1947, the wife brought the present action to recover arrears allegedly due her under

MARGARITE AUTEN, Appellant, v. HAROLD AUTEN, Respondent.
Court of Appeals of New York
308 N.Y. 155; 124 N.E.2d 99; 1954 N.Y. LEXIS 930; 50 A.L.R.2d 246
the agreement. Since the law of England must be applied, and since, at the least, an
issue exists whether the courts of that country treat the commencement of a
separation action as a repudiation of an earlier-made separation agreement, the
husband's motion for summary judgment, based on his defense of an alleged
repudiation by the wife of the separation agreement, should not have been granted.

2. The "center of gravity" or "grouping of contacts" theory of the conflict of laws

Argued October 22, 1954.
December 31, 1954, decided
PRIOR HISTORY: [***1]
Auten v. Auten, 281 App. Div. 740, reversed.
APPEAL from a judgment, entered December 1, 1953, upon an order of the
Appellate Division of the Supreme Court in the first judicial department, which (1)
affirmed an order of the Supreme Court at Special Term (SCHREIBER, J.), entered
in New York County, granting a motion by defendant for summary judgment
dismissing the complaint and (2) granted leave to serve an amended complaint.
(See 306 N.Y. 752.)
DISPOSITION: LEWIS, Ch. J., CONWAY, DESMOND, DYE, FROESSEL and VAN
VOORHIS, JJ., concur.
emphasizes the law of the place which has the most significant contacts with the
matter in dispute. Examination of the respective contacts with New York and
England indicates that the English law should be applied to determine the effect to
be given the wife's institution of the separation suit in England. The parties were
married in England, had children there and lived there as a family for fourteen years.
The husband allegedly had willfully deserted and abandoned the [***4] wife and
children in England, and was in this country on a temporary visa when the
agreement was signed. The sole purpose of the wife's trip to New York was to
arrange for defendant to agree to support his family, and she returned to England
immediately after the agreement was executed. The agreement, effecting a
separation between British subjects, was drawn with an understanding that the wife
and children would live in England. The only relation of this state with the matter is
that it is the place where the agreement was made and where the trustee had his
office.

Judgments reversed, etc.
HEADNOTES: Conflict of laws - husband and wife - repudiation of separation
agreement - (1) wife and husband entered into separation agreement in New York
providing that husband pay stated amount monthly for support of wife and children,
that neither should sue in any action relating to separation, and that wife should not
sue in any jurisdiction by reason of prior Mexican divorce; thereafter wife sued for
separation in England; action herein by wife to recover arrears due her under
agreement; husband's motion for summary judgment based on defense that wife's
separation action in England operated as repudiation of agreement, [***2] denied;
law of England applicable and thereunder issue exists as to effect of
commencement of separation action on separation agreement - (2) under "grouping
of contacts" theory of conflict of laws, English law would be applied - (3) parties
could not have expected that law other than English law would be applied - (4)
moreover, under rule that matters of performance and breach are governed by law
of place of performance, English law would control - (5) husband's contention that
wife's commencement of English action amounted to breach of her covenant not to
sue also governed by English law.
1. Defendant husband, who had procured a Mexican divorce, and plaintiff wife
entered into a separation agreement in 1933 in New York providing that the husband
pay a stated amount monthly to a New York trustee for the account of his wife, for
the support of herself and their children; that neither should sue "in any action
relating to their separation", and that the wife should not "cause any complaint to be
lodged against * * * [the husband], in any jurisdiction, by reason of the said alleged
divorce". Immediately after the signing of the agreement, the wife returned to
England, where she [***3] has since lived with the children. In 1934, the wife filed a
petition for separation in an English court, but the action never proceeded to trial. In
3. The parties could not have expected or believed that any law other than that of
England would govern the effect of the wife's institution of a separation action.
4. If the rule that matters of performance and breach are governed by the law of the
place of performance should be applied, the law of England would still control.
5. The husband's contention that plaintiff's commencement of the English action
amounted to a material breach of his wife's covenant not to sue, barring recovery on
the agreement, is also governed by English law.
COUNSEL: Michael Alexander, Bernard B. Smith and Leonard H. Steibel [***5] for
appellant. I. The effect of the English separation action upon the separation
agreement must be determined in accordance with the rule of law applied by the
English courts. ( Rennie v. Rennie, 287 N.Y. 86; Lynde v. Lynde, 41 App. Div. 280,
162 N.Y. 405, 181 U.S. 183; Swift & Co. v. Bankers Trust Co., 280 N.Y.
135; Myles v. Cuba R.R. Co., 182 Misc. 169; Lann v. United States Steel Works
Corp., 166 Misc. 465; Matter of Palmer, 192 Misc. 385, 275 App. Div.
792;Graham v. First Nat. Bank of Norfolk, 84 N.Y. 393; Hutchinson v. Ross, 262 N.Y.
381.) II. Even assuming, arguendo, that the effect of the English separation action
upon the separation agreement must be determined in accordance with the rule of
law applied by the courts of New York, the judgment of the Appellate Division
affirming Special Term cannot be sustained. ( Woods v. Bard, 285 N.Y.
11; Krell v. Krell, 192 Misc. 1; Clark v. Kirby, 243 N.Y. 295; Dimick v. Dimick, 230
App. Div. 99; Van Horn v. Van Horn, 196 App. Div. 472; Chamberlain v. Cuming, 37
Misc. 815; Estin v. Estin, 296 N.Y. 308, 334 U.S. 541; [***6] Gifford v. Corrigan, 117
N.Y. 257; Rosmarin v. Rosmarin, 238 App. Div. 798; De Brauwere v. De Brauwere,
203 N.Y. 460; Patino v. Patino, 195 Misc. 887, 278 App. Div. 756, 278 App. Div.
921.)
CONFLICTS OF LAW FEB 23 ASS CASES 1

Saul Hammer for respondent. I. The separation agreement sued upon is governed
by the law of the State of New York. ( Bitterman v. Schulman, 265 App. Div.
486; Stumpf v. Hallahan, 101 App. Div. 383, 185 N.Y. 550; Vander Horst v. Kittredge,
229 App. Div. 126; Aronson v. Carobine, 129 Misc. 800; Rennie v. Rennie, 287 N.Y.
86.) II. The law of the contract also governs the interpretation and legal effect of any
acts urged as a defense or discharge of the agreement. ( Benton v. Safe Deposit
Bank, 255 N.Y. 260; Pritchard v. Norton, 106 U.S. 124.) III. The law of domicile does
not govern. ( Vander Horst v. Kittredge, 229 App. Div. 126; Graham v. First Nat.
Bank of Norfolk, 84 N.Y. 393; Hutchinson v. Ross, 262 N.Y. 381.) IV. Appellant
repudiated the agreement sued upon by instituting suit against respondent for
judicial separation. ( O'Brien v. O'Brien, 252 App. Div. 427; [***7] Hettich v. Hettich,
278 App. Div. 518; Woods v. Bard, 285 N.Y. 11; Krell v. Krell, 192 Misc.
1; Schmelzel v. Schmelzel, 287 N.Y. 21; Dimick v. Dimick, 230 App. Div. 99; Van
Horn v. Van Horn, 196 App. Div. 472.) V. In any event, appellant's breach of the
covenants of the agreement barred any subsequent recovery thereunder.
( Duryea v. Bliven, 122 N.Y. 567; Haskell v. Haskell, 207 App. Div.
723;Muth v. Wuest, 76 App. Div. 332; Matter of Noel, 173 Misc.
844; Cole v. Addison, 153 Ore. 688; Harwood v. Harwood, 182 Misc.
130; Roth v. Roth, 77 Misc. 673; Schmidt v. Schmidt, 74 Misc. 423.) VI. No rights
survive to appellant after her repudiation of the separation agreement.
OPINIONBY: FULD
OPINION: [*158] [**100] FULD, J. In this action to recover installments allegedly
due for support and maintenance under a separation agreement executed in this
state in 1933, the wife's complaint has been dismissed, on motion for summary
judgment, upon the ground that her institution of an action for separation in England
constituted a repudiation and a rescission of the agreement under New [***8] York
law. Determination of the appeal, involving as it does a question of conflict of laws,
requires examination of the facts disclosed by the papers before us.
Married in England in 1917, Mr. and Mrs. Auten continued to live there with their two
children until 1931. In that year, according to plaintiff, defendant deserted her, came
to this country and, in the following year, obtained a Mexican divorce and proceeded
to "marry" another woman. Unable to come to terms with the ocean between them,
plaintiff made a trip to New York City to see and talk to defendant about adjustment
of their differences. The outcome was the separation agreement of June, 1933,
upon which the present action is predicated. It obligated the husband to pay to a
trustee, for the "account of" the wife, who was to return to England, the sum of 50 a
month for the support of herself and the children. In addition, the agreement
provided that the parties were to continue to live separate and apart, that neither
should sue "in any action relating to their separation" and that the wife should not
"cause any complaint to be lodged against * * * [the husband], in any jurisdiction, by
reason of the said alleged [***9] divorce or remarriage".
Immediately after the agreement was signed, plaintiff returned to England, where
she has since lived with her children, and it is alleged by her - but disputed by
defendant - that the latter is also domiciled in that country. Be that as it may,
defendant failed to live up to his agreement, making but a few payments under it,
with the result that plaintiff was left more or less destitute in England with the
children. About a year after the agreement had been executed, in August of 1934,
plaintiff filed a petition for separation in an English court, charging defendant with
adultery. Defendant was served in New York with process in that suit on December
4, 1936, and, in July, 1938, an order was entered requiring defendant to pay
alimonypendente lite. This English action - which, we are told [*159] never
proceeded to trial - was instituted upon advice of English counsel that it "was the
only method" by which she "could collect money" from defendant; it was done,
plaintiff expressly declares, to "enable" her "to enforce" the separation agreement,
and not with any thought or intention of repudiating it.
The years passed, and in 1947, having realized [***10] nothing as a result of the
English action and little by reason of the New York separation agreement, plaintiff
brought the present suit to recover the sum of $26,564, which represents the
amount allegedly due her, under the agreement, from January 1, 1935 to September
1, 1947.
[**101] In his answer, defendant admitted making the agreement, but, by way of a
separate defense - one of several - claimed that plaintiff's institution of the
separation suit in England operated as a repudiation of the agreement and effected
a forfeiture of her right to any payments under it. Following a motion by the wife for
summary judgment and a cross motion by the husband for like relief, the court at
Special Term granted the husband's cross motion and dismissed the complaint. The
Appellate Division affirmed, with leave to the wife, however, to serve an amended
complaint, asserting any cause of action which accrued prior to the date of the
commencement of the English suit. The ensuing judgment, dismissing all of the
wife's claims which accrued subsequent to that date, is a final judgment of
modification, and the wife's appeal therefrom is properly before us as of right. (306
N.Y. 752; see, also, [***11] Cohen and Karger, Powers of the New York Court of
Appeals, pp. 88-91, 222-223.)
Both of the courts below, concluding that New York law was to be applied, held that
under such law plaintiff's commencement of the English action and the award of
temporary alimony constituted a rescission and repudiation of the separation
agreement, requiring dismissal of the complaint. Whether that is the law of this state,
or whether something more must be shown to effect a repudiation of the agreement
(cf. Hettich v. Hettich, 304 N.Y. 8, 13-14; Woods v. Bard, 285 N.Y.
11; Butler v. Butler, 206 App. Div. 214), need not detain us, since in our view it is the
law of England, not that of New York, which is here controlling.
Choosing the law to be applied to a contractual transaction with elements in different
jurisdictions is a matter not free from [*160] difficulty. The New York decisions
evidence a number of different approaches to the question. (See,
e.g., Jones v. Metropolitan Life Ins. Co., 158 Misc. 466.)
Most of the cases rely upon the generally accepted rules that "All matters bearing
upon the execution, the interpretation and the validity of contracts [***12] * * * are
determined by the law of the place where the contract is made", while "All matters
connected with its performance * * * are regulated by the law of the place where the
contract, by its terms, is to be performed." ( Swift & Co. v. Bankers Trust Co., 280
N.Y. 135, 141; Union Nat. Bank v. Chapman, 169 N.Y. 538, 543; see,
also, Zwirn v. Galento, 288 N.Y. 428; United States Mtge. & Trust Co. v. Ruggles,
CONFLICTS OF LAW FEB 23 ASS CASES 2
258 N.Y. 32, 38; Restatement, Conflict of Laws, 332, 358; Goodrich on Conflict of
Laws [2d ed., 1938], p. 293.) What constitutes a breach of the contract and what
circumstances excuse a breach are considered matters of performance, governable,
within this rule, by the law of the place of performance. (See Richard v. American
Union Bank, 241 N.Y. 163, 166-167; Restatement, Conflict of Laws, 370;
Goodrich, op. cit., p. 293.)
Many cases appear to treat these rules as conclusive. Others consider controlling
the intention of the parties and treat the general rules merely as presumptions or
guideposts, to be considered along with all the other circumstances.
(See Wilson v. Lewiston Mill Co., 150 N.Y. 314, 322-
323; Stumpf [***13] v. Hallahan, 101 App. Div. 383, 386, affd. 185 N.Y.
550;Grand v. Livingston, 4 App. Div. 589, affd. 158 N.Y. 688.) And still other
decisions, including the most recent one in this court, have resorted to a method -
first employed to rationalize the results achieved by the courts in decided cases
(see Barber Co. v. Hughes, 223 Ind. 570, 586) - which has come to be called the
"center of gravity" or the "grouping of contacts" theory of the conflict of laws. Under
this theory, the courts, instead of regarding as conclusive [**102] the parties'
intention or the place of making or performance, lay emphasis rather upon the law of
the place "which has the most significant contacts with the matter in dispute".
( Rubin v. Irving Trust Co., 305 N.Y. 288, 305; see, also, Jones v. Metropolitan Life
Ins. Co., supra, 158 Misc. 466, 469-470; Jansson v. Swedish American Line, 185 F.
2d 212; [*161] Barber Co. v. Hughes, supra, 223 Ind. 570; Boissevain v. Weil,
[1949] 1 K.B. 482, 490-492; Cook, "Contracts" and the Conflict of Laws: "Intention"
of the Parties, 32 Ill. L. Rev. 899, 918-919; Harper, Policy Bases of the Conflict of
[***14] Laws: Reflections on Rereading Professor Lorenzen's Essays, 56 Yale L.J.
1155, 1163-1168; Note, Choice of Law Problems in Direct Actions Against
Indemnification Insurers, 3 Utah L. Rev. 490, 498-499.)
Although this "grouping of contacts" theory may, perhaps, afford less certainty and
predictability than the rigid general rules (see Note, op. cit., 3 Utah L. Rev. 490,
498), the merit of its approach is that it gives to the place "having the most interest in
the problem" paramount control over the legal issues arising out of a particular
factual context, thus allowing the forum to apply the policy of the jurisdiction "most
intimately concerned with the outcome of [the] particular litigation" (3 Utah L. Rev.,
pp. 498-499). Moreover, by stressing the significant contacts, it enables the court,
not only to reflect the relative interests of the several jurisdictions involved
(see Vanston Committee v. Green, 329 U.S. 156, 161-162), but also to give effect to
the probable intention of the parties and consideration to "whether one rule or the
other produces the best practical result". ( Swift & Co. v. Bankers Trust Co., supra,
280 N.Y. 135, 141; see Vanston Committee [***15] v. Green, supra, 329 U.S. 156,
161-162.)
Turning to the case before us, examination of the respective contacts with New York
and England compels the conclusion that it is English law which must be applied to
determine the impact and effect to be given the wife's institution of the separation
suit n1. It hardly needs stating that it is England which has all the truly significant
contacts, while this state's sole nexus with the matter in dispute - entirely fortuitous,
at that - is that it is the place where the agreement was made and where the trustee,
to whom the moneys were in the first [*162] instance to be paid, had his office. The
agreement effected a separation between British subjects, who had been married in
England, had children there and lived there as a family for fourteen years. It involved
a husband who, according to the papers before us, had willfully deserted and
abandoned his wife and children in England and was in the United States, when the
agreement was signed, merely on a temporary visa. And it concerned an English
wife who came to this country at that time because it was the only way she could
see her husband to discuss their differences. The sole [***16] purpose of her trip to
New York was to get defendant to agree to the support of his family, and she
returned to England immediately after the agreement was executed. While the
moneys were to be paid through the medium of a New York trustee, such payments
were "for account of" the wife and children, who, it was thoroughly understood, were
to live in England. The agreement is instinct with that understanding; not only does it
speak in terms of English currency in providing for payments to the wife, not only
does it recite that the first payment be made to her "immediately before sailing for
England", but it specifies that the husband may visit the children "if he should go to
England".
n1. Our decision in Rennie v. Rennie (287 N.Y. 86) casts no light on the problem.
The court did not there consider whether it is the law of the place where the
separation agreement was made or of the jurisdiction where the separation suit or
other judicial proceeding was brought which determines the effect that such action
may have upon the agreement.
[**103] In short, then, the agreement determined and fixed the marital
responsibilities of an English husband and father and provided [***17] for the
support and maintenance of the allegedly abandoned wife and children who were to
remain in England. It merely substituted the arrangements arrived at by voluntary
agreement of the parties for the duties and responsibilities of support that would
otherwise attach by English law. There is no question that England has the greatest
concern in prescribing and governing those obligations, and in securing to the wife
and children essential support and maintenance. And the paramount interest of that
country is not affected by the fact that the parties separate and provide for such
support by a voluntary agreement. It is still England, as the jurisdiction of marital
domicile and the place where the wife and children were to be, that has the greatest
concern in defining and regulating the rights and duties existing under that
agreement, and, specifically, in determining the circumstances that effect a
termination or repudiation of the agreement.
[*163] Nor could the parties have expected or believed that any law other than
England's would govern the effect of the wife's institution of a separation action. It is
most unlikely that the wife could have intended to subject her [***18] rights under
English law to the law of a jurisdiction several thousand miles distant, with which she
had not the slightest familiarity. On the contrary, since it was known that she was
returning to England to live, both parties necessarily realized that any action which
she took, whether in accordance with the agreement or in violation of it, would have
to occur in England. If any thought was given to the matter at all, it was that the law
of the place where she and the children would be should determine the effect of acts
performed by her.
It is, perhaps, not inappropriate to note that, even if we were not to place our
emphasis on the law of the place with the most significant contacts, but were instead
simply to apply the rule that matters of performance and breach are governed by the
CONFLICTS OF LAW FEB 23 ASS CASES 3
law of the place of performance, the same result would follow. Whether or not there
was a repudiation, essentially a form of breach (see Restatement, Contracts, 318;
4 Corbin on Contracts [1951], 954, pp. 829-834), is also to be determined by the
law of the place of performance (cf. Wester v. Casein Co. of America, 206 N.Y. 506;
Restatement, Conflict of Laws, 370, Caveat [***19] ), and that place, so far as the
wife's performance is concerned, is England. Whatever she had to do under the
agreement - "live separate and apart from" her husband, "maintain, educate and
support" the children and refrain from bringing "any action relating to [the]
separation" - was to be done in England. True, the husband's payments were to be
made to a New York trustee for forwarding to plaintiff in England, but that is of no
consequence in this case. It might be, if the question before us involved the manner
or effect of payment to the trustee, but that is not the problem; we are here
concerned only with the effect of the wife's performance. (Cf. Zwirn v. Galento,
supra, 288 N.Y. 428, 433.)

Since, then, the law of England must be applied, and since, at the very least, an
issue exists as to whether the courts of that country treat the commencement of a
separation action as a [*164] repudiation of an earlier-made separation agreement,
summary judgment should not have been granted n2.

n2. In point of fact, the English lawyers, whose affidavits have been submitted by
plaintiff, unequivocally opine that the institution of a separation suit and the award of
alimony pendente lite did not, under the law of England, constitute a repudiation of
the separation agreement or bar the present action to recover amounts due under it.
[***20]

As to defendant's further contention that, in any event, plaintiff's commencement of

the English action amounted to a [**104] material breach of her covenant not to
sue, barring recovery upon the agreement, we need but say that this question, too,
must be governed by English law, and for the same reasons already set forth.

The judgment of the Appellate Division and that of Special Term insofar as they
dismiss the complaint should be reversed, with costs in all courts, and the matter
remitted for further proceedings in accordance with this opinion.

Republic of the Philippines

SUPREME COURT
Manila
CONFLICTS OF LAW FEB 23 ASS CASES 4
 FIRST DIVISION
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, petitioner,
vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ,
in his capacity as Presiding Judge of Branch 89, Regional Trial Court of
Quezon City, respondents.
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul
and set aside the Resolution 1dated September 27, 1995 and the Decision 2 dated
April 10, 1996 of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4and the
Orders 5 dated August 29, 1994 6 and February 2, 1995 7 that were issued by the trial
court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as stated in
the questioned Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight
Attendant for its airlines based in Jeddah, Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia,
plaintiff went to a disco dance with fellow crew members Thamer
Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because
it was almost morning when they returned to their hotels, they
agreed to have breakfast together at the room of Thamer. When
they were in te (sic) room, Allah left on some pretext. Shortly after
he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy
and several security personnel heard her cries for help and
rescued her. Later, the Indonesian police came and arrested
Thamer and Allah Al-Gazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several
SAUDIA officials interrogated her about the Jakarta incident. They
then requested her to go back to Jakarta to help arrange the
release of Thamer and Allah. In Jakarta, SAUDIA Legal Officer
Sirah Akkad and base manager Baharini negotiated with the
police for the immediate release of the detained crew members
but did not succeed because plaintiff refused to cooperate. She
was afraid that she might be tricked into something she did not
want because of her inability to understand the local dialect. She
also declined to sign a blank paper and a document written in the
local dialect. Eventually, SAUDIA allowed plaintiff to return to
Jeddah but barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer
and Allah after two weeks of detention. Eventually, they were
again put in service by defendant SAUDI (sic). In September
1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors requested her to
see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah,
Saudi Arabia. When she saw him, he brought her to the police
station where the police took her passport and questioned her
about the Jakarta incident. Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon
flight out of Jeddah.
One year and a half later or on lune 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal
Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA
office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary
to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June
27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993
for further investigation. Plaintiff did so after receiving assurance
from SAUDIA's Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on
June 28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
CONFLICTS OF LAW FEB 23 ASS CASES 5
 plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take flight. At the Inflight Service Office
where she was told to go, the secretary of Mr. Yahya Saddick took
away her passport and told her to remain in Jeddah, at the crew
quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock,
rendered a decision, translated to her in English, sentencing her
to five months imprisonment and to 286 lashes. Only then did she
realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing and listening to
the music in violation of Islamic laws; and (3) socializing with the
male crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the
Philippine Embassy in Jeddah to help her while her case is on appeal. Meanwhile,
to pay for her upkeep, she worked on the domestic flight of SAUDIA, while Thamer
and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to
Manila, 12 she was terminated from the service by SAUDIA, without her being
informed of the cause.
On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA,
and Khaled Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised
the following grounds, to wit: (1) that the Complaint states no cause of action against
Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim
or demand set forth in the Complaint has been waived, abandoned or otherwise
extinguished; and (4) that the trial court has no jurisdiction to try the case.
15
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) . Saudia
filed a reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was
dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and
Motion to Dismiss Amended Complaint 18.
The trial court issued an Order 19 dated August 29, 1994 denying the Motion to
Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed
on September 20, 1994, its Motion for Reconsideration 21 of the Order dated August
29, 1994. It alleged that the trial court has no jurisdiction to hear and try the case on
the basis of Article 21 of the Civil Code, since the proper law applicable is the law of
the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her
Opposition 22 (To Defendant's Motion for Reconsideration).
In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that
since its Motion for Reconsideration raised lack of jurisdiction as its cause of action,
the Omnibus Motion Rule does not apply, even if that ground is raised for the first
time on appeal. Additionally, SAUDIA alleged that the Philippines does not have any
substantial interest in the prosecution of the instant case, and hence, without
jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated February 2, 1995,
denying SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed
Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi
Arabian Airlines filed, thru counsel, on September 20, 1994, and
the Opposition thereto of the plaintiff filed, thru counsel, on
October 14, 1994, as well as the Reply therewith of defendant
Saudi Arabian Airlines filed, thru counsel, on October 24, 1994,
considering that a perusal of the plaintiffs Amended Complaint,
which is one for the recovery of actual, moral and exemplary
damages plus attorney's fees, upon the basis of the applicable
Philippine law, Article 21 of the New Civil Code of the Philippines,
is, clearly, within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of substance which
might cause the reversal or modification of the order sought to be
reconsidered, the motion for reconsideration of the defendant, is
DENIED.
SO ORDERED. 25
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or
Temporary Restraining Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
Order 27 dated February 23, 1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed, in the interim.
CONFLICTS OF LAW FEB 23 ASS CASES 6
In another Resolution 28 promulgated on September 27, 1995, now assailed, the
appellate court denied SAUDIA's Petition for the Issuance of a Writ of Preliminary
Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is
hereby DENIED, after considering the Answer, with Prayer to
Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and
Rejoinder, it appearing that herein petitioner is not clearly entitled
thereto (Unciano Paramedical College, et. Al., v. Court of Appeals,
et. Al., 100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant
Petition 29 for Review with Prayer for Temporary Restraining Order dated October
13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals
rendered the Decision 30 dated April 10, 1996, now also assailed. It ruled that the
Philippines is an appropriate forum considering that the Amended Complaint's basis
for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the
jurisdiction of respondent Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have
proceeded to trial, and in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order 31 dated April 30, 1996, given due course by this Court.
After both parties submitted their Memoranda, 32 the instant case is now deemed
submitted for decision.
Petitioner SAUDIA raised the following issues:
I II.
The trial court has no jurisdiction to hear and try Civil Case No. Q-
93-18394 based on Article 21 of the New Civil Code since the
proper law applicable is the law of the Kingdom of Saudi Arabia
inasmuch as this case involves what is known in private
international law as a "conflicts problem". Otherwise, the Republic
of the Philippines will sit in judgment of the acts done by another
sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence of
leave of court is now moot and academic when this Honorable
Court required the respondents to comment on petitioner's April
30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days From Notice
Thereof. Further, the Revised Rules of Court should be construed
with liberality pursuant to Section 2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in
CA-G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon.
Rodolfo A. Ortiz, et al." and filed its April 30, 1996 Supplemental
Petition For Review With Prayer For A Temporary Restraining
Order on May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1, Rule 45 of
the Revised Rules of Court. Therefore, the decision in CA-G.R.
SP NO. 36533 has not yet become final and executory and this
Honorable Court can take cognizance of this case. 33
From the foregoing factual and procedural antecedents, the following issues emerge
for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON
CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO.
Q-93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI
ARABIAN AIRLINES".
WHETHER RESPONDENT APPELLATE COURT ERRED IN
RULING THAT IN THIS CASE PHILIPPINE LAW SHOULD
GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at
the outset. It maintains that private respondent's claim for alleged abuse of rights
occurred in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign
element qualifies the instant case for the application of the law of the Kingdom of
Saudi Arabia, by virtue of the lex loci delicti commissi rule. 34
CONFLICTS OF LAW FEB 23 ASS CASES 7
On the other hand, private respondent contends that since her Amended Complaint
is based on Articles 19 35 and 21 36 of the Civil Code, then the instant case is
properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case, there is no dispute that the
interplay of events occurred in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign
airlines corporation doing business in the Philippines. It may be
served with summons and other court processes at Travel Wide
Associated Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114
Valero St., Salcedo Village, Makati, Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport
Thamer and Allah after two weeks of detention. Eventually, they
were again put in service by defendant SAUDIA. In September
1990, defendant SAUDIA transferred plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the
Jakarta incident was already behind her, her superiors reauested
her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA in
Jeddah, Saudi Arabia. When she saw him, he brought her to the
police station where the police took her passport and questioned
her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon
flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila,
plaintiff was not allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal
Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA
office brought her to a Saudi court where she was asked to sigh a
document written in Arabic. They told her that this was necessary
to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June
27, 1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993
for further investigation. Plaintiff did so after receiving assurance
from SAUDIA's Manila manger, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi court on June 27, 1993. Nothing happened then but on
June 28, 1993, a Saudi judge interrogated plaintiff through an
interpreter about the Jakarta incident. After one hour of
interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the
airline had forbidden her to take that flight. At the Inflight Service
Office where she was told to go, the secretary of Mr. Yahya
Saddick took away her passport and told her to remain in Jeddah,
at the crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff
to the same court where the judge, to her astonishment and
shock, rendered a decision, translated to her in English,
sentencing her to five months imprisonment and to 286 lashes.
Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta.
The court found plaintiff guilty of (1) adultery; (2) going to a disco,
dancing, and listening to the music in violation of Islamic laws; (3)
socializing with the male crew, in contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case,
plaintiff sought the help of the Philippines Embassy in Jeddah.
The latter helped her pursue an appeal from the decision of the
court. To pay for her upkeep, she worked on the domestic flights
of defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights. 39
Where the factual antecedents satisfactorily establish the existence of a foreign
element, we agree with petitioner that the problem herein could present a "conflicts"
case.
A factual situation that cuts across territorial lines and is affected by the diverse laws
of two or more states is said to contain a "foreign element". The presence of a
foreign element is inevitable since social and economic affairs of individuals and
associations are rarely confined to the geographic limits of their birth or
conception. 40
The forms in which this foreign element may appear are many. 41 The foreign
element may simply consist in the fact that one of the parties to a contract is an alien
CONFLICTS OF LAW FEB 23 ASS CASES 8
or has a foreign domicile, or that a contract between nationals of one State involves
properties situated in another State. In other cases, the foreign element may
assume a complex form. 42
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident
foreign corporation. Also, by virtue of the employment of Morada with the petitioner
Saudia as a flight stewardess, events did transpire during her many occasions of
travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi
Arabia, and vice versa, that caused a "conflicts" situation to arise.
We thus find private respondent's assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of
jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended Complaint, 44 and the
Comment thereon, we note that she aptly predicated her cause of action on Articles
19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due
and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy
shall compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:
The aforecited provisions on human relations were intended to
expand the concept of torts in this jurisdiction by granting
adequate legal remedy for the untold number of moral wrongs
which is impossible for human foresight to specifically provide in
the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent's assertion that violations of
Articles 19 and 21 are actionable, with judicially enforceable remedies in the
municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the light of the Rules
of Court on jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City
possesses jurisdiction over the subject matter of the suit. 48 Its authority to try and
hear the case is provided for under Section 1 of Republic Act No. 7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known
as the "Judiciary Reorganization Act of 1980", is hereby amended
to read as follows:
Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which
demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation
expenses, and cots or the value of the property
in controversy exceeds One hundred thousand
pesos (P100,000.00) or, in such other cases in
Metro Manila, where the demand, exclusive of
the above-mentioned items exceeds Two
hundred Thousand pesos (P200,000.00).
(Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue,
Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now Regional Trial
Court]
(a) xxx xxx xxx
(b) Personal actions. All other actions may be commenced and
tried where the defendant or any of the defendants resides or may
be found, or where the plaintiff or any of the plaintiff resides, at the
election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh
heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the
private interest of the litigant. Enforceability of a judgment if one is obtained is quite
obvious. Relative advantages and obstacles to a fair trial are equally important.
Plaintiff may not, by choice of an inconvenient forum, "vex", "harass", or "oppress"
CONFLICTS OF LAW FEB 23 ASS CASES 9
the defendant, e.g. by inflicting upon him needless expense or disturbance. But
unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum
should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear the
case in the Philippines. Had it refused to take cognizance of the case, it would be
forcing plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in
the Kingdom of Saudi Arabia where she no longer maintains substantial
connections. That would have caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties
herein. By filing her Complaint and Amended Complaint with the trial court, private
respondent has voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the
dismissal of Morada's Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is very patent and explicit from
the motions filed, is that SAUDIA prayed for other reliefs under the premises.
Undeniably, petitioner SAUDIA has effectively submitted to the trial court's
jurisdiction by praying for the dismissal of the Amended Complaint on grounds other
than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
We observe that the motion to dismiss filed on April 14, 1962,
aside from disputing the lower court's jurisdiction over defendant's
person, prayed for dismissal of the complaint on the ground that
plaintiff's cause of action has prescribed. By interposing such
second ground in its motion to dismiss, Ker and Co., Ltd. availed
of an affirmative defense on the basis of which it prayed the court
to resolve controversy in its favor. For the court to validly decide
the said plea of defendant Ker & Co., Ltd., it necessarily had to
acquire jurisdiction upon the latter's person, who, being the
proponent of the affirmative defense, should be deemed to have
abandoned its special appearance and voluntarily submitted itself
to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to
the jurisdiction of the court over the person, it must be for the sole
and separate purpose of objecting to the jurisdiction of the court. If
his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special appearance by
motion made for the purpose of objecting to the jurisdiction of the
court over the person will be held to be a general appearance, if
the party in said motion should, for example, ask for a dismissal of
the action upon the further ground that the court had no
jurisdiction over the subject matter. 52
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that
its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to
answer two important questions: (1) What legal system should control a given
situation where some of the significant facts occurred in two or more states; and (2)
to what extent should the chosen legal system regulate the situation. 53
Several theories have been propounded in order to identify the legal system that
should ultimately control. Although ideally, all choice-of-law theories should
intrinsically advance both notions of justice and predictability, they do not always do
so. The forum is then faced with the problem of deciding which of these two
important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what
category a certain set of facts or rules fall. This process is known as
"characterization", or the "doctrine of qualification". It is the "process of deciding
whether or not the facts relate to the kind of question specified in a conflicts
rule." 55 The purpose of "characterization" is to enable the forum to select the proper
law. 56
Our starting point of analysis here is not a legal relation, but a factual situation,
event, or operative fact. 57 An essential element of conflict rules is the indication of a
"test" or "connecting factor" or "point of contact". Choice-of-law rules invariably
consist of a factual relationship (such as property right, contract claim) and a
connecting factor or point of contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test
for the determination of the applicable law. 59 These "test factors" or "points of
contact" or "connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his
place of sojourn, or his origin;
CONFLICTS OF LAW FEB 23 ASS CASES 10
 (2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situs is decisive when
real rights are involved;
(4) the place where an act has been done, the locus actus, such
as the place where a contract has been made, a marriage
celebrated, a will signed or a tort committed. The lex loci actus is
particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a
power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should
govern their agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are
instituted or done. The lex fori the law of the forum is
particularly important because, as we have seen earlier, matters
of "procedure" not going to the substance of the claim involved
are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from
application in a given case for the reason that it falls under one of
the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically
all legal relationships of the ship and of its master or owner as
such. It also covers contractual relationships particularly contracts
of affreightment. 60 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the
Amended Complaint deemed admitted for purposes of the motion to dismiss, we are
convinced that there is reasonable basis for private respondent's assertion that
although she was already working in Manila, petitioner brought her to Jeddah on the
pretense that she would merely testify in an investigation of the charges she made
against the two SAUDIA crew members for the attack on her person while they were
in Jakarta. As it turned out, she was the one made to face trial for very serious
charges, including adultery and violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the "handing over" or
"turning over" of the person of private respondent to Jeddah officials, petitioner may
have acted beyond its duties as employer. Petitioner's purported act contributed to
and amplified or even proximately caused additional humiliation, misery and
suffering of private respondent. Petitioner thereby allegedly facilitated the arrest,
detention and prosecution of private respondent under the guise of petitioner's
authority as employer, taking advantage of the trust, confidence and faith she
reposed upon it. As purportedly found by the Prince of Makkah, the alleged
conviction and imprisonment of private respondent was wrongful. But these capped
the injury or harm allegedly inflicted upon her person and reputation, for which
petitioner could be liable as claimed, to provide compensation or redress for the
wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the
"connecting factor" or "point of contact" could be the place or places where the
tortious conduct or lex loci actus occurred. And applying the torts principle in a
conflicts case, we find that the Philippines could be said as a situs of the tort (the
place where the alleged tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private respondent, a Filipina
residing and working here. According to her, she had honestly believed that
petitioner would, in the exercise of its rights and in the performance of its duties, "act
with justice, give her due and observe honesty and good faith." Instead, petitioner
failed to protect her, she claimed. That certain acts or parts of the injury allegedly
occurred in another country is of no moment. For in our view what is important here
is the place where the over-all harm or the totality of the alleged injury to the person,
reputation, social standing and human rights of complainant, had lodged, according
to the plaintiff below (herein private respondent). All told, it is not without basis to
identify the Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability 61 have been advanced to offer
fresh judicial approaches to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the "State of the most
significant relationship" rule, which in our view should be appropriate to apply now,
given the factual context of this case.
In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the
place where the injury occurred; (b) the place where the conduct causing the injury
occurred; (c) the domicile, residence, nationality, place of incorporation and place of
business of the parties, and (d) the place where the relationship, if any, between the
parties is centered. 62
As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a
resident Filipina national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus, the "relationship"
between the parties was centered here, although it should be stressed that this suit
is not based on mere labor law violations. From the record, the claim that the
CONFLICTS OF LAW FEB 23 ASS CASES 11
Philippines has the most significant contact with the matter in this dispute, 63 raised
by private respondent as plaintiff below against defendant (herein petitioner), in our
view, has been properly established.

Prescinding from this premise that the Philippines is the situs of the tort complained
of and the place "having the most interest in the problem", we find, by way of
recapitulation, that the Philippine law on tort liability should have paramount
application to and control in the resolution of the legal issues arising out of this case.
Further, we hold that the respondent Regional Trial Court has jurisdiction over the
parties and the subject matter of the complaint; the appropriate venue is in Quezon
City, which could properly apply Philippine law. Moreover, we find untenable
petitioner's insistence that "[s]ince private respondent instituted this suit, she has the
burden of pleading and proving the applicable Saudi law on the matter." 64 As aptly
said by private respondent, she has "no obligation to plead and prove the law of the
Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21"
of the Civil Code of the Philippines. In her Amended Complaint and subsequent
pleadings, she never alleged that Saudi law should govern this case. 65 And as
correctly held by the respondent appellate court, "considering that it was the
petitioner who was invoking the applicability of the law of Saudi Arabia, then the
burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia
is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the
trial court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not
only was jurisdiction in order and venue properly laid, but appeal after trial was
obviously available, and expeditious trial itself indicated by the nature of the case at
hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below, not just for the benefit of all the litigants, but also for the
vindication of the country's system of law and justice in a transnational setting. With
these guidelines in mind, the trial court must proceed to try and adjudge the case in
the light of relevant Philippine law, with due consideration of the foreign element or
elements involved. Nothing said herein, of course, should be construed as
prejudging the results of the case in any manner whatsoever.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case
No. Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby
REMANDED to Regional Trial Court of Quezon City, Branch 89 for further
proceedings.

SO ORDERED.

Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.

CONFLICTS OF LAW FEB 23 ASS CASES 12

 present action against William Jackson, alleging negligence on his part in operating
his automobile. [1]

At the time of the accident, there was in force in Ontario a statute providing
that "the owner or driver of a motor vehicle, other than a vehicle operated in the
business of carrying passengers for compensation, is not liable for any loss or
damage resulting from bodily injury to, or the death of any person being carried in * *
* the motor vehicle" (Highway Traffic Act of Province of Ontario [Ontario Rev. Stat.
(1960), ch. 172], 105, subd. [2]). Even though no such bar is recognized under this
State's substantive law of torts (see, e.g., Higgins v. Mason, 255 N. Y. 104,
108; Nelson v. Nygren, 259 N. Y. 71), the defendant moved to dismiss the complaint
on the ground that the law of the place where the accident occurred governs and
that Ontario's guest statute bars recovery. The court at Special Term, agreeing with
the defendant, granted the motion and the Appellate Division, over a strong dissent
by Justice Halpern, affirmed the judgment of dismissal without opinion.

The question presented is simply drawn. Shall the law of the place of the
tort [2] invariably govern the availability of relief for the tort or shall the applicable
choice of law rule also reflect a consideration of other factors which are relevant to
the purposes served by the enforcement or denial of the remedy?

The traditional choice of law rule, embodied in the original Restatement of

Conflict of Laws ( 384), and until recently unquestioningly followed in this court
(see, e.g.,Poplar v. Bourjois, Inc., 298 N. Y. 62, 66; Kaufman v. American Youth
Hostels, 5 N Y 2d 1016,modfg. 6 A D 2d 223), has been that the substantive rights
and liabilities arising out of a tortious occurrence are determinable by the law of the
Georgia W. Babcock, Appellant,
place of the tort. (See Goodrich, Conflict of Laws [3d ed., 1949], p. 260; Leflar, The
v
Law of Conflict of Laws [1959], p. 207; Stumberg, Principles of Conflict of Laws [2d
Mabel B. Jackson, as Executrix of William H. Jackson, Deceased, Respondent.
ed., 1951], p. 182.) It had its conceptual foundation in the vested rights doctrine,
namely, that a right to recover for a foreign tort owes its creation to the law of
Court of Appeals of New York the [*478] jurisdiction where the injury occurred and depends for its existence and
Argued January 23, 1963 extent solely on such law. (See Hancock, Torts in the Conflict of Laws [1942], pp. 30-
Decided May 9, 1963 36; Reese, The Ever Changing Rules of Choice of Law, Nederlands Tijdschrift Voor
Internationaal Recht [1962], 389.) Although espoused by such great figures as
12 NY2d 473 Justice Holmes (see Slater v. Mexican Nat. R. R. Co., 194 U. S. 120) and Professor
CITE TITLE AS: Babcock v Jackson Beale (2 Conflict of Laws [1935], pp. 1286-1292), the vested rights doctrine has long
since been discredited because it fails to take account of underlying policy
considerations in evaluating the significance to be ascribed to the circumstance that
[*476] OPINION OF THE COURT an act had a foreign situs in determining the rights and liabilities which arise out of
that act. [3]"The vice of the vested rights theory", it has been aptly stated, "is that it
affects to decide concrete cases upon generalities which do not state the practical
FULD, J. considerations involved". (Yntema, The Hornbook Method and the Conflict of Laws,
37 Yale L. J. 468, 482-483.) More particularly, as applied to torts, the theory ignores
the interest which jurisdictions other than that where the tort occurred may have in
On Friday, September 16, 1960, Miss Georgia Babcock and her friends, Mr. the resolution of particular issues. It is for this very reason that, despite the
and Mrs. William Jackson, all residents of Rochester, left that city in Mr. Jackson's advantages of certainty, ease of application and predictability which it affords (see
automobile, Miss Babcock as guest, for a week-end trip to Canada. Some hours Cheatham and Reese, Choice of the Applicable Law, 52 Col. L. Rev. 959, 976),
later, as Mr. Jackson was driving in the Province of Ontario, he apparently lost there has in recent years been increasing criticism of the traditional rule by
control of the car; it went off the highway into an adjacent stone wall, and Miss commentators [4]and a judicial trend towards its abandonment or modification. [5]
Babcock was seriously injured. Upon her return to this State, she brought [*477] the [*479]
CONFLICTS OF LAW FEB 23 ASS CASES 13
 Significantly, it was dissatisfaction with "the mechanical formulae of the
conflicts of law" (Vanston Committee v. Green, 329 U. S. 156, 162) which led to
judicial departure from similarly inflexible choice of law rules in the field of contracts,
grounded, like the torts rule, on the vested rights doctrine. According to those
traditional rules, matters bearing upon the execution, interpretation and validity of a
contract were determinable by the internal law of the place where the contract was
made, while matters connected with their performance were regulated by the
internal law of the place where the contract was to be performed. (See Swift & Co. v.
Bankers Trust Co., 280 N. Y. 135, 141; see, also, Restatement, Conflict of Laws,
332, 358; Goodrich, Conflict of Laws [3d ed., 1949], pp. 342-343.)
In Auten v. Auten (308 N. Y. 155), however, this court abandoned such rules
and applied what has been termed the "center of gravity" or "grouping of contacts"
theory of the conflict of laws. "Under this theory," we declared in the Auten case,
"the courts, instead of regarding as conclusive the parties' intention or the place of
making or performance, lay emphasis rather upon the law of the place 'which has
the most significant contacts with the matter in dispute' " (308 N. Y., at p. 160). The
"center of gravity" rule of Auten has not only been applied in other cases in this
State, [6]as well as in other jurisdictions, [7]but has supplanted the prior rigid and set
contract rules in the most current draft of the Restatement of Conflict of Laws. (See
Restatement, Second, Conflict of Laws, 332b [Tentative Draft No. 6, 1960].)
Realization of the unjust and anomalous results which may ensue from
application of the traditional rule in tort cases has also prompted judicial search for a
more satisfactory alternative in that area. In the much discussed case of Kilberg v.
Northeast Airlines (9 N Y 2d 34), this court declined to apply the law of the place of
the tort as respects the issue of the quantum of the recovery in a death action
arising out of an airplane crash, [*480] where the decedent had been a New York
resident and his relationship with the defendant airline had originated in this State. In
his opinion for the court, Chief Judge Desmond described, with force and logic, the
shortcomings of the traditional rule (9 N Y 2d, at p. 39):
"Modern conditions make it unjust and anomalous to subject the traveling citizen of
this State to the varying laws of other States through and over which they move. * * *
An air traveler from New York may in a flight of a few hours' duration pass through *
* * commonwealths [limiting death damage awards]. His plane may meet with
disaster in a State he never intended to cross but into which the plane has flown
because of bad weather or other unexpected developments, or an airplane's
catastrophic descent may begin in one State and end in another. The place of injury
becomes entirely fortuitous. Our courts should if possible provide protection for our
own State's people against unfair and anachronistic treatment of the lawsuits which
result from these disasters."
The emphasis in Kilberg was plainly that the merely fortuitous circumstance
that the wrong and injury occurred in Massachusetts did not give that State a
controlling concern or interest in the amount of the tort recovery as against the
competing interest of New York in providing its residents or users of transportation
facilities there originating with full compensation for wrongful death. Although
the Kilberg case did not expressly adopt the "center of gravity" theory, its weighing of
the contacts or interests of the respective jurisdictions to determine their bearing on
the issue of the extent of the recovery is consistent with that approach. (See Leflar,
Conflict of Laws, 1961 Ann. Sur. Amer. Law, 29, 45.)
The same judicial disposition is also reflected in a variety of other decisions,
some of recent date, others of earlier origin, relating to workmen's
compensation, [8]tortious occurrences aristing [*481] out of a contract, [9]issues
affecting the survival of a tort right of action [10]and intrafamilial immunity from
tort [11]and situations involving a form of statutory liability. [12]These numerous cases
differ in many ways but they are all similar in two important respects. First, by one
rationale or another, they rejected the inexorable application of the law of the place
of the tort where that place has no reasonable or relevant interest in the particular
issue involved. And, second, in each of these cases the courts, after examining the
particular circumstances presented, applied the law of some jurisdiction other than
the place of the tort because it had a more compelling interest in the application of
its law to the legal issue involved.
The "center of gravity" or "grouping of contacts" doctrine adopted by this court
in conflicts cases involving contracts impresses us as likewise affording the
appropriate approach for accommodating the competing interests in tort cases with
multi-State contacts. Justice, fairness and "the best practical result" (Swift & Co. v.
Bankers Trust Co., 280 N. Y. 135, 141, supra) may best be achieved by giving
controlling effect to the law of the jurisdiction which, because of its relationship or
contact with the occurrence or the parties, has the greatest concern with the specific
issue raised in the litigation. The merit of such a rule is that "it gives to the place
'having the most interest in the problem' paramount control over the legal issues
arising out of a particular factual context" and thereby allows the forum to apply "the
policy of the jurisdiction 'most [*482] intimately concerned with the outcome of [the]
particular litigation.' " (Auten v. Auten, 308 N. Y. 155, 161, supra.)
Such, indeed, is the approach adopted in the most recent revision of the
Conflict of Laws Restatement in the field of torts. According to the principles there
set out, "The local law of the state which has the most significant relationship with
the occurrence and with the parties determines their rights and liabilities in tort"
(Restatement, Second, Conflict of Laws, 379[1]; also Introductory Note to Topic 1
of Chapter 9, p. 3 [Tentative Draft No. 8, 1963]), and the relative importance of the
relationships or contacts of the respective jurisdictions is to be evaluated in the light
of "the issues, the character of the tort and the relevant purposes of the tort rules
involved" ( 379[2], [3]).
Comparison of the relative "contacts" and "interests" of New York and Ontario
in this litigation, vis-a-vis the issue here presented, makes it clear that the concern of
New York is unquestionably the greater and more direct and that the interest of
Ontario is at best minimal. The present action involves injuries sustained by a New
York guest as the result of the negligence of a New York host in the operation of an
automobile, garaged, licensed and undoubtedly insured in New York, in the course
of a week-end journey which began and was to end there. In sharp contrast,
Ontario's sole relationship with the occurrence is the purely adventitious
circumstance that the accident occurred there.
CONFLICTS OF LAW FEB 23 ASS CASES 14
 New York's policy of requiring a tort-feasor to compensate his guest for injuries
caused by his negligence cannot be doubted as attested by the fact that the
Legislature of this State has repeatedly refused to enact a statute denying or limiting
recovery in such cases (see, e.g., 1930 Sen. Int. No. 339, Pr. No. 349; 1935 Sen.
Int. No. 168, Pr. No. 170; 1960 Sen. Int. No. 3662, Pr. No. 3967) and our courts
have neither reason nor warrant for departing from that policy simply because the
accident, solely affecting New York residents and arising out of the operation of a
New York based automobile, happened beyond its borders. Per contra, Ontario has
no conceivable interest in denying a remedy to a New York guest against his New
York host for injuries suffered in Ontario by reason of conduct which was tortious
under Ontario law. The object of Ontario's guest statute, it has been said, is "to
prevent the fraudulent assertion [*483] of claims by passengers, in collusion with the
drivers, against insurance companies" (Survey of Canadian Legislation, 1 U. Toronto
L. J. 358, 366) and, quite obviously, the fraudulent claims intended to be prevented
by the statute are those asserted against Ontario defendants and their insurance
carriers, not New York defendants and their insurance carriers. Whether New York
defendants are imposed upon or their insurers defrauded by a New York plaintiff is
scarcely a valid legislative concern of Ontario simply because the accident occurred
there, any more so than if the accident had happened in some other jurisdiction.
It is hardly necessary to say that Ontario's interest is quite different from what
it would have been had the issue related to the manner in which the defendant had
been driving his car at the time of the accident. Where the defendant's exercise of
due care in the operation of his automobile is in issue, the jurisdiction in which the
allegedly wrongful conduct occurred will usually have a predominant, if not
exclusive, concern. In such a case, it is appropriate to look to the law of the place of
the tort so as to give effect to that jurisdiction's interest in regulating conduct within
its borders, and it would be almost unthinkable to seek the applicable rule in the law
of some other place.
occurred (see, e.g., Smith v. Clute, 277 N. Y. 407; Kerfoot v. Kelley, 294 N. Y.
288; Naphtali v. Lafazan, 8 N Y 2d 1097, affg. 8 A D 2d 22), it is not amiss to point
out that the question here posed was neither raised nor considered in those cases
and that the question has never been presented in so stark a manner as in the case
before us with a statute so unique as Ontario's. [13]Be that as it may, however,
reconsideration of the inflexible traditional rule persuades us, as already indicated,
that, in failing to take into account essential policy considerations and objectives, its
application may lead to unjust and anomalous results. This being so, the rule,
formulated as it was by the courts, should be discarded. (Cf. Bing v. Thunig, 2 N
Y 2d 656, 667; Woods v. Lancet, 303 N. Y. 349, 355.) [14]
In conclusion, then, there is no reason why all issues arising out of a tort claim
must be resolved by reference to the law of the same jurisdiction. Where the issue
involves standards of conduct, it is more than likely that it is the law of the place of
the tort which will be controlling but the disposition of other issues must turn, as
does the issue of the standard of conduct itself, on the law of the jurisdiction which
has the strongest interest in the resolution of the particular issue presented. [*485]
The judgment appealed from should be reversed, with costs, and the motion
to dismiss the complaint denied.

The issue here, however, is not whether the defendant offended against a rule
of the road prescribed by Ontario for motorists generally or whether he violated
some standard of conduct imposed by that jurisdiction, but rather whether the
plaintiff, because she was a guest in the defendant's automobile, is barred from
recovering damages for a wrong concededly committed. As to that issue, it is New
York, the place where the parties resided, where their guest- host relationship arose
and where the trip began and was to end, rather than Ontario, the place of the
fortuitous occurrence of the accident, which has the dominant contacts and the
superior claim for application of its law. Although the rightness or wrongness of
defendant's conduct may depend upon the law of the particular jurisdiction through
which the automobile passes, the rights and liabilities of the parties which stem from
their guest-host relationship should remain constant and not vary and shift as the
automobile proceeds from place to place. Indeed, such a result, we
note, [*484] accords with "the interests of the host in procuring liability insurance
adequate under the applicable law, and the interests of his insurer in reasonable
calculability of the premium." (Ehrenzweig, Guest Statutes in the Conflict of Laws,
69 Yale L. J. 595, 603.)

Although the traditional rule has in the past been applied by this court in giving
controlling effect to the guest statute of the foreign jurisdiction in which the accident
CONFLICTS OF LAW FEB 23 ASS CASES 15
 respondents were solidarily liable to pay petitioner the sum prayed for in the
complaint.

The facts are as follows: Respondent M/V Lok Maheshwari (Vessel) is an

oceangoing vessel of Indian registry that is owned by respondent Shipping
Corporation of India (SCI), a corporation organized and existing under the laws of
India and principally owned by the Government of India. It was time-chartered by
respondent SCI to Halla Merchant Marine Co. Ltd. (Halla), a South Korean
company. Halla, in turn, sub-chartered the Vessel through a time charter to
Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to
Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized
and existing under the laws of Canada.

On or about November 1, 1995, Portserv requested petitioner Crescent

Petroleum, Ltd. (Crescent), a corporation organized and existing under the laws of
Canada that is engaged in the business of selling petroleum and oil products for the
use and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to
the Vessel. Petitioner Crescent granted and confirmed the request through an
advice via facsimile dated November 2, 1995. As security for the payment of the
bunker fuels and related services, petitioner Crescent received two (2) checks in the
amounts of US$100,000.00 and US$200,000.00. Thus, petitioner Crescent
contracted with its supplier, Marine Petrobulk Limited (Marine Petrobulk), another
SECOND DIVISION Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.

