its effect on the other
side. The reason for this is, where part of a statement
of a party is used against him as an admission, the
court should weigh any other portion connected with
the statement, which tends to neutralize or explain the
portion which is against interest.

In other words, while the admission is admissible in

evidence, its probative value is to be determined from
the whole statement and others intimately related or
connected therewith as an integrated unit. Although
acts or facts admitted do not require proof and cannot
be contradicted, however, evidence aliunde can be
presented to show that the admission was made
through palpable mistake. The rule is always in favor
of liberality in construction of pleadings so that the
real matter in dispute may be submitted to the
judgment of the court.
And, lastly, the Republic cites the following portions of
the joint Pre-Trial Brief of Cojuangco, et al.,[111] to
wit:
IV.
PROPOSED EVIDENCE
xxx
4.01. xxx Assuming, however, that plaintiff presents
evidence to support its principal contentions,
defendants evidence in rebuttal would include
testimonial and documentary evidence showing: a) the
ownership of the shares of stock prior to their
acquisition by respondents (listed in Annexes A and
B); b) the consideration for the acquisition of the
shares of stock by the persons or companies in whose
names the shares of stock are now registered; and c)
the source of the funds used to pay the purchase
price.
4.02. Herein respondents intend to
following evidence:
xxx
b. Proposed Exhibits ____, ____, ____

present

the

Records of the United Coconut Planters Bank which

would show borrowings of the companies listed in
Annexes A and B, or companies affiliated or associated
with them, which were used to source payment of the
shares of stock of the San Miguel Corporation subject
of this case.
4.03. Witnesses.
xxx
(b) A representative of the United Coconut Planters
Bank who will testify in regard the loans which were
used to source the payment of the price of SMC shares
of stock.
(c) A representative from the CIIF Oil Mills who will
testify in regard the loans or credit advances which
were used to source the payment of the purchase
price of the SMC shares of stock.
The Republic insists that the aforequoted portions of
the joint Pre-Trial Brief were Cojuangco, et al.s
admission that:
(a) Cojuangco had received money from the UCPB, a
bank entrusted by law with the administration of the
coconut levy funds; and
(b) Cojuangco had received more money from the CIIF
Oil Mills in which part of the CIIF funds had been
placed, and thereby used the funds of the UCPB and
the CIIF as capital to buy his SMC shares.[112]
We disagree with the Republics posture.
The statements found in the joint Pre-Trial Brief of
Cojuangco, et al. were noticeably written beneath the

heading of Proposed Evidence. Such location indicated

that the statements were only being proposed, that is,
they were not yet intended or offered as admission of
any fact stated therein. In other words, the matters
stated or set forth therein might or might not be
presented at all. Also, the text and tenor of the
statements expressly conditioned the proposal on the
Republic ultimately presenting its evidence in the
action. After the Republic opted not to present its
evidence, the condition did not transpire; hence, the
proposed admissions, assuming that they were that,
did not materialize.
Obviously, too, the statements found under the
heading of Proposed Evidence in the joint Pre-Trial
Brief were incomplete and inadequate on the
important details of the supposed transactions (i.e.,
alleged borrowings and advances). As such, they could
not constitute admissions that the funds had come
from borrowings by Cojuangco, et al. from the UCPB
or had been credit advances from the CIIF Oil
Companies. Moreover, the purpose for presenting the
records of the UCPB and the representatives of the
UCPB and of the still unidentified or unnamed CIIF Oil
Mills as declared in the joint Pre-Trial Brief did not at
all show whether the UCPB and/or the unidentified or
unnamed CIIF Oil Mills were the only sources of
funding, or that such institutions, assuming them to be
the sources of the funding, had been the only sources
of funding. Such ambiguousness disqualified the
statements from being relied upon as admissions. It is
fundamental that any statement, to be considered as
an admission for purposes of judicial proceedings,
should be definite, certain and unequivocal;[113]
otherwise, the disputed fact will not get settled.

Another reason for rejecting the Republics posture is

that the Sandiganbayan, as the trial court, was in no
position to second-guess what the non-presented
records of the UCPB would show as the borrowings
made by the corporations listed in Annexes A and B, or
by the companies affiliated or associated with them,
that were used to source payment of the shares of
stock of the San Miguel Corporation subject of this
case, or what the representative of the UCPB or the
representative of the CIIF Oil Mills would testify about
loans or credit advances used to source the payment
of the price of SMC shares of stock.
Lastly, the Rules of Court has no rule that treats the
statements found under the heading Proposed
Evidence as admissions binding Cojuangco, et al. On
the contrary, the Rules of Court has even distinguished
between admitted facts and facts proposed to be
admitted during the stage of pre-trial. Section 6 (b),
[114] Rule 18 of the Rules of Court, requires a PreTrial Brief to include a summary of admitted facts and
a proposed stipulation of facts. Complying with the
requirement, the joint Pre-Trial Brief of Cojuangco, et
al. included the summary of admitted facts in its
paragraph 3.00 of its Item III, separately and
distinctly from the Proposed Evidence, to wit:
III.
SUMMARY OF UNDISPUTED FACTS
3.00. Based on the complaint and the answer, the
acquisition of the San Miguel shares by, and their
registration in the names of, the companies listed in
Annexes A and B may be deemed undisputed.
3.01. All other allegations in the complaint are
disputed.[115]

The burden of proof, according to Section 1, Rule 131

of the Rules of Court, is the duty of a party to present
evidence on the facts in issue necessary to establish
his claim or defense by the amount of evidence
required by law. Here, the Republic, being the plaintiff,
was the party that carried the burden of proof. That
burden required it to demonstrate through competent
evidence that the respondents, as defendants, had
purchased the SMC shares of stock with the use of
public funds; and that the affected shares of stock
constituted ill-gotten wealth. The Republic was well
apprised of its burden of proof, first through the
joinder of issues made by the responsive pleadings of
the defendants, including Cojuangco, et al. The
Republic was further reminded through the pre-trial
order and the Resolution denying its Motion for
Summary Judgment, supra, of the duty to prove the
factual allegations on ill-gotten wealth against
Cojuangco, et al., specifically the following disputed
matters:
(a) When the loans or advances were incurred;
(b) The amount of the loans from the UCPB and of the
credit advances from the CIIF Oil Mills, including the
specific CIIF Oil Mills involved;
(c) The identities of the borrowers, that is, all of the
respondent corporations together, or separately; and
the amounts of the borrowings;
(d) The conditions attendant to the loans or advances,
if any;

(e) The manner, form, and time of the payments made

to Zobel or to the Ayala Group, whether by check,
letter of credit, or some other form; and
(f) Whether the loans were paid, and whether the
advances were liquidated.
With the Republic nonetheless choosing not to adduce
evidence proving the factual allegations, particularly
the aforementioned matters, and instead opting to
pursue its claims by Motion for Summary Judgment,
the Sandiganbayan became completely deprived of the
means to know the necessary but crucial details of the
transactions on the acquisition of the contested block
of shares. The Republics failure to adduce evidence
shifted no burden to the respondents to establish
anything, for it was basic that the party who asserts,
not the party who denies, must prove.[116] Indeed, in
a civil action, the plaintiff has the burden of pleading
every essential fact and element of the cause of action
and proving them by preponderance of evidence. This
means that if the defendant merely denies each of the
plaintiffs allegations and neither side produces
evidence on any such element, the plaintiff must
necessarily fail in the action.[117] Thus, the
Sandiganbayan correctly dismissed Civil Case No.
0033-F for failure of the Republic to prove its case by
preponderant evidence.
A summary judgment under Rule 35 of the Rules of
Court is a procedural technique that is proper only
when there is no genuine issue as to the existence of a
material fact and the moving party is entitled to a
judgment as a matter of law.[118] It is a method
intended to expedite or promptly dispose of cases
where the facts appear undisputed and certain from
the pleadings, depositions, admissions, and affidavits

on record.[119] Upon a motion for summary judgment

the courts sole function is to determine whether there
is an issue of fact to be tried, and all doubts as to the
existence of an issue of fact must be resolved against
the moving party. In other words, a party who moves
for summary
judgment
has
the
burden
of
demonstrating clearly the absence of any genuine
issue of fact, and any doubt as to the existence of
such an issue is resolved against the movant. Thus, in
ruling on a motion for summary judgment, the court
should take that view of the evidence most favorable
to the party against whom it is directed, giving that
party the benefit of all favorable inferences.[120]
The term genuine issue has been defined as an issue
of fact that calls for the presentation of evidence as
distinguished from an issue that is sham, fictitious,
contrived, set up in bad faith, and patently
unsubstantial so as not to constitute a genuine issue
for trial. The court can determine this on the basis of
the pleadings, admissions, documents, affidavits, and
counter-affidavits submitted by the parties to the
court. Where the facts pleaded by the parties are
disputed or contested, proceedings for a summary
judgment cannot take the place of a trial.[121] Wellsettled is the rule that a party who moves for
summary judgment has the burden of demonstrating
clearly the absence of any genuine issue of fact.[122]
Upon that partys shoulders rests the burden to prove
the cause of action, and to show that the defense is
interposed solely for the purpose of delay. After the
burden has been discharged, the defendant has the
burden to show facts sufficient to entitle him to
defend.[123] Any doubt as to the propriety of a
summary judgment shall be resolved against the
moving party.

We need not stress that the trial courts have limited

authority to render summary judgments and may do
so only in cases where no genuine issue as to any
material fact clearly exists between the parties. The
rule on summary judgment does not invest the trial
courts with jurisdiction to try summarily the factual
issues upon affidavits, but authorizes summary
judgment only when it appears clear that there is no
genuine issue as to any material fact.[124]

The Republics lack of proof on the source of the funds

by which Cojuangco, et al. had acquired their block of
SMC shares has made it shift its position, that it now
suggests that Cojuangco had been enabled to obtain
the loans by the issuance of LOI 926 exempting the
UCPB from the DOSRI and the Single Borrowers Limit
restrictions.
We reject the Republics suggestion.

IV.
Republics burden to establish by preponderance of
evidence that respondents SMC shares had been
illegally acquired with coconut-levy funds was not
discharged
Madame Justice Carpio Morales argues in her dissent
that although the contested SMC shares could be
inescapably treated as fruits of funds that are prima
facie public in character, Cojuangco, et al. abstained
from presenting countervailing evidence; and that with
the Republic having shown that the SMC shares came
into fruition from coco levy funds that are prima facie
public funds, Cojuangco, et al. had to go forward with
contradicting evidence, but did not.
The Court disagrees. We cannot reverse the decision
of November 28, 2007 on the basis alone of judicial
pronouncements to the effect that the coconut levy
funds were prima facie public funds,[125] but without
any competent evidence linking the acquisition of the
block of SMC shares by Cojuangco, et al. to the
coconut levy funds.
V.
No violation of the DOSRI and
Single Borrowers Limit restrictions

Firstly, as earlier pointed out, the Republic adduced no

evidence on the significant particulars of the supposed
loan, like the amount, the actual borrower, the
approving official, etc. It did not also establish whether
or not the loans were DOSRI[126] or issued in
violation of the Single Borrowers Limit. Secondly, the
Republic could not outrightly assume that President
Marcos had issued LOI 926 for the purpose of allowing
the loans by the UCPB in favor of Cojuangco. There
must be competent evidence to that effect. And,
finally, the loans, assuming that they were of a DOSRI
nature or without the benefit of the required approvals
or in excess of the Single Borrowers Limit, would not
be void for that reason. Instead, the bank or the
officers responsible for the approval and grant of the
DOSRI loan would be subject only to sanctions under
the law.[127]
VI.
Cojuangco violated no fiduciary duties
The Republic invokes the following pertinent statutory
provisions of the Civil Code, to wit:
Article 1455. When any trustee, guardian or other
person holding a fiduciary relationship uses trust funds

for the purchase of property and causes the

conveyance to be made to him or to a third person, a
trust is established by operation of law in favor of the
person to whom the funds belong.

shares come under a constructive trust in favor of the

Republic?

Article 1456. If property is acquired through mistake

or fraud, the person obtaining it s by force of law,
considered a trustee of an implied trust for the benefit
of the person from whom the property comes.

The conditions for the application of Articles 1455 and

1456 of the Civil Code (like the trustee using trust
funds to purchase, or a person acquiring property
through mistake or fraud), and Section 31 of the
Corporation Code (like a director or trustee willfully
and knowingly voting for or assenting to patently
unlawful acts of the corporation, among others)
require factual foundations to be first laid out in
appropriate judicial proceedings. Hence, concluding
that Cojuangco breached fiduciary duties as an officer
and member of the Board of Directors of the UCPB
without competent evidence thereon would be
unwarranted and unreasonable.

and the Corporation Code, as follows:

Section 31. Liability of directors, trustees or
officers.Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts
of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the
corporation or acquire any personal or pecuniary
interest in conflict with their duty as such directors, or
trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the
corporation, its stockholders or members and other
persons.
When a director, trustee or officer attempts to acquire
or acquires, in violation of his duty, any interest
adverse to the corporation in respect of any matter
which has been reposed in him in confidence, as to
which equity imposes a disability upon him to deal in
his own behalf, he shall be liable as a trustee for the
corporation and must account for the profits which
otherwise would have accrued to the corporation.
Did Cojuangco breach his fiduciary duties as an officer
and member of the Board of Directors of the UCPB?
Did his acquisition and holding of the contested SMC

The answers to these queries are in the negative.