On or about November 4, 1995, Marine Petrobulk delivered the bunker

CRESCENT PETROLEUM, LTD., G.R. No. 155014 Petitioner,
fuels amounting to US$103,544 inclusive of barging and demurrage charges to the
Present:
Vessel at the port of Pioneer Grain, Vancouver, Canada. The Chief Engineer Officer
Puno, J.,
of the Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk
- versus - Chairman,
issued an invoice to petitioner Crescent for the US$101,400.00 worth of the bunker
Austria-Martinez,
fuels. Petitioner Crescent issued a check for the same amount in favor of Marine
Callejo, Sr.,
Petrobulk, which check was duly encashed.
Tinga, and
*
Chico-Nazario, JJ.
M/V LOK MAHESHWARI, Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice
THE SHIPPING CORPORATION dated November 21, 1995 to Portserv Limited, and/or the Master, and/or Owners,
OF INDIA, and PORTSERV LIMITED Promulgated: and/or Operators, and/or Charterers of M/V Lok Maheshwari in the amount of
and/or TRANSMAR SHIPPING, INC., US$103,544.00 with instruction to remit the amount on or before December 1, 1995.
Respondents. November 11, 2005 The period lapsed and several demands were made but no payment was received.
x--------------------------------------------------x Also, the checks issued to petitioner Crescent as security for the payment of the
bunker fuels were dishonored for insufficiency of funds. As a consequence,
DECISION petitioner Crescent incurred additional expenses of US$8,572.61 for interest,
tracking fees, and legal fees.
PUNO, J.: On May 2, 1996, while the Vessel was docked at the port of Cebu City,
petitioner Crescent instituted before the RTC of Cebu City an action for a sum of
money with prayer for temporary restraining order and writ of preliminary attachment
This petition for review on certiorari under Rule 45 seeks the (a) reversal of the
against respondents Vessel and SCI, Portserv and/or Transmar. The case was
November 28, 2001 Decision of the Court of Appeals in CA-G.R. No. CV-54920,
[1] raffled to Branch 10 and docketed as Civil Case No. CEB-18679.
which dismissed for want of jurisdiction the instant case, and the September 3,
On May 3, 1996, the trial court issued a writ of attachment against the
2002 Resolution of the same appellate court, [2] which denied petitioners motion for
Vessel with bond at P2,710,000.00. Petitioner Crescent withdrew its prayer for a
reconsideration, and (b) reinstatement of the July 25, 1996 Decision [3] of the
temporary restraining order and posted the required bond.
Regional Trial Court (RTC) in Civil Case No. CEB-18679, which held that

CONFLICTS OF LAW FEB 23 ASS CASES 16

On May 18, 1996, summonses were served to respondents Vessel and SCI, and WHEREFORE, premises considered, the Decision
Portserv and/or Transmar through the Master of the Vessel. On May 28, 1996, dated July 25, 1996, issued by the Regional Trial Court of Cebu
respondents Vessel and SCI, through Pioneer Insurance and Surety Corporation City, Branch 10, is hereby REVERSED and SET ASIDE, and a
(Pioneer), filed an urgent ex-parte motion to approve Pioneers letter of undertaking, new one is entered DISMISSING the instant case for want of
to consider it as counter-bond and to discharge the attachment. On May 29, 1996, jurisdiction.
the trial court granted the motion; thus, the letter of undertaking was approved as
counter-bond to discharge the attachment.
The appellate court denied petitioner Crescents motion for reconsideration
For failing to file their respective answers and upon motion of petitioner Crescent, explaining that it dismissed the instant action primarily on the ground of forum non
the trial court declared respondents Vessel and SCI, Portserv and/or Transmar in conveniensconsidering that the parties are foreign corporations which are not doing
default. Petitioner Crescent was allowed to present its evidence ex-parte. business in the Philippines.
On July 25, 1996, the trial court rendered its decision in favor of petitioner Crescent,
thus: Hence, this petition submitting the following issues for resolution, viz:
WHEREFORE, premises considered, judgment is 1. Philippine courts have jurisdiction over a foreign
hereby rendered in favor of plaintiff [Crescent] and against the vessel found inside Philippine waters for the
defendants [Vessel, SCI, Portserv and/or Transmar]. enforcement of a maritime lien against said vessel
and/or its owners and operators;
Consequently, the latter are hereby ordered to pay plaintiff jointly
and solidarily, the following: 2. The principle of forum non conveniens is
inapplicable to the instant case;
(a) the sum of US$103,544.00, representing the
outstanding obligation; 3. The trial court acquired jurisdiction over the subject
matter of the instant case, as well as over the res and
(b) interest of US$10,978.50 as of July 3, 1996, over the persons of the parties;
plus additional interest at 18% per annum
for the period thereafter, until the principal 4. The enforcement of a maritime lien on the subject
account is fully paid; vessel is expressly granted by law. The Ship Mortgage
Acts as well as the Code of Commerce provides for
(c) attorneys fees of P300,000.00; and relief to petitioner for its unpaid claim;

(d) P200,000.00 as litigation expenses. 5. The arbitration clause in the contract was not rigid
or inflexible but expressly allowed petitioner to enforce
SO ORDERED. its maritime lien in Philippine courts provided the vessel
was in the Philippines;
On August 19, 1996, respondents Vessel and SCI appealed to the Court of
Appeals. They attached copies of the charter parties between respondent SCI and 6. The law of the state of New York is inapplicable to
Halla, between Halla and Transmar, and between Transmar and Portserv. They the present controversy as the same has not been
pointed out that Portserv was a time charterer and that there is a clause in the time properly pleaded and proved;
charters between respondent SCI and Halla, and between Halla and Transmar,
which states that the Charterers shall provide and pay for all the fuel except as 7. Petitioner has legal capacity to sue before
otherwise agreed. They submitted a copy of Part II of the Bunker Fuel Agreement Philippine courts as it is suing upon an isolated
between petitioner Crescent and Portserv containing a stipulation that New York law business transaction;
governs the construction, validity and performance of the contract. They likewise
submitted certified copies of the Commercial Instruments and Maritime Lien Act of 8. Respondents were duly served summons although
the United States (U.S.), some U.S. cases, and some Canadian cases to support service of summons upon respondents is not a
their defense. jurisdictional requirement, the action being a suit quasi
in rem;
On November 28, 2001, the Court of Appeals issued its assailed Decision,
9. The trial courts decision has factual and legal
which reversed that of the trial court, viz:
bases; and,

CONFLICTS OF LAW FEB 23 ASS CASES 17

 10. The respondents should be held jointly and solidarily
liable.
In a nutshell, this case is for the satisfaction of unpaid supplies furnished
by a foreign supplier in a foreign port to a vessel of foreign registry that is owned,
chartered and sub-chartered by foreign entities.
Under Batas Pambansa Bilang 129, as amended by Republic Act No.
7691, RTCs exercise exclusive original jurisdiction (i)n all actions in admiralty and
maritime where the demand or claim exceeds two hundred thousand pesos
(P200,000) or in Metro Manila, where such demand or claim exceeds four hundred
thousand pesos (P400,000). Two (2) tests have been used to determine whether a
case involving a contract comes within the admiralty and maritime jurisdiction of a
court - the locational test and the subject matter test. The English rule follows the
locational test wherein maritime and admiralty jurisdiction, with a few exceptions, is
exercised only on contracts made upon the sea and to be executed thereon. This is
totally rejected under the American rule where the criterion in determining whether a
contract is maritime depends on the nature and subject matter of the contract,
having reference to maritime service and transactions. [4] In International Harvester
Company of the Philippines v. Aragon,[5] we adopted the American rule and held
that (w)hether or not a contract is maritime depends not on the place where the
contract is made and is to be executed, making the locality the test, but on the
subject matter of the contract, making the true criterion a maritime service or a
maritime transaction.
A contract for furnishing supplies like the one involved in this case is
maritime and within the jurisdiction of admiralty.[6] It may be invoked before our
courts through an action in rem or quasi in rem or an action in personam. Thus: [7]
xxx
Articles 579 and 584 [of the Code of Commerce] provide
a method of collecting or enforcing not only the liens created
under Section 580 but also for the collection of any kind of lien
whatsoever.[8] In the Philippines, we have a complete legislation,
both substantive and adjective, under which to bring an action in
remagainst a vessel for the purpose of enforcing liens. The
substantive law is found in Article 580 of the Code of Commerce.
The procedural law is to be found in Article 584 of the same
Code. The result is, therefore, that in the Philippines any vessel
even though it be a foreign vessel found in any port of this
Archipelago may be attached and sold under the substantive law
which defines the right, and the procedural law contained in the
Code of Commerce by which this right is to be enforced.[9] x x
x. But where neither the law nor the contract between the parties
creates any lien or charge upon the vessel, the only way in which
it can be seized before judgment is by pursuing the remedy
relating to attachment under Rule 59 [now Rule 57] of the Rules
of Court.[10]
But, is petitioner Crescent entitled to a maritime lien under our laws?
Petitioner Crescent bases its claim of a maritime lien on Sections
21, 22 and 23 of Presidential Decree No. 1521 (P.D. No. 1521), also known as
the Ship Mortgage Decree of 1978, viz:
Sec. 21. Maritime Lien for Necessaries; persons
entitled to such lien. - Any person furnishing repairs, supplies,
towage, use of dry dock or maritime railway, or other
necessaries, to any vessel, whether foreign or domestic, upon
the order of the owner of such vessel, or of a person authorized
by the owner, shall have a maritime lien on the vessel, which
may be enforced by suit in rem, and it shall be necessary to
allege or prove that credit was given to the vessel.
Sec. 22. Persons Authorized to Procure Repairs,
Supplies and Necessaries. - The following persons shall be
presumed to have authority from the owner to procure repairs,
supplies, towage, use of dry dock or marine railway, and other
necessaries for the vessel: The managing owner, ships husband,
master or any person to whom the management of the vessel at
the port of supply is entrusted. No person tortuously or unlawfully
in possession or charge of a vessel shall have authority to bind
the vessel.
Sec. 23. Notice to Person Furnishing Repairs, Supplies
and Necessaries. - The officers and agents of a vessel specified
in Section 22 of this Decree shall be taken to include such
officers and agents when appointed by a charterer, by an
owner pro hac vice, or by an agreed purchaser in possession of
the vessel; but nothing in this Decree shall be construed to
confer a lien when the furnisher knew, or by exercise of
reasonable diligence could have ascertained, that because of the
terms of a charter party, agreement for sale of the vessel, or for
any other reason, the person ordering the repairs, supplies, or
other necessaries was without authority to bind the vessel
therefor.
Petitioner Crescent submits that these provisions apply to both domestic
and foreign vessels, as well as domestic and foreign suppliers of necessaries. It
contends that the use of the term any person in Section 21 implies that the law is not
restricted to domestic suppliers but also includes all persons who supply provisions
and necessaries to a vessel, whether foreign or domestic. It points out further that
the law does not indicate that the supplies or necessaries must be furnished in the
Philippines in order to give petitioner the right to seek enforcement of the lien with a
Philippine court.[11]
Respondents Vessel and SCI, on the other hand, maintain that Section 21
of the P.D. No. 1521 or the Ship Mortgage Decree of 1978 does not apply to a
CONFLICTS OF LAW FEB 23 ASS CASES 18
foreign supplier like petitioner Crescent as the provision refers only to a situation
where the person furnishing the supplies is situated inside the territory of the
Philippines and not where the necessaries were furnished in a foreign jurisdiction
like Canada.[12]
We find against petitioner Crescent.
I.
P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted to
accelerate the growth and development of the shipping industry and to extend the
benefits accorded to overseas shipping under Presidential Decree No. 214 to
domestic shipping.[13] It is patterned closely from the U.S. Ship Mortgage Act of 1920
and the Liberian Maritime Law relating to preferred mortgages. [14] Notably, Sections
21, 22 and 23 of P.D. No. 1521 or the Ship Mortgage Decree of 1978 are identical to
Subsections P, Q, and R, respectively, of the U.S. Ship Mortgage Act of 1920, which
is part of the Federal Maritime Lien Act. Hence, U.S. jurisprudence finds relevance
to determining whether P.D. No. 1521 or the Ship Mortgage Decree of 1978 applies
in the present case.
The various tests used in the U.S. to determine whether a maritime lien
exists are the following:
One. In a suit to establish and enforce a maritime lien for supplies
furnished to a vessel in a foreign port, whether such lien exists, or whether the court
has or will exercise jurisdiction, depends on the law of the country where the
supplies were furnished, which must be pleaded and proved.[15] This principle was
laid down in the 1888 case of The Scotia,[16] reiterated in The Kaiser Wilhelm
II[17] (1916), in The Woudrichem[18] (1921) and in The City of Atlanta[19] (1924).
Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced
such single-factor methodologies as the law of the place of supply.[20]
In Lauritzen v. Larsen,[21] a Danish seaman, while temporarily in New
York, joined the crew of a ship of Danish flag and registry that is owned by a Danish
citizen. He signed the ships articles providing that the rights of the crew members
would be governed by Danish law and by the employers contract with the Danish
Seamens Union, of which he was a member. While in Havana and in the course of
his employment, he was negligently injured. He sued the shipowner in a federal
district court in New York for damages under the Jones Act. In holding that Danish
law and not the Jones Act was applicable, the Supreme Court adopted a multiple-
contact test to determine, in the absence of a specific Congressional directive as to
the statutes reach, which jurisdictions law should be applied. The following factors
were considered: (1) place of the wrongful act; (2) law of the flag; (3) allegiance
or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place
of contract; (6) inaccessibility of foreign forum; and (7) law of the forum.
Several years after Lauritzen, the U.S. Supreme Court in the case
of Romero v. International Terminal Operating Co. [22] again considered a foreign
seamans personal injury claim under both the Jones Act and the general maritime
law. The Court held that the factors first announced in the case of Lauritzen
were applicable not only to personal injury claims arising under the Jones Act
but to all matters arising under maritime law in general.[23]
Hellenic Lines, Ltd. v. Rhoditis [24] was also a suit under the Jones Act by
a Greek seaman injured aboard a ship of Greek registry while in American waters.
The ship was operated by a Greek corporation which has its largest office in New
York and another office in New Orleans and whose stock is more than 95% owned
by a U.S. domiciliary who is also a Greek citizen. The ship was engaged in regularly
scheduled runs between various ports of the U.S. and the Middle East, Pakistan,
and India, with its entire income coming from either originating or terminating in the
U.S. The contract of employment provided that Greek law and a Greek collective
bargaining agreement would apply between the employer and the seaman and that
all claims arising out of the employment contract were to be adjudicated by a Greek
court. The U.S. Supreme Court observed that of the seven factors listed in the
Lauritzen test, four were in favor of the shipowner and against jurisdiction. In
arriving at the conclusion that the Jones Act applies, it ruled that the application of
the Lauritzen test is not a mechanical one. It stated thus: [t]he significance of one or
more factors must be considered in light of the national interest served by the
assertion of Jones Act jurisdiction. (footnote omitted) Moreover, the list of seven
factors in Lauritzen was not intended to be exhaustive. x x x [T]he shipowners base
of operations is another factor of importance in determining whether the Jones Act is
applicable; and there well may be others.
The principles enunciated in these maritime tort cases have been extended
to cases involving unpaid supplies and necessaries such as the
cases of Forsythe International U.K., Ltd. v. M/V Ruth Venture,[25] and Comoco
Marine Services v. M/V El Centroamericano.[26]
Three. The factors provided in Restatement (Second) of Conflicts of
Law have also been applied, especially in resolving cases brought under the
Federal Maritime Lien Act. Their application suggests that in the absence of an
effective choice of law by the parties, the forum contacts to be considered include:
(a) the place of contracting; (b) the place of negotiation of the contract; (c) the place
of performance; (d) the location of the subject matter of the contract; and (e) the
domicile, residence, nationality, place of incorporation and place of business of the
parties.[27]
In Gulf Trading and Transportation Co. v. The Vessel Hoegh Shield,
[28]
an admiralty action in rem was brought by an American supplier against a vessel
of Norwegian flag owned by a Norwegian Company and chartered by a London time
charterer for unpaid fuel oil and marine diesel oil delivered while the vessel was in
U.S. territory. The contract was executed in London. It was held that because the
bunker fuel was delivered to a foreign flag vessel within the jurisdiction of the U.S.,
and because the invoice specified payment in the U.S., the admiralty and maritime
law of the U.S. applied. The U.S. Court of Appeals recognized the modern approach
to maritime conflict of law problems introduced in the Lauritzen case. However, it
observed that Lauritzen involved a torts claim under the Jones Act while the present
claim involves an alleged maritime lien arising from unpaid supplies. It made a
CONFLICTS OF LAW FEB 23 ASS CASES 19
disclaimer that its conclusion is limited to the unique circumstances surrounding a
maritime lien as well as the statutory directives found in the Maritime Lien Statute
and that the initial choice of law determination is significantly affected by the
statutory policies surrounding a maritime lien. It ruled that the facts in the case
call for the application of the Restatement (Second) of Conflicts of Law. The U.S.
Court gave much significance to the congressional intent in enacting the Maritime
Lien Statute to protect the interests of American supplier of goods, services or
necessaries by making maritime liens available where traditional services are
routinely rendered. It concluded that the Maritime Lien Statute represents a relevant
policy of the forum that serves the needs of the international legal system as well as
the basic policies underlying maritime law. The court also gave equal importance to
the predictability of result and protection of justified expectations in a particular field
of law. In the maritime realm, it is expected that when necessaries are furnished to a
vessel in an American port by an American supplier, the American Lien Statute will
apply to protect that supplier regardless of the place where the contract was formed
or the nationality of the vessel.
The same principle was applied in the case of Swedish Telecom Radio v.
M/V Discovery I[29] where the American court refused to apply the Federal Maritime
Lien Act to create a maritime lien for goods and services supplied by foreign
companies in foreign ports. In this case, a Swedish company supplied radio
equipment in a Spanish port to refurbish a Panamanian vessel damaged by fire.
Some of the contract negotiations occurred in Spain and the agreement for supplies
between the parties indicated Swedish companys willingness to submit to Swedish
law. The ship was later sold under a contract of purchase providing for the
application of New York law and was arrested in the U.S. The U.S. Court of Appeals
also held that while the contacts-based framework set forth in Lauritzen was useful
in the analysis of all maritime choice of law situations, the factors were geared
towards a seamans injury claim. As in Gulf Trading, the lien arose by operation of
law because the ships owner was not a party to the contract under which the goods
were supplied. As a result, the court found it more appropriate to consider the
factors contained in Section 6 of the Restatement (Second) of Conflicts of Law. The
U.S. Court held that the primary concern of the Federal Maritime Lien Act is the
protection of American suppliers of goods and services.
The same factors were applied in the case of Ocean Ship Supply, Ltd. v.
M/V Leah.[30]
II.
Finding guidance from the foregoing decisions, the Court cannot sustain
petitioner Crescents insistence on the application of P.D. No. 1521 or the Ship
Mortgage Decree of 1978 and hold that a maritime lien exists.
First. Out of the seven basic factors listed in the case of Lauritzen,
Philippine law only falls under one the law of the forum. All other elements are
foreign Canada is the place of the wrongful act, of the allegiance or domicile of the
injured and the place of contract; India is the law of the flag and the allegiance of the
defendant shipowner. Balancing these basic interests, it is inconceivable that the
Philippine court has any interest in the case that outweighs the interests of Canada
or India for that matter.
Second. P.D. No. 1521 or the Ship Mortgage Decree of 1978 is
inapplicable following the factors under Restatement (Second) of Conflict of Laws.
Like the Federal Maritime Lien Act of the U.S., P.D. No. 1521 or the Ship Mortgage
Decree of 1978 was enacted primarily to protect Filipino suppliers and was not
intended to create a lien from a contract for supplies between foreign entities
delivered in a foreign port.
Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of 1978 and
rule that a maritime lien exists would not promote the public policy behind the
enactment of the law to develop the domestic shipping industry. Opening up our
courts to foreign suppliers by granting them a maritime lien under our laws even if
they are not entitled to a maritime lien under their laws will encourage forum
shopping.
Finally. The submission of petitioner is not in keeping with the reasonable
expectation of the parties to the contract. Indeed, when the parties entered into a
contract for supplies in Canada, they could not have intended the laws of a remote
country like the Philippines to determine the creation of a lien by the mere accident
of the Vessels being in Philippine territory.
III.
But under which law should petitioner Crescent prove the existence of its maritime
lien?
In light of the interests of the various foreign elements involved, it is clear that
Canada has the most significant interest in this dispute. The injured party is a
Canadian corporation, the sub-charterer which placed the orders for the supplies is
also Canadian, the entity which physically delivered the bunker fuels is in Canada,
the place of contracting and negotiation is in Canada, and the supplies were
delivered in Canada.
The arbitration clause contained in the Bunker Fuel Agreement which
states that New York law governs the construction, validity and performance of the
contract is only a factor that may be considered in the choice-of-law analysis but is
not conclusive. As in the cases of Gulf Trading and Swedish Telecom, the lien that
is the subject matter of this case arose by operation of law and not by contract
because the shipowner was not a party to the contract under which the goods were
supplied.
It is worthy to note that petitioner Crescent never alleged and proved
Canadian law as basis for the existence of a maritime lien. To the end, it insisted on
its theory that Philippine law applies. Petitioner contends that even if foreign law
applies, since the same was not properly pleaded and proved, such foreign law
must be presumed to be the same as Philippine law pursuant to the doctrine of
processual presumption.
CONFLICTS OF LAW FEB 23 ASS CASES 20
 Thus, we are left with two choices: (1) dismiss the case for petitioners
failure to establish a cause of action[31] or (2) presume that Canadian law is the
same as Philippine law. In either case, the case has to be dismissed.
It is well-settled that a party whose cause of action or defense depends
upon a foreign law has the burden of proving the foreign law. Such foreign law is
treated as a question of fact to be properly pleaded and proved. [32] Petitioner
Crescents insistence on enforcing a maritime lien before our courts depended on
the existence of a maritime lien under the proper law. By erroneously claiming a
maritime lien under Philippine law instead of proving that a maritime lien exists
under Canadian law, petitioner Crescent failed to establish a cause of action.[33]
Even if we apply the doctrine of processual presumption, the result will still
be the same. Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the
following are the requisites for maritime liens on necessaries to exist: (1) the
necessaries must have been furnished to and for the benefit of the vessel; (2) the
necessaries must have been necessary for the continuation of the voyage of the
vessel; (3) the credit must have been extended to the vessel; (4) there must be
necessity for the extension of the credit; and (5) the necessaries must be ordered by
persons authorized to contract on behalf of the vessel.[34] These do not avail in the
instant case.
First. It was not established that benefit was extended to the vessel. While
this is presumed when the master of the ship is the one who placed the order, it is
not disputed that in this case it was the sub-charterer Portserv which placed the
orders to petitioner Crescent.[35] Hence, the presumption does not arise and it is
incumbent upon petitioner Crescent to prove that benefit was extended to the
vessel. Petitioner did not.
Fourth. There was no proof of necessity of credit. A necessity of credit will
be presumed where it appears that the repairs and supplies were necessary for the
ship and that they were ordered by the master. This presumption does not arise in
this case since the fuels were not ordered by the master and there was no proof of
necessity for the supplies.
Finally. The necessaries were not ordered by persons authorized to
contract in behalf of the vessel as provided under Section 22 of P.D. No. 1521 or the
Ship Mortgage Decree of 1978 - the managing owner, the ships husband, master or
any person with whom the management of the vessel at the port of supply is
entrusted. Clearly, Portserv, a sub-charterer under a time charter, is not someone to
whom the management of the vessel has been entrusted. A time charter is a
contract for the use of a vessel for a specified period of time or for the duration of
one or more specified voyages wherein the owner of the time-chartered vessel
retains possession and control through the master and crew who remain his
employees.[37] Not enjoying the presumption of authority, petitioner Crescent should
have proved that Portserv was authorized by the shipowner to contract for supplies.
Petitioner failed.
A discussion on the principle of forum non conveniens is unnecessary.
IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. No.
CV 54920, dated November 28, 2001, and its subsequent Resolution of September
3, 2002 are AFFIRMED. The instant petition for review on certiorari is DENIED for
lack of merit. Cost against petitioner.
SO ORDERED.

Second. Petitioner Crescent did not show any proof that the marine
products were necessary for the continuation of the vessel.

Third. It was not established that credit was extended to the vessel. It is
presumed that in the absence of fraud or collusion, where advances are made to a
captain in a foreign port, upon his request, to pay for necessary repairs or supplies
to enable his vessel to prosecute her voyage, or to pay harbor dues, or for pilotage,
towage and like services rendered to the vessel, that they are made upon the credit
of the vessel as well as upon that of her owners. [36] In this case, it was the sub-
charterer Portserv which requested for the delivery of the bunker fuels. The
issuance of two checks amounting to US$300,000 in favor of petitioner Crescent
prior to the delivery of the bunkers as security for the payment of the obligation
weakens petitioner Crescents contention that credit was extended to the Vessel.

We also note that when copies of the charter parties were submitted by
respondents in the Court of Appeals, the time charters between respondent SCI and
Halla and between Halla and Transmar were shown to contain a clause which
states that the Charterers shall provide and pay for all the fuel except as otherwise
agreed. This militates against petitioner Crescents position that Portserv is
authorized by the shipowner to contract for supplies upon the credit of the vessel.

CONFLICTS OF LAW FEB 23 ASS CASES 21

 "characterized by bad faith." On appeal, however, the appellate court found that
while there was a breach of contract on respondent TWA's part, there was neither
fraud nor bad faith because under the Code of Federal Regulations by the Civil
Aeronautics Board of the United States of America it is allowed to overbook flights.

The factual backdrop of the case is as follows:

Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter,

Liana Zalamea, purchased three (3) airline tickets from the Manila agent of
respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June
6, 1984. The tickets of petitioners-spouses were purchased at a discount of 75%
while that of their daughter was a full fare ticket. All three tickets represented
confirmed reservations.

While in New York, on June 4, 1984, petitioners received notice of the reconfirmation
Republic of the Philippines of their reservations for said flight. On the appointed date, however, petitioners
SUPREME COURT checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but
Manila were placed on the wait-list because the number of passengers who had checked in
before them had already taken all the seats available on the flight. Liana Zalamea
SECOND DIVISION appeared as the No. 13 on the wait-list while the two other Zalameas were listed as
"No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22
names were eventually allowed to board the flight to Los Angeles, including
petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being
ranked lower than 22, were not able to fly. As it were, those holding full-fare tickets
G.R. No. 104235 November 18, 1993 were given first priority among the wait-listed passengers. Mr. Zalamea, who was
holding the full-fare ticket of his daughter, was allowed to board the plane; while his
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners, wife and daughter, who presented the discounted tickets were denied boarding.
vs. According to Mr. Zalamea, it was only later when he discovered the he was holding
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, his daughter's full-fare ticket.
INC., respondents.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could
Sycip, Salazar, Hernandez, Gatmaitan for petitioners. not be accommodated because it was also fully booked. Thus, they were
constrained to book in another flight and purchased two tickets from American
Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars.
Quisumbing, Torres & Evangelista for private-respondent.

Upon their arrival in the Philippines, petitioners filed an action for damages based on
breach of contract of air carriage before the Regional Trial Court of Makati, Metro
Manila, Branch 145. As aforesaid, the lower court ruled in favor of petitioners in its
NOCON, J.: decision 1 dated January 9, 1989 the dispositive portion of which states as follows:

Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA WHEREFORE, judgment is hereby rendered ordering the
Flight 007 departing from New York to Los Angeles on June 6, 1984 despite defendant to pay plaintiffs the following amounts:
possession of confirmed tickets, petitioners filed an action for damages before the
Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating petitioner's
position, the trial court categorically ruled that respondent TransWorld Airlines (TWA) (1) US $918.00, or its peso equivalent at the time of payment
representing the price of the tickets bought by Suthira and Liana
breached its contract of carriage with petitioners and that said breach was

CONFLICTS OF LAW FEB 23 ASS CASES 22

 Zalamea from American Airlines, to enable them to fly to Los
Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment,
representing the price of Suthira Zalamea's ticket for TWA Flight
007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty
Centavos (P8,934.50, Philippine Currency, representing the price
of Liana Zalamea's ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine
Currency, as moral damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine
Currency, as and for attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are
recoverable in a damage suit predicated upon a breach of contract of
carriage only where there is fraud or bad faith. Since it is a matter of record that
overbooking of flights is a common and accepted practice of airlines in the United
States and is specifically allowed under the Code of Federal Regulations by the Civil
Aeronautics Board, no fraud nor bad faith could be imputed on respondent
TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the
flight was overbooked and that even a person with a confirmed reservation may be
denied accommodation on an overbooked flight, nevertheless it ruled that such
omission or negligence cannot under the circumstances be considered to be so
gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list
along with forty-eight (48) other passengers where full-fare first class tickets were
given priority over discounted tickets.
The dispositive portion of the decision of respondent Court of Appeals 3 dated
October 25, 1991 states as follows:
WHEREFORE, in view of all the foregoing, the decision under
review is hereby MODIFIED in that the award of moral and
exemplary damages to the plaintiffs is eliminated, and the
defendant-appellant is hereby ordered to pay the plaintiff the
following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment,
representing the price of Suthira Zalamea's ticket for TWA Flight
007;
(2) US$159.49, or its peso equivalent at the time of the payment,
representing the price of Cesar Zalamea's ticket for TWA Flight
007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED. 4
Not satisfied with the decision, petitioners raised the case on petition for review
on certiorari and alleged the following errors committed by the respondent Court of
Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH
ON THE PART OF RESPONDENT TWA BECAUSE IT HAS A
RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S
TWA TICKET AND PAYMENT FOR THE AMERICAN AIRLINES
TICKETS. 5
That there was fraud or bad faith on the part of respondent airline when it did not
allow petitioners to board their flight for Los Angeles in spite of confirmed tickets
cannot be disputed. The U.S. law or regulation allegedly authorizing overbooking
has never been proved. Foreign laws do not prove themselves nor can the courts
take judicial notice of them. Like any other fact, they must be alleged and
proved. 6 Written law may be evidenced by an official publication thereof or by a
CONFLICTS OF LAW FEB 23 ASS CASES 23
copy attested by the officer having the legal custody of the record, or by his deputy,
and accompanied with a certificate that such officer has custody. The certificate may
be made by a secretary of an embassy or legation, consul general, consul, vice-
consul, or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the
seal of his office. 7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its
customer service agent, in her deposition dated January 27, 1986 that the Code of
Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside from
said statement, no official publication of said code was presented as evidence.
Thus, respondent court's finding that overbooking is specifically allowed by the US
Code of Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
applicable to the case at bar in accordance with the principle of lex loci
contractus which require that the law of the place where the airline ticket was issued
should be applied by the court where the passengers are residents and nationals of
the forum and the ticket is issued in such State by the defendant airline. 8 Since the
tickets were sold and issued in the Philippines, the applicable law in this case would
be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith,
entitling the passengers concerned to an award of moral damages. In Alitalia
Airways v. Court of Appeals, 9 where passengers with confirmed bookings were
refused carriage on the last minute, this Court held that when an airline issues a
ticket to a passenger confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he would fly on
that flight and on that date. If he does not, then the carrier opens itself to a suit for
breach of contract of carriage. Where an airline had deliberately overbooked, it took
the risk of having to deprive some passengers of their seats in case all of them
would show up for the check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is entitled to an award
of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private
respondent was not allowed to board the plane because her seat had already been
given to another passenger even before the allowable period for passengers to
check in had lapsed despite the fact that she had a confirmed ticket and she had
arrived on time, this Court held that petitioner airline acted in bad faith in violating
private respondent's rights under their contract of carriage and is therefore liable for
the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach of contract of
carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate
Appellate Court, 11 where a would-be passenger had the necessary ticket, baggage
claim and clearance from immigration all clearly and unmistakably showing that she
was, in fact, included in the passenger manifest of said flight, and yet was denied
accommodation in said flight, this Court did not hesitate to affirm the lower court's
finding awarding her damages.
A contract to transport passengers is quite different in kind and degree from any
other contractual relation. So ruled this Court in Zulueta v. Pan American World
Airways, Inc. 12 This is so, for a contract of carriage generates a relation attended
with public duty a duty to provide public service and convenience to its
passengers which must be paramount to self-interest or enrichment. Thus, it was
also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707
because there were only 138 confirmed economy class passengers who could very
well be accommodated in the smaller planes, thereby sacrificing the comfort of its
first class passengers for the sake of economy, amounts to bad faith. Such
inattention and lack of care for the interest of its passengers who are entitled to its
utmost consideration entitles the passenger to an award of moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty
of bad faith in not informing its passengers beforehand that it could breach the
contract of carriage even if they have confirmed tickets if there was overbooking.
Respondent TWA should have incorporated stipulations on overbooking on the
tickets issued or to properly inform its passengers about these policies so that the
latter would be prepared for such eventuality or would have the choice to ride with
another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which
were written the name of the passenger and the points of origin and destination,
contained such a notice. An examination of Exhibit I does not bear this out. At any
rate, said exhibit was not offered for the purpose of showing the existence of a
notice of overbooking but to show that Exhibit I was used for flight 007 in first class
of June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its
alleged policy of giving less priority to discounted tickets. While the petitioners had
checked in at the same time, and held confirmed tickets, yet, only one of them was
allowed to board the plane ten minutes before departure time because the full-fare
ticket he was holding was given priority over discounted tickets. The other two
petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline
system of boarding priorities are reasonable policies, which when implemented do
not amount to bad faith. But the issue raised in this case is not the reasonableness
of said policies but whether or not said policies were incorporated or deemed written
on petitioners' contracts of carriage. Respondent TWA failed to show that there are
provisions to that effect. Neither did it present any argument of substance to show
that petitioners were duly apprised of the overbooked condition of the flight or that
CONFLICTS OF LAW FEB 23 ASS CASES 24
there is a hierarchy of boarding priorities in booking passengers. It is evident that
petitioners had the right to rely upon the assurance of respondent TWA, thru its
agent in Manila, then in New York, that their tickets represented confirmed seats
without any qualification. The failure of respondent TWA to so inform them when it
could easily have done so thereby enabling respondent to hold on to them as
passengers up to the last minute amounts to bad faith. Evidently, respondent TWA
placed its self-interest over the rights of petitioners under their contracts of carriage.
Such conscious disregard of petitioners' rights makes respondent TWA liable for
moral damages. To deter breach of contracts by respondent TWA in similar fashion
in the future, we adjudge respondent TWA liable for exemplary damages, as well.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent
Court of Appeals is hereby MODIFIED to the extent of adjudging respondent
TransWorld Airlines to pay damages to petitioners in the following amounts, to wit:
(1) US$918.00 or its peso equivalent at the time of payment representing the price
of the tickets bought by Suthira and Liana Zalamea from American Airlines, to
enable them to fly to Los Angeles from New York City;
(2) P50,000.00 as moral damages;

(3) P50,000.00 as exemplary damages;

Petitioners also assail the respondent court's decision not to require the refund of
Liana Zalamea's ticket because the ticket was used by her father. On this score, we
uphold the respondent court. Petitioners had not shown with certainty that the act of (4) P50,000.00 as attorney's fees; and
respondent TWA in allowing Mr. Zalamea to use the ticket of her daughter was due
to inadvertence or deliberate act. Petitioners had also failed to establish that they did (5) Costs of suit.
not accede to said agreement. The logical conclusion, therefore, is that both
petitioners and respondent TWA agreed, albeit impliedly, to the course of action SO ORDERED.
taken.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
The respondent court erred, however, in not ordering the refund of the American
Airlines tickets purchased and used by petitioners Suthira and Liana. The evidence
shows that petitioners Suthira and Liana were constrained to take the American
Airlines flight to Los Angeles not because they "opted not to use their TWA tickets on
another TWA flight" but because respondent TWA could not accommodate them
either on the next TWA flight which was also fully booked. 14 The purchase of the
American Airlines tickets by petitioners Suthira and Liana was the consequence of
respondent TWA's unjustifiable breach of its contracts of carriage with petitioners. In
accordance with Article 2201, New Civil Code, respondent TWA should, therefore,
be responsible for all damages which may be reasonably attributed to the non-
performance of its obligation. In the previously cited case of Alitalia Airways v. Court
of Appeals, 15 this Court explicitly held that a passenger is entitled to be reimbursed
for the cost of the tickets he had to buy for a flight to another airline. Thus, instead of
simply being refunded for the cost of the unused TWA tickets, petitioners should be
awarded the actual cost of their flight from New York to Los Angeles. On this score,
we differ from the trial court's ruling which ordered not only the reimbursement of the
American Airlines tickets but also the refund of the unused TWA tickets. To require
both prestations would have enabled petitioners to fly from New York to Los Angeles
without any fare being paid.

The award to petitioners of attorney's fees is also justified under Article 2208(2) of
the Civil Code which allows recovery when the defendant's act or omission has
compelled plaintiff to litigate or to incur expenses to protect his interest. However,
the award for moral damages and exemplary damages by the trial court is excessive
in the light of the fact that only Suthira and Liana Zalamea were actually "bumped
off." An award of P50,000.00 moral damages and another P50,000.00 exemplary
damages would suffice under the circumstances obtaining in the instant case.
CONFLICTS OF LAW FEB 23 ASS CASES 25