Thus, the Sandiganbayan could not fairly find that

Cojuangco had committed breach of any fiduciary
duties as an officer and member of the Board of
Directors of the UCPB. For one, the Amended
Complaint contained no clear factual allegation on
which to predicate the application of Articles 1455 and
1456 of the Civil Code, and Section 31 of the
Corporation Code. Although the trust relationship
supposedly arose from Cojuangcos being an officer
and member of the Board of Directors of the UCPB,
the link between this alleged fact and the borrowings
or advances was not established. Nor was there
evidence on the loans or borrowings, their amounts,
the approving authority, etc. As trial court, the
Sandiganbayan could not presume his breach of
fiduciary duties without evidence showing so, for fraud
or breach of trust is never presumed, but must be
alleged and proved.[128]

The thrust of the Republic that the funds were

borrowed or lent might even preclude any consequent
trust implication. In a contract of loan, one of the
parties (creditor) delivers money or other consumable
thing to another (debtor) on the condition that the
same amount of the same kind and quality shall be
paid.[129] Owing to the consumable nature of the
thing loaned, the resulting duty of the borrower in a
contract of loan is to pay, not to return, to the creditor
or lender the very thing loaned. This explains why the
ownership of the thing loaned is transferred to the
debtor upon perfection of the contract.[130]
Ownership of the thing loaned having transferred, the
debtor enjoys all the rights conferred to an owner of
property, including the right to use and enjoy (jus
utendi), to consume the thing by its use (jus
abutendi), and to dispose (jus disponendi), subject to
such limitations as may be provided by law.[131]
Evidently, the resulting relationship between a creditor
and debtor in a contract of loan cannot be
characterized as fiduciary.[132]
To say that a relationship is fiduciary when existing
laws do not provide for such requires evidence that
confidence is reposed by one party in another who
exercises dominion and influence. Absent any special
facts and circumstances proving a higher degree of
responsibility, any dealings between a lender and
borrower are not fiduciary in nature.[133] This
explains why, for example, a trust receipt transaction
is not classified as a simple loan and is characterized
as fiduciary, because the Trust Receipts Law (P.D. No.
115) punishes the dishonesty and abuse of confidence
in the handling of money or goods to the prejudice of
another regardless of whether the latter is the owner.
[134]

Based on the foregoing, a debtor can appropriate the

thing loaned without any responsibility or duty to his
creditor to return the very thing that was loaned or to
report how the proceeds were used. Nor can he be
compelled to return the proceeds and fruits of the
loan, for there is nothing under our laws that compel a
debtor in a contract of loan to do so. As owner, the
debtor can dispose of the thing borrowed and his act
will not be considered misappropriation of the thing.
[135] The only liability on his part is to pay the loan
together with the interest that is either stipulated or
provided under existing laws.
WHEREFORE, the Court dismisses the petitions for
certiorari in G.R. Nos. 166859 and 169023; denies the
petition for review on certiorari in G.R. No. 180702;
and, accordingly, affirms the decision promulgated by
the Sandiganbayan on November 28, 2007 in Civil
Case No. 0033-F.
The Court declares that the block of shares in San
Miguel Corporation in the names of respondents
Cojuangco, et al. subject of Civil Case No. 0033-F is
the exclusive property of Cojuangco, et al. as
registered owners.
Accordingly, the lifting and setting aside of the Writs of
Sequestration affecting said block of shares (namely:
Writ of Sequestration No. 86-0062 dated April 21,
1986; Writ of Sequestration No. 86-0069 dated April
22, 1986; Writ of Sequestration No. 86-0085 dated
May 9, 1986; Writ of Sequestration No. 86-0095 dated
May 16, 1986; Writ of Sequestration No. 86-0096
dated May 16, 1986; Writ of Sequestration No. 860097 dated May 16, 1986; Writ of Sequestration No.
86-0098 dated May 16, 1986; Writ of Sequestration

No. 86-0042 dated April 8, 1986; and Writ of

Sequestration No. 87-0218 dated May 27, 1987) are
affirmed; and the annotation of the conditions
prescribed in the Resolutions promulgated on October
8, 2003 and June 24, 2005 is cancelled.

Assailed similarly is the resolution[2] of the Court of

Appeals dated 28 June 1993 denying petitioners
motion for reconsideration.
As borne by the records, the controversy arose from
the following facts:

SO ORDERED.
[G.R. No. 110844. April 27, 2000]
ALFREDO CHING, petitioner, vs. HON. COURT OF
APPEALS, HON. ZOSIMO Z. ANGELES, RTC - BR. 58,
MAKATI,
METRO
MANILA,
PEOPLE
OF
THE
PHILIPPINES AND ALLIED BANKING CORPORATION,
respondents.
DECISION

On 04 February 1992,[3] petitioner was charged

before the Regional Trial Court of Makati (RTCMakati), Branch 58, with four counts of estafa
punishable under Article 315 par. 1(b) of the Revised
Penal Code, in relation to Presidential Decree 115,
otherwise known as the "Trust Receipts Law".
The four separate informations[4] which were couched
in similar language except for the date, subject goods
and amount thereof, charged herein petitioner in this
wise:

BUENA, J.:
Confronting the Court in this instant petition for review
on certiorari under Rule 45 is the task of resolving the
issue of whether the pendency of a civil action for
damages and declaration of nullity of documents,
specifically trust receipts, warrants the suspension of
criminal proceedings instituted for violation of Article
315 1(b) of the Revised Penal Code, in relation to P.D.
115, otherwise known as the "Trust Receipts Law".xlaw
Petitioner Alfredo Ching challenges before us the
decision[1] of the Court of Appeals promulgated on 27
January 1993 in CA G.R. SP No. 28912, dismissing his
"Petition for Certiorari and Prohibition with Prayer for
Issuance of Temporary Restraining Order/ Preliminary
Injunction", on the ground of lack of merit.

"That on or about the (18th day of May 1981; 3rd day

of June 1981; 24th day of June 1981 and 24th day of
June 1981), in the Municipality of Makati, Metro
Manila, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused having
executed a trust receipt agreement in favor of Allied
Banking Corporation in consideration of the receipt by
the said accused of goods described as 12 Containers
(200 M/T) Magtar Brand Dolomites; 18 Containers
(Zoom M/T) Magtar Brand Dolomites; High Fired
Refractory Sliding Nozzle Bricks; and High Fired
Refractory Sliding Nozzle Bricks for which there is now
due the sum of (P 278, 917.80; P 419,719.20; P 387,
551. 95; and P389, 085.14 respectively) under the
terms of which the accused agreed to sell the same for
cash with the express obligation to remit to the
complainant bank the proceeds of the sale and/or to
turn over the goods, if not sold, on demand, but the

accused, once in possession of said goods, far from

complying with his obligation and with grave abuse of
confidence, did then and there, willfully, unlawfully and
feloniously misappropriate, misapply and convert to
his own personal use and benefit the said goods
and/or the proceeds of the sale thereof, and despite
repeated demands, failed and refused and still fails
and refuses, to account for and/or remit the proceeds
of sale thereof to the Allied Banking Corporation to the
damage and prejudice of the said complainant bank in
the aforementioned amount of ( P 278,917.80; P
419,719.20; P 387,551.95; and P 389,085.14)." x-sc

criminal proceedings on the ground of prejudicial

question in a civil action.

On 10 February 1992, an "Omnibus Motion[5] to

Strike Out Information, or in the Alternative to Require
Public Prosecutor to Conduct Preliminary Investigation,
and to Suspend in the Meantime Further Proceedings
in these Cases," was filed by the petitioner.

In an order[11] dated 04 September 1992, the RTCMakati, before which the criminal cases are pending,
denied petitioner's motion for reconsideration and set
the criminal cases for arraignment and pre-trial.

In an order dated 13 February 1992, the Regional Trial

Court of Makati, Branch 58, acting on the omnibus
motion, required the prosecutors office to conduct a
preliminary investigation and suspended further
proceedings in the criminal cases.
On 05 March 1992, petitioner Ching, together with
Philippine Blooming Mills Co. Inc., filed a case[6]
before the Regional Trial Court of Manila (RTC-Manila),
Branch 53, for declaration of nullity of documents and
for damages docketed as Civil Case No. 92-60600,
entitled "Philippine Blooming Mills, Inc. et. al. vs.
Allied Banking Corporation."
On 07 August 1992, Ching filed a petition[7] before
the RTC-Makati, Branch 58, for the suspension of the

The prosecution then filed an opposition to the petition

for suspension, against which opposition, herein
petitioner filed a reply.[8]
On 26 August 1992, the RTC-Makati issued an
order[9] which denied the petition for suspension and
scheduled the arraignment and pre-trial of the criminal
cases. As a result, petitioner moved to reconsider[10]
the order to which the prosecution filed an opposition.

Aggrieved by these orders[12] of the lower court in

the criminal cases, petitioner brought before the Court
of Appeals a petition for certiorari and prohibition
which sought to declare the nullity of the
aforementioned orders and to prohibit the RTC-Makati
from conducting further proceedings in the criminal
cases.
In denying the petition,[13] the Court of Appeals, in
CA G.R. SP No. 28912, ruled:
"X X X Civil Case No. 90-60600 pending before the
Manila Regional Trial Court seeking(sic) the declaration
of nullity of the trust receipts in question is not a
prejudicial question to Criminal Case Nos. 92-0934 to
37 pending before the respondent court charging the
petitioner with four counts of violation of Article 315,
par. 1(b), RPC, in relation to PD 115 as to warrant the
suspension of the proceedings in the latter X X X." Sc

Notwithstanding the decision rendered by the Court of

Appeals, the RTC-Manila, Branch 53 in an order dated
19 November 1993 in Civil Case No. 92-60600,
admitted petitioners amended complaint[15] which,
inter alia, prayed the court for a judgment:

"After due consideration, to render judgment reversing

the decision and resolution, Annexes A and B hereof,
respectively, and ordering the suspension of Criminal
Cases (sic) Nos. 92-0934 to 92-0937, inclusive,
entitled "People of the Philippines vs. Alfredo Ching"
pending before Branch 58 of the Regional Trial Court of
Makati, Metro Manila, until final determination of Civil
Case No. 92-600 entitled Philippine Blooming Mills Co.
Inc. and Alfredo Ching vs. Allied Banking Corporation"
pending before Branch 53 of the Regional Trial Court of
Manila."

"X X X

The instant petition is bereft of merit.

"1. Declaring the Trust Receipts, annexes D, F, H and J

hereof, null and void, or otherwise annulling the same,
for failure to express the true intent and agreement of
the parties;

We agree with the findings of the trial court, as

affirmed by the Court of Appeals, that no prejudicial
question exists in the present case. Scmis

Consequently,
petitioner
filed
a
motion
for
reconsideration of the decision which the appellate
court denied for lack of merit, via a resolution[14]
dated 28 June 1993.

"2. Declaring the transaction subject hereof as one of

pure and simple loan without any trust receipt
agreement and/or not one involving a trust receipt,
and accordingly declaring all the documents annexed
hereto as mere loan documents XXX"(emphasis ours)
In its amended answer,[16] herein private respondent
Allied Banking Corporation submitted in riposte that
the transaction applied for was a "letter of credit/trust
receipt accommodation" and not a "pure and simple
loan with the trust receipts as mere additional or side
documents", as asserted by herein petitioner in its
amended complaint.[17]
Through the expediency of Rule 45, petitioner seeks
the intervention of this Court and prays:

As defined, a prejudicial question is one that arises in

a case the resolution of which is a logical antecedent
of the issue involved therein, and the cognizance of
which pertains to another tribunal. The prejudicial
question must be determinative of the case before the
court but the jurisdiction to try and resolve the
question must be lodged in another court or tribunal.
[18]
It is a question based on a fact distinct and separate
from the crime but so intimately connected with it that
it determines the guilt or innocence of the accused,
and for it to suspend the criminal action, it must
appear not only that said case involves facts intimately
related to those upon which the criminal prosecution
would be based but also that in the resolution of the
issue or issues raised in the civil case, the guilt or
innocence of the accused would necessarily be
determined.[19] It comes into play generally in a

situation where a civil action and a criminal action are

both pending and there exists in the former an issue
which must be preemptively resolved before the
criminal action may proceed, because howsoever the
issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence
of the accused in the criminal case.[20]
More simply, for the court to appreciate the pendency
of a prejudicial question, the law,[21] in no uncertain
terms, requires the concurrence of two essential
requisites, to wit:
a) The civil action involves an issue similar or
intimately related to the issue raised in the criminal
action; and
b) The resolution of such issue determines whether or
not the criminal action may proceed.
Verily, under the prevailing circumstances, the alleged
prejudicial question in the civil case for declaration of
nullity of documents and for damages, does not juris
et de jure determine the guilt or innocence of the
accused in the criminal action for estafa. Assuming
arguendo that the court hearing the civil aspect of the
case adjudicates that the transaction entered into
between the parties was not a trust receipt
agreement, nonetheless the guilt of the accused could
still be established and his culpability under penal laws
determined by other evidence. To put it differently,
even on the assumption that the documents are
declared null, it does not ipso facto follow that such
declaration of nullity shall exonerate the accused from
criminal prosecution and liability.