G.R. Nos. L-27860 and L-27896 March 29, 1974
PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the
Testate Estate of Charles Newton Hodges (Sp. Proc. No. 1672 of the Court of
First Instance of Iloilo), petitioner,
vs.
THE HONORABLE VENICIO ESCOLIN, Presiding Judge of the Court of First
Instance of Iloilo, Branch II, and AVELINA A. MAGNO, respondents.
G.R. Nos. L-27936 & L-27937 March 29, 1974
TESTATE ESTATE OF THE LATE LINNIE JANE HODGES (Sp. Proc. No. 1307).
TESTATE ESTATE OF THE LATE CHARLES NEWTON HODGES (Sp. Proc. No.
1672). PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, administrator-
appellant,
vs.
LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR
GUZMAN, BELCESAR CAUSING, FLORENIA BARRIDO, PURIFICACION
CORONADO, GRACIANO LUCERO, ARITEO THOMAS JAMIR, MELQUIADES
BATISANAN, PEPITO IYULORES, ESPERIDION PARTISALA, WINIFREDO
ESPADA, ROSARIO ALINGASA, ADELFA PREMAYLON, SANTIAGO
PACAONSIS, and AVELINA A. MAGNO, the last as Administratrix in Sp. Proc.
No. 1307, appellees, WESTERN INSTITUTE OF TECHNOLOGY, INC., movant-
appellee.
San Juan, Africa, Gonzales and San Agustin for Philippine Commercial and
Industrial Bank.
Manglapus Law Office, Antonio Law Office and Rizal R. Quimpo for private
respondents and appellees Avelina A. Magno, etc., et al.
BARREDO, J.:p
Certiorari and prohibition with preliminary injunction; certiorari to "declare all acts of
the respondent court in the Testate Estate of Linnie Jane Hodges (Sp. Proc. No.
1307 of the Court of First Instance of Iloilo) subsequent to the order of December
14, 1957 as null and void for having been issued without jurisdiction"; prohibition to
enjoin the respondent court from allowing, tolerating, sanctioning, or abetting private
respondent Avelina A. Magno to perform or do any acts of administration, such as
those enumerated in the petition, and from exercising any authority or power as
Regular Administratrix of above-named Testate Estate, by entertaining
manifestations, motion and pleadings filed by her and acting on them, and also to
enjoin said court from allowing said private respondent to interfere, meddle or take
part in any manner in the administration of the Testate Estate of Charles Newton
Hodges (Sp. Proc. No. 1672 of the same court and branch); with prayer for
preliminary injunction, which was issued by this Court on August 8, 1967 upon a
bond of P5,000; the petition being particularly directed against the orders of the
respondent court of October 12, 1966 denying petitioner's motion of April 22, 1966
and its order of July 18, 1967 denying the motion for reconsideration of said order.
Related to and involving basically the same main issue as the foregoing petition,
thirty-three (33) appeals from different orders of the same respondent court
approving or otherwise sanctioning the acts of administration of the respondent
Magno on behalf of the testate Estate of Mrs. Hodges.
THE FACTS
On May 23, 1957, Linnie Jane Hodges died in Iloilo City leaving a will executed on
November 22, 1952 pertinently providing as follows:
CONFLICTS OF LAW FEB 23 ASS CASES 26
FIRST: I direct that all my just debts and funeral expenses be first
paid out of my estate.
SECOND: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever
situated, or located, to my beloved husband, Charles Newton
Hodges, to have and to hold unto him, my said husband, during
his natural lifetime.
THIRD: I desire, direct and provide that my husband, Charles
Newton Hodges, shall have the right to manage, control, use and
enjoy said estate during his lifetime, and he is hereby given the
right to make any changes in the physical properties of said
estate, by sale or any part thereof which he may think best, and
the purchase of any other or additional property as he may think
best; to execute conveyances with or without general or special
warranty, conveying in fee simple or for any other term or time,
any property which he may deem proper to dispose of; to lease
any of the real property for oil, gas and/or other minerals, and all
such deeds or leases shall pass the absolute fee simple title to the
interest so conveyed in such property as he may elect to sell. All
rents, emoluments and income from said estate shall belong to
him, and he is further authorized to use any part of the principal of
said estate as he may need or desire. It is provided herein,
however, that he shall not sell or otherwise dispose of any of the
improved property now owned by us located at, in or near the City
of Lubbock, Texas, but he shall have the full right to lease,
manage and enjoy the same during his lifetime, above provided.
He shall have the right to subdivide any farm land and sell lots
therein. and may sell unimproved town lots.
FOURTH: At the death of my said husband, Charles Newton
Hodges, I give, devise and bequeath all of the rest, residue and
remainder of my estate, both real and personal, wherever situated
or located, to be equally divided among my brothers and sisters,
share and share alike, namely:
Esta Higdon, Emma Howell, Leonard Higdon, Roy Higdon, Saddie
Rascoe, Era Roman and Nimroy Higdon.
FIFTH: In case of the death of any of my brothers and/or sisters
named in item Fourth, above, prior to the death of my husband,
Charles Newton Hodges, then it is my will and bequest that the
heirs of such deceased brother or sister shall take jointly the share
which would have gone to such brother or sister had she or he
survived.
SIXTH: I nominate and appoint my said husband, Charles Newton
Hodges, to be executor of this, my last will and testament, and
direct that no bond or other security be required of him as such
executor.
SEVENTH: It is my will and bequest that no action be had in the
probate court, in the administration of my estate, other than that
necessary to prove and record this will and to return an inventory
and appraisement of my estate and list of claims. (Pp. 2-4,
Petition.)
This will was subsequently probated in aforementioned Special Proceedings No.
1307 of respondent court on June 28, 1957, with the widower Charles Newton
Hodges being appointed as Executor, pursuant to the provisions thereof.
Previously, on May 27, 1957, the said widower (hereafter to be referred to as
Hodges) had been appointed Special Administrator, in which capacity he filed a
motion on the same date as follows:
URGENT EX-PARTE MOTION TO ALLOW OR AUTHORIZE
PETITIONER TO CONTINUE THE BUSINESS IN WHICH HE
WAS ENGAGED AND TO PERFORM ACTS WHICH HE HAD
BEEN DOING WHILE DECEASED WAS LIVING
Come petitioner in the above-entitled special proceedings, thru his undersigned
attorneys, to the Hon. Court, most respectfully states:
1. That Linnie Jane Hodges died leaving her last will and
testament, a copy of which is attached to the petition for probate
of the same.
2. That in said last will and testament herein petitioner Charles
Newton Hodges is directed to have the right to manage, control
use and enjoy the estate of deceased Linnie Jane Hodges, in the
same way, a provision was placed in paragraph two, the following:
"I give, devise and bequeath all of the rest, residue and remainder
of my estate, to my beloved husband, Charles Newton Hodges, to
have and (to) hold unto him, my said husband, during his natural
lifetime."
3. That during the lifetime of Linnie Jane Hodges, herein
petitioner was engaged in the business of buying and selling
personal and real properties, and do such acts which petitioner
may think best.
4. That deceased Linnie Jane Hodges died leaving no
descendants or ascendants, except brothers and sisters and
CONFLICTS OF LAW FEB 23 ASS CASES 27
 herein petitioner as executor surviving spouse, to inherit the
properties of the decedent.
5. That the present motion is submitted in order not to paralyze
the business of petitioner and the deceased, especially in the
purchase and sale of properties. That proper accounting will be
had also in all these transactions.
WHEREFORE, it is most respectfully prayed that, petitioner C. N.
Hodges (Charles Newton Hodges) be allowed or authorized to
continue the business in which he was engaged and to perform
acts which he had been doing while deceased Linnie Jane
Hodges was living.
City of Iloilo, May 27, 1957. (Annex "D", Petition.)
which the respondent court immediately granted in the following order:
It appearing in the urgent ex-parte motion filed by petitioner C. N.
Hodges, that the business in which said petitioner and the
deceased were engaged will be paralyzed, unless and until the
Executor is named and appointed by the Court, the said petitioner
is allowed or authorized to continue the business in which he was
engaged and to perform acts which he had been doing while the
deceased was living.
SO ORDERED.
City of Iloilo May 27, 1957. (Annex "E", Petition.)
Under date of December 11, 1957, Hodges filed as such Executor another motion
thus:
MOTION TO APPROVE ALL SALES, CONVEYANCES, LEASES,
MORTGAGES THAT THE EXECUTOR HAD MADE FURTHER
AND SUBSEQUENT TRANSACTIONS WHICH THE EXECUTOR
MAY DO IN ACCORDANCE WITH THE LAST WISH OF THE
DECEASED LINNIE JANE HODGES.
Comes the Executor in the above-entitled proceedings, thru his
undersigned attorney, to the Hon. Court, most respectfully states:
1. That according to the last will and testament of the deceased
Linnie Jane Hodges, the executor as the surviving spouse and
legatee named in the will of the deceased; has the right to dispose
of all the properties left by the deceased, portion of which is
quoted as follows:
Second: I give, devise and bequeath all of the rest, residue and
remainder of my estate, both personal and real, wherever
situated, or located, to my beloved husband, Charles Newton
Hodges, to have and to hold unto him, my said husband, during
his natural lifetime.
Third: I desire, direct and provide that my husband, Charles
Newton Hodges, shall have the right to manage, control, use and
enjoy said estate during his lifetime, and he is hereby given the
right to make any changes in the physical properties of said
estate, by sale or any part thereof which he may think best, and
the purchase of any other or additional property as he may think
best; to execute conveyances with or without general or special
warranty, conveying in fee simple or for any other term or time,
any property which he may deem proper to dispose of; to lease
any of the real property for oil, gas and/or other minerals, and all
such deeds or leases shall pass the absolute fee simple title to the
interest so conveyed in such property as he may elect to sell. All
rents, emoluments and income from said estate shall belong to
him, and he is further authorized to use any part of the principal of
said estate as he may need or desire. ...
2. That herein Executor, is not only part owner of the properties
left as conjugal, but also, the successor to all the properties left by
the deceased Linnie Jane Hodges. That during the lifetime of
herein Executor, as Legatee has the right to sell, convey, lease or
dispose of the properties in the Philippines. That inasmuch as
C.N. Hodges was and is engaged in the buy and sell of real and
personal properties, even before the death of Linnie Jane Hodges,
a motion to authorize said C.N. Hodges was filed in Court, to allow
him to continue in the business of buy and sell, which motion was
favorably granted by the Honorable Court.
3. That since the death of Linnie Jane Hodges, Mr. C.N.
Hodges had been buying and selling real and personal properties,
in accordance with the wishes of the late Linnie Jane Hodges.
4. That the Register of Deeds for Iloilo, had required of late the
herein Executor to have all the sales, leases, conveyances or
mortgages made by him, approved by the Hon. Court.
5. That it is respectfully requested, all the sales, conveyances
leases and mortgages executed by the Executor, be approved by
the Hon. Court. and subsequent sales conveyances, leases and
mortgages in compliances with the wishes of the late Linnie Jane
Hodges, and within the scope of the terms of the last will and
testament, also be approved;
CONFLICTS OF LAW FEB 23 ASS CASES 28
 6. That the Executor is under obligation to submit his yearly
accounts, and the properties conveyed can also be accounted for,
especially the amounts received.
WHEREFORE, it is most respectfully prayed that, all the sales,
conveyances, leases, and mortgages executed by the Executor,
be approved by the Hon. Court, and also the subsequent sales,
conveyances, leases, and mortgages in consonance with the
wishes of the deceased contained in her last will and testament,
be with authorization and approval of the Hon. Court.
City of Iloilo, December 11, 1967.
(Annex "G", Petition.)
which again was promptly granted by the respondent court on December 14, 1957
as follows:
ORDER
As prayed for by Attorney Gellada, counsel for the Executor for
the reasons stated in his motion dated December 11, 1957, which
the Court considers well taken all the sales, conveyances, leases
and mortgages of all properties left by the deceased Linnie Jane
Hodges executed by the Executor Charles N. Hodges are hereby
APPROVED. The said Executor is further authorized to execute
subsequent sales, conveyances, leases and mortgages of the
properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes conveyed in the last will and
testament of the latter.
So ordered.
Iloilo City. December 14, 1957.
(Annex "H", Petition.)
On April 14, 1959, in submitting his first statement of account as Executor for
approval, Hodges alleged:
Pursuant to the provisions of the Rules of Court, herein executor
of the deceased, renders the following account of his
administration covering the period from January 1, 1958 to
December 31, 1958, which account may be found in detail in the
individual income tax return filed for the estate of deceased Linnie
Jane Hodges, to wit:
That a certified public accountant has examined the statement of
net worth of the estate of Linnie Jane Hodges, the assets and
liabilities, as well as the income and expenses, copy of which is
hereto attached and made integral part of this statement of
account as Annex "A".
IN VIEW OF THE FOREGOING, it is most respectfully prayed
that, the statement of net worth of the estate of Linnie Jane
Hodges, the assets and liabilities, income and expenses as shown
in the individual income tax return for the estate of the deceased
and marked as Annex "A", be approved by the Honorable Court,
as substantial compliance with the requirements of the Rules of
Court.
That no person interested in the Philippines of the time and place
of examining the herein accounts be given notice, as herein
executor is the only devisee or legatee of the deceased, in
accordance with the last will and testament already probated by
the Honorable court.
City of Iloilo April 14, 1959.
(Annex "I", Petition.)
The respondent court approved this statement of account on April 21, 1959 in its
order worded thus:
Upon petition of Atty. Gellada, in representation of the Executor,
the statement of net worth of the estate of Linnie Jane Hodges,
assets and liabilities, income and expenses as shown in the
individual income tax return for the estate of the deceased and
marked as Annex "A" is approved.
SO ORDERED.
City of Iloilo April 21, 1959.
(Annex "J", Petition.)
His accounts for the periods January 1, 1959 to December 31, 1959 and January 1,
1960 to December 31, 1960 were submitted likewise accompanied by allegations
identical mutatis mutandis to those of April 14, 1959, quoted above; and the
respective orders approving the same, dated July 30, 1960 and May 2, 1961, were
substantially identical to the above-quoted order of April 21, 1959. In connection with
the statements of account just mentioned, the following assertions related thereto
made by respondent-appellee Magno in her brief do not appear from all indications
discernible in the record to be disputable:
CONFLICTS OF LAW FEB 23 ASS CASES 29
 Under date of April 14, 1959, C.N. Hodges filed his first "Account
by the Executor" of the estate of Linnie Jane Hodges. In the
"Statement of Networth of Mr. C.N. Hodges and the Estate of
Linnie Jane Hodges" as of December 31, 1958 annexed thereto,
C.N. Hodges reported that the combined conjugal estate earned a
net income of P328,402.62, divided evenly between him and the
estate of Linnie Jane Hodges. Pursuant to this, he filed an
"individual income tax return" for calendar year 1958 on the estate
of Linnie Jane Hodges reporting, under oath, the said estate as
having earned income of P164,201.31, exactly one-half of the net
income of his combined personal assets and that of the estate of
Linnie Jane Hodges. (p. 91, Appellee's Brief.)
xxx xxx xxx
Under date of July 21, 1960, C.N. Hodges filed his second
"Annual Statement of Account by the Executor" of the estate of
Linnie Jane Hodges. In the "Statement of Networth of Mr. C.N.
Hodges and the Estate of Linnie Jane Hodges" as of December
31, 1959 annexed thereto, C.N. Hodges reported that the
combined conjugal estate earned a net income of P270,623.32,
divided evenly between him and the estate of Linnie Jane
Hodges. Pursuant to this, he filed an "individual income tax return"
for calendar year 1959 on the estate of Linnie Jane Hodges
reporting, under oath, the said estate as having earned income of
P135,311.66, exactly one-half of the net income of his combined
personal assets and that of the estate of Linnie Jane Hodges. (pp.
91-92. Appellee's Brief.)
xxx xxx xxx
Under date of April 20, 1961, C.N. Hodges filed his third "Annual
Statement of Account by the Executor for the Year 1960" of the
estate of Linnie Jane Hodges. In the "Statement of Net Worth of
Mr. C.N. Hodges and the Estate of Linnie Jane Hodges" as of
December 31, 1960 annexed thereto, C.N. Hodges reported that
the combined conjugal estate earned a net income of
P314,857.94, divided evenly between him and the estate of Linnie
Jane Hodges. Pursuant to this, he filed an "individual income tax
return" for calendar year 1960 on the estate of Linnie Jane
Hodges reporting, under oath, the said estate as having earned
income of P157,428.97, exactly one-half of the net income of his
combined personal assets and that of the estate of Linnie Jane
Hodges. (Pp. 92-93, Appellee's Brief.)
Likewise the following:
In the petition for probate that he (Hodges) filed, he listed the
seven brothers and sisters of Linnie Jane as her "heirs" (see p. 2,
Green ROA). The order of the court admitting the will to probate
unfortunately omitted one of the heirs, Roy Higdon (see p. 14,
Green ROA). Immediately, C.N. Hodges filed a verified motion to
have Roy Higdon's name included as an heir, stating that he
wanted to straighten the records "in order the heirs of deceased
Roy Higdon may not think or believe they were omitted, and that
they were really and are interested in the estate of deceased
Linnie Jane Hodges. .
As an executor, he was bound to file tax returns for the estate he
was administering under American law. He did file such as estate
tax return on August 8, 1958. In Schedule "M" of such return, he
answered "Yes" to the question as to whether he was
contemplating "renouncing the will". On the question as to what
property interests passed to him as the surviving spouse, he
answered:
"None, except for purposes of administering the
Estate, paying debts, taxes and other legal
charges. It is the intention of the surviving
husband of deceased to distribute the remaining
property and interests of the deceased in their
Community estate to the devisees and legatees
named in the will when the debts, liabilities,
taxes and expenses of administration are finally
determined and paid."
Again, on August 9, 1962, barely four months before his death, he
executed an "affidavit" wherein he ratified and confirmed all that
he stated in Schedule "M" of his estate tax returns as to his having
renounced what was given him by his wife's will. 1
As appointed executor, C.N. Hodges filed an "Inventory" dated
May 12, 1958. He listed all the assets of his conjugal partnership
with Linnie Jane Hodges on a separate balance sheet and then
stated expressly that her estate which has come into his
possession as executor was "one-half of all the items" listed in
said balance sheet. (Pp. 89-90, Appellee's Brief.)
Parenthetically, it may be stated, at this juncture, that We are taking pains to quote
wholly or at least, extensively from some of the pleadings and orders whenever We
feel that it is necessary to do so for a more comprehensive and clearer view of the
important and decisive issues raised by the parties and a more accurate appraisal of
their respective positions in regard thereto.
CONFLICTS OF LAW FEB 23 ASS CASES 30
The records of these cases do not show that anything else was done in the above-
mentioned Special Proceedings No. 1307 until December 26, 1962, when on
account of the death of Hodges the day before, the same lawyer, Atty. Leon P.
Gellada, who had been previously acting as counsel for Hodges in his capacity as
Executor of his wife's estate, and as such had filed the aforequoted motions and
manifestations, filed the following:
URGENT EX-PARTE MOTION FOR THE APPOINTMENT OF A
SPECIAL ADMINISTRATRIX
COMES the undersigned attorney for the Executor in the above-
entitled proceedings, to the Honorable Court, most respectfully
states:
1. That in accordance with the Last Will and Testament of Linnie
Jane Hodges (deceased), her husband, Charles Newton Hodges
was to act as Executor, and in fact, in an order issued by this Hon.
Court dated June 28, 1957, the said Charles Newton Hodges was
appointed Executor and had performed the duties as such.
2. That last December 22, 1962, the said Charles Newton Hodges
was stricken ill, and brought to the Iloilo Mission Hospital for
treatment, but unfortunately, he died on December 25, 1962, as
shown by a copy of the death certificate hereto attached and
marked as Annex "A".
3. That in accordance with the provisions of the last will and
testament of Linnie Jane Hodges, whatever real and personal
properties that may remain at the death of her husband Charles
Newton Hodges, the said properties shall be equally divided
among their heirs. That there are real and personal properties left
by Charles Newton Hodges, which need to be administered and
taken care of.
4. That the estate of deceased Linnie Jane Hodges, as well as
that of Charles Newton Hodges, have not as yet been determined
or ascertained, and there is necessity for the appointment of a
general administrator to liquidate and distribute the residue of the
estate to the heirs and legatees of both spouses. That in
accordance with the provisions of Section 2 of Rule 75 of the
Rules of Court, the conjugal partnership of Linnie Jane Hodges
and Charles Newton Hodges shall be liquidated in the testate
proceedings of the wife.
which respondent court readily acted on in its order of even date thus: .
5. That the undersigned counsel, has perfect personal knowledge
of the existence of the last will and testament of Charles Newton
Hodges, with similar provisions as that contained in the last will
and testament of Linnie Jane Hodges. However, said last will and
testament of Charles Newton Hodges is kept inside the vault or
iron safe in his office, and will be presented in due time before this
honorable Court.
6. That in the meantime, it is imperative and indispensable that,
an Administratrix be appointed for the estate of Linnie Jane
Hodges and a Special Administratrix for the estate of Charles
Newton Hodges, to perform the duties required by law, to
administer, collect, and take charge of the goods, chattels, rights,
credits, and estate of both spouses, Charles Newton Hodges and
Linnie Jane Hodges, as provided for in Section 1 and 2, Rule 81
of the Rules of Court.
7. That there is delay in granting letters testamentary or of
administration, because the last will and testament of deceased,
Charles Newton Hodges, is still kept in his safe or vault, and in the
meantime, unless an administratrix (and,) at the same time, a
Special Administratrix is appointed, the estate of both spouses are
in danger of being lost, damaged or go to waste.
8. That the most trusted employee of both spouses Linnie Jane
Hodges and C.N. Hodges, who had been employed for around
thirty (30) years, in the person of Miss Avelina Magno, (should) be
appointed Administratrix of the estate of Linnie Jane Hodges and
at the same time Special Administratrix of the estate of Charles
Newton Hodges. That the said Miss Avelina Magno is of legal age,
a resident of the Philippines, the most fit, competent, trustworthy
and well-qualified person to serve the duties of Administratrix and
Special Administratrix and is willing to act as such.
9. That Miss Avelina Magno is also willing to file bond in such sum
which the Hon. Court believes reasonable.
WHEREFORE, in view of all the foregoing, it is most respectfully
prayed that, Miss AVELINA A. MAGNO be immediately appointed
Administratrix of the estate of Linnie Jane Hodges and as Special
Administratrix of the estate of Charles Newton Hodges, with
powers and duties provided for by law. That the Honorable Court
fix the reasonable bond of P1,000.00 to be filed by Avelina A.
Magno.
(Annex "O", Petition.)
For the reasons alleged in the Urgent Ex-parte Motion filed by
counsel for the Executor dated December 25, 1962, which the
Court finds meritorious, Miss AVELINA A. MAGNO, is hereby
CONFLICTS OF LAW FEB 23 ASS CASES 31
 appointed Administratrix of the estate of Linnie Jane Hodges and
as Special Administratrix of the estate of Charles Newton Hodges,
in the latter case, because the last will of said Charles Newton
Hodges is still kept in his vault or iron safe and that the real and
personal properties of both spouses may be lost, damaged or go
to waste, unless a Special Administratrix is appointed.
Miss Avelina A. Magno is required to file bond in the sum of FIVE
THOUSAND PESOS (P5,000.00), and after having done so, let
letters of Administration be issued to her." (Annex "P", Petition.)
On December 29, 1962, however, upon urgent ex-parte petition of
respondent Magno herself, thru Atty. Gellada, Harold, R. Davies,
"a representative of the heirs of deceased Charles Newton
Hodges (who had) arrived from the United States of America to
help in the administration of the estate of said deceased" was
appointed as Co-Special Administrator of the estate of Hodges,
(pp. 29-33, Yellow - Record on Appeal) only to be replaced as
such co-special administrator on January 22, 1963 by Joe
Hodges, who, according to the motion of the same attorney, is
"the nephew of the deceased (who had) arrived from the United
States with instructions from the other heirs of the deceased to
administer the properties or estate of Charles Newton Hodges in
the Philippines, (Pp. 47-50, id.)
Meanwhile, under date of January 9, 1963, the same Atty. Gellada filed in Special
Proceedings 1672 a petition for the probate of the will of Hodges, 2 with a prayer for
the issuance of letters of administration to the same Joe Hodges, albeit the motion
was followed on February 22, 1963 by a separate one asking that Atty. Fernando
Mirasol be appointed as his co-administrator. On the same date this latter motion
was filed, the court issued the corresponding order of probate and letters of
administration to Joe Hodges and Atty. Mirasol, as prayed for.
At this juncture, again, it may also be explained that just as, in her will, Mrs. Hodges
bequeathed her whole estate to her husband "to have and to hold unto him, my said
husband, during his natural lifetime", she, at the same time or in like manner,
provided that "at the death of my said husband I give devise and bequeath all of
the rest, residue and remainder of my estate, both real and personal, wherever
situated or located, to be equally divided among my brothers and sisters, share and
share alike ". Accordingly, it became incumbent upon Hodges, as executor of his
wife's will, to duly liquidate the conjugal partnership, half of which constituted her
estate, in order that upon the eventuality of his death, "the rest, residue and
remainder" thereof could be determined and correspondingly distributed or divided
among her brothers and sisters. And it was precisely because no such liquidation
was done, furthermore, there is the issue of whether the distribution of her estate
should be governed by the laws of the Philippines or those of Texas, of which State
she was a national, and, what is more, as already stated, Hodges made official and
sworn statements or manifestations indicating that as far as he was concerned no
"property interests passed to him as surviving spouse "except for purposes of
administering the estate, paying debts, taxes and other legal charges" and it was the
intention of the surviving husband of the deceased to distribute the remaining
property and interests of the deceased in their Community Estate to the devisees
and legatees named in the will when the debts, liabilities, taxes and expenses of
administration are finally determined and paid", that the incidents and controversies
now before Us for resolution arose. As may be observed, the situation that ensued
upon the death of Hodges became rather unusual and so, quite understandably, the
lower court's actuations presently under review are apparently wanting in
consistency and seemingly lack proper orientation.
Thus, We cannot discern clearly from the record before Us the precise perspective
from which the trial court proceeded in issuing its questioned orders. And,
regretably, none of the lengthy briefs submitted by the parties is of valuable
assistance in clearing up the matter.
To begin with, We gather from the two records on appeal filed by petitioner, as
appellant in the appealed cases, one with green cover and the other with a yellow
cover, that at the outset, a sort of modus operandi had been agreed upon by the
parties under which the respective administrators of the two estates were supposed
to act conjointly, but since no copy of the said agreement can be found in the record
before Us, We have no way of knowing when exactly such agreement was entered
into and under what specific terms. And while reference is made to said modus
operandi in the order of September 11, 1964, on pages 205-206 of the Green
Record on Appeal, reading thus:
The present incident is to hear the side of administratrix, Miss
Avelina A. Magno, in answer to the charges contained in the
motion filed by Atty. Cesar Tirol on September 3, 1964. In answer
to the said charges, Miss Avelina A. Magno, through her counsel,
Atty. Rizal Quimpo, filed a written manifestation.
After reading the manifestation here of Atty. Quimpo, for and in
behalf of the administratrix, Miss Avelina A. Magno, the Court finds
that everything that happened before September 3, 1964, which
was resolved on September 8, 1964, to the satisfaction of parties,
was simply due to a misunderstanding between the representative
of the Philippine Commercial and Industrial Bank and Miss Magno
and in order to restore the harmonious relations between the
parties, the Court ordered the parties to remain in status quo as to
their modus operandi before September 1, 1964, until after the
Court can have a meeting with all the parties and their counsels
on October 3, as formerly agreed upon between counsels, Attys.
Ozaeta, Gibbs and Ozaeta, Attys. Tirol and Tirol and Atty. Rizal
Quimpo.
In the meantime, the prayers of Atty. Quimpo as stated in his
manifestation shall not be resolved by this Court until October 3,
1964.
CONFLICTS OF LAW FEB 23 ASS CASES 32
 SO ORDERED.
there is nothing in the record indicating whatever happened to it afterwards, except
that again, reference thereto was made in the appealed order of October 27, 1965,
on pages 292-295 of the Green Record on Appeal, as follows:
On record is an urgent motion to allow PCIB to open all doors and
locks in the Hodges Office at 206-208 Guanco Street, Iloilo City, to
take immediate and exclusive possession thereof and to place its
own locks and keys for security purposes of the PCIB dated
October 27, 1965 thru Atty. Cesar Tirol. It is alleged in said urgent
motion that Administratrix Magno of the testate estate of Linnie
Jane Hodges refused to open the Hodges Office at 206-208
Guanco Street, Iloilo City where PCIB holds office and therefore
PCIB is suffering great moral damage and prejudice as a result of
said act. It is prayed that an order be issued authorizing it (PCIB)
to open all doors and locks in the said office, to take immediate
and exclusive possession thereof and place thereon its own locks
and keys for security purposes; instructing the clerk of court or
any available deputy to witness and supervise the opening of all
doors and locks and taking possession of the PCIB.
A written opposition has been filed by Administratrix Magno of
even date (Oct. 27) thru counsel Rizal Quimpo stating therein that
she was compelled to close the office for the reason that the PCIB
failed to comply with the order of this Court signed by Judge
Anacleto I. Bellosillo dated September 11, 1964 to the effect that
both estates should remain in status quo to their modus
operandi as of September 1, 1964.
To arrive at a happy solution of the dispute and in order not to
interrupt the operation of the office of both estates, the Court aside
from the reasons stated in the urgent motion and opposition heard
the verbal arguments of Atty. Cesar Tirol for the PCIB and Atty.
Rizal Quimpo for Administratix Magno.
After due consideration, the Court hereby orders Magno to open
all doors and locks in the Hodges Office at 206-208 Guanco
Street, Iloilo City in the presence of the PCIB or its duly authorized
representative and deputy clerk of court Albis of this branch not
later than 7:30 tomorrow morning October 28, 1965 in order that
the office of said estates could operate for business.
Pursuant to the order of this Court thru Judge Bellosillo dated
September 11, 1964, it is hereby ordered:
(a) That all cash collections should be deposited in the joint
account of the estates of Linnie Jane Hodges and estates of C.N.
Hodges;
(b) That whatever cash collections that had been deposited in the
account of either of the estates should be withdrawn and since
then deposited in the joint account of the estate of Linnie Jane
Hodges and the estate of C.N. Hodges;
(c) That the PCIB should countersign the check in the amount of
P250 in favor of Administratrix Avelina A. Magno as her
compensation as administratrix of the Linnie Jane Hodges estate
chargeable to the testate estate of Linnie Jane Hodges only;
(d) That Administratrix Magno is hereby directed to allow the PCIB
to inspect whatever records, documents and papers she may
have in her possession in the same manner that Administrator
PCIB is also directed to allow Administratrix Magno to inspect
whatever records, documents and papers it may have in its
possession;
(e) That the accountant of the estate of Linnie Jane Hodges shall
have access to all records of the transactions of both estates for
the protection of the estate of Linnie Jane Hodges; and in like
manner the accountant or any authorized representative of the
estate of C.N. Hodges shall have access to the records of
transactions of the Linnie Jane Hodges estate for the protection of
the estate of C.N. Hodges.
Once the estates' office shall have been opened by Administratrix
Magno in the presence of the PCIB or its duly authorized
representative and deputy clerk Albis or his duly authorized
representative, both estates or any of the estates should not close
it without previous consent and authority from this court.
SO ORDERED.
As may be noted, in this order, the respondent court required that all collections from
the properties in the name of Hodges should be deposited in a joint account of the
two estates, which indicates that seemingly the so-called modus operandi was no
longer operative, but again there is nothing to show when this situation started.
Likewise, in paragraph 3 of the petitioner's motion of September 14, 1964, on pages
188-201 of the Green Record on Appeal, (also found on pp. 83-91 of the Yellow
Record on Appeal) it is alleged that:
CONFLICTS OF LAW FEB 23 ASS CASES 33
 3. On January 24, 1964 virtually all of the heirs of C.N. Hodges,
Joe Hodges and Fernando P. Mirasol acting as the two co-
administrators of the estate of C.N. Hodges, Avelina A. Magno
acting as the administratrix of the estate of Linnie Jane Hodges
and Messrs. William Brown and Ardell Young acting for all of the
Higdon family who claim to be the sole beneficiaries of the estate
of Linnie Jane Hodges and various legal counsel representing the
aforementioned parties entered into an amicable agreement,
which was approved by this Honorable Court, wherein the parties
thereto agreed that certain sums of money were to be paid in
settlement of different claims against the two estates and that the
assets (to the extent they existed) of both estates would be
administered jointly by the PCIB as administrator of the estate of
C.N. Hodges and Avelina A. Magno as administratrix of the estate
of Linnie Jane Hodges, subject, however, to the aforesaid October
5, 1963 Motion, namely, the PCIB's claim to exclusive possession
and ownership of one hundred percent (100%) (or, in the
alternative, seventy-five percent (75%) of all assets owned by
C.N. Hodges or Linnie Jane Hodges situated in the Philippines.
On February 1, 1964 (pp. 934-935, CFI Rec., S.P. No. 1672) this
Honorable Court amended its order of January 24, 1964 but in no
way changed its recognition of the afore-described basic demand
by the PCIB as administrator of the estate of C.N. Hodges to one
hundred percent (100%) of the assets claimed by both estates.
but no copy of the mentioned agreement of joint administration of the two estates
exists in the record, and so, We are not informed as to what exactly are the terms of
the same which could be relevant in the resolution of the issues herein.
On the other hand, the appealed order of November 3, 1965, on pages 313-320 of
the Green Record on Appeal, authorized payment by respondent Magno of, inter
alia, her own fees as administratrix, the attorney's fees of her lawyers, etc., as
follows:
Administratrix Magno thru Attys. Raul S. Manglapus and Rizal. R.
Quimpo filed a Manifestation and Urgent Motion dated June 10,
1964 asking for the approval of the Agreement dated June 6, 1964
which Agreement is for the purpose of retaining their services to
protect and defend the interest of the said Administratrix in these
proceedings and the same has been signed by and bears the
express conformity of the attorney-in-fact of the late Linnie Jane
Hodges, Mr. James L. Sullivan. It is further prayed that the
Administratrix of the Testate Estate of Linnie Jane Hodges be
directed to pay the retailers fee of said lawyers, said fees made
chargeable as expenses for the administration of the estate of
Linnie Jane Hodges (pp. 1641-1642, Vol. V, Sp. 1307).
An opposition has been filed by the Administrator PCIB thru Atty.
Herminio Ozaeta dated July 11, 1964, on the ground that payment
of the retainers fee of Attys. Manglapus and Quimpo as prayed for
in said Manifestation and Urgent Motion is prejudicial to the 100%
claim of the estate of C. N. Hodges; employment of Attys.
Manglapus and Quimpo is premature and/or unnecessary; Attys.
Quimpo and Manglapus are representing conflicting interests and
the estate of Linnie Jane Hodges should be closed and terminated
(pp. 1679-1684, Vol, V, Sp. 1307).
Atty. Leon P. Gellada filed a memorandum dated July 28, 1964
asking that the Manifestation and Urgent Motion filed by Attys.
Manglapus and Quimpo be denied because no evidence has
been presented in support thereof. Atty. Manglapus filed a reply to
the opposition of counsel for the Administrator of the C. N. Hodges
estate wherein it is claimed that expenses of administration
include reasonable counsel or attorney's fees for services to the
executor or administrator. As a matter of fact the fee agreement
dated February 27, 1964 between the PCIB and the law firm of
Ozaeta, Gibbs & Ozaeta as its counsel (Pp. 1280-1284, Vol. V,
Sp. 1307) which stipulates the fees for said law firm has been
approved by the Court in its order dated March 31, 1964. If
payment of the fees of the lawyers for the administratrix of the
estate of Linnie Jane Hodges will cause prejudice to the estate of
C. N. Hodges, in like manner the very agreement which provides
for the payment of attorney's fees to the counsel for the PCIB will
also be prejudicial to the estate of Linnie Jane Hodges (pp. 1801-
1814, Vol. V, Sp. 1307).
Atty. Herminio Ozaeta filed a rejoinder dated August 10, 1964 to
the reply to the opposition to the Manifestation and Urgent Motion
alleging principally that the estates of Linnie Jane Hodges and C.
N. Hodges are not similarly situated for the reason that C. N.
Hodges is an heir of Linnie Jane Hodges whereas the latter is not
an heir of the former for the reason that Linnie Jane Hodges
predeceased C. N. Hodges (pp. 1839-1848, Vol. V, Sp. 1307); that
Attys. Manglapus and Quimpo formally entered their appearance
in behalf of Administratrix of the estate of Linnie Jane Hodges on
June 10, 1964 (pp. 1639-1640, Vol. V, Sp. 1307).
Atty. Manglapus filed a manifestation dated December 18, 1964
stating therein that Judge Bellosillo issued an order requiring the
parties to submit memorandum in support of their respective
contentions. It is prayed in this manifestation that the
Manifestation and Urgent Motion dated June 10, 1964 be resolved
(pp. 6435-6439, Vol. VII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a counter-
manifestation dated January 5, 1965 asking that after the
consideration by the court of all allegations and arguments and
pleadings of the PCIB in connection therewith (1) said
CONFLICTS OF LAW FEB 23 ASS CASES 34
manifestation and urgent motion of Attys. Manglapus and Quimpo
be denied (pp. 6442-6453, Vol. VII, Sp. 1307). Judge Querubin
issued an order dated January 4, 1965 approving the motion
dated June 10, 1964 of the attorneys for the administratrix of the
estate of Linnie Jane Hodges and agreement annexed to said
motion. The said order further states: "The Administratrix of the
estate of Linnie Jane Hodges is authorized to issue or sign
whatever check or checks may be necessary for the above
purpose and the administrator of the estate of C. N. Hodges is
ordered to countersign the same. (pp. 6518-6523, Vol VII, Sp.
1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a manifestation and
motion dated January 13, 1965 asking that the order of January 4,
1965 which was issued by Judge Querubin be declared null and
void and to enjoin the clerk of court and the administratrix and
administrator in these special proceedings from all proceedings
and action to enforce or comply with the provision of the aforesaid
order of January 4, 1965. In support of said manifestation and
motion it is alleged that the order of January 4, 1965 is null and
void because the said order was never delivered to the deputy
clerk Albis of Branch V (the sala of Judge Querubin) and the
alleged order was found in the drawer of the late Judge Querubin
in his office when said drawer was opened on January 13, 1965
after the death of Judge Querubin by Perfecto Querubin, Jr., the
son of the judge and in the presence of Executive Judge Rovira
and deputy clerk Albis (Sec. 1, Rule 36, New Civil Code) (Pp.
6600-6606, Vol. VIII, Sp. 1307).
Atty. Roman Mabanta, Jr. for the PCIB filed a motion for
reconsideration dated February 23, 1965 asking that the order
dated January 4, 1964 be reversed on the ground that:
1. Attorneys retained must render services to the estate not to the
personal heir;
2. If services are rendered to both, fees should be pro-rated
between them;
3. Attorneys retained should not represent conflicting interests; to
the prejudice of the other heirs not represented by said attorneys;
4. Fees must be commensurate to the actual services rendered to
the estate;
5. There must be assets in the estate to pay for said fees (Pp.
6625-6636, Vol. VIII, Sp. 1307).
Atty. Quimpo for Administratrix Magno of the estate of Linnie Jane
Hodges filed a motion to submit dated July 15, 1965 asking that
the manifestation and urgent motion dated June 10, 1964 filed by
Attys. Manglapus and Quimpo and other incidents directly
appertaining thereto be considered submitted for consideration
and approval (pp. 6759-6765, Vol. VIII, Sp. 1307).
Considering the arguments and reasons in support to the
pleadings of both the Administratrix and the PCIB, and of Atty.
Gellada, hereinbefore mentioned, the Court believes that the
order of January 4, 1965 is null and void for the reason that the
said order has not been filed with deputy clerk Albis of this court
(Branch V) during the lifetime of Judge Querubin who signed the
said order. However, the said manifestation and urgent motion
dated June 10, 1964 is being treated and considered in this
instant order. It is worthy to note that in the motion dated January
24, 1964 (Pp. 1149- 1163, Vol. V, Sp. 1307) which has been filed
by Atty. Gellada and his associates and Atty. Gibbs and other
lawyers in addition to the stipulated fees for actual services
rendered. However, the fee agreement dated February 27, 1964,
between the Administrator of the estate of C. N. Hodges and Atty.
Gibbs which provides for retainer fee of P4,000 monthly in
addition to specific fees for actual appearances, reimbursement
for expenditures and contingent fees has also been approved by
the Court and said lawyers have already been paid. (pp. 1273-
1279, Vol. V, Sp. Proc. 1307 pp. 1372-1373, Vol. V, Sp. Proc.
1307).
WHEREFORE, the order dated January 4, 1965 is hereby
declared null and void.
The manifestation and motion dated June 10, 1964 which was
filed by the attorneys for the administratrix of the testate estate of
Linnie Jane Hodges is granted and the agreement annexed
thereto is hereby approved.
The administratrix of the estate of Linnie Jane Hodges is hereby
directed to be needed to implement the approval of the agreement
annexed to the motion and the administrator of the estate of C. N.
Hodges is directed to countersign the said check or checks as the
case may be.
SO ORDERED.
thereby implying somehow that the court assumed the existence of independent but
simultaneous administrations.
CONFLICTS OF LAW FEB 23 ASS CASES 35
Be that as it may, again, it appears that on August 6, 1965, the court, acting on a
motion of petitioner for the approval of deeds of sale executed by it as administrator
of the estate of Hodges, issued the following order, also on appeal herein:
Acting upon the motion for approval of deeds of sale for registered
land of the PCIB, Administrator of the Testate Estate of C. N.
Hodges in Sp. Proc. 1672 (Vol. VII, pp. 2244-2245), dated July 16,
1965, filed by Atty. Cesar T. Tirol in representation of the law firms
of Ozaeta, Gibbs and Ozaeta and Tirol and Tirol and the
opposition thereto of Atty. Rizal R. Quimpo (Vol. VIII, pp. 6811-
6813) dated July 22, 1965 and considering the allegations and
reasons therein stated, the court believes that the deeds of sale
should be signed jointly by the PCIB, Administrator of the Testate
Estate of C. N. Hodges and Avelina A. Magno, Administratrix of
the Testate Estate of Linnie Jane Hodges and to this effect the
PCIB should take the necessary steps so that Administratrix
Avelina A. Magno could sign the deeds of sale.
SO ORDERED. (p. 248, Green Record on Appeal.)
Notably this order required that even the deeds executed by petitioner, as
administrator of the Estate of Hodges, involving properties registered in his name,
should be co-signed by respondent Magno. 3 And this was not an isolated instance.
In her brief as appellee, respondent Magno states:
After the lower court had authorized appellee Avelina A. Magno to
execute final deeds of sale pursuant to contracts to sell executed
by C. N. Hodges on February 20, 1963 (pp. 45-46, Green ROA),
motions for the approval of final deeds of sale (signed by appellee
Avelina A. Magno and the administrator of the estate of C. N.
Hodges, first Joe Hodges, then Atty. Fernando Mirasol and later
the appellant) were approved by the lower court upon petition of
appellee Magno's counsel, Atty. Leon P. Gellada, on the basis of
section 8 of Rule 89 of the Revised Rules of Court. Subsequently,
the appellant, after it had taken over the bulk of the assets of the
two estates, started presenting these motions itself. The first such
attempt was a "Motion for Approval of Deeds of Sale for
Registered Land and Cancellations of Mortgages" dated July 21,
1964 filed by Atty. Cesar T. Tirol, counsel for the appellant, thereto
annexing two (2) final deeds of sale and two (2) cancellations of
mortgages signed by appellee Avelina A. Magno and D. R.
Paulino, Assistant Vice-President and Manager of the appellant
(CFI Record, Sp. Proc. No. 1307, Vol. V, pp. 1694-1701). This
motion was approved by the lower court on July 27, 1964. It was
followed by another motion dated August 4, 1964 for the approval
of one final deed of sale again signed by appellee Avelina A.
Magno and D. R. Paulino (CFI Record, Sp. Proc. No. 1307. Vol. V,
pp. 1825-1828), which was again approved by the lower court on
August 7, 1964. The gates having been opened, a flood ensued:
the appellant subsequently filed similar motions for the approval of
a multitude of deeds of sales and cancellations of mortgages
signed by both the appellee Avelina A. Magno and the appellant.
A random check of the records of Special Proceeding No. 1307
alone will show Atty. Cesar T. Tirol as having presented for court
approval deeds of sale of real properties signed by both appellee
Avelina A. Magno and D. R. Paulino in the following numbers: (a)
motion dated September 21, 1964 6 deeds of sale; (b) motion
dated November 4, 1964 1 deed of sale; (c) motion dated
December 1, 1964 4 deeds of sale; (d) motion dated February
3, 1965 8 deeds of sale; (f) motion dated May 7, 1965 9
deeds of sale. In view of the very extensive landholdings of the
Hodges spouses and the many motions filed concerning deeds of
sale of real properties executed by C. N. Hodges the lower court
has had to constitute special separate expedientes in Special
Proceedings Nos. 1307 and 1672 to include mere motions for the
approval of deeds of sale of the conjugal properties of the Hodges
spouses.
As an example, from among the very many, under date of
February 3, 1965, Atty. Cesar T. Tirol, as counsel for the appellant,
filed "Motion for Approval of Deeds of Sale for Registered Land
and Cancellations of Mortgages" (CFI Record, Sp. Proc. No.
1307, Vol. VIII, pp. 6570-6596) the allegations of which read:
"1. In his lifetime, the late C. N. Hodges executed "Contracts to
Sell" real property, and the prospective buyers under said
contracts have already paid the price and complied with the terms
and conditions thereof;
"2. In the course of administration of both estates, mortgage
debtors have already paid their debts secured by chattel
mortgages in favor of the late C. N. Hodges, and are now entitled
to release therefrom;
"3. There are attached hereto documents executed jointly by the
Administratrix in Sp. Proc. No. 1307 and the Administrator in Sp.
Proc. No. 1672, consisting of deeds of sale in favor
Fernando Cano, Bacolod City, Occ. Negros
Fe Magbanua, Iloilo City
Policarpio M. Pareno, La Paz, Iloilo City
Rosario T. Libre, Jaro, Iloilo City
Federico B. Torres, Iloilo City
Reynaldo T. Lataquin, La Paz, Iloilo City
CONFLICTS OF LAW FEB 23 ASS CASES 36
 Anatolio T. Viray, Iloilo City
Benjamin Rolando, Jaro, Iloilo City
and cancellations of mortgages in favor of
Pablo Manzano, Oton, Iloilo
Ricardo M. Diana, Dao, San Jose, Antique
Simplicio Tingson, Iloilo City
Amado Magbanua, Pototan, Iloilo
Roselia M. Baes, Bolo, Roxas City
William Bayani, Rizal Estanzuela, Iloilo City
Elpidio Villarete, Molo, Iloilo City
Norma T. Ruiz, Jaro, Iloilo City
"4. That the approval of the aforesaid
documents will not reduce the assets of the
estates so as to prevent any creditor from
receiving his full debt or diminish his dividend."
And the prayer of this motion is indeed very revealing:
"WHEREFORE, it is respectfully prayed that, under Rule 89,
Section 8 of the Rules of Court, this honorable court approve the
aforesaid deeds of sale and cancellations of mortgages." (Pp.
113-117, Appellee's Brief.)
None of these assertions is denied in Petitioner's reply brief.
Further indicating lack of concrete perspective or orientation on the part of the
respondent court and its hesitancy to clear up matters promptly, in its other
appealed order of November 23, 1965, on pages 334-335 of the Green Record on
Appeal, said respondent court allowed the movant Ricardo Salas, President of
appellee Western Institute of Technology (successor of Panay Educational
Institutions, Inc.), one of the parties with whom Hodges had contracts that are in
question in the appeals herein, to pay petitioner, as Administrator of the estate of
Hodges and/or respondent Magno, as Administrator of the estate of Mrs. Hodges,
thus:
Considering that in both cases there is as yet no judicial
declaration of heirs nor distribution of properties to whomsoever
are entitled thereto, the Court believes that payment to both the
administrator of the testate estate of C. N. Hodges and the
administratrix of the testate estate of Linnie Jane Hodges or to
either one of the two estates is proper and legal.
WHEREFORE, movant Ricardo T. Salas can pay to both estates
or either of them.
SO ORDERED.
(Pp. 334-335, Green Record on Appeal.)
On the other hand, as stated earlier, there were instances when respondent Magno
was given authority to act alone. For instance, in the other appealed order of
December 19, 1964, on page 221 of the Green Record on Appeal, the respondent
court approved payments made by her of overtime pay to some employees of the
court who had helped in gathering and preparing copies of parts of the records in
both estates as follows:
Considering that the expenses subject of the motion to approve
payment of overtime pay dated December 10, 1964, are
reasonable and are believed by this Court to be a proper charge
of administration chargeable to the testate estate of the late Linnie
Jane Hodges, the said expenses are hereby APPROVED and to
be charged against the testate estate of the late Linnie Jane
Hodges. The administrator of the testate estate of the late Charles
Newton Hodges is hereby ordered to countersign the check or
checks necessary to pay the said overtime pay as shown by the
bills marked Annex "A", "B" and "C" of the motion.
SO ORDERED.
(Pp. 221-222, Green Record on Appeal.)
Likewise, the respondent court approved deeds of sale executed by respondent
Magno alone, as Administratrix of the estate of Mrs. Hodges, covering properties in
the name of Hodges, pursuant to "contracts to sell" executed by Hodges,
irrespective of whether they were executed by him before or after the death of his
wife. The orders of this nature which are also on appeal herein are the following:
1. Order of March 30, 1966, on p. 137 of the Green Record on Appeal, approving
the deed of sale executed by respondent Magno in favor of appellee Lorenzo Carles
on February 24, 1966, pursuant to a "contract to sell" signed by Hodges on June 17,
1958, after the death of his wife, which contract petitioner claims was cancelled by it
for failure of Carles to pay the installments due on January 7, 1965.
2. Order of April 5, 1966, on pp. 139-140, id., approving the deed of sale executed
by respondent Magno in favor of appellee Salvador Guzman on February 28, 1966
pursuant to a "contract to sell" signed by Hodges on September 13, 1960, after the
death of his wife, which contract petitioner claims it cancelled on March 3, 1965 in
view of failure of said appellee to pay the installments on time.
3. Order of April 20, 1966, on pp. 167-168, id., approving the deed of sale executed
by respondent Magno in favor of appellee Purificacion Coronado on March 28, 1966
CONFLICTS OF LAW FEB 23 ASS CASES 37
pursuant to a "contract to sell" signed by Hodges on August 14, 1961, after the
death of his wife.
4. Order of April 20, 1966, on pp. 168-169, id., approving the deed of sale executed
by respondent Magno in favor of appellee Florenia Barrido on March 28, 1966,
pursuant to a "contract to sell" signed by Hodges on February 21, 1958, after the
death of his wife.
5. Order of June 7, 1966, on pp. 184-185, id., approving the deed of sale executed
by respondent Magno in favor of appellee Belcezar Causing on May 2, 1966,
pursuant to a "contract to sell" signed by Hodges on February 10, 1959, after the
death of his wife.
6. Order of June 21, 1966, on pp. 211-212, id., approving the deed of sale executed
by respondent Magno in favor of appellee Artheo Thomas Jamir on June 3, 1966,
pursuant to a "contract to sell" signed by Hodges on May 26, 1961, after the death
of his wife.
7. Order of June 21, 1966, on pp. 212-213, id., approving the deed of sale executed
by respondent Magno in favor of appellees Graciano Lucero and Melquiades
Batisanan on June 6 and June 3, 1966, respectively, pursuant to "contracts to sell"
signed by Hodges on June 9, 1959 and November 27, 1961, respectively, after the
death of his wife.
8. Order of December 2, 1966, on pp. 303-304, id., approving the deed of sale
executed by respondent Magno in favor of appellees Espiridion Partisala, Winifredo
Espada and Rosario Alingasa on September 6, 1966, August 17, 1966 and August
3, 1966, respectively, pursuant to "contracts to sell" signed by Hodges on April 20,
1960, April 18, 1960 and August 25, 1958, respectively, that is, after the death of his
wife.
9. Order of April 5, 1966, on pp. 137-138, id., approving the deed of sale executed
by respondent Magno in favor of appellee Alfredo Catedral on March 2, 1966,
pursuant to a "contract to sell" signed by Hodges on May 29, 1954, before the death
of his wife, which contract petitioner claims it had cancelled on February 16, 1966
for failure of appellee Catedral to pay the installments due on time.
10. Order of April 5, 1966, on pp. 138-139, id., approving the deed of sale executed
by respondent Magno in favor of appellee Jose Pablico on March 7, 1966, pursuant
to a "contract to sell" signed by Hodges on March 7, 1950, after the death of his
wife, which contract petitioner claims it had cancelled on June 29, 1960, for failure of
appellee Pablico to pay the installments due on time.
11. Order of December 2, 1966, on pp. 303-304, id., insofar as it approved the deed
of sale executed by respondent Magno in favor of appellee Pepito Iyulores on
September 6, 1966, pursuant to a "contract to sell" signed by Hodges on February
5, 1951, before the death of his wife.
12. Order of January 3, 1967, on pp. 335-336, id., approving three deeds of sale
executed by respondent Magno, one in favor of appellees Santiago Pacaonsis and
two in favor of appellee Adelfa Premaylon on December 5, 1966 and November 3,
1966, respectively, pursuant to separate "promises to sell" signed respectively by
Hodges on May 26, 1955 and January 30, 1954, before the death of his wife, and
October 31, 1959, after her death.
In like manner, there were also instances when respondent court approved deeds of
sale executed by petitioner alone and without the concurrence of respondent
Magno, and such approvals have not been the subject of any appeal. No less than
petitioner points this out on pages 149-150 of its brief as appellant thus:
The points of fact and law pertaining to the two abovecited
assignments of error have already been discussed previously. In
the first abovecited error, the order alluded to was general, and as
already explained before, it was, as admitted by the lower court
itself, superseded by the particular orders approving specific final
deeds of sale executed by the appellee, Avelina A. Magno, which
are subject of this appeal, as well as the particular orders
approving specific final deeds of sale executed by the appellant,
Philippine Commercial and Industrial Bank, which were never
appealed by the appellee, Avelina A. Magno, nor by any party for
that matter, and which are now therefore final.
Now, simultaneously with the foregoing incidents, others of more fundamental and
all embracing significance developed. On October 5, 1963, over the signature of
Atty. Allison J. Gibbs in representation of the law firm of Ozaeta, Gibbs & Ozaeta, as
counsel for the co-administrators Joe Hodges and Fernando P. Mirasol, the following
self-explanatory motion was filed:
URGENT MOTION FOR AN ACCOUNTING
AND DELIVERY TO ADMINISTRATION OF
THE ESTATE OF C. N. HODGES OF ALL OF
THE ASSETS OF THE CONJUGAL
PARTNERSHIP OF THE DECEASED LINNIE
JANE HODGES AND C N. HODGES
EXISTING AS OF MAY 23, 1957 PLUS ALL
THE RENTS, EMOLUMENTS AND INCOME
THEREFROM.
COMES NOW the co-administrator of the estate of C. N. Hodges,
Joe Hodges, through his undersigned attorneys in the above-
entitled proceedings, and to this Honorable Court respectfully
alleges:
(1) On May 23, 1957 Linnie Jane Hodges died in Iloilo City.
CONFLICTS OF LAW FEB 23 ASS CASES 38
 (2) On June 28, 1957 this Honorable Court admitted to probate
the Last Will and Testament of the deceased Linnie Jane Hodges
executed November 22, 1952 and appointed C. N. Hodges as
Executor of the estate of Linnie Jane Hodges (pp. 24-25, Rec. Sp.
Proc. 1307).
(3) On July 1, 1957 this Honorable Court issued Letters
Testamentary to C. N. Hodges in the Estate of Linnie Jane
Hodges (p. 30, Rec. Sp. Proc. 1307).
(4) On December 14, 1957 this Honorable Court, on the basis of
the following allegations in a Motion dated December 11, 1957
filed by Leon P. Gellada as attorney for the executor C. N.
Hodges:
"That herein Executor, (is) not only part owner
of the properties left as conjugal, but also, the
successor to all the properties left by the
deceased Linnie Jane Hodges."
(p. 44, Rec. Sp. Proc. 1307; emphasis
supplied.)
issued the following order:
"As prayed for by Attorney Gellada, counsel for
the Executory, for the reasons stated in his
motion dated December 11, 1957 which the
court considers well taken, all the sales,
conveyances, leases and mortgages of all
properties left by the deceased Linnie Jane
Hodges are hereby APPROVED. The said
executor is further authorized to execute
subsequent sales, conveyances, leases and
mortgages of the properties left by the said
deceased Linnie Jane Hodges in consonance
with the wishes contained in the last will and
testament of the latter."
(p. 46, Rec. Sp. Proc. 1307; emphasis
supplied.)
(5) On April 21, 1959 this Honorable Court approved the inventory
and accounting submitted by C. N. Hodges through his counsel
Leon P. Gellada on April 14, 1959 wherein he alleged among
other things
"That no person interested in the Philippines of
the time and place of examining the herein
account, be given notice, as herein executor is
the only devisee or legatee of the deceased, in
accordance with the last will and testament
already probated by the Honorable Court."
(pp. 77-78, Rec. Sp. Proc. 1307; emphasis
supplied.).
(6) On July 30, 1960 this Honorable Court approved the "Annual
Statement of Account" submitted by C. N. Hodges through his
counsel Leon P. Gellada on July 21, 1960 wherein he alleged
among other things:
"That no person interested in the Philippines of
the time and place of examining the herein
account, be given notice as herein executor is
the only devisee or legatee of the deceased
Linnie Jane Hodges, in accordance with the last
will and testament of the deceased, already
probated by this Honorable Court."
(pp. 81-82. Rec. Sp. Proc. 1307; emphasis
supplied.)
(7) On May 2, 1961 this Honorable court approved the "Annual
Statement of Account By The Executor for the Year 1960"
submitted through Leon P. Gellada on April 20, 1961 wherein he
alleged:
That no person interested in the Philippines be
given notice, of the time and place of examining
the herein account, as herein Executor is the
only devisee or legatee of the deceased Linnie
Jane Hodges, in accordance with the last will
and testament of the deceased, already
probated by this Honorable Court.
(pp. 90-91. Rec. Sp. Proc. 1307; emphasis
supplied.)
(8) On December 25, 1962, C.N. Hodges died.
(9) On December 25, 1962, on the Urgent Ex-parte Motion of
Leon P. Gellada filed only in Special Proceeding No. 1307, this
Honorable Court appointed Avelina A. Magno
CONFLICTS OF LAW FEB 23 ASS CASES 39
"Administratrix of the estate of Linnie Jane Hodges and as Special
Administratrix of the estate of Charles Newton Hodges, in the
latter case, because the last will of said Charles Newton Hodges
is still kept in his vault or iron safe and that the real and personal
properties of both spouses may be lost, damaged or go to waste,
unless a Special Administratrix is appointed."
(p. 100. Rec. Sp. Proc. 1307)
(10) On December 26, 1962 Letters of Administration were issued
to Avelina Magno pursuant to this Honorable Court's aforesaid
Order of December 25, 1962
"With full authority to take possession of all the
property of said deceased in any province or
provinces in which it may be situated and to
perform all other acts necessary for the
preservation of said property, said Administratrix
and/or Special Administratrix having filed a bond
satisfactory to the Court."
(p. 102, Rec. Sp. Proc. 1307)
(11) On January 22, 1963 this Honorable Court on petition of Leon
P. Gellada of January 21, 1963 issued Letters of Administration to:
(a) Avelina A. Magno as Administratrix of the estate of Linnie Jane
Hodges;
(b) Avelina A. Magno as Special Administratrix of the Estate of
Charles Newton Hodges; and
(c) Joe Hodges as Co-Special Administrator of the Estate of
Charles Newton Hodges.
(p. 43, Rec. Sp. Proc. 1307)
(12) On February 20, 1963 this Honorable Court on the basis of a
motion filed by Leon P. Gellada as legal counsel on February 16,
1963 for Avelina A. Magno acting as Administratrix of the Estate of
Charles Newton Hodges (pp. 114-116, Sp. Proc. 1307) issued the
following order:
"... se autoriza a aquella (Avelina A. Magno) a
firmar escrituras de venta definitiva de
propiedades cubiertas por contratos para
vender, firmados, en vida, por el finado Charles
Newton Hodges, cada vez que el precio
estipulado en cada contrato este totalmente
pagado. Se autoriza igualmente a la misma a
firmar escrituras de cancelacion de hipoteca
tanto de bienes reales como personales cada
vez que la consideracion de cada hipoteca este
totalmente pagada.
"Cada una de dichas escrituras que se otorguen
debe ser sometida para la aprobacion de este
Juzgado."
(p. 117, Sp. Proc. 1307).
[Par 1 (c), Reply to Motion For Removal of Joe
Hodges]
(13) On September l6, 1963 Leon P. Gellada, acting as attorney
for Avelina A. Magno as Administratrix of the estate of Linnie Jane
Hodges, alleges:
3. That since January, 1963, both estates of
Linnie Jane Hodges and Charles Newton
Hodges have been receiving in full, payments
for those "contracts to sell" entered into by C. N.
Hodges during his lifetime, and the purchasers
have been demanding the execution of definite
deeds of sale in their favor.
4. That hereto attached are thirteen (13)
copies deeds of sale executed by the
Administratrix and by the co-administrator
(Fernando P. Mirasol) of the estate of Linnie
Jane Hodges and Charles Newton Hodges
respectively, in compliance with the terms and
conditions of the respective "contracts to sell"
executed by the parties thereto."
(14) The properties involved in the aforesaid motion of September
16, 1963 are all registered in the name of the deceased C. N.
Hodges.
(15) Avelina A. Magno, it is alleged on information and belief, has
been advertising in the newspaper in Iloilo thusly:
For Sale
CONFLICTS OF LAW FEB 23 ASS CASES 40
Testate Estate of Linnie Jane Hodges and Charles Newton
Hodges.
All Real Estate or Personal Property will be sold on First Come
First Served Basis.
Avelina A. Magno
Administratrix
(16) Avelina A. Magno, it is alleged on information and belief, has
paid and still is paying sums of money to sundry persons.
(17) Joe Hodges through the undersigned attorneys manifested
during the hearings before this Honorable Court on September 5
and 6, 1963 that the estate of C. N. Hodges was claiming all of the
assets belonging to the deceased spouses Linnie Jane Hodges
and C. N. Hodges situated in Philippines because of the aforesaid
election by C. N. Hodges wherein he claimed and took possession
as sole owner of all of said assets during the administration of the
estate of Linnie Jane Hodges on the ground that he was the sole
devisee and legatee under her Last Will and Testament.
(18) Avelina A. Magno has submitted no inventory and accounting
of her administration as Administratrix of the estate of Linnie Jane
Hodges and Special Administratrix of the estate of C. N. Hodges.
However, from manifestations made by Avelina A. Magno and her
legal counsel, Leon P. Gellada, there is no question she will claim
that at least fifty per cent (50%) of the conjugal assets of the
deceased spouses and the rents, emoluments and income
therefrom belong to the Higdon family who are named in
paragraphs Fourth and Fifth of the Will of Linnie Jane Hodges (p.
5, Rec. Sp. Proc. 1307).
WHEREFORE, premises considered, movant respectfully prays
that this Honorable Court, after due hearing, order:
(1) Avelina A. Magno to submit an inventory and accounting of all
of the funds, properties and assets of any character belonging to
the deceased Linnie Jane Hodges and C. N. Hodges which have
come into her possession, with full details of what she has done
with them;
(2) Avelina A. Magno to turn over and deliver to the Administrator
of the estate of C. N. Hodges all of the funds, properties and
assets of any character remaining in her possession;
(3) Pending this Honorable Court's adjudication of the aforesaid
issues, Avelina A. Magno to stop, unless she first secures the
conformity of Joe Hodges (or his duly authorized representative,
such as the undersigned attorneys) as the Co-administrator and
attorney-in-fact of a majority of the beneficiaries of the estate of C.
N. Hodges:
(a) Advertising the sale and the sale of the properties of the
estates:
(b) Employing personnel and paying them any compensation.
(4) Such other relief as this Honorable Court may deem just and
equitable in the premises. (Annex "T", Petition.)
Almost a year thereafter, or on September 14, 1964, after the co-administrators Joe
Hodges and Fernando P. Mirasol were replaced by herein petitioner Philippine
Commercial and Industrial Bank as sole administrator, pursuant to an agreement of
all the heirs of Hodges approved by the court, and because the above motion of
October 5, 1963 had not yet been heard due to the absence from the country of Atty.
Gibbs, petitioner filed the following:
MANIFESTATION AND MOTION, INCLUDING
MOTION TO SET FOR HEARING AND
RESOLVE "URGENT MOTION FOR AN
ACCOUNTING AND DELIVERY TO
ADMINISTRATORS OF THE ESTATE OF C. N.
HODGES OF ALL THE ASSETS OF THE
CONJUGAL PARTNERSHIP OF THE
DECEASED LINNIE JANE HODGES AND C.
N. HODGES EXISTING AS OF MAY 23, 1957
PLUS ALL OF THE RENTS, EMOLUMENTS
AND INCOME THEREFROM OF OCTOBER 5,
1963.
COMES NOW Philippine Commercial and Industrial Bank
(hereinafter referred to as PCIB), the administrator of the estate of
C. N. Hodges, deceased, in Special Proceedings No. 1672,
through its undersigned counsel, and to this Honorable Court
respectfully alleges that:
1. On October 5, 1963, Joe Hodges acting as the co-administrator
of the estate of C. N. Hodges filed, through the undersigned
attorneys, an "Urgent Motion For An Accounting and Delivery To
Administrator of the Estate of C. N. Hodges of all Of The Assets
Of The Conjugal Partnership of The Deceased Linnie Jane
Hodges and C. N. Hodges Existing as Of May, 23, 1957 Plus All
CONFLICTS OF LAW FEB 23 ASS CASES 41
Of The Rents, Emoluments and Income Therefrom" (pp. 536-542,
CFI Rec. S. P. No. 1672).
2. On January 24, 1964 this Honorable Court, on the basis of an
amicable agreement entered into on January 23, 1964 by the two
co-administrators of the estate of C. N. Hodges and virtually all of
the heirs of C. N. Hodges (p. 912, CFI Rec., S. P. No. 1672),
resolved the dispute over who should act as administrator of the
estate of C. N. Hodges by appointing the PCIB as administrator of
the estate of C. N. Hodges (pp. 905-906, CFI Rec. S. P. No. 1672)
and issuing letters of administration to the PCIB.
3. On January 24, 1964 virtually all of the heirs of C. N. Hodges,
Joe Hodges and Fernando P. Mirasol acting as the two co-
administrators of the estate of C. N. Hodges, Avelina A. Magno
acting as the administratrix of the estate of Linnie Jane Hodges,
and Messrs. William Brown and Ardel Young Acting for all of the
Higdon family who claim to be the sole beneficiaries of the estate
of Linnie Jane Hodges and various legal counsel representing the
aforenamed parties entered into an amicable agreement, which
was approved by this Honorable Court, wherein the parties
thereto agreed that certain sums of money were to be paid in
settlement of different claims against the two estates and that the
assets (to the extent they existed)of both estates would be
administrated jointly by the PCIB as administrator of the estate of
C. N. Hodges and Avelina A. Magno as administratrix of the
estate of Linnie Jane Hodges, subject, however, to the aforesaid
October 5, 1963 Motion, namely, the PCIB's claim to exclusive
possession and ownership of one-hundred percent (10017,) (or, in
the alternative, seventy-five percent [75%] of all assets owned by
C. N. Hodges or Linnie Jane Hodges situated in the Philippines.
On February 1, 1964 (pp. 934-935, CFI Rec., S. P. No. 1672) this
Honorable Court amended its order of January 24, 1964 but in no
way changes its recognition of the aforedescribed basic demand
by the PCIB as administrator of the estate of C. N. Hodges to one
hundred percent (100%) of the assets claimed by both estates.
4. On February 15, 1964 the PCIB filed a "Motion to Resolve" the
aforesaid Motion of October 5, 1963. This Honorable Court set for
hearing on June 11, 1964 the Motion of October 5, 1963.
5. On June 11, 1964, because the undersigned Allison J. Gibbs
was absent in the United States, this Honorable Court ordered the
indefinite postponement of the hearing of the Motion of October 5,
1963.
6. Since its appointment as administrator of the estate of C. N.
Hodges the PCIB has not been able to properly carry out its duties
and obligations as administrator of the estate of C. N. Hodges
because of the following acts, among others, of Avelina A. Magno
and those who claim to act for her as administratrix of the estate
of Linnie Jane Hodges:
(a) Avelina A. Magno illegally acts as if she is in
exclusive control of all of the assets in the
Philippines of both estates including those
claimed by the estate of C. N. Hodges as
evidenced in part by her locking the premises at
206-208 Guanco Street, Iloilo City on August
31, 1964 and refusing to reopen same until
ordered to do so by this Honorable Court on
September 7, 1964.
(b) Avelina A. Magno illegally acts as though
she alone may decide how the assets of the
estate of C.N. Hodges should be administered,
who the PCIB shall employ and how much they
may be paid as evidenced in party by her
refusal to sign checks issued by the PCIB
payable to the undersigned counsel pursuant to
their fee agreement approved by this Honorable
Court in its order dated March 31, 1964.
(c) Avelina A. Magno illegally gives access to
and turns over possession of the records and
assets of the estate of C.N. Hodges to the
attorney-in-fact of the Higdon Family, Mr. James
L. Sullivan, as evidenced in part by the cashing
of his personal checks.
(d) Avelina A. Magno illegally refuses to execute
checks prepared by the PCIB drawn to pay
expenses of the estate of C. N. Hodges as
evidenced in part by the check drawn to
reimburse the PCIB's advance of P48,445.50 to
pay the 1964 income taxes reported due and
payable by the estate of C.N. Hodges.
7. Under and pursuant to the orders of this Honorable Court,
particularly those of January 24 and February 1, 1964, and the
mandate contained in its Letters of Administration issued on
January 24, 1964 to the PCIB, it has
"full authority to take
possession of all the property
of the deceased C. N.
Hodges
CONFLICTS OF LAW FEB 23 ASS CASES 42
 "and to perform all other acts necessary for the
preservation of said property." (p. 914, CFI
Rec., S.P. No. 1672.)
8. As administrator of the estate of C. N. Hodges, the PCIB claims
the right to the immediate exclusive possession and control of all
of the properties, accounts receivables, court cases, bank
accounts and other assets, including the documentary records
evidencing same, which existed in the Philippines on the date of
C. N. Hodges' death, December 25, 1962, and were in his
possession and registered in his name alone. The PCIB knows of
no assets in the Philippines registered in the name of Linnie Jane
Hodges, the estate of Linnie Jane Hodges, or, C. N. Hodges,
Executor of the Estate of Linnie Jane Hodges on December 25,
1962. All of the assets of which the PCIB has knowledge are
either registered in the name of C. N. Hodges, alone or were
derived therefrom since his death on December 25, 1962.
9. The PCIB as the current administrator of the estate of C. N.
Hodges, deceased, succeeded to all of the rights of the previously
duly appointed administrators of the estate of C. N. Hodges, to
wit:
(a) On December 25, 1962, date of C. N.
Hodges' death, this Honorable Court appointed
Miss Avelina A. Magno simultaneously as:
(i) Administratrix of the estate of Linnie Jane
Hodges (p. 102, CFI Rec., S.P. No. 1307) to
replace the deceased C. N. Hodges who on
May 28, 1957 was appointed Special
Administrator (p. 13. CFI Rec. S.P. No. 1307)
and on July 1, 1957 Executor of the estate of
Linnie Jane Hodges (p. 30, CFI Rec., S. P. No.
1307).
(ii) Special Administratrix of the estate of C. N.
Hodges (p. 102, CFI Rec., S.P. No. 1307).
(b) On December 29, 1962 this Honorable Court
appointed Harold K. Davies as co-special
administrator of the estate of C.N. Hodges
along with Avelina A. Magno (pp. 108-111, CFI
Rec., S. P. No. 1307).
(c) On January 22, 1963, with the conformity of
Avelina A. Magno, Harold K. Davies resigned in
favor of Joe Hodges (pp. 35-36, CFI Rec., S.P.
No. 1672) who thereupon was appointed on
January 22, 1963 by this Honorable Court as
special co-administrator of the estate of C.N.
Hodges (pp. 38-40 & 43, CFI Rec. S.P. No.
1672) along with Miss Magno who at that time
was still acting as special co-administratrix of
the estate of C. N. Hodges.
(d) On February 22, 1963, without objection on
the part of Avelina A. Magno, this Honorable
Court appointed Joe Hodges and Fernando P.
Mirasol as co-administrators of the estate of
C.N. Hodges (pp. 76-78, 81 & 85, CFI Rec., S.P.
No. 1672).
10. Miss Avelina A. Magno, pursuant to the orders of this
Honorable Court of December 25, 1962, took possession of all
Philippine Assets now claimed by the two estates. Legally, Miss
Magno could take possession of the assets registered in the name
of C. N. Hodges alone only in her capacity as Special
Administratrix of the Estate of C.N. Hodges. With the appointment
by this Honorable Court on February 22, 1963 of Joe Hodges and
Fernando P. Mirasol as the co-administrators of the estate of C.N.
Hodges, they legally were entitled to take over from Miss Magno
the full and exclusive possession of all of the assets of the estate
of C.N. Hodges. With the appointment on January 24, 1964 of the
PCIB as the sole administrator of the estate of C.N. Hodges in
substitution of Joe Hodges and Fernando P. Mirasol, the PCIB
legally became the only party entitled to the sole and exclusive
possession of all of the assets of the estate of C. N. Hodges.
11. The PCIB's predecessors submitted their accounting and this
Honorable Court approved same, to wit:
(a) The accounting of Harold K. Davies dated
January 18, 1963 (pp. 16-33, CFI Rec. S.P. No.
1672); which shows or its face the:
(i) Conformity of Avelina A. Magno acting as
"Administratrix of the Estate of Linnie Jane
Hodges and Special Administratrix of the Estate
of C. N. Hodges";
(ii) Conformity of Leslie Echols, a Texas lawyer
acting for the heirs of C.N. Hodges; and
(iii) Conformity of William Brown, a Texas lawyer
acting for the Higdon family who claim to be the
CONFLICTS OF LAW FEB 23 ASS CASES 43
 only heirs of Linnie Jane Hodges (pp. 18, 25-33,
CFI Rec., S. P. No. 1672).
Note: This accounting was approved by this Honorable Court on
January 22, 1963 (p. 34, CFI Rec., S. P. No. 1672).
(b) The accounting of Joe Hodges and
Fernando P. Mirasol as of January 23, 1964,
filed February 24, 1964 (pp. 990-1000, CFI Rec.
S.P. No. 1672 and pp. 1806-1848, CFI Rec. S.P.
No. 1307).
Note: This accounting was approved by this Honorable Court on
March 3, 1964.
(c) The PCIB and its undersigned lawyers are
aware of no report or accounting submitted by
Avelina A. Magno of her acts as administratrix of
the estate of Linnie Jane Hodges or special
administratrix of the estate of C.N. Hodges,
unless it is the accounting of Harold K. Davies
as special co-administrator of the estate of C.N.
Hodges dated January 18, 1963 to which Miss
Magno manifested her conformity (supra).
12. In the aforesaid agreement of January 24, 1964, Miss Avelina A. Magno agreed
to receive P10,000.00
"for her services as administratrix of the estate
of Linnie Jane Hodges"
and in addition she agreed to be employed, starting February 1,
1964, at
"a monthly salary of P500.00 for her services as
an employee of both estates."
24 ems.
13. Under the aforesaid agreement of January 24, 1964 and the
orders of this Honorable Court of same date, the PCIB as
administrator of the estate of C. N. Hodges is entitled to the
exclusive possession of all records, properties and assets in the
name of C. N. Hodges as of the date of his death on December
25, 1962 which were in the possession of the deceased C. N.
Hodges on that date and which then passed to the possession of
Miss Magno in her capacity as Special Co-Administratrix of the
estate of C. N. Hodges or the possession of Joe Hodges or
Fernando P. Mirasol as co-administrators of the estate of C. N.
Hodges.
14. Because of Miss Magno's refusal to comply with the
reasonable request of PCIB concerning the assets of the estate of
C. N. Hodges, the PCIB dismissed Miss Magno as an employee
of the estate of C. N. Hodges effective August 31, 1964. On
September 1, 1964 Miss Magno locked the premises at 206-208
Guanco Street and denied the PCIB access thereto. Upon the
Urgent Motion of the PCIB dated September 3, 1964, this
Honorable Court on September 7, 1964 ordered Miss Magno to
reopen the aforesaid premises at 206-208 Guanco Street and
permit the PCIB access thereto no later than September 8, 1964.
15. The PCIB pursuant to the aforesaid orders of this Honorable
Court is again in physical possession of all of the assets of the
estate of C. N. Hodges. However, the PCIB is not in exclusive
control of the aforesaid records, properties and assets because
Miss Magno continues to assert the claims hereinabove outlined
in paragraph 6, continues to use her own locks to the doors of the
aforesaid premises at 206-208 Guanco Street, Iloilo City and
continues to deny the PCIB its right to know the combinations to
the doors of the vault and safes situated within the premises at
206-208 Guanco Street despite the fact that said combinations
were known to only C. N. Hodges during his lifetime.
16. The Philippine estate and inheritance taxes assessed the
estate of Linnie Jane Hodges were assessed and paid on the
basis that C. N. Hodges is the sole beneficiary of the assets of the
estate of Linnie Jane Hodges situated in the Philippines. Avelina
A. Magno and her legal counsel at no time have questioned the
validity of the aforesaid assessment and the payment of the
corresponding Philippine death taxes.
17. Nothing further remains to be done in the estate of Linnie Jane
Hodges except to resolve the aforesaid Motion of October 5, 1963
and grant the PCIB the exclusive possession and control of all of
the records, properties and assets of the estate of C. N. Hodges.
18. Such assets as may have existed of the estate of Linnie Jane
Hodges were ordered by this Honorable Court in special
Proceedings No. 1307 to be turned over and delivered to C. N.
Hodges alone. He in fact took possession of them before his
death and asserted and exercised the right of exclusive ownership
over the said assets as the sole beneficiary of the estate of Linnie
Jane Hodges.
CONFLICTS OF LAW FEB 23 ASS CASES 44
 WHEREFORE, premises considered, the PCIB respectfully
petitions that this Honorable court:
(1) Set the Motion of October 5, 1963 for hearing at the earliest
possible date with notice to all interested parties;
(2) Order Avelina A. Magno to submit an inventory and accounting
as Administratrix of the Estate of Linnie Jane Hodges and Co-
Administratrix of the Estate of C. N. Hodges of all of the funds,
properties and assets of any character belonging to the deceased
Linnie Jane Hodges and C. N. Hodges which have come into her
possession, with full details of what she has done with them;
(3) Order Avelina A. Magno to turn over and deliver to the PCIB as
administrator of the estate of C. N. Hodges all of the funds,
properties and assets of any character remaining in her
possession;
(4) Pending this Honorable Court's adjudication of the aforesaid
issues, order Avelina A. Magno and her representatives to stop
interferring with the administration of the estate of C. N. Hodges
by the PCIB and its duly authorized representatives;
(5) Enjoin Avelina A. Magno from working in the premises at 206-
208 Guanco Street, Iloilo City as an employee of the estate of C.
N. Hodges and approve her dismissal as such by the PCIB
effective August 31, 1964;
(6) Enjoin James L. Sullivan, Attorneys Manglapus and Quimpo
and others allegedly representing Miss Magno from entering the
premises at 206-208 Guanco Street, Iloilo City or any other
properties of C. N. Hodges without the express permission of the
PCIB;
(7) Order such other relief as this Honorable Court finds just and
equitable in the premises. (Annex "U" Petition.)
On January 8, 1965, petitioner also filed a motion for "Official Declaration of Heirs of
Linnie Jane Hodges Estate" alleging:
COMES NOW Philippine Commercial and Industrial Bank (hereinafter referred to as
PCIB), as administrator of the estate of the late C. N. Hodges, through the
undersigned counsel, and to this Honorable Court respectfully alleges that:
1. During their marriage, spouses Charles Newton Hodges and
Linnie Jane Hodges, American citizens originally from the State of
Texas, U.S.A., acquired and accumulated considerable assets
and properties in the Philippines and in the States of Texas and
Oklahoma, United States of America. All said properties
constituted their conjugal estate.
2. Although Texas was the domicile of origin of the Hodges
spouses, this Honorable Court, in its orders dated March 31 and
December 12, 1964 (CFI Record, Sp. Proc. No. 1307, pp. ----; Sp.
Proc. No. 1672, p. ----), conclusively found and categorically ruled
that said spouses had lived and worked for more than 50 years in
Iloilo City and had, therefore, acquired a domicile of choice in said
city, which they retained until the time of their respective deaths.
3. On November 22, 1952, Linnie Jane Hodges executed in the
City of Iloilo her Last Will and Testament, a copy of which is hereto
attached as Annex "A". The bequests in said will pertinent to the
present issue are the second, third, and fourth provisions, which
we quote in full hereunder.
SECOND: I give, devise and bequeath all of the
rest, residue and remainder of my estate, both
personal and real, wherever situated, or
located, to my husband, Charles Newton
Hodges, to have and to hold unto him, my said
husband during his natural lifetime.
THIRD: I desire, direct and provide that my
husband, Charles Newton Hodges, shall have
the right to manage, control, use and enjoy said
estate during his lifetime, and he is hereby
given the right to make any changes in the
physical properties of said estate by sale of any
part thereof which he think best, and the
purchase of any other or additional property as
he may think best; to execute conveyances with
or without general or special warranty,
conveying in fee simple or for any other term or
time, any property which he may deem proper
to dispose of; to lease any of the real property
for oil, gas and/or other minerals, and all such
deeds or leases shall pass the absolute fee
simple title to the interest so conveyed in such
property as he may elect to sell. All rents,
emoluments and income from said estate shall
belong to him, and he is further authorized to
use any part of the principal of said estate as he
may need or desire. It is provided herein,
however, that he shall not sell or otherwise
dispose of any of the improved property now
owned by us located at, in or near the City of
CONFLICTS OF LAW FEB 23 ASS CASES 45
 Lubbock, Texas, but he shall have the full right
to lease, manage and enjoy the same during his
lifetime, as above provided. He shall have the
right to sub-divide any farmland and sell lots
therein, and may sell unimproved town lots.
FOURTH: At the death of my said husband,
Charles Newton Hodges, I give, devise and
bequeath all of the rest, residue and remainder
of my estate both real and personal, wherever
situated or located, to be equally divided among
my brothers and sisters, share and share alike,
namely:
"Esta Higdon, Emma Howell, Leonard Higdon,
Roy Higdon, Sadie Rascoe, Era Boman and
Nimray Higdon."
4. On November 14, 1953, C. N. Hodges executed in the City of
Iloilo his Last Will and Testament, a copy of which is hereto