Accordingly, the prosecution may adduce evidence to

prove the criminal liability of the accused for estafa,
specifically under Article 315 1(b) of the Revised Penal
Code which explicitly provides that said crime is
committed: Missc
"X X X (b) By misappropriating or converting, to the
prejudice of another, money, goods, or any other
personal property received by the offender in trust or
on commission, or for administration, or any other
obligation involving the duty to make delivery of or to
return the same, even though such obligation be
totally or partially guaranteed by a bond; or by
denying having received such money, goods, or other
property."
Applying the foregoing principles, the criminal liability
of the accused for violation of Article 315 1(b) of the
Revised Penal Code, may still be shown through the
presentation of evidence to the effect that: (a) the
accused received the subject goods in trust or under
the obligation to sell the same and to remit the
proceeds thereof to Allied Banking Corporation, or to
return the goods, if not sold; (b) that accused Ching
misappropriated or converted the goods and/or the
proceeds of the sale; (c) that accused Ching
performed such acts with abuse of confidence to the
damage and prejudice of Allied Banking Corporation;
and (d) that demand was made by the bank to herein
petitioner.
Presidential Decree 115, otherwise known as the
"Trust Receipts Law", specifically Section 13 thereof,
provides:
"The failure of an entrustee to turn over the proceeds
of the sale of the goods, documents or instruments

covered by a trust receipt to the extent of the amount

owing to the entruster or as appears in the trust
receipt or to return said goods, documents or
instruments if they were not sold or disposed of in
accordance with the terms of the trust receipt shall
constitute the crime of estafa, punishable under the
provisions of Article Three hundred fifteen, paragraph
one (b) of Act Numbered Three thousand eight
hundred and fifteen, as amended, otherwise known as
the Revised Penal Code."

them. In the receipt, the accused acknowledged

having received the aforesaid sum, in addition to the
amount of P240.00 as agents commission. The
complaint, however, alleged that the accused never
received any amount from Jimenez and that the
signatures on the questioned receipt were secured by
means of fraud, deceit and intimidation.

We must stress though, that an act violative of a trust

receipt agreement is only one mode of committing
estafa under the abovementioned provision of the
Revised Penal Code. Stated differently, a violation of a
trust receipt arrangement is not the sole basis for
incurring liability under Article 315 1(b) of the Code.

"X X X It will be readily seen that the alleged

prejudicial question is not determinative of the guilt or
innocence of the parties charged with estafa, because
even on the assumption that the execution of the
receipt whose annulment they sought in the civil case
was vitiated by fraud, duress or intimidation, their
guilt could still be established by other evidence
showing, to the degree required by law, that they had
actually received from the complainant the sum of
P20,000.00 with which to buy for him a fishing boat,
and that, instead of doing so, they misappropriated
the money and refused or otherwise failed to return it
to him upon demand. X X X "Spped

In Jimenez vs. Averia,[22] where the accused was

likewise charged with estafa, this Court had occasion
to rule that a civil case contesting the validity of a
certain receipt is not a prejudicial question that would
warrant the suspension of criminal proceedings for
estafa.
In the abovementioned case, a criminal charge for
estafa was filed in the Court of First Instance of Cavite
against the two accused. The information alleged that
the accused, having received the amount of
P20,000.00 from Manuel Jimenez for the purchase of a
fishing boat, with the obligation on the part of the
former to return the money in case the boat was not
purchased, misappropriated the said amount to the
damage and prejudice of Jimenez.[23] Misspped
Before arraignment, the accused filed a civil case
contesting the validity of a certain receipt signed by

In ruling out the existence of prejudicial question, we

declared:

Furthermore, petitioner submits that the truth or

falsity of the parties respective claims as regards the
true nature of the transactions and of the documents,
shall have to be first determined by the Regional Trial
Court of Manila, which is the court hearing the civil
case.
While this may be true, it is no less true that the
Supreme Court may, on certain exceptional instances,
resolve the merits of a case on the basis of the records
and other evidence before it, most especially when the

resolution of these issues would best serve the ends of

justice and promote the speedy disposition of cases.
Thus,
considering
the
peculiar
circumstances
attendant in the instant case, this Court sees the
cogency to exercise its plenary power:
"It is a rule of procedure for the Supreme Court to
strive to settle the entire controversy in a single
proceeding leaving no root or branch to bear the seeds
of future litigation. No useful purpose will be served if
a case or the determination of an issue in a case is
remanded to the trial court only to have its decision
raised again to the Court of Appeals and from there to
the Supreme Court (citing Board of Commissioners vs.
Judge Joselito de la Rosa and Judge Capulong, G.R.
Nos. 95122-23).
"We have laid down the rule that the remand of the
case or of an issue to the lower court for further
reception of evidence is not necessary where the Court
is in position to resolve the dispute based on the
records before it and particularly where the ends of
justice would not be subserved by the remand thereof
(Escudero vs. Dulay, 158 SCRA 69). Moreover, the
Supreme Court is clothed with ample authority to
review matters, even those not raised on appeal if it
finds that their consideration is necessary in arriving at
a just disposition of the case."[24]
On many occasions, the Court, in the public interest
and for the expeditious administration of justice, has
resolved actions on the merits instead of remanding
them to the trial court for further proceedings, such as
where the ends of justice would not be subserved by
the remand of the case.[25]

Inexorably, the records would show that petitioner

signed and executed an application and agreement for
a commercial letter of credit to finance the purchase of
imported goods. Likewise, it is undisputed that
petitioner
signed
and
executed
trust
receipt
documents in favor of private respondent Allied
Banking Corporation. Josp-ped
In its amended complaint, however, which notably was
filed only after the Court of Appeals rendered its
assailed decision, petitioner urges that the transaction
entered into between the parties was one of "pure
loan without any trust receipt agreement". According
to petitioner, the trust receipt documents were
intended merely as "additional or side documents
covering the said loan" contrary to petitioners
allegation in his original complaint that the trust
receipts were executed as collateral or security.
We do not agree. As Mr. Justice Story succinctly puts
it: "Naked statements must be entitled to little weight
when the parties hold better evidence behind the
scenes."[26]
Hence, with affirmance, we quote the findings of the
Court of Appeals:
"The concept in which petitioner signed the trust
receipts, that is whether he signed the trust receipts
as such trust receipts or as a mere evidence of a pure
and simple loan transaction is not decisive because
precisely, a trust receipt is a security agreement of an
indebtedness."
Contrary to petitioners assertions and in view of
jurisprudence established in this jurisdiction, a trust
receipt is not merely an additional or side document to

a principal contract, which in the instant case is

alleged by petitioner to be a pure and simple loan.
As elucidated in Samo vs. People,[27] a trust receipt is
considered a security transaction intended to aid in
financing importers and retail dealers who do not have
sufficient funds or resources to finance the importation
or purchase of merchandise, and who may not be able
to acquire credit except through utilization, as
collateral, of the merchandise imported or purchased.
Further, a trust receipt is a document in which is
expressed a security transaction whereunder the
lender, having no prior title in the goods on which the
lien is to be given and not having possession which
remains in the borrower, lends his money to the
borrower on security of the goods which the borrower
is privileged to sell clear of the lien with an agreement
to pay all or part of the proceeds of the sale to the
lender.[28] It is a security agreement pursuant to
which a bank acquires a "security interest" in the
goods. It secures an indebtedness and there can be no
such thing as security interest that secures no
obligation.[29]
Clearly, a trust receipt partakes the nature of a
security transaction. It could never be a mere
additional or side document as alleged by petitioner.
Otherwise, a party to a trust receipt agreement could
easily renege on its obligations thereunder, thus
undermining the importance and defeating with
impunity the purpose of such an indispensable tool in
commercial transactions. Spp-edjo
Of equal importance is the fact that in his complaint in
Civil Case No. 92-60600, dated 05 March 1992,
petitioner alleged that the trust receipts were executed

and intended as collateral or security. Pursuant to the

rules, such particular allegation in the complaint is
tantamount to a judicial admission on the part of
petitioner Ching to which he must be bound.
Thus, the Court of Appeals in its resolution dated 28
June 1993, correctly observed:
"It was petitioner himself who acknowledged the trust
receipts as mere collateral and security for the
payment of the loan but kept on insisting that the real
and true transaction was one of pure loan. X X X"
"In his present motion, the petitioner alleges that the
trust receipts are evidence of a pure loan or that the
same were additional or side documents that actually
stood as promissory notes and not a collateral or
security agreement. He cannot assume a position
inconsistent with his previous allegations in his civil
complaint that the trust receipts were intended as
mere collateral or security X X X."
Perhaps, realizing such flaw, petitioner, in a complete
turn around, filed a motion to admit amended
complaint before the RTC-Manila. Among others, the
amended complaint alleged that the trust receipts
stood as additional or side documents, the real
transaction between the parties being that of a pure
loan without any trust receipt agreement.
In an order dated 19 November 1993, the RTC-Manila,
Branch 53, admitted the amended complaint.
Accordingly, with the lower courts admission of the
amended complaint, the judicial admission made in
the original complaint was, in effect, superseded. Miso

Under the Rules, pleadings superseded or amended

disappear from the record, lose their status as
pleadings and cease to be judicial admissions. While
they may nonetheless be utilized against the pleader
as extrajudicial admissions, they must, in order to
have such effect, be formally offered in evidence. If
not offered in evidence, the admission contained
therein will not be considered.[30]
Consequently, the original complaint, having been
amended, 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.[31]
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.[32]
Thus, in the instant case, the original complaint is
deemed superseded by the amended complaint.
Corollarily, the judicial admissions in the original
complaint are considered abandoned. Nonetheless, we
must stress that the actuations of petitioner, as
sanctioned by the RTC-Manila, Branch 53 through its
order admitting the amended complaint, demands
stern rebuke from this Court.
Certainly, this Court is not unwary of the tactics
employed by the petitioner specifically in filing the
amended complaint only after the promulgation of the
assailed decision of the Court of Appeals. It bears
noting that a lapse of almost eighteen months (from
March 1992 to September 1993), from the filing of the
original complaint to the filing of the amended

complaint, is too lengthy a time sufficient to enkindle

suspicion and enflame doubts as to the true intentions
of petitioner regarding the early disposition of the
pending cases. Ne-xold
Although the granting of leave to file amended
pleadings is a matter peculiarly within the sound
discretion of the trial court and such discretion would
not normally be disturbed on appeal, it is also well to
mention that this rule is relaxed when evident abuse
thereof is apparent.[33]
Hence, in certain instances we ruled that amendments
are not proper and should be denied when delay would
arise,[34] or when the amendments would result in a
change of cause of action or defense or change the
theory of the case,[35] or would be inconsistent with
the allegations in the original complaint.[36]
Applying the foregoing rules, petitioner, by filing the
amended complaint, in effect, altered the theory of his
case. Likewise, the allegations embodied in the
amended complaint are inconsistent with that of the
original complaint inasmuch as in the latter, petitioner
alleged that the trust receipts were intended as mere
collateral or security, the principal transaction being
one of pure loan.
Yet, in the amended complaint, petitioner argued that
the said trust receipts were executed as additional or
side documents, the transaction being strictly one of
pure loan without any trust receipt arrangement.
Obviously these allegations are in discord in relation to
each other and therefore cannot stand in harmony.
These circumstances, taken as a whole, lead this Court
to doubt the genuine purpose of petitioner in filing the

amended complaint. Again, we view petitioners

actuations with abhorrence and displeasure. Man-ikx
Moreover, petitioner contends that the transaction
between Philippine Blooming Mills (PBM) and private
respondent Allied Banking Corporation does not fall
under the category of a trust receipt arrangement
claiming that the goods were not to be sold but were
to be used, consumed and destroyed by the importer
PBM.
To our mind, petitioners contention is a stealthy
attempt to circumvent the principle enunciated in the
case of Allied Banking Corporation vs. Ordonez,[37]
thus:

"The Court takes judicial notice of customary banking

and business practices where trust receipts are used
for importation of heavy equipment, machineries and
supplies used in manufacturing operations. We are
perplexed by the statements in the assailed DOJ
resolution that the goods subject of the instant case
are outside the ambit of the provisions of PD 115
albeit covered by trust receipt agreements ( 17
February 1988 resolution) and that not all transactions
covered by trust receipts may be considered as trust
receipt transactions defined and penalized under P.D.
115 (11 January 1988 resolution). A construction
should be avoided when it affords an opportunity to
defeat compliance with the terms of a statute. Manik-s
xxx......xxx......xxx

"X X X In an attempt to escape criminal liability,

private respondent claims P.D. 115 covers goods which
are ultimately destined for sale and not goods for use
in manufacture. But the wording of Section 13 covers
failure to turn over the proceeds of the sale of the
entrusted goods, or to return said goods if unsold or
disposed of in accordance with the terms of the trust
receipts. Private respondent claims that at the time of
PBMs application for the issuance of the LCs, it was
not represented to the petitioner that the items were
intended for sale, hence, there was no deceit resulting
in a violation of the trust receipts which would
constitute a criminal liability. Again we cannot uphold
this contention. The non-payment of the amount
covered by a trust receipt is an act violative of the
entrustees obligation to pay. There is no reason why
the law should not apply to all transactions covered by
trust receipts, except those expressly excluded (68
Am. Jur. 125).