attached as Annex "B ". In said Will, C. N. Hodges designated his
wife, Linnie Jane Hodges, as his beneficiary using the identical
language she used in the second and third provisos of her
Will, supra.
5. On May 23, 1957 Linnie Jane Hodges died in Iloilo City,
predeceasing her husband by more than five (5) years. At the time
of her death, she had no forced or compulsory heir, except her
husband, C. N. Hodges. She was survived also by various
brothers and sisters mentioned in her Will (supra), which, for
convenience, we shall refer to as the HIGDONS.
6. On June 28, 1957, this Honorable Court admitted to probate the
Last Will and Testament of the deceased Linnie Jane Hodges
(Annex "A"), and appointed C. N. Hodges as executor of her
estate without bond. (CFI Record, Sp. Proc. No. 1307, pp. 24-25).
On July 1, 1957, this Honorable Court issued letters testamentary
to C. N. Hodges in the estate of Linnie Jane Hodges. (CFI Record,
Sp. Proc. No. 1307, p. 30.)
7. The Will of Linnie Jane Hodges, with respect to the order of
succession, the amount of successional rights, and the intrinsic of
its testamentary provisions, should be governed by Philippine
laws because:
(a) The testatrix, Linnie Jane Hodges, intended
Philippine laws to govern her Will;
(b) Article 16 of the Civil Code provides that "the
national law of the person whose succession is
under consideration, whatever may be the
nature of the property and regardless of the
country wherein said property may be found",
shall prevail. However, the Conflict of Law of
Texas, which is the "national law" of the
testatrix, Linnie Jane Hodges, provide that the
domiciliary law (Philippine law see paragraph
2, supra) should govern the testamentary
dispositions and successional rights over
movables (personal properties), and the law of
the situs of the property (also Philippine law as
to properties located in the Philippines) with
regards immovable (real properties). Thus
applying the "Renvoi Doctrine", as approved
and applied by our Supreme Court in the case
of "In The Matter Of The Testate Estate of
Eduard E. Christensen", G.R. No.
L-16749, promulgated January 31, 1963,
Philippine law should apply to the Will of Linnie
Jane Hodges and to the successional rights to
her estate insofar as
her movable and immovable assets in the
Philippines are concerned. We shall not, at this
stage, discuss what law should govern the
assets of Linnie Jane Hodges located in
Oklahoma and Texas, because the only assets
in issue in this motion are those within the
jurisdiction of this motion Court in the two
above-captioned Special Proceedings.
8. Under Philippine and Texas law, the conjugal or community
estate of spouses shall, upon dissolution, be divided equally
between them. Thus, upon the death of Linnie Jane Hodges on
May 23, 1957, one-half (1/2) of the entirety of the assets of the
Hodges spouses constituting their conjugal estate pertained
automatically to Charles Newton Hodges, not by way of
inheritance, but in his own right as partner in the conjugal
partnership. The other one-half (1/2) portion of the conjugal estate
constituted the estate of Linnie Jane Hodges. This is the only
portion of the conjugal estate capable of inheritance by her heirs.
9. This one-half (1/2) portion of the conjugal assets pertaining to
Linnie Jane Hodges cannot, under a clear and specific provision
of her Will, be enhanced or increased by income, earnings, rents,
or emoluments accruing after her death on May 23, 1957. Linnie
Jane Hodges' Will provides that "all rents, emoluments and
income from said estate shall belong to him (C. N. Hodges) and
he is further authorized to use any part of the principal of said
CONFLICTS OF LAW FEB 23 ASS CASES 46
estate as he may need or desire." (Paragraph 3, Annex "A".)
Thus, by specific provision of Linnie Jane Hodges' Will, "all rents,
emoluments and income" must be credited to the one-half (1/2)
portion of the conjugal estate pertaining to C. N. Hodges. Clearly,
therefore, the estate of Linnie Jane Hodges, capable of
inheritance by her heirs, consisted exclusively of no more than
one-half (1/2) of the conjugal estate, computed as of the time of
her death on May 23, 1957.
10. Articles 900, 995 and 1001 of the New Civil Code provide that
the surviving spouse of a deceased leaving no ascendants or
descendants is entitled, as a matter of right and by way of
irrevocable legitime, to at least one-half (1/2) of the estate of the
deceased, and no testamentary disposition by the deceased can
legally and validly affect this right of the surviving spouse. In fact,
her husband is entitled to said one-half (1/2) portion of her estate
by way of legitime. (Article 886, Civil Code.) Clearly, therefore,
immediately upon the death of Linnie Jane Hodges, C. N. Hodges
was the owner of at least three-fourths (3/4) or seventy-five (75%)
percent of all of the conjugal assets of the spouses, (1/2 or 50%
by way of conjugal partnership share and 1/4 or 25% by way of
inheritance and legitime) plus all "rents, emoluments and income"
accruing to said conjugal estate from the moment of Linnie Jane
Hodges' death (see paragraph 9, supra).
11. The late Linnie Jane Hodges designated her husband C.N.
Hodges as her sole and exclusive heir with full authority to do
what he pleased, as exclusive heir and owner of all the assets
constituting her estate, except only with regards certain properties
"owned by us, located at, in or near the City of Lubbock, Texas".
Thus, even without relying on our laws of succession and legitime,
which we have cited above, C. N. Hodges, by specific
testamentary designation of his wife, was entitled to the entirely to
his wife's estate in the Philippines.
12. Article 777 of the New Civil Code provides that "the rights of
the successor are transmitted from the death of the decedent".
Thus, title to the estate of Linnie Jane Hodges was transmitted to
C. N. Hodges immediately upon her death on May 23, 1957. For
the convenience of this Honorable Court, we attached hereto as
Annex "C" a graph of how the conjugal estate of the spouses
Hodges should be divided in accordance with Philippine law and
the Will of Linnie Jane Hodges.
13. In his capacity as sole heir and successor to the estate of
Linnie Jane Hodges as above-stated, C. N. Hodges, shortly after
the death of Linnie Jane Hodges, appropriated to himself the
entirety of her estate. He operated all the assets, engaged in
business and performed all acts in connection with the entirety of
the conjugal estate, in his own name alone, just as he had been
operating, engaging and doing while the late Linnie Jane Hodges
was still alive. Upon his death on December 25, 1962, therefore,
all said conjugal assets were in his sole possession and control,
and registered in his name alone, not as executor, but as
exclusive owner of all said assets.
14. All these acts of C. N. Hodges were authorized and
sanctioned expressly and impliedly by various orders of this
Honorable Court, as follows:
(a) In an Order dated May 27, 1957, this Honorable Court ruled
that C. N. Hodges "is allowed or authorized to continue the
business in which he was engaged, and to perform acts which he
had been doing while the deceased was living." (CFI Record, Sp.
Proc. No. 1307, p. 11.)
(b) On December 14, 1957, this Honorable Court, on the basis of
the following fact, alleged in the verified Motion dated December
11, 1957 filed by Leon P. Gellada as attorney for the executor C.
N. Hodges:
That herein Executor, (is) not only part owner of the properties left
as conjugal, but also, the successor to all the properties left by the
deceased Linnie Jane Hodges.' (CFI Record, Sp. Proc. No. 1307,
p. 44; emphasis supplied.)
issued the following order:
"As prayed for by Attorney Gellada, counsel for the Executor, for
the reasons stated in his motion dated December 11, 1957, which
the Court considers well taken, all the sales, conveyances, leases
and mortgages of all the properties left by the deceased Linnie
Jane Hodges executed by the Executor, Charles Newton Hodges
are hereby APPROVED. The said Executor is further authorized to
execute subsequent sales, conveyances, leases and mortgages
of the properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes contained in the last will and
testament of the latter." (CFI Record. Sp. Proc. No. 1307, p. 46;
emphasis supplied.)
24 ems
(c) On April 21, 1959, this Honorable Court approved the verified
inventory and accounting submitted by C. N. Hodges through his
counsel Leon P. Gellada on April 14, 1959 wherein he alleged
among other things,
CONFLICTS OF LAW FEB 23 ASS CASES 47
 "That no person interested in the Philippines of
the time and place of examining the herein
account, be given notice, as herein executor is
the only devisee or legatee of the deceased, in
accordance with the last will and testament
already probated by the Honorable Court." (CFI
Record, Sp. Proc. No. 1307, pp. 77-78;
emphasis supplied.)
(d) On July 20, 1960, this Honorable Court approved the verified
"Annual Statement of Account" submitted by C. N. Hodges
through his counsel Leon P. Gellada on July 21, 1960 wherein he
alleged, among other things.
"That no person interested in the Philippines of
the time and place of examining the herein
account, be given notice as herein executor is
the only devisee or legatee of the deceased
Linnie Jane Hodges, in accordance with the last
will and testament ofthe deceased, already
probated by this Honorable Court." (CFI Record,
Sp. Proc. No. 1307, pp. 81-82; emphasis
supplied.)
(e) On May 2, 1961, this Honorable Court approved the verified
"Annual Statement of Account By The Executor For the Year
1960" submitted through Leon P. Gellada on April 20, 1961
wherein he alleged:
"That no person interested in the Philippines be given notice, ofthe
time and place of examining the herein account, as herein
executor is the only devisee or legatee of the deceased Linnie
Jane Hodges, in accordance with the last will and testament ofthe
deceased, already probated by this Honorable Court." (CFI
Record, Sp. Proc. No. 1307, pp. 90-91; emphasis supplied.)
15. Since C. N. Hodges was the sole and exclusive heir of Linnie
Jane Hodges, not only by law, but in accordance with the
dispositions of her will, there was, in fact, no need to liquidate the
conjugal estate of the spouses. The entirely of said conjugal
estate pertained to him exclusively, therefore this Honorable Court
sanctioned and authorized, as above-stated, C. N. Hodges to
manage, operate and control all the conjugal assets as owner.
16. By expressly authorizing C. N. Hodges to act as he did in
connection with the estate of his wife, this Honorable Court has
(1) declared C. N. Hodges as the sole heir of the estate of Linnie
Jane Hodges, and (2) delivered and distributed her estate to C. N.
Hodges as sole heir in accordance with the terms and conditions
of her Will. Thus, although the "estate of Linnie Jane Hodges" still
exists as a legal and juridical personality, it had no assets or
properties located in the Philippines registered in its name
whatsoever at the time of the death of C. N. Hodges on December
25, 1962.
17. The Will of Linnie Jane Hodges (Annex "A"), fourth paragraph,
provides as follows:
"At the death of my said husband, Charles
Newton Hodges, I give, devise and bequeath all
of the rest, residue and remainder of my estate
both real and personal, wherever situated or
located, to be equally divided among my
brothers and sisters, share and share alike,
namely:
"Esta Higdon, Emma Howell,
Leonard Higdon, Roy Higdon,
Sadie Rascoe, Era Boman
and Nimray Higdon."
Because of the facts hereinabove set out there is no "rest, residue
and remainder", at least to the extent of the Philippine assets,
which remains to vest in the HIGDONS, assuming this proviso in
Linnie Jane Hodges' Will is valid and binding against the estate of
C. N. Hodges.
18. Any claims by the HIGDONS under the above-quoted
provision of Linnie Jane Hodges' Will is without merit because
said provision is void and invalid at least as to the Philippine
assets. It should not, in anyway, affect the rights of the estate of C.
N. Hodges or his heirs to the properties, which C. N. Hodges
acquired by way of inheritance from his wife Linnie Jane Hodges
upon her death.
(a) In spite of the above-mentioned provision in
the Will of Linnie Jane Hodges, C. N. Hodges
acquired, not merely a usufructuary right, but
absolute title and ownership to her estate. In a
recent case involving a very similar
testamentary provision, the Supreme Court held
that the heir first designated acquired full
ownership of the property bequeathed by the
will, not mere usufructuary rights. (Consolacion
Florentino de Crisologo, et al., vs. Manuel
CONFLICTS OF LAW FEB 23 ASS CASES 48
Singson, G. R. No. L-13876, February 28,
1962.)
(b) Article 864, 872 and 886 of the New Civil
Code clearly provide that no charge, condition
or substitution whatsoever upon the legitime
can be imposed by a testator. Thus, under the
provisions of Articles 900, 995 and 1001 of the
New Civil Code, the legitime of a surviving
spouse is 1/2 of the estate of the deceased
spouse. Consequently, the above-mentioned
provision in the Will of Linnie Jane Hodges is
clearly invalid insofar as the legitime of C. N.
Hodges was concerned, which consisted of 1/2
of the 1/2 portion of the conjugal estate, or 1/4
of the entire conjugal estate of the deceased.
(c) There are generally only two kinds of
substitution provided for and authorized by our
Civil Code (Articles 857-870), namely,
(1) simple or common substitution, sometimes
referred to as vulgar substitution (Article 859),
and (2) fideicommissary substitution (Article
863). All other substitutions are merely
variations of these. The substitution provided for
by paragraph four of the Will of Linnie Jane
Hodges is not fideicommissary substitution,
because there is clearly no obligation on the
part of C. N. Hodges as the first heir
designated, to preserve the properties for the
substitute heirs. (Consolacion Florentino de
Crisologo et al. vs. Manuel Singson, G. R. No.
L-13876.) At most, it is
a vulgar or simple substitution. However, in
order that a vulgar or simple substitution can be
valid, three alternative conditions must be
present, namely, that the first designated heir
(1) should die before the testator; or (2) should
not wish to accept the inheritance; or (3) should
be incapacitated to do so. None of these
conditions apply to C. N. Hodges, and,
therefore, the substitution provided for by the
above-quoted provision of the Will is not
authorized by the Code, and, therefore, it is
void. Manresa, commenting on these kisses of
substitution, meaningfully stated that: "...
cuando el testador instituyeun primer heredero,
y por fallecimiento de este nombra otro u otros,
ha de entenderse que estas segundas
designaciones solo han de llegar a tener
efectividad en el caso de que el primer instituido
muera antes que el testador, fuera o no esta su
verdadera intencion. ...". (6 Manresa, 7 a ed.,
pag. 175.) In other words, when another heir is
designated to inherit upon the death of a first
heir, the second designation can have effect
only in case the first instituted heir dies before
the testator, whether or not that was the true
intention of said testator. Since C. N. Hodges
did not die before Linnie Jane Hodges, the
provision for substitution contained in Linnie
Jane Hodges' Willis void.
(d) In view of the invalidity of the provision for
substitution in the Will, C. N. Hodges'
inheritance to the entirety of the Linnie Jane
Hodges estate is irrevocable and final.
19. Be that as it may, at the time of C. N. Hodges' death, the
entirety of the conjugal estate appeared and was registered in him
exclusively as owner. Thus, the presumption is that all said assets
constituted his estate. Therefore
(a) If the HIGDONS wish to enforce their dubious rights as
substituted heirs to 1/4 of the conjugal estate (the other 1/4 is
covered by the legitime of C. N. Hodges which can not be affected
by any testamentary disposition), their remedy, if any, is to file
their claim against the estate of C. N. Hodges, which should be
entitled at the present time to full custody and control of all the
conjugal estate of the spouses.
(b) The present proceedings, in which two estates exist under
separate administration, where the administratrix of the Linnie
Jane Hodges estate exercises an officious right to object and
intervene in matters affecting exclusively the C. N. Hodges estate,
is anomalous.
WHEREFORE, it is most respectfully prayed that after trial and
reception of evidence, this Honorable Court declare:
1. That the estate of Linnie Jane Hodges was and is composed
exclusively of one-half (1/2) share in the conjugal estate of the
spouses Hodges, computed as of the date of her death on May
23, 1957;
2. That the other half of the conjugal estate pertained exclusively
to C. N. Hodges as his share as partner in the conjugal
partnership;
CONFLICTS OF LAW FEB 23 ASS CASES 49
 3. That all "rents, emoluments and income" of the conjugal estate
accruing after Linnie Jane Hodges' death pertains to C. N.
Hodges;
4. That C. N. Hodges was the sole and exclusive heir of the estate
of Linnie Jane Hodges;
5. That, therefore, the entire conjugal estate of the spouses
located in the Philippines, plus all the "rents, emoluments and
income" above-mentioned, now constitutes the estate of C. N.
Hodges, capable of distribution to his heirs upon termination of
Special Proceedings No. 1672;
6. That PCIB, as administrator of the estate of C. N. Hodges, is
entitled to full and exclusive custody, control and management of
all said properties; and
7. That Avelina A. Magno, as administratrix of the estate of Linnie
Jane Hodges, as well as the HIGDONS, has no right to intervene
or participate in the administration of the C. N. Hodges estate.
PCIB further prays for such and other relief as may be deemed
just and equitable in the premises."
(Record, pp. 265-277)
Before all of these motions of petitioner could be resolved, however, on December
21, 1965, private respondent Magno filed her own "Motion for the Official
Declaration of Heirs of the Estate of Linnie Jane Hodges" as follows:
COMES NOW the Administratrix of the Estate of Linnie Jane
Hodges and, through undersigned counsel, unto this Honorable
Court most respectfully states and manifests:
1. That the spouses Charles Newton Hodges and Linnie Jane
Hodges were American citizens who died at the City of Iloilo after
having amassed and accumulated extensive properties in the
Philippines;
2. That on November 22, 1952, Linnie Jane Hodges executed a
last will and testament (the original of this will now forms part of
the records of these proceedings as Exhibit "C" and appears as
Sp. Proc. No. 1307, Folio I, pp. 17-18);
3. That on May 23, 1957, Linnie Jane Hodges died at the City of
Iloilo at the time survived by her husband, Charles Newton
Hodges, and several relatives named in her last will and
testament;
4. That on June 28, 1957, a petition therefor having been priorly
filed and duly heard, this Honorable Court issued an order
admitting to probate the last will and testament of Linnie Jane
Hodges (Sp. Proc. No. 1307, Folio I, pp. 24-25, 26-28);
5. That the required notice to creditors and to all others who may
have any claims against the decedent, Linnie Jane Hodges has
already been printed, published and posted (Sp. Proc. No. 1307,
Folio I. pp. 34-40) and the reglamentary period for filing such
claims has long ago lapsed and expired without any claims having
been asserted against the estate of Linnie Jane Hodges,
approved by the Administrator/Administratrix of the said estate,
nor ratified by this Honorable Court;
6. That the last will and testament of Linnie Jane Hodges already
admitted to probate contains an institution of heirs in the following
words:
"SECOND: I give, devise and bequeath all of
the rest, residue and remainder of my estate,
both personal and real, wherever situated or
located, to my beloved husband, Charles
Newton Hodges to have and to hold unto him,
my said husband, during his natural lifetime.
THIRD: I desire, direct and provide that my
husband, Charles Newton Hodges, shall have
the right to manage, control, use and enjoy said
estate during his lifetime, and, he is hereby
given the right to make any changes in the
physical properties of said estate, by sale of any
part thereof which he may think best, and the
purchase of any other or additional property as
he may think best; to execute conveyances with
or without general or special warranty,
conveying in fee simple or for any other term or
time, any property which he may deem proper
to dispose of; to lease any of the real property
for oil, gas and/or other minerals, and all such
deeds or leases shall pass the absolute fee
simple title to the interest so conveyed in such
property as he elect to sell. All rents,
emoluments and income from said estate shall
belong to him, and he is further authorized to
use any part of the principal of said estate as he
may need or desire. It is provided herein,
CONFLICTS OF LAW FEB 23 ASS CASES 50
 however, that he shall not sell or otherwise
dispose of any of the improved property now
owned by us located at, in or near the City of
Lubbock Texas, but he shall have the full right to
lease, manage and enjoy the same during his
lifetime, above provided. He shall have the right
to subdivide any farm land and sell lots therein,
and may sell unimproved town lots.
FOURTH: At the death of my said husband,
Charles Newton Hodges, I give, devise and
bequeath all of the rest, residue and remainder
of my estate, both real and personal, wherever
situated or located, to be equally divided among
my brothers and sisters, share and share alike,
namely:
Esta Higdon, Emma Howell, Leonard Higdon,
Roy Higdon, Sadie Rascoe, Era Boman and
Nimroy Higdon.
FIFTH: In case of the death of any of my
brothers and/or sisters named in item Fourth,
above, prior to the death of my husband,
Charles Newton Hodges, then it is my will and
bequest that the heirs of such deceased brother
or sister shall take jointly the share which would
have gone to such brother or sister had she or
he survived."
7. That under the provisions of the last will and testament already
above-quoted, Linnie Jane Hodges gave a life-estate or a usufruct
over all her estate to her husband, Charles Newton Hodges, and a
vested remainder-estate or the naked title over the same estate to
her relatives named therein;
8. That after the death of Linnie Jane Hodges and after the
admission to probate of her last will and testament, but during the
lifetime of Charles Newton Hodges, the said Charles Newton
Hodges with full and complete knowledge of the life-estate or
usufruct conferred upon him by the will since he was then acting
as Administrator of the estate and later as Executor of the will of
Linnie Jane Hodges, unequivocably and clearly through oral and
written declarations and sworn public statements, renounced,
disclaimed and repudiated his life-estate and usufruct over the
estate of Linnie Jane Hodges;
9. That, accordingly, the only heirs left to receive the estate of
Linnie Jane Hodges pursuant to her last will and testament, are
her named brothers and sisters, or their heirs, to wit: Esta Higdon,
Emma Howell, Leonard Higdon, Aline Higdon and David Higdon,
the latter two being the wife and son respectively of the deceased
Roy Higdon, Sadie Rascoe Era Boman and Nimroy Higdon, all of
legal ages, American citizens, with residence at the State of
Texas, United States of America;
10. That at the time of the death of Linnie Jane Hodges on May
23, 1957, she was the co-owner (together with her husband
Charles Newton Hodges) of an undivided one-half interest in their
conjugal properties existing as of that date, May 23, 1957, which
properties are now being administered sometimes jointly and
sometimes separately by the Administratrix of the estate of Linnie
Jane Hodges and/or the Administrator of the estate of C. N.
Hodges but all of which are under the control and supervision of
this Honorable Court;
11. That because there was no separation or segregation of the
interests of husband and wife in the combined conjugal estate, as
there has been no such separation or segregation up to the
present, both interests have continually earned exactly the same
amount of "rents, emoluments and income", the entire estate
having been continually devoted to the business of the spouses
as if they were alive;
12. That the one-half interest of Linnie Jane Hodges in the
combined conjugal estate was earning "rents, emoluments and
income" until her death on May 23, 1957, when it ceased to be
saddled with any more charges or expenditures which are purely
personal to her in nature, and her estate kept on earning such
"rents, emoluments and income" by virtue of their having been
expressly renounced, disclaimed and repudiated by Charles
Newton Hodges to whom they were bequeathed for life under the
last will and testament of Linnie Jane Hodges;
13. That, on the other hand, the one-half interest of Charles
Newton Hodges in the combined conjugal estate existing as of
May 23, 1957, while it may have earned exactly the same amount
of "rents, emoluments and income" as that of the share pertaining
to Linnie Jane Hodges, continued to be burdened by charges,
expenditures, and other dispositions which are purely personal to
him in nature, until the death of Charles Newton Hodges himself
on December 25, 1962;
14. That of all the assets of the combined conjugal estate of Linnie
Jane Hodges and Charles Newton Hodges as they exist today, the
estate of Linnie Jane Hodges is clearly entitled to a portion more
CONFLICTS OF LAW FEB 23 ASS CASES 51
than fifty percent (50%) as compared to the portion to which the
estate of Charles Newton Hodges may be entitled, which portions
can be exactly determined by the following manner:
a. An inventory must be made of the assets of
the combined conjugal estate as they existed on
the death of Linnie Jane Hodges on May 23,
1957 one-half of these assets belong to the
estate of Linnie Jane Hodges;
b. An accounting must be made of the "rents,
emoluments and income" of all these assets
again one-half of these belong to the estate of
Linnie Jane Hodges;
c. Adjustments must be made, after making a
deduction of charges, disbursements and other
dispositions made by Charles Newton Hodges
personally and for his own personal account
from May 23, 1957 up to December 25, 1962,
as well as other charges, disbursements and
other dispositions made for him and in his
behalf since December 25, 1962 up to the
present;
15. That there remains no other matter for disposition now insofar
as the estate of Linnie Jane Hodges is concerned but to complete
the liquidation of her estate, segregate them from the conjugal
estate, and distribute them to her heirs pursuant to her last will
and testament.
WHEREFORE, premises considered, it is most respectfully
moved and prayed that this Honorable Court, after a hearing on
the factual matters raised by this motion, issue an order:
a. Declaring the following persons, to wit: Esta Higdon, Emma
Howell, Leonard Higdon, Aline Higdon, David Higdon, Sadie
Rascoe, Era Boman and Nimroy Higdon, as the sole heirs under
the last will and testament of Linnie Jane Hodges and as the only
persons entitled to her estate;
b. Determining the exact value of the estate of Linnie Jane
Hodges in accordance with the system enunciated in paragraph
14 of this motion;
c. After such determination ordering its segregation from the
combined conjugal estate and its delivery to the Administratrix of
the estate of Linnie Jane Hodges for distribution to the heirs to
whom they properly belong and appertain.
(Green Record on Appeal, pp. 382-391)
whereupon, instead of further pressing on its motion of January 8, 1965
aforequoted, as it had been doing before, petitioner withdrew the said motion and in
addition to opposing the above motion of respondent Magno, filed a motion on April
22, 1966 alleging in part that:
1. That it has received from the counsel for the administratrix of
the supposed estate of Linnie Jane Hodges a notice to set her
"Motion for Official Declaration of Heirs of the Estate of Linnie
Jane Hodges";
2. That before the aforesaid motion could be heard, there are
matters pending before this Honorable Court, such as:
a. The examination already ordered by this
Honorable Court of documents relating to the
allegation of Avelina Magno that Charles
Newton Hodges "through ... written declarations
and sworn public statements, renounced,
disclaimed and repudiated life-estate and
usufruct over the estate of Linnie Jane Hodges';
b. That "Urgent Motion for An Accounting and
Delivery to the Estate of C. N. Hodges of All the
Assets of the Conjugal Partnership of the
Deceased Linnie Jane Hodges and C. N.
Hodges Existing as of May 23, 1957 Plus All the
Rents, Emoluments and Income Therefrom";
c. Various motions to resolve the aforesaid
motion;
d. Manifestation of September 14, 1964,
detailing acts of interference of Avelina Magno
under color of title as administratrix of the
Estate of Linnie Jane Hodges;
which are all prejudicial, and which involve no issues of fact, all
facts involved therein being matters of record, and therefore
require only the resolution of questions of law;
CONFLICTS OF LAW FEB 23 ASS CASES 52
 3. That whatever claims any alleged heirs or other persons may
have could be very easily threshed out in the Testate Estate of
Charles Newton Hodges;
4. That the maintenance of two separate estate proceedings and
two administrators only results in confusion and is unduly
burdensome upon the Testate Estate of Charles Newton Hodges,
particularly because the bond filed by Avelina Magno is grossly
insufficient to answer for the funds and property which she has
inofficiously collected and held, as well as those which she
continues to inofficiously collect and hold;
5. That it is a matter of record that such state of affairs affects and
inconveniences not only the estate but also third-parties dealing
with it;" (Annex "V", Petition.)
and then, after further reminding the court, by quoting them, of the relevant
allegations of its earlier motion of September 14, 1964, Annex U, prayed that:
1. Immediately order Avelina Magno to account for and deliver to
the administrator of the Estate of C. N. Hodges all the assets of
the conjugal partnership of the deceased Linnie Jane Hodges and
C. N. Hodges, plus all the rents, emoluments and income
therefrom;
2. Pending the consideration of this motion, immediately order
Avelina Magno to turn over all her collections to the administrator
Philippine Commercial & Industrial Bank;
3. Declare the Testate Estate of Linnie Jane Hodges (Sp. Proc.
No. 1307) closed;
4. Defer the hearing and consideration of the motion for
declaration of heirs in the Testate Estate of Linnie Jane Hodges
until the matters hereinabove set forth are resolved.
(Prayer, Annex "V" of Petition.)
On October 12, 1966, as already indicated at the outset of this opinion, the
respondent court denied the foregoing motion, holding thus:
ORDER
On record is a motion (Vol. X, Sp. 1672, pp. 4379-4390) dated
April 22, 1966 of administrator PCIB praying that (1) Immediately
order Avelina Magno to account for and deliver to the
administrator of the estate of C. N. Hodges all assets of the
conjugal partnership of the deceased Linnie Jane Hodges and C.
N. Hodges, plus all the rents, emoluments and income therefrom;
(2) Pending the consideration of this motion, immediately order
Avelina Magno to turn over all her collections to the administrator
PCIB; (3) Declare the Testate Estate of Linnie Jane Hodges (Sp.
Proc. No. 1307) closed; and (4) Defer the hearing and
consideration of the motion for declaration of heirs in the Testate
Estate of Linnie Jane Hodges until the matters hereinabove set
forth are resolved.
This motion is predicated on the fact that there are matters
pending before this court such as (a) the examination already
ordered by this Honorable Court of documents relating to the
allegation of Avelina Magno that Charles Newton Hodges thru
written declaration and sworn public statements renounced,
disclaimed and repudiated his life-estate and usufruct over the
estate of Linnie Jane Hodges (b) the urgent motion for accounting
and delivery to the estate of C. N. Hodges of all the assets of the
conjugal partnership of the deceased Linnie Jane Hodges and C.
N. Hodges existing as of May 23, 1957 plus all the rents,
emoluments and income therefrom; (c) various motions to resolve
the aforesaid motion; and (d) manifestation of September 14,
1964, detailing acts of interference of Avelina Magno under color
of title as administratrix of the estate of Linnie Jane Hodges.
These matters, according to the instant motion, are all pre-judicial
involving no issues of facts and only require the resolution of
question of law; that in the motion of October 5, 1963 it is alleged
that in a motion dated December 11, 1957 filed by Atty. Leon
Gellada as attorney for the executor C. N. Hodges, the said
executor C. N. Hodges is not only part owner of the properties left
as conjugal but also the successor to all the properties left by the
deceased Linnie Jane Hodges.
Said motion of December 11, 1957 was approved by the Court in
consonance with the wishes contained in the last will and
testament of Linnie Jane Hodges.
That on April 21, 1959 this Court approved the inventory and
accounting submitted by C. N. Hodges thru counsel Atty. Leon
Gellada in a motion filed on April 14, 1959 stating therein that
executor C. N. Hodges is the only devisee or legatee of Linnie
Jane Hodges in accordance with the last will and testament
already probated by the Court.
That on July 13, 1960 the Court approved the annual statement of
accounts submitted by the executor C. N. Hodges thru his counsel
Atty. Gellada on July 21, 1960 wherein it is stated that the
executor, C. N. Hodges is the only devisee or legatee of the
deceased Linnie Jane Hodges; that on May 2, 1961 the Court
CONFLICTS OF LAW FEB 23 ASS CASES 53
approved the annual statement of accounts submitted by
executor, C. N. Hodges for the year 1960 which was submitted by
Atty. Gellada on April 20, 1961 wherein it is stated that executor
Hodges is the only devisee or legatee of the deceased Linnie
Jane Hodges;
That during the hearing on September 5 and 6, 1963 the estate of
C. N. Hodges claimed all the assets belonging to the deceased
spouses Linnie Jane Hodges and C. N. Hodges situated in the
Philippines; that administratrix Magno has executed illegal acts to
the prejudice of the testate estate of C. N. Hodges.
An opposition (Sp. 1672, Vol. X, pp. 4415-4421) dated April 27,
1966 of administratrix Magno has been filed asking that the
motion be denied for lack of merit and that the motion for the
official declaration of heirs of the estate of Linnie Jane Hodges be
set for presentation and reception of evidence.
It is alleged in the aforesaid opposition that the examination of
documents which are in the possession of administratrix Magno
can be made prior to the hearing of the motion for the official
declaration of heirs of the estate of Linnie Jane Hodges, during
said hearing.
That the matters raised in the PCIB's motion of October 5, 1963
(as well as the other motion) dated September 14, 1964 have
been consolidated for the purpose of presentation and reception
of evidence with the hearing on the determination of the heirs of
the estate of Linnie Jane Hodges. It is further alleged in the
opposition that the motion for the official declaration of heirs of the
estate of Linnie Jane Hodges is the one that constitutes a
prejudicial question to the motions dated October 5 and
September 14, 1964 because if said motion is found meritorious
and granted by the Court, the PCIB's motions of October 5, 1963
and September 14, 1964 will become moot and academic since
they are premised on the assumption and claim that the only heir
of Linnie Jane Hodges was C. N. Hodges.
That the PCIB and counsel are estopped from further questioning
the determination of heirs in the estate of Linnie Jane Hodges at
this stage since it was PCIB as early as January 8, 1965 which
filed a motion for official declaration of heirs of Linnie Jane
Hodges that the claim of any heirs of Linnie Jane Hodges can be
determined only in the administration proceedings over the estate
of Linnie Jane Hodges and not that of C. N. Hodges, since the
heirs of Linnie Jane Hodges are claiming her estate and not the
estate of C. N. Hodges.
A reply (Sp. 1672, Vol. X, pp. 4436-4444) dated May 11, 1966 of
the PCIB has been filed alleging that the motion dated April 22,
1966 of the PCIB is not to seek deferment of the hearing and
consideration of the motion for official declaration of heirs of Linnie
Jane Hodges but to declare the testate estate of Linnie Jane
Hodges closed and for administratrix Magno to account for and
deliver to the PCIB all assets of the conjugal partnership of the
deceased spouses which has come to her possession plus all
rents and income.
A rejoinder (Sp. 1672, Vol. X, pp. 4458-4462) of administratrix
Magno dated May 19, 1966 has been filed alleging that the motion
dated December 11, 1957 only sought the approval of all
conveyances made by C. N. Hodges and requested the Court
authority for all subsequent conveyances that will be executed by
C. N. Hodges; that the order dated December 14, 1957 only
approved the conveyances made by C. N. Hodges; that C. N.
Hodges represented by counsel never made any claim in the
estate of Linnie Jane Hodges and never filed a motion to declare
himself as the heir of the said Linnie Jane Hodges despite the
lapse of more than five (5) years after the death of Linnie Jane
Hodges; that it is further alleged in the rejoinder that there can be
no order of adjudication of the estate unless there has been a
prior express declaration of heirs and so far no declaration of heirs
in the estate of Linnie Jane Hodges (Sp. 1307) has been made.
Considering the allegations and arguments in the motion and of
the PCIB as well as those in the opposition and rejoinder of
administratrix Magno, the Court finds the opposition and rejoinder
to be well taken for the reason that so far there has been no
official declaration of heirs in the testate estate of Linnie Jane
Hodges and therefore no disposition of her estate.
WHEREFORE, the motion of the PCIB dated April 22, 1966 is
hereby DENIED.
(Annex "W", Petition)
In its motion dated November 24, 1966 for the reconsideration of this order,
petitioner alleged inter alia that:
It cannot be over-stressed that the motion of December 11, 1957
was based on the fact that:
a. Under the last will and testament of the
deceased, Linnie Jane Hodges, the late Charles
Newton Hodges was the sole heir instituted
insofar as her properties in the Philippines are
concerned;
CONFLICTS OF LAW FEB 23 ASS CASES 54
 b. Said last will and testament vested upon the
said late Charles Newton Hodges rights over
said properties which, in sum, spell ownership,
absolute and in fee simple;
c. Said late Charles Newton Hodges was,
therefore, "not only part owner of the properties
left as conjugal, but also, the successor to all
the properties left by the deceased Linnie Jane
Hodges.
Likewise, it cannot be over-stressed that the aforesaid motion was
granted by this Honorable Court "for the reasons stated" therein.
Again, the motion of December 11, 1957 prayed that not only "all
the sales, conveyances, leases, and mortgages executed by" the
late Charles Newton Hodges, but also all "the subsequent sales,
conveyances, leases, and mortgages ..." be approved and
authorized. This Honorable Court, in its order of December 14,
1957, "for the reasons stated" in the aforesaid motion, granted the
same, and not only approved all the sales, conveyances, leases
and mortgages of all properties left by the deceased Linnie Jane
Hodges executed by the late Charles Newton Hodges, but also
authorized "all subsequent sales, conveyances, leases and
mortgages of the properties left by the said deceased Linnie Jane
Hodges. (Annex "X", Petition)
and reiterated its fundamental pose that the Testate Estate of Linnie Jane Hodges
had already been factually, although not legally, closed with the virtual declaration of
Hodges and adjudication to him, as sole universal heir of all the properties of the
estate of his wife, in the order of December 14, 1957, Annex G. Still unpersuaded,
on July 18, 1967, respondent court denied said motion for reconsideration and held
that "the court believes that there is no justification why the order of October 12,
1966 should be considered or modified", and, on July 19, 1967, the motion of
respondent Magno "for official declaration of heirs of the estate of Linnie Jane
Hodges", already referred to above, was set for hearing.
In consequence of all these developments, the present petition was filed on August
1, 1967 (albeit petitioner had to pay another docketing fee on August 9, 1967, since
the orders in question were issued in two separate testate estate proceedings, Nos.
1307 and 1672, in the court below).
Together with such petition, there are now pending before Us for resolution herein,
appeals from the following:
1. The order of December 19, 1964 authorizing payment by
respondent Magno of overtime pay, (pp. 221, Green Record on
Appeal) together with the subsequent orders of January 9, 1965,
(pp. 231-232, id.) October 27, 1965, (pp. 227, id.) and February
15, 1966 (pp. 455-456, id.) repeatedly denying motions for
reconsideration thereof.
2. The order of August 6, 1965 (pp. 248, id.) requiring that deeds
executed by petitioner to be co-signed by respondent Magno, as
well as the order of October 27, 1965 (pp. 276-277) denying
reconsideration.
3. The order of October 27, 1965 (pp. 292-295, id.) enjoining the
deposit of all collections in a joint account and the same order of
February 15, 1966 mentioned in No. 1 above which included the
denial of the reconsideration of this order of October 27, 1965.
4. The order of November 3, 1965 (pp. 313-320, id.) directing the
payment of attorney's fees, fees of the respondent administratrix,
etc. and the order of February 16, 1966 denying reconsideration
thereof.
5. The order of November 23, 1965 (pp. 334-335, id.) allowing
appellee Western Institute of Technology to make payments to
either one or both of the administrators of the two estates as well
as the order of March 7, 1966 (p. 462, id.) denying
reconsideration.
6. The various orders hereinabove earlier enumerated approving
deeds of sale executed by respondent Magno in favor of
appellees Carles, Catedral, Pablito, Guzman, Coronado, Barrido,
Causing, Javier, Lucero and Batisanan, (see pp. 35 to 37 of this
opinion), together with the two separate orders both dated
December 2, 1966 (pp. 306-308, and pp. 308-309, Yellow Record
on Appeal) denying reconsideration of said approval.
7. The order of January 3, 1967, on pp. 335-336, Yellow Record
on Appeal, approving similar deeds of sale executed by
respondent Magno, as those in No. 6, in favor of appellees
Pacaonsis and Premaylon, as to which no motion for
reconsideration was filed.
8. Lastly, the order of December 2, 1966, on pp. 305-306, Yellow
Record on Appeal, directing petitioner to surrender to appellees
Lucero, Batisanan, Javier, Pablito, Barrido, Catedral, Causing,
Guzman, and Coronado, the certificates of title covering the lands
involved in the approved sales, as to which no motion for
reconsideration was filed either.
Strictly speaking, and considering that the above orders deal with different matters,
just as they affect distinctly different individuals or persons, as outlined by petitioner
CONFLICTS OF LAW FEB 23 ASS CASES 55
in its brief as appellant on pp. 12-20 thereof, there are, therefore, thirty-three (33)
appeals before Us, for which reason, petitioner has to pay also thirty-one (31) more
docket fees.
It is as well perhaps to state here as elsewhere in this opinion that in connection with
these appeals, petitioner has assigned a total of seventy-eight (LXXVIII) alleged
errors, the respective discussions and arguments under all of them covering also the
fundamental issues raised in respect to the petition for certiorari and prohibition,
thus making it feasible and more practical for the Court to dispose of all these cases
together. 4
The assignments of error read thus:
I to IV
THE ORDER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEES, PEPITO G.
IYULORES, ESPIRIDION PARTISALA, WINIFREDO C. ESPADA
AND ROSARIO ALINGASA, EXECUTED BY THE APPELLEE,
AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED
BY THE DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED
BY HIM DURING HIS LIFETIME.
V to VIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF
SALE IN FAVOR OF THE APPELLEES, PEPITO G. IYULORES,
ESPIRIDION PARTISALA, WINIFREDO C. ESPADA AND
ROSARIO ALINGASA, COVERING PARCELS OF LAND FOR
WHICH THEY HAVE NEVER PAID IN FULL IN ACCORDANCE
WITH THE ORIGINAL CONTRACTS TO SELL.
IX to XII
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS
OF OWNERSHIP OVER REAL PROPERTY OF THE
APPELLEES, PEPITO G. IYULORES, ESPIRIDION PARTISALA,
WINIFREDO C. ESPADA AND ROSARIO ALINGASA, WHILE
ACTING AS A PROBATE COURT.
XIII to XV
THE LOWER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEES ADELFA
PREMAYLON (LOT NO. 102), SANTIAGO PACAONSIS, AND
ADELFA PREMAYLON (LOT NO. 104), EXECUTED BY THE
APPELLEE, AVELINA A. MAGNO, COVERING PARCELS OF
LAND OWNED BY THE DECEASED, CHARLES NEWTON
HODGES, AND THE CONTRACTS TO SELL COVERING WHICH
WERE EXECUTED BY HIM DURING HIS LIFETIME.
XVI to XVIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF
SALE IN FAVOR OF THE APPELLEES ADELFA PREMAYLON
(LOT NO. 102), SANTIAGO PACAONSIS, AND ADELFA
PREMAYLON (LOT NO. 104) COVERING PARCELS OF LAND
FOR WHICH THEY HAVE NEVER PAID IN FULL IN
ACCORDANCE WITH THE ORIGINAL CONTRACTS TO SELL.
XIX to XXI
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS
OF OWNERSHIP OVER REAL PROPERTY OF THE
APPELLEES ADELFA PREMAYLON (LOT NO. 102), SANTIAGO
PACAONSIS, AND ADELFA PREMAYLON (LOT NO. 104) WHILE
ACTING AS A PROBATE COURT.
XXII to XXV
THE LOWER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEES LORENZO
CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND
SALVADOR S. GUZMAN, EXECUTED BY THE APPELLEE,
AVELINA A. MAGNO, COVERING PARCELS OF LAND OWNED
BY THE DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED
BY HIM DURING HIS LIFETIME.
XXVI to XXIX
THE LOWER COURT ERRED IN APPROVING THE FINAL DEED
OF SALE EXECUTED IN FAVOR OF THE APPELLEES,
LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL
AND SALVADOR S. GUZMAN PURSUANT TO CONTRACTS TO
SPELL WHICH WERE CANCELLED AND RESCINDED.
XXX to XXXIV
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS
OF OWNERSHIP OVER REAL PROPERTY OF THE LORENZO
CARLES, JOSE PABLICO, ALFREDO CATEDRAL AND
CONFLICTS OF LAW FEB 23 ASS CASES 56
 SALVADOR S. GUZMAN, WHILE ACTING AS A PROBATE
COURT.
XXXV to XXXVI
THE LOWER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEES, FLORENIA
BARRIDO AND PURIFICACION CORONADO, EXECUTED BY
THE APPELLEE, AVELINA A. MAGNO, COVERING PARCELS
OF LAND OWNED BY THE DECEASED, CHARLES NEWTON
HODGES, AND THE CONTRACTS TO SELL COVERING WHICH
WERE EXECUTED BY HIM DURING HIS LIFETIME.
XXXVII to XXXVIII
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF
SALE IN FAVOR OF THE APPELLEES, FLORENIA BARRIDO
AND PURIFICACION CORONADO, ALTHOUGH THEY WERE IN
ARREARS IN THE PAYMENTS AGREED UPON IN THE
ORIGINAL CONTRACT TO SELL WHICH THEY EXECUTED
WITH THE DECEASED, CHARLES NEWTON HODGES, IN THE
AMOUNT OF P10,680.00 and P4,428.90, RESPECTIVELY.
XXXIX to XL
THE LOWER COURT ERRED IN DEPRIVING THE DECEASED,
CHARLES NEWTON HODGES, OF THE CONTRACTUAL
RIGHT, EXERCISED THROUGH HIS ADMINISTRATOR, THE
INSTANT APPELLANT, TO CANCEL THE CONTRACTS TO SELL
OF THE APPELLEES, FLORENIA BARRIDO AND
PURIFICACION CORONADO.
XLI to XLIII
THE LOWER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEES, GRACIANO
LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES
BATISANAN, EXECUTED BY THE APPELLEE, AVELINA A.
MAGNO, COVERING PARCELS OF LAND OWNED BY THE
DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED
BY HIM DURING HIS LIFETIME.
XLIV to XLVI
THE LOWER COURT ERRED IN APPROVING THE FINAL DEED
OF SALE IN FAVOR OF THE APPELLEES, GRACIANO
LUCERO, ARITEO THOMAS JAMIR AND MELQUIADES
BATISANAN, PURSUANT TO CONTRACTS TO SELL
EXECUTED BY THEM WITH THE DECEASED, CHARLES
NEWTON HODGES, THE TERMS AND CONDITIONS OF
WHICH THEY HAVE NEVER COMPLIED WITH.
XLVII to XLIX
THE LOWER COURT ERRED IN DEPRIVING THE DECEASED,
CHARLES NEWTON HODGES, OF HIS RIGHT, EXERCISED
THROUGH HIS ADMINISTRATION, THE INSTANT APPELLANT,
TO CANCEL THE CONTRACTS TO SELL OF THE APPELLEES,
GRACIANO LUCERO, ARITEO THOMAS JAMIR AND
MELQUIADES BATISANAN, AND IN DETERMINING THE
RIGHTS OF THE SAID APPELLEES OVER REAL PROPERTY
WHILE ACTING AS A PROBATE COURT.
L
THE LOWER COURT ERRED IN APPROVING THE FINAL
DEEDS OF SALE IN FAVOR OF THE APPELLEE, BELCESAR
CAUSING, EXECUTED BY THE APPELLEE, AVELINA A.
MAGNO, COVERING PARCELS OF LAND OWNED BY THE
DECEASED, CHARLES NEWTON HODGES, AND THE
CONTRACTS TO SELL COVERING WHICH WERE EXECUTED
BY HIM DURING HIS LIFETIME.
LI
THE LOWER COURT ERRED IN APPROVING THE DEEDS OF
SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING,
ALTHOUGH HE WAS IN ARREARS IN THE PAYMENTS
AGREED UPON IN THE ORIGINAL CONTRACT TO SELL
WHICH HE EXECUTED WITH THE DECEASED, CHARLES
NEWTON HODGES, IN THE AMOUNT OF P2,337.50.
LII
THE LOWER COURT ERRED IN APPROVING THE DEED OF
SALE IN FAVOR OF THE APPELLEE, BELCESAR CAUSING,
ALTHOUGH THE SAME WAS NOT EXECUTED IN
ACCORDANCE WITH THE RULES OF COURT.
LIII to LXI
THE LOWER COURT ERRED IN ORDERING THE APPELLANT,
PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK TO
CONFLICTS OF LAW FEB 23 ASS CASES 57
 SURRENDER THE OWNER'S DUPLICATE CERTIFICATES OF
TITLE OVER THE RESPECTIVE LOTS COVERED BY THE
DEEDS OF SALE EXECUTED BY THE APPELLEE, AVELINA A.
MAGNO, IN FAVOR OF THE OTHER APPELLEES, JOSE
PABLICO, ALFREDO CATEDRAL, SALVADOR S. GUZMAN,
FLRENIA BARRIDO, PURIFICACION CORONADO, BELCESAR
CAUSING, ARITEO THOMAS JAMIR, MAXIMA BATISANAN AND
GRACIANO L. LUCERO.
LXII
THE LOWER COURT ERRED IN RESOLVING THE MOTION OF
THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY,
DATED NOVEMBER 3, 1965, WITHOUT ANY COPY THEREOF
HAVING BEEN SERVED UPON THE APPELLANT, PHILIPPINE
COMMERCIAL & INDUSTRIAL BANK.
LXIII
THE LOWER COURT ERRED IN HEARING AND CONSIDERING
THE MOTION OF THE APPELLEE, WESTERN INSTITUTE OF
TECHNOLOGY, DATED NOVEMBER 3rd, 1965, ON NOVEMBER
23, 1965, WHEN THE NOTICE FOR THE HEARING THEREOF
WAS FOR NOVEMBER 20, 1965.
LXIV
THE LOWER COURT ERRED IN GRANTING THE APPELLEE,
WESTERN INSTITUTE OF TECHNOLOGY A RELIEF OTHER
THAN THAT PRAYED FOR IN ITS MOTION, DATED
NOVEMBER 3, 1965, IN THE ABSENCE OF A PRAYER FOR
GENERAL RELIEF CONTAINED THEREIN.
LXV
THE LOWER COURT ERRED IN ALLOWING THE APPELLEE,
WESTERN INSTITUTE OF TECHNOLOGY, TO CONTINUE
PAYMENTS UPON A CONTRACT TO SELL THE TERMS AND
CONDITIONS OF WHICH IT HAS FAILED TO FULFILL.
LXVI
THE LOWER COURT ERRED IN DETERMINING THE RIGHTS
OF THE APPELLEE, WESTERN INSTITUTE OF TECHNOLOGY
OVER THE REAL PROPERTY SUBJECT MATTER OF THE
CONTRACT TO SELL IT EXECUTED WITH THE DECEASED,
CHARLES NEWTON HODGES, WHILE ACTING AS A PROBATE
COURT.
LXVII
LOWER COURT ERRED IN ALLOWING THE CONTINUATION
OF PAYMENTS BY THE APPELLEE, WESTERN INSTITUTE OF
TECHNOLOGY, UPON A CONTRACT TO SELL EXECUTED BY
IT AND THE DECEASED, CHARLES NEWTON HODGES, TO A
PERSON OTHER THAN HIS LAWFULLY APPOINTED
ADMINISTRATOR.
LXVIII
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF
RETAINER'S FEES FROM THE SUPPOSED ESTATE OF THE
DECEASED, LINNIE JANE HODGES, WHEN THERE IS
NEITHER SUCH ESTATE NOR ASSETS THEREOF.
LXIX
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF
RETAINER'S FEES OF LAWYERS OF ALLEGED HEIRS TO THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES.
LXX
THE LOWER COURT ERRED IN IMPLEMENTING THE
ALLEGED AGREEMENT BETWEEN THE HEIRS OF THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES, AND THEIR LAWYERS.
LXXI
THE LOWER COURT ERRED IN ORDERING THE PREMATURE
DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR
BENEFICIARIES THEREOF, BY WAY OF RETAINER'S FEES.
LXXII
THE LOWER COURT ERRED IN ORDERING THAT ALL FINAL
DEEDS OF SALE EXECUTED PURSUANT TO CONTRACTS TO
SELL ENTERED INTO BY THE DECEASED, CHARLES
NEWTON HODGES, DURING HIS LIFETIME, BE SIGNED
JOINTLY BY THE APPELLEE, AVELINA A. MAGNO, AND THE
CONFLICTS OF LAW FEB 23 ASS CASES 58
 APPELLANT, PHILIPPINE COMMERCIAL AND INDUSTRIAL
BANK, AND NOT BY THE LATTER ONLY AS THE LAWFULLY
APPOINTED ADMINISTRATOR OF HIS ESTATE.
LXXIII
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF
LEGAL EXPENSES FROM THE SUPPOSED ESTATE OF THE
DECEASED, LINNIE JANE HODGES, WHEN THERE IS
NEITHER SUCH ESTATE NOR ASSETS THEREOF.
LXXIV
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF
LEGAL EXPENSES OF LAWYERS OF ALLEGED HEIRS TO THE
SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES.
LXXV
THE LOWER COURT ERRED IN ORDERING THE PREMATURE
DISTRIBUTION OF ESTATE ASSETS TO ALLEGED HEIRS OR
BENEFICIARIES THEREOF, BY WAY OF LEGAL EXPENSES.
LXXVI
THE LOWER COURT ERRED IN ORDERING THE PAYMENT OF
COMPENSATION TO THE PURPORTED ADMINISTRATRIX OF
THE SUPPOSED ESTATE OF THE DECEASED, LINNIE JANE
HODGES, THE INSTANT APPELLEE, AVELINA A. MAGNO,
WHEN THERE IS NEITHER SUCH ESTATE NOR ASSETS
THEREOF.
LXXVII
THE LOWER COURT ERRED IN ORDERING THAT THE FUNDS
OF THE TESTATE ESTATE OF THE DECEASED, CHARLES
NEWTON HODGES, BE PLACED IN A JOINT ACCOUNT OF
THE APPELLANT, PHILIPPINE COMMERCIAL AND
INDUSTRIAL BANK, AND THE APPELLEE, AVELINA A. MAGNO,
WHO IS A COMPLETE STRANGER TO THE AFORESAID
ESTATE.
LXXVIII
THE LOWER COURT ERRED IN ORDERING THAT THE
APPELLEE, AVELINA A. MAGNO, BE GIVEN EQUAL ACCESS
TO THE RECORDS OF THE TESTATE ESTATE OF THE
DECEASED, CHARLES NEWTON HODGES, WHEN SHE IS A
COMPLETE STRANGER TO THE AFORESAID ESTATE. (Pp. 73-
83, Appellant's Brief.)
To complete this rather elaborate, and unavoidably extended narration of the factual
setting of these cases, it may also be mentioned that an attempt was made by the
heirs of Mrs. Hodges to have respondent Magno removed as administratrix, with the
proposed appointment of Benito J. Lopez in her place, and that respondent court did
actually order such proposed replacement, but the Court declared the said order of
respondent court violative of its injunction of August 8, 1967, hence without force
and effect (see Resolution of September 8, 1972 and February 1, 1973).
Subsequently, Atty. Efrain B. Trenas, one of the lawyers of said heirs, appeared no
longer for the proposed administrator Lopez but for the heirs themselves, and in a
motion dated October 26, 1972 informed the Court that a motion had been filed with
respondent court for the removal of petitioner PCIB as administrator of the estate of
C. N. Hodges in Special Proceedings 1672, which removal motion alleged that
22.968149% of the share of C. N. Hodges had already been acquired by the heirs of
Mrs. Hodges from certain heirs of her husband. Further, in this connection, in the
answer of PCIB to the motion of respondent Magno to have it declared in contempt
for disregarding the Court's resolution of September 8, 1972 modifying the injunction
of August 8, 1967, said petitioner annexed thereto a joint manifestation and motion,
appearing to have been filed with respondent court, informing said court that in
addition to the fact that 22% of the share of C. N. Hodges had already been bought
by the heirs of Mrs. Hodges, as already stated, certain other heirs of Hodges
representing 17.343750% of his estate were joining cause with the heirs of Mrs.
Hodges as against PCIB, thereby making somewhat precarious, if not possibly
untenable, petitioners' continuation as administrator of the Hodges estate.
RESOLUTION OF ISSUES IN THE CERTIORARI AND
PROHIBITION CASES
I
As to the Alleged Tardiness
of the Present Appeals
The priority question raised by respondent Magno relates to the alleged tardiness of
all the aforementioned thirty-three appeals of PCIB. Considering, however, that
these appeals revolve around practically the same main issues and that it is
admitted that some of them have been timely taken, and, moreover, their final
results hereinbelow to be stated and explained make it of no consequence whether
or not the orders concerned have become final by the lapsing of the respective
periods to appeal them, We do not deem it necessary to pass upon the timeliness of
any of said appeals.
CONFLICTS OF LAW FEB 23 ASS CASES 59
II
The Propriety Here of Certiorari and
Prohibition instead of Appeal
The other preliminary point of the same respondent is alleged impropriety of the
special civil action of certiorari and prohibition in view of the existence of the remedy
of appeal which it claims is proven by the very appeals now before Us. Such
contention fails to take into account that there is a common thread among the basic
issues involved in all these thirty-three appeals which, unless resolved in one single
proceeding, will inevitably cause the proliferation of more or less similar or closely
related incidents and consequent eventual appeals. If for this consideration alone,
and without taking account anymore of the unnecessary additional effort, expense
and time which would be involved in as many individual appeals as the number of
such incidents, it is logical and proper to hold, as We do hold, that the remedy of
appeal is not adequate in the present cases. In determining whether or not a special
civil action of certiorari or prohibition may be resorted to in lieu of appeal, in
instances wherein lack or excess of jurisdiction or grave abuse of discretion is
alleged, it is not enough that the remedy of appeal exists or is possible. It is
indispensable that taking all the relevant circumstances of the given case, appeal
would better serve the interests of justice. Obviously, the longer delay, augmented
expense and trouble and unnecessary repetition of the same work attendant to the
present multiple appeals, which, after all, deal with practically the same basic issues
that can be more expeditiously resolved or determined in a single special civil
action, make the remedies of certiorari and prohibition, pursued by petitioner,
preferable, for purposes of resolving the common basic issues raised in all of them,
despite the conceded availability of appeal. Besides, the settling of such common
fundamental issues would naturally minimize the areas of conflict between the
parties and render more simple the determination of the secondary issues in each of
them. Accordingly, respondent Magno's objection to the present remedy
of certiorari and prohibition must be overruled.
We come now to the errors assigned by petitioner-appellant, Philippine Commercial
& Industrial Bank, (PCIB, for short) in the petition as well as in its main brief as
appellant.
III
On Whether or Not There is Still Any Part of the Testate
Estate Mrs. Hodges that may be Adjudicated to her brothers
and sisters as her estate, of which respondent Magno is the
unquestioned Administratrix in special Proceedings 1307.
In the petition, it is the position of PCIB that the respondent court exceeded its
jurisdiction or gravely abused its discretion in further recognizing after December 14,
1957 the existence of the Testate Estate of Linnie Jane Hodges and in sanctioning
purported acts of administration therein of respondent Magno. Main ground for such
posture is that by the aforequoted order of respondent court of said date, Hodges
was already allowed to assert and exercise all his rights as universal heir of his wife
pursuant to the provisions of her will, quoted earlier, hence, nothing else remains to
be done in Special Proceedings 1307 except to formally close it. In other words, the
contention of PCIB is that in view of said order, nothing more than a formal
declaration of Hodges as sole and exclusive heir of his wife and the consequent
formal unqualified adjudication to him of all her estate remain to be done to
completely close Special Proceedings 1307, hence respondent Magno should be
considered as having ceased to be Administratrix of the Testate Estate of Mrs.
Hodges since then.
After carefully going over the record, We feel constrained to hold that such pose is
patently untenable from whatever angle it is examined.
To start with, We cannot find anywhere in respondent Order of December 14, 1957
the sense being read into it by PCIB. The tenor of said order bears no suggestion at
all to such effect. The declaration of heirs and distribution by the probate court of the
estate of a decedent is its most important function, and this Court is not disposed to
encourage judges of probate proceedings to be less than definite, plain and specific
in making orders in such regard, if for no other reason than that all parties
concerned, like the heirs, the creditors, and most of all the government, the devisees
and legatees, should know with certainty what are and when their respective rights
and obligations ensuing from the inheritance or in relation thereto would begin or
cease, as the case may be, thereby avoiding precisely the legal complications and
consequent litigations similar to those that have developed unnecessarily in the
present cases. While it is true that in instances wherein all the parties interested in
the estate of a deceased person have already actually distributed among
themselves their respective shares therein to the satisfaction of everyone concerned
and no rights of creditors or third parties are adversely affected, it would naturally be
almost ministerial for the court to issue the final order of declaration and distribution,
still it is inconceivable that the special proceeding instituted for the purpose may be
considered terminated, the respective rights of all the parties concerned be deemed
definitely settled, and the executor or administrator thereof be regarded as
automatically discharged and relieved already of all functions and responsibilities
without the corresponding definite orders of the probate court to such effect.
Indeed, the law on the matter is specific, categorical and unequivocal. Section 1 of
Rule 90 provides:
SECTION 1. When order for distribution of residue made.
When the debts, funeral charges, and expenses of administration,
the allowance to the widow and inheritance tax, if any, chargeable
to the estate in accordance with law have been paid, the court, on
the application of the executor or administrator, or of a person
interested in the estate, and after hearing upon notice, shall
assign the residue of the estate to the persons entitled to the
same, naming them and the proportions, or parts, to which each is
entitled, and such persons may demand and recover their
respective shares from the executor or administrator, or any other
person having the same in his possession. If there is a
CONFLICTS OF LAW FEB 23 ASS CASES 60
 controversy before the court as to who are the lawful heirs of the
deceased person or as to the distributive shares to which each
person is entitled under the law, the controversy shall be heard
and decided as in ordinary cases.
No distribution shall be allowed until the payment of the
obligations above mentioned has been made or provided for,
unless the distributees, or any of them give a bond, in a sum to be
fixed by the court, conditioned for the payment of said obligations
within such time as the court directs.
These provisions cannot mean anything less than that in order that a proceeding for
the settlement of the estate of a deceased may be deemed ready for final closure,
(1) there should have been issued already an order of distribution or assignment of
the estate of the decedent among or to those entitled thereto by will or by law, but
(2) such order shall not be issued until after it is shown that the "debts, funeral
expenses, expenses of administration, allowances, taxes, etc. chargeable to the
estate" have been paid, which is but logical and proper. (3) Besides, such an order
is usually issued upon proper and specific application for the purpose of the
interested party or parties, and not of the court.
... it is only after, and not before, the payment of all debts, funeral
charges, expenses of administration, allowance to the widow, and
inheritance tax shall have been effected that the court should
make a declaration of heirs or of such persons as are entitled by
law to the residue. (Moran, Comments on the Rules of Court, 2nd
ed., Vol. II, p. 397, citing Capistrano vs. Nadurata, 49 Phil., 726;
Lopez vs. Lopez, 37 Off. Gaz., 3091.) (JIMOGA-ON v.
BELMONTE, 84 Phil. 545, 548) (p. 86, Appellee's Brief)
xxx xxx xxx
Under Section 753 of the Code of Civil Procedure, (corresponding
to Section 1, Rule 90) what brings an intestate (or testate)
proceeding to a close is the order of distribution directing delivery
of the residue to the persons entitled thereto after paying the
indebtedness, if any, left by the deceased. (Santiesteban vs.
Santiesteban, 68 Phil. 367, 370.)
In the cases at bar, We cannot discern from the voluminous and varied facts,
pleadings and orders before Us that the above indispensable prerequisites for the
declaration of heirs and the adjudication of the estate of Mrs. Hodges had already
been complied with when the order of December 14, 1957 was issued. As already
stated, We are not persuaded that the proceedings leading to the issuance of said
order, constituting barely of the motion of May 27, 1957, Annex D of the petition, the
order of even date, Annex E, and the motion of December 11, 1957, Annex H, all
aforequoted, are what the law contemplates. We cannot see in the order of
December 14, 1957, so much relied upon by the petitioner, anything more than an
explicit approval of "all the sales, conveyances, leases and mortgages of all the
properties left by the deceased Linnie Jane Hodges executed by the Executor
Charles N. Hodges" (after the death of his wife and prior to the date of the motion),
plus a general advance authorization to enable said "Executor to execute
subsequent sales, conveyances, leases and mortgages of the properties left the
said deceased Linnie Jane Hodges in consonance with wishes conveyed in the last
will and testament of the latter", which, certainly, cannot amount to the order of
adjudication of the estate of the decedent to Hodges contemplated in the law. In
fact, the motion of December 11, 1957 on which the court predicated the order in
question did not pray for any such adjudication at all. What is more, although said
motion did allege that "herein Executor (Hodges) is not only part owner of the
properties left as conjugal, but also, the successor to all the properties left by the
deceased Linnie Jane Hodges", it significantly added that "herein Executor, as
Legatee (sic), has the right to sell, convey, lease or dispose of the properties in the
Philippines during his lifetime", thereby indicating that what said motion
contemplated was nothing more than either the enjoyment by Hodges of his rights
under the particular portion of the dispositions of his wife's will which were to be
operative only during his lifetime or the use of his own share of the conjugal estate,
pending the termination of the proceedings. In other words, the authority referred to
in said motions and orders is in the nature of that contemplated either in Section 2 of
Rule 109 which permits, in appropriate cases, advance or partial implementation of
the terms of a duly probated will before final adjudication or distribution when the
rights of third parties would not be adversely affected thereby or in the established
practice of allowing the surviving spouse to dispose of his own share of he conjugal
estate, pending its final liquidation, when it appears that no creditors of the conjugal
partnership would be prejudiced thereby, (see the Revised Rules of Court by
Francisco, Vol. V-B, 1970 ed. p. 887) albeit, from the tenor of said motions, We are
more inclined to believe that Hodges meant to refer to the former. In any event, We
are fully persuaded that the quoted allegations of said motions read together cannot
be construed as a repudiation of the rights unequivocally established in the will in
favor of Mrs. Hodges' brothers and sisters to whatever have not been disposed of by
him up to his death.
Indeed, nowhere in the record does it appear that the trial court subsequently acted
upon the premise suggested by petitioner. On the contrary, on November 23, 1965,
when the court resolved the motion of appellee Western Institute of Technology by
its order We have quoted earlier, it categorically held that as of said date, November
23, 1965, "in both cases (Special Proceedings 1307 and 1672) there is as yet no
judicial declaration of heirs nor distribution of properties to whomsoever are entitled
thereto." In this connection, it may be stated further against petitioner, by way of
some kind of estoppel, that in its own motion of January 8, 1965, already quoted in
full on pages 54-67 of this decision, it prayed inter alia that the court declare that "C.
N. Hodges was the sole and exclusive heir of the estate of Linnie Jane Hodges",
which it would not have done if it were really convinced that the order of December
14, 1957 was already the order of adjudication and distribution of her estate. That
said motion was later withdrawn when Magno filed her own motion for determination
and adjudication of what should correspond to the brothers and sisters of Mrs.
Hodges does not alter the indubitable implication of the prayer of the withdrawn
motion.
CONFLICTS OF LAW FEB 23 ASS CASES 61
It must be borne in mind that while it is true that Mrs. Hodges bequeathed her whole
estate to her husband and gave him what amounts to full powers of dominion over
the same during his lifetime, she imposed at the same time the condition that
whatever should remain thereof upon his death should go to her brothers and
sisters. In effect, therefore, what was absolutely given to Hodges was only so much
of his wife's estate as he might possibly dispose of during his lifetime; hence, even
assuming that by the allegations in his motion, he did intend to adjudicate the whole
estate to himself, as suggested by petitioner, such unilateral act could not have
affected or diminished in any degree or manner the right of his brothers and sisters-
in-law over what would remain thereof upon his death, for surely, no one can rightly
contend that the testamentary provision in question allowed him to so adjudicate any
part of the estate to himself as to prejudice them. In other words, irrespective of
whatever might have been Hodges' intention in his motions, as Executor, of May 27,
1957 and December 11, 1957, the trial court's orders granting said motions, even in
the terms in which they have been worded, could not have had the effect of an
absolute and unconditional adjudication unto Hodges of the whole estate of his wife.
None of them could have deprived his brothers and sisters-in-law of their rights
under said will. And it may be added here that the fact that no one appeared to
oppose the motions in question may only be attributed, firstly, to the failure of
Hodges to send notices to any of them, as admitted in the motion itself, and,
secondly, to the fact that even if they had been notified, they could not have taken
said motions to be for the final distribution and adjudication of the estate, but merely
for him to be able, pending such final distribution and adjudication, to either exercise
during his lifetime rights of dominion over his wife's estate in accordance with the
bequest in his favor, which, as already observed, may be allowed under the broad
terms of Section 2 of Rule 109, or make use of his own share of the conjugal estate.
In any event, We do not believe that the trial court could have acted in the sense
pretended by petitioner, not only because of the clear language of the will but also
because none of the interested parties had been duly notified of the motion and
hearing thereof. Stated differently, if the orders of May 27, 1957 and December 4,
1957 were really intended to be read in the sense contended by petitioner, We
would have no hesitancy in declaring them null and void.
Petitioner cites the case of Austria vs. Ventenilla, G. R. No. L-10018, September 19,
1956, (unreported but a partial digest thereof appears in 99 Phil. 1069) in support of
its insistence that with the orders of May 27 and December 14, 1957, the closure of
Mrs. Hodges' estate has become a mere formality, inasmuch as said orders
amounted to the order of adjudication and distribution ordained by Section 1 of Rule
90. But the parallel attempted to be drawn between that case and the present one
does not hold. There the trial court had in fact issued a clear, distinct and express
order of adjudication and distribution more than twenty years before the other heirs
of the deceased filed their motion asking that the administratrix be removed, etc. As
quoted in that decision, the order of the lower court in that respect read as follows:
En orden a la mocion de la administradora, el juzgado la
encuentra procedente bajo la condicion de que no se hara
entrega ni adjudicacion de los bienes a los herederos antes de
que estos presten la fianza correspondiente y de acuerdo con lo
prescrito en el Art. 754 del Codigo de Procedimientos: pues, en
autos no aparece que hayan sido nombrados comisionados de
avaluo y reclamaciones. Dicha fianza podra ser por un valor igual
al de los bienes que correspondan a cada heredero segun el
testamento. Creo que no es obice para la terminacion del
expediente el hecho de que la administradora no ha presentado
hasta ahora el inventario de los bienes; pues, segun la ley, estan
exentos de esta formalidad os administradores que son legatarios
del residuo o remanente de los bienes y hayan prestado fianza
para responder de las gestiones de su cargo, y aparece en el
testamento que la administradora Alejandra Austria reune dicha
condicion.
POR TODO LO EXPUESTO, el juzgado declara, 1.o: no haber
lugar a la mocion de Ramon Ventenilla y otros; 2.o, declara
asimismo que los unicos herederos del finado Antonio Ventenilla
son su esposa Alejandra Austria, Maria Ventenilla, hermana del
testador, y Ramon Ventenilla, Maria Ventenilla, Ramon Soriano,
Eulalio Soriano, Jose Soriano, Gabriela Ventenilla, Lorenzo
Ventenilla, Felicitas Ventenilla, Eugenio Ventenilla y Alejandra
Ventenilla, en representacion de los difuntos Juan, Tomas,
Catalino y Froilan, hermanos del testador, declarando, ademas
que la heredera Alejandra Austria tiene derecho al remanente de
todos los bienes dejados por el finado, despues de deducir de
ellos la porcion que corresponde a cada uno de sus coherederos,
conforme esta mandado en las clausulas 8.a, 9.a, 10.a, 11.a, 12.a
y 13.a del testamento; 3.o, se aprueba el pago hecho por la
administradora de los gastos de la ultima enfermedad y funerales
del testador, de la donacion hecha por el testador a favor de la
Escuela a Publica del Municipio de Mangatarem, y de las misas
en sufragio del alma del finado; 4.o, que una vez prestada la
fianza mencionada al principio de este auto, se haga la entrega y
adjudicacion de los bienes, conforme se dispone en el testamento
y se acaba de declarar en este auto; 5.o, y, finalmente, que
verificada la adjudicacion, se dara por terminada la
administracion, revelandole toda responsabilidad a la
administradora, y cancelando su fianza.
ASI SE ORDENA.
Undoubtedly, after the issuance of an order of such tenor, the closure of any
proceedings for the settlement of the estate of a deceased person cannot be but
perfunctory.
In the case at bar, as already pointed out above, the two orders relied upon by
petitioner do not appear ex-facie to be of the same tenor and nature as the order
just quoted, and, what is more, the circumstances attendant to its issuance do not
suggest that such was the intention of the court, for nothing could have been more
violative of the will of Mrs. Hodges.
CONFLICTS OF LAW FEB 23 ASS CASES 62
Indeed, to infer from Hodges' said motions and from his statements of accounts for
the years 1958, 1959 and 1960, A Annexes I, K and M, respectively, wherein he
repeatedly claimed that "herein executor (being) the only devisee or legatee of the
deceased, in accordance with the last will and testament already probated," there is
"no (other) person interested in the Philippines of the time and place of examining
herein account to be given notice", an intent to adjudicate unto himself the whole of
his wife's estate in an absolute manner and without regard to the contingent
interests of her brothers and sisters, is to impute bad faith to him, an imputation
which is not legally permissible, much less warranted by the facts of record herein.
Hodges knew or ought to have known that, legally speaking, the terms of his wife's
will did not give him such a right. Factually, there are enough circumstances extant
in the records of these cases indicating that he had no such intention to ignore the
rights of his co-heirs. In his very motions in question, Hodges alleged, thru counsel,
that the "deceased Linnie Jane Hodges died leaving no descendants and
ascendants, except brothers and sisters and herein petitioner, as surviving spouse,
to inherit the properties of the decedent", and even promised that "proper
accounting will be had in all these transactions" which he had submitted for
approval and authorization by the court, thereby implying that he was aware of his
responsibilities vis-a-vis his co-heirs. As alleged by respondent Magno in her brief as
appellee:
Under date of April 14, 1959, C. N. Hodges filed his first "Account
by the Executor" of the estate of Linnie Jane Hodges. In the
"Statement of Networth of Mr. C. N. Hodges and the Estate of
Linnie Jane Hodges" as of December 31, 1958 annexed thereto,
C. N. Hodges reported that the combined conjugal estate earned
a net income of P328,402.62, divided evenly between him and the
estate of Linnie Jane Hodges. Pursuant to this, he filed an
"individual income tax return" for calendar year 1958 on the estate
of Linnie Jane Hodges reporting, under oath, the said estate as
having earned income of P164,201.31, exactly one-half of the net
income of his combined personal assets and that of the estate of
Linnie Jane Hodges. (p. 91, Appellee's Brief.)
Under date of July 21, 1960, C. N. Hodges filed his second
"Annual Statement of Account by the Executor" of the estate of
Linnie Jane Hodges. In the "Statement of Networth of Mr. C. N.
Hodges and the Estate of Linnie Jane Hodges" as of December
31, 1959 annexed thereto, C. N. Hodges reported that the
combined conjugal estate earned a net income of P270,623.32,
divided evenly between him and the estate of Linnie Jane
Hodges. Pursuant to this, he filed an "individual income tax return"
for calendar year 1959 on the estate of Linnie Jane Hodges
reporting, under oath, the said estate as having earned income of
P135,311.66, exactly one-half of the net income of his combined
personal assets and that of the estate of Linnie Jane Hodges. (pp.
91-92, id.)
Under date of April 20, 1961, C. N. Hodges filed his third "Annual
Statement of Account by the Executor for the year 1960" of the
estate of Linnie Jane Hodges. In the "Statement of Net Worth of
Mr. C. N. Hodges and the Estate of Linnie Jane Hodges" as of
December 31, 1960 annexed thereto, C. N. Hodges reported that
the combined conjugal estate earned a net income of
P314,857.94, divided of Linnie Jane Hodges. Pursuant to this, he
filed an "individual evenly between him and the estate income tax
return" for calendar year 1960 on the estate of Linnie Jane
Hodges reporting, under oath, the said estate as having earned
income of P157,428.97, exactly one-half of the net income of his
combined personal assets and that of the estate of Linnie Jane
Hodges. (pp. 92-93, id.)
In the petition for probate that he (Hodges) filed, he listed the
seven brothers and sisters of Linnie Jane as her "heirs" (see p. 2,
Green ROA). The order of the court admitting the will to probate
unfortunately omitted one of the heirs, Roy Higdon (see p. 14,
Green ROA). Immediately, C. N. Hodges filed a verified motion to
have Roy Higdon's name included as an heir, stating that he
wanted to straighten the records "in order (that) the heirs of
deceased Roy Higdon may not think or believe they were omitted,
and that they were really and are interested in the estate of
deceased Linnie Jane Hodges".
Thus, he recognized, if in his own way, the separate identity of his wife's estate from
his own share of the conjugal partnership up to the time of his death, more than five
years after that of his wife. He never considered the whole estate as a single one
belonging exclusively to himself. The only conclusion one can gather from this is
that he could have been preparing the basis for the eventual transmission of his
wife's estate, or, at least, so much thereof as he would not have been able to
dispose of during his lifetime, to her brothers and sisters in accordance with her
expressed desire, as intimated in his tax return in the United States to be more
extensively referred to anon. And assuming that he did pay the corresponding estate
and inheritance taxes in the Philippines on the basis of his being sole heir, such
payment is not necessarily inconsistent with his recognition of the rights of his co-
heirs. Without purporting to rule definitely on the matter in these proceedings, We
might say here that We are inclined to the view that under the peculiar provisions of
his wife's will, and for purposes of the applicable inheritance tax laws, Hodges had
to be considered as her sole heir, pending the actual transmission of the remaining
portion of her estate to her other heirs, upon the eventuality of his death, and
whatever adjustment might be warranted should there be any such remainder then
is a matter that could well be taken care of by the internal revenue authorities in due
time.
It is to be noted that the lawyer, Atty. Leon P. Gellada, who signed the motions of
May 27, 1957 and December 11, 1957 and the aforementioned statements of
account was the very same one who also subsequently signed and filed the motion
of December 26, 1962 for the appointment of respondent Magno as "Administratrix
of the Estate of Mrs. Linnie Jane Hodges" wherein it was alleged that "in accordance
with the provisions of the last will and testament of Linnie Jane Hodges, whatever
real properties that may remain at the death of her husband, Charles Newton
CONFLICTS OF LAW FEB 23 ASS CASES 63
Hodges, the said properties shall be equally divided among their heirs." And it
appearing that said attorney was Hodges' lawyer as Executor of the estate of his
wife, it stands to reason that his understanding of the situation, implicit in his
allegations just quoted, could somehow be reflective of Hodges' own understanding
thereof.
As a matter of fact, the allegations in the motion of the same Atty. Gellada dated July
1, 1957, a "Request for Inclusion of the Name of Roy Higdon in the Order of the
Court dated July 19, 1957, etc.", reference to which is made in the above quotation
from respondent Magno's brief, are over the oath of Hodges himself, who verified
the motion. Said allegations read:
1. That the Hon. Court issued orders dated June 29, 1957,
ordering the probate of the will.
2. That in said order of the Hon. Court, the relatives of the
deceased Linnie Jane Hodges were enumerated. However, in the
petition as well as in the testimony of Executor during the hearing,
the name Roy Higdon was mentioned, but deceased. It was
unintentionally omitted the heirs of said Roy Higdon who are his
wife Aline Higdon and son David Higdon, all of age, and residents
of Quinlan, Texas, U.S.A.
3. That to straighten the records, and in order the heirs of
deceased Roy Higdon may not think or believe they were omitted,
and that they were really and are interested in the estate of
deceased Linnie Jane Hodges, it is requested of the Hon. Court to
insert the names of Aline Higdon and David Higdon, wife and son
of deceased Roy Higdon in the said order of the Hon. Court dated
June 29, 1957. (pars. 1 to 3, Annex 2 of Magno's Answer
Record, p. 260)
As can be seen, these italicized allegations indicate, more or less, the real attitude
of Hodges in regard to the testamentary dispositions of his wife.
In connection with this point of Hodges' intent, We note that there are documents,
copies of which are annexed to respondent Magno's answer, which purportedly
contain Hodges' own solemn declarations recognizing the right of his co-heirs, such
as the alleged tax return he filed with the United States Taxation authorities,
identified as Schedule M, (Annex 4 of her answer) and his supposed affidavit of
renunciation, Annex 5. In said Schedule M, Hodges appears to have answered the
pertinent question thus:
2a. Had the surviving spouse the right to declare an election
between (1) the provisions made in his or her favor by the will and
(11) dower, curtesy or a statutory interest? (X) Yes ( ) No
2d. Does the surviving spouse contemplate renouncing the will
and electing to take dower, curtesy, or a statutory interest? (X) Yes
( ) No
3. According to the information and belief of the person or persons
filing the return, is any action described under question 1
designed or contemplated? ( ) Yes (X) No (Annex 4, Answer
Record, p. 263)
and to have further stated under the item, "Description of property interests passing
to surviving spouse" the following:
None, except for purposes of administering the Estate, paying
debts, taxes and other legal charges. It is the intention of the
surviving husband of deceased to distribute the remaining
property and interests of the deceased in their Community Estate
to the devisees and legatees named in the will when the debts,
liabilities, taxes and expenses of administration are finally
determined and paid. (Annex 4, Answer Record, p. 263)
In addition, in the supposed affidavit of Hodges, Annex 5, it is stated:
I, C. N. Hodges, being duly sworn, on oath affirm that at the time
the United States Estate Tax Return was filed in the Estate of
Linnie Jane Hodges on August 8, 1958, I renounced and
disclaimed any and all right to receive the rents, emoluments and
income from said estate, as shown by the statement contained in
Schedule M at page 29 of said return, a copy of which schedule is
attached to this affidavit and made a part hereof.
The purpose of this affidavit is to ratify and confirm, and I do
hereby ratify and confirm, the declaration made in Schedule M of
said return and hereby formally disclaim and renounce any right
on my part to receive any of the said rents, emoluments and
income from the estate of my deceased wife, Linnie Jane Hodges.
This affidavit is made to absolve me or my estate from any liability
for the payment of income taxes on income which has accrued to
the estate of Linnie Jane Hodges since the death of the said
Linnie Jane Hodges on May 23, 1957. (Annex 5, Answer
Record, p. 264)
Although it appears that said documents were not duly presented as evidence in the
court below, and We cannot, therefore, rely on them for the purpose of the present
proceedings, still, We cannot close our eyes to their existence in the record nor fail
to note that their tenor jibes with Our conclusion discussed above from the
circumstances related to the orders of May 27 and December 14, 1957. 5 Somehow,
these documents, considering they are supposed to be copies of their originals
found in the official files of the governments of the United States and of the
CONFLICTS OF LAW FEB 23 ASS CASES 64
Philippines, serve to lessen any possible apprehension that Our conclusion from the
other evidence of Hodges' manifest intent vis-a-vis the rights of his co-heirs is
without basis in fact.
Verily, with such eloquent manifestations of his good intentions towards the other
heirs of his wife, We find it very hard to believe that Hodges did ask the court and
that the latter agreed that he be declared her sole heir and that her whole estate be
adjudicated to him without so much as just annotating the contingent interest of her
brothers and sisters in what would remain thereof upon his demise. On the contrary,
it seems to us more factual and fairer to assume that Hodges was well aware of his
position as executor of the will of his wife and, as such, had in mind the following
admonition made by the Court in Pamittan vs. Lasam, et al., 60 Phil., 908, at pp.
913-914:
Upon the death of Bernarda in September, 1908, said lands
continued to be conjugal property in the hands of the defendant
Lasam. It is provided in article 1418 of the Civil Code that upon
the dissolution of the conjugal partnership, an inventory shall
immediately be made and this court in construing this provision in
connection with section 685 of the Code of Civil Procedure (prior
to its amendment by Act No. 3176 of November 24, 1924) has
repeatedly held that in the event of the death of the wife, the law
imposes upon the husband the duty of liquidating the affairs of the
partnership without delay (desde luego) (Alfonso vs. Natividad, 6
Phil., 240; Prado vs. Lagera, 7 Phil., 395; De la Rama vs. De la
Rama, 7 Phil., 745; Enriquez vs. Victoria, 10 Phil., 10; Amancio vs.
Pardo, 13 Phil., 297; Rojas vs. Singson Tongson, 17 Phil., 476;
Sochayseng vs. Trujillo, 31 Phil., 153; Molera vs. Molera, 40 Phil.,
566; Nable Jose vs. Nable Jose, 41 Phil., 713.)
In the last mentioned case this court quoted with approval the
case of Leatherwood vs. Arnold (66 Texas, 414, 416, 417), in
which that court discussed the powers of the surviving spouse in
the administration of the community property. Attention was called