"The penal provision of P.D. 115 encompasses any act

violative of an obligation covered by the trust receipt;
it is not limited to transactions in goods which are to
be sold (retailed), reshipped, stored or processed as a
component of a product ultimately sold."
An examination of P.D. 115 shows the growing
importance of trust receipts in Philippine business, the
need to provide for the rights and obligations of
parties to a trust receipt transaction, the study of the
problems involved and the action by monetary
authorities, and the necessity of regulating the
enforcement of rights arising from default or violations
of trust receipt agreements. The legislative intent to
meet a pressing need is clearly expressed.[38]
In fine, we reiterate that the civil action for declaration
of nullity of documents and for damages does not
constitute a prejudicial question to the criminal cases
for estafa filed against petitioner Ching.

WHEREFORE, premises considered, the assailed

decision and resolution of the Court of Appeals are
hereby AFFIRMED and the instant petition is
DISMISSED for lack of merit. Accordingly, the Regional
Trial Court of Makati, Branch 58, is hereby directed to
proceed with the hearing and trial on the merits of
Criminal Case Nos. 92-0934 to 92-0937, inclusive, and
to expedite proceedings therein, without prejudice to
the right of the accused to due process.

There is no dispute as to the amounts involved; that

they represent the balances they represent the
balances due and unpaid on sugar crop loans applied
from and granted by the PNB to Dolores, Estrella, 1
Feliza, and Corazon, all surnamed Granada; that said
loans were personally received by the petitioners for
which the corresponding promissory notes were
principally executed and signed by them, uniformly
worded as follows:

SO ORDERED.

On demand after date, for value received, I promise to

pay to the order of the Philippine National Bank at its
office in Bacolod or Manila, the sum of (amount in
pesos stated), Philippine currency, with interest at the
rate of 5% per annum from date until paid.

G.R. No. L-20745

September 2, 1966

DOLORES GRANADA and ESTRELLA GRANADA, ET AL.,

petitioners,
vs.
PHILIPPINE NATIONAL BANK, ET AL., respondents.
G. Occeno, Sr. for petitioner.
Tomas Besa and J.C. Jimenez for respondents.

BARRERA, J.:
Petitioners herein seek to review the decision of the
Court of Appeals reversing that of the Court of First
Instance of Negros Occidental, and sentencing
petitioners to pay the respondent Philippine National
Bank the of P1,982.24 with interest thereon at 5% per
annum from August 20, 1940 and 10% on the
principal as attorneys' fees; and the sum of P1,349.90
with interest at 5% per annum, from September 20,
1941, and 10% on the principal as attorneys' fees,
and costs.

In case of judicial execution of this obligation or any

part of it, the debtor waives his right under the
provisions of Rule 39, Section 12 of the Rules of Court.
In case it is necessary to collect this note by or
through an attorney-at-law, the makers and indorsers
shall pay, 10% of the amount due on the notes as
attorney's fee. Demand and dishonor waived. Holder
may accept partial payment reserving his right of
recourse against each and all indorsers.
The only issue raised by petitioners emanated from an
amended complaint filed by the attorney of the PNB
branch in Bacolod, Occidental Negros, wherein it was
alleged that
defendants Dolores Granada and Estrella Granada,
together with their sisters Feliza Granada and Corazon
Granada, who are now dead, as representative of their
parents, Cristeta Granada and Matias Granada,

borrowed from and were granted by, the plaintiff ...

sugar crop loan .. for the cultivation and production of
sugar canes in hacienda Cristeta.
that said ... loan ... was released to, and received by,
defendants Dolores Granada and Estrella Granada and
their sisters Feliza Granada and Corazon Granada, as
representatives of their parents Cristeta Granada and
Matias Granada, as evidenced by promissory notes
hereto attached as Exhibit A, B,C, ... etc., and made
integral parts hereof.
Solely on the strength of the phrase "as
representatives of their parents, etc." inserted in the
amended complaint, the petitioners contended, and
that trial court sustained the contention, that they are
not liable personally as they merely acted as agents of
a disclosed principal.
The Court of Appeals, however, reversed the decision
of the court a quo after reviewing the facts and
antecedents of the case.
It appears that in the original complaint filed by the
plaintiff bank, it was alleged that the defendants
Dolores, Estrella, Feliza, and Corazon, all surnamed
Granada, secured sugar crop loans for the crop year
1940-41 and 1941-42 from the plaintiff and received
the money as evidenced by various promissory notes
attached to said original complaint marked as Exhibits
"A" to "F" and "G" to "P" that the balances of said crop
loans in the sum of P1,982.24 and P1,349.90 were not
paid; hence, it was prayed that the defendants be
sentenced to pay the same, plus interest and costs.2
A motion to dismiss the complaint was filed by the
defendants alleging prescription and that the signers

of the promissory notes have secured and received the

amounts of the loans as "mere representatives of the
parents Matias and Cristeta Granada," who were the
owners of Hda. Cristeta, and that the money was used
for maintenance and support of the said spouses and
their children Dolores, Estrella, Feliza and Corazon,
who were then still single and living with their parents.
In answer to the motion, plaintiff reiterated that the
documents covering that loans were signed and
executed by Dolores Granada, for herself and as
attorney-in-fact of Estrella, Feliza and Corazon, by
virtue of a duly notarized power of attorney, and that
plaintiff has no documents or evidence in its
possession to hold the spouses Matias and Cristeta
Granada liable for the payment of the accounts. The
motion to dismiss was denied.
Thereafter, the defendants filed their answer, again
alleging that the promissory notes were signed by
them as mere representatives and administrators of
their parents and that the plaintiff has been informed
by Cristeta Granada and her attorney-in-fact, Jose
Granada that the so-called accounts of "Granada
Hermanas" were the accounts of the spouses Matias
and Cristeta and could be charged against their
properties known as Hda. Cristeta.
Subsequently, the defendants filed another motion
calling attention to their defense alleged in their
answer and praying that in view thereof "the plaintiff
be given leave of court to amend the complaint and
include as principal party defendants Cristeta Granada,
and the defendants be allowed to file their answer, if
they so desire." The motion was granted in an order of
the following tenor, "... por el presente si les concede
a ambas partes autorizacion para presentar los

escritos enmendados que deseen presentar dentro del

plazo reglamentario."
Accordingly, the plaintiff filed an amended complaint,
this time impleading Cristeta Granada, together with
the original defendants, and it was in this amended
complaint that for the first time, the phrase "as
representatives of their parents" was inserted. There
was no other amendment in the complaint, and in the
prayer, the plaintiff insisted that judgment be rendered
ordering defendants Dolores Granada, Estrella
Granada and Cristeta Granada to pay the plaintiff the
amounts claimed in the complaint, and granting such
other relief as the court may deem just and
equitable.1awphl.nt

of the amended complaint joining Cristeta Granada as

a party defendant was in obedience to the order of the
court issued upon motion of the original defendants,
and "in order to be relieved of any liability it is
incumbent upon defendants Dolores and Estrella to
prove or help the plaintiff prove that they acted as
representatives of their parents."
Thereafter, trial was held and plaintiff presented the
promissory notes whose genuineness and due
execution were unquestioned; proof of the receipt of
the loans by defendants and the amounts still unpaid
thereon in spite of demands. All this evidence was
admitted without objection on the part of the
defendants.

In their answer to the amended complaint, defendants

Dolores and Estrella Granada reproduced and
reiterated their allegations in their answer to the
original complaint.

Upon these facts, the Court of Appeals, as already

stated, reversed the decision of the court a quo and
rendered judgment in favor of the plaintiff, reasoning
thus:

Cristeta Granada, in his answer under oath,

significantly denied that she has given or granted any
authority to Dolores, Estrella, Feliza and Corazon, or to
any of them, to borrow money or secure a loan in her
behalf from the bank.

As a general rule, facts alleged in a party's pleading

are deemed admissions of that party and binding upon
it. However, that is not an absolute and inflexible rule.
Every admission is to be taken as an entirety of the
fact which makes for the one side with the
qualifications which limit, modify or destroy its effect
on the other side. The reason for this is that, where
part of a statement of a party is used against him as
an admission, the court should consider and weigh any
other portions connected with the statement which
tend to neutralize or explain the portion which is
against interest. In other words, while the admission is
admissible in evidence, its probative value is to be
determined from the whole statement and others
intimately related or connected therewith as an
integrated unit for, as said by the Supreme Court,

Replying to the answer to the amended complaint of

the defendants Dolores and Estrella Granada, the
plaintiff again averred that as alleged in the original
complaint, Dolores, Estrella, Feliza and Corazon were
personally, jointly and severally liable to the plaintiff
for the payment of the amount of the loans, as that is
what appears in the promissory notes and the
borrowers did not inform the bank when they applied
for and secured the loan that they were acting as
agents for and in behalf of their parents, and the filing

although acts or facts admitted do not require proof

and cannot be contradicted, however, evidence aliunde
can be presented to show that the admission was
made through palpable mistake. (Irlanda vs. Pitargue,
22 Phil. 383.)
From the pleadings filed by the parties it clearly
appears that the cause of action stated in the original
complaint was against Dolores, Estrella, Felisa and
Corazon, surnamed Granada, for the payment of the
loans which they obtained from the bank in their
individual and personal capacity, as evidenced by the
promissory notes in question.1awphl.nt
The foregoing facts called from the pleadings of the
parties have persuaded us to believe, and we so hold,
that in filing the amended complaint containing the
allegation which has become the bone of contention on
this appeal, the plaintiff had acted through a mistaken
belief that the adverted allegation in the amended
complaint did not constitute an amendment of its
cause of action, and this matter was made known to
the court and the defendants when in its reply to the
motion to dismiss it stated that it has no document or
evidence in its possession to hold the spouses Matias
and Cristeta Granada liable to the payment of the
account; and it honestly relied on the belief that the
defendants, Dolores and Estrella, surnamed Granada,
had the necessary evidence to establish the fact. At
any rate, guided by the provisions of the rules of court
that "These rules shall be liberally construed in order
to promote their object and to assist the parties in
obtaining just, speedy, and inexpensive determination
of every action and proceeding"; the amended
complaint may be treated as stating two or more
statements of a claim in a single cause of action,
which is permitted under Section 9, Rule 15, or it may

be considered as including several defendants in the

alternative against any of which plaintiff may be
entitled to relief, a course of action sanctioned by
Section 13, Rule 3. There are cases where the facts
essential to the party's claim or defense are within the
knowledge of the adverse party, as to be unable to
state them with certainty. He may, however, know that
one out of two or more sets of facts is true, without
knowing which. In such a case, plaintiff is allowed to
make alternative statements of his claim under
Section 9, Rule 15. (Everett vs. Asia Banking
Corporation, 59 Phil. 512, 526, cited in 1 Moran 235,
1957 ed.) On the other hand, Section 13 of Rule 3
"gives the plaintiff the right to include alternatively
several possible defendants when he is uncertain
against which of them he is entitled to relief, as ...
where a defendant may have been acting either as an
agent or a principal." ... And the above provision is
applicable, although the right to relief alleged to exist
against one of the defendants may be inconsistent
with the right to relief against the other, as where A is
sued as principal and B is joined in the alternative, if A
should be found to have been B's agents. (1 Moran 71,
1957 ed.) The amended complaint in the instant case
may not be a model pleading for an alternative
statements of the claim or against two or more
defendants in the alternative; however, judging the
said complaint from a liberal standpoint as ordained by
the Rules and considering that in the prayer judgment
is asked against all the defendants, Dolores Granada,
Estrella Granada and Cristeta Granada, it is within the
jurisdiction of the court to render such judgment as
the facts warrant against all or some of the defendants
for the payment of the amount claimed by the plaintiff.
Taking into account the circumstances of this case, we
find no error committed by the Court of Appeals, both

in the assessment of the facts and the application of

the law on the matter in dispute. It is evident that the
plaintiff bank, in amending the complaint conformably
with the order of the trial court, never intended to
change the cause of action which was embodied in the
original complaint.
WHEREFORE, this petition is hereby dismissed, with
costs against the petitioners. So ordered.