to the fact that the surviving husband, in the management of the
conjugal property after the death of the wife, was a trustee of
unique character who is liable for any fraud committed by him with
relation to the property while he is charged with its administration.
In the liquidation of the conjugal partnership, he had wide powers
(as the law stood prior to Act No. 3176) and the high degree of
trust reposed in him stands out more clearly in view of the fact that
he was the owner of a half interest in his own right of the conjugal
estate which he was charged to administer. He could therefore no
more acquire a title by prescription against those for whom he was
administering the conjugal estate than could a guardian against
his ward or a judicial administrator against the heirs of estate.
Section 38 of Chapter III of the Code of Civil Procedure, with
relation to prescription, provides that "this chapter shall not
apply ... in the case of a continuing and subsisting trust." The
surviving husband in the administration and liquidation of the
conjugal estate occupies the position of a trustee of the highest
order and is not permitted by the law to hold that estate or any
portion thereof adversely to those for whose benefit the law
imposes upon him the duty of administration and liquidation. No
liquidation was ever made by Lasam hence, the conjugal
property which came into his possession on the death of his wife
in September, 1908, still remains conjugal property, a continuing
and subsisting trust. He should have made a liquidation
immediately (desde luego). He cannot now be permitted to take
advantage of his own wrong. One of the conditions of title by
prescription (section 41, Code of Civil Procedure) is possession
"under a claim of title exclusive of any other right". For a trustee to
make such a claim would be a manifest fraud.
And knowing thus his responsibilities in the premises, We are not convinced that
Hodges arrogated everything unto himself leaving nothing at all to be inherited by
his wife's brothers and sisters.
PCIB insists, however, that to read the orders of May 27 and December 14, 1957,
not as adjudicatory, but merely as approving past and authorizing future dispositions
made by Hodges in a wholesale and general manner, would necessarily render the
said orders void for being violative of the provisions of Rule 89 governing the
manner in which such dispositions may be made and how the authority therefor and
approval thereof by the probate court may be secured. If We sustained such a view,
the result would only be that the said orders should be declared ineffective either
way they are understood, considering We have already seen it is legally impossible
to consider them as adjudicatory. As a matter of fact, however, what surges
immediately to the surface, relative to PCIB's observations based on Rule 89, is that
from such point of view, the supposed irregularity would involve no more than some
non-jurisdictional technicalities of procedure, which have for their evident
fundamental purpose the protection of parties interested in the estate, such as the
heirs, its creditors, particularly the government on account of the taxes due it; and
since it is apparent here that none of such parties are objecting to said orders or
would be prejudiced by the unobservance by the trial court of the procedure pointed
out by PCIB, We find no legal inconvenience in nor impediment to Our giving
sanction to the blanket approval and authority contained in said orders. This solution
is definitely preferable in law and in equity, for to view said orders in the sense
suggested by PCIB would result in the deprivation of substantive rights to the
brothers and sisters of Mrs. Hodges, whereas reading them the other way will not
cause any prejudice to anyone, and, withal, will give peace of mind and stability of
rights to the innocent parties who relied on them in good faith, in the light of the
peculiar pertinent provisions of the will of said decedent.
Now, the inventory submitted by Hodges on May 12, 1958 referred to the estate of
his wife as consisting of "One-half of all the items designated in the balance sheet,
copy of which is hereto attached and marked as "Annex A"." Although, regrettably,
no copy of said Annex A appears in the records before Us, We take judicial notice,
on the basis of the undisputed facts in these cases, that the same consists of
considerable real and other personal kinds of properties. And since, according to her
will, her husband was to be the sole owner thereof during his lifetime, with full power
CONFLICTS OF LAW FEB 23 ASS CASES 65
and authority to dispose of any of them, provided that should there be any
remainder upon his death, such remainder would go to her brothers and sisters, and
furthermore, there is no pretension, much less any proof that Hodges had in fact
disposed of all of them, and, on the contrary, the indications are rather to the effect
that he had kept them more or less intact, it cannot truthfully be said that, upon the
death of Hodges, there was no more estate of Mrs. Hodges to speak of. It is Our
conclusion, therefore, that properties do exist which constitute such estate, hence
Special Proceedings 1307 should not yet be closed.
Neither is there basis for holding that respondent Magno has ceased to be the
Administratrix in said proceeding. There is no showing that she has ever been
legally removed as such, the attempt to replace her with Mr. Benito Lopez without
authority from the Court having been expressly held ineffective by Our resolution of
September 8, 1972. Parenthetically, on this last point, PCIB itself is very emphatic in
stressing that it is not questioning said respondent's status as such administratrix.
Indeed, it is not clear that PCIB has any standing to raise any objection thereto,
considering it is a complete stranger insofar as the estate of Mrs. Hodges is
concerned.
It is the contention of PCIB, however, that as things actually stood at the time of
Hodges' death, their conjugal partnership had not yet been liquidated and, inasmuch
as the properties composing the same were thus commingled pro indiviso and,
consequently, the properties pertaining to the estate of each of the spouses are not
yet identifiable, it is PCIB alone, as administrator of the estate of Hodges, who
should administer everything, and all that respondent Magno can do for the time
being is to wait until the properties constituting the remaining estate of Mrs. Hodges
have been duly segregated and delivered to her for her own administration.
Seemingly, PCIB would liken the Testate Estate of Linnie Jane Hodges to a party
having a claim of ownership to some properties included in the inventory of an
administrator of the estate of a decedent, (here that of Hodges) and who normally
has no right to take part in the proceedings pending the establishment of his right or
title; for which as a rule it is required that an ordinary action should be filed, since
the probate court is without jurisdiction to pass with finality on questions of title
between the estate of the deceased, on the one hand, and a third party or even an
heir claiming adversely against the estate, on the other.
We do not find such contention sufficiently persuasive. As We see it, the situation
obtaining herein cannot be compared with the claim of a third party the basis of
which is alien to the pending probate proceedings. In the present cases what gave
rise to the claim of PCIB of exclusive ownership by the estate of Hodges over all the
properties of the Hodges spouses, including the share of Mrs. Hodges in the
community properties, were the orders of the trial court issued in the course of the
very settlement proceedings themselves, more specifically, the orders of May 27
and December 14, 1957 so often mentioned above. In other words, the root of the
issue of title between the parties is something that the court itself has done in the
exercise of its probate jurisdiction. And since in the ultimate analysis, the question of
whether or not all the properties herein involved pertain exclusively to the estate of
Hodges depends on the legal meaning and effect of said orders, the claim that
respondent court has no jurisdiction to take cognizance of and decide the said issue
is incorrect. If it was within the competence of the court to issue the root orders, why
should it not be within its authority to declare their true significance and intent, to the
end that the parties may know whether or not the estate of Mrs. Hodges had already
been adjudicated by the court, upon the initiative of Hodges, in his favor, to the
exclusion of the other heirs of his wife instituted in her will?
At this point, it bears emphasis again that the main cause of all the present
problems confronting the courts and the parties in these cases was the failure of
Hodges to secure, as executor of his wife's estate, from May, 1957 up to the time of
his death in December, 1962, a period of more than five years, the final adjudication
of her estate and the closure of the proceedings. The record is bare of any showing
that he ever exerted any effort towards the early settlement of said estate. While, on
the one hand, there are enough indications, as already discuss that he had
intentions of leaving intact her share of the conjugal properties so that it may pass
wholly to his co-heirs upon his death, pursuant to her will, on the other hand, by not
terminating the proceedings, his interests in his own half of the conjugal properties
remained commingled pro-indiviso with those of his co-heirs in the other half.
Obviously, such a situation could not be conducive to ready ascertainment of the
portion of the inheritance that should appertain to his co-heirs upon his death.
Having these considerations in mind, it would be giving a premium for such
procrastination and rather unfair to his co-heirs, if the administrator of his estate
were to be given exclusive administration of all the properties in question, which
would necessarily include the function of promptly liquidating the conjugal
partnership, thereby identifying and segregating without unnecessary loss of time
which properties should be considered as constituting the estate of Mrs. Hodges,
the remainder of which her brothers and sisters are supposed to inherit equally
among themselves.
To be sure, an administrator is not supposed to represent the interests of any
particular party and his acts are deemed to be objectively for the protection of the
rights of everybody concerned with the estate of the decedent, and from this point of
view, it maybe said that even if PCIB were to act alone, there should be no fear of
undue disadvantage to anyone. On the other hand, however, it is evidently implicit in
section 6 of Rule 78 fixing the priority among those to whom letters of administration
should be granted that the criterion in the selection of the administrator is not his
impartiality alone but, more importantly, the extent of his interest in the estate, so
much so that the one assumed to have greater interest is preferred to another who
has less. Taking both of these considerations into account, inasmuch as, according
to Hodges' own inventory submitted by him as Executor of the estate of his wife,
practically all their properties were conjugal which means that the spouses have
equal shares therein, it is but logical that both estates should be administered jointly
by representatives of both, pending their segregation from each other. Particularly is
such an arrangement warranted because the actuations so far of PCIB evince a
determined, albeit groundless, intent to exclude the other heirs of Mrs. Hodges from
their inheritance. Besides, to allow PCIB, the administrator of his estate, to perform
now what Hodges was duty bound to do as executor is to violate the spirit, if not the
letter, of Section 2 of Rule 78 which expressly provides that "The executor of an
executor shall not, as such, administer the estate of the first testator." It goes without
saying that this provision refers also to the administrator of an executor like PCIB
here.
CONFLICTS OF LAW FEB 23 ASS CASES 66
We are not unmindful of the fact that under Section 2 of Rule 73, "When the
marriage is dissolved by the death of the husband or wife, the community property
shall be inventoried, administered, and liquidated, and the debts thereof paid, in the
testate or intestate proceedings of the deceased spouse. If both spouses have died,
the conjugal partnership shall be liquidated in the testate or intestate proceedings of
either." Indeed, it is true that the last sentence of this provision allows or permits the
conjugal partnership of spouses who are both deceased to be settled or liquidated in
the testate or intestate proceedings of either, but precisely because said sentence
allows or permits that the liquidation be made in either proceeding, it is a matter of
sound judicial discretion in which one it should be made. After all, the former rule
referring to the administrator of the husband's estate in respect to such liquidation
was done away with by Act 3176, the pertinent provisions of which are now
embodied in the rule just cited.
Thus, it can be seen that at the time of the death of Hodges, there was already the
pending judicial settlement proceeding of the estate of Mrs. Hodges, and, more
importantly, that the former was the executor of the latter's will who had, as such,
failed for more than five years to see to it that the same was terminated earliest,
which was not difficult to do, since from ought that appears in the record, there were
no serious obstacles on the way, the estate not being indebted and there being no
immediate heirs other than Hodges himself. Such dilatory or indifferent attitude
could only spell possible prejudice of his co-heirs, whose rights to inheritance
depend entirely on the existence of any remainder of Mrs. Hodges' share in the
community properties, and who are now faced with the pose of PCIB that there is no
such remainder. Had Hodges secured as early as possible the settlement of his
wife's estate, this problem would not arisen. All things considered, We are fully
convinced that the interests of justice will be better served by not permitting or
allowing PCIB or any administrator of the estate of Hodges exclusive administration
of all the properties in question. We are of the considered opinion and so hold that
what would be just and proper is for both administrators of the two estates to act
conjointly until after said estates have been segregated from each other.
At this juncture, it may be stated that we are not overlooking the fact that it is PCIB's
contention that, viewed as a substitution, the testamentary disposition in favor of
Mrs. Hodges' brothers and sisters may not be given effect. To a certain extent, this
contention is correct. Indeed, legally speaking, Mrs. Hodges' will provides neither for
a simple or vulgar substitution under Article 859 of the Civil Code nor for a
fideicommissary substitution under Article 863 thereof. There is no vulgar
substitution therein because there is no provision for either (1) predecease of the
testator by the designated heir or (2) refusal or (3) incapacity of the latter to accept
the inheritance, as required by Article 859; and neither is there a fideicommissary
substitution therein because no obligation is imposed thereby upon Hodges to
preserve the estate or any part thereof for anyone else. But from these premises, it
is not correct to jump to the conclusion, as PCIB does, that the testamentary
dispositions in question are therefore inoperative and invalid.
The error in PCIB's position lies simply in the fact that it views the said disposition
exclusively in the light of substitutions covered by the Civil Code section on that
subject, (Section 3, Chapter 2, Title IV, Book III) when it is obvious that substitution
occurs only when another heir is appointed in a will "so that he may enter into
inheritance in default of the heir originally instituted," (Article 857, id.) and, in the
present case, no such possible default is contemplated. The brothers and sisters of
Mrs. Hodges are not substitutes for Hodges because, under her will, they are not to
inherit what Hodges cannot, would not or may not inherit, but what he would not
dispose of from his inheritance; rather, therefore, they are also heirs instituted
simultaneously with Hodges, subject, however, to certain conditions, partially
resolutory insofar as Hodges was concerned and correspondingly suspensive with
reference to his brothers and sisters-in-law. It is partially resolutory, since it
bequeaths unto Hodges the whole of her estate to be owned and enjoyed by him as
universal and sole heir with absolute dominion over them 6 only during his lifetime,
which means that while he could completely and absolutely dispose of any portion
thereof inter vivos to anyone other than himself, he was not free to do so mortis
causa, and all his rights to what might remain upon his death would cease entirely
upon the occurrence of that contingency, inasmuch as the right of his brothers and
sisters-in-law to the inheritance, although vested already upon the death of Mrs.
Hodges, would automatically become operative upon the occurrence of the death of
Hodges in the event of actual existence of any remainder of her estate then.
Contrary to the view of respondent Magno, however, it was not the usufruct alone of
her estate, as contemplated in Article 869 of the Civil Code, that she bequeathed to
Hodges during his lifetime, but the full ownership thereof, although the same was to
last also during his lifetime only, even as there was no restriction whatsoever against
his disposing or conveying the whole or any portion thereof to anybody other than
himself. The Court sees no legal impediment to this kind of institution, in this
jurisdiction or under Philippine law, except that it cannot apply to the legitime of
Hodges as the surviving spouse, consisting of one-half of the estate, considering
that Mrs. Hodges had no surviving ascendants nor descendants. (Arts. 872, 900,
and 904, New Civil Code.)
But relative precisely to the question of how much of Mrs. Hodges' share of the
conjugal partnership properties may be considered as her estate, the parties are in
disagreement as to how Article 16 of the Civil Code 7 should be applied. On the one
hand, petitioner claims that inasmuch as Mrs. Hodges was a resident of the
Philippines at the time of her death, under said Article 16, construed in relation to the
pertinent laws of Texas and the principle of renvoi, what should be applied here
should be the rules of succession under the Civil Code of the Philippines, and,
therefore, her estate could consist of no more than one-fourth of the said conjugal
properties, the other fourth being, as already explained, the legitime of her husband
(Art. 900, Civil Code) which she could not have disposed of nor burdened with any
condition (Art. 872, Civil Code). On the other hand, respondent Magno denies that
Mrs. Hodges died a resident of the Philippines, since allegedly she never changed
nor intended to change her original residence of birth in Texas, United States of
America, and contends that, anyway, regardless of the question of her residence,
she being indisputably a citizen of Texas, under said Article 16 of the Civil Code, the
distribution of her estate is subject to the laws of said State which, according to her,
do not provide for any legitime, hence, the brothers and sisters of Mrs. Hodges are
entitled to the remainder of the whole of her share of the conjugal partnership
properties consisting of one-half thereof. Respondent Magno further maintains that,
in any event, Hodges had renounced his rights under the will in favor of his co-heirs,
as allegedly proven by the documents touching on the point already mentioned
CONFLICTS OF LAW FEB 23 ASS CASES 67
earlier, the genuineness and legal significance of which petitioner seemingly
questions. Besides, the parties are disagreed as to what the pertinent laws of Texas
provide. In the interest of settling the estates herein involved soonest, it would be
best, indeed, if these conflicting claims of the parties were determined in these
proceedings. The Court regrets, however, that it cannot do so, for the simple reason
that neither the evidence submitted by the parties in the court below nor their
discussion, in their respective briefs and memoranda before Us, of their respective
contentions on the pertinent legal issues, of grave importance as they are, appear to
Us to be adequate enough to enable Us to render an intelligent comprehensive and
just resolution. For one thing, there is no clear and reliable proof of what in fact the
possibly applicable laws of Texas are. 7* Then also, the genuineness of documents
relied upon by respondent Magno is disputed. And there are a number of still other
conceivable related issues which the parties may wish to raise but which it is not
proper to mention here. In Justice, therefore, to all the parties concerned, these and
all other relevant matters should first be threshed out fully in the trial court in the
proceedings hereafter to be held therein for the purpose of ascertaining and
adjudicating and/or distributing the estate of Mrs. Hodges to her heirs in accordance
with her duly probated will.
To be more explicit, all that We can and do decide in connection with the petition
for certiorari and prohibition are: (1) that regardless of which corresponding laws are
applied, whether of the Philippines or of Texas, and taking for granted either of the
respective contentions of the parties as to provisions of the latter, 8 and regardless
also of whether or not it can be proven by competent evidence that Hodges
renounced his inheritance in any degree, it is easily and definitely discernible from
the inventory submitted by Hodges himself, as Executor of his wife's estate, that
there are properties which should constitute the estate of Mrs. Hodges and ought to
be disposed of or distributed among her heirs pursuant to her will in said Special
Proceedings 1307; (2) that, more specifically, inasmuch as the question of what are
the pertinent laws of Texas applicable to the situation herein is basically one of fact,
and, considering that the sole difference in the positions of the parties as to the
effect of said laws has reference to the supposed legitime of Hodges it being the
stand of PCIB that Hodges had such a legitime whereas Magno claims the negative
- it is now beyond controversy for all future purposes of these proceedings that
whatever be the provisions actually of the laws of Texas applicable hereto, the
estate of Mrs. Hodges is at least, one-fourth of the conjugal estate of the spouses;
the existence and effects of foreign laws being questions of fact, and it being the
position now of PCIB that the estate of Mrs. Hodges, pursuant to the laws of Texas,
should only be one-fourth of the conjugal estate, such contention constitutes an
admission of fact, and consequently, it would be in estoppel in any further
proceedings in these cases to claim that said estate could be less, irrespective of
what might be proven later to be actually the provisions of the applicable laws of
Texas; (3) that Special Proceedings 1307 for the settlement of the testate estate of
Mrs. Hodges cannot be closed at this stage and should proceed to its logical
conclusion, there having been no proper and legal adjudication or distribution yet of
the estate therein involved; and (4) that respondent Magno remains and continues
to be the Administratrix therein. Hence, nothing in the foregoing opinion is intended
to resolve the issues which, as already stated, are not properly before the Court
now, namely, (1) whether or not Hodges had in fact and in law waived or renounced
his inheritance from Mrs. Hodges, in whole or in part, and (2) assuming there had
been no such waiver, whether or not, by the application of Article 16 of the Civil
Code, and in the light of what might be the applicable laws of Texas on the matter,
the estate of Mrs. Hodges is more than the one-fourth declared above. As a matter
of fact, even our finding above about the existence of properties constituting the
estate of Mrs. Hodges rests largely on a general appraisal of the size and extent of
the conjugal partnership gathered from reference made thereto by both parties in
their briefs as well as in their pleadings included in the records on appeal, and it
should accordingly yield, as to which exactly those properties are, to the more
concrete and specific evidence which the parties are supposed to present in support
of their respective positions in regard to the foregoing main legal and factual issues.
In the interest of justice, the parties should be allowed to present such further
evidence in relation to all these issues in a joint hearing of the two probate
proceedings herein involved. After all, the court a quo has not yet passed squarely
on these issues, and it is best for all concerned that it should do so in the first
instance.
Relative to Our holding above that the estate of Mrs. Hodges cannot be less than
the remainder of one-fourth of the conjugal partnership properties, it may be
mentioned here that during the deliberations, the point was raised as to whether or
not said holding might be inconsistent with Our other ruling here also that, since
there is no reliable evidence as to what are the applicable laws of Texas, U.S.A.
"with respect to the order of succession and to the amount of successional rights"
that may be willed by a testator which, under Article 16 of the Civil Code, are
controlling in the instant cases, in view of the undisputed Texan nationality of the
deceased Mrs. Hodges, these cases should be returned to the court a quo, so that
the parties may prove what said law provides, it is premature for Us to make any
specific ruling now on either the validity of the testamentary dispositions herein
involved or the amount of inheritance to which the brothers and sisters of Mrs.
Hodges are entitled. After nature reflection, We are of the considered view that, at
this stage and in the state of the records before Us, the feared inconsistency is more
apparent than real. Withal, it no longer lies in the lips of petitioner PCIB to make any
claim that under the laws of Texas, the estate of Mrs. Hodges could in any event be
less than that We have fixed above.
It should be borne in mind that as above-indicated, the question of what are the laws
of Texas governing the matters herein issue is, in the first instance, one of fact, not
of law. Elementary is the rule that foreign laws may not be taken judicial notice of
and have to be proven like any other fact in dispute between the parties in any
proceeding, with the rare exception in instances when the said laws are already
within the actual knowledge of the court, such as when they are well and generally
known or they have been actually ruled upon in other cases before it and none of
the parties concerned do not claim otherwise. (5 Moran, Comments on the Rules of
Court, p. 41, 1970 ed.) In Fluemer vs. Hix, 54 Phil. 610, it was held:
It is the theory of the petitioner that the alleged will was executed in Elkins West
Virginia, on November 3, 1925, by Hix who had his residence in that jurisdiction, and
that the laws of West Virginia govern. To this end, there was submitted a copy of
section 3868 of Acts 1882, c. 84 as found in West Virginia Code, Annotated, by
Hogg Charles E., vol. 2, 1914, p. 1960, and as certified to by the Director of the
National Library. But this was far from a compliance with the law. The laws of a
CONFLICTS OF LAW FEB 23 ASS CASES 68
foreign jurisdiction do not prove themselves in our courts. The courts of the
Philippine Islands are not authorized to take judicial notice of the laws of the various
States of the American Union. Such laws must be proved as facts. (In re Estate of
Johnson [1918], 39 Phil., 156.) Here the requirements of the law were not met.
There was no showing that the book from which an extract was taken was printed or
published under the authority of the State of West Virginia, as provided in section
300 of the Code of Civil Procedure. Nor was the extract from the law attested by the
certificate of the officer having charge of the original, under the seal of the State of
West Virginia, as provided in section 301 of the Code of Civil Procedure. No
evidence was introduced to show that the extract from the laws of West Virginia was
in force at the time the alleged will was executed."
No evidence of the nature thus suggested by the Court may be found in the records
of the cases at bar. Quite to the contrary, the parties herein have presented
opposing versions in their respective pleadings and memoranda regarding the
matter. And even if We took into account that in Aznar vs. Garcia, the Court did
make reference to certain provisions regarding succession in the laws of Texas, the
disparity in the material dates of that case and the present ones would not permit Us
to indulge in the hazardous conjecture that said provisions have not been amended
or changed in the meantime.
On the other hand, in In re Estate of Johnson, 39 Phil. 156, We held:
Upon the other point as to whether the will was executed in
conformity with the statutes of the State of Illinois we note that
it does not affirmatively appear from the transcription of the
testimony adduced in the trial court that any witness was
examined with reference to the law of Illinois on the subject of the
execution of will. The trial judge no doubt was satisfied that the will
was properly executed by examining section 1874 of the Revised
Statutes of Illinois, as exhibited in volume 3 of Starr & Curtis's
Annotated Illinois Statutes, 2nd ed., p. 426; and he may have
assumed that he could take judicial notice of the laws of Illinois
under section 275 of the Code of Civil Procedure. If so, he was in
our opinion mistaken. That section authorizes the courts here to
take judicial notice, among other things, of the acts of the
legislative department of the United States. These words clearly
have reference to Acts of the Congress of the United States; and
we would hesitate to hold that our courts can, under this provision,
take judicial notice of the multifarious laws of the various American
States. Nor do we think that any such authority can be derived
from the broader language, used in the same section, where it is
said that our courts may take judicial notice of matters of public
knowledge "similar" to those therein enumerated. The proper rule
we think is to require proof of the statutes of the States of the
American Union whenever their provisions are determinative of
the issues in any action litigated in the Philippine courts.
Nevertheless, even supposing that the trial court may have erred
in taking judicial notice of the law of Illinois on the point in
question, such error is not now available to the petitioner, first,
because the petition does not state any fact from which it would
appear that the law of Illinois is different from what the court
found, and, secondly, because the assignment of error and
argument for the appellant in this court raises no question based
on such supposed error. Though the trial court may have acted
upon pure conjecture as to the law prevailing in the State of
Illinois, its judgment could not be set aside, even upon application
made within six months under section 113 of the Code of Civil
Procedure, unless it should be made to appear affirmatively that
the conjecture was wrong. The petitioner, it is true, states in
general terms that the will in question is invalid and inadequate to
pass real and personal property in the State of Illinois, but this is
merely a conclusion of law. The affidavits by which the petition is
accompanied contain no reference to the subject, and we are
cited to no authority in the appellant's brief which might tend to
raise a doubt as to the correctness of the conclusion of the trial
court. It is very clear, therefore, that this point cannot be urged as
of serious moment.
It is implicit in the above ruling that when, with respect to certain aspects of the
foreign laws concerned, the parties in a given case do not have any controversy or
are more or less in agreement, the Court may take it for granted for the purposes of
the particular case before it that the said laws are as such virtual agreement
indicates, without the need of requiring the presentation of what otherwise would be
the competent evidence on the point. Thus, in the instant cases wherein it results
from the respective contentions of both parties that even if the pertinent laws of
Texas were known and to be applied, the amount of the inheritance pertaining to the
heirs of Mrs. Hodges is as We have fixed above, the absence of evidence to the
effect that, actually and in fact, under said laws, it could be otherwise is of no longer
of any consequence, unless the purpose is to show that it could be more. In other
words, since PCIB, the petitioner-appellant, concedes that upon application of Article
16 of the Civil Code and the pertinent laws of Texas, the amount of the estate in
controversy is just as We have determined it to be, and respondent-appellee is only
claiming, on her part, that it could be more, PCIB may not now or later pretend
differently.
To be more concrete, on pages 20-21 of its petition herein, dated July 31, 1967,
PCIB states categorically:
Inasmuch as Article 16 of the Civil Code provides that "intestate
and testamentary successions both with respect to the order of
succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by
the national law of the person whose succession is under
consideration, whatever may be the nature of the property and
regardless of the country wherein said property may be found",
while the law of Texas (the Hodges spouses being nationals of
CONFLICTS OF LAW FEB 23 ASS CASES 69
 U.S.A., State of Texas), in its conflicts of law rules, provides that
the domiciliary law (in this case Philippine law) governs the
testamentary dispositions and successional rights over movables
or personal properties, while the law of the situs (in this case also
Philippine law with respect to all Hodges properties located in the
Philippines), governs with respect to immovable properties, and
applying therefore the 'renvoi doctrine' as enunciated and applied
by this Honorable Court in the case of In re Estate of Christensen
(G.R. No. L-16749, Jan. 31, 1963), there can be no question that
Philippine law governs the testamentary dispositions contained in
the Last Will and Testament of the deceased Linnie Jane Hodges,
as well as the successional rights to her estate, both with respect
to movables, as well as to immovables situated in the Philippines.
In its main brief dated February 26, 1968, PCIB asserts:
The law governing successional rights.
As recited above, there is no question that the deceased, Linnie
Jane Hodges, was an American citizen. There is also no question
that she was a national of the State of Texas, U.S.A. Again, there
is likewise no question that she had her domicile of choice in the
City of Iloilo, Philippines, as this has already been pronounced by
the above-cited orders of the lower court, pronouncements which
are by now res adjudicata (par. [a], See. 49, Rule 39, Rules of
Court; In re Estate of Johnson, 39 Phil. 156).
Article 16 of the Civil Code provides:
"Real property as well as personal property is subject to the law of
the country where it is situated.
However, intestate and testamentary successions, both with
respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary
provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may be the
nature of the property and regardless of the country wherein said
property may be found."
Thus the aforecited provision of the Civil Code points towards the
national law of the deceased, Linnie Jane Hodges, which is the
law of Texas, as governing succession "both with respect to the
order of succession and to the amount of successional rights and
to the intrinsic validity of testamentary provisions ...". But the law
of Texas, in its conflicts of law rules, provides that the domiciliary
law governs the testamentary dispositions and successional rights
over movables or personal property, while the law of the situs
governs with respect to immovable property. Such that with
respect to both movable property, as well as immovable property
situated in the Philippines, the law of Texas points to the law of the
Philippines.
Applying, therefore, the so-called "renvoi doctrine", as enunciated
and applied by this Honorable Court in the case of "In re
Christensen" (G.R. No. L-16749, Jan. 31, 1963), there can be no
question that Philippine law governs the testamentary provisions
in the Last Will and Testament of the deceased Linnie Jane
Hodges, as well as the successional rights to her estate, both with
respect to movables, as well as immovables situated in the
Philippines.
The subject of successional rights.
Under Philippine law, as it is under the law of Texas, the conjugal
or community property of the spouses, Charles Newton Hodges
and Linnie Jane Hodges, upon the death of the latter, is to be
divided into two, one-half pertaining to each of the spouses, as his
or her own property. Thus, upon the death of Linnie Jane Hodges,
one-half of the conjugal partnership property immediately
pertained to Charles Newton Hodges as his own share, and not
by virtue of any successional rights. There can be no question
about this.
Again, Philippine law, or more specifically, Article 900 of the Civil
Code provides:
If the only survivor is the widow or widower, she
or he shall be entitled to one-half of the
hereditary estate of the deceased spouse, and
the testator may freely dispose of the other half.
If the marriage between the surviving spouse
and the testator was solemnized in articulo
mortis, and the testator died within three months
from the time of the marriage, the legitime of the
surviving spouse as the sole heir shall be one-
third of the hereditary estate, except when they
have been living as husband and wife for more
than five years. In the latter case, the legitime of
the surviving spouse shall be that specified in
the preceding paragraph.
This legitime of the surviving spouse cannot be burdened by a
fideicommisary substitution (Art. 864, Civil code), nor by any
charge, condition, or substitution (Art, 872, Civil code). It is clear,
CONFLICTS OF LAW FEB 23 ASS CASES 70
 therefore, that in addition to one-half of the conjugal partnership
property as his own conjugal share, Charles Newton Hodges was
also immediately entitled to one-half of the half conjugal share of
the deceased, Linnie Jane Hodges, or one-fourth of the entire
conjugal property, as his legitime.
One-fourth of the conjugal property therefore remains at issue.
In the summary of its arguments in its memorandum dated April 30, 1968, the
following appears:
Briefly, the position advanced by the petitioner is:
a. That the Hodges spouses were domiciled legally in the
Philippines (pp. 19-20, petition). This is now a matter of res
adjudicata (p. 20, petition).
b. That under Philippine law, Texas law, and the renvoi doctrine,
Philippine law governs the successional rights over the properties
left by the deceased, Linnie Jane Hodges (pp. 20-21, petition).
c. That under Philippine as well as Texas law, one-half of the
Hodges properties pertains to the deceased, Charles Newton
Hodges (p. 21, petition). This is not questioned by the
respondents.
d. That under Philippine law, the deceased, Charles Newton
Hodges, automatically inherited one-half of the remaining one-half
of the Hodges properties as his legitime (p. 21, petition).
e. That the remaining 25% of the Hodges properties was inherited
by the deceased, Charles Newton Hodges, under the will of his
deceased spouse (pp. 22-23, petition). Upon the death of Charles
Newton Hodges, the substitution 'provision of the will of the
deceased, Linnie Jane Hodges, did not operate because the
same is void (pp. 23-25, petition).
f. That the deceased, Charles Newton Hodges, asserted his sole
ownership of the Hodges properties and the probate court
sanctioned such assertion (pp. 25-29, petition). He in fact
assumed such ownership and such was the status of the
properties as of the time of his death (pp. 29-34, petition).
Of similar tenor are the allegations of PCIB in some of its pleadings quoted in the
earlier part of this option.
On her part, it is respondent-appellee Magno's posture that under the laws of Texas,
there is no system of legitime, hence the estate of Mrs. Hodges should be one-half
of all the conjugal properties.
It is thus unquestionable that as far as PCIB is concerned, the application to these
cases of Article 16 of the Civil Code in relation to the corresponding laws of Texas
would result in that the Philippine laws on succession should control. On that basis,
as We have already explained above, the estate of Mrs. Hodges is the remainder of
one-fourth of the conjugal partnership properties, considering that We have found
that there is no legal impediment to the kind of disposition ordered by Mrs. Hodges
in her will in favor of her brothers and sisters and, further, that the contention of
PCIB that the same constitutes an inoperative testamentary substitution is
untenable. As will be recalled, PCIB's position that there is no such estate of Mrs.
Hodges is predicated exclusively on two propositions, namely: (1) that the provision
in question in Mrs. Hodges' testament violates the rules on substitution of heirs
under the Civil Code and (2) that, in any event, by the orders of the trial court of May
27, and December 14, 1957, the trial court had already finally and irrevocably
adjudicated to her husband the whole free portion of her estate to the exclusion of
her brothers and sisters, both of which poses, We have overruled. Nowhere in its
pleadings, briefs and memoranda does PCIB maintain that the application of the
laws of Texas would result in the other heirs of Mrs. Hodges not inheriting anything
under her will. And since PCIB's representations in regard to the laws of Texas
virtually constitute admissions of fact which the other parties and the Court are being
made to rely and act upon, PCIB is "not permitted to contradict them or
subsequently take a position contradictory to or inconsistent with them." (5 Moran,
id, p. 65, citing Cunanan vs. Amparo, 80 Phil. 227; Sta. Ana vs. Maliwat, L-23023,
Aug. 31, 1968, 24 SCRA 1018).
Accordingly, the only question that remains to be settled in the further proceedings
hereby ordered to be held in the court below is how much more than as fixed above
is the estate of Mrs. Hodges, and this would depend on (1) whether or not the
applicable laws of Texas do provide in effect for more, such as, when there is no
legitime provided therein, and (2) whether or not Hodges has validly waived his
whole inheritance from Mrs. Hodges.
In the course of the deliberations, it was brought out by some members of the Court
that to avoid or, at least, minimize further protracted legal controversies between the
respective heirs of the Hodges spouses, it is imperative to elucidate on the possible
consequences of dispositions made by Hodges after the death of his wife from the
mass of the unpartitioned estates without any express indication in the pertinent
documents as to whether his intention is to dispose of part of his inheritance from
his wife or part of his own share of the conjugal estate as well as of those made by
PCIB after the death of Hodges. After a long discussion, the consensus arrived at
was as follows: (1) any such dispositions made gratuitously in favor of third parties,
whether these be individuals, corporations or foundations, shall be considered as
intended to be of properties constituting part of Hodges' inheritance from his wife, it
appearing from the tenor of his motions of May 27 and December 11, 1957 that in
asking for general authority to make sales or other disposals of properties under the
jurisdiction of the court, which include his own share of the conjugal estate, he was
not invoking particularly his right over his own share, but rather his right to dispose
CONFLICTS OF LAW FEB 23 ASS CASES 71
of any part of his inheritance pursuant to the will of his wife; (2) as regards sales,
exchanges or other remunerative transfers, the proceeds of such sales or the
properties taken in by virtue of such exchanges, shall be considered as merely the
products of "physical changes" of the properties of her estate which the will
expressly authorizes Hodges to make, provided that whatever of said products
should remain with the estate at the time of the death of Hodges should go to her
brothers and sisters; (3) the dispositions made by PCIB after the death of Hodges
must naturally be deemed as covering only the properties belonging to his estate
considering that being only the administrator of the estate of Hodges, PCIB could
not have disposed of properties belonging to the estate of his wife. Neither could
such dispositions be considered as involving conjugal properties, for the simple
reason that the conjugal partnership automatically ceased when Mrs. Hodges died,
and by the peculiar provision of her will, under discussion, the remainder of her
share descended also automatically upon the death of Hodges to her brothers and
sisters, thus outside of the scope of PCIB's administration. Accordingly, these
construction of the will of Mrs. Hodges should be adhered to by the trial court in its
final order of adjudication and distribution and/or partition of the two estates in
question.
THE APPEALS
A cursory examination of the seventy-eight assignments of error in appellant PCIB's
brief would readily reveal that all of them are predicated mainly on the contention
that inasmuch as Hodges had already adjudicated unto himself all the properties
constituting his wife's share of the conjugal partnership, allegedly with the sanction
of the trial court per its order of December 14, 1957, there has been, since said
date, no longer any estate of Mrs. Hodges of which appellee Magno could be
administratrix, hence the various assailed orders sanctioning her actuations as such
are not in accordance with law. Such being the case, with the foregoing resolution
holding such posture to be untenable in fact and in law and that it is in the best
interest of justice that for the time being the two estates should be administered
conjointly by the respective administrators of the two estates, it should follow that
said assignments of error have lost their fundamental reasons for being. There are
certain matters, however, relating peculiarly to the respective orders in question, if
commonly among some of them, which need further clarification. For instance, some
of them authorized respondent Magno to act alone or without concurrence of PCIB.
And with respect to many of said orders, PCIB further claims that either the matters
involved were not properly within the probate jurisdiction of the trial court or that the
procedure followed was not in accordance with the rules. Hence, the necessity of
dealing separately with the merits of each of the appeals.
Indeed, inasmuch as the said two estates have until now remained commingled pro-
indiviso, due to the failure of Hodges and the lower court to liquidate the conjugal
partnership, to recognize appellee Magno as Administratrix of the Testate Estate of
Mrs. Hodges which is still unsegregated from that of Hodges is not to say, without
any qualification, that she was therefore authorized to do and perform all her acts
complained of in these appeals, sanctioned though they might have been by the trial
court. As a matter of fact, it is such commingling pro-indiviso of the two estates that
should deprive appellee of freedom to act independently from PCIB, as
administrator of the estate of Hodges, just as, for the same reason, the latter should
not have authority to act independently from her. And considering that the lower
court failed to adhere consistently to this basic point of view, by allowing the two
administrators to act independently of each other, in the various instances already
noted in the narration of facts above, the Court has to look into the attendant
circumstances of each of the appealed orders to be able to determine whether any
of them has to be set aside or they may all be legally maintained notwithstanding the
failure of the court a quo to observe the pertinent procedural technicalities, to the
end only that graver injury to the substantive rights of the parties concerned and
unnecessary and undesirable proliferation of incidents in the subject proceedings
may be forestalled. In other words, We have to determine, whether or not, in the
light of the unusual circumstances extant in the record, there is need to be more
pragmatic and to adopt a rather unorthodox approach, so as to cause the least
disturbance in rights already being exercised by numerous innocent third parties,
even if to do so may not appear to be strictly in accordance with the letter of the
applicable purely adjective rules.
Incidentally, it may be mentioned, at this point, that it was principally on account of
the confusion that might result later from PCIB's continuing to administer all the
community properties, notwithstanding the certainty of the existence of the separate
estate of Mrs. Hodges, and to enable both estates to function in the meantime with a
relative degree of regularity, that the Court ordered in the resolution of September 8,
1972 the modification of the injunction issued pursuant to the resolutions of August
8, October 4 and December 6, 1967, by virtue of which respondent Magno was
completely barred from any participation in the administration of the properties
herein involved. In the September 8 resolution, We ordered that, pending this
decision, Special Proceedings 1307 and 1672 should proceed jointly and that the
respective administrators therein "act conjointly none of them to act singly and
independently of each other for any purpose." Upon mature deliberation, We felt that
to allow PCIB to continue managing or administering all the said properties to the
exclusion of the administratrix of Mrs. Hodges' estate might place the heirs of
Hodges at an unduly advantageous position which could result in considerable, if
not irreparable, damage or injury to the other parties concerned. It is indeed to be
regretted that apparently, up to this date, more than a year after said resolution, the
same has not been given due regard, as may be gleaned from the fact that recently,
respondent Magno has filed in these proceedings a motion to declare PCIB in
contempt for alleged failure to abide therewith, notwithstanding that its repeated
motions for reconsideration thereof have all been denied soon after they were filed. 9
Going back to the appeals, it is perhaps best to begin first with what appears to Our
mind to be the simplest, and then proceed to the more complicated ones in that
order, without regard to the numerical sequence of the assignments of error in
appellant's brief or to the order of the discussion thereof by counsel.
Assignments of error numbers
LXXII, LXXVII and LXXVIII.
These assignments of error relate to (1) the order of the trial court of August 6, 1965
providing that "the deeds of sale (therein referred to involving properties in the name
of Hodges) should be signed jointly by the PCIB, as Administrator of Testate Estate
CONFLICTS OF LAW FEB 23 ASS CASES 72
of C.N. Hodges, and Avelina A. Magno, as Administratrix of the Testate Estate of
Linnie Jane Hodges, and to this effect, the PCIB should take the necessary steps so
that Administratrix Avelina A. Magno could sign the deeds of sale," (p. 248, Green
Rec. on Appeal) (2) the order of October 27, 1965 denying the motion for
reconsideration of the foregoing order, (pp. 276-277, id.) (3) the other order also
dated October 27, 1965 enjoining inter alia, that "(a) all cash collections should be
deposited in the joint account of the estate of Linnie Jane Hodges and estate of C.
N. Hodges, (b) that whatever cash collections (that) had been deposited in the
account of either of the estates should be withdrawn and since then (sic) deposited
in the joint account of the estate of Linnie Jane Hodges and the estate of C. N.
Hodges; ... (d) (that) Administratrix Magno allow the PCIB to inspect whatever
records, documents and papers she may have in her possession, in the same
manner that Administrator PCIB is also directed to allow Administratrix Magno to
inspect whatever records, documents and papers it may have in its possession" and
"(e) that the accountant of the estate of Linnie Jane Hodges shall have access to all
records of the transactions of both estates for the protection of the estate of Linnie
Jane Hodges; and in like manner, the accountant or any authorized representative
of the estate of C. N. Hodges shall have access to the records of transactions of the
Linnie Jane Hodges estate for the protection of the estate of C. N. Hodges", (pp.
292-295, id.) and (4) the order of February 15, 1966, denying, among others, the
motion for reconsideration of the order of October 27, 1965 last referred to. (pp. 455-
456, id.)
As may be readily seen, the thrust of all these four impugned orders is in line with
the Court's above-mentioned resolution of September 8, 1972 modifying the
injunction previously issued on August 8, 1967, and, more importantly, with what We
have said the trial court should have always done pending the liquidation of the
conjugal partnership of the Hodges spouses. In fact, as already stated, that is the
arrangement We are ordering, by this decision, to be followed. Stated differently,
since the questioned orders provide for joint action by the two administrators, and
that is precisely what We are holding out to have been done and should be done
until the two estates are separated from each other, the said orders must be
affirmed. Accordingly the foregoing assignments of error must be, as they are
hereby overruled.
Assignments of error Numbers LXVIII
to LXXI and LXXIII to LXXVI.
The orders complained of under these assignments of error commonly deal with
expenditures made by appellee Magno, as Administratrix of the Estate of Mrs.
Hodges, in connection with her administration thereof, albeit additionally,
assignments of error Numbers LXIX to LXXI put into question the payment of
attorneys fees provided for in the contract for the purpose, as constituting, in effect,
premature advances to the heirs of Mrs. Hodges.
More specifically, assignment Number LXXIII refers to reimbursement of overtime
pay paid to six employees of the court and three other persons for services in
copying the court records to enable the lawyers of the administration to be fully
informed of all the incidents in the proceedings. The reimbursement was approved
as proper legal expenses of administration per the order of December 19, 1964, (pp.
221-222, id.) and repeated motions for reconsideration thereof were denied by the
orders of January 9, 1965, (pp. 231-232, id.) October 27, 1965, (p. 277, id.) and
February 15, 1966. (pp. 455-456, id.) On the other hand, Assignments Numbers
LXVIII to LXXI, LXXIV and LXXV question the trial court's order of November 3,
1965 approving the agreement of June 6, 1964 between Administratrix Magno and
James L. Sullivan, attorney-in-fact of the heirs of Mrs. Hodges, as Parties of the First
Part, and Attorneys Raul Manglapus and Rizal R. Quimpo, as Parties of the Second
Part, regarding attorneys fees for said counsel who had agreed "to prosecute and
defend their interests (of the Parties of the First Part) in certain cases now pending
litigation in the Court of First Instance of Iloilo , more specifically in Special
Proceedings 1307 and 1672 " (pp. 126-129, id.) and directing Administratrix
Magno "to issue and sign whatever check or checks maybe needed to implement
the approval of the agreement annexed to the motion" as well as the "administrator
of the estate of C. N. Hodges to countersign the said check or checks as the case
maybe." (pp. 313-320, id.), reconsideration of which order of approval was denied in
the order of February 16, 1966, (p. 456, id.) Assignment Number LXXVI imputes
error to the lower court's order of October 27, 1965, already referred to above,
insofar as it orders that "PCIB should counter sign the check in the amount of P250
in favor of Administratrix Avelina A. Magno as her compensation as administratrix of
Linnie Jane Hodges estate chargeable to the Testate Estate of Linnie Jane Hodges
only." (p. 294, id.)
Main contention again of appellant PCIB in regard to these eight assigned errors is
that there is no such estate as the estate of Mrs. Hodges for which the questioned
expenditures were made, hence what were authorized were in effect expenditures
from the estate of Hodges. As We have already demonstrated in Our resolution
above of the petition for certiorari and prohibition, this posture is incorrect. Indeed, in
whichever way the remaining issues between the parties in these cases are
ultimately resolved, 10 the final result will surely be that there are properties
constituting the estate of Mrs. Hodges of which Magno is the current administratrix.
It follows, therefore, that said appellee had the right, as such administratrix, to hire
the persons whom she paid overtime pay and to be paid for her own services as
administratrix. That she has not yet collected and is not collecting amounts as
substantial as that paid to or due appellant PCIB is to her credit.
Of course, she is also entitled to the services of counsel and to that end had the
authority to enter into contracts for attorney's fees in the manner she had done in the
agreement of June 6, 1964. And as regards to the reasonableness of the amount
therein stipulated, We see no reason to disturb the discretion exercised by the
probate court in determining the same. We have gone over the agreement, and
considering the obvious size of the estate in question and the nature of the issues
between the parties as well as the professional standing of counsel, We cannot say
that the fees agreed upon require the exercise by the Court of its inherent power to
reduce it.
PCIB insists, however, that said agreement of June 6, 1964 is not for legal services
to the estate but to the heirs of Mrs. Hodges, or, at most, to both of them, and such
being the case, any payment under it, insofar as counsels' services would redound
to the benefit of the heirs, would be in the nature of advances to such heirs and a
CONFLICTS OF LAW FEB 23 ASS CASES 73
premature distribution of the estate. Again, We hold that such posture cannot
prevail.
Upon the premise We have found plausible that there is an existing estate of Mrs.
Hodges, it results that juridically and factually the interests involved in her estate are
distinct and different from those involved in her estate of Hodges and vice versa.
Insofar as the matters related exclusively to the estate of Mrs. Hodges, PCIB, as
administrator of the estate of Hodges, is a complete stranger and it is without
personality to question the actuations of the administratrix thereof regarding matters
not affecting the estate of Hodges. Actually, considering the obviously considerable
size of the estate of Mrs. Hodges, We see no possible cause for apprehension that
when the two estates are segregated from each other, the amount of attorney's fees
stipulated in the agreement in question will prejudice any portion that would
correspond to Hodges' estate.
And as regards the other heirs of Mrs. Hodges who ought to be the ones who should
have a say on the attorney's fees and other expenses of administration assailed by
PCIB, suffice it to say that they appear to have been duly represented in the
agreement itself by their attorney-in-fact, James L. Sullivan and have not otherwise
interposed any objection to any of the expenses incurred by Magno questioned by
PCIB in these appeals. As a matter of fact, as ordered by the trial court, all the
expenses in question, including the attorney's fees, may be paid without awaiting the
determination and segregation of the estate of Mrs. Hodges.
Withal, the weightiest consideration in connection with the point under discussion is
that at this stage of the controversy among the parties herein, the vital issue refers
to the existence or non-existence of the estate of Mrs. Hodges. In this respect, the
interest of respondent Magno, as the appointed administratrix of the said estate, is
to maintain that it exists, which is naturally common and identical with and
inseparable from the interest of the brothers and sisters of Mrs. Hodges. Thus, it
should not be wondered why both Magno and these heirs have seemingly agreed to
retain but one counsel. In fact, such an arrangement should be more convenient and
economical to both. The possibility of conflict of interest between Magno and the
heirs of Mrs. Hodges would be, at this stage, quite remote and, in any event, rather
insubstantial. Besides, should any substantial conflict of interest between them arise
in the future, the same would be a matter that the probate court can very well take
care of in the course of the independent proceedings in Case No. 1307 after the
corresponding segregation of the two subject estates. We cannot perceive any
cogent reason why, at this stage, the estate and the heirs of Mrs. Hodges cannot be
represented by a common counsel.
Now, as to whether or not the portion of the fees in question that should correspond
to the heirs constitutes premature partial distribution of the estate of Mrs. Hodges is
also a matter in which neither PCIB nor the heirs of Hodges have any interest. In
any event, since, as far as the records show, the estate has no creditors and the
corresponding estate and inheritance taxes, except those of the brothers and sisters
of Mrs. Hodges, have already been paid, 11 no prejudice can caused to anyone by
the comparatively small amount of attorney's fees in question. And in this
connection, it may be added that, although strictly speaking, the attorney's fees of
the counsel of an administrator is in the first instance his personal responsibility,
reimbursable later on by the estate, in the final analysis, when, as in the situation on
hand, the attorney-in-fact of the heirs has given his conformity thereto, it would be
idle effort to inquire whether or not the sanction given to said fees by the probate
court is proper.
For the foregoing reasons, Assignments of Error LXVIII to LXXI and LXXIII to LXXVI
should be as they are hereby overruled.
Assignments of error I to IV,
XIII to XV, XXII to XXV, XXXV
to XXX VI, XLI to XLIII and L.
These assignments of error deal with the approval by the trial court of various deeds
of sale of real properties registered in the name of Hodges but executed by appellee
Magno, as Administratrix of the Estate of Mrs. Hodges, purportedly in
implementation of corresponding supposed written "Contracts to Sell" previously
executed by Hodges during the interim between May 23, 1957, when his wife died,
and December 25, 1962, the day he died. As stated on pp. 118-120 of appellant's
main brief, "These are: the, contract to sell between the deceased, Charles Newton
Hodges, and the appellee, Pepito G. Iyulores executed on February 5, 1961; the
contract to sell between the deceased, Charles Newton Hodges, and the appellant
Esperidion Partisala, executed on April 20, 1960; the contract to sell between the
deceased, Charles Newton Hodges, and the appellee, Winifredo C. Espada,
executed on April 18, 1960; the contract to sell between the deceased, Charles
Newton Hodges, and the appellee, Rosario Alingasa, executed on August 25, 1958;
the contract to sell between the deceased, Charles Newton Hodges, and the
appellee, Lorenzo Carles, executed on June 17, 1958; the contract to sell between
the deceased, Charles Newton Hodges, and the appellee, Salvador S. Guzman,
executed on September 13, 1960; the contract to sell between the deceased,
Charles Newton Hodges, and the appellee, Florenia Barrido, executed on February
21, 1958; the contract to sell between the deceased, Charles Newton Hodges, and
the appellee, Purificacion Coronado, executed on August 14, 1961; the contract to
sell between the deceased, Charles Newton Hodges, and the appellee, Graciano
Lucero, executed on November 27, 1961; the contract to sell between the
deceased, Charles Newton Hodges, and the appellee, Ariteo Thomas Jamir,
executed on May 26, 1961; the contract to sell between the deceased, Charles
Newton Hodges, and the appellee, Melquiades Batisanan, executed on June 9,
1959; the contract to sell between the deceased, Charles Newton Hodges, and the
appellee, Belcezar Causing, executed on February 10, 1959 and the contract to sell
between the deceased, Charles Newton Hodges, and the appellee, Adelfa
Premaylon, executed on October 31, 1959, re Title No. 13815."
Relative to these sales, it is the position of appellant PCIB that, inasmuch as
pursuant to the will of Mrs. Hodges, her husband was to have dominion over all her
estate during his lifetime, it was as absolute owner of the properties respectively
covered by said sales that he executed the aforementioned contracts to sell, and
consequently, upon his death, the implementation of said contracts may be
undertaken only by the administrator of his estate and not by the administratrix of
CONFLICTS OF LAW FEB 23 ASS CASES 74
the estate of Mrs. Hodges. Basically, the same theory is invoked with particular
reference to five other sales, in which the respective "contracts to sell" in favor of
these appellees were executed by Hodges before the death of his wife, namely,
those in favor of appellee Santiago Pacaonsis, Alfredo Catedral, Jose Pablico,
Western Institute of Technology and Adelfa Premaylon.
Anent those deeds of sale based on promises or contracts to sell executed by
Hodges after the death of his wife, those enumerated in the quotation in the
immediately preceding paragraph, it is quite obvious that PCIB's contention cannot
be sustained. As already explained earlier, 1 1* all proceeds of remunerative
transfers or dispositions made by Hodges after the death of his wife should be
deemed as continuing to be parts of her estate and, therefore, subject to the terms
of her will in favor of her brothers and sisters, in the sense that should there be no
showing that such proceeds, whether in cash or property have been subsequently
conveyed or assigned subsequently by Hodges to any third party by acts inter vivos
with the result that they could not thereby belong to him anymore at the time of his
death, they automatically became part of the inheritance of said brothers and
sisters. The deeds here in question involve transactions which are exactly of this
nature. Consequently, the payments made by the appellees should be considered
as payments to the estate of Mrs. Hodges which is to be distributed and partitioned
among her heirs specified in the will.
The five deeds of sale predicated on contracts to sell executed Hodges during the
lifetime of his wife, present a different situation. At first blush, it would appear that as
to them, PCIB's position has some degree of plausibility. Considering, however, that
the adoption of PCIB's theory would necessarily have tremendous repercussions
and would bring about considerable disturbance of property rights that have
somehow accrued already in favor of innocent third parties, the five purchasers
aforenamed, the Court is inclined to take a pragmatic and practical view of the legal
situation involving them by overlooking the possible technicalities in the way, the
non-observance of which would not, after all, detract materially from what should
substantially correspond to each and all of the parties concerned.
To start with, these contracts can hardly be ignored. Bona fide third parties are
involved; as much as possible, they should not be made to suffer any prejudice on
account of judicial controversies not of their own making. What is more, the
transactions they rely on were submitted by them to the probate court for approval,
and from already known and recorded actuations of said court then, they had reason
to believe that it had authority to act on their motions, since appellee Magno had,
from time to time prior to their transactions with her, been allowed to act in her
capacity as administratrix of one of the subject estates either alone or conjointly with
PCIB. All the sales in question were executed by Magno in 1966 already, but before
that, the court had previously authorized or otherwise sanctioned expressly many of
her act as administratrix involving expenditures from the estate made by her either
conjointly with or independently from PCIB, as Administrator of the Estate of
Hodges. Thus, it may be said that said buyers-appellees merely followed precedents
in previous orders of the court. Accordingly, unless the impugned orders approving
those sales indubitably suffer from some clearly fatal infirmity the Court would rather
affirm them.
It is quite apparent from the record that the properties covered by said sales are
equivalent only to a fraction of what should constitute the estate of Mrs. Hodges,
even if it is assumed that the same would finally be held to be only one-fourth of the
conjugal properties of the spouses as of the time of her death or, to be more exact,
one-half of her estate as per the inventory submitted by Hodges as executor, on
May 12, 1958. In none of its numerous, varied and voluminous pleadings, motions
and manifestations has PCIB claimed any possibility otherwise. Such being the
case, to avoid any conflict with the heirs of Hodges, the said properties covered by
the questioned deeds of sale executed by appellee Magno may be treated as
among those corresponding to the estate of Mrs. Hodges, which would have been
actually under her control and administration had Hodges complied with his duty to
liquidate the conjugal partnership. Viewing the situation in that manner, the only
ones who could stand to be prejudiced by the appealed orders referred to in the
assignment of errors under discussion and who could, therefore, have the requisite
interest to question them would be only the heirs of Mrs. Hodges, definitely not
PCIB.
It is of no moment in what capacity Hodges made the "contracts to sell' after the
death of his wife. Even if he had acted as executor of the will of his wife, he did not
have to submit those contracts to the court nor follow the provisions of the rules,
(Sections 2, 4, 5, 6, 8 and 9 of Rule 89 quoted by appellant on pp. 125 to 127 of its
brief) for the simple reason that by the very orders, much relied upon by appellant
for other purposes, of May 27, 1957 and December 14, 1957, Hodges was "allowed
or authorized" by the trial court "to continue the business in which he was engaged
and to perform acts which he had been doing while the deceased was living", (Order
of May 27) which according to the motion on which the court acted was "of buying
and selling personal and real properties", and "to execute subsequent sales,
conveyances, leases and mortgages of the properties left by the said deceased
Linnie Jane Hodges in consonance with the wishes conveyed in the last will and
testament of the latter." (Order of December 14) In other words, if Hodges acted
then as executor, it can be said that he had authority to do so by virtue of these
blanket orders, and PCIB does not question the legality of such grant of authority; on
the contrary, it is relying on the terms of the order itself for its main contention in
these cases. On the other hand, if, as PCIB contends, he acted as heir-adjudicatee,
the authority given to him by the aforementioned orders would still suffice.
As can be seen, therefore, it is of no moment whether the "contracts to sell" upon
which the deeds in question were based were executed by Hodges before or after
the death of his wife. In a word, We hold, for the reasons already stated, that the
properties covered by the deeds being assailed pertain or should be deemed as
pertaining to the estate of Mrs. Hodges; hence, any supposed irregularity attending
the actuations of the trial court may be invoked only by her heirs, not by PCIB, and
since the said heirs are not objecting, and the defects pointed out not being strictly
jurisdictional in nature, all things considered, particularly the unnecessary
disturbance of rights already created in favor of innocent third parties, it is best that
the impugned orders are not disturbed.
In view of these considerations, We do not find sufficient merit in the assignments of
error under discussion.
CONFLICTS OF LAW FEB 23 ASS CASES 75
Assignments of error V to VIII,
XVI to XVIII, XXVI to XXIX, XXXVII
to XXXVIII, XLIV to XLVI and LI.
All these assignments of error commonly deal with alleged non-fulfillment by the
respective vendees, appellees herein, of the terms and conditions embodied in the
deeds of sale referred to in the assignments of error just discussed. It is claimed that
some of them never made full payments in accordance with the respective contracts
to sell, while in the cases of the others, like Lorenzo Carles, Jose Pablico, Alfredo
Catedral and Salvador S. Guzman, the contracts with them had already been
unilaterally cancelled by PCIB pursuant to automatic rescission clauses contained in
them, in view of the failure of said buyers to pay arrearages long overdue. But
PCIB's posture is again premised on its assumption that the properties covered by
the deeds in question could not pertain to the estate of Mrs. Hodges. We have
already held above that, it being evident that a considerable portion of the conjugal
properties, much more than the properties covered by said deeds, would inevitably
constitute the estate of Mrs. Hodges, to avoid unnecessary legal complications, it
can be assumed that said properties form part of such estate. From this point of
view, it is apparent again that the questions, whether or not it was proper for
appellee Magno to have disregarded the cancellations made by PCIB, thereby
reviving the rights of the respective buyers-appellees, and, whether or not the rules
governing new dispositions of properties of the estate were strictly followed, may not
be raised by PCIB but only by the heirs of Mrs. Hodges as the persons designated
to inherit the same, or perhaps the government because of the still unpaid
inheritance taxes. But, again, since there is no pretense that any objections were
raised by said parties or that they would necessarily be prejudiced, the contentions
of PCIB under the instant assignments of error hardly merit any consideration.
Assignments of error IX to XII, XIX
to XXI, XXX to XXIV, XXXIX to XL,
XLVII to XLIX, LII and LIII to LXI.
PCIB raises under these assignments of error two issues which according to it are
fundamental, namely: (1) that in approving the deeds executed by Magno pursuant
to contracts to sell already cancelled by it in the performance of its functions as
administrator of the estate of Hodges, the trial court deprived the said estate of the
right to invoke such cancellations it (PCIB) had made and (2) that in so acting, the
court "arrogated unto itself, while acting as a probate court, the power to determine
the contending claims of third parties against the estate of Hodges over real
property," since it has in effect determined whether or not all the terms and
conditions of the respective contracts to sell executed by Hodges in favor of the
buyers-appellees concerned were complied with by the latter. What is worse, in the
view of PCIB, is that the court has taken the word of the appellee Magno, "a total
stranger to his estate as determinative of the issue".
Actually, contrary to the stand of PCIB, it is this last point regarding appellee
Magno's having agreed to ignore the cancellations made by PCIB and allowed the
buyers-appellees to consummate the sales in their favor that is decisive. Since We
have already held that the properties covered by the contracts in question should be
deemed to be portions of the estate of Mrs. Hodges and not that of Hodges, it is
PCIB that is a complete stranger in these incidents. Considering, therefore, that the
estate of Mrs. Hodges and her heirs who are the real parties in interest having the
right to oppose the consummation of the impugned sales are not objecting, and that
they are the ones who are precisely urging that said sales be sanctioned, the
assignments of error under discussion have no basis and must accordingly be as
they are hereby overruled.
With particular reference to assignments LIII to LXI, assailing the orders of the trial
court requiring PCIB to surrender the respective owner's duplicate certificates of title
over the properties covered by the sales in question and otherwise directing the
Register of Deeds of Iloilo to cancel said certificates and to issue new transfer
certificates of title in favor of the buyers-appellees, suffice it to say that in the light of
the above discussion, the trial court was within its rights to so require and direct,
PCIB having refused to give way, by withholding said owners' duplicate certificates,
of the corresponding registration of the transfers duly and legally approved by the
court.
Assignments of error LXII to LXVII
All these assignments of error commonly deal with the appeal against orders
favoring appellee Western Institute of Technology. As will be recalled, said institute is
one of the buyers of real property covered by a contract to sell executed by Hodges
prior to the death of his wife. As of October, 1965, it was in arrears in the total
amount of P92,691.00 in the payment of its installments on account of its purchase,
hence it received under date of October 4, 1965 and October 20, 1965, letters of
collection, separately and respectively, from PCIB and appellee Magno, in their
respective capacities as administrators of the distinct estates of the Hodges
spouses, albeit, while in the case of PCIB it made known that "no other arrangement
can be accepted except by paying all your past due account", on the other hand,
Magno merely said she would "appreciate very much if you can make some
remittance to bring this account up-to-date and to reduce the amount of the
obligation." (See pp. 295-311, Green R. on A.) On November 3, 1965, the Institute
filed a motion which, after alleging that it was ready and willing to pay P20,000 on
account of its overdue installments but uncertain whether it should pay PCIB or
Magno, it prayed that it be "allowed to deposit the aforesaid amount with the court
pending resolution of the conflicting claims of the administrators." Acting on this
motion, on November 23, 1965, the trial court issued an order, already quoted in the
narration of facts in this opinion, holding that payment to both or either of the two
administrators is "proper and legal", and so "movant can pay to both estates or
either of them", considering that "in both cases (Special Proceedings 1307 and
1672) there is as yet no judicial declaration of heirs nor distribution of properties to
whomsoever are entitled thereto."
The arguments under the instant assignments of error revolve around said order.
From the procedural standpoint, it is claimed that PCIB was not served with a copy
of the Institute's motion, that said motion was heard, considered and resolved on
November 23, 1965, whereas the date set for its hearing was November 20, 1965,
and that what the order grants is different from what is prayed for in the motion. As
CONFLICTS OF LAW FEB 23 ASS CASES 76
to the substantive aspect, it is contended that the matter treated in the motion is
beyond the jurisdiction of the probate court and that the order authorized payment to
a person other than the administrator of the estate of Hodges with whom the
Institute had contracted.
The procedural points urged by appellant deserve scant consideration. We must
assume, absent any clear proof to the contrary, that the lower court had acted
regularly by seeing to it that appellant was duly notified. On the other hand, there is
nothing irregular in the court's having resolved the motion three days after the date
set for hearing the same. Moreover, the record reveals that appellants' motion for
reconsideration wherein it raised the same points was denied by the trial court on
March 7, 1966 (p. 462, Green R. on A.) Withal, We are not convinced that the relief
granted is not within the general intent of the Institute's motion.
Insofar as the substantive issues are concerned, all that need be said at this point is
that they are mere reiterations of contentions We have already resolved above
adversely to appellants' position. Incidentally, We may add, perhaps, to erase all
doubts as to the propriety of not disturbing the lower court's orders sanctioning the
sales questioned in all these appeal s by PCIB, that it is only when one of the parties
to a contract to convey property executed by a deceased person raises substantial
objections to its being implemented by the executor or administrator of the
decedent's estate that Section 8 of Rule 89 may not apply and, consequently, the
matter has, to be taken up in a separate action outside of the probate court; but
where, as in the cases of the sales herein involved, the interested parties are in
agreement that the conveyance be made, it is properly within the jurisdiction of the
probate court to give its sanction thereto pursuant to the provisions of the rule just
mentioned. And with respect to the supposed automatic rescission clauses
contained in the contracts to sell executed by Hodges in favor of herein appellees,
the effect of said clauses depend on the true nature of the said contracts, despite
the nomenclature appearing therein, which is not controlling, for if they amount to
actual contracts of sale instead of being mere unilateral accepted "promises to sell",
(Art. 1479, Civil Code of the Philippines, 2nd paragraph) the pactum
commissorium or the automatic rescission provision would not operate, as a matter
of public policy, unless there has been a previous notarial or judicial demand by the
seller (10 Manresa 263, 2nd ed.) neither of which have been shown to have been
made in connection with the transactions herein involved.
Consequently, We find no merit in the assignments of error
Number LXII to LXVII.
SUMMARY
Considering the fact that this decision is unusually extensive and that the issues
herein taken up and resolved are rather numerous and varied, what with appellant
making seventy-eight assignments of error affecting no less than thirty separate
orders of the court a quo, if only to facilitate proper understanding of the import and
extent of our rulings herein contained, it is perhaps desirable that a brief restatement
of the whole situation be made together with our conclusions in regard to its various
factual and legal aspects. .
The instant cases refer to the estate left by the late Charles Newton Hodges as well
as that of his wife, Linnie Jane Hodges, who predeceased him by about five years
and a half. In their respective wills which were executed on different occasions, each
one of them provided mutually as follows: "I give, devise and bequeath all of the
rest, residue and remainder (after funeral and administration expenses, taxes and
debts) of my estate, both real and personal, wherever situated or located, to my
beloved (spouse) to have and to hold unto (him/her) during (his/her) natural
lifetime", subject to the condition that upon the death of whoever of them survived
the other, the remainder of what he or she would inherit from the other is "give(n),
devise(d) and bequeath(ed)" to the brothers and sisters of the latter.
Mrs. Hodges died first, on May 23, 1957. Four days later, on May 27, Hodges was
appointed special administrator of her estate, and in a separate order of the same
date, he was "allowed or authorized to continue the business in which he was
engaged, (buying and selling personal and real properties) and to perform acts
which he had been doing while the deceased was living." Subsequently, on
December 14, 1957, after Mrs. Hodges' will had been probated and Hodges had
been appointed and had qualified as Executor thereof, upon his motion in which he
asserted that he was "not only part owner of the properties left as conjugal, but also,
the successor to all the properties left by the deceased Linnie Jane Hodges", the
trial court ordered that "for the reasons stated in his motion dated December 11,
1957, which the Court considers well taken, ... all the sales, conveyances, leases
and mortgages of all properties left by the deceased Linnie Jane Hodges executed
by the Executor, Charles Newton Hodges are hereby APPROVED. The said
Executor is further authorized to execute subsequent sales, conveyances, leases
and mortgages of the properties left by the said deceased Linnie Jane Hodges in
consonance with the wishes contained in the last will and testament of the latter."
Annually thereafter, Hodges submitted to the court the corresponding statements of
account of his administration, with the particularity that in all his motions, he always
made it point to urge the that "no person interested in the Philippines of the time and
place of examining the herein accounts be given notice as herein executor is the
only devisee or legatee of the deceased in accordance with the last will and
testament already probated by the Honorable Court." All said accounts approved as
prayed for.
Nothing else appears to have been done either by the court a quo or Hodges until
December 25, 1962. Importantly to be the provision in the will of Mrs. Hodges that
her share of the conjugal partnership was to be inherited by her husband "to have
and to hold unto him, my said husband, during his natural lifetime" and that "at the
death of my said husband, I give, devise and bequeath all the rest, residue and
remainder of my estate, both real and personal, wherever situated or located, to be
equally divided among my brothers and sisters, share and share alike", which
provision naturally made it imperative that the conjugal partnership be promptly
liquidated, in order that the "rest, residue and remainder" of his wife's share thereof,
as of the time of Hodges' own death, may be readily known and identified, no such
liquidation was ever undertaken. The record gives no indication of the reason for
such omission, although relatedly, it appears therein:
CONFLICTS OF LAW FEB 23 ASS CASES 77
1. That in his annual statement submitted to the court of the net
worth of C. N. Hodges and the Estate of Linnie Jane Hodges,
Hodges repeatedly and consistently reported the combined
income of the conjugal partnership and then merely divided the
same equally between himself and the estate of the deceased
wife, and, more importantly, he also, as consistently, filed
corresponding separate income tax returns for each calendar year
for each resulting half of such combined income, thus reporting
that the estate of Mrs. Hodges had its own income distinct from
his own.
2. That when the court a quo happened to inadvertently omit in its
order probating the will of Mrs. Hodges, the name of one of her
brothers, Roy Higdon then already deceased, Hodges lost no time
in asking for the proper correction "in order that the heirs of
deceased Roy Higdon may not think or believe they were omitted,
and that they were really interested in the estate of the deceased
Linnie Jane Hodges".
3. That in his aforementioned motion of December 11, 1957, he
expressly stated that "deceased Linnie Jane Hodges died leaving
no descendants or ascendants except brothers and sisters and
herein petitioner as the surviving spouse, to inherit the properties
of the decedent", thereby indicating that he was not excluding his
wife's brothers and sisters from the inheritance.
4. That Hodges allegedly made statements and manifestations to
the United States inheritance tax authorities indicating that he had
renounced his inheritance from his wife in favor of her other heirs,
which attitude he is supposed to have reiterated or ratified in an
alleged affidavit subscribed and sworn to here in the Philippines
and in which he even purportedly stated that his reason for so
disclaiming and renouncing his rights under his wife's will was to
"absolve (him) or (his) estate from any liability for the payment of
income taxes on income which has accrued to the estate of Linnie
Jane Hodges", his wife, since her death.
On said date, December 25, 1962, Hodges died. The very next day, upon motion of
herein respondent and appellee, Avelina A. Magno, she was appointed by the trial
court as Administratrix of the Testate Estate of Linnie Jane Hodges, in Special
Proceedings No. 1307 and as Special Administratrix of the estate of Charles Newton
Hodges, "in the latter case, because the last will of said Charles Newton Hodges is
still kept in his vault or iron safe and that the real and personal properties of both
spouses may be lost, damaged or go to waste, unless Special Administratrix is
appointed," (Order of December 26, 1962, p. 27, Yellow R. on A.) although, soon
enough, on December 29, 1962, a certain Harold K. Davies was appointed as her
Co-Special Administrator, and when Special Proceedings No. 1672, Testate Estate
of Charles Newton Hodges, was opened, Joe Hodges, as next of kin of the
deceased, was in due time appointed as Co-Administrator of said estate together
with Atty. Fernando P. Mirasol, to replace Magno and Davies, only to be in turn
replaced eventually by petitioner PCIB alone.
At the outset, the two probate proceedings appear to have been proceeding jointly,
with each administrator acting together with the other, under a sort of modus
operandi. PCIB used to secure at the beginning the conformity to and signature of
Magno in transactions it wanted to enter into and submitted the same to the court for
approval as their joint acts. So did Magno do likewise. Somehow, however,
differences seem to have arisen, for which reason, each of them began acting later
on separately and independently of each other, with apparent sanction of the trial
court. Thus, PCIB had its own lawyers whom it contracted and paid handsomely,
conducted the business of the estate independently of Magno and otherwise acted
as if all the properties appearing in the name of Charles Newton Hodges belonged
solely and only to his estate, to the exclusion of the brothers and sisters of Mrs.
Hodges, without considering whether or not in fact any of said properties
corresponded to the portion of the conjugal partnership pertaining to the estate of
Mrs. Hodges. On the other hand, Magno made her own expenditures, hired her own
lawyers, on the premise that there is such an estate of Mrs. Hodges, and dealth with
some of the properties, appearing in the name of Hodges, on the assumption that
they actually correspond to the estate of Mrs. Hodges. All of these independent and
separate actuations of the two administrators were invariably approved by the trial
court upon submission. Eventually, the differences reached a point wherein Magno,
who was more cognizant than anyone else about the ins and outs of the businesses
and properties of the deceased spouses because of her long and intimate
association with them, made it difficult for PCIB to perform normally its functions as
administrator separately from her. Thus, legal complications arose and the present
judicial controversies came about.
Predicating its position on the tenor of the orders of May 27 and December 14, 1957
as well as the approval by the court a quo of the annual statements of account of
Hodges, PCIB holds to the view that the estate of Mrs. Hodges has already been in
effect closed with the virtual adjudication in the mentioned orders of her whole
estate to Hodges, and that, therefore, Magno had already ceased since then to have
any estate to administer and the brothers and sisters of Mrs. Hodges have no
interests whatsoever in the estate left by Hodges. Mainly upon such theory, PCIB
has come to this Court with a petition for certiorari and prohibition praying that the
lower court's orders allowing respondent Magno to continue acting as administratrix
of the estate of Mrs. Hodges in Special Proceedings 1307 in the manner she has
CONFLICTS OF LAW FEB 23 ASS CASES 78
been doing, as detailed earlier above, be set aside. Additionally, PCIB maintains that
the provision in Mrs. Hodges' will instituting her brothers and sisters in the manner
therein specified is in the nature of a testamentary substitution, but inasmuch as the
purported substitution is not, in its view, in accordance with the pertinent provisions
of the Civil Code, it is ineffective and may not be enforced. It is further contended
that, in any event, inasmuch as the Hodges spouses were both residents of the
Philippines, following the decision of this Court in Aznar vs. Garcia, or the case of
Christensen, 7 SCRA 95, the estate left by Mrs. Hodges could not be more than
one-half of her share of the conjugal partnership, notwithstanding the fact that she
was citizen of Texas, U.S.A., in accordance with Article 16 in relation to Articles 900
and 872 of the Civil Code. Initially, We issued a preliminary injunction against Magno
and allowed PCIB to act alone.
At the same time PCIB has appealed several separate orders of the trial court
approving individual acts of appellee Magno in her capacity as administratrix of the
estate of Mrs. Hodges, such as, hiring of lawyers for specified fees and incurring
expenses of administration for different purposes and executing deeds of sale in
favor of her co-appellees covering properties which are still registered in the name
of Hodges, purportedly pursuant to corresponding "contracts to sell" executed by
Hodges. The said orders are being questioned on jurisdictional and procedural
grounds directly or indirectly predicated on the principal theory of appellant that all
the properties of the two estates belong already to the estate of Hodges exclusively.
On the other hand, respondent-appellee Magno denies that the trial court's orders of
May 27 and December 14, 1957 were meant to be finally adjudicatory of the
hereditary rights of Hodges and contends that they were no more than the court's
general sanction of past and future acts of Hodges as executor of the will of his wife
in due course of administration. As to the point regarding substitution, her position is
that what was given by Mrs. Hodges to her husband under the provision in question
was a lifetime usufruct of her share of the conjugal partnership, with the naked
ownership passing directly to her brothers and sisters. Anent the application of
Article 16 of the Civil Code, she claims that the applicable law to the will of Mrs.
Hodges is that of Texas under which, she alleges, there is no system of legitime,
hence, the estate of Mrs. Hodges cannot be less than her share or one-half of the
conjugal partnership properties. She further maintains that, in any event, Hodges
had as a matter of fact and of law renounced his inheritance from his wife and,
therefore, her whole estate passed directly to her brothers and sisters effective at
the latest upon the death of Hodges.
In this decision, for the reasons discussed above, and upon the issues just
summarized, We overrule PCIB's contention that the orders of May 27, 1957 and
December 14, 1957 amount to an adjudication to Hodges of the estate of his wife,
and We recognize the present existence of the estate of Mrs. Hodges, as consisting
of properties, which, while registered in that name of Hodges, do actually
correspond to the remainder of the share of Mrs. Hodges in the conjugal
partnership, it appearing that pursuant to the pertinent provisions of her will, any
portion of said share still existing and undisposed of by her husband at the time of
his death should go to her brothers and sisters share and share alike. Factually, We
find that the proven circumstances relevant to the said orders do not warrant the
conclusion that the court intended to make thereby such alleged final adjudication.
Legally, We hold that the tenor of said orders furnish no basis for such a conclusion,
and what is more, at the time said orders were issued, the proceedings had not yet
reached the point when a final distribution and adjudication could be made.
Moreover, the interested parties were not duly notified that such disposition of the
estate would be done. At best, therefore, said orders merely allowed Hodges to
dispose of portions of his inheritance in advance of final adjudication, which is
implicitly permitted under Section 2 of Rule 109, there being no possible prejudice to
third parties, inasmuch as Mrs. Hodges had no creditors and all pertinent taxes have
been paid.
More specifically, We hold that, on the basis of circumstances presently extant in the
record, and on the assumption that Hodges' purported renunciation should not be
upheld, the estate of Mrs. Hodges inherited by her brothers and sisters consists of
one-fourth of the community estate of the spouses at the time of her death, minus
whatever Hodges had gratuitously disposed of therefrom during the period from,
May 23, 1957, when she died, to December 25, 1962, when he died provided, that
with regard to remunerative dispositions made by him during the same period, the
proceeds thereof, whether in cash or property, should be deemed as continuing to
be part of his wife's estate, unless it can be shown that he had subsequently
disposed of them gratuitously.
At this juncture, it may be reiterated that the question of what are the pertinent laws
of Texas and what would be the estate of Mrs. Hodges under them is basically one
of fact, and considering the respective positions of the parties in regard to said
factual issue, it can already be deemed as settled for the purposes of these cases
that, indeed, the free portion of said estate that could possibly descend to her
brothers and sisters by virtue of her will may not be less than one-fourth of the
conjugal estate, it appearing that the difference in the stands of the parties has
reference solely to the legitime of Hodges, PCIB being of the view that under the
laws of Texas, there is such a legitime of one-fourth of said conjugal estate and
Magno contending, on the other hand, that there is none. In other words, hereafter,
whatever might ultimately appear, at the subsequent proceedings, to be actually the
laws of Texas on the matter would no longer be of any consequence, since PCIB
would anyway be in estoppel already to claim that the estate of Mrs. Hodges should
be less than as contended by it now, for admissions by a party related to the effects
of foreign laws, which have to be proven in our courts like any other controverted
fact, create estoppel.
In the process, We overrule PCIB's contention that the provision in Mrs. Hodges' will
in favor of her brothers and sisters constitutes ineffective hereditary substitutions.
But neither are We sustaining, on the other hand, Magno's pose that it gave Hodges
only a lifetime usufruct. We hold that by said provision, Mrs. Hodges simultaneously
instituted her brothers and sisters as co-heirs with her husband, with the condition,
however, that the latter would have complete rights of dominion over the whole
estate during his lifetime and what would go to the former would be only the
remainder thereof at the time of Hodges' death. In other words, whereas they are
not to inherit only in case of default of Hodges, on the other hand, Hodges was not
obliged to preserve anything for them. Clearly then, the essential elements of
testamentary substitution are absent; the provision in question is a simple case of
conditional simultaneous institution of heirs, whereby the institution of Hodges is
CONFLICTS OF LAW FEB 23 ASS CASES 79
subject to a partial resolutory condition the operative contingency of which is
coincidental with that of the suspensive condition of the institution of his brothers
and sisters-in-law, which manner of institution is not prohibited by law.
We also hold, however, that the estate of Mrs. Hodges inherited by her brothers and
sisters could be more than just stated, but this would depend on (1) whether upon
the proper application of the principle of renvoi in relation to Article 16 of the Civil
Code and the pertinent laws of Texas, it will appear that Hodges had no legitime as
contended by Magno, and (2) whether or not it can be held that Hodges had legally
and effectively renounced his inheritance from his wife. Under the circumstances
presently obtaining and in the state of the record of these cases, as of now, the
Court is not in a position to make a final ruling, whether of fact or of law, on any of
these two issues, and We, therefore, reserve said issues for further proceedings and
resolution in the first instance by the court a quo, as hereinabove indicated. We
reiterate, however, that pending such further proceedings, as matters stand at this
stage, Our considered opinion is that it is beyond cavil that since, under the terms of
the will of Mrs. Hodges, her husband could not have anyway legally adjudicated or
caused to be adjudicated to himself her whole share of their conjugal partnership,
albeit he could have disposed any part thereof during his lifetime, the resulting
estate of Mrs. Hodges, of which Magno is the uncontested administratrix, cannot be
less than one-fourth of the conjugal partnership properties, as of the time of her
death, minus what, as explained earlier, have been gratuitously disposed of
therefrom, by Hodges in favor of third persons since then, for even if it were
assumed that, as contended by PCIB, under Article 16 of the Civil Code and
applying renvoi the laws of the Philippines are the ones ultimately applicable, such
one-fourth share would be her free disposable portion, taking into account already
the legitime of her husband under Article 900 of the Civil Code.
The foregoing considerations leave the Court with no alternative than to conclude
that in predicating its orders on the assumption, albeit unexpressed therein, that
there is an estate of Mrs. Hodges to be distributed among her brothers and sisters
and that respondent Magno is the legal administratrix thereof, the trial court acted
correctly and within its jurisdiction. Accordingly, the petition for certiorari and
prohibition has to be denied. The Court feels however, that pending the liquidation of
the conjugal partnership and the determination of the specific properties constituting
her estate, the two administrators should act conjointly as ordered in the Court's
resolution of September 8, 1972 and as further clarified in the dispositive portion of
its decision.
Anent the appeals from the orders of the lower court sanctioning payment by
appellee Magno, as administratrix, of expenses of administration and attorney's
fees, it is obvious that, with Our holding that there is such an estate of Mrs. Hodges,
and for the reasons stated in the body of this opinion, the said orders should be
affirmed. This We do on the assumption We find justified by the evidence of record,
and seemingly agreed to by appellant PCIB, that the size and value of the properties
that should correspond to the estate of Mrs. Hodges far exceed the total of the
attorney's fees and administration expenses in question.
With respect to the appeals from the orders approving transactions made by
appellee Magno, as administratrix, covering properties registered in the name of
Hodges, the details of which are related earlier above, a distinction must be made
between those predicated on contracts to sell executed by Hodges before the death
of his wife, on the one hand, and those premised on contracts to sell entered into by
him after her death. As regards the latter, We hold that inasmuch as the payments
made by appellees constitute proceeds of sales of properties belonging to the estate
of Mrs. Hodges, as may be implied from the tenor of the motions of May 27 and
December 14, 1957, said payments continue to pertain to said estate, pursuant to
her intent obviously reflected in the relevant provisions of her will, on the assumption
that the size and value of the properties to correspond to the estate of Mrs. Hodges
would exceed the total value of all the properties covered by the impugned deeds of
sale, for which reason, said properties may be deemed as pertaining to the estate of
Mrs. Hodges. And there being no showing that thus viewing the situation, there
would be prejudice to anyone, including the government, the Court also holds that,
disregarding procedural technicalities in favor of a pragmatic and practical approach
as discussed above, the assailed orders should be affirmed. Being a stranger to the
estate of Mrs. Hodges, PCIB has no personality to raise the procedural and
jurisdictional issues raised by it. And inasmuch as it does not appear that any of the
other heirs of Mrs. Hodges or the government has objected to any of the orders
under appeal, even as to these parties, there exists no reason for said orders to be
set aside.
DISPOSITIVE PART
IN VIEW OF ALL THE FOREGOING PREMISES, judgment is hereby rendered
DISMISSING the petition in G. R. Nos. L-27860 and L-27896, and AFFIRMING, in
G. R. Nos. L-27936-37 and the other thirty-one numbers hereunder ordered to be
added after payment of the corresponding docket fees, all the orders of the trial
court under appeal enumerated in detail on pages 35 to 37 and 80 to 82 of this
decision; the existence of the Testate Estate of Linnie Jane Hodges, with
respondent-appellee Avelina A. Magno, as administratrix thereof is recognized, and
it is declared that, until final judgment is ultimately rendered regarding (1) the
manner of applying Article 16 of the Civil Code of the Philippines to the situation
obtaining in these cases and (2) the factual and legal issue of whether or not
Charles Newton Hodges had effectively and legally renounced his inheritance under
the will of Linnie Jane Hodges, the said estate consists of one-fourth of the
community properties of the said spouses, as of the time of the death of the wife on
May 23, 1957, minus whatever the husband had already gratuitously disposed of in
favor of third persons from said date until his death, provided, first, that with respect
to remunerative dispositions, the proceeds thereof shall continue to be part of the
wife's estate, unless subsequently disposed of gratuitously to third parties by the
husband, and second, that should the purported renunciation be declared legally
effective, no deductions whatsoever are to be made from said estate; in
consequence, the preliminary injunction of August 8, 1967, as amended on October
4 and December 6, 1967, is lifted, and the resolution of September 8, 1972,
directing that petitioner-appellant PCIB, as Administrator of the Testate Estate of
Charles Newton Hodges, in Special Proceedings 1672, and respondent-appellee
Avelina A. Magno, as Administratrix of the Testate Estate of Linnie Jane Hodges, in
Special Proceedings 1307, should act thenceforth always conjointly, never
CONFLICTS OF LAW FEB 23 ASS CASES 80
independently from each other, as such administrators, is reiterated, and the same
is made part of this judgment and shall continue in force, pending the liquidation of
the conjugal partnership of the deceased spouses and the determination and
segregation from each other of their respective estates, provided, that upon the
finality of this judgment, the trial court should immediately proceed to the partition of
the presently combined estates of the spouses, to the end that the one-half share
thereof of Mrs. Hodges may be properly and clearly identified; thereafter, the trial
court should forthwith segregate the remainder of the one-fourth herein adjudged to
be her estate and cause the same to be turned over or delivered to respondent for
her exclusive administration in Special Proceedings 1307, while the other one-fourth
shall remain under the joint administration of said respondent and petitioner under a
joint proceedings in Special Proceedings 1307 and 1672, whereas the half
unquestionably pertaining to Hodges shall be administered by petitioner exclusively
in Special Proceedings 1672, without prejudice to the resolution by the trial court of
the pending motions for its removal as administrator12; and this arrangement shall be
maintained until the final resolution of the two issues of renvoi and renunciation
hereby reserved for further hearing and determination, and the corresponding
complete segregation and partition of the two estates in the proportions that may
result from the said resolution.
Generally and in all other respects, the parties and the court a quo are directed to
adhere henceforth, in all their actuations in Special Proceedings 1307 and 1672, to
the views passed and ruled upon by the Court in the foregoing opinion.
Appellant PCIB is ordered to pay, within five (5) days from notice hereof, thirty-one
additional appeal docket fees, but this decision shall nevertheless become final as to
each of the parties herein after fifteen (15) days from the respective notices to them
hereof in accordance with the rules.
Costs against petitioner-appellant PCIB.
Zaldivar, Castro, Esguerra and Fernandez, JJ., concur.
Makasiar, Antonio, Muoz Palma and Aquino, JJ., concur in the result.
FIRST DIVISION [G.R. No. 136804. February 19, 2003]
MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL
BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set aside the
Court of Appeals[1] Decision of August 24, 1998 and Resolution of December 14,
1998 in CA-G.R. SP No. 42310[2] affirming the trial courts denial of petitioners motion
for partial summary judgment.
The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero (Guerrero for brevity) filed
a complaint for damages against petitioner Manufacturers Hanover Trust Co. and/or
Chemical Bank (the Bank for brevity) with the Regional Trial Court of Manila (RTC
for brevity). Guerrero sought payment of damages allegedly for (1) illegally withheld
taxes charged against interests on his checking account with the Bank; (2) a
returned check worth US$18,000.00 due to signature verification problems; and (3)
unauthorized conversion of his account. Guerrero amended his complaint on April
18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by
stipulation Guerreros account is governed by New York law and this law does not
permit any of Guerreros claims except actual damages. Subsequently, the Bank
filed a Motion for Partial Summary Judgment seeking the dismissal of Guerreros
claims for consequential, nominal, temperate, moral and exemplary damages as
well as attorneys fees on the same ground alleged in its Answer. The Bank
contended that the trial should be limited to the issue of actual damages. Guerrero
opposed the motion.
The affidavit of Alyssa Walden, a New York attorney, supported the Banks
Motion for Partial Summary Judgment. Alyssa Waldens affidavit (Walden affidavit for
brevity) stated that Guerreros New York bank account stipulated that the governing
law is New York law and that this law bars all of Guerreros claims except actual
damages. The Philippine Consular Office in New York authenticated the Walden
affidavit.
The RTC denied the Banks Motion for Partial Summary Judgment and its
motion for reconsideration on March 6, 1996 and July 17, 1996, respectively. The
Bank filed a petition for certiorari and prohibition with the Court of Appeals assailing
the RTC Orders. In its Decision dated August 24, 1998, the Court of Appeals
dismissed the petition. On December 14, 1998, the Court of Appeals denied the
Banks motion for reconsideration.
CONFLICTS OF LAW FEB 23 ASS CASES 81
 Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for partial
summary judgment. The Court of Appeals ruled that the Walden affidavit does not
serve as proof of the New York law and jurisprudence relied on by the Bank to
support its motion. The Court of Appeals considered the New York law and
jurisprudence as public documents defined in Section 19, Rule 132 of the Rules on
Evidence, as follows:
SEC. 19. Classes of Documents. For the purpose of their presentation in evidence,
documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers, whether of
the Philippines, or of a foreign country;
x x x.
The Court of Appeals opined that the following procedure outlined in Section
24, Rule 132 should be followed in proving foreign law:
SEC. 24. Proof of official record. The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by
an official publication thereof or by a copy attested by the officer having the legal
custody of the record, or by his deputy, and accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. If the office in
which the record is kept is in a foreign country, the certificate may be made by a
secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his
office.
The Court of Appeals likewise rejected the Banks argument that Section 2,
Rule 34 of the old Rules of Court allows the Bank to move with the supporting
Walden affidavit for partial summary judgment in its favor. The Court of Appeals
clarified that the Walden affidavit is not the supporting affidavit referred to in Section
2, Rule 34 that would prove the lack of genuine issue between the parties. The
Court of Appeals concluded that even if the Walden affidavit is used for purposes of
summary judgment, the Bank must still comply with the procedure prescribed by the
Rules to prove the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error in -
x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TO SUPPORT ITS
MOTION FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;
x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES FOREIGN LAW
AS A FACT, IS HEARSAY AND THEREBY CANNOT SERVE AS PROOF OF THE
NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR
SUMMARY JUDGMENT x x x.[3]
First, the Bank argues that in moving for partial summary judgment, it was
entitled to use the Walden affidavit to prove that the stipulated foreign law bars the
claims for consequential, moral, temperate, nominal and exemplary damages and
attorneys fees. Consequently, outright dismissal by summary judgment of these
claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the requirements
of Rule 35 on summary judgments and those of a trial on the merits in considering
the Walden affidavit as hearsay. The Bank points out that the Walden affidavit is not
hearsay since Rule 35 expressly permits the use of affidavits.
Lastly, the Bank argues that since Guerrero did not submit any opposing
affidavit to refute the facts contained in the Walden affidavit, he failed to show the
need for a trial on his claims for damages other than actual.
The Courts Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to Section 2,
Rule 34 of the old Rules of Court which reads:
Section 2. Summary judgment for defending party. A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits for a summary judgment in his favor as to all or
any part thereof.
A court may grant a summary judgment to settle expeditiously a case if, on
motion of either party, there appears from the pleadings, depositions, admissions,
and affidavits that no important issues of fact are involved, except the amount of
damages. In such event, the moving party is entitled to a judgment as a matter of
law.[4]
CONFLICTS OF LAW FEB 23 ASS CASES 82
 In a motion for summary judgment, the crucial question is: are the issues
raised in the pleadings genuine, sham or fictitious, as shown by affidavits,
depositions or admissions accompanying the motion?[5]
A genuine issue means an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious or contrived so as not to
constitute a genuine issue for trial.[6]
A perusal of the parties respective pleadings would show that there are
genuine issues of fact that necessitate formal trial. Guerreros complaint before the
RTC contains a statement of the ultimate facts on which he relies for his claim for
damages. He is seeking damages for what he asserts as illegally withheld taxes
charged against interests on his checking account with the Bank, a returned check
worth US$18,000.00 due to signature verification problems, and unauthorized
conversion of his account. In its Answer, the Bank set up its defense that the agreed
foreign law to govern their contractual relation bars the recovery of damages other
than actual. Apparently, facts are asserted in Guerreros complaint while specific
denials and affirmative defenses are set out in the Banks answer.
True, the court can determine whether there are genuine issues in a case
based merely on the affidavits or counter-affidavits submitted by the parties to the
court. However, as correctly ruled by the Court of Appeals, the Banks motion for
partial summary judgment as supported by the Walden affidavit does not
demonstrate that Guerreros claims are sham, fictitious or contrived. On the contrary,
the Walden affidavit shows that the facts and material allegations as pleaded by the
parties are disputed and there are substantial triable issues necessitating a formal
trial.
There can be no summary judgment where questions of fact are in issue or
where material allegations of the pleadings are in dispute.[7] The resolution of
whether a foreign law allows only the recovery of actual damages is a question of
fact as far as the trial court is concerned since foreign laws do not prove themselves
in our courts.[8] Foreign laws are not a matter of judicial notice. [9] Like any other fact,
they must be alleged and proven. Certainly, the conflicting allegations as to whether
New York law or Philippine law applies to Guerreros claims present a clear dispute
on material allegations which can be resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a sovereign
authority or tribunal may be proved by (1) an official publication thereof or (2)
a copy attested by the officer having the legal custody thereof. Such official
publication or copy must be accompanied, if the record is not kept in the Philippines,
with a certificate that the attesting officer has the legal custody thereof. The
certificate may be issued by any of the authorized Philippine embassy or consular
officials stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in substance, that
the copy is a correct copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v. Court
of Appeals[10] which held that:
x x x:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v.
Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of
Court) does not exclude the presentation of other competent evidence to prove the
existence of a foreign law. In that case, the Supreme Court considered the testimony
under oath of an attorney-at-law of San Francisco, California, who quoted verbatim
a section of California Civil Code and who stated that the same was in force at the
time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court in
the Collector of Internal Revenue v. Fisher et al., upheld the Tax Court in considering
the pertinent law of California as proved by the respondents witness. In that
case, the counsel for respondent testified that as an active member of the California
Bar since 1951, he is familiar with the revenue and taxation laws of the State of
California. When asked by the lower court to state the pertinent California law as
regards exemption of intangible personal properties, the witness cited Article 4, Sec.
13851 (a) & (b) of the California Internal and Revenue Code as published in
Derrings California Code, a publication of Bancroft-Whitney Co., Inc. And as part of
his testimony, a full quotation of the cited section was offered in evidence by
respondents. Likewise, in several naturalization cases, it was held by the Court that
evidence of the law of a foreign country on reciprocity regarding the acquisition of
citizenship, although not meeting the prescribed rule of practice, may be allowed
and used as basis for favorable action, if, in the light of all the circumstances, the
Court is satisfied of the authenticity of the written proof offered. Thus, in a number of
decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law. (Emphasis
supplied)
The Bank, however, cannot rely on Willamette Iron and Steel Works v.
Muzzal or Collector of Internal Revenue v. Fisher to support its cause. These
cases involved attorneys testifying in open court during the trial in the Philippines
CONFLICTS OF LAW FEB 23 ASS CASES 83
and quoting the particular foreign laws sought to be established. On the other hand,
the Walden affidavit was taken abroad ex parteand the affiant never testified in
open court. The Walden affidavit cannot be considered as proof of New York law on
damages not only because it is self-serving but also because it does not state the
specific New York law on damages. We reproduce portions of the Walden affidavit
as follows:
3. In New York, [n]ominal damages are damages in name only, trivial sums such as
six cents or $1. Such damages are awarded both in tort and contract cases when
the plaintiff establishes a cause of action against the defendant, but is unable to
prove actual damages. Dobbs, Law of Remedies, 3.32 at 294 (1993). Since
Guerrero is claiming for actual damages, he cannot ask for nominal damages.
4. There is no concept of temperate damages in New York law. I have reviewed
Dobbs, a well-respected treatise, which does not use the phrase temperate
damages in its index. I have also done a computerized search for the phrase in all
published New York cases, and have found no cases that use it. I have never heard
the phrase used in American law.
5. The Uniform Commercial Code (UCC) governs many aspects of a Banks
relationship with its depositors. In this case, it governs Guerreros claim arising out of
the non-payment of the $18,000 check.Guerrero claims that this was a wrongful
dishonor. However, the UCC states that justifiable refusal to pay or accept as
opposed to dishonor, occurs when a bank refuses to pay a check for reasons such
as a missing indorsement, a missing or illegible signature or a forgery, 3-510, Official
Comment 2. .. to the Complaint, MHT returned the check because it had no
signature card on . and could not verify Guerreros signature. In my opinion,
consistent with the UCC, that is a legitimate and justifiable reason not to pay.
6. Consequential damages are not available in the ordinary case of a justifiable
refusal to pay. UCC 1-106 provides that neither consequential or special or punitive
damages may be had except as specifically provided in the Act or by other rule of
law. UCC 4-103 further provides that consequential damages can be recovered only
where there is bad faith. This is more restrictive than the New York common law,
which may allow consequential damages in a breach of contract case (as does the
UCC where there is a wrongful dishonor).
7. Under New York law, requests for lost profits, damage to reputation and mental
distress are considered consequential damages. Kenford Co., Inc. v. Country of
Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction
Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d 868, 869-70 (4th Dept
1975) damage to reputation); Dobbs, Law of Remedies 12.4(1) at 63 (emotional
distress).
8. As a matter of New York law, a claim for emotional distress cannot be recovered
for a breach of contract. Geler v. National Westminster Bank U.S.A., 770 F. Supp.
210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540
N.Y.S.2d 387, 390 (3d Dept 1989) Martin v. Donald Park Acres, 54 A.D.2d 975, 389
N.Y.S..2d 31, 32 (2nd Dept 1976). Damage to reputation is also not recoverable for a
contract. Motif Construction Corp. v. Buffalo Savings Bank, 374 N.Y.S.2d at 869-70.
9. In cases where the issue is the breach of a contract to purchase stock, New York
courts will not take into consideration the performance of the stock after the
breach. Rather, damages will be based on the value of the stock at the time of the
breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th Dept
1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023 (1983).
10. Under New York law, a party can only get consequential damages if they were
the type that would naturally arise from the breach and if they were brought within
the contemplation of parties as the probable result of the breach at the time of or
prior to contracting. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540
N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo, 223 N.Y. 32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys fees unless they are
provided by contract or statute. E.g., Geler v. National Westminster Bank, 770 F.
Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs.,
Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept 1992); Stanisic v. Soho Landmark
Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dept 1991). There is no statute
that permits attorneys fees in a case of this type.
12. Exemplary, or punitive damages are not allowed for a breach of contract, even
where the plaintiff claims the defendant acted with malice. Geler v. National
Westminster Bank, 770 F.Supp. 210, 215 (S.D.N.Y. 1991); Catalogue Service of
chester[11]_v. Insurance Co. of North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d
635, 637 (2d Dept 1980); Senior v. Manufacturers Hanover Trust Co., 110 A.D.2d
833, 488 N.Y.S.2d 241, 242 (2d Dept 1985).
13. Exemplary or punitive damages may be recovered only where it is alleged and
proven that the wrong supposedly committed by defendant amounts to a fraud
aimed at the public generally and involves a high moral culpability. Walker v.
Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961).
14. Furthermore, it has been consistently held under New York law that exemplary
damages are not available for a mere breach of contract for in such a case, as a
matter of law, only a private wrong and not a public right is involved. Thaler v. The
North Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dept 1978).[12]
The Walden affidavit states conclusions from the affiants personal
interpretation and opinion of the facts of the case vis a vis the alleged laws and
jurisprudence without citing any law in particular. The citations in the Walden
affidavit of various U.S. court decisions do not constitute proof of the official records
or decisions of the U.S. courts. While the Bank attached copies of some of the U.S.
CONFLICTS OF LAW FEB 23 ASS CASES 84
court decisions cited in the Walden affidavit, these copies do not comply with
Section 24 of Rule 132 on proof of official records or decisions of foreign courts.
The Banks intention in presenting the Walden affidavit is to prove New York
law and jurisprudence. However, because of the failure to comply with Section 24 of
Rule 132 on how to prove a foreign law and decisions of foreign courts, the Walden
affidavit did not prove the current state of New York law and jurisprudence. Thus, the
Bank has only alleged, but has not proved, what New York law and jurisprudence
are on the matters at issue.
Next, the Bank makes much of Guerreros failure to submit an opposing
affidavit to the Walden affidavit. However, the pertinent provision of Section 3, Rule
35 of the old Rules of Court did not make the submission of an opposing affidavit
mandatory, thus:
SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party prior to the
day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleadings, depositions and admissions on
file, together with the affidavits, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law. (Emphasis supplied)
It is axiomatic that the term may as used in remedial law, is only permissive and not
mandatory.[13]
Guerrero cannot be said to have admitted the averments in the Banks motion
for partial summary judgment and the Walden affidavit just because he failed to file
an opposing affidavit.Guerrero opposed the motion for partial summary judgment,
although he did not present an opposing affidavit. Guerrero may not have presented
an opposing affidavit, as there was no need for one, because the Walden affidavit
did not establish what the Bank intended to prove. Certainly, Guerrero did not admit,
expressly or impliedly, the veracity of the statements in the Walden affidavit. The
Bank still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit. As the party moving for summary
judgment, the Bank has the burden of clearly demonstrating the absence of any
genuine issue of fact and that any doubt as to the existence of such issue is
resolved against the movant.[14]
Moreover, it would have been redundant and pointless for Guerrero to submit
an opposing affidavit considering that what the Bank seeks to be opposed is the
very subject matter of the complaint. Guerrero need not file an opposing affidavit to
the Walden affidavit because his complaint itself controverts the matters set forth in
the Banks motion and the Walden affidavit. A party should not be made to deny
matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a
quo correctly denied the Banks motion for partial summary judgment. There is a
need to determine by presentation of evidence in a regular trial if the Bank is guilty
of any wrongdoing and if it is liable for damages under the applicable laws.
This case has been delayed long enough by the Banks resort to a motion for
partial summary judgment. Ironically, the Bank has successfully defeated the very
purpose for which summary judgments were devised in our rules, which is, to aid
parties in avoiding the expense and loss of time involved in a trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
August 24, 1998 and the Resolution dated December 14, 1998 of the Court of
Appeals in CA-G.R. SP No. 42310 is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-35694 December 23, 1933
ALLISON G. GIBBS, petitioner-appelle,
vs.
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositor-appellant.
THE REGISTER OF DEEDS OF THE CITY OF MANILA, respondent-appellant.
Office of the Solicitor-General Hilado for appellants.
Allison D. Gibbs in his own behalf.
BUTTE, J.:
This is an appeal from a final order of the Court of First Instance of Manila, requiring
the register of deeds of the City of Manila to cancel certificates of title Nos. 20880,
28336 and 28331, covering lands located in the City of Manila, Philippine Islands,
and issue in lieu thereof new certificates of transfer of title in favor of Allison D.
CONFLICTS OF LAW FEB 23 ASS CASES 85
Gibbs without requiring him to present any document showing that the succession
tax due under Article XI of Chapter 40 of the Administrative Code has been paid.
The said order of the court of March 10, 1931, recites that the parcels of land
covered by said certificates of title formerly belonged to the conjugal partnership of
Allison D. Gibbs and Eva Johnson Gibbs; that the latter died intestate in Palo Alto,
California, on November 28, 1929; that at the time of her death she and her
husband were citizens of the State of California and domiciled therein.
It appears further from said order that Allison D. Gibbs was appointed administrator
of the state of his said deceased wife in case No. 36795 in the same court, entitled
"In the Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased"; that in said
intestate proceedings, the said Allison D. Gibbs, on September 22,1930, filed an ex
parte petition in which he alleged "that the parcels of land hereunder described
belong to the conjugal partnership of your petitioner and his wife, Eva Johnson
Gibbs", describing in detail the three facts here involved; and further alleging that his
said wife, a citizen and resident of California, died on November 28,1929; that in
accordance with the law of California, the community property of spouses who are
citizens of California, upon the death of the wife previous to that of the husband,
belongs absolutely to the surviving husband without administration; that the conjugal
partnership of Allison D. Gibbs and Eva Johnson Gibbs, deceased, has no
obligations or debts and no one will be prejudiced by adjucating said parcels of land
(and seventeen others not here involved) to be the absolute property of the said
Allison D. Gibbs as sole owner. The court granted said petition and on September
22, 1930, entered a decree adjucating the said Allison D. Gibbs to be the sole and
absolute owner of said lands, applying section 1401 of the Civil Code of California.
Gibbs presented this decree to the register of deeds of Manila and demanded that
the latter issue to him a "transfer certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code provides in part
that:
Registers of deeds shall not register in the registry of property any
document transferring real property or real rights therein or any chattel
mortgage, by way of gifts mortis causa, legacy or inheritance, unless the
payment of the tax fixed in this article and actually due thereon shall be
shown. And they shall immediately notify the Collector of Internal Revenue
or the corresponding provincial treasurer of the non payment of the tax
discovered by them. . . .
Acting upon the authority of said section, the register of deeds of the City of Manila,
declined to accept as binding said decree of court of September 22,1930, and
refused to register the transfer of title of the said conjugal property to Allison D.
Gibbs, on the ground that the corresponding inheritance tax had not been paid.
Thereupon, under date of December 26, 1930, Allison D. Gibbs filed in the said
court a petition for an order requiring the said register of deeds "to issue the
corresponding titles" to the petitioner without requiring previous payment of any
inheritance tax. After due hearing of the parties, the court reaffirmed said order of
September 22, 1930, and entered the order of March 10, 1931, which is under
review on this appeal.
On January 3, 1933, this court remanded the case to the court of origin for new trial
upon additional evidence in regard to the pertinent law of California in force at the
time of the death of Mrs. Gibbs, also authorizing the introduction of evidence with
reference to the dates of the acquisition of the property involved in this suit and with
reference to the California law in force at the time of such acquisition. The case is
now before us with the supplementary evidence.
For the purposes of this case, we shall consider the following facts as established by
the evidence or the admissions of the parties: Allison D. Gibbs has been
continuously, since the year 1902, a citizen of the State of California and domiciled
therein; that he and Eva Johnson Gibbs were married at Columbus, Ohio, in July
1906; that there was no antenuptial marriage contract between the parties; that
during the existence of said marriage the spouses acquired the following lands,
among others, in the Philippine Islands, as conjugal property:lawphil.net
1. A parcel of land in the City of Manila represented by transfer certificate of title No.
20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs
casado con Eva Johnson Gibbs".
2. A parcel of land in the City of Manila, represented by transfer certificate of title No.
28336, dated May 14, 1927, in which it is certified "that spouses Allison D. Gibbs
and Eva Johnson Gibbs are the owners in fee simple" of the land therein described.
3. A parcel of land in the City of Manila, represented by transfer certificate of title No.
28331, dated April 6, 1927, which it states "that Allison D. Gibbs married to Eva
Johnson Gibbs" is the owner of the land described therein; that said Eva Johnson
Gibbs died intestate on November 28, 1929, living surviving her her husband, the
appellee, and two sons, Allison J. Gibbs , now age 25 and Finley J. Gibbs, now aged
22, as her sole heirs of law.
Article XI of Chapter 40 of the Administrative Code entitled "Tax on inheritances,
legacies and other acquisitions mortis causa" provides in section 1536 that "Every
transmission by virtue of inheritance ... of real property ... shall be subject to the
following tax." It results that the question for determination in this case is as follows:
Was Eva Johnson Gibbs at the time of her death the owner of a descendible interest
in the Philippine lands above-mentioned?
The appellee contends that the law of California should determine the nature and
extent of the title, if any, that vested in Eva Johnson Gibbs under the three
certificates of title Nos. 20880, 28336 and 28331 above referred to, citing article 9 of
the Civil Code. But that, even if the nature and extent of her title under said
CONFLICTS OF LAW FEB 23 ASS CASES 86
certificates be governed by the law of the Philippine Islands, the laws of California
govern the succession to such title, citing the second paragraph of article 10 of the
Civil Code.
Article 9 of the Civil Code is as follows:
The laws relating to family rights and duties, or to the status, condition, and
legal capacity of persons, are binding upon Spaniards even though they
reside in a foreign country." It is argued that the conjugal right of the
California wife in community real estate in the Philippine Islands is a
personal right and must, therefore, be settled by the law governing her
personal status, that is, the law of California. But our attention has not been
called to any law of California that incapacitates a married woman from
acquiring or holding land in a foreign jurisdiction in accordance with the lex
rei sitae. There is not the slightest doubt that a California married woman
can acquire title to land in a common law jurisdiction like the State of Illinois
or the District of Columbia, subject to the common-law estate by the
courtesy which would vest in her husband. Nor is there any doubt that if a
California husband acquired land in such a jurisdiction his wife would be
vested with the common law right of dower, the prerequisite conditions
obtaining. Article 9 of the Civil Code treats of purely personal relations and
status and capacity for juristic acts, the rules relating to property, both
personal and real, being governed by article 10 of the Civil Code.
Furthermore, article 9, by its very terms, is applicable only to "Spaniards"
(now, by construction, to citizens of the Philippine Islands).
The Organic Act of the Philippine Islands (Act of Congress, August 29,
1916, known as the "Jones Law") as regards the determination of private
rights, grants practical autonomy to the Government of the Philippine
Islands. This Government, therefore, may apply the principles and rules of
private international law (conflicts of laws) on the same footing as an
organized territory or state of the United States. We should, therefore,
resort to the law of California, the nationality and domicile of Mrs. Gibbs, to
ascertain the norm which would be applied here as law were there any
question as to her status.
But the appellant's chief argument and the sole basis of the lower court's decision
rests upon the second paragraph of article 10 of the Civil Code which is as follows:
Nevertheless, legal and testamentary successions, in respect to the order
of succession as well as to the amount of the successional rights and the
intrinsic validity of their provisions, shall be regulated by the national law of
the person whose succession is in question, whatever may be the nature of
the property or the country in which it may be situated.
In construing the above language we are met at the outset with some difficulty by
the expression "the national law of the person whose succession is in question", by
reason of the rather anomalous political status of the Philippine Islands. (Cf.
Manresa, vol. 1, Codigo Civil, pp. 103, 104.) We encountered no difficulty in applying
article 10 in the case of a citizen of Turkey. (Miciano vs. Brimo, 50 Phil., 867.)
Having regard to the practical autonomy of the Philippine Islands, as above stated,
we have concluded that if article 10 is applicable and the estate in question is that of
a deceased American citizen, the succession shall be regulated in accordance with
the norms of the State of his domicile in the United States. (Cf. Babcock
Templeton vs. Rider Babcock, 52 Phil., 130, 137; In re Estate of Johnson, 39 Phil.,
156, 166.)
The trial court found that under the law of California, upon the death of the wife, the
entire community property without administration belongs to the surviving husband;
that he is the absolute owner of all the community property from the moment of the
death of his wife, not by virtue of succession or by virtue of her death, but by virtue
of the fact that when the death of the wife precedes that of the husband he acquires
the community property, not as an heir or as the beneficiary of his deceased wife,
but because she never had more than an inchoate interest or expentancy which is
extinguished upon her death. Quoting the case of Estate of Klumpke (167 Cal., 415,
419), the court said: "The decisions under this section (1401 Civil Code of California)
are uniform to the effect that the husband does not take the community property
upon the death of the wife by succession, but that he holds it all from the moment of
her death as though required by himself. ... It never belonged to the estate of the
deceased wife."
The argument of the appellee apparently leads to this dilemma: If he takes nothing
by succession from his deceased wife, how can the second paragraph of article 10
be invoked? Can the appellee be heard to say that there is a legal succession under
the law of the Philippine Islands and no legal succession under the law of
California? It seems clear that the second paragraph of article 10 applies only when
a legal or testamentary succession has taken place in the Philippines and in
accordance with the law of the Philippine Islands; and the foreign law is consulted
only in regard to the order of succession or the extent of the successional rights; in
other words, the second paragraph of article 10 can be invoked only when the
deceased was vested with a descendible interest in property within the jurisdiction of
the Philippine Islands.
In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law ed., 1028, 1031), the
court said:
It is principle firmly established that to the law of the state in which the land
is situated we must look for the rules which govern its descent, alienation,
and transfer, and for the effect and construction of wills and other
conveyances. (United States vs. Crosby, 7 Cranch, 115; 3 L. ed., 287;
Clark vs. Graham, 6 Wheat., 577; 5 L. ed., 334; McGoon vs. Scales, 9
CONFLICTS OF LAW FEB 23 ASS CASES 87
 Wall., 23; 19 L. ed., 545; Brine vs. Hartford F. Ins. Co., 96 U. S., 627; 24 L.
ed., 858.)" (See also Estate of Lloyd, 175 Cal., 704, 705.) This fundamental
principle is stated in the first paragraph of article 10 of our Civil Code as
follows: "Personal property is subject to the laws of the nation of the owner
thereof; real property to the laws of the country in which it is situated.
It is stated in 5 Cal. Jur., 478:
In accord with the rule that real property is subject to the lex rei sitae, the
respective rights of husband and wife in such property, in the absence of
an antenuptial contract, are determined by the law of the place where the
property is situated, irrespective of the domicile of the parties or to the
place where the marriage was celebrated. (See also Saul vs. His Creditors,
5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.]; Heidenheimer vs. Loring, 26
S. W., 99 [Texas].)
Under this broad principle, the nature and extent of the title which vested in Mrs.
Gibbs at the time of the acquisition of the community lands here in question must be
determined in accordance with the lex rei sitae.
It is admitted that the Philippine lands here in question were acquired as community
property of the conjugal partnership of the appellee and his wife. Under the law of
the Philippine Islands, she was vested of a title equal to that of her husband. Article
1407 of the Civil Code provides:
All the property of the spouses shall be deemed partnership property in the
absence of proof that it belongs exclusively to the husband or to the wife.
Article 1395 provides:
"The conjugal partnership shall be governed by the rules of law applicable to the
contract of partnership in all matters in which such rules do not conflict with the
express provisions of this chapter." Article 1414 provides that "the husband may
dispose by will of his half only of the property of the conjugal partnership." Article
1426 provides that upon dissolution of the conjugal partnership and after inventory
and liquidation, "the net remainder of the partnership property shall be divided share
and share alike between the husband and wife, or their respective heirs." Under the
provisions of the Civil Code and the jurisprudence prevailing here, the wife, upon the
acquisition of any conjugal property, becomes immediately vested with an interest
and title therein equal to that of her husband, subject to the power of management
and disposition which the law vests in the husband. Immediately upon her death, if
there are no obligations of the decedent, as is true in the present case, her share in
the conjugal property is transmitted to her heirs by succession. (Articles 657, 659,
661, Civil Code; cf. also Coronel vs. Ona, 33 Phil., 456, 469.)
It results that the wife of the appellee was, by the law of the Philippine Islands,
vested of a descendible interest, equal to that of her husband, in the Philippine lands
covered by certificates of title Nos. 20880, 28336 and 28331, from the date of their
acquisition to the date of her death. That appellee himself believed that his wife was
vested of such a title and interest in manifest from the second of said certificates,
No. 28336, dated May 14, 1927, introduced by him in evidence, in which it is
certified that "the spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners
in fee simple of the conjugal lands therein described."
The descendible interest of Eva Johnson Gibbs in the lands aforesaid was
transmitted to her heirs by virtue of inheritance and this transmission plainly falls
within the language of section 1536 of Article XI of Chapter 40 of the Administrative
Code which levies a tax on inheritances. (Cf. Re Estate of Majot, 199 N. Y., 29; 92
N. E., 402; 29 L. R. A. [N. S.], 780.) It is unnecessary in this proceeding to determine
the "order of succession" or the "extent of the successional rights" (article 10, Civil
Code, supra) which would be regulated by section 1386 of the Civil Code of
California which was in effect at the time of the death of Mrs. Gibbs.
The record does not show what the proper amount of the inheritance tax in this case
would be nor that the appellee (petitioner below) in any way challenged the power of
the Government to levy an inheritance tax or the validity of the statute under which
the register of deeds refused to issue a certificate of transfer reciting that the
appellee is the exclusive owner of the Philippine lands included in the three
certificates of title here involved.
The judgment of the court below of March 10, 1931, is reversed with directions to
dismiss the petition, without special pronouncement as to the costs.
Avancea, C. J., Malcolm, Villa-Real, Abad Santos, Hull, and Vickers, JJ., concur.
Street, J., dissents.
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN,
DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the
deceased, Executor and Heir-appellees,
CONFLICTS OF LAW FEB 23 ASS CASES 88
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon.
Vicente N. Cusi, Jr., presiding, in Special Proceeding No. 622 of said court, dated
September 14, 1949, approving among things the final accounts of the executor,
directing the executor to reimburse Maria Lucy Christensen the amount of P3,600
paid by her to Helen Christensen Garcia as her legacy, and declaring Maria Lucy
Christensen entitled to the residue of the property to be enjoyed during her lifetime,
and in case of death without issue, one-half of said residue to be payable to Mrs.
Carrie Louise C. Borton, etc., in accordance with the provisions of the will of the
testator Edward E. Christensen. The will was executed in Manila on March 5, 1951
and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the
Philippines about twenty-eight years ago, and who is now residing at No.
665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no
descendants except my above named daughter, MARIA LUCY
CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now
married to Eduardo Garcia, about eighteen years of age and who,
notwithstanding the fact that she was baptized Christensen, is not in any
way related to me, nor has she been at any time adopted by me, and who,
from all information I have now resides in Egpit, Digos, Davao, Philippines,
the sum of THREE THOUSAND SIX HUNDRED PESOS (P3,600.00),
Philippine Currency the same to be deposited in trust for the said Maria
Helen Christensen with the Davao Branch of the Philippine National Bank,
and paid to her at the rate of One Hundred Pesos (P100.00), Philippine
Currency per month until the principal thereof as well as any interest which
may have accrued thereon, is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the
said MARIA LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now
residing as aforesaid at No. 665 Rodger Young Village, Los Angeles,
California, U.S.A., all the income from the rest, remainder, and residue of
my property and estate, real, personal and/or mixed, of whatsoever kind or
character, and wheresoever situated, of which I may be possessed at my
death and which may have come to me from any source whatsoever,
during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final
account and project of partition ratified the payment of only P3,600 to Helen
Christensen Garcia and proposed that the residue of the estate be transferred to his
daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen
Garcia, insofar as it deprives her (Helen) of her legitime as an acknowledged natural
child, she having been declared by Us in G.R. Nos. L-11483-84 an acknowledged
natural child of the deceased Edward E. Christensen. The legal grounds of
opposition are (a) that the distribution should be governed by the laws of the
Philippines, and (b) that said order of distribution is contrary thereto insofar as it
denies to Helen Christensen, one of two acknowledged natural children, one-half of
the estate in full ownership. In amplification of the above grounds it was alleged that
the law that should govern the estate of the deceased Christensen should not be the
internal law of California alone, but the entire law thereof because several foreign
elements are involved, that the forum is the Philippines and even if the case were
decided in California, Section 946 of the California Civil Code, which requires that
the domicile of the decedent should apply, should be applicable. It was also alleged
that Maria Helen Christensen having been declared an acknowledged natural child
of the decedent, she is deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United
States and of the State of California at the time of his death, the successional rights
and intrinsic validity of the provisions in his will are to be governed by the law of
California, in accordance with which a testator has the right to dispose of his
property in the way he desires, because the right of absolute dominion over his
property is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176
P. 2d 952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record
on Appeal). Oppositor Maria Helen Christensen, through counsel, filed various
motions for reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED
CONFLICTS OF LAW FEB 23 ASS CASES 89
NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN
DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO
RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE
INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE
DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E.
CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF
DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE
PHILIPPINE LAWS.
V herein) which he executed at his lawyers' offices in Manila on March 5,
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE
PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF
(1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States
and of the State of California at the time of his death. But there is also no question
that at the time of his death he was domiciled in the Philippines, as witness the
following facts admitted by the executor himself in appellee's brief:
In the proceedings for admission of the will to probate, the facts of record
show that the deceased Edward E. Christensen was born on November 29,
1875 in New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an
appointed school teacher, was on July 1, 1901, on board the U.S. Army
Transport "Sheridan" with Port of Embarkation as the City of San
Francisco, in the State of California, U.S.A. He stayed in the Philippines
until 1904.
In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time he
resided in, and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year
1913. However, in 1928, he again departed the Philippines for the United
States and came back here the following year, 1929. Some nine years
later, in 1938, he again returned to his own country, and came back to the
Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of
facts be admitted and approved by this Honorable Court, without prejudice
to the parties adducing other evidence to prove their case not covered by
this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the Japanese
Military Forces in the Philippines during World War II. Upon liberation, in
April 1945, he left for the United States but returned to the Philippines in
December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc.
622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-
Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California
shortly after the making of his last will and testament (now in question
1951. He died at the St. Luke's Hospital in the City of Manila on April 30,
1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we
are persuaded by the fact that he was born in New York, migrated to California and
resided there for nine years, and since he came to the Philippines in 1913 he
returned to California very rarely and only for short visits (perhaps to relatives), and
considering that he appears never to have owned or acquired a home or properties
in that state, which would indicate that he would ultimately abandon the Philippines
and make home in the State of California.
Sec. 16. Residence is a term used with many shades of meaning from
mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in
California when he resided in Sacramento, California from 1904 to 1913, was never
lost by his stay in the Philippines, for the latter was a territory of the United States
(not a state) until 1946 and the deceased appears to have considered himself as a
citizen of California by the fact that when he executed his will in 1951 he declared
CONFLICTS OF LAW FEB 23 ASS CASES 90
that he was a citizen of that State; so that he appears never to have intended to
abandon his California citizenship by acquiring another. This conclusion is in
accordance with the following principle expounded by Goodrich in his Conflict of
Laws.
The terms "'residence" and "domicile" might well be taken to mean the
same thing, a place of permanent abode. But domicile, as has been shown,
has acquired a technical meaning. Thus one may be domiciled in a place
where he has never been. And he may reside in a place where he has no
domicile. The man with two homes, between which he divides his time,
certainly resides in each one, while living in it. But if he went on business
which would require his presence for several weeks or months, he might
properly be said to have sufficient connection with the place to be called a
resident. It is clear, however, that, if he treated his settlement as continuing
only for the particular business in hand, not giving up his former "home," he
could not be a domiciled New Yorker. Acquisition of a domicile of choice
requires the exercise of intention as well as physical presence. "Residence
simply requires bodily presence of an inhabitant in a given place, while
domicile requires bodily presence in that place and also an intention to
make it one's domicile." Residence, however, is a term used with many
shades of meaning, from the merest temporary presence to the most
permanent abode, and it is not safe to insist that any one use et the only
proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article
16 of the Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of
the country where it is situated.
However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
where said property may be found.
The application of this article in the case at bar requires the determination of the
meaning of the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in
the United States, each state of the Union having its own private law applicable to its
citizens only and in force only within the state. The "national law" indicated in Article
16 of the Civil Code above quoted can not, therefore, possibly mean or apply to any
general American law. So it can refer to no other than the private law of the State of
California.
The next question is: What is the law in California governing the disposition of
personal property? The decision of the court below, sustains the contention of the
executor-appellee that under the California Probate Code, a testator may dispose of
his property by will in the form and manner he desires, citing the case of Estate of
McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant invokes the provisions
of Article 946 of the Civil Code of California, which is as follows:
If there is no law to the contrary, in the place where personal property is
situated, it is deemed to follow the person of its owner, and is governed by
the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied.
We have checked it in the California Civil Code and it is there. Appellee, on the other
hand, relies on the case cited in the decision and testified to by a witness. (Only the
case of Kaufman is correctly cited.) It is argued on executor's behalf that as the
deceased Christensen was a citizen of the State of California, the internal law
thereof, which is that given in the abovecited case, should govern the determination
of the validity of the testamentary provisions of Christensen's will, such law being in
force in the State of California of which Christensen was a citizen. Appellant, on the
other hand, insists that Article 946 should be applicable, and in accordance
therewith and following the doctrine of the renvoi, the question of the validity of the
testamentary provision in question should be referred back to the law of the
decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule
of the forum refers a jural matter to a foreign law for decision, is the
reference to the purely internal rules of law of the foreign system; i.e., to
the totality of the foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to
accept the renvoi, that is, applied the Conflict of Laws rule of Illinois which
referred the matter back to Michigan law. But once having determined the
the Conflict of Laws principle is the rule looked to, it is difficult to see why
the reference back should not have been to Michigan Conflict of Laws. This
would have resulted in the "endless chain of references" which has so
often been criticized be legal writers. The opponents of the renvoi would
have looked merely to the internal law of Illinois, thus rejecting the renvoi or
the reference back. Yet there seems no compelling logical reason why the
original reference should be the internal law rather than to the Conflict of
Laws rule. It is true that such a solution avoids going on a merry-go-round,
but those who have accepted the renvoi theory avoid this inextricabilis
circulas by getting off at the second reference and at that point applying
internal law. Perhaps the opponents of the renvoi are a bit more consistent
for they look always to internal law as the rule of reference.
CONFLICTS OF LAW FEB 23 ASS CASES 91
Strangely enough, both the advocates for and the objectors to
the renvoi plead that greater uniformity will result from adoption of their
respective views. And still more strange is the fact that the only way to
achieve uniformity in this choice-of-law problem is if in the dispute the two
states whose laws form the legal basis of the litigation disagree as to
whether the renvoi should be accepted. If both reject, or both accept the
doctrine, the result of the litigation will vary with the choice of the forum. In
the case stated above, had the Michigan court rejected the renvoi,
judgment would have been against the woman; if the suit had been brought
in the Illinois courts, and they too rejected the renvoi, judgment would be
for the woman. The same result would happen, though the courts would
switch with respect to which would hold liability, if both courts accepted
the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title
to land is in question, and where the validity of a decree of divorce is
challenged. In these cases the Conflict of Laws rule of the situs of the land,
or the domicile of the parties in the divorce case, is applied by the forum,
but any further reference goes only to the internal law. Thus, a person's title
to land, recognized by the situs, will be recognized by every court; and
every divorce, valid by the domicile of the parties, will be valid everywhere.
(Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving
movable property in Massachusetts, England, and France. The question
arises as to how this property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the
rule of the conflict of laws as to intestate succession to movables calls for
an application of the law of the deceased's last domicile. Since by
hypothesis X's last domicile was France, the natural thing for the
Massachusetts court to do would be to turn to French statute of
distributions, or whatever corresponds thereto in French law, and decree a
distribution accordingly. An examination of French law, however, would
show that if a French court were called upon to determine how this property
should be distributed, it would refer the distribution to the national law of
the deceased, thus applying the Massachusetts statute of distributions. So
on the surface of things the Massachusetts court has open to it alternative
course of action: (a) either to apply the French law is to intestate
succession, or (b) to resolve itself into a French court and apply the
Massachusetts statute of distributions, on the assumption that this is what
a French court would do. If it accepts the so-called renvoi doctrine, it will
follow the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-
laws rule of the forum refers to a foreign law, the conflict-of-laws rule of
which, in turn, refers the matter back again to the law of the forum. This is
renvoi in the narrower sense. The German term for this judicial process is
'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to
as governing a particular case, the further question may arise: Are the rules
as to the conflict of laws contained in such foreign law also to be resorted
to? This is a question which, while it has been considered by the courts in
but a few instances, has been the subject of frequent discussion by
textwriters and essayists; and the doctrine involved has been descriptively
designated by them as the "Renvoyer" to send back, or the
"Ruchversweisung", or the "Weiterverweisung", since an affirmative answer
to the question postulated and the operation of the adoption of the foreign
law in toto would in many cases result in returning the main controversy to
be decided according to the law of the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The
theory of the doctrine of renvoi is that the court of the forum, in determining
the question before it, must take into account the whole law of the other
jurisdiction, but also its rules as to conflict of laws, and then apply the law
to the actual question which the rules of the other jurisdiction prescribe.
This may be the law of the forum. The doctrine of the renvoi has generally
been repudiated by the American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its
application in a country explained by Prof. Lorenzen in an article in the Yale Law
Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent parts of the article are
quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of
laws are to be understood as incorporating not only the ordinary or internal
law of the foreign state or country, but its rules of the conflict of laws as
well. According to this theory 'the law of a country' means the whole of its
law.
xxx xxx xxx
Von Bar presented his views at the meeting of the Institute of International
Law, at Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the
application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall
respect:
CONFLICTS OF LAW FEB 23 ASS CASES 92
 (a) The provisions of a foreign law which disclaims the right to
bind its nationals abroad as regards their personal statute, and
desires that said personal statute shall be determined by the law
of the domicile, or even by the law of the place where the act in
question occurred.
(b) The decision of two or more foreign systems of law, provided it
be certain that one of them is necessarily competent, which agree
in attributing the determination of a question to the same system
of law.
xxx xxx xxx
If, for example, the English law directs its judge to distribute the personal
estate of an Englishman who has died domiciled in Belgium in accordance
with the law of his domicile, he must first inquire whether the law of
Belgium would distribute personal property upon death in accordance with
the law of domicile, and if he finds that the Belgian law would make the
distribution in accordance with the law of nationality that is the English
law he must accept this reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while
the rule applied in In re Kaufman, Supra, its internal law. If the law on succession
and the conflict of laws rules of California are to be enforced jointly, each in its own
intended and appropriate sphere, the principle cited In re Kaufman should apply to
citizens living in the State, but Article 946 should apply to such of its citizens as are
not domiciled in California but in other jurisdictions. The rule laid down of resorting to
the law of the domicile in the determination of matters with foreign element involved
is in accord with the general principle of American law that the domiciliary law should
govern in most matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states, and
leaves a will directing the manner of distribution of the property, the law of
the state where he was domiciled at the time of his death will be looked to
in deciding legal questions about the will, almost as completely as the law
of situs is consulted in questions about the devise of land. It is logical that,
since the domiciliary rules control devolution of the personal estate in case
of intestate succession, the same rules should determine the validity of an
attempted testamentary dispostion of the property. Here, also, it is not that
the domiciliary has effect beyond the borders of the domiciliary state. The
rules of the domicile are recognized as controlling by the Conflict of Laws
rules at the situs property, and the reason for the recognition as in the case
of intestate succession, is the general convenience of the doctrine. The
New York court has said on the point: 'The general principle that a
dispostiton of a personal property, valid at the domicile of the owner, is
valid anywhere, is one of the universal application. It had its origin in that
international comity which was one of the first fruits of civilization, and it this
age, when business intercourse and the process of accumulating property
take but little notice of boundary lines, the practical wisdom and justice of
the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec. 164,
pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out
as the national law is the internal law of California. But as above explained the laws
of California have prescribed two sets of laws for its citizens, one for residents
therein and another for those domiciled in other jurisdictions. Reason demands that
We should enforce the California internal law prescribed for its citizens residing
therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we
must enforce the law of California as in comity we are bound to go, as so declared in
Article 16 of our Civil Code, then we must enforce the law of California in
accordance with the express mandate thereof and as above explained, i.e., apply
the internal law for residents therein, and its conflict-of-laws rule for those domiciled
abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in
the place where the property is situated" in Sec. 946 of the California Civil Code
refers to Article 16 of the Civil Code of the Philippines and that the law to the
contrary in the Philippines is the provision in said Article 16 that the national law of
the deceased should govern. This contention can not be sustained. As explained in
the various authorities cited above the national law mentioned in Article 16 of our
Civil Code is the law on conflict of laws in the California Civil Code, i.e., Article 946,
which authorizes the reference or return of the question to the law of the testator's
domicile. The conflict of laws rule in California, Article 946, Civil Code, precisely
refers back the case, when a decedent is not domiciled in California, to the law of
his domicile, the Philippines in the case at bar. The court of the domicile can not and
should not refer the case back to California; such action would leave the issue
incapable of determination because the case will then be like a football, tossed back
and forth between the two states, between the country of which the decedent was a
citizen and the country of his domicile. The Philippine court must apply its own law
as directed in the conflict of laws rule of the state of the decedent, if the question
has to be decided, especially as the application of the internal law of California
provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil
Code of the Philippines, makes natural children legally acknowledged forced heirs of
the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40
Phil. 105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock,
52 Phil. 130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support
the decision can not possibly apply in the case at bar, for two important reasons, i.e.,
the subject in each case does not appear to be a citizen of a state in the United
States but with domicile in the Philippines, and it does not appear in each case that
there exists in the state of which the subject is a citizen, a law similar to or identical
with Art. 946 of the California Civil Code.
CONFLICTS OF LAW FEB 23 ASS CASES 93
We therefore find that as the domicile of the deceased Christensen, a citizen of
California, is the Philippines, the validity of the provisions of his will depriving his
acknowledged natural child, the appellant, should be governed by the Philippine
Law, the domicile, pursuant to Art. 946 of the Civil Code of California, not by the
internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case
returned to the lower court with instructions that the partition be made as the
Philippine law on succession provides. Judgment reversed, with costs against
appellees.
Padilla, Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Bengzon, C.J., took no part.
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the
Court of First Instance of Manila dated April 30, 1964, approving the project of
partition filed by the executor in Civil Case No. 37089 therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United
States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate
hildren: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A.
Bellis, Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy,
who survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis
and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr.,
Maria Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he
directed that after all taxes, obligations, and expenses of administration are paid for,
his distributable estate should be divided, in trust, in the following order and manner:
(a) $240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three
illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or
P40,000.00 each and (c) after the foregoing two items have been satisfied, the
remainder shall go to his seven surviving children by his first and second wives,
namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman,
Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio,
Texas, U.S.A. His will was admitted to probate in the Court of First Instance of
Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests
therein including the amount of $240,000.00 in the form of shares of stock to Mary
E. Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina
Bellis and Miriam Palma Bellis, various amounts totalling P40,000.00 each in
satisfaction of their respective legacies, or a total of P120,000.00, which it released
from time to time according as the lower court approved and allowed the various
motions or petitions filed by the latter three requesting partial advances on account
of their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor
submitted and filed its "Executor's Final Account, Report of Administration and
Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy of
Mary E. Mallen by the delivery to her of shares of stock amounting to $240,000.00,
and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in
the amount of P40,000.00 each or a total of P120,000.00. In the project of partition,
the executor pursuant to the "Twelfth" clause of the testator's Last Will and
Testament divided the residuary estate into seven equal portions for the benefit of
the testator's seven legitimate children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their
respective oppositions to the project of partition on the ground that they were
deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of
the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of
which is evidenced by the registry receipt submitted on April 27, 1964 by the
executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the
lower court, on April 30, 1964, issued an order overruling the oppositions and
approving the executor's final account, report and administration and project of
CONFLICTS OF LAW FEB 23 ASS CASES 94
partition. Relying upon Art. 16 of the Civil Code, it applied the national law of the
decedent, which in this case is Texas law, which did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower court
on June 11, 1964, oppositors-appellants appealed to this Court to raise the issue of
which law must apply Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine
of renvoi, applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31,
1963. Said doctrine is usually pertinent where the decedent is a national of one
country, and a domicile of another. In the present case, it is not disputed that the
decedent was both a national of Texas and a domicile thereof at the time of his
death.2 So that even assuming Texas has a conflict of law rule providing that the
domiciliary system (law of the domicile) should govern, the same would not result in
a reference back (renvoi) to Philippine law, but would still refer to Texas law.
Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae)
calling for the application of the law of the place where the properties are situated,
renvoi would arise, since the properties here involved are found in the Philippines. In
the absence, however, of proof as to the conflict of law rule of Texas, it should not be
presumed different from ours.3 Appellants' position is therefore not rested on the
doctrine of renvoi. As stated, they never invoked nor even mentioned it in their
arguments. Rather, they argue that their case falls under the circumstances
mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil
Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law
of the decedent, in intestate or testamentary successions, with regard to four items:
(a) the order of succession; (b) the amount of successional rights; (e) the intrinsic
validity of the provisions of the will; and (d) the capacity to succeed. They provide
that
ART. 16. Real property as well as personal property is subject to the law of
the country where it is situated.
However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration,
whatever may he the nature of the property and regardless of the country
wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the
decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code,
stating that
Prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not
be rendered ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not
correct. Precisely, Congress deleted the phrase, "notwithstanding the provisions of
this and the next preceding article" when they incorporated Art. 11 of the old Civil
Code as Art. 17 of the new Civil Code, while reproducing without substantial change
the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must
have been their purpose to make the second paragraph of Art. 16 a specific
provision in itself which must be applied in testate and intestate succession. As
further indication of this legislative intent, Congress added a new provision, under
Art. 1039, which decrees that capacity to succeed is to be governed by the national
law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved
in our System of legitimes, Congress has not intended to extend the same to the
succession of foreign nationals. For it has specifically chosen to leave, inter alia,
the amount of successional rights, to the decedent's national law. Specific provisions
must prevail over general ones.
Appellants would also point out that the decedent executed two wills one to
govern his Texas estate and the other his Philippine estate arguing from this that
he intended Philippine law to govern his Philippine estate. Assuming that such was
the decedent's intention in executing a separate Philippine will, it would not alter the
law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a
foreigner's will to the effect that his properties shall be distributed in accordance with
Philippine law and not with his national law, is illegal and void, for his national law
cannot be ignored in regard to those matters that Article 10 now Article 16 of
the Civil Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of
Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or
legitimes. Accordingly, since the intrinsic validity of the provision of the will and the
amount of successional rights are to be determined under Texas law, the Philippine
law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs
against appellants. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and
Castro, JJ., concur.
CONFLICTS OF LAW FEB 23 ASS CASES 95

FIRST DIVISION[G.R. No. 124371. November 23, 2000]
PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F.
LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of
Appeals[1] modifying that of the Regional Trial Court, Camarines Sur, Branch 35,
Iriga City[2] declaring respondent Alicia F. Llorente (herinafter referred to as Alicia), as
co-owners of whatever property she and the deceased Lorenzo N. Llorente
(hereinafter referred to as Lorenzo) may have acquired during the twenty-five (25)
years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United
States Navy from March 10, 1927 to September 30, 1957.[3]
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter
referred to as Paula) were married before a parish priest, Roman Catholic Church,
in Nabua, Camarines Sur.[4]
Before the outbreak of the Pacific War, Lorenzo departed for the United States
and Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.[5]
On November 30, 1943, Lorenzo was admitted to United States citizenship
and Certificate of Naturalization No. 5579816 was issued in his favor by the United
States District Court, Southern District of New York.[6]
Upon the liberation of the Philippines by the American Forces in 1945,
Lorenzo was granted an accrued leave by the U. S. Navy, to visit his wife and he
visited the Philippines.[7] He discovered that his wife Paula was pregnant and was
living in and having an adulterous relationship with his brother, Ceferino Llorente.[8]
On December 4, 1945, Paula gave birth to a boy registered in the Office of the
Registrar of Nabua as Crisologo Llorente, with the certificate stating that the child
was not legitimate and the line for the fathers name was left blank.[9]
Lorenzo refused to forgive Paula and live with her. In fact, on February 2,
1946, the couple drew a written agreement to the effect that (1) all the family
allowances allotted by the United States Navy as part of Lorenzos salary and all
other obligations for Paulas daily maintenance and support would be suspended; (2)
they would dissolve their marital union in accordance with judicial proceedings; (3)
they would make a separate agreement regarding their conjugal property acquired
during their marital life; and (4) Lorenzo would not prosecute Paula for her
adulterous act since she voluntarily admitted her fault and agreed to separate from
Lorenzo peacefully. The agreement was signed by both Lorenzo and Paula and was
witnessed by Paulas father and stepmother. The agreement was notarized by
Notary Public Pedro Osabel.[10]
Lorenzo returned to the United States and on November 16, 1951 filed for
divorce with the Superior Court of the State of California in and for the County of
San Diego. Paula was represented by counsel, John Riley, and actively participated
in the proceedings. On November 27, 1951, the Superior Court of the State of
California, for the County of San Diego found all factual allegations to be true and
issued an interlocutory judgment of divorce.[11]
On December 4, 1952, the divorce decree became final.[12]
In the meantime, Lorenzo returned to the Philippines.
CONFLICTS OF LAW FEB 23 ASS CASES 96
 On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.
[13]
Apparently, Alicia had no knowledge of the first marriage even if they resided in
the same town as Paula, who did not oppose the marriage or cohabitation.[14]
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife.
[15]
Their twenty-five (25) year union produced three children, Raul, Luz and Beverly,
all surnamed Llorente.[16]
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was
notarized by Notary Public Salvador M. Occiano, duly signed by Lorenzo with
attesting witnesses Francisco Hugo, Francisco Neibres and Tito Trajano. In the will,
Lorenzo bequeathed all his property to Alicia and their three children, to wit:
(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential
house and lot, located at San Francisco, Nabua, Camarines Sur, Philippines,
including ALL the personal properties and other movables or belongings that may be
found or existing therein;
(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children,
Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real
properties whatsoever and wheresoever located, specifically my real properties
located at Barangay Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua,
Camarines Sur; Barangay Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay
Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto
my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal
shares, my real properties located in Quezon City Philippines, and covered by
Transfer Certificate of Title No. 188652; and my lands in Antipolo, Rizal, Philippines,
covered by Transfer Certificate of Title Nos. 124196 and 165188, both of the
Registry of Deeds of the province of Rizal, Philippines;
(4) That their respective shares in the above-mentioned properties, whether real or
personal properties, shall not be disposed of, ceded, sold and conveyed to any other
persons, but could only be sold, ceded, conveyed and disposed of by and among
themselves;
(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last
Will and Testament, and in her default or incapacity of the latter to act, any of my
children in the order of age, if of age;
(6) I hereby direct that the executor named herein or her lawful substitute should
served (sic) without bond;
(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions
heretofore executed, signed, or published, by me;
(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the
Llorentes Side should ever bother and disturb in any manner whatsoever my wife
Alicia R. Fortunato and my children with respect to any real or personal properties I
gave and bequeathed respectively to each one of them by virtue of this Last Will and
Testament.[17]
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga,
Camarines Sur, a petition for the probate and allowance of his last will and
testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of
his estate.[18]
On January 18, 1984, the trial court denied the motion for the reason that the
testator Lorenzo was still alive.[19]
On January 24, 1984, finding that the will was duly executed, the trial court
admitted the will to probate.[20]
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.
[21]
On September 4, 1985, Paula filed with the same court a petition [22] for letters
of administration over Lorenzos estate in her favor. Paula contended (1) that she
was Lorenzos surviving spouse, (2) that the various property were acquired during
their marriage, (3) that Lorenzos will disposed of all his property in favor of Alicia and
her children, encroaching on her legitime and 1/2 share in the conjugal property.[23]
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-
755), a petition for the issuance of letters testamentary.[24]
On October 14, 1985, without terminating the testate proceedings, the trial
court gave due course to Paulas petition in Sp. Proc. No. IR-888.[25]
On November 6, 13 and 20, 1985, the order was published in the newspaper
Bicol Star.[26]
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
Wherefore, considering that this court has so found that the divorce decree granted
to the late Lorenzo Llorente is void and inapplicable in the Philippines, therefore the
marriage he contracted with Alicia Fortunato on January 16, 1958 at Manila is
likewise void. This being so the petition of Alicia F. Llorente for the issuance of
CONFLICTS OF LAW FEB 23 ASS CASES 97
letters testamentary is denied. Likewise, she is not entitled to receive any share from
the estate even if the will especially said so her relationship with Lorenzo having
gained the status of paramour which is under Art. 739 (1).
On the other hand, the court finds the petition of Paula Titular Llorente, meritorious,
and so declares the intrinsic disposition of the will of Lorenzo Llorente dated March
13, 1981 as void and declares her entitled as conjugal partner and entitled to one-
half of their conjugal properties, and as primary compulsory heir, Paula T. Llorente is
also entitled to one-third of the estate and then one-third should go to the illegitimate
children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition in
equal shares and also entitled to the remaining free portion in equal shares.
Petitioner, Paula Llorente is appointed legal administrator of the estate of the
deceased, Lorenzo Llorente. As such let the corresponding letters of administration
issue in her favor upon her filing a bond in the amount (sic) of P100,000.00
conditioned for her to make a return to the court within three (3) months a true and
complete inventory of all goods, chattels, rights, and credits, and estate which shall
at any time come to her possession or to the possession of any other person for her,
and from the proceeds to pay and discharge all debts, legacies and charges on the
same, or such dividends thereon as shall be decreed or required by this court; to
render a true and just account of her administration to the court within one (1) year,
and at any other time when required by the court and to perform all orders of this
court by her to be performed.
On the other matters prayed for in respective petitions for want of evidence could
not be granted.
SO ORDERED.[27]
In time, Alicia filed with the trial court a motion for reconsideration of the
aforequoted decision.[28]
On September 14, 1987, the trial court denied Alicias motion for
reconsideration but modified its earlier decision, stating that Raul and Luz Llorente
are not children legitimate or otherwise of Lorenzo since they were not legally
adopted by him.[29] Amending its decision of May 18, 1987, the trial court declared
Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third
(1/3) of the estate and one-third (1/3) of the free portion of the estate.[30]
On September 28, 1987, respondent appealed to the Court of Appeals.[31]
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with
modification the decision of the trial court in this wise:
WHEREFORE, the decision appealed from is hereby AFFIRMED with the
MODIFICATION that Alicia is declared as co-owner of whatever properties she and
the deceased may have acquired during the twenty-five (25) years of cohabitation.
SO ORDERED.[32]
On August 25, 1995, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision.[33]
On March 21, 1996, the Court of Appeals,[34] denied the motion for lack of
merit.
Hence, this petition.[35]
The Issue
Stripping the petition of its legalese and sorting through the various arguments
raised,[36] the issue is simple. Who are entitled to inherit from the late Lorenzo N.
Llorente?
We do not agree with the decision of the Court of Appeals. We remand the
case to the trial court for ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long
before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3)
execution of his will; and (4) death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed
by foreign law.
The Civil Code clearly provides:
Art. 15. Laws relating to family rights and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though
living abroad.
Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary succession, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person
CONFLICTS OF LAW FEB 23 ASS CASES 98
whose succession is under consideration, whatever may be the nature of the
property and regardless of the country wherein said property may be found.
(emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts
are not authorized to take judicial notice of them. Like any other fact, they must be
alleged and proved.[37]
While the substance of the foreign law was pleaded, the Court of Appeals did
not admit the foreign law. The Court of Appeals and the trial court called to the fore
the renvoi doctrine, where the case was referred back to the law of the decedents
domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not
sufficiently proven, in the same breath it made the categorical, albeit equally
unproven statement that American law follows the domiciliary theory hence,
Philippine law applies when determining the validity of Lorenzos will.[38]
First, there is no such thing as one American law. The "national law" indicated
in Article 16 of the Civil Code cannot possibly apply to general American law. There
is no such law governing the validity of testamentary provisions in the United
States. Each State of the union has its own law applicable to its citizens and in force
only within the State. It can therefore refer to no other than the law of the State of
which the decedent was a resident. [39] Second, there is no showing that the
application of the renvoi doctrine is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained
dispositions in favor of Alice, who in the trial courts opinion was a
mere paramour. The trial court threw the will out, leaving Alice, and her two children,
Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one
half (1/2) of whatever property she and Lorenzo acquired during their cohabitation,
applying Article 144 of the Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will,
already probated as duly executed in accordance with the formalities of Philippine
law, is fatal, especially in light of the factual and legal circumstances here
obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr.[40] 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,[41] 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,[42] 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.
For failing to apply these doctrines, the decision of the Court of Appeals must
be reversed.[43] 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. Now, the effects of this divorce (as to the succession to the estate of the
decedent) are matters best left to the determination of the trial court.
Validity of the Will
The Civil Code provides:
Art. 17. The forms and solemnities of contracts, wills, and other public instruments
shall be governed by the laws of the country in which they are executed.
When the acts referred to are executed before the diplomatic or consular officials of
the Republic of the Philippines in a foreign country, the solemnities established by
Philippine laws shall be observed in their execution. (underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and
children by her is glaringly shown in the will he executed. We do not wish to frustrate
his wishes, since he was a foreigner, not covered by our laws on family rights and
duties, status, condition and legal capacity.[44]
Whether the will is intrinsically valid and who shall inherit from Lorenzo are
issues best proved by foreign law which must be pleaded and proved. Whether the
will was executed in accordance with the formalities required is answered by
referring to Philippine law. In fact, the will was duly probated.
As a guide however, the trial court should note that whatever public policy or
good customs may be involved in our system of legitimes, Congress did not intend
to extend the same to the succession of foreign nationals. Congress specifically left
the amount of successional rights to the decedent's national law.[45]
CONFLICTS OF LAW FEB 23 ASS CASES 99
 Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals
in CA-G. R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court
and RECOGNIZES as VALID the decree of divorce granted in favor of the deceased
Lorenzo N. Llorente by the Superior Court of the State of California in and for the
County of San Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination
of the intrinsic validity of Lorenzo N. Llorentes will and determination of the parties
successional rights allowing proof of foreign law with instructions that the trial court
shall proceed with all deliberate dispatch to settle the estate of the deceased within
the framework of the Rules of Court.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago,
JJ., concur.
THIRD DIVISION [G.R. No. 138322. October 2, 2001]
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner, vs. REDERICK
A. RECIO, respondent.
DECISION
PANGANIBAN, J.:
A divorce obtained abroad by an alien may be recognized in our jurisdiction,
provided such decree is valid according to the national law of the
foreigner. However, the divorce decree and the governing personal law of the alien
spouse who obtained the divorce must be proven. Our courts do not take judicial
notice of foreign laws and judgments; hence, like any other facts, both the divorce
decree and the national law of the alien must be alleged and proven according to
our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking
to nullify the January 7, 1999 Decision[1] and the March 24, 1999 Order[2] of the
Regional Trial Court of Cabanatuan City, Branch 28, in Civil Case No. 3026AF. The
assailed Decision disposed as follows:
WHEREFORE, this Court declares the marriage between Grace J. Garcia and
Rederick A. Recio solemnized on January 12, 1994 at Cabanatuan City as dissolved
and both parties can now remarry under existing and applicable laws to any and/or
both parties.[3]
The assailed Order denied reconsideration of the above-quoted Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian
citizen, in Malabon, Rizal, on March 1, 1987.[4] They lived together as husband and
wife in Australia. On May 18, 1989, [5] a decree of divorce, purportedly dissolving the
marriage, was issued by an Australian family court.
CONFLICTS OF LAW FEB 23 ASS CASES 100
 On June 26, 1992, respondent became an Australian citizen, as shown by a Issues
Certificate of Australian Citizenship issued by the Australian government. [6] Petitioner
-- a Filipina -- and respondent were married on January 12, 1994 in Our Lady of
Perpetual Help Church in Cabanatuan City.[7] In their application for a marriage Petitioner submits the following issues for our consideration:
license, respondent was declared as single and Filipino.[8]
1
Starting October 22, 1995, petitioner and respondent lived separately without
prior judicial dissolution of their marriage. While the two were still in Australia, their The trial court gravely erred in finding that the divorce decree obtained in Australia
conjugal assets were divided on May 16, 1996, in accordance with their Statutory
by the respondent ipso facto terminated his first marriage to Editha Samson thereby
Declarations secured in Australia.[9] capacitating him to contract a second marriage with the petitioner.
On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of
Marriage[10] in the court a quo, on the ground of bigamy -- respondent allegedly had 2
a prior subsisting marriage at the time he married her on January 12, 1994. She
claimed that she learned of respondents marriage to Editha Samson only in
The failure of the respondent, who is now a naturalized Australian, to present a
November, 1997.
certificate of legal capacity to marry constitutes absence of a substantial requisite
In his Answer, respondent averred that, as far back as 1993, he had revealed voiding the petitioners marriage to the respondent
to petitioner his prior marriage and its subsequent dissolution.[11] He contended that
his first marriage to an Australian citizen had been validly dissolved by a divorce 3
decree obtained in Australia in 1989;[12] thus, he was legally capacitated to marry
petitioner in 1994.
The trial court seriously erred in the application of Art. 26 of the Family Code in this
On July 7, 1998 -- or about five years after the couples wedding and while the case.
suit for the declaration of nullity was pending -- respondent was able to secure a
divorce decree from a family court in Sydney, Australia because the marriage ha[d] 4
irretrievably broken down.[13]
Respondent prayed in his Answer that the Complaint be dismissed on the The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40,
ground that it stated no cause of action. [14] The Office of the Solicitor General agreed 52 and 53 of the Family Code as the applicable provisions in this case.
with respondent.[15] The court marked and admitted the documentary evidence of
both parties.[16] After they submitted their respective memoranda, the case was 5
submitted for resolution.[17]
Thereafter, the trial court rendered the assailed Decision and Order. The trial court gravely erred in pronouncing that the divorce decree obtained by the
respondent in Australia ipso facto capacitated the parties to remarry, without first
securing a recognition of the judgment granting the divorce decree before our
courts.[19]
Ruling of the Trial Court
The Petition raises five issues, but for purposes of this Decision, we shall
concentrate on two pivotal ones: (1) whether the divorce between respondent and
The trial court declared the marriage dissolved on the ground that the divorce Editha Samson was proven, and (2) whether respondent was proven to be legally
issued in Australia was valid and recognized in the Philippines. It deemed the capacitated to marry petitioner. Because of our ruling on these two, there is no more
marriage ended, but not on the basis of any defect in an essential element of the necessity to take up the rest.
marriage; that is, respondents alleged lack of legal capacity to remarry. Rather, it
based its Decision on the divorce decree obtained by respondent. The Australian
divorce had ended the marriage; thus, there was no more marital union to nullify or
annul. The Courts Ruling
Hence, this Petition.[18]
The Petition is partly meritorious.

CONFLICTS OF LAW FEB 23 ASS CASES 101

 First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial courts recognition of the divorce between respondent
and Editha Samson. Citing Adong v. Cheong Seng Gee,[20] petitioner argues that the
divorce decree, like any other foreign judgment, may be given recognition in this
jurisdiction only upon proof of the existence of (1) the foreign law allowing absolute
divorce and (2) the alleged divorce decree itself. She adds that respondent
miserably failed to establish these elements.
Petitioner adds that, based on the first paragraph of Article 26 of the Family
Code, marriages solemnized abroad are governed by the law of the place where
they were celebrated (the lex loci celebrationis). In effect, the Code requires the
presentation of the foreign law to show the conformity of the marriage in question to
the legal requirements of the place where the marriage was performed.
At the outset, we lay the following basic legal principles as the take-off points
for our discussion. Philippine law does not provide for absolute divorce; hence, our
courts cannot grant it.[21] A marriage between two Filipinos cannot be dissolved even
by a divorce obtained abroad, because of Articles 15[22] and 17[23] of the Civil Code.
[24]
In mixed marriages involving a Filipino and a foreigner, Article 26 [25]of the Family
Code allows the former to contract a subsequent marriage in case the divorce is
validly obtained abroad by the alien spouse capacitating him or her to remarry.[26] A
divorce obtained abroad by a couple, who are both aliens, may be recognized in the
Philippines, provided it is consistent with their respective national laws.[27]
A comparison between marriage and divorce, as far as pleading and proof are
concerned, can be made. Van Dorn v. Romillo Jr. decrees that aliens may obtain
divorces abroad, which may be recognized in the Philippines, provided they are
valid according to their national law.[28] Therefore, before a foreign divorce decree
can be recognized by our courts, the party pleading it must prove the divorce as a
fact and demonstrate its conformity to the foreign law allowing it. [29] Presentation
solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in evidence, it
must first comply with the registration requirements under Articles 11, 13 and 52 of
the Family Code. These articles read as follows:
ART. 11. Where a marriage license is required, each of the contracting parties shall
file separately a sworn application for such license with the proper local civil registrar
which shall specify the following:
xxxxxxxxx
(5) If previously married, how, when and where the previous marriage was dissolved
or annulled;
xxxxxxxxx
ART. 13. In case either of the contracting parties has been previously married, the
applicant shall be required to
ART. 13. In case either of the contracting parties has been previously married, the
applicant shall be required to furnish, instead of the birth or baptismal certificate
required in the last preceding article, the death certificate of the deceased spouse or
the judicial decree of the absolute divorce, or the judicial decree of annulment or
declaration of nullity of his or her previous marriage. x x x.
ART. 52. The judgment of annulment or of absolute nullity of the marriage, the
partition and distribution of the properties of the spouses, and the delivery of the
childrens presumptive legitimes shall be recorded in the appropriate civil registry
and registries of property; otherwise, the same shall not affect their persons.
Respondent, on the other hand, argues that the Australian divorce decree is a
public document -- a written official act of an Australian family court. Therefore, it
requires no further proof of its authenticity and due execution.
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.[30] A divorce obtained abroad is proven by the divorce decree
itself. Indeed the best evidence of a judgment is the judgment itself. [31] The decree
purports to be a written act or record of an act of an official body or tribunal of a
foreign country.[32]
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[33] 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. [34]
The divorce decree between respondent and Editha Samson appears to be an
authentic one issued by an Australian family court.[35] However, appearance is not
sufficient; compliance with the aforementioned rules on evidence must be
demonstrated.
Fortunately for respondents cause, when the divorce decree of May 18, 1989
was submitted in evidence, counsel for petitioner objected, not to its admissibility,
but only to the fact that it had not been registered in the Local Civil Registry of
Cabanatuan City.[36] The trial court ruled that it was admissible, subject to petitioners
qualification.[37] Hence, it was admitted in evidence and accorded weight by the
judge. Indeed, petitioners failure to object properly rendered the divorce decree
admissible as a written act of the Family Court of Sydney, Australia.[38]
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.[39]Naturalization is the legal act of adopting
an alien and clothing him with the political and civil rights belonging to a citizen.
[40]
Naturalized citizens, freed from the protective cloak of their former states, don the
CONFLICTS OF LAW FEB 23 ASS CASES 102
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.
[41]
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.
[42]
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.[43] 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.[44] The power of judicial notice must be exercised
with caution, and every reasonable doubt upon the subject should be resolved in the
negative.
Second Issue: Respondents Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the divorce,
respondent was legally incapacitated to marry her in 1994. Hence, she concludes
that their marriage was void ab initio.
Respondent replies that the Australian divorce decree, which was validly
admitted in evidence, adequately established his legal capacity to marry under
Australian law.
Respondents contention is untenable. In its strict legal sense, divorce means
the legal dissolution of a lawful union for a cause arising after marriage. But divorces
are of different types. The two basic ones are (1) absolute divorce or a vinculo
matrimonii and (2) limited divorce or a mensa et thoro. The first kind terminates the
marriage, while the second suspends it and leaves the bond in full force.[45] There is
no showing in the case at bar which type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory decree -- a conditional
or provisional judgment of divorce. It is in effect the same as a separation from bed
and board, although an absolute divorce may follow after the lapse of the prescribed
period during which no reconciliation is effected.[46]
Even after the divorce becomes absolute, the court may under some foreign
statutes and practices, still restrict remarriage. Under some other jurisdictions,
remarriage may be limited by statute; thus, the guilty party in a divorce which was
granted on the ground of adultery may be prohibited from marrying again. The court
may allow a remarriage only after proof of good behavior.[47]
On its face, the herein Australian divorce decree contains a restriction that
reads:
1. A party to a marriage who marries again before this decree becomes
absolute (unless the other party has died) commits the offence of
bigamy.[48]
This quotation bolsters our contention that the divorce obtained by respondent
may have been restricted. It did not absolutely establish his legal capacity to remarry
according to his national law. Hence, we find no basis for the ruling of the trial court,
which erroneously assumed that the Australian divorce ipso facto restored
respondents capacity to remarry despite the paucity of evidence on this matter.
We also reject the claim of respondent that the divorce decree raises a
disputable presumption or presumptive evidence as to his civil status based on
Section 48, Rule 39[49] of the Rules of Court, for the simple reason that no proof has
been presented on the legal effects of the divorce decree obtained under Australian
laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of
the Family Code was not submitted together with the application for a marriage
license. According to her, its absence is proof that respondent did not have legal
capacity to remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by
the national law of the party concerned. The certificate mentioned in Article 21 of the
Family Code would have been sufficient to establish the legal capacity of
respondent, had he duly presented it in court. A duly authenticated and admitted
certificate is prima facie evidence of legal capacity to marry on the part of the alien
applicant for a marriage license.[50]
As it is, however, there is absolutely no evidence that proves respondents legal
capacity to marry petitioner. A review of the records before this Court shows that
only the following exhibits were presented before the lower court: (1) for petitioner:
(a) Exhibit A Complaint;[51] (b) Exhibit B Certificate of Marriage Between Rederick A.
Recio (Filipino-Australian) and Grace J. Garcia (Filipino) on January 12, 1994 in
Cabanatuan City, Nueva Ecija;[52] (c) Exhibit C Certificate of Marriage Between
Rederick A. Recio (Filipino) and Editha D. Samson (Australian) on March 1, 1987 in
Malabon, Metro Manila;[53] (d) Exhibit D Office of the City Registrar of Cabanatuan
City Certification that no information of annulment between Rederick A. Recio and
Editha D. Samson was in its records;[54] and (e) Exhibit E Certificate of Australian
Citizenship of Rederick A. Recio;[55] (2) for respondent: (a) Exhibit 1 -- Amended
Answer;[56] (b) Exhibit 2 Family Law Act 1975 Decree Nisi of Dissolution of Marriage
in the Family Court of Australia;[57] (c) Exhibit 3 Certificate of Australian Citizenship of
Rederick A. Recio;[58] (d) Exhibit 4 Decree Nisi of Dissolution of Marriage in the
CONFLICTS OF LAW FEB 23 ASS CASES 103
Family Court of Australia Certificate;[59] and Exhibit 5 -- Statutory Declaration of the
Legal Separation Between Rederick A. Recio and Grace J. Garcia Recio since
October 22, 1995.[60] Republic of the Philippines
Based on the above records, we cannot conclude that respondent, who was SUPREME COURT
then a naturalized Australian citizen, was legally capacitated to marry petitioner on Manila
January 12, 1994. We agree with petitioners contention that the court a quo erred in
finding that the divorce decree ipso facto clothed respondent with the legal capacity THIRD DIVISION
to remarry without requiring him to adduce sufficient evidence to show the Australian
personal law governing his status; or at the very least, to prove his legal capacity to
contract the second marriage. G.R. No. 61594 September 28, 1990

Neither can we grant petitioners prayer to declare her marriage to respondent PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,
null and void on the ground of bigamy. After all, it may turn out that under Australian vs
law, he was really capacitated to marry petitioner as a direct result of the divorce
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE
decree. Hence, we believe that the most judicious course is to remand this case to
LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B.
the trial court to receive evidence, if any, which show petitioners legal capacity to
marry petitioner. Failing in that, then the court a quo may declare a nullity of the FARRALES and MARIA MOONYEEN MAMASIG, respondents.
parties marriage on the ground of bigamy, there being already in evidence two
existing marriage certificates, which were both obtained in the Philippines, one in Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Malabon, Metro Manila dated March 1, 1987 and the other, in Cabanatuan City
dated January 12, 1994.
Ledesma, Saludo & Associates for private respondents.
WHEREFORE, in the interest of orderly procedure and substantial justice,
we REMAND the case to the court a quo for the purpose of receiving evidence
which conclusively show respondents legal capacity to marry petitioner; and failing
in that, of declaring the parties marriage void on the ground of bigamy, as above
discussed. No costs. FELICIANO, J.:

SO ORDERED. On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"),

Melo, (Chairman), Vitug, and Sandoval-Gutierrez, JJ., concur. a foreign corporation licensed to do business in the Philippines, executed in Manila
two (2) separate contracts of employment, one with private respondent Ethelynne B.
Farrales and the other with private respondent Ma. M.C. Mamasig. 1 The contracts,
which became effective on 9 January 1979, provided in pertinent portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but can be

extended by the mutual consent of the parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA

reserves the right to terminate this agreement at any time by

CONFLICTS OF LAW FEB 23 ASS CASES 104

 giving the EMPLOYEE notice in writing in advance one month
before the intended termination or in lieu thereof, by paying the
EMPLOYEE wages equivalent to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by
the laws of Pakistan, and only the Courts of Karachi, Pakistan
shall have the jurisdiction to consider any matter arising out of or
under this agreement.
Respondents then commenced training in Pakistan. After their training period, they
began discharging their job functions as flight attendants, with base station in Manila
and flying assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of
the contracts of employment, PIA through Mr. Oscar Benares, counsel for and
official of the local branch of PIA, sent separate letters both dated 1 August 1980 to
private respondents Farrales and Mamasig advising both that their services as flight
stewardesses would be terminated "effective 1 September 1980, conformably to
clause 6 (b) of the employment agreement [they had) executed with [PIA]." 2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a
complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment
of company benefits and bonuses, against PIA with the then Ministry of Labor and
Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE
hearing officer Atty. Jose M. Pascual ordered the parties to submit their position
papers and evidence supporting their respective positions. The PIA submitted its
position paper, 3 but no evidence, and there claimed that both private respondents
were habitual absentees; that both were in the habit of bringing in from abroad
sizeable quantities of "personal effects"; and that PIA personnel at the Manila
International Airport had been discreetly warned by customs officials to advise
private respondents to discontinue that practice. PIA further claimed that the
services of both private respondents were terminated pursuant to the provisions of
the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered
the reinstatement of private respondents with full backwages or, in the alternative,
the payment to them of the amounts equivalent to their salaries for the remainder of
the fixed three-year period of their employment contracts; the payment to private
respondent Mamasig of an amount equivalent to the value of a round trip ticket
Manila-USA Manila; and payment of a bonus to each of the private respondents
equivalent to their one-month salary. 4 The Order stated that private respondents
had attained the status of regular employees after they had rendered more than a
year of continued service; that the stipulation limiting the period of the employment
contract to three (3) years was null and void as violative of the provisions of the
Labor Code and its implementing rules and regulations on regular and casual
employment; and that the dismissal, having been carried out without the requisite
clearance from the MOLE, was illegal and entitled private respondents to
reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy
Minister, MOLE, adopted the findings of fact and conclusions of the Regional
Director and affirmed the latter's award save for the portion thereof giving PIA the
option, in lieu of reinstatement, "to pay each of the complainants [private
respondents] their salaries corresponding to the unexpired portion of the contract[s]
[of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional
Director and the Order of the Deputy Minister as having been rendered without
jurisdiction; for having been rendered without support in the evidence of record
since, allegedly, no hearing was conducted by the hearing officer, Atty. Jose M.
Pascual; and for having been issued in disregard and in violation of petitioner's
rights under the employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction
over the subject matter of the complaint initiated by private respondents for illegal
dismissal, jurisdiction over the same being lodged in the Arbitration Branch of the
National Labor Relations Commission ("NLRC") It appears to us beyond dispute,
however, that both at the time the complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on January 1981 (by Regional Director
Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.),
the Regional Director had jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the
services of employees with at least one (1) year of service without prior clearance
from the Department of Labor and Employment:
Art. 278. Miscellaneous Provisions . . .
(b) With or without a collective agreement, no employer may shut
down his establishment or dismiss or terminate the employment of
employees with at least one year of service during the last two (2)
years, whether such service is continuous or broken, without prior
written authority issued in accordance with such rules and
regulations as the Secretary may promulgate . . . (emphasis
supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor
Code, made clear that in case of a termination without the necessary
CONFLICTS OF LAW FEB 23 ASS CASES 105
clearance, the Regional Director was authorized to order the reinstatement
of the employee concerned and the payment of backwages; necessarily,
therefore, the Regional Director must have been given jurisdiction over
such termination cases:
Sec. 2. Shutdown or dismissal without clearance. Any
shutdown or dismissal without prior clearance shall be
conclusively presumed to be termination of employment without a
just cause. The Regional Director shall, in such case order the
immediate reinstatement of the employee and the payment of his
wages from the time of the shutdown or dismissal until the time of
reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April
1976, was similarly very explicit about the jurisdiction of the Regional
Director over termination of employment cases:
Under PD 850, termination cases with or without CBA are
now placed under the original jurisdiction of the Regional Director.
Preventive suspension cases, now made cognizable for the first
time, are also placed under the Regional Director. Before PD 850,
termination cases where there was a CBA were under the
jurisdiction of the grievance machinery and voluntary arbitration,
while termination cases where there was no CBA were under the
jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and
its implementing rules and regulations with respect to termination
and preventive suspension cases are:
1. The Regional Director is now required to rule on every
application for clearance, whether there is opposition or not, within
ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation
of petitioner's right to procedural due process . 6 This claim, however, cannot be
given serious consideration. Petitioner was ordered by the Regional Director to
submit not only its position paper but also such evidence in its favor as it might
have. Petitioner opted to rely solely upon its position paper; we must assume it had
no evidence to sustain its assertions. Thus, even if no formal or oral hearing was
conducted, petitioner had ample opportunity to explain its side. Moreover, petitioner
PIA was able to appeal his case to the Ministry of Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be
rejected. At the time the complaint was filed by private respondents on 21
September 1980 and at the time the Regional Director issued his questioned order
on 22 January 1981, applicable regulation, as noted above, specified that a
"dismissal without prior clearance shall be conclusively presumed to be
termination of employment without a cause", and the Regional Director was required
in such case to" order the immediate reinstatement of the employee and the
payment of his wages from the time of the shutdown or dismiss until . . .
reinstatement." In other words, under the then applicable rule, the Regional Director
did not even have to require submission of position papers by the parties in view of
the conclusive (juris et de jure) character of the presumption created by such
applicable law and regulation. In Cebu Institute of Technology v. Minister of Labor
and Employment, 8 the Court pointed out that "under Rule 14, Section 2, of the
Implementing Rules and Regulations, the termination of [an employee] which was
without previous clearance from the Ministry of Labor is conclusively presumed to be
without [just] cause . . . [a presumption which] cannot be overturned by any contrary
proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of
employment with private respondents Farrales and Mamasig, arguing that its
relationship with them was governed by the provisions of its contract rather than by
the general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship,
extendible by agreement between the parties; while paragraph 6 provided that,
notwithstanding any other provision in the Contract, PIA had the right to terminate
the employment agreement at any time by giving one-month's notice to the
employee or, in lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since
a contract is the law between the parties. 10 The principle of party autonomy in
contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil
Code is that the contracting parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law, morals, good customs,
public order or public policy." Thus, counter-balancing the principle of autonomy of
contracting parties is the equally general rule that provisions of applicable law,
CONFLICTS OF LAW FEB 23 ASS CASES 106
especially provisions relating to matters affected with public policy, are deemed
written into the contract. 11 Put a little differently, the governing principle is that
parties may not contract away applicable provisions of law especially peremptory
provisions dealing with matters heavily impressed with public interest. The law
relating to labor and employment is clearly such an area and parties are not at
liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other. It is thus necessary to
appraise the contractual provisions invoked by petitioner PIA in terms of their
consistency with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect
held that paragraph 5 of that employment contract was inconsistent with Articles 280
and 281 of the Labor Code as they existed at the time the contract of employment
was entered into, and hence refused to give effect to said paragraph 5. These
Articles read as follows:
Art. 280. Security of Tenure. In cases of regular employment,
the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title An
employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his backwages
computed from the time his compensation was withheld from him
up to the time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: provided, that, any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered as regular
employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists.
(Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion
to examine in detail the question of whether employment for a fixed term has been
outlawed under the above quoted provisions of the Labor Code. After an extensive
examination of the history and development of Articles 280 and 281, the Court
reached the conclusion that a contract providing for employment with a fixed period
was not necessarily unlawful:
There can of course be no quarrel with the proposition that where
from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregarded as contrary
to public policy, morals, etc. But where no such intent to
circumvent the law is shown, or stated otherwise, where the
reason for the law does not exist e.g. where it is indeed the
employee himself who insists upon a period or where the nature
of the engagement is such that, without being seasonal or for a
specific project, a definite date of termination is a sine qua
non would an agreement fixing a period be essentially evil or illicit,
therefore anathema Would such an agreement come within the
scope of Article 280 which admittedly was enacted "to prevent the
circumvention of the right of the employee to be secured in . . .
(his) employment?"
As it is evident from even only the three examples already given
that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly,
but would also appear to restrict, without reasonable distinctions,
the right of an employee to freely stipulate with his employer the
duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be
given reasonable interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term employment and
subverting to boot the principle of freedom of contract to remedy
the evil of employers" using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the
nose to spite the face or, more relevantly, curing a headache by
lopping off the head.
xxx xxx xxx
Accordingly, and since the entire purpose behind the development
of legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his
tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be
CONFLICTS OF LAW FEB 23 ASS CASES 107
 construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent
security of tenure. It should have no application to instances
where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter. Unless
thus limited in its purview, the law would be made to apply to
purposes other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and apt to
lead to absurd and unintended consequences. (emphasis
supplied)
It is apparent from Brent School that the critical consideration is the
presence or absence of a substantial indication that the period specified in
an employment agreement was designed to circumvent the security of
tenure of regular employees which is provided for in Articles 280 and 281 of
the Labor Code. This indication must ordinarily rest upon some aspect of
the agreement other than the mere specification of a fixed term of the
ernployment agreement, or upon evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement
between petitioner PIA and private respondents, we consider that those provisions
must be read together and when so read, the fixed period of three (3) years
specified in paragraph 5 will be seen to have been effectively neutralized by the
provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from
the employee the fixed three (3)-year period ostensibly granted by paragraph 5 by
rendering such period in effect a facultative one at the option of the employer PIA.
For petitioner PIA claims to be authorized to shorten that term, at any time and for
any cause satisfactory to itself, to a one-month period, or even less by simply paying
the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the
agreement here involved is to render the employment of private respondents
Farrales and Mamasig basically employment at the pleasure of petitioner PIA, the
Court considers that paragraphs 5 and 6 were intended to prevent any security of
tenure from accruing in favor of private respondents even during the limited period
of three (3) years, 13 and thus to escape completely the thrust of Articles 280 and 281
of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement
which specifies, firstly, the law of Pakistan as the applicable law of the agreement
and, secondly, lays the venue for settlement of any dispute arising out of or in
connection with the agreement "only [in] courts of Karachi Pakistan". The first clause
of paragraph 10 cannot be invoked to prevent the application of Philippine labor
laws and regulations to the subject matter of this case, i.e., the employer-employee
relationship between petitioner PIA and private respondents. We have already
pointed out that the relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be rendered illusory by
the parties agreeing upon some other law to govern their relationship. Neither may
petitioner invoke the second clause of paragraph 10, specifying the Karachi courts
as the sole venue for the settlement of dispute; between the contracting parties.
Even a cursory scrutiny of the relevant circumstances of this case will show the
multiple and substantive contacts between Philippine law and Philippine courts, on
the one hand, and the relationship between the parties, upon the other: the contract
was not only executed in the Philippines, it was also performed here, at least
partially; private respondents are Philippine citizens and respondents, while
petitioner, although a foreign corporation, is licensed to do business (and actually
doing business) and hence resident in the Philippines; lastly, private respondents
were based in the Philippines in between their assigned flights to the Middle East
and Europe. All the above contacts point to the Philippine courts and administrative
agencies as a proper forum for the resolution of contractual disputes between the
parties. Under these circumstances, paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction
vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did
not undertake to plead and prove the contents of Pakistan law on the matter; it must
therefore be presumed that the applicable provisions of the law of Pakistan are the
same as the applicable provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally
dismissed and that public respondent Deputy Minister, MOLE, had not committed
any grave abuse of discretion nor any act without or in excess of jurisdiction in
ordering their reinstatement with backwages. Private respondents are entitled to
three (3) years backwages without qualification or deduction. Should their
reinstatement to their former or other substantially equivalent positions not be
feasible in view of the length of time which has gone by since their services were
unlawfully terminated, petitioner should be required to pay separation pay to private
respondents amounting to one (1) month's salary for every year of service rendered
by them, including the three (3) years service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit,
and the Order dated 12 August 1982 of public respondent is hereby AFFIRMED,
except that (1) private respondents are entitled to three (3) years backwages,
without deduction or qualification; and (2) should reinstatement of private
respondents to their former positions or to substantially equivalent positions not be
feasible, then petitioner shall, in lieu thereof, pay to private respondents separation
pay amounting to one (1)-month's salary for every year of service actually rendered
by them and for the three (3) years putative service by private respondents. The
Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
CONFLICTS OF LAW FEB 23 ASS CASES 108
Fernan (C.J., Chairman), Gutierrez, Jr., Bidin and Corts, JJ., concur.

SECOND DIVISION [G.R. No. 110263. July 20, 2001]

ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner, vs. COURT OF

APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.

DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision [1] of the Court of
Appeals dated May 19, 1993 in CA-G.R. CV No. 35871 affirming the
Decision[2] dated October 14, 1991 of the Regional Trial Court of Pasig, Metro
Manila, Branch 168 in Civil Case No. 56368 which dismissed the complaint of
petitioner Asiavest Merchant Bankers (M) Berhad for the enforcement of the money

CONFLICTS OF LAW FEB 23 ASS CASES 109

judgment of the High Court of Malaya in Kuala Lumpur against private respondent
Philippine National Construction Corporation.
The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation
organized under the laws of Malaysia while private respondent Philippine National
Construction Corporation is a corporation duly incorporated and existing under
Philippine laws.
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of
$5,108,290.23 (Ringgit Five million one hundred and eight thousand two hundred
and ninety and Sen twenty-three) together with interest at the rate of 12% per
annum on: -
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date
of payment; and

It appears that sometime in 1983, petitioner initiated a suit for collection (ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date
against private respondent, then known as Construction and Development of payment; and $350.00 (Ringgit Three Hundred and Fifty) costs.
Corporation of the Philippines, before the High Court of Malaya in Kuala Lumpur
entitled Asiavest Merchant Bankers (M) Berhad v. Asiavest CDCP Sdn. Bhd. and Dated the 13th day of September, 1985.
Construction and Development Corporation of the Philippines.[3]
Senior Assistant Registrar,
Petitioner sought to recover the indemnity of the performance bond it had put
up in favor of private respondent to guarantee the completion of the Felda Project
High Court, Kuala Lumpur
and the non-payment of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the
completion of Paloh Hanai and Kuantan By-Pass Project.
This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building,
No. 4, Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed.
On September 13, 1985, the High Court of Malaya (Commercial Division)
(VP/Ong/81194.7/83)[4]
rendered judgment in favor of the petitioner and against the private respondent
which is also designated therein as the 2nd Defendant. The judgment reads in full:
On the same day, September 13, 1985, the High Court of Malaya issued an
Order directing the private respondent (also designated therein as the
SUIT NO. C638 of 1983
2nd Defendant) to pay petitioner interest on the sums covered by the said
Judgment, thus:
Between
SUIT NO. C638 OF 1983
Asiavest Merchant Bankers (M) Berhad Plaintiffs
Between
And
Asiavest Merchant Bankers (M) Berhad Plaintiffs
1. Asiavest-CDCP Sdn. Bhd.
And
2. Construction & Development
1. Asiavest-CDCP Sdn. Bhd.
Corporation of the Philippines Defendant
2. Construction & Development
JUDGMENT
Corporation of the Philippines Defendants
The 2nd Defendant having entered appearance herein and the Court having under
Order 14, rule 3 ordered that judgment as hereinafter provided be entered for the
BEFORE THE SENIOR ASSISTANT REGISTRAR
Plaintiffs against the 2nd Defendant.

CIK SUSILA S. PARAM

CONFLICTS OF LAW FEB 23 ASS CASES 110

THIS 13th DAY OF SEPTEMBER, 1985 IN CHAMBERS
ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this
action AND UPON READING the Summons in Chambers dated the 16th day of
August, 1984 and the Affidavit of Lee Foong Mee affirmed on the 14th day of August
1984 both filed herein AND UPON HEARING Mr. T. Thomas of Counsel for the
Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant abovenamed on
the 26th day of December 1984 IT WAS ORDERED that the Plaintiffs be at liberty to
sign final judgment against the 2nd Defendant for the sum of $5,108.290.23 AND IT
WAS ORDEREDthat the 2nd Defendant do pay the Plaintiffs the costs of suit at
$350.00 AND IT WAS FURTHER ORDERED that the plaintiffs be at liberty to apply
for payment of interest AND upon the application of the Plaintiffs for payment of
interest coming on for hearing on the 1st day of August in the presence of Mr.
Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of
Counsel for the 2ndDefendant above-named AND UPON HEARING Counsel as
aforesaid BY CONSENT IT WAS ORDERED that the 2nd Defendant do pay the
Plaintiffs interest at a rate to be assessed AND the same coming on for assessment
this day in the presence of Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs
and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant AND UPON HEARING
Counsel as aforesaid BY CONSENT IT IS ORDERED that the 2nd Defendant do
pay the Plaintiffs interest at the rate of 12% per annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date
of payment; and
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date
of Payment.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur.[5]
Following unsuccessful attempts[6] to secure payment from private respondent
under the judgment, petitioner initiated on September 5, 1988 the complaint before
Regional Trial Court of Pasig, Metro Manila, to enforce the judgment of the High
Court of Malaya.[7]
Private respondent sought the dismissal of the case via a Motion to Dismiss
filed on October 5, 1988, contending that the alleged judgment of the High Court of
Malaya should be denied recognition or enforcement since on its face, it is tainted
with want of jurisdiction, want of notice to private respondent, collusion and/or fraud,
and there is a clear mistake of law or fact. [8] Dismissal was, however, denied by the
trial court considering that the grounds relied upon are not the proper grounds in a
motion to dismiss under Rule 16 of the Revised Rules of Court.[9]
On May 22, 1989, private respondent filed its Answer with Compulsory
Counterclaim[10] and therein raised the grounds it brought up in its motion to dismiss.
In its Reply[11] filed on June 8, 1989, the petitioner contended that the High Court of
Malaya acquired jurisdiction over the person of private respondent by its voluntary
submission to the courts jurisdiction through its appointed counsel, Mr. Khay Chay
Tee. Furthermore, private respondents counsel waived any and all objections to the
High Courts jurisdiction in a pleading filed before the court.
In due time, the trial court rendered its Decision dated October 14, 1991
dismissing petitioners complaint. Petitioner interposed an appeal with the Court of
Appeals, but the appellate court dismissed the same and affirmed the decision of
the trial court in a Decision dated May 19, 1993.
Hence, the instant petition which is anchored on two (2) assigned errors, [12] to
wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN
COURT DID NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC,
NOTWITHSTANDING THAT (a) THE FOREIGN COURT HAD SERVED
SUMMONS ON PNCC AT ITS MALAYSIA OFFICE, AND (b) PNCC ITSELF
APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT.
II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND
ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.
Generally, in the absence of a special compact, no sovereign is bound to give
effect within its dominion to a judgment rendered by a tribunal of another country;
[13]
however, the rules of comity, utility and convenience of nations have established
a usage among civilized states by which final judgments of foreign courts of
competent jurisdiction are reciprocally respected and rendered efficacious under
certain conditions that may vary in different countries.[14]
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be
recognized insofar as the immediate parties and the underlying cause of action are
concerned so long as it is convincingly shown that there has been an opportunity for
a full and fair hearing before a court of competent jurisdiction; that the trial upon
regular proceedings has been conducted, following due citation or voluntary
CONFLICTS OF LAW FEB 23 ASS CASES 111
appearance of the defendant and under a system of jurisprudence likely to secure
an impartial administration of justice; and that there is nothing to indicate either a
prejudice in court and in the system of laws under which it is sitting or fraud in
procuring the judgment.[15]
A foreign judgment is presumed to be valid and binding in the country from
which it comes, until a contrary showing, on the basis of a presumption of regularity
of proceedings and the giving of due notice in the foreign forum. Under Section
50(b),[16] Rule 39 of the Revised Rules of Court, which was the governing law at the
time the instant case was decided by the trial court and respondent appellate court,
a judgment, against a person, of a tribunal of a foreign country having jurisdiction to
pronounce the same is presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact. In addition, under Section 3(n), Rule 131 of the
Revised Rules of Court, a court, whether in the Philippines or elsewhere, enjoys the
presumption that it was acting in the lawful exercise of its jurisdiction. Hence, once
the authenticity of the foreign judgment is proved, the party attacking a foreign
judgment, is tasked with the burden of overcoming its presumptive validity.
In the instant case, petitioner sufficiently established the existence of the
money judgment of the High Court of Malaya by the evidence it offered. Vinayak
Prabhakar Pradhan, presented as petitioners sole witness, testified to the effect that
he is in active practice of the law profession in Malaysia;[17] that he was connected
with Skrine and Company as Legal Assistant up to 1981; [18] that private respondent,
then known as Construction and Development Corporation of the Philippines, was
sued by his client, Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur; [19] that
the writ of summons were served on March 17, 1983 at the registered office of
private respondent and on March 21, 1983 on Cora S. Deala, a financial planning
officer of private respondent for Southeast Asia operations;[20] that upon the filing of
the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with address at
24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur, entered their conditional
appearance for private respondent questioning the regularity of the service of the
writ of summons but subsequently withdrew the same when it realized that the writ
was properly served;[21] that because private respondent failed to file a statement of
defense within two (2) weeks, petitioner filed an application for summary judgment
and submitted affidavits and documentary evidence in support of its claim; [22] that the
matter was then heard before the High Court of Kuala Lumpur in a series of dates
where private respondent was represented by counsel;[23] and that the end result of
all these proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the following
documentary evidence:
authenticity of the foreign judgment, said foreign judgment enjoys presumptive
(a) A certified and authenticated copy of the Judgment promulgated by
the Malaysian High Court dated September 13, 1985 directing private
respondent to pay petitioner the sum of $5,108,290.23 Malaysian
Ringgit plus interests from March 1983 until fully paid;[24]
(b) A certified and authenticated copy of the Order dated September 13,
1985 issued by the Malaysian High Court in Civil Suit No. C638 of
1983;[25]
(c) Computation of principal and interest due as of January 31, 1990 on
the amount adjudged payable to petitioner by private respondent;[26]
(d) Letter and Statement of Account of petitioners counsel in Malaysia
indicating the costs for prosecuting and implementing the Malaysian
High Courts Judgment;[27]
(e) Letters between petitioners Malaysian counsel, Skrine and Co., and
its local counsel, Sycip Salazar Law Offices, relative to institution of
the action in the Philippines;[28]
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2,
1990 showing attorneys fees paid by and due from petitioner;[29]
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such
writ in petitioners suit against private respondent before the Malaysian
High Court;[30]
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed
by counsel for private respondent with the Malaysian High Court;[31]
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, counsel for
private respondent, submitted during the proceedings before the
Malaysian High Court;[32]
(j) Record of the Courts Proceedings in Civil Case No. C638 of 1983;[33]
(k) Petitioners verified Application for Summary Judgment dated August
14, 1984;[34] and
(l) Letter dated November 6, 1985 from petitioners Malaysian counsel to
private respondents counsel in Malaysia.[35]
Having thus proven, through the foregoing evidence, the existence and
CONFLICTS OF LAW FEB 23 ASS CASES 112
validity and the burden then fell upon the party who disputes its validity, herein
private respondent, to prove otherwise.
Private respondent failed to sufficiently discharge the burden that fell upon it to
prove by clear and convincing evidence the grounds which it relied upon to prevent
enforcement of the Malaysian High Court judgment, namely, (a) that jurisdiction was
not acquired by the Malaysian Court over the person of private respondent due to
alleged improper service of summons upon private respondent and the alleged lack
of authority of its counsel to appear and represent private respondent in the suit; (b)
the foreign judgment is allegedly tainted by evident collusion, fraud and clear
mistake of fact or law; and (c) not only were the requisites for enforcement or
recognition allegedly not complied with but also that the Malaysian judgment is
allegedly contrary to the Constitutional prescription that the every decision must
state the facts and law on which it is based.[36]
Private respondent relied solely on the testimony of its two (2) witnesses,
namely, Mr. Alfredo N. Calupitan, an accountant of private respondent, and Virginia
Abelardo, Executive Secretary and a member of the staff of the Corporate
Secretariat Section of the Corporate Legal Division, of private respondent, both of
whom failed to shed light and amplify its defense or claim for non-enforcement of the
foreign judgment against it.
Mr. Calupitans testimony centered on the following: that from January to
December 1982 he was assigned in Malaysia as Project Comptroller of the Pahang
Project Package A and B for road construction under the joint venture of private
respondent and Asiavest Holdings;[37] that under the joint venture, Asiavest Holdings
would handle the financial aspect of the project, which is fifty-one percent (51%)
while private respondent would handle the technical aspect of the project, or forty-
nine percent (49%);[38] and, that Cora Deala was not authorized to receive summons
for and in behalf of the private respondent. [39]Ms. Abelardos testimony, on the other
hand, focused on the following: that there was no board resolution authorizing Allen
and Gledhill to admit all the claims of petitioner in the suit brought before the High
Court of Malaya,[40] though on cross-examination she admitted that Allen and Gledhill
were the retained lawyers of private respondent in Malaysia.[41]
The foregoing reasons or grounds relied upon by private respondent in
preventing enforcement and recognition of the Malaysian judgment primarily refer to
matters of remedy and procedure taken by the Malaysian High Court relative to the
suit for collection initiated by petitioner. Needless to stress, the recognition to be
accorded a foreign judgment is not necessarily affected by the fact that the
procedure in the courts of the country in which such judgment was rendered differs
from that of the courts of the country in which the judgment is relied on.[42] Ultimately,
matters of remedy and procedure such as those relating to the service of summons
or court process upon the defendant, the authority of counsel to appear and
represent a defendant and the formal requirements in a decision are governed by
the lex fori or the internal law of the forum,[43] i.e., the law of Malaysia in this case.
In this case, it is the procedural law of Malaysia where the judgment was
rendered that determines the validity of the service of court process on private
respondent as well as other matters raised by it. As to what the Malaysian
procedural law is, remains a question of fact, not of law. It may not be taken judicial
notice of and must be pleaded and proved like any other fact. Sections 24 and 25 of
Rule 132 of the Revised Rules of Court provide that it may be evidenced by an
official publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon private respondent to present evidence as to what that Malaysian
procedural law is and to show that under it, the assailed service of summons upon a
financial officer of a corporation, as alleged by it, is invalid. It did not. Accordingly,
the presumption of validity and regularity of service of summons and the decision
thereafter rendered by the High Court of Malaya must stand.[44]
On the matter of alleged lack of authority of the law firm of Allen and Gledhill to
represent private respondent, not only did the private respondents witnesses admit
that the said law firm of Allen and Gledhill were its counsels in its transactions in
Malaysia,[45] but of greater significance is the fact that petitioner offered in evidence
relevant Malaysian jurisprudence[46] to the effect that (a) it is not necessary under
Malaysian law for counsel appearing before the Malaysian High Court to submit a
special power of attorney authorizing him to represent a client before said court, (b)
that counsel appearing before the Malaysian High Court has full authority to
compromise the suit, and (c) that counsel appearing before the Malaysian High
Court need not comply with certain pre-requisites as required under Philippine law to
appear and compromise judgments on behalf of their clients before said court.[47]
Furthermore, there is no basis for or truth to the appellate courts conclusion
that the conditional appearance of private respondents counsel who was allegedly
not authorized to appear and represent, cannot be considered as voluntary
submission to the jurisdiction of the High Court of Malaya, inasmuch as said
conditional appearance was not premised on the alleged lack of authority of said
counsel but the conditional appearance was entered to question the regularity of the
service of the writ of summons. Such conditional appearance was in fact
subsequently withdrawn when counsel realized that the writ was properly served.[48]
On the ground that collusion, fraud and clear mistake of fact and law tainted
the judgment of the High Court of Malaya, no clear evidence of the same was
adduced or shown. The facts which the trial court found intriguing amounted to mere
conjectures and specious observations. The trial courts finding on the absence of
judgment against Asiavest-CDCP Sdn. Bhd. is contradicted by evidence on record
that recovery was also sought against Asiavest-CDCP Sdn. Bhd. but the same was
found insolvent.[49] Furthermore, even when the foreign judgment is based on the
drafts prepared by counsel for the successful party, such is not per se indicative of
collusion or fraud. Fraud to hinder the enforcement within the jurisdiction of a foreign
judgment must be extrinsic, i.e., fraud based on facts not controverted or resolved in
the case where judgment is rendered,[50] or that which would go to the jurisdiction of
the court or would deprive the party against whom judgment is rendered a chance to
defend the action to which he has a meritorious defense.[51] Intrinsic fraud is one
CONFLICTS OF LAW FEB 23 ASS CASES 113
which goes to the very existence of the cause of action is deemed already adjudged, WHEREFORE, the instant petition is GRANTED. The Decision of the Court of
and it, therefore, cannot militate against the recognition or enforcement of the Appeals dated May 19, 1993 in CA-G.R. CV No. 35871 sustaining the Decision
foreign judgment.[52] Evidence is wanting on the alleged extrinsic fraud. Hence, such dated October 14, 1991 in Civil Case No. 56368 of the Regional Trial Court of Pasig,
unsubstantiated allegation cannot give rise to liability therein. Branch 168 denying the enforcement of the Judgment dated September 13, 1985 of
the High Court of Malaya in Kuala Lumpur is REVERSED and SET ASIDE, and
Lastly, there is no merit to the argument that the foreign judgment is not another in its stead is hereby rendered ORDERING private respondent Philippine
enforceable in view of the absence of any statement of facts and law upon which the National Construction Corporation to pay petitioner Asiavest Merchant Bankers (M)
award in favor of the petitioner was based. As aforestated, the lex fori or the internal Berhad the amounts adjudged in the said foreign Judgment, subject of the said
law of the forum governs matters of remedy and procedure. [53] Considering that case.
under the procedural rules of the High Court of Malaya, a valid judgment may be
rendered even without stating in the judgment every fact and law upon which the Costs against the private respondent.
judgment is based, then the same must be accorded respect and the courts in this
jurisdiction cannot invalidate the judgment of the foreign court simply because our SO ORDERED.
rules provide otherwise.
Bellosillo, (Chairman), Mendoza and Buena, JJ., concur.
All in all, private respondent had the ultimate duty to demonstrate the alleged
invalidity of such foreign judgment, being the party challenging the judgment
Quisumbing, J., on official business.
rendered by the High Court of Malaya. But instead of doing so, private respondent
merely argued, to which the trial court agreed, that the burden lay upon petitioner to
prove the validity of the money judgment. Such is clearly erroneous and would
render meaningless the presumption of validity accorded a foreign judgment were
the party seeking to enforce it be required to first establish its validity.[54]

CONFLICTS OF LAW FEB 23 ASS CASES 